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Taking Action for Energy Security

Shirley Ann Jackson, Ph.D.
President, Rensselaer Polytechnic Institute

Monarch Room, Westin Galleria & Oaks
Houston, TX

Thursday, February 12, 2009

Good morning. It is my pleasure to be here, today, to address this Leadership Circle Breakfast during CERA Week. First, I would like to express my appreciation to our hosts at CERA, and to our sponsors — Marathon Oil and the Council on Competitiveness.

We are caught, as never before, in a double grip — the need for national and global energy security, and alarm over our planet’s climate change.

These twin challenges, now, are further complicated by the global economic crisis. Energy demand is softening with declining national fortunes. In China, for example, oil consumption is dropping, and the nation that had been building the equivalent of a new power plant every week, soon will have more generation capacity than it needs. It acutely feels the global recession as a consequence of its export-driven economy, and may soon face social unrest, as some 20 million rural migrant workers are returning home, after having lost their jobs. In a nation that was putting some 1,000 cars per month on the road before the Beijing Olympics, car sales have plummeted.

The major drop in oil prices shifts the immediate energy prospect. Depending upon how long the economic slowdown continues, the situation could devolve back to non-strategic approaches to energy security — in the U.S., in China, and globally.

I returned, last week, from the World Economic Forum in Davos. While the focus primarily was on the global economy, there was, too, an underlying recognition of the consequences of climate change and of global water scarcity.

Even amid a global recession, uncertainty of energy supply, unpredictable price swings, alarm over climate change, and competition for water (for food and energy) — are major drivers of a global energy system restructuring. There are new energy markets, new technologies, new trading schemes, new players, new alignments. Governments, corporations, institutions, and groups are looking to assure energy supply, improve efficiency, strengthen conservation, and reduce their carbon footprint.

Issues that ensue from these entwined realities — including complex geopolitical and geostrategic challenges, the unprecedented wealth transfer that has occurred from one group of nations to another, the profusion of technological investment choices before us — require vision, careful analysis, coherent thinking, and, finally, action.

Here, in the U.S., with national leadership committed to action — we have the opportunity to focus on pathways that will lead us from the extant to the green — from rhetoric to reality.

The question is — what action?

More than a year ago, the Council on Competitiveness launched the Energy Security, Innovation and Sustainability Initiative (ESIS) to seek answers to this question. My colleagues in leading this effort are James W. Owens, Chairman and Chief Executive Officer, Caterpillar Inc. — who recently was named to President Obama’s Economic Advisory Board — and D. Michael Langford, National President, Utility Workers Union of America [AFL-CIO]. With a multi-sector steering committee of some 40 CEO-level leaders, we began an initiative to enhance U.S. competitiveness and energy security.

I realize that I am speaking to more than a national audience, and that ESIS has focused on steps the United States can take to strengthen industry competitiveness and U.S. energy security, but the foci of the initiative are relevant more generally. In fact, we have benchmarked other countries’ efforts, and we have received valuable input from international partners, and from multi-national corporations. The intent is to develop a public-private action agenda to drive private sector demand for sustainable energy solutions, and to create new markets, industries, and jobs. A key contribution of the ESIS Initiative is to embed energy security into the competitiveness dialogue.

Working with a cross section from industry, academia, and labor, we have used the ESIS initiative to examine, via a series of progressive dialogues, the implications of today’s energy challenges for economic competitiveness. Two previous ESIS reports, based on the dialogues, underscored the lack of cohesive action in U.S. industry and government, the woeful under-investment in improving U.S. energy efficiency, and the urgent need for bold leadership and decisive action.

You will notice that the title of the ESIS Initiative begins with the words “Energy Security” rather than the more commonly used “Energy Independence.” Independence implies that we are able to “go it alone,” fully supplying our own needs. The term appeals, perhaps, to an aspect of the American psyche — but, it is an unfortunate misnomer. There IS no energy independence. Of the approximately 190 countries in the world, not one is energy independent — nor is likely to be any time soon. Energy Security, on the other hand, suggests the imperatives inherent in the interlinking of national security, global security, and climate security.

Within this context, the ESIS developed Prioritize: A 100-day Energy Action Plan for the 44th President (and the new Congress) of the United States, released in September. It results from collaboration among upwards of 200 private sector leaders — CEOs, venture capitalists, university presidents, labor leaders, national laboratory directors, and energy experts. Key recommendations ask the President and/or the Congress to:

  • Mandate that Federal procurement — for goods, services, new construction, and facilities retrofits — lead the market toward higher energy efficiency standards, with concomitant reduction of carbon load. Such leadership, by example and requirement, will encourage the private sector in this direction.
  • Encourage the development and utilization of all energy sources, in as sustainable a way as possible, by equalizing energy source subsidies, and by creating incentives for discovery and deployment of new energy sources. One means to accomplish this is to direct the Office of Management and Budget to create a cross-governmental task group to identify barriers to various sources of energy production, their technological readiness, and to issue a Presidential Executive Order, or to propose legislation, as necessary, to construct a consistent investment framework for clean energy development. This framework must require a full life-cycle analysis, including cost and environmental impact, for each energy alternative, as well as regulatory requirements (e.g. environmental standards), legal liabilities, tax incentives, accelerated depreciation for outmoded assets, and mitigation vis-à-vis market distortion from global trade subsidies and tariffs.
  • Ramp up investment in energy research, development, and commercialization. This means at least tripling current federal investment in basic and applied energy research and development; creating public-private partnerships with baseline federal funding — to be matched by state and private sector investments — to create regionally-based research and development test-beds and large-scale commercial pilots for new energy technologies. It means expanding federal programs, and creating new initiatives, that provide early financing for clean energy start-up businesses, support for existing small and medium-sized businesses in the development and deployment of clean energy technologies, and funding for pre-commercialization of technology for clean energy.
  • Establish a $200 billion national “clean energy” bank, modeled on the U.S. Export-Import Bank and the Overseas Private Investment Corporation (OPIC), to provide long-term financing for large-scale private sector investment in sustainable energy solutions that reduce, avoid, or sequester carbon; for their deployment to market; and for development of supporting infrastructure. This recognizes the crucial role of private sector demand, and action, in driving energy system transformation — a role largely unrecognized and unaddressed in prior policy initiatives.
  • Mobilize an energy workforce — a subset of the invaluable science and engineering professionals who comprise our national innovation engine — by creating a $300 million “Clean Energy Workforce Readiness Program,” augmented with state and private sector funding. This would foster partnerships with the energy industry, universities, community colleges, workforce boards, technical schools, labor unions, and the U.S. military, and, finally,
  • Create a National Electrical Transmission Superhighway by engaging governors and state regulatory authorities to focus on the current regulation/oversight patchwork for transmission within different states, and interconnection between states, to develop better interoperability standards for the national grid. The President should competitively incent the creation of consortia of national laboratories, universities, and corporations to model and simulate the characteristics of an intelligent, self-healing, electrical grid, with the ability to connect multiple new energy sources and devices to the system.

Some points already are in place — the Federal procurement mandate, for example. Funding for work on enhanced electrical grid infrastructure is included in the economic stimulus package. Comprehensive energy security legislation is expected later this spring.

These six key points are highlights of the framework laid out in Prioritize, and copies of the whole document are available, here, this morning. The ESIS will continue its work through the fall, holding four regional meetings across the country. The first will be held, here, tomorrow. The Council will issue a comprehensive set of recommendations at a National Energy Summit in Washington, D.C., late this year.

Thank you.

Source citations are available from the division of Strategic Communications and External Relations, Rensselaer Polytechnic Institute. Statistical data contained herein were factually accurate at the time it was delivered. Rensselaer Polytechnic Institute assumes no duty to change it to reflect new developments.

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