EcoLogic Blog

After the morning panel discussion, AWEA held a news conference with the panelists. This is an excerpt of the questions from reporters and bloggers (including one from yours truly) and the panelists’ answers.

Q: General Clark, what would federal energy legislation look like to you?

General Clark:

“Big picture legislation would look like cap and trade legislation, benchmark goals and a timeline, incentives, research and funding, energy efficiency standards apart from the cap and trade system and incentives to promote energy efficiency. If you put those in and probably some other pieces like dealing with the strategic petroleum reserves, you could address energy security in terms of infrastructure and protection.”

Wood didn’t think government was the most effective way to create change. What it should do is create a market, he said, like with renewable energy standards, and then let the market work itself out.

But, Clark responded, you do need a regulatory piece when you’re talking about carbon sequestration or nuclear power. To launch technologies like these, we’ll have to have a public-private partnership.

“…There are winners and losers as you move forward. It’s who gets what, how much, how soon that determines whether these programs work or not. Emphasize the best technology and spread the profit opportunities around in a fair way. Spread it wide enough to pick up the little producers as well as the big producers.”

I thought about the American Petroleum Institute/Newsweek energy series last week at Stanford, and how a few of those panel members said the real test of renewables would come when the price of oil comes back down. And so I asked these panelists: “If the price of oil were to plummet tomorrow, how would this effect renewable energy markets and the political will to keep moving in this direction?”

General Clark answered first, noting that although we’re at a time when the price of oil and the awareness helps the drive towards cleantech, the fundamentals of energy policy – like the cost of oil extraction – don’t change with the price of oil exactly. Oil prices are certainly a stimulus to cleantech, but regardless of the price of oil, it’s still a matter of national security and climate change.

Podesta:

“When I was in the White House [as President Clinton’s Chief of Staff], oil was $13 a barrel…but we didn’t capture what the cost of that all meant to climate change, the economy, and the effect it had on national security like the regimes in the Mid-East. We need to learn from that experience.”

Wood:

“Even at $65/barrel, you could still do corn ethanol and other more efficient fuels profitably. I think we’re there and it’s going to take time to change out the auto fleet but I think we still will.”

Next, a reporter asked whether the climate bill in the Senate could put coal on the right track?

Wood was skeptical that Congress could deal efficiently with a topic as complicated as energy and global warming. Instead, he said, we should have a bill that either says “Coal, you’re over with” or “Coal, you have to get cleaner.” Although there have been a number of states who have just said “no” to coal, he questioned: can we do that as a nation?

Goodell completely agreed with Wood except he thought such a straightforward move on coal would be politically impossible:

“You’re asking politicians to put their finger on the red button…It’s easier to do it if it looks like you’re doing something else rather than to just say what you’re doing. It’s one of the hottest political issues right now.”

Then Podesta made an interesting point: If Congress can’t pass a bill to regulate CO2, the EPA now has the authority to directly regulate CO2 from power plants. “I think [that option] can be a backstop to partisan gridlock.”

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But like the states that have put renewable energy standards in place and are now getting into the dirty details, the details of national CO2 regulation will get at least as messy, especially when we start talking about who’s going to pay for what. So how far down into this new cleantech market does government legislate? Yesterday afternoon, I arrived to a session late but just in time to hear a panelist practically yell:

“If government’s going to create the markets then they can’t set the prices! You either regulate [emissions] or you don’t, but a bill that creates a ‘free market’ and then sets a price or price limit will fail. That’s what Europe did and it didn’t work. Let the market decide.”

The Tuesday morning panel was outstanding: Diverse opinions, common goals, wise thoughts. The following people addressed the question: What’s next in American energy policy?

• John Podesta, President of the Center for American Progress and former Bill Clinton Chief of Staff
• Pat Wood III, Principal of Wood3 Resources and former chairman of the Federal Energy Regulatory Commission
• Wesley Clark, former Supreme Allied Commander of NATO
• Jeff Goodell author of Big Coal

All panelists agreed that the issue of global warming has come a long way, but while American politicians are just coming around to supporting emissions cuts and the change to a cleantech system, foreign competitors have raced ahead: Japan and Germany are solar leaders and Europe has more wind power installed and better policies to support it.

In order for people to better understand the urgency of the issues, General Clark said, we have to connect the dots between cleantech, the price at the pump and national security. In other words, dependence on foreign imports and global warming. And both have foreign policy impacts: they affect U.S. relationships (our refusal to sign international agreements), enable potential adversaries (petrol dollars funding unfriendly regimes) and distort economic development abroad (China needs a lot of energy and will compete with us for it).

Pat Wood agreed, going on to explain his theory he calls “A tale of two Jihads.” The first “Jihad” is against petrol-totalitarians (transport fuels) and the second is against coal (power generation). Neither of these energy sources will be the future of our power supply. Instead, by 2100, Wood predicts wind, solar and nuclear to make up the electricity sector.

Jeff Goodell said that although we frequently hear we have 250 years of coal left in the ground, that number is based on decades-old studies and on current rates of consumption. But even besides all that, the easy coal is gone: what we have left to dig out is going to be far more expensive and environmentally harmful to get.

Carbon capture and sequestration (CCS), he went on, “is often talked about as a no-brainer, like it’s a technology that’s just about ready for prime time. But I think there are a lot of questions about the economics of it and about the scalability of it.”

Clark disagreed that CCS pie-in-the-sky. “It’s a proven technology; they have a facility up in North Dakota. But just as we’re talking about all the details needed to make wind power work, there’s a million and one details to deal with CCS.”

The General is working and advising cleantech investment firms, and explained that while renewables like solar energy are great, “If you go to the Street, [wind] is a really hot sector. They want opportunities in this field.” But we also can’t think we can exclude certain industries in energy policy negotiations:

“There’s something for everyone…as long as we don’t let ourselves get too narrowly focused in the wind energy business, then I think we can bring others with us and get what we need.”

Podesta explained what the wind industry and wind advocates need to do:

“Energy is still a regional issue….what this [wind] industry needs to do in order to really make progress is to break through that and create a national movement to support clean energy. The states that have embraced – including coal producing states – a clean energy future have done so with great results. People who embrace the future and who embrace a clean technology approach to their economy are succeeding politically and succeeding economically.”

Next, the fiery and riveting Department of Energy (DOE) assistant secretary Alexander “Andy” Karsner (who was in the wind power business before going to the DOE) spoke passionately about the PTC:

“Take note all you media people out there. The [Bush] administration supports the extension of the PTC. We believe the PTC should be durable, reliable, improved…unreliable policy does nothing more than stave off growth in job creation…If we’re going to use tax policy, we at least have to make it reliable and durable.

But why would the [U.S. House of Representatives] put the same legislation before the president there or four times if you know it’s going to be vetoed but then bury the PTC in it?… It’s an old trick to use veto bait during an election year. The President just wants a clean bill with the PTC! The Senate did it and was more mature about it. Why can’t the House deliver on the same thing?

We want these things to succeed and out of the basket of politics. It is not the government’s role to select electricity winners. We need neutrality of government that ensures delivery of the attributes that we seek.

That means policy that’s carbon weighted and leans to emissions-free sources.”

He went to talk about the need of natural gas and wind power to be energy partners (using natural gas as a back up to variable wind power). “We are going to need every drop of domestic natural gas and we’re going to need wind.”

He concluded:

“We are facing a new energy reality. We are in a new and unknown era where we need your leadership. Urgency is what matters. All reports say we have 10 – 15 years to cut emissions to the point needed. We’ve got the first 7 percent of the next 10 years in the last days of this administration. Even if people are taking about lame duck, it doesn’t mean government can sit back and not take action [on the PTC].”

There were several questions from the audience, made up of academics, venture capitalists and business folks. One of the most interesting questions was: What do you want the next president to do to address energy in their first 100 days?

Trae Vassallo from KPCB pleaded for a price on carbon dioxide to help the market start to determine the energy winners and losers. David Victor of Stanford said that even if Congress were to come to their senses tomorrow and pass sweeping energy legislation, it’d still take years to implement. This is a slow moving needle. We need massive CO2 reductions at this point. But we also need competitive prices and the ability to compete with other countries.

“The less any policy is anchored in price, the higher the risk. But a price on carbon isn’t enough just on its own. We need a portfolio of crucial technologies.

“I’m optimistic in the long-term, but in the short term - the next few decades - I’m pessimistic. You can build a coal plant in China so cheaply right now. They’re not going to change their trajectory, even if the U.S. does. At this point, we’ve committed ourselves to warming planet.”

Jackalyne Pfannenstiel, CA Energy Commission:

“The new president should not lie to people about the energy situation. The new president needs to say ‘energy prices are high. They’re going to stay high.’ Then they need to explain to people why the prices are high and why that may not be a bad thing. Let’s work with what we have and drive innovation.”

Another question from the audience: Can we really leave this huge problem up to states and municipalities to solve?

David Victor said that it’s dangerous for public policy to be based on what people think is the “next big idea” for solving the energy problem. People grasp on to a solution, think it’s the best idea and then pour money in to it. Silicon Valley acts this way and can be “irrationally exuberant” at times. There has to be a political strategy to go along with the Silicon Valley strategy. He thinks the big question is: How do we keep public policy on the right course without generating massive distortion by telling consumers what to use and how to use energy?

Jackalyne Pfannenstiel of the CA Energy Commission:

“Energy is a global problem and we need to address it globally. But you have to start somewhere. People ask me ‘Does California’s leadership really matter?’ You bet it does! We’re doing things directly applicable elsewhere. California’s policies could be adopted by other Western states. You’re going to get the regional groups working on it, which could set the model for national legislation.”

Andrew Murr of Newsweek commented:

“The Department of Energy could use a green fire lit under it. With all due respect to Chevron, it’s been too petroleum-centric in the past 7 years and we need to branch out. Renewables aren’t just something to talk about.”

Later on in the discussion, Paul Siegele of Chevron disagreed that states or the U.S. can solve this global problem on their own. China and India need to be on board for any change to take place. Different solutions around the world will not work:

“It’s a patchwork of regulations and these state-by-state regulations have increased the cost of gasoline distribution. The successful presidential candidate shouldn’t do much in the next 100 days. They should just think a lot about this problem.”