Documenting the 1970s – Part 2 of 2

This post is a follow-up to my previous blog post ‘Documenting the 1970’s – Part 1′ which republished President Carter’s June 20, 1979 solar energy Message to the Congress of the United States. Part 2 republishes testimony that I presented on February 25, 1981 to the Energy and Power Subcommittee of the House Energy and Commerce Committee. My views were requested by the House Subcommittee because of my role in guiding the multi-agency Federal study, the Domestic Policy Review of Solar Energy (DPR), that formed the basis for President Carter’s proposed solar energy strategy. My testimony reflected my views a little over two years after I delivered the study to the White House on December 6, 1978, and after I had left DOE for another position a year later and had a chance to reflect on how the recommendations of that study had been implemented to date. In those two years the Carter Administration had been replaced by the Reagan Administration and implemention of any solar strategy was now in the new Administration’s hands.


Oral Statement by Dr. Allan R. Hoffman
Assistant Director for Industrial Programs, Energy Productivity Center, Mellon Institute

before the

Subcommittee on Energy Conservation and Power
Committee on Energy and Commerce
U.S. House of Representatives
February 25, 1981
Mr. Chairman, members of the Committee:
I welcome the opportunity to be here today to discuss the
development of our nation’s solar energy policy, and to present
my thoughts on how that policy should evolve in the future. Let
me emphasize that the views I will express are strictly my own,
and do not necessarily reflect the views of any other person or
organization with which I am affiliated.
Currently I serve as Assistant Director for Industrial
Programs at the Mellon Institute’s Energy Productivity Center.
The letter inviting me to this hearing requested that I provide
some historical perspective on how national solar energy policy
has developed. This is because of my previous role as Director
of the solar energy policy division within the Department of
Energy’s Office of Policy and Evaluation.

In that role I also served as day-to-day director of the Carter Administration’s Domestic Policy Review of Solar Energy, commonly referred to as the DPR. A detailed discussion of the DPR, which formed the basis for President Carter’s June 20, 1979 speech and Message to the Congress, setting forth a national strategy for accelerating the use of solar energy, is included in the full statement I am submitting for the record.

In the few minutes allowed for my oral statement, I would
like to address the other issues mentioned in the letter of
invitation: how well has the Federal government carried out its
solar energy programs, and what should policy be in the future?
The DPR was announced by President Carter on May 3, 1978, and
a Response Memorandum to the President was delivered to the White House December 6th. It contained nine major findings, which are discussed in the full statement, and presented three broad policy options for Presidential consideration.

This Memorandum was digested for 6 additional months by the Domestic Policy Staff prior to the announcement of President Carter’s solar energy policy in mid June. That announcement made a strong statement in support of solar energy, committed some additional funds to an expanded Federal solar effort, and took several steps towards defining a long-term national solar energy strategy. It accepted the rationale developed in the Response Memorandum that use of solar energy systems could reduce the nation’s dependence on, and misuse of, fossil fuels, enhance the quality of the environment, reduce the costs of energy services if oil and gas prices rose rapidly, provide large savings to the economy if major energy systems such as coal or nuclear power fail to achieve expected penetrations due to environmental or other considerations, provide employment opportunities, and enhance important U.S. foreign policy and trade objectives. It also recognized that under any reasonable economic growth scenario, supplies of oil and gas would eventually deplete, and that the nation and the rest of the world would have to rely increasingly upon alternative and renewable energy sources. Therefore, the critical question was not whether solar energy development should be encouraged by the Federal government, but rather at what pace and in what form.

However, other important steps were not taken by the Carter
Administration, which, in my view, raised serious questions about
its commitment to solar energy.

At the time of the President’s solar message, the Federal
bureaucracy needed to receive clear instructions on how to
respond in terms of program activities to the President’s speech.
In fact, a set of Presidential directives to the departments and
agencies had been prepared in anticipation of the President’s speech, but were never issued. It must be remembered that the DPR was a policy, not a program, document. There was a need to move from a policy statement to detailed program plans, a step the Carter Administration took very haltingly.

Establishment of the standing Solar Subcommittee of the
Energy Coordinating Committee, an important thrust of the
President’s speech, could have been pursued vigorously, but was not. It was finally established almost a year later when pressure from Congress began to develop. This Subcommittee has the potential for improving significantly the management and coordination of the Federal Solar program, if allowed by OMB and others to do its job.

In addition, throughout its tenure, the Carter Administration
failed to manage properly the Federal solar energy program. In
my view, this has been a more serious problem than allocation of financial resources. When the Department of Energy was organized, the President split responsibility for solar energy between two assistant secretaries, but didn’t appoint one of those assistant secretaries until his Administration was almost half over. When he finally combined the DOE solar programs under one assistant secretary, he promptly fired the responsible official, who had been in office approximately one year. Appointing a new Assistant Secretary for Conservation and Solar Energy took three and a half months, and a Deputy Assistant Secretary for solar energy was appointed only after an even longer delay.

DOE’s solar energy programs, from their inception, have suffered from serious personnel shortages. Multi-million dollar programs have been staffed at headquarters with one or two professionals, leading to overload situations and unavoidable inefficiencies. Such problems should not exist in a 20,000 person agency. In addition, the role of the Solar Energy Research Institute vis-a-vis that of the four Regional Solar Energy Centers has been a major source of confusion, and the minimal funding provided to the regional centers has seriously reduced their effectiveness in promoting solar commercialization.

The inevitable results of these management failures have been
serious morale problems, loss of program personnel, and strong
and growing skepticism on the part of the public, the private sector, and other levels of government that the Federal government can he effective in speeding solar development.

My personal view is that the Federal government can and
should play a role in speeding solar development, and that this role is clearly suggested by the DPR’ s findings. I might add that this role is not inconsistent with the new Administration’s emphasis on market actions to limit demand and provide adequate energy supplies.

Coordinated and effective information dissemination programs
are required if the public is to make informed choices about
solar energy, and if market forces are to efficiently allocate capital resources. And the public, which is overwhelmingly favorable to solar development, is demanding such information. In this effort, the Federal government will have to work closely with state and local governments, universities, manufacturers, trade associations, public interest groups, and others. It is well to remember the advice offered by a banker in the midst of the DPR: “Bankers listen to other bankers, not to the Federal government.”

The nation needs to develop greater experience with solar energy. My view is that as a nation we should accumulate a sufficient level of experience over the next two decades to allow rapid solarization of the U.S. in the 21st century, if that is the national will. This means learning by doing , and accepting the fact that mistakes will be made. The Federal government can contribute to this learning through support of carefully designed and monitored demonstration programs, and through the use of solar equipment in its own operations. This latter option was extensively explored by the DPR’ s Federal Operations Panel, but has not been widely implemented. Possible causes are the lack of any real support by DOE or the White House for FEMP, the Federal Energy Management Program, which has been struggling to move beyond both Republican and Democratic administration rhetoric for years. Other probable causes are the subsidized energy costs presented to Federal facilities. One example will suffice. The Naval Shipyard at Mare Island, California, near Vallejo, currently pays 8 mills per kilowatt-hour for electricity, a rate far below national average costs for electricity. This is made possible by Bureau of Reclamation subsidies. Under these conditions, it is not difficult to understand a lack of DOD interest in renewable energy systems.

The Federal solar R&D program can be improved by putting
increased effort into long-term basic research, a point
consistent with the new Administration’s approach to energy funding. Emphasis should also be placed on non-electric as well as electric solar applications. This does not necessarily translate into equality of R&D dollars, given the high unit costs of several solar electric systems (e.g., OTEC), but it should translate into equality of effort.

Financing for solar equipment purchases should be on an equal footing with other energy system purchases. For example, a homebuyer should have the option of putting a conventional or solar hot water system into his or her mortgage, and not be

required to finance the solar option in a more costly, shorter term way. The Federal government, through its activities in secondary markets, can help remove such discriminations from our financing system.

Other market distortions which discriminate against solar should also be removed. Creating and maintaining an economic and regulatory environment in which solar can compete equitably with other energy technologies is probably the most important single action the Federal government can take to stimulate solar development. This position is entirely consistent with the new Administration’s market focus. However, l already see evidence that the reality will not live up to the rhetoric. Increased Federal support for nuclear power development is being promoted at the same time that Federal support for conservation and solar energy is being cut significantly. This lack of evenhandedness, if permitted by the Congress, will polarize public opinion and inhibit energy market competition.

Careful attention to consumer protection will also be
required if consumer confidence is to grow during the solar
industry’s early years.

Finally, and importantly, there is a need for greater Federal
coordination with and support for state and local solar energy
initiatives – e.g., local efforts to evaluate the potential for utilizing indigenous renewable resources. It is only through stimulation of such local activities that widespread solar use can occur.

In summary, there are important steps the Federal government
can take to facilitate the nation’s transition to renewable energy use, steps that improve energy market operations: information generation and dissemination, support for local initiatives, and removal of energy market distortions. I agree with the new Administration that commercialization activities are best left to the private sector, which has the financial  incentives to serve the marketplace efficiently. However, it is the responsibility of government to create and maintain an economic and regulatory environment in which effective competition can take place among the means of providing energy services. In such an environment conservation would compete with solar energy systems and other supply options on an equal footing, a position that conservation advocates, solar advocates, nuclear advocates, synfuel advocates, and others should be willing to support. I encourage you to support policies which create such an environment, and which will unleash the creative potential of the American people.

Thank you for your attention. I would be pleased to answer any questions you may have.