sorry I wasn t here earlier. I was meeting with a group of UN people about a long-term UN role

Transcription

1 Remarks by the Honorable Timothy E. Wirth 21st Annual Energy Efficiency Forum June 15-16, 2010 National Press Club Washington, DC It s wonderful to be back with you today and what extraordinary timing we have. I m sorry I wasn t here earlier. I was meeting with a group of UN people about a long-term UN role in the energy business and I really wanted to come and hear what Jennifer had to say. I m sorry to miss that but I hope we have a chance for a little Q&A and back and forth. We ve done this together before and I always learn a lot from you and I have some pretty strong thoughts about where we are right now. I ve learned about strong thoughts. My first hearing as a freshman member of Congress in 1975 was sitting next to John Dingell. It was John Dingell s first subcommittee chairmanship and if you ever want to learn how to legislate and learn how to question and learn how to terrorize witnesses and the whole deal, I mean John was the man and a wonderful, wonderful legislator and a great coach. We obviously didn t agree on everything but it was a wonderful opportunity a long time ago that we ve been battling on these fronts now for 35 years. The Energy Future Coalition is a creature of the UN Foundation. The Energy Future Coalition tries to hurry our energy future. It was established by Boyden Gray. Remember, Boyden was counsel to Bush 41 and a member of the conservative establishment here. Boyden and John Podesta, the head of the Center for American Progress, and I had dinner together right after 9/11. And we said to ourselves, what is it that how does this change our lives? And we all came back to sort of energy, energy, energy. So we established the Energy Future Coalition, which is a broad coalition that runs all the way politically from former Senator Steve Symms to Vic Fazio to a group of scientists, the Sierra Club, a number of industry groups. 1

2 We re not a voting coalition like USCAP but rather focus on what should we be thinking about, where should the emphasis be, how might we come together, where are we ought to be headed? It s been very, very helpful and we really appreciate working with Johnson Controls on this. We established a group called 25x 25, which is the broad agricultural coalition. We wrote, I think, the broad consensus on what the smart grid legislation ought to look like. We re deeply involved with many of you in the room here on Building Star, which is a pickup on the Home Star companion bill. So, we ve done a lot of work together. Having said that, my belief is that we have one more chance at this now, and that chance is enormously important. The context in which we are together today and which we think about this one more chance is this heart-wrenching tragedy in the Gulf. President Obama s speech last night, which began to perhaps frame at last a sort of White House census to where we ought to go and Senator Kerry s valiant efforts in the United States Senate, I think, John gets - although I don t agree with everything they re doing - I think he gets every purple heart and medal of honor and so on for just continuing at it and continuing at it with a remarkable persistence. So that s the context in which we find ourselves, the Gulf hovering over everything. What s the White House going to do and where is the Senate going to go? We should have learned a huge lesson, and what s that lesson? That we ve reached beyond our technical capacity? We are beyond what we can control. The Gulf shows that. The tragedy of the Massey mines and what s going on over and over and over again shows that while we re going deep in the Gulf, we can t control that, or we re going deep in the earth, we can t control that. And I really worry long term about nuclear power and people saying we ve got to go on and build more and more nuclear plants. If you do an overlay of where those nuclear plants are planned around the world and where the country is in any kind of a stability/instability scale, 2

3 unfortunately there is a very strong correlation between the two. Do we really want nuclear plants being built in a lot of these places and nuclear materials available in a lot of these places? I think if you look at this as we should through the lens of risk, through the lens of technical capacity, you have to say to yourself, well, what s the alternative? It seems to me, finally, we re talking about these massive geo-engineering projects putting iron filings in the ocean. Are we going to put aluminum filings in the atmosphere? Are we going to try to put great big blockers out there? Geo-engineering items about which we have no idea what the implications of that may be as if some if we can t control these other technologies, how do we possibly think we can control these geo-engineering technologies? So it seems to me the byword from all of this is risk. We should learn from these experiences. We should learn from our observations and learn within the context of three major pressures that are out there, three major paths. One is obviously the environmental and climate change, one is obviously national security, and one is obviously the need for economic rebuilding. So risk is at the center of this, and we have three sort of major frameworks or circles on the outside: climate challenge, security and economics. So we ask ourselves, how much risk are we willing to take to reach to those three frames in which we are operating? Most of us think about risk and we say, well, how do we manage risk? How do all of us manage risk? We assess the odds and we try to take a look at what insurance policies might we write. And as a result of that, we change our behavior. I think we re right at that point right now that we still have an opportunity, as we must, to change our behavior. I am not going to talk about taxes. I m not going to talk about cap and trade. Those dominate the market and that is exactly the wrong way to try to get a debate going. 3

4 Let me suggest how we do get a debate going and I would have five points that I think should dominate our thinking about what this insurance policy is and five points that I hope will dominate any legislative product. One is a transition from coal. We have to think really seriously for looking at the climate side, very seriously about doing a transition to coal, not to kill the coal industry, not to kill the railroad industry but they know and we know that we ve got to make this transition over a period of time. The old plants that should ve been shut down after the 1990 Clean Air Act amendments, the creaky ones that have no business staying open anymore, held together by bailing wire. That s too much of a shorthand; I know it s more complicated than that. But the idea in that legislation was that they were going to be phased out and shut down. That has not been done and it must be. Second, we have to figure out a transition for new plants, the most recent ones that have been built, an incentive, probably some kind of a low-carbon standard for power plants, a way to phase out over a period of time so the industry knows what s going to happen to their existing plants. And for future plants, we have to say we re not going to build anymore coal-fired power plants. We can t afford to do so. We know that the risk is too big. Third, related to a commitment to technology. We have to do as was suggested by the Bill Gates Panel the other day, Norm Augustine, you re all familiar with that, a really good piece of work on what kind of technical investments we have to make both in terms of research and development which is extremely important but that s long term. But if you look very carefully at what they set, it s also setting renewable energy standards which is going to be the item right away which is going to drive wind and solar. We can put wind and solar out there by themselves and that s very nice but if you do it in the context of this commitment to technology, we have to make these technological changes. 4

5 We know a lot already, we have to advance it, and we know that the most important and effective way of doing that is to set renewable energy standards. That s been done in some 30 states across the country. It s been done around the world; the Germans have done that in a very, very effective way as have other European countries. That is the way to move this very rapidly - a big R&D package, a renewable energy portfolio standard that s very strong. States are doing it; we have to do it at the federal level, and tax incentives that provide this over a long period of time so the people know what to do. Can we do tax incentives? We ve done it for every other energy source. Why not do it in terms of renewable energy? Fourth is regulatory strengthening. We ought to learn from the Gulf that this is the most important part of immediate public policy. We depend upon the regulators and a sound careful, thoughtful regulatory structure to protect the public interest and protect the public health. First and foremost, legislation cannot and should not preempt EPA. Every one of these bills has been driven by parts of the fossil fuel industry, one of whose primary goals is to preempt EPA. They don t want EPA to regulate. Well, if you were in their position, what would your goal be? That you don t want EPA to regulate. You d like to try to take your chances with the huge army of lobbyists on Capitol Hill with the rhetoric that says legislation is better than what EPA can do. Well, who says? I am deeply doubtful that legislation can effectively replace what could be done at EPA, and certainly even if we went a legislative route, we cannot leave EPA totally out as a fallback position. If the legislation fails, where are we left? We can t be left with nothing. It is too much risk out there. We have to use the current EPA authorities, and there are a number of them, a number of items that are in the law under the Clean Air Act which is one of the most remarkable pieces of 5

6 legislation ever written. I ll give you some examples. Most of you don t know and probably don t know anything about what are called aromatics. Twenty-five percent of every gallon of gasoline are aromatics, very nasty chemicals - benzene, xylene, toluene 25 percent of every gallon of gasoline. They re in a gallon of gasoline to replace lead, to increase the octane and the efficiency of engines. When lead got taken out in the mid-70s, aromatics were phased in. These are very nasty characters spewing out of tailpipes and there is a very real correlation between the increase of asthma among our young, very significant low-level ozone problems the number one public health problem in the country and aromatics. EPA has a responsibility under the law to undertake this if they have not done so. There is a boiler rule. It s very obscure stuff but is extremely important. What s going to happen to those old boilers and how does EPA deal with the regulations surrounding these old coal-fired power plants and those boilers? EPA is about to promulgate. They ve got a rule out that says one of the things that can t be done in terms of this transition is to make a transition from coal to natural gas. Now, why is that? Because EPA says in this proposed rulemaking that there isn t enough natural gas to use natural gas as a transition. Where do they get that data? That s about 10 years old data before this explosion of natural gas probably the wrong word before this incredible - before this really remarkable set of discoveries of natural gas and we are afloat in natural gas in the United States. EPA says in its draft rulemaking on this boiler rule there isn t enough natural gas. It s the same EPA, by the way, whose economic analysis of much of this has had oil at $17 a barrel. There is a fleet vehicles rule that was in Section 111 of the Clean Air Act, 111-D which many of you I know are familiar with. Section 111-D of the Clean Air Act has in it I think it s that one a requirement that very large fleet purchases in the United States will be done with a 6

7 view to alternative fuels. Any large percentage of them have to be alternative fuels. That has never been enforced by the government and it s very much time to do so. It s the time if we think seriously about the public health and security. Those are examples of what has to be done in terms of strengthening and using a regulatory regime. Finally, we have to think different about that regulatory regime. We have to work with FERC and - I don t know if you had the FERC person here earlier - the opportunities that FERC has of setting an example and working with 130 regulatory authorities around the country to change the reward structure of most regulatory authorities. Right now, most regulatory authorities provide an incentive to the subject utility for better rate of return as based on the amount of fuel that they burn. It s based on the amount of power that they create. They get a rate of return depending on how much power they create. That s the basic structure of almost all utility regulation. Why don t we flip that on its head and say if that utility invests $100 million and gets X rate of return for generating power? What if it invests that same $100 million? Why shouldn t it get the same rate of return for investments in efficiency? That is the basic flipping which is now moving in a few states; interestingly, Idaho. California started down that route, not completely. Colorado started down that route, Maryland, North Carolina, good examples of where there s an opportunity to really use the regulatory structure and the regulatory incentive to achieve the goals that we want to achieve, again, going back to environment, national security and the economy. A fourth point that has to be part of the strategy is very careful examination of the use of natural gas. I mentioned some of this earlier but to go back to the legislation, when Waxman- Markey was written, we were just beginning to understand these huge new reserves of shale gas discovered in the south, now discovered up the east coast. We have more natural gas in reserves 7

8 in the United States than we do usable coal reserves in the United States. That is a very large number and they exist around the world. They exist in China. They exist on the west coast of India. And isn t it interesting that Medvedev, the premier in Russia who is not known as a world-class environmentalist talks about all of the problems of recovering shale gas? Now, why would that be? Because, if the reserves in Eastern Europe and Turkey are exploited, what happens to the Russian stranglehold on natural gas going into Europe and moving south? Medvedev, the environmentalist, tells us a very, very important story. There is a series of steps that can and must be taken related to the understanding of natural gas. There is almost nothing in the house legislation related to natural gas at all. Why is that? Because, the industry was in total chaos, very, very decentralized, and on the other side, the coal industry was extraordinarily well organized. In the Waxman-Markey bill, coal is effectively grandfathered in its current way for the next 30 years. It s a rough number but approximately for the next 30 years, the coal usage that we have is grandfathered in that legislation, and why is that? You talk to members up there. There was no voice on the other side. The only way we could get the votes was by dealing as openly as we did and as thoroughly as we did with the coal industry. There was no voice on the other side. Where were these people with palpably within their own self interest? This is an industry that is going to have to be sharpened. It has to organize itself. It has to be reinforced from the outside to be part of this play. That absolutely is essential. It is the transition fuel to a clean economy. The natural gas people are picking fights with the solar and wind industry. They ought to be embracing the solar and wind industry, terribly popular with the public. They ought to be the closest allies and not fighting each other. 8

9 Finally, the natural gas industry play has to be brought in. Also, it s going to have to play by the rules. We have to have a very clear set of what kind of new fracking process. You all have read a lot about this, the environmental impacts. Well, the recovery of the shale reserves has a big impact on water we don t really know how to present. But we have to have an ironclad guarantee on that that we re doing the very best we can. The natural gas point is complex, but extremely, extremely important. Finally, of course, we think about the issue that you ve all been talking about as well which is efficiency. Efficiency is the first fuel and the opportunities that we have for building into legislation now, much of what has been learned in the 50 states, the development of efficiency standards which in my own home state of Colorado have moved up and moved up and moved up. It s happened in every state that tried to do this when efficiency was legislated. Standards were met immediately, so it is doable, it s feasible. We ve had that experience. We know what to do. It s also the best immediate jobs program that exists. When the president said last night we ought to I think the word was consider efficiency. Good Lord, I say to myself, now, wait a minute, this is more than consider. We have got to make a major commitment on this front, a major commitment on this front. We have to finance it. I don t know if any of you have heard Bill Clinton on the subject of energy efficiency. Clinton has discovered climate change. It s on the screen now and with that energy, it s sort of like the Bill Clinton who used to go into McDonald s. Now, he s into energy efficiency. I mean, it s fantastic. He s got such good ideas and such energy and such an approach for how to do this, how to finance this, how it gets selffinanced and how this can pay for itself. 9

10 This has to be a major part of what we do, and it s the jobs program. It s the base that has when we talk about energy, energy jobs come a little bit from solar and wind. Where they re really going to come from is efficiency. Where we can do this rapidly and finance it is efficiency. We can t just consider it. We have to actually do it. The final point that I would make is nothing that I have said gets into the carbon pricing issue. Much as I believe, every bit of me believes, that we have to get a carbon pricing system. Much as I believe -- John Heinz and I invented the cap and trade program in the late 1980s for sulfur dioxide, it became part of the Clean Air Act amendments of It was an enormously important breakthrough, but it has been so compromised and so sullied by having to add an auction to it which really killed it and has been so attacked politically. Just take that and put it over on the side. It s not going anywhere. Mitch McConnell made that very clear. Republicans have made that very clear. We re not going to get something that s so bright. Not one of the five points that I mentioned, which get us on the road, if we did those five things, it gets us on the road, and we can do every one of those right now. None of those is dependent upon going through this huge war related to taxes, cap and trade, all of the questions of raising those prices. We don t have to do that right now. We can t do that right now. The political system can t handle it right now. So all of this can be done now. It can be done immediately. What s going to happen? Well, nobody s got a perfect crystal ball obviously. I don t believe, one, that the Congress is going to be able to leave town without doing something related to energy. Second, I think that something can t get all tangled up in some kind of pricing mechanism. It can t trip itself wound around that axel. It s a killer if it does. 10

11 So that means -- it seems to me that you shift over to Senator Bingaman s legislation, which can be made a lot stronger. And there is a coalition, many of them are in this room today, who ought to be coming together and going to Senator Bingaman and saying, you ve got to put in your bill the need to maintain very strong regulations because that is in our interest to do so. We have to have renewable energy standards in there. That is absolutely imperative, much stronger than what you have. We have to have a phase-in of energy efficiency standards and it s financeable and that has to be in your legislation and we ve got to engage the natural gas community in this, Senator. You ve got to bring them in and make them part of this because this is so much a part of what we can do. These are all feasible. Jeff is a very careful and a very thoughtful legislator. Jeff really thinks about this and is very good and faced with the kind of coalition that s together in this room and we re going to be trying to do this as well from the Energy Future Coalition. That s where I think the legislative vehicle is going to be. Will it be something that comes from Kerry or Lieberman? Maybe they ll try to draft that on or graft that on as part of legislation, I just don t know. It s a little unclear what they ve got there. They ve just gotten an EPA economics study of various parts of it. But this is the chance that we have and it seems to me the best chance is the one that I ve described, which doesn t start with that kind of a pricing mechanism. It doesn t start with all of that kind of controversy. It does start with our understanding very clearly we have to simplify our lives. We can t take all of these risks. We know what to do. We know these are things that happen. Finally, it is going to demand real leadership from the White House. The White House is going to have to say what it is that it wants done. I m a great admirer of the president. He s 11

12 been dealt a really tough hand all these problems and they multiplied and he s got many more and suddenly the Gulf sits on top of it. To go back where we started, the Gulf is an opportunity for him to say that we can act now. These are the things that we can do now. He s got the dream team in the administration. I mean, he s got the most extraordinarily good people right there with Steve Chu and Jane Lubchenco and John Holdren. I mean a remarkable group of people. Maybe Larry Summers is even on board now. I think he might be. That would be a tremendous team to really move this forward. If the president says I want to see, this is what ought to be in this legislation and let s go get it and let s get it now and appeal to the American people, not once. It s not one Pittsburgh speech. It s not one evening speech. You don t sell Coca-Cola by advertising one time. You got to say it over and over and over again and we have to help them say it over and over and over again. I think about my grandchildren and what we are doing to this world. We have now just seen that in the most dreadful sense of Armageddon in the Gulf. What happened in the Gulf is just a small amount of carbon that s going into our environment and that s a small amount compared to what we do every day in terms of putting it in the atmosphere, in terms of its appearance in the lungs of our kids, in terms of what it s doing in the Arctic. We all know that scenario. We have a responsibility to our future. We ve got to go to these Republicans and say, Mitch McConnell, you have grandchildren too. You have Lamar Alexander who knows by the way Lamar knows this stuff very, very well. Lamar, we all have this obligation. Let s do this legislation and we have this one chance to do it for our children and do it this year. We can do it now. We have to do that. We have an obligation to do that, just those little ones. Thank you very much. 12