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Media Briefing: Fiscal Year 2012 Budget


US Department of Energy Secretary Steven Chu holds a media briefing on the Fiscal Year 2011 Budget.
Secretary Steven Chu
Energy Department Video

SECRETARY STEVEN CHU:  And good afternoon.  We’d like to unveil our 2012 budget overview. 

So let me just begin.  This budget is about winning the future.  The president has spoken that it takes time to compete for jobs in the industries of our time.  And he points out that the United States is going to be in a race with the rest of the world.  And in order to win this race, a race for our future prosperity, our energy security, our security in general, “we need to out-innovate, out-educate and out-build the rest of the world.”  And so he goes on.  But this is the crux of the budget and this is the crux of what I have to say today and how the Department of Energy will play a role in that.

The president again has spoken that some of the most promising innovations happening in the area of clean-energy technology, technology that is creating jobs, reducing our dependence on foreign oil and making sure our planet is a healthier place to live. 

Again, taking our – note of what’s going on in the rest of the world, if you look at what’s happening in Asia, when you look at what’s happening in Europe, you find that countries have decided – country after country – that the energy sector is going to be a key part in the future economic prosperity of those countries, that that is really a key part of what they need to do in the long-term future. 

And it’s because you’re going to be needing clean-energy technologies; you’re going to be needing to transition to more efficient ways of using our country’s energy resources, that that is going to be a fundamental part of this.  And so the Department of Energy’s FY ’12 budget request is really about making those strategic investments to unleash American innovation and promote economic competitiveness.

So the budget of FY ’12 does a number of things.  It supports cutting-edge science research.  It marshals this nation’s brightest minds to discover and deliver new energy solutions.  And it develops and deploys the clean and efficient energy technologies the world will demand in the coming years.  This also strengthens our security by reducing the – we are also going to be strengthening our security by reducing nuclear dangers and maintaining a safe, secure and effective nuclear deterrent.

So how it breaks out – we compare the budget of FY 2010, the current budget, with one proposed in 2012.  As you see, there is a $3.0 billion increase.  And it breaks out – it partitions as follows, where NSA is 11.8 billion (dollars), Science is 5.4 (billion dollars), Environment 6.3 (billion dollars), Energy 4.8 (billion dollars).  There’s others of loans at .3 billion (dollars), ARPA-E at 550 million (dollars), rounded up to .6 (billion dollars).

So in our commitment to fiscal responsibility, investing is what’s needed and cutting is what’s not needed.  The president’s budget estimates approximately $3.6 billion dollars in tax subsidies for oil, coal, gas industries are expected to generate more than $46 billion in revenues over the next 10 years. 

We’re going to be reducing our funding from the fossil energy program by 45 percent, 418 million (dollars).  It’s a tough choice but we’re going to be concentrating on looking forward and developing the technologies needed for carbon capture and sequestration.  We’re going to be reducing funding of the Office of Energy Efficiency and Renewable Energy’s hydrogen technology program by nearly 70 million (dollars), about 40 percent. 

And we’ve made a number of hard choices in this shared sacrifice.  There’s been a salary and bonus freeze for all our national lab employees, site and facility management contractors.  And the money saved in that salary increase is being reinvested in the laboratories and a number of things. 

Infrastructure, when properly invested, will actually reduce the total operating expenses of those labs, so we can save further money in years to come.  That’s an example of a much-needed energy investments.

We made a touch choice.  We’ve ended the operation of the Tevatron that was debated whether it was going to be going for another three years.  And we’ve said no, we’re not going to do that to save money for future development at Fermilab.  The Holifield Radioactive Ion Beam Facility will also close down.

We’re doing a lot to improve the management and operations.  We’re reducing the corporate management costs by 45 million (dollars) and reducing administrative expenses across all programs. We’re trying to consolidate programs that carry out the same mission. 

There is an Office of Cost Analysis and an Office of Engineering Construction Management and those have been combined so that we have a single but thorough review of projects.  We’re promoting good government improving the business practices.  For example, the NSA supply chain management center saved about 200 million (dollars) in procurement costs since 2007. 

Overall, let’s put our budget in a context of what has been spent on Science, Defense, Environmental Management.  This is the budget of the Department of Energy.  And you see it evolving in a time where – well, I think it speaks for itself.  And so, if there any questions on that. 

Saving money by saving energy – this is very important to us.  A new program – the budget calls for a new program, the Better Buildings Initiative, includes $100 million in loan guarantee programs so that institutions, for example, hospitals, universities, can make investments that would save them money.  It also includes 320 million to weatherize homes for low-income families. 

We want to lead in vehicle – electric vehicle technologies.  Again, it’s a worldwide race.  This is helpful because of course, it will decrease our dependence on imported oil and promote leadership in what we think will be a very important growth industry.  And so the budget invests $588 million in vehicles to support President Obama’s goal of putting a million electric vehicles on the road by 2015.

We are leading in clean-energy technologies.  There’s R&D, research, development, demonstration, deployment.  As one example, we have a new SunShot Initiative.  This is an initiative that was designed to look at what we anticipate industry will be doing worldwide in reducing the cost of photovoltaics. 

And industry was fairly confident that it could reduce the cost by about 50 percent over the – within this decade.  And we asked, is it possible to reduce that not by 50 percent, but let’s say, 75 percent, a factor four instead of a factor two. 

And so there’s a difference.  If you reduce the cost by 75 percent, we feel that that crosses a magical threshold that – that means solar energy will be ubiquitous anywhere where there’s sun.  It will pop up without subsidy.  And so what technological things could the Department of Energy do in order to really make this happen far sooner than we would expect? 

And that’s our SunShot Initiative.  This is 425 million.  It includes support from EERE, primarily, but also ARPA-E and the Office of Science have lended support to this and it is a unified program now within the Department of Energy.

Wind is mature, but offshore wind is not mature and so we’re going to be adding $64 million to improve the reliability to make it happen that we can actually begin to install offshore wind, geothermal energy, 59 million.  The budget also supports biomass, carbon capture and sequestration and nuclear, including $97 million for small modular reactors. 

In deploying clean-energy projects, we still are on a path to restarting the American nuclear power industry.  We’re asking for an additional 36 billion in loan guarantee authority.  Combined with the existing authority, this will support about six to eight projects.  Some of those projects will be multi-reactors, just as the first one at Vogtle was a two-reactor project.

We’re promoting renewable energy and energy efficiency projects with 300 million in credit subsidy to support three or $4 billion in projects.  And we’re calling upon Congress to allow us to build on progress made from the Loan Programs Office over the last two years.  And so far, we’ve committed more than $26 billion in loans or loan guarantees to support 23 clean projects, estimated to create or save 50,000 direct jobs.

What we can do, as President Obama said, what America does better than anyone else is spark the creativity and the imagination of our people.  In America, innovation doesn’t change lives – doesn’t just change our lives – it’s how we make a living.  This is true more so today than perhaps any other time.  But to remind you, this is what a large part of what made America great and added to its prosperity.

Leadership in an automobile revolution at the turn of the century, leadership in transmission distribution systems, leadership in aerospace, leadership in the semiconductor and computer revolution, the Internet revolution, the biotech revolution.  There’s going to be – we need leadership in this new energy – sustainable energy revolution and this is our moment to assume that leadership.

The president’s budget maintains commitment to double the investment in key basic research agencies, including the Office of Science.  It provides $36 million, a 72 percent increase to support the development of a skilled scientific workforce and it positions the United States to maintain international leadership in scientific computing.

More specifically, we are asking Congress to approve of additional hubs.  This is a total of 146 million to support, now, six hubs.  And so in this – hubs, as again, President Obama said, we’re issuing a challenge.  We’re telling America’s best scientists and engineers that if they assemble teams of the best minds in their fields and focus on the hardest problems in clean-energy, we’ll fund the Apollo projects of our time.

So right now, we have existing programs in fuels, from sunlight, so sunlight directly making transportation fuels, a hub on energy efficiency in buildings and a modeling and simulation of nuclear reactors.  What we’re asking for is hubs on batteries and in energy storage, including just not the research in the battery modules, the packs, but an integrated system.  We’re asking for smart-grid technology and systems and a hub on critical materials that will be needed in the future energy of tomorrow.

Let me remind you that these hubs have been built upon the success of the Department of Energy’s Bioenergy Research Centers and the combined 66 inventions in the patent process in the first three years of operation, many of these patents are now being exploited by companies in partnership with these bioenergy centers and it is being moved to commercialization.  So this is a striking example of the success of these hub-like entities.  And that is, in fact, a model for what we want to do in the future.

We’re also asking for $550 million to the Advanced Research Projects Agency for Energy.  As you know, this is to fund the development of potentially game-changing, clean-energy technologies with a very short time scale, typically two years. 

The budget request builds on – ARPA-E’s already had some tremendous successes in ARPA-E.  Let me go back.  This is – you probably can’t read the fine print, but it was – it’s an article talking about the successes of ARPA-E.  In many instances – I think there are least a half-a-dozen instances I know where small funding in ARPA-E then led to some research and that company was able to turn around and get far more investments from the private sector. 

And in – let’s say, in this – the investments talked about in this article in The New York Times, where they were talking about a 4-to-1 ratio.  That is to say, a few million dollars in ARPA-E, then, a half-a-year or three-quarters-of-a-year later, they were able to turn around and say, okay, next step, work, and can raise that with the private sector.  This is a big, big success and we want to continue that.

Energy Frontier Research Centers – we’re asking for 100 million (dollars) to continue the support of 46 projects started in 2009.  These are linking small groups of researchers, who normally don’t work intimately with each other, to clear the scientific roadblocks.  We feel that this has been also very successful in having people self-assemble into teams to do far more than they would have individually.

In terms of supporting the president’s nuclear security agenda, the budget calls for $11.8 billion from the NNSA.  And it’s building on the momentum of last year, that we have negotiation, ratification and entry into force of the New START treaty.  There has been a release of the Nuclear Posture Review and a historic nuclear security summit. 

We have secured nuclear materials equivalent for more than 800 nuclear weapons.  We have completed and began operations for the world’s most secure highly enriched uranium source facility, the highly enriched uranium materials facility at Y-12 security complex.  And we’ve installed radiation-detecting equipment in more than 65 border crossings, airports, seaports around the world to prevent nuclear smuggling.

So in reducing the nuclear dangers and environmental risks, the budget calls for modernizing our nuclear security enterprise, $7.6 billion and part of the $85 billion commitment over the next 10 years to promote stockpile management, infrastructure, science and technology, engineering.

A big investment in reducing the risk of proliferation of nuclear materials and weapons – $2.5 billion to support the president’s goal of securing vulnerable nuclear materials worldwide – four years.  And we’ll continue with our responsibility in the environmental cleanup of 6.1 billion (dollars). 

So with that, I’ll turn it over to Steve Isakowitz.  And he’ll have more of the real numbers. 

STEVE ISAKOWITZ:  Thank you, Mr. Secretary.  Good afternoon.  Thank you all for being here.  Again, my name is Steve Isakowitz.  I’m the chief financial officer. 

The table here is an overall summary of the budgets request.  And as the secretary said, we are requesting a $3 billion, or 12 percent, increase.  One thing, it’s important to note all the numbers that we’re going to be quoting here today use the 2010 budget as the baseline for the changes.

We use 2010 because 2011 is still going through final passage.  And right now, we are operating at a rate that’s consistent with 2010.  The only exception to that, as I will point out later, we do talk about the NNSA budget in terms of its comparison to the president’s 2011 budget.

A few things to highlight from this chart, is the NNSA budget overall increases 5 percent against the 2011 requests, or 19 percent against 2010.  Our Applied Energy Programs grow by 15 percent, Environmental Management by 2 percent, Science by 9 percent, ARPA-E by 41 percent when you compare it to the recovery act funding it had.  And all others are down 5 percent.

Although this is a significant increase, I think it’s very important to point out that this is against an overall administration domestic discretionary budget that is frozen over the next five years.  And its savings would be at $400 billion over the decade.  And it would be the lowest share of discretionary spending for domestic agencies since the Eisenhower administration.  We believe this reflects the president’s confidence in this agency, and that within that overall, frozen budget made the tradeoffs to see the increases that you see here today. 

With regards to Energy Efficiency and Renewable Energy, the overall budget goes up 984 million (dollars), or 44 percent, and supports the president’s clean-energy initiative.  Some of the things I’d like to highlight are increases in solar, which is an 88 percent increase due largely to our efforts in the SunShot Initiative which is being done in collaboration with ARPA-E and Science.  And overall in SunShot, we’re proposing 425 million (dollars).

Wind is up 61 percent primarily to our investments in offshore research and technology.  Biomass is up 57 percent due largely to our efforts in a cellulosic-biofuels reverse auction of 150 million (dollars), which provides a market-based outlet for demonstrating pilot plants.

Geothermal, 135 percent increase due largely from enhanced geothermal systems, including next-generation systems using waste carbon dioxide instead of water.  Vehicle technologies, a 93 percent increase due primarily from the president’s goal of 1 million electric vehicles on the road by 2015.  And building and industrial technologies, 114 percent and 239 percent increases respectively, including funding for a Better Buildings Initiative and a new hub in critical materials.  Weatherization, also for a 52 percent increase.

One major decrease is in hydrogen technology, which is down 41 percent or $70 million.  It’s also worth pointing out that the administration is proposing still for the passage of the HOMESTAR program, which is requesting $6 billion to make all homes more energy efficient.

For Electricity Delivery and Energy Reliability, overall increase of 69 million (dollars) or 41 percent.  The highlights include a new hub – smart-grid technology and systems hub, advanced modeling grid research for 20 million (dollars), 17 million for energy storage to support demonstrations of a suite of grid-level storage projects, 10 million to develop utility-scale power electronics.  And finally it’s worth pointing out for cybersecurity, although it shows a decrease there, in fact it’s really flat funding because of a one-time expense in the 2010 budget.

Fossil Energy – as the secretary said, the decrease is – it’s being decreased by 45 percent or $418 million.  The decreases include $173 million for a one-time use of prior-year balances in oil-sale receipts.  And I’ll talk to that in a moment.  

Also, it’s 139 million (dollars) we’re saving for zeroing funds in fuel cells, natural-gas technologies, old earmarks and unconventional fossil technologies and a decrease in hydrogen-turbine R&D.  Also, the methane-hydrate research program is being shifted to Science for fundamental research.

Also, we’re seeking no mandatory funding for the ultra-deep program.  And this is consistent with the proposal to repeal that program.  Increases include 22 million (dollars), or 65 percent, for post-combustion capture.  And 49 percent increase for some crosscutting research such as computational-energy science. 

With regards to our petroleum reserves, three things to highlight:  one is that overall, the Strategic Petroleum Reserve, we are proposing the sale of oil from it.  And we’ll receive $500 million in receipts.  It will reduce the inventory from 727 million to 720 million barrels – I’m sorry, from 727 to 720 in order to achieve operational flexibility in managing the reserve.

Also, for the Northeast Home Oil Heating Reserve (ph), we’re looking to sell 2 million barrels of oil in 2011 and using the receipts to purchase 1 million barrels of ultra-low sulfur distillate heating oil.  And for the Naval Petroleum Reserve, so-called NPR-3, we will be discontinuing that since its costs now exceed its oil revenue.

And nuclear energy – this table, it can be a little bit confusing because we’ve had significant budget-structure changes between the 2010 and the 2012 budget.  So for example, Gen IV is not really going to zero.  It’s just that it’s been changed and split among two other different programs.

To highlight a few areas, $97 million for nuclear-energy enabling technologies, which includes 24 million (dollars) for the existing modeling hub.  And 97 million for the small modular reactors, including 30 million for R&D and 67 million for licensing and design certification, 95 million for reactor concepts, 115 million for fuel-cycle R&D.

We’re showing NP2010 going to zero, but really, that was planned to be phased out.  And program direction increases in part due to including additional staff to assume ongoing responsibilities under the Nuclear Waste Policy Act. 

Office of Science – a 9 percent, or $452 million increase.  This is consistent with the administration’s plans to double Science.  Highlights include a 22 percent increase for advanced computing, which includes 88 million (dollars) or 63 percent increase for exascale computing, positioning the U.S. to maintain international leadership in scientific computing, 24 percent increase in basic energy sciences, which includes funding for two hubs, fuel from sunlight and energy storage, 22 percent for biological and environmental research, which includes the bioenergy research centers, minus 4 percent for fusion energy which includes 105 million to maintain our participation in the ITER project.

And 1 percent increase in high-energy physics.  And it’s worth noting that the National Science Board did not approve development of NSF’s Deep Underground Science and Engineering Lab (ph).  However, we maintain funding in there and we’ll be examining alternatives.  Nuclear physics, a 16-percent increase.  Science laboratory infrastructures, we have no new starts in 2011.  And we have one new start planned for 2012.

As the secretary said earlier, we have two terminations, one at Tevatron and the other at the Holifield Radioactive Ion Beam Facility.  And lastly, it supports from the graduate fellowship program, 320 graduate fellows.

As for ARPA-E, the 550 million (dollars) will provide for five subprograms in stationary power, electrical infrastructure, and use embedded efficiency, transportation efficiency and hold 17 million for broad funding opportunity announcements.  We’re also showing 100 million in mandatory funding.  This is a result of the administration’s proposal to auction spectrum bands over the next 10 years.  From those receipts, 100 million has been set aside for ARPA-E use. 

The loan program – showing sort of two tables up here.  It’s important to view the loan program in these two ways.  One is the credit subsidy itself, which is that first table.  The second table is the loan authority that’s available to us for committing to loans.  With regards to nuclear, we’re requesting $36 billion in additional loan authority.  With the 18.5 billion existing authority, that would give us 54.5 billion total to support the near-term deployment of six to nine nuclear energy projects.

In the renewable area, we are seeking a credit subsidy of 200 million (dollars) that allows us to support one to 2 billion (dollars) more in loans for the 1703 innovative renewable energy.  And in total, for FY ’12 requests, this, as well as existing loan authority would provide 40 billion in renewable energy and energy-efficiency loans.

And finally, we have a new pilot program, 100 million (dollars) in appropriated credit subsidy to support a better buildings pilot loan guarantee effort through universities, schools and hospitals.  It’s also worth pointing out that as important as the loan program is to deployment, the administration is also building on the success from the recovery act for two other tax incentives.

One is the so-called Section 48C Advanced Energy Manufacturing Tax Credit and the other is Section 1603 Energy Cash Assistance Program.  For 48C, the administration is seeking $5 billion more and for 1603, extending that for another year.

For NNSA, for the weapons activities, it funds the stockpile requirements for the Nuclear Posture Review and the New START treaty.  Requests constitutes a multiyear investment to modernize the nuclear security enterprise consistent with the president’s proposal to spend more than $85 billion over the next 10 years.  It also supports enhancements for science, technology and engineering and funds critical infrastructure, in particular, the UPF and CMRR.

And Defense Nuclear Nonproliferation?  Its mission is to detect, deter and secure and dispose of dangerous nuclear material.  The funding there shows a 5 percent decrease but again, that’s against the president’s 2011 budget, which was intentionally frontloaded with additional budget.  If you compare it to the 2010, it’s a 20 percent increase.

Naval reactors are seeking 1.2 billion (dollars), an 8 percent or $83 million increase over 2011 to support design work for their Ohio class ballistic missile submarine replacement, refueling of the land-based nuclear prototype and recapitalization of spent nuclear fuel infrastructure in Idaho.

In Environmental Management, the program will be in full compliance with the 2012 regulatory agreements.  To highlight, we have a $150 million increase in 2012 for the waste treatment plant.  This will enable the facility to complete its commissioning as planned by 2019 and keep the project within a total cost of 12.6 billion.  Also worth highlighting is R&D increases by 63 million or 90 percent in 2012, which promises future cost reductions in life-cycle costs.

Lastly, for the Energy Information Administration, we have a – requesting a 12 percent increase to improve in the analysis.  For Health, Safety and Security, a 3 percent increase.  Corporate management, we have a 13 percent decrease which reflects, as the secretary pointed out, efforts to improve our operations while reducing our costs.

And then finally, the Power Marketing Administration, the decrease there just reflects mostly technical changes as result for how we collect receipts there.  So that concludes my remarks and I guess now we could shift to question and answer.

Q:  Mr. Secretary, I think this is the second time you’ve tried to cut funding for fuel sales and to get six energy innovation hubs instead of just three.  And of course, the last budget went absolutely nowhere.  What are the prospects of you getting what you want here?

SEC. CHU:  Well, we still think it’s a good idea to decrease the funding for fuel sales and the innovation hubs.  I’m still very hopeful, you know, maybe it’s optimism, continued optimism.  I think going forward, I’m hoping that Congress can be convinced that – of the wisdom of these hubs based on the early track record of the first ones.

In terms of fuel sales, it’s – look, that’s a tough choice.  Certainly, it’s part of – what we want have happen is continuing, but we have to, again, make a tough choices on what to support.  Industry is pursuing fuel sales, as I said before, last time, the fuel sale part is actually the easiest part in the sense that – and where the most progress is made and where you see a great deal of commitment from industry.

The unsolved problem is where the hydrogen’s going to come from, you know, is still that – is not a solved problem.  And so we think that you know, given the cuts we had to make and the emphasis, we still think that that’s the right thing to do.

Q:  Can you explain your – (inaudible) – small modular reactors – (inaudible)?

SEC. CHU:  Sure.  We think that the small modular reactors is an incredible opportunity where you can build reactors in a centralized factory and stamp them out and to serve markets, not on the United States, but the rest of the world.  There are many areas, power plants, where you cannot – they don’t have the infrastructure to do – sustain a one-to-1.5 gigawatt reactor. 

And so to make them in sort of bite-sized chunks where the utility companies are – whoever’s going to be investing in these don’t really have to bet out some real fraction of the entire company’s assets to make sure these go forward, it’s something which we see as a world market.  And so the Department of Energy is very, very positive about small modulars, both to help with the engineering design to get NRC licensing, and also for further research. 

We think this is an opportunity where the United States can actually capture a leadership role in the nuclear sector.  We had it once before, when we made the first nuclear reactor.  We lost it to France and Japan and Korea.  China is now wanting very much to be a world player in that market.  But this is where we think the United States has a lot that we can offer.

Q:  On your reactor concepts program, which is new, which will also include work on small modulars, I noticed there was a difference of like 30 million in the total.  There was the small reactor project, which was 67 and SMRs are a part of the reactor concept.  Will that include like 30 million (dollars) for work on that and could you give us a break –

SEC. CHU:  Well, I think the breakdown you’re referring to is the part where we’re helping a few companies with the engineering design to get licensed approval.  And then there’s another 30 million (dollars) additional of R&D that we’re funding directly.  So we’re both helping companies get licensed approval, hopefully in the next couple years, but that’s in the purview of the NRC.

Q:  And could you give us a breakdown of what you see or what the reactor concepts program, what the aim is, and what you hope it will –

SEC. CHU:  That’s more advanced concepts and this goes to, as Steve Isakowitz said, some of the more advanced designs.  This is, for example, you know, the air-cooled reactors, so so-called Gen IV reactors, where the Gen III plus is something like an AP1000, where you have cooling within the vessel and pumps do that that are more, possibly, safe.  The Gen IV would be different, really, could be a radically different design, like air-cooled reactors, air-cooled pebble bed reactors, things of that nature.  Yes?

Q:  Mr. Secretary, the oil that you plan to sell from the SPR, will you do that even without congressional approval?  Do you need it?  And second, when do you plan to do this?  Actually sometime during the 2012 spending year, which starts October 1st or before that, earlier this year?

SEC. CHU:  Yeah, what – yes, we actually have a situation here with the oil that one of the caverns has a technical difficulty and we’re going to have to drain that cavern partially anyway.  And so some part of it is prompted by that, but in this – timing, do you know, Steve?  The exact timing?  Does anyone know the exact timing?

Q:  As part of the budget request was the immediate reauthorization.

SEC. CHU:  Yeah.

Q:  (We’re going to need that ?) to do the sale.  But because of the draining of the one cavern there, it’d have to be put into the other caverns and it’s creating an overfill situation.  So we need to sell that off so – (inaudible).

SEC. CHU:  But yes, I mean certainly, you know, and that has a lot of congressional control and we’re going to wait for that, but there is this other issue as well.

Q:  But will it happen during the 2012 budget year or before?  Will it happen after October 1st, when the new budget year begins?  Or will it happen before –

SEC. CHU:  Well, we hope that Congress can give us permission now because as we overfill some of those others, we don’t want the oil to be spilling out.  And so we’ll work with Congress on that.  But certainly, we need to work with Congress.  Yes?

Q:  On the dollar-per-watt goal of the solar shot, can you break out for us what fraction of that is sort of applied research?  What role do you see the solution coming from?  Basic research says that ARPA-E will play a role.  How do you see us getting to that dollar-per-watt?

SEC. CHU:  Sure.  Well, we looked at the entire chain of what it costs now to install and this is – this dollar is (installed ?) at utility scale, it’s a multi-megawatt field.  And right now, roughly half of the costs are in what we call “balance of system.”  It’s not in the module itself, but in the associated electronics, the mounting, the installation fees, you know, land rental, land-use fees, things of that nature.

And it also – it depends on what you call basic research because some of the things we fund are radically if – for example, we’re funding research on silicon photo cells, polycrystalline silicon photo cells.  But I call it research because this is not the usual way of doing it in terms of sawing it up into wafers, polishing and then doping. 

This is a completely new system of taking molten silicon and dripping off and directly – and then removing that melted – molten, now solidified silicon off so you have something that is one-third, one-quarter the thickness.  That’s, if it works and it can be scaled to commercial systems, that’s a totally different way of making what was a very old-fashioned silicon photo cell invented, you know, in the late ’50s at the labs. 

But that’s a truly innovative possibility that we’re funding.  And so it’s – so it’s very research-y, but it’s not in looking at a new material.  It’s taking tried and true material and just turning it upside down.  It’s like plate glass.  You know, in the olden days, 200 years ago, glass, molten wiggly stuff you see in the old buildings.  And all of a sudden, someone figured out you could float glass on another liquid and it could be flat and smooth and really inexpensive – revolutionized glassmaking. 

So we are looking at many things, not only in silicon, but in various types of thin film, CIGS, cad telluride and other things.  We’re looking at the electronics.  How do you make the electronics much more reliable?  Even the installation costs, the cleaning of the reflectors, things like that, everything.  So some of it, very applied, some it, very basic, some of it, basic, but a more radical manufacturing bend.  So we think, you know, we’re thinking about – before the end of this century, we can get down there.

Q:  Secretary, some in Congress might make the argument that as you’re increasing these fossil fuel subsidies, the price of energy can go up and there’s a reasonable argument that as we transition to – (inaudible) – of the future, that the cost of the energy we use now – (inaudible) – interest.

SEC. CHU:  Well, I – I think – I personally think that the cost – and these – there are fuel subsidies in the oil and gas industry that – I spoke about the $3.6 billion and you have to fold that into, you know, there’s recent reports on what – you guys can all look up what the major multinational corporations are making in terms of their revenues and their profits and it’s a very, very small fraction of that.

Q:  Mr. Secretary, can you talk about the next generation nuclear power plants and specifically, how much funding is allocated for that and what will that funding be used for, for the program?

SEC. CHU:  Let’s see, what’s the exact number on the new – the Gen IV – I think you’re asking about the Gen IV or the small modular.(Cross talk.)

Q:  Next generation nuclear power plants, the high-temperature gas-cooled reactor.

SEC. CHU:  Yeah, that’s in there – I forget – it’s of scale, 100 million (dollars), but I don’t know.  Okay, 53 million for the next generation? 

Q:  For NGNPs

SEC. CHU:  Okay, NGNP, okay. 

Q:  How will that be used?

SEC. CHU:  I think this is, looking at – these are – these are reactors whose designs are not widely deployed, not – certainly, not on a commercial scale.  And so this is looking at research that says, you know, so our feasibility studies.  They have not been – and you can correct me if I’m wrong, they have not had NRC approval either.  And so there’s a lot of preliminary work that has to be done on these gas-cooled reactors.  Pete Lyons, do you want – anything else to add?  Okay.  Yes?

Q:  It looked as though – I just looked at it quickly as you went through – in terms of  grid storage for the back of the grid, can you talk a little bit about what kinds of things you’re looking at it?  Is it batteries or is it other devices?  Can you do a little breakdown?

SEC. CHU:  Yeah.  Yes, we’re looking at batteries.  We’re looking at pump storage and then there’s scales of – amount of storage.  And what we’re finding is that depending on what you want to store, whether you want to do load shifting, that’s the biggest kind of storage and that would be appropriate for either pumped storage where you pump water up a hill or a compressed-air storage.

But there are scales of batteries storage that are very, very valuable for taking up – there’s a very high-frequency transience in renewables like wind and solar, if clouds go by, things of that nature.  And levelizing that – that will enable us to use the full output of, let’s say, a wind farm.

Right now, what happens is if there’s a burst of wind or there’s a sudden lull, what we have to do is – the burst of wind – we feather the blades.  We throw away that energy or we just dump it somewhere.  And batteries are turning out to be a very valuable way of taking the full ability of that wind farm to capture all the energy and put it on the line and have it be used.

So we’re looking at, first, how to interface the system with these batteries of various different scales.  We’re also funding very novel ways of increasing the batteries for this large-scale storage of the megawatt power – multi-megawatt power, megawatt-hour scale. 

ARPA-E has funded a number of things along those lines, like the liquid battery we talked about.  There’s a couple of others.  There’s a wide open space here where if we improve the battery technology – and this also means driving the cost down, the cost of these larger-scale batteries. 

Like, the sulfur-flow batteries are anywhere typically 400 (dollars), $500 per kilowatt-hour.  There’s a hope if we can get this down to 100, lots of things open up.  And it’s, again, making the energy infrastructure we have much more useful.  We’ve become much more efficient grid system, so that’s part of it.

Q:  Mr. Secretary, why in this year’s budget request did DOE choose not to seek to reauthorize payments into the uranium-enrichment D&D fund?  And is DOE looking to increase the amount of uranium it uses to conduct environmental management work? 

SEC. CHU:  I think I’m going to hand it over to Inés.

INÉS R. TRIAY:  We are looking to continue the transfer of uranium in exchange for cleanup services.  And of course, we’re going to do our market analysis.  And depending on our assurances that we’re not going to impact the uranium market adversely, we will continue to exchange uranium for cleanup services.

Q:  Mr. Secretary, given the deep cuts that we just saw in the House C.R., including Energy, how confident are you that Congress will appropriate, you know, a budget like this, or anything that even resembles this budget –

SEC. CHU:  Well, we’ll take it a day at a time.  I think this budget presentation and the president’s request is really a budget about winning the future.  This is a budget where the president has made some very tough choices. 

If you look not only at the Department of Energy, but you look across the board at the other agencies, this, as Steve Isakowitz has said, is this is the first budget since the Eisenhower administration which has held flat.  And we have a pledge to hold it flat for the next five years.  So the priorities are laid out in this budget. 

The fact that the Department of Energy has gotten a budget increase really reflects the deep commitment the president feels towards the part energy will be playing in winning the future, in actually creating jobs tomorrow and the following years, and making sure that the United States is going to be competitive as we go forward, and how important the energy sector is to that competition and you know, in part for the confidence he has that this department can carry that out. 

There was another – yes?

Q:  Hi.  It’s under fossil research and development.  There’s a number of programs in the – especially as regards to coal that have been sharply reduced or taken out entirely.  And they get – all get the same reason.  They say the decrease in funding represents a shift in focus towards technologies that have potential benefits towards both existing and new fossil fuel plants. 

So what sort of technologies are, you know, being focused on?

SEC. CHU:  So let me put it in context.  We have just come over two years of recovery act, where a lot of money was invested in recovery act.  That money has been invested in demonstrating technologies that have not been demonstrated at near-commercial scale, but where heavy private-sector partnership is involved.

Now, going forward, realizing the budget realities of what we are going forward, to – we’re looking a lot at the technologies not that can be deployed today, but newer technologies that would totally change the landscape of how we can capture carbon at the stack instead of using amine or chilled ammonia, which are the present-day technologies that are now being piloted around the world and in the United States – a very different one where you might absorb the carbon dioxide in small particles, so when you release it you can take that away from the system – far less energy cost in releasing the particles. 

In new separation techniques, if you want to go to oxyburn – oxyburn, you have to separate the oxygen from the air.  Right now, that’s done cryogenically – again, at great cost and great investment.  Can you use novel nanotechnology membranes in order to do that?  And so we’re investing in things like that.

So a lot of the program now – and saying, okay, given the budget realities, what can we do going to the future?  Because we are committed to driving down the costs of carbon capture and sequestration. 

We are going to continue with the sequestration part of the program because that’s also very important.  We have to prove at a number of geological sites that it’s going to be safe, and get the confidence of the American people that it can be stored safely and securely for very long periods of time. 

So it’s – again, it was a hard choice of what we decided we wanted to put an emphasis on.  But we do remain committed that we have to drive down the costs of CCS.  And we will drive down those costs.  There’s a lot of great ideas that I see out there.

Okay.  One last question.  And then – sorry to end.  (Chuckles.)

Q:  Yes.  Could you give a little follow-up?  You made a strong statement that the funding for environmental management in 2012 would be in full compliance.  I was looking at the – at the figures, say, for Oak Ridge, and I think one was 401 million (dollars).  I think the other was 384, I saw.  And those don’t seem to be very close to what would, based on earlier negotiations on the federal facility agreement there, would keep it in compliance.  Can you speak to that?

SEC. CHU:  Well, the details of whether it’s 410 (million dollars) or 420, I think I’ll let Inés talk about. 

MS. TRIAY:  What we have done is, we have been very efficient in terms to the recovery act funding associated with the Oak Ridge activities.  So we have on the order of $90 million that we are going to work very closely with a state regulator, which added to the 400 million that we’re requesting.  We feel it’s going to be sufficient to ensure compliance in Oak Ridge.

SEC. CHU:  Actually, you should say, I’m going to pat her on the back a little bit.  I think E.M. during the recovery act period has done amazing things.  A lot of the things came ahead of – under budget and ahead of schedule.  And so there was a little bit of leftover, okay?  And we’ll be glad to give you the details on that.

Q:  Mr. Secretary, how is the Chrysler loan application affected by this budget?  What is – do you have a status on that?

SEC. CHU:  We’re moving ahead with Chrysler.  I don’t think it’s affected on that – by this budget.  Okay, thank you.