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situation could easily lead to a disruption in supplies that we are no longer able to respond to effectively.

Knowing the uncertainty of our energy future should make us even more determined in our resolve to achieve energy independence.

We can only attain this goal with aggressive government support for conservation and renewable technologies such as solar, geothermal and hydropower. We also need to preserve

the tax credits that have made the application of these technologies more available in the marketplace. Finally, we need to continue our efforts to extend our supplies of fossil fuels.

These important programs require and deserve the federal government's support. The proposed 52 percent cut in Conservation and Renewable programs and the 73 percent cut in Fossil programs cannot be justified. I cannot support this budget.

New Mexico Impacts

The proposed budget has a tremendous impact on the work performed by the national laboratories in New Mexico in alternative energy research. At Sandia National Laboratory, major efforts have been discontinued.

Funding for Solar and

Geothermal research is reduced by this budget by about 25%

from last year and could result in a 50% reduction in

contractor support and outside research activities. Funding for enhanced gas recovery may decline substantially, and efforts in coal related research will be reduced 50%. At Los Alamos National Laboratory, there will be insufficient funds to complete the Hot Dry Rock geothermal energy program, which has seen significant accomplishments over the last three years. Pesides the laboratories, funding to state government for conservation programs will be cut substantially affecting many New Mexicans who have come to depend on these conservation initiatives. The Department has also requested the deferral of $450,000 for the operation of the Residential Energy Program at New Mexico State University after Congress appropriated the money last year. The program carries out worthwhile photovoltaics research and provides employment for approximately 20 individuals.

This committee has already expressed its opposition to the proposed budget and its support for maintaining these programs at the FY '86 appropriated levels. I hope the Administration will finally understand that we do not find it in the best interest of the country to abandon the pursuit of energy independence.

Senator DOMENICI. Senator Ford, did you desire to make an opening statement?

Senator FORD. Mr. Chairman, I have no opening statement. I might say that Senator Rockefeller was unavoidably detained, and he reserves the right to send questions in writing to the witnesses today.

Senator DOMENICI. Thank you very much. We will submit them and hope they will be responded to.

The first witness is Hon. Claudine Schneider, U.S. House of Representatives. We are delighted to see you. We have seen your prepared remarks. You are at liberty to state them in detail or summarize them, whichever you prefer.

STATEMENT OF HON. CLAUDINE SCHNEIDER, A U.S.
REPRESENTATIVE FROM THE STATE OF RHODE ISLAND

Ms. SCHNEIDER. Mr. Chairman, thank you for the opportunity to speak to the subcommittee this afternoon regarding the Department of Energy's fiscal year 1987 conservation budget.

As a member of the House Subcommittee on Energy Development and Applications, which authorizes DOE's conservation budget, I am very disturbed by the proposals to eliminate twothirds of the energy-efficient R&D programs and to completely eliminate the State and local energy conservation programs.

These proposals come fast on the expiration of the conservation tax credits. I think it is important to look at this in the big picture, but I think this means that out of the roughly $40 to $50 billion per year that we spend on Federal tax and budget energy subsidies, that energy efficiency will receive a mere $70 million out of a total of $50 billion. Clearly, the Federal Government is distorting the marketplace by making such changes.

These actions are not at all consistent with DOE's national energy policy plan that calls for efficiency as the cornerstone of Federal energy policy.

As you know, energy efficiency right now provides one-fifth of U.S. energy services. It saved the American economy about $150 billion in the last year. These efficiency measures have also displaced the equivalent of about 13 million barrels of oil per day, and I believe that that is the key reason that we have seen the collapse of OPEC's power and world oil prices.

If we had not had these efficiency improvements, then what? Well, I think we would be guaranteed that we would be importing four times as much oil as we do now. Oil prices would still be very high. OPEC would still be in control, inflation rates would be high, and the trade deficit would be even more horrendous than it is, not to mention the fact that the United States and its allies would be extremely vulnerable to any Mideast oil disruption.

In light of the energy efficiency's incredible success in improving economic productivity and enhancing national security, it is hard to figure out why DOE's zealous budget-cutting efforts have been targeted toward these projects. I think this Nation has run out of energy; there is no reason to believe that we have run out of energy-efficient opportunities. The United States continues to con

sumes as much as 75 percent more energy per unit of GNP than our foreign competitors such as Japan and France.

Just about 20 minutes ago, I had the opportunity to speak at the Brookings Institute and to share with them some of the specifics as to how competition with Japan and our other allies is being severely damaged through our failure to invest in energy-efficiency improvements and keeping apace with the high technology opportunities for international competition.

According to the analysis, cost-effective efficiency investments could trim an additional $150 billion a year off of our annual energy budget. The oil price hikes in the 1970's spawned our fuelsaving efficiency improvements. Now in the 1980's, we have solid state electronic advancements that are spawning another enormous pool of electricity savings that deliver services at 2 to 10 times cheaper than building new powerplants, not to mention the capital that is required in building new powerplants.

The savings in U.S. manufacturing and industrial facilities for electricity represent 40 percent of their electricity consumption. This can be significant, particularly to the Northeast/Midwest region of the country, where we still see a great deal of energy consumption in the manufacturing and industrial sector.

I would like to ask, Mr. Chairman, to have submitted into the record a copy of the report by the American Council for EnergyEfficiency Economy. That report points out that the United States is receding from Federal support for energy efficiency R&D while our foreign trade competitors are maintaining or increasing their R&D efforts. Right now, the United States ranks fifth in the funding levels behind the United Kingdom, France, Japan, and Germany.

The other thing I would mention is that the President's Commission on Industrial Competitiveness has also noted that the United States has lost not only a large market share in the auto, steel, rubber and primary metals industries, but we have also lost shares in 7 out of the 10 high technology markets-and energy efficiency products are among those fast-growing high technology markets.

One electricity-consuming product after another is being totally renovated with high technology design improvements in solid state electronic devices. Japan, which is the leader, is about to extend its assault on the United States manufacturers of motors, lighting systems, heat pumps, air conditioners, photovoltaics, and industrial processes.

And just as Japan has captured a major segment of the United States auto market with high efficiency models, their emergence into the high energy efficiency consuming products is also on the upswing. In order to protect the U.S. domestic markets and to improve our global competitive position, I think we should be pursuing national energy policies that help to cut in half the 12 percent of our GNP that pays for energy, not to mention the impact that this would have on a lower budget deficit.

So although the U.S. energy sector accounts for about 12 percent of the GNP, it represents 40 percent of the total investment in plant and equipment expenditures.

The final point I would like to make about the oil price collapse is one of national security. There is no assurance that our oil price

collapse will sustain itself. The U.S. Energy Information Administration has projected that substantial increases in oil imports in the 1990's will occur as a result of declining U.S. oil reserves.

As a matter of fact, it is worthy of note that between 1979 and 1984 the U.S. oil industry invested $250 billion in oil exploration alone without achieving a net increase in U.S. reserves at the end of 5 years, if we could just imagine what benefits we could have reaped if that $250 billion had been invested in energy-efficiency improvements.

So, Mr. Chairman, I would like to urge you and the members of the committee to please strongly support the freeze of DOE's conservation programs at the 1986 level. I think the fact that they have suffered a 50-percent cut over the past 5 years is contributing more than their share to balancing the budget.

I would also like to point out that I would certainly appreciate your support for the least-cost energy planning initiative, which is part of the energy conservation budget. This is a 3-year, $4 million technology transfer program that I initiated as a member of the Science and Technology Committee. It is a modest program that has broad-based support from the National Association of Regulatory Utility Commissioners, the American Gas Association, the American Public Power Association, the Edison Electric Institute, and the National Association of State Utility Consumer Advocates. Essentially what it would do would be to return the benefits of taxpayer funded research to the U.S. utilities and to the ratepayers. The essence of the technology transfer program is to provide information on a full range of energy efficiency technologies to the utilities and also new, innovative schemes on energy management. So I am hopeful that this committee will be receptive to the concept of developing a balanced approach to our energy policy and recognizing that we cannot afford to put all of our eggs in one basket and that diversity is a way of securing not only a lasting energy supply but also a more secure energy supply.

Thank you, Mr. Chairman.

[The prepared statement of Ms. Schneider follows:]

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