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U.S. Chamber of Commerce's 4th Annual North America Forum

June 16, 2008 - 1:30pm

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Remarks As Prepared for Delivery for Secretary Bodman

Thank you very much, Ron, for that kind introduction and for the critically important work that you and your colleagues do at Lawrence Livermore.  I also want to thank my good friend Secretary George Shultz - along with his esteemed co-chairs for this event, Peter Lougheed and Pedro Aspe, for inviting me to be with you.  It's a pleasure to be here.

The way I see it, this event could not come at a better time.  With its focus on enhancing cooperation among the United States, Canada and Mexico - and on bringing together representatives of our governments and the private sector - you are helping to develop and achieve real and lasting solutions to some of our world's most significant challenges.  And when it comes to the global energy landscape, the challenges we face are certainly massive and pervasive.  I don't need to remind you of where we stand.

Increasing global demand for energy, rising prices, a lack of adequate investment in new supply - which goes back several decades - along with harmful regulatory and policy environments around the world have coalesced into a global energy reality that is not sustainable.  And, of course, producing enough affordable energy to meet demand is not our only challenge.

We also must confront global climate change and continue to look for ways to develop and use energy that are cleaner, more efficient and more sustainable.

This is our collective challenge: whether or not we have access to diverse, secure, clean, and affordable energy supplies is directly related to whether or not our economies 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.  And what happens on this continent will be a major driver of the world's energy future.

North America is critical to determining the path forward for global energy development, delivery and consumption.

In many ways, our collective success in shaping that future in a productive way will depend on our ability to come together and expand our regional cooperation in order to encourage the sustained investment in all energy resources - and in our energy infrastructure - that must occur on our shared continent.

The truth is we do not know precisely what North America's energy future will look like.  But I believe we can say this:

Our energy mix will be more diverse, with a major focus on renewable energy sources and alternative fuels.

We will become more reliant on safe and emissions-free nuclear power.

We will depend on a more diverse group of energy suppliers and supply routes, our three national economies will be more efficient throughout, and, though we will continue to rely on traditional hydrocarbons, we will develop, produce and deliver them more cleanly and efficiently.

And as a result, our environment will be healthier, and our energy future will be more secure.

We will get there because we must.  We have no choice.

And, I believe that we can and we will - and, in fact, that we're on our way to doing it.  But getting to that point will continue to require a long-term commitment on the part of all three of our governments - as well as substantial levels of investment from the private sector over many years.

That is why President Bush has put such a priority on working with our partners in North America to establish reliable, productive, and cooperative mechanisms to improve our continent's energy security - and our environmental health and sustainability as well.

We are making good progress - through the North American Energy Working Group, which is a key component of the Security and Prosperity Partnership (or "SPP") launched by the leaders of our three nations in 2005.  While we recognize the considerable progress-to-date, we also know that we have much more to do.

One area of progress has been in energy efficiency, particularly with regard to the harmonization of standards.  Considering that Mexico and Canada are our two biggest trading partners in energy, it just makes sense to remove barriers to the more efficient and cost-effective movement of energy-efficient products.

We are working to align energy efficiency standards for key products across our three economies, and have already done so for freezers and refrigerators, three-phase motors, and air conditioners.

Standards for central air conditioners and heat pumps are expected to be harmonized later this year, and our next step is to expand this work to other home appliances such as clothes washers, dishwashers, and water heaters.

I'm proud to say that Mexico, Canada and the United States share a strong commitment to harnessing the power of clean, renewable energy technologies, which I see as a real opportunity for regional cooperation.

We would do well to remember that this continent was - for decades - the world's leading producer of fossil fuels.  And I believe that we can - and should - be the world's leading producer of renewable energy for decades to come.

But in order to ensure we achieve that leadership position, we will continue to depend on the power of science and engineering to push back the boundaries of what is possible - and, therefore, on sustained funding for research and development, which I believe is a responsibility of our governments - and of governments around the world.

Here in this country we are aggressively funding programs - for both basic science and applied research and development - to achieve the type of transformational discoveries we need, the breakthroughs that truly change the nature of our thinking and fundamentally alter how we produce, deliver and use energy.

We are placing a strong emphasis on technologies such as solar, wind, and cellulosic biofuels derived from waste streams rather than edible fuel sources.

For example, just since the start of 2007 we have invested well over $1 billion to spur the growth of a robust, sustainable next generation biofuels industry.

And so I'm quite pleased that, through the Trilateral Agreement for Cooperation in Energy Science and Technology, biofuels is our first major area of cooperation in the research and development realm - with scientists from our three countries identifying opportunities for collaborative research.

We jointly held a workshop in Mexico in March to develop recommendations for unifying the North American biofuels market and to provide input to the North American Biofuels Outlook, which will be completed this summer.

That document will include an overview of the continent's biomass feedstocks, an analysis of second- and third-generation technologies, data on synergies and impediments in our regulatory, policy and infrastructure environments, and policy recommendations for strengthening the North American biofuels market.

We are in the process of expanding our cooperative work to other technology areas as well, including methane hydrates, carbon capture and storage, and advanced technologies for strengthening our electric power grid.

I hope that we will push forward with this work aggressively, and I would highlight, in particular, the area of carbon capture and storage, which will allow us to expand the availability of clean-coal technologies.  After all, this continent is blessed with an abundant coal supply.

Our challenge is: we must find ways to reduce - or perhaps eliminate - its environmental impacts.

To that end, over the past year, the U.S. Energy Department has announced that we have awarded funds for six large-scale carbon sequestration projects, which will conduct large volume tests for the storage of one million or more tons of carbon dioxide in deep saline reservoirs.  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 through two of these projects we have partnerships with the Canadian provinces of Alberta, Saskatchewan, Manitoba and British Columbia.

Beyond research and development, we also know for certain that government policies and regulations - at all levels, from communities to the international stage - must actively encourage renewable energy development and deployment in the private sector.

The U.S. government takes this very seriously, and we're taking direct actions to promote predictable and durable policies that enable greater private investment.  For example, the Department of Energy is moving ahead with a program to provide up to $42.5 billion in loan guarantees to commercialize technologies that avoid, sequester or reduce greenhouse gas emissions.

The goal here is to support early commercial use of advanced energy technologies by helping projects realize lifecycle profitability.  But in order to encourage the necessary levels of private investment on a global scale, we absolutely require open, transparent investment climates and predictable legal and regulatory environments - in producing and consuming countries alike.

And this is something that must underpin all our trilateral efforts, and a message we must continue to assert throughout this region, this hemisphere and around the world.

One important component of a transparent investment climate is producing and making available usable and reliable data, particularly important in a time of such considerable volatility in the energy markets.

To that end, experts from each of our three nations continue to work on a projection of North American supply and demand for oil and gas, electricity, and coal, as well as continental import and exports.

We already have produced the first side-by-side comparison of our national energy data, and are working on the first joint modeling effort to project our continent's energy picture out to 2030.

This effort will look at different scenarios affecting future energy use, such as the implications of higher oil prices and the adoption of new technologies, and will culminate with a report based on the group's findings.

In my view, we need more of this type of regional thinking, and look for additional ways to strengthen how we, as a continent, consider our future energy needs and make decisions that will impact us all.

And this means further enhancing our bilateral relationships as well.

Just last week we hosted with the State Department this year's U.S.-Canada Energy Consultative Meetings at which our two nations discussed strengthened cooperation in areas including oil sands, natural gas pipelines, carbon capture and storage, and nuclear power.

Let me just mention that, in regard to nuclear power, it is estimated that Canada has about 10 percent of the world's uranium reserves.  Access to this vital supply will be indispensable to meeting increased demand for nuclear fuel on this continent.

We also will continue to work with Canada on developing and building our shared energy infrastructure - and let me say here that the United States government remains strongly committed to expediting the siting, permitting and construction of the pipelines that will help North America take advantage of our own natural resources.

The United States continues to pursue and strongly support bilateral cooperation with Mexico as well.

President Calderon has spoken very frankly about the challenges facing Mexico's petroleum sector, particularly with regard to replacing declining reserves.

He has also indicated renewed interest in strengthening our bilateral energy cooperation and exploring additional areas for collaboration between our two Energy Departments.  I commend his administration for its current reform efforts, and I welcome the possibility of discussions.

Now, before I conclude, I want to say a few words about the upcoming oil summit in Jeddah.

As you may know, the Saudis have asked that the world's significant oil producers and consumers come together in Jeddah for a candid discussion concerning the global oil market.  We commend them for this and, I would like to add, it is in line with what President Bush and I have been saying for some time.

It is up to every nation - producers and consumers - to take aggressive steps that will help the world confront our energy and environmental challenges.

In my judgment, the price increases we have seen over the last several years are a function of the laws of supply and demand, not of so-called speculation.  Oil production has remained static at roughly 85 million barrels per day while demand has increased, significantly and rapidly.

The result has been dramatic price increases.

And this should serve as an additional reminder to us all of the need to diversify our energy supplies - and suppliers, to push for the development and deployment of breakthrough technologies that will increase our use of energy produced from wind, solar, advanced cellulosic biofuels, and clean-coal technologies, and to markedly improve the energy efficiency of all sectors of our economies.

The bottom line, as I see it, is this: if our continent - and our world - is to meet our future energy needs - and do so in a way that is affordable, efficient, clean and secure - then we need massive and sustained levels of investment from our governments and from the private sector, and, to do that, we need enhanced cooperation between our governments and with industry.

As I said at the outset, though it will not be easy and it will not be quick, I am confident that we can do this, that we can work together to meet North America's energy challenges, and even more than that, that we can turn them into opportunities for our people - and for the world.

I thank you for taking part in this important forum and for the opportunity to be here, and I'm happy to take your questions.

Location: Washington, D.C.

Media contact(s): Kristin Brown, (202) 586-4940

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