Tuesday, May 03, 2011

Senate Hearing On Clean Energy Deployment Administration

May 3: The Senate Energy & Natural Resources (ENR) Committee, Chaired by Senator Jeff Bingaman (D-NM), with Ranking Member Lisa Murkowski (R-AK), held a hearing to receive testimony on the proposal for a Clean Energy Deployment Administration (CEDA) as contained in Title I, Subtitle A of the American Clean Energy Leadership Act of 2009 (S.1462 of the 111th Congress) [See WIMS 6/17/09]. Witnesses included: Jonathan Silver, Executive Director of the U.S. Department of Energy (DOE) Loan Guarantee Program; and representatives from the Center for Energy Policy and Finance, Stanford University; Tana Energy Capital LLC; and the U.S. Chamber of Commerce, Institute for 21st Century Energy.
    Chairman Bingaman indicated in an opening statement, "This legislation has been in development for several years now and has benefitted greatly from the input of many people in the private sector, including the ones here today to testify on the proposal of CEDA. The problems of bringing new energy technologies to the commercial marketplace have been documented for a long time.  In many hearings, over several years, we have heard about the challenging environment for securing investment in emerging clean energy technologies.  The high capital requirements, coupled with unavailability of affordable financing, have generally steered investments toward largely proven technologies while the real 'game changing' technologies have not been able to get the money they need. . .
    "Although research and development in the United States has been strong - leading to some very promising advances in renewable energy, highly fuel-efficient and electric drive vehicles, smart grid technology and ultra-efficient lighting and appliances – their transition to the commercial marketplace has been frustratingly slow. The rest of the world is working hard to accelerate this deployment cycle and, as we have heard in a hearing in March of this year, our global competitors are committing significant resources to make their countries attractive environments for clean energy technology deployment, including through financing support. . . "
    In relation to the current budget debates in Congress and future investments in clean energy technology, Chairman Bingaman said, "One thing I think has been made clear in the hearings we have had so far on this topic is that we should not wait in making these investments. The budgeting conventions we use here dictate that the funds set aside for CEDA within the Treasury are considered 'spent' immediately, even though any actual losses may not happen for years and could be offset by fees collected.  We need to find a way to pay for that amount when the bill comes to the full Senate. While I acknowledge that the current environment makes this difficult, and I look forward to working with my colleagues to find a suitable offset, and we should not lose sight of the fundamental cost-effectiveness of this type of financing support. CEDA will generate significant private sector spending and will finance projects that have many times the value of the actual risks taken."
    Ranking Member Murkowski made clear that the cost of the program would need to be offset by spending reductions elsewhere in the federal budget. She said, "This debate should be about how to make better use of all of our resources, including the revenues that result from energy production. Despite the high initial costs of creating a Clean Energy Deployment Administration, I continue to believe that it's a smarter, more efficient way for the federal government to promote clean energy technologies.
    "Legislation creating CEDA was voted out of the Energy Committee on a bipartisan basis last Congress. The proposal would address the persistent lack of available financing for clean energy projects. CEDA allows the opportunity to re-use its funding over time to back private lending for clean energy projects, instead of only offering one-time payments in the form of grants or tax credits as previous programs have done. It is my view that we must find an acceptable offset for CEDA. An offset will not only help CEDA become a reality; it will also help us hold the line on new spending and ensure we do not add to our national debt."
    The Chamber of Commerce testified that, ". . .this Committee's version of CEDA from ACELA is elegantly tailored to address the primary problem of commercializing technologies because of their newness and inherent technological risk, while doing it in a technology-neutral fashion. I must be clear, the label 'clean energy' is not reserved solely for renewables, but must be accurately applied to any and all new technologies and processes that reduce environmental impact, whether it be clean coal, advanced biofuels, natural gas vehicles, advanced nuclear, or energy storage to name a few. The ability to acquire financing is not the only hurdle to clean energy deployment. Our existing siting process has proven to be an absolute obstacle for dozens of clean energy projects. Without substantive reform to the current National Environmental Policy Act (NEPA) process, clean energy deployment will not reach its potential. . . CEDA combines a domestic energy mission with sophisticated financial risk management skills to bring emerging clean energy technologies to the market significantly faster than would occur under current market conditions."
    The Center for Energy Policy & Finance at Stanford University testified that, ". . .We support significant FY 2012 funding for the DOE Loan Guarantee Program to continue its important work in the near term. However, over the longer term, supporting the financing of capital-intensive energy projects with serious scale-up risks – with leadership from and in close collaboration with the private sector -- is not a good match for the current structure, oversight, risk tolerance, and financial tools of the Department of Energy. If the U.S. is to regain its competitiveness in the global clean energy technology race, commercializing energy technology innovations requires a new more effective approach – and that approach is CEDA. I would also note that political support for -- and the ultimate success of -- a national Clean Energy Standard, that this committee is currently considering and the Obama Administration supports, will be greatly enhanced if a complementary and comprehensive financing mechanism, like CEDA, is also adopted. . ."
    Tana Energy Capital LLC, an energy investment and advisory firm, testified that, "CEDA has a focused purpose to promote affordable financing for clean energy technologies and projects which would not get financing otherwise. CEDA will help to improve U.S. competitiveness in clean energy and reduce the cost of new energy technologies. Support for breakthrough technologies developed and deployed domestically could strengthen U.S. clean technology leadership and lay the groundwork for a competitive U.S. export market. In this time of fiscal austerity, I see CEDA as a winwin for the American people, legislators, and energy companies alike. . ."
    Access the hearing website and link to all testimony and a webcast (click here). Access the statement from Sen. Bingaman (click here). Access the statement from Sen. Murkowski (click here). Access the ACELA, S.1462, which included CEDA from the last Congress including summaries, support, a report and more (click here[*Energy/Tech]