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Remarks Prepared for Energy Secretary Samuel Bodman

Thank you, Greg. It's always a pleasure to be in a room full of engineers.

As an engineer myself, I know there is nothing our profession likes better than plain talk and solving problems. So, I'm going to serve you up some plain talk and then some assignments.

Our nation faces big challenges in the energy and transportation arena. The President put it plainly in the State of the Union message when he said America is addicted to oil. To start us on the path to recovery from this addiction, he set out the Advanced Energy Initiative which calls for increasing spending on clean energy programs by 22% in next year's budget.

These programs deal with generating power from clean coal, from wind and solar energy, and in the automotive sector - alternative fuels such as ethanol in the near term, and ultimately electricity and hydrogen.

What they have in common is a focus on accelerating the development of the most promising technologies in all of these areas, so we can bring them online at the earliest possible date.

With America now importing 60% of the oil we use and a national bill for this habit that came to $250 billion last year, there is simply no time to waste. With worldwide demand growing rapidly, and with concern about the environmental impact of greenhouse gases rising, the deployment of clean, reliable sources of energy is clearly in our national interest. It will not be an easy task. But I know I am talking to the group that can get it done.

I know the restructuring that is now underway in the American auto industry is making this a difficult period for many of you. But I believe the future for your industry is bright. The technologies now being developed for flex-fuel and hybrid vehicles and hydrogen fuel cells will open the door to exciting new vehicle designs and configurations that I believe will hold great appeal to consumers, while also addressing our concerns about fuel sources and emissions.

At the Department of Energy, we want to be an active and effective partner with industry in developing these and other transformational technologies. And I'd like to talk to you about how I see the challenges in the near and long-term.

First, I want to thank General Motors, Ford, Daimler-Chrysler and Nissan for their commitment to building some 700,000 flex-fuel vehicles in the current model year that can run on E85 fuel, the ethanol/gasoline blend. This is a big increase over where we were just a couple of years ago.

The efforts by ethanol refiners and oil companies to expand the network of stations that can deliver E85 at the pump are also producing gains. Today we have 600 retail outlets for E85, a substantial increase from where we were just a few years ago. And while this represents a vigorous start, much more growth in downstream distribution can and must occur. Together we must continue the campaigns to raise public awareness of flex-fuel vehicles and the E85 option, which I believe, are having a positive effect.

At the Department of Energy, we will continue to convene all stakeholders, including the leaders in this room to move forward and analyze our oil addiction with a sense of national purpose.

More needs to be done. I am looking to your civic leadership and corporate citizenship to help us realize the President's vision of our energy future. We need to have more flex-fuel vehicles on the market of all vehicle types and classes. And we need to have them available from all manufacturers who serve the U.S. market.

It should be our common goal that E85 become a nationwide fueling option. In the coming days, I will be asking that we do more to make consumers aware of the flex-fuel option both when they are considering a new car purchase and for existing owners of flex-fuel vehicles.

We need to forge ahead together down this path with the seriousness and sense of urgency this challenge merits.

Flex-fuel and E85 are proven options for substituting a clean burning renewable fuel for gasoline today, and we must make the best possible use of them. To do this, of course, we must continue to encourage the exponential expansion in the supply of ethanol available and I have been pleased to see the strong interest in building new ethanol plants around the country.

There are at least 33 new plants under construction around the country-in addition to the 97 we already have-while nine existing plants are being expanded. These investments will boost our overall production capacity by about 40%. Yet this too is only a vigorous start. To push this process along, the Energy Department will be coming out with a solicitation later this month for proposals on how we can form public-private teams and other affiliations to make E85 more widely available in the marketplace.

Hybrid vehicles are another solution that is available today and has enjoyed strong acceptance in the market place. As a part of the President's Advanced Energy Initiative, our Department is seeking $6.7 million in additional funding next year to support research on batteries and related systems that could be used in plug-in applications and could extend the range these vehicles can travel on electric power alone. We want to continue to work with the industry in this arena and we hope to see manufacturers continue to expand their product offerings.

Clean diesel technologies are also making exciting progress. Daimler-Chrysler's plans to make its low-emissions diesel engine technology available in a range of its models in 2008 is a step in the right direction. If we could convert just one third of our automotive fleet in the U.S. to clean diesel power, we could save 1.4 million barrels of oil a day.

While these technologies are vital for changing our energy consumption patterns in the near term, for the long-term, this Administration believes that hydrogen energy offers the greatest promise of a fundamental break with the patterns of the past.

It was just three years ago that President Bush committed to spend $1.2 billion over five years on the Hydrogen Fuel Initiative with the goal of developing hydrogen fuel cells as a power source for both automobiles and electric power generation.

In next year's budget, as part of the Advanced Energy Initiative, we are asking for $289 million for these programs with the goal of putting hydrogen powered vehicles on the road by the year 2020.

As all of you know, hydrogen has many virtues. It offers the highest energy content per unit of weight of any known fuel and the added advantage of being nearly emissions free when burned in an engine. In a fuel cell, it can produce power with zero emissions while delivering fuel economy that is 100% better than conventional gasoline powered vehicles and 50% better than today's hybrids.

Finally, it can be produced from coal, nuclear energy or renewable energy. There are still significant technical challenges that must be mastered, but I know that many of you in the industry believe strongly in hydrogen's potential for transforming the way our cars are powered and designed. I recently had the chance to visit General Motors Fuel Cell Activities Center near Rochester, New York, and I must say I was very impressed with the work that is going on there.

The prospect of future vehicles that have only a tenth of the moving parts of today's models and that offer the possibility for configuring interior space in entirely new ways is truly exciting. Just as exciting is the prospect that if we can bring hydrogen powered vehicles to mass market acceptance by the year 2040, we could save 11 million barrels of oil a day and eliminate 500 metric tons of carbon emissions.

Later this month, the Energy Department's Office of Science will be putting out a solicitation for new research proposals that address three of the technical challenges that still must be overcome if we are to make hydrogen the dominant power and fuel mode of the future.

We expect to award grants totaling $50 million over the next three years for proposals-that we hope to receive from private industry as well as laboratories and academia-for novel materials that can be used in hydrogen storage and that can enable hydrogen-powered vehicles to travel more than 300 miles before refueling. We will also be looking for proposals on membranes for hydrogen purification and fuel cell operation and for nanoscale catalysts for hydrogen production and fuel cell electrochemical reactions.

We already, of course, have a wide range of research and development projects underway in partnership with industry through our FreedomCAR, and Vehicle Technologies program and our 21 st Century Truck Partnership and we continue to give them a high priority. We want these programs to deliver real world results, and we are counting on you to let us know if they drift off target.

One thing these programs all share is their reliance on the ingenuity and innovation of engineers, and no doubt some of you in this room are directly involved.

Over the years, engineers have been the real heroes of many of our nation's biggest environmental gains. Policy makers in Washington, environmental groups and lawyers may grab the headlines, but you are the people who actually get things done. You have given us catalytic converters, displacement on demand, hybrid vehicles and now, flex-fuel vehicles.

Now, we are counting on you to deliver some more of that magic that really comes from outside the box thinking and lots of hard work to make hydrogen power a reality.

It's been great to see all of you here and I'm glad to hear that SAE members will be in Washington next month for the annual government/industry gathering, including a technology exhibition the Energy Department will be hosting. I'm looking forward to getting a first hand look at some of the latest concepts coming out of your proving grounds.

Thank you all for having me today.