As the Senate prepares to consider climate and energy legislation this fall, what are the key issues that will be debated on the energy front? During today's OnPoint, Robbie Diamond, president and CEO of Securing America's Future Energy, discusses this fall's debate and explains how the legislation may change as it makes its way to the Senate floor.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Robbie Diamond, president and CEO of Securing America's Future Energy. Robbie, great to have you back on the show.

Robbie Diamond: Thanks for having me.

Monica Trauzzi: Robbie, SAFE has been doing work on the offshore drilling provisions included in the Senate energy bill. Let's backtrack for a moment and just sort of highlight what came out of the committee at the end of June and what the full Senate will be taking up in the fall.

Robbie Diamond: So, I think it's actually pretty exciting what came out of the Senate Energy and Natural Resources Committee in June. Really, it's a nod that we are going to get off oil from the sole source of our transportation fuel as they have electrification provisions and also provisions that deal with the transmission and distribution of electricity for those vehicles and just for the country, the power of the country as a whole. It also acknowledges that energy is needed in the interim years to power our economy, such as producing oil and natural gas offshore and I think that shows maybe how the center of gravity has shifted after our $140 price spike last summer. And really you had a majority of Democrats supporting, in a Democratic Congress, offshore production and it wasn't the Republicans that were able to get this done, but really the Democrats.

Monica Trauzzi: As the full Senate prepares to take up this legislation what are the biggest challenges you think it faces? I mean where are the biggest fights going to be?

Robbie Diamond: So, if we just look at the Senate Energy and Natural Resources bill, excluding climate change ...

Monica Trauzzi: Right.

Robbie Diamond: I mean you've got particular fights in that bill. There's going to be fights over nuclear provisions and maybe people wanting more nuclear provisions or less, the offshore provisions. Transmission is going to be, once again, the great fight in front of us and so that's particular issues for that bill. When you bring in climate change as part of it you have the whole climate change discussion, so really energy security and climate change are totally related, but yet they are in some cases distinct. And I think it's going to be for the Senate and for Congress and for President Obama to decide how they move forward, if both are going to be together, if both could ultimately be separated or to do nothing because it gets crowded out by health care.

Monica Trauzzi: And there has been a lot of talk about what the Senate leadership might end up doing if they do get to a point where those votes just aren't there for a cap and trade. Do you believe that they're going to start peeling off some of the energy provisions and taking them up separately?

Robbie Diamond: I'm not sure that they are committed to doing that now. I think they definitely want to just work on energy as an entire package, both climate change and some of these energy provisions. Ultimately it will depend on the calendar. Health care, I think the greatest threat to energy being the topic du jour or top topic for the fall is really health care. Does that crowd out the schedule and does political capital gets so expended dealing with that issue that energy is just ... you're just not able to do it. If that's not the case, they're going to face that question. I mean I think oil prices will always be a player in this and so you never know what's going to happen in the international oil world. Will prices go up or not? Will the economy shows some signs of recovery and prices go up? Will one country have an insurrection or a country attack another country? And if the prices go up and the people demand action on energy and they can't get climate done they're going to turn to potentially what has been passed.

Monica Trauzzi: Your organization, as you mentioned, is also working on transportation electrification. Obviously, infrastructure is the key hurdle here. Is enough being done? Is it being addressed adequately in this session of Congress?

Robbie Diamond: I think we have great concerns that electrification becomes a niche novelty market as opposed to something that's on a mass scale that really impacts are oil security by reducing our oil use. If one just looks at hybrids there's about 1.3 billion hybrids on the road. You know, there's over 280 million vehicles just in the United States. So it really is a niche novelty market. Maybe in New York, Washington, and LA you see lots of them, but in the rest of the country they're not there. And so in order to make electrification have some real value and reduce oil dependence in a dramatic fashion you need millions and millions and millions of vehicles. And so batteries, cars, and infrastructures sort of have to come online around the same time in order to make this work. I don't think we can just depend on the fact that, oh, we're spending money on batteries and it will get better. Of course it's important and the grant announced by DOE and President Obama today is fabulous, or depend on consumer incentives to buy those vehicles. I think we really need to think about preparing our cities for these vehicles, the common, in a country the size of the United States, do we have to pick parts of the country and prepare them for the vehicles in the next few years and start those infrastructure changes today? And I think we have to think about these as electrification ecosystems and really prepare for the mass penetration of vehicles, show the value proposition in certain places and then allow us to invest across the country to bring it out.

Monica Trauzzi: These are expensive goals and they're more long-term goals. What are some of the immediate impacts, the immediate potential of electrification? Could we see stuff happening tomorrow?

Robbie Diamond: You know, tomorrow the cars are going to come out in no quantity to impact our oil dependence, but it's very important that the battery companies are building the factories to produce the cars that the automakers are starting to design and build the cars and that the utilities are getting ready to think about the smart meters that have to be out there and how they're going to charge for the electricity and other types of companies like the Ciscos and the IBMs on the backend. So, there's just so much to do I think these things will be behind the scenes in the first years, but I think you really do need to put shovels in the ground on some of these infrastructure questions that I raise. I mean you see countries like Israel or Denmark, of course they're so much smaller they can take sort of these big investments now in preparation for the cars. So, with a country the size of the United States do we pick off areas the size of Israel or the size of Denmark and do what they're doing to get ready for these cars to come online? Now, a lot of those investments are investments we'll want to make anyways, like the smart meters and the smart grid.

Monica Trauzzi: Final question here. The renewable electricity standard also received a lot of criticism because it was scaled back in the final bill that came out of committee. What do you think will happen there? Do they need to get those numbers up in order to get support from the full Senate?

Robbie Diamond: I think if they drop climate change and they sort of go forward with just this energy package we'll probably try to strengthen that. When it comes to all the controversial things I think it possibly might be a very difficult lift, just one more battle that they have to fight that they're not ready, that they're not able to get it over the line. So I think it will all depend on the politics of oil prices, health care, and then sort of if they're able to package things with climate change or not.

Monica Trauzzi: OK, we'll end it right there. Thanks for coming on the show.

Robbie Diamond: Thank you very much.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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