[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
SOLVING THE CLIMATE CRISIS: MANUFACTURING
JOBS FOR AMERICA'S WORKERS
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HEARING
BEFORE THE
SELECT COMMITTEE ON THE
CLIMATE CRISIS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
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HEARING HELD
SEPTEMBER 10, 2019
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Serial No. 116-9
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.govinfo.gov
Printed for the use of the Select Committee on the Climate Crisis
__________
U.S. GOVERNMENT PUBLISHING OFFICE
38-471 WASHINGTON : 2020
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SELECT COMMITTEE ON THE CLIMATE CRISIS
One Hundred Sixteenth Congress
KATHY CASTOR, Florida, Chair
BEN RAY LUJAN, New Mexico GARRET GRAVES, Louisiana,
SUZANNE BONAMICI, Oregon Ranking Member
JULIA BROWNLEY, California MORGAN GRIFFITH, Virginia
JARED HUFFMAN, California GARY PALMER, Alabama
A. DONALD McEACHIN, Virginia BUDDY CARTER, Georgia
MIKE LEVIN, California CAROL MILLER, West Virginia
SEAN CASTEN, Illinois KELLY ARMSTRONG, North Dakota
JOE NEGUSE, Colorado
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Ana Unruh Cohen, Majority Staff Director
Marty Hall, Minority Staff Director
climatecrisis.house.gov
C O N T E N T S
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STATEMENTS OF MEMBERS OF CONGRESS
Page
Hon. Kathy Castor, a Representative in Congress from the State of
Florida, and Chair, Select Committee on the Climate Crisis:
Opening Statement.............................................. 1
Prepared Statement............................................. 3
Hon. Garrett Graves, a Representative in Congress from the State
of Louisiana, and Ranking Member, Select Committee on the
Climate Crisis:
Opening Statement.............................................. 3
Hon. Ben Ray Lujan, a Representative in Congress from the State
of New Mexico, and Member, Select Committee on the Climate
Crisis:
Prepared Statement............................................. 5
WITNESSES
Josh Nassar, Legislative Director, United Auto Workers
Oral Statement................................................. 6
Prepared Statement............................................. 8
Tarak Shah, Former Chief of Staff and Under Secretary for
Secretary and Energy, U.S. Department of Energy
Oral Statement................................................. 11
Prepared Statement............................................. 13
Edward Stones, Global Business Director, Energy and Climate
Change, Dow
Oral Statement................................................. 19
Prepared Statement............................................. 20
Zoe Lipman, Director, Vehicles and Advanced Transportation
Program, BlueGreen Alliance
Oral Statement................................................. 25
Prepared Statement............................................. 27
SUBMISSIONS FOR THE RECORD
Report, Taking the High Road: Strategies for a Fair EV Future,
submitted for the record by Ms. Castor......................... 46
APPENDIX
Questions for the Record from Hon. Kathy Castor to Josh Nassar... 52
Questions for the Record from Hon. Kathy Castor to Tarak Shah.... 52
Questions for the Record from Hon. Ben Ray Lujan to Tarak Shah... 55
Questions for the Record from Hon. Mike Levin to Tarak Shah...... 56
Questions for the Record from Hon. Kathy Castor to Edward Stones. 56
Questions for the Record from Hon. Kathy Castor to Zoe Lipman.... 57
Questions for the Record from Hon. Mike Levin to Zoe Lipman...... 62
SOLVING THE CLIMATE CRISIS: MANUFACTURING JOBS FOR AMERICA'S WORKERS
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TUESDAY, SEPTEMBER 10, 2019
House of Representatives,
Select Committee on the Climate Crisis,
Washington, DC.
The committee met, pursuant to call, at 2:06 p.m., in Room
1334, Longworth House Office Building, Hon. Kathy Castor
(chairwoman of the committee) presiding.
Present: Representatives Castor, Bonamici, Brownley,
Huffman, Levin, Casten, Graves, Griffith, Palmer, Carter, and
Miller.
Ms. Castor. The committee will come to order. Without
objection, the chair is authorized to declare a recess of the
committee at any time.
Today, we will discuss expanding job opportunities for
America's workers in clean vehicle and clean energy technology
manufacturing. As we transition to a low carbon economy, we
need to make sure that the tools for that transition, such as
electric vehicles, energy efficient products, and wind turbines
are made right here in the good old USA.
I now recognize myself for 5 minutes for an opening
statement.
First of all, I would like to say welcome back to
Washington, everyone. This is going to be a busy week when it
comes to climate action. We have a number of votes this week on
the floor of the House to ban dangerous offshore oil drilling,
to protect the Arctic Refuge. I believe it is Mr. Huffman's
bill that was voted on last night to clean up diesel pollution,
and to boost energy efficiency.
And our committee is ramping up its work as well. We just
released a public request for information, which you can find
on our website at climatecrisis.house.gov. The committee is
soliciting scientifically based proposals to reduce carbon
emissions and to build more resilient communities across
America. We want to hear your ideas. We want to hear from
experts and advocates so that we can help--so that you all can
help build our congressional climate action plan that will be
released in the coming months.
Of course, I wish Representative Carter was here, because
we really were thinking about him and his coastal Georgia
district as Hurricane Dorian strengthened and charted its
destructive path. Hurricane Dorian is just the latest reminder
of the need for solutions that reduce carbon pollution and
prepare our communities for the growing dangers of the climate
crisis. Our neighbors on the East Coast are recovering from
Hurricane Dorian, and the climate refugees fleeing the Bahamas
right now need our support.
But I hope everyone had a productive August work period. I
am grateful to Congressman Neguse who hosted our first field
hearing in Boulder, Colorado. I think Rep. Graves would agree
it was a fascinating time, especially at the National Renewable
Energy Lab, and to hear from experts from that community that
are right in the heart of coming up with solutions to tackle
the climate crisis. So I am grateful to Rep. Neguse.
Last month, I also got to visit Representative Casten in
the Chicago area. He hosted me to talk about climate resilience
and clean energy in Illinois. And then I went to Detroit and
Dearborn, Michigan, to learn more about the transition to
electric vehicles. I saw the latest cutting-edge technology at
Ford and at General Motors, and what that means for the auto
industry, for workers, and their communities. It was a
fascinating trip.
And one of the things I kept hearing on these trips is that
people see addressing the climate crisis as an opportunity to
lead the world in new technologies and create millions of new
jobs, but they also want them to be the kind of quality, family
sustaining jobs that build the American middle class.
There used to be about 20 million manufacturing jobs in
America. That was 1979. Today, there are only 12.4 million
manufacturing jobs in the United States. So pursuing policies
that create jobs while providing solutions to the climate
crisis are critical. Meeting the Paris climate goals means we
are going to see a $23 trillion clean energy market emerge
between now and 2030. So we have a choice: We can build on
America's competitive edge in innovation, we can help America's
workers tap into that market, or we could let China eat our
lunch. I think we will all choose the former. That is why we
are here.
When Congress passed the Recovery Act, we provided $88.5
billion in funding to clean energy businesses. That funding
supported 100,000 clean energy projects and provided hundreds
of thousands of jobs for American workers. And we can do more,
much more. We need millions of workers to design, build, and
manufacture wind turbines, solar panels, electric cars, new
mass transit, energy efficient projects, and new industrial
facilities.
But last month, we actually saw the manufacturing sector
contract for the first time since 2009. But when we have a
President who denies climate change, who thinks that wind
turbines cause cancer, and who undermines consumers and
businesses by undoing energy saving rules for cars and light
bulbs, America is missing out on a huge economic opportunity.
And we can't stand for that.
We need to pass long-term policies that support
manufacturing in America. Clean energy technology should move
from American labs to American production facilities to the
enormous global market that will be willing to pay top dollar
for innovative solutions to the climate crisis. I believe we
can do this. I know we can do this. We must do this.
I look forward to hearing from our witnesses on how we can
make a prosperous clean energy future a reality for American
workers. Thank you.
And I yield 5 minutes to the ranking member.
[The statement of Ms. Castor follows:]
Opening Statement (As Prepared for Delivery)
Rep. Kathy Castor (D-FL), Chair
U.S. House Select Committee on the Climate Crisis
Solving the Climate Crisis: Manufacturing Jobs for America's Workers
September 10, 2019
I'm glad to see everyone back in Washington. We have a number of
climate action votes on the House floor this week to ban dangerous
offshore drilling, protect the Arctic Refuge, clean up diesel
pollution, and boost energy efficiency.
Our committee is also ramping up its work. We just released a
public request for information, which you can find on our website--
climatecrisis.house.gov. We want to hear your ideas and your
recommendations for our Congressional climate action plan.
Hurricane Dorian is just the latest reminder of the need for
solutions that reduce carbon pollution and prepare our communities for
the growing dangers of the climate crisis. Our neighbors on the East
Coast recovering from Hurricane Dorian and the climate refugees fleeing
the Bahamas right now need our support.
I hope everyone had productive visits back to their districts. Last
month, I also got to visit some of our colleagues in their districts.
Representative Casten hosted me to talk about climate resilience and
clean energy in Illinois. And I also went to Detroit to learn more
about what the transition to electric vehicles means for the auto
industry, workers and their communities.
One thing I kept hearing on these trips is that people see
addressing the climate crisis as an opportunity to lead the world in
new technologies and create millions of new jobs. But they also want
them to be the kind of quality, family-sustaining jobs that built the
American middle class.
There used be about 20 million manufacturing jobs in America. That
was in 1979. Today, there are only 12.4 million manufacturing jobs in
the United States. Pursuing policies that create jobs while providing
solutions to the climate crisis will be critical.
Meeting the Paris climate goals means we're going to see a $23
trillion-dollar clean energy market emerge between now and 2030. So we
have a choice. We can build on America's competitive edge in
innovation. We can help American workers tap into that market. Or we
can let China eat our lunch.
When Congress passed the Recovery Act, we provided $88.5 billion in
funding to clean energy businesses. That funding supported 100,000
clean energy projects and provided hundreds of thousands of jobs for
American workers.
We can do more--much more. We need millions of workers to design,
build, and manufacture wind turbines, solar panels, electric cars, new
mass transit, energy efficient products, and state-of-the-art
industrial facilities.
But last month we actually saw the manufacturing sector contract
for the first time since 2009. When we have a president who denies
climate change, who thinks that wind turbines cause cancer, and who
undermines consumers and businesses by undoing energy saving rules for
cars and light bulbs, America is missing out on a huge economic
opportunity.
We need to pass long-term policies that support manufacturing in
America. Clean energy technology should move from American labs to
American production facilities to the enormous global market that will
pay top dollar for innovative solutions to the climate crisis.
I believe we can do this. And I believe we must do this. I look
forward to hearing from our witnesses on how we can make a prosperous
clean energy future a reality for American workers.
Mr. Graves. Thank you, Madam Chair. And I also want to
thank Mr. Neguse and those of you that had the opportunity to
come to Colorado. The National Renewable Energy Lab was
fascinating. It was. I could stay there for days, I think, and
meet with those folks. It really was an impressive trip. And,
of course, the other facilities, the UCAR facility, the ESRL
facility and others in Colorado were all great, the ones that I
had the chance to attend, but I did have to miss a few. But
thanks again for hosting that hearing over there.
So today, we are talking about manufacturing jobs and the
concept here is that if you create a new sector, if you create
a new industry, that perhaps you have hundreds of thousands or
millions of jobs in economic activity that go along with it.
But as I said in the Boulder hearing, we have got to get it
right, but we have got to get it right. And part of that
getting it right is being very thoughtful about the policies
that we are carrying out to ensure that the policies are truly
benefiting the United States.
Now, the chair brought up some of the bills that are on the
floor this week. And this is a perfect example of where
policies are not thought out, that are actually going to
undermine the very intent of the objectives they are purported
to advance. And I will talk about this all day long, and my
friend, Mr. Huffman, I will--I will have a discussion with you
or anybody else about this.
So, for example, this week, we are pushing legislation
affecting Alaska, the Gulf of Mexico, and the Atlantic that
prevent energy production in the United States. When this was
attempted previously, when policies were pushed to stop energy
production, what happened was that we simply--we didn't stop
using oil and gas; we just imported more from other countries.
And so what it did is it created jobs in other countries. It
caused us to export dollars and, effectively, jobs to other
countries.
And so while I do share the chair's optimism and objectives
to ensure that we provide clean energy solutions for Americans,
I think we also have to be very thoughtful about the policies.
California stopped trying to count the green jobs--article in
Politico just recently--they stopped trying to count green jobs
that were being created. In fact, the article goes through and
undermines some of the Presidential candidates' assertion on
job numbers, because they were unable to tease out or determine
which jobs were created as a result of this green economy
versus jobs that were otherwise created.
Much of the energy technologies that we have developed
right here in our energy labs in the United States have been
pirated by other countries, especially China, taking, stealing
our intellectual property, then turning around and selling it
to us, undermining the very innovators that came up with these
ideas, these concepts, and in many cases, shuddering these
domestic businesses.
For example, Tesla recently announced that they are opening
up a manufacturing facility in China as opposed to
manufacturing vehicles only in the United States, giving us the
chance to export vehicles to China. In Mr. Stones' testimony,
he talks about how, in 1997, we actually had a $19 billion
trade surplus in the chemical sector that ended up flipping
because of, I assume, policies that were not properly thought
out, resulted in the loss of 200,000 jobs in the United States.
And so many cases, efforts that are attempting to create
jobs, result in the complete opposite. And, in fact, even in
the committee memo briefing us for this hearing, it talks about
the fact that converting or transitioning to electrical
vehicles results in mining in China, which, of course, isn't
good for the environment. I believe there was a study that was
recently done that found that for every 1 pound of battery, you
have 50 to 100 pounds of mining activities.
And so we need to be very thoughtful and ensure that the
policies that we are advancing are creating jobs, not just
anywhere, but right here in the United States, making sure that
we are advancing efforts to improve our environment, helping to
reduce greenhouse gas emissions, helping to ensure the
competitiveness of the U.S. economy, helping to ensure
competitive energy prices, and ensuring that we are not simply
creating jobs in other countries as opposed to in the United
States. And that, I think that there are many, many examples we
could cite, including the one cited in Mr. Stones' testimony,
that indicate that we could be making the wrong decisions in
some cases.
So with that, Madam Chair, looking forward to witness
testimony. I do want to make note that we have an aviation
briefing on NextGen that was scheduled weeks ago that I do need
to head over to, but I am going to try and participate in as
much as I can here.
Thank you. I yield back.
Ms. Castor. Thank you.
Without objection, members who wish to enter opening
statements into the record may have 5 business days to do so.
Submission for the Record
Representative Ben Ray Lujan
Select Committee on the Climate Crisis
September 10, 2019
The manufacturing sector is the lifeblood of the American economy--
responsible for nearly 13 million American jobs. These represent good-
paying jobs and economic growth that directly benefit working
Americans. Consider that for every $1.00 we spend on manufacturing,
$1.82 is added to the economy. Clearly, this is an industry that must
be healthy for the economy to grow.
Still, according to the EPA, the manufacturing sector is
responsible for approximately a quarter of the nation's greenhouse gas
emissions. This means that when Congress looks at addressing the
climate crisis, Congress must look at how the manufacturing sector can
innovate and evolve to reduce greenhouse gas emissions while
maintaining competitiveness.
Unfortunately, since the most recent recession, we have not seen
manufacturing jobs bounce back as happened after previous economic
downturns. And this slow recovery has only been made worse by this
administration's disastrous trade policy. Congress must do more to
ensure our manufacturing sector is resilient.
Fortunately, these is a solution that is both green and supports
working Americans. Within in the work of this Committee, we have a
great opportunity to revive our manufacturing industry through
sustainability.
Countries all over the world are looking at how they can address
the climate crisis, and when it comes to manufacturing, they are going
to need the right technologies. To meet this rising demand for
sustainable industry, we must step up as a Country and do what we do
best--innovate. And that leads to the creation of good, homegrown
American jobs that support a sustainable manufacturing industry.
I appreciate the leadership of my colleague Representative Casten,
who is leading the bipartisan, bicameral Clean Industrial Technology
Act of 2019 which aims to do just that.
And with that, at this time I would like to welcome our
witnesses.
First, Josh Nassar, is the legislative director for the
United Autoworkers and is responsible for implementing the
union's policy agenda and legislative strategy. Previously, Mr.
Nassar was the assistant legislative director for the Service
Employees International Union.
Tarak Shah is an energy policy consultant who has worked on
Federal clean energy and climate policy. From 2014 to 2017, Mr.
Shah served as the chief of staff and senior adviser to the
Under Secretary for Science and Energy at the U.S. Department
of Energy. Prior to his time at DOE, he served as special
assistant to the Assistant Secretary of Defense for Operational
Energy Plans and Programs at the United States Department of
Defense.
Edward Stones is the global business director, Energy and
Climate Change, for the Dow Chemical Company, and leads Dow's
energy conservation and greenhouse gas reduction efforts. Since
1997, Mr. Stones has held several roles in manufacturing,
finance, business development, and investor relations.
And Zoe Lipman directs the Vehicles and Advanced
Transportation Program for the BlueGreen Alliance. Prior to
joining BGA, Ms. Lipman led the National Wildlife Federation's
program on fuel economy and electric vehicles.
Welcome.
Without objection, the witnesses' written statements will
be made part of the record.
With that, Mr. Nassar, you are now recognized to give a 5-
minute presentation of your testimony.
STATEMENTS OF JOSH NASSAR, LEGISLATIVE DIRECTOR, UNITED AUTO
WORKERS; TARAK SHAH, FORMER CHIEF OF STAFF, UNDER SECRETARY FOR
SCIENCE AND ENERGY, U.S. DEPARTMENT OF ENERGY; EDWARD STONES,
GLOBAL BUSINESS DIRECTOR, ENERGY AND CLIMATE CHANGE, DOW; AND
ZOE LIPMAN, DIRECTOR, VEHICLES AND ADVANCED TRANSPORTATION
PROGRAM, BLUEGREEN ALLIANCE
STATEMENT OF JOSH NASSAR
Mr. Nassar. Thank you very much, Chairwoman Castor, Ranking
Member Graves, and members of the select committee for this
opportunity. I am proud here to speak on behalf of the 1
million members and retirees of the UAW.
There is no membership organization that cares and has more
direct consequences from the decisions made here in the auto
industry than our members. So these issues are extremely
important to us.
I first want to talk about the quality of auto jobs that we
see right now. We are proud of the fact and our members are
proud of the fact that we really help establish manufacturing
jobs that can be middle-class jobs, and countless families are
able to retire in dignity, you know, and earn a good living
through manufacturing for many decades. Unfortunately, that is
less and less the case today.
We have seen over the past 15 years adjusted for inflation
that actually wages have dropped by more than 20 percent for
both auto assembly and for parts. Twenty percent--over 20
percent. So, for us, when we are looking at what is going on,
we first have to acknowledge that we have a lot of work to do
with the auto jobs that exist right now, and I think, you know,
there are many reasons for that.
I think, you know, many of these reasons are not directly
related to this committee, but I would say they include trade
policies that really, you know, reward offshoring of jobs, same
with tax policies and such, and also antilabor policies. We
really have weak labor laws, and our labor laws need to be
strengthened. So those are some of the factors.
So what are we going to do here and how is this relevant to
this work of this select committee? So I think, first of all,
we have to get ahead of the curve, and the reality is, is that
the entire globe is going towards more efficient vehicles, and
we have to stay competitive within that race.
I think for us, we look at the, you know, the proposal that
is put forward, the preferred alternative by the administration
on CAFE GHG standards, and we think that is a step backwards.
We urge the administration to not move forward with the
preferred alternative because we really think that standards
have a role to play because they really encourage investment
and they also keep the industry moving ahead. And what we can
see is that many, many jobs have actually been created because
of this.
So, for us, I mean, there are a few other things. One is
that the transition to EVs is important. It is going to take
time. Right now, EVs and plug-ins are 2 percent of the market
right now. So we have a chance to do this in a thoughtful way,
and the reality is that there are going to be lost jobs from
this transition, because the traditional engine, you know,
requires quite a bit of work and a fair amount of jobs will be
lost.
So what are we going to do to make sure that the jobs for
the batteries and all the new technologies are made in the
U.S.? Right now, we are not doing a whole lot to make sure that
is the case. And according to experts, it is supposed to be
that more and more of the production is going to go to China
over the next few years, and projections are that only roughly
14 percent within a few years will be manufactured in the
United States. It is a very small percentage.
We have also seen some investments by auto companies in
next generation vehicles, but there has also been offshoring of
them. There have been announcements of moving EV production
from--you know, from General Motors and other manufacturers. So
that is a problem.
The reality is that we can't have a situation anymore where
we are just relying on the corporate sector to invest in
America and ensure that those new jobs are made here. We are
going to need proactive policy. We are going to need trade
policies that really look to, you know, enhance those
technologies. We are also going to need to move our, you know,
environmental policy forward, and we really have to make sure
that there are conditions where, if companies are getting tax
breaks for, let's say, electric vehicles, we want to make sure
those are good jobs and they are jobs that are right here in
the United States.
So there is a lot of work to do. We look forward to working
with this committee. And because this is a race that we can't
afford to lose, I think it is very important that we focus on
solutions today.
And I really appreciate this opportunity. Thank you very
much. Look forward to answering your questions.
[The statement of Mr. Nassar follows:]
Testimony of Josh Nassar
Legislative Director, UAW
Before the U.S. House of Representatives, Select Committee on the
Climate Crisis
Solving the Climate Crisis: Manufacturing Jobs for America's Workers
September 10, 2019
Madam Chair Castor, Ranking Member Graves and members of the Select
Committee on the Climate Crisis, today I will testify on behalf of the
one million active and retired members of the International Union,
United Automobile, Aerospace, and Agricultural Implement Workers (UAW).
Thank you for the opportunity to share our views on this important
topic. It is an honor to speak before this distinguished committee.
Today, I will focus on the automotive sector and its impact on
workers, the environment, and our economy at large.
the state of u.s. auto manufacturing
No other membership organization in the United States is more
directly impacted by the health and stability of the domestic auto
manufacturing industry than UAW members and retirees. The majority of
our members and retirees work in or have retired from the auto
industry. Changes in the industry and proposals to combat climate
change have real life consequences for manufacturing workers, retirees,
and their families.
The United States' motor vehicle industry is the cornerstone of
American manufacturing jobs. Nearly one million people work in the auto
and auto-parts manufacturing sectors.\1\ Of course, the economic impact
of the auto industry reaches far beyond the workers employed at the
plants and their families. The domestic vehicle assembly and parts
industries are vital to our manufacturing base and it is imperative
that we stay strong and competitive now and into the future. When jobs
from other linked industries are included, the auto industry is
responsible for over seven million jobs nationwide.\2\ The long-term
health of the industry is critically important to both workers and the
economy at large.
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\1\ Bureau of Labor Statistics, ``Automotive Industry: Employment,
Earnings, and Hours,'' https://www.bls.gov/iag/tgs/iagauto.htm.
\2\ Hill, Kim, Deb Menk, Joshua Cregger, and Michael Schultz.
``Contribution of the Automotive Industry to the Economies of All Fifty
States and the United States.'' Center for Automotive Research. January
2015.
---------------------------------------------------------------------------
employment standards in the u.s. auto industry
UAW members are proud of their important role in creating middle
class jobs that have enabled countless workers to provide for their
families and retire with dignity. Unfortunately, many auto jobs are not
what they used to be.
Over the past fifteen years, U.S. automotive production workers'
wages have fallen significantly. When adjusting for inflation, average
hourly earnings for production workers in auto assembly have declined
by 23 percent, while wages in the auto parts sector have declined by 22
percent.\3\ Real wages have dropped despite remarkable increases in
productivity. From 1979 to 2018, net worker productivity rose 69.6
percent, while the hourly pay of typical workers increased by a mere
only 11.6 percent over 39 years (after adjusting for inflation).\4\ To
make matters worse, since 2000, the U.S. has lost of over three million
manufacturing production jobs.
---------------------------------------------------------------------------
\3\ Bureau of Labor Statistics. ``Average hourly earnings of
production and supervisory employees.'' Series CEU3133610008 &
CEU3133630008, Data from April 2004-April 2019. Adjusted using BLS CPI
Inflation Calculator.
\4\ Economic Policy Institute. ``The Productivity-Pay Gap.'' July
2019. https://www.epi.org/productivity-pay-gap/.
---------------------------------------------------------------------------
A holistic approach is needed to address this complex problem.
Congress and the Administration must fight for workers by strengthening
our labor laws. Unionized workers are more likely to have health care
benefits, employer provided pension plans and safer working conditions
compared to their non-union counterparts.
Congress and the Administration must enact equitable tax policies
that uplift working families and not reward CEO's with massive tax
breaks while incentivizing business to outsource jobs overseas.
Congress and the Administration need to put in place a strong
industrial policy focused on education, workforce training, research
and development, support for advanced manufacturing and technologies,
building a 21st century infrastructure, balancing environmental and
energy policy.
Of course, low wages and the lack of job security in U.S.
manufacturing is far from the only serious challenge facing working
people.
tackling our climate crisis
The climate crisis is real and growing. Failing to take concrete
steps to address it puts us on an unsustainable course. It not only
creates risks for our national security and our planet, but it is also
a direct threat to our jobs, and an even bigger threat to the jobs and
quality of life enjoyed by our children and grandchildren in the
future.
There is no credible scientific debate on the connection between
fossil fuel consumption, rising carbon dioxide levels in the earth's
atmosphere, and climate change. The impact is happening in real time as
the number and strength of extreme weather and climate events such as
heat waves and droughts have increased over the last several decades.
UAW members and retirees throughout the continental United States and
Puerto Rico have suffered from extreme weather events in recent years.
The problems created by climate change are grave and include
increased risk of extinction for many species, risks to fisheries and
crops, reduced access to fresh water, and more extreme storms that
destroy homes and threaten to devastate coastal cities.
Protecting the environment is not inherently bad for the economy
and solutions exist all around us. UAW members have proven that well-
crafted regulations and policies can benefit both American workers and
our environment.
Last decade UAW members reached a hard-fought consensus among a
wide variety of stakeholders to significantly reduce passenger vehicle
emissions and raise the Corporate Average Fuel Economy (CAFE) for
passenger vehicles sold in the United States. This standard
demonstrated that well-constructed regulations and policies can promote
investment in advanced technology, create new jobs, and make our cars
more attractive in foreign markets while allowing manufacturers the
flexibility they need. Fuel efficiency is improving across the
industry, including many vehicles and components made by UAW members.
Standards have played an important role in incentivizing the
development of more energy efficient vehicles. It is not clear to what
extent they will in the future. The Administration's preferred
alternative would drastically roll back fuel efficiency standards.
Rolling back emissions standards risks allowing the U.S. auto industry
to fall behind on advanced vehicle technology and sustainable
innovation, just as other nations are promoting increased efficiency
and lower emissions It could also lead to years of litigation and
uncertainty. This would not be a good outcome for workers, the economy,
or the environment.
We urge the Administration to not adopt the preferred alternative.
the future of evs
A strong, forward looking industrial policy is needed to promote
the manufacturing of EVs in the United States. Again, our trade, tax,
labor, and environmental policies must work in tandem to promote the
manufacturing of EVs in the United States. We can promote high quality
manufacturing jobs that make vehicles of the future in the U.S. in a
myriad of ways, such as: advancing trade policies that strengthen U.S.
manufacturing, investing in clean energy infrastructure, supporting
worker training, and advancing pro-worker policies that enable workers'
to collectively bargain free of employer intimidation.\5\
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\5\ UAW Research. ``Taking the High Road: Strategies for a Fair EV
Future.'' August 2018. https://uaw.org/wp-content/uploads/2019/07/EV-
White-Paper-Spring-2019.pdf.
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EVs are currently only one percent of the U.S. market but are
projected to rise to 10 percent of the market in the mid-2020's and
over 50 percent by 2040.\6\ EVs will increase their market share, it is
just a matter of how quickly. This change will not come without serious
challenges.
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\6\ https://about.bnef.com/electric-vehicle-outlook/.
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The shift to EVs involves a fundamental change in the components
that power the vehicle. We could see changes in where the most valuable
auto components are made, decreased employment in powertrain
manufacturing, and the entrance of corporate actors without a
manufacturing base.
If the EV manufacturing footprint takes root outside the US, it
will be extremely difficult for the U.S. to recapture that work in the
future. The capital intensity and long manufacturing lead times in
auto, makes the possibility of reshoring the EV market once it has
left, all the less likely.
As consumer demand grows and technologies evolve, it is essential
that we are building EVs in the United States. This opportunity will be
lost if EV components are imported or made by low road suppliers who
underpay workers. We must have an industrial policy that fosters the
creation of high-quality manufacturing jobs making EVs and their
components.
Most of the production footprint for tomorrow's advanced automotive
technology is being developed overseas. It is projected that by 2021,
56 percent of the battery manufacturing capacity will be in China and
another 19 percent will be in Europe. The U.S. will only have 14
percent of global battery production capacity. The U.S. is currently
falling behind its Asian and European counterparts.
EVs and Plug-in Hybrid Vehicles made up approximately 2 percent of
US passenger vehicle sales in 2018.\7\ Given that production volumes
are still relatively small, automakers are in the process of developing
their EV strategies. Policy incentives at this early stage could
influence where and under what conditions the cars are made.
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\7\ http://www.ev-volumes.com/country/usa/.
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Some automakers have made commitments to build EVs on U.S. soil,
illustrating we could expand the number of America workers in high
quality jobs building the cars that will help meet our climate goals.
For example:
Ford's plans to make EVs in Flat Rock, MI \8\
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\8\ https://media.ford.com/content/fordmedia/fna/us/en/news/2019/
03/20/ford-adds-2nd-north-american-site-to-build-battery-
electrics.html.
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GM's plans to build a new EV in Orion Township, MI
\9\
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\9\ https://media.gm.com/media/us/en/gm/home.detail.html/content/
Pages/news/us/en/2019/mar/0322-orion.html.
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Fiat Chrysler will build a Jeep Wrangler PHEV in
Toledo, OH \10\
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\10\ https://www.toledoblade.com/business/automotive/2018/12/01/
jeep-wrangler-hybrid-coming-quietly-to-a-woods-near-you/stories/
20181130116https://media.vw.com/releases/1117.
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At the same time, some production has moved overseas.
For example:
GM ended production of the Chevy Volt plug-in hybrid
in February 2019. The Chevy Volt was made at GM's Detroit-
Hamtramck plant, which GM has declared ``unallocated.'' \11\
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\11\ https://www.cbsnews.com/news/chevy-volt-discontinued-
chevrolets-last-volt-rolls-off-the-assembly-line/.
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Ford ended production of the C-Max Energi plug-in
hybrid and the Ford Focus Electric EV in 2018. The C-Max was
produced at Michigan Assembly in Wayne, MI. Michigan Assembly
now makes the Ford Ranger mid-sized pickup. Ford will begin
production of EV SUV in Cuautitlan, Mexico starting in
2020.\12\
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\12\ https://www.autonews.com/article/20180508/BLOG06/180509813/a-
final-goodbye-to-the-ford-focus-c-max.
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As consumer demand grows and technologies evolve, it is essential
that we are building EVs in the United States. This opportunity will be
lost if EV components are imported or made by low road suppliers who
underpay workers.
Countries around the globe continue to promote greater efficiency
and lower emissions. The greener vehicles of the future are going to be
made somewhere and other countries are preparing for these new
technologies. We could see the U.S. auto industry fall behind on
advanced technology, hurting the American economy and American workers.
The global market is moving towards ever more efficient vehicles,
including hybrids and electric vehicles. It has been projected that by
2040, over 50 percent of new car sales globally will be electric and
over 30 percent of cars on the road will be powered by batteries.\13\
Yet, where will the batteries that power these vehicles be made? As it
stands today, most of the production footprint of tomorrow's advance
automotive technology will be overseas.
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\13\ https://about.bnef.com/electric-vehicle-outlook/.
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In addition, the demand for raw materials such as cobalt and
lithium to make EV batteries often come at troubling cost. 60 percent
of the world's cobalt is mined in the Democratic Republic of Congo
(DRC), where child labor and other labor abuses are prevalent, and
injury and death are common.\14\ Congress should not ignore this part
of the supply chain. Congress should take measures to hold companies
accountable that exploit workers throughout the entire supply chain.
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\14\ UAW Research. (August 2018) ``Taking the High Road: Strategies
for A Fair EV Future.'' https://uaw.org/wp-content/uploads/2019/07/EV-
White-Paper-Spring-2019.pdf.
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EVs and autonomous vehicles (AVs) of the future will be heavily
reliant on semiconductors. It is estimated that an EV/AV will have over
a thousand dollars' worth of semiconductors. This increase in
semiconductor usage comes at a time when U.S. semiconductor
manufacturing has been in decline. The total number of U.S. fabrication
plants have decreased from 123 in 2007 to 95 today,\15\ while the
industry employs 100,000 fewer production workers than it did at the
turn of the century.\16\ Currently, U.S. manufacturers account for only
13 percent of the global semiconductor supply. This is because the U.S.
is no longer attracting new fabrication plants. In 2011, of 27 high-
volume fabrications plants built worldwide, only one was in the U.S.;
18 were in China and 4 in Taiwan. In 2018, 20 new fabrication projects
had been announced in China, with total investment exceeding $10
billion.\17\
---------------------------------------------------------------------------
\15\ MForesight, ``Manufacturing Prosperity: A Bold Strategy for
National Wealth and Security'', June 2018: http://mforesight.org/
download/7817/.
\16\ BLS, Quarterly Census of Employment and Wages (QCEW) for NAICS
334413, http://www.bls.gov/cew/.
\17\ MForesight, ``Manufacturing Prosperity: A Bold Strategy for
National Wealth and Security'', June 2018: http://mforesight.org/
download/7817/.
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next steps
Federal policy must strongly incentivize investment in and
production of advanced technology components and vehicles in the U.S.
If the U.S. falls behind on this front, it will erode our competitive
advantages in manufacturing and research. We all have an obligation to
not cede the jobs and technology of the future to other countries.
The U.S. is in a race with other advanced countries to develop the
automobiles and technologies of the future. While Germany and other
industrialized countries have developed policies that are investing in
its citizenry and infrastructure, the U.S. has instead taken a low-road
approach. Corporations may develop new products in the U.S., but they
have increasingly outsourced manufacturing to low-cost countries.
Maintaining the status quo is not an option.
Special attention must be paid to key components that are important
for the U.S. to remain relevant in vehicle parts manufacturing.
Safeguards should be put in place to ensure domestic production of
strategic parts. Technologies that have been developed, primarily
thanks to American R&D (for example, AVs) and regulatory requirements
(emissions and fuel efficiency standards), should be manufactured in
the U.S. Protecting strategic parts will help ensure U.S. manufacturers
will remain industry leaders, and that all American workers will share
in that prosperity.
conclusion
American workers have a proud history of building the equipment and
technologies that have made the U.S. a global leader.
As we confront the climate crisis, we urge Congress to support
policies that invest in U.S. manufacturing and promote U.S. leadership
in advanced auto technology. Our policies to fight climate change must
promote investment in building diverse fleets of vehicles on U.S. soil
with high quality jobs that contribute to stronger communities for
generations to come.
We stand ready to work with you and all other stakeholders on
crafting policies that are good for working people, environment, and
national economy.
I look forward to answering your questions.
Ms. Castor. Thank you very much.
Mr. Shah, you are recognized for 5 minutes.
STATEMENT OF TARAK SHAH
Mr. Shah. Thank you.
Good afternoon, Chair Castor, Ranking Member Graves, and
members of the committee. It is an honor to be here.
My name is Tarak Shah, and I currently work as an
independent consultant to organizations that are advancing
clean energy technology and policy. For most of this decade, I
worked on energy policy in the Federal Government, including as
chief of staff to the Under Secretary for Science and Energy at
the Department of Energy from 2014 to 2017, also at the Defense
Department on energy policy, and recently as an adviser to the
International Energy Agency.
From those experiences, I have come to believe that the
Federal Government can and should be doing more to stimulate
clean energy manufacturing. Today, I would like to share with
you why and how.
We know that the climate crisis requires that we completely
transform the ways we use and produce energy and at a scale and
pace we have never before accomplished. And one of the
principal ways we will do this will be with better products,
like solar panels, wind turbines, energy efficient appliances,
carbon capture technologies, advanced nuclear and low carbon
chemicals, steel, and cement. Added up, the world will invest
nearly $60 trillion over the next 20 years in the energy
industry. All of those products are going to be manufactured
somewhere, and with the right policies, that somewhere could be
the United States.
In many ways, we are already well positioned. We have a
national consensus that innovation is important. Our U.S.
Government is the largest Federal supporter of energy R&D in
the world, and our innovation system is world leading, starting
international laboratories and universities and all the way to
the companies and financial institutions that are deploying
clean energy.
Many of the programs in the U.S. are implemented through
the Department of Energy, and these include efforts like the
Manufacturing USA Institutes which fund public/private teams
that reduce the cost of making next-gen clean energy
technologies. Other programs fund industry directly to take on
clean tech challenges, like how to manufacture better
semiconductors or denser batteries, but these programs barely
scratch the surface of what is needed.
For example, DOE's Advanced Manufacturing Office, which
funds these Manufacturing USA Institutes, along with hundreds
of other clean energy manufacturing efforts, received less than
1 percent of DOE's overall funding last year. So we need to
improve and better fund the tools that we have, but we also
need to invent some new ones.
We can take steps in three areas, research and development,
deployment, and workforce development, to do so. In the area of
R&D, Congress should immediately double clean energy R&D
funding across the board, including for clean energy
manufacturing R&D. From my time at DOE, I know that the
scientists and engineers both at headquarters and in the
national laboratories are the world's leading energy
technologists, and given the opportunities to support more
innovative U.S. businesses, they can and will do so.
In addition, our industrial sector is probably the hardest
to decarbonize. Congress should authorize DOE to establish a
new R&D effort to investigate the full range of decarbonization
efforts for the industrial sector, including electrification,
low carbon fuels, and carbon capture utilization and
sequestration. The Clean Industrial Technology Act of 2019
which Representative Casten has introduced would do exactly
that.
Second in the area of deployment, Congress should
reinstitute the 48C Advanced Clean Energy Manufacturing Tax
Credit. From 2009 to 2017, this investment tax credit expanded
domestic clean energy manufacturing nationwide and created tens
of thousands of jobs at the same time.
Next, DOE already requires awardees to commit to
manufacturing technologies developed with DOE funding
domestically, but these requirements are toothless and still
allow U.S. taxpayer funded clean energy R&D to be manufactured
offshore. Congress should close this loophole and give DOE the
authority to enforce these commitments.
Congress can also allow DOE's Loan Programs Office to
invest in efficient heavy-duty truck and bus manufacturing.
Finally, a competitive growing manufacturing sector needs a
talented workforce of engineers and technicians. Congress
should authorize and fund new workforce development programs
that teach skills in topics like clean energy manufacturing,
robotics, artificial intelligence, and green construction.
These recommendations and more are in my written testimony
and also in a forthcoming report that I have authored along
with the staff at the Natural Resources Defense Council.
This is about climate change, but it is also about gaining
millions of new jobs for higher living standards and new
economic opportunities. Now is the time for Congress to give
the Federal agencies the tools to catalyze our private sector
into winning this global race.
Thank you very much, and I look forward to answering your
questions.
[The statement of Mr. Shah follows:]
Testimony of Tarak Shah
Former Chief of Staff, Under Secretary for Science and Energy
Before the U.S. House of Representatives, Select Committee on the
Climate Crisis
Solving the Climate Crisis: Manufacturing Jobs for America's Workers
September 10, 2019
Good afternoon Chair Castor, Ranking Member Graves, and members of
the committee. Thank you for the opportunity to have a discussion today
about how clean energy manufacturing can help address the climate
crisis and create jobs in the United States.
My name is Tarak Shah. From 2014-2017, I served as Chief of Staff
to the Under Secretary for Science and Energy and the U.S. Department
of Energy (DOE). I now work as an independent consultant to private
sector and non-government organizations that are advancing clean energy
technology and policy.
innovation as the key to long term economic growth
For decades, economists have recognized that technological
innovation is the principal driver of long-term growth in living
standards and the broader economy.\1\ And, according to the National
Science Foundation, U.S. manufacturing firms were responsible for two
thirds of the R&D conducted and paid for by companies in the U.S. in
2016.\2\ Taken together, we know that there are critical links between
manufacturing innovation and the health of our economy.
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\1\ Moses Abramovitz, ``Resource and Output Trends in the U.S.
since 1870,'' American Economic Review 46, no. 2 (May 1956). http://
www.nber.org/chapters/c5650.pdf.
\2\ ``Business Research and Development and Innovation: 2016,''
National Science Foundation (May 2019). https://ncses.nsf.gov/pubs/
nsf19318/-&.
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We also know that climate change is impacting us now, that if left
unchecked the effects over the next century will fundamentally and
negatively change the way humans live. While it is not too late to
prevent its worst potential impacts, to do so, we need to completely
transform the ways we use and produce energy, and at a scale and pace
never before accomplished.
Unfortunately, there is no silver bullet to ending the climate
crisis. Instead, we must take steps to eliminate greenhouse gas
pollution from multiple sectors at once--steps like increasing energy
efficiency and zero-emitting power generation at record pace,
electrifying buildings and transportation systems in order to replace
fossil fuel use, transitioning industrial processes to be carbon
neutral, and capturing already-emitted carbon from the atmosphere.
There are two principle ways we can achieve this transformation--
first, by enacting a comprehensive set of new policies to curb
pollution and deploy clean energy technologies and second, by
simultaneously developing new energy technologies. Today, I will
describe strategies that cut greenhouse gas emissions, while also
creating millions of new jobs and better economic opportunities for
Americans as well.
To share the bottom line up front, Congress has the ability to
significantly alter our nation's future by stimulating more domestic
clean energy manufacturing.
winning the global clean energy race
Congress can make a large impact on our clean energy economy
because new Federal investments and policy changes can help U.S.
workers access the huge global opportunity associated with addressing
climate change. The International Energy Agency estimates that nearly
$60 trillion will be invested in global energy markets over the next 20
years.\3\ Given the enormous size of this economic opportunity,
countries around the world will be competing for shares of this market,
using all the tools they can bring to bear.
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\3\ ``World Energy Outlook 2018,'' International Energy Agency
(November 2018). https://www.iea.org/weo/.
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Much of the opportunity in this space lies in manufacturing--both
in building tomorrow's energy technologies like solar, wind, batteries,
efficient appliances and carbon capture technologies and in reducing
the energy demand and GHG emissions associated with everything we
manufacture, particularly in energy intensive industries like petroleum
refining, chemicals, iron and steel, and cement.
For many of these technologies, the U.S. has led the globe on their
research and development. But without care, we risk seeing the benefits
of taxpayer funded technology investments being reaped by other
countries.
For example, solar photovoltaics (PV) were invented by American
industry and nurtured for decades in government labs. However, about a
decade ago, just as the price of the technology began to make it
competitive with other forms of power generation, Chinese companies,
with substantial assistance from their government, stepped in to become
the world's low-cost manufacturer.\4\
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\4\ Varun Sivaram, ``Unlocking Clean Energy,'' Issues in Science
and Technology (Winter 2017). https://issues.org/unlocking-clean-
energy/.
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Today, over 60% of the world's solar panels are manufactured in
China.\5\ In fact, China has now developed an entirely domestic solar
manufacturing supply chain--from polysilicon to finished modules. The
jobs associated with mining, making solar cells, module assembly, even
manufacturing the equipment that makes solar panels are all now
primarily based in China. In addition, that expertise is now spilling
over into other high-value industries like semiconductor manufacturing.
As those industries dramatically expand over the coming years, China
will continue to benefit.
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\5\ ``Renewables 2017,'' International Energy Agency (October
2017). https://www.iea.org/publications/renewables2017/.
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There are effective steps we can take now to prevent the same from
happening to the next generation of low and zero carbon technologies.
key technology focus areas
Opportunities to innovate and hold manufacturing preeminence exist
for technologies across the clean energy spectrum, and I will briefly
mention several.
First, with solar energy, the U.S. should continue to compete.
Total domestic PV capacity is expected to double over the next five
years.\6\ Capturing even some of the manufacturing associated with that
increase would represent a significant economic opportunity. In
addition, the U.S. leads on developing new solar technologies including
multi-junction cells and perovskites, and as they commercialize, we
should build them here, which will correspond with high-quality jobs
for Americans.
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\6\ ``Solar Market Insight Report--Q2 2019,'' Solar Energy
Industries Association (June 2019). https://www.seia.org/research-
resources/solar-market-insight-report-2019-q2.
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Offshore wind is huge untapped opportunity in the U.S. Driven by
state-level policy commitments, particularly in the Northeast, the
market is expected to grow from 5 turbines deployed today, to at least
one thousand by 2030, which represents enough capacity to power roughly
5 million homes.\7\ Despite this, there are no U.S.-flagged
installation vessels or any domestic manufacturing centers yet built.
---------------------------------------------------------------------------
\7\ ``2018 Offshore Wind Technology Market Report,'' U.S.
Department of Energy (August 2019). https://www.energy.gov/sites/prod/
files/2019/08/f65/2018%20Offshore%20Wind%20Market%20Report.pdf.
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Nearly 10% or 231,000 of the 2.5 million workers in the domestic
auto industry worked with electric vehicles (EV) in 2018.\8\ But this
industry is rapidly evolving. Domestic EV demand in other countries
that manufacturing cars is higher than in the U.S. As companies in
these countries develop robust supply chains and scale to satisfy
domestic demand, they will also gain an exporting advantage.
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\8\ ``2019 U.S. Energy and Employment Report,'' Energy Futures
Initiative (March 2019). https://www.usenergyjobs.org.
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Nearly one third of the cost of an EV is in the battery that powers
the vehicle.\9\ China already controls about 73% of the global lithium
cell manufacturing capacity, while the U.S. has about 12%.\10\ China
has used this early lead to become the global manufacturer for electric
buses.
---------------------------------------------------------------------------
\9\ Electric Car Price Tag Shrinks Along With Battery Cost,''
Bloomberg New Energy Finance (April 2019). https://www.bloomberg.com/
opinion/articles/2019-04-12/electric-vehicle-battery-shrinks-and-so-
does-the-total-cost.
\10\ ``Why China is Dominating Lithium-Ion Production,'' Forbes
(August 2019). https://www.forbes.com/sites/rrapier/2019/08/04/why-
china-is-dominating-lithium-ion-batteryproduction/- 1e39ab423786.
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The key driver of U.S. wind, solar and EV deployment over the past
decade has been tax policy. That policy has not been stable and has
introduced long-term uncertainty for companies across the supply chain,
including manufacturers. In some cases, that has led to factory
closures and layoffs. Congress can stave off this uncertainty by acting
now to extend credits for a variety of low carbon technologies before
they expire.
In the power sector, the world needs 100 times more carbon capture
capacity by 2030 than it currently has to maintain a path to prevent an
increase in global average temperatures of more than 2 degrees C.\11\
Each of these facilities require huge machines--machines that can and
should be built in America, not to mention the hundreds of construction
jobs and dozens of permanent jobs associated with their installations
and operation. The largest carbon capture facilities in the world are
in the United States, but other countries are taking concrete steps to
deploy this technology. We need to act now to build a CCUS industrial
base in the U.S. that exports this homegrown technology around the
world.
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\11\ ``Tracking Clean Energy Progress,'' International Energy
Agency (June 2019). https://www.iea.org/tcep/power/.
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Advanced nuclear power offers another very important zero-carbon
manufacturing opportunity for the United States. The nuclear supply
chain already employs nearly 5,000 Americans.\12\ Domestic small
modular reactor manufacturing could also support export markets.
---------------------------------------------------------------------------
\12\ Ibid. 8.
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Hydrogen has a wide variety of potential applications, particularly
in industry. For example, hydrogen produced by renewable energy can
replace metallurgical coal to dramatically reduce carbon pollution
emitted during steel making, providing a competitive advantage for U.S.
steel industry jobs, including in steel-making regions like
Representative Palmer's district. Renewable hydrogen could also act as
a form of low carbon energy storage, be used to replace fossil fuels in
industrial heating processes, and be converted to green fertilizers.
The U.S. has an early lead in additive manufacturing, also known as
3-D printing, thanks to early investments by the U.S. Department of
Energy. As the first step in the supply chain for a variety of finished
high-value energy-efficient products in the aerospace, energy, and
transportation sector, it is important to continue to support
development of this technology domestically.
Finally, energy efficiency products including LED bulbs, solid
state power electronics, better motors, and high efficiency appliances
are a source of manufacturing strength for the U.S. Manufacturing these
products employed over 320,000 Americans in 2018. Many of these
products are made in America and exported around the world.
All of these technologies would benefit from a long-term price
signal on greenhouse gas pollution. Valuing the low/no carbon aspects
of these technologies could help them better compete with existing
energy resources, create spillover benefits across our economic sectors
and thus spur growth in manufacturing capacity in the U.S.
role of the federal government
The Federal government currently supports clean energy
manufacturing in two principal ways--by supporting research and
development and through workforce development.
Clean energy manufacturing R&D is supported by a variety of
programs at the Department of Energy and concentrated in the Advanced
Manufacturing Office (AMO). Over the past few decades, several
technologies fostered by DOE have left the lab and entered the market
with great success. These include solar panels, wind turbines, grid-
scale batteries, and LED light bulbs (see Figure 1). In each case, DOE
has supported both the initial development of the technology and
subsequent innovations in manufacturing these products to bring down
costs.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
DOE sponsors programs to make U.S. manufacturers more competitive
vis-a-vis foreign competitors. For example, the Innovation in
Manufacturing Competitiveness program in the Solar Energy Technology
Office funds projects that are helping rebuild the solar module
industry and supply chain in America.
AMO pursues a large variety of programs to do the same, including
through the Manufacturing USA Institutes, a national network of
federally sponsored manufacturing institutes, each with their own
technological concentration, but designed to accelerate U.S.
manufacturing as a whole. For 2019, Congress appropriated $320 million
for the Advanced Manufacturing Office, or less than 1% of DOE's overall
appropriation.\13\
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\13\ ``Joint Explanatory Statement of the Committee of
Conference,'' U.S. Congress. September 2018. https://docs.house.gov/
billsthisweek/20180910/Joint Statement.pdf.
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In addition, through the R&D tax credit, the Federal government
rewards companies for performing research in the U.S. It was made
permanent in 2015 and has provided companies over $11B in credits
annually in recent years. This tax credit generally benefits all firms,
including clean energy manufacturers who perform R&D.
Government labs are also playing a role, not only in developing new
technology, but in supporting energy and manufacturing innovators.
Programs like Cyclotron Road at Lawrence Berkeley National Laboratory
support entrepreneurial scientists and engineers through a two-year
fellowship program, giving then access to the unique expertise and
world-class facilities of the laboratory. Fellows in the program work
on hard science products like microelectronics, carbon nanotubes,
fibers and polymers, and electrochemical storage devices. Once
commercialized, these products will create innovative manufacturing
jobs across the country.\14\
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\14\ ``Cyclotron Road 2018 Impact Report,'' Lawrence Berkeley
National Laboratory. (2019). https://www.cyclotronroad.org/.
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DOE also supports some workforce development programs, which are
important to ensure that domestic manufacturers can access a trained
pool of engineering and technical talent to meet demand from the
growing clean energy market. Programs like the Solar Instructor
Training Network and the Collegiate Wind Competition have been
successful in training the next generation of clean energy
professionals. DOE's Industrial Assessment Centers also train the next
generation of collegiate engineers as they perform energy audits at
small and medium sized manufacturing facilities around the country. As
a result of this program, students are given valuable learning
experiences while American businesses receive energy saving advice.
the federal government can do much more
With Congress' help, the Federal government can do much more to
support clean energy manufacturing in three primary ways--focusing and
strengthening its support of manufacturing R&D, deploying advanced
energy manufacturing technologies, and ramping up workforce development
programs. Taking these steps will not only help strengthen the
competitiveness of U.S. manufacturing, but also help increase U.S.
exports and support domestic job and wage growth.
Many of these recommendations and others are included in a
forthcoming report I have written along with staff at the Natural
Resources Defense Council. I look forward to sharing the full report
with the Committee.
In the area of R&D, Congress should immediately double funding for
the entire suite of federal energy innovation efforts, including
advanced clean energy manufacturing. DOE programs are oversubscribed--
meaning that there are many more qualified research applicants than
there is funding available. Additional funding will yield faster clean
energy innovation. Congress should also make manufacturing
competitiveness and exports an explicit authorized goal of DOE
research.
In addition, because many technology options to decarbonize the
U.S. industrial sector are currently very expensive or non-existent,
DOE should establish a new R&D effort to investigate the full range of
decarbonization options for the industrial sector, including
electrification, low-carbon fuels, and carbon capture, utilization, and
sequestration (CCUS). H.R. 3978, the Clean Industrial Technology Act of
2019, which Representative Casten has introduced, would do exactly
this.
In the area of deployment, Congress should reinstitute the 48C
Advanced Clean Energy Manufacturing Tax Credit. That tax credit,
jointly administered by DOE and the Department of the Treasury from
2009 to 2017, provided $2.3 billion in funding through a 30% investment
tax credit to hundreds of firms around the nation.\15\ These firms used
the funding to expand domestic manufacturing capacity for parts and
equipment for clean energy projects.
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\15\ ``48C Phase II Advanced Energy Manufacturing Tax Credit
Program Fact Sheet,'' U.S. Department of Energy (December 2013).
https://www.energy.gov/downloads/48c-phase-ii-advanced-energy-
manufacturing-tax-credit-program-fact-sheet.
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Funding helped American manufacturers expand production for
efficient HVAC systems, cleaner trucks, efficient lightbulbs, smart
power electronics, electric vehicles and SUVs, wind turbines, lithium-
ion batteries, and much more. These projects generated tens of
thousands of jobs while making our economy cleaner and more efficient.
A new program, double the size of the previous one, could help
stimulate manufacturing supply ecosystems for the next generation of
clean energy technologies.
Under a provision of the Bayh-Dole Act, DOE's Energy Efficiency and
Renewable Energy (EERE) and Advanced Research Projects Agency-Energy
(ARPA-E) programs require award applicants to submit U.S. Manufacturing
Plans.\16\ These plans state an awardee's commitment to manufacture
technologies resulting from DOE awards in the United States.
---------------------------------------------------------------------------
\16\ ``Determination of Exceptional Circumstances Under the Bayh-
Dole Act for Energy
Efficiency, Renewable Energy, and Advanced Energy Technologies,'' U.S.
Department of
Energy (September 9, 2013). https://www.energy.gov/sites/prod/files/
2014/01/f6/DEC_for_
Energy_Efficiency_Renewable_Energy_%26Advanced Energy.pdf.
---------------------------------------------------------------------------
Congress should ask DOE to strengthen this requirement by applying
it to all applied energy RDD&D programs (not just EERE and ARPA-E) and
to develop recommendations for strengthening proposed manufacturing
plans. Specifically, the current law gives the Federal government very
few mechanisms to enforce the commitments that awardees make in their
plans. These mechanisms could include clawback provisions for
intellectual property or financial compensation for U.S. taxpayer
sponsored technology that is manufactured offshore.
Congress can also expand the remit of DOE's Loan Programs Office's
Advanced Technologies Vehicles Manufacturing program. The program
provides loans to automotive or automotive component manufacturers to
build or expand manufacturing facilities that produce fuel-efficient
vehicles. The program has supported the production of more than four
million fuel-efficient and electric vehicles, including Tesla's
California factory and Nissan's Tennessee factory, which produces the
Leaf.\17\ While the program has $17.7B in loan authority left, it is
not currently allowed to invest in efficient heavy-duty truck and bus
manufacturing. Congress can expand ATVM's authority with no additional
scoring implications and, in doing so, support new manufacturing
facilities and jobs in the U.S.
---------------------------------------------------------------------------
\17\ ``Advanced Vehicles Manufacturing Projects,'' U.S. Department
of Energy (June 2017). https://www.energy.gov/lpo/advanced-technology-
vehicles-manufacturing-atvm-loan-program.
---------------------------------------------------------------------------
Additionally, incentives to develop regional ecosystems focused on
the manufacturing of new energy technologies, like new battery
chemistries, multi-junction solar cells, perovskites, and others
discussed today will help grow the economy. These ecosystems are made
up of strong supply chains, workforce development programs, investors,
and national labs and universities (i.e. sources of innovation) and
will create more jobs and make it more likely that the manufacturing of
these technologies will stay in the U.S.
Stronger trade and environmental standards with effective
enforcement provisions could help even the playing field for U.S.
manufacturers of clean energy. Foreign firms that manufacture clean
energy products while polluting the environment have a leg up on U.S.
firms that are subject to stricter state and Federal laws. Cross-border
adjustment mechanisms that price carbon and other pollution could help
ensure that U.S. manufacturers are not disadvantaged for stewarding the
planet.
U.S. manufacturers have a history of developing innovative, energy
efficient products. DOE's Appliance Standards program sets and
implements minimum energy performance standards for appliances and
devices in our homes, businesses, and factories. These appliance
standards have already saved consumers nearly $1 trillion dollars over
the past three decades.\18\ By implementing rigorous appliance
standards, innovative American firms would have an advantage over less
efficient foreign products, thereby incentivizing U.S. manufacturing
and creating jobs domestically.
---------------------------------------------------------------------------
\18\ ``Saving Energy and Money with Appliance and Equipment
Standards in the United States,'' U.S. Department of Energy (June
2017). https://www.energy.gov/sites/prod/files/2017/01/f34/Appliance
and Equipment Standards Fact Sheet-011917_0.pdf.
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Finally, California has recently instituted a ``Buy Clean''
procurement policy for steel, glass, and insulation purchased for
state-funded projects. The policy considers a manufacturer's GHG
emissions in state purchasing decisions, rewarding those manufacturers
that have invested in pollution reduction. Congress should require the
Federal agencies to adopt this policy, require that such products be
made in America, and expand it to other finished goods and construction
materials.
And to develop and deploy these technologies, we need a
competitive, growing manufacturing sector that has the workforce, the
engineering talent, and capacity to innovate in order to meet the dual
challenges of producing more clean energy and reducing the use of
carbon emitting fuels.
Workforce development programs that teach skills in topics like
clean energy manufacturing, robotics, artificial intelligence, and
green construction are lacking and required. Such training programs
should be conducted in partnership with industry, to provide a clear
pathway to job placement. In addition, these programs should be
coordinated with other agencies, including the National Science
Foundation and the Departments of Labor and Education. DOE workforce
development programs also must include diversity and inclusion as a key
criterion. Finally, DOE's Manufacturing USA Institutes could be tasked
with workforce development for both engineers and technicians in their
focus areas.
Taking these steps will help maintain our national human capital
lead, which is an important factor that firms consider when choosing
where to locate their facilities.
concluding thoughts
The United States is competing in a global clean energy race, along
with every other country on the planet. Whoever wins will lead the
planet in addressing climate change--which is the most serious
challenge of our time--while also gaining the millions of jobs, the
higher living standards, and the other economic opportunities that
accompany it. Everything about our national innovation model--our
world-leading academic and National lab systems, the entrepreneurial
spirit of our private sector, and our national technological embrace
tells me that we can win this race.
What we need now is for Congress to give the Federal agencies the
tools to catalyze our private sector into taking that leading position.
Thank you very much for holding a hearing on this important topic.
Ms. Castor. Thank you.
Mr. Stones, you are recognized for 5 minutes.
STATEMENT OF EDWARD STONES
Mr. Stones. Chairwoman Castor and Ranking Member Graves and
members of the committee, thank you for the opportunity to
share Dow's action plan to address the impacts of climate
change.
At Dow, we accept the scientific consensus that climate
change caused by human activity has serious consequences and
must be addressed. We believe the time is now for the U.S.
Congress to establish a market-based price on carbon.
I am accountable for delivering power and steam at Dow's 14
company-owned generation facilities and at more than 100
manufacturing facilities globally. Our manufacturing facilities
rely on almost 7 gigawatts of reliable and cost-effective power
and steam.
Dow is one of the world's leading manufacturers of
chemicals, plastics, and advanced materials, with about 15,000
of our 37,000 employees based here in the United States. We
have invested billions of dollars into our U.S. operations over
the last decade because we intend to continue as the country's
premier material science company.
Addressing climate change is one of the greatest technical,
social, and economic problems ever faced by humanity and one in
which the U.S. must take a leadership role. By 2040, humanity's
energy consumption is expected to increase by 28 percent over
2015. By 2050, the population is expected to grow by another 2
billion people, and power demand is going to grow by 30 to 50
percent. Despite this, the International Panel on Climate
Change has called for global carbon neutrality in that time. So
society is faced with a challenge of meeting increased energy
demand while simultaneously eliminating net emissions.
Since the industrial revolution, economic growth has always
been accompanied by increased energy usage and emissions.
Although the need for action is clear, the time scale required
for solutions will be decades, not years.
Dow's approach to climate change is deeply rooted in the
company's ambitions and values. According to Bloomberg, we are
the leading user of renewable energy in the petrochemical
industry with more than 700 megawatts under contract. Our
products insulate, they dampen noise and vibration enabling
lighter vehicles, they enable concentrated solar facilities, we
seal buildings, and we keep food clean and fresh. On average,
for each unit of carbon emitted by the chemical processes in
our industry, our products will save two to three units of
carbon emissions over their lifetime.
Our processes are highly efficient, but are approaching a
limit on what can be achieved through incremental improvements.
Further substantial emission reductions will require a paradigm
change supported by technology breakthroughs.
Dow is leading on that front with the announcement of a
retrofit of one of our mixed-feed crackers in Louisiana with a
proprietary fluidized catalytic dehydrogenation, or FCDh,
technology. That will reduce our greenhouse gas emissions by
roughly 20 percent versus conventional technology.
Partnership and government engagement are necessary to
drive many of the technology actions that will make meaningful
impacts, such as deploying CCS. We have to rely on our partners
in government and industry to provide a network grid where we
can store or use the carbon we capture. There is also a role
for government in catalyzing the next generation nuclear
technology.
Finally, governments need to ensure the playing field is
level, rules don't overlap, feedstock is treated differently
than fuel and not unfairly penalized, and liability is
addressed. Society needs a holistic approach that is
sustainable, reliable, and affordable. Many regulations focused
on just one or two of these pillars--or one or two of these
pillars leading to significant unintended consequences such as
carbon leakage where U.S. regulations are out of sync with the
rest of the world and manufacturers move operations to less
stringent locations. We need broad, global policy alignment,
and the United States needs to be a leader. The consequences of
getting this wrong are dire for both the environment and
economy.
For example, a $19 billion U.S. chemical industry trade
surplus in 1997 became a deficit from 2001 to 2007 as
feedstocks and energy became economically unavailable for the
industry. More than 200,000 jobs were lost in our industry and
assets were shut down permanently. We cannot afford for this to
happen again.
The chemical sector has seen hundreds of billions of
dollars of investment over the past handful of years because of
abundant and affordable energy resources. An affordable,
reliable, and sustainable energy policy environment is critical
for the industry to remain globally competitive.
Thank you for the opportunity to be here today. We look
forward to working with members of the committee and interested
stakeholders.
[The statement of Mr. Stones follows:]
Testimony of Edward Stones
Global Business Director for Energy and Climate Change, Dow
Before the U.S. House of Representatives, Select Committee on the
Climate Crisis
Solving the Climate Crisis: Manufacturing Jobs for America's Workers
September 10, 2019
introduction
Chairwoman Castor and Ranking Member Graves, and members of the
Committee, thank you for the opportunity to share Dow's perspective on
actions we are taking to address climate change, and the impact these
actions have on our ability to compete globally. My name is Edward
Stones, and I am the Global Business Director for Energy and Climate
Change within Dow's Feedstocks & Energy business. In this role I am
accountable for delivering power and steam at Dow's 14 company-operated
generation facilities, as well as steam, utilities, and energy services
to more than 100 manufacturing facilities globally. I also have
responsibility for Dow's energy conservation and greenhouse gas
emission reduction efforts, and provide business guidance for the
Company's global advocacy efforts in energy sustainability and climate
change.
dow intends to remain the premier material sciences company
Dow was founded in Midland, Michigan in 1897, and is one of the
world's leading manufacturers of chemicals, plastics and advanced
materials. We supply thousands of products to customers in
approximately 160 countries, connecting chemistry and innovation with
the principles of sustainability to enable everything from fresh water,
food, and pharmaceuticals to insulation, paints, packaging, and
personal care products. About 15,000 of Dow's 37,000 employees are
based in the United States.
Dow has invested billions of dollars into its U.S. operations over
the last decade because we intend to continue as the country's premier
materials science company--today and well into the future. That means
innovating and growing here in the U.S. while competing globally. The
regulatory environment in the U.S. will frame our ability to deliver on
that promise. We believe the time is now for the U.S. Congress to
establish a market-based price on carbon, so the U.S. can continue to
lead the world in new product development while reducing impact on the
environment.
global scale of the challenge
Addressing climate change is one of the greatest technical, social
and economic problems ever faced by humanity. Today, the earth has
roughly 7 billion inhabitants, about 1 billion of whom live with
limited access to energy, and another 1 billion of whom have no power
in their homes or communities. Human activity causes greenhouse gas
(GHG) emissions of more than 50 billion tons/year of CO2
equivalents (CO2e).\1\ Between 2010 and 2030, the world's
middle class is expected to double in size, and by 2040, humanity's
energy consumption is expected to increase by 28% vs. 2015.\2\ By 2050,
the population is expected to grow by another 2 billion people, and
power demand will grow by 30 to 50 percent.\3\ Despite this increase in
demand, the International Panel on Climate Change has called for the
globe to be carbon neutral by sometime between 2040 and 2055 so as to
preserve the chance to limit temperature increases to less than 1.5
degrees Celcius.\4\ Together, these points suggest humanity must both
increase energy usage dramatically and simultaneously eliminate net
emissions.
---------------------------------------------------------------------------
\1\ UN Environment Emissions Gap Report, 2018.
\2\ 2017 International Energy Outlook, US EIA.
\3\ Ibid.
\4\ The International Panel on Climate Change special report on
global warming of 1.5 C (2018)
---------------------------------------------------------------------------
However, historical data suggest the energy economy is unlikely to
evolve quickly. Since the industrial revolution, economic growth has
been accompanied by increased energy usage and emissions. Global energy
demand doubled from 1995 to 2015.\5\ From the time energy sources
achieved five percent of the global energy demand, it took coal fifty
years to supply 40 percent of that demand, crude oil fifty years to
supply 30 percent, and natural gas fifty years to supply 20 percent.
Renewables do not yet supply 5 percent of the global energy demand.\6\
Although the need for action is clear, the time scale required for
solutions will be decades, not years.\7\
---------------------------------------------------------------------------
\5\ Richard Newell and Daniel Raimi (2018)
\6\ V. Smil, Scientific American 2014, based on IEA data
\7\ Grateful acknowledgement is made to Jason Bordoff of Columbia
University for compiling the data presented.
---------------------------------------------------------------------------
dow's approach to reducing carbon emissions
We accept the scientific consensus that climate change caused by
increasing greenhouse gas emissions from human activity has serious
consequences for the planet and society if left unaddressed. Dow's
approach to climate change is deeply rooted in the Company's ambitions
and values:
Our ambition is to become the most sustainable
materials science company in the world, and we strive to make a
positive impact on society and the planet in everything we do.
Protecting the planet is one of our three core values.
Our 2025 Sustainability Goals aim to help lead the
transition to a sustainable planet and society.
In 2015, Dow embarked on its third and most ambitious set of 10-
year sustainability goals--the 2025 Sustainability Goals. Dow's
sustainability journey has evolved from focusing on operational
efficiency (footprint), to product solutions to world challenges
(handprint), to recognizing that only through collaboration can we join
others to accelerate the progress toward a sustainable planet
(blueprint). The 2025 goals are centered around building blueprints for
a sustainable planet, which are aligned to the UN Sustainable
Development Goals and integrate public policy solutions, science and
technology, and value chain innovation. The aim is to build solutions
between government, business and society that generate shared values
and are long lasting, scalable, and transformative. We know there are
others who share our blueprint vision, and we want to join existing
conversations and convene new ones on how we as companies and
organizations can accelerate sustainable practices through
collaboration.
Dow's 2025 goals are designed to harness Dow's innovation
strengths, global reach and the passion of our employees to expand the
Company's impact around the world, driving unprecedented collaborations
to develop societal blueprints that will facilitate the transition to a
sustainable planet and society.
Through our 2025 Sustainability Goal on World-Leading Operations
Performance, Dow is committed to driving environmental benefits for our
communities and the world. Making our operations as efficient as
possible is not only important for the environment, but also makes
clear business sense. We continue to actively:
Maintain our absolute GHG emissions at or below our
2006 baseline, though we will grow globally by 2025.
Obtain 750 MW of energy from renewable resources by
2025 (Dow is already one of the largest users of renewable
energy in the chemical industry).
Offset new emissions of Priority Compounds, VOC's and
NOX, though we will grow globally by 2025.
dow products contribute to reducing our customers' emissions
Dow materials help customers and brand owners reduce the energy
demand and carbon emissions of many of their products. On average, for
each unit of carbon emitted by the chemical industry's processes, the
resulting products will save 2 to 3 units of carbon emission over their
lifetime.\8\
---------------------------------------------------------------------------
\8\ Innovations for Greenhouse Gas Reductions: A Life-Cycle
Quantification of Carbon Abatement Solutions Enabled by the Chemical
Industry, International Council of Chemical Associations, 2009,
Amsterdam.
---------------------------------------------------------------------------
Polyurethane provides thermal insulation, vibration
dampening, and noise abatement in building structures and
transportation applications.
Heat transfer fluids enable concentrated solar
facilities, which provide clean energy to more than 500,000
homes.
Silicone sealants for buildings reduce emissions 200
Kg CO2e per Kg of silicone.
Advanced Polyethylene enables down-gauging, reducing the
packaging materials required while preserving performance.
responding to the physical effects of climate change
Dow is experiencing the physical effects of climate change in two
areas: manufacturing sites with hurricane exposure, and through water
scarcity concerns. Forty to fifty percent of our volume is produced in
the U.S. Gulf Coast with high exposure to hurricanes. In those
locations, we have already implemented a host of mitigating factors
like improved levy systems to prevent flooding, enhanced `greenbelt'
areas to separate us from local communities, designing equipment
specifically to sustain adverse weather, and water conservation
programs. At the same time, there are places around the globe where
water scarcity due to increased drought is a real concern. We've taken
actions there--with our local communities--to improve those situations.
We factor in all of these potential risks when making decisions
about existing or future asset investments. We believe the consequences
for these types of events will continue to increase unless society--and
government--take action.
the need for new technology development
Dow's approach to carbon emissions has transitioned beyond an
initial focus on energy efficiency and meeting renewables targets to
additionally developing and deploying new technologies, and ensuring a
corporate wide focus on carbon reduction at our sites and with our
customers.
We believe the transition to a lower carbon economy will require
unprecedented cooperation between business and government. It is
important that policymakers fully appreciate the technological,
economic and societal challenges of such a transition. Achieving
meaningful emissions reductions will require equally significant
technology breakthroughs, which will take time, resources, and
collaboration.
Despite continuous improvement, the high efficiencies of industry's
current processes mean we are approaching a limit in the emission
reduction that can be achieved through incremental improvements.
Achieving further substantial carbon emission reductions will require a
paradigm change supported by technology breakthroughs.
Over 96 percent of all manufactured goods are directly touched by
the business of chemistry, which is why the chemical sector is the key
to achieving breakthrough technology solutions to enable downstream
emissions reductions. On average, for each unit of carbon emitted by
the chemical industry's processes, the resulting products will save 2
to 3 units of carbon emission over their lifetime.
Dow is pursuing innovative chemical processes to deliver step
changes in emissions intensity for our own operations and for others
once fully commercialized, likely around 2030. The Company recently
announced a retrofit of one of our mixed-feed crackers in Plaquemine,
Louisiana with proprietary fluidized catalytic dehydrogenation (FCDh)
technology. This technology will allow Dow to lower energy usage and
associated greenhouse gas emissions by roughly 20 percent when compared
to conventional propane dehydrogenation technologies, thereby improving
our overall sustainability.
Most sources of process heat today rely on fired heat, and few
options exist for low carbon alternatives. This makes carbon capture
and storage (CCS) and next generation nuclear critical technology and
policy solutions. CCS needs to be explored at sites where a destination
for CO2 is available as it may be the only technically
available control technology today. State and federal governments have
a role to play in defining and enabling the infrastructure required for
collecting and moving captured CO2. Funding for approaches
to utilize captured carbon beneficially (CCU) also will be helpful.
Next generation nuclear facilities are an additional potential source
of zero-carbon steam and power. Governments have a role to play in
catalyzing the development and deployment of new nuclear technologies
as well, and in expediting the permitting and construction processes.
solving the energy trilemma while maintaining industrial
competitiveness
One of the key actions to lower overall carbon emissions of the
industrial sector is to lower the carbon footprint of the sector's
purchased power. Dow is on the leading edge of integrating renewable
energy into our manufacturing operations. The Company is already one of
the largest users of renewable energy in the chemical industry, and we
are well on our way to surpassing our goal of obtaining 750 MW of
energy from renewable sources by 2025.
A major challenge facing society in the pathway to a lower carbon
intensity--especially in the electricity sector and for industrial
consumers--is the energy trilemma of affordability, sustainability, and
reliability. Both the reliability and quality of the power grid are of
paramount importance in ensuring the competitiveness of the industrial
sector. Many of the regulations focus on one or two of these pillars
alone, and often with significant negative consequences for the other
legs of the trilemma. Instead, a holistic approach is needed to avoid
unintended consequences.
The most significant consequence of poorly crafted regulations
would be carbon leakage, where U.S. regulations were out-of-sync with
the rest of the world and manufacturers moved operations to locations
with less stringent requirements. We need broad, global alignment on
greenhouse gas emissions reduction programs, and the U.S. needs to be a
leader. The consequences for getting energy policy wrong are dire. For
example, a $19 Billion U.S. chemical industry trade surplus in 1997
became a deficit from 2001-2007 as resources became economically
unavailable for industry.\9\ Over this period, more than 200,000 jobs
were lost in our industry.\10\
---------------------------------------------------------------------------
\9\ US Dept. of Commerce data for SITC Code 5 (Chemicals and
Related Products) from tse.export.gov website.
\10\ US Bureau of Labor Statistics employment for Chemicals and
allied industries in 2007 vs 1997, https://www.bls.gov/oes/tables.htm.
---------------------------------------------------------------------------
Real world data clearly show the value of natural gas as a key
driver for resolving the trilemma. From 2008-2017 in the U.S., natural
gas increased its share in power generation dramatically, displacing
outdated coal fired plants that were retired because of unfavorable
economics. Germany, on the other hand, subsidized a substantially
increased mix of renewables, replacing mostly nuclear plants. During
this time, the U.S. CO2 emission intensity for power
decreased by much more than in Germany while electricity was delivered
to the average household at less than one-half of the price. Today,
emission intensity in the U.S. is lower than in Germany, demonstrating
the importance of natural gas-fired power generation as the
stabilizing, cost-efficient anchor in the transition to a lower
emission future (EIA, UBA).
impact of grid design and power regulation on industrial consumers
The technical aspects of grid design matter a great deal to
industrial consumers. When considering renewable energy policy and grid
design, policymakers need to account for the intermittency and peak
load variability that comes along with integrating large amounts of
renewable energy into the grid. Industrial processes operate on a
continuous basis making us a consistent and predictable energy
consumer. In return, we rely on a similarly consistent and reliable
supply of power and steam to manufacture our products. This is best
provided by a portfolio of energy supplies which includes both
renewables and gas fired cogeneration.
Some of the technical challenges associated with integrating
renewable power into the grid are outside of our control, including
access to abundant and affordable low-carbon power capacities.
Similarly, we are seeing reductions in the quality of the power
received from the grid at our facilities in terms of inertia and
frequency control. Additionally, the intermittency of renewable power
supplies dramatically increases the volatility of power markets--
including run ups from $30/MWh to $9000/MWh for power during several
hours this summer in Texas.
With respect to power grid planning and renewable energy policy
development, we would like the Committee to consider the following
major points:
Cogeneration/Combined Heat and Power (CHP) are an
important part of efficiently meeting future power demand.
In 2018, emissions of carbon dioxide
(CO2) by the U.S. electric power sector were about
33% of total U.S. energy-related CO2 emissions.\11\
---------------------------------------------------------------------------
\11\ US EIA FAQ website, accessed 9/6/2019. https://www.eia.gov/
tools/faqs.php?id=77&t=11.
---------------------------------------------------------------------------
Federally driven solutions may cause unintended
regional consequences.
The ISO framework is the best way to address
regional specific power needs. This model preserves state
authority, maintains transmission owner withdrawal rights, and
includes a cross section of stakeholders from the region.
Federal agencies (i.e. FERC) have a role in defining
the criteria under which regional ISO's operate. Attention
needs to be paid to the impact of renewables on the power grid
(i.e. through factors such as spinning inertia, ramp rate, load
factors, seasonality, etc.).
Federal policy should continue to encourage
widespread utilization of cogeneration at industrial plants and
large facilities. Examples:
Right to sell cogeneration/Combined Heat
and Power (CHP) generated energy or capacity to a
utility at avoided costs and/or open access market
based rates.
Cogeneration/CHP considered eligible
resources for efficiency and carbon emission reduction.
In Germany, the Netherlands, Australia, the UK, and the U.S., clean
energy targets have had significant unintended consequences, resulting
in wide day and night swings in power pricing and highly unattractive
investment environments for power producers. Over time, gas and coal
generation are retired, leading to higher risk of blackouts, etc.
government policies on climate
Partnership, collaboration, and government engagement are necessary
to drive many of the actions that will make meaningful impacts. For
example, partnership will be needed to deploy CCS, which will likely be
needed on some of our processes and for power generation grid
stability. In those cases, we will work on how to capture the carbon,
and rely on our partners in government and industry to provide a
network grid where we can store or use the carbon we capture.
Governments also need to ensure the playing field is level, rules do
not overlap, feedstock is treated differently than fuel and not
unfairly penalized, and liability is addressed.
We believe the time has come for Congress to put in place a federal
policy to protect against the worst impacts of climate change. Taking
action now allows us to meet the challenge at the lowest overall cost
to society. We believe a market-based price on carbon is the most
efficient and effective way to lower greenhouse gas emissions. Dow has
been working proactively through trade associations and coalitions to
advocate for a federal solution. We are proud to be founding members of
the newly announced CEO Climate Dialogue, a group of U.S. and global
Fortune 500 CEOs that are committed to advancing climate action. The
goal of the group is to urge Congress to enact a market-based approach
to climate change.
To the extent that Congress considers a policy framework to address
climate change, we believe public policy should:
Recognize and value the chemical industry's use of
hydrocarbon feedstocks (in both traditional and nontraditional
forms) that are transformed into products rather than emitted
as CO2.
Eliminate federal regulations that are made
duplicative or unnecessary through the enactment of
comprehensive federal regulations.
Prioritize regulations at the federal level instead
of creating a patchwork of state and/or regional levels.
Regulations should be harmonized, and state and/or regulations
made duplicative or unnecessary should be eliminated.
Recognize industry's allocation of time and
resources to deliver efficiencies and breakthrough innovation
by protecting it from the broad legal liabilities of climate
change.
Dedicate revenue generated as a result of carbon
pricing exclusively to developing new technologies to avoid
future emissions, and/or support infrastructure required to
capture emissions or enable lower carbon emissions.
Establish a standard protocol to account for the
emissions that are avoided through the use of manufactured
products, and generate credits that can be applied against the
emissions of the manufacturer. Similar protocols should be
established for re-used CO2 (i.e. through Carbon
Capture and Utilization).
The key to continued manufacturing competitiveness is a well-
executed, comprehensive energy policy which addresses supply and
demand, energy security, and environmental objectives.
conclusion
Thank you for the opportunity to share Dow's perspective on
reducing industrial sector greenhouse gas emissions, and the actions we
have taken to reduce the impact of our own operations and those of our
customers. There is an important role for Congress to play in crafting
a federal regulatory framework that achieves meaningful emissions
reductions at the lowest possible cost to society. We look forward to
working with members of the Committee and all interested stakeholders
on this important issue.
Ms. Castor. Thank you very much.
Ms. Lipman, you are recognized for 5 minutes.
STATEMENT OF ZOE LIPMAN
Ms. Lipman. Thank you, Chairwoman Castor, Ranking Member
Graves, and distinguished members of the select committee. My
name is Zoe Lipman, and I am the director of the Vehicles and
Advanced Transportation Program at the BlueGreen Alliance, a
national partnership of labor unions and environmental
organizations. On behalf of my organization, our partners, and
the millions of members and supporters they represent, I want
to thank you for convening this hearing.
Earlier this summer, BlueGreen Alliance, alongside our
labor and environmental partners, released Solidarity for
Climate Action, an ambitious concrete platform to address the
dual crises of climate change and increasing income inequality,
simultaneously fighting climate change, reducing pollution, and
creating and maintaining good paying union jobs.
Our plan puts American workers at the forefront of the
discussion to fix these pressing problems. Rebuilding American
manufacturing is a key part of this plan. We cannot rebuild
American prosperity if we fall behind the rest of the world in
building the technologies of the future or if working people in
the communities they live in fail to see the gains from
innovation and a cleaner economy.
The next generation of investments in advanced clean
vehicles, energy, and infrastructure must be made here and
result in the kinds of good paying jobs that Americans need.
This strategy should include, I will say, many of the things
that we have heard on the panel already:
Major new investments to spur domestic
manufacturing of rapidly growing clean technologies, plus
increased funding for research and development and deployment
and to translate that innovation into manufacturing, supply
chain development, and good jobs.
Investments to transform our existing industries,
spurring clean and efficient domestic materials production, and
to make energy intensive industries more efficient and
competitive globally.
A focus on environmentally, economically, and
socially responsible mining, reclamation and recycling of the
materials necessary for a clean and secure future; and strong
labor, environmental, procurement, and safety standards to
strengthen manufacturing and ensure good paying jobs across
these advanced technology fields.
This includes using tools proven to create and improve job
quality, like project labor and community benefit agreements,
Buy American, Davis-Bacon prevailing wage, and policies that
ensure the use of domestic, clean, and safe materials made by
law-abiding corporations for all public spending and across the
supply chain.
Finally, fair and enforceable trade agreements are critical
and so are common sense tax, procurement, and border adjustment
policies to stop offshoring either jobs or pollution overseas.
Over the past decade in the auto sector, for example,
American workers and businesses have proven that we can rebuild
American manufacturing through strong action on climate. Today,
in a recovered profitable and competitive industry, hundreds of
thousands of American manufacturing workers are building the
advanced components, materials, and technology that go into
making our cars, trucks, and SUVs cleaner while saving
consumers billions and deeply cutting emissions. Unfortunately,
just as smart policy choices aided in manufacturing recovery,
poor choices will cost them.
The administration's moves to roll back these long-term
standards threaten more than 89,000 of tomorrow's manufacturing
jobs. We cannot afford to go backward. We need to retain and
extend globally leading standards and we need to act now in an
aggressive agenda to manufacture the next generation of
advanced and electric vehicles, materials, and technology in
the United States.
There is no doubt that the energy, transportation, and
technology sectors are changing rapidly, and all too often,
workers have borne the brunt of change. But while technological
change is inevitable and necessary, wasteful and inequitable
disruption is not. Nothing should stop us from building clean
energy technology with good jobs in America, but it doesn't
happen by itself.
In some factories, for example, EVs and EV components are
built on the same production lines in the same plants with the
same good union jobs as conventional technology, but not enough
of our clean vehicle and clean energy jobs are good paying
family supporting jobs and not enough are in communities that
have seen good jobs disappear. Creating high-quality jobs
across the country, especially in clean energy, vehicles,
efficiency adaptation, and resilience, requires strengthening
workers' rights on the job, removing barriers to organizing,
and raising and extending labor standards, plus a serious
investment in work-based training and apprenticeships and
reinvestment in hard hit communities across the nation.
To rebuild American prosperity, the clean economy must go
hand-in-hand with making high-quality, family-sustaining union
jobs accessible to all. Adopting an aggressive, worker-centered
agenda to address the climate crisis will build a stronger U.S.
manufacturing sector, benefit workers, communities, the
economy, and the environment.
Thank you for this opportunity. I look forward to your
questions.
[The statement of Ms. Lipman follows:]
Testimony of Zoe Lipman
Director, Vehicles and Advanced Transportation Program, BlueGreen
Alliance
Before the U.S. House of Representatives, Select Committee on the
Climate Crisis
Solving the Climate Crisis: Manufacturing Jobs for America's Workers
September 10, 2019
Thank you Chairwoman Castor, Ranking Member Graves, and
distinguished members of the select committee. My name is Zoe Lipman,
and I am the Director of the Vehicles and Advanced Transportation
program of the BlueGreen Alliance, a national partnership of labor
unions and environmental organizations. On behalf of my organization,
our partners, and the millions of members and supporters they
represent, I want to thank you for convening this hearing today
regarding the opportunities that the clean energy economy can provide
to rebuild American competitiveness manufacturing and good jobs.
Our nation faces the dual crises of climate change and increasing
economic inequality. These crises are inextricably linked, as are their
solutions.
That's why earlier this summer the BlueGreen Alliance, alongside
our labor and environmental partners, released Solidarity for Climate
Action, an ambitious, concrete platform to address these crises
simultaneously, fighting climate change, reducing pollution, and
creating and maintaining good-paying, union jobs across the
nation.i
We need to plan for the future and American workers must be at the
forefront of that discussion.
One key strategy for tackling both climate change and the
challenges faced by working people nationwide is rebuilding American
manufacturing. We recognize that we cannot rebuild prosperity if we
fall behind the rest of the world in building the technologies of the
future, or if working people and the communities they live in fail to
see the gains from innovation and a cleaner economy. We need to act now
to ensure the next generation of investments in advanced, clean
vehicles, energy, and infrastructure are made here in the United States
and that those investments result in the kinds of good-paying jobs that
are out of the grasp of too many Americans.
In Solidarity for Climate Action, the BlueGreen Alliance and our
partners call for aggressive action to ensure that America remains
competitive, that our manufacturing sector is strong, and that we
retain our spot as an innovative leader. The nation needs a national
strategy to lead in clean and emerging technology production,
including:
Major new investments to spur domestic manufacturing and
supply chain development in rapidly growing clean technologies, as well
as increased funding for research, development, and deployment to
ensure that American innovation is translated into good jobs and
cutting edge manufacturing in the United States;
Investments to transform our existing industries,
including investing in efficient domestic materials production and
energy-intensive manufacturing to both limit emissions and make them
more efficient and competitive globally;
A focus on environmentally, economically, and socially
responsible mining projects, as well as reclamation and recycling
initiatives to ensure we're creating the materials necessary for a
clean and secure energy future here in the United States;
Strong labor, environmental, procurement, and safety
standards to strengthen manufacturing and ensure that jobs across these
advanced technology fields are good-paying jobs. This includes using
tactics proven to create and improve job quality--like project labor
and community benefit agreements, Buy American, Davis-Bacon prevailing
wage, and policies that ensure the use of domestic, clean, and safe
materials made by law-abiding corporations--for all public spending and
throughout the supply chain;
Ensuring that trade agreements are enforceable, fair for
all workers, and benefit the environment and the climate; and
Using common sense tax, procurement, trade enforcement,
and border adjustment policies to stop offshoring and the leakage of
jobs--and pollution--overseas.
Rebuilding American manufacturing through leadership on climate
action is not just possible in theory. Over the past decade American
workers and businesses have proven that theory in the in the auto
industry. Building on bipartisan agreements in 2007 energy bill, a new
generation of strong, smartly structured clean vehicle standards--
coupled with deliberate manufacturing policy and investment--not only
helped avoid catastrophe at the heart of U.S. manufacturing, but sped
up the recovery, rebuilt automaker profitability and competitiveness,
and brought back hundreds of thousands jobs, all while building
exceptional vehicles that deeply cut pollution and saved consumers and
businesses money.
The BlueGreen Alliance and its partners have long tracked the
impact of standards on manufacturing jobs and investment in the auto
industry. Under globally leading fuel economy and greenhouse gas (GHG)
standards, automakers and suppliers invested billions in innovative
plants and technology in the United States,ii and across the
country, hundreds of thousands of manufacturing workers are building
the advanced components, materials and technology that goes into
cleaner cars, trucks, and SUVs. What's more, taken together, the
vehicles built today are achieving the nation's largest ever reductions
in climate pollution.
policy matters
Unfortunately, just as sound policy choices helped underpin a
recovery in manufacturing in America's auto industry, stepping back
from globally leading standards will cost them. Recent efforts by the
administration to rollback these long-term standards--together with
counter-productive corporate tax incentives that further discourage
investment in domestic manufacturing and workers--are threatening these
gains. They are putting today's and tomorrow's jobs at risk, driving
future manufacturing investment overseas, and setting us back in an
urgent race to attract the next generation of advanced and electric
vehicle technology in the United States.
Data from the Environmental Protection Agency (EPA) and National
Highway Traffic Safety Administration's (NHTSA) shows the proposed
rollback would cut approximately $30 billion per year in investment in
advanced technology and cost 60,000 jobs, and that's without taking
into account the potential impact of missing the boat on the next
generation of automotive innovation in America. A recent analysis
conducted by the BlueGreen Alliance looking specifically at the impact
on manufacturers who build advanced vehicle technology in the United
States, found the potential impact on jobs to be even more substantial,
concluding that the proposal would result in more than 89,000 of
tomorrow's jobs lost or foregone.iii
At a time when countries worldwide are rushing to capture the next
generation of vehicles, manufacturing and jobs, we cannot afford to go
backward. We need to retain and extend globally leading vehicle
standards, and we need to act now on an aggressive agenda to
manufacture the next generation of advanced and electric vehicles--and
the strategic materials and technology that goes into them--in the
United States.
now is the time for an advanced and electric vehicle manufacturing
agenda
An advanced and electric vehicle manufacturing agenda would couple
strong globally leading standards and targets, which give companies the
certainty they need to invest, with an aggressive push to manufacture
vehicles and strategic components here in the United States. The key
elements of that agenda include:
Make a robust investment to spur advanced and electric
vehicle and technology manufacturing and supply chain--whether through
new programs or through expansion of the loan, grant, and tax programs
we have today to help companies build, retool, or convert manufacturing
plants in America. Further, to enhance the benefits for the economy,
communities, and working people, we should:
Incentivize responsible labor,
community, and supply chain practices and prioritize
reinvestment in existing or idle facilities and in
deindustrialized, impacted, underinvested communities;
Prioritize economically strategic and
emerging technology and materials; and
Encourage consortia of assemblers and
suppliers--and small- and medium-sized manufacturers--
and aid states and municipalities in investing in local
priorities and clusters.
Act to responsibly produce critical minerals and materials
and to launch new domestic recycling and reclamation projects;
Boost public investment in electric vehicle (EV) fleets
and infrastructure and ensure that all public spending supports efforts
to build critical components here and to secure and build good family
supporting jobs;
Make globally competitive levels of investment in research
and development and ensure innovation is translated into domestic
manufacturing and growth of supplier networks; and
Enact fairer trade, labor, and corporate tax policies that
can stem advanced tech offshoring and exploitative labor practices
while driving a new generation of investment in domestic plants,
workers, and training.
Finally, the experience, opportunities, and challenges we have in
the iconic auto industry underscore some broader lessons for how we
ensure the clean economy, innovation, and technological change deliver
to working people.
the clean economy can and must deliver for working people
Energy, transportation, tech industries are changing rapidly. This
is both a tremendous opportunity and a significant challenge. All too
often in recent decades workers have borne the brunt of change. But
what we've seen is that while technological change is inevitable,
wasteful and inequitable disruption is not.
Nothing should stop us from building clean tech with good jobs in
America--but it doesn't happen by itself. In the auto industry for
example, in many factories, EVs and EV components are built on the same
production lines, in the same plants, with the same good union jobs, as
conventional vehicles. If anything, higher labor standards and better
working conditions in parts of the industry enable more effective and
efficient manufacturing systems.
The technology does not dictate job quality, or whether we rebuild
Americas manufacturing vitality, but the choices corporations and
policy makers make on offshoring and outsourcing and investing in
workers and communities do. In this industry, we've shown that, with
smart policy developed with stakeholders at the table, successful
innovation can be an industrywide undertaking, not a zero sum game. We
can engage every part of the industry and secure and build jobs across
existing and emerging technologies, while innovating across all types
of vehicles and delivering gains for all types of consumers, and we can
achieve--indeed perhaps it's the only way to achieve--groundbreaking
pollution reductions.
And, as we move to clean and innovative mobility across the
transportation sector, it's not just manufacturing jobs at stake, and
having labor and community stakeholders at the table makes all the
difference. New research shows that in commercial transportation--where
drivers are contingent or often misclassified as independent
contractors--deployment of clean technology can also be more
difficult.iv Similarly, in the absence of clear standards,
new ``innovative mobility`` technologies like autonomous vehicles, ride
sharing, and ride hailing may not deliver on promised labor, safety,
equity, and environmental benefits. Proactive engagement of
stakeholders and agreed public policy framework are critical to ensure
the public sees the benefits of technological change, and this would
shape innovation itself--helping to guarantee that we do not lock in
innovative technology with exploitative business models.
These lessons hold true across the clean economy. We have the
opportunity to retain and create millions of high quality jobs while
implementing bold solutions to climate change. We know this is possible
because we are building good high skilled union jobs today in
manufacturing and in the trades in transit, energy efficiency
retrofits, pipefitting and offshore wind, just to name a few. At the
same time not enough of the clean energy jobs created or promised are
good-paying, family--supporting jobs, nor are these jobs in communities
that have seen good jobs disappear. The clean economy must do more for
working people who have seen wages fall, and economic mobility and
power in the workplace decline. Unions--which empower workers, ensure
quality jobs, and sustain families--are an essential vehicle to
confront the economic insecurity most Americans face.
A commitment to high-quality job creation across the economy--but
especially related to clean energy, vehicles, adaptation and
resilience--means strengthening workers rights on the job, removing
barriers to organizing, raising and extending labor standards,
investing in work-based training, registered apprenticeships, enhanced
equity, community benefits and community preparedness. To rebuild
American prosperity, the future of energy, manufacturing,
transportation, infrastructure, and resilience must go hand in hand
with making high-quality, family-sustaining, union jobs accessible to
all.
conclusion
Today, our key economic and political challenges include
reorienting the American economy around the essential and growing clean
and resilient technologies of tomorrow, while addressing the challenges
working people are facing right now. Acting now to adopt an aggressive,
worker-centered agenda to address the climate crisis is amongst the
most compelling opportunities we have to meet America's challenges and
capture its most exciting opportunities--for the U.S. manufacturing
sector, workers, communities, the overall economy, and the environment.
references
i BlueGreen Alliance, ``Solidarity for Climate Change,''
June 2019. Available online: https://www.bluegreenalliance.org/
solidarity
ii BlueGreen Alliance, Driving Investment: How Fuel
Efficiency Is Rebuilding American Manufacturing, January 25, 2018.
Available online: https://www.bluegreenalliance.org/resources/driving-
investment-how-fuel-efficiency-is-rebuilding-american-manufacturing/
iii BlueGreen Alliance, Tech@Risk: The Domestic
Innovation, Technology Deployment, Manufacturing, And Jobs At Risk In
Stepping Away From Global Leadership On Clean Cars, August 1, 2019.
Available online: https://www.bluegreenalliance.org/resources/techrisk-
the-domestic-innovation-technology-deployment-manufacturing-and-jobs-
at-risk-in-stepping-away-from-global-leadership-on-clean-cars/
iv UC Berkeley Labor Center, Truck Driver
Misclassification: Climate, Labor, and Environmental Justice Impacts,
August 22, 2019. Available online: http://laborcenter.berkeley.edu/
truck-driver-misclassification/
Ms. Castor. Well, thank you to all of the witnesses for
your very compelling testimony. I recognize myself 5 minutes to
ask questions.
I have to say, after touring through Illinois and Michigan
during August, my great takeaway was, boy, the global race is
on for building the fuel-efficient and electric vehicles of the
future. I heard from the experts at GM and Ford, how they are
going all in on electric vehicles, but they are very afraid
that U.S. policy is going to take a backseat and let other
countries capture the market, because this is a very
competitive global market.
And I think the average person, the average American
understands that when you have a more fuel-efficient vehicle or
an electric vehicle, you are going to save money at the pump
and there are significant health benefits. Gosh, the electric
school buses of the future--I see that over time, all the
school districts are going to be driving electric school buses
because of the benefits, but there are some very significant
roadblocks right now.
Ms. Lipman, you highlighted that everyone understands how
the Trump administration is trying to roll back fuel economy
standards. There is a huge fight on. Go into a little more
detail for us on how globally leading fuel economy and emission
standards help create more manufacturing jobs in America and
investment by the U.S. auto industry.
Ms. Lipman. I would be happy to, and this is something we
have been tracking for years. In this sector, we really have an
example of how globally leading emission standards coupled with
deliberate manufacturing policy have underpinned a dramatic
recovery in the industry, bringing back hundreds of thousands
of jobs, returning to record sales, profitability, and
competitiveness for the industry.
In 2017, we found 288,000 manufacturing workers in 1,200
factories and 48 States building the specific technology that
goes into improving fuel economy and creating advanced
vehicles. We also saw over $76 billion invested just by the
automakers alone (the previous numbers included the suppliers).
Some of this was certainly business as usual, but much
additional came from retooling factories more frequently,
buying additional technology, and enhancing investment in
innovation, and it illustrated how investments to meet these
standards translated directly into a multibillion dollar
investment in manufacturing communities across the country.
Unfortunately, just as smart policy underpinned the
recovery, bad policy can reverse it. And as I mentioned in my
statement, we are seeing a proposal to roll back these policies
today. The administration's own analysis of the rollback found
that it would result in $30 billion a year less in
manufacturing investment and a loss of 60,000 future jobs. We
find in analysis we just completed, more than 89,000 jobs could
be foregone in the future.
Strong long-term standards not only boost investment in
manufacturing directly, but they provide the certainty for
companies to make decisions about whether or not to invest in
America for the long term, and we risk losing that next
generation of technology just at a time when countries
worldwide----
Ms. Castor. Well, and I want to get Mr. Nassar's comment on
this because I am hearing it from workers too. They want these
jobs. They know these are the jobs of the future. They don't
want the electric vehicles to be built in China and have China
eat our lunch. We need to be the leader. So what is your view,
what is UAW's view of the Trump rollback of fuel economy, and
what else do we need to be doing to make sure the Trump
administration doesn't undermine consumers and their pocket
books and good American jobs?
Mr. Nassar. Well, I think--first of all, thank you for the
question. I think as far as the preferred alternative that the
administration put forward by flatlining standards in the years
ahead, it really goes backwards from investments that are
already being made, first of all, because the automakers have
to plan well in advance so it is a problem. It is also leading
to an awful lot of litigation and uncertainty of where we are
heading, and that is creating a lot of problems.
We worked hard with a lot of stakeholders to build a
consensus before and we could do it again; we just need the
political will to do that.
Ms. Castor. Great. Mr. Griffith, I recognize you for 5
minutes.
Mr. Griffith. Thank you very much, Madam Chair, and I
appreciate it.
I want to start by looking at a concept that Mr. Stones put
forward in his written testimony, which was the trilemma, the
energy trilemma which states that you have got to try to
balance all three: affordability, sustainability, and
reliability. And I think all of those are important, and
sometimes we forget about that.
And, Mr. Shah, I like a lot of things, believe it or not,
that the Department of Energy did when you were there, because
I am big on research. The one thing I would point out, when we
are looking at this trilemma of affordability, is that we need
to be doing research on not just the renewables and increase
that research, but we need to have parity with our fossil fuel
research as well.
And I would point to an article that appeared in the
Roanoke Times on August 18 of this year, where it talks about a
new technology that is being developed in my district in
Pulaski County, and Virginia Tech is now working on it to come
up with a prototype, based on a decade of work, roughly, where
they are using solid sorbents. They create a filter which can
be used on smokestacks of any manufacturing facility or coal-
fired power plant. And what it does is, is that the emissions
come through this filter, it has got different compartments
with the solid sorbents, if I am saying that correctly, and
what happens is, is that there is a combination; the chemicals
then combine with the various things that we don't want in our
air--carbon dioxide, SOX, NOX, et
cetera--pulls it out, but it leaves it in a form because it is
not a jumbled mess. Most of the filters today can filter that
stuff out, but you end up with a jumbled mess that you can't
sell. This gives you a product you can sell so you can sell the
nitrogen to fertilizer companies. You can sell the arsenic to,
you know, folks who use arsenic for poisons or whatever they
are using it for, and you can pull out the carbon.
So what do you say about that? I mean, shouldn't we be
increasing--instead of putting all of our eggs into the basket
of the renewables where everybody is working on it, but as a
fossil fuel rich country, shouldn't we also be doing a lot of
research to clean up the fossil fuel production that we have or
whatever manufacturing? And this seems like a great project
among many others, I am sure.
Mr. Shah. Absolutely. This is a huge global economic
opportunity and we have got to be working on every sector. When
you look at the IPCC reports, they say that we are not going to
be able to achieve the two-degree scenario without both carbon
capture use and sequestration and advanced nuclear, in addition
to renewables and storage and all. So it is ``and, and, and''.
We have got to do it all. And you know what? Virginia Tech is
leading the way.
Just earlier this year, they got $2.4 million from DOE's
Fossil Energy Office to look at how to produce ammonia more
efficiently. So, you know, we got to work across the board, and
I think you are absolutely right.
Mr. Griffith. Well, I appreciate that very much.
Mr. Stones, I imagine Dow might be very interested in that
kind of technology as well.
Mr. Stones. Well, we do provide, you know, products to help
with carbon capture. We believe very strongly that carbon
capture is one of the processes required to deal specifically,
especially with processed heat, which is a very important issue
for our industry.
Mr. Griffith. Well, what I love about this one--and I hope
it takes off. I don't know if it will or not, but this is what
research is about, is trying to figure out different things
that will happen. But what I love about this is, is that we can
do all kinds of things with it and you end up with a product
you can then resell; you just don't have to store it away
somewhere or isolate it, and I think that is great.
And when you are looking at your trilemma and you look at
affordability--by the way, that is MOVA, I am always looking
for investment in my district, so you might check them out,
have your folks check them out. But I was recently in Turkey on
this same line trying to find some manufacturing jobs for one
of the counties in my district that wanted their--they are
targeting some Turkish companies, and one of the questions that
every manufacturer asked us was, what is the cost of your
energy? And I think that is important.
And you pointed out we lost 200,000 jobs when we didn't
have the feedstock. That translates to coal and natural gas
feedstocks from making chemicals, doesn't it? And when the
price went up so high it wasn't affordable, we lost those jobs
elsewhere. When the price of natural gas came down because of
research and development, those jobs came back, did they not?
Mr. Stones. Yeah. So I think----
Mr. Griffith. The answer is yes. You can keep go ahead, but
I want to make sure everybody understands the answer was yes.
Mr. Stones. I think what happened in that instance is that
technology and innovation led to revitalization of the energy
economy and specifically initially around shale gas, but then
eventually around shale oil.
Mr. Griffith. And I think if we get parity between
renewables and fossil fuels, we can have more breakthroughs
that will continue to have some of our traditional jobs but at
a cleaner output. And I appreciate it.
My time is up, and I have to yield back. Thank you, sir.
Look forward to discussions down the road.
Ms. Castor. Ms. Bonamici, you are recognized for 5 minutes.
Ms. Bonamici. Thank you, Chair Castor. Thank you to all of
our witnesses.
I am glad that we are focusing on manufacturing jobs for
America's workers today. I think this is a conversation we need
to have every time we are talking about the climate crisis and
especially with the focus on transportation today.
As the chair said, the global race is on, and as Mr. Nassar
and Ms. Lipman noted, why would we go backwards when other
countries are going forward. It just doesn't make any sense.
We talk a lot here on the Hill about infrastructure and
passing an infrastructure package. Look at all the potential
with charging stations and the technologies with fast charging,
and there is just so much that can be done and there are a lot
of jobs in that.
So we know that we need to reduce harmful emissions. We
know, as we transition to a clean energy economy, that we need
significant Federal investment in research and development of
advanced clean energy technologies. I also serve on the
Science, Space, and Technology Committee, so we look at
complementing Federal high-risk, high-reward programs like
ARPA-E, with regional partnerships that could spur the
development of both early stage innovation and help move new
technologies beyond laboratory research to market development.
I am actually working on a bill to support the creation and
expansion of regional public-private partnerships to foster
that environment of innovation and job creation at the local
level, but also part of that is to accelerate smart market
deployment of clean energy technology.
So, Mr. Shah, you in your testimony did talk about the
value of the DOE supporting both the initial research and
development of clean energy technologies and the subsequent
innovation in manufacturing to drive down market costs. So how
can we strengthen research and development to avoid that
commercialization valley of death that we hear about for new
clean energy technologies and support the supply chains for
accelerated clean energy development?
Mr. Shah. Thank you for the question. You know, I think you
are absolutely right, we need to do this. We need to support
innovation ecosystems, and the way do that is to take a
holistic approach, where we adequately fund R&D, we adequately
fund deployment, and we support workforce development for the
industries of the future.
So in Oregon, for example, DOE has been supporting NuScale,
and advanced nuclear is a big, hard problem. And it has taken
years of investment, but for nearly a decade now, DOE has been
seeding this industry through investments in companies like
NuScale. They have completed their first initial reactor design
which is under review, and that was done with Federal support.
They are now seeking long-term purchase contracts. They are
working with DOE and Congress to determine how to build
manufacturing capacity here. And what is exciting and important
about that is it is not just for domestic industry, but it is
also a huge potential export opportunity.
So I think to answer your question, you just have to look
holistically. We have to think about industrial policy, not
just doing one or the other; we have to do it all.
Ms. Bonamici. Thank you. And NuScale is not like the old
nuclear reactors, just like manufacturing jobs of today are not
like the old manufacturing jobs of the past.
So, in Oregon, on the workforce issue, we have numerous
examples of strong registered apprenticeship programs that have
the training, the portable credentials, high wages, and a
pathway to a permanent job. We have the Oregon Manufacturing
Innovation Center that is kind of a public-private partnership
with academia and the workforce.
So, Ms. Lipman, Mr. Shah, Mr. Nassar, you all highlight how
the clean energy sector could help create high-quality good
paying jobs. Registered apprenticeships and paid on-the-job
training opportunities provide us with an opportunity to
support individuals that might face barriers. So where do you
see Federal workforce investments being the most useful--
preapprenticeship programs, sector partnerships, more
registered apprenticeships? Where do you think the best
approaches are? Maybe just quickly because I am running out of
time. Thank you.
Mr. Nassar, go ahead.
Mr. Nassar. Just really quick. Well, I think, frankly, once
again, all of them are needed, but one thing that is going on
is the administration, unfortunately, has a proposal on
apprenticeships which would actually bring things backwards
because it would let apprenticeships move forward that have
much lower standards.
Ms. Bonamici. Not a supporter of IRAPs.
Mr. Nassar. And we collectively bargain, by the way, for a
lot of these good apprenticeship programs.
Ms. Bonamici. Okay. I am going to let Ms. Lipman get an
answer in quickly.
Ms. Lipman. Yes. I would underscore the importance of work-
based training and registered apprenticeship, preapprenticeship
programs. I would say we also are very proud that our full
partnerships supported the PRO Act and the importance of
raising labor standards, facilitating workers' rights in
organizing, and the ability to secure and improve jobs.
Ms. Bonamici. Absolutely. We want these to be good paying
jobs.
And I see that my time is expired. I yield back. Thank you,
Madam Chair.
Ms. Castor. Thank you.
We have three votes on the floor. So at this time, the
committee will recess, and then we will reconvene 5 minutes
after the last vote is called.
Thank you.
[Recess.]
Ms. Castor. Okay. The committee will come to order.
Mrs. Miller, you are recognized for 5 minutes.
Mrs. Miller. Thank you, Chairwoman Castor and Ranking
Member Graves, and to all of you-all for being here today.
Mr. Stones, how has the cost of energy changed over the
last 15 years?
Mr. Stones. So over the last 15 years, the price of energy
has been relatively volatile, and it has ranged from a period
of history where the United States has been very, very
competitive on energy. There was a period of time in the 2001
to 2007 period when it wasn't.
But natural gas, for example, has traded probably between,
frankly, zero and maybe $25 a million BTU, and probably is
about 2.50 right now.
Mrs. Miller. So, basically, right now it is down?
Mr. Stones. Right now, technological innovation has
occurred in the oil and gas space which allows a reduction in
the cost of those--of energy in both natural gas and oil. But
we have also seen a significant decrease in the price of
renewables. So those are also much cheaper today than they were
historically.
Mrs. Miller. How has the low cost in energy positively
impacted Dow's business?
Mr. Stones. So, basically, we rely on competitive and
reliable energy prices to remain competitive globally and
allow, for example, the investment of approximately $12 billion
over the last, say, 10 years in the Gulf Coast where we have
started up a new cracker, a new propane dehydrogenation
facility. The one we just----
Mrs. Miller. Can you speak closer, please?
Mr. Stones. Sorry. We have invested about $12 billion over
the last 10 years or so in the Gulf Coast to produce more
products here, including a new ethylene cracker and a new
propane dehydrogenation facility and the derivatives thereof.
Mrs. Miller. So that is a good thing?
Mr. Stones. It is a good thing, yes.
Mrs. Miller. Okay. Mr. Nassar, how important is the price
of electricity in manufacturing vehicles?
Mr. Nassar. Oh, it is absolutely an important input, for
sure. No question about that.
Mrs. Miller. How important is that same price in
maintaining manufacturing jobs?
Mr. Nassar. The price of electricity is an important
aspect, but it is one of many. I would say trade policy and a
whole bunch of other things too are important in whether those
jobs are here or elsewhere.
Mrs. Miller. If the price of electricity were to triple,
how would that impact jobs and union jobs in manufacturing?
Mr. Nassar. Well, I would need to get back with you with
precise numbers. I don't have that. But whenever you have major
increases in costs, you know, that is going to impact the
bottom line, which will impact employment for sure.
Mrs. Miller. Absolutely.
Mr. Shah, can you elaborate on successful carbon capture
projects in the United States?
Mr. Shah. Sure. The United States has some very large
carbon capture facilities, including Petra Nova, which is a new
facility that has been stood up in Texas. In addition, there is
a facility in Illinois that sequesters carbon that comes out of
an ethanol plant. So it is a technology that remains nascent,
but if we are to maintain 2 degrees or less of warming, we
really need to ramp up CCUS technologies, along with a whole
host of other clean energy technologies like renewables and
storage.
Mrs. Miller. Are there any other plants in the making that
you can see?
Mr. Shah. There are. But again, this is a new industry, and
additional Federal support could help speed deployment of these
types of facilities.
Mrs. Miller. Thank you.
How can we reduce the price of carbon capture so that it is
able to be exported globally?
Mr. Shah. Right. I think that is exactly the right
question, how do we create the manufacturing jobs to build
carbon capture technologies here in the U.S. and move them to
the rest of the world. And I think, as with many other nascent
industries, Federal support has been really important in the
past. So the U.S. Department of Energy Office of Fossil Energy
is focused on carbon capture utilization and sequestration
technologies, has been really important in the past, and I
think that Congress should continue its strong support there.
Mrs. Miller. Thank you. I yield back my time.
Ms. Castor. Thank you. Ms. Brownley, you are recognized for
5 minutes.
Ms. Brownley. Thank you, Madam Chair.
And I certainly concur with your comments at the beginning
of the meeting that we are in a global race towards the clean
energy future, without question.
I was recently in India and was there for India's
independence day and had a chance to hear the President of
India speak. And during that speech, he set some very, very
high standards for India with regards to electrification of his
country as well as electric vehicle goals.
And so, you know, thinking about that race, there is China
that is literally next door, and China is leading the way in
this area, and they will be the ones to capture that market.
And India is a very valuable market and would give us huge
export opportunities in this space. It is the most populated
country in the world, and 10 years from now, it is going to be
the third largest economy in the world. So we need to get
going.
So, Mr. Nassar, I wanted to ask you, in your written
testimony, you talked about some of the things that other
countries are doing to develop the automobiles and technologies
of the future, and you referenced the country of Germany. And
you said they were investing in its citizenry. What do you mean
by that exactly?
Mr. Nassar. Well, first of all, they have a dual path,
right? They have a path when it comes to--you know, kind of
university, traditional academic, but they also have a, you
know, manufacturing apprenticeship path that lasts a long time.
But, you know, it all matters. You know, if you have a healthy
population, you know, healthcare matters. There is a whole--you
know, the whole litany of things as far as having a solid
foundation for folks.
Ms. Brownley. And so, you know, on the line of--on the line
of apprenticeships, so, you know, in terms of looking towards
the future, in terms of looking at new technologies, and in
terms of automation and factories, sort of all of these
issues--and I know labor unions across the country, they all
have--you know, internally, within their own organizations,
they have apprenticeship programs for their particular trade,
and some of these emerging technologies and job possibilities.
Can you speak a little bit to what unions are doing across
the country in relationship to apprenticeships for the future?
Mr. Nassar. Sure. Well, I think, first of all, you know,
this is an area where collective bargaining, where workers
having a voice really matters, because a lot of the
apprenticeship programs and investments are agreed to in the
context of a collective bargaining agreement.
But a lot of times, what it is, is it is really focused on
making sure incumbent or existing employees, you know, have the
skills to do the--to upgrade to do the new jobs. So it is not--
you know, part of it is trying to get new folks into the
stream, but it is also trying to make sure the people that are
already working there, you know, can take those jobs as they
advance.
Good communication and work between the company and the
workers is key. And I would argue labor unions help that, not
hurt it.
Ms. Brownley. Thank you.
And the last question I really have, and it is really for
anybody on the panel that would like to answer it. In terms of,
you know, in the Trump administration, in the Department of
Energy, EPA, there have been so many rollbacks that have taken
place. And we do know that there is an employment dip in the
last two--in the first two quarters, I think, of this year.
Does anybody have any data in terms of a relationship of
rollbacks and workforce? I mean, intuitively you would think,
yes, there is a nexus there. Or is it a drop in the economy
or----
Ms. Lipman. Certainly. Rolling back regulations has really
been shown over the last several years not to be what either
manufacturing or workers need. I mentioned earlier the sort of
grave potential impacts on manufacturing jobs from the
automotive rollback. Similarly, our methane rules would
potentially build jobs across that sector.
We also have seen rollbacks of labor standards and
workplace safety and community and chemical safety. None of
those are good for workers or communities and working people
generally. And in addition, they are not what we need to--to
build the competitive, high-skill economy for the future.
Ms. Brownley. And with the BlueGreen Alliance--I have a few
more seconds--I know it is basically an alliance between the
environmental community and the labor community. Do you have
any interaction really with private industry and your
influence, perhaps, on what the industries are doing?
Ms. Lipman. Absolutely. We definitely do talk with
companies. We work with a number. And I think we would just
underscore how important it is to bring all of those
constituencies to the table to develop real practical policy
that both works for the American economy and workers but also
can deeply cut emissions.
Ms. Brownley. Thank you.
Thank you, Madam Chair. I yield back.
Ms. Castor. Thank you.
Mr. Palmer, you are recognized for 5 minutes.
And the acoustics in this room are not very good. So for
members and for our witnesses, speak directly into the
microphone and try to elevate your voice a little bit. Thanks.
Mr. Palmer. And some of us need a little help hearing
anyway, so----
Appreciate the opportunity to be here. Thank you, Madam
Chairman.
I want to follow up on Congresswoman Miller's questions
about the price of electricity and the cost of manufacturing
vehicles. She asked how important is the price of electricity
regarding electric vehicle manufacturing.
How important would that be if the government did not
subsidize the purchase of electric vehicles? Would they be
affordable to the average American?
Mr. Nassar. As far as the price of electric vehicles, I
mean, they do have to absolutely come down, but they also have
to be more attractive to folks. That is why I think, you know,
also investing in infrastructure matters and such. But we need
to up the demand for electric vehicles in order to have a more
vibrant market and make sure they are made here.
Mr. Palmer. Well, making them more attractive, is that in
the context of it--like a BMW is attractive to a lot of people,
but most people can't afford a BMW. Do you mean more attractive
that way or more attractive--did you mean more affordable?
Mr. Nassar. I meant more affordable. But also attractive in
the sense of people--you know, if you have more charging
stations everywhere, then people have more confidence in their
ability to purchase. There is some research along those lines.
Mr. Palmer. Increasing the range?
Mr. Nassar. Right.
Mr. Palmer. Along the same line, though, when you talk
about all of this in context--and I am fine with electric
vehicles. I have actually driven a Tesla. It is quite a ride.
Can't afford one, but quite a ride.
If you double or triple the cost of electricity for
manufacturing but you also double or triple the cost of
households' electricity, that is going to have an impact on
people's ability to buy an electric vehicle.
Mr. Nassar. Sure. And I would also add that, you know,
frankly, wages for a lot of manufacturing workers haven't kept
up. And, you know, a lot of--way too many auto workers can't
afford the products they build. And, you know, we believe the
old Henry Ford principle in that regard.
Mr. Palmer. Yeah. Well, you know, we get locked into this
discussion about wages a lot of times and we lose sight of the
fact that it is compensation. Compensation actually has gone up
quite a bit, but it is gone up in regard to health benefits,
what the companies are having to pay for health benefits, and
that takes away from what can be out there on that little
rectangle box on the check.
But I want to point out that China's electric vehicle sales
had grown by 126 percent, but by May of this year, I think they
had gone down to 2 percent. And China is looking at doing away
with their subsidies. I think they are putting about $60
billion a year into subsidies. If you don't subsidize these
vehicles, I think it is going to be a very difficult market, a
very limited market.
So to your point, we have got to find a way to make these
vehicles more affordable, more practical for folks.
Particularly where I live, they want to drive a full-size
pickup because it is not just a vehicle to drive; it also has a
utility value. And that is a big issue.
I also want to talk about something Mr. Shah brought up
about the--how much technology has improved our ability,
particularly in natural gas. And there was a study that came
out from Harvard, the Harvard Business School, and the Boston
Consulting Group, that was entitled American's Unconventional
Energy Opportunity. And it talked about the tremendous
opportunities we have in reducing our trade deficit through the
shale revolution--through the fracking revolution and shale in
particular.
There have been various studies done. One was by IHS in New
York, Daniel Yergin's group--I believe it was Daniel Yergin's
group--that showed that over a 15-year period, just in
exporting crude oil, that it would generate another $1.3
trillion in government revenues--new government revenues. I
think there was another study--I can't remember who did it--
that showed that over a 20-year period, 25-year period, it
would add a trillion dollars to GDP.
I will commend the Department of Energy in the previous
administration and the current administration, what is being
done in that regard, and the people who are leading this effort
in technology to put the United States into a position where we
reduce our trade deficits, we make energy affordable and
cleaner.
And with that, Madam Chairman, I will yield the balance of
my time.
Ms. Castor. Thank you.
And, Mr. Palmer, you will be interested to know when we
visited with the automakers in Michigan a few weeks ago, they
have big plans for electric SUVs and electric trucks. And they
did say some will be built in the U.S., but some will be built
overseas. So we need policies to ensure that those vehicles are
going to be built here in the good old USA.
Mr. Palmer. May I comment to that? Have you ever driven a
Tesla?
Ms. Castor. I have. And I have driven the Volt and the
Bolt, and they are fun to drive. And I love it. You don't have
to stop at a gas station. One of the----
Mr. Palmer. You don't have to hit the brakes.
Ms. Castor. No, you don't have to hit the brakes. And the
costs are lower to maintain. There are fewer parts to them.
So that is one of the issues we have to grapple with. There
is a whole supply chain out there right now for building the
parts that go into our cars. And if we are not going to have as
many parts being manufactured in America, what are the policies
to ensure that those manufacturing jobs stay here, that they
expand, and we don't lose ground.
Mr. Palmer. If I may, I would like to commend you on that
perspective, because building these cars, and particularly the
batteries, overseas adds to emissions. Because a lot of the
places that are building the batteries are using coal-fired
power generation, where here in the United States, our
CO2 emissions have actually declined. They have gone
up over there. So if we build them here, and we want to
encourage you to build it all here, it actually reduces
emissions.
Ms. Castor. And what was interesting is that the Tesla
battery is being built in the U.S. Some of the others are not.
But those rare earth metals are an issue. We have talked about
it before in the hearing, and these are the issues we have to
grapple with as we transition to the clean energy economy.
Mr. Palmer. Mercedes is building their batteries in
Alabama.
Ms. Castor. God bless America.
And, Mr. Levin, you are recognized for 5 minutes.
Mr. Levin. Thank you, Chair Castor. I appreciate you
holding the hearing today. It is an incredibly important topic.
I always remind people that jobs are the reason that this
whole transition of clean energy economy really is a win-win.
It is good for our planet, good for our health, and good for
workers.
And while my friend Mr. Graves was here, I reminded him of
a new report that clean energy jobs in California now outnumber
jobs in the fossil fuel industry 5 to 1. The report was based
on an annual survey of businesses, called the U.S. Energy and
Employment Report, which used to be put out by the Department
of Energy but was discontinued in 2017 after President Trump
took office. Fortunately, two nonprofits have picked up the
ball to provide that data.
And as Chair Castor said, the clean energy technology of
the future can be built here or abroad. I want to ensure that
it is built here. I have introduced the Zero-Emission Vehicles
Act with my friend, Representative Neguse, to accelerate market
trends and ensure that 100 percent of new light-duty vehicles
are zero emissions by the year 2040, of new sales.
This legislation, paired with research and development
funding, strong labor protections, and appropriate tax
incentives will keep our domestic automakers competitive and
facilitate the adoption of zero-emission vehicles built here in
the United States by American workers.
And, Mr. Nassar, I appreciate you being here to represent
the UAW. At home, I drive a Chevy Volt, a plug-in hybrid EV,
built by UAW Local 22. I am very grateful to your members for
building such a great car.
And when I had a chance to speak with Mary Barra, the head
of GM earlier this year, I expressed my disappointment with her
that they were discontinuing production of the Chevy Volt. She
assured me, however, that GM is committed to an all-electric
future, introducing, I think, something like 20 new models,
all-electric models, in the coming years. So I hope that they
have a union label on them just as my Chevy Volt has a union
label on it.
Ms. Lipman, I wanted to ask you a couple of questions. I
appreciated that you touched on the need in your testimony, you
talked about developing battery reclamation and recycling
initiatives. Lithium ion battery recycling is key to making EVs
more sustainable, keeping battery materials in the country, and
making the United States competitive in the battery space.
The resale center at the Department of Energy works to
foster the development of cost-effective battery recycling by
stimulating research and convening experts from across the
United States in order to drive down battery costs to DOE's
$80-per-kilowatt-hour goal. The center also partners with UC
San Diego, in my district, in its very important work that will
reduce the cost of EV ownership.
Ms. Lipman, do you see any other programs we can be funding
or other policies that can be adopted to help develop battery
recycling capabilities? And are there any State-level
initiatives that can help inform our work at the Federal level?
Ms. Lipman. Thanks. Yes. And this issue is one that has
come up over and over again about how we ensure that the
materials that we critically need for clean energy technologies
are built here and that we are not offshoring either those jobs
or the emissions.
We would add, in addition to the valuable program you
mentioned, that we definitely need a national strategy on how
we ensure we have a secure and clean energy future in the U.S.
that would include looking at the full range of production,
recycling, and reclamation of these products and materials.
Secondarily, we are very interested in a wide range of
direct programs we have in the U.S. or could have around
investing in manufacturing, our loan and grant and tax programs
for clean energy manufacturing, and there is no reason why
recycling and reclamation projects, especially first-in-kind
deployment of these projects, shouldn't be included under those
kinds of programs for support as well. There are important
things we could do on supply chain accountability to encourage
folks to utilize this kind of project and initiative.
And I guess I--I don't know off the top of my head of
programs that are helping at the State level, except to say
that I know in conventional batteries, we used to do much more
recycling in the U.S., and a lot of that did get offshored to
unfortunate jobs and environmental outcomes.
Mr. Levin. Thank you. Perhaps you can get back to us with
any other ideas.
And I will use the balance of my time just to mention that
Senator Cortez Masto and I have introduced the Green Spaces,
Green Vehicles Act which would fund charging infrastructure on
public lands across the United States and help convert National
Park Service and U.S. Forest Service fleets to zero-emission
vehicles.
Honored to be working on this issue with you, and look
forward to more in the years to come. Thank you for being here.
Thank you, Chair.
Ms. Castor. Thank you.
Well, Mr. Carter, at the outset of the hearing, I expressed
my relief that Hurricane Dorian did not head to Coastal
Florida, Coastal Georgia. So I know----
Mr. Carter. Yes. Thank you.
Ms. Castor. We have been thinking about you over the past
few weeks. And you are recognized for 5 minutes.
Mr. Carter. Well, thank you. I appreciate that very much.
And I thank all of you for being here. This is certainly
important. Manufacturing is important obviously in our Nation,
and it is also important in the First Congressional District of
Georgia that I have the honor and privilege of representing.
As a matter of fact, in the Savannah area alone, we have
over 18,000 manufacturing jobs that we value, as you can
imagine. And as the home to two major seaports, the Port of
Savannah, the third largest--third busiest container port in
the country, and the Port of Brunswick, manufacturing is
extremely important.
I want to ask you, Mr. Stones, how important is the cost of
energy to Dow Chemical?
Mr. Stones. The cost of energy is critically important. It
needs to be affordable, sustainable, and reliable. And that
provides the competitive base of our company and our investment
strategy.
Mr. Carter. So do energy costs play any kind of role in
where you decide to put a plant?
Mr. Stones. Absolutely. We will invest where we can get the
most competitive energy in the world.
Mr. Carter. So how would--if you had increased energy costs
here in the United States, what kind of impact would that have
on your decisionmaking?
Mr. Stones. So, you know, we--we shared that in the--the
kind of 2001 to 2007 period, the chemical industry lost about
200,000 jobs versus 1997. When we reinvented--you know, the
industry had more technology, innovation in oil and gas and
then eventually also in renewables, that helped us to make
decisions to invest $12 billion over the last sort of 10-year
period.
Mr. Carter. Sure, sure. Well, you know, whether it be
Democrats or Republicans or Independents, you know, we all want
to curb climate change and have a greener environment and make
our society greener. But I worry a lot about government
mandates and specifically about the bureaucracy that sometimes
can cause companies a lot of problems.
And I was just wondering, can you share with us some of the
innovations that Dow Chemical has done on your own accord to
become greener and more efficient?
Mr. Stones. So, you know, for example, the plant I had
mentioned earlier, the fluidized catalytic dehydrogenation, or
FCDh, which is a mouthful to say, is a new process technology
which should reduce the emissions versus comparable
technologies by about 20 percent.
We also very much invest in our products. So, for example,
every kilogram of silicon we sell typically saves about 20
kilograms of CO2 emissions. We also do things like
lightweighting for vehicles that allow dampening and sound
insulation, among other things. We have packaging for food,
which preserves the freshness and the cleanliness of the food,
which is very important globally.
And, for example, concentrated solar is developed from our
technologies for heat transfer fluids. So investing in the
product space as well as the manufacturing processes, because
the--you know, for every--basically, for every kilogram of
CO2 we use in our processes, we save two to three in
the products, the life cycle of the products.
Mr. Carter. And that is your own innovation; that wasn't
anything the government was forcing you to do or mandating or--
--
Mr. Stones. We believe in bringing to the market what the
products that the--the industry and the companies that we serve
want.
Mr. Carter. And I think that is very important, because as
we go through this process, it is going to be important for the
private sector to be involved. So what I want to ask you is,
how can we in government encourage that? And how can we--how
can we incentivize that short of tax credits or whatever?
Mr. Stones. So I think, you know, we would say that there
is a logical place for government in things like ensuring--
carbon capture as a technology isn't that tough. You know, it
is a known technology. It is being developed. A lot of good
work has been done. What is difficult is carbon reuse and the
carbon grid network that needs to be put together.
Right now, if we had a carbon capture stream at one of our
facilities, there is nowhere--there is nobody to take it from
us. There is no place to store it. So enabling that grid is
critically important in this space.
We also need to make sure that the regulation of the energy
industry doesn't create adverse price spikes. You know, for
example, just this month, we had $9,000 power in Texas. You
know, it is normally 30, just so everybody is clear. And that
volatility needs to be, you know, managed and understood.
Mr. Carter. Right, right. Well, let me--you know, let me
compliment you and let you know that I applaud your efforts in
the private sector of trying to do this. This is exactly what
we need done. And we need the relationship and the cooperation
of the private sector. And that is why I am so excited about
the future, particularly as it relates to climate change,
because I am convinced that the greatest innovators, the
greatest scientists are right here in the United States of
America. So I am really looking forward to this. So thank you
very much. Thank all of you for being here.
And I yield back.
Ms. Castor. Mr. Casten, you are recognized for 5 minutes.
Mr. Casten. Thank you, Madam Chair. Thank you so much to
the witnesses.
And I want to start--I want to--I am delighted to hear that
there is a bipartisan commitment to cheap energy. I am
delighted to hear this concern about making sure that we get to
a point where fossil energy and clean energy reach cost parity.
But we need to recognize that the fossil energy ain't going to
be happy about that, because they are going to take a revenue
hit.
Clean energy is cheap energy. The idea that a commitment to
making energy cleaner is a commitment to making energy more
expensive, as a technical term, it is stupid.
In 2007, the price of natural gas spiked. We all know that.
Natural gas is a volatile commodity. Solar energy is not a
volatile commodity. It is zero margin; it stays on the margin.
Since 2007, the carbon intensity of the United States grid
has fallen by 26 percent, the price of power has fallen by 6
percent. The reason for that is completely obvious. If you
deploy zero marginal cost technology, a commodity that prices
on the marginal cost falls. Thank you. Let's do more of it.
A decision not to invest in clean energy on the basis of
economics is like a decision not to travel to Denver because
you are afraid of shark attacks. It is dumb.
Now, that is a tremendously great opportunity, because it
means that we have tons of space to lower the carbon intensity
of our grid per dollar of GDP. We can do what our trading
partners have done. We can significantly improve the efficiency
of our economy, both in our electric sector, making our homes
more efficient, deploying renewables. And that is terrific, but
it ain't going to get us all the way there.
And I think the challenge that we have is that there are
huge chunks of our economy that use fossil energy as a chemical
input. And anybody who stands here and says I have a path to
zero carbon better explain how we are going to make fertilizer,
how we are going to make silicon, how we are going to make
steel, how we are going to make cement, how we are going to
feed 7 billion people without fertilizer, how we are going to
build a solar panel on a concrete pad without silicon, cement,
and steel.
And, you know, there are names like Haber and Bosch and
Fischer and Tropsch and Bessemer, who we all learn as a young
chemical engineer, who created these processes that depend on,
and we have an opportunity right now to invent the technologies
that are going to get us there in the future.
And, Mr. Shah, I was delighted to hear you give a shout-out
to my clean energy technology bill, because that is exactly
what we are trying to do, is saying, you know, one of the
buckets we have got we can be greedy about. The other buckets,
we have got to invent new stuff.
And so my question for you, given your DOE experience, can
you expand on what R&D is currently going on at DOE to lower
the carbon--figure out how to make low carbon products, and
then why--you know, given as we have advanced manufacturing op
centers, why is it important that we consolidate and prioritize
those activities into one space?
Mr. Shah. Thank you. And just on the first point you made
about wind and solar, you know, prices have gone down--thank
you--50 to 75 percent since 2009, and more innovation and more
deployment will help make energy even cheaper for renewable
energy for American businesses. So wind and solar are a really
good bet.
Now, on the industrial sector, you know, this is a really
hard sector to decarbonize. Added up, it is about 22 percent of
our Nation's GHG emissions. And we have identified solutions,
as you said, in the transportation sector, in the building
sector, in the power sector, to reduce GHG emissions. But the
industrial sector is big, it is hard, it is diffuse, and we are
having a little bit of a harder time. We haven't gotten as far
technologically as we have in these other sectors.
You know, the Department of Energy's Advanced Manufacturing
Office is authorized by Congress to work on industrial
efficiency. It is not authorized right now to work on GHG
emissions reduction, to work on industrial electrification, to
work on alternative fuels for industrial processes.
So the bill that you have put forward does exactly that. It
is a big gap, one of the biggest gaps in DOE's current
authorization. And it is part of a slew of R&D bills that are
moving through Congress right now: wind, R&D solar, R&D grid
modernization, storage, fossil, nuclear. It is really exciting
to see Congress working on these bills right now, because DOE
hasn't been reauthorized since 2005, and doing so could really
help us move forward with climate policy.
Mr. Casten. Terrific.
And just with the few seconds that I have left, for Mr.
Stones, way back when I was a young chemical engineer, I think
Dow was the leader on polylactic acid. I did some work on
levulinic acids and biomaterials. I know Dow has been out in
the front on figuring out how to make nonfossil derived
biomaterials--or hydrocarbon materials for a long time.
Talk about what it means if DOE--you know, the Federal
Government, in some capacity, can figure out how to make
fertilizer without fossil fuels, plastics without fossil fuels,
silicon, what does that mean for you, and what role do you see
between what you can do in the private sector and where the
need is in the public sector to lead some of that innovation?
Mr. Stones. So we absolutely will embrace technology. We
are very happy to work with partnerships with the governments
and various functions.
I am familiar with the PLA process. That actually was sold
off many years ago. We had a really hard time making the
economics work.
Mr. Casten. That was a long time ago. I was in grad school.
Mr. Stones. I understand. But certainly, you know, I think,
you know, setting a stable power and--and working on process
heat is incredibly important.
We are very concerned about things like, you know, there
being a place for us to put the carbon we captured through a
network of carbon capture and that sort of thing. And certainly
our products, we are going to continue innovating.
We do produce products, for example, with different types
of power and steam. We do use renewable steam in Latin America
where there are trees, where they grow very quickly. It is much
more difficult to do that in the U.S.
Mr. Casten. Thank you. I yield back.
Ms. Castor. Well, thank you again to our witnesses for your
testimony.
I would like to remind everyone what I stated at the outset
of the hearing. The committee has issued a request for
information. A lot of the ideas on solving the climate crisis
are not going to come from Washington, D.C.; they are going to
come from the private sector, experts, academics, advocates all
across the country.
If you go to www.climatecrisis.house.gov or find us through
Twitter @climatecrisis, you can access our request for
information. The deadline for proposals is November 22.
I would also like to ask unanimous consent to enter into
the record the UAW EV report called ``Taking the High Road:
Strategies for a Fair EV Future'', of spring of 2019.
Without objection.
[The information follows:]
Submission for the Record
Representative Kathy Castor
Select Committee on the Climate Crisis
September 10, 2019
ATTACHMENT: Taking the High Road: Strategies for a Fair EV Future.
United Automobile Workers, 2019.
This report is retained in the committee files and available at:
https://uaw.org/wp-content/uploads/2019/07/EV-White-Paper-
Spring-2019.pdf
Ms. Castor. All members will have 10 business days within
which to submit additional written questions for the witnesses.
I ask the witnesses to please respond promptly if you receive
additional questions.
Thank you very much. The hearing is adjourned.
[Whereupon, at 4:17 p.m., the committee was adjourned.]
United States House of Representatives Select Committee on the
Climate Crisis
Hearing on September 10, 2019, ``Solving the Climate Crisis:
Manufacturing Jobs for America's Workers''
Questions for the Record
Josh Nassar
Legislative Director
United Auto Workers
the honorable kathy castor
1. Do you support the United States rejoining the Paris climate
agreement? If yes, why?
Yes, we strongly support rejoining the Paris climate agreement. It
is painfully clear to our members that the climate crisis is real, and
its scope is global. International cooperation and commitment to
action, like the Paris Climate Agreement, are a must for addressing the
crisis. Failing to take concrete steps to address climate change at the
global level puts us on an unsustainable course. Ignoring climate
change only creates risks for our national security and our planet, but
it is also a direct threat to our jobs, and an even bigger threat to
the jobs and quality of life enjoyed by future generations. This is why
the UAW supports a broad policy agenda to address climate change,
including emissions regulations, investment in sustainable
infrastructure and the green economy, and international cooperation.
The UAW, based on experience, rejects the idea that fuel efficiency
and environmental regulations lead to closed plants and lost jobs.
Protecting the environment is not inherently bad for the economy and
solutions exist all around us. Fuel-efficient vehicles, clean energy,
clean manufacturing, renewable energy and other advanced technologies
are an opportunity to create new middle-class jobs with good pay, good
benefits and economic security. Our economy is changing in real time
and UAW members already design and build advanced cars and trucks,
advanced engines and transmissions, lighter materials and other
advanced green products.
Consumers and governments worldwide expect greener products. Europe
and China are developing advanced green technologies at a brisk pace.
Products for a green economy should be made here but we fear they will
not be if we remain on the current course in Washington, D.C. The
United States must be a producer and exporter of advanced technology
products, not jobs. We have an obligation to safeguard the future of
our jobs, families, communities and our planet.
2. Please discuss technologies and components that are being
manufactured in the United States today by UAW members to reduce
emissions and improve efficiency.
The UAW represents 225,000 workers in auto vehicle and auto parts
manufacturing, many of whom are working to produce vehicles and
components with improved efficiency and reduced emissions. Whether it
is electric vehicles (EVs), autonomous vehicles (AVs), plug-in hybrids
(PHEVs), more efficient internal combustion vehicles, or other key
vehicles components optimized for efficiency, UAW members are already
building the vehicles of the future. To ensure that the UAW members
build the next generation of advanced technology vehicles, we need
policies that promote investment in domestic production of the latest
technologies.
Electric Vehicles & Plug-In Hybrids: UAW members are playing a role
in the development of PHEVs, EVs, and AVs. Currently, the UAW
represents around 1,600 workers at General Motors' Orion, MI assembly
plant where the Chevrolet Bolt electric vehicle and Cruise autonomous
test vehicle are produced. Automakers have announced future investments
that will bring additional EVs and PHEVs to UAW-represented assembly
plants. These include:
GM plans to build a second EV at its plant in Orion
MI.\1\
Ford will build the 2020 Ford Escape PHEV in
Louisville, KY,\2\ is upgrading its Chicago, IL assembly plant
to make the hybrid Ford Explorer and PHEV Lincoln Aviator,\3\
and plans to build a new EV in Flat Rock, MI.\4\
Fiat Chrysler plans to build a Jeep Wrangler PHEV in
Toledo, OH \5\ and is preparing three assembly plants in
Michigan for future plug-in hybrid production of Jeep
vehicles.\6\
The UAW advocates for automaker investment in the domestic
production of advanced technology vehicles in order to create quality
jobs. But other decisions by automakers raise concerns about their
commitment to US production of advanced technology vehicles.
GM ended production of the Chevrolet Volt plug-in
hybrid in February 2019. The Chevrolet Volt was made at GM's
Detroit-Hamtramck plant, which GM has declared ``unallocated''
for future products.\7\
Ford ended production in Wayne, MI of the C-Max
Energi plug-in hybrid and the Ford Focus Electric EV in
2018.\8\
Ford is beginning production of its first EV SUV in
Cuautitlan, Mexico starting in 2020.\9\
More Efficient Traditional Vehicles: Electric vehicles and plug-in
hybrids are just one part of a broader trend of improved fuel economy
and reduced emissions in the auto industry. In the past decade, real
world fuel economy has improved across all vehicle segments, from
sedans to pickups.\10\ UAW members not only assemble many of those
vehicles, they also produce key components that improve vehicle
efficiency.
For example, the UAW represents roughly 25,000 workers in
automotive engine and transmission assembly in Indiana, Michigan, New
York, Ohio, and Tennessee. Many of these workers are producing the
latest technologies in internal combustion engines that are driving
incremental improvements in fuel economy and emissions reduction
fleetwide, such as engines with turbocharging, direct fuel injection,
and cylinder de-activation or transmissions with 9 or 10 speeds. UAW
members build cutting edge technologies in the heavy duty as well light
duty motor vehicle sector.
Continued investment in US manufacturing to producer cleaner, more
efficient products show that future technology trends in the auto
industry can be a win-win for workers and the environment. This win-win
is only possible if manufacturers commit to investing in production in
the U.S., government trade and industrial policies promotes U.S.
production of advanced technology, and workers have a voice in the
workplace to ensure the resulting jobs provide quality pay, benefits,
and safety. Congress needs to make sure our laws provide sufficient
incentives for domestic investments and remove perverse incentives that
favor foreign investments over domestic.
3. What are other countries doing to secure their piece of the
market in the global clean vehicle economy? What can we learn from
them?
The auto industry is facing a new shift in technology with the
proliferation of electric vehicles (EVs). This shift is an opportunity
to re-invest in U.S. manufacturing. But this opportunity will be lost
if EVs or their components are imported or made by low-road suppliers
who underpay workers. In order to preserve American jobs and work
standards, what is needed is a proactive industrial policy that creates
high-quality manufacturing jobs making EVs and their components.
Other countries are ahead of the US on creating an EV supply chain
by proactively promoting domestic production. China is promoting
domestic production of EVs and EV components by favoring domestic firms
and subsidizing its domestic EV market. Because of these policies,
automakers are orienting their EV strategies toward China. And European
countries have recognized that EVs could lead to key vehicle components
being imported and are taking actions to promote a domestic supply
chain.
Will the U.S. Lose Out on the EV Supply Chain?
No one knows for sure. Unfortunately, this is a distinct
possibility. Automakers, governments, and other key stakeholders have
shown a commitment to develop and produce EVs. Where those vehicles and
components will be made remains an open question.
A January 2019 Reuters analysis of automaker investment
announcements found over $300 billion in pledged investment for vehicle
electrification, with $39 billion announced by U.S.-based automakers,
$139.5 billion from Germany-based automakers and $57 billion from
China-based automakers. However, the report also found a large portion
of those investments from U.S. and German automakers are destined for
China to address the country's tightening EV regulations.\11\
Besides competition over where EVs will be assembled, there is a
global competition for control of the new EV value-chain. The prime
example of this race is lithium-ion batteries. Lithium-ion batteries
are the most valuable component in EVs. This has sparked a race to
develop the production capacity to meet growing battery demand and it
is this race that will determine the geography of much of the EV value
chain.
Based on developments so far, the U.S. is falling behind Asian and
European countries in lithium-ion battery capacity. It is projected
that by 2023, 62% of battery manufacturing capacity will be in China
and another 14% will be in Europe. North America will only have 12% of
global battery production capacity.\12\
China & Europe Are Taking Action: How are other countries getting
ahead on electric vehicle technology? It is through industrial policy
that uses targeted, proactive policies to increase demand for EVs and
promotes domestic production of vehicles and components.
For example, China has set ambitious targets for the new energy
auto industry. This includes a sales target of 1 million EVs and plug-
in hybrids in 2020 and 3 million in 2025. It calls for 80% global
market share in EV batteries and electric motors by 2020, and to have
two Chinese OEMs enter the global top 10 in sales by 2025.\13\
China has increased demand from consumers by offering a variety of
purchase subsidies, tax breaks, and in-kind benefits to EV buyers.
China has also stimulated demand through government procurement
policies that mandate a portion of vehicle purchases are EVs or
hybrids. As a result, China is leveraging its position as the world's
largest automotive market and leading the world's largest automakers to
orient their EV strategies toward China.
China has structured these incentives to support domestic
production. For example, consumer subsidies are only applied to cars
with government-approved batteries that favor Chinese-made batteries
and government procurement is directed toward domestically produced
vehicles.\14\
It is not just China that sees the importance of the new EV value
chain. The European Union and its members countries have recognized
that the lack of a domestic battery manufacturing base will undermine
the region's competitiveness,\15\ especially if the growth of EVs leads
to key vehicle components being imported from elsewhere.
In a speech to the EU Members of Parliament, Vice President of the
European Commission Maros Sefcovic put the issue in stark terms. ``The
European battery market is expected to create four to five million new
jobs. These can be jobs here in Europe or somewhere else''.\16\
To address these concerns, steps are being taken by European
governments to develop a European-based EV supply chain. For example:
In October 2017, the European Commission announced
the creation of the European Battery Alliance. The goal of the
alliance is to develop a ``complete value-chain`` for
manufacturing batteries in Europe \17\ by coordinating with
governments and stakeholders throughout the battery supply
chain, including major European companies in the chemical,
automotive, and engineering sectors.\18\
In April 2019, the French and German governments
announced plans for a state-subsidized battery cell consortium
between automaker PSA, its German subsidiary Opel, and French
battery maker Saft that will result in large battery factories
in each country.\19\
Policy Lessons to Lead on EVs: What is needed is a proactive
industrial policy that promotes the production of EVs and their
components in the U.S. under higher road conditions that benefit
American workers and the communities that rely on manufacturing jobs.
Infrastructure: Vehicle electrification requires
building a charging infrastructure for drivers and upgrading
our energy infrastructure to meet electricity demand while
ensuring electricity production is as green as the EVs
themselves. This is an opportunity to create quality jobs to
build, install, and maintain EV infrastructure.
Training: Workers will need new skills and displaced
workers will need re-training programs. Strong industrial
policy should include every effort to re-train and place
workers in quality jobs, provide strong economic support for
workers during transition periods, and create robust government
jobs programs to guarantee quality jobs for all those seeking
work. We must expand training and apprenticeship programs that
anticipate the types of future skills needed to produce,
install, operate, and service products and equipment that
utilize the new technologies which will be transforming our
workplaces.
Trade and Tax Policy: The economic potential of EVs
will be lost if their components are imported. Advanced vehicle
technology should be treated as a strategic sector to be
protected and built in the U.S. Trade and tax policies should
be aimed at ensuring EVs are manufactured in the U.S.
Tax policy should incentive domestic manufacturing.
Sadly, the opposite is often true today. Tax policies must hold
companies accountable for eliminating jobs domestically by
moving their operations offshore.
Environmental Policy: Strong environmental standards
can be structured as a win-win for the environment, workers,
and the economy. Environmental policy should be used to address
climate change while also promoting investment in future
technologies that create quality jobs in the process.
Manufacturing Incentives: Government incentives can
promote production of EVs and EV components in the U.S. Such
incentives should be used in a targeted way to promote a
domestic EV supply chain and enforce high-road manufacturing
practices.
Government Procurement: Government EV fleet
purchases, from cars to public transportation, can be a tool to
spur demand and create cleaner transportation. Such purchases
should be used to promote high-road jobs by considering where
vehicles are assembled, their level of domestic content, and
the labor conditions under which they were produced.
Consumer Incentives: Consumer incentives are a tool
to create a robust domestic EV market. This will encourage
companies to orient their EV strategies toward the U.S. market.
Consumer incentives should also be used to promote high-road
domestic EV production. Incentives should be based on where the
vehicle and its contents were produced and under what labor
conditions.
4. In your testimony, you referenced new technologies such as
autonomous vehicles. What policies should Congress adopt to ensure that
new technology trends in the transportation sector are good for the
environment and for workers?
While autonomous vehicles are in the early stages of development
and years away from widespread deployment, it is important to establish
standards today that ensure AV producers and operators are accountable
to key stakeholders tomorrow. Advocates for AVs point to many potential
benefits in safety, sustainability, and mobility, but those goals will
only be fully reached if we have policies that take into account the
impact AVs will have on jobs, communities, and the environment.
There is little dispute AVs will be disruptive. One study predicts
that autonomous passenger vehicles and heavy-duty trucks could combine
to eliminate 1.3 to 2.3 million workers' jobs by 2050, with most job
losses occurring in the latter years.\20\ Many more jobs will be
radically changed. Congress should promulgate regulation and policies
that provide a comprehensive plan for addressing job displacement for
workers in the transportation sectors. Unlike inadequate retraining
programs meant to address job losses due to unfair trade policies,
workers and communities should be held harmless from rapid
technological change. AV regulations should ensure that the pace of AV
deployment is driven by safety, security, sustainability, and efficacy
and not used as a strategy to cut costs and destroy quality jobs. It is
incumbent on Congress to ensure this transition is just. The UAW
believes Congress should enact legislation that not only ensures
American firms are global leaders in advanced transportation
technology, but that affords American workers a just transition.
Developing Domestic Supply Chains: The mass production of AVs will
create a valuable and strategic new supply chain in AV-specific
components related to electronics and electrical architecture,
semiconductors, graphic processing units, computer processing units,
lidar, radar, cameras, and other sensors. As with EV-specific
components, these AV-specific components represent an economic
opportunity to reinvest in US manufacturing to produce the most
advanced vehicle technology.
This opportunity will be lost if these key AV components are simply
imported. Too often, corporations develop new products in the U.S., but
outsource manufacturing to low-cost countries with weak labor and
environmental regulations--limiting the environmental benefits of
electric-autonomous vehicles. Based on historical experience, once
these supply chains are established outside of the U.S., they will be
difficult to re-shore. Federal policy must strongly incentivize
investment in and production of advanced technology components and
vehicles in the U.S. The UAW recommends:
Research and Development Grants Tied to U.S.
Production: Federal support for AV research and development
should include incentives or mandates that commercialized
production is done in the U.S.
Federal Subsidies for Manufacturing of Cutting-Edge
Products: Federal subsidies for manufacturing of AVs and AV
components can be an important tool to incentive domestic
production and should be targeted in a way that develop a full
supply chain of domestically produced AV-specific components.
Support Trade Policy That Protects Strategic
Cutting-Edge Components: Trade policy should include safeguards
for domestic production of strategic parts to ensure workers
benefit from the new technology and the technology is made with
the highest levels of safety and security.
Developing an Infrastructure for the 21st Century: New
infrastructure will be required to regulate how AVs interact with their
surroundings, including re-investment in traditional infrastructure and
the development of new `smart' infrastructure. Building new
infrastructure is an opportunity to create quality jobs by mandating
high-road labor standards and incentivizing the use of domestically
manufactured equipment. The design of AV infrastructure must fairly
address the concerns of key stakeholders and prioritize safety, quality
job creation, environmental sustainability, and the well-being of local
communities where the vehicles are being deployed.
A recent study found that on-demand transportation, which in the
future may include autonomous vehicles, has significantly increased
vehicle congestion.\21\ Increased congestion could offset some of the
freedom of movement and reduced environmental impact that electric AVs
promise. A well-designed public transit system could counteract these
inherent problems. Going forward, public transit should be the anchor
that allows for proper and limited use of AVs. Requiring integration
with a metro areas mass transit system would allow for public input on
a system's priorities, its environmental impact, and job quality.
Developing a Just Transition for Workers: Federal AV regulations or
policies must include a comprehensive plan for addressing job
displacement for workers in the transportation sectors, including
negotiating job protections and retraining programs with labor
organizations and funding a robust safety net to support displaced
workers and provide them with new jobs. The burden of technological
change should not be carried by working people.
The government should intervene to help identify, and train workers
for, the high value-added jobs associated with autonomous vehicles. AVs
will also create new types of transportation jobs. AV testing and fleet
operation will require safety drivers, software operators, remote
drivers, dispatchers, mechanics, cleaners, call center operators or
customer service workers. Any AV operator that receives public support
or permission to use public infrastructure should have to meet job
quality standards. It is vital that the AV industry is not modelled on
the ``gig-economy'', with low-wages, contract labor, lack of benefits,
and job insecurity. If these jobs are going to offset some of the job
displacement of AVs, they must be good paying jobs that come with
benefits, safety, and a voice in the workplace.
5. Congress has provided incentives for consumers to expedite
deployment of electric vehicles. When crafting these incentives, how
can Congress ensure workers benefit from this expanding sector?
Incentive programs to promote EV adoption must strongly encourage
domestic production and high-quality jobs for workers to stabilize the
middle class. Programs must be designed to promote manufacturing motor
vehicles, batteries and components on U.S. soil and to hold
manufacturers accountable for working conditions. For far too long,
companies have received extensive support from taxpayers only to turn
around and shirk their responsibilities to U.S. workers and our
economy.
Publicly funded incentives are an essential component to
stimulating a robust EV market. There continue to be barriers to
widespread adoption of EVs. One major reason is higher vehicle prices,
driven by the high cost of EV batteries. Although analysts project that
electric vehicles will likely become price competitive with traditional
vehicles in about a decade,\22\ EV sales would need to accelerate on a
shorter timeline in order to reduce emissions and combat the climate
crisis.
Incentives with labor standards should be required for all EV consumer
incentives programs, government procurement policies, and
manufacturing subsidies.
Consumer incentives for vehicle purchases or residential charging
installations are a policy tool that can increase the adoption of
cleaner vehicles and nurture this new market. Consumer incentives
should also be used to promote quality domestic jobs manufacturing EVs
by considering where the vehicle was assembled, the level of the
vehicle's domestic content, and the conditions under which the vehicle
and components were produced, including wages, benefits, health and
safety, and freedom of association.
In addition to labor standards, it is critical that EV incentives
are offered across all types of passenger vehicles. Nearly all EVs and
PHEVs available for sale in the last few years have been sedans, with
few options for larger vehicles. Yet, consumers have moved away from
sedans in favor of crossovers, SUVs, and pickups. Nationwide, car sales
declined by 30% between 2013 and 2018, while all other segments
grew.\23\
Reaching mass-adoption of EVs and PHEVs will require electrifying
larger vehicle segments. Manufacturers are expanding beyond EV sedans
and are starting to offer models that will include pickups, crossovers
and SUVs. Consumer incentives for PHEVs and EVs should be structured to
encourage automakers to offer electrified options in all segments.
For electrification to reach the broadest swath of consumers and
vehicle segments, incentives should always include PHEVs. PHEVs are an
important option for consumers who live in regions with limited
charging infrastructure because they can combine gas and electric
mileage for longer range. PHEV are often a more affordable option as
well. The 2018 sales weighted average MSRP for PHEVs was more than
$10,000 cheaper than for EVs.\24\ It is also likely that the first
electrified versions of many larger vehicles will be PHEVs, with full
EVs coming to market later.
Procurement Policy: Government EV fleet purchases, whether it is
cars or public transportation, can be a tool for spurring demand and
creating cleaner transportation. And EVs are well-suited for fleet
purchases due to their operating cost advantages.\25\
These purchases can also be a tool to push EV production toward a
high-road path, by conditioning such purchases upon standards of social
responsibility. Such purchase policies would incentivize manufacturers
to establish a production footprint in the U.S. and ensure that
production has the positive economic impacts that come with quality
manufacturing jobs.
Manufacturing Incentives: The electrification of the auto industry
is still in its early stages and auto manufacturers are responding to a
combination of regulatory requirements and consumer demand. The next
few years will see the introduction of many new EV models, with nearly
all major automakers setting ambitious goals for EVs and plans to spend
over $300 billion globally to transition to electric vehicles.\26\
While some manufacturers have made plans to invest in domestic EV
production, without additional policy guidance and market growth, much
of the industry could move overseas, compromising the quality of jobs
and vehicles.
Policymakers should consider programs to stimulate investment in
domestic EV assembly, including retooling existing plants, building new
plants for EV assembly, as well as building batteries or other
components. Such programs should ensure high quality jobs, and
opportunities for workers to transition from building conventional
combustion engines or parts to electric vehicles without loss of wages
and benefits.
references
\1\ https://media.gm.com/media/us/en/gm/home.detail.html/content/
Pages/news/us/en/2019/mar/0322-orion.html
\2\ https://www.bizjournals.com/louisville/news/2019/04/02/ford-
unveils-new-louisville-built-
escape-photos.html
\3\ https://www.freep.com/story/news/local/michigan/detroit/2019/
07/22/ford-upgrading-chicago-assembly-plant-adding-450-jobs/1801125001/
\4\ https://media.ford.com/content/fordmedia/fna/us/en/news/2019/
03/20/ford-adds-2nd-north-american-site-to-build-battery-electrics.html
\5\ https://www.toledoblade.com/business/automotive/2018/12/01/
jeep-wrangler-hybrid-coming-quietly-to-a-woods-near-you/stories/
20181130116
\6\ https://media.fcanorthamerica.com/newsrelease.do?id=20661&mid=
\7\ https://www.cbsnews.com/news/chevy-volt-discontinued-
chevrolets-last-volt-rolls-off-the-
assembly-line/
\8\ https://www.autonews.com/article/20180508/BLOG06/180509813/a-
final-goodbye-to-the-ford-focus-c-max
\9\ https://www.thedrive.com/news/27066/ford-will-split-electric-
vehicle-manufacturing-between-mexico-and-united-states
\10\ https://nepis.epa.gov/Exe/ZyPDF.cgi/
P100W5C2.PDF?Dockey=P100W5C2.PDF, p. 15
\11\ https://graphics.reuters.com/AUTOS-INVESTMENT-ELECTRIC/
010081ZB3HD/index.html
\12\ https://www.visualcapitalist.com/battery-megafactory-forecast-
1-twh-capacity-2028/
\13\ http://english.gov.cn/policies/infographics/2015/06/02/
content_281475119391820.htm
\14\ http://www.nbr.org/downloads/pdfs/eta/heller_brief_092717.pdf
\15\ http://europa.eu/rapid/press-release_STATEMENT-17-3861_en.htm
\16\ https://ec.europa.eu/commission/commissioners/2014-2019/
sefcovic/announcements/speech-launch-friends-eu-battery-alliance-
european-parliament_en
\17\ https://ec.europa.eu/transparency/regdoc/rep/1/2017/EN/COM-
2017-675-F1-EN-MAIN-PART-1.PDF, page 10
\18\ https://www.euractiv.com/section/electric-cars/news/airbus-
style-eu-battery-alliance-splits-
before-take-off/
\19\ https://www.reuters.com/article/us-france-germany-industry/
france-and-germany-commit-to-european-electric-battery-industry-
idUSKCN1S80SF
\20\ https://research.upjohn.org/up_technicalreports/36/
\21\ https://advances.sciencemag.org/content/5/5/eaau2670
\22\ Bloomberg New Energy Finance, ``Electric Vehicle Outlook
2018'': https://about.bnef.com/electric-vehicle-outlook/
\23\ WardsAuto, Sales Data
\24\ Argonne National Laboratory, March 2019, ``Assessment of
Light-Duty Plug-In Electric Vehicles in the United States, 2010-2018'':
https://publications.anl.gov/anlpubs/2019/03/151081.pdf, page 16
\25\ https://www2.deloitte.com/content/dam/insights/us/articles/
3851_FoM-Power-and-utilities/DeloitteInsights_FoM-P&U.pdf, page 6
\26\ https://graphics.reuters.com/AUTOS-INVESTMENT-ELECTRIC/
010081ZB3HD/index.html
Questions for the Record
Tarak Shah
Former Chief of Staff, Under Secretary for Secretary and Energy
U.S. Department of Energy
the honorable kathy castor
1. Could you please describe overall funding levels for federal
energy innovation efforts? In the context of the climate crisis, are
these levels adequate and are there any areas that deserve special
emphasis?
The last comprehensive official survey of U.S. Government clean
energy R&D funding levels was completed in 2016. At the time, the
Office of Management and Budget found that Congress had enacted $6.4B
in clean energy R&D funding in FY 2016 across the government, $4.8B (or
approximately 75%) of which was appropriated to the U.S. Department of
Energy (DOE).
Since then, Congress has increased funding to DOE's science and
clean energy programs by about 20%. Congress deserves credit for
increasing DOE funding even as the current administration has proposed
gutting federal energy innovation programs.
Even so, the rate of increase in energy innovation funding is not
fast enough. Along with nearly two-dozen other countries, the United
States committed to doubling its national clean energy innovation
programs between 2016 and 2021. Other countries are making good on
their commitments. If the United States does not, the jobs and economic
opportunities associated with these types of catalytic government
investments will flow to the countries that are stepping up to the
plate.
In the United States, we are particularly underinvested in energy
innovation in the transportation, buildings, and industrial sectors, in
comparison to their shares of greenhouse gas (GHG) emissions. Congress
should more than double clean energy innovation efforts in these areas.
2. In your testimony, you mentioned that there are programs at the
U.S. Department of Energy (DOE) that focus on industrial efficiency
improvements. Should the mandate for these programs be updated in the
context of the climate crisis, and if so, how? Please feel free to
reference specific DOE programs.
The U.S. industrial sector is the source of about 22% of our GHG
emissions. DOE's Advanced Manufacturing Office (AMO) works to help
reduce these emissions by improving energy efficiency in our nation's
factories. While there is much more to do to improve the energy
efficiency of our industrial processes, there are thermodynamic limits
on how much efficiency can be achieved. In other words, the industrial
sector will always generate some greenhouse gas emissions even if
energy efficiency is implemented fully. Therefore, to get to net zero
by 2050 (as is required to prevent the worst impacts of climate
change), industry must capture those remaining emissions.
Given the research challenges and large capital requirements of
innovation in this area, the federal government needs to lead the way.
Carbon capture, utilization, and sequestration (CCUS) technologies,
electrification of process heat, and substitution of low-carbon fuels
for fossil fuels hold promise for the industrial sector but need more
research to reduce costs and commercialize.
The current legislative authorization for DOE, last updated in
2005, does not mention climate change (Energy Policy Act of 2005,
Section 902). In addition, the authorized goals for AMO (Energy Policy
Act of 2005, Section 911) are exclusively focused on industrial energy
efficiency. So much has changed in our energy sector since 2005.
Congress should comprehensively update DOE's statutory goals to include
climate considerations, both at the agency level, and to authorize AMO
to develop a broader set of industrial decarbonization solutions,
including industrial CCUS technologies. H.R. 3978, the Clean Industrial
Technology Act of 2019 would promote this goal.
In addition, DOE should elevate the level and widen the focus of
its buildings and industrial RD&D by raising the level of the office
from the current Deputy Assistant Secretary for Energy Efficiency to a
new Assistant Secretary for Buildings and Manufacturing.
3. In your testimony, you mentioned the potential for offshore wind
development in the United States. What policies should Congress adopt
to scale up deployment of this vast, clean resource?
DOE estimates that more than 2,000 GW, or two times the combined
generating capacity of all U.S. electric power plants of offshore wind
resources exist in the state and federal waters of the United States
and the Great Lakes. While not all of this will be realistically
developed, to date, we have 30 MW of operating offshore wind in the
U.S. That equals .0015% of our potential capacity.
Furthermore, these offshore wind resources are near coastal
population centers, which need new clean energy resources, but face
onshore land constraints. In addition to funding additional research
into offshore wind technologies, Congress should extend the federal
Investment Tax Credit for offshore wind. Without action, the credit is
set to phase out this year, cutting off investments in offshore wind,
just as the costs for this technology is beginning to support
widespread deployment. In addition to extending the tax credit for
offshore wind, Congress should consider mechanisms to facilitate
investments in transmission infrastructure to bring the robust offshore
wind energy to load centers.
4. In your testimony, you mentioned that DOE appliance standards
have saved consumers almost $1 trillion dollars. Could you please
describe additional ways that new technologies can help consumers save
money? What are some examples?
DOE's appliance standards program sets minimum efficiency levels
for 60 commercial and consumer products, such as refrigerators,
lighting, washing machines, dryers, and heating and cooling systems.
Working with industry, this program brings together manufacturers,
consumer advocates, environmental advocates and states to continually
raise the game on the efficiency of appliances in our homes and
businesses.
The standards program has driven remarkable efficiency gains in
household appliances and equipment. For example, today, the typical new
refrigerator uses one-quarter the energy than in 1973--despite offering
20% more storage capacity and being available at half the retail cost.
Since 1990, new washing machines use 70% less energy, air conditioners
use 50% less energy, and dishwashers use 40% less energy.
Overall, these standards already help save consumers $1 trillion
over the past 30 years, and will save them another $1 trillion over the
next decade. Put another way, the program helps the average family
nearly $500 per year through lower energy bills. This also has the
effect of reducing GHG emissions.
Congress requires DOE to update these standards every six years,
but the current administration has slowed this process, and in some
cases is attempting to roll back existing standards. Over time, this
will mean that Americans will pay higher energy bills and emit more
GHGs than they would if DOE was updating these standards.
Doing so also weakens U.S. industry. American manufacturers are
always at the technological cutting edge, and they are the best
positioned globally to develop new products that meet energy efficiency
standards. By rolling back these standards, the current administration
is giving foreign competitors with inefficient technologies an
advantage over domestic companies. DOE should instead be strengthening
the standards, which would increase energy efficiency and save
consumers even more money on energy costs.
5. In your testimony, you mentioned how policies could be
strengthened to ensure that projects that receive funding from DOE have
domestic manufacturing plans. Could you expand upon what Congress
should do to better safeguard domestic production of taxpayer-funded
technologies?
Under a provision of the Bayh-Dole Act, DOE's Energy Efficiency and
Renewable Energy (EERE) and Advanced Research Projects Agency-Energy
(ARPA-E) programs require award applicants to submit U.S. Manufacturing
Plans. These plans state an awardee's commitment to manufacture
technologies resulting from DOE awards in the United States.
Congress should ask DOE to strengthen this requirement by applying
it to all applied energy RDD&D programs (not just EERE and ARPA-E) and
to develop recommendations for strengthening proposed manufacturing
plans. Specifically, the current law gives the Federal government very
few mechanisms to enforce the commitments that awardees make in their
plans. At most, DOE could bar an entity that violated the terms of its
U.S. Manufacturing Plan from competing for future awards.
Stronger mechanisms could include clawback provisions for offshored
intellectual property or financial compensation for U.S. taxpayer
sponsored technology that is manufactured offshore. DOE is well suited
to address the pros and cons of strengthening the requirements and
enforceability of these plans.
6. In your testimony, you mentioned that support from DOE programs,
particularly in the Advanced Manufacturing Office, helped drive down
the price of clean energy technologies. Could you please provide
examples of how the Manufacturing USA Institutes have produced real
results for the U.S. economy and clean energy in particular? How could
Congress help these existing institutes meet the scale of the climate
crisis?
The Manufacturing USA Institutes are a national network of
federally sponsored manufacturing institutes, each with their own
technological concentration, but designed to accelerate U.S.
manufacturing as a whole. DOE sponsors six of these institutes,
focusing on topics like solid-state power electronics, advanced
composites, and chemical manufacturing.
The first of these institutes, Power America, is approaching its
fifth year in operation. Based on manufacturing advances developed at
Power America, a foundry in Texas is the first in the world to
manufacture 6-inch Silicon Carbide (SiC) wafers. SiC semiconductors
represent a revolutionary new design for computer chips. Computer chips
are at the base of the supply chain for every clean energy technology--
so if we can build them here, we have an advantage when it comes to
building all the things they are in as well--from solar technologies to
electric vehicles (EVs) and beyond.
Congress and DOE originally agreed to support these institutes for
five years, at which time they would become self-sustaining. Other
countries with similar technology-specific clean energy manufacturing
institutes support their entities indefinitely. This is because
experience shows that it takes more than five years to build
enterprises on the scale of these institutes. Congress and DOE should
work together to determine a new, competitive funding mechanism to
support these institutes after their initial five years of funding
ends. The advances they have made are substantial, and the investments
U.S. taxpayers have made risk being stranded without additional federal
support. In addition, because the model has been so successful,
Congress should ask DOE to identify new potential topic areas that
would be well suited for the institute model.
7. What are other countries doing to secure their piece of the
market in the global clean energy economy? What can we learn from them?
Other countries have holistic, sector-centric models to address the
climate crisis. For example, some countries like the U.K. have set
overall carbon budgets by sector and then are applying a comprehensive
range of solutions, including R&D, market and deployment incentives,
workforce development, and regulation to achieve their goals.
Yet other countries are examining future technologies on a case-by-
case basis and deciding if they want to lead the market. For example, a
decade ago, China looked at solar PV manufacturing and decided to
become the world leader. Because of their expertise in solar
manufacturing, they are now a world leader in semi-conductor
manufacturing, which has enabled them to become a world-leading
computer manufacturer. And because future clean energy products like
EVs are heavily digitized, they now have an advantage in that space.
The United States should be looking at the future clean energy
business in much the same way other countries are--based on both the
moral imperative and the size of the economic opportunity. Upon
examining technologies like next generation solar, offshore wind, EVs,
carbon capture, advanced nuclear, renewable hydrogen, energy efficient
appliances and others, we would recognize that we have historical
strengths in each of these areas.
With the right combination of catalytic tools from the federal
government, we can lead the world on each of these technologies. But it
takes a comprehensive array of federal programs, not ad hoc, one-time
interventions by Congress and the federal agencies.
8. Congress has provided incentives to wind and solar companies to
expedite deployment of this zero-carbon source of electricity. When
crafting these incentives, how can Congress ensure workers benefit from
this expanding sector?
For those wind and solar products that are imported into the U.S.,
Congress should ensure that trade agreements with the countries they
are manufactured in include rigorous labor and environmental standards.
In other words, American workers who build solar panels and wind
turbine components should not be penalized for making a fair wage or
building them without destroying the environment. A number of trade
deals are in various stages of development with countries that send
their solar and wind products to the U.S. at the moment, so this is a
crucial time to ensure such protections are put in place.
the honorable ben ray lujan
1. Given the magnitude of the industrial decarbonization challenge,
I'd like to ask you, Mr. Shah, on how we can begin to address such a
problem. Given that we need to reduce emissions from a wide range of
manufacturing processes, such as steel, iron, aluminum, concrete,
chemicals, and a whole host of other products that are essential for
our economy, are there existing technologies that we can build and
learn from and adapt to suit the needs of reducing emissions from
manufacturing?
This is an important question because the Environmental Protection
Agency reports that 22% of U.S. emissions come from the industrial
sector. When examining the range of solutions by sector, industry is
generally thought of as the most difficult to decarbonize from a
technological perspective. On the other hand, industrial emissions are
well known, and relatively concentrated, which means that once we begin
to apply solutions, they can make a big difference quickly.
The solution set is two fold. One, there must be a financial
imperative for industry to decarbonize. Right now, there is no a market
signal that would either incentivize or disincentivize industry to
pollute. Incentives could come in the form of a tax credit for reducing
emissions, either through efficiency, electrification, low-carbon
fuels, or carbon capture, utilization, and storage (CCUS). The 45Q tax
credit is a start, but without clear guidance from IRS, remains
difficult for companies to access. Even after guidance is promulgated,
more incentives are required. Disincentives to pollute can also spur
action. For example, implementing a price on carbon pollution would
also stimulate quick action to reduce GHGs from industry.
For these financial incentives to work, we also need new
technological solutions for industrial energy efficiency and CCUS. For
2019, Congress appropriated $320 million for DOE's Advanced
Manufacturing Office, or less than 1% of DOE's overall appropriation.
There is a huge array of energy innovation options for industry, but we
are not examining them robustly because we have not made it a funding
priority. More funding is needed. In addition, the authorized goals for
AMO (Energy Policy Act of 2005, Section 911) are exclusively focused on
industrial energy efficiency. As Congress considers updating DOE's
statutory mandate, it should authorize AMO to perform research on
industrial CCUS technologies.
2. When we talk about innovation in the manufacturing sector, we
are going to need to find new ways for the federal government to
partner with the private sector, academia, and philanthropy. We have
seen some agencies establish non-profit foundations to better support
their missions. For example, the Foundation for the National Institute
of Health has raised over $1 billion dollars and supported over 550
projects. I have introduced the bipartisan, bicameral IMPACT for Energy
Act, which would create a foundation for the Department of Energy.
Should we consider these models to accelerate the development and
deployment of clean energy technologies at the Department of Energy?
How could a non-profit alongside the Department of Energy assist the
Department in its mission and better leverage federal resources?
99% of U.S. energy infrastructure is in the hands of the private
sector. That means that the federal government cannot transform our
energy mix without active participation from the private sector. That
is why accelerating the commercialization of research and technology
through increased access to private sector funding and new models for
public-private partnership is critical.
As it has done with other federal agencies, a DOE Foundation could
be an important tool to address early-stage gaps in the energy
innovation cycle, which are hampering DOE's ability to spur the
adoption of transformative technology in the market. Congress
rightfully included a study by the National Association of Public
Administration in the FY2020 appropriations to look at this question,
because there is a lot to learn about what this opportunity could
deliver.
In general, new energy technologies have a particularly difficult
time getting to the market because they require a significant amount of
capital and very long commercialization timelines. They also are
deployed into an incumbent dominated market with large barriers to
entry. These barriers could potentially be overcome through unique
partnership models created by a foundation where communication and
collaboration between the private sector and the DOE can be
facilitated. These models have already been demonstrated by the
Foundation for the National Institutes for Health and the CDC
Foundation.
Over the last several years DOE has experimented with hubs,
consortia, Energy Frontier Research Centers, and institutes. These new
research models are important funding experiments. The DOE Foundation
could serve as another model--one built off of an already proven
experiment--and I encourage DOE and Congress to further consider the
idea.
the honorable mike levin
1. Mr. Shah, in your testimony, you described the California ``Buy
Clean'' procurement policy. How does a ``Buy Clean'' policy incentivize
U.S. manufacturing?
The State of California recently instituted a policy that requires
the state to take the emissions related to producing steel, glass, and
insulation from different manufacturers into account. For example, all
things being equal, if one steel company produced lower emissions steel
than another, the State would give that company preferential treatment
in purchasing.
The federal government is a huge purchaser of finished goods and
construction materials. This, for example, includes cement and steel
for federal highways, glass and concrete for housing projects, and
vehicles for the federal fleet. If the federal government instituted a
similar set of `buy clean' provisions, it would incentivize competition
among producers to reduce the amount of GHGs released when
manufacturing their products.
2. If Congress were to adopt a Federal ``Buy Clean'' policy, what
essential elements would need to be part of the policy?
``Buy clean'' policies must apply equally to all products,
regardless of whether they are produced inside or outside of the U.S.
Without such a provision, manufacturers could be incentivized to
produce highly polluting products outside of the U.S. for import,
harming domestic manufacturing.
The monitoring and verification of companies GHG certifications are
also important. Many proposed or enacted `buy clean' policies around
the world rely on established eco-labels or other certification
programs. However, not all certifications are created equal, so strong
rules need to be put in place early to make sure companies are
operating on a level playing field.
In addition, acquisition officials should be able to examine the
overall life-cycle costs of a product, to include weighing the long-
term environmental benefits of a clean product, as opposed to simply
awarding a contract to the lowest bidder.
Finally, federal agencies should be able to continuously raise the
bar for purchased products, as lower GHG options appear on the market,
without seeking additional authorization from Congress.
Questions for the Record
Edward Stones
Global Business Director for Energy and Climate Change
Dow
the honorable kathy castor
1. In your testimony, you reference the fact that the Dow Chemical
Company is one of the largest users of renewable energy in the
chemicals industry. What Federal policies could facilitate greater use
of renewable energy by companies like Dow?
Technologies such as energy storage and demand-response need
support to reach the point of economies of scale. Both of these
technologies should form part of a broad, cost-competitive environment
for large companies such as Dow. Both are essential to grid stability
in the long term, and will be needed for further gains in renewables
penetration.
Over the past years the renewable energy markets in the United
States grew thanks in part to the federal support received through the
Renewable Electricity Production Tax Credit (PTC) and the Business
Energy Investment Tax Credit (ITC). Onshore wind and solar energy
reached technologies of scale, making them cost-competitive in
comparison to traditional means of creating power, thus expanding their
accessibility to large users such as Dow. Today, both onshore wind and
solar technology are competitive beyond the federal support received
through the PTC and the ITC, so that continued federal credits are
unnecessary.
Information from the Renewable Energy Buyers Alliance, based on
publicly announced contracted capacity of corporate Power Purchase
Agreements, Green Power Purchases, Green Tariffs, and Outright Project,
shows that in 2014 there were eight transactions with a volume equal to
1.2 GW of capacity; by year-end 2018 there were seventy-five
transactions with a total volume of 6.36 GW of capacity. Since 2014
companies have contracted almost 20 GW of renewable energy capacity.
Until there is wide spread adoption of energy storage options,
which we foresee post 2030 at the earliest, gas fired energy generation
will be required to offset renewable energy intermittency.
Additionally, companies like Dow require process heat in significant
amounts, with high temperatures and pressures. Few options other than
nuclear exist for low carbon alternatives or renewables. Carbon Capture
and Storage (CCS) and Carbon Capture, Utilization, and Storage (CCUS)
are critical technologies and policy solutions. State and federal
governments have a role to play in defining and enabling the
infrastructure required for collecting and moving captured
CO2. Next generation nuclear facilities are also potentially
a source of zero carbon steam and power, as well as grid reliability.
Questions for the Record
Zoe Lipman
Director, Vehicles and Advanced Transportation Program
BlueGreen Alliance
the honorable kathy castor
1. What types of Federal policies should Congress enact to
facilitate greater manufacturing of clean vehicle and clean energy
technologies in the United States?
An effective advanced and electric vehicle manufacturing agenda
would couple strong globally leading standards and targets--most
notably globally leading, strong, long-term fuel economy and vehicle
greenhouse gas (GHG) standards--which give companies the certainty they
need to invest in America, together with an aggressive push to
manufacture vehicles and strategic components here in the United
States.
The key elements of that agenda include:
A robust investment to spur advanced and electric vehicle
(EV) and technology manufacturing and supply chain. This could include:
New programs to support establishing, upgrading
or converting domestic clean vehicle and technology
manufacturing--such as an industrial bank, new bonds, grants,
or revolving loan programs.
Expansion of the loan, grant, and tax programs we have
today to help companies build, retool, or convert manufacturing plants
in America. These include, for example, the Advanced Technology
Vehicles Manufacturing (ATVM) loan program, 48C manufacturing tax
credit, the Section 132 manufacturing conversion grant program, and
others. Across these programs, to enhance the benefits for the economy,
communities, and working people, we should:
Incentivize responsible labor, community, and
supply chain practices and prioritize reinvestment in existing
or idle facilities and in deindustrialized, impacted,
underinvested communities;
Prioritize economically strategic and emerging
technology and materials; and
Encourage consortia of assemblers and
suppliers--and small- and medium-sized manufacturers--and aid
states and municipalities in investing in local priorities and
clusters.
Act to responsibly produce critical minerals and materials
and to launch new domestic recycling and reclamation projects--as
discussed further below;
Boost public investment in EV fleets and infrastructure
and ensure that all public spending supports efforts to build critical
components here and to secure and build good family-supporting jobs.
This means:
Improving, enhancing, and extending the
applicability of long-standing procurement standards and tools
such as Buy America/n and Davis Bacon prevailing wage--as well
as newer procurement approaches that enhance labor standards,
workers' rights, career pathways, equity and community
benefits--to ensure the use of domestically manufactured,
clean, and safe vehicles and infrastructure and to raise labor
standards throughout the supply chain; and
Ensuring all public spending--such as tax
incentives, loan, grants, and bonds--also support--and do not
undermine--the manufacturing of domestic clean vehicle
technology in America, and promoting high labor standards, and
safe and healthy manufacturing throughout the supply chain.
Make globally competitive levels of investment in research
and development and ensure innovation is translated into domestic
manufacturing and growth of supplier networks. This could include, for
example:
Establishing and implementing a national clean
energy and technology manufacturing strategy;
At least doubling funding for research,
development, and deployment (RD&D) to levels commensurate with
competitor nations, and enhancing and emphasizing initiatives
focused on translating tax-payer funded R&D into full-scale
deployment and manufacturing;
Establishing coordinated RD&D and manufacturing
initiatives aimed at capturing the full supply chains for
critical clean technologies--such as EV cells, batteries, and
related electronics--in the United States; and
A focus on developing and deploying innovative
recycling and reclamation initiatives for key materials in the
advanced automotive supply chain.
Enact fairer trade, labor, and corporate tax policies that
can stem advanced tech offshoring and exploitative labor practices
while driving a new generation of investment in domestic plants,
workers, and training.
2. How could Federal policies encourage greater reclamation and
recycling of lithium-ion batteries from electric vehicles? Are there
any promising state policy models that could be an example?
Federal policy makers should make it a priority to explore ways to
jump-start domestic efforts to responsibly reclaim and recycle key
economically strategic materials--such as lithium--and to spur
deployment of innovative circular economy processes and products.
Past experience with conventional lead acid automotive batteries
has shown that very high recycling rates are possible, but that moving
the recycling processes to other countries both costs jobs in the
United States, and can result in serious lead pollution and exposure
problems in the host country if there are less stringent environmental
standards and oversight.i
With the new generation of lithium ion automotive batteries (and
any subsequent battery chemistries), developing economically, socially
and environmentally responsible recycling processes domestically will
be critical and can also help ensure a more secure domestic supply of
lithium. The same is true of many other comparatively rare minerals and
materials that are part of advanced vehicles.
There may also be important second life use of electric vehicle
batteries, and any recycling processes likely should be coordinated
with increasing use of similar batteries for residential, commercial,
and utility energy storage.
Federal policies that could spur the development of effective
advanced battery recycling include, for example:
Develop a national strategy to ensure we are creating the
materials necessary for a clean and secure energy future here in the
United States;
Include investment to spur domestic projects to
responsibly reclaim and recycle strategic minerals and materials--or to
deploy circular economy technologies--as one of several key priorities
for an industrial bank, or revolving loan fund, as discussed above; and
Enhance funding to develop and deploy new recycling and
reclamation approaches through existing grant, loan, tax, and other
clean energy investment incentives.
BlueGreen Alliance is just now beginning a review of state level
policies that may be relevant--so we are unable to answer this portion
of the question comprehensively--but initial assessment suggests that,
a) encouraging states to address recycling proactively as the industry
matures will be extremely valuable, and b) across materials recycling
and reclamation, some federal role to sustain effective recycling
programs across the inevitable wide swings in global commodity prices
will be essential.
3. In your testimony, you mentioned the potential for offshore wind
development in the United States. What policies should Congress adopt
to ensure that American workers benefit from deployment of this vast,
clean resource?
The potential for responsible offshore wind development in the
United States is indeed substantial. According to the U.S. Department
of Energy, if we utilized even one percent of the nation's technical
potential offshore wind capacity, we could power nearly 6.5 million
homes. We have the technology to harness wind power off the coasts of
at least half of our states, and the industry is rapidly expanding both
domestically and internationally.ii
With this industry expansion comes tremendous potential to create
and sustain quality, union jobs. Jobs in the offshore wind industry
include designing the wind farm; constructing the onshore substations;
laying cable interconnections; erecting the turbines; permitting;
manufacturing rotor and nacelle controls, gearboxes, drive trains,
generator and power electronics, steel towers, electrical wiring,
advanced polymers, and coatings; construction; and operations and
maintenance. Trades included in these various stages include operating
engineers, pile drivers, millwrights, welders, electrical workers,
utility workers, ironworkers, steelworkers, and machinists.
Estimates put job creation potential off the Atlantic Coast alone
at somewhere between 133,000 and 212,000 jobs per year in the United
States.iii Additionally, the National Renewable Energy
Laboratory (NREL) cites that the Atlantic coast states could create
$200 billion in new economic opportunity, as well as over 43,000 high-
paying, permanent jobs, simply by developing 54 GW of their 1,283 GW
offshore wind energy potential.iv
In order to truly capture the full benefits and potential of these
projects, it is critical that they are built by skilled workers who are
paid family-sustaining wages, with project labor agreements in place,
and with materials manufactured here in the United States.
Offshore wind projects rely heavily on skilled labor and advanced
manufacturing for construction, installation, maintenance, and
operations. For example, the Block Island project--a comparatively
small, demonstration project--created more than 300 jobs in the state
alone v for local unionized craftsmen in ten different
building trades locals, working for 30 unionized contractors and
subcontractors.vi This was thanks--in large part--to the
project labor agreement (PLA) in place for Block Island.
PLAs are particularly critical in these projects because they bring
coordinated, proactive planning to complex projects; provide crucial
benefits to local communities in terms of skills training, employment
opportunities, and future workforce development; and ensure that the
most productive and skilled craft labor is available to work on a
project. In addition, as wind farms and their components age, skilled
workers in operations and maintenance will continue to prove necessary
to the operation of the farms, so it is important to ensure that jobs
throughout the life cycle of a wind farm are quality, family-sustaining
jobs
In addition to the construction phase of these projects, a critical
component of the job creation potential for the offshore wind sector is
the vast manufacturing supply chain that offers major opportunities for
growth in a variety of sectors.
As the industry grows, sourcing components domestically represents
a significant opportunity to help revitalize American manufacturing.
The Special Initiative for Offshore Wind's recent white paper predicts
an almost $70 billion buildout of U.S. offshore wind supply chain by
calculating growth in a number of sectors, which include wind turbines
and towers; turbine and substation foundations; upland, export, and
array cables; onshore and offshore substations; and marine support,
insurance, and project management.vii
Finally, the development of wind energy off our coasts can also
provide important and much needed support to local communities in our
coastal states. Community benefit agreements, designed in coordination
with organized labor and local community organizations, help maximize a
project's contribution to local communities, and ensure that local
communities support the project in question.
If we do this right, the American people can feel confident that
emerging industries--such as offshore wind--will secure employment
today and support the creation a new generation of family-supporting
jobs across the nation.
By supporting a wide variety of workforce development strategies
targeted at this burgeoning sector, including union training and
apprenticeship programs, legislation like the H.R. 3068 the Offshore
Wind Jobs and Opportunity Act can also help ensure that workers have
access to the skills training they need to take advantage of this
important and emerging industry.
4. What are other countries doing to secure their piece of the
market in the global clean energy economy? What can we learn from them?
Worldwide, countries are rushing to capture the economic benefits
of the rapidly growing clean energy economy--and they are using the
full range of policy tools to do so. If it is to compete, the United
States needs a much more aggressive and coordinated strategy to capture
the innovation, investment, jobs, and manufacturing gains from the
clean economy.
BlueGreen Alliance has not itself carried out any recent detailed
research on global policy shifts, but a number of our partners and
allies have focused on this question, and we would urge the committee
to engage them further on this topic. Drawing on their expertise,
however, and looking at the EV industry as an example, we make a few
high-level comments about what is needed:
Coordinated strategy and industrial policy: Both in China
and the European Union, as well as elsewhere, countries are developing
comprehensive long term strategies to deploy and produce EVs and the
key technologies that go into them. These strategies often include
energy and emissions targets and regulations, consumer and industry
incentives, and economic development and manufacturing strategies
working together. The United Auto Workers's recent report Taking the
High Road: Strategies for a Fair EV Future provides a brief summary of
EV policy, incentives, and approaches globally.viii
Long-term policy leadership: Strong, certain, long-term
emissions standards and targets are critical to giving manufacturers
the certainty about future markets necessary to make large long-term
investments in advanced technology manufacturing. Where countries'
markets lead, investment follows. Over the past decade U.S. vehicle
emissions standards have moved to equal or exceed those worldwide. As
shown in Figure 1 below, however, a rollback of current fuel economy
standards would put other nations back in the driving seat. The Motor
Equipment Manufacturers Association-the largest automotive supplier
association-has testified to the impact that this change in direction
and continued uncertainty could mean to decisions multinational
corporations make with respect to where they located their advanced
technology manufacturing.ix
Turning innovation into manufacturing and jobs: A number
of countries, but particularly Germany and the EU, have more
comprehensive programs for coupling R&D, commercialization,
manufacturing, and workforce development and a focus on developing
expertise and manufacturing across the full electric propulsion supply
chain.x Many opportunities exist to better coordinate and
fund U.S. RD&D and manufacturing programs, and to better ensure that
taxpayer funded innovation, patents, and intellectual property are
turned into to domestic manufacturing and jobs gains.
[GRAPHIC] [TIFF OMITTED] T8471A.002
5. In your testimony, you described the Solidarity for Climate
Action principles labor unions and environmental groups developed
jointly. The principles include a call for a commitment to high-quality
job creation across all sectors of the economy, but especially related
to clean energy, adaptation, and resilience. There are existing
domestic manufacturing plants that could be retooled or converted to
focus on manufacturing advanced and electric vehicles and other new
technologies. What kind of Federal policy could incentivize companies
to invest in upgrading these plants?
There is a lot more federal policymakers could do to help ensure we
manufacture advanced and electric vehicles and technology--and other
clean energy, technology and materials--in existing manufacturing
plants, and that America's manufacturing workers and communities see
the benefits of technological innovation and change.
As discussed above, an effective clean technology manufacturing
agenda would couple globally leading energy and vehicle standards and
targets--which give companies the certainty they need to invest in
America--with an aggressive push to manufacture vehicles and strategic
components here in the United States.
As part of a robust and coordinated manufacturing agenda, any new
industrial bank or revolving loan program should prioritize investment
in existing or idle facilities and in deindustrialized, impacted,
underinvested communities. There is also room to better utilize
existing programs. The ATVM Loan Program, for example, expressly funds
manufacturing retooling and plant conversion and could be improved and
expanded to be applicable to a wider range of facilities. Similarly,
Section 132 of the Energy Independence and Security Act of 2007 created
a program to provide grants specifically to convert existing or
recently closed facilities to build clean vehicle technology--but was
never funded by congress.
In addition, policymakers need to stop and reverse actions and
policies that encourage plant closures and offshoring and drive the
jobs of the future overseas. This includes:
Realigning corporate tax and finance rules and
incentives to encourage investment in domestic plants and
workers and to discourage outsourcing and offshoring--
particularly in critical energy and technology sectors; and
Ensuring that any NAFTA replacement includes strong,
fair, and enforceable labor and environmental standards and
that existing trade rules and remedies are improved and
enforced.
Finally our energy and climate policy choices matter. For example,
since 2007 smartly structured fuel economy and vehicle GHG standards
have driven tens of billions of dollars in reinvestment in American
manufacturing across the automotive supply chain.xii As we
discuss in detail in our recent report Tech@Risk, the proposed rollback
or radical weakening of these standards not only puts jobs in todays
factories at risk, it discourages future investment to locate, upgrade,
retool, or convert American factories to build the clean vehicle
technologies of the future at the potential cost of nearly 90,000
future manufacturing jobs.xiii
6. Congress has provided incentives to wind and solar companies to
expedite deployment of this zero-carbon source of electricity. When
crafting these incentives, how can Congress ensure workers benefit from
this expanding sector?
As discussed above, all our major incentives and public
investments--not just those in infrastructure--can and should be
structured to ensure they create good jobs and build strong clean
energy manufacturing industries in America.
Congress should consider requiring strong procurement policies that
ensure the use of domestic, clean, and safe materials and technology
made by law-abiding corporations throughout the supply chain for all
purchases made with public funds provided by tax incentives. In
addition, Congress should consider requiring mandatory labor standards
for employers accepting clean energy tax incentives--including
prevailing wages, safety and health protections, project labor
agreements, community benefit agreements, local hire, and other
provisions and practices that prioritize improving training, working
conditions, and project benefits.
The Good Jobs for 21st Century Energy Act recently introduced by
Senator Merkley and 10 co-sponsors provides an initial example of some
such policy provisions with respect to energy tax
credits.xiv
the honorable mike levin
1. Ms. Lipman, what are your views on a Federal ``Buy Clean''
policy?
The manufacture of raw building materials like steel and cement
produces 11% of total global greenhouse gas emissions and is on the
rise. But because these commodities are exported around the world, the
countries that consume them rarely account for the carbon it took to
produce them, and manufacturers are not rewarded for making low-carbon
products.
Buy Clean policies help close this ``carbon loophole'' by helping
ensure taxpayer dollars are spent on climate-friendly materials for
infrastructure and building projects. Wide-scale adoption of Buy Clean
state and federal purchasing programs would reward companies that are
cleaner and more efficient. It would give American manufacturers and
workers a tremendous opportunity to take the lead in growing markets
for low-carbon products, and help prevent the offshoring of pollution
and jobs overseas.
2. If Congress were to adopt a Federal ``Buy Clean'' policy, what
essential elements would need to be part of the policy?
In crafting a policy of this kind, it is essential to work together
with agencies, business, labor, and other key stakeholders to develop a
strong solution and policy framework.
A key design consideration should be the impact of this policy on
the U.S. industrial sector and the competitiveness of our
manufacturers. The policy must result in a strengthening of U.S.
manufacturing and ensure quality manufacturing jobs here in the United
States. Without careful attention to the trade exposed nature of these
industries, unintended consequences could occur. This consideration
should inform policy design, including structure and application of the
standard.
At a federal level it would be helpful to identify what products
the federal government procures by agency above a certain de minimus
threshold, in order to craft a policy that is most efficient and
impactful. In general, however, the policy could be structured in the
following ways:
Apply to procurement of all construction materials
for public building and infrastructure projects;
Apply to procurement of products within a material
type, rather than between material types; and
Create a selected list of ``eligible materials''
determined by domestic manufacturing, current emissions levels,
and potentially considering trade exposed products.
Congress could also consider incorporating high labor standards and
land, air, and water pollution into procurement determinations. We
believe this could work in tandem with Buy Clean, where the federal
government would set emissions, pollution and labor standards for an
``eligible entity'' to be able to be considered for federal public
projects.
Finally, any Buy Clean policy must go hand in hand with
complementary policies that invest in U.S. manufacturing. Ultimately,
Buy Clean policy should make U.S. industry stronger and more
competitive. These investments should include funding and financing for
investments to reduce emissions in the industrial sector, technical
assistance, and increased funding for research, development,
demonstration, and deployment of the transformative technologies that
will be required to decarbonize the industrial sector.
references page
i The Washington Post, ``A dangerous export: America's
car-battery waste is making Mexican communities sick'' February 26,
2016. Available online: https://www.washingtonpost.com/sf/national/
2016/02/26/a-dangerous-export-americas-car-battery-waste-is-making-
mexican-communities-sick/?utm_term=.6c896eec67bc
ii U.S. Department of Energy (DOE), Office of Energy
Efficiency & Renewable Energy, ``Computing America's Offshore Wind
Energy Potential,'' September 9, 2016. Available online: https://
www.energy.gov/eere/articles/computing-america-s-offshore-wind-energy-
potential
iii Center for American Progress. ``Green Recovery: A
Program to Create Good Jobs and
Start Building a Low-Carbon Economy.'' Political Economy Research
Institute, University of
Massachusetts Amherst, http://www.peri.umass.edu/fileadmin/pdf/
other_publication_types/peri_report.pdf
iv National Renewable Energy Laboratory, Large-Scale
Offshore Wind Power in the United States, September 2010. Available
online: https://www.nrel.gov/docs/fy10osti/40745.pdf
v Deepwater Wind, ``Block Island Wind Farm.'' Available
online: http://dwwind.com/project/block-island-windfarm/
vi Deepwater Wind, ``Block Island Wind Farm begins
commercial operations,'' December 12, 2016. Available online:
www.dwwind.com/press/americas-first-offshore-wind-farm-powers/
vii Stephanie A. McClellan, Supply Chain Contracting
Forecast for U.S. Offshore Wind Power, March 2019. Available online:
https://www.ceoe.udel.edu/File%20Library/About/SIOW/SIOW-White-Paper---
SupplyChain-Contracting-Forecast-for-US-Offshore-Wind-Power-FINAL.pdf.
viii United Auto Workers, Taking the High Road:
Strategies for a Fair EV Future, Spring 2019. Available online: https:/
/uaw.org/wp-content/uploads/2019/07/EV-White-Paper-Spring-2019.pdf
ix Motor & Equipment Manufacturers Association, Fuel
Economy Standards: Investments and Jobs in The U.S. are on the Line,
November, 2018. Available online: https://www.mema.org/sites/default/
files/2018%20MEMA%20CAFE%20White%20Paper%20-%20FINAL.pdf
x United Auto Workers, Taking the High Road: Strategies
for a Fair EV Future, Spring 2019. Available online: https://uaw.org/
wp-content/uploads/2019/07/EV-White-Paper-Spring-2019.pdf
xi International Council on Clean Transportation, Chart
library: Passenger vehicle fuel economy. Available online: https://
theicct.org/chart-library-passenger-vehicle-fuel-economy
xii BlueGreen Alliance, Driving Investment: How Fuel
Efficiency is Rebuilding American Manufacturing, January 25, 2019.
Available online: https://www.bluegreenalliance.org/resources/driving-
investment-how-fuel-efficiency-is-rebuilding-american-manufacturing/
xiii BlueGreen Alliance, Tech@Risk: The Domestic
Innovation, Technology Deployment, Manufacturing, and Jobs at Risk in
Stepping Away From Global Leadership on Clean Cars, August 1, 2019.
Available online: https://www.bluegreenalliance.org/resources/techrisk-
the-domestic-innovation-technology-deployment-manufacturing-and-jobs-
at-risk-in-stepping-away-from-global-leadership-on-clean-cars/
xiv Senator Jeff Merkley, H.R. 3068, the Offshore Wind
Jobs and Opportunity Act, July 18, 2019. Available online: https://
www.merkley.senate.gov/news/press-releases/merkley-trumka-senate-
democrats-announce-major-new-legislation-to-create-good-paying-jobs-in-
the-transition-to-clean-energy-2019
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