News

July 11, 2013

Federal action on energy and climate urgently needed, say former federal policymakers, finding some reasons for hope

By Mark Golden

STANFORD, Calif.—Despite the common complaint that the United States lacks a federal energy policy, the immediate past energy secretary and the former chair of the Senate energy committee discussed reasons for optimism at the annual Silicon Valley Energy Summit.

Steven Chu, energy secretary during President Barack Obama’s first term, noted that government subsidies of solar power have led directly to lower costs, soon expected to compete with local electric utility rates.

Steven Chu, William Perry and Jeff Bingaman
Secretary Chu and Sen. Bingaman discuss federal energy policy with Secretary Perry
“The cost of rooftop solar energy and energy storage systems is expected to continue to decrease to just a third or even to a fourth of current costs over the next 10 to 15 years,” said Chu, who won the Nobel prize in physics in 1997.

“At that point, those who can afford such systems can become 80 percent energy independent with a payback period of less than five years,” said Chu, now a Stanford professor of physics, and of molecular and cellular physiology. “This technology could be as disruptive to the electric utility industry as the Internet was to publishing and entertainment.”

Chu and former Senator Jeff Bingaman, who chaired the Senate’s energy committee from 2007 until retiring from the Senate earlier this year, spoke on federal energy and climate policy separately to open the Precourt Energy Efficiency Center’s annual summit. The June 28 conference concluded with the two in conversation with former U.S. Secretary of Defense William Perry.

The five-term senator shared Chu’s mix of optimism, urgency and frustration.

“We have a lot of federal policies related to energy,” said former Senator Jeff Bingaman, now a distinguished fellow at Stanford University’s Steyer-Taylor Center for Energy Policy & Finance. “Everyone agrees we have abundant energy and it should be inexpensive. Everyone agrees we should lead the world in science and engineering to develop new energy sources.”

“What we don’t have is agreement on what the government should do to accelerate the transition to a low-carbon energy system,” said Bingaman. “That’s where the fight is, and there is great resistance to changing the status quo.”

Federal energy efficiency bill
Bingaman said that Congress may seriously consider energy efficiency legislation this summer, based on what his former colleagues in the Senate have told him. The bill, written by senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH), has bipartisan and private-sector support. It seeks to spur adoption of off-the-shelf efficiency technologies for both buildings and manufacturing. The bill also could overcome a major barrier to loans to homeowners for efficiency retrofits, Bingaman said.

In terms of charging consumers and businesses for emitting carbon dioxide, Bingaman said that a federal cap-and-trade system similar to those in California and Europe is very unlikely. However, reform of the U.S. tax system, including a tax on carbon, may be a real issue in Congress in 2014.

Bingaman expressed concern, however, that several renewable energy tax incentives, like credits for wind production and cellulosic biofuels, may very well not be renewed. Even if such incentives are renewed, the uncertainty increases risk for investors and, therefore, the costs of project finance, added James Sweeney, director of Stanford’s Precourt Energy Efficiency Center, while interviewing Sen. Bingaman,

New research from Secretary Chu shows how government efficiency standards have consistently resulted in lower total costs, as much lower operating costs have overcome higher purchase prices. In some cases, Chu said of the unpublished study, government efficiency standards have even resulted in lower purchase prices.

“This is true for refrigerators, as well as clothes washers—where the purchase price declined—, and air conditioners,” said Chu. “It’s true for state efficiency standards and federal, and we checked if it has been true in Europe, too. It has.”

Positive gains for vehicles
In transportation, Bingaman is encouraged that a very popular American pickup truck now comes equipped with both gasoline liquefied natural gas fueling capabilities. “And all electric cars are improving, with the cost of getting extended range coming down,” he said, “though I think there’s more of a market for plug-in hybrid electric vehicles.”

Despite such positive notes, the former federal energy policymakers expressed the need for much greater urgency concerning climate change. Chu noted that if global sea levels rose at all over the past 2,000 years the average annual increase was 0.02 millimeters at most. The current rate, however, is 3 millimeters a year. Meanwhile, the combined costs of all U.S. natural disasters in a given year have risen from around $40 billion in 1980 to about $170 billion in 2011, said Chu, siting insurance industry data.

“And I think this is an understatement, because really big losses that the insurance industry can’t afford to cover, like Hurricane Katrina, get paid for by the U.S. government,” he added. “And government backstop payments aren’t included in the reinsurance data.”

In terms of major federal spending to address climate change proactively, Bingaman said there’s not much appetite in Washington, given the size of the federal deficit, to fund substantial additional spending on infrastructure in the near future.

Declarations that major U.S. cities can be fully powered by renewable sources in 20 years are unrealistic, Chu, Bingaman, Perry and Sweeney agreed.

“A 10 percent difference in energy cost is a huge deal for a lot of people,” said Chu. “If it’s realistic except for cost, it’s not realistic.”

“Technically you can do it if you don’t care about the cost, the economy or reliability,” Sweeney joked. “And for airplanes you would need a very long extension cord.”

Still the discussion of the major policy issues was serious, as it was for the Silicon Valley Energy Summit’s more specific technology discussions.

“We have a moral responsibility to the most innocent victims of climate change: the poorest citizens of the world and those yet to be born,” Chu said. “What can we do that doesn’t require a lot of federal money to get the energy industry to reinvest in itself? That to me is the $64,000 question.”

(Mark Golden works in communications at the Precourt Energy Efficiency Center at Stanford University.)

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More on SVES 2013...
Huffington Post: Ex-energy secretary Steven Chu has message for climate deniers
Examiner.com: Silicon Valley employers becoming urban transportation planners?


Media Contact: Mark Golden, (650) 724-1629, mark.golden@stanford.edu