Well, thank you, Dan (Poneman).
As Dan indicated, we go back a ways and if you look at Secretaries and Deputy Secretaries and Acting Secretaries of the Department of Energy, I’m pretty sure that Dan is the record holder for his tenure at the Department, and I’m especially grateful that he agreed to work together with us, and as he said, have fun, which we are doing.
“All of the above” is a phrase that we talk about a lot in energy and in this administration. We’ll come back to that, but in a sense, I would say Dan is also an “all of the above” guy – our collaboration and our coauthorship was in the area nuclear security, but now we have the pleasure of working together across the energy spectrum. And so in that sense, you know, DOE has looked at “all of the above” as well with our collection of missions.
It’s also great to be back here again today. Yesterday I was up here with some very good friends – Tom Friedman and John Podesta. I think it was a great start yesterday, at least for my participation in this conference with Tom Friedman laying out this vision of how the world has and will keep changing and what all of you do in the innovation space and – I heard a baseball reference – going beyond small ball to the Earl Weaver philosophy of good pitching and three-run homers. What you do, I think, is so critical. John Podesta, of course, then laying out how, with the President, there is a strong commitment here.
Also, getting into issues like clean energy finance, and there, I would mention that, again, yesterday, with former Congressman Bart Gordon here in the front row, but Congressman Tonko, Senator Coons –I think what you’re seeing is this tremendous focus developing around the whole issue of clean energy finance and moving these technologies to the marketplace, and again, I’ll come back and talk a little bit about that.
Finally, again I want to recognize Cheryl Martin and her team and what they’ve done not just for this conference, but of course, to continue to show such leadership in ARPA-E and its – and its programs. And again, I’ll be returning to some of that.
In the brief period we have here this morning, I want to make five points that I’d like to leave you with. First, I want to talk about the budget. As many of you know, the FY ’15 budget will be coming out next Tuesday. The FY ’14 budget was a return to what is called normal order in the sense of an appropriations process that took place over the holidays, basically, and into January.
And I think the point is, first, if you look at the FY ’14 budget, that was a product of normal order. What you saw was the very strong commitment to the energy programs. Frankly, we did very well, and I think what that shows is, underlying all of the issues we all know about the political situation here in Washington, D.C., the fact is, when it comes to energy – science and technology, innovation, clean energy, I think there is a far broader agreement across aisles, across chambers, across the administration and the Congress than perhaps meets the eye in some of the other political discussions. So I think that’s very, very important. We like normal order, because what we’re doing, I think is something that will continue to garner support.
Now, going to next week, I can’t say too much in detail, clearly. Tune in next Tuesday. But, first of all, bluntly, the ’15 budget year is going to be more difficult than the ’14 budget year because of the cap on discretionary spending as it was laid out in the budget agreement, but without, again, saying too much, there is no reason to believe that the priority attached to this clean energy agenda will be any different, and perhaps it will turn out a little bit better than some other parts of the budget next week. So I do hope you will tune in on that and see what our plans are going forward.
And I might say, in referencing that, when I talk about the energy programs at the Department – of course, we all know we have basic energy sciences and the Office of Science – we have our critical energy – sometimes called applied energy programs – energy efficiency and renewables, nuclear, fossil, Office of Electricity; and we have ARPA-E as a critical component.
But I do want to stress, in addition, we have offices like the Energy Information Administration that are very, very critical to the whole industry and researchers, et cetera. We have our new organization – Energy Policy and Systems Analysis. And I do want emphasize the systems analysis addendum to that office name. That’ll be involved in the Quadrennial Energy Review. I’m not going to talk about that today, but I just want to say that across the board – in technology, in science, in analysis, in data, we will have a strong focus on energy.
Second, “all of the above.” Let me just say a few words about – to make it very clear what we mean by “all of the above.” It starts with a commitment to moving to a low-carbon future. It is within that commitment that we are looking to develop the technologies, for example, that allow all of our fuel sources to be competitive in the different marketplaces that we will see in different parts of our country and in different parts of the world.
That is, there’s not going to be one low-carbon solution, there are going to be multiple low-carbon solutions. We need all the arrows in the quiver, and that is why we will continue to invest across the board in our different fuels and, of course, efficiency and other technologies.
I’ll just mention that in that context – I have personally had a kind of a travel log over the last period. In this “all of the above” sense, it’s included being in Mississippi to see an almost-completed carbon capture enhanced oil recovery sequestration project, multiple product streams – CO2 for EOR but also sulfuric acid, electricity – 500 megawatts et cetera, and no liquid effluents off of the site.
In Texas, where we of course see the shale revolution in oil and gas, but also meeting with people like Mayor Castro in San Antonio about strong city energy efficiency programs that we – that we work with. In the Mojave Desert close to the California-Nevada border, the world’s largest solar thermal plant – almost 400 megawatts – $1.6 billion loan guarantee from the Department of Energy. It is impressive to see 340,000 garage-sized mirrors, and glowing towers that looked like Lord of the Rings –I mean, fantastic. Georgia, just last week, another loan guarantee program to stimulate first movers in the nuclear space – the Vogtle reactors – first-generation, three-plus reactors built in the United States.
So again, our programs have intersected all of those; we believe we are walking the talk in terms of supporting these various programs. And I might say that also applies to ARPA-E. ARPA-E is very much part of the “all of the above” approach. In fact, when I was in Austin, I announced $30 million in ARPA-E funding for transformational hybrid solar energy technologies.
In October, awards were announced for 14 projects – next-generation power conversion devices. In September, awards for advanced vehicles, including for cost effective processing of aluminum, magnesium, titanium for lighter vehicles – natural gas, also, in September - transformational potential in biological technologies for natural gas conversion. Yesterday, touring the showcase was really very exciting. Even with only a few that I saw, let alone the entire showcase – Ceramatec, another natural gas conversion technology, one that could be used in a distributed way, for example, to address natural gas flaring at oil wells, which we know is both a problem and an opportunity. AutoGrid, another one – real-time demand response software for the grid. Brookhaven National Laboratory project, low-cost superconducting wire, could be used in high-power wind generators and many, many other applications, while reducing demand for things like rare earths in other technologies.
So again, whether it’s our loan program, ARPA-E, our applied energy offices, we are committed to trying to develop these technologies across the entire spectrum. In fact, in the Loan Program, I would just repeat something I’ve said often in the last few months, that we now have over $30 billion in play. Despite some of the exciting discussions we’ve had over the last year about elements of that portfolio, I want to emphasize any rational view of that portfolio is that it has been a major success in doing exactly what it wanted to do, is designed to do, in terms of first movers of technologies at commercial scale, pushing the envelope. We have over $40 billion of remaining authority. We are looking to deploy that, again, across the board, advanced vehicles, nuclear, fossil, renewables. And in fact, proposals are due by this Friday for an $8 billion fossil – emissions-reducing fossil set of technologies. You can expect others coming in the renewable space, et cetera.
So that’s our “all of the above,” and I would say some of the rationale for it.
Third, we are very committed to the manufacturing agenda. You may have seen yesterday the President announced two new awards from the Department of Defense and announced a forthcoming DOE solicitation for a new institute.
First of all: the history. First, the Department of Defense and Department of Energy joined together for the first of these manufacturing, technology-developing hubs in Ohio, on 3-D printing. The Department of Energy – in January, we went down to Raleigh with the President to announce the DOE-sponsored hub in wide bandgap semiconductors, power electronics, et cetera, et cetera. Yesterday the DOD hubs in lightweight metals and digital manufacturing, which, I might add, as you can see alignment with some of the ARPA-E projects here.
And let me say a little bit more about the new hub that we will be putting out. Actually, the FOA is now out there. It’s on polymer composites – as you well know, many potential applications in, obviously, lightweighting, again, of motor vehicles, wind turbines, fatigue-resistant big blades, compressed gas storage tanks, industrial equipment, corrosion-resistant, et cetera, many, many applications. And this hub is to develop the kinds of manufacturing approaches that can dramatically lower cost to get those materials out there. And again, I would say if you just look at that set of manufacturing hubs, a very, very strong resonance with the ARPA-E agenda.
So manufacturing will continue to be a major focus in this Administration. The President is committed to doing two more this year, beyond this and going into ’15, and there does look to be, again, bipartisan support developing in both chambers for achieving the President’s dream of the order of 50 such institutes across the country, setting the basis for continuing manufacturing innovation and establishing the base for a very, very strong U.S. presence not only in clean energy but in a whole array of activities important especially to our energy and security agenda.
Fourth point. Yesterday in the conversation with John Podesta, I asked the question – a rather simple-minded question – is the transformation we are looking for going to be technology-driven or policy-driven? I think John kind of leaned to the policy-driven side, and I made it pretty clear I lean to the technology-driven side. Why?
Let me, first of all – kind of let’s define what the challenge is. We have seen historically that major changes, say, in the fuel mix of the energy system have come on a half a century scale. If you listen to Vaclav Smil, he would say 60 years, but I think that’s a rounding error for our discussion. So 50, 60 years has been the time scale. We certainly believe that, looking at the climate risk mitigation agenda, we don’t have 50 or 60 years for the kind of low-carbon transformation that we need. We probably got to cut that – round numbers – let’s say, cut it in half.
We also have to cut it in half in the context of what, certainly in the industrialized countries, we are looking at situation where demand is not growing. Transformations are even more challenging when demand is flat or declining. Energy efficiency is part of our very important low-carbon agenda.
But if we look internationally, we know in emerging economies, in developing countries, their economic development agenda is very, very important. And that’s why it’s in that global context especially that I believe we must have a technology-driven transformation, and a technology-driven transformation, which is accomplishing the critical goal of cost reduction. It’s all of the innovations that you do that drive down the costs of realizing energy services, providing electrons, providing heat, providing fuels for transportation. Getting those alternative pathways to have lower cost is, I think, what we will need, certainly to achieve the global transformation, not just the American transformation to the low-carbon future that we need.
So I think we can split the difference with John. I think certainly in the United States, we will – we are going to look for those – for that policy, and certainly the administration – in some sense, the Climate Action Plan is an administrative down payment on the kinds of policies we need. As John and as the President have emphasized we do look down the road to legislative approaches as well. But again, I think that if we’re going to have the Chinas, the Indias of the world, the African countries, developing their economies with a low-carbon future, we really are going to depend upon technology success that gets the cost down of those technologies.
And finally, fifth, the scale of the opportunity – my friend Tim Wirth I think has been especially cogent and articulate in saying that we should not be looking at this climate challenge, the low-carbon challenge in the energy space as somehow a limiting issue, as opposed to an opportunity. And we want to capture that opportunity. Recently Ceres – many of you are presumably familiar with Ceres, rather respected investment organization – Ceres has estimated – I can’t defend quantitatively the number – but they’ve certainly said that if you look over the next 40 years and the kind of global transformation that we are talking about, we’re talking about the better fraction of a trillion dollars a year will be needed in terms of the investment to accomplish that transformation, whether it’s on the supply side, the demand side or the infrastructure that connects them with transmission, storage and distribution of energy.
Now, in reality, if you look at the role of energy in the global economy, 8, 10 percent of the global economy, it’s not a number that cannot be accomplished. If you look in terms of the opportunity, the technology opportunities, it’s a very big number. And that’s where, again, the kinds of investments that we are making in our “all of the above” approach – we view them as critical to meet our climate responsibilities.
As the President said in the State of the Union, we want to be able to tell our children and our grandchildren that we really addressed this issue. But it’s also economic opportunity. Domestically, I would posit that today, with our incredible developments in our energy sector today, from fossil to renewables, that what the President refers to as the ladders of opportunity to the middle class have a very, very large concentration right now in the energy sector. But internationally, again, the supply, that global need, we need to get the innovations that you are all pushing very, very hard to succeed and to give us the chance, for both environmental reasons and for economic reasons, to lead the transformation.
So in my view of the rest of this decade, clearly we’re going to push on efficiency. We’re going to push in terms of continuing our energy revolution. But I think the remainder of this decade has got to be the decade of tremendous continuing technology innovation, and as I said earlier, with the result of significantly reducing, continuously reducing our costs.
It’s happening. You know it’s happening. Look at solar. We’re not talking about costs that are somehow in some different planet. We’re talking about costs that are, in many areas today, in fact, competitive. And of course, we also should remember that in that global context, the irony is that many of those least developed countries have the highest energy costs.
Look at LEDs. You all know the calculation. You take one 60-watt incandescent and replace it by an LED, with its 25,000-hour lifetime, and over that lifetime, it’s $130 of energy savings. Well, right now you can buy that replacement for less than $10 - $9.95. But this year, guaranteed, it’s going to go down. It’s going to be a one-year payback period. So, you know, I think we’re there.
Batteries for transportation – we’ve got a ways to go. We know that. But we shouldn’t lose sight either of the fact that there has been, like, a factor of 2 reduction in about four years.
So we’ve got to keep driving that, keep driving that. I think on the global level, that’s going to push our transformation, and it’s your responsibility to do it. Thank you.