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Secretary of Energy Ernest Moniz's Remarks at a National Press Club Newsmaker Luncheon in Washington D.C. -- As Delivered

February 19, 2014 - 3:39pm


Well, thank you, Myron.  It’s a great pleasure to be here at the press club.  And to note also, I learned that this is President Belkind’s first lunch as president, so I feel honored doubly.  Also (I) want to thank Rod and the Speakers Committee for pulling this event together.  You’ve also been introduced to some of my DOE colleagues here who may pitch in on some of the questions.

It’s been a busy few weeks since the president gave his State of the Union speech, traveling across the country, highlighting, reinforcing some of the messages in terms of the administration’s efforts to promote domestic energy production, create jobs and opportunities and address the serious issues surrounding climate change.  So I’m going to start with a little kind of travelogue.

So three weeks ago, I was in Virginia, talk about STEM education and job creation in the energy field, capacity building.  Human capacity building actually is a critical challenge throughout the energy industry, and we need to draw upon all of our talents among our population.  And it was impressive in particular to see how at Hampton University, an HBCU, has evolved into a research university, partly by drawing on collaboration with nearby Department of Energy and NASA facilities.  And we were able also to recruit Hampton’s president, Bill Harvey, to be an ambassador for DOE’s new Minorities in Energy program.

Then two weeks ago, I was in Texas, at the University of Texas, both in Austin and in San Antonio, there talking about domestic oil and gas production, meeting with students and entrepreneurs who are doing some pretty remarkable things in clean energy and advanced manufacturing. And also Mayor Castro of San Antonio and I explored how DOE is and can work more with cities to advance energy efficiency.

Last week it was Southern California to help inaugurate the world’s largest solar thermal plant.  This was made possible by an extraordinary public-private partnership between DOE’s loan program, private enterprise, state government and utilities, who are of course the customers for this solar-generated electricity.

And in a few minutes, I’ll be talking about tomorrow’s travel and another piece of the president’s “all of the above” approach to energy and climate.  I will note that this travel encompassed California, Texas, Virginia and tomorrow another Southeastern state, so we’re saving the northern tour for spring and summer. Although, as we have seen, we have had a real touch of winter going pretty far south this year, and that in itself is something that we need to pay attention to. And in fact also has pointed out a theme that we are providing a major focus on this year at the Department of Energy, which is the resilience of our energy infrastructure.

So with that kind of tour, again, reinforcing different parts of the energy system, let me return to the State of the Union where you heard the president reiterate the importance of energy and climate.  And I’ll just make a brief quote from what the president said:  “One of the biggest factors in bringing more jobs back is our commitment to American energy.  The ‘all of the above’ energy strategy I announced a few years ago is working, and today America is closer to energy independence than we’ve been in decades.”

So today what I want to do in the remaining time is elaborate a little bit on this strategy, note that “all of the above” is not a slogan; it’s a policy and a pathway to creating jobs and at the same time reducing carbon emissions, which recently stood at their lowest level in 20 years.  So I want to be clear:  “All of the above,” as we will discuss, certainly encompasses fossil fuels, nuclear power, renewables, energy efficiency, but it starts with a commitment to lowering our carbon emissions and addressing the mitigation responsibilities that we have for climate change.

So let’s start looking at some of these sources and discussing it in this context.  As you all know, we’re producing more natural gas than ever before, and the Energy Information Administration forecasts that this will continue for the foreseeable future.  About half of the drop we have seen in our carbon emissions are due, in fact, to this increase in low-to-moderate-price gas, particularly through its substitution for coal in the electricity sector.  So again, we are producing a lot more gas, but we are using it as what is sometimes referred to as part of the bridge to a lower-carbon future.

At the same time, this natural gas has had a remarkable effect on domestic manufacturing.  Again, the president, in his State of the Union, noted that businesses have or will invest almost a hundred billion dollars in new factories that use natural gas.  Frankly, I think this was, probably appropriately, on the conservative side of the estimate of those investments, and the administration will be committed to supporting innovative manufacturing across the United States.

In fact, last month the president traveled to Raleigh, North Carolina, and announced that North Carolina State University had been selected to lead the nation’s newest manufacturing innovation hub, one dedicated to wide-bandgap semiconductors for power electronics, which has implications across many parts of the energy industry, and this hub will bring together companies, universities, federal research centers under one roof to help generate this next generation of power electronics.  The president announced plans to launch six more manufacturing hubs this year.  We already started one, DOE in concert with the Department of Defense, in Ohio on 3-D printing.  We will do more this year, and that will include the Department of Energy.

Oil – again, tremendously increased production.  For the first time in 20 years, we are producing more crude oil at home than we are importing.  However, how does this fit in with, again, the climate commitment, which I indicated earlier?  It fits in because with this increased production, which has dramatically decreased imports and obviously helped in terms of balance of payments, we continue to focus on reducing our dependence on oil.

And here we have a three-pronged strategy.  First, efficiency standards for vehicles.  The CAFE standards enacted during the president’s first term are projected to save 2 million barrels per day of oil by 2025 and to save the U.S. $1.7 trillion in fuel costs.  The other prongs of this approach include an ongoing commitment to develop next-generation biofuels – and those costs are coming down – and finally, to continue to advance electrification of vehicles.  And once again, the cost of vehicle batteries has dropped significantly in the last four or five years.  We have another ways to go, another factor of two or three.  But we should really keep focusing on the fact that these costs are dropping.

But if I return to the efficiency standards, just yesterday the president directed the EPA and the Department of Transportation to develop and issue the next phase of medium and heavy-duty vehicle fuel efficiency standards by the end of March.  The Department of Energy Office of Energy Efficiency and Renewable Energy is working with industry on what is called a Supertruck collaboration to, in fact, advance the technologies that will be needed to meet these new standards coming forward.  The idea is to improve the efficiency, the ton-miles per gallon, by at least 50 percent in Class 8 trucks: heavy-duty long-haul trucks.  These trucks are about 4 percent of the vehicles and use about 25 percent of our transportation fuel.  They don’t get very good mileage. And so increasing that is a high-leverage situation.

Literally as I walked out the door of DOE on the way here today, I witnessed the first product of that Supertruck collaboration.  This was a Cummins-Peterbilt Supertruck.  It has achieved already a 75 percent increase in fuel efficiency.  The technologies contributing to it, from advanced engine technologies, advanced powertrain technologies, advanced aerodynamics and other innovations – they will start working their way into the commercial products over the rest of this decade, and things like this will be critical for meeting these new challenges.

So again, the message is that our oil production is greatly increasing, oil imports are decreasing, but we continue to work heavily on the oil demand side.  In fact, the U.S. trade deficit fell to a four-year low in November, in no small part, of course, because of this booming domestic energy production and flat or declining demand.

Now, those are some of the fossil fuel initiatives, but, of course, we have also seen remarkable progress in clean and renewable energy.  In the last five years, we’ve more than doubled the amount of wind and solar electricity, and we see a doubling of that again in the next five years.

One of the tools that we use for advancing renewable, in addition to our research and development, our ARPA-E programs and the like, is our Loan Program.  And I want to spend a little time on that.

Let me mention one program that sums up the Administration’s “all of the above” approach in our loan portfolio.  We are supporting, right now, first, a portfolio of more than $30 billion invested in more than 30 projects around the country.  We recently announced up to $8 billion in available loan guarantees for advanced fossil energy projects that will reduce carbon emissions and increase efficiency.

We provided more than $8.4 billion in loans to the auto industry to allow domestic auto producers to retool their American factories to produce cleaner and more efficient vehicles that are increasingly in demand here at home and around the world.  And these range from loans to established major companies like Ford, retooling factories in six states, to startups, if you like, like Tesla, with a very, very different business model, a pure electric vehicle, as you know, a very high-performance vehicle, which will start exports next month.

We’ve committed more than $24 billion in loan guarantees, again, to a variety of clean energy and renewable projects across the country.  These are supporting one of the world’s largest wind farms, several of the world’s largest solar generation and thermal energy storage systems and more than a dozen, as I already said, new or retooled auto manufacturing plants across the country.

Last week I was in California, I mentioned earlier, for the opening of the Ivanpah Solar Energy Generating System, the world’s largest concentrating solar power system.  It received a $1.6 billion loan guarantee from the Department of Energy back in that time period 2009-2010 where, if you recall, some of us already I think are forgetting, it was not exactly easy to get debt financing for projects in that time period.  And so this program was really critical for kick-starting major utility-scale solar projects.

The Ivanpah project is a remarkable feat of innovation and engineering.  It’s over 300,000 mirrors the size of garage doors reflecting the sun’s energy to three massive towers, where water is heated, converted into steam and then spinning turbines.  Nearly 400 megawatts of power – that’s on the order of what one needs to service nearly a hundred thousand homes.  So Ivanpah now has demonstrated to the private sector that this technology is feasible on a scale that has not been seen before.  It opens up, as well, an export market for this technology in suitable geographies.  We all know there are first-mover problems in terms of moving out these new technologies at new scale, and that’s essentially what we are doing in many contests, is getting over that first-mover problem for commercial-scale activities.

I should say that we’ve also had remarkable success through investments in large-scale photovoltaic technology as well.  The Department of Energy’s loan program helped finance the first five utility-scale photovoltaic plants larger than 100 megawatts, in the United States, again, proving to industry that these projects were viable; and subsequently, 10 utility-scale PV projects are now privately financed without department support.  That’s, again, the nature of the program that we are trying to do. Kick-start, get the first-movers out there, and then have the private sector come in.

So last year was a banner year for solar: 2.3 gigawatts, 2,300 megawatts of solar were installed in the United States in 2013.  I want to emphasize, as I mentioned, we have issued or made provisional commitments of over $30 billion of loan guarantee.  We have substantial remaining authorities, over $40 billion.  We are planning to move forward across the energy spectrum with more projects, assuming that we can find good commercial-type projects that could benefit from this kind of debt financing.

I should also add, besides energy supply, of course efficiency is critical.  Indeed, we believe that certainly in the long term a solution to climate change risk mitigation will require major efforts on the demand side as well as clean energy on the supply side.  One of the ways the Department of Energy is moving forward on this is by picking up the pace on issuing appliance efficiency standards.  Already in 2014, just a few weeks into 2014, we have finalized two efficiency rules covering metal halide lamp fixtures and external power supplies.  No individual one of these may sound overwhelming, but the cumulative effect of all of our new efficiency standards will be to reduce U.S. carbon dioxide emissions between 2005 and 2030 by more than 3 billion tons, which is not bad for a series of actions addressing essentially everyday appliances.

We’ve also seen on the technology side for efficiency remarkable breakthroughs, paying attention, for example, to what’s happening with LED lights.  Today LED lights are perhaps a factor of six more efficient than incandescents, a single fixture replacing a 60-watt bulb, with $130 of lifetime energy cost savings to consumers.  And the prices are now below $10.  And I can guarantee you you’ll see them significantly below $10 this year.  So this is the kind of cost reduction that will drive the transformation of our system to clean energy.

Let me say a few words about climate change specifically.  And again, going back to State of the Union, the president restated his strong commitment to addressing the threat of climate change and reducing our domestic carbon emissions.  As the president said, and I’ll quote for the second time, “When our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.”

Now, one feature of that is the reaction to what we have been seeing in terms of a number of extreme weather events.  Now clearly I’m not here to tell you that we could tie any storm or drought or climate change individually to warming, but the patterns are alarming, and they have been statistically anticipated – frankly, just as we are seeing them – for quite some time: 20, 25 years.  We are seeing them.  What we see is warming amplifying the effects of such things as storms.  Superstorm Sandy was an example of a Category 1 hurricane that transformed into a storm that devastated much of the Northeast coastline. 

Last summer, President Obama, in his climate action plan, emphasized not only the issues of cutting carbon emissions to avoid as much as possible the impacts of climate change, but he also emphasized the importance of preparedness to the consequences of climate change, sometimes called adaptation. 

Here, the Department of Energy again has some major roles to play, particularly in leading response around the energy infrastructure.  We put out a report last summer detailing the vulnerabilities of the energy sector to climate change.  Just to point out a few examples, in 2012, several power plants in Illinois had to get special permits to operate with higher-than-normally allowed discharged temperatures for their cooling water.  This past summer, wildfire damage, which has increased significantly, threatened the grid in California, leading Governor Brown to declare a state of emergency, even though the fires were distant from the major load centers.  In July of 2012, in the midst of one of the worst droughts in American history, a number of companies that extract natural gas and oil through hydraulic fracturing were in fact denied access to water for weeks or more in several states.  So that’s just emphasizing in many ways the energy/water nexus that is one of the areas of major concern with climate change.

So resiliency of the energy infrastructure, in particular our electrical grid and fuel supply, will be a major focus this year as we work throughout the administration on the Quadrennial Energy Review.  That is, this Quadrennial Energy Review, its first installment in 2014, will focus specifically on the transmission, storage and distribution of energy.  And as we have seen, even only in the last weeks, our infrastructure challenges require some urgent attention.

President Obama expanded on these resiliency efforts last week when he announced at his 2015 budget submission we’ll include a new $1 billion climate resilience fund.  And through this fund, we’ll be able to help communities plan and prepare for the impacts of climate change and further support breakthrough technologies that will make us more resilient in the face of a changing climate.

Let me end by returning to my southern itinerary.  Since the State of the Union, as we’ve said, this itinerary has kind of reflected the all-of-the-above.  I’ve mentioned fossil fuels, efficiency and renewables.  Tomorrow I’ll be traveling to Waynesboro, Georgia, to finalize a $6 ½ billion loan guarantee for the construction of two new nuclear reactors at the Vogtle electric generating plant.

In 2010, the Department of Energy offered conditional commitments for $8.3 billion in loan guarantees to support construction of the country’s first new generation nuclear power plants in nearly 30 years.  This was again in the spirit of the first-mover challenge of getting some new nuclear plants built.  And three separate commitments were made to three of the four owners of the plant, and tomorrow the department is closing on two of those commitments, to Georgia Power and to Vogtle Power Corporation, constituting $6 ½ billion of those loan guarantees.  So, truly, I wanted to emphasize again, we are working across the board to try to push the technology forward into the marketplace for all of our energy sources. 

These will be two new 1,100 megawatt Westinghouse AP-1000 nuclear reactors: the first U.S. deployments of this next generation of advanced reactors.  In fact, earlier, the DOE cost-shared the moving toward design certification of this and other reactors under the program again to stimulate the development of next-generation reactors with passive safety features.

Once completed, these new units at Vogtle will produce enough safe, reliable and carbon-free energy to power about 1 ½ million homes.  And the president, I want to emphasize, did make it clear that he sees nuclear energy as part of America’s low-carbon energy portfolio, and of course nuclear power already is a major part of our carbon-free portfolio.

So to conclude, it’s obviously an exciting time in the energy world.  We are producing more domestic energy here in the United States than ever before.  Across the country, the promise of clean, affordable, domestically produced energy that we have sought for decades is finally coming true at a massive scale.  

We didn’t get here by accident.  The advances that we see today in clean renewable energy – whether the world’s largest solar thermal plant, or the first new designed nuclear plant to be built in 30 years – again, didn’t happen by accident.

In fact, Monday was the five-year anniversary of the signing of the American Recovery and Reinvestment Act.  It’s worth remembering, again, that the president took office in the middle of the worst economic crisis since the Great Depression, at a time the economy was losing over 700,000 jobs a month, and in the midst of the worst six-month period for GDP growth in over 60 years. 

The Recovery Act was an unprecedented effort to jump-start the economy, save and create jobs and make a down payment on addressing long-neglected challenges so that our country could thrive in the 21st century.  And some of the most important investments that we made with that Recovery Act were in clean and renewable energy.  The Recovery Act helped provide more than $16 billion of loan guarantees to 25 clean energy projects that are under construction or already helping to produce clean and renewable energy at a time when debt financing just wasn’t available.

So these and other investments through our loan program, renewable energy program, ARPA-E, our science office, they are establishing tomorrow’s clean energy technologies, both to meet our domestic needs for affordable and secure clean energy and to position us as a major supplier to the global market.

In fact, to finish, I’ll just quote that last month, Ceres, a nonprofit investment organization, estimated that the world will need a global investment of $36 trillion, or nearly a trillion dollars per year on average, over the next four decades to address climate change at the scale that we believe is required while, of course, supplying energy and managing the demand side of global economic development.  That’s a pretty serious investment.  Many of us think at least that, however, doing nothing to address these risks of climate change will prove to be far more expensive.

And when those technologies are deployed, we can’t afford to be at the back of the train.  We want to be driving the train, leading the world in these industries.  So investing in clean energy isn’t a decision that limits our economic potential; it’s an opportunity to lead the global clean technology markets that are forming right now.  And tomorrow maybe I’ll ask some of those 3,500 construction workers how they think about the opportunities in this new economy.  Thank you.