SECRETARY STEVEN CHU: We are dependent on foreign oil. Right now, transportation fuels are almost totally dependent on petroleum. Our consumption is increasing. Our production is going down. And so how do we break the heavy dependency on foreign oil is one of our issues.
There is another issue: We’re beginning to lag in production – in auto production. These are United States, Japan and China in auto production. And it is startling how much production is now happening in China. One thing I do not want to see – and, you know, there’s – there are some comments that say, ah, well, manufacturing in U.S. – that’s OK – it is offshored; you know, we can make money in financial houses. Uh-uh. (Chuckles.) We have to bring back manufacturing – and automobile manufacturing is a crucial part of this – back onshore. And this is something we feel very committed about. In order to bring that back, in order to make sure the United States plays a dominant role in innovation in this sector, it relies on a lot of the things I’m seeing here, a lot of the new ideas.
In terms of mileage, I think it’s safe to say we don’t know what the price of oil will be tomorrow, next year, but it’s safe to say five, 10, 20 years from now, 30 years from now it will have to go up. It will oscillate around, but it’s going to have to go up – just supply and demand. And so we are accelerating fuel standards – it’s 35 miles per gallon by 2016 – (inaudible) – fleet, and – but that’s a beginning. We want to do better than that.
We are investing nearly $13 billion to promote competition and convergence in several approaches – electric vehicles – both plug-in hybrids, all-electric vehicles. We’re also looking to advanced biofuels, next-generation biofuels. Corn ethanol is a transition approach, but we want to give the American farmers something to grow, and we also want to take advantage of all the agricultural waste that we have and convert that into biofuels. Advanced combustion engines – there’s a few examples of that in the show, just a beginning. Natural gas – due to research sponsored by the Department of Energy from 1978 to 1990, and in the early ’80s methane coal bed and shale gas – that research was finally picked up by the oil and gas industries. In 1990, Schlumberger started investing in shale gas research. That has effectively doubled the gas reserves of the United States. And hydrogen fuel cells – it’s longer in the distance, but we’re still in there.
Electrifying transportation – personal vehicle transportation – is very important to us. The kind of cars that we’re seeing here today are examples. This is a preview of the Fisker Karma, which is the – a moderate – well, it depends on who you are, but – (chuckles) – not a high-end cost vehicle. This is something where we’re investing $2 ½ billion for three of the world’s first electric car factories, $2 billion to support 30 battery and component factories in the U.S., $40 million to deploy electric vehicles and chargers around the country and four ARPA-E projects. So this is really to help the United States take a commanding lead in this new technology.
So today, as an example, we’re announcing the closing of a $1.4 billion loan to Nissan. This is Nissan America. It is going to be money spent in America for American jobs. It’s to help retool a Tennessee factory – produce the all-electric Leaf, which is around just a stone’s throw from here – huge headroom, you know. It’s enough headroom so even after you get a Nobel Prize your heads can still fit in. (Laughter.) Sorry. (Chuckles.) Expected to create 1,300 American jobs.
This is one example. We have an advanced technology vehicle program, to Ford, to Nissan, to Tesla, Fisker, (Tentacle?) – substantial amount of loan money, $8.6 billion. This is part of the entire loan guarantee package we – that was authorized in 2005, appropriated in 2006. And it – but it wasn’t until 2009 that these loans have gotten out. We now have – and just, Jonathan Silver, who’s down there, please stand up. He’s the head of the loan guarantee program. He’s come on board. We have now 11 conditional loans out also. Please stand up – and see, these are their DOE folks. You shouldn’t come to me. You should go to them if you want a loan. (Laughter.) Anyway, so we went from zero to 11. We’re revamping how we do these things. We’re really pushing forward on making this part of the engine for driving innovation in the U.S.
This is – other examples, the Chevy Volt – funded early R&D research. It’s a beautiful car. Another very beautiful car – this is the Tesla Model S. This is the one expecting to cost roughly half of the earlier version and still – so both Fisker, Tesla, the Leaf – all these cars are redefining an electric vehicle, it – in terms of its body design, fantastic looking. ETec, the world’s largest EV demos – and so these are – again working closely with Nissan. And so you get the electric cars on the road. We need charging stations. We need the infrastructure, and it’s being developed concurrently – very important.
The battery cost is the biggest thing for plug-in hybrids and electric vehicles. This is our projection just simply on increasing the production, essentially going to mass production of the batteries. The projections now are by 2015 the cost per kilowatt-hour of a battery now in the over a thousand dollar range today will go down by a factor of four, so somewhere between 3 (hundred dollars) and $400. In addition to that, we are investing in research that can reduce that to a hundred dollars. In addition to that, there are a lot of very exciting prospects out there for doubling and tripling the energy density, both energy weight and volume of these batteries, so they can last 15 years of deep discharges, the lifetime of the car. And so this is something we’re really hoping in the next couple of years will start to be mass produced.
So another thing – this is an example of something I personally think has some real potential. In today’s best lithium-ion batteries, there’s a peak current. If you charge too fast, you begin to wear them out more rapidly. Even in today’s Prius, for example, if you put hard – stomp hard on the brake, the energy – the kinetic energy from the braking can’t be delivered all to the battery because the battery can’t really take that quick a charge. So there are what we call ultracapacitors – electrostatic storage, very inexpensive. They don’t have the energy density or the longevity, but it’s OK because in the braking you give it – the energy to an ultracapacitor, which slowly puts it into the main battery. So a hybrid solution like that, I think – this is also true in truck hybrid braking, for delivery trucks. So you can get all the energy – kinetic energy back. You put it in a battery, you run the electrical systems. Again, it’s going to – I – we believe, improve the gas mileage of all vehicles. Again, it’s technology that just has to be hybridized with the batteries that we have today.
Next-generation biofuels. We’re investing a lot in looking at how bacteria, in this case, can directly take sunlight, and instead of growing some biomass stuff, it directly makes petroleum products. So this is one of the things we’re investing in. And another thing we’re investing in is a totally different approach. Instead of taking either microbes or developing better enzymes and – to digest biomass and turn it into fuels beyond ethanol, beyond butanol, but into really direct replacements for gasoline and diesel fuel, we’re also looking at the gasification of biomass, where you take the biomass – and this – you can blend in – you gasify it. You turn it, for example, into an intermediate methanol; then you make a synthetic fuel, which then becomes a very clean, direct substitute for diesel fuel or gasoline. So we’re seeing if that can be made available, competitive. One company says that if we take out 20 percent profit from investment in this plant, our business model is we hope to make diesel fuel at $2 a gallon wholesale. OK – the total costs. OK, now if you can do that, that’s pretty good. And so we’ll see.
This is my old laboratory, Lawrence Berkeley Laboratory. It’s an institute funded by the Department of Energy called the Joint BioEnergy Institute. Next week in Nature magazine – one of the premier science journals in the world – will come out an article where they’ve told E. coli – they’ve reprogrammed E. coli by putting in whole new metabolic pathways. And in doing so, you feed simple sugars to this bacteria, and out pops diesel fuel, diesel fuel that is secreted into solution that floats to the surface, you skim it off, and you can put it in a gas tank or a diesel tank. And so I saw the press release. The director of this institute and the director of the research is an old friend of mine, Jay Keasling. I said, Jay, this is great. Tell me, does it really have a shot at being commercially viable without subsidy? And he says, we will know in two years. It – they started in a collaboration with a company, LS9. LS9 – it’s – they have a target: We have to get the yield up to X amount. They think they’re going to – they think they’re – they’re optimistic. But it’s still research.
In the meantime, the scientists – the basic scientists who have done this aren’t saying, well, we’ve published our Nature article, on to do another research project. They’re saying no, we’re now going to develop a little pilot station to really show that it works. So now you have a new attitude among some of our best basic scientists. You’re going to invent something, and you’re going to nurse it all the way through. So we say yes, this is going to be good to go, and you hand it off to industry. So this is the kind of attitude we are now starting up in the Department of Energy. It’s just like in the wartime where the best basic scientists working on the Manhattan Project, on radar – they wanted to deliver the goods. They weren’t – you know, they weren’t stopping at a scientific publication. Plus you couldn’t publish those things.
So anyway, advanced combustion engines – we – there is improvement in internal combustion engines. Ford has been doing some very great things in the direct injection, Cummins also doing some really good things. And so there’s a lot of exciting things going on in combustion engines, both in diesel and in gasoline engines.
We are trying to drive, as I said, innovation from the lab to the marketplace. The Department of Energy’s reputation started as – you know, well, starting with the Manhattan Project, but going into higher-energy physics – just to remind you – this is a little-known fact, but by the time I leave this department, I hope it’s well known – the Department of Energy is the biggest funder of the physical sciences in the United States. But it also has funded the work of more Nobel laureates than any other science funding agency in the world. In addition to that, it has trained more future Nobel laureates, an enormous number. The lab that I came from, Lawrence Berkeley Lab, where I was director for almost five years – I was a graduate student at Berkeley and a postdoc at Berkeley, and I was also a lab employee. That lab has trained graduate students, postdocs, young career scientists. Thirty young scientists went on to get Nobel prizes. It’s an enormous addition to the legacy of the United States, to the industrial competitiveness. And we want to even grow this more.
So we do R&D. But we also are very interested in transferring as rapidly as possible, like that example I just gave you with the E. coli, into demonstration and innovation, and finally to partner with industry to get it out there, to get it deployed at scale. And we have to do all of these things in order to solve the climate problem, to solve the energy dependency and energy security problem as rapidly as possible.
Our investments are creating jobs all across the country. This is a map of transportation electrification, electric drive components, batteries. Supertruck – we think we can improve the mileage of trucks, long-haul trucks, by 30 percent. Fundamentally going to be aerodynamics, but a lot of other things as well – Clean Cities, electrification, education, things of that nature.
So we’re looking at the whole food chain of the transportation – automobile sector. The – we think this is a good way to create jobs immediately, but much more importantly, it’s laying the foundation in the future so that these are jobs that will decrease our dependency on foreign oil, save money for American consumers, lead in advanced vehicle manufacturing. But above all else, this is laying the foundation to create high-quality American jobs now, tomorrow, in decades in the future.
So that’s all I have to say. Thank you for your attention, and we hope we can all go forward and push all these technologies. The automobile industry, the trucking industry in the United States has been a pillar of our industry, our overall industry. We want it to remain so. We – but we want to drive towards higher efficiency.
Thank you again. (Applause.)