You are here
Well thank you Ambassador Hills for the kind introduction and of course your service to our country over the many years. And also for the flexibility and patience shown by this organization in what has indeed been a complicated schedule over the last month.
We will be setting off on Friday of this week with some of the 27 companies that are here on the joint trade mission with Penny Pritzker. I think many of you know that the – that this trade mission was put forward in November during the Xi-Obama announcement on climate change. And I’ll come back to some of the more recent comments that I’ve received anticipating this trade mission in China.
The context, as we stated, is – in many ways was the road to Paris. And I would emphasize that the Department of Energy, in particular, has a fairly broad portfolio, but ultimately our focus is on the solutions to the climate-change challenge through technology. And that will be the core of our relationship with China: technology, both in the government-to-government channel, but most importantly in the in the private sector and the fruits of the innovation of our private sector helping China meet its ambitious goals.
As the ambassador has mentioned, Iran has been on my mind recently. And today is not the time to express that at any level – but maybe a few words only because Iran is the reason that I’ve had to have so many scheduling conflicts. I just want to say this, make no mistake about this, Secretary Kerry obviously is the leader in the negotiations, but over the last five or six weeks I was brought in to work with him. And on the Iranian side, they had – a very good organization which brought in my counterpart and it really – and it did really help the negotiations substantially to have that channel as well.
I just wanted to say that those of you who do have not seen it, you can go to the White House website and look at a four-page document. And I think that gives a very good idea about specificity of what we were able to negotiate and the comprehensiveness as well for moving into a final agreement – and hopefully a long and successful implementation. This will, on one hand, assure us and our allies that Iran is not moving to a nuclear weapon. And this is an agreement based not on trust, but on a hard-nosed set of requirements. But we will see if, in the long term, this helps build more trust and confidence, certainly, in their peaceful program. So we will work closely with our P5+1 partners, with members of Congress, et cetera, in going forward.
I did want to mention that the P5+1, obviously including China – that’s our kick back to this – to this discussion – and just to say that, in and of itself, the coherence of the P5+1 in reaching this understanding on the way to an agreement is actually quite remarkable in and of itself, especially when you consider the kinds of tensions, for example, right now with another member of the P5+1, an unnamed entity. And so it was really, really pretty remarkable unanimity across the board. And I’d just say, China’s been part in that. Now let’s get back to the U.S.-China relationship and the upcoming trip that we will have.
Again, last winter’s announcement on climate change was a historic agreement. The historic announcement between our presidents, where China agreed to peak its CO2 emissions by 2030 and to strive to do so earlier was very important; recognition of the responsibility that we both have as being responsible for a combined 50 percent, roughly, of the global CO2 emissions. But also the other main part, in my view, which perhaps gets less attention and maybe deserves a bit more attention, was the commitment to increase the non-fossil share of energy by 20 percent by 2030, again, maybe trying to do a little bit better than that. I think we sometimes don’t fully comprehend the magnitude of that commitment in terms of doubling. We’re probably talking about over a gigawatt a week, sustained for the next 15 years. You know, 15 years is roughly 800 weeks, and probably need a thousand gigawatts there – a terawatt. And so, their goal is really very substantial.
Now, China, as we all know, has to produce more than a gigawatt a week in years not so long ago in coal, but now they’re doing that for 15 years of clear energy quite something. And needless to say that there are some serious business opportunities for supplying that kind of technology because it will have to be effective and it will have to be have to be affordable to be able to do that.
So that kind of sets to me the context. And as I said, Penny Pritzker and I will travel to China starting on Friday. It’s highly unusual to bring two Cabinet secretaries together on this kind of thing, although I’m getting used to that, particularly with John Kerry over the last month. And in fact, I just might say that last June, when he had the Strategic and Economic Dialogue in Beijing last year to be honest, I think a signal that was missed by many is that, for that visit, Penny and I were both there as well, led by Secretaries Kerry and Lew. But there were five Cabinet members there for that meeting, and the only so-called joint strategic and economic discussion was on climate change. So one might have sensed that there was some movement afoot. And of course, it was a great pleasure to see that then realized in November with the joint announcement.
The visit coming up, obviously, has the specific goal of having 25 of our innovative companies present, establishing business relationships and looking at future opportunities. But in a bigger context for of DOE, I go back to the word “solutions.” This is about solutions. I believe very strongly that solutions are about technology. It’s about technology that obviously is green and sustainable, but also technology that can meet economic cost targets. I’ve always believed, probably because I guess I’m now called the biggest nerd in the Cabinet as a result of the last few weeks. But I’ve always felt that it is the driving down the cost of these green technologies that ultimately makes the policy so much easier to obtain. That certainly is major part of the theme.
I will say that Hank Paulson, a repeated visitor to China and John Podesta, were just there. I spoke with John this morning, and the signals that are coming back from his visit are just uniformly positive in terms of the potential for the engagement of the United States and China in these areas, a real powerful recognition of the importance of the announcement that our presidents made in November and a real determination to follow this movement and work closely together. So we are very, very pleased about that.
So turning to the private sector and the real focus of this mission to China. At DOE, we always are very pleased to point out the origins of many of today’s important breakthroughs in the energy sector in government-sponsored research, and that’s true. But this trip really emphasizes how, in the end, the energy sector and energy infrastructure, et cetera, it really is about the private sector. American business will be called upon here to do the heavy lifting – take technologies to market, taking the risks, which is what a job is really in the private sector, competing in global markets and really, you know, making these clean-energy solutions work. We still have the most creative, innovative, I think, advanced technology companies anywhere, and these will be the critical partners in making the U.S.-China relationship on climate real and very, very consequential.
Our message there is obviously going to be that these 25 companies that will be accompanying us and many more who will not be on this particular trip can offer so much to the Chinese marketplace as they are stretched to meet those goals that we mentioned earlier.
I might add, of course, our own goals will be a stretch, our 26 to 28 percent reduction by 2025. We think we’re on track for our 17 percent goal by 2020, but to meet the goal as put forward is going to need to put that on steroids for the next five years, staying on the kind of pathway to low carbon. And again – I’m saying it over and over again – we cannot get there without the continued progress in our technology, innovation and cost reductions.
Now, we know that the companies are also going to, obviously, need clarification and, indeed, evolution in a variety of areas, like intellectual property protection. And one of the things that we’ve been emphasizing is this is not just an issue for American entrepreneurs. It’s an issue for all entrepreneurs, including Chinese entrepreneurs, in terms of the IP protections. And Penny and I will certainly continue to emphasize that.
Our collaboration right now with the U.S.-China Clean Energy Research Center, CERC has been a very effective collaboration in a number of areas – clean-coal technology to carbon capture, buildings, vehicles, smart grids. And then I’ll come back to a new thrust in terms of the energy-water nexus. What is not emphasized so often is that the CERC has a specific IP track – an IP agreement that is central to our discussion.
Let me say little bit more about, again, CERC and DOE. As I said, the research areas are advanced coal, clean vehicles and efficiency in buildings, and the new track, the energy-water nexus. And as far as the energy-water nexus, for the formation of the U.S.-based energy-water research consortium with the CERC, we have released a funding opportunity that closes on May 4th. So this is very active. We’re moving forward on this and we want to get projects going soon.
One of the particularly important areas for cooperation is carbon capture, storage and utilization. It’s pretty obviously when China uses more than half of the world’s coal in and of itself and we are second, about a billion tons per year. This is a major emphasis for us as well. We are hoping for major projects in both directions – us involved in Chinese projects and China involved in at least one major U.S. project that is on the books. And so this is going to be critical for the transition to a low-carbon future in which coal continues to to play a role, but emitting less carbon than, obviously, it generates currently.
On the issue of technology as the solution, I feel very encouraged by what we’re seeing on the technology front. One of the small documents that we have on our website that we will be updating annually is called “Revolution Now,” and I would actually urge you to look at it. It’s got one story told four times. The story is dramatic cost reduction of the technology accompanied by dramatic increases in deployment. And that story is just told four times – once for wind, once for solar, once for LED lighting and once for vehicle batteries. And these things are really, really coming down.
On wind: things like developing larger turbines, larger blades, ability to operate at much lower wind speeds, et cetera, effectively really driving down costs. It’s very competitive with conventional technologies.
Solar, again, another incredible drop. But actually, the Holy Grail for solar modules for a long, long time has been about 50 cents per watt. And we are clearly, for utility-scale deployments, we are clearly below 80 cents already, and it wasn’t long ago when we were talking, you know, $3. And one company, an unnamed company since I can’t say who it is, believes that they will be within two or three years below 50 cents a watt per module. So this is really incredible.
Then for DOE for example, one of the things that we have done in the last year is with our loan program. The loan program stimulated the first five utility-scale photovoltaic projects within the United States. And now there are 17 more rolling out through private financing. So that means a lot of the private sector and the financial sector are coming together to promote this technology. And that’s the kind of thing, even in solar, where we are looking to China to move forward.
LEDs, another great story, where payback periods are now down to a year, even below a year. And that’s only on direct energy use, not to mention other things like if you have to change one of those lights up there, you want it to be something that lasts a long time. So that’s really important.
And electric vehicles, again, cost is coming down dramatically. Still a ways to go, but very dramatic reductions in the last years. And one of the things that came out on our sire is the operating cost of an electric car is captured in something called an eGallon – what is the equivalent of a gallon of gas with electric vehicles. The average is, in the United States, about $1.17
I’d like to say a couple words on the – about the road to Paris, which in many ways is what, of course, drove our joint announcements last November. And there’s no question about the role of the United States and China there. I think that’s why we must see the fact of the U.S.-China announcement having such an impact on the nature of the discussions that we are having. It changed the game in terms of the discussion.
Now, I’m not going to stand here and predict what will come out of Paris, but I have to say I think you will agree that we are so much better positioned for Paris than almost anybody thought prior to the announcement of Presidents Xi and Obama. And it’ll take a lot of work, but at least we’ve got much, much better positioning, largely – not entirely, but to a large extent associated with that announcement.
So our trade mission we put in the context of the road to Paris. But again, it was part of the November announcement, but we submit that this is again all about advancing the solutions to our mutual challenges. And it’s only one part of the very busy growth – (inaudible) – going to Paris.
In May, for example, we will have an Energy and Climate Partnership of the Americas meeting in Mexico. And just recently Mexico stepped forward with a strong –commitment, and in fact, reached out to us to establish a joint panel to manage the solution part of the equation, which I will be pleased to be a co-chair of.
That meeting in Mexico literally will run right into the Clean Energy Ministerial, something President Obama started a few years ago. It involves 23 of the world’s largest emitters; 90 percent of global clean energy investment in those 23 countries and 80 percent of world greenhouse gas emissions there. We expect the Chinese and Minister Wan Gang to be coming to the ministerial, it’s a reflection of the commitment and our opportunity to work together.
In June will be the next Strategic and Economic Dialogue, the U.S.-China dialogue, now back here in D.C., again, hosted by Secretaries Kerry and Lew. I think the meeting that last year proved to be very consequential and this year will now allow no longer talk about what are our goals, what are our targets, are but how we are going to get there. And again, your companies are going to be a big part of how we and they get there.
Finally, I’d just mention just two weeks before COP in Paris we’ll meet at the IEA, International Energy Agency, also in Paris. And there we will have the opportunity to chair the biannual energy ministerial of the IEA. And once again, our focus is going to be to have that discussion really hone in on the solutions. It’s solutions, solutions, solutions. And that’s really the key.
That’s the road to Paris. Hopefully the road to Paris we be a success and that will lead us to the road from Paris. And then obviously it will be very, very important. We hope that that road from Paris to our successful trajectory towards these frameworks will be enabled in no small part by the kinds of business relationships that we want to see started next week in China, because, again, if the United States and China don’t meet our ambitious goals, it’s going to be very difficult for the world to do so, not just politically but also in the technology that they will need as well to go there.
I’m confident in what we are doing, in our government-to-government efforts. But I’m also very confident in the capabilities that these companies will take to China - innovative solutions, and again, hopefully the beginning of what will be a very, very robust partnerships. So with that, I will end this and be happy to take a few questions.