NEWSWEEK DIALOGUE SERIES
CLIMATE AND ENERGY POLICY: MOVING?
CO-PRESENTED BY
API
MODERATOR:
Howard Fineman, Newsweek
PANELISTS:
Sen. Byron Dorgan (D-N.D.)
Rep. Ed Markey (D-Mass.)
Rep. Fred Upton (R-Mich.)
Jack Gerard, President and CEO, API
Rana Foroohar, Newsweek
Tuesday, December 1, 2009
HOWARD FINEMAN: I think we're going to get started. Welcome to the
wonderfully august Mansfield Room, that's Mike Mansfield up there with the pipe, and I think
there are a lot of interesting discussions that go on behind closed doors in this room because if I'm
not mistaken, some of the Tuesday -- Sen. Dorgan -- don't the Tuesday Senate lunches take place
in and around here? So, this is a place that is used to frank discussion, and we're going to try to do
that here today.
My name is Howard Fineman, I'm senior Washington correspondent and
columnist for NEWSWEEK, based here in the Washington bureau. You're to hear a panel that is
co-hosted by NEWSWEEK Magazine and the American Petroleum Institute, and the purpose of it
is to discuss environmental policy and legislation, and to do it with some of the most
knowledgeable and important people in town. I'm going to introduce them in reverse order from
my far right.
The first one I want to mention because he's going to have to leave at 5
o'clock, and we'll want to hear from him right off the top, after I introduce everybody, is Sen.
Byron Dorgan of North Dakota. He's Chairman of the Subcommittee on Energy and Water
Development, member of the Appropriations Committee, member of the Senate Energy and
Natural Resources Committee, and also he's the Chairman of the Democratic Policy Committee. I
know there are a lot of Hill staffers here, a lot of people from downtown, people who know their
way around Washington. You know that the policy committee is a very important organization.
That's really where the rubber meets the road in terms of thinking about policy and trying to draft
legislation. So, Sen. Dorgan's here.
Next to him is Jack Gerard, who's the President -- is that the correct title -- of
API, and who I think has Hill roots. Right? You worked for Jim McClure and so forth, and is a
graduate of both GW undergraduate and I think GW Law School, if I'm not mistaken. How many
years have you been head at API?
JACK GERARD: One.
FINEMAN: One.
MALE: [INAUDIBLE]
FINEMAN: Okay, he's a veteran of one year. What's the normal length,
tenure for presidents of API?
MALE: Fifty.
MALE: Hopefully more than one.
FINEMAN: Yeah, hopefully long for you, longer than Charlie Weiss of
Notre Dame, or something like that.
MALE: That's it.
FINEMAN: And Eddie Markey is the missing chair. He assures me he'll be
here at any minute. Ed was flying down from Boston. He said the weather was very clear. No
problem. I won't hazard a guess as to which airline he was flying but if it's the one I think he was
flying, he may get here by six. And then Fred Upton, Congressman Fred Upton, a very
distinguished member who's the ranking member of the Subcommittee on Energy and
Environment, and for those of you who aren't either Hill staffers or members of Congress or
professionals in life in Washington, the ranking member is a very nice way of saying he's the guy
whose job it is to deal with the chairman on behalf of the other party.
Ranking has the sound of power about it, but it isn't always the case. At least
when your party is not in charge, which at this point, Fred's party is not. But I think he's known
on the Hill and known around town and known everywhere as a person of good will, and I think
that's true of everybody here. Arguing is good. I wrote a whole book saying that arguing is the
essence of who we are as a people. But if you don't accept the fundamental humanity of the
people you're arguing with, you're not going to get anywhere, and I think the people who are up
here, all of them, and Congressman Markey when he shows up, are the kinds of people who are
persons of goodwill. Who want to argue their positions, argue them forcefully, even emotionally,
but who believe in the humanity of others.
What we're going to do is talk for awhile about policy. I'm going to ask
questions, and then toward the end, we're going to ask if you have any questions. We're going to
pass out cards. If you have questions, write them down, send them up, and I will read them out
loud, as many as we have time for.
I'm going to start with Sen. Dorgan, since he does have to leave. Senator, my
understanding is that even as the House passed a cap-and-trade bill, which seeks to use in ways
that I profess I don't completely understand the mechanics of the marketplace, to try to incentivize
environmental progress and control, you have doubts about using that mechanism, to oversimplify
perhaps, you're for cap but not for trade. Explain why.
HON. BYRON DORGAN: Well, Howard, first of all, thanks for doing this,
and with Jack, and my colleagues from the House, Fred and Ed will be here, hopefully he's on the
right airline. You're right, I have great difficulties, not with cap, but we're going to have a lower
carbon future. I believe in capping carbon and doing it the right way; setting up targets and time
tables that are achievable and will work, and finding ways both to constrain carbon, perhaps
sequester it, but more likely in my judgment, find beneficial use for it.
So, I support that. But the issue of delivering a trillion-dollar carbon trading
securities market to Wall Street and saying to the investment banks and the speculators on Wall
Street, why don't you trade on Monday and Tuesday as aggressively as you like, and then give us
a notion on Thursday and Friday what our energy is going to cost based on what you've decided in
these marketplaces. I have precious little confidence in allowing that to happen, and so, I have not
been a supporter of so-called cap-and-trade.
There are other ways to do this. Climate change needn't be accomplished
through cap-and-trade. Cap-and-trade is one approach. Carbon fee, which I would must prefer, a
straightforward carbon fee, would be another approach. Command and control is another
approach. Tool boxes and a set of policy choices. You can create the specific policies or tools, as
we have done in the energy bill here in the U.S. Senate, which actually moves you towards a
lower carbon future.
Talking about it, going to negotiate, setting up targets and timetables, doesn't
reduce carbon. It's only the policies that will reduce carbon, and what we did in the Energy Bill
four or five months ago, on a bipartisan basis, we said the following. First ever renewable
electricity standard in the history of our country, 15 percent. Maximize the use of wind and solar
and renewables and build the transmission to move them around the country from where the wind
blows and the sun shines to the load setters that need the energy. An entire series of things --
retrofitting buildings, which is the lowest hanging fruit -- all of these policy changes that actually
produce a lower carbon future are what we passed out of the Energy Committee but have not
brought to the floor.
Now we're going to waste an entire year because there are people who
believe you can't do climate change without attaching the energy piece to it. We should have done
the energy piece first. That's progress. And then come back along, if we couldn't have done both
of them together, at least get the energy piece in the bank, to create the lower carbon future, and
then develop the targets and timetables. We're going to get to that. I don't know what the timeline
is here in the United States Senate, but we will get to that.
And I think it is important. As I said in answer to your question, we're going
to have a lower carbon future. The question is when we can pass the legislation that will actually
accomplish [it] -- my judgment, the sooner the better, and then how do we create the targets and
time tables, the enforcement, so that we actually all can meet the same judgment in the end.
FINEMAN: I'll come back to you as soon as I can, but I wanted to ask Jack,
Jack, which way do you want it? Do you want -- because there's going to be more action on this
one way or the other. Do you want cap-and-trade, do you want the carbon tax? What's your view
of the best way to go about it, assuming that there is going to be legislation eventually? And I
think ultimately there will be.
JACK GERARD: Howard, thanks to you, thanks to NEWSWEEK as well
for putting the forum together today. Let me say first, I agree with a lot of what Sen. Dorgan has
said. I think we're at a point in time when we've really got to have a reset, and renew a discussion,
and look at alternatives. We look at the bill that has passed the House, and I'll let Congressman
Upton speak to that, and the proposal that's in the Senate. Fundamentally they boil down to two
key issues in our mind, and this we don't think they're acceptable. First, they're job killers. In the
current environment, we think that's the wrong direction to go in a carbon-constrained economy.
We as an industry agree we are going to have a carbon-constrained economy,
and the real question is, as you have posed, how do we get there?
The second key point is we believe you unnecessarily drive the cost of energy
up, and there are alternative ways to doing this where we don't penalize or impose tremendous
costs on every working woman and man in this country.
From our industry standpoint, we still have a variety of views. We have
some who have been very active and quite aggressive in promoting a carbon fee of sorts, or a pure
carbon tax, if you will. Who believe that it's a far more effective way to be transparent, to send
signals to the consumer, that they need to change behavior if you're going to quit emitting carbon
or putting carbon in the air.
FINEMAN: Which of your members are [CROSSTALK] on that?
GERARD: Some might recognize the name Exxon-Mobil, who's a big one.
FINEMAN: I've heard of that one, yes.
GERARD: Exxon has been quite active in putting out there the need to look
at this from a carbon tax perspective. But then there are others. We also have three of our major
members that are part of the U.S. Cap Organization, who believe a cap-and-trade approach, if
done well, is the right way to do it.
But what we all agree on at this point in time is that we don't support what
has currently happened in the House and what's taking place in the Senate, and we believe we've
almost got to go to a point of starting over, and look at some of these alternatives.
FINEMAN: Congressman Upton, you were in the House when Congressman
Markey, who we keep mentioning and who still isn't here, and his people passed the House
version of the cap-and-trade bill. What are the features of that bill that you found most onerous,
or is it the whole concept of it? Just tell us why you were against it.
HON. FRED UPTON: Well, we could be here another hour, I think, if you
wanted me to finish my checklist.
FINEMAN: Just two or three.
UPTON: Yeah, all right, a couple of things. I'm from the Midwest, and
people know of Michigan as the auto state. Michigan, because we use a higher percentage of
electricity that comes from coal, 65 percent. You look at Indiana, about 95 percent of their
electricity comes from coal. Ohio, it's about 90, is again above 90 percent. One of my utilities,
major utilities in Michigan, Consumers Energy, came out and said that just because of cap-and-
trade, our consumers would see energy costs go up by as much as 40 percent by the year 2020.
That is a dagger in the heart of Michigan's -- any type of economic growth
where across the nation we've lost 1 in 5 jobs in manufacturing, is gone over the last two years.
Almost -- U of M -- University of Michigan study came out just before Thanksgiving, and it
predicted that automotive jobs in Michigan would decline by as much as 75 percent between the
year 2005 and 2012.
If you want to add extra utility costs, knowing full well that most of the
nation, we hope, as we rebound out of this terrible economy that we're in, the early projections
were that we're going to need as much as 30 to 40 percent more electricity by the year 2030, you
cannot add this extra burden, this extra tax, extra fee, the extra cost, to business if you want to
keep those jobs here. They are going to go, and they're going to be gone, and they are not going
to come back.
And the cap-and-trade scheme, which as you all know, passed 220 to 213,
switched four votes. It goes down on the House floor last June. I am convinced that if we had the
vote today, that bill would go down by as much as 50 votes. It would not pass, it would go down.
But it's the whole idea of added costs on businesses, small and large, that are
just struggling to survive in today's economy, which is prevalent throughout the Midwest.
FINEMAN: I'll let the Congressman speak for himself when he gets here,
but let me just ask you this, I assume you agree that we are going to have to limit emissions of
carbon dioxide?
UPTON: I'm one that wants to reduce emissions.
FINEMAN: You want to reduce emissions?
UPTON: I am. And there's a lot of ways that we can do it. And frankly, we
can look, along the ideas of what the Senate committee has already done. Byron, your bill that
came out of committee, was bipartisan, right?
DORGAN: That's right.
UPTON: This bill was not. Not the one that [CROSSTALK].
FINEMAN: Why is what he's suggesting better?
UPTON: Well, when you look at energy conservation standards, you look at
green energy, you look at renewables, you had nothing, I don't think, on nuclear, right? Did you
do anything on nuclear?
DORGAN: We have loan guarantees on nuclear.
UPTON: Loan -- but you did a number of things that most of us could agree
on. I don't remember what the vote -- what was it, was it pretty overwhelming?
DORGAN: We had some Republican support. I think three or four
Republicans. We had some Republican opposition as well. But it was a bipartisan bill, as it was
reported out of the committee.
FINEMAN: Let me ask you, Sen. Dorgan, about nuclear power. Where are
you on that in this mix, and how realistic is it, if you support it, to expect that we have the money
to build a huge bunch of new nuclear power plants, which I think are $5 billion a piece, or
something like that?
DORGAN: Yeah, I think we're going to see some nuclear power in our
future. There has to be what is called waste confidence in order to get a license to do it, and
Yucca is still out there as a question being defunded at this point. So you need an intellectual
framework for being able to demonstrate waste confidence in order to build these plants. But,
look, my view is that we ought to do a lot of everything and do it very, very well. We face a
couple of things here.
Number one, energy security issues that are serious. We have energy
security problems. Seventy percent of our oil comes from outside of our country. At the same
time, we have to address climate change, and there are some who don't want to do that. They're
wrong. We need to address climate change, and the third thing is we have a rather sick economy
at the moment. So, the timing is everything, and as a Cherokee Indian chief once said, the success
of a rain dance depends a lot on timing. [LAUGHTER] Well, that's especially true in American
politics. Timing is everything.
So, the question is how do we get at this? I think we have to do a lot of
everything, be smart, do it well, and I would hope that we could get bipartisan support. We're not
getting bipartisan support for anything in the Senate. We have to file cloture petitions on motions
to proceed to noncontroversial bills. It takes us a week to get there.
But on this, these are all serious issues. Energy security is very important to
our way of life. Climate change is also very important for this globe, and we need to be leaders
and do it smart and right. And we have to be attentive to the jobs issue, even as we do that, and
[INAUDIBLE].
FINEMAN: Jack, I see you nodding your head there. I've got to ask, do you
think climate change is a serious problem that we need to address?
GERARD: Absolutely, we've been working on that. In fact many people
probably don't know that when you look at zero-emitting technologies or low carbon-emitting
technologies in the United States, the single largest investor in developing those technologies is
the oil and gas industry. Since 2000, from 2000 to 2008, we spent $58 billion trying to develop
the next generation of alternative forms of energy, of new energies and new technologies.
FINEMAN: What percentage of your overall spending, or developmental
spending, what is that?
GERARD: Well, I'll tell you, it's almost three times as much as the entire
federal government spent, Howard, in doing the same thing. They got close to $20 billion in that
same time span. We got close to 60 billion. So anybody who'd suggest we don't get it or don't
understand it, we're energy companies. We will be the leaders in those. It's our companies that
did a lot of the early development of wind and solar.
Chevron is a leader in geothermal around the world today, and the list goes
on and on.
FINEMAN: Fred, let me ask you about Michigan. Is it unfair to say to the
auto companies, Look, the future is different. The future is not cheap gasoline. The future is not
what you thought it was, it's something different, and we want to help you make that transition,
and it's not enough just to say this is going to cost us jobs because in the longer view, it might cost
more jobs if they don't make vehicles that are energy-efficient?
UPTON: Well, they are going to make cars that are more energy-efficient.
They've agreed to new cafe standards beginning in 2016, that are a pretty dramatic increase. I
want to say 40 miles per gallon, and also you look at the new cars that are going to be in the show
room as early as next year, you look at that Ford, Chrysler, the Volt by GM. They are really
exciting in terms of what they're going to do.
If you really calculated out, it could be as much as 200 miles per gallon, and
some of those vehicles may never use gasoline. Maybe entirely powered, their entire lifetime of
the vehicle, by electricity.
We still have to come with a power force. So whether it's coal coming from
the electric plant or nuclear or whatever it is, you're still going to have to have a power source if
we move from the fossil fuels that we have today. But yes, they have to be part of that equation,
and are ready to make that step.
I want to just say one thing, too, on nuclear, going back to your question to
Byron. Today in this country, 20 percent of our electricity comes from nuclear. If we're going to
demand more electricity, which we will, the autos(?) is an example, by the year 2030, just to
maintain 20 percent nuclear, we're going to have to have 55 new nuclear plants on line prior to
2030 to maintain 20 percent.
We tried to get a nuclear provision in the House bill. We were denied it, the
Rules committee, to be able to offer a bipartisan amendment to do that. But somehow, we have to
shorten the timeframe. The French can put a new plant on line in four to five years. Ours are
eight to 10, and they cost a lot more. We've got to change that.
FINEMAN: Sen. Dorgan, let me ask you about ethanol. I think that's one of
your let's do everything arrows in your quiver there. Are you sure that ethanol is in fact energy-
saving?
DORGAN: Yep. [LAUGHTER]
FINEMAN: Okay.
MALE: Next question.
DORGAN: As we say back home, yep! Well, I -- sure, sure.
FINEMAN: I think there are some people who say it depends on how you
calculate the whole thing.
DORGAN: You can find people who think everything around here.
FINEMAN: Yeah.
DORGAN: Can I make a point before I have to leave.
FINEMAN: Sure.
DORGAN: You know, if we want to do the right things, for example,
maximize renewable energy, and you've got to build an interstate highway of transmission,
modern transmission. So, in the last nine years, we've built 11,000 miles of natural gas pipeline in
America. During the same period, we've built 660 miles of high voltage transmission lines
interstate. You know why? Because you can't get it done. You've got a dozen jurisdictions in
every area that can say no, and they do.
FINEMAN: Well, one is above ground and the other is under ground.
DORGAN: That's absolutely true, but if you're going to have an interstate
highway of transmission to produce energy, where the sun shines and the wind blows, and then
move it to the load centers, you're not going to do it without building the transmission.
So, we can do this if we go at it the right way. We've done it the right way in
this Energy Bill that's been languishing now for four or five months. But I also want to say one
other thing. We're going to have to use coal, which is our most abundant resource in a lower
carbon way. I'm excited about what people are discovering out there. Craig Venter is out there
working with scientists right now to create synthetic microbes to simply consume the coal and
produce methanol -- or methane, rather. Methane gas, right?
At Sandia National Laboratory, we've got people that are working on solar
heat engines where you put CO2 on one side, water on the other, and it fractures the molecules
and they thermochemically recombine it and it produces methanol.
We've got algae. I restarted algae after 15 years -- the science of algae --
where you just use water, sunlight and CO2 and grow single-cell pond scum called algae. It
increases its bulk in hours, then you harvest it for diesel fuel. There's a guy that's the world's
expert in concrete. He now has a patent where he takes the entire flue gas from a coal plant -- all
of it -- he doesn't separate the carbon -- and he mineralizes it somehow with his patent and turns it
into a product that is harder than concrete, more valuable than concrete, and contains all the CO2
sequestered.
Now, my point is this. I think there are unbelievably exciting things going
on, and our future is going to be guided, I think, by things that we don't even understand at the
moment, that solve these problems. I'm excited by it.
FINEMAN: Right, right. Before I get to Congressman Markey, who is kind
enough to join us here, and I know you've got to leave, Senator, so let me just ask you before you
have to go. On exotics like that, and it's unfair to call them exotics because eventually they'll be
the new heart of what we do, what's your sense right now of how close to putting the pedal to the
metal we are on technologies like that, on solar, on conservation, on the biological things you're
talking about? Maybe I'm missing it, but I don't sense the Man -- everybody uses the cliche,
Manhattan Project -- am I missing it? Do we have a Manhattan Project sense of urgency about all
this?
DORGAN: Well, the largest energy venture fund in the history of
humankind is now at the Department of Energy from the Economic Recovery Fund, I think
roughly around $37 billion, and Matt Rogers(?) is down there, and the fact is, what I think they're
trying to do is scale up the best ideas. You take those best ideas, scale them up to demonstration
level, and then let the marketplace beat a path to the best ideas.
FINEMAN: All right, but if somebody with a sense of history and you've
been around, you know how things work here, are you satisfied that at this minute, the federal
government is doing everything it can to push conservation and exotics and new forms of energy
and conservation?
DORGAN: Maybe not everything that's conceivable, but I think there's a lot
going on. It doesn't get -- it doesn't get headlines because good news doesn't attract big headlines,
but there's a lot going on in these areas. There's a lot of money out there and a lot of work being
done in DOE, pursuing these new technologies. And frankly, those technologies I think are going
to represent our future, that allows us to have a much lower carbon future using the fossil energy
and maximizing renewables, and so on.
FINEMAN: Well, than you very much for joining us. [CROSSTALK] No,
no, I really appreciate it.
DORGAN: It's always a good time to leave when Eddie comes in.
FINEMAN: Yeah.
[LAUGHTER]
MALE: It's like a World Wrestling [CROSSTALK]. Now I'm in the ring.
FINEMAN: So thanks very much, and before I introduce Congressman
Markey, I wanted to ask Rana Foroohar, who is the Economics and Business Editor of
NEWSWEEK International, to join us; deeply experienced in international business and worked in
Europe and will explain the mysterious of Copenhagen to us at some point. [LAUGHTER] But
before she does, I want to introduce Congressman Ed Markey. The Congressman is Chairman of
the Select Committee on Energy Independence and Global Warming; Chairman of the
Subcommittee on Energy and Environment; member of the U.S. House Energy and Commerce
Committee, and in addition to that, is the ultimate Bostonian in my view, in a good sense, and a
guy who understands Washington and the Hill as well as anybody.
And Congressman, I want to congratulate you, whether you agree or
disagree, with your position on managing to get your bill past the House, because as Sen. Dorgan
was saying, and as we can see every minute here, getting any piece of legislation passed in either
chamber is tantamount to carving Mt. Rushmore.
So, your House bill was taken in vain by various people before you arrived. I
think Congressman Upton described it as a job killer and a scheme. [LAUGHTER] You can
always tell when somebody opposes a piece of legislation when they call it a scheme.
UPTON: Yeah, it was their words.
FINEMAN: Okay, I don't think they probably used scheme. And Sen.
Dorgan -- and Sen. Dorgan described it as a job creation act for partners at Goldman Sachs. So,
explain to us why your way of going about it is the right way to do it.
HON. ED MARKEY: Thank you, Howard, very much, and in fact, it did
take Gutzon Borglum about as long to actually carve out Mt. Rushmore as it has taken us to get
serious attention paid to an issue that was identified a long time ago. So the legislation is in my
opinion analogous to what we did in telecommunications. I was the chairman back in the early
1990s, of the telecommunications sector. One(?), we passed the Cable Act of 1992, which created
the satellite dish industry. Thirty million people use it. 1993, we moved over 200 megahertz of
spectrum, which created the third, fourth, fifth and sixth cellphone license, and the ... two
companies that did not bid on this new spectrum moved to digital, as did the four new companies,
and the price of a cellphone call went from .50 a minute down to .10 a minute.
So we had the wireless revolution now in motion, and people can actually be
pretending to listen to me right now while they're actually reading their Blackberry. That would
not have been possible before that Act.
And then finally, the Telecommunications Act of 1994, which did get
filibustered in the Senate, and so it became the Telecom Act of 1996. That unleashed the
broadband revolution. Not one home in America had broadband in February of 1996. Not one
home in America had broadband in February of 1996.
So, since then however, since the 1996 Telecom Act, and these other laws,
we've now moved to a new vocabulary in America, and it is Google, EBay, Amazon, Hulu,
YouTube -- thousands of companies, 2 million jobs, that were created.
So, what we're trying to do here is to take the very same approach to this
energy marketplace, which is very dependent upon an old strategy and inject marketplace values.
So what the legislation does is it's science-based, it is market-oriented, it is consumer-focused, and
it is basically going to unleash, finally, a technology revolution.
So, this as a result will have thousands of new companies with venture capital
and I think that's the best -- those are the best two words you can hear in the American economy.
Eight hundred and fifty billion dollars worth of private sector investments were unleashed because
of those three bills in the 1990s. Here, with the energy sector being four times larger than the
telecom sector, we think that a trillion to 2 trillion dollars minimum will be unleashed by the
private sector.
Yes, we're going to start it in the same way that ARPANET was the
forerunner of Internet and funded by the federal government, but ultimately, we believe that this
will be a private sector, job creating bill.
Now inside of it, we have a 15 percent requirement that all new electricity by
the year 2020 be generated from renewable electricity sources. You want a revolution? Forty-two
percent of all new installed capacity for electricity in 2008 was ... Forty-two percent of all new
installed capacity. And this year, while we're in a recession, people might have said it's going to
fall back. Not at all. It's on pace along with solar and geothermal to have a very large number
again this year. And once this legislation passes, it's going to skyrocket even more, but it needs
government policy in order to ensure that that works.
We have a 50 percent requirement in improvement in building efficiencies in
the United States by the year 2016. Bold new appliance efficiency standards. After all, it's the
appliances which we use that consume the electricity in this room. If they were all 50 percent
more efficient, we would have to actually construct half of the electrical generating capacity going
forward in the years ahead.
So all of this moves towards working smart and not harder. Saying to young
people out there in the country, the young technologists, the venture capitalists, the entrepreneurs,
that this is going to be your opportunity, to move in and to deal with this very serious,
fundamental risk to the United States, which is that we produce 8 million barrels of oil a day and
we import 13 million barrels of oil a day.
Half of our trade deficit is importing oil. Half of our trade deficit is
importing oil.
Thirteen million barrels of oil a day, $350 billion. So this creates a strategy
where domestically, we will begin to create the new technologies that will deal with that issue,
have the energy produced here domestically, have the automotive industry reinvent it after it
ignored this perilous risk that it was running, and at the end of the day, we're going to see those 2
million jobs created here.
And I'll just conclude on this one note. We have a choice. Right now our
energy strategy says made by OPEC. And we import it every day. Gone from 20 percent of the
oil that we imported in 1970 to 60 percent of the oil we import today from other countries. Not a
good position for us, from a national security, or international relations perspective. Okay, that's
where we are today.
Where are we heading? Towards `Made in China,' because China is targeting
this market. Germany is targeting this market. Denmark is targeting this market. Our choice,
should we put together a strategy that says `Made in America?' That's what this bill is all about.
How do we create the incentives to have a private sector unleashed, that creates these new jobs,
that will be here in our country, and not just leap from `made in OPEC' to `made in China,'
because let's not kid ourselves. This green generation, this under-30 generation, when they're
making the decisions 10 or 15 years from now, they're going green. They're going to be investing.
They're going to be telling their companies, we need more green technologies. We need more
efficiency. We have to move off that old model.
So the question is, as my father always said, isn't it always better, Eddie, to
start out where you're going to be forced to wind up anyway? The global trends are quite evident,
okay, what's happening. The auto industry missed this. Other industries have missed this. In
telecom, we got ahead of the curve, we created the 2 million new jobs. That's our chance. That's
our opportunity, that's the economic growth for the next generation.
FINEMAN: Thank you. That was a tour de force of summarizing what I'm
sure are the most optimistic and favorable and enthusiastic features of what you're doing, and I
know you've been working on this for a long time, and that's probably the sharpest point of the
lance you could probably have created. And it was exciting to listen to. So now I'm going to ask
Jack and Congressman Upton to say what was wrong with anything that Eddie just said. It
sounded pretty good to me.
MALE: I won't have anything to say for about half an hour. [LAUGHTER]
FINEMAN: No, no, Mr. Gerard?
GERARD: You want me to go first?
FINEMAN: Sure!
GERARD: I stopped taking notes halfway through, Mr. Chairman.
FINEMAN: So just pick a couple of items and --
GERARD: Let me share a couple of quick thoughts, if I can. I'll try to
summarize it quickly. I appreciate the Chairman's enthusiasm. He has a lot of it, a lot of passion
towards this issue, but let me take exception with perhaps five quick items. First one is, one half
of our trade deficit, 13 million barrels a day being imported oil. We're now 60 percent plus
relying on foreign sources. The energy policy of the United States for the past 25 years has been a
moratorium on the oil and gas assets of the United States.
Over 85 percent of the vast reserves of oil and natural gas in the United
States have been put off limits by congressional policy. We would not be reliant on 60 percent
foreign resource today if we had had a better energy policy in the United States.
FINEMAN: Well, let me stop you there. What percentage would it -- let's
say, [CROSSTALK] a reasonable midline. It's still going to be a lot, wouldn't it?
GERARD: Well, it might be, but it clearly wouldn't be 60. Would it be 50,
would it be 30, what would it be? So we believe part of that was a challenge that could have been
addressed early on, had it been addressed by the Congress.
The second one is the green revolution. As I mentioned earlier before you
came, Mr. Chairman, I pointed out that the oil and gas industry is the leader in the development of
zero-emitting and lower-emitting technologies constraining carbon.
The second key point we shouldn't forget, when we talk about Blackberries
and all the latest generation of newfound technologies, by and large, they're heavily dependent
upon natural gas for their construction and their makeup. Ninety-six percent of everything
manufactured in the United States is touched by the business of chemistry. That business of
chemistry in the United States is fed and supplied by natural gas.
We have new technologies we've developed in the United States, and in the
past two years, now estimate more than a 35 percent increase in our natural gas reserves in the
United States. Clean-burning fuel can help us get to a more carbon-constrained world. It's been
overlooked in the House bill, and we believe there's a future for it there.
A couple of other quick points, then I'll turn it to Congressman Upton.
The Chairman identified his bill as market-oriented. We believe it's anything
but. In fact, that bill has already picked the winners and the losers. Unfortunately, those who
consume fuels in this country like gas, diesel, et cetera, are the clear losers. We're held
accountable, responsible for 44 percent of all emissions and given 2 percent of the allowances.
Who do you think is going to bear the cost of the bill at the end of the day?
And that's why the vast majority of all economic analyses point out that we're probably close to 2
million jobs being lost in this country as a result of the bill. We don't believe it's market-oriented
at all.
Secondarily, consumer-focused. Same point. If you're imposing tremendous
burden on the consumers, where you're driving their gasoline price, estimates based on EIA data,
governmental data, will drive it close to $5 a gallon in the current marketplace. We believe that's
excessive and it hurts consumers.
Last point, job creator. I touched on it earlier. With one small exception --
or I should state -- let me state it differently. Every major economic analysis of the House-passed
bill shows job destruction. Some are as high as multi-millions. We don't think this bill is a job
creator. We believe it's far from it, and we believe that's one of the key reasons why we really
need to reset. Look at all the great ideas that many have, including the Chairman, and come back
with a new start to get us someplace with an energy policy and a climate policy that can be
integrated and work for the United States.
FINEMAN: Well, thank you. I think in order to let this work and since the
Congressman is being tag-teamed here inadvertently, it's set up that way, I'll let you respond,
Congressman Markey, first, to that --
UPTON: Then I'll get the last word. [LAUGHTER]
FINEMAN: -- then Fred gets the surrebuttal.
MARKEY: Okay, great. Number one, the fundamental problem for the oil
industry is that even they have to admit that all we have are three to four percent of the world's oil
reserves, but yet we consume 25 percent of the world's oil on a daily basis. Three percent oil
reserves for the whole world, 25 percent of its consumption.
So, longterm, that doesn't work. Longterm, that does not work.
So, what's our plan? You obviously can't have a plan to have a country go
from 200 million to 300 million to 400 million people over this century without some plan to deal
with the fact that we only have 3 percent of the oil reserves. So we have to move towards all-
electric vehicles, towards hybrids, and the fact that we right now import 60 percent of our oil.
And again, we peaked in 1974. So that's through the Reagan Administration,
the Nixon Administration, the Ford Administration. Bush 1, Bush 2, Newt Gingrich, Tom Delay,
all that. Eight million. Okay, just get that number in your head.
So maybe you can get it up to 9 million, 10 million? Let's just say they can
do it. You're still 10 million barrels of oil short, unless you begin to change policies, and that gets
us into the middle of the Middle East. We're going to be debating that, we're going to be hearing
from the President on Afghanistan tonight.
Natural gas, I agree with Jack on this issue. Natural gas emits half the
greenhouse gases as coal. Inside of our legislation, 20 percent of the allocation of credits actually
goes to the natural gas industry. We have incentives to go to natural gas vehicles, and we'd be
open-minded in hearing other suggestions as to how we can give incentives to the natural gas
industry.
Third, we do in fact provide for, with the allocation process, for the process
that is used by the oil industry, and taking crude oil and turning it into refined product. So, we
actually have $2-1/2 billion per year for the industry in order to accomplish that. But remember
also from the legislation, we're moving towards this all-electric vehicle, high plug-in hybrid
future. Okay, so, the consumers are going to average 35 miles per gallon by 2016 in the 10 to,
hopefully, 17 million new vehicles that will be sold that year.
And by 2020, 40 miles per gallon. So, we're going to start to see 5 million of
barrels of oil backed out of our system, and that's going to put a downward pressure on the price
of gasoline that the consumers will benefit from.
With regard to the consumer burden, again, that's a balance with this new
technology as well. For electric utility consumers, we create a formula that will protect them
against price spikes, and on the job creation, this year, in the venture capital market, is it telecom?
No. Is it biotech? No. Number one with an asterisk, just pulling away from all the other sectors,
is the clean tech sector. Okay? It is where venture capital money in our country is heading
because they kind of have a sense that something's happening in the same way it did in the tech
market back in the 1990s.
FINEMAN: Ed, is that happening because they think your bill is going to
pass, or is it just happening because they see what's happening in the world, in which case maybe
your bill is not as necessary?
MARKEY: It's happening because of what happened in the 2007 Energy Bill
that we passed and President Bush signed. Remember, he opposed raising it to 35 miles per
gallon, but my language was ultimately adopted. The cellulosic language that we have in that bill,
the beginning of the smart grid. It's moving because of the $80 billion that is inside the stimulus
package, that we passed in February of this year, which is as Byron Dorgan said, this huge venture
capital fund, helping in the energy efficiency and the new technology areas. And it's also moving
because of what's happening in the states and the anticipation that Waxman-Markey will become
law in some form over the next year or so.
So, the markets are moving, and they're moving quite rapidly, and I think it's
an indication that we're on the verge of unleashing this private sector capital, that then will
principally displace any public sector investment that we make.
FINEMAN: Okay, Congressman Upton, do you feel on the edge of a
greater ...
UPTON: Yeah, yeah. Let me say just two quick things. One, I'm one of
those "all of the above" guys, so I'm in favor of more green technology. The hybrids, et cetera.
More conservation. It needs to be part of the equation, very much along the lines of what Byron
was able to get through in the Senate.
But one of the things that's missing, that really is a job loss here, is the lack
of any new nuclear in this bill.
I have 2 nuclear plans in my district, and when they brought on line in the
early '70s, 85 percent of the components inside were built in America.
By not putting a new nuclear plant on line in the last couple of decades now,
as you look at new reactors, looking at, going to be built maybe at present sites in the next 10 to
15 years, they tell us that 85 percent of components are not going to come from the U.S. They're
going to come from someplace else.
The British during our break I think announced that they're going to build 10
new nuclear plants. They're ready to go. Why can't we do that, knowing that there's no
greenhouse gas emissions, knowing that there are a lot of jobs as it relates to the nuclear industry
that we are just turning our back on?
FINEMAN: Okay, I want to, since you mentioned Britain, I'm going to
radically shift gears here, if you don't mind.
MARKEY: Could I just answer that [CROSSTALK]?
FINEMAN: Yes, please, Ed, go ahead.
MARKEY: Thank you. First of all, let me just say this to -- Congressman
Waxman and I are quite proud of this, that the Nuclear Energy Institute has endorsed the
Waxman-Markey bill. The Nuclear Energy Institute. And every major nuclear utility in the
country has also endorsed our bill. And why is that? Number one because, in a carbon-
constrained economy, it places the non-carbon-emitting electrical-generating sources in a more
favorable economic light, to draw revenues from the private sector.
Number two, the green bank which we have inside of the legislation, which
will be able to leverage upwards of $75 billion worth of private sector investment is in fact
available to the nuclear industry for additional revenues. And so, I just wanted to be made clear
here that the nuclear industry has already endorsed our bill. As we know, Sen. Lindsay Graham
and John Kerry and Joe Lieberman are talking about additional changes in that formula and maybe
taking it yet in an even more favorable position from the nuclear industry.
So, I think they should be able to continue to negotiate on that, and we look
forward to meeting with them on the conference committee. But remember, the principle reason
that our country has really not built is that in France, in Japan, in China, they're all socialist and
communist countries that have the government pay for the construction. Our country has
capitalism. So that's just a constraint, and what's happened in San Antonio is they've announced
down there, their utility, the construction of two new nuclear power plants. The original prospect
was $5 billion. It's jumped to $13 billion. It's now $17 billion for two nuclear power plants.
In Finland, they're building the first nuke plant in a generation, since
Chernobyl. They signed on with the French, with Areva. The original pricetag was $4 billion,
and it was going to be completed in 2012. It's now $7 billion, and it's not anywhere near being
completed on time. So, there are constraints on that technology.
But that notwithstanding, inside of our legislation, we do create the
incentives. The Nuclear Energy Institute had endorsed the bill. And any other characterization
really is not an accurate description of how the bill is built.
FINEMAN: Jack, go ahead. Then we're going to move on to another topic.
GERARD: I'm not in the nuclear business. Some of us see it a little
differently, Mr. Chairman. The nuclear industry is given allowances, free allowances, and they
don't emit any carbon. So some of us believe some of the reason they support the bill is because
in many ways it's a free handout. I will say that they get more allowances than the oil and gas
industry gets refineries that are held responsible for 44 percent of all the emissions.
The second key point I would point out, which is very important, is when you
look at all the economic analysis that's been done on this by all the major governmental entities --
EIA, CBO, et cetera -- they assume that we're going to build roughly 100 new nuclear power
plants in this country over the course of the next 20, 30 years.
The last we built took us 24 years to get there, and that was 30 years ago.
But that single assumption keeps the cost and the job destruction down considerably in this bill.
And so, there's a couple of key nuclear facts here that I think are very
important, that we ought to explore further because they are pretty well --
FINEMAN: I keep wanting to move onto Copenhagen, but Congressman
Markey, what about it? You're just handing out chits to the nuclear industry here?
MARKEY: Well, the utility industry of the United States, the Edison
Electric Institute, actually created a formula that dealt with the amount of emissions that a utility
traditionally produces balanced against the revenues of the utility. And out of that formula came
an agreement, that was able to get the support not only of Duke and American Electric Power,
which are the largest coal-burning generators in our country, the two major utilities, for example,
in Indiana, and it was also able to get the support of the utilities from New England and from
California.
So, it was a balance that the nuclear, oil, gas, wind -- whatever the source of
generation, utility industry investment portfolio strategy -- resulted in a collective
recommendation to us, that this is the approach that we should take. And so, at the end of the day,
let's just say this in terms of natural gas, 90 percent of all new electrical-generating capacity in
America since 1990 has been natural gas.
And it's going to continue on that way as a base load with the new mandates
for renewable electricity in the states having a higher percentage increasingly coming from that
source. But natural gas is going to do very well in the future, and the discoveries from the
Marcellus Shale all the way through Barnett, that is all the way from New York down to Texas,
are going to be big sources of new electrical-generating investment(?).
FINEMAN: As a native of Pittsburgh, I'm really excited about the Marcellus
Shale. I'm hoping maybe there's some under my relatives's land in Western Pennsylvania.
[LAUGHTER] But let's move on here.
You mentioned Britain before, so I wanted to ask Rana. This is a big week
for Barack Obama as everybody is writing. He's got his big speech in a couple of hours on
Afghanistan, which bears on the whole Middle East question, as Congressman Markey was
saying. And he's going to go to Copenhagen. So Rana, you have scoped out the politics of that.
Let me ask you, we've been discussing what's going on in the United States. When Barack Obama
goes there, will he be greeted as someone who's helping the United States, genuinely do an
effective part in this, or is he just going to be viewed as somebody who hasn't gotten the ball
rolling here?
RANA FOROOHAR: Well, I think he's going to have a hard time being
taken seriously, frankly. Because of some of the reasons we've been hearing, he's not really going
to know what he can promise back home. And that puts the U.S. in a difficult negotiating
position.
This comes at an unfortunate time because the developing countries -- the
major developing countries like China, Brazil, Indonesia -- have actually been getting their acts
together over the last few years. China, in particular, has made some big announcements in this
area. They've talked about cutting emissions by 40 to 45 percent. Now admittedly, that would
still leave them rising. But they're doing a lot.
They've got the largest green stimulus package by some measures. They've
made this a strategic focus nationally. So they have a coherent plan.
Same goes for Brazil. Even India, which has been a laggard until recently,
even in India, some of the pro-emissions-cuts factions are gaining some ground now.
So, it makes it difficult for the U.S. to point the finger at the large developing
countries, namely China, which is of course now the world's largest emitter, as many of you know.
And this is unfortunate because even though these countries are increasingly
stepping up to the plate and talking, none of them have any kind of a history of leading any kind
of international cooperation on a major issue like this.
So, the U.S. leadership is really needed, and particularly because even though
I happen to believe that the current Chinese leadership, Wen Jiabao and Hu Jintao, are very much
behind the idea of sustainable development. I think what you're starting to see in China is a
political shift, and by the time they get around to having a new leadership in 2012, there may be
more pressure from parts of the government that are more pro-coastal development, less interested
in green stimulus. And so I think this is a time, really, for the U.S. to be taking leadership on this
issue, and I think unfortunately we're not.
FINEMAN: Well, is it a good idea --. Fred, let me ask you, Congressman, is
it a good idea for the President to go?
UPTON: I think it's going to be a pretty tough sell. I would agree. I mean
you've got -- this was on the front burner early on in the year. Again, they barely passed a bill out
of the House, and the Senate hasn't done really anything, and no one expects it now. Or they're
saying maybe in the Spring. But I think the prospects of a bill getting to conference in this
congressional term through next year is pretty slim.
FINEMAN: Congressman Markey, I should know the answer to this, but are
you going over there? Do you think it's a good idea for the President to go? Is he going empty-
handed? What's he going with in the global effort to control this problem?
MARKEY: Am I going there?
FINEMAN: Yes.
MARKEY: Will the Senate finish the Healthcare Bill before that week, and
we will have a final product on the House floor that I will have to vote on.
FINEMAN: Probably not. Let's see, that's next week.
MARKEY: All right, in that unlikely scenario, then yes, I will be in
Copenhagen. I think that the President already in statements coming out of the White House, has
decided to talk about the number that we have in the Waxman-Markey bill, which is a 17 percent
reduction in greenhouse gases using 2005 as the baseline year, by the year 2020. I think that's
good judgment on his part. I think ultimately, that's where we will come down somewhere in the
vicinity of that number.
One thing that's very important for everyone to keep in mind is that the
question is no longer legislation or no legislation. Since the Supreme Court decision,
Massachusetts vs. EPA, ignored by the Bush Administration in terms of its mandate that it had to
make a decision as to whether or not greenhouse gases did in fact provide a danger to the
American public health and welfare, this administration is acting on that, and within a very brief
period of time, the EPA will have the authority to regulate greenhouse gases.
And so whether you're a coal-burning utility in the Middle West or any other
emitter, you will no longer have the ability just to say, I think I'll block legislation because the
EPA would be able to regulate. And I think many industries have already come to the conclusion
that they're better off coming to Congress because we can help consumers. We can give a
transition for industries. We can create incentives for new technologies, which the EPA cannot in
any one of those instances do. It's a much more blunt instrument.
So I think the President can tell the world that 17 percent is his political goal.
Reach an agreement with other world leaders on that issue. Reach agreements on international
financing and deforestation, which I think will help inform the Senate debate.
But also make it clear to them that he now has the administrative authority to
act, and these world leaders will actually come from countries where the administrator just
decides, and the legislature is out of it. So they'll understand now that he has that power, and I
think that the industries of America are still, many of them, not well-informed by their
Washington representatives of this looming threat to them if they decide that they don't want to
work in a legislative format to construct a much sounder transition from this type of economy to
one which is a green-jobs economy.
FINEMAN: Jack, how do you view Copenhagen? Will you have
representatives, will the API be there? Or other global energy companies? Will they all be there?
GERARD: Sure, there will be a lot of representation in Copenhagen from a
variety of different interests, I believe from the energy sector.
Let me just say, it reminds me a little bit, back to Chairman Markey's
colleague, former Speaker O'Neill, when he said all politics are local. I think in the current
environment, it's a very difficult time for the President as he'll go to Copenhagen, because I think
all politics are domestic at this point in time.
Where the focus is on job creation, 10.2 percent unemployment, it's difficult
to go into an international forum and make any commitments that can be perceived back home as
not supporting, if you will, domestic development of jobs and getting people back to work.
I think the other thing that's often talked about is obviously a lot of the
developing world is looking to the United States as a major developed interest to help assist them
in the transition. And when conversations begin to turn to potential $100 billion contributions
from us to others to help and assist them, and I'm not passing judgment on that, I just think it
makes it very difficult in a domestic environment in the current dynamic to make that sale.
And my guess is that's part of what's temporing in their efforts to manage the
expectation as they go to Copenhagen.
FINEMAN: Let me ask you about the President's leadership overall. And
this is a bigger question now than just energy. But I figured I may as well ask it because he's
about to give this big speech. You guys are all very experienced. Rana has watched leadership
around the world. Do you think he's -- I'll ask Congressman Markey this first -- do you think the
President has taken on too many things? Or, are the circumstances such that he had no choice but
to do the stimulus and the bank bailouts and the big healthcare reform initiative and this massive
energy restructuring program? Do you wish that he had been more selective, or was this just
naturally what he had to do? Not to mention Afghanistan and Iraq. Yeah.
MARKEY: He did not have a choice on the day that he was sworn in,
January 20th. Afghanistan was a mess. Our economy was in the worst condition that it was since
the Great Depression. Again, we're importing 60 percent of our oil from overseas, from that part
of the world that we're now again beginning to discuss in terms of adding more troops to that
region, to maintain more stability.
And on healthcare, 50 million without health insurance. So, these are all
unattended-to issues. The stimulus was something that helped to deal with it. But there are longer
term solutions that have to be put on the books. Okay? This appeals to the old Wayne Gretzky
line. Wayne Gretzky used to say I don't go to where the puck is, I go to where the puck is going
to be, that's how I score.
So, that's what he's trying to do. He's trying to put the country where it has to
be on each one of these issues.
Clearly, he put healthcare up front though in terms of trying to finish that
process, and that's what they're doing in the Senate. But on deck will be the Energy Bill, and will
be the financial services overhaul legislation as well. And I think at the end of the day, he will be
judged by how well he does on those major issues. But I think it was almost unavoidable. He had
to deal with them, and I think that his political capital is being spent, but it's being spend in a way
that as progress is made on each one of those issues, it will be replenished.
FINEMAN: What do you think, Congressman Upton?
UPTON: I think that the administration has made a big mistake by not trying
to reach out in a bipartisan way to get these things done, and Politico reminded me in a column
that I saw a week or two ago that Pat Moynihan said if you're ever going to do something big,
make sure that it's bipartisan. The stimulus certainly wasn't. Neither was energy, as they skipped
our subcommittee and went to full committee and then to the floor. And it's been the same thing
with healthcare.
And if you want to look at the end of the day, at the end of the process, at the
end of President Obama's term, whether it's in 2013 or 2017, the question as to whether he
succeeded I think was whether he's bipartisan and he moved the country forward. And like it or
not, it has not happened in this first 11 months of this year, and I don't know if the calculation was
made that because they have an 81-vote margin in the House and 60/40 in the Senate, that they're
going to try to roll that. But we'll see what happens 11 months from now when we have that
midterm election and where the country is, and what it wants to do.
Byron Dorgan, they worked on a very decent bipartisan plan that could sail
through the Senate today if it wasn't behind held up. And I think you could have done the same
thing in the House with the same dynamics. Maybe a little bit more to the left, but in fact, he
would have had a bill, and he could have planted the flag saying we got it done, and we reduced
emissions.
And instead, if we end up with gridlock, the reason will be because it was not
bipartisan and nothing got done, and that will be a tragedy if that happens.
FINEMAN: Rana, since you have an international perspective, helping to
edit our international editions, how do you think the President -- and again, this is a little broader
than the energy topic -- but how's he going to be viewed when he comes over there next week?
Beleaguered, on top of things, having taken on too much? What's your sense of how the
Europeans, and others around the world, view him right now?
FOROOHAR: Well, I think he has taken on a lot, but I would agree with
Sen.[sic] Markey, actually, that he didn't really have a choice. These issues had to be dealing
with. They're all big. Yes, he's spent a lot of political capital. I think that what we're seeing is
this clear end on almost every front. On finance, on trade, on climate change, an end of the
unipolar moment, but a rise of what? We don't know exactly.
Is there some clear Beijing consensus that everybody can follow now? No.
There's no one really filling this void, and I think that that actually as much as anything is why the
President appears perhaps even more beleaguered than he is sometimes.
And I think that -- I was at actually a Chinese business conference recently.
And there was a lot of talk about how the U.S. was stumbling on everything from banking
regulation to trade to climate change. But there weren't a lot of other clear answers in the room.
So, I think that that's the scene from overseas. That's not a very clear answer, but that's what I see.
FINEMAN: No, that does, and so I think the Copenhagen -- will the
Copenhagen meeting be important in your view? Is it going to produce anything of importance or
is it just going to be a big photo-op?
FOROOHAR: Yeah, in terms of what it will produce, I think that it's going
to produce an agreement to agree at some point in the next year. Maybe if we're lucky. But he
has to go. He has to show up. I think it's good that he's doing that. I think to the extent that the
U.S. can figure out what it can do at home, and there can be some clearer consensus, that will be a
big sign for other countries of our leadership.
But even to the extent that we can figure out on the invasion front how to
move ahead and how to take ownership of the green business sector. I mean this is something
China is doing, Germany is doing. These are big opportunities that it's not clear where the U.S. is
headed on yet. So I think that's another important thing.
FINEMAN: Is it your sense that -- is that real, what other countries are
doing? In other words, this is the real deal in Europe and Germany and China even?
FOROOHAR: Yeah, it's pretty real. I mean I've been to China three times
this year, and I can tell you that it's real. They're probably on their way to being the turbine
factory of the world, I would say. I think two out of the top 10 wind companies now are Chinese
whereas only one is American.
It helps when you're developing these kind of industrial policies to be an
autocracy, of course, because you really don't have to jump through too many hoops. You sort of
say go forth and do this, and people do it.
Same with bank lending. If you want to solve the banking crisis in China,
you get all the bankers in the room and say who wants to lend, and everybody raises their hand.
So it's a little bit of a different environment. But, yes, I do think there's a commitment within the
current leadership, and there's a heckuvalot of money behind it. So.
FINEMAN: How about solar in China?
FOROOHAR: Yeah, I mean actually --
FINEMAN: I know in the United States there's a big effort as part of that
money, somebody was mentioning, Sen. Dorgan I think, that there's $37 billion to DOE. They're
doing a lot of solar development. Is China moving ahead of us in that regard?
FOROOHAR: China is, and here again, they're competing as they have
historically on being cheaper than everybody else. They've actually done a pretty good job of
competing with Germany, which had had the lead in this area, and they're now on the way to sort
of decimating the German cell(?) market because they're producing really good stuff for a lot less.
QUESTIONS AND ANSWERS
FINEMAN: Well, what we're going to do now, because we're carbon-
constrained but not wine-constrained, is we're going to go to the questions. And please, if you
have any questions, write them down and pass them over, and if I run out of these questions, we
still have a few minutes of time, you can raise your hand and ask a question.
And I just didn't get a chance to read them all, but I'll start with this one since
Jack is the co-host with us of this event, which I've found to be absolutely fascinating and
watching the close net play between Ed Markey and these guys is really riveting.
Mr. Gerard, your industry is a primary source of greenhouse gas emissions.
Why are you a credible voice on climate change policy? And then the person who wrote out this
card said, don't use my name. [LAUGHTER]
But you know who you are. So what about it? What about it?
GERARD: What's that?
FINEMAN: You heard the question.
GERARD: I think to your earlier point, Howard, when we first started the
discussion today, we can argue over the facts and figures, but we have to, through the humanity
that we all share, understand that we have differences of opinions on this. I think we are the most
credible source in this country to represent the oil and gas interests. Now why is that?
It's because we represent all of them in a collective way, a collective interest,
to make sure that their voice is heard, and just like everybody else's voice should be heard in this
country, oil and gas is a key important player. Let me share a couple of key facts with you that
you're probably not aware of. There are 9.2 million people in this country that are employed
directly and indirectly by the oil and gas industry. The oil and gas industry in the United States
constitutes 7.5 percent of all GDP. That's all of our economic activity in the United States, 7.5
percent of it comes from the oil and gas sector.
This is a huge job creating machine that allows us to enjoy some of the
lowest-cost energy in the world. And all you have to do is look to Europe and elsewhere. Look at
the massive opportunities we have here.
Which takes me to a point the Chairman made a moment ago, as to what
about our potential in this country? And let me just tell you, perhaps dismissed too early, the
potential for oil and gas in the United States.
First point, we really haven't been given an opportunity in the past 25 years
to really determine how much oil and gas we do have in the United States. It goes up every year.
Three quick points, and then I'll turn it back to you, Howard. Alaska's
Prudhoe Bay has now produced $15 billion of oil and natural gas, and is still producing. The
government forecast for Prudhoe Bay were 9 billion barrels, surpassed a long time ago.
I wish Sen. Dorgan were still here. The Bakken formation, now North
Dakota and Montana, the U.S. Geological Survey now says 3 to 4 billion barrels of oil lie under
those two states. Twenty-five times more than what they estimated in 1995.
In 1987, the MMS -- Minerals Management Service -- estimated there were 9
billion barrels of oil in the Gulf of Mexico. By 2006, after major advances in seismic technology
and deep water drilling techniques, the MMS resource estimate for that area has now ballooned to
over 45 billion barrels of oil. And we believe we're only scratching the surface.
So back to the original point, with 9.2 million people dependent upon a
successful healthy oil and gas industry, we believe we are a credible voice, and though some
would like to dismiss it out of hand, we deserve a right to be heard -- along with the 7.5 percent of
all the economic activity in this country -- as anyone else.
We might disagree, and I'm a big fan of all chairmen in the Congress, but
fundamentally, we've got to get this right.
[CROSSTALK] [LAUGHTER]
FINEMAN: And other members, and any other member.
GERARD: My apologies. And anybody else who's here that I forgot to
mention. But we will continue to play an important role. The experts say that the United States
over the next two decades will still continue to rely primarily on oil and natural gas to fuel this
economy. So we need a place at the table, and I appreciate the chance today to interact with the
good Chairman on this.
FINEMAN: Mr. Chairman, do you have anything you want to say in
addition to that?
MARKEY: [OFF-MIKE] Well, again, it's just mathematically impossible to
continue to buy 25 percent of all global oil consumption, the United States, into(?) 3 percent of the
reserves. And no one is contending that all these new discoveries, that we now have 10 percent of
the oil reserve or 20 percent of oil reserves ... 3 percent.
Now we have to remember, that we're depleting the existing reserves that we
have. Those wells are getting depleted. So you need more discoveries just to stay where you are.
And I think we can be open-minded about where we might be allowing more drilling.
But the fundamental equation is not going to change. We're going to be
importing more and more and more oil for only [INAUDIBLE] a new strategy.
And our national security is at stake. ... that the wind turbines from China,
they're about to become the wind turbine giant. Well, we visited -- the Speaker and I and the
select committee -- we visited China over Memorial Day ... here. We went up to see one of their
electric vehicle factories. As we were driving by, about half a mile away, there was a wind
turbine factory, and it was closed that day. But we got out to just look at it, and there were
hundreds of wind turbines, with tarpaulins over them, like it was a major league infield and a rain
out.
And what it reminded me of was this, it reminded when I was 15 years old,
and Adlai Stevenson at the United Nations was holding up a picture of Soviet missiles being
deployed inside of Russia. And it was an existential threat to the United States.
Well, that got our attention. These wind turbines were pointed at our
American economy, with the same kind of threat, to where the jobs over the next generation are
going to be created. And we should either take this seriously or we should just get ready for Made
in China to be not just on the electronic equipment that we purchase, but on all this new energy-
related technology that inevitably is going to be used in our country.
FINEMAN: Well, here's one that relates to energy reliance and dependence
for -- I think they said that I should ask this to Congressman Upton. Would you agree or disagree
that increasing oil imports from Canada and decreasing reliance on OPEC sources is better for the
U.S. in terms of energy security? Nobody signed that. I don't know much about that. What about
it, Congressman, about oil shale from Alberta.
UPTON: [SIMULTANEOUSLY] Well, this is initiated -- yeah, well -- .
Canada is actually one of our largest exporters of energy here and it relates probably to the issue
up in Alberta where they are able to convert from oil sands, oil. But they have to use a process to
heat the sand to separate the oil from it and then they're actually looking to expand refineries in
Indiana and Ohio, to actually convert that then. It's a heavier substance that we're able to use for
automobiles here.
I'm a big supporter of it, and there was a glitch in the '05 bill that prevented
more than a hiccup in terms of having it come down to the lower 48. We're hoping to resolve that.
That the Canadians are producing literally a million barrels a day of oil from that facility in
Alberta, and if we don't get it here, it will be shipped to China. They'll build a pipeline. It'll go on
a boat, and the carbon imprint will be much higher using that, transporting that oil to China, than
it will be putting it in a pipeline and having it come to the lower 48.
FINEMAN: Rana, I have a couple -- thank you, Congressman. Rana, I have
a couple questions for you. One of them is my own question. I made it up right on the spot.
[LAUGHTER] In terms of use of the world's resources, energy resources and otherwise, whether
it's concrete or steel or oil or hydrocarbons, whatever. What's your sense, since you know
international economics, of how much China -- what are we looking at over the next 20 or 30
years? In other words, we're drawing figures based on now and we're looking at our own
consumption. But I don't know that we always are looking at just what a giant -- to paraphrase
Ross Perot from an earlier day -- what a giant sucking sound that is of resources going to China.
FOROOHAR: Yeah, it's a pretty big sucking sound. Chinese growth is
going to drive the global economy going forward. There's actually a Goldman Sachs prediction
that China is going to overtake the size of the U.S. economy by 2027, and clearly its resource need
is growing exactly in sync.
In fact, one of the reasons that commodity prices across the board are up right
now, including in areas like oil or copper where there's actually plenty of extra supply, is because
the Chinese government has lent a lot of money to state-owned enterprises, and they are buying up
resources.
So there is real demand. There is in some cases stockpiling of resources, and
it's clearly something that's going to drive demand for every natural resource going forward.
FINEMAN: Okay, and this is a question that Eldon Boes(?) [he pronounces
as Buuse because he's reading handwriting; still could be someone else than this Harkin
staffmember] -- do I have the right name? Yeah, from Harkin's staff, has for you, Rana. What
level -- this relates to what we were just talking about -- what level of reduction in greenhouse gas
emissions per GDP by China by 2020 is fair? And how do we explain to the American people that
such an emissions intensity reduction is fair overall? In other -- let me just, folks, on the first part
of that, what's fair to expect from China in your view?
FOROOHAR: It's a difficult question because it depends on China's growing
wealth, and it depends in part on how quickly it can grow its middle class, how quickly it can
rebalance its economy. China's per capita GDP is still hovering around 2500 a year. So that's not
a lot. I happen to think that the proposals of the current government to cut emissions by 40 to 45
percent are a great start. I don't think that if China is able to continue to grow at 8 or 9 percent
going forward, that that's going to be enough.
But I think that the U.S. should really support the efforts that are being made
right now in part because we need to get out in front of this potential shift in the political climate
around support for sustainable development in China.
FINEMAN: We're honored to have Congresswoman Sheila Jackson-Lee
here, and I wanted, even though you're not sitting up in the dais here, would you like to make a
comment about where we are in terms of balancing energy needs and concerns about the
environment? I assume you liked the Congressman's bill, right? You voted for it, right?
HON. SHEILA JACKSON-LEE: [OFF-MIKE] [INAUDIBLE]
FINEMAN: Sure.
MALE: Can you turn that microphone on? [INAUDIBLE]
JACKSON-LEE: Thank you very much. I wanted to suggest that we have a
meeting of the minds here. Chairman Markey has captured the crisis and the need for response
along with the concerns expressed by my good friend from Michigan. I happen to come from oil
and gas territory, and Jack has made a very valid point. As I walk through my community, there
are people who are concerned about losing their jobs. And I, frankly, believe that we in America
must be concerned about job loss, as I know my good friend from Boston is.
Peer(?) Markey indicated that the EPA has a regulatory scheme. But on the
other hand, we have the ability to go to Congress and work out our concerns. So my question is,
since some of us are very comfortable with environmentally secure offshore exploration in the
Gulf, I will not comment on California or New York, but we have done it successfully. We've
created jobs. Myself and a former Congressman even had language in a bill that said we wanted
to determine how many deposits were off the Gulf, and we wanted to make sure that we had
oversight, that it was explored in an environmentally-safe manner.
So Jack, my question is, do you find or see the opportunity for working
through this legislative process, keeping in mind your interest and concern about jobs, recognizing
that the doom that the Chairman sees on turbines being produced in China is real, in fact, with all
due respect to China, it does offend me that Texas companies are buying wind turbines from
China, I'd like to see that changed. But can we work together, particularly on a better scheme, if
you will -- scheme sounds treacherous -- but a structure for cap-and-trade to have us sit down at
the table.
I think the challenge that I see here is are we sitting down at the table and
talking to each other about what is the effective transition that can work for companies that I
represent, refineries, for example, and educate the leadership in the --
[END OF DIGITAL FILE 1]
[START OF FILE 2]
-- oil and gas industry -- I mean ultimately, I think, you may be representing,
if you will, the energy industry, which may be wind and solar. You're the Petroleum Institute.
But our energy companies already have research components that are looking into wind and solar,
particularly those in Texas.
So, I guess my question to you is how do we work through this process,
recognizing your statistics, the Chairman's hard work, and the ranking members, and Rana's
comments about our international standing?
I think we have a making of an opportunity for bringing these issues together
because I know my party in particular is not interested in losing jobs, but we also have the
responsibility of leadership and we are always reminded of the Clean Air Act. There were a lot of
naysayers, but we have benefited from the Clean Air Act, and I think we can benefit from this
approach, and I think we can work together.
Jack?
FINEMAN: It all sounds so reasonable when the Congresswoman
summarizes it that way. [LAUGHTER]
GERARD: She's terrific, we appreciate the chance to work with her. She
does represent a lot of oil and gas interests down in her Texas district. I agree, Congresswoman. I
really think and early on I think just before you got here, I made the comment. I think we're at a
point of what I would describe best as a reset. We've seen the good work that's gone on in the
House, though we don't agree with it. We see what's starting in the Senate, and I believe the start
in the Senate that's been produced to date through the EPW committee is a false start. And I
think now the heads are starting to come together. We're going to start to see now what's realistic
and what's doable.
I think there's a couple key factors here that have not been mentioned. We
talk a lot about China. The wind mills, the solar panels, and all. But I will also tell you is one
who represents these interests, they are around the globe securing all the oil and gas that they can
secure. Don't misunderstand where they're going. They have an energy policy, and it's to secure
as much as they can as long as they can.
Part of our challenge in this country is I believe we need to think
domestically how do we support the good companies who reside here. A lot of people don't
realize when you look at the reserves, the Chairman talked about those before, the big companies
in this country, though they may be perceived as big, pale in comparison to the size of their
competitors.
When you think of the size of Exxon-Mobil, which is the largest investor and
oil(?) traded company in the United States, in a global world, when you look at those who control
oil reserves, they rank number 17 behind national oil companies.
And while some might want to be critical of their size, they have to be large
to compete with the largest entities in the world to even hold their own to provide the good energy
of this country.
So I think a recognition of some of the basic facts surrounding this,
recognition that oil and gas will play a prominent role not only now but into the future. I think we
can move to new technologies. We can provide the energy we need. We shouldn't overlook just a
few years ago, we lost 3 million manufacturing jobs from this country because we didn't provide
enough energy to keep the price competitive.
We have the ability to do that. We have the ability to keep those jobs here.
To make it in America and compete with anybody in the world. But we have to have a sound,
stable energy supply, and I still believe -- and to your point Congresswoman -- we can find a
window to make it in the best interest of everybody here.
JACKSON-LEE: Thank you [INAUDIBLE].
FINEMAN: No, thank you Congresswoman.
JACKSON-LEE: [OFF-MIKE] I'd conclude by saying you have -- thank
you Jack -- two of the most thoughtful members of Congress along with the Chairman up in the
Senate who just left. I've worked with Chairman Markey, and found him to be both an advocate
but a listener. I think we have the makings of the door being open and ... work with Fred as well.
And I think there is that great possibility --
FINEMAN: Well, thank you.
JACKSON-LEE: -- and opportunity.
FINEMAN: Thank you. We like to associate ourselves at NEWSWEEK
with thoughtful people. [LAUGHTER] Where possible. I want to thank everybody that's here.
Let me say if anybody has any further questions, stick around, because there's a reception
afterwards and if you have them, you can ask them.
We are going to make -- obviously, we'll have a big team there for both the
domestic and the international editions of NEWSWEEK.