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Remarks Prepared for Secretary Bodman
Washington, DC - Thank you very much for that kind introduction and for inviting me to join you here today. My thanks also to The Washington Post.
You all have spent the entire day discussing our global energy situation and, in fact, many of you have devoted your careers to these issues. So, you will not be surprised to hear me say that, in my view, improving our energy security is one of the most pressing challenges of our time. I would put it this way: whether or not we have access to a secure, clean, affordable supply of energy is directly related to whether or not our economy will grow and our people will prosper, whether or not our industries will operate efficiently, whether or not our earth's climate will worsen or improve and whether or not our people will be safe and secure.
The basic components of this problem may be well known, but they bear repeating: First, demand for energy is rising rapidly and will continue to do so. I trust you've heard these staggering projections before: by 2030, we estimate that global energy consumption will grow by over 50 percent, with 70 percent of that growth coming from the world's emerging economies. For electricity specifically, we estimate that U.S. demand will increase by about 50 percent by 2030, with global demand nearly doubling. To meet the future demand in this country, we would require 285,000 megawatts of new base-load capacity. By way of comparison, that represents roughly the total capacity of all the coal-burning power plants now operating in the U.S. or almost three times the capacity of the existing fleet of nuclear plants.
Second, as we confront this rapidly growing demand, we know that our economy - like so many around the world - is overly dependent on fossil fuels, and particularly foreign oil.
Third, the fact that much of the world's fossil fuel supply exists in unstable areas of the world further complicates not only our energy supply challenges, but also the global security situation. This instability manifests not only in terms of our safety and security, but also in terms of inefficient commercial activity. In order for any market to function well and fairly, we need stable regulatory environments, transparency, adequate protections for physical and intellectual property, and systems for rooting out corruption. The world must diversify its sources of reliable energy, to be sure, but it also must demand positive investment climates around the globe.
Finally, we all must recognize the realities of global climate change and look for ways to develop cleaner sources of energy that at the very least do not worsen, and hopefully can improve, the health of our earth's environment. Climate change is a global challenge and requires a global response and, on that topic, I want to reiterate that the United States has been and remains committed to doing our part.
This whole set of challenges will only grow more acute with time. So, in my view, it is not enough to say that we should expand, or should diversify, the energy options available to us; in reality, we must. We have no choice.
Given all this, not to mention the fact that oil prices are approaching the once-unimaginable level of $100/barrel, you may wonder why I'm at all optimistic but, in fact, I am. Here's why: because just as the components of the problem are all too clear today, I believe the components of the solution are also coming into focus, and more so everyday.
First, we have what I believe to be one of the most important elements of a successful strategy: a national imperative to act. Perhaps as never before, the American people are calling for action, and taking action themselves. And this commitment is critical for many reasons, but one is this: we all must actively promote enhanced energy efficiency wherever we can, in our homes, our vehicles, our offices and across all industries. Because the truth is, the largest source of immediately-available "new" energy is the energy that we waste everyday. Everyone can do more to conserve. I'm talking about things like: keeping current with vehicle maintenance; adequately insulating your home and choosing energy-efficient appliances and compact fluorescent light bulbs; considering a fuel-efficient vehicle or taking public transportation; and, if you own a business, participating in an energy assessment program - or encouraging your employer to do so. Though taken alone, these actions may seem minor, if done consistently; they can have an impact in precisely the right direction, taking some immediate pressure off demand. Just consider this: if every American home replaced just one light bulb with an ENERGY STAR®-qualified bulb, we would save enough energy to light more than 3 million homes for a year, more than $600 million in annual energy costs, and prevent greenhouse gases equivalent to the emissions of more than 800,000 cars.
I would just add that this commitment on the part of many Americans could be unfairly interpreted as merely a reaction to rising fuel prices at the pump or higher home-heating bills. But I think that misses the mark. I believe we are seeing a growing, and admirably strong, commitment to not just affordable energy, but clean, safe energy as well.
So that's one component. Secondly, we have put in place a series of federal policies to increase our national investment in the R&D, at all stages of the innovation cycle, to help break our over-dependence on fossil fuels. On the basic research side, President Bush has proposed a dramatic set of increases for federally-funded research in the physical sciences, aptly called the American Competitiveness Initiative. This is serious money for serious science in areas like supercomputing, nanotechnology, advanced nuclear reactor technologies, and fusion energy. The results may not be seen for decades, but the critical investments must be made now.
At the same time, we have laid out an aggressive strategy to expand the availability of renewable energy and alternative fuels. Known as the Advanced Energy Initiative, our goal is to identify the technologies that could have the greatest impact on the marketplace in the relatively near future, the next 5-10 years, and then really go after them with increased resources and aggressive timelines. I'm talking about things like: commercially competitive cellulosic ethanol; advanced hybrid vehicle technologies; hydrogen fuel cells; solar photovoltaics; and high-efficiency wind power. These are things that are already in the pipeline and, as a matter of sound public policy, need to be pushed more quickly to market.
To accomplish this, the federal government absolutely requires intense, strategic collaboration with industry and academia. To this end, we are employing a range of collaborative models, including cost-sharing partnerships, loan guarantee programs, which allow us to fund innovative technologies, which are commercially viable and share some of the risk that the private sector is unwilling to take on alone. These programs cover a range of technical areas, including solar technologies and advanced biofuels. By way of just one example, today the Department announced that it has selected 25 projects in the solar energy field for funding through the Advanced Energy Initiative. These advanced photovoltaic technologies have the potential to produce electricity at costs below the current costs of grid-supplied electricity. In total, DOE is providing up to $21.7 million in funding and with industry cost-sharing the total public-private investment will be over $30 million.
To further encourage the aggressive development of alternative fuels, President Bush has announced a plan to reduce projected U.S. gasoline consumption by 20% by 2017 this is the so-called "twenty-in-ten" program. And the President has submitted legislation to Congress to implement it. That plan calls for increasing the Renewable Fuels Standard (RFS) to displace 15% of America's gasoline consumption, up to the equivalent of 35 billion gallons of alternative fuels. Now, some have questioned whether this type of proposal is overly ambitious - can the United States really produce that much alternative fuel in the next decade? To that, I say: that is precisely the point. This is the definition of an aggressive challenge. If we are to truly expand our energy horizons, then we must set the bar high. We must bet on technology. And, we must signal to private investors that our policy environment supports sustained investment in renewable and alternative fuels. And let me add this: while we would very much prefer that the Congress act to pass this pending legislation, and soon, we are concurrently developing regulations to implement these goals.
While we are rightly placing a great deal of emphasis on renewables and alternative fuels, we also must recognize that our economy is, and will remain, heavily dependent on fossil energy. After all, this nation is blessed with an abundant coal supply. The challenge is: we must find ways to use it more cleanly and efficiently to reduce, or perhaps eliminate, its environmental impacts. One way to do this is through the development of carbon sequestration capacity. Last month the Department announced that we have awarded funds for the first three large-scale carbon sequestration projects in the United States, which will conduct large volume tests for the storage of one million or more tons of carbon dioxide in deep saline reservoirs. DOE plans to invest $197 million over ten years for the projects, whose estimated value including cost-sharing with our partners is over $300 million. Collectively, these formations have the potential to store more than one hundred years of CO2 emissions from all major sources of pollution in North America and will help enable us to one day use coal without emitting greenhouse gases into the atmosphere.
Even as we bring more alternative and renewable energy online and develop new ways to produce fossil energy more cleanly, we also must expand access to safe and emissions-free nuclear power in this country and do so in a way that responsibly manages waste and dramatically reduces proliferation risks. Because at present, nuclear power is the only mature technology that can supply large amounts of emissions-free base load power to help us meet the expected growth in demand. If we are talking about what is available to order right now that would have a material impact on our ability to produce "home-grown," clean power, we must talk nuclear. And we have not licensed construction of a new nuclear plant in this country in nearly 30 years. That must change. We are working to see that it does by, among other things, implementing federal risk insurance or so-called "stand-by support" and loan guarantees to try to remove some of the roadblocks associated with getting the next generation of nuclear plants online, after that, the private market rightly takes over.
The rest of the world is also on the verge of a major nuclear expansion for many of the same reasons. Last year President Bush introduced the Global Nuclear Energy Partnership whose goal is to facilitate this worldwide expansion of nuclear energy for peaceful purposes in a safe and secure manner. In September I hosted a GNEP ministerial meeting attended by 35 countries and 3 intergovernmental organizations. At this meeting, 16 nations signed the GNEP Statement of Principles that puts in place the framework that will foster nuclear expansion. This cornerstone document establishes, among other things, the common goal of creating reliable fuel services that will provide a viable and economic alternative to the spread of sensitive nuclear technologies. To support this end, the partnership seeks to take advantage of the best available fuel cycle approaches to recycle spent nuclear fuel to reduce the amount of waste and tap its unused energy.
All of our efforts at the federal level are being reinforced by a third component of a successful national strategy: the critical role of the market. Having spent a good chunk of my career in the financial sector, I can honestly say that for the first time in my life we are seeing the venture capital community put sizeable amounts of money into entrepreneurial companies in the alternative energy business. In the third quarter of this year alone, the so-called "clean tech" sector, which includes alternative energy and conservation technologies, among other things, saw record investment levels of $844 million, an 80% increase over the previous quarter, according to a recent industry report.
And, I interpret this as a clear sign that clean-energy market is viable, indeed, thriving. After all, we know that investors will not enter a field for purely altruistic reasons - though that may certainly play a part; they need a market. And, I believe that they now have one, one that will grow even more robust with time. The private sector recognizes that there is an opportunity here, one that can favorably impact their balance sheets as well as the nation's energy security and our environmental health.
So, why am I optimistic? Well, the bottom line is this: we are seeing a convergence of forces that tells me that our nation is on a path to a cleaner, affordable, and more secure energy future. We certainly have a lot of work ahead of us, and this is not going to be an easy fix, nor a quick or painless one. But look what we have going for us: We have forward-looking leadership and funding commitments from Washington. We have the dedication and ingenuity of America's scientists and engineers. We have the innovative power and the unmatched capital of the private sector. And we have the commitment of the American people to achieve together what none of us can do alone.
In short, what we have is the makings of a solution and I look forward to the day when, together, we achieve it.
Location: Washington Post Energy Conference
Media contact(s): Megan Barnett, (202) 586-4940