don't have sufficient economic incentive to take the high risks, even in view of long-term payoffs.

So we are concentrating our research programs in that area. I think that is vitally important for the future energy security of the Nation.

TAX CREDIT ISSUE

With regard to the tax credit issue, we know that the tax credits, when they were first passed, were intended to be a transitional provision. That is why they had an end period.

In 1984, we had supported the continuation of those tax credits for a short time in a kind of phased schedule to complete that transition period.

We feel that on the tax reform proposal, which was submitted by the President last year, we have done a great deal to assist small businesses which are typical of the renewable energy industry, and in the interests of tax simplification and also because of the benefits to small businesses, we do not support the continuation of tax credits.

However, we now find ourselves in the position where we have neither tax credits nor any reform yet on the books of the tax system. So I would be the first to admit tax credits are not there and neither is any other assistance to the industry.

They are clearly going to suffer somewhat from that. We have also seen evidence that those parts of the industry which have worked hard to improve their technologies, to market aggressively, and to deliver the product and good value for the money they are charging seem to be able to continue to function and to prosper.

Chairman HATFIELD. Even though it would be difficult to quantify, would you call the Federal role significant?

Miss FITZPATRICK. In the R&D area, certainly, yes, very significant. Chairman HATFIELD. Which, in turn, creates that growing base of contribution.

Miss FITZPATRICK. That is correct, yes.

SOLAR AND RENEWABLES FUNDING REQUEST

Chairman HATFIELD. Madam Secretary, in spite of this rather remarkable record, I note that the budget for the solar and renewables was cut in about half. I believe it came down from about $145 to $72 million. May I ask you and I solicit this as information on behalf of the committee what was the figure that was requested of OMB during the budget preparation period for this year's budget?

Miss FITZPATRICK. It was approximately twice what the request is.
Chairman HATFIELD. Around $144 million?

Miss FITZPATRICK. Approximately that, yes, $143.8 million.

COOPERATIVE RESEARCH AND DEVELOPMENT VENTURES

Chairman HATFIELD. Would you describe for us that part of your testimony where you refer to the idea of the new innovative cooperative R&D approach, the joint R&D ventures between industry and the Federal Government?

Miss FITZPATRICK. Yes; in the last few years, there has been growing interest in industry in doing cooperative partnerships in research and development.

We think that there is a distinct possibility that these could be a very good tool for the Federal Government to use, both to leverage the available Federal dollars and to enhance technology transfer.

So although we have not allocated specific dollars for such cooperative ventures, because we think that is still a little premature, we do want to investigate with industry their interest in working with us under that kind of a format.

Chairman HATFIELD. How would you implement that?

Miss FITZPATRICK. We will be asking industry whether they are interested in participating when we have more definite proposals and what the cost figures would be. Then we would come to the Congress and ask for those funds, probably through reprogramming. What we might be doing is replacing some of the R&D work that we are doing, the same types of subject areas, with this new kind of funding mechanism, which would bring more private dollars to bear on the project.

Chairman HATFIELD. Let me refer to page 17 of your budget justification material. You indicate, and I quote, "This approach is intended for more technology transfer to allow broader research support."

Could I ask you, in your opinion, what renewable resource activities would benefit the most from this particular approach?

Miss FITZPATRICK. I think that the industries that would tend to benefit the most from it would be those that are most mature and have the participation of financially muscular companies, if you can say that.

There are a number of companies that are very well established in energy and in other industries which are in the renewable energy industry also, a number of them oil companies. In particular, a number of electrical engineering companies, such as Westinghouse, are getting into various renewable energy technologies, principally, photovoltaics, geothermal, and some wind, and also in solar thermal technologies. All of those, I think, are potential candidates for that kind of a cooperative

venture.

Chairman HATFIELD. Did the joint venture idea originate in OMB? Miss FITZPATRICK. I honestly can't tell you where it originated, Mr. Chairman.

Chairman HATFIELD. It wouldn't be beyond the possibility, if I tied or linked the possibility of it originating in OMB in light of the funding level that is now before us? It would be reasonable or

Miss FITZPATRICK. Possible.

Chairman HATFIELD. Possible?

ADDITIONAL PREPARED QUESTIONS FOR THE RECORD

I have some other questions I will submit to you for the record if you would respond to them in writing.

[The questions and answers follow:]

QUESTIONS SUBMITTED BY SENATOR HATFIELD

Biofuels

Question: Provide the Committee with a breakdown of the budget request using the FY86 format of short rotation intensive culture, production research, thermochemical conversion,

biochemical conversion, regional program, and capital equipment with FY85, 86 and FY87 levels for each area.

Answer: The following chart, which provides a breakdown of the actual and planned budget for the biofuels program, is submitted for the record.

Question: Congress provided $4 million last year for the Regional Biomass Program. What is the request for FY87? What is the reason for the reduction? Do you anticipate greater cost-sharing to provide the additional funding from what source? Please provide a breakdown of how the reduction will be allocated in each of the regions with funding levels for FY86 and FY87.

Answer: No funds are requested for FY87 for the Regional Biomass Program because this program has matured to the point where federal involvement is no longer required. Activities which promote the use of biomass on a regional basis can be assumed by the individual states, local municipalities, and the private sector.

An increase in cost-sharing by the program participants can be expected in the future. The following chart, which provides a breakdown of the FY86 and FY87 budget, is submitted for the record.

Question: How much is requested in FY87 as compared to FY86 for municipal waste activities? Provide an explanation of the proposed activities with a funding breakdown for each year.

Answer: In FY86, $5 million was appropriated for municipal solid waste activities. This funding was allocated approximately equally between biochemical and thermochemical research. The bioconversion research of municipal solid waste to liquid and gaseous fuels includes research with industry to gain an understanding of the migration of gases through a landfill surface and research on techniques to dewater municipal wastewater sludge. Additional research includes work on feedstock preparation systems and environmental concerns.

The FY87 biofuel planning includes $2.3 million relating to Municipal Solid Waste Technology, which will be used to continue research on liquefaction, pyrolysis and combustion of Municipal Solid Waste as well as anaerobic digestion and landfills for the production of methane.

Question: For the record, provide a detailed explanation and the funding levels in FY86 and FY87 for alcohol fuels activities.

This

Answer: The funding levels for alcohol fuels in FY86 and FY87 are $3.9 million and $2.2 million respectively. The alcohol fuels program conducts research on the most promising technologies for the conversion of wood or MSW to alcohol fuels. Wood has three major components, cellulose, hemicellulose and lignin. program is addressing the problems involved in maximizing the conversion of these componets into alcohols or other gasoline compatible fuels. Such research includes acid hydrolysis and enzymestic hydrolysis of cellulose and hemicellulose to sugars, and subsequent fermentation to alcohol as well as chemical conversion of lignins to gasoline compatible octane enhancers.

Question: What is the status of the RefCom facility?

Answer: The refuse conversion to methane, RefCom, facility in Pompano Beach Florida, was dismantled in December 1985. In FY 1986 the Biofuels program working with industry will complete its cost-shared, research and development of this energy from municipal waste system which anaerobically digests solid waste to produce methane. Assuming the successful completion of research this year, the contractor and the Gas Research Institute have reached a tentative agreement to develop a full scale demonstration RefCom facility.

Question: Please provide a breakdown, and explanation of the decrease in FY87 as compared to FY86 biochemical conversion.

Answer: The funding levels for biochemical conversion in FY86 and FY87 are $8.1M and $3.1M, respectively. The decreased level of funding is primarily due to completion of RefCom research, phasing out of waste water treatment R&D, a decrease in work on effluent dewatering and focusing acid and enzymatic hydrolysis R&D on the most promising processes.

Photovoltaics

Question: Discuss briefly the progress and accomplishments of the PV industry over the last 5 years.

Answer: During the past five years, the PV industry has grown significantly in those activities not supported either by direct government purchases or subsidized by major tax credits. Most of the U. S. manufacturers' 1985 sales of 8.5MW were without government help. Also during this period, four U.S. manufacturers have entered the amorphous silicon commercial market, and several companies have either entered or expanded into the photovoltaic manufacturing equipment market. It is expected that announcements of new and improved products will be coming forth in the very near future.

Question: Provide the Committee with a breakdown of the budget request using the FY86 format including Materials Research with Amorphous silicon, Single-junction High-efficiency Materials, Multiple-Junction and High-efficiency concepts, Related Materials; Advanced Silicon sheet, University and new ideas research; Collector Research with collector efficiency and collector simplification research; System research; and capital equipment with FY 86 and FY 87 funding levels for each area.

Answer: The planned funding levels in requested format for FY 1986 and FY 1987 are submitted for the record: