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Energy secretary to step down, after creating a large suite of clean energy policies

Trading his suit and tie for a lab coat and goggles, Energy Secretary Steven Chu announced his decision to step down last week and return to academia. In his wake, the Nobel Prize-winning physicist will leave a gulf of technical expertise, a volatile energy market and an administration in flux on how to address climate change.

Chu pushed aggressively for new science and technologies to solve America's energy issues, at times palpably excited by new findings, while making politically and financially risky bets on new technologies. Echoing President Obama, Chu advocated an "all of the above" approach to energy, pushing his department to advance renewable power along with better fossil fuels and nuclear energy. The goals, he said, were to make the United States energy-independent, foster economic prosperity and slow climate change.

At the time of his appointment, Chu headed Lawrence Berkeley National Laboratory, which expanded its research in solar energy and biofuels under his tenure. He also worked in the physics and cell biology departments at University of California, Berkeley, researching how individual polymer molecules behave.

More comfortable in front of a whiteboard than in front of a microphone, Chu said he looks forward to resuming his scientific pursuits. "I would like to return to an academic life of teaching and research but will still work to advance the missions that we have been working on together for the last four years," he said in a letter last week announcing his resignation.

Over the past four years, Chu presided over drastic changes in the nation's energy portfolio. Solar and wind generation doubled while natural gas prices plummeted as developers tapped shale gas wells across the United States. Gasoline prices soared and electricity rates rose in many parts of the country. The Energy Department also approved the first new nuclear reactors in more than 30 years.

As a Cabinet official, Chu brought a great deal of hands-on science to the White House. Speaking at a press conference last year, Rahm Emanuel, mayor of Chicago and former chief of staff for President Obama, lauded Chu's handling of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Emanuel said it was a relief to have someone involved in the disaster response who actually knew what he was taking about and had a strong grasp of the science at play. Emanuel also needled Chu for his enthusiasm and droning on about energy topics long after everyone else's attention had lapsed during Cabinet meetings.

Science solves all

Chu used his department as a laboratory for ideas on how structure programs and policies. He helped drag research languishing at DOE national labs into the marketplace. Using funding under the American Recovery and Reinvestment Act, the department formed initiatives like the Advanced Research Projects Agency-Energy (ARPA-E), modeled on the Department of Defense's own research group, to fund high-risk, high-reward energy technologies.

Chu's department also pursued ambitious targets like the SunShot Initiative, which aims for solar energy to be cost-competitive with fossil fuels by the end of the decade. Citing his experiences at Bell Labs, where he conducted his Nobel-winning research, Chu created innovation hubs, research centers with specific focus areas like batteries, as a new model for basic and applied research.

These high-risk investments also mean a high failure rate, something Chu was more comfortable with than Congress. "An old adage I tell all my students that I learned when I was about 30 years old is: It's OK to fail, but do it fast and move on," Chu said last year during DOE's budget request briefing.

Several startup companies receiving DOE funding suffered high-profile flameouts, drawing political ire. Solar manufacturer Solyndra received $535 million in backing under DOE's loan guarantee program before going bankrupt, and more recently, regulators approved the sale of battery manufacturer A123 Systems Inc., which was allocated $249 million, to a Chinese firm.

Chu also brought his "science solves all" approach to climate change. He never minced words on the research behind the warming planet and is, at his core, a bespectacled professor who can riff with ease on everything from the technical aspects of desertification to sea level rise. In a city of politicians, the diminutive scientist seemed to speak from a taller podium.

In his letter Friday, the physicist and self-styled nerd ended his Cabinet tenure in the same way he started it: with a sweeping portrayal of humankind's impact on the atmosphere.

"Ultimately we have a moral responsibility to the most innocent victims of adverse climate change," Chu wrote, referring to the poor and "those yet to be born."

"There is an ancient Native American saying: 'We do not inherit the land from our ancestors, we borrow it from our children,'" he added. "A few short decades later, we don't want our children to ask, 'What were our parents thinking? Didn't they care about us?'"

Last April, with Congress gone missing on climate, and at the outset of a presidential campaign in which the topic was a mumble, Chu told a forum in New York that the scientific underpinnings for atmospheric warming had grown stronger.

"The debate is how much it will change," he said of the climate.

Some well-publicized stumbles

Chu, the policymaker, on the other hand, had his share of stumbles. One of his most recited quotes was featured with abandon in Republican attacks during the legislative debate on capping carbon emissions and erecting a marketplace to trade permits equaling 1 ton of CO2. It's still being used today.

He promoted raising the price of gasoline with the innocence, or naivete, of a scientist seeking to advance the use of cleaner fuels. It was a simple calculation in his mind: Reduce demand for gas-burning cars and increase it for those that run on something else.

"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe," Chu said in a Wall Street Journal interview three months before he was nominated as Energy secretary.

That viewpoint, which Chu later retracted, was never the policy of the Obama administration. But it came to embody the burden that Chu and his boss would shoulder throughout the first term. And beyond.

"While many will remember Secretary Chu for his comments about the need to raise gas prices on American consumers and the high grades he publicly bestowed on himself," Rep. Darrell Issa (R-Calif.), chairman of the Oversight and Government Reform Committee, said Friday in a statement, "I found taxpayer losses on projects like Solyndra and the Department's deeply misguided effort to use taxpayer dollars as an investment bank for unproven technologies to be the most problematic aspects of his legacy."

Chu didn't mention Solyndra by name in his Friday letter, but he hoisted a strong defense of his department's use of loan guarantees as a successful element of the $35 billion clean energy outlay in the Recovery Act.

"While critics try hard to discredit the program, the truth is that only one percent of the companies of the companies we funded went bankrupt," he wrote. "That one percent has gotten more attention than the 99 percent that have not."

Tim Phillips, president of Americans for Prosperity, which has links to Koch Industries, mocked Chu for being "out-of-touch" on gasoline prices because he doesn't own a car.

"Sadly, Secretary Chu's energy policies were the most ideologically driven and uniformly failed energy policies in American history," Phillips said in a statement.

But where special interests see clean energy favoritism, Chu's supporters see transformation.

Mark Munro, a senior fellow at the Brookings Institution, described Chu as changing DOE from a backwater overseer of nuclear cleanup to an engine of economic development that has been adapted to advance energy breakthroughs.

"For the first [Obama] administration, and the first term, Chu really was a historic figure," Munro said. "I think the second term will be much more incremental, much more constrained and much more about partnerships with subnational units -- states, regions, local finance authorities."

As far as solving climate change directly, Chu broached a variety of mitigation approaches, including geoengineering. He suggested paving roads with white asphalt and painting roofs light colors to reflect sunlight back into space to cool the planet. Researchers at national labs are now investigating these possibilities.

Working on 'clean coal'

DOE also funded research into capturing emissions at sources like factories and power plants. Chu also said pulling greenhouse gases straight out of the atmosphere could be a viable strategy. "We still have to pay attention to carbon capture and sequestration because we have a climate issue, and by midcentury, we will need to capture a lot of things, not only from power plants but cement plants, from steel plants, from all these other things," Chu said last week at the 2013 Washington Auto Show.

Analysts said that one of Chu's biggest legacies was overseeing major milestones with carbon capture and sequestration (CCS) -- a technology that envisions capturing CO2 from coal plants and industrial emitters and injecting the gas underground.

Armed with roughly $270 million in department funds, Mississippi Power -- a subsidiary of Southern Co. -- broke ground in 2010 on what could become the nation's first coal-fired power plant equipped with the technology at a commercial level, if it begins operations in 2014 as planned.

Similarly, the Texas Clean Energy Project -- a planned coal gasification plant that would capture most of its CO2 -- became the first CCS proposal on a large coal plant to ink a power contract agreement with a utility, according to a department announcement last year. Developers expect to break ground this year.

John Thompson, an analyst at the Clean Air Task Force, said Chu was instrumental in offering financial support to a few key CCS projects far along with permitting, like the Texas Clean Energy Project, rather than distributing money to new proposals. When some CCS projects were canceled, Chu looked to the "existing pool," he said.

"He made sure that certain projects had enough money to cross the finish line," Thompson said.

Some of those projects had roots in the George W. Bush administration, but Chu was instrumental in keeping them viable, said Thompson.

The stimulus package was critical for this -- particularly for FutureGen 2.0, a planned CCS project in Illinois that was allocated $1 billion -- more than any other "clean" coal proposal.

FutureGen is still moving forward, and Illinois regulators approved its power contract in December (ClimateWire, Dec. 20, 2012).

Additionally, Chu was crucial to shifting the department's focus with "clean" coal technology to "utilization," or finding a financial purpose for captured CO2, Thompson said. This was extremely important considering the cost of the CCS and the lack of a financial driver for the technology such as a carbon tax.

Last year, the industry's annual conference added the word "utilization" to its name and emphasized the financial potential of linking proposed capture projects to enhanced oil recovery, in which CO2 is used to pump more crude out of the ground.

With utilization in mind, regional carbon capture partnerships overseen by the department also are now spending more money and doing more studies to find "opportunities for EOR," said Thompson. With CCS, Thompson said what happened in the last four years is less important than what will happen in the next four, particularly considering that there is no repeat of funding like the stimulus.

The next secretary could play an important role in being an advocate for changes to the Section 45Q tax credit, which provides a financial incentive for carbon sequestration projects via a 2008 law, said Thompson. Many of the proposals to change the tax credit are enshrined in recommendations from the National Enhanced Oil Recovery Initiative, a coalition of coal companies, think tanks, state agencies and universities.

Pushing electric cars uphill

Another feature that defined Chu's term was his commitment to reducing dependence on foreign oil and fighting climate change through vehicle electrification.

Chu said at the auto show that his overarching goal is to bring the cost of a plug-in vehicle down to $20,000 or $25,000, where it can compete with a comparable-sized gasoline-powered car that gets 40 mpg.

There is reason to think it's doable, he added. The Chevrolet Volt sold nearly 24,000 units in 2012, and the newly priced Nissan Leaf -- which comes in under $20,000 in California, factoring in all available incentives -- will likely become an attractive purchase.

However, the Obama administration is still well off its target to put 1 million EVs on the road by 2015. "It's ambitious, but we'll see what happens," said Chu.

David Danielson, assistant secretary for energy efficiency and renewable energy, said last week that DOE is committed to lowering the cost of lithium-ion batteries from $650 per kilowatt-hour to $300 per kilowatt-hour by 2015 and eventually plans to reach $125 per kWh. He credited Chu for leading that vision.

But Chu himself noted that DOE isn't only committed to EVs but will continue to advance technology for hydrogen fuel-cell and natural gas vehicles, too.

"We're technology neutral. We are not going to pick ... natural gas or electric vehicles or fuel cells -- we're pushing all of those things, and that's the attitude we have about this," he said. "We want a diversified choice for our transportation other than oil-based fuel."

DOE underscored its ongoing commitment to cutting oil use Friday by opening up a public comment period on a solicitation for more than $50 million in new research projects targeting vehicle performance and fuel economy.

At the moment, it's still unclear who will take the helm of DOE. Despite all of Chu's experimentation, his lab equipment was in short supply of political experience. Some observers are predicting that Obama could choose a successor who is able to connect with lawmakers, business leaders and energy innovators on the ground.

Among those being mentioned are Tom Steyer, founder of Farallon Capital Management LLC; former Sen. Byron Dorgan (D-N.D.); former Michigan Gov. Jennifer Granholm (D); Stanford Law School professor Dan Reicher; former Colorado Gov. Bill Ritter (D); Center for American Progress founder John Podesta; and Deputy Energy Secretary Daniel Poneman.

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