Lugar: Next President Must Make Energy Security "Core National Goal"

U.S. Sen. Dick Lugar will deliver the following remarks today at Purdue Calumet’s Lugar Visclosky Energy Forum:

I thank Chancellor Howard Cohen for his kind introduction and for the leadership he is demonstrating at Purdue Calumet and in the wider community. At today’s Energy Expo, you will have the opportunity to learn about the important energy innovation taking place on this campus and at facilities across Indiana.

It is a special privilege to be here with my good friend Congressman Pete Visclosky. We have enjoyed many opportunities to work together in Congress on a wide variety of issues important to Northwest Indiana and beyond. I admire his long devotion to energy security and his work as chairman of the House Appropriations Energy and Water Development Subcommittee. No issue is more important for the long-term economic health of our state, and Indiana benefits greatly from Pete’s stalwart leadership on the energy issues we will address today.

Energy Crisis

More than two years ago, in August 2006, I joined with Purdue University to host the Lugar/Purdue Summit on Energy Security. On that occasion, experts and policy makers from around the country, including Pete Visclosky, came to West Lafayette to share their ideas on how we might accelerate progress toward U.S. energy security. I delivered a speech in which I observed that global trends in energy supply and demand would bring tougher times for Americans if we failed to shift to a diversified and sustainable energy portfolio. Despite progress in a few areas, and some especially creative energy efforts here in Indiana, the twenty-six months since the Summit at Purdue have seen our energy crisis deepen.

America’s voracious appetite for energy exists in a world of unprecedented competition for increasingly scarce supplies. The International Energy Agency’s most recent “World Energy Outlook” projected that global demand for energy would increase 50 percent by 2030. Three quarters of this demand growth is likely to happen in the developing world, especially in China and India. Meanwhile, about 80 percent of the world’s oil supplies are directly controlled by foreign governments. Most oil-rich nations are not well-functioning democracies with transparent accounting systems and independent oversight of their energy sectors. Consequently, much of the oil wealth flowing to foreign countries is subject to corruption and political manipulation.

If nothing is done to change this situation, nations dependent on oil imports, like the United States, will see their influence challenged and bank accounts diminished, while countries rich in oil will gain staggering amounts of wealth. The International Energy Agency projected that global oil demand will increase from about 85 million barrels per day to about 116 million barrels per day by 2030. To meet surging oil demand, the world will become even more dependent on OPEC and unpredictable oil-rich countries like Russia, Iran, and Venezuela. OPEC’s oil export revenues are projected to total more than one trillion dollars in 2008. Some of that oil wealth will find its way into productive investments, but too much of it will be used to finance objectives that may hurt U.S. interests.

In fact, many of today’s foreign policy and security challenges are increased by U.S. oil dependence. We pressure Sudan to stop genocide in Darfur, but we find that the Sudanese government is insulated by oil revenue and oil supply relationships. We pressure Iran to stop its nuclear weapons program, yet other nations are hesitant to endanger their access to Iran's oil and natural gas. We try to foster global respect for civil society and human rights, yet oil revenues flowing to authoritarian governments are often diverted to corrupt or repressive purposes. We fight terrorism, yet some of the hundreds of billions of dollars we spend each year on oil imports is diverted to terrorists. We give foreign assistance to lift people out of poverty, yet energy-poor countries are further impoverished by expensive energy import bills. We seek options that would allow for a smaller U.S. military commitment in the Middle East, yet our way of life depends on a steady stream of oil from that region.

Efforts to address the potentially devastating impacts of climate change also depend on moving our energy future beyond an overwhelming reliance on fossil fuels. Consider the sobering picture of China’s energy demand. The Chinese coal plants that came on line in 2006 alone added a net 80 gigawatts of electricity generation to the Chinese system – an amount roughly equal to the entire electricity capacity of Great Britain. Unless energy policies change dramatically, eighty-four percent of energy demand growth is expected to come from fossil fuels. This means that business as usual could bring a 57 percent increase in carbon dioxide emissions by 2030 that would overwhelm any efforts to address climate change.

As our security and environment are threatened by oil dependence, so too are our economic aspirations. The U.S. oil import bill cost about $53 billion in July 2008, twice the amount of a year earlier. It accounted for 85 percent of the entire U.S. trade deficit that month. That $53 billion flowing overseas was nearly 12 times the amount private companies spent building new ethanol production capacity in the United States in all of 2007, according to data from the Renewable Fuels Association. That $53 billion was 203 times more than what the U.S. government offered workers in trade adjustment assistance last year. It was 371 times more than what the federal government spent on the monthly budget for the Energy Department office overseeing development of new fuel sources and new vehicle technology.

Without dramatic changes in the ways Americans generate and use energy, American workers and industry will be at a competitive disadvantage in a rapidly growing world.

The Economic Opportunities of Energy

The security, environmental, and economic threats presented by our energy crisis are all the more lamentable because the United States has the innovation, industry, and agriculture necessary to forge a sustainable energy future. Indiana, in particular, is rich in these resources. Energy security through diversification and improved efficiency can transform our economy, bringing new opportunities for jobs and economic growth in areas of the country that have struggled in recent years.

The United States should recognize that steps to address energy security and climate change involve economic opportunities, not just constraints. New technologies offer pro-growth solutions that can benefit manufacturing and create value-added products and technologies to bolster U.S. exports. But we must have the will to develop and implement these technologies on an expedited basis. The next President must demand that research projects related to battery technology, cellulosic ethanol, carbon capture and storage, solar and wind power, and dozens of other technologies receive the highest priority within the Administration.

Many Hoosiers are already seeing the promise of a new energy future. Rapid increases in ethanol production and the first wind farms in Indiana are beginning to bring jobs and revitalize rural communities. According to the Gary Post-Tribune, demand for steel to build windmills led to the reopening of a plate mill employing 220 people in Gary. Indiana’s academic institutions are at the forefront of energy innovation and education. Here at Purdue Calumet, faculty and students have undertaken important energy projects, including one that offers local businesses energy audits that can substantially improve their energy efficiency. In a few minutes we will hear from Andrew Hsu of the Lugar Center for Renewable Energy at IUPUI and Nate Mosier of Purdue. Both schools are conducting groundbreaking work on biofuels and fuel cells. Companies like EnerDel and Altairnano are working in Indiana to perfect battery technology for electric vehicles. In fact, entrepreneurs and other committed individuals across the state are contributing to our energy security. I try to recognize publicly some of these admirable Hoosiers with Lugar Energy Patriot awards, including Lorrie and Carl Lisek, Mike Hudson, and Bill Keith, who are with us today.

Energy innovations that bring jobs and economic growth also can save Americans money. I have found this to be true in my own life. For a number of years now, I have dedicated about a third of the 604-acre Lugar family farm in Marion County to growing black walnut and other hardwood trees. As these majestic trees grow, they absorb and store carbon from the air around Indianapolis – about 400 tons of carbon dioxide in 2007 alone. To highlight the opportunities of participating in markets for carbon sequestration, the Lugar Stock Farm has entered into a binding contract with the Chicago Climate Exchange. Each ton of carbon dioxide the trees sequester earns credits with real monetary value, which I can sell to entities that may want to use them to mitigate the greenhouse gasses they produce. Opportunities to make money through carbon sequestration can be found across Indiana.

Urgent Action is Required

The challenge for Indiana, and for our nation, is to act urgently in moving toward a sustainable energy future. Some people have noted that Americans are using less oil because they are driving less, and that large numbers of Americans are demanding more fuel efficient cars for the first time in decades. Movement toward more efficient cars is a good development, but at least part of the reason for this change is the economic slowdown. We should not mistake this for a real energy policy.

In my view, relieving our energy dilemmas will require “game changing” policies that guide energy markets toward more sustainable energy solutions and technologies. Many new energy technologies have difficulty moving from research to deployment for commercial use. In some cases, technologies need help to demonstrate to potential investors that they will work. The U.S. government can use its purchasing power to jumpstart markets for new energy technologies ranging from electric vehicles, to alternative fuels, and better light bulbs. Loan guarantees that serve as an insurance policy for investors offer additional avenues for promoting private investment with minimal risk to taxpayers. Such loan guarantees were signed into law three years ago, but their implementation has staggered beneath bureaucratic delays in the Energy Department.

Making meaningful progress on energy security also requires dogged devotion to resolving specific points of energy vulnerability. A broad, unfocused campaign to achieve an ill-defined state of “energy independence” almost guarantees that no objective will receive the resources and attention necessary to overcome technological obstacles and societal inertia.

In my judgment, our first priority should be eliminating our over-dependence on oil in the transportation sector. The heart of our geostrategic problem is reliance on imported oil in a market that is dominated by volatile and hostile governments. This is where we must devote our national effort, because it is our most intense short term vulnerability. This is not to minimize the challenges facing our electricity grid or other energy problems, but as we marshal our political capital for a difficult task, this should be our first focus.

Congress and the next President should commit to establishing a national goal of making competitively-priced biofuels available to every motorist in America. Such an accomplishment would transform our transportation sector and cut our oil import bill. It would require several elements, including ensuring that virtually every new car sold in America is a flexible fuel vehicle capable of running on an 85 percent ethanol fuel known as E-85; expanding availability of E-85 ethanol pumps; and speeding commercialization of advanced biofuels produced from a wide range of sources like agricultural residues, municipal waste, and specialty energy crops.

We also should commit to radically increasing the fuel efficiency of America’s auto fleet. Given that other developed nations have made great strides in improving fuel economy, this is fertile ground for rapid improvement. Incredibly, the fuel efficiency of cars in America has stagnated for 20 years. Meanwhile, hybrids, plug-in hybrids and fully electric cars are at or nearly at commercialization, yet there is not enough incentive for consumers to buy them or producers to make them on the mass scale necessary.

Indiana has tremendous potential to be a global leader in the priorities I have suggested today.

Conclusion

All of us are concerned about the current instability of our economy. In times of great uncertainty, it is vital that we not limit our actions to responding to the latest crisis. We also must invest in the future. Energy security should be the foremost target for new investment.

Whoever is sworn in as President of the United States in 2009 must commit to elevating energy security to the status of a core national goal, and he must directly engage all the American people in the solution. If the next President addresses energy through a familiar ideological prism, the chance to strengthen U.S. national security and economic prosperity will be lost. To succeed, the President must be more than thoughtful and attentive to energy concerns. The President must be relentless. He must be willing to have his Administration judged according to its success or failure on this issue.

I am confident that in Indiana, we can bring together people across industry, academia, civil society, and government to find solutions that will help propel our state toward a more secure energy future. Pete Visclosky and I are committed to do our part in Congress. We look forward to celebrating successes in our state that will keep Indiana at the forefront of the U.S. energy transformation. Thank you.

Source: Office of U.S. Senator Richard Lugar