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U.S. Commitment to Renewable Energy

Daniel Sullivan, Assistant Secretary for Economic, Energy and Business Affairs
Remarks to theScandinavian Renewable Energy Forum
Oslo, Norway
October 1, 2008

Distinguished guests, Mr. Prime Minister, Lord Oxburg, Mr. Righton, Ambassador Whitney. Thank you for inviting me to speak at the first Scandinavian Renewables Energy Forum.

Leadership of Scandinavian countries goes without saying—you lead by example in so many areas. Prime Minister Stoltenburg highlighted Norway's hydropower. Norway has shown amazing leadership on hydropower, and on Carbon Capture and Sequestration, great leadership. Congratulations on ScanREF.

We had a great dinner last night. Thanks, Ambassador Godal, Mr. Fred Olsen, and Lord Oxburgh, whose ballroom dancing skills are quite impressive. I’m particularly pleased that Norway is holding this conference. This is my second visit to Norway and I know the United States and Norway have a long history of cooperation in a broad range of areas.

We are the strongest of NATO allies. Our cooperation continues today in our work to promote peace and stability in parts of the world like Afghanistan; scientific cooperation through the Arctic Climate Impact Assessment; ongoing Arctic research cooperation in Svalbard; and Arctic/high north policy. We work globally on other issues, transparency, Arctic Council, EITI and, sovereign wealth fund Principals—I visited yesterday with Norges Bank and the Pension Fund - Global.

Defining the Policy Nexus of Energy Security and Climate Change

Before focusing on some of what the U.S. policy priorities are regarding the promotion of clean energy technology and renewables. I wanted to take a step back as an official from the U.S. State Department and briefly discuss how what we are doing at this conference relates to broader issues of energy security, climate change, foreign policy, and national security.

First, energy security and climate change. I think it is important to recognize the progress and international consensus that has been reached regarding how the challenges of securing energy supplies and addressing climate change relate. For many years, those who worried about climate change and those who worried about energy security often appeared on the opposite ends of the debate. It was said that we faced a choice between protecting the environment and producing enough energy. This turned out to be a false choice.

Today we know better: we know, for example, that our energy challenges and climate change challenges stem primarily from a common source—an over-reliance on hydrocarbons as the world’s primary form of energy. Stepping back even further, we also know now more than ever when oil is over $100 per barrel, how an over-reliance on hydrocarbons is also the source of some of the most pressing national security and foreign policy challenges we face.

As President Bush said at the 2008 Washington International Renewable Energy Conference, “It is in our interest to end our dependency on oil because that dependency presents a direct challenge to our national security.” Just last week, I had the opportunity to attend a lunch in New York City hosted by my boss, Secretary of State Condoleezza Rice, with Foreign Ministers from over thirty European countries, including Foreign Minister Støre, where the topic of energy security and foreign policy challenges was discussed at length.

Finally, just as we know that many of the climate change, energy security, and foreign policy challenges we face stem from a common source—over-reliance on hydrocarbons—we also know that many of these challenges share a common solution: clean and renewable energy technology. And that is one reason why this conference is so important and why I am honored to speak here.

International and Private Sector Cooperation Vital to Finding a Way Forward

International consensus on these issues—the interrelated challenges of climate change, energy security, and foreign policy, and the promise of technological advancement—has never been greater. Such consensus is critical because it can and does spur domestic and international action. In that regard, I want to briefly cover three areas with you this morning:

  • First, the U.S. Government's commitment and actions involving clean and renewable energy technology and how we have sought to translate that commitment into progress and international action.
  • Second, the importance of incorporating all countries, but in particular the world's major economies, into global efforts to address climate change and energy security.
  • And third, to highlight some of the activities of the U.S. private sector as it seeks to address the opportunities and challenges presented by today’s global energy markets.

The U.S. Government Strongly Supports Clean and Renewable Energy

First, the U.S. Government commitment and actions on clean energy technology and renewables. Although often overlooked in the international discussions on climate change, the U.S. financial commitment to promoting clean and renewable technology has been substantial.

Since 2001, the U.S. Government has invested nearly $45 billion in climate-related science, technology, observation, and incentives. Nearly $22 billion of this amount has been dedicated to research, development, and promotion of alternative energy technologies and reducing energy demand. Additionally, our Department of Energy has appropriated loan guarantee authorities of up to $42.5 billion to help commercialize technologies that help avoid, reduce, or sequester greenhouse gases. These incentives are open to all companies.

This strong financial commitment has also been backed by increasing government mandates, one of the most important of which was signed into law last year to reduce gasoline use in the U.S. by 20% in 10 years. How? By increasing the use of renewables fuels by 500% and requiring fuel producers to supply at least 36 billion gallons of renewables fuel by 2022.

We have also dramatically increased funding for the Department of Energy’s world class National Renewables Laboratories.

Now, it was not my intent to throw out a bunch of numbers to this august group, but I did want to make an important point about America’s strong, enduring commitment to addressing climate change and clean and renewable technology, which is not always well known or understood in European capitols. To be frank, the thought that if you’re not part of the Kyoto Protocol you’re not serious – we need to reach beyond that.

U.S. Efforts Produce Results

These investments are producing results. Let me give you a few examples:

  • Since 2001, ethanol production has quadrupled from 1.6 billion gallons in 2000 to an estimated 6.4 billion gallons in 2007. In 2005, the United States became the world’s leading ethanol producer, and last year, the U.S. accounted for nearly half of worldwide ethanol production.
  • We recognize the tension between food and fuel, so the Administration is also investing in next-generation biofuels such as cellulosic ethanol. This can be made from wood chips, switch grass, and other agricultural products. With the President’s 2009 budget, the Department of Energy has dedicated about $1 billion since 2001 to develop technologies that can make cellulosic ethanol cost-competitive. Since 2001, the projected cost of cellulosic ethanol has dropped by more than 60%.
  • Last year, the U.S. produced about 450 million gallons of biodiesel—up 80% from 2006. Today, there are more than 650 biodiesel fueling stations, and hundreds of fleet operators use biodiesel to fuel their trucks. Every year, more Americans are realizing the benefits of biodiesel, which can produce fuel from soybeans and other vegetable oils, including waste products like recycled cooking grease.
  • Since 2001, the U.S. has increased wind energy production by more than 300%. Last year, more than 20% of new electrical generating capacity added in the U.S. came from wind—up from just 3% a few years ago—and the U.S. installed more wind power capacity than any other country in the world.
  • Between 2000 and 2007, the United States’ solar energy capacity doubled—and last year, the U.S. solar installations grew by more than 32%.

Leveraging the G8 to Combat Climate Change and Expand Energy Supplies

We have a long way to go, but we think this is a strong record, so at this year’s G8 Summit in Hokkaido, Japan we worked closely with our G8 allies to match the U.S. commitment. Last year in the G-8, we moved from talk to action. For example, we wanted to get G-8 partners to match the U.S. commitment of $30 billion for combating HIV/AIDS, Malaria and other diseases in Africa. And we were extremetly successful by achieving a $60 billion G8 commitment; this year’s G8 Summit reached a similarly successful outcome in three areas in which the U.S. tried to get the rest of the G8 to match our commitments.

1. A collective $10 billion annual commitment for research and development in clean energy technology.

2. Commercialization incentives, including CCS. Unfortunately we were unable to get rest of G8 to match the $42.5 billion U.S. loan guaranted program.

3. Clean energy technology deployment where we worked in two areas:

(a) We committed to Clean Technology Fund to help address deployment of clean technology in developing countries. We have roughly $6 billion committed to the Clean Technology Fund at the World Bank. The U.S. is providing $2 billlion.

(b) We resolved to work with EU to reduce through WTO negotiations tariff and non-tariff barriers on environmental goods and services to zero.

Working with the International Community

U.S. efforts internationally extend beyond the G8. I wanted to discuss U.S. efforts to bring key major economies together as part of global effort to address climate change and energy security. International Energy Agency estimates global energy needs incease by 50% by 2030 if governments continue with current policies. Most of this growth in energy demand will come from world’s emerging economies—China and India alone will account for over 45% of this increase. So, U.S. policy has been focused on integrating such countries into global efforts to address climate change and energy security. Let me provide two examples of how we are doing this.

First, the Major Economies Meetings. President Bush initiated the Major Economies Process, in which the 17 countries that account for over 80% of global output, energy use, and greenhouse gas emissions, meet to discuss energy security and climate change. The Major Economies Leaders Meeting that followed the G-8 Summit represented a significant step. If these countries come to an to agreement, we will have a much smoother path to a post-2012 framework as part of the UN Framework Convention on Climate Change process. For the first time, leaders of developed and developing economies met to advance shared objectives of reducing greenhouse gas emissions and identify actions to be taken immediately.

Second, we are working to significantly increase the involvement of countries like India and China with the IEA. The U.S. Governing Board member of the International Energy Agency (IEA), I am passionate about the importance of this issue. The IEA has grown to take on responsibilities beyond its founding function of collective emergency oil supply response through strategic petroleum reserves. The IEA also become a premier multilateral organization for analyzing the policy changes that can help drive deployment of clean energy technologies, and had developed an extensive series of recommendations for its members on increasing energy efficiency. In addition, the IEA has for over a decade been providing rigorous, objective analyses on the energy dimensions of climate change and the energy implications of the United Nations Framework Convention on Climate Change.

By 2020—not many years from now—current IEA members are expected to be consuming less oil combined than the rest of the world. This is a significant shift in the global energy demand landscape, and much of it is the result of the rise of Asian economies. That is precisely why it is important for China, India, and other key economies to prepare to eventually join the IEA as full members. We want to work with Norway, Sweden, Denmark, Germany, the United Kingdom, and other representatives to make this happen.

Harnessing the Power of the Private Sector

The third and final topic I want to briefly discuss today is the role of the U.S. Private Sector in advancing clean technology and renewables. Many of the U.S. programs, both domestic and international, that I have mentioned today ultimately are focused on bringing clean and renewable technology out of the lab and into the mainstream marketplace. And private sector financing and innovation is key to doing this.

There is a "quiet revolution" going on in the U.S. private sector as the focus of our efforts has increasingly turned toward clean energy and renewables technologies. Let me provide a few numbers in that regard:

  • In 2007, venture capitalists in the U.S. invested $2.7 billion in the clean-energy sector, representing more than 9% of total U.S. venture capital activity.
  • Between 2006 and 2007, venture investments in clean energy increased more than 70%, an astonishing figure.
  • Of all new venture capital and private equity in clean technology in 2007, half the global total—$4.7 billion—was invested in the United States. Ambassador Whitney, our wonderful Ambassador has spoken a lot about this.

World class R&D, with world-class universities and being able to rapidly commercialize technology and bring it to market to create new products and even new industry, remain an American competitive advantage. We welcome investment by many world-class companies. Yes, our economy, particularly our financial system, is facing significant challenges. But we are addressing these head on through our democratic process. That can be contentions and messy, but we will get through these challenges, just as we have overcome previous economic challenges.

In closing, walking through the Convention Center this morning clearly, there are exciting technolgocial breakthroughs on the horizon, whether coming from the United States, Scandanivia, or a more likely collaboration from all of our countries' governments and private sectors. Who knows what kind of breakthroughs will happen, or their implications, perhaps some breakthroughs will not be noticed at first? There was an article in the New York Sun not long after Alexander Bell’s famous phone call; his first phone call to a fellow named Thomas Watson. I would like to read to you from that article: “It is to be doubted if the telephone will be used otherwise than locally. It’s too sensitive for circuits exceeding a few miles in length.” Imagine what the author of that article would have thought of today’s modern telecommunications system. Perhaps here at the ScanREF, the world’s next Alexander Graham Bell sits in this audience—the person who will revolutionize the energy market and address climate change. Let’s hope so. Thanks again for your attention.

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