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Statement of Hazel R. O'Leary

Secretary of Energy

U.S Department of Energy
FY 1994 Budget Request before the
Committee on Energy and Commerce
Subcommittee on Energy and Power

Mr. Chairman and members of the Committee, I am pleased to appear before you

today to present the FY 1994 budget for the Department of Energy. This budget is responsive to the President's plan for achieving National economic renewal

by a combination of a short-term stimulus package; long-term public

investments to increase the productivity of our people and businesses; and a

serious, fair, and balanced deficit-reduction plan. I would like first to

describe the President's investment and savings initiatives, and then provide

a summary of the budget for the Department's major missions.

INVESTMENTS AND SAVINGS

The President has identified the Department of Energy (DOE) as an integral part of his program for national investment and renewal. His goals for DOE

are clearly reflected in his short-term economic stimulus package for FY 1993

which includes $148.7 million for DOE activities, primarily in the areas of

energy conservation; increased support for States to carry out conservation

and low-income weatherization activities; alternative-fueled vehicles for the

Federal fleet; and transfer of defense-related and civilian technology from

our National Laboratories to the private sector.

As part of his longer-term investment strategy for FY 1994-1998, the President

has proposed to redirect substantially DOE'S research and development

priorities.

In addition to continuing increased support for the programs

included in the stimulus package, emphasis has also been placed on natural gas

utilization research and development; expanded renewable energy and energy

efficiency R&D; fusion energy research, the construction of the Advanced

Neutron Source for support of scientific research; isotope production for

medical, industrial and research applications, the construction of the B Factory for high energy physics research; enhanced funding for Federal Coordinating Council for Science, Engineering, and Technology (FCCSET) initiatives; and continued support of the environmental clean up program.

In addition to the aforementioned funding increases, the budget proposes

elimination of the research and development funding support and related

facility funding for nuclear reactors that have no near-term commercial application; implementation of debt repayment reform and market driven

conservation incentives for the Federal Government's Power Marketing

Administrations; extension of the project schedule for the Superconducting Super Collider; reduced funding for Defense Programs weapons activities, but new support for workers affected by Defense Programs redirection; increased cost-effectiveness in the management of the Federal uranium enrichment

activities; and a slowdown of the fill rate for the Strategic Petroleum

Reserve. Paired with these initiatives is the introduction of a broad-based

tax on energy, based on the energy content of the fuel (measured in British Thermal Units) to reduce the deficit, increase efficiency, and improve

environmental quality.

A brief discussion of some of the major investment and savings initiatives

follows.

INVESTMENTS

The Energy Policy Act of 1992 (EPACT) contains a number of new and enhanced Energy Efficiency and Renewable Energy responsibilities for the Department, including establishment of new energy efficiency standards, authorization for enhanced research programs, and new demonstration/commercialization programs for renewable energy and energy efficiency programs. The investment initiative increases funding for these programs by $1.9 billion through FY 1998. Other energy efficiency programs which benefit from the investment

initiative include Federal energy management, alternatively fueled vehicles, and grants to States for weatherization of low-income homes.

We need to increase the utilization of natural gas because, it is cleaner than

other fossil fuels, creates jobs, and is an abundant domestic resource. Natural gas is a readily available and competitively priced domestic fuel which is underutilized today. After considerable discussion with industry, state and federal regulators, and the environmental community, we have developed a natural gas research, development and demonstration program that addresses barriers along the entire gas fuel path: production, transportation, storage and distribution, utilization, and environmental protection. We are

proposing to focus particular emphasis on utilization technologies as a way of opening new gas markets and expanding existing markets. This initiative would

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significantly contribute to DOE's natural gas efforts, which are conducted within the Energy Efficiency and Renewable Energy, Fossil Energy, and Energy Research programs. The FY 1993 natural gas activities are funded at $157.6 million, and will grow by $42.8 million to $200.4 million in FY 1994. Most of this growth is in utilization technologies. The initiative also reflects an increased emphasis on technology transfer, commercialization, and

international market development, to strengthen the United State industry's

competitiveness.

The Advanced Neutron Source initiative would fund the design and construction of a major new facility to serve as a national user facility to perform

materials research, produce rare isotopes for medical diagnosis, treatment,

and research, and perform research using neutron irradiation techniques. The

facility would accommodate approximately 1,000 users from industry, universities, and Federal laboratories.

The B Factory is a High Energy Physics initiative that funds the design and construction of a high luminosity electron-positron colliding beam machine for the purpose of studying the fundamental aspects of the structure of matter.

This initiative includes $36.0 million in FY 1994 to initiate construction.

The Fusion Energy Research initiative would allow construction of a new

facility, the Tokamak Physics Experiment, which will advance the Tokamak reactor concept and enhance our ability to contribute to and benefit from the

International Thermonuclear Experimental Reactor. A budget increase of $20.0

million is proposed for the Tokamak Physics Experiment in FY 1994, of which

$13.0 million is for construction.

Cooperative Research and Development Agreements (CRADAS) are one of the mechanisms by which the National Laboratories can work with industry to transfer lab-developed technology and know-how to the private sector and improve our competitiveness in world markets. This initiative provides

increased funds of $30.0 million in FY 1994 and $50.0 million per year through

FY 1998 for non-defense laboratories. In addition, as part of the President's

stimulus package, an increase of $47.0 million of FY 1993 funds was proposed

for CRADAS at non-defense laboratories, and $47.0 million in FY 1993 funds

that were appropriated for research and development of nuclear weapons at the

Department's defense laboratories was proposed for redirection to research in

dual-use technologies.

Of the five areas addressed by the Federal Coordinating Council on Science,

Technology and Engineering (FCCSET) initiative, DOE has been the leader of

three: high performance computing and communications, math and science

education, and biotechnology; and an active participant in the others:

materials processing and advanced manufacturing. This initiative proposes an

increase of $78.0 million in FY 1994 to support DOE's Office of Energy

Research programs in these areas.

COST SAVINGS

Programmatic savings resulting from the redirection of National Defense
Programs total $1.35 billion for FY 1994. These savings will accrue from

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