Mercury News interview: Energy Secretary Steven Chu
Energy Secretary Steven Chu, a vocal advocate for alternative energy and nuclear power, was in Silicon Valley earlier this week to talk about the role of clean energy in combating global climate change. He also discussed the stiff competition the United States faces from China, which is moving quickly to close down inefficient coal plants as well as nurturing its fast-growing wind and solar industries.
His official biography on the Department of Energy Web site spells out the tall order that is his job: “He is charged with helping implement President Obama’s ambitious agenda to invest in alternative and renewable energy, end our addiction to foreign oil, address the global climate crisis and create millions of new jobs.”
Chu had a private meeting with cleantech executives and venture capitalists and gave a public talk at Stanford University, where he taught physics for several years. Chu also met with Mercury News reporters and editors; here is an edited transcript of the conversation.
Q You may have seen the Thomas Friedman column about Calera (a startup that recycles power plant emissions into a raw material for cement) and Bloom Energy (a startup that creates fuel cells). How does the Department of Energy monitor companies like that along with other innovations like electric cars?
A So let’s talk about Calera … it’s great. Will it solve the carbon dioxide problem? No. It’s part of the solution, but we don’t
use that much cement. Bloom Energy, that one is very interesting. It’s a solid oxide fuel cell that can operate on either hydrogen or natural gas and make electricity. K.R. Sridhar (Bloom’s CEO) says the cost is 10 or 12 cents a kilowatt hour, which is getting interesting, but that’s wholesale, and with the government subsidies. I don’t like those “with the subsidy” numbers — what I’d rather see is without the subsidies. But they are just starting, and I assume if it really works, the cost will come down. We are investing in solid oxide fuel cells, and we’re watching that very closely.
Q A big issue for companies in Silicon Valley is project financing, because of the long time needed to get new cleantech products launched. Many cleantech startups have venture capital funding and Energy Department loan guarantees, but they say they still need more money, that there’s still a missing piece. Is the Energy Department talking about a “green bank” or project financing arm?
A In this budget, we’ve asked for another half-billion dollars in credit subsidies, to help more high-risk loans. We don’t have a process of handling $10 million to $20 million loans — that’s VC land.
We’d rather figure out how to encourage private investment. The best way to get to that is to have a very clear long-term fiscal policy — a national renewable portfolio standard (a policy that would require set amounts of electricity to come from renewable sources) that will create a market draw — and a price on carbon emissions. Those are the things that actually get banks to loan money. Without altering those conditions, we’re in limbo land.
Q Are you worried that the political will to enact a national policy or somehow tax or price carbon emissions is gone now? If you look at recent polls, the number of Americans who believe that global warming is real and man-made is declining. The political trends are not in your favor.
A Americans were believing because of sound bites, and now they’re disbelieving because of sound bites. One can honestly say that if we don’t do this, we will not be economically competitive. Ten and 20 years from now, the price of oil will likely be higher — this is not a stretch of the imagination. The debate for whether smoking causes lung cancer and emphysema was actually in the first decade among scientists, but they muddied the waters for 2½ more decades. Climate change, on a global scale, is a much bigger deal, and people are trying to muddy the waters, particularly people who think they might lose. Unfortunately, it’s easier to propagate fear than seeing a vision of prosperity.
Q Are you surprised that more businesses aren’t stepping up and moving in this direction?
A A lot of businesses in Silicon Valley see the opportunity. The push back comes from more traditional businesses, like oil and gas, and energy-intensive businesses. Take agriculture: Rural America can benefit greatly from clean technology. They have land, so they can have wind turbines. They can have carbon offsets from planting trees. They can have biofuel from biowaste. Now you have three different income generators in rural America that could dwarf or at least be comparable to the cash you’d get from growing food crops. But the thinking is: If you put a price on carbon, that means the cost of natural gas might go up, the cost of fertilizer might go up, the cost of diesel fuel might go up, I’m worried about that. To convince them of the opportunity that you can make a heck of a lot more money is tough.
Q Would it be helpful if the industries that will benefit were more vocal?
AThey should be as vocal as possible, but they mostly should quietly convince the others who might be afraid that they might lose, to say, “No, you could win!” and by the way, if you do not develop a more energy-efficient way of running your business — eventually the old coal plants will have to be replaced, and the price of energy will go up. Isn’t it better to have a sustainable business model than to keep saying, “I don’t want to do this?” The world is changing, and the United States is changing. Fighting a rear-guard action ultimately will mean a slow death, or slow strangulation, and a decrease in competitiveness. Rather than do that, why not say, “How do you actually win?”
