Blueprint for a Secure Energy Future

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Energy Secretary Chu announced his Blueprint for a Secure Energy Future summarizing the Administration’s strategy on energy issues.  That it was announced on the White House blog in advance of several campaign fundraising President Obama was making was probably no coincidence.

The Blueprint is more a resuscitation of what the Administration has been saying and doing rather than an ambitious new plan.  It is an optimistic, ‘feel good’ piece that celebratea America’s bright energy future.  As a champion of energy research Secretary Chu is no stranger to motivational talks.  He also has going for him—a strong belief in the power of commercializing the basic research done by the Federal Government and private business to put new technologies into practical use to address the energy business problems we face.

The Blueprint for a Secure Energy Future lays out three broad strategies:

  • Develop and Secure America’s Energy Supplies: Deploy American assets, innovation, and technology to safely and responsibly develop more energy here at home and be a leader in the global energy economy.
  • Provide Consumers With Choices to Reduce Costs and Save Energy: Volatile gasoline prices reinforce the need for innovation that will make it easier and more affordable for consumers to buy more advanced and fuel-efficient vehicles, use alternative means of transportation, weatherize their homes and workplaces, and in doing so, save money and protect the environment. These measures help families’ pocketbooks, reduce our dependence on finite energy sources and help create jobs here in the United States.
  • Innovate our Way to a Clean Energy Future: Leading the world in clean energy is critical to strengthening the American economy and winning the future. We can get there by creating markets for innovative clean technologies that are ready to deploy, and by funding cutting-edge research to produce the next generation of technologies. And as new, better, and more efficient technologies hit the market, the Federal government needs to put words into action and lead by example.

This sounds very uplifting and American pie doesn’t it? The problem with blueprints is that they depend upon actions to implement them before the benefits can be realized.  That this blueprint appears as a campaign promotional piece invites campaign opponents to take ‘pot shots’ at what it says and what it does not say about America’s energy policies in action.

My goal here is not to trash Secretary Chu’s blueprint aspirations but to praise them.  After the silly season of presidential campaigns is over there will be time, once again, to consider America’s national energy strategy and its essential building blocks.  This blueprint is not a bad place to start while adding to it the elements missing or politically incorrect and there is a need to clarify a few things:

  1. How Much New Domestic Oil & Gas Production Expansion will be Permitted? How will broad goals like support for clean, safe domestic oil and gas production will ACTUALLY be implemented so that we see a steady growth in actual domestic production year over year. America has huge potential to expand domestic production not only in the Gulf of Mexico, Alaska and off-shore on both the Atlantic and Pacific coasts from conventional sources but also from unconventional sources onshore.  Our problem has not been our domestic energy potential but our resolve.  The plain truth is by not producing more of our energy potential here at home we subject ourselves to higher costs and greater risks than we would have experienced by domestic energy production we can control.  Our failure to act has meant exporting much of America’s technology competitive advantages to other parts of the world often unfriendly or even hostile to America’s strategic interests making America less secure while undermining some of our broader global environmental goals.
  2. When will we get Serious about Fuel Substitution for Transport?  As the Blueprint points out much of our dependence upon foreign imported oil is for transport.  Better fuel use efficiency is certainly important but it is NOT SUFFICIENT to shift strategic advantage back to US consumers and diminish the OPEC monopoly control of oil prices.  The most significant actions we could take to shift transportation use of oil are to promote hybrid vehicle use, promote natural gas conversion for fleets and trucks, grow market share of CNG-fueled passenger vehicles, and support mass transit options for commuters. One more thing: Quit trying to change our lifestyle and just focus on the fuel substitution and vehicle efficiency issue and we will support it, but we don’t want the government telling us how or where to live.
  3. When, Where and How Many New Nuclear Power Plants?   Clarifying our policies on nuclear power plant licensing, permitting and construction to replace now ancient nuclear technology with new, safe, modular and cost effective nuclear power plants.  The government cannot be serious about reducing greenhouse gas emissions or reducing our dependence upon coal fired generation without a practical, dispatchable, cost effective baseload generation alternative.  And you better hurry up too because, remember, the thing that really stopped the building of the first generation of nukes was inflation that drove most projects to near bankruptcy.
  4. Please Get serious about Clean Coal Technology Research.  We know coal is politically incorrect and the target for elimination due to its greenhouse gas emissions.  It is time to get real about coal—it is NOT going away anytime soon.  We are too dependent upon it for electric reliability and the government won’t let us build new nuclear to displace it.  Given the political problems for coal few investors are willing to put money into it.  The government can really help by investing in clean coal technologies to accelerate its transformation as a viable continuing resource.  We are the Saudi Arabia of coal, after all, so finding ways to make coal cleaner are in our strategic energy security interests.  The Federal Government appears to be the only party capable of investing in clean coal technology sufficiently and on a sustained basis long enough to get results.  Just do it!
  5. When will Congress clarify FERC authority over Interstate Electric Transmission?  To realize the promise of Smart Grid and Renewable Energy we need to know whether the markets for the commercial application of these and other new technologies is scalable enough across state lines and regional markets to make them practicable and profitable. The Court of Appeals action invalidating the National Interest Electric transmission Corridors (NIETC) is only the latest signpost that we don’t have our energy policy act together.  This must be fixed. Fragmentation of America’s energy markets is holding back our clean energy transformation.
  6. Competition is our Friend!  Quit fighting it!  The Federal Government has developed this bad habit of wanting to pick winners and losers among fuels, technologies and lifestyles instead of letting people choose for themselves and let markets set prices in a fair competition for the least cost, best fit choices in our economic lives.  As a scientist, Secretary Chu, I must say this is VERY un-Darwinian of you.  We need survival of the fittest in our economic and policy lives as much as we have benefited from it in our evolutionary life on this planet.  Competition in the wholesale energy markets has worked well to improve supply choices, bring down prices and enable our growing environmental aspirations to become mainstream markers for new products and services—we get it, we do!  Government subsidies and rules are getting in the way of the scalable growth and functioning of sustainable energy markets—its bad policy and bad economics.  If the government creates a level playing field of ‘least cost, best fit’ competition for a place in the energy supply stack and allows competitive markets to set market clearing prices our energy security will improve, our costs will go down and our environmental aspirations and goals will be achieved faster, better, cheaper than any government program.

May the Force be with you!

Gary L Hunt

About 

Gary Hunt is a global business executive with 20+ years experience as a “C’ level trusted adviser on corporate strategy, M&A, and recurring revenue business model strategies.

His focus is information technology and energy vertical “sweet spots” where IT and OT converge to offer scalable growth opportunities to leverage data and analytics into advanced predictive analytics solutions using recurring revenue business models.

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