New regulations to push the marketplace toward the use of more natural gas and renewables could unshackle the United States from oil imports, U.S. Rep. Ed Markey (D-MA) said last week. He spoke to a standing room only crowd on the first day of Cambridge Energy Research Associates' CERAWeek conference in Houston.
"I see my job as setting the policies that...give companies two things they need -- certainty and opportunity," said Markey.
Referring to his work on the Telecommunications Act of 1996, the long-time "Big Oil" industry critic said his goal then was to ensure that every company had a chief technology officer to deal with the changes across the industry. Companies in the energy sector, he said, need to have chief energy and environmental officers to ensure there is enough research and development taking place.
"The energy sector doesn't spend anywhere near what the pharmaceutical companies do, the semiconductor companies do, even what the automakers spend," Markey said. "We have to change the incentives to induce a new set of entrepreneurial interests."
Almost 30 years ago 10% of federal government research spending was directed to energy. In 2008 only 2% of those research dollars went to energy research -- and that has to change, Markey said.
Legislators in Washington, DC, now have an opportunity to enact workable greenhouse gas legislation, a cap-and-trade system to limit carbon dioxide emissions and a way to stem oil imports, said the Massachusetts Democrat.
"We see this as an economic opportunity," Markey told the crowd. "How do we look at this as a new sector where we can create new jobs? What is it that we can replace?"
New energy efficiency efforts and renewable energy sources could create two million to four million new jobs in the United States, Markey said. However, it will only happen "if we capture the opportunity that is there. And we have to decide if it's an area where we want to lead."
"Finally, the U.S. is not in denial on the science...but are we now the leader?" Markey asked. "The...rest of world is waiting for the United States to stop being the laggard and start being the leader in terms of these issues."
CERAWeek, now in its 28th year, attracted more than 2,000 energy professionals from across the world.
"There's a real urgency to CERAWeek this year," said Daniel Yergin, CERA's founder and the conference chairman. "The recession shock has hit all of the energy industry hard, and indeed has taken it by surprise...The dramatic rise in oil prices and then the rapid fall have created great uncertainty for strategies and investment, and people need perspective. At the same time, there is a clear recognition that major changes in energy policy are at hand, and the United States will move soon to a climate change system. There is more on the impact of technology and innovation across the energy spectrum."
Yergin, whose book The Prize: the Epic Quest for Oil, Money and Power won a Pulitzer Prize in 1992, said the current turmoil in the markets is setting up the industry for a more difficult recovery -- unless companies continue to prepare for it. "For the industry, it's been whiplash. It's just changed so quickly...We learn again and again about the power of cycles in the energy business. They may get postponed, but they never get abolished."
The energy industry, said Yergin, faces the possibility of falling "into the type of situation we had after the 1998 price collapse, when Wall Street put enormous pressure on energy companies to cut back investments. When demand started again, people were running double time to try and catch up...It's very challenging. You're making investments that will have a 10- to 15-year time horizon." Recent events highlight the turmoil facing the entire energy sector, he said.
President Obama's new energy secretary, Steven Chu, is an indicator of a changing environment, said Yergin. Chu has promoted alternative energy and warned of global warming as director of the Lawrence Berkeley National Laboratory in California.
"I think it's very clear there's going to be a big emphasis on climate change," Yergin said of Obama's administration. "The appointment of Steven Chu is a notable statement." The CERA chairman said "there's a strong sense" that the United States is "moving into an era in which there's going to be more focus on energy policy. But the reality is there's no simple answer for such a policy in a $14 trillion economy."
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