Lawrence Summers, Director of the National Economic Council, provided the luncheon keynote for EIA's 2010 conference. To my left at the lunch table (delicious, by the way), a planning director for a Minnesota energy cooperative; to my right, a U.S. Navy commander charged with improving energy efficiency in nuclear submarines. Over a delectable chocolate cake, Summers delivered his address. Here are some highlights:

The current economic recession, Summers says, will not be remembered as a decade-defining moment (like the Great Depression defined the 1930s). Instead, it will be remembered as a disturbing economic fluctuation. This is with thanks to the leadership and initiatives promulgated by the Obama administration, by the way. With 162,000 job-growth this past month, the economy is on the right track.

Dependence on foreign oil “represents a serious national security concern,” Summers says (echoing similar statements made by Energy Secretary Steven Chu earlier that morning). Debates on a national energy policy need to move from an either/or paradigm into a both/and mode of thinking. In other words, we can no longer discuss exploration or renewables, or environmental preservation or economic growth—we need to discuss exploration AND renewable, environmental preservation AND economic growth. An eclectic approach is needed.

This approach (which rather mirrors Chu’s call for a new industrial revolution) for economic security will come in the form of comprehensive energy legislation, which will accomplish five things:

1. Raise demand for and create new jobs (especially through capital intensive projects)
2. Reduce uncertainty and increase confidence
3. Reduce reliance on regulation and increase reliance on market forces
4. Support leadership and innovation
5. Strengthen the country’s international competitive position

Taken together, the five elements will mitigate systemic risks [pick you system, I suppose].

Summers then continued to hammer home some points made by Chu a couple hours earlier. The United States led the 20th century with innovations and transitive technologies, such as with nuclear technology, silicon chips, and the internet (Chu also had on his list satellite and GPS technology).

This was the gist of Summers’ speech, here are a couple of responses to questions from the audience:

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The military has been at the nexus of technological innovation and development. Think of the internet and jets—neither would have been possible without the support of a government entity willing to shell out immense amounts of investment dollars and resources to give the technologies necessary boosts. Much like the transcontinental railroad [yup, he brought history into the discussion, and even did an impression of J.P. Morgan…], market forces alone would not have supported these kinds of projects because they were not economically viable or profitable in the near-term. It takes government heft to get beyond this hesitancy toward the unknown.

To abdicate the responsibility of project development where prospects and benefits are unknown is, Summers says, blinkered and shortsighted. Indeed, harkening to Chu’s theme earlier, it is a matter of economic and national security to support such projects and innovations.

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Posted by Shaun Randol at 1:00 PM 1 comments

Philip Sharp, President of Resources for the Future, followed Steven Chu’s keynote at EIA’s 2010 conference. (Why was Chu a warm-up act for Sharp?) (Note also that Steve Bolze of GE Energy followed Sharp, but I ducked out to wrestle with the press gaggle pelting Chu with follow-up questions.)

In any case, Sharp’s remarks on shale gas exploration and production were the most interesting in his presentation. Shale gas’s emergence into the markets has had a number of impacts that are certainly worth considering in the risk management world, including:

• A re-thinking of LNG markets
• Will it cause the U.S. to become a gas exporter?
• Pipeline and gas plant construction
• Effects on gulf drilling operations
• Government and regulatory policy

Sharp also notes, with a tone of quasi-foreboding, that the emergence of shale gas will delay nuclear and renewable energy developments. On the bright side, Sharp thinks the emergence of shale gas will make the transition to a low-carbon future easier.

Readers take note: the shale gas debate is REALLY heating up in the United States, especially in Texas and now, New York. The lines of the triangular debate are being drawn by gas developers on one side, NIMBY and citizen groups on another side, and government and the need for tax revenue making up the third angle. (Look here, here, and here for an argument from each of these sides.) The risks in shale gas exploration and production go well beyond market forces!

In the press gaggle following his address, Steven Chu remarked on “hydro-fracking,” the method of shale gas removal sparking so much debate (as well as bringing so much new natural gas onto the market). The Energy Secretary said that as long as it is practiced in an environmentally friendly way, hydro-fracking would be “part and parcel” of American energy development.

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Up next, Lawrence Summers, Director of the National Economic Council...

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Posted by Shaun Randol at 12:56 PM 0 comments

Hundreds of eager energy, thirsty conventioneers braved the gorgeous weather of Washington, DC and the flurries of cherry blossoms to attend the Energy Information Administration’s annual energy conference. This year’s theme: Short-Term Stresses, Long-Term Change.

Keynote addresses frontloaded the conference. Headliners included Secretary of Energy Steven Chu, and Director of the National Economic Council, Lawrence Summers. Let’s begin!

Steven Chu came into the event under a heavy cloud: a coal mining disaster in West Virginia had left, at the time, 25 dead and four missing. His presentation avoided discussing the issue, however. Instead, Chu made bold calls for a “new industrial revolution,” one that ensures competitiveness (of the U.S. in the world), weans this country from oil dependence, and mitigates climate change.

“We can and must be a global leader” in the clean energy economy, Chu stated. Already this is being accomplished in mandating standards in appliance energy usage and home energy efficiency.

For those not sold on the market incentives or who are not tickled by technological innovations, Chu stated that smarter energy-resource use enhances the U.S.’s national security. These can be accomplished in a myriad of sectors, like:

• Transportation, especially through increased transition to electric cars
• Responsible expansion of offshore oil and natural gas exploration and production
• Development of clean coal technology
• Nuclear energy development, especially small modular reactors

All of these elements cannot happen, Chu told the audience, without large-scale, rapid deployment of private-sector investment into new technologies. Likewise carbon caps will be important policy initiatives that will spur innovation amongst the private sector.

This new industrial revolution must occur. Indeed, it will occur, for as Chu points out, oil prices will continue to rise, and the risks of climate change are becoming increasingly apparent.

Likewise, the European Union and China are moving ahead with their new energy revolutions; the United States must catch up—“we can still lead” the world in innovation and energy usage, Chu declares.

See “Shale Gas Snippets” for a quick note on Chu’s position on shale gas exploration.

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Posted by Shaun Randol at 12:50 PM 0 comments