“Our National Energy Policy: Post-Election Prospects and Challenges”

December 14th, 2012
National Press Club, Washington, DC

See below for an abridged version of the transcript and a full video recording of the event. You can view or download the full transcript here.

Opening Remarks: WILLIAM SQUADRON, President, OurEnergyPolicy.org
Speakers:

• JAMES CONNAUGHTON, Executive Vice President and Senior Policy Advisor with Exelon Corporation and Former Chairman of the White House Council on Environmental Quality

• GENERAL JAMES L. JONES, USMC (retired), Senior Fellow at the Bipartisan Policy Center, Senior Advisor to the American Energy Innovation Council with the Bipartisan Policy Center, and Former National Security Advisor & Supreme Allied Commander Europe

• TIMOTHY E. WIRTH, President of the United Nations Foundation and the Better World Fund and Former US Senator

• JIM ANGLE (moderator), Chief National Correspondent for the Fox News Channel

OurEnergyPolicy.org brought together a panel of energy policy experts for Our National Energy Policy: Prospects and Challenges, an event held at the National Press Club and attended by representatives from industry, government, academia, and civil society.

General James L. Jones centered his opening comments on his work at the Bipartisan Policy Center, suggesting the formation of a national energy council. He noted that the current Energy of Secretary does not have purview of all of national energy policy. The national energy council would develop comprehensive energy strategy, coordinate the efforts of the myriad agencies that deal with aspects of national energy policy, and engage in a quadrennial energy review.

He also noted that energy policy is not only an economic issue, but also a national security issue, and that changes in domestic energy production in the U.S. will shift our geopolitical engagements and relationships with areas such as the Gulf States.

Senator Tim Wirth pointed to five arenas in which current energy policy differs from that of five years ago. First, the reelection of President Obama means that he can “relax about the politics and be much more aggressive about the policy.” Second, is hurricane Sandy, which, according to Senator Wirth, alerted millions of Americans to the challenge and catastrophes presented by climate change, opening up the possibility of widespread discussion and policy action. Third, the abundance of natural gas presents economic and environmental opportunities, but buy-in from the public is necessary, and industry must pursue a set of standards that the public supports. Fourth, China’s leadership has just changed, presenting a three year window for creating strong diplomatic ties on a number of issues, including energy and the environment. Fifth, public opinion on climate change presents an opportunity for public education.

James Connaughton summarized the progress made over the past seven years: nine mandatory programs (many market based) that promote clean, secure energy, and billions of dollars in applied research. He also discussed the power market struggling to become a “more free and fully competitive market-based system for fuels, for gas, for power,” which will lead to increased innovation. Mr. Connaughton also spoke about the upcoming electricity and fuel sector infrastructure investment set to take place over the next decade – $1 trillion dollars and $2 trillion respectively.

James Connaughton raised the fact that the EPA is embarking on a regulatory agenda around greenhouse gases, which is largely undefined in the Clean Air Act, which leaves open the possibility of all types of policy, but also means a legal vulnerability for those policies.

Jim Angle started the discussion by asking about the current role of the private sector in energy delivery and energy supply, and the role of policies in guiding development in that area.  James Connaughton said that because of the distortive property policy has on markets, there is a need to “simplify.” The government’s role should be in setting up performance requirements, then allowing innovation to come from the private sector.

Tim Wirth took the question as an opportunity to call for a price on carbon, but added that it is unlikely to happen soon.

Jim Angle’s next question concerned hydraulic fracturing and the energy boom that has resulted, asking “What is your view on the extent to which policy needs to look at fracking, and the extent to which it is a positive, or a mixed case, or a negative?”

James Connaughton noted that the structure of regulation and enforcement has to be adapted to ensure it meets federal, state, and local requirements, and that the industry is well positioned to establish best practices and mesh those with regulations.

Senator Wirth was less optimistic about industry adopting sound best practices, saying that although large operators like Exxon are carrying out development at a high standard, smaller “mom-and-pop” operations are “fouling the well,” and companies like Exxon need to take a leadership role in bringing those smaller operators up to standard.

Mr. Connaughton directed a question to General James L. Jones, asking about Obama’s energy “dream team,” and the positive and negative aspects of the experience. General Jones replied that energy policy was “stovepiped,” with uncoordinated agencies making policy often independently from each other.

Jame Connaughton piggybacked on those comments, saying that Dick Cheney’s energy policy mapped out the energy landscape for the country, and that the plan was largely followed because of a solid management structure. However, he noted, not institutionalizing many aspects of that management structure was a mistake.

The session then opened up to a question and answer session. The first question prompted James Connaughton to raise the issue of energy illiteracy in the policy community, giving Congress’ lack of understanding about electricity markets as an example. He recommended institutionalizing energy conversation. Tim Wirth noted that a significant opportunity to have national climate change discussion and education exists at this moment, and a broad, grassroots approach is needed.

The second question, directed at Tim Wirth, asked about the president’s approach to climate change. Senator Wirth responded by saying that there are more imminent policy issues – immigration and the “fiscal cliff” – and that energy and climate will not be addressed by the administration in the short-term. However, he pointed out that there is the opportunity for a bottom-up national discussion with involvement from different constituencies, such as the technology sector and fracking business community.

James Connaughton’s perspective was that the energy and climate discussion is taking place among diverse groups all around the country. He also pointed out that the U.S. is on track to meet its target of reducing emissions 17% by 2020 compared to 2005 levels.

The next question asked about energy policy and energy markets in a time of budget constraints. Mr. Connaughton started off by discussing the efficiency and cost saving potential of opening up the nation to competition for electricity supply. He noted that he was not calling for deregulation, and that above and beyond saving money, that kind of market competition would enhance energy security and lower pollution.

Tim Wirth pointed to the power of fleet standards to save money over the long-term, and that a price on carbon has a potential role to play in our national budget and energy discussion. James Connaughton responded by saying that there already is a price on carbon in the form of subsidies for renewables, but that it’s highly distortive and contrary to the emissions reductions aims of such subsidies. He called for an end to all subsidies, with half of the reduced spending going to public/private R&D partnerships and half going to the Treasury.

The final question dealt with U.S. energy leadership abroad. General Jones stated that “helping (people in the underdeveloped world) with basic things like energy, food, water is as important as sending an aircraft carrier.” Tim Wirth pointed out that we pursued arms control bilaterally with Russia in the 1980s at a high level, and that bilateral energy and climate discussions should be taking place at a high level between China and the U.S.