I appreciate the opportunity to appear before the subcommittee today to provide information on our fiscal year 1989 budget request for the Department's renewable energy programs. The budget for these programs is consistent with and supports the goals and objectives of national energy policy, and is fully responsive to the administration and congressional goal of deficit reduction.

SOLAR AND RENEWABLE REQUEST

In support of these strategies, we have requested $123 million for solar and renewable energy R&D. This is an increase of 22 percent over last year's request and 16 percent less than the current year's appropriation.

This budget was developed based upon our multiyear program plans for each of the renewable energy technology programs. The approach we used in these plans is to set a goal for each program and then identify the technical barriers which must be overcome to achieve those goals.

We develop a peer-reviewed plan and include a prioritization of our research needs. In general, the goal is to make each renewable energy technology reliable and economically competitive.

The budget request to implement these plans is not a generous one, but it is within the current federal budget limitations. So, we concentrate our efforts on the highest priority research to address the most critical scientific and technological issues. We believe that this will provide effective programs that will accomplish our program goals.

We also continue to focus on improved dissemination of the results of our R&D programs and on expanding collaboration with the private sector.

The research sponsored by the federal government and private companies is now bearing fruit in better materials and improved components and system designs to increase our energy conversion efficiency and to make alternative energy sources reliable and economically competitive. Now we must look to the future and pursue those activities which will slowly but surely expand and improve our energy supply options.

FUTURE PROGRAM DIRECTION

The way out of our energy problems in the long run must be through better technology to improve both utilization efficiency and supplies of every kind, and the only way to better technology is through research. Here is where there are some crucial decisions to be made and where the Congress and the Department of Energy can work together.

We need to work to assure that every dollar appropriated for R&D is spent productively. If we are going to spend more than the President requests, then let's at least spend it on justifiable peer-reviewed work that actually advances the national interests. If we do that, we can turn the budget reductions that we face into an opportunity to bring more discipline and higher quality work to our research programs.

The days of the add-on programs that nobody really minded are gone because those programs are no longer add-ons, they are substitutions for work that has been peer reviewed and justified in terms of the national interest.

We need to work together to form a consensus because, if we do not, we are going to see our total R&D budget continue to shrink and the truly productive part will shrink even faster.

It is important that the decisions that we make today move the nation toward a greater energy efficiency and broader availability of supply choices. Therefore, Mr. Chairman, we would like to ask you and the subcommittee to review our multiyear plans, which we have recently made available to you, and to give us your comments.

Tell us that we are geniuses or that we are all wet, but most of all we need your help in doing our job better, to support the best and the most productive research for renewable energy.

PREPARED STATEMENT

Mr. Chairman, we appreciate the opportunity to appear before you today and to gain your advice on these matters. I will be happy to answer any questions you may have.

[The statement follows:]

STATEMENT OF DONNA R. FITZPATRICK, ASSISTANT SECRETARY FOR CONSERVATION AND RENEWABLE ENERGY

Mr. Chairman and Members of the Subcommittee, I appreciate the opportunity to appear before you today to provide information on the FY 1989 budget request concerning the Department's Renewable Energy programs. The budget for these programs is consistent with the goals and objectives of national energy policy and is fully responsive to the Administration and Congressional goals of deficit reduction.

I would now like to discuss each of our major program areas under your jurisdiction and its related FY 1988 funding request.

RENEWABLE ENERGY OVERVIEW

The Nation's overall national energy program is built upon broad policy goals improving national security, assuring an adequate, stable supply of energy

at reasonable costs, and protecting public health and safety and environmental quality. The reliability of an adequate supply of energy impacts day-to-day functions of the entire public and private economy of the nation. Energy is and will remain a vital ingredient in the competitiveness of the country's goods and services in domestic and foreign markets. The nation has made important strides over the past several years towards an improved energy security through increasing the efficiency of energy use and diversifying its sources of energy supplies. Important areas of energy opportunity remain; the ability to build upon these successes will make the critical difference in the Nation's energy, and therefore economic future.

An energy economy that depends largely on imported commodities such as oil or gas can be subject to short term volatility and a large degree of potential uncertainty in response to national or international economic and political forces. But our energy economy is shifting steadily toward reliance on improved technology rather than abundant commodities. Research sponsored by the Department and the private sector will lead to the technologies needed to allow economic access to domestic oil supplies and clean burning of coal.

Improved technology is already allowing us to exploit non-commodity energy supplies by decreasing the costs and increasing the efficiency and reliability of the many types of solar, geothermal, and biomass energy systems. These systems are typically capital intensive; that is, the bulk of the system's life-time cost is for the equipment, not a fuel. The need for large up-front investment can make the systems appear less economically attractive in the short term than a fuel-burning system, but their inherent security and environmental advantages will lead to increased use in the decades to come. Increased reliance on domestically available resources will improve both energy security and economic productivity.

Renewable energy technologies currently make important, often under-recognized, contributions to the Nation's energy supply mix.. Renewable energy is about 9% of national energy supplies. This contribution can be expected to reach about 12% of domestic energy production over the next two decades as industry continues to deploy currently competitive technology and begins to exploit the commercial opportunity of technology just now emerging from the R&D process. Similar trends are observed within the international marketplace where renewable energy is playing an increasing role in both industrialized and developing economies.

Today's research will lay a foundation for an even larger role for renewables in the Nation's longer term energy supply system. Renewable energy technologies appear poised to make vital contributions to electric power generation, industrial process heat requirements, solid, liquid, and gaseous fuel needs, and the cooling, lighting, and heating of buildings. Advances in electric energy systems and in energy storage will provide the basis for greatly improved utilization of renewable resources. The DOE research program undertakes research in each of these technology areas.

In order to realize their large potential contribution to the Nation's energy supply, renewable technologies will have to be competitive in the energy market and be compatible with the existing supply system. The Department of Energy's Renewable Energy Program is working toward the goal of producing a

technology base upon which the private sector can build to provide the economy

with a broader selection of competitive energy supplies. The Federal R&D program serves as a catalyst to stimulate private sector development of renewable technologies.

The current strategy of renewable energy programs is to concentrate Federal resources on scientific and engineering research to achieve a better understanding of the characteristics of renewable energy sources, of the technologies for collecting and converting these sources to useful forms, and of the generic materials sciences to support industrial development of reliable and efficient systems. DOE's research emphasizes basic and applied research and exploratory development that supply the scientific and technical basis for increasing cost-effective use of the renewable energy resource base and important crosscutting technologies for storage of energy and for reliable and efficient management of the electric energy supply network. The focus of such efforts is on those technologies with the greatest long-term promise for contribution to the Nation's energy supply mix. The goal is to advance the technology while avoiding interference with the capacity and responsibility of industry to develop specific commercial products and services.

The Renewable Energy Research Program is structured to ensure maximum responsiveness to the technical innovation requirements of the private sector. Private sector input regarding research direction and emphasis is sought through integration of industry experts in the review and planning of research activities, direct participation of private sector organizations and universities in the Renewable Energy Research Program, and maintenance of an open and active dialogue with industry, trade associations, and universities. Renewable energy technologies can be significantly advanced through research. Many R&D successes have occurred to date, with between two- and ten-fold improvements in technology cost, efficiency, and reliability. Many important scientific and technical obstacles in resource assessment, materials, and systems integration remain, but we are confident that they have been identified and that a sustained research commitment will provide solutions.