JOINT TRANSPORTATION & ENERGY
SECRETARY STEVEN CHU
September 13, 2011
San Francisco, CA
MS. KURLAND: Good morning. Honored APEC ministers, Governor of this great host State of California, U.S. Secretaries of Energy and Transportation, the National Committee for APEC, the California Committee for APEC, and distinguished guests. My name is Susan Kurland, the Assistant Secretary for Aviation, International Affairs for the U.S. Department of Transportation.
It is my distinct honor to call to order the first APEC Transportation and Energy Ministerial Conference. First, I'd like to begin with a hearty thank you to the APEC U.S. Host Committee for the wonderful reception last evening. We are calling today's session a public-private dialogue and welcome not only the highest level transport and energy officials from across the Pacific Rim region, but also representatives from the private and NGO sectors to combine voices and ideas on the critical issues that make up today's agenda.
We will be welcomed this morning by California Governor Jerry Brown and our sessions will be jointly chaired by U.S. Department of Transportation Secretary Ray LaHood and Department of Energy Secretary Steven Chu.
We've had an extremely positive response to the themes that we've set up for today's dialogue, and many people will be participating, and as such it is critical that we all respect the time limits. I hope you will understand if our Chairman gently reminds you that your time may nearly be at a close, and also in the interest of time, we're going to keep introductions to a minimum. All of our individual details will be found in the program materials.
But before we get our welcome keynote, I'd like to turn the mic over to Assistant Secretary Sandalow of the U.S. Department of Energy for a few words about today's proceedings.
MR. SANDALOW: Thank you very much, Assistant Secretary Kurland, and thank you to everybody gathered here today.
It is my distinct privilege to introduce to you this morning the Governor of the State of California, Jerry Brown. Governor Brown has been a force in American politics for four decades. First elected Governor of the State of California in 1974 and reelected in 1978, his record of accomplishments is long. For this group it includes quite significantly leading the first building and appliance energy efficiency standards in the United States history and during his first term as Governor of California, leading our nation in the deployment of solar and renewable energy.
Governor Brown came back to the office in 2010. It is particularly appropriate that he be here today. It is often said that California, if it were a nation, would be the eighth largest economy in the world. If California were a nation, it would be the fourth largest economy in the APEC region.
Ladies and gentlemen, Governor Brown.
GOV. BROWN: Thank you very much.
[Pause in proceedings.]
GOV. BROWN: Good. Got to get the technology correct here as we save our energy.
I want to just reiterate how much I appreciate your choosing California and San Francisco as the site of this APEC conference. We're here at the edge of the Pacific Rim in a very dynamic state, and we're meeting together with some of the other dynamic economies from throughout the Pacific Rim.
I want to thank the Department of Transportation and Energy and Department of State for their work in making this all possible, and I also want to recognize Secretary LaHood and Secretary Chu for the work that they've been doing in propelling our country here in terms of transportation and energy.
What I want to focus on for just the few minutes that I have here is I want to call attention to the continuing crisis that continues to build not only on energy challenges, but global warming itself, and of course, the widespread economic crisis that we are now facing. It seems as though leaders and officials from Washington all the way throughout the Pacific Rim seem to have forgotten about global warming, but global warming hasn't forgotten about us. The crisis continues to mount. Our relentless addiction to fossil fuels intensifies and there is no turning aside. We have to confront it. We have to confront it with investment, with cooperation, with creativity.
We also face the suffering of widespread unemployment in many of the countries of the Pacific Rim, particularly in the United States, and millions of people are facing very painful circumstances. So as we confront that, we have to really mobilize the energy and the political will to do more than just the ordinary. It is not a time for business as usual. There's too much at stake. Political legitimacy is being called into question. Social discontent is rising, and the problems aren't going away.
Just today it was reported that Americans will spend almost a half a trillion dollars buying fossil fuel products to move their vehicles along the road. So I see when we look at the twin challenges of climate change and mass unemployment, we put the two together, and just as in the United States during the administration of Franklin Roosevelt facing a depression, he was able to muster the optimism, the enthusiasm of a country that was facing tremendous difficulties. He called for sacrifice, but he always did so in a very upbeat and optimistic way.
So I do say it's time for a war on unemployment, find the jobs, and do so by investing in the renewable energy, the efficiency technologies, the innovative transportation, the land use policies. We can curb climate change, and to the extent we don't curb it, we have to adapt to it, and in all of that, we can make investments in renewable energy and the technologies that will drive our economy and our communities forward. That is the real challenge that I see here, and it is not something that we can put our heads in the sand. It is not easy to curb fossil fuel use. It is expensive. We have to make choices, and if we don't make choices, down the road in a few years, a few decades, our problems will be all that more difficult.
And so somehow we have to muster the capacity to make real change. And when I say "we," I have to look at my own country. The House of Representatives, many of them don't believe in major parts of science. There's convenient skepticism about climate change. So we are definitely having our own problems in making the tough decisions, but we will have to make them, and I think we will over the next few years, will make that turn. And we need the help of the countries in the Pacific Rim, all struggling in our own way. Every country has its own reason, I would say even its own excuse, for not doing what needs to be done. But the next generation will hold us all accountable if we just enjoy the diplomatic delay and the silence, almost imagining we can shoosh away climate change by not talking about it.
That is kind of what has happened in the last couple of years. The public perception and belief in climate change has been changing under a barrage of propaganda that belies the facts and does not serve our future wellbeing.
So in welcoming you here to focus on energy and transportation, I want to put it in the broad context of widespread unemployment, political discontent, and the continuing buildup of carbon in our atmosphere. So all of us here in whatever way we can, whatever our role, in the private company, a state, a nation, whatever economy, we have got to seize the moment. And there is not that much time left, and the more we wait the more expensive it will get and the more challenging to our political process.
People are discontent at least in many parts of the United States. There's a lot of discontent, and I see it in other parts of the world as well, but we don't cope with that by evasion and delay. It is time for courage. It is time for creativity, and it is time for boldness to tackle climate change, to tackle the adaptation to climate change which is inevitable, and that means focusing our money on the kind of investments in renewable energy and transportation that we know are needed, but often we can't find the political will to actually put into practice.
So, again, welcome to our fair City of San Francisco and to California. I wish you the best in these deliberations, and to the extent that California can be a part of the innovative investments, we will. We have a goal in California of one-third renewable energy by 2020. I have made the goal of 20,000 megawatts of renewable energy by that time, and we'll make it. In fact, I think we'll even exceed it. So that's our commitment, and I hope that we can learn from each other that we can find investments, investments from the east going west and from the west going east.
We have the talent. We have the capital. The only question is do we have the political will, and I think we can. And this conference can help generate that political will for the coming days.
Thank you very much.
MS. KURLAND: Thank you very much, Governor Brown.
I now have the pleasure of introducing the co-host of this event, U.S. Secretary of Transportation, Ray LaHood. A member of President Obama's Cabinet from the early days of this administration, Secretary LaHood shares the President's deep conviction that transportation is the lifeline for economies, the creator of jobs, and a facilitator in bringing nations together. I will let Secretary LaHood speak for himself.
Secretary Ray LaHood.
SECRETARY LaHOOD: Good morning. Thank you all for joining us. Welcome to APEC-USA, 2011, and on a personal note, I'm glad to be here with my wonderful cabinet colleague, Dr. and Secretary of Energy Steven Chu. And I want to say a special word of thanks to Governor Brown. For being here with the enormous number of issues and problems the Governor faces in the state, for him to take time and, more importantly, to send a very loud message of cooperation from his office to our conference, around the country, and around the world is very significant. Governor, thank you very much for your leadership and for being here today.
On behalf of President Obama, the United States is honored to host APEC for the first time in nearly two decades. I bring the President's gratitude for APEC's commitment to building an energy efficient, sustainable, low carbon transportation future.
As we get going, I want to share a little about President Obama's administration's vision of a 21st Century economy in which we create jobs, strengthen our communities, and protect our environment and climate at the same time. As you've heard directly from President Obama last Thursday night, investments in transportation are a crucial part of our plan to make this vision a reality. They're a crucial part of our plan to get our workers back on the jobsite, and they're a crucial part of the American Jobs Act, which the President presented to a joint session of Congress last week and which he is now taking on the road around the country to the American people. It is the President's number one domestic priority, to put America back to work building America's infrastructure.
For too long we've let the cynics and the naysayers tell us that we have to choose either economic growth or environmental stewardship and that we can't pursue and accomplish both simultaneously. Well, we're here because we've rejected that false choice, because we know that each of our economies has to move greater numbers of people and products while leaving a smaller environmental footprint. For the United States, the possibilities for progress are greater in the transportation sector, which accounts for two-thirds of our oil use and contributes one-third of our nation's greenhouse gas emissions. That means we in transportation have the obligation and the opportunity to take action, to change both the types and the amounts of energy that America's transportation systems use while creating good, high paying jobs.
Needless to say, many of you are tackling these challenges in your own ways in your own countries, and we know we have a lot to learn from you. But here's how we're seizing the moment for our citizens.
First, we've raised fuel economy standards for cars and light trucks to 35 miles per gallon by 2016, and again, I want to thank Governor Brown and the State of California for their cooperation in getting us to these standards. We could not have done it without the cooperation of the Governor and this great state. These standards will alone save 1.8 billion barrels of oil, or an average of $3,000 during the lifetime of every family vehicle. And the President recently announced further increases which will nearly double the average fuel economy of vehicles to almost 55 miles per gallon by 2025. That's a big deal, and again, our friends in California, the Governor of California, and the leadership of California have helped us to reach this very high standard: 55 miles per gallon by 2025.
Second, we’re making historic investments in high speed rail, and it’s no secret that our largest investment in high speed rail is in this state. California will become the model for high speed rail in America, for implementing high speed rail. And again, I am grateful to Governor Brown for his vision, the same vision that President Obama has for high speed rail.
If we want to get people off our roadways and into fuel efficient transportation, high speed rail is the way to do it. California will be a leader in that. We’re also making historic investments in transit, walk-able, bike-able streets so that people can choose to drive less, which is good for their health, their wallets and the environment.
Third, we are accelerating aviation’s transition from radar-based navigation systems of the last century to satellite-based systems of the next century, commonly known as next generation technology, NexGen. This will dramatically boost fuel efficiency by allowing planes to fly more directly from origin to destination.
Fourth, we are encouraging freight carriers to ship products from less to more fuel efficient systems, from air to truck, from truck to rail or from rail to maritime. All across America, we are seeing these investments are paying off in dollars saved, jobs created and economic development spurred.
All of these topics are ripe for further discussion today. In our first roundtable, we’ll focus on defining transportation’s role in clean energy future, developing fuel efficient members and shaping strategies to reduce APEC’s region’s carbon footprint. In our second roundtable, we’ll exchange ideas about building transportations for livable low carbon communities. Here, we’ll discuss transportation-related aspects of livable, including transit-oriented development, expansion of mass transit corridors and construction of bike paths and sidewalks.
In our third roundtable, Powering Low Carbon Transport, we’ll identify opportunities to develop and promote environmentally sustainable biofuels and electric drive vehicles to reduce dependence on petroleum. And in our final roundtable, we will look at ways to make the supply chain, the way we move goods within the APEC region, greener. We have been especially impressed with the aviation industry’s work on this front. We believe that your innovation in energy efficiency and alternative fuels holds enormous promise for the future.
So let me reiterate that we conduct these -- as we conduct these roundtables, we will do so in the spirit of friendship and cooperation. And our goal must be a clear blueprint for action, just as President Obama is doing in the United States, we the members of APEC will look for ways to build new partnerships, whether between nations, across agencies or between the public and private sectors. And our discussions are just one part of an ongoing dialogue.
This work will continue during the upcoming leaders week in Honolulu, and beyond that, will continue interacting, sharing our best practices and joining our efforts in the weeks, months and years to come. Joining me today are two outstanding administrators, the Department of Transportation, our FAA administrator Randy Babbitt and our Safety and NHTSA administrator David Strickland.
Thank you again for participating in this crucial exchange this week, and I look forward to a thoughtful and productive day. Thank you very much.
MR. SANDALOW: Thank you very much Secretary LaHood. It is now my great honor to introduce my boss, U.S. Energy Secretary Steven Chu, who came to his position from a distinguished career, which included the 1997 Nobel Prize in Physics. Secretary Chu was also the director of the Lawrence Berkeley National Lab and -- yesterday that he spent much of his adult life right here in the Bay Area.
Ladies and gentlemen, Secretary Chu.
SECRETARY CHU: Thank you, David. And first of all, thank you Governor for being here and for sharing your words. I also want to say how delighted I am to be here before you with Secretary Ray LaHood. He has been a friend, a colleague, a tireless advocate for clean transportation in the United States during his whole tenure there. And you know, to use the frame of expression, ‘Some of my best friends are Republicans.’
SECRETARY CHU: Anyway, we’re delighted. The United States is delighted to host this ministerial. The U.S. is a Pacific nation with strong, enduring ties to the region. And APEC provides a valuable forum to promote cooperation and achieve our shared goals of sustainable growth.
So here -- we’re here today to discuss transportation and energy. And I would say transportation and energy as well as the environmental issues surrounding it are really in many cases at the core of the problems and challenges of this energy and climate situation we find ourselves in. One of the things is mobility is becoming an increasingly important part of our lives. The idea that we can ship goods, including fresh produce and fish halfway around the world is staggering. The fact that many of you, as I noted before, came to this conference flying in airplanes with the power of over 100,000 horses is staggering.
So we have gotten quite used to transportation, both of goods, we’ve gotten used to it in the developed world to move people. But let’s talk about what’s going on.
If you look at the time it takes, for example, in transportation, the key energy source is oil. It takes five to ten years to develop a new reservoir of oil, particularly, let’s say, an offshore or Arctic reservoir. But economies can come to life or they can go into a lull in a few years.
But because transportation is fueled almost exclusively by oil, as an economy boosts, then the demand for oil goes up, the supply can’t really respond. You see a price spike. As economies falter and the demand goes down, once you have invested billions of dollars to produce, you see a price fall.
And so this volatility in price because of just the logistics and the supply and demand time cycles are going to be part of the future. But this is really tough on economies in both developed and developing economies.
Another thing I want to point out is that I want to amplify the Governor’s remarks on climate change. Climate change is happening. The evidence for it is growing more compelling year after year among those who actually followed the evidence, the scientists. And it’s not only that it’s happening and it’s changing, but there is stronger compelling evidence that the majority of it is due to humans.
Now sadly, in some circles, including in the United States, this has become a political debate rather than studying the science. What you do about climate change is properly a political debate. Whether it’s happening or not is like saying, ‘Well, we can debate the second law of thermodynamics, and if you get enough votes, it can be repealed.’
SECRETARY CHU: Nature doesn’t work that way.
Let me also say something about the transportation. Transport consumes about 19 percent of the world energy supply and produces about 23 percent of the carbon emissions. We have about a billion cars on the road today, and there is a book sitting before me, in front of many of you. The project is, in a pretty short while, we’ll be at 2 billion cars.
For example, in 2010, China sold, I believe it was 16.7 million cars in one year. These cars and the desire as one grows in prosperity to own a personal transportation vehicle is growing by leaps and bounds. And it quite frankly is a significant part of the engine of many economies, both developed and developing economies. But we’ve got to do something about how we have personal transportation. We’ve got to increase the efficiency of these vehicles. We have to realize what the role is that these vehicles will play and also allow the people who desire vehicles to have them, but not -- I have been very blessed. I should say, during my entire life, I have always arranged that I would not have to commute one hour going to work, one hour coming back from work. The longest I could tolerate was about five minutes, except now, my job in Washington where someone else drives me, it’s a different story.
SECRETARY CHU: But in any case, it’s just the quality of life that dictated that one doesn’t want to spend a fair fraction of it in an automobile.
So there are incredibly challenges to the transportation. There are incredibly challenges in that if you look around at nations, not only APEC nations, but nations around the world, the access to oil, the fear that your access might be cut off, the access to gas, these are things that are -- weight heavily on any government official.
But the bottom line is, unless we diversify our transportation energy, we will be still chained to these volatile prices. And volatile prices of a source that is ultimately finite and a source that -- very difficult to capture the emissions from a tailpipe to prevent or mitigate the worst of climate change. So there are technological options and solutions.
Let me just briefly mention a few. There is electrification. With electrification, if you have clean sources of energy, you need not capture the tailpipe emissions. So what does that mean? It means batteries.
Now let me tell you about today’s batteries. If you look at the Chevy Volt, it can go about 40 miles, which turns out to be in U.S. usage, up to 90 percent of the average use of a car per day. It goes 40 miles on a single charge and then it has to be recharged or it flips into gasoline mode. There are cars like the Nissan Leaf, which can go about 75 to 100 miles on a single charge.
Now the cost of a Chevy Volt battery is not really known, but it’s estimated to be on the order of $10,000, and more for a Nissan Leaf. The cost of that battery will come down, probably by a factor of two within the next four or five years just by economies of scale. But what needs to be done is, that battery -- if the cost comes down by a factor of three, if the energy capacity of the battery increases by a factor of three, then you can go 300 miles on a single charge. And at today’s electricity and gasoline prices in the United States, at about one-fifth the cost.
And if it comes down by a factor of three, you can dispense with the internal combustion engine and you will have a car that would be competitive, a $20,000 car with a competitive range but an operating expense that’s far less. And so that’s -- there is a tremendous amount of excitement there. But to be candid also, there will have to be some technological inroads, whether you call them breakthroughs or not.
We don’t see a way to gain a factor of three and one-third the cost. We do see a factor of two in costs and other things. And so this is going to be a very exciting area of development. The good news is there is a tremendous number of scientists and engineers who are now in this because they see the incredible opportunity for this type of battery.
I can go through other things like biofuels. Sugarcane in Brazil does make sense. It does make environmental sense, and it is competitive with gasoline today. For those countries who can grow sugarcane, because sugar is a perennial crop, it fixes its own nitrogen, the energy inputs are far less. And so there is a great reduction in carbon, the total lifecycle of carbon emission for sugar.
But sugarcane doesn’t grow everywhere, and the Department of Energy is very focused on developing methods of growing biofuels from woody materials, lumber residues, agricultural residues, perhaps even algae, algae perhaps even grown in salt or brackish water that can replace fuel. Right now we don’t have an advanced biofuel drop-in substitute for diesel jet fuel and gasoline that is competitive without subsidy in today’s market of, let’s say, $80-$100 a barrel oil. But we are again very encouraged that there is a real possibility. I cannot say whether it’s going to be five or ten years or something like that, but again, one of the most rapidly developing areas in science say that these things really are possible, and it happens to be a particular hobby of mine following the synthetic biology developments in advanced biofuels.
And then finally, there are other technologies like fuel cells, rapid development in fuel cells. We still need a clean source of hydrogen, but these are examples of things where technology can really give us much better choices to the internal combustion engine and to oil.
This is very important, and as a scientist, I am very optimistic that science will rise to the occasion and deliver these things. But I should caution you. Let’s not say, ‘Okay, it’s under control. We don’t really have to do anything. We’ll just look at the short-term, figure out how to get access to oil and not worry about it,’ because it’s, I think, foolish of any country that plans a national strategy waiting of the scientific miracle to happen.
And so for that reason, I think meetings like this where you actually look at what is possible in the technological roadmap, also what needs to be done on the policy side, to nudge industries, to nudge R&D, to nudge behaviors, to nudge everything in the right direction so that we can satisfy our energy security, our economic prosperity, and our environmental responsibility.
So with that, I will conclude my remarks will --
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