The interest subsidy would be provided only for that part of the home improvement or mortgage loan which directly finances the solar investment. The interest rate subsidy would be calculated to compensate the lender for the difference in yield between the subsidized loan and a similar loan made at the

prevailing market rate.

O The interest subsidy would be set from time to time by the Board of Directors of the Bank (composed of the Secretaries of HUD, DOE, and Treasury) at the level which will best serve the purposes of accelerating the use of solar energy systems in residential and commercial buildings.

The availability of the subsidy would be conditioned on an appropriate warranty against defects.

At least 60% of the Bank's subsidy payments would have to go to residential loans.

The following ceilings would be set on the size of

the loan or portion of the loan which would be

subsidized: $10,000 for a single-family residence;

$5,000 for each unit in a multi-family residence (not

to exceed $500,000 per loan); and $200,000 for a

commercial structure.

The Bank would be funded at $100 million in its first year (Fiscal Year 1981). It would be financed with monies to be provided from the Energy Security Trust Fund.

2.

3.

An exemption for gasoline/alcohol mixtures from the
current 4 federal gasoline excise tax to encourage
the use of gasohol. Gasohol provides a useful supplement
for fueling our existing automobile fleet and can help
in reducing our needs for imported crude oil,

A 20% tax credit, up to a total of $2,000 per home, for
new homes built using passive solar designs and applica-
tions. This provides a significant new incentive for
use of cost-effective designs and materials which take
maximum advantage of the direct heating power of the
sun. This and the following tax credits will be funded
from the Energy Security Trust Fund, as announced in the
April 5, 1979 Energy Message.

4. A new investment tax credit to encourage the use of solar technologies to provide process heat for use in

5.

industry and agriculture.

This credit adds to the

existing investment tax credit to provide a total of
25%, and will remain in effect for investments made
through 1989.

A new 15% tax credit for the purchase and installation of airtight woodburning stoves in principal residences. This credit will permit greater use of our wood resources for home heating, and should permit consumers to save significantly on their heating bills.

6. Enhanced efforts to encourage the use of solar and renewable resource systems internationally, including a significant program to be administered by the Agency for International Development (AID) to assist developing countries in harnessing the power of the sun.

7.

Establishment of a permanent Standing Subcommittee of the Energy Coordinating Committee to monitor and direct the implementation of all of the solar programs across the government. The Subcommittee will report regularly to the Energy Coordinating Committee which is chaired by

the Secretary of Energy, and is comprised of representatives of all major agencies of government with responsibility for solar and renewable resource applications.

Solar Goal

The 20% goal set by the President stands as a challenge, intended to marshall the efforts of America's industries, institutions, and the public, to realize the full potential of solar energy. Depending on the timing of technological breakthroughs (and other factors) solar could provide 20% of our energy needs in 2000.

The program announced by the President yesterday creates incentives for millions of Americans to get busy and figure out new ways to make solar work:

the solar industry, through expanded RD&D efforts
sponsored by the Federal Government,

the financial community, through the Solar Bank,

O builders, making use of the passive solar tax credits,

agriculture, through gasohol incentives and tax

credits for solar process heat,

energy-using industries, through the new tax credits for industrial process heat,

individuals, through tax credits for conservation,

solar, and wood stoves,

state governments, through utility rate reforms,
building codes, and actions to protect consumers.

This is not like the man-on-the-moon goal; Federal actions alone cannot do the job. But the President can provide the leadership necessary for all of us to work together to achieve that goal. Ths success of this national solar

strategy relies on the Federal Government

-

both the Execu

on state and local govern

tive Branch and the Congress ments, on the private entrepreneurs and inventors who have already given us significant progress in the availability of solar technologies, and ultimately, on the strength of the American people's commitment to finding and using substitutes for our diminishing supplies of traditional fossil fuels. STATEMENT OF ALVIN L. ALM, ASSISTANT SECRETARY, POLICY AND EVALUATION, DEPARTMENT OF ENERGY, ACCOMPANIED BY FRED MORSE, ACTING DIRECTOR, OFFICE OF SOLAR APPLICATIONS; AND BENNETT MILLER, PROGRAM DIRECTOR, SOLAR, GEOTHERMAL, ELECTRIC STORAGE SYSTEMS

Mr. ALM. Mr. Chairman, thank you very much.

I have rather a long statement which I would propose to submit for the record and make some observations from that statement, if that is all right with the Chair.

Mr. OTTINGER. That is most agreeable and your full statement will appear in the record. I hope you won't feel such pressure of time that you won't address some of these particular concerns.

Mr. ALM. I will address the concerns you have raised and to the extent to which I don't, you can remind me. I think I have most of them in mind.

As you know, yesterday the President announced his decision based on the results of the domestic policy review of solar energy. As you know, the DPR was a major interagency effort. It included 30 different Federal agencies. It was a great privilege on my part to participate in the solar DPR and to lead the effort. Sometimes working with 30 agencies is slow but one of the main advantages is