CONGRESSIONAL PROGRAM Energy Policy Challenges for a Secure North America
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CONGRESSIONAL PROGRAM Energy Policy Challenges for a Secure North America August 15-19, 2018 Vancouver, British Columbia Copyright ©2018 by The Aspen Institute The Aspen Institute 2300 N Street NW Washington, DC 20037 Published in the United States of America In 2018 by the Aspen Institute All rights reserved Printed in the United States of America Pub # 18/008 Energy Policy Challenges for a Secure North America August 15-19, 2018 Vancouver, British Columbia The Aspen Institute Congressional Program Table of Contents Rapporteur’s Summary Marika Nell .............................................................................................. 3 U.S. Energy Diplomacy in an Age of Energy Abundance Meghan L. O’Sullivan ...................... 17 The Importance of American Energy Innovation Kelly Sims Gallagher ..................................... 21 Modernizing the Department of Energy to Meet the Nation’s 21st Century Clean Energy, Environmental Stewardship, and National Security Objectives James L. Connaughton ............ 29 Just Around the Curve Ahead, the Future of Transportation Robert Bienenfeld ......................... 41 The Future of the Auto Industry: Evolution or Revolution? Drew Kodjak ................................. 47 Canada’s Climate Policies in a Decarbonizing World Glen Murray .......................................... 53 Carbon Pricing in an Oil Economy: The Right (and Wrong) “Ands” Gitane De Silva............... 59 The Northern Belt & The Arctic and Climate Change: Impacts on Agriculture, Forestry, and Commerce and Its Policy Relevance for the U.S. Terry Chapin ................................................. 63 Beyond the Edge of the Grid Front: Alaska and Technological Transitions in a Niche Energy Market Gwen Holdmann .............................................................................................................. 69 Protecting and Promoting our Energy Partnership Sergio Marchi .............................................. 79 The Changing Context for Energy: Implications for Energy Policies Howard Gruenspecht ..... 83 Energy Policy That Drives Toward Results Hal Harvey ............................................................. 89 At the Forefront of the Clean Energy Transition Ben Fowke ...................................................... 99 Participants .................................................................................................................................. 103 Agenda ........................................................................................................................................ 107 1 2 Energy Policy Challenges for a Secure North America Rapporteur’s Summary Marika Nell Ph.D. Candidate in Civil & Environmental Engineering, Cornell University Graduate School The views expressed here are not the author’s, rather the rapporteur’s effort to reflect the discussion. *** The Aspen Institute’s Congressional Program convened a conference in Vancouver, Canada from August 15-19, 2018, to consider the topic of Energy Policy Challenges for a Secure North America. Eighteen members of Congress engaged with sixteen American and Canadian scholars on a number of policy issues pertinent to U.S. energy needs. A former National Security Council official, a former Federal Energy Regulatory Commission Commissioner, and an executive from a major U.S. utility company also addressed participants. The conference began with a discussion of the opportunities and threats for the U.S. in the age of energy abundance enabled by the shale revolution. As U.S. energy diplomacy adapts to this newfound energy abundance, the traditional objectives of maintaining the smooth functioning of the energy market, encouraging allies to diversify sources of energy and influencing policy change in other countries will be easier to realize. However, the U.S. must be careful to avoid weaponizing its energy resources to avoid being seen as an unreliable energy supplier and undermine these objectives. As the week progressed, members were able to discuss a broad variety of topics including energy technology, the role of research and development, the impacts of climate change, and the international framework for energy policy. The Role of Technology and Consumer Choice in Energy Supply and Demand In the first session, conferees discussed the role of U.S. investment in energy research, development, and demonstration (RD&D) and the role of public and private research in bringing energy technologies to market. Historically, the U.S. has been a leading innovator and investor when it came to energy technology, resulting in solar, nuclear, and wind technologies. Public- private partnerships have resulted in the development of disruptive technologies such as hydraulic fracturing and directional drilling, which together enabled the shale revolution. These technological innovations create major benefits for the nation including cost savings for consumers, jobs, and exports such as natural gas turbines. While these benefits are hard to monetize, it has been estimated that the $7 billion invested by the Department of Energy (DOE) in energy efficiency and fossil fuels between 1978 and 2000 resulted in over $30 billion in direct benefits to U.S. consumers and firms (even without including benefits such as public health). However, China is emerging as a major challenger to the U.S. in energy technology innovation and production. Some attendees noted a troubling trend of Chinese companies buying 3 out bankrupt U.S. energy companies, some of which received federal funding for technology development. This represents an inefficient loss of U.S. investment and innovation due to a lack of support for bringing technologies to market after the initial research and development (R&D). China now comprises 70% of the global renewable energy trade and sets clear and consistent goals that will result in the expansion of its energy sectors. Without further investment in renewable energy technology and consistent energy policy, the U.S. will continue to fall behind and miss the opportunity to create clean energy jobs. An innovation system with a holistic approach is required to avoid these losses by promoting not only the development of new technology, but also the commercialization of technology. In the development of new technology, there are three phases: demonstration, early deployment, and full commercialization. While policies are in place to push the development of new technologies, analogous policies are not in place to pull the technology to market (or stimulate the commercial take up of these technologies). To be successful, these policies must also be consistent. Under the current system, policies are fragmented across states. This policy uncertainty hurts jobs and labor because companies cannot count on the support of policy. To operate and invest effectively, businesses need predictability, durability, and simplicity of policy. The stop-and-start nature of R&D programs is debilitating to the private sector. Longer term and more sustained programs are needed to encourage efficient innovation and growth. In general, private sector R&D is declining in the energy sector, partly due to the need to provide returns on a quarterly basis. Research in the public sector is necessary to support projects that provide undervalued contributions to the public good or that otherwise do not produce returns in the near term, such as the high-risk/high-return projects funded under the Advanced Research Projects Agency for Energy (ARPA-E). The U.S. needs to set clear goals and adopt a systemic approach to push and pull technology into fruition if it is to fully harness its well-trained workforce, world-class universities, and productive national laboratories and maintain its reputation as a leader of innovation. Conferees largely called for market-based policies to create financial incentives that would pull the new technologies into the commercial markets. These policies could be performance standards (such as clean energy standards pertaining to power generation, vehicle emissions, the built environment, and industry), a carbon tax, or cap and trade. In order to achieve these goals efficiently, scholars cautioned against picking winning technologies and advocated for technology neutral policies. Many also advocated for the removal of energy subsidies to level the playing field. To achieve these goals, multiple conferees suggested that it is necessary to reframe the debate over energy policy. Innovative technology development that will benefit the public good and achieve environmental goals can be spurred by focusing on the development of a good economy and the creation of jobs in growth industries. Messages about energy-driven industrial policy may be more successful than those about energy policy. The debate surrounding the declining use of coal for energy production has highlighted the importance of communication and consultation of workers in this time of energy transition. While the advent of hydraulic fracturing and subsequent shale gas revolution are primarily responsible for the displacement of coal jobs, this displacement is frequently blamed on environmental regulations set by the Environmental Protection Agency (EPA). Labor needs to be involved in navigating these transitions to prevent the loss of jobs to American innovation and to promote the transition of workforces to provide craft labor required for new technologies (such as hydraulic fracturing). A 4 shift in messaging would also aid in these efforts.