By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, Feb. 16 – Energy Secretary Steven Chu told a Senate hearing Wednesday that U.S. energy policy needs to focus on promising new “clean energy” technologies not “mature industries” like fossil fuels and on-shore wind. In response, several Democrats joined Republicans in warning Chu against picking winners and said energy policy needs to recognize the continuing importance of fossil fuels.

Senate Energy Committee Ranking Member Lisa Murkowski, R-Alaska, said that although she supports promoting clean energy technologies, “given the urgent need to make tough budget decisions, we need to draw a distinction between the programs we want to fund and the programs we need to fund.” She said the best course for energy policy would be to first of all “harness our own abundant resources” – and then use the increased revenues from domestic oil and gas production “to help develop more advanced technologies.”

Murkowski warned against “picking winners and losers.” She said that “while the challenge of providing our nation with abundant, affordable, clean, domestic energy is great, there are an almost endless number of technologies that might, someday, lead us to that goal.”

Senate Energy Committee Chair Jeff Bingaman, D-N.M., said he's also concerned that the administration's proposed budget for fiscal 2012 includes “cuts to R&D in the DOE’s fossil energy programs.” He said he supports “the clean energy objectives of the administration” but that he believes “fossil energy sources can be made much cleaner by the application of appropriate R&D and that should also be a priority.”

Bingaman concluded that “we face a long period of transition from our dependence on fossil fuels, so continued research relating to advanced coal technologies, natural gas, and unconventional sources of fossil energy is a sensible part of an overall energy strategy.”

Energy Secretary Steven Chu testifying in the Senate Energy Committee hearing Wednesday. 

In response to the committee's bipartisan concern over reduced support for fossil fuels, Sec. Chu explained why the administration proposes budgeting $1.2 billion for renewable programs including solar ($457 million), wind ($127 million), water ($39 million), hydrogen ($101 million), biomass ($34 million), and geothermal ($102 million). He said “Research, development, and deployment of these technologies will reduce the production of greenhouse gas emissions and revitalize an economy built on the next generation of domestic production. The request includes the solar SunShot program which will invest in transformative research focusing on achieving radical cost reductions in photovoltaic modules, balance of systems, and power electronics.”

Questioned closely by senators who objected to picking winners and losers, Dr. Chu said that the Clean Energy Standard advocated in the proposed FY 2012 budget “is meant to be technology neutral” rather than favoring renewables over fossil fuels. He said the importance of creating a Clean Energy Standard is that it “creates a marketplace, it creates certainty for industry and for the investment community” by requiring a switch to cleaner forms of energy, while leaving it up to utilities themselves to decide whether to build a clean coal power plant, a nuclear plant, a wind farm or solar power plant.

Chu said the technology issue is a separate issue. “If you look at the history of the United States, there are mature technologies and then there are technologies that have to be further developed,” he said, adding that “oil and gas got considerable help from the federal government” in the 19th and 20th centuries and that “we consider those mature technologies.” In contrast, he said there's “a world race” to lead in solar technologies and that “the companies that develop solar technology will have a world-wide market.” He said “there's no doubt that we will need oil, we will need gas, we will need coal going forward, but we consider those mature technologies.”

Chu also provided details on the administration's plan to eliminate tax breaks for conventional oil, gas and coal production: “In accordance with the President's agreement at the G-20 Summit in Pittsburgh to phase out subsidies for fossil fuels so that we can transition to a 21st century energy economy, the administration proposes to repeal a number of tax preferences available for fossil fuels. Tax subsidies proposed for repeal include, but are not limited to: the credit for oil and gas produced from marginal wells; the deduction for costs paid or incurred for any tertiary injectant used as part of a tertiary oil recovery method; the ability to claim the domestic manufacturing deduction against income derived from the production of oil and gas and coal; and expensing the exploration and development costs for coal.”

To read Energy Secretary Chu's 25-page testimony in the Senate hearing Wednesday, click here.

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