[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]

FINANCING CLIMATE SOLUTIONS
AND JOB CREATION

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HEARING

BEFORE THE

SELECT COMMITTEE ON THE
CLIMATE CRISIS
HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTEENTH CONGRESS

FIRST SESSION

__________

HEARING HELD

JULY 29, 2021

__________

Serial No. 117-8

[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
45-587 WASHINGTON : 2021

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SELECT COMMITTEE ON THE CLIMATE CRISIS
One Hundred Seventeenth Congress

KATHY CASTOR, Florida, Chair
SUZANNE BONAMICI, Oregon GARRET GRAVES, Louisiana,
JULIA BROWNLEY, California Ranking Member
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 DAN CRENSHAW, Texas
VERONICA ESCOBAR, Texas ANTHONY GONZALEZ, Ohio
------
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. Garret Graves, a Representative in Congress from the State
of Louisiana, and Ranking Member, Select Committee on the
Climate Crisis:
Opening Statement............................................ 3

WITNESSES

Duanne Andrade, Chief Financial and Strategic Officer, Solar and
Energy Loan Fund
Oral Statement............................................... 6
Prepared Statement........................................... 7
John Larsen, Director, Rhodium Group
Oral Statement............................................... 14
Prepared Statement........................................... 16
Rich Powell, Executive Director, ClearPath
Oral Statement............................................... 18
Prepared Statement........................................... 20
Zoe Lipman, Director, Manufacturing and Advanced Transportation,
BlueGreen Alliance
Oral Statement............................................... 27
Prepared Statement........................................... 29

APPENDIX

Questions for the Record from Hon. Kathy Castor to Duanne Andrade 55
Questions for the Record from Hon. Kathy Castor to John Larsen... 58
Questions for the Record from Hon. Kathy Castor to Zoe Lipman.... 60

FINANCING CLIMATE SOLUTIONS.
AND JOB CREATION

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THURSDAY, JULY 29, 2021

U.S. House of Representatives,
Select Committee on the Climate Crisis,
Washington, DC.
The committee met, pursuant to call, at 9:03 a.m., via
Zoom, Hon. Kathy Castor [chairwoman of the committee]
presiding.
Present: Representatives Castor, Bonamici, Brownley, Levin,
Casten, Escobar, Graves, Palmer, Carter, Miller, Armstrong,
Crenshaw, and Gonzalez.
Ms. Castor. Well, the committee will come to order.
Without objection, the chair is authorized to declare a
recess of the committee at any time.
As a reminder, members participating in this hearing
remotely should be visible on camera throughout the hearing. As
with in-person meetings, members are responsible for
controlling their own microphone. Members can be muted by staff
only to avoid inadvertent background noise.
In addition, statements, documents, or motions must be
submitted to the electronic repository at
sccc.repository@mail.house.gov.
Finally, members or witnesses experiencing technical
problems should inform the committee staff immediately.
Well, good morning, everyone. Thank you for joining this
remote hearing. Today we will hear about financial incentives
and investments to create jobs and accelerate deployment of
clean energy and clean vehicles.
I now recognize myself right now for 5 minutes.
Well, thanks in large part to American research and
innovation, we can now power our homes and cars and businesses
in ways that pollute less and cost less. Solar and wind have
become two of the cheapest sources of power in America, and
energy efficiency saves families hundreds on their utility
bills. It is now cheaper to drive an electric car than a gas-
powered one, thanks to lower maintenance costs and other
savings over the lifetime of a vehicle. On Tuesday, I had a
chance to check out Ford's new electric pickup truck, the F-150
Lightning. I love the name, by the way. And it is an impressive
vehicle. It was built by union workers right here in America.
The modern wave of all sorts of clean technology will save
Americans money, help create jobs as we make progress on
solving the climate crisis.
And that is good news because we know that we must act
urgently to reduce carbon pollution. We are already facing the
growing risks and costs of the climate crisis--we go through
this every hearing--heatwaves, wildfires, extreme storms, sea-
level rise that threaten the lives and livelihoods of millions
of our neighbors back home. So in this committee and in
Congress we have heard from scientists that America needs to
reach net-zero emissions as soon as possible and no later than
2050, and we need to lead by example so that the rest of the
world will join us in finding global climate solutions.
And the key to a clean economy is clean electricity. The
good news is that our nation's electricity sector has reduced
carbon pollution in the last decade, but the reality is that we
have to do more, and we have to do it quickly. Clean
electricity helps unlock further pollution cuts in other
sectors of the economy, including transportation, buildings,
and industry. And in order to cut U.S. carbon pollution by more
than half by 2030, as President Biden pledged to the world that
we will do, we need to implement climate solutions in every
sector.
And that is why the Federal policies and investments that
we are discussing today are so important. The Federal
Government needs to help everyone, from homeowners to heads of
companies. We have got to help everyone make the shift to clean
technologies. We know that these clean technologies will
improve the lives of our neighbors, leading to cleaner air,
healthier communities, and a more sustainable economy.
Our job is to help American families and businesses make
that transition, especially as so many of them are still
recovering from the economic impacts of the COVID pandemic.
That is why Congress must support expanded access to
technologies that are already available, making them more
affordable, and building on the progress that we have already
made. Because while we have helped bring down the costs of
climate solutions, we still have a lot of work to do when it
comes to deploying them at the scale the climate crisis
requires.
So that is what we are going to focus on today. We will
discuss how we can use financial incentives and smart
investments that can help families afford cleaner energy. We
will talk about how we can accelerate the deployment of zero
emission cars and trucks. And we will discuss how to create
jobs in clean energy and electric vehicle manufacturing. These
jobs come with high-road labor standards and family-sustaining
wages. And as you will hear from one of our witnesses today,
access to financing can be a critical barrier to upgrading
homes for Americans. But cutting carbon pollution from houses
and strengthening them to withstand the climate crisis hazards
is necessary now. And we will hear about success in overcoming
these barriers at the state level, and we will hear about the
opportunities that a national initiative will provide to
protect property, cut energy bills, and reduce pollution.
When it comes to solving the climate crisis, we need to
empower everyone to take concrete steps to make a difference
and ensuring that clean energy solutions provide good
opportunities and that they are within reach of all Americans.
I know we can do this. So now let's make it happen.
So with that, I will recognize our ranking member, Mr.
Graves, for 5 minutes for an opening statement.
[The statement of Ms. Castor follows:]

Opening Statement of Chair Kathy Castor

Hearing on ``Financing Climate Solutions and Job Creation''

Select Committee on the Climate Crisis

July 29, 2021

As prepared for delivery

Thanks in large part to American research and innovation, we can
now power our homes, cars, and businesses in ways that pollute less and
cost less. Solar and wind have become two of the cheapest sources of
power in America, and energy efficiency saves families hundreds on
their utility bills. It's now cheaper to drive an electric car than a
gas-powered one, thanks to lower maintenance costs and other savings
over the lifetime of a vehicle. On Tuesday, I had a chance to check out
Ford's new electric pick-up truck, the F-150 Lightning. It's
impressive--and it was built by union workers right here in America.
The modern wave of all sorts of clean technologies will save Americans
money, and help create jobs as we make progress on solving the climate
crisis.
And that's good news--because we know we must act urgently to
reduce carbon pollution. We're already facing the growing risks of the
climate crisis: heatwaves, wildfires, extreme storms, and sea-level
rise that threaten lives and livelihoods. In this committee and across
Congress, we've heard from scientists that America needs to reach net
zero emissions as soon as possible, and no later than 2050. And we need
to lead by example, so the rest of the world will join us finding
global solutions to global warming.
The key to a clean economy is clean electricity. The good news is
our nation's electricity sector has reduced carbon pollution in the
last decade. But the reality is we need them to do more--and quickly.
Clean electricity helps unlock further pollution cuts in other sectors
of the economy, including transportation, buildings, and industry. In
order to cut U.S. carbon pollution by more than half by 2030--as
President Biden has pledged to the world--we need to implement climate
solutions for every economic sector.
And that's why the federal policies and investments that we're
discussing today are so important. The federal government needs to help
everyone--from homeowners to heads of companies--make the shift to
clean technologies. We know clean technologies will better the lives of
our neighbors--leading to cleaner air, healthier communities, and a
more sustainable economy. Our job is to help American families and
businesses make that transition, especially as many of them are still
recovering from the economic impacts of the COVID pandemic. That's why
Congress must support expanded access to the technologies that are
already available, making them more affordable, and building on the
progress we've already made. Because while we've helped bring down the
costs of climate solutions, we still have a lot of work to do when it
comes to deploying them at the scale the climate crisis requires.
That's what today's hearing will focus on. We'll discuss how we can
use financial incentives and smart investments that can help all
families afford cleaner energy. We'll talk about how we can accelerate
the deployment of zero-emission cars and trucks. And we'll discuss how
to create jobs in clean energy and electric vehicle manufacturing--jobs
with high-road labor standards and family-sustaining wages. As you will
hear from one of our witnesses today, access to financing can be a
critical barrier to upgrading homes for Americans. But cutting carbon
pollution from houses and strengthening them to withstand climate
crisis hazards is necessary now. We'll hear about success in overcoming
these barriers at the state level. And we'll hear about the
opportunities that a national program will provide to protect property,
cut energy bills, and reduce pollution.
When it comes to solving the climate crisis, we need to empower
everyone to take concrete steps to make a difference, ensuring that
clean energy solutions provide good opportunities, and that they are
within reach of all Americans. I know we can do this. Now let's make it
happen.

Mr. Graves. Thank you, Madam Chair. And I want to thank the
witnesses for being here today. I look forward to your
testimony.
And I really welcome this hearing this morning because we
do need to look at where we are investing our precious taxpayer
resources to get the best return on investment. We have got to
make sure that we are incorporating more science into this
discussion to ensure that the investments we are making are the
most efficient at actually reducing emissions and plotting a
course, not just to a clean energy future in the United States
but one that will actually result in a clean energy future
globally.
I have heard many witnesses come before the committee and
talk about how solar and wind are the most cheapest forms of
electricity, the most inexpensive forms of electricity, yet for
30 years we have been subsidizing those forms of electricity
through the ITC and the PTC. If they are the most affordable,
should we be diverting those resources to other types of
incentives that will actually help to reduce global emissions?
And I keep making reference to global because, as we all know,
this is a global problem, and there is not anything that we can
do exclusively in the United States that will help to turn the
corner.
The chair in her opening noted the challenges that we are
experiencing in the United States. And let's be clear, there is
no trajectory that we are on right now that will change or
thwart that future unless there is a significant change in
global emissions reductions.
The Paris Accords that have been largely celebrated
actually codify an increase in global emissions. If you look,
for example, just at China, which now emits more than every
developed country in the world combined, under the agreement,
they get to increase their emissions another 50 percent between
now and 2030. That is the wrong direction.
And the reality is is that our investments, our financing,
our tax incentives have to be deployed in a way that is
strategic and recognizes not just the reality in the United
States but the global reality because you will never have an
uptake in more expensive energy solutions in developing
countries. You are not going to have the ability to afford
those types of energy solutions. You are not going to have the
exportability of those energy solutions.
We also have to recognize other facts, like the fact that
global energy demand is projected to increase another 50
percent between now and 2050, just over the next 29 years.
Natural gas alone is projected to have a 40 percent increase in
demand over that same time period. Where is that going to come
from? Where are those energy sources going to come from? Are
they going to be affordable and exportable to some of these
third world countries? Who is going to provide that natural
gas? Is it going to be the United States that currently has a
40-plus percent lower emissions profile than Russian gas? And
what role will technologies like carbon capture, storage, and
utilization play, which in some cases, unfortunately, I have
heard people demonize, but I think the reality is that we are
going to see it probably play one of the most important roles
in a clean energy future.
And that is why I am encouraged that the Biden
administration has embraced it. That is why I am encouraged
that entities like The Nature Conservancy, National Wildlife
Federation have endorsed.
It is why I am encouraged that Senators Bennet, Duckworth,
Tester, Whitehouse, Kaine, which are all Democrats, who are all
Democrats, and Senator King, who is an Independent, released a
statement saying we urge you to support programs that the
Department of Energy develops that deploy carbon capture,
utilization, and storage technologies in partnership with the
private sector.
Madam Chair, I think we have found ourselves in a scenario
whereby we are often looking at solutions based on faith and
emotion rather than science, economics, and facts. And I am
concerned that we are going to try to squeeze that last drop of
emissions out of certain sectors, whether it be transportation
or energy, and the cost for that last ton is going to be so
excessively expensive, and we are not going to be looking at
how can we most affordably chart that clean energy future in a
way that will truly receive uptake in the global community and
turn the emissions trajectory we are on now in a different
direction.
So, again, I look forward to hearing from our witnesses
today. I welcome this hearing and yield back.
Ms. Castor. Okay. Now we are going to hear from our
witnesses. They are all prominent leaders and researchers on
financial policies that can help ensure that every American can
access clean energy and drive clean vehicles.
Duanne Andrade is the Chief Financial and Strategic Officer
of the Solar and Energy Loan Fund in Florida. She leads
development of innovative financing programs to help low- and
moderate-income Floridians make their homes more sustainable
through energy efficiency, renewable energy, and climate
resilience. Ms. Andrade previously worked as a consultant for
startups focused on environmental justice, sustainability, and
clean energy finance models.
John Larsen is a Director at Rhodium Group and leads the
firm's U.S. power sector and energy systems research. He
specializes in analysis of clean energy policy and market
trends. Previously Mr. Larsen worked for the Department of
Energy's Office of Energy Policy and Systems Analysis as an
electric power Policy Advisor.
Rich Powell is the Executive Director of ClearPath, an
organization whose mission is to advance clean energy
innovations. Mr. Powell served as a member of the 2019 Advisory
Committee to the Export Import Bank of the United States, and
he is also on the Atlantic Council's Global Energy Center's
Advisory Group.
And Zoe Lipman is the Director of Manufacturing and
Advanced Transportation at the BlueGreen Alliance. She leads
their policy and advocacy work on clean technology
manufacturing and advanced vehicles and transportation. A
former trade union official, she previously led the National
Wildlife Federation's program on fuel economy and advanced and
electric vehicles and headed the organization's Midwest climate
policy program.
Without objection, the witnesses' written statements will
be made part of the record.
And with that, Ms. Andrade, you are now recognized for 5
minutes to summarize your testimony.
Welcome.

STATEMENTS OF DUANNE ANDRADE, CHIEF FINANCIAL
AND STRATEGIC OFFICER, SOLAR AND ENERGY LOAN
FUND (SELF); JOHN LARSEN, DIRECTOR, RHODIUM GROUP; RICH POWELL,
EXECUTIVE DIRECTOR, CLEARPATH; AND ZOE LIPMAN, DIRECTOR,
MANUFACTURING & ADVANCED TRANSPORTATION, BLUEGREEN ALLIANCE
(BGA)

STATEMENT OF DUANNE ANDRADE

Ms. Andrade. Thank you very much.
Good morning, Chair Castor, Ranking Member Graves, and
members of the Select Committee. It is a great honor for me to
be with you here today in this important hearing. My name is
Duanne Andrade, and I am the Chief Financial and Strategic
Officer for Florida's green bank, the Solar and Energy Loan
Fund, known also as SELF.
The Select Committee is already well informed on the
science behind the climate crisis, so today I would like to
focus on why we need to invest in clean energy and resilience,
how SELF is doing this despite scarce resources, and what we
need to do so we can scale and benefit communities in an
equitable and sustainable way across America.
SELF is a nonprofit Community Development Financial
Institution known as the CDFI. We are also a founding member of
the American Green Bank Consortium, we are based in Florida and
have pilot programs in South Carolina, Alabama, and in a few
weeks we are going to be opening up Georgia, next Tennessee,
and Texas.
Our mission is to provide access to affordable financing
for sustainable property improvements, which means basically
making unsecured loans for clean energy and climate resilient
improvements to low- and moderate-income populations with low
credit scores, basically high efficiency ACs, fortified roofs,
impact windows and doors, solar, battery storage, and more.
SELF has a 10-year track record serving LMI homeowners with
unsecured loans based on ability to repay not credit scores.
LMI populations have typically lower credit scores and are
perceived as subprime, which connotes high risk in the
traditional financing system. And it makes them less likely to
access affordable financing and makes them vulnerable to
predatory lenders.
SELF has grown by 400 percent over the last 3 years and
completed over 2,100 sustainable home improvements totaling
over $19 million, and 73 percent of our loans have been to LMI
homeowners with low credit scores mostly, and our average
default rate is less than 2 percent. SELF's success bears
testament to the demand for climate resiliency and proof of the
creditworthiness of LMI households. LMI households make up
about 40 percent of American households. They tend to live in
older housing with outdated building standards which often lead
to higher energy burdens and higher insurance rates, if they
can afford that at all. Due to low credit scores, they also
lack access to affordable capital to make energy efficiency and
climate resiliency improvements that would reduce energy costs,
climate risks, and also carbon emissions.
According to a recent study, 32 million homes in America
are at risk from hurricanes alone. This makes me think of our
client, Alice, a 62-year old woman with a serious spinal
disease who lives on fixed income. Her roof was caving in and
she was about to lose her insurance right before hurricane
season. Because of her medical bills, her credit was low and
she had been denied access to fix her roof and retain
insurance. She did not qualify for traditional financing.
So one of our contractors referred her to us, and we were
able to finance a new roof. She was able to secure insurance.
She was able to secure the only and probably most valuable
asset that she has, which is her home. Alice said, quote,
``SELF helped me save my home,'' end quote.
Another client, Joe, is a combat-wounded veteran who told
SELF that his kids were suffering in the sweltering heat of
Florida last summer when his AC went out. It seems like
something so quotidian, so normal. However, it is life-
changing, and it has huge health impacts. He couldn't get a
loan, not even from the VA. So a contractor referred him to us,
and we were able to give him a small unsecured loan to get a
new AC, providing quality of life and energy efficiency.
SELF has over 700 approved contractors in our networks. We
use our financing to create more business. They have told us
that without SELF they would lose anywhere between 20 to 40
percent of business due to clients lacking access to financing.
One of our contractors, Sea Coast, has done more than a million
dollars in projects.
At SELF we get constant inquiries from other states,
cities, and organizations asking us to bring our services to
their communities. The demand is there. What we are missing is
sufficient capital to meet all the demand. SELF and other green
banks across the nation are innovative and specialize in
bridging financing gaps. Collectively we have decades of
experience underwriting energy savings, climate risk, and
energy efficiency.
Funding an independent nonprofit accelerator would have a
large impact, much more than its initial capitalization from
Congress, because green banks can leverage private capital up
to eight times. For example, with $100 billion in the
accelerator, we could generate $880 billion in total
investments the first 5 years and create up to 5.5 million
jobs. This is why we need Congress to fund an independent
accelerator, to do just that, accelerate equitable investments
to build more resilient communities while fostering sustainable
jobs and transitioning to clean energy economy.
Thank you very much.
[The statement of Ms. Andrade follows:]

Testimony of Duanne Andrade

CFO of the Florida Solar & Energy Loan Fund

Before the House Select Committee on the Climate Crisis

Hearing on Financing Climate Solutions and Job Creation

July 29, 2021

Chair Castor, Ranking Member Graves, and Members of the Select
Committee, it is a pleasure to be here with you today for this
important hearing. My name is Duanne Andrade, and I am the Chief
Financial and Strategic Officer of Florida's green bank, the Solar &
Energy Loan Fund (SELF). I am here today as a witness to the benefits
that can be achieved through the passage of House Bill H.R. 806, the
Clean Energy & Sustainability Accelerator Act.
I want to begin by thanking Chair Castor and the Select Committee
on the Climate Crisis for bringing forth this discussion. This Select
Committee is already well-informed on the science behind the climate
crisis, so today I will focus on how we can tackle the issue and create
green jobs with the power of low-cost, long term capital through a
Clean Energy & Sustainability Accelerator.
The Clean Energy & Sustainability Accelerator Act (Accelerator) is
a bipartisan bill that would create an independent nonprofit
Accelerator to function as a national green bank. The Accelerator bill
is led by Michigan Representative Debbie Dingell, and is supported by a
group of Members from both parties, including Representatives Don Young
from Alaska and Brian Fitzpatrick from Pennsylvania. The Accelerator
would invest in existing state and local green banks, fund the creation
of green banks in states where they do not yet exist, and participate
in project finance for large projects of national significance.
A fully funded Accelerator would catalyze hundreds of billions of
dollars in investments by leveraging public, private, and philanthropic
sources to create sustainable jobs; resilient, efficient, and
affordable low-emissions housing; and clean transportation. The
Accelerator bill has passed the House three times now: twice last year
in the Moving Forward Act and the Clean Energy Jobs and Innovation Act
and again this year in the Invest in America Act. The Accelerator was
also included in the recent Democratic Senate budget resolution
framework.
My organization, the Solar Energy and Loan Fund, and the
constituents we serve, would directly benefit from creation of this
Accelerator.
The Solar Energy and Loan Fund (SELF)
SELF is a Treasury certified, non-profit Community Development
Financial Institution (CDFI), and a founding member of the American
Green Bank Consortium. SELF is based out of Fort Pierce, Florida, with
additional Florida offices in St. Petersburg, Hillsborough County, and
Orange County. Also, SELF is opening an office in Atlanta, Georgia, has
pilot programs in South Carolina and Alabama, and is soon expanding
into Texas and Tennessee. SELF has a ten-year track record serving low
to moderate income (LMI) homeowners with small unsecured loans based on
ability to repay rather than credit scores. To date, SELF has deployed
nearly $19 million in over 2,100 unsecured loans to a majority LMI
homeowners with low-credit scores, with a less than 2% default rate.
SELF's mission is to rebuild and empower underserved communities by
providing access to affordable and innovative financing for sustainable
property improvements, with a primary focus on energy efficiency,
renewable energy, and climate resilience in low-to-moderate income
communities. SELF pursues its mission by making unsecured loans to
finance these improvements. An unsecured loan means that the borrower
does not face the threat of confiscation of their home or other assets
if they fail to repay the loan.
SELF underwrites these loans based on the customer's ability to
repay, not their credit score. A typical loan size is approximately
$10,000 with a 5- to 7-year term. The most common home improvement
projects are high efficiency air conditioners, roofs, impact windows,
hurricane shutters, and solar rooftop PV systems.
SELF believes that our current lending system does not work well
for those who need credit the most. LMI households account for 42% of
all U.S. households. Working class Americans frequently have low wealth
and low credit scores, which investors refer to as ``sub-prime'' to
connote ``high risk''. The traditional financial system assesses risk
by looking at credit scores, rather than the ability to repay. Credit
scores and traditional underwriting methods frequently do not capture
true creditworthiness of underbanked and LMI clients. Therefore, there
are huge opportunities to serve these markets, delivering economic,
social, and environmental benefits. The biggest barrier to serving
these markets, however, is the lack of low-cost, flexible capital.
This LMI population that SELF serves is referred to by United Way
as ``ALICE'': Asset Limited, Income Constrained, Employed.\1\ ALICE
Americans are not wealthy enough to access fair-priced capital, but not
poor enough to benefit from most grant or subsidy programs. While they
might hold a mortgage, pay their taxes, and always meet their bills on
time, they cannot afford the upfront costs of residential energy
efficiency and climate resilience retrofits, and their low credit
scores prohibit them from borrowing at affordable rates.
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\1\ https://www.unitedforalice.org/
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We are proud of the progress that we have made over the past 10
years and especially our growth in recent years. However, the stark
truth is that we are not doing enough. In our home state of Florida,
there are 7.7 million households, of which 33% are ALICE.\2\ That means
there are approximately 2.5 million households in Florida that live
above the federal poverty line but cannot afford the investment to make
their homes cheaper to run and safer from storms. All these homes could
benefit from the flexible, low-cost capital that SELF provides.
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\2\ https://www.hfuw.org/wp-content/uploads/2020/05/
2020ALICEHightlightsReport_FL_FINAL-4.15.20.pdf
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The lack of access to affordable credit to build, improve, and
protect assets exacerbates climate risks, leaving LMI communities more
exposed than anyone else to climate events. This exposure creates a
heavy ``climate burden''--meaning additional costs (insurance, energy,
capital) and risks associated with climate events that threaten their
only assets: their homes; their health; and their ability to be
productive. Climate resilience upgrades include energy efficiency;
insulation and weatherization; high-efficiency air conditioners and
heaters; solar energy with battery storage; and fortified roofs, impact
windows and hurricane shutters. These upgrades help residents save
money to repay the investments, but even more importantly, they greatly
improve quality of life, health, and safety when faced with climate or
health threats as we experienced during the Covid-19 Pandemic.
In 2020, amidst the Covid-19 pandemic, SELF's overall lending
activity increased by 84% and surpassed $5 million annually for the
first time. SELF has now grown by 400% over the last three years and
financed over 2,000 sustainable home improvement projects totaling $19
million in unsecured loans, with 74% of the lending activity in
underserved markets.
Jobs
From an economic stimulus perspective, SELF helps large and small,
local, minority-owned contractors do work in underserved communities-
often their own-by offering a financing tool that will fit the needs of
LMI homeowners. Developers benefit from access to SELF's low-cost
Housing Impact funds that provide low-cost capital to complete capital
stacks that incorporate ``green'' (climate resiliency, energy
efficiency, and solar and battery storage) building standards to
benefit low income rental tenants. This latter product is one that
there is an increasing demand for.
By financing improvements in communities with no affordable
alternative, SELF opens up a new market for contractors who would
otherwise be shut out of helping this portion of America. This
translates to more business and more jobs. SELF's contractors have
expressed that without SELF, they lose anywhere between 20 to 40
percent of business due to lack of financing available for LMI clients.
SELF has over 700 vetted and approved contractors in our network, and
is always adding more as we find more capital to lend.
When contractors sign up for SELF's network, they are able to do
business in new markets without taking any financial risk, which allows
them to expand their businesses to support new jobs. One of SELF's
approved contractors, Westfall Roofing, said in a recent interview:
``There's not a lot of options like SELF out there, I'll tell you that.
There's a lot of financing companies in the home-improvement industry,
but they all have pretty similar restrictions and guidelines where SELF
is able to give options to homeowners when they're getting declined
everywhere else.'' \3\
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\3\ https://www.theinvadingsea.com/2021/07/12/steve-sowders-the-
solar-and-energy-loan-fund-enables-low-income-property-owners-to-get-
loans-for-roofing-work/
---------------------------------------------------------------------------
One local Ft. Pierce family-owned business, Sea Coast Air
Conditioning, has done over $1 million in projects with SELF financing.
He said: ``We did the math on it this morning,'' Zack Langel said. ``We
have done a little over 200 systems through SELF (and) have never once
had a problem.'' \4\
---------------------------------------------------------------------------
\4\ https://
---------------------------------------------------------------------------
www.wptv.com/rebound/self-helps-struggling-homeowners-avoid-sweating-
over-ac-payments
A female-owned minority contractor in Orange County, Florida, was
thrilled when she found out about SELF. She said, ``(SELF) is a very
ethical company. They explain everything very well to the homeowner. We
were looking for a financing company that could help homeowners that
are struggling.'' \5\
---------------------------------------------------------------------------
\5\ https://www.youtube.com/watch?v=m07ghVYZdUs&t=165s
---------------------------------------------------------------------------
SELF's contractors are eager to find more financing for projects
that are awaiting capital, especially in disadvantaged communities. In
Florida, contractors are keenly aware that thousands of LMI homeowners
are losing insurance coverage due to outdated roofs, windows, and
doors. Insurance companies are no longer willing to underwrite climate
risks unless homes are upgraded. To address this issue, accessible, low
cost, and flexible capital for climate resilience is needed, especially
for disadvantaged communities so that LMI homeowners and small
landlords of low-income housing are able to access insurance coverage
and protect their assets.
The Case for the Accelerator
As extreme temperatures become more common and severe weather
events more frequent, homes use more energy and sustain more threats to
their structural integrity. This year, hurricane seasons for Florida
and the Southeastern United States began in May, a month earlier than
usual. This week, we're seeing how a heat wave across Texas leads
people to stay safe by cranking their inefficient AC units, straining
the system so much that the state's grid manager has warned of
potentially record-breaking electricity demand.\6\
---------------------------------------------------------------------------
\6\ https://www.bloomberg.com/news/articles/2021-07-23/-dome-of-
doom-will-bake-texas-and-central-u-s-next-
week?fbclid=IwAR0Ds3qgscxSn96bg6Kmn41l__kcV5H0fdPsr9mYySVK-
LSPy8gH3gz8Igk
---------------------------------------------------------------------------
In Florida, we're seeing how the home insurance markets will
respond to worsening climate events. Just weeks before the 2021
hurricane season began, property insurance companies used the excuse of
insufficient storm resilience to justify dropping over 50,000
Floridians from their homeowner policies.\7\ Close to a third of
American families have zero or negative non-home wealth.\8\ This means
that close to a third of America is at risk of losing their sole asset
to climate change-related severe weather events. The loss of insurance
protection placed over 50,000 Floridians at risk of losing the only
asset they might pass on as generational wealth. With help from the
Accelerator, SELF will provide the upfront capital for climate
resilience improvements, so Americans in climate-vulnerable regions can
live safely, maintain their insurance policies, and pass along the full
wealth of their home to future generations.
---------------------------------------------------------------------------
\7\ https://www.clickorlando.com/news/local/2021/05/24/property-
insurance-companies-drop-50000-florida-policy-holders-ahead-of-
hurricane-season/
\8\ https://www.db.com/newsroom_news/Inequality_Jan2018.pdf
---------------------------------------------------------------------------
How can LMI homeowners ensure their health and quality of life
during these extreme weather events, while also reducing broader power
outage risks? In the case of Texas, who will finance energy efficiency
improvements that help make these homes less of a strain on the power
grid and more affordable for the residents to operate on a regular
basis? In Florida, who will finance wind-resistant roofs, impact
windows, and doors so the average American homeowner can protect their
homes and keep their insurance?
Capital from an Accelerator would help SELF greatly expand existing
LMI lending programs and would enable us to provide longer-term
financing options (e.g., 10-20 years) to further advance the
affordability of projects like rooftop solar PV plus battery storage.
The longer-term loans would stretch out the repayment term and
therefore lower monthly loan payments. Energy and insurance savings
derived from these projects also help pay for the loans over time.
SELF and other green banks across the nation specialize in filling
financing gaps and have decades of experience underwriting energy
savings, climate risk, and energy efficiency. Green banks are
innovative and nimble and exist to find financing solutions to climate
issues that have been left out of the traditional financing system.
Green banks have successful track records, manage funds prudently with
triple bottom line returns: financial, social and environmental.
Funding for an independent Accelerator would have a much larger
real-world impact than its initial capitalization from Congress because
it would fund green banks that leverage private capital, recycle their
own capital for repeat investment of the same dollars, and can borrow
private capital. An Accelerator has a multiplier effect on total real-
world investment in sustainability and resilience. For example, with
$100 billion of funding, the Accelerator would generate $880 billion of
total investment and would create 5.5 million jobs in its first five
years of operations. \9\ You can learn more about the impact of the
Accelerator in the document referenced in the footnote \10\ below.
---------------------------------------------------------------------------
\9\ https://coalitionforgreencapital.com/wp-content/uploads/
Accelerator-Impact-Vivid-Economics-11.22.20.pdf
\10\ https://
---------------------------------------------------------------------------
docs.google.com/presentation/d/
1E8Cxgfm2dw1eigDkyQnnwzGwqG19xEIXTRBdZGUYmVA/edit#slide=id.
SELF believes that capitalizing Green Banks will greatly help
respond to these needs and that is why we need to have a federally
funded Accelerator. In particular, I'd like to call your attention to a
few of the key benefits of having the Accelerator funded as an
independent nonprofit (as envisioned in Rep. Dingell's bill) which
could not be achieved if the Accelerator is a federal government
program:

Speed: An independent nonprofit Accelerator would be able
to move with alacrity, funding projects within weeks of establishment
rather than a lengthy rulemaking process.
Alignment: An independent nonprofit would allow for the
measuring and direction necessary to achieve specific policy goals set
forward in legislation, most notably ensuring that 40% of Accelerator
investment is directed to disadvantaged communities.
Impact: Only an independent nonprofit would be able to
maximize the impact of public funding by leveraging its balance sheet
to access additional private sector capital; an independent, nonprofit
Accelerator could also recycle its capital as principal and interest
from loans are repaid to the organization.
Standardization: An independent nonprofit Accelerator
would allow for standardization of critical metrics and lending
documents, which would eventually allow for securitization of state and
local green bank loans, providing further liquidity into clean energy
financing markets.
Savings: An independent nonprofit Accelerator would be
able to reduce operating expenses by offering centralized services such
as underwriting or marketing to state and local green banks like ours.
Cost reduction: According to a recent study by the NRDC
and the Medical Society Consortium on Climate and Health, the total
economic cost of the health impact of climate change and continued and
fossil fuel air pollution exceeds $820 billion each year in
America.\11\
---------------------------------------------------------------------------
\11\ https://morningconsult.com/opinions/before-another-deadly-
summer-congress-must-act-to-address-the-rising-costs-of-climate-change/

There is enormous demand for the type of capital offered through
the Accelerator. At SELF we get weekly inquiries from other states,
cities and organizations asking us to take our services to their
communities seeking to replicate our inclusive green financing model to
help LMI homeowners. SELF is currently actively working with groups in
South Carolina, North Carolina, Alabama, Georgia, Tennessee, Texas and
Louisiana to try and take existing loan programs for LMI and create new
customized loan programs to address specific locational needs.
Funding from the Accelerator would enable SELF to make energy
efficiency and clean energy upgrades that would help improve the lives
of LMI households across the country. A report from the U.S. Department
of Energy's National Renewable Energy Laboratory (NREL) states:

``Pairing solar photovoltaics with rooftops of low and
moderate-income housing represents an opportunity to help
modernize the U.S. electric grid and improve energy
affordability in low-income communities. Understanding the
potential size of the LMI market in detail offers new insights
and opportunities to serve these communities,'' Mooney said.
``The potential electric bill savings from the adoption of
rooftop solar would have a greater material impact on low-
income households compared to their high-income counterparts.''
\12\
---------------------------------------------------------------------------
\12\ NREL, ``Low- and Moderate-Income Residences Can Help Modernize
the U.S. Electric Grid,'' April 25, 2018, see https://www.nrel.gov/
news/program/2018/lmi-residences-can-help-modernize-us-electric-
grid.html

In conclusion, in order to fully realize the economic, resilience,
and climate benefits that the services SELF and other state entities
offer to people in need, the Accelerator will be crucial.
Thank you for the opportunity to testify today before this
committee, and I look forward to answering your questions and
discussing this policy.

Appendix

Client Testimonials:
Marine Combat Engineer Joe Hill: High Efficiency Air Conditioner
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Pamela Turner: Roof Loan (Resilience)
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Pamela Turner is a U.S. veteran, single-mother of four small
children, and cancer-survivor, who works three jobs to try and make
ends meet! Unfortunately, a large portion of her roof collapsed and she
did not have the savings to pay for a new roof or have the credit score
needed to qualify for a traditional loan. Pamela and her family were
forced to suffer the consequences and she resorted to using dozens of
buckets throughout her two-bedroom home to collect water seeping
through the roof. Her home was deteriorating rapidly before her eyes
and it was now unsafe and unhealthy for her and her children. She had a
``major problem'' on her hands and she said she ``felt defeated''.
Pamela learned of SELF and applied for a loan based on ability to
repay. She was approved for SELF's lowest interest rate (5%), which is
available to veterans and women with poor credit. She now has a solid
metal roof on her home, and her family is safer, the home is healthier,
and her largest asset is now protected. Pamela also qualifies for home
insurance again, with lower premiums, and she will rebuild her credit
as she pays off the SELF roof loan.
Alice Munster Testimonial
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

A 62-year-old with a degenerative spinal disease, Munster said
she's almost lost her house twice due to financial hardships. She's
been living on a fixed-income for about the past nine years while her
husband Michael works at a local grocery store.

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
``They don't treat you like you're asking for a handout. They (SELF) have helped save my home.''--Alice Munster
----------------------------------------------------------------------------------------------------------------

https://www.tcpalm.com/story/news/2021/03/11/fort-pierce-nonprofit-
helping-disabled-homeowners-veterans-communities-color/4594405001/

Ms. Castor. Thank you very much.
Next we will go to Mr. Larsen. You are now recognized for 5
minutes. Welcome.

STATEMENT OF JOHN LARSEN

Mr. Larsen. Thank you, Chair Castor. Thank you, Ranking
Member Graves, and members of the committee for inviting me to
speak today.
My name is John Larsen. I am a Director at Rhodium Group,
an independent research firm whose research informs
decisionmakers in the public, private, and philanthropic
sectors. I lead Rhodium Group's U.S. energy systems research
where we focus on analyzing clean energy policies, emerging
clean technologies, and market trends. I am also a Nonresident
Senior Associate in the Energy Security and Climate Change
Program at the Center for Strategic and International Studies.
I appreciate the opportunity to speak with you today about
how Congress can create financial incentives and investments to
accelerate clean energy technologies and create good-paying
jobs. To tackle the challenge of climate change, the U.S. needs
to rapidly deploy clean energy technologies across the energy
system and quickly cut carbon pollution.
There are a variety of policies that can accelerate this
transition. Recent Rhodium research shows that updating and
enhancing clean energy tax credits have the potential to
increase the average annual rate of wind and solar
installations on the grid by more than double last year's
record of 30 gigawatts.
An enhanced clean energy tax credit framework can drive
electric power CO2 emissions down as much as 73
percent compared to 2005 levels and save or create up to
600,000 jobs on an annual average basis. All of this can be
done with little impact on national average electric bills
while also cutting harmful SO2 and nox pollution in
half from today's levels in just 5 years.
While electric power CO2 emissions have dropped
in the U.S. by 40 percent since 2005, our research shows that
under current policy, including the current tax credit regime,
this progress will stall out in the next few years. At best,
the electric power sector maintains emissions in the range of
46 to 50 percent below 2005 levels in 2030 without new Federal
action.
Modernizing clean energy tax credits a decade ahead can cut
U.S. electric power CO2 emissions to 64 to 73
percent below 2005 levels by 2031. This is up to eight times
more emission reductions than simply extending the current
clean energy tax credit framework.
To achieve these outcomes, Rhodium Group identified five
critical improvements to the current tax credit framework. They
are as follows: Number one, first extend the investment tax
credit, the ITC, and the production tax credit, the PTC, over a
long term period, such as 10 years.
Two, increase the value of the tax credits back to their
initial levels, 30 percent of project costs for the ITC and $25
a megawatt hour for the PTC. While these first two points are
essential, alone they cut U.S. electric power emissions down to
as low as 55 percent below 2005 levels in 2031. Adding more
enhancements can amplify these productions.
Number three, if you provide flexibility to allow
developers of any clean generating technology to claim the ITC
or PTC, whichever makes sense for them, that will also
accelerate deployment of clean technologies.
And, number four, providing a direct pay provision or
refundability provision to prevent financing bottlenecks will
be important to avoid constraining clean energy deployment.
All four of these enhancements together can drive emissions
down to as low as 61 percent below 2005 levels in 2031. But the
U.S. can double these gains again by including a fifth
enhancement, incentivizing existing clean energy resources to
stay on the grid. Retaining economically distressed existing
clean generation, such as nuclear plants, helps to make sure
that all new clean energy additions to the U.S. grid, such as
wind and solar, only displace uncontrolled fossil generation
and accelerate progress towards meeting clean energy goals.
These five enhancements combined can slash emissions and
save or create hundreds of thousands of jobs. Even after
accounting for declines in fossil fuel jobs, enhanced tax
credits can create or retain up to 600,000 jobs on an annual
average basis from 2022 through 2031. Clean energy tax credits
have the potential to establish renewable energy. It's the
largest energy sector employer in America over the next decade,
surpassing the oil industry and the natural gas industry.
Enhanced tax credits can also serve as a foundation to
compliment other policy actions, such as a clean electric
standard or pollution regulations. Congress can also tailor tax
credits to help achieve other policy goals, such as supporting
emerging clean technologies and directing investment toward
disadvantaged communities.
Rhodium Group recently published research that also
explores how tax credits can accelerate clean energy deployment
in the transportation sector and in the industrial sectors of
the energy system.
Thank you again for the opportunity to testify today. I
look forward to your questions about our research and findings.
[The statement of Mr. Larsen follows:]

July 29, 2021

Statement of John Larsen

Director, Rhodium Group

Presented to: House Select Committee on the Climate Crisis

Hearing on ``Financing Climate Solutions and Job Creation''

Thank you Chair Castor, Ranking Member Graves, and members of the
Committee for inviting me to speak today.
My name is John Larsen, and I am a director at Rhodium Group, an
independent research firm whose research informs decision-makers in the
public, private, and philanthropic sectors. I lead Rhodium Group's U.S.
energy systems research, where we focus on analyzing clean energy
policies, emerging clean technologies, and market trends. I am also a
non-resident senior associate in the energy security and climate change
program at the Center for Strategic and International Studies.
I appreciate the opportunity to speak with you today about how
Congress can create financial incentives and investments to accelerate
clean energy technologies and create good-paying jobs. To tackle the
challenge of climate change, the U.S. needs to rapidly deploy clean
energy technologies across the energy system and quickly cut carbon
pollution. There are a variety of policies that can accelerate this
transition. Recent Rhodium research shows that updating and enhancing
clean energy tax credits have the potential to increase the average
annual rate of wind and solar installations on the grid by more than
double last year's record of 30 gigawatts. An enhanced clean energy tax
credit framework can drive electric power CO2 emissions down
as much as 73% compared to 2005 levels and save or create up to 600,000
jobs on an annual average basis. All this can be done with little
impact on national average electric bills while cutting harmful
SO2 and NOX pollution in half from today's levels
in just five years.
While electric power CO2 emissions have dropped in the
U.S. by 40% since 2005, our research shows that under current policy,
including the current tax credit regime, this progress will stall out
in the next few years. At best, the electric power sector maintains
emissions in the range of 46%-50% below 2005 levels in 2030 without new
federal action.\1\
---------------------------------------------------------------------------
\1\ (Larsen, King, Kolus, & Herndon, Pathways to Build Back Better:
Investing in 100% Clean Electricity, 2021)
---------------------------------------------------------------------------
Modernizing clean energy tax credits for the decade ahead can cut
U.S. electric power sector CO2 emissions to 64-73% below
2005 levels in 2031.\2\ This is up to eight times more emission
reductions than simply extending the current clean energy tax credit
framework. To achieve these outcomes, Rhodium Group identified five
critical improvements to the current tax credit framework. They are:
---------------------------------------------------------------------------
\2\ (Larsen, King, Kolus, Dasari, & Herndon, Pathways to Build Back
Better: Maximizing Clean Energy Tax Credits, 2021)

One, extend the investment tax credit (ITC) and
production tax credit (PTC) over a long-term period, such as ten years.
Two, increase the value of tax credits back to their
initial levels of 30% of project costs for the ITC and $25/megawatt
hour for the PTC.

While these first two points are essential, alone, they cut U.S.
electric power emissions down to as low as 55% below 2005 levels in
2031. Adding more enhancements can amplify these reductions.

Three, provide flexibility to allow developers of any
clean generating technology to claim the ITC or PTC, whichever makes
the most sense in each situation.
Four, provide a direct pay or refundability provision to
prevent financing bottlenecks that could constrain clean energy
deployment.

All four of these enhancements together can drive emissions down to
as low as 61% below 2005 levels in 2031.

The U.S. can double these gains by including a fifth
enhancement: incentivizing existing clean energy resources to stay on
the grid. Retaining economically distressed existing clean generators
such as nuclear plants helps to make sure that all new clean energy
additions to the U.S. grid only displace uncontrolled fossil
generation, accelerating progress towards clean energy goals.

These five enhancements combined can slash emissions and save or
create hundreds of thousands of jobs. Even after accounting for
declines in fossil fuel jobs, enhanced tax credits can create or retain
up to 600,000 jobs on an annual average basis from 2022 through 2031.
Clean energy tax credits have the potential to establish renewable
energy as the largest energy sector employer in America over the next
decade, surpassing oil and natural gas.\3\ Enhanced tax credits can
also serve as a foundation to complement other policy actions such as a
clean electricity standard and pollution regulations. Congress can also
tailor tax credits to help achieve other policy goals, such as
supporting emerging clean technologies and directing investment toward
disadvantaged communities.
---------------------------------------------------------------------------
\3\ (Larsen, Mohan, & Houser, Pathways to Build Back Better: Jobs
from Investing in Clean Electricity, 2021)
---------------------------------------------------------------------------
Rhodium Group recently published research that explores how tax
credits can accelerate clean energy deployment in the transportation
\4\ and industrial \5\ sectors of the energy system as well. Thank you
again for the opportunity to testify today. I look forward to your
questions about our research and findings.
---------------------------------------------------------------------------
\4\ (Larsen, King, Kolus, & Wimberger, Pathways to Build Back
Better: Investing in Transportation Decarbonization, 2021)
\5\ (Larsen, King, Hiltbrand, & Herndon, Capturing the Moment:
Carbon Capture in the American Jobs Plan, 2021)
---------------------------------------------------------------------------

References

Larsen, J., King, B., Hiltbrand, G., & Herndon, W. (2021, April
21). Capturing the Moment: Carbon Capture in the American Jobs Plan.
Retrieved from Rhodium Group: https://rhg.com/research/carbon-capture-
american-jobs-plan/
Larsen, J., King, B., Kolus, H., & Herndon, W. (2021, March 23).
Pathways to Build Back Better: Investing in 100% Clean Electricity.
Retrieved from Rhodium Group: https://rhg.com/research/build-back-
better-clean-electricity/
Larsen, J., King, B., Kolus, H., & Wimberger, E. (2021, May 13).
Pathways to Build Back Better: Investing in Transportation
Decarbonization. Retrieved from Rhodium Group: https://rhg.com/
research/build-back-better-transportation/
Larsen, J., King, B., Kolus, H., Dasari, N., & Herndon, W. (2021,
July 8). Pathways to Build Back Better: Maximizing Clean Energy Tax
Credits. Retrieved from Rhodium Group: https://rhg.com/research/build-
back-better-clean-energy-tax-credits/
Larsen, J., Mohan, S., & Houser, T. (2021, April 20). Pathways to
Build Back Better: Jobs from Investing in Clean Electricity. Retrieved
from Rhodium Group: https://rhg.com/research/build-back-better-jobs-
electric-power/

Ms. Castor. Thank you very much.
Next up, Mr. Powell, you are recognized for 5 minutes.
Welcome.

STATEMENT OF RICH POWELL

Mr. Powell. Good morning, Chair Castor, Ranking Member
Graves, and members of the Select Committee. My name is Rich
Powell. I lead ClearPath.
ClearPath advances polices that accelerate breakthrough
innovations that reduce emissions in the energy and industrial
sectors. An important note, we are supported by philanthropy,
not industry.
Climate change is real and industrial activity around the
globe is the dominant contributor. I believe the challenge it
poses to society merits significant action at every level of
government and the private sector. Lawmakers and businesses
across the country are prioritizing investments in climate
solutions. Florida established a fund providing up to $100
million annually for climate resiliency projects, and Louisiana
has a $50 billion coastal master plan.
Since 1980, the United States has spent $1.9 trillion in
disaster recovery from 290 separate billion dollar events. If
we don't better prepare, we will massively deepen deficit
spending.
As the committee looks at Federal incentives for clean
energy, I will discuss five key points: First, a portfolio
approach to clean energy innovation; second, the 45Q tax
incentive for carbon capture; third, opportunities for
enhancing 45Q; fourth, the new Energy Sector Innovation Credit;
and, finally, building on the bipartisan clean energy
innovation record.
While the U.S. and a few others have reversed emissions
trajectories, much of the rest of the world is growing their
emissions as they grow their populations, industries, and
quality of life. We need an American innovation-focused
approach to solving the global climate challenge. There is no
tax or domestic regulation that will magically halt emissions
around the world. We must focus on strengthening the American
economy, not ceding ground to Russia and China.
Reducing American emissions is essential, and we have seen
a significant decline already. But even if the U.S. somehow
eliminated all of its carbon emissions tomorrow, just the
growth in emissions from today through 2050 by developing Asian
countries would exceed total U.S. emissions today.
Why? Clean technology available today is simply not up to
the task of global economy-wide decarbonization, which is why
we need to focus on breakthroughs that offer both better
performance and lower costs.
If Congress leads with an innovation-focused agenda, we can
guide basic and applied R&D for clean energy innovation through
to commercialization. America will lead in creating jobs,
reestablishing global leadership, and driving down global
emissions.
To do this, we will first need to drive down the cost of
clean energy. Smart tax incentive policy has a proven record
from natural gas to wind and solar. Carbon capture remains one
of the most promising clean energy technologies. The
Intergovernmental Panel on Climate Change and the International
Energy Agency have stated that carbon capture and storage is
essential to achieving net-zero emissions.
The Federal carbon capture tax credit, affectionately known
as 45Q, is viewed as the single most useful tool in spurring
carbon capture project development. Most recently, a 2-year
extension of 45Q was passed as part of the Energy Act of 2020.
Recent modeling from the Rhodium Group, and I am delighted
to be here with John today, determined a permanent extension
generated gigatons of emissions reductions and new investments
in both the power and industrial sectors. Their analysis found
benefits up to 157,000 job years by 2035, 52 gigawatts of power
sector carbon capture deployment by 2050, deployment on
industrial facilities in more than 30 states, and 4 gigatons of
emission reductions by 2050 across both power and industry.
Expanding and extending 45Q is an idea that has been led on
by Republicans, most notably in Leader McCarthy's energy
innovation agenda launched this year, and is gaining bipartisan
appeal due to the environmental benefits. Currently there are a
variety of bipartisan proposals that could enable widespread
deployment.
A recent National Petroleum Council report highlighted the
45Q extension and significant expansion, in line with Leader
McCarthy's expanded bill of earlier this year, could
incentivize an additional 350 to 400 million tons per year of
carbon capture capacity, bringing the total U.S. capacity to
500 million tons per year.
One reason 45Q is so effective, it incentivizes emissions
reductions in both the power sector and heavy industrial
processes, like cement and chemicals manufacturing, and the
transportation fuel sectors, unlike renewable energy tax
credits for the power sector alone.
Going beyond carbon capture, Ways and Means members just
this Tuesday introduced the Energy Sector Innovation Credit, or
ESIC, a bipartisan energy tax proposal to encourage innovation
in the clean energy sector. A companion bill was also
introduced in the Senate. ESIC creates incentives for
breakthrough innovation, for power generation, and storage
technologies, a game-changing market signal for private sector
innovators. It also includes a clean hydrogen production
credit. ESIC will help rapidly scale and diversify clean energy
technologies through innovation to achieve long-term emissions
targets, create jobs, and provide safe and reliable energy.
For each breakthrough, the incentive automatically ramps
down as technologies commercialize, not an arbitrary date like
traditional energy credits. The credit could incentivize
gigawatts of new clean generation, including for advanced
nuclear, enhanced geothermal systems, offshore wind, long-
duration storage, and next generation solar.
As you craft this agenda--and I cannot emphasize this
enough--partisan climate policy is not sustainable. It results
in short-term uncertainty and does not provide the market
signals we need to move to a clean energy economy. We can start
by building on recent bipartisan wins. If you pair bipartisan
efforts like the Energy Act of 2020 with tax incentive policy
like 45Q and ESIC, Congress will send an undeniable message
that lawmakers are serious about leading on clean, reliable
energy breakthroughs.
Thank you for this opportunity. We applaud the Select
Committee for taking on this important task.
[The statement of Mr. Powell follows:]

Testimony of Richard J. Powell

Executive Director, ClearPath Inc.

U.S. House Select Committee on the Climate Crisis

Financing Climate Solutions and Job Creation

Thursday, July 29, 2021

Good morning Chair Castor, Ranking Member Graves and Members of the
Select Committee. My name is Rich Powell, and I am the Executive
Director of ClearPath.
ClearPath is a 501(c)(3) organization whose mission is to develop
and advance policies that accelerate breakthrough innovations that
reduce emissions in the energy and industrial sectors. We develop
cutting-edge policy solutions on clean energy and industrial
innovation, and we collaborate with public and private sector
stakeholders on innovations in nuclear energy, carbon capture,
hydropower, natural gas, geothermal, energy storage, and heavy industry
to enable private-sector deployment of critical technologies. An
important note: we are supported by philanthropy, not industry.
Climate change is real and industrial activity around the globe is
the dominant contributor to it. I believe the challenge it poses to
society merits significant action at every level of government and the
private sector.
Lawmakers and businesses across the country are prioritizing
investments in climate change mitigation and adaptation. Governor
DeSantis of Florida, for example, has signed legislation requiring a
master plan for the state to deal with sea level rise and flooding, and
established a fund providing up to $100 million annually for climate
resiliency projects.\1\ Meanwhile, Louisiana has a $50 billion coastal
master plan for coastal restoration in part due to rising sea
levels.\2\
---------------------------------------------------------------------------
\1\ https://abcnews.go.com/Politics/wireStory/legislation-fight-
sea-level-rise-florida-governor-76954829
\2\ https://coastal.la.gov/our-plan/
---------------------------------------------------------------------------
Since 1980, the United States has spent $1.9 trillion in Disaster
Recovery from 290 ``billion-dollar events.'' \3\ From 2014 to 2018, the
United States has seen an annual average of 13 billion-dollar
disasters. If we don't better prepare--both with smarter investments in
adaptation and by mitigating the underlying problem with global clean
energy solutions--we will massively deepen deficit spending. Federal
incentives for clean energy innovation have already, and should
continue to, play a major role in that effort.
---------------------------------------------------------------------------
\3\ https://www.ncdc.noaa.gov/billions/
---------------------------------------------------------------------------
As the Committee looks at the role federal incentives play in
climate change solutions, I will discuss five key topics today:

A portfolio approach to clean energy innovation. An
innovation-first agenda is the best way to solve the global climate
challenge by scaling up clean energy technology so the developing world
chooses clean energy as an affordable option.
The 45Q tax incentive for carbon capture. 45Q was
expanded in 2018 through the FUTURE Act, and was extended recently as
part of the bipartisan Energy Act of 2020. It will play a huge role in
carbon emissions reductions in the U.S., private sector investment, job
creation and deployment across the United States.
Enhancing 45Q. Republican Leader Kevin McCarthy (R-CA)
recently launched a clean energy innovation agenda, which among other
climate solutions, included legislation to make the 45Q incentive
permanent, increase the credit values, extend the payout term, and
expand the credit to a larger pool of projects. The National Petroleum
Council has found that a carbon capture incentive at roughly this level
could deploy carbon capture technology at scale and incentivize an
additional 350 to 400 million tonnes per year of capacity, bringing the
total U.S. capacity to 500 million tonnes per year.\4\
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\4\ https://dualchallenge.npc.org/
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The Energy Sector Innovation Credit (ESIC). Beyond carbon
capture, conservatives in the House and Senate are leading with broader
bipartisan efforts on clean energy incentives which would update the
energy portion of the tax code by allowing cutting-edge technologies to
gain commercial viability and upend the status quo without distorting
the free market.
Building on the strong bipartisan clean energy innovation
record. The last several Congresses have enacted record investments and
authorizations to spur on clean energy innovation.
An American Innovation-Focused Approach To Solving the Global Climate
Challenge
While the U.S. and a few other leaders have reversed our emissions
trajectories, much of the rest of the world is growing their emissions
as they grow their populations, industries, and quality of life.
The United States can truly lead on reducing global emissions. But,
there is no tax or domestic regulation that will magically halt
emissions around the world. We must focus on strengthening the American
economy--not ceding ground to China or Russia.
That's why it is important that U.S. energy policy synchronizes
with the global nature of the climate challenge. Reducing American
emissions is essential, and we have seen a significant decline already.
Since U.S. emissions peaked in 2005, power sector emissions have fallen
by roughly 40 percent as of 2020, largely due to the abundance of
cleaner natural gas and resulting coal to gas power switching, as well
as an increase in renewables. But, even if the U.S. somehow eliminated
all of its carbon emissions tomorrow, just the growth in carbon
emissions from today through 2050 by developing Asian countries (e.g.,
China, India, and other Eastern Asian nations) would exceed total U.S.
emissions today. Going forward, we expect power sector emissions in the
United States to flatline if natural gas prices remain low, and more
action is required to ensure emissions continue to decrease here at
home.
However, clean technology available today is simply not up to the
task of global economy-wide decarbonization. As the chart below
indicates, the global supply of clean energy has remained stagnant
since 2005. We need to focus on breakthrough technologies that offer
both better performance and lower costs than the traditional emitting
technologies in the market today--only then should we expect to truly
change this trajectory.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

China's Belt and Road Initiative, their commitment to global
infrastructure finance and development to tie together a huge swath of
the developing world, is currently hugely outpacing all U.S. export
credit and development finance activity. Among many other things,
including clean energy technologies, China continues to finance new
sub-critical coal plants--an outdated, extremely high emitting, but
very cheap, coal technology--around the developing world.
There is hope for the United States to truly change the trajectory
of global emissions and remain an energy leader. If Congress leads with
an innovation-focused agenda, we can guide basic and applied R&D for
clean energy innovation through to commercialization. America will lead
in creating jobs in new industries, reestablishing America's global
energy technology leadership, and driving down global emissions by
creating clean energy options that are affordable to rapidly growing
nations. To do all of this, we will first need to drive down the cost
of clean energy. Smart, targeted tax incentives policy has a proven
record on early deployment of technologies, bringing them down the
learning curve on cost and up the S curve of global adoption.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

A Carbon Capture Credit With Huge Returns
Carbon capture remains one of the most promising clean energy
technologies, gaining recognition for its potential to improve the
environmental footprint of heavy industrial processes and eventually
draw back down atmospheric CO2. The International Energy
Agency has stated that carbon capture and storage is:

Essential to achieving net-zero emissions as it tackles
emissions from existing energy infrastructure,
A solution for some of the most hard to decarbonize
sectors, and
An opportunity to directly remove carbon from the
atmosphere.\5\
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\5\ https://iea.blob.core.windows.net/assets/181b48b4-323f-454d-
96fb-
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0bb1889d96a9/CCUS_in_clean_energy_transitions.pdf

The federal carbon capture tax credit (affectionately known as
``45Q'') has such broad support in Congress as well as energy
stakeholders because it brings robust energy security, skilled labor
and environmental benefits. The 45Q tax credit is viewed as the single
most useful tool in spurring the development of carbon capture,
utilization, and storage projects. Most recently, a two-year extension
of 45Q was passed as part of the Energy Act of 2020. Developers now
have until the end of 2025 to commence construction on projects to be
eligible for the credit.
Carbon capture projects are often billion-dollar investments that
require long-term certainty to pencil out and attract investment.
Recent modeling from the Rhodium Group, a leading research firm,
determined that this extension could enable an additional 53 to 113
million tons of capture capacity that would not have happened if not
for this legislation.\6\ That is a significant impact as the U.S.
captures only 25 million tonnes per year currently.
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\6\ https://rhg.com/research/climate-progress-in-the-year-end-
stimulus/

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Expanding and extending the 45Q credit is an idea that has been led
by Republicans, and is now gaining bipartisan appeal due to the
potential benefits. While the existing 45Q credit is expected to have a
significant impact at reducing emissions from certain industrial
facilities, additional value is needed to motivate carbon capture at
scale. Currently, there are a variety of proposals, many of them
bipartisan, that have been introduced to do just that. These proposals
address a number of issues, that if implemented, could enable
widespread deployment of carbon capture:
---------------------------------------------------------------------------
\7\ Ibid

A higher credit level would help make carbon capture
relevant to a wider portfolio of emissions sources, help cover costs
associated with transportation and storage infrastructure, and
incentivize carbon capture at scale. According to the National
Petroleum Council's 2019 report entitled Meeting the Dual Challenge: A
Roadmap to At-Scale Deployment of Carbon Capture, Use, and Storage,
extending and expanding current policies to achieve a combined level of
$90/tonne could incentivize an additional 75 to 85 million tonnes per
year of capture capacity, bringing the total U.S. capacity to 150
million tonnes per year. And to achieve carbon capture deployment at
scale, policies that support financial incentives of $110/tonne are
needed and could enable an additional 350 to 400 million tonnes per
year of capacity, bringing the total U.S. capacity to 500 million
tonnes per year.\8\
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\8\ https://dualchallenge.npc.org/

Increasing the maximum credit payment period from 12
years to 20 years would better align the incentive with the expected
---------------------------------------------------------------------------
lifetime of facilities and improve certainty for project developers.

Reducing or eliminating the minimum capture eligibility
thresholds would remove the arbitrary requirements limiting the pool of
potential capture sources and enable smaller capture technologies to
claim the credit.

Implementing a direct pay elective would enable the pool
of investors to increase since the ability to claim the credit would
not be restricted to those who have a tax liability.

Extending the date for projects to begin construction
would provide project developers much-needed security that projects can
meet the deadline to claim the credit, as well as enable even more
projects to be developed within this timeframe.

A permanent extension (effectively a removal of the commence
construction date, aligned with a bill introduced by Representatives
Schweikert, Wenstrup, and Miller in April 2021 as part of Leader
McCarthy's energy and climate package) generated gigatons of emissions
reductions and new investments in both the power and industrial
sectors.
Here are five key points from their analysis:\9\
---------------------------------------------------------------------------
\9\ https://rhg.com/research/opportunities-for-advancing-electric-
power-sector-carbon-capture/

Up to 157,000 job-years by 2035. Deployment could
encourage new construction and operations jobs at existing
manufacturing facilities and new power plants.
Up to 52 GW of power sector carbon capture deployment by
2050. The 45Q credit could incentivize the build out of ultra-efficient
fossil power plants with carbon capture, more than half the size of our
current U.S. nuclear fleet. For a sense of scale, that'd be more than
170 zero-emission NET Power Allam cycle natural gas plants.
Deployment in 30+ states.\10\ The 45Q credit could
facilitate new carbon capture projects in a host of new states. For
reference, a plant that captures 0.1 million metric tons is a large
facility by the Global CCS Institute's standards and is eligible for
claiming the credit.
---------------------------------------------------------------------------
\10\ https://rhg.com/research/industrial-carbon-capture/
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Up to 4 gigatons of emission reductions by 2050
collectively from the power and industrial sectors. That's equivalent
to the emissions produced by 29 million cars for 30 years, or more than
all the emissions produced from all U.S. coal and natural gas power
plants produced over the last two years.
$42 per MWh. Advanced carbon capture is cost-competitive
with many other clean energy sources in the power sector. Unlike
variable renewable energy sources, it also does not require additional
batteries or other investments to provide around-the-clock electricity.

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

One reason 45Q is so effective: it can incentivize emissions
reductions in both the power sector and the industrial sector, such as
heavy industrial processes like cement and chemicals manufacturing, and
the transportation fuel sectors--unlike renewable energy tax credits.
Expected deployment could catalyze emissions reductions totalling
more than one-tenth of all U.S. industrial sector emissions.
Support for carbon capture is diverse. Many states have recently
implemented enabling carbon capture policies--from Wyoming to
California. A recent National Petroleum Council carbon capture report--
led by companies like Shell, Valero, and Southern Company--highlighted
the 45Q extension as one of its top policy recommendations.\11\
---------------------------------------------------------------------------
\11\ https://dualchallenge.npc.org/
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Carbon capture technology is on the cusp of a step change. And as
you can see from the Rhodium analyses--building on 45Q can help make
that goal a reality.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Energy Sector Innovation Credit (ESIC) Is a Game Changer
This week, Members of the U.S. House Ways and Means Committee,
including Reps. Tom Reed (R-NY), Jimmy Panetta (D-CA), David Schweikert
(R-AZ), Josh Gottheimer (D-NY), Darin LaHood (R-IL), and Tom Suozzi (D-
NY) are expected to introduce the Energy Sector Innovation Credit
(ESIC) Act, a bipartisan energy tax proposal to encourage innovation in
the clean energy sector. A companion bill in the U.S. Senate is also
expected to be introduced by Finance Committee Ranking Member Mike
Crapo (R-ID) and Finance Committee member Sheldon Whitehouse (D-RI),
among others.
---------------------------------------------------------------------------
\12\ Rhodium Group modeling commissioned by ClearPath
\13\ Ibid
---------------------------------------------------------------------------
The bipartisan Energy Sector Innovation Credit creates incentives
for breakthrough innovation for power generation and storage
technologies across the clean energy spectrum--a game-changing market
signal for private sector innovators.
ESIC is motivated by the need to rapidly scale and diversify
American clean energy technologies through innovation as a means to
achieve long-term emissions targets, create jobs, and provide safe and
reliable energy. The credit is designed to help nascent technologies
overcome the incumbency advantages of established technologies,
including suboptimal resource location relative to existing grid
infrastructure, lack of economies of scale, and the absence of existing
constituencies.
The bill would establish a production incentive system for
promising new power sector clean energy technologies needed to tackle
climate change. For each breakthrough technology, the incentive
automatically ramps down as individual technologies scale up in the
commercial marketplace, not an arbitrary date like traditional energy
credits. This credit could incentivize gigawatts of new clean energy
generation needed to accelerate the U.S. power grid towards deep
emissions reductions, including advanced nuclear, carbon capture,
enhanced geothermal systems, offshore wind, long-duration storage and
next-generation solar energy.
By making the credit proportional to how much a project earns from
market sales, the credit eliminates the unintended `negative pricing'
distortions other credits have had on power markets.
The policy also would bolster the initial deployment of industrial
carbon capture and direct air capture technologies, identified as an
essential piece of the net-zero strategy of multiple U.S. utilities and
corporate entities like Xcel Energy, U.S. Steel and Microsoft.
Strong Bipartisan Clean Energy Record
Finally, I cannot underscore this enough, partisan only climate
policy is not sustainable. It results in short-term uncertainty and
does not provide the market signals we need to move to a clean energy
economy. We must work to have sustainable climate policy that includes
the buy-in from both political parties in Congress.
In addition to the bipartisan authorizations in the Energy Act of
2020, the most recent FY20 & 21 appropriations bills are great
successes to build on. They included critical programmatic direction
and eagle-eyed investments in enhanced geothermal, advanced nuclear,
carbon capture, grid-scale storage and other clean energy technologies
included.
If you pair bipartisan efforts like the Energy Act of 2020 with
incentive policy, like 45Q and ESIC, Congress will send an undeniable
message that lawmakers are serious about keeping the U.S. in the top
tier of countries pursuing clean and reliable energy breakthroughs.
Again, we must think globally when approaching this challenge.
Partisan regulations will not pass the political sustainability test
needed for climate solutions. Likewise, halting pipelines or placing
moratoriums on oil and gas drilling on federal lands also has little to
no impact on actual carbon dioxide emissions reductions in the U.S.,
let alone the rest of the world--particularly if we are simultaneously
pushing OPEC+ for expanded oil and gas production globally. And none of
that will make us more competitive with China. We agree, the cost of
inaction on climate is high, and finding bipartisan common ground on
clean energy innovation policy is priceless.
Thank you again for the opportunity to provide remarks. ClearPath
is eager to assist the Select Committee in developing policies that
help innovation reach the market place in the service of a stable
global climate.

Ms. Castor. Terrific. Thanks so much.
Next up, Ms. Lipman, you are recognized for 5 minutes.
Welcome.

STATEMENT OF ZOE LIPMAN

Ms. Lipman. Thank you, Chair Castor, Ranking Member Graves,
and members of the committee. I am Zoe Lipman, Director of
Manufacturing and Advanced Transportation at the BlueGreen
Alliance, which brings together labor unions and environmental
organizations to build a clean, thriving, and equitable
economy.
America is a good investment. Working people across the
country are counting on Congress to see that. Investments to
rebuild and retool American manufacturing, modernize our
infrastructure systems, invest in our care economy, and create
high-quality clean energy jobs are needed now and are needed at
scale. They will be essential to addressing the climate crisis
and to ensuring a real and equitable recovery.
We cannot build back better if we fall behind the rest of
the world in manufacturing the technology of the future here in
the United States or if the workers and communities that need
it most fail to see the benefits of innovation or a clean air
economy.
That means investing not only in deploying climate
solutions but making equally central investments in
manufacturing, good jobs, and revitalizing communities.
Nowhere is this more true than in the coming shift to
electric vehicles. EVs are coming. The actions and investments
the policymakers make now will determine whether the U.S.
economy, workers, and communities see the gains from the
transformation of the transportation sector.
If done right, the shift to EVs will not only play a
critical role in addressing climate change, but it can
strengthen domestic manufacturing and supply chains, secure and
grow good jobs, and help reverse decades' long declines in job
quality and access to middle class careers for manufacturing
workers and workers of color.
However, if policymakers fail to act, we risk being left
behind in the next generation of automotive manufacturing and
ceding future industries to global competitors. So what does
this mean for Congress? We need to invest now to make the U.S.
a leading market for EVs and do so with conditions that support
working people.
In addition to globally competitive clean vehicle standards
that give companies the certainty to invest here, we need
deployment--we need incentives for deployment to ensure faster,
broader, and fairer consumer and fleet adoption of domestically
manufactured electric vehicles, from cars and trucks to school
buses, and to expand EV charging infrastructure to all of those
who will need it. And all of our public investments, regardless
of how financed, must come with strong labor standards and
incentivize domestic manufacturing throughout the supply chain.
For example, it is vital to update the section 30D Plug-In
Electric Drive Vehicle Credit, the consumer EV credit, or a
similar rebate to require vehicles and key components to be
built here in order to receive the incentive and to support the
retention and growth of good-paying jobs. The updated bill
should also--updated credit should also facilitate purchase of
EVs by those who would not otherwise be able to.
And it is absolutely critical that we invest to make the
United States a leading manufacturer of EVs and the technology
that goes into them. That means taking action to expand,
retool, and convert U.S. automotive and component manufacturing
through the Advanced Technology Vehicles Manufacturing Loan
Program, manufacturing conversion grants, and the 48C
Manufacturing Investment Tax Credit, which applies to a wide
range of manufacturing clean energy technologies, as well as to
the automotive sector.
We need to onshore critical supply chains, such as
batteries, cells, and the materials that go into them,
including through a new manufacturing investment tax credit and
production tax credit.
We need to modernize and cut emissions from our energy-
intensive industrial base, as I have heard other speakers
mention, and target investment to revitalize manufacturing
communities and build new pathways into family-supporting
careers.
Auto and components manufacturing employs around a million
workers directly and millions more indirectly, from mining and
steelmaking, to engines and batteries, to final assembly, to
auto dealerships, and a multitude of local jobs supported in
manufacturing communities.
We are already fighting against decades of shortsighted
policy and investment decisions that have spurred offshoring
and outsourcing, and cost manufacturing jobs. Those choices
have driven down the living and working standards of
manufacturing workers, often hitting Black workers first and
hardest, and cost access to family-supporting careers in too
many communities.
At the same time, the United States is already lagging far
behind our competitors in investments to capture EV
manufacturing and jobs and to ensure that good advanced engine
and transmission, powertrain jobs of today become the good EV
propulsion jobs of tomorrow.
But we can and must reverse these trends and take a better
path. Whether or not working people across America see the
gains from the coming clean economy depends on what Congress
does now.
Thanks so much.
[The statement of Ms. Lipman follows:]

Testimony of Zoe Lipman

Director of Advanced Manufacturing and Transportation

BlueGreen Alliance

U.S. House of Representatives

Select Committee on the Climate Crisis

Financing Climate Solutions and Job Creation

July 29, 2021

Thank you Chairwoman Castor, Ranking Member Graves, and members of
the committee.
I am Zoe Lipman, Director of Manufacturing and Advanced
Transportation at the BlueGreen Alliance. The BlueGreen Alliance brings
together labor unions and environmental organizations to solve today's
environmental challenges in ways that create and maintain quality jobs
and build a clean, thriving, and equitable economy.
America is a good investment. Working people across the country are
counting on Congress to see that. We need to rebuild and retool
American manufacturing, repair and modernize our infrastructure
systems, invest in our care economy, and create high-quality clean
energy jobs. Making these investments at scale, and doing them right,
will be essential to addressing the climate crisis, and ensuring a real
and equitable recovery.
But we cannot build back better if we fall behind the rest of the
world in manufacturing the technology of the future here in the United
States, or if the workers and communities that need it most fail to see
the benefits from innovation or a cleaner economy. That means investing
not only in deploying climate solutions, but in the equally central
investments we need to ensure workers, working families, and
communities see the benefit of this transition.
Nowhere is this more true than in the global shift to electric
vehicles (EVs).
EVs are coming. The actions and investments made by policymakers
now will determine whether the U.S. economy, workers, and communities
see the gains from the transformation of the transportation sector.
It is critical that we take action now to position the United
States as a leading market for the most advanced vehicles, while at the
same time making serious investments to strengthen advanced vehicle
manufacturing, to bring electric vehicle technology and components
manufacturing here and into today's factories and to build good jobs in
industries that are clean and safe for workers and communities alike.
If done right, the shift to EVs will not only play a critical role
in addressing climate change, but it can strengthen domestic
manufacturing and supply chains, secure and grow good jobs, and help
reverse decades-long declines in jobs quality and access to middle-
class careers for manufacturing workers and workers of color.
By contrast, however, if policymakers fail to act, the United
States risks being left behind in the global shift to using and
manufacturing the next generation of automotive technology, which will
cost good manufacturing jobs in communities across the nation, cede
future industries to our competitors, leave many rural and urban
communities behind, and aggravate inequality.
Auto and components manufacturing makes up the single largest
sector of U.S. manufacturing, employing around 1 million workers
directly, and millions more indirectly--from mining and steelmaking to
engines and batteries to final assembly, to auto dealerships and the
multitude of local jobs supported in manufacturing communities.
Over the past decade, auto sector companies and workers have
demonstrated that they can build good union jobs making advanced clean
and efficient vehicle technology. But now, our global economic
competitors, including in Europe and Asia, are rushing to capture the
jobs and economic benefits from the global transition to electric
vehicles. The United States is lagging far behind in investments to
capture these gains, and to ensure that good advanced engine and
transmission jobs--what we know as the ``powertrain''--jobs of today
become the good EV propulsion jobs of tomorrow.
At the same time, decades of shortsighted policy and investment
decisions have spurred offshoring and outsourcing, cost manufacturing
jobs, driven down the living and working standards of manufacturing
workers, and cost access to family-supporting careers in too many
communities.
Now is the time to act to reverse these trends and eliminate these
risks. Critical decisions and investments that will shape the industry,
domestic jobs, and the impacts on climate and our economy for decades
will be made over the next few years.
An effective and equitable transition means we must lead in
advanced clean vehicle deployment and manufacturing. This means
sufficient investment in the cleanest and most advanced vehicle
technology, and in ensuring we build the next generation of vehicle
technology in America and build good jobs throughout the transportation
supply chain.

We need to invest to make the U.S. a leading market for EVs--and do
so with conditions that support working people.

In conjunction with globally competitive fuel economy and vehicle
greenhouse gas (GHG) standards that give companies the certainty to
invest and invest here, we need to adopt incentives to ensure faster,
broader, and fairer consumer and fleet adoption of domestically
manufactured electric vehicles--whether that's cars, trucks, buses,
school buses or the U.S. Postal Service--and to extend EV charging
infrastructure to all those who will need it.
At the same time, all our public investments--through traditional
or novel infrastructure finance or through the tax code--must come with
strong labor standards and incentivize domestic manufacturing
throughout the supply chain.
For example, the Section 30D (now 36C) Plug-In Electric Drive
Vehicle Credit for consumers or a similar rebate plays an important
role in building a domestic EV market, and it is critical to update it
to require that vehicles and key components to be built here to receive
the incentive, to support the retention and growth of good paying U.S.
manufacturing jobs, and to spur automakers to further invest in
building their most advanced vehicles here. The updated bill should
also facilitate purchase of EVs by those who would not otherwise be
able to purchase an EV.

We need to invest to make the United States a leading manufacturer
of EVs and the technology that goes into them.

Catching up in the deployment race alone does not guarantee that
working people and communities see the gains from the shift to EVs. We
also need to make a globally competitive manufacturing investment
through a robust set of manufacturing tax credits, grants, and loans,
to:

Expand, retool and convert U.S. automotive and component
manufacturing to build the technology of the future;
Onshore critical supply chains, such as batteries, cells
and the materials that go into them; and
Rebuild manufacturing communities and jobs.

Notably, this includes:

Restoring, updating and expanding the scope--and
increasing the loan authority--of the Advanced Technology Vehicles
Manufacturing (ATVM) loan program;
Robustly funding a domestic manufacturing conversion
grant program to retool existing facilities--especially those at risk
of closure--to build EV and related advanced technology;
Creating new manufacturing investment and production tax
credits specifically focused on filling critical gaps in the EV supply
chain (as well as in other clean technologies such as solar and
offshore wind) and bringing new production to scale (again in
conjunction with related grants or loans);
Funding the 48C Advanced Energy Manufacturing Tax Credit
(including direct pay) and/or a complementary grant program to
establish, expand or retool manufacturing to build a wide range of
clean and efficient technology including for advanced and electric
vehicles, and to focus that investment on targeted communities. This
program should be expanded to fund investments to reduce emissions at
industrial facilities as well; and
Making manufacturing and community investments that work
together to build a new generation of clean manufacturing, revitalize
communities, and create good jobs.

In addition, reaching beyond the automotive sector, though critical
to it, we need to reinvest in our energy-intensive industrial base, to
modernize and cut emissions from production of key materials such as
steel and aluminum that are as critical to the future economy as they
are to the economy today. We have the opportunity to make these
facilities the cleanest and most competitive in the world, while
safeguarding jobs and helping to cut emissions and drive up labor
standards worldwide.

Manufacturing as a whole matters, and reinvesting in manufacturing
will be critical to meeting our climate, economic, and equity goals.

As is vividly demonstrated in the transportation sector, investing
in transforming manufacturing will play a fundamental role in ensuring
we move quickly to produce and adopt the clean technologies of the
future. The energy-intensive industrial sector also represents a major,
and one of the fastest growing, sources of U.S. emissions, and
investing to modernize and decarbonize this sector will be critical to
meeting our climate goals while securing jobs and building momentum for
ongoing sustainable economic change. In the United States, the
manufacturing sector contributes $2 trillion a year to GDP, and with
its purchases of goods and services, comprises approximately one-third
of our total economic output, nearly two-thirds of private sector R&D,
and one in 11 jobs.i Manufacturing has a proven ability to
provide high-wage, high-skill jobs, and a reliable pathway into the
middle class for millions of Americans. It has not always lived up to
that promise, however, and these pathways are unavailable to too many
workers today.
As decades of damaging trade, tax, and labor policy have weakened
U.S. manufacturing relative to our global competitors and hollowed out
manufacturing communities, this critical pathway to the middle class
has narrowed. For example: from 2000 to 2016, the U.S. lost over 5
million manufacturing jobs (1.5 million in the Midwest alone),
exacerbating inequality, as high-skill jobs--many of which do not
require a college degree--dissolved in the midst of the financial
crisis and only partially recovered in the aftermath.ii
For communities of color--especially Black workers--the impact of
poor policy has been even more grave. Ongoing declines in U.S.
manufacturing--particularly in sectors such as auto manufacturing where
Black workers are comparatively strongly represented--have hit Black
workers first and hardest.
Most recently, the COVID-19 pandemic demonstrated the power of
advanced manufacturing to meet critical needs, including PPE and other
medical equipment. But it also underscored dangerous gaps in critical
supply chains, and the grave shortfalls in working conditions and
safety for too many workers.
But there is nothing inevitable about this outcome. Instead
policymakers have a clear opportunity now to learn from the past and
take a new approach to rebuilding a U.S. manufacturing sector that once
again plays a defining role in a strong, equitable, and resilient
economy.

Finally, just as manufacturing as a whole matters, so too does a
broader transportation agenda.

Our urgent transportation needs include not only EV deployment and
infrastructure commitments, but also major investments in transformed
transportation systems, such as sorely-needed funding for public
transit, support for clean, efficient, and equitable freight and
commercial transportation, and much more.
We are at a crossroads. The global economy is changing; and the
climate, economic and justice challenges we face are urgent and
intertwined. Now is the time to invest at the scale necessary to lead
in the clean transportation and technology of the future, lift up
workers and communities across the country, and restore U.S.
manufacturing and good jobs in a more prosperous, equitable--and
clean--economy.

References

i. Economic Policy Institute, The Manufacturing Footprint and the
Importance of U.S. Manufacturing Jobs, January 2015. Available online:
https://www.epi.org/publication/the-manufacturing-footprint-and-the-
importance-of-u-s-manufacturing-jobs/

ii. Center for American Progress, The Midwestern Great Recession of
2001 and the Destruction of Good Jobs, June 2017. Available online:
https://www.americanprogress.org/issues/economy/reports/2017/06/07/
429492/midwestern-great-recession-2001-destruction-good-jobs/

Ms. Castor. Well, thank you all so much. All of your
testimony was insightful and very constructive, and we
appreciate it.
So now we will move on to questions. I will recognize
myself first for 5 minutes for questions.
Ms. Andrade, thank you so much for all of your work in the
State of Florida and the Southeast. It is great news that you
are targeting expansion. There--I mean, neighbors back home
they are hungry to lower their electric bills and to weatherize
their homes, and it is a bear to try to find the capital, the
little bit of a loan to help them get there, but we know it has
such incredible benefits of lowering their costs and lowering
pollution for everyone.
So we are headed into a big bipartisan agreement here where
we are going to be able to target a number of different
initiatives to lower costs and ramp up renewables. You
recommended to us kind of a green bank model that has worked
well in other regions of the country.
How can this--go through how an accelerator should be
structured and how do we ensure that we are really getting help
to folks who truly need it, working class communities,
communities of color that have long carried a disproportionate
burden of pollution and often have trouble getting those loan
dollars?
Ms. Andrade. Yes. Thank you very much, Representative
Castor. That is a very good question, and I am happy to try and
address it as best I can.
Green banks, there are 23 green banks across the nation
right now. They take different forms and shapes, depending on
each state and the needs. One of the advantages of green banks
is that they can adapt to the needs of each state and
community. We are very flexible, nimble, and because typically
they are independent nonprofits--we happen to be the only CDFI,
but other structures are quasi state funded, they have a
combination of capital, they really can address the specific
issues in each state.
So currently there are efforts across the nation to start
up more new green banks because what green banks do is really
facilitate and channel funding from the private, public, and
philanthropic sector into communities for these different
purposes, whether it is EVs, whether it is resilience and
solar, or a combination of all of those.
We are proposing, and what we find, is that there is a huge
demand, of course, as we are all talking about here, but
especially the low- and moderate-income communities with the
working class Americans are being left behind and can't access
the benefits of the clean energy economy. It has always been
kind of the--you know, something that the wealthy can access.
The tax credits are typically something that low-income
communities can't access, even the solar tax credits.
So we find that funding a clean energy accelerator would
allow green banks across the nation to proliferate, to also
capitalize our existing funds so that we can create more
programs, and in that creation there is a provision to earmark
40 percent of the funding for LMI communities to ensure
equitable deployment of capital.
And one of the last comments would be that importantly
green banks, because they are independent and nonprofit, which
is the way that we are recommending that the clean energy
accelerator be structured, as an independent non-profit, that
allows us to crowd in more capital, to leverage the balance
sheet and not be tied to Federal funds that are not flexible.
Green banks across the nation are leveraging these public
funding 8 to 1. SELF started with a Department of Energy grant
from the previous American Reinvestment and Recovery Act, and
here we are 10 years later, and we have leveraged public
private funding eight times, and we continue to expand.
So that is our recommendation is invest in these green
banks that can multiply the effects that capital and the job
creation throughout.
Ms. Castor. Thank you very much.
And just back home in the Tampa Bay area, I keep meeting
all of these new small business owners and startups that are
getting into this business, and I know that, again, there is a
hunger out there among neighbors across all communities to
lower their electric bills, and I love the win-win-win
proposition of it all.
So, Ms. Lipman, I loved checking out the new Ford F-150
Lightning the other day. It is--I know they have already over a
hundred thousand on order, and these are good American-made
vehicles. We have got to win the global competition. I have all
the faith in the world in our auto workers and all along the
supply chain, so we are working on the blend of tax credits.
Highlight for us quickly again the priorities here to make
sure that consumers can access these vehicles and we can build
them ASAP.
Ms. Lipman. Thanks very much for that question.
I think we are really excited by products like you
mentioned as well. It is exactly what we want to see the future
look like in the automotive sector. And I think we are rightly
recognizing that worldwide our competitors in Europe and Asia
are rushing ahead to take advantage of this coming industry
globally.
And if we are going to ensure we capture this opportunity,
we need both to spur--make U.S. a leading market and to spur
deployment and to ensure that we do that in both the electric
vehicle, you know, for cars, for trucks, and through fleets, as
well as in charging and to ensure that for across those
incentives we are supporting both high labor standards so we
are ensuring--we are building as good or better jobs in the
clean technologies of the future as we are in the jobs today
and----
Ms. Castor. Unfortunately, Zoe, Ms. Lipman, my time is
short.
Ms. Lipman. Oh, sorry.
Ms. Castor. We have other members, and we are going to talk
more and get----
Ms. Lipman. Manufacturing incentives.
Ms. Castor [continuing]. Other questions from members, so I
am going to go now and recognize Mrs. Miller. You are
recognized for 5 minutes. Thank you.
Mrs. Miller. Thank you, Chair Castor and Ranking Member
Graves, and thank you all for being here today.
I do want to say that I strongly support 45Q and carbon
capture and all of the progress we have made scientifically
moving forward. If we on this committee are really serious
about addressing climate change and ensuring that the Americans
and the rest of us all around the globe can access affordable
and reliable energy, we must embrace carbon capture.
Some of my colleagues across the aisle need to broaden
their view on how carbon capture can impact everybody around
the world. Utilization of carbon capture will allow us to
continue to use cheap baseload energy, which would also include
coal. Specifically exporting this technology abroad will help
the developing nations power up as they are behind us in so
many ways, while we will also be reducing global emissions. It
is a win-win situation.
That is why keeping incentives in place to help fine-tune
the technology is key. Making carbon capture accessible and
affordable is really a critical first step.
Mr. Powell, what steps are needed to make carbon capture
available worldwide?
Mr. Powell. Well, thank you so much, Congresswoman Miller,
and thank you for your leadership on this very important issue.
The recent legislation that you introduced as part of
Leader McCarthy's energy innovation package I think is a
terrific first step to make this more accessible. So amongst
other things, just to summarize, your legislation effectively
made the credit [inaudible] in the tax code. It effectively
doubled the value of the credit from its current state up to
something more--it is $85 a ton and then paying out for more
years which would effectively double its value.
And, very importantly, it radically increased the number of
facilities, including even very small facilities, that would be
able to take advantage of and capture that credit. So,
collectively, that hugely expands the number of facilities that
could take on something like this.
What we have learned in the experience of both radically
reducing the cost of natural gas-fired power, and in wind and
solar, is that deployment is key to bring down costs. We learn
by doing the more of these things we install. So if we can use
a significantly enhanced credit like that to hugely increase
the uptake of this across more and more facilities and start
building out the infrastructure across the country that could
move that captured CO2 either to permanent
sequestration sites or to places where it can be utilized for
other means as a commodity, that would be a terrific first
step.
And then we need to think about strengthening our export
authorities in this space so that we can get that technology
out to more of the rapidly developing world, and there are a
number of things we can do there as well.
Mrs. Miller. That is part of it because of the worldwide
need. How would this utilization of technologies like the
carbon capture reduce energy poverty?
Mr. Powell. Absolutely. So across the world, there are
enormous remaining fossil fuel assets. In many places they are
an extremely affordable way to both generate electricity and to
power heavy industry or to heat cities. If there is some way
that we can continue using these resources in a low emissions
future, that is a terrific tool to keep available for the
rapidly developing world.
If you look at countries like China and Indonesia, they are
continuing to build coal-fired power plants and coal-fired
power technology because they have tremendous coal reserves.
Many other countries have tremendous gas reserves.
Frankly, if we don't find some way to allow those countries
to retrofit a lot of what they have built with carbon capture
technology, I don't see any path to solving the global
emissions challenge and actually reducing the risks of climate
change.
There is just so much steel in the ground now that is using
these assets, literally a terawatt of coal in China, the size
of the entire U.S. power grid alone, and still rapidly
developing in a number of other countries.
Mrs. Miller. Don't you think the utilization of this
technology would also create jobs in the developing nations as
well?
Mr. Powell. Absolutely. I mean, if you look at China alone,
there are--you know, for better or for worse, there are 10
million people employed in the coal value chain in China alone
and hundreds of thousands and millions in many other rapidly
developing countries. And to preserve those jobs in many of
those places or even to expand the jobs in this industry, but
to do so in a more responsible way going forward to capture the
emissions, that is a win-win for development and for global
clean energy.
Mrs. Miller. Because they are going to keep doing it.
Thank you so much. I yield back my time.
Ms. Castor. Okay. Next up, Rep. Bonamici, you are
recognized for 5 minutes.
Ms. Bonamici. Thank you so much, Chair Castor and Ranking
Member Graves, and thank you to our witnesses.
So this is a hearing about financing climate solutions and
job creation, and I serve on the Education and Labor Committee,
and I do a lot of work in the workforce area, so I am going to
focus on the job creation part of this hearing.
And to follow up on Representative Miller's questioning, my
grandfather was a coal miner. I am the granddaughter of a coal
miner, and I know that what is important to transition to a
clean energy economy while making workers a priority. We have
the opportunity to create millions of good-paying, high-quality
union jobs as we make this transition. But it can't be a race
to the bottom in terms of wages, and that is what I am
concerned that there is this fear across the country that
people won't get good jobs, they will get low-paying jobs, and
that is a concern.
We need to make worker protections and workforce
development a priority, and our Climate Action Plan integrates
Buy American requirements, Davis-Bacon prevailing wage
requirements, and the use of Community Benefit Agreements and
Project Labor Agreements into Federal clean energy and
resilience investments, and that is important.
Our transition to a clean energy economy also offers an
opportunity to connect people who are unemployed or
underemployed with the training they need to access those jobs.
And earlier this year, I reintroduced my bipartisan, bicameral
BUILDS Act, and that bill supports people who have historically
faced barriers to employment, particularly women and people of
color. It gives them access to register for apprenticeships and
the support services they need to secure those good-paying,
high-quality jobs in transportation, clean energy,
construction, and infrastructure.
So, Ms. Lipman, the BlueGreen Alliance's manufacturing
agenda does highlight the importance of high-quality jobs with
labor standards and creating pathways for more people to access
those jobs. So how can tools like keeping the Benefit
Agreements and investments, and registered apprenticeships help
improve those economic opportunities particularly for frontline
communities and increase access to good-paying manufacturing
jobs?
Ms. Lipman. Thanks so much.
You have already laid out some of the key priorities here.
We need to ensure, as I started to mention previously, that as
we deploy, as we have incentives of any kind, public funding of
any kind that deploys this technology, that it comes with high
labor standards, with incentives to utilize the kinds of
community benefit and Community Workforce Agreements that you
mentioned, that we invest in sufficient scale to ensure that we
can reach--can rebuild the manufacturing communities, both to
the communities and the workers who need it most, and that we
target this investment to a whole range of communities who have
seen this investment.
And where we can ensure that we are bringing back good-
paying industrial jobs to industrial communities that have lost
them and energy communities that have lost them, as you
mentioned, as well as to ensure that we are providing
investment in communities that have historically been excluded
from that investment and that, as someone else mentioned
earlier, that the benefits from this clean energy transition
reach every community, that we see EV charging in rural and
low-income communities, not just where the market price is
provided.
Ms. Bonamici. Absolutely. And also, Ms. Lipman, what
Federal investments would help scale up our nation's
manufacturing supply chain to meet the current needs of
transitioning to a clean energy economy?
And how can Congress support efforts to retool existing
factories or facilities or incentivize new businesses to
manufacture EVs and clean energy technologies? What would we
need to do?
Ms. Lipman. Absolutely. We have a host of tools at our
disposal that we have the opportunity to more robustly fund and
use more aggressively. Those include the Advanced Technology
Vehicles Manufacturing Loan Program that could be expanded and
used more broadly.
We need to fund a Manufacturing Conversion Grants Program
that would help ensure that we retool facilities that may be at
risk of closure to build the technology for the future, and we
need to, in addition to, as we mentioned the domestic
manufacturing conditions on the deployment incentives, look at
a new manufacturing investment and production tax credits to
fill the supply chain gaps that we have seen so vividly missing
here and that are so important to bring battery and cell and
other production here, not to mention things like
semiconductors.
Ms. Bonamici. Right.
Ms. Lipman. So, for all of these things, it will be
critical, not to mention targeting these investments.
Ms. Bonamici. Tremendous amount of potential.
Madam Chair, as I yield back, I just want to take a moment
to thank Maxine Sugarman of my staff, who has been with me for
6 years, and has staffed me on not only the Select Committee on
Climate Crisis but also on many of the labor and education
issues, and science committee issues. Maxine is heading off to
law school soon, but I just want to thank her for her exemplary
work over the years, particularly on this committee.
Ms. Castor. Well, thank you, Rep. Bonamici. And Maxine has
been a wonderful staff member part of the Climate Crisis family
here, and she hasn't just helped you out, but she has helped
out the entire committee.
So good luck in law school, Maxine. I think you are just
getting started out there in the world.
Ms. Bonamici. Thank you, Madam Chair. I yield back.
Ms. Castor. Thank you.
Next we will go to Congressman Gonzalez. Good morning. You
are recognized for 5 minutes.
Mr. Gonzalez. Good morning, and thank you for holding this
hearing.
I have to start, unfortunately, I deeply respect the Chair
and everybody on this committee and everyone across Congress. I
have to respectfully disagree with the idea that we are having
a remote hearing today. From what I can tell, there is no
guidance whatsoever that suggests that we cannot meet in person
safely. I think over 85 percent of Members are vaccinated. I
don't know what percent of this committee. I have been
vaccinated from day one. I urged all of my constituents to do
it. I know there is still hesitancy out there.
But there is nothing anywhere that suggests that we can't
figure out a way to meet safely in person, and I think it is
important that we show the country that we can go back to
normal and stay normal and meet in person.
Also, I think it is worth noting this is a global virus,
much like climate change. This is a global virus, and there
will be variants for the rest of our lives. There is
effectively zero chance that we are going to eradicate COVID
from Planet Earth, and if we run and hide every time there is a
variant, we will never, ever get back to normal.
I don't know, I am a parent of young kids. My wife and I,
we are not wild about locking ourselves up for another year if
that is the way that this is going to happen, and I know that
my constituents feel the exact same way.
Ms. Castor. Well, I want to thank you, Rep. Gonzalez,
because I--this was my call, and I thought, well, since all of
our witnesses were remote and it was a 9:00 a.m. early morning
hearing that just for convenience sake, we would do it. If we
were in the committee room, we would be masked, and this is a
little more comfortable way to do it. But I prefer the in-
person hearings, and we will be doing those on a more regular
basis.
But, please, everybody, if you are not vaccinated, get
vaccinated so that we can crush COVID.
Mr. Gonzalez. Yes, ma'am.
Ms. Castor. And I won't ding you on your time here. You
will get some extra time. So please go ahead.
Mr. Gonzalez. Well, yes, ma'am, and that is good to hear,
so I appreciate that explanation.
So, as I said, it is good to see everyone, and I thank the
witnesses for joining us. As I have said, no doubt climate
change is a challenge that warrants our attention, but like any
issue, we do need a policy approach that is realistic and cost
effective.
It requires we balance a broad array of interests and
commitments, such as energy security, economic growth,
competitiveness with Russia and China, and human rights.
The good news is there is quite a bit of common ground on
these policies, particularly on innovation, a competitive
advantage that the U.S. can tap that exists nowhere else in the
world. In my view, policy proposals should be focused on
stimulating an innovation ecosystem here in the U.S. that have
the potential to drive real technological breakthroughs that
are affordable and reduce our carbon footprint.
To that end, I recently introduced the Steel Upgrading
Partnerships and Emissions Reduction Act, which passed out of
the Science Committee, or the SUPER Act, legislation that would
establish a program at DOE to further the research,
development, demonstration, and commercial application of
breakthrough technologies for low-emissions steel
manufacturing.
By developing and commercializing these technologies, we
can ensure U.S. industry remains competitive in global markets
while reducing emissions in the steelmaking process, again
balancing economic growth with emissions reduction.
I have also introduced the Coordinated Action to Capture
Harmful Emissions Act, a bill that would expand the values of
45Q tax credit for carbon capture technology and eliminate the
arbitrary thresholds on facilities that limit deployment.
Mr. Powell, I appreciated your testimony because you are
absolutely right that carbon capture has to be the central
focus of our effort to decarbonize the power and industrial
sectors. I don't know how we can do it without carbon capture.
Innovation, public-private partnerships, and incentive-based
actions have proven to work, and each of these bills relies on
these proven abilities, and I encourage my colleagues to
consider each bill as we debate policy solutions.
So, Mr. Powell, I want to start my questions with you. And,
first off, it is good to see you. Reasonable estimates of the
Green New Deal suggest the electricity portion alone costs
around $500 billion per year, or about $4,000 annually per
American household. I want to highlight this because I, again,
think it is important we recognize that massive reductions in
greenhouse gas emissions do have a cost associated with them,
and it is going to force us to deal with various trade-offs.
There is a great deal of interest, investment, and talent going
into various technologies, but which are you most excited
about? And how can Congress accelerate their development?
Mr. Powell. Well, first, again, thank you, Representative
Gonzalez, for your terrific leadership on this. I think that
between the terrifically named SUPER Act and CATCH Act, I think
that starts to set up really a comprehensive regime to think
about radically reducing the cost of steel and other
commodities in the industrial sector.
Just to reiterate, industrial emissions actually in the
United States last year for the first time were about equal to
power sector emissions, and most estimates have them going to
being the predominant source of emissions for the United States
by 2030. So finding ways through innovation and incentives to
start bringing those down, alongside all the success we have
had in power and increasingly in transportation I think is very
important.
Unfortunately, there is no silver bullet technology. We
need a portfolio of approaches to do this. Carbon capture is
extremely important, and for many parts of the industrial
sector, that is the most available technology today, literally
just kind of putting a cap on top of a facility and capturing
those emissions. Over time we should also be looking,
particularly in the industrial sector, at ways to do things
differently within those facilities. A huge source of those
emissions are heat in the industrial sector. Today, in many
blast furnace steel plants, for example, a lot of that heat
comes from either natural gas or coke and coal, part of the
process.
If we could find some alternative way to produce that heat
in a fully clean way, either with clean hydrogen or high-
temperature nuclear reactors or heat-generating units with
carbon capture on them themselves, that will be a huge step
forward.
And then, lastly, we can think about entirely new ways to
run those processes. There are now electric chemical approaches
well under development and heavily underfinanced in the venture
capital sector, but entirely new ways to reduce the iron--or
reducing the oxygen out of iron oxide, the first part of the
steelmaking process. We should be deeply investing in basic and
applied research and demonstrations of those advanced
technologies as well.
Mr. Gonzalez. Thank you.
I see my time is almost up, but I think it is helpful to
think about it that way is, you know, how far along on the R&D
curve are we when it comes to decarbonizing the industrial
sector. I think from an R&D standpoint, we have developed a lot
of technologies in the power sector, we need to make them more
efficient, bring the costs down, et cetera, but looking at the
industrial sector, where are we and how can we make
improvements going forward I think should be a central focus
for this committee and much of Congress.
With that, I yield back.
Ms. Castor. Thank you.
Next we will go to Congresswoman Brownley. You are
recognized for 5 minutes.
Ms. Brownley. Thank you, Madam Chair. Thank you for having
this hearing.
My first question is to Ms. Andrade. Hopefully I am
pronouncing your name somewhat correctly. You know, today, we
are talking a lot about green banks, which you did, and clean
energy tax credits, and I just wanted to ask you if you could
talk a little bit how these two things can really sort of
compliment each other. And so if you could speak to that.
Ms. Andrade. Thank you.
Yes. So I think Mr. Powell said something that I just want
to start with, which is there is no silver bullet to address
these issues, and we have to work in multilayer and multilane
programs to address these issues.
Green banks can bring capital into communities to solve a
series of issues, specifically to finance everything from R&D
that has been talked about here to EV financing for low- and
moderate-income or not. And the financing the green banks can
deploy is flexible and can leverage additional capital.
So, for example, one of the things that we have been
hearing more and more is that developers that are building
affordable housing don't really go that extra mile to build the
climate resilient, maximum energy efficient and even solar or,
you know, wind powered buildings because of the cost.
So that is where tax credits come in, for example, where if
there were tax credits that incentivize and motivated
resilience investment, solar investment--there is a Federal tax
credit for solar, but the capture of that tax credit remains at
a very high level for the developers. It doesn't go down to the
tenants, for example. Typically it is used to fill those
capital stacks and to make the financing work.
So what we are finding is that there is a need for more
flexible, low-cost capital to complete these capital stacks so
we can invest in better buildings that are resilient, that are
efficient, that are not only affordable to get into and to rent
or to own but actually to operate over time.
So that is the gap that a combination of low-cost flexible
capital deployed through green banks and a policy of tax
credits that motivates energy efficiency and climate resilience
can bring together, can really unleash and catalyze a whole new
standard of building in a way that works for everybody. For
developers that want to make profits, for people that live in
those homes, and for communities that are trying to stabilize
and revitalize.
Ms. Brownley. Thank you very much.
Mr. Larsen, I am working on a bill on sustainable aviation
fuel and, you know, I think we are moving forward certainly
with a production incentive tax. And my question is, you know,
this is sort of a new emerging area. We haven't had a tax
incentive federally for aviation in this particular area.
So I am wondering, you know--I believe, and I want to just
hear what your opinion is, is that to really get this industry
going, we need both. We need both the investment and the
Production Tax Credit. Can you give your opinion on that?
Mr. Larsen. Yes. No, thank you for the question.
I think the most important thing to keep in mind in policy
design for all of this is something Rich Powell said, which is
the way that we get all of these technologies to get down in
cost is through deployment. Right? And so--and that goes for
everything, from an electric vehicle, to the next generation of
wind farms, to sustainable aviation fuel. And I think there is
lots of different combinations of incentives and tax credits
that can meet that general goal of accelerating deployment and
getting costs down.
I don't think any investor is going to go big on major
production of clean fuels without knowing that there is going
to be a market for it, and one way to do that is through a
production incentive. At the same time, these are very large
facilities that have a lot of capital involved, and so finding
ways to get over that first hurdle of just building the
facility is going to be important.
I think a combination of PTC and ITC is one way to do that.
I think, you know, it could also be through deployment grants
out of DOE or something like that. Right? There is lots of
different--back to the no silver bullet point. Right?
But I would say, you know, thinking through how different
levers can fit together here to make--get those new
technologies to scale is going to be very important.
Ms. Brownley. Thank you so much.
And thank you, Madam Chair. I yield back.
Ms. Castor. Great.
Next was Mr. Armstrong. Is he there? If not, let's see, Mr.
Crenshaw, are you ready?
So next we will to--we will recognize Mr. Crenshaw for 5
minutes.
Mr. Crenshaw. All right. I can be ready. We will do this.
And thank you all for being here. I appreciate it.
I do have to start out with echoing some of my colleagues'
statements. We should be in person. This hearing is about
science. Our decisions here in the Capitol should be about
science, and I could go into a long tirade about where the CDC
got their guidance and where our own House doctor got their
guidance. We have all been vaccinated. It is safe. We need to
show some leadership.
I would also say I don't know how we are supposed to keep
engaging in bipartisanship when the majority is threatening the
minority with fines and jail time for not wearing a mask. This
has gone too far. It has gone way too far. You are demeaning
us, making us walk through metal detectors to get onto the
House floor, if that makes any security sense whatsoever. We
have to stop this so that we can get to the real work, which is
policy. Okay?
So now I will transition to policy. And I want to start
with asking a question. When we are talking about tax
incentives and ways to decrease global emissions, that is a
common goal. I can't emphasize that enough. But is it about
reducing carbon emissions or is it about promoting wind and
solar? And are wind and solar just getting preferential
treatment? And they are, of course.
You know, for instance, why is there a pushback on moving
from a PTC and ITC to a tech neutral tax credit? That seems
like a common sense thing to do. Because the reality is that
solar and wind can't possibly power the economy. It is a total
fallacy to believe that that can happen.
But I can tell you just with a few statistics, it takes 3
to 4 more times more land to power the same amount of energy
for solar than it would for nuclear. Just, for instance, from a
capacity standpoint, solar and wind operate at about 30
percent. Nuclear, gas, coal operate above 90 percent. This
matters. And you also can't change this fact. It is just a
basic law of physics, and it matters quite a bit.
We talk about environmental justice all the time but what
about energy justice? What about the right of people to have
power when they need it? So dedicating incentives and
regulatory changes only towards solar and wind, I just--I am
not sure it will be successful. I am not sure it makes any
sense. And it certainly won't create jobs the way that many of
my colleagues have proposed.
So, you know, why are we against the carbon capture credit
is what--you know, we say it is too harmful because, well, you
are still pulling fossil fuels out of the ground. But, again,
is the goal to reduce carbon emissions globally or is the goal
just to push a very specific industry in the United States?
And now the argument has been made that that industry
creates jobs, like these tax incentives will create jobs, but
here is the thing--and, by the way, the Washington Post had to
fact-check John Kerry for making this claim, that solar and
wind jobs were the fastest--some of the fastest growing in
America. Well, by a percentage growth, yes, but by absolute
value, almost no growth whatsoever. We would be losing hundreds
of thousands of jobs. We lost 800,000 jobs in the past year in
the oil and gas sector just because there was a dip in demand,
and that is how sensitive this job market is.
So, you know, it is also worth noting on average solar and
wind jobs pay $20,000 less than an oil and gas job. So if you
wanted to create a lot more jobs, and especially manufacturing
jobs and good-paying ones, we would build more nuclear plants.
We would build more nuclear plants, and we would build more
carbon capture stations. We have private companies that are
really willing to invest in that.
I get briefs on it all the time, especially in the Houston
area. You could have massive effects on carbon reduction with
this. You can have massive effects on carbon reduction with
exporting more of our natural gas because we burn it cleaner
and we produce it cleaner than any other country in the world.
But if we give that up and global demand for energy keeps going
up, as it will, well, Saudi Arabia, Iran, and Russia will meet
that demand, and they will do it with much dirtier energy.
Let me see how much time I have left here. Very little.
Okay. Mr. Powell, can I ask you a quick question? Depending
on the other climate solutions proposed, could jobs gained
through a tax incentive just be lost through additional
regulatory actions?
Mr. Powell. Well, first, thanks, Congressman Crenshaw, for
your leadership across these issues, your support of the Energy
Act last year, your leadership on carbon capture and geothermal
and regulatory reform. I do think we should remember, to your
point, that the incentives we put into the system are also
dependent on having a permitting and regulatory system such
that those incentives will actually allow us to build in a
timely fashion all of the things that we want to build.
And so it is very, very sensitive on the other end to
having, for example, NEPA processes that actually allow timely
environmental impact statements and yes-or-no answers to
actually cite and permit things on an expeditious timeline. Or
regulations to safely store and site carbon capture permits and
facilities and pipelines.
And so we can't leave out the really important process of
reforming and streamlining our regulatory processes so that we
are not kind of pushing on a string. Right? We are not putting
more incentives in and spending more but actually not getting a
lot of projects actually out of the back end as a result of
those incentives.
Mr. Crenshaw. Thank you. I am out of time. I yield back.
Ms. Castor. Thank you.
And, Mr. Crenshaw, I know you joined the committee this
Congress. I recommend to you you go back and read the section
of our Solving the Climate Crisis Action Plan where we have a
significant section on carbon capture and storage with a lot of
good recommendations that I think can provide some bipartisan
ways forward.
And we highlight the fact that, especially in the steel,
cement, other industrial processes, we do not have the answers
on how we are going to capture carbon and how we need to invest
in R&D there, and I think that this could be an area of
bipartisan agreement moving forward. So I recommend that to
you.
And next we will go to--before we go to Representative
Casten, if you all haven't seen his rifs on the House floor on
social media on Hot FERC Summer, I recommend those to you as
well.
So next, Rep. Casten, you are recognized for 5 minutes.
Mr. Casten. Thank you, Madam Chair. I will not being
rapping today, much to your displeasure I am sure. I really
appreciate you all having this hearing.
As you have heard me say many times before, getting to a
clean energy economy is synonymous with getting to a cheap
energy economy. And with the exception of carbon capture and
storage, which is a total economic boondoggle, we are going to
get to that. Every clean energy technology we have has a lower
operating cost than the technology it displaces, and I wish
that wasn't partisan.
My goodness. I am getting exhausted hearing my friends
across the aisle say that what we need to do is to subsidize
energy sources that are slashing their prices and losing market
share.
I don't know what that is, but it isn't capitalism, so
let's talk about markets. Let's talk about the challenges of
deploying low-cost technologies, getting them through that
valley of death, and we did that with Title XVII of the Loan
Programs Office in the ARA and was actually hugely successful,
deployed over $30 billion. You know, there is a lot of hype
around some of their losses, but I think they have generated $3
billion in interest revenue and only had a billion dollars in
losses. We need to be expanding that program.
In my prior life I actually participated in that program,
and one of the challenges that we still never fixed is that
when that program was set up, Congress in their wisdom, lack
thereof, said that the credit subsidy would have to be paid
essentially as an added fee so that what happened was that
while we set this out to say let's provide lower cost
guaranteed debt to help these companies come forward, what we
effectively did was increase the equity participation in those
programs.
I wasn't sure who I was going to ask my next question to,
but, Ms. Lipman, I see you nodding your head. And briefly,
because I want to get to a couple of things, but would you
confirm that that is a problem, or would you disagree because
it looks like you have got some experience there as well?
Ms. Lipman. Yes, I agree, and I think there is a huge
opportunity to address that particular issue, but also to more
broadly utilize the loan programs, the manufacturing loan
programs, and the grant authority of DOE to get at exactly what
many folks have been talking about here, moving these
technologies through commercialization into full deployment and
particularly in the industrial sector where we have a
tremendous opportunity to reinvest and transform----
Mr. Casten. Okay.
Ms. Lipman [continuing]. As well as across clean energy and
clean energy manufacturing.
Mr. Casten. I am sorry.
I totally agree, and I was pleased we actually voted on the
floor last night, we had an amendment that myself and
Representative McEachin put in to start the process of
eliminating that credit subsidy so that we can actually use the
program, as I think Congress intended, to provide a lower cost
source of capital to these technologies.
Ms. Andrade, one of the ideas that we have been kicking
around is that the U.S. buys about $8 billion of appliances
every month, and I think LMI communities are about half of that
number. If we could fix the credit subsidy problem, is there
any reason we couldn't use that program to essentially provide
low-interest financing to help LMI communities accelerate their
acquisition of energy-efficient appliances that are going to
leave more money in their pocket every time their rent comes
due because they don't have to pay for energy? Structurally can
we do that?
Ms. Andrade. Thank you, Representative.
I think that you could definitely do that, and, again, it
is one more layer that would benefit this transition to clean
energy economy. We need all of the tools in the toolbox, and
you are talking about appliances. One of the things that is
interesting to note is that in LMI communities, a lot of times
there is this, like, sharing of old appliances, where, you
know, when an old appliance doesn't work well anymore, they
pass it on to a neighbor, and this really creates tremendous
inefficiencies, and it is a huge cost for community members,
households, but also they are high carbon-emitting appliances.
So, yes, we should work at this level where tax credits can
incentivize the switch out of these old inefficient appliances
with new technologies that are low carbon emitting and more
efficient. So that is one layer, but that still doesn't solve
the whole problem.
Mr. Casten. I am sorry because we are tight on time, but I
would love to do that, and I would love to work with this
committee to do it because I think we need to expand the actual
authority on the renewable and efficiency part of this
ultimately do that, but I think that there is an opportunity.
Just lastly, I want to close on CCS. Mr. Powell, should we
be using the 45Q program to accelerate the release of carbon
dioxide into the atmosphere?
Mr. Powell. We should be--can you repeat the end of that
question?
Mr. Casten. Should we be using the 45Q program to
accelerate the release of carbon dioxide into the atmosphere?
Mr. Powell. No. And the 45Q credit obviously does the
opposite.
Mr. Casten. Then let's--for goodness sake, let's stop
subsidizing enhanced oil recovery. Pumping low density gases
underground to accelerate the release of high density sources
of carbon does not release CO2 into the atmosphere.
It is a boondoggle. We need to stop pretending that 45Q doesn't
need massive restorations.
I am out of time. Thank you. Yield back.
Ms. Castor. All right. Next up, Ranking Member Graves. You
are recognized for 5 minutes.
Mr. Graves. All right. Thank you, Madam Chair.
Madam Chair, I would like to start and yield 30 seconds to
Mr. Crenshaw.
Mr. Crenshaw. I thank the gentleman from Louisiana, and I
thank the Chairwoman for expressing the bipartisanship that can
exist on carbon capture and utilization; but I have to point
out that all of the environmental justice literature is
completely against carbon capture, and Representative Casten
just spent his entire time calling it a boondoggle. Okay.
So this is why I express that there is actually
disagreement, and to the Chairwoman's point, I think there can
be agreements, and I would like us to get there.
I yield back.
Mr. Graves. Thank you.
Madam Chair, I wasn't planning on doing this, but I do
think that Mr. Crenshaw's earlier line of comments are
appropriate.
We are talking about science, and we are being asked to
follow the science. Yet as we are witnessing right now, we are
being asked to wear masks again, but then the same leadership
or the folks that built a plexiglass chamber on the House floor
to actually allow for COVID positive people to come into the
House chamber, and as we know, there is no pathway you can walk
without walking through the Capitol and sharing your germs with
everyone, and that was done solely for a political purpose of
electing Pelosi Speaker. It is the same party that without any
threat assessment, without any threat assessment at all, is
diverting 12 or 15 officers, as long as we are in session, to
the House floor whenever U.S. Capitol Police is actually
understaffed, and the threat is truly on the outside.
And so I think Mr. Crenshaw's line was exactly right, and
that it is really hard in some cases to think that folks are
operating in good faith and truly on science whenever they just
use it when it is convenient.
Now, I want to pivot back to the topic of this hearing.
Mr. Larsen, I want to understand something. You responded
to a question a minute ago where you said that the best way--
and I think you were referencing Mr. Powell's comments as well,
the best way to bring down costs is through deployment. I said
in my opening, we have had solar and wind for decades now. I
have heard Mr. Casten and others talk about how it is the most
affordable source of electricity. But then in your testimony
you said we need to extend and expand the ITC and PTC.
Can you help me understand that quickly, please?
Mr. Larsen. I will be happy to, and it is a great question.
Essentially, in the absence of any other deployment policy
to decarbonize the electric power sector, tax credits can do a
lot to meet that same goal. Right? So if you don't have either
some sort of EPA regulations or clean electric standard or some
other policy driving decarbonization, then tax credits are a
tool----
Mr. Graves. But why do you need them if it is already the
most affordable? I mean, shouldn't the market drive you to that
solution if it is the most affordable? What am I not
understanding about?
Mr. Larsen. I mean, one key nuance there is the most
affordable new generation, there is a lot of existing natural
gas with no carbon capture on it that is just as competitive as
the new renewables, and it is already built and it can run.
Right?
Mr. Graves. So when you say or when folks say it is the
least expensive, they are talking about just operating? They
are not talking about the actual Capex and everything else that
goes into it? Is that----
Mr. Larsen. No. I think what they are saying is when you
build something new, renewables are the cheapest option; but
than doesn't mean when you are dispatching the grid, it is
always the cheapest thing to go. In fact, there is 400
gigawatts of gas combined cycle units that can run quite
cheaply on very low variable [inaudible] fuel cost. Right?
And so--and all of that emits. And so that is the other key
challenge here that when it is----
Mr. Graves. Thank you.
Mr. Powell.
Mr. Larsen. Yes.
Mr. Graves. The United States being able to take advantage
of clean energy technologies to utilize our resources is
important. Can you talk about the global importance of
development of technologies, including more important
affordable technologies that allow the developing world to have
reliable low emissions?
Doesn't it make sense that we develop the technology in the
United States and then export it to India and other developing
nations?
Mr. Powell. Absolutely, Congressman Graves. And, again,
thank you for your leadership across these issues and
particularly your focus on permitting reform to get clean
energy built faster.
I think this global picture has two fundamental pieces.
One, very quickly in response to Congressman Casten's last
point, we have to remember we are in a global market for
commodities like oil. So if we use enhanced oil--
CO2-based advanced oil recovery here in the United
States, that is offsetting another barrel of much dirtier oil
produced somewhere else in the world, for example, in the
Russian arctic.
So we are actually lowering global carbon dioxide emissions
even though we are using it to produce another barrel of oil
here in the United States. Very, very important point, it is a
little sophisticated point, about how global oil markets work,
but a really important one to remember.
Similarly, on the global technology market, we need to
remember we are in a race with a number of other very
aggressive countries globally to supply the rapidly developing
world with the power plants and the industrial equipment that
they are going to use to develop and modernize.
A lot of the other players in that race, China in
particular, talks a good game about climate change but doesn't
necessarily prioritize selling clean energy technologies to
those developing markets. In fact, through the Belt and Road
Initiative, they have been very happy to heavily subsidize,
finance, build, and supply even really inefficient subcritical
coal technologies, things we wouldn't allow to be built in the
United States today because they are so inefficient and so
polluting on so many dimensions.
So we have got to remember that we are up against really
tough competitors globally. We need better solutions. We need
cheaper, higher performing solutions, and we need packages of
incentives like the support of the Export Import Bank or the
Development Finance Corporation so we can actually go head to
head with what China is offering to the developing world and
change their emissions trajectory.
Mr. Graves. Great. Thank you, Madam Chair. Thank you for
allowing a little extra time there, and I do--I just want to
say I think Mr. Crenshaw's comments about, look, the only way
we are going to get anywhere is us working together, and I
think that there is some--some, as you and I have discussed,
plenty of areas where we do agree, and it is important for us
to get back together to work together to achieve some of these
mutual goals.
Over. I yield back.
Ms. Castor. Yes. I trust we are going to have those
opportunities shortly if some bipartisan packages come over
from the United States Senate soon.
So next we will go to Congresswoman Escobar. Good morning.
Welcome. You are recognized for 5 minutes.
Ms. Escobar. Good morning, Madam Chair, and thank you so
much for having this hearing for us and bringing us together
this morning. And to our panelists, thank you so much for all
that you have shared so far and for the work that you are
doing. I am really grateful for it.
I want to begin with a very general question, and then I
want to dive into some specific questions as they relate to my
community. But, Mr. Larsen, you began your comments kind of
laying out, you know, very clearly some specific tasks that
Congress could accomplish, and in that spirit of what you
shared with us, what I would like to ask our other panelists is
a couple of quick--what is some low-hanging fruit that you
think Congress immediately can jump on to achieve some quick
wins? Because my belief is that having some easy, quick wins on
climate builds momentum, and with that momentum we are able to
then begin to tackle some of the more difficult conversations,
which you all have witnessed here during this hearing today.
But if I can start with Ms. Lipman, low-hanging fruit, easy
wins that you would tell us to get to work on immediately?
Ms. Lipman. Manufacturing conversion grants. We have such
an opportunity to invest in companies that want to move into
clean technologies of all kinds and may be faced with changes
in the market they can't respond to now and ways that save jobs
and save good jobs, and it is a great opportunity to help folks
move into these sectors and keep jobs here in the U.S.
Ms. Escobar. Thank you.
Ms. Andrade.
Ms. Andrade. Thank you.
Yes, some low-hanging fruits would be to increase funding
for the existing weatherization insulation programs, so-called
WAP, LIHEAP, but also just provide funding to green banks that
are in existence so that they can capitalize and catalyze and
leverage those funds so that instead of just having a certain
amount in these programs, we actually have eight or ten times
more.
So that, coupled with--honestly, I think that we have to
include a climate resiliency tax credit along with the solar
tax credit or any other tax credit so that we motivate energy
efficiency as a first step. That is the low-hanging fruit,
energy efficiency and resilience, and then all the other
technologies especially for LMI communities.
Ms. Escobar. Thank you Ms. Andrade.
Before I head to Mr. Powell for any low-hanging fruit
suggestions he has, you essentially identified what I was going
to be asking you about. I represent an economically
disadvantaged community out in the middle of the Chihuahuan
Desert where we suffer frequently from severe drought, and then
we sometimes swing over to extreme flooding; but many of our
families are unable to really protect themselves against the
extreme heat because of lack of access to weatherization for
their own homes. So I may get back to you if we have time on
that issue in just a sec.
Mr. Powell, low-hanging fruit, quick ideas?
Mr. Powell. Pass the Energy Sector Innovation Credit. It is
bipartisan. It is bicameral. It has support from leadership in
both Senate Finance and House Ways and Means. It is poised for
passage. It would put all advanced clean energy generating
technologies on an equal footing with a leg up to get those
into the market and deployed quickly and lower the cost so we
would have a whole portfolio of things to use here in the
United States and export to the developing world.
Ms. Escobar. Thank you.
And, Mr. Larsen, anything you want to add as a footnote in
the great list that you gave us during your remarks?
Mr. Larsen. I think I would just reiterate a couple of key
components. One is allowing credit flexibility so, you know, a
technology or a developer could choose either the ITC or the
PTC is really important to actually broadening the scope of
opportunities for investment across America and also can really
hyper charge deployment by doing so. And I think just that
tweak to the existing tax credit framework would be quite
impactful.
Ms. Escobar. Great. Thank you.
And I have probably only 30 seconds. Ms. Lipman, I want to
ask you a quick question. In my community, the El Paso Chamber
of Commerce is working with our university and our electric
utility on a model that ensures that vehicle batteries can plug
into the grid and sell excess energy back to the grid. They
estimate that it could mean an additional $500 income for
consumers who own an electric vehicle.
How can Congress support more of these kind of vehicle-to-
grid models?
Ms. Lipman. Sure. And in 7 seconds I would say there are
numerous tools. It is an exciting opportunity to both use our
tax credits and grants, but also the public sector, the
infrastructure funding that would allow both households and
things like schools systems and municipal bus utilities to
create both--bring in the electric vehicles, but also create
this vehicle-to-grid or vehicle-to-building resilience assets
that are there in times of a disaster, but also provide the
return to the school system, to the community through the
utility services.
Ms. Escobar. Thank you.
I am so sorry, Ms. Andrade, we can't finish our
conversation. I am out of time.
Madam Chair, I yield back.
Ms. Castor. Thank you very much.
Well, I am going to make sure you all get together after
the hearing to make that connection.
Next up, Rep. Levin. You are recognized for 5 minutes.
Mr. Levin. Well, thank you, Chair Castor. I am grateful
that we are holding this hearing on such an important topic.
You know, since I came to Congress in 2019, I have been
fighting for the passage of a comprehensive clean energy and
clean transportation tax package that will put our country on a
path to a sustainable future. That package would drastically
reduce greenhouse gas emissions so we can address the climate
crisis that study after study tells us that we face.
In April of 2019, I co-lead a letter signed by more than
100 of our House colleagues calling for the inclusion of these
sorts of policy and the always just around the corner
infrastructure package under the prior administration. And we
saw and continue to see these clean energy tax policies as a
way that our country can combat the climate crisis, grow our
economy, and create good jobs all at the same time.
Unfortunately, the infrastructure package often discussed
under the previous administration seemed to be more about
scoring political points and less about actually creating jobs
for our constituents, so it never materialized. But this
administration, President Biden has revitalized these
infrastructure efforts with the American Jobs Plan where he
calls for an expanded investment tax credit and production tax
credit for clean energy generation and storage, along with
significant incentives to facilitate electric vehicle adoption
and charging infrastructure.
I share his vision. Many of our colleagues do as well. And
earlier this month, I was really pleased that 133 other members
signed a letter of support calling for the climate provisions
in the American Jobs Plan. We called for the adoption
specifically of a robust 10-year clean energy and
transportation tax title as outlined in the President's
proposal.
A key part of that, making sure that the clean energy tax
credits were made eligible for direct pay, particularly
important as we continue the economic recovery from the
pandemic which has made it more challenging to finance clean
energy projects. I introduced last Congress the bipartisan
Solar Jobs Preservation Act with Representative Schweikert to
temporarily create a direct pay option for solar projects that
were able to break ground by the end of 2021. They extended the
phase down of the tax credit scheduled by 1 year. And then this
Congress Earl Blumenauer and I built on that by introducing the
Renewable Energy Investment Act to allow either the PTC or ITC
to be taken as a direct payment rather than a tax credit. I
continue to believe these policies are critical to our effort
to build more clean energy projects.
Mr. Larsen, I will turn to you for a couple of questions.
Your testimony recommends that Congress provide a direct pay or
refundability policy to prevent financing bottlenecks that
could constrain clean energy deployment. And I know that
Rhodium has done a lot of good work in this space. Please say
hi to my friend, Trevor Hauser, if you get a chance.
Mr. Larsen. I will.
Mr. Levin. Could you elaborate on the bottlenecks that
clean energy development could face and how direct pay
specifically could address them?
Mr. Larsen. Yes, absolutely.
So essentially, you know, as you know, you need some sort
of tax appetite to monetize the current tax credits the way
that the current framework is set up without direct pay. It
turns out there is a finite pool of capital available to help
finance projects that are eligible for these tax credits.
In 2020, in the renewable energy sector, the U.S. had
record deployment of wind and solar and also saw basically a
tax equity market hit its functional limits. People--you know,
we hear multiple reports of folks either not finding financing
or were finding very expensive financing because of those
constraints.
We see just in renewables alone a doubling of that
capacity, of those capacity additions, up to 60, 65 gigawatts a
year if we are going to get to the clean energy goals we need
to see, and there is just no reason to believe that tax equity
is currently set up to meet that challenge, especially if you
would then expand to carbon capture, to EV charging, to all the
other technologies that are going to matter here. And so
basically a direct pay removes that constraint. It broadens the
available capital available to monetize these tax credits and
really connects an array of investment across all of these
sectors and all of these technologies.
Mr. Levin. Could you expand on--I know we all have this
goal, 500,000 EV chargers, and there has been proposals back
and forth, most recently $7.5 billion in the bipartisan
infrastructure deal as announced yesterday. But do you have any
thoughts on how direct pay could help us achieve the goal of
500,000 EV chargers?
Mr. Larsen. Yes. I mean, in any kind of, like,
infrastructure investment, like EV charging, there is a long-
term game being played. Right? You are building for the demand
you anticipate down the road. What that means is that in the
immediate term, there is less of a revenue opportunity and less
tax equity and tax appetite for the developers. Right? Because
they just don't have all of the revenue they need down the
road, and direct pay allows those same investments to happen
absent that profitability concern in the near term and really
can allow folks to kind of remove some of the risk of investing
in these technologies in the near term and really build things
out.
That is a key part, component of this.
Mr. Levin. Thanks, Mr. Larsen.
I am out of time, but I hope that everybody takes a look at
direct pay. It is good bipartisan policy.
And, Madam Chair, I yield back.
Ms. Castor. Thanks, Rep. Levin.
Next up, Rep. Carter, good to see you. Good morning. You
are recognized for 5 minutes.
Mr. Carter. Thank you, Madam Chair, and thank all of the
witnesses for being here. This is certainly a much needed
discussion.
But I really want to thank Mr. Powell for being here and
for your comments, Mr. Powell, on what I think is the heart of
the issue with the Select Committee, and that is global
emissions. And, you know, when we talk about that and reducing
global emissions, particularly while we strengthen the U.S.
economy and not allow China and Russia to dominate energy
development around the world, and I think there is bipartisan
agreement that we need to invest in the innovation of clean
technologies; but I am convinced that we can do that and still
grow our economy at the same time.
However, there are some of those who differ in what kind of
innovation is acceptable, and we need to concentrate on
innovations in the U.S. interest and that maintains our energy
security and brings down global emissions.
The key is global emissions. We do not live in a vacuum
here. It is not just the United States. It is the whole world
that is contributing to this and even more so other countries
than it is the United States of America.
I want to talk about carbon capture, Mr. Powell. The
Department of Energy announced last year that they were funding
two cost-sharing projects in Georgia with Georgia Tech and the
Southern States Energy Board. Georgia Tech is researching
direct air capture technology under realistic conditions for
global deployment, while the other project by Southern States
Energy Board in Peachtree Corners is targeting reducing the
overall cost of direct air capture.
Mr. Powell, are there any encouraging developments in
direct air capture technology?
Mr. Powell. Well, first, thanks so much, Congressman
Carter. Great to see you, and thanks for your leadership on
these issues, on supporting the Energy Act and your support for
nuclear energy. It was terrific to see those grants go to the
great State of Georgia for research into this really important
technology. There are some extremely promising developments in
this space.
I think we should all remember that a lot of folks are
setting goals around net-zero, and that means that in the
future we might still have some parts of our economy that
continue to emit. For example, it would be extremely expensive
to stop the emissions in that space; but as long as we net them
back out with some kind of carbon dioxide removal or direct air
capture, that is just fine. Right? The climate only cares about
the net emissions, right, not the absolute emissions. So direct
air capture could be a really promising technology that would
be a mechanical removal of CO2 from the atmosphere.
Some models show that we are going to have to do that at an
enormous scale, maybe billions of tons in the future, and so we
need to be investing now to radically bring down the cost of
that technology.
There are now a number of companies that are actively
working on it and even ready to deploy this technology in the
United States. I think the largest project and the one that is
probably the most promising is Carbon Engineering's proposed
project in the Permian Basin where they are working with
Occidental Petroleum. They are going to remove CO2
from the atmosphere at enormous scale, up to a million tons a
year. They are going to put that underground and use it for
enhanced oil recovery, and that will actually----
Mr. Carter. I think he froze. I am sorry for that.
But if it is okay, I don't mean to interrupt you, but I am
going to go ahead because the clock is ticking, and I really
want to get to this, and what it is about is it is about carbon
capture and--I am sorry, you froze there, Mr. Powell, but I
want to get to this, so please allow me if you will.
Georgia--and this will be the first time I have ever said
this before this committee, but Georgia is the number one
forestry state in the country, and certainly growing trees can
sequester more carbon dioxide than the annual U.S. emissions
from passenger vehicle travel, forest products, manufacturing
facilities, forest harvest operations, and estimated wildfires.
What can we do to further incentivize carbon capture
through our nation's forests?
Mr. Powell. So natural climate solutions, particularly the
forestry space, I think are a really important part of this
picture, and the most promising thing would be if we could find
a way to use those to sequester that CO2 in those
forests and forest products and then to either permanently use
them, for example, in building materials, so that never goes
back up into the air or use some of those forest products for
bioenergy, and combine that with carbon capture and storage,
that actually creates negative emissions power generation----
Mr. Carter. Right.
Mr. Powell [continuing]. Which would be a hugely important
way in the future to both continue having a clean energy
generating economy and to be pulling CO2 out of the
air as we are doing it.
Mr. Carter. Okay. Just a few seconds left.
Why don't we use more biomass in this country?
Mr. Powell. That is a great question.
I think that there is some disagreement about the carbon
impacts of biomass. I think there is no disagreement that if
you combined it with carbon capture, we would actually have
negative emission, you know, power generation, and that could
be a really powerful tool in our clean energy arsenal.
Mr. Carter. Great. Thank you, Mr. Powell.
And thank you, Madam Chair.
Ms. Castor. Thank you, Rep. Carter.
Well, thanks to our witnesses today. You all have been
terrific, provided very insightful constructive testimony, so
thanks again.
Oh, okay. Before--Gary Palmer makes it under the wire. So,
Rep. Palmer, you are recognized for 5 minutes.
Mr. Palmer. Thank you, Madam Chairman. I was unavoidably
delayed.
Mr. Powell, I think some of this has been discussed
already, but it was noticed by a witness from our last hearing
that studies showed that an estimated 90 percent of electric
vehicle owners earn over $100,000 a year, yet somehow my
Democrat colleagues think we are going to be able to provide
every American with an electric vehicle.
Do you think giving wealthy individuals thousands of
dollars to buy a vehicle that they can clearly afford is a good
use of money?
Mr. Powell. You know, I think the thing we need to remember
about electric vehicles is that they are only as clean as the
power grid that supplies them with power. Our argument would be
that the highest and best use of public funds would be making
sure that there is a clean grid in the first place to power
those electric vehicles, and I think at a ton per ton of carbon
dioxide emissions reductions, in most cases it is more
efficient to put incentives and resources into making the grid
cleaner than to incentivizing the purchase of the EVs.
Mr. Palmer. The cost of making the grid cleaner--and they
are pushing for a uniform grid which would basically replace
the existing grid--could run into the trillions of dollars, and
that is eventually going to be passed on to everybody in the
form of higher energy costs, perhaps even taxes and fees, and
it will be particularly hard on low-income families. I grew up
basically dirt poor, so I understand this. We heated our house
with a coal heater that sat in the kitchen.
Does that concern you?
Mr. Powell. Well, Congressman Palmer, I think that this is
the reason that we need to think about not radically changing
and transforming our grid but doing everything we can to use
the existing grid and the existing infrastructure and the
existing assets. That is preserving our existing nuclear
plants. That is finding ways to retrofit as much of our
existing coal- and gas-fired power plants with carbon capture
technologies as we possibly can. So that is finding ways we
don't have to tremendously overbuild our grid or tremendously
overhaul the transmission infrastructure but try to keep the
costs low.
Mr. Palmer. I am one of these all-of-the-above, but when
you talk about--I am talking about they want to replace the
grid. If we maintain the grid that we have, which is a
patchwork grid, then we have got to come up with some kind of
technology that can store power, energy for days, and that
technology doesn't exist right now. And the grid requires a
consistent baseload.
So if we have this grid, it is going to have to be backed
up with some other form of fuel, whether it is nuclear or
natural gas. I literally had a Democrat witness recommend using
natural gas to back it up, which would require the laying of
new pipe.
Mr. Powell. So we absolutely need flexible and baseload
zero-emitting sources for a low-cost, low carbon power grid in
the future.
Completely agree with you that energy storage is also a big
priority there. I think there has been some really interesting
advances in those technologies. There was actually one
announced just last week. Forum Energy believes that it has
made a breakthrough in very long duration energy storage
technologies that would be 90 percent cheaper than today's
battery technology and get around a lot of the really
problematic sourcing of critical minerals from China and some
of our other geopolitical competitors globally by using iron,
which we could source here domestically in the U.S., so----
Mr. Palmer. We have got to address the whole issue of the
minerals as well, but you have a pretty good understanding of
what it will take to build out this grid. My Democrat
colleagues think that we only have like 9 years left to get it
done. Can we get it done in 9 years? Can we do everything that
you want to do in 9 years? Are we doomed? Are we doomed?
Mr. Powell. We----
Mr. Palmer. I mean, is this all just an involved fantasy?
Mr. Powell. We are not doomed. We are not doomed. We do
have----
Mr. Palmer. Do you all think we only have 9 years left to
get it done?
Mr. Powell. I do not. So climate change is, I think, best
thought of as a chronic condition for the planet. I think that
is the better way to think about it than an emergency. It is
something we are going to have to deal with for decades, if not
centuries, and we have got to marry----
Mr. Palmer. Let me cut you off there because I have only
got a few seconds left.
It is something we are going to have to deal with as long
as humankind exists because the history of climate change is in
the geologic record, and it is not necessarily related to the
emissions of CO2. CO2 certainly has an
impact on it; but in the short term and the long term, in terms
of climate change, what we have got to address is natural
variation. We are not doing that. And with all due respect to
all of the witnesses, this idea that we are going to stop
climate change by building a renewable grid, clean energy grid,
that is fantasy.
I yield back.
Ms. Castor. All right. Well, I want to start--I wanted to
end where I started today, and that is the need to cut carbon
pollution as quickly as possible. We are all witness to the
rising harms, the escalating costs, and we have got to do
everything in our power to avoid the catastrophic impacts of
the climate crisis. It is not some political imperative. It is
a scientific imperative. And it is our moral obligation to our
kids and our grandkids. And, fortunately, we can tap American
ingenuity to help solve the climate crisis, and that is what we
intend to do. We have made progress, but we have the
technologies now to go farther and help deploy them, as all of
the witnesses said, globally.
This is what America does best. We research, we develop, we
deploy, we share, and we sell to the rest of the world, and
that is what we need to do. But we need Federal policies here,
tax credits, creative financing policies to help get us there,
and that will benefit workers. It will benefit our neighbors
back home. It will make the air we breathe cleaner, and it will
lift everyone all across this country.
So thanks again to all of our witnesses for being here
today.
Without objection, all members will have 10 business days
within which to submit any opening statements and additional
written questions for the witnesses. I ask our witnesses to
please respond as promptly as you are able.
Thanks again, everyone. The committee is adjourned.
[Whereupon, at 10:53 a.m., the committee was adjourned.]

United States House of Representatives

Select Committee on the Climate Crisis

Hearing on July 29, 2021

``Financing Climate Solutions and Job Creation''

Questions for the Record

Duanne Andrade

Chief Financial and Strategic Officer

Solar and Energy Loan Fund

the honorable kathy castor
1. Ms. Andrade, could you please describe how a Clean Energy and
Sustainability Accelerator could help create local jobs in communities
across the country?

If funded with the $100 billion capitalization envisioned in Rep.
Dingell's
H.R. 806, the Clean Energy & Sustainability Accelerator is projected to
deliver 440,000 jobs in its first year, and over five and a half
million jobs within its first five years according to an independent
analysis from Vivid Economics.\1\ The chart below shows the
distribution of job categories projected from Accelerator investment.
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The Coalition for Green Capital identified more than a hundred
types of jobs directly created with an Accelerator, from aerospace and
marine engineers to roofers and welders, and found real-world job
postings for each category.\2\ These job types range from requiring no
college degree to PHD, and the average salary was $73,853.
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In terms of local job creation, my organization (the Florida Solar
& Energy Loan Fund--SELF) has over 700 approved contractors in our
network. They've told us that without SELF, they'd lose anywhere
between 20 to 40 percent of business due to clients lacking access to
financing. One of our contractors, SEA COAST a local mom-pop shop in
Fort Pierce, Florida has financed 200 projects worth over $1 million
with SELF.
Another one, Westfall Roofing, in a recent interview with The
Invading Sea, said that without SELF financing, many people would not
be able to fix their homes. They have grown their market and increased
business with SELF financing.

2. Ms. Andrade, could you please describe how homeowner investments
in energy efficiency, renewable energy, and resilience upgrades can be
complementary and can help homeowners save money?

As a mission-driven, non-profit green bank, the Solar and Energy
Loan Fund (SELF) provides financial inclusion, low-cost financing, and
project management to help low- and moderate-income (LMI) homeowners
overcome the high upfront cost of energy efficiency, resilience, and
renewable energy upgrades, such as: high-efficiency air conditioners;
fortified roofs; and, rooftop solar photovoltaic (PV) systems. These
sustainable home improvement projects go hand in hand to enhance
benefits for homeowners that include: energy savings (high efficiency
A/Cs and Solar PV systems; increased safety from climate impacts (storm
resistance with fortified roofs, impact windows and doors); lower
utility bills (with water conservation upgrades); and improved health
and safety for aging in place (ancillary disability home adaptations).
The array of improvements that SELF finances ultimately increases
climate resilience which results in the preservation of generational
wealth, the home; and the sustainability of our environment, through
transforming our homes to low-carbon, weather resistant homes.
SELF helps homeowners through the process of going all the way to
net-zero when possible by encouraging a step by step approach that
maximizes savings and benefits. For example, if a home is not
weatherized and sealed, SELF encourages the homeowner and contractor to
add this to the project to be financed with the new high efficiency air
conditioner. Once the home is sealed and has reduced energy demand
through energy efficiency upgrades, the next step is to replace the
energy source with a clean source by going solar or using other
renewable sources. In Florida, solar is the most appropriate source of
clean energy and has the potential to save up to 100 percent of the
energy cost. These benefits can be further enhanced by homeowners
having access to solar plus battery storage which would provide
increased safety and health benefits during climate events that cause
power outages-which are increasingly frequent. In order to obtain
maximum economic and social benefits, these upgrades would be paired
with fortified roofs that have the highest wind code to withstand
storms and protect the lives and assets of residents. With higher wind
resistant roofs homeowners increase climate resilience and safety, and
also significantly reduce insurance costs. In many cases homeowners are
unable to qualify or simply can't afford insurance due to the home
having older roofs and windows which don't meet the minimum standard
required by insurance.
An integrated approach to clean energy and resilience is the only
way to ensure a sustainable path to low carbon, sustainable
communities. Resiliency upgrades (i.e., fortified roofs, impact windows
and doors), help our homeowners save money by lowering their insurance
costs, reinstating them to insurance coverage, and by protecting what's
often the only asset owned by the low-to-moderate Americans we serve.
Energy efficiency upgrades save homeowners money by ensuring energy
does not wastefully slip through a leaky window or cheaply built roof.
Renewable energy saves our homeowners money by producing energy more
cheaply than traditional energy sources and allowing for climate-
emergency response with backup storage.
However, these higher standards of homes call for upfront
investments that are unaffordable, especially for many vulnerable low-
and-moderate income homeowners living in older dwellings with limited
or no access to affordable and flexible financing options.
SELF has been working at the grass roots level in LMI communities
for a decade now and since the beginning we listened to the needs of
homeowners and to the challenges they faced to life in safe, healthy
and affordable homes. We understood the benefits of pairing wind
resistance with energy efficiency and clean energy early on when we
observed that homeowners needed to fix their roofs before they could
even consider solar energy- and that in order to maximize savings and
social benefits, we needed to provide a path to transition to clean
energy and that meant making the home solar ready by addressing the
envelope, sealing, weatherizing, fortifying roofs, installing energy
efficient appliances and then transitioning to solar energy. By
addressing the home as an ecosystem and combining these upgrades,
homeowners can unlock significant savings in insurance costs and reduce
or eliminate energy costs altogether which frees up a significant
proportion of their income spent on energy, utilities and insurance.
Finally, by combining these upgrades, homeowners also increase the
equity in their homes, maximize safety and preserve and protect
generational wealth in their homes. That is why we created loan
products to finance the full spectrum of home improvements to unlock
savings with quality of life benefits.
Climate resilience and clean energy need to go hand in hand to
maximize economic, social and health benefits not only to residents but
to communities as a whole. This combination reduces potential losses
during climate events (saving tax payers dollars in emergency funds
like FEMA), while transforming neighborhoods and communities into
sustainable, affordable, low-carbon, safe and healthy places to thrive
in- today, and in the future.
In order to produce this transformation what is needed is:
financing. We need inclusive, equitable capital to deploy in all
communities, especially, disadvantaged communities. There is expertise
and technology ready to be deployed.
That is why funding for an independent, nonprofit Clean Energy &
Sustainability Accelerator is so critical to the transition towards a
clean energy economy and the achievement of broader national and global
carbon emission reduction goals. The funding would allow green banks
across the country to leverage private capital and help homeowners
across the income spectrum participate in the benefits of a clean
energy economy, especially low-income residents who are the most energy
burdened.
SELF is much more than a green bank who is fostering the clean
energy economy. Our lending programs and complementary services also
provide: vital health benefits and quality of life to working-class
families, disabled homeowners, veterans, and retirees on fixed incomes;
significantly reduce operating costs, risk, anxiety and unnecessary
suffering; enhance operational efficiencies, property values and
generational wealth; decrease harmful carbon-based emissions and
related climate impacts; and, create green jobs and support local
companies. Shifting to a more sustainable and resilient economy is not
a sacrifice, it's an enormous missed opportunity that can promote
widespread and complementary benefits to our communities at large, the
economy, and particularly those individuals most-effected by climate
change. For more details on types of improvements that SELF provides
financing for see Appendix A.

APPENDIX A

Common types of home improvement projects financed by SELF.
One of the most common types of home improvement projects that SELF
helps LMI homeowners finance is high-efficiency air conditioners (e.g.,
16+ SEER system), which typically reduces household energy use and
costs by 20-25%. These basic upgrades generate an annual savings of
$500-600 per household per year and greatly improves their health and
overall quality of life. Having a functioning A/C in Florida during the
sweltering summer heat and humidity is not a luxury item for the
elderly, disabled and children. The new high-efficiency A/Cs also
enhance property equity and generational wealth, while cutting the
carbon footprint of the household and creating local green jobs. SELF's
#1 contractor is a family-owned A/C company in St. Lucie County, FL,
which has completed more than $1 million of projects financed by SELF.
SeaCoast AC employs dozens of local people, pays substantial local
property and business taxes, and they rely exclusively on American made
products (``supply chain'').
Another common project SELF finances is roof repairs/replacement
which are not only safeguarding families and homes during hurricanes
and extreme storm events, which are on the rise, but also reducing home
insurance premiums by $700-$1,000 per year. Roof repairs and upgrades
also provide additional energy savings and make the homes ``solar-
ready''. Homes are also most often the largest family asset in LMI
communities, so these fundamental repairs also provide long-term
benefits as the home is passed on to the next generation. These
projects also create additional work for local certified contractors
and skilled craftsmen.
Finally, solar PV prices have dropped by 80% over the last decade
so it is now more cost-effective to build your own rooftop solar PV
system than it is to buy carbon-based fuels off the grid. Homeowners
can save $10,000 or more on their energy bills over the warrantied life
of the solar PV system, substantially increase the market value of
their homes, and re-direct the outflow of energy dollars from leaving
the Sunshine State. These PV projects also dramatically reduce harmful
carbon emissions and generate substantial work for local solar
contractors.

Questions for the Record

John Larsen

Director

Rhodium Group

the honorable kathy castor
1. Mr. Larsen, in your testimony, you highlight some critical
improvements to clean energy tax credits, like making them available
for direct pay, allowing developers to choose between the Production
and Investment Tax Credits, and providing a long-term full value
extension of the tax credits. Given that wind and solar are abundant
and affordable, why do we need to extend and expand clean energy tax
credits? Can we just assume we'll meet our climate goals without them?

Wind and solar costs have come down dramatically over the past two
decades. As a source of new electricity, they now represent the
majority of annual capacity additions in the U.S. outpacing natural gas
(EIA 2021). In the absence of a national climate policy that cuts
electric power emissions, extension and expansion of clean energy tax
credits can do more than just outcompete new fossil fuel-fired power
plants to meet new demand. Clean energy tax credits can make new wind
and solar competitive against existing fossil fuel-fired power plants.
The capital expenses associated with most existing coal and natural
gas-fired power plants are largely paid off, and these assets are fully
depreciated. This means that all they need to compete in electric
markets is to covering their operating costs on an annual basis. This
is a much smaller amount of cost than recovering the operating and
capital costs associated with new capacity. To date, wind and solar
have largely led to avoiding emissions from new fossil fuel fired power
plants. Enhanced and extended tax credits, combined with continued
technology costs declines will allow the next wave of wind and solar to
both displace new and existing power plants and lead to greater
reductions of greenhouse gases.

2. Mr. Larsen, we will need more than public investment to meet our
climate goals. How do Federal tax credits help leverage private capital
to accelerate the transition to a clean energy economy?

Federal tax credits provide a stable, certain and familiar
incentive for private capital to invest in renewables as opposed to
conventional fossil alternatives. The incentive is large enough to
entice private capital away from fossil investments and attract capital
that might otherwise sit on the sidelines. Investors then get the
benefit of a rate of return on the investment as well as a reduction in
their tax liability. Meanwhile, more clean energy gets built around
America.

3. Mr. Larsen, we know zero-emission vehicles are cleaner and cost
less over a vehicle's lifetime than vehicles with internal combustion
engines. Based on your work at the Rhodium Group on EV policies, could
you please explain how tax credits for zero-emission vehicles would
help increase deployment?

Long-term extensions of the 30D EV tax credit and removal of
manufacturer sales caps cut the cost of new EVs for consumers and make
them more competitive with conventional vehicles on an upfront cost
basis. Previous Rhodium analysis found that a ten-year extension of the
tax credit could drive EV sales to 40-52% of total light-duty vehicle
sales in 2031. In a scenario, with no tax credit extension, we found
that EVs only achieve 27-39% of total LDV sales in 2031.

4. Mr. Larsen, many of the clean energy technologies we need to
achieve deep decarbonization across our economy are still under
development. The International Energy Agency estimates that 75% of the
cumulative CO2 emissions reductions needed to shift to a
sustainable path come from technologies that are in the demonstration
and early deployment phase. How can Congress better support innovation
and emerging clean energy technologies via the array of available
financial tools, policies, and incentives?

There are four general categories of policies that can help the
development and deployment of emerging clean technologies.

First, investing in research and development (R&D) of a
diverse array of new and emerging technologies. The U.S. is a leader in
this space. The Energy Act of 2020 constructs and revamps clean energy
R&D and the Infrastructure package contains even more enhancements.
Second, funding the construction of large-scale
demonstration projects and early commercial deployment of developed
technologies. Without government support, many emerging clean
technologies get to initial deployment and stall because it's difficult
to attract investors to fund new and untested technologies. Government
direct investment and cost-share programs, as well as tax credits, can
help get new technologies off the ground at scale and reduce financial
risks.
Third, long-term commercial incentives are required to
send firm signals to the market that clean technologies need to be
deployed to achieve emission reductions goals. There are many forms
these signals can take. Carbon pricing, regulations, clean energy
standards (including clean fuel or clean product standards), and tax
credits can all play a role. The key is to make the deployment of
emerging clean technologies more profitable than continuing the status
quo.
Fourth and finally, non-cost barriers to clean technology
deployment need to be addressed or else efforts in the first three
categories won't drive change. Non-cost barriers include but are not
limited to permitting constraints, access to resources, public
understanding/acceptance of new technologies, access to and siting of
infrastructure and other issues. The federal government has a role to
play in all of these areas to allow clean technologies to scale up in a
safe and responsible way.

5. Mr. Larsen, according to analysis from the Rhodium Group, in
order to be on track for 100% clean generation in 2035, emissions need
to be 80% below 2005 levels in 2030. This means we need to both support
rapid deployment of additional clean energy technologies and ensure we
don't lose any of the existing sources of clean energy available to us
today. What type of support could help existing clean energy generation
sources stay online in the coming decades? And can we ensure new
incentives go only towards supporting displacing fossil fuels?

Due to competition with fossil fuels and a lack of valuing their
clean energy attributes, some existing clean resources are at risk of
early retirement by the end of this decade. For example, depending on
market conditions, Rhodium estimates that nearly a third of the
existing nuclear fleet could retire by 2030 without new policy support.
If these plants retire, then even more new clean capacity will be
needed to get on track for 100% clean generation in 2035, or fossil
generation will replace it instead. A clean electric standard or clean
electric performance program that provides a technology-neutral
incentive to increase the amount of clean generation in the U.S.
(regardless of whether its existing or new) can provide incentives to
retain at-risk existing clean capacity. Targeted federal programs or
tax credits that provide incentives to retain existing clean generation
can also be useful tools to do the same.
Beyond the goal of meeting 100% clean generation, retaining
existing clean resources also helps to ensure that all new clean
generation displaces fossil generation. This is one way to maximize the
climate benefits of clean energy tax credits. Without existing clean
support, there is a risk that new clean will outcompete existing clean
generation leading to no net change in total clean generation and no
change in emissions.

6. Mr. Larsen, how can tax credits and a clean electricity standard
serve as complementary policies?

Tax credits complement a clean electricity standard (CES) in a few
ways. First, they shift some of the costs of complying with a CES away
from ratepayers and on to the federal government. This reduces the cost
to consumers of decarbonizing the electric power sector. Second, tax
credits can accelerate the deployment of grid improvements needed to
meet high levels of clean electricity penetration, such as storage and
transmission. They make it easier to achieve CES targets. Finally, they
can shift CES compliance towards technologies that receive tax credits.
This may be desirable if the CES is technology-neutral. Still, some tax
credit eligible technologies help to meet other policy goals such as
domestic manufacturing or increasing reliance on renewable energy
instead of nuclear.

7. Mr. Larsen, could you please explain how the investment tax
credit (ITC) has driven access to, deployment of, and innovation in
solar energy? How could a long-term extension of the ITC help build on
this success?

Since its inception 15 years ago, the ITC has been a critical
incentive for the early and current commercial scale-up of utility-
scale solar generation. Initially, solar's high cost and relatively low
capacity factors made other deployment incentives such as the
production tax credit ineffective at driving deployment. Over the last
decade and a half, a whole industry has arisen around the scale-up of
utility-scale solar. All of it is thanks to the ITC.
While a long-term extension of the ITC will help solar continue to
thrive without more comprehensive decarbonization policies, its
usefulness will diminish relative to other options. Since the value of
the ITC is defined as a share of the costs of developing a solar
project, that value has and will continue to decline as the cost of
solar declines. In high-quality solar resource areas in the U.S. today,
the ITC is a less valuable incentive than the PTC because of this
dynamic. The PTC is a fixed value payment based on generation. As solar
costs decline, the PTC's value as a share of the total cost of solar
energy will increase, whereas the ITC's value will decrease. This is
why Rhodium research shows that a flexible tax credit framework that
allows solar developers to choose the PTC or ITC, whichever works best
for them, can lead to even faster clean energy deployment compared to
simple extensions of the current tax credit framework.

References Page

Larsen, J., King, B., Kolus, H., & Herndon, W. (2021, March 23).
Pathways to Build Back Better: Investing in 100% Clean Electricity.
Retrieved from Rhodium Group: https://rhg.com/research/build-back-
better-clean-electricity/

Larsen, J., King, B., Kolus, H., & Wimberger, E. (2021, May 13).
Pathways to Build Back Better: Investing in Transportation
Decarbonization. Retrieved from Rhodium Group: https://rhg.com/
research/build-back-better-transportation/

Larsen, J., King, B., Kolus, H., Dasari, N., & Herndon, W. (2021,
July 8). Pathways to Build Back Better: Maximizing Clean Energy Tax
Credits. Retrieved from Rhodium Group: https://rhg.com/research/build-
back-better-clean-energy-tax-credits/

Larsen, J., Mohan, S., & Houser, T. (2021, April 20). Pathways to
Build Back Better: Jobs from Investing in Clean Electricity. Retrieved
from Rhodium Group: https://rhg.com/research/build-back-better-jobs-
electric-power/

Questions for the Record

Zoe Lipman

Director, Manufacturing & Advanced Transportation

BlueGreen Alliance

the honorable kathy castor
1. Ms. Lipman, we know zero-emission vehicles are cleaner and cost
less over a vehicle's lifetime than vehicles with internal combustion
engines. Could you please explain how incentives for consumers to buy
zero-emission vehicles and incentives for automakers to build zero-
emission vehicles in America could be helpful?

Sufficient and targeted consumer incentives that expand and speed
uptake of cleaner vehicles are important to transitioning the
nationwide vehicle fleet to electric vehicles at the pace needed to
achieve climate goals. At the same time, we must urgently support
increased domestic manufacturing in meeting this quickening demand for
EVs. Our competitors worldwide are also moving fast to capture the
economic gains from this shift. If the U.S. is going to successfully
meet our climate, jobs or economic goals, we will need both a supply-
and demand-side approach. We will need to use a coordinated set of
tools to support the domestic manufacture and deployment of cleaner
vehicles, and to ensure that the shift to electric vehicles protects
and creates good jobs in communities across America--together these
actions are key to enabling a rapid, equitable and sustainable
transition to clean transportation.i
Consumer incentives stand to play a significant role in shaping the
shift to electric vehicles, as well as the manufacturing, jobs, and
community impacts of that transition. Specifically, the 30D consumer
tax credit for electric vehicles should be updated (such as described
in Sen. Stabenow's amendment to The Clean Energy for America Act (S.
1298)) to incentivize strong manufacturing labor standards and support
domestically manufactured EVs.
By incentivizing vehicles assembled in the U.S. with greater
domestic content, and vehicles built in union facilities, the consumer
EV tax credit can help retain and grow the next generation of high-
skill, high-wage, family-supporting jobs in the United States, while
accelerating the domestic electric vehicle production and supply chain
investment and growth necessary to secure long-term U.S.
competitiveness in the automotive sector. To maximize the equitable
deployment of EVs, the credit should be made refundable, or ideally,
available at the point of sale.
Additionally, Congress should establish a tax credit to incentivize
the purchase of used EVs, which could improve access to EVs for low-
and moderate-income consumers, and Congress should ensure that such a
credit is similarly refundable and targeted. Similar criteria for
domestic manufacturing, labor standards, and addressing equity should
be applied to the 30B credit for other advanced technology vehicles.
We also support the ongoing work to expand the 30C tax credit for
charging infrastructure, as robust proliferation of easily accessible
charging will be essential to the success of EV adoption. Incentives
for charging infrastructure should ensure availability for all
communities, with a priority on filling gaps in low income, rural, and
deindustrialized communities and communities of color, and availability
for residents of multi-family housing, and be refundable. These
incentives should also require certified training for installation of
electric vehicle supply equipment (such as the Electric Vehicle
Infrastructure Training Program, or EVITP) and the domestic manufacture
of charging stations.
On the manufacturing side, incentives to expand and retool the
domestic factories building the clean vehicle fleet of the future, and
to establish and grow the domestic EV technology supply chain in the
U.S. are essential to secure the economic and jobs benefits
accompanying this major sector transformation. Key incentives include:

The 48C Advanced Manufacturing Tax Credit Program.
New production and investment tax credits for facilities
in the EV supply chain.
Enhanced funding and expansion of DOE advanced automotive
loan and grant programs, including the Advanced Technology Vehicle
Manufacturing (ATVM) loan program and manufacturing conversion grant
programs.

48C Advanced Manufacturing Tax Credit Program: The always-
oversubscribed 48C tax credit program has provided funding to over 180
facilities--predominantly in small- and medium-sized manufacturing--to
establish or expand domestic production of a wide range of clean energy
and industrial products, including EV components and
materials.ii By increasing funding for the tax credits (and/
or comparable grants) Congress can provide the necessary funds to
establish or retool facilities manufacturing batteries and battery
materials, semiconductors, inverters, motors, and facilities that
process and recycle critical minerals. These tax credits should
prioritize investment in economically distressed communities,
deindustrialized, and disadvantaged communities.
New manufacturing production and investment tax credits: The recent
global semiconductor technology shortage, and its impacts on the
domestic auto sector, illustrate how our reliance on a limited number
of foreign suppliers for critical components can threaten our economic
security. For the growing EV market, the challenge is even greater; the
U.S. lags behind its competitors in producing key propulsion system
technologies. Through a new manufacturing investment tax credit (ITC)
designed to fill economically critical supply chain gaps, Congress can
provide key support to speed investment in establishing landmark
production facilities, while a production tax credit (PTC) can aid in
supporting the domestic scale-up of novel technology production. These
investments will facilitate the national transition to EVs, protect and
create high-quality jobs, build resilience and stability into the
domestic EV supply chain, and ward off or reverse the offshoring of
good jobs throughout the automotive supply chain.
ATVM: The ATVM plays a key role in spurring major auto and
component manufacturers to locate their advanced vehicle and technology
facilities in the U.S., rather than abroad, reducing risk as technology
and markets shift. The ATVM has supported the establishment, retooling
or expansion of domestic auto manufacturing facilities in eight states
to build clean, fuel-efficient, and electric vehicles. The policy has
sustained or created at least 35,000 direct jobs, and 200,000 indirect
jobs. As the market accelerates toward EVs, the ATVM can again provide
essential support for auto and manufacturing jobs throughout the supply
chain, while facilitating vehicle emission reductions.
Manufacturing Conversion Grants: Conversion and retooling grants
can play
a key role in bringing new technology into existing facilities, and
maintaining
supplier networks and workforces. This allows for expansion of the
domestic EV
manufacturing sector and enhancement of local jobs and community
benefits, while avoiding--and in some cases, redressing--the harms of
poor industrial policies of the past. These grants are key to an EV
transition that puts workers and communities first.
We discuss these programs in more detail below.

2. Could you please describe the types of policies and investments
that could help expand, retool, and convert U.S. automotive and
component manufacturing facilities to build advanced vehicles?

There are five principal mechanisms by which Congress can support
manufacturing and good jobs all throughout the domestic automotive
supply chain: the Advanced Technology Vehicle Manufacturing loan
program (ATVM); conversion & retooling grants for recently-closed or
at-risk facilities; the 48C Advanced Manufacturing tax credit program;
production and investment tax credits for critical components in the EV
supply chain; and labor standards, domestic content requirements, and
equity provisions in EV deployment incentives. These mechanisms are
described in detail below:

Fund the Advanced Technology Vehicle Manufacturing (ATVM) loan program
at the Department of Energy to restore rescinded funds and expand
existing authority to additional technologies, including medium- and
heavy-duty vehicles, electric vehicle subcomponents, charging
infrastructure, and other economically critical materials and
technologies.

The ATVM plays a key role in spurring major auto and component
manufacturers to locate their advanced vehicle and technology
facilities in the U.S., rather than abroad, reducing risk as technology
and markets shift. The ATVM has supported the establishment, retooling
or expansion of domestic auto manufacturing facilities in eight states
to build clean, fuel-efficient, and electric vehicles. The policy has
sustained or created at least 35,000 direct jobs, and over 200,000
indirect jobs.iii As the market accelerates toward EVs, the
ATVM can again provide essential support for auto and manufacturing
jobs throughout the supply chain, while facilitating vehicle emission
reductions. Congress should at minimum replace the portion of ATVM
funding rescinded in 2020, and increase funding to cover expanded
program scope that includes medium and heavy duty vehicles and
components manufacture, related electric charging and hydrogen fueling
equipment, and other critical materials and technologies, which
represent the key frontiers of advanced vehicle innovation. The ATVM is
a high-impact program that, with comparatively modest additional
federal investment, can enable tens of billions in manufacturing loans.
The program demonstrates how centering manufacturing as an integral
part of the nationwide vehicle transition can yield wins for jobs and
the climate. With additional funding, the program could be utilized to
spur investment across even more of the advanced transportation market
and value chain. The broad impacts of past--and potentially, future--
use of the program are illustrated below.iv

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Invest in Manufacturing Conversion & Industrial Retooling Grants to
leverage the facilities and expertise we have today to build the clean
vehicle fleet of the future.

The closure of manufacturing facilities can have widespread and
lasting economic impacts on manufacturing communities, while
undermining valuable manufacturing capacity, networks, and workforce
capabilities. Manufacturing conversion and industrial retooling grants
(such as authorized in Section 132 of the 2007 Energy Independence and
Security Act) mitigate against this community devastation and costly
economic disruption by directing investment to refurbish and retool
recently-closed or at-risk facilities in the auto manufacturing sector.
Conversion and retooling grants can play a key role in bringing new
technology into existing facilities, and maintaining supplier networks
and workforces. This allows for expansion of the domestic EV
manufacturing sector and enhancement of local jobs and community
benefits, while avoiding--and in some cases, redressing--the harms of
poor industrial policies of the past. These grants are key to an EV
transition that puts workers and communities first.

Robustly fund the 48C Advanced Manufacturing Tax Credit Program to
support small- and medium-sized manufacturers that largely comprise the
automotive supply chain.

The highly successful 48C tax credit program has a proven track
record of enabling predominantly small- and medium-sized manufacturers
to establish or expand domestic production of a wide range of clean
energy and industrial products, including EV components and materials.
With major increases in funding for these tax credits (and/or
comparable grants) Congress can provide the necessary funds to
establish or retool facilities manufacturing batteries, semiconductors,
inverters, motors, and facilities that recycle critical minerals. 48C
tax credits are also essential to spur manufacturing expansion in other
critical clean technology sectors. These tax credits should prioritize
distressed communities, including those that have traditionally relied
on the fossil fuel economy for their livelihoods.

Fill domestic EV supply chain gaps through strategic manufacturing
investment and production tax credits, among other potential measures.

The recent global semiconductor technology shortage, and its
impacts on the domestic auto sector, illustrate how our reliance on a
limited number of foreign suppliers for critical components can
threaten our economic security. For the growing EV market, the
challenge is even greater; the U.S. lags behind its competitors in
producing central EV propulsion system technologies. Through a new
manufacturing investment tax credit (ITC) designed to fill economically
critical supply chain gaps, Congress can provide key support to speed
investment in establishing landmark production facilities, while a
production tax credit (PTC) can aid in supporting the domestic scale-up
of novel technology production. These investments will facilitate the
national transition to EVs, protect and create high-quality jobs, build
resilience and stability into the domestic EV supply chain, and ward
off or reverse the offshoring of good jobs throughout the automotive
supply chain.

Update and extend the 30D tax credit (as described in the Stabenow
amendment) to incentivize strong manufacturing labor standards and
support domestically manufactured EVs, and extend the 30B and 30C tax
credits with labor standards and domestic manufacturing safeguards.

Ensuring our clean energy deployment tax credits are also updated
to include labor and domestic content standards is also key to support
and complement the protection and growth of domestic manufacturing and
jobs.
By incentivizing vehicles assembled in the U.S. with greater
domestic content, and vehicles built in union facilities, the consumer
EV tax credit can help retain and grow the next generation of high-
skill, high-wage, family-supporting jobs in the United States, while
accelerating the domestic electric vehicle production and supply chain
investment and growth necessary to secure long-term U.S.
competitiveness in the automotive sector.
To maximize the equitable deployment of EVs, the credit should be
made refundable, or ideally, available at the point of sale, and
include an appropriate MSRP cap. Additionally, we should expand the
reach of the EV tax credit to more consumers--particularly those who
may not otherwise have been able to purchase and EV through the
addition of a used EV credit.
Spurring domestic demand for EVs can and should boost American
innovation, American manufacturing, and family-supporting, union jobs.
Congress has the power to help ensure that American communities and
workers can access the opportunities arising from this industry
transformation, rather than facilitating the flight of good jobs to
Asia and Europe, where key elements of the EV value chain are currently
concentrated, and where policymakers are taking stronger actions to
spur the production of key technologies.v Our consumer
incentives should reward increased investment in U.S. manufacturing and
workers and the creation of good jobs with high labor standards in
communities across America.

Endnotes/References Page

i. BlueGreen Alliance, EVs Are Coming. Will They Be Made in the
USA?, April 2021. Available online:
https://www.bluegreenalliance.org/resources/backgrounder-evs-are-
coming-will-they-be-made-in-the-usa/.

ii. Department of Energy, Fact Sheet: 48C Manufacturing Tax
Credits, February 2013. Available online:
https://www.energy.gov/downloads/fact-sheet-48c-manufacturing-tax-
credits.

iii. BlueGreen Alliance, Advanced Technology Vehicles Manufacturing
Loans: Employment Impacts, November 2016. Available online:
https://www.bluegreenalliance.org/wp-content/uploads/2016/11/ATVM-
employment-impacts-and-potential-FINAL.pdf

iv. Ibid. Chart and data, BGA. From above report.

v. Ibid. BGA, EVs Are Coming. Will They Be Made in the USA?.

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