The New Energy Bill: Fueling America's Energy Security
by Samuel Wright Bodman
U.S. Secretary of Energy
Four years of hard work and negotiation culminated in Congress finally
passing comprehensive energy legislation. Its action will help to set
the course of our energy and economic policy well into the 21st century.
Therefore, my topic for this article goes to the heart of what Congress
has accomplished. It goes to the heart of my job as the nation's
11th secretary of energy. Indeed, it goes to the heart of the job George
W. Bush holds as president. The topic: how to achieve fundamental, long-term
energy security for the United States during the 21st century.
A Policy to Meet Growing Demand
The question of energy in the 21st century is shaping into one of the
central public policy issues of our time. It encompasses the broad, sweeping
topics that touch on every aspect of life in the United States –
from our economy to our citizens' health and well-being, the condition
of our skies and waters, and our military's ability to defend the
nation.
It is impossible to predict the future with any degree of precision. Business
consultant Peter Drucker said it was like trying to drive down a country
road at night without lights, attempting to navigate by looking out the
back window.
Yet it is certainly the case that this century will be marked by economic
expansion in China, India and the developing world, as well as continued
growth and prosperity in the United States. And that means a commensurate
increase in the world's demand for energy.
So the great global challenge we face is to figure out how to meet that
rising demand. And we must meet that challenge in the face of some unpleasant
facts about energy in the United States. For example, demand for natural
gas – which we used to generate 18 percent of our electricity in
2004 – has been rising, but domestic production of natural gas seems
to have plateaued. Our thirst for crude oil is rising, too, but our domestic
output has been declining. As a result, our share of imports has escalated.
The United States imports nearly 60 percent of our oil today. That figure
could be as high as 75 percent within a few decades.
Demand for electricity is growing, but our electric grid infrastructure
has been shown to be outdated and, in too many places, overloaded.
We have abundant reserves of coal, which can generate electricity, but
there are significant environmental concerns that previous generations
didn't have to consider.
Indeed, our continued use of fossil fuels entails concerns about pollution
and global climate change that need to be addressed.
To his credit, the president vowed to tackle these problems when he took
office in 2001. At that time, California was suffering rolling blackouts.
Nationwide, there were looming shortages of natural gas. The Organization
of the Petroleum Exporting Countries (OPEC) had announced a cut in output
of a million barrels per day, putting pressure on an economy already heading
into recession in the months before President George W. Bush was sworn
in.
So in the first days of his administration, the president assembled a
team of experts to develop a comprehensive strategy to help the Unired
States deal with those problems on the horizon. This strategy called for
boosting domestic production, improving energy efficiency and conservation,
promoting increased use of renewable energies and developing the advanced
technologies that are the best way to deal with questions about global
climate change.
Since that time, the administration implemented a number of recommendations.
For example, help was provided in solving the infamous Path 15 electricity
bottleneck in California, and Yucca Mountain in Nevada was designated
as the permanent repository for the nation's nuclear waste.
Of course, a great many of the most important recommendations of the president's
Energy Task Force required legislative action to take effect. So we are
extremely gratified that finally, more than four years after President
Bush first called on Congress to take action, it has finally done so.
The bill Congress passed is a landmark achievement. It will truly help
bring about the energy and economic security that the American people
deserve. And while we are pleased with that achievement, for some people
it is not enough. I was asked why gasoline prices haven't already
gone down – one week after the bill had been passed!
The answer, of course, is that things won't change overnight. Gasoline
prices won't sink as an immediate result of the passage of an energy
bill. The high prices at the pump, high prices for natural gas, pressing
electricity problems and blackouts … these problems were a long
time in the making. Similarly, achieving true energy security will be
a long-term process.
What is important is that with the passage of comprehensive energy legislation,
we are finally headed in the right direction. After years of indecision,
partisan squabbling and disjointed policies, we are committed finally
to making the changes necessary to secure our country's energy future.
Facing the Six Major Issues
I believe there are six major issues that must be addressed – six
fundamental changes that must occur – to set us on a sounder energy
footing during the 21st century. And, I am happy to report, these issues
by and large are addressed in the new bill.
Infrastructure. The first of these issues applies to our nation's
energy infrastructure. Our network of wires, cables, transformers, pipelines
and refineries was constructed to deal with the challenges of the last
century. Today, this infrastructure is wholly inadequate to meet the very
clear challenges of the new century. The United States does not, for instance,
have a national electricity grid, as many would assume. Instead, we have
a number of highly balkanized electricity delivery systems with different
rules and standards.
Additionally, we have insufficient petroleum refining capacity. There
has not been a new refinery built in the United States in three decades.
Even though our refining capacity has remained about the same, about half
the refineries that existed in 1981 have been closed.
On top of that, the United States has only four terminals to receive liquefied
natural gas (LNG), as construction of needed new terminals in certain
locations has been hung up by "Not in My Back Yard" politics
and regulatory obstruction.
The inadequacy of our energy infrastructure was a major contributor to
the blackouts that roiled California four years ago, as well as to the
massive blackout in the northeastern United States in 2003. It has been
a major factor in the run-up in gasoline prices in recent years. It has
been a culprit in the tripling of natural gas prices.
The energy bill addresses these problems. It establishes uniform electricity
reliability standards, moving us toward a modern, national electricity
grid. It removes archaic New Deal-era regulatory barriers to investment.
It promotes research and development of superconductive electric lines.
It eases the constraints that have strangled new refinery construction.
It also grants the federal government ultimate siting authority for new
LNG receiving terminals. This last point is particularly important, as
we are beginning to see the creation of a global market for LNG. The construction
of new terminals to receive natural gas from far corners of the earth
is precisely what is needed at a time when our own domestic production
has run flat, yet demand continues to increase.
Nuclear power. The second major change that is happening involves the
resurgence of nuclear power. Nuclear power presently supplies 20 percent
of America's electricity. It is manifestly safe. It is clean, efficient
and affordable. And it produces no greenhouse gases, which has to be a
consideration at a time when concerns about greenhouse gas emissions and
global climate change are running high.
As with refineries, no new nuclear power plants have been built in the
United States in decades, a vestige of the incident at Pennsylvania's
Three Mile Island in 1979. That episode spurred a number of safety and
regulatory changes. As a result, nuclear power is even safer and more
efficient than a quarter century ago. And it is still just as clean, which
is why we need nuclear power to remain a key component in our power mix.
The energy bill contains a number of provisions to ensure that this happens
– provisions that will augment the efforts of our Nuclear Power
2010 program to license new processes and site new facilities. In particular,
a provision by President Bush establishes federal insurance to protect
new reactor projects from economic harm resulting from regulatory and
legal delays.
Coal. The third major topic involves coal. The United States has been
described as "the Saudi Arabia of coal" because we possess more
than 250 years worth of it in Wyoming, Montana, West Virginia, Illinois
and many other states. But if we want to keep using coal, which presently
generates half of our nation's electricity, we need to deal with
the emissions that burning coal produces.
The energy bill will do that. In particular, it authorizes research into
clean coal and carbon-sequestration technologies. Carbon sequestration
almost sounds like the stuff of science fiction. We literally capture
the carbon dioxide that would otherwise go into the atmosphere, and store
it away underground. Our researchers and their industry partners are very
close to perfecting this technology, which will permit the continued use
of coal for centuries with no worries about a possible environmental effect.
Hydrogen. The fourth significant measure for 21st-century energy security
is the development of the hydrogen economy. I commend the pioneering efforts
of Governor Arnold Schwarzenegger and other California officials to usher
in the future by building the Hydrogen Highway. Today's automobiles
may run on gasoline, but tomorrow's will be powered by hydrogen
fuel cells.
The question is when. Our administration has begun a major international
effort involving 16 countries and the European Commission, as well as
the world's major automakers and energy companies, to hasten the
development of hydrogen-powered fuel cell vehicles. We know how to build
them. Now we must build them in a cost-competitive manner.
The advent of the hydrogen economy will dramatically reduce the amount
of oil required to fuel our economy, allowing us to slash our imports
from foreign countries. It will have the added benefit of slashing the
pollutants and greenhouse gas emissions today's cars and trucks
produce.
The new energy bill fully authorizes full funding of this ambitious program.
With last week's action by Congress, we are now moving in a direction
that could free the United States from overdependence on foreign oil in
just a few decades.
Renewables. The fifth major concern centers on energy efficiency and renewable
energies. When people ask me where we are going to get the energy we need
in the coming decades, I often say that one of the greatest untapped sources
of energy we have in this country is the energy we currently waste.
There are numerous ways to make our homes, businesses and vehicles more
energy efficient, saving both money and energy in the process. Efficiency
gains will be crucial in the years ahead if we are to stave off major
energy and economic problems.
Similarly, we must develop renewable energy sources like ethanol and biodiesel,
not to mention solar and wind power: clean sources that tap existing flows
of energy and therefore do not deplete.
I'm reminded of my trip to Michigan to break ground on a pioneering
solar manufacturing plant that will produce enough solar modules each
year to generate 50 megawatts of power. This much solar capacity would
produce enough power each year to serve the electricity needs of 10,000
average homes.
Critics say renewables will never amount to more than a small percentage
of our energy mix. I am not sure if that is true. But even if they are
right, we are approaching an era in time when every bit counts. There
is no question in my mind that the 10,000 homes supplied by the solar
panels from just one plant will make a significant contribution.
Congress agrees on the need for renewables and energy efficiency. The
energy bill includes important tax credits for installing solar panels
and other home-based energy-efficiency measures. It provides tax credits
for buying hybrid vehicles, as the president called for in his State of
the Union address this year. And it will take a major step toward increasing
the use of ethanol in our cars and trucks.
Cooperation. The sixth and final area relates to international energy
cooperation. Working on a global scale to increase overall energy security
is a critical component of our strategy. While the energy bill is focused
largely on domestic activities, it does include provisions encouraging
international cooperation on research and development for new and advanced
technologies.
We know that aggregate world demand for energy will skyrocket over the
next two decades. Energy consumption will soar in those countries that
are modernizing their economies.
For our own security, as well as for the health of the planet, the United
States must work with developing nations on ways they can meet their energy
needs in an affordable and environmentally responsible manner. Led by
President Bush, the leaders at the G8 meeting in Scotland called for sharing
energy technology with developing economies.
But it isn't just developing countries. We must broaden our partnerships
with the developed world, too, on energy efficiency, clean energy technologies,
renewables, hydrogen, nuclear power and anything else that can contribute
to global energy security.
That is the thinking behind the hydrogen partnership I alluded to earlier.
It is why we are also working as part of international consortia investigating
carbon-sequestration technologies, next-generation nuclear power and nuclear
fusion.
And it is why the United States recently signed a major energy cooperation
agreement with India. Helping India – or any other nation –
meet its energy needs in a clean, sustainable and affordable way will
not only benefit the people of India, it will benefit the people of the
United States as well.
A Push Toward Energy Security
By making progress on these six broad areas we will be making a dramatic
push for true energy security in the 21st century.
We envision a day when our economy will no longer be subject to the vagaries
of an unstable world, and when we will no longer have to worry about the
effects of our energy use on the environment.
That is why the step Congress took to pass comprehensive energy legislation
represents a momentous decision for our future. Passage of such a vitally
important bill represents a fateful decision to break away from the policies
of the past to head toward a future marked by safety, security and prosperity.
Just as important, it means taking critical steps to safeguard the environment
for future generations to enjoy.
Samuel Wright Bodman was sworn in as the 11th secretary of energy on
February 1, 2005, after the U.S. Senate unanimously confirmed him on January
31, 2005. He leads the Department of Energy with a budget in excess of
$23 billion and over 100,000 federal and contractor employees.
Previously, Secretary Bodman served as deputy secretary of the Treasury
beginning in February 2004. He also served the George W. Bush administration
as deputy secretary of the Department of Commerce beginning in 2001. A
financier and executive by trade, with three decades of experience in
the private sector, Secretary Bodman was well suited manage the day-to-day
operations of both of these cabinet agencies.
Born in 1938 in Chicago, he graduated in 1961 with a B.S. in chemical
engineering from Cornell University. In 1965 he completed his Sc.D. at
Massachusetts Institute of Technology (MIT). For the next six years he
served as an associate professor of chemical engineering at MIT and began
his work in the financial sector as technical director of the American
Research and Development Corporation, a pioneer venture capital firm.
He and his colleagues provided financial and managerial support to scores
of new business enterprises throughout the United States.
From there, Secretary Bodman went to Fidelity Venture Associates, a
division of Fidelity Investments. In 1983 he was named president and chief
operating officer of Fidelity Investments and a director of the Fidelity
Group of Mutual Funds. In 1987 he joined Cabot Corporation, a Boston-based
Fortune 300 company with global business activities in specialty chemicals
and materials, where he served as chairman, CEO and a director. Over the
years, he has been a director of many other publicly owned corporations.
Secretary Bodman has also been active in public service. He is a former
director of MIT's School of Engineering Practice and a former member
of the MIT Commission on Education. He also served as a member of the
Executive and Investment Committees at MIT, a member of the American Academy
of Arts and Sciences and a trustee of the Isabella Stewart Gardner Museum
and the New England Aquarium.
Secretary Bodman is married to M. Diane Bodman. He has three children,
two stepchildren and eight grandchildren.
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