First Hundred Days of Secretary Moniz
It has been 106 days since President Obama’s second Energy Secretary started serving as his chief energy advisor and helmsman of the DOE. This week’s DataPoints briefly analyzes Secretary of Energy Ernest Moniz. Though, before we look at Moniz, we must first mention the previous Secretary of Energy, Steven Chu, in order to understand the nature of the position that Muniz must now endure.
Few would disagree that Steven Chu was a champion for the research, development, and deployment of renewable energy projects in the U.S. during his time as Secretary of Energy. Numerous innovative clean energy proposals found the financial footing with DOE loan guarantees and stimulus funding that that would have otherwise been unattainable for firms trying to make it in the renewable energy sector. The Treasury’s 1603 stimulus grants, which the DOE helped administer, and the DOE's Loan Guarantee Program have enabled numerous pioneering renewable energy projects to reach commercial scale. Unfortunately for Chu, his term came to end, boisterously smudged by Solyndra's default despite the excellent track record of the DOE Loan Guarantee Program. The result of the unnecessarily harsh criticism to the entire loan program has caused not a single new DOE loan guarantee to be approved since September, 2011.
With Secretary Chu’s departure from the DOE along with the overzealous attacks regarding Solyndra, newly appointed Secretary Ernest Moniz has resuscitated the DOE's Loan Guarantee Program. There is, however, a distinctly different message from Moniz than what previously came from Chu. Moniz is choosing to start with advance fossil energy projects, on which the DOE is currently accepting comments. With the comment period, the DOE is moving towards opening solicitation for advanced fossil fuel project that “avoid, reduce, or sequester air pollutants or greenhouse gas emissions.” Rather than attempting to quell criticism from republicans and big oil on DOE loans, we might think that the new DOE Loan Guarantee announcement is meant to coax the fossil fuel industry to clean up their act. However, a rather conciliatory tone in a statement by Moniz acknowledges his desire to appease by stating, “I think the issue is to prepare for the future — a future in which coal is in fact part of the mix.” Whereas Secretary Chu was forceful in addressing the fossil fuel industry and openly promoting renewables, Secretary Moniz seems to be wielding a stick that dangles cash in place of the carrot to stop criticism on the Loan Guarantee Program.
Those of us in the renewables sector aware of the economic growth that loan guarantees can spur might be upset that $8 billion will likely soon be available, pending comment, for the advancement of fossil energy. Legislative earmark bind Moniz to loaning certain amounts of money to specific sectors: $8 billion for advance fossil fuel projects, $20.5 for nuclear projects, and $1.5 billion for energy efficiency and renewable energy projects. It is the intention of the DOE to ultimately allow access to all funds for all sectors. Moniz has moved first with the loans to fossil energy while also speaking eloquently about the need for renewable energy and energy efficiency loan guarantees. Moniz wants to convey that he has not forgotten about fossil fuel in the ‘all-of-the-above’ policy message from the Obama Administration. This seems to be a divergent tactic from the previous Secretary Chu, who made more enemies than friends in the fossil energy industry.
After 100 days of Secretary Moniz directing U.S. energy policy, we should celebrate his new softer strategy to effective energy transitions by posting the carbon abatement cost curve, hopping that he knows this graph well. McKinsey & Company’s ground breaking work to pair project cost and greenhouse gas mitigation potential, the carbon abatement cost curve shows that energy efficiency and renewable energy programs have the potential to reduce significant quantities of atmospheric carbon (X axis) for a lowest cost and even at a savings for some projects (Y axis). With the DOE dedicating $28.5 billion to fossil and nuclear energy projects, a measly $1.5 billion for renewables and efficiency is not congruent with what would reap the greatest benefits to American society. Though earmarks are difficult, if not impossible to remove, a proactive climate change policy for the Obama Administration should focus on the sectors that are the least expensive and relieve the greatest amount of atmospheric carbon, not the projects that simply perpetuate costly industries in order to appease disdain.