Saturday, January 9, 2010

Video: Mark Warner Says U.S. Energy Policy Is "Screwed Up"

This video is from Chap Petersen's "Business Leaders Breakfast" yesterday morning in Tysons Corner. Unfortunately, it took me a while to upload this onto YouTube due to technical difficulties. Hopefully, I'll have more videos later today. Meanwhile, here's a transcript of Mark Warner's comments on energy, followed by my comments.
It is stunning to me that we are as screwed up as we are in this country on energy policy...and both sides have been crazy on this, there are no clean hands on this subject.

It pains me as a former telcom and IT guy to say this, but if I'm talking to a business school class today, I would argue the place to be where the most jobs and the most wealth created worldwide over the next 25 years is going to be in the energy sector. And one of the things that just blows my...blows my freakin' mind is that we have got certain business organizations in America are basically saying, 'let's just keep the status quo,' who are opposing a fundamental change in our energy policy. It would be like in the 80s if the National Chamber of Commerce said 'we are adamantly opposed to cell phones.' Or in the 90s, the National Association of Manufacturers said, 'this internet stuff may not be worthwhile and let's not just change our information technology systems.'

Now, I am - and Lowell, get this down - I think there is not a silver bullet, I think your word exactly is right, 'portfolio approach.' None of us in this room are smart enough to figure out what's going to be the silver bullet. So yes, more wind, more solar, more biofuels - although I think corn-based ethanol is a stupid, government-driven decision and not a market-based decision, but other biofuels make more sense. More nuclear energy. Yes, we've gotta use coal, continue to find ways to do it in a cleaner, more efficient way. Smart grid technology. I am not opposed to additional domestic oil and gas exploration. I think we ought to put it all out there...

And I actually think there are three reasons why this has actually got a better chance, whether it is a national renewable energy standard, whether it is a cap-and-trade system, or whether if we were really starting from scratch we ought to have just done a carbon tax as opposed to the system that can be gamed the way cap-and-trade can be. But there are three reasons why I think this perhaps has got a better possibility of success than the political prognosticators indicate.

One is, I think that most American business, as kind of messed up as Copenhagen was, most American business realizes that China is starting to eat our lunch. Even though they have not put in place national standards, they have higher auto efficiency standards, they are 5x or 10x investing on carbon sequestration than the way we are. You talk about the wind turbines and solar, they have made an economic decision that this is going to be a major job creator for their country, and they are eating our lunch number one.

Number two, you have on this bill or on this approach, unlike on health care unfortunately, you've got a number of our colleagues on the other side who are recognizing from a business standpoint that we've gotta do this. People like, for example, Lindsay Graham recently, and a host of others...there's a lot of bipartisan potential to change our energy standards.

And third is, I would say to some of our more liberal Democrats in the room, there is an acknowledgment that you can't have this purist approach. That this is not going to be totally solved by some airy dream of it's just gonna be all solar and wind, that nuclear has to be a piece of this, that coal has to be a piece of this, that there's gonna be a portfolio approach. And I think those three factors make the possibilities of some action on this area on a national basis much higher than it was, say, six months ago.
A few comments.

First, I largely agree with Senator Warner that U.S. energy policy is totally screwed up and that nobody has clean hands on this. Over the past 8 years, however, we had an administration that was almost totally beholden to - actually a part of - the oil and gas industry in this country. In addition, we had people at the highest levels of the Bush Administration who denied climate change, who had no respect for science, who were actually anti-environment. So, when we say that "nobody has clean hands," it's largely true, but some hands are a lot dirtier than others.

Second, I totally agree with Senator Warner that "the place to be where the most jobs and the most wealth created worldwide over the next 25 years is going to be in the energy sector." I also totally agree that it "blows my freakin' mind...that we have got certain business organizations in America are basically saying, 'let's just keep the status quo,' who are opposing a fundamental change in our energy policy." Crazy.

Third, I agree with Senator Warner that there's no "silver bullet" to any of this. Anyone who thinks that is delusional.

Fourth, I agree that corn-based ethanol "is a stupid, government-driven decision and not a market-based decision." However, I would point out that there are many market distortions in the energy sector, meaning that there's almost nothing about the energy sector in this country that operates on a pure "market-based decision" basis. For starters, look at all the subsidies and tax breaks for energy production, processing and distribution in this country. Also, look at the almost complete market and policy failure when it comes to greenhouse gas emissions specifically, and "internalizing externalities" more generally.

Finally, that last part of what Mark Warner has to say is a total straw man. The fact is, nobody - at least nobody who knows anything about energy - is seriously saying that we can solve all our energy problems with "all solar and wind." That's utterly ridiculous and borderline insulting. Also, this has nothing to do with being "liberal," this has to do with being "smart" and understanding where the lowest-hanging fruit (aka, "biggest bang for the buck") happens to be. And the fact is, the lowest-hanging fruit in energy is clearly (see Figure 9) energy efficiency, followed by biomass co-firing, combined heat and power, offshore wind, onshore wind, geothermal, small hydro...all the way down to the bottom of the "low-hanging fruit" list where we find Coal IGCC, Nuclear, and Solar PV. Again, I'm not philosophically opposed to nuclear power, or even hypothetically to coal if we figure out a way to capture/sequester the carbon (and also outlaw mountaintop removal coal mining). The point here is that nuclear and coal are not even close to the "lowest hanging fruit" compared to energy efficiency and the other options mentioned - certainly not coal if carbon pollution costs are "internalized" - so why on earth would we put our resources in that direction, aside from crass political pandering and kowtowing to large fossil fuel corporate interests? And yes, that last question was rhetorical.

P.S. I welcome Senator Warner's acknowledgment that "we ought to have just done a carbon tax as opposed to the system that can be gamed the way cap-and-trade can be." I look forward to his leadership on this issue!


  1. All I want is a fair price on carbon that be the best way to lower our emissions at the lowest cost to consumers. It's Mark Warner who seems to want to make sure the coal, oil & nuclear get theirs -- whether they can pull their own weight or not. Considering one look at Warner's contributor list shows his #7 contributor primarily sells coal-fired power and his #9 contributor primarily ships coal, you have to wonder why he's such a vigorous defender of a dwindling, dirty resource.

  2. Lowell, you don't think a carbon tax could be "gamed"? A judge just threw out France's carbon tax because it was too riddled with loopholes. What reason can you give us to think the coal industry would do the same with a carbon tax here?

  3. Miles: I think a straight carbon tax is much less likely to be "gamed" than a cap-and-trade system, but obviously anything can be "gamed" and nothing's perfect. As you know, I've been a fan of a revenue-neutral carbon tax, but I also support cap-and-trade or cap-and-dividend, as long as they get the job done (e.g., slash carbon emissions) and aren't full of giveaways to polluters.

  4. Unfortunately, with this Senate, no matter where you start, you're going to end with something with giveaways to coal, oil & nuclear (and the Senate beyond 2010 isn't likely to be any better). Heck, the House is far more progressive than the Senate, and even ITS bill has coal giveaways. I'll be fighting for the strongest bill possible, but we're going to have to swallow some bitter pills to get that carbon price.

  5. Yes, I know. "The making of sausage" strikes again.


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