Ending the Energy StalemateA Bipartisan Strategy to Meet America’s Energy Challenges

Ending the Energy StalemateA Bipartisan Strategy to Meet America’s Energy Challenges

Jason GrumetGlobal Energy & Climate ChangeUCLA Conference - Lake ArrowheadOctober 22, 2006

Jason GrumetGlobal Energy & Climate ChangeUCLA Conference - Lake ArrowheadOctober 22, 2006

The CommissionersThe Commissioners

John Holdren (co-chair)Teresa and John Heinz Professor of Environmental Policy, Harvard University; Director of the Woods Hole Research Center

William K. Reilly (co-chair)Founding Partner, Aqua International Partners; former Administrator, U.S. Environmental Protection Agency

John W. Rowe (co-chair)Chairman and CEO, Exelon Corporation

Philip Sharp (congressional chair)President, Resources for the Future; Former Congressman, Indiana

The CommissionersThe Commissioners

Marilyn BrownInterim Director of Oak Ridge National Laboratory’s Engineering Science and Technology Division

Ralph CavanaghCo-Director, Energy Program, Natural Resource Defense Council

Archie DunhamFmr. CEO Conoco-Phillips, (*resigned 2005)

Rodney EllisState Senator, Texas

Leo W. GerardPresident, United Steelworkers of America

Robert E. GradyManaging Partner, Carlyle Venture Partners,

F. Henry HabichtCEO, Global Environment & TechnologyFoundation; fmr. Deputy Administrator U.S. EPA  

Frank KeatingCEO of the American Council of Life Insurers;former governor of Oklahoma

Marilyn BrownInterim Director of Oak Ridge National Laboratory’s Engineering Science and Technology Division

Ralph CavanaghCo-Director, Energy Program, Natural Resource Defense Council

Archie DunhamFmr. CEO Conoco-Phillips, (*resigned 2005)

Rodney EllisState Senator, Texas

Leo W. GerardPresident, United Steelworkers of America

Robert E. GradyManaging Partner, Carlyle Venture Partners,

F. Henry HabichtCEO, Global Environment & TechnologyFoundation; fmr. Deputy Administrator U.S. EPA  

Frank KeatingCEO of the American Council of Life Insurers;former governor of Oklahoma

Richard A. Meserve President of the Carnegie Institution; fmr. Chairman of the U.S. Nuclear Regulatory Commission

Mario MolinaProfessor, University of California, San Diego; Nobel Laureate

Sharon L. NelsonChief, Consumer Protection Division, Washington Attorney’s General Office; Chair of Consumers Union

Richard L. Schmalensee

Dean of the MIT Sloan School of Management

Linda StuntzPartner Stuntz, Davis & Saffierfmr Deputy Secretary U.S. DOE (*resigned 2005)

Susan TierneyManaging Principal, The Analysis Group; fmr. Assistant Secretary U.S. DOE

R. James WoolseyVice President, Booz, Allen, Hamilton; fmr. Director of Central Intelligence

Martin ZimmermanProfessor of Business, University of Michigan; Fmr. Group Vice President, Ford Motor Company

Richard A. Meserve President of the Carnegie Institution; fmr. Chairman of the U.S. Nuclear Regulatory Commission

Mario MolinaProfessor, University of California, San Diego; Nobel Laureate

Sharon L. NelsonChief, Consumer Protection Division, Washington Attorney’s General Office; Chair of Consumers Union

Richard L. Schmalensee

Dean of the MIT Sloan School of Management

Linda StuntzPartner Stuntz, Davis & Saffierfmr Deputy Secretary U.S. DOE (*resigned 2005)

Susan TierneyManaging Principal, The Analysis Group; fmr. Assistant Secretary U.S. DOE

R. James WoolseyVice President, Booz, Allen, Hamilton; fmr. Director of Central Intelligence

Martin ZimmermanProfessor of Business, University of Michigan; Fmr. Group Vice President, Ford Motor Company

Structure of the Commission’s ReportStructure of the Commission’s Report

• Improving Oil Security• Reducing Risks from Climate Change• Improving Energy Efficiency• Expanding Energy Supplies• Strengthening Energy Supply Infrastructure• Developing Energy Technologies for the Future

• Improving Oil Security• Reducing Risks from Climate Change• Improving Energy Efficiency• Expanding Energy Supplies• Strengthening Energy Supply Infrastructure• Developing Energy Technologies for the Future

Top World Oil ConsumersTop World Oil Consumers

US accounts for 25% of global consumption

Top World Oil ProducersTop World Oil Producers

U.S the third largest producer, but only has 3% of world’s proved reserves.

US Oil End UseUS Oil End Use

97% of US transportation is petroleum dependent

Three Steps Toward Oil SecurityThree Steps Toward Oil Security

1. Improve the reliability and resiliency of the global oil supply chain.

2. Dramatically Improve Transportation Efficiency (Fuel Economy).

3. Diversify Transportation Fuels.

• Repeating this success will require displacing @ 8MBD of oil by 2030

Oil Intensity Per GDP 1970 -2000Oil Intensity Per GDP 1970 -2000

Increase Conventional Oil ProductionIncrease Conventional Oil Production

CONVENTIONAL RESERVES CRUDE OIL (BILLION BARRELS)

Alaska (ANWR) 10.36

Pacific Offshore 10.71

Eastern Gulf of Mexico 3.58

Atlantic Offshore 2.31

• Must Focus on Global Production- Confront Statist Tendencies in Oil Rich Nations- Trade / Investment Reciprocity

• US Potential < 2 MBD 2025

Improve Efficiency (2025)Improve Efficiency (2025)

Heavy-Duty Trucks

Improved Engines & Aerodynamics 1.0 MBD

Passenger Vehicles & Delivery Trucks

Improved Gasoline Vehicle Technology (32MPG) 2.2 MBD

50% new car sales Advanced Hybrid and diesel (40 MPG) 3.5 MBD

Advanced Hybrid/Diesel + 25% plug in Hybrids (50 MPG) 4.6 MBD

Alternatives to Conventional OilAlternatives to Conventional Oil4 Part Test:

1. Ample Domestic Feedstock2. Generally Compatible with Existing Infrastructure3. Low Carbon4. Cost-Competitive with Gasoline

• Hydrogen: Fails #2 & #4 / #3??• Unconventional Oil: Fails #3 / #4?• Coal to Liquids: Fails #3 / #4?• Traditional Ethanol Fails #1

• Cellulosic Biofuels challenge is scale

Oil Security Conclusion Oil Security Conclusion

“…Diversity and Diversity Alone.”

Buy Time•Improve Resiliency of Global Supply Chain;•Reduce Oil Intensity of the Global Economy;•Increase U.S. Fuel Economy Requirements;•Land Use / Transportation Planning.

Diversify – low carbon alternatives•Significant Public and Private Investment;•Biofuels and Electricity;

Climate Change Climate Change

• “Technology is the Answer”

• The Question is who pays to accelerate technology development and deployment

• Must combine a long term market signal and technology incentives

• “Technology is the Answer”

• The Question is who pays to accelerate technology development and deployment

• Must combine a long term market signal and technology incentives

Ecological ConsiderationsEcological Considerations

• Move Quickly

• Volunteerism is not a credible response

• Combine gradually increasing market signal & significant technology incentives

• Adopt robust program architecture that will evolve and strengthen over time

• Recapture ability to effectively engage developing countries

• Move Quickly

• Volunteerism is not a credible response

• Combine gradually increasing market signal & significant technology incentives

• Adopt robust program architecture that will evolve and strengthen over time

• Recapture ability to effectively engage developing countries

Economic & Political ConsiderationsEconomic & Political Considerations

• Limit premature retirement of otherwise valuable energy infrastructure

• Address economic/technology uncertainty through cost cap or “Safety-Valve”

• Link future action to international efforts

• Engage key political constituencies in designing technology incentives and adaptation funding

• Design equitable allowance distribution

• Limit premature retirement of otherwise valuable energy infrastructure

• Address economic/technology uncertainty through cost cap or “Safety-Valve”

• Link future action to international efforts

• Engage key political constituencies in designing technology incentives and adaptation funding

• Design equitable allowance distribution

Slow, Stop and Reverse Greenhouse Gas EmissionsSlow, Stop and Reverse Greenhouse Gas Emissions

Climate Change Conclusion Climate Change Conclusion

Strengthening Science

+State Action

+Threats to Charismatic Mega Fauna

+Fear of 2008 elections

=Fluid & Dynamic National Debate in

2007

Thank YouThank YouFor More Information…

• Go to www.energycommission.org.

• jgrumet@energycommission.org

1250 I St NW

Washington, DC 20005

202-637-0400

For More Information…

• Go to www.energycommission.org.

• jgrumet@energycommission.org

1250 I St NW

Washington, DC 20005

202-637-0400