Energy Policy:

DOE's Sandalow discusses impacts of stimulus spending

One year after the American Recovery and Reinvestment Act was signed into law, how effective has it been at expanding clean energy development and creating jobs? How has the Department of Energy handled the distribution of stimulus funds? During today's E&ETV Event Coverage of a Center for Strategic and International Studies event, David Sandalow, assistant secretary for policy and international affairs at the Department of Energy, discusses the early impacts of the stimulus and the administration's broader strategy for expanding clean energy growth in the United States.

Transcript

David Sandalow: It's great to be here at CSIS. I am a long-time admirer, not just of Frank's work, but of the work of this think tank more broadly. CSIS does great work on geopolitics. It does great work on energy policy, so I'm delighted to be here.

It's actually a terrific place to make an announcement not related to the topic of today's conference, but I can announce today that Secretary Chu is going to travel to the Mideast next week and will be in Saudi Arabia, UAE and Qatar next week.

He follows trips there by Deputy Secretary Dan Poneman, who is in the region in December, and by the head of our ARPA-E program, Arun Majumdar, who was in Qatar last month, and this series of high-level meetings reflects the priority that we attach at the Department of Energy to our relationships in the region.

Turning to today's very timely topics, a few thoughts. Let me start with Sam Fortune. Sam Fortune Jr. is a single father of three in Coshocton, Ohio. He lost his job during the Christmas week in 2007 and struggled for more than a year to find work.

Finally, he saw an ad in a local paper announcing a job as a heating technician under a local home weatherization program. Sam got the job and has been helping people in this community cut heating bills ever since.

Elizabeth Rolinski is a plant manager for Johnson Controls, which is a 125-year-old American company. Rolinski is in charge of reopening the company's Holland, Mich., manufacturing facility, which will make next-generation lithium-ion batteries.

The plant will provide more than 550 manufacturing jobs and is expected to produce at least three times as many indirect jobs in the Holland, Mich., community.

And Michael Harvey is chief technical officer at XeroCoat, a California startup that makes parts for solar energy systems. A year ago, Harvey was having trouble finding funding for a small but promising project to lower the cost of solar energy.

It looked like the company would fall behind foreign competitors, but today, XeroCoat is pursuing that project and has already created five new jobs in the process.

Now, what do all these people have in common? Along with millions of Americans, each one is doing work made possible by the American Recovery and Reinvestment Act, landmark legislation signed into law by President Obama just one year ago today.

The Recovery Act was a sweeping economic recovery package designed to help rescue a nation on the edge of economic abyss. For millions of Americans, its impacts have already been profound.

Public and private forecasters ranging from the Council of Economic Advisers to Moody's Economy and IHS Global now say that the Recovery Act is responsible for about 2 million jobs nationwide.

And the nonpartisan Congressional Budget Office, widely respected by members of Congress on both sides of the aisle, says that the numbers of jobs created could be as high as 2.4 million. Now, furthermore, within this legislation was the largest one-time investment in clean energy in U.S. history.

So when I received your invitation to come speak at this timely conference, I was delighted to accept. I thought I could use it as a platform for both taking stock of our progress to date and offering thoughts on the road ahead.

So to take stock of progress, let's start by recalling where we were just one year ago. In December 2008, the U.S. economy lost 673,000 jobs. In January 2009, it lost 779,000 jobs. The economy was in free-fall.

As a result of the financial crisis, affordable credit had dried up. Many Americans were unable to access loans for their businesses, education and mortgages. Home values were plummeting, and across the political spectrum there was real fear of another Great Depression.

Congress responded with the American Recovery and Reinvestment Act, which President Obama signed less than one month after taking office.

The act pledged $786 billion to pull the economy back from the brink. It was divided into three parts. One-third was for tax cuts for small businesses and working families.

One-third was for emergency relief, extending unemployment benefits, reducing the cost of health insurance, and providing assistance to state and local governments facing enormous budget shortfalls.

And a final third was for investments to put Americans to work on critical projects to help us keep competitive in the 21st century. This includes computerizing medical records, medical research, renovating classrooms, upgrading roads and railways, and most important for our discussion today, making historic investments in clean energy.

And that's where the Department of Energy comes in. Actually, I've worked at several places in the federal government, and before last year, I had never worked at the Department of Energy.

I can report to you the DOE's mission is wide-ranging. DOE is the manager at our nation's nuclear arsenal and the associated environmental cleanup.

It's the largest funder of basic science research in the nation, and it's the agency in charge of clean-energy technology deployment.

Actually, it's a very exciting time to be at the Department of Energy. That's true for several reasons. I think it's true in large part because we have a transformational leader in Energy Secretary Steven Chu.

As many people here know, Dr. Chu was awarded the 1997 Nobel Prize in physics. Five years ago, he changed the course of his career to focus on energy, leaving Stanford to direct the Lawrence Berkeley National Lab.

I must say, I sometimes sit in budget meetings and I wonder, what was it like before the Secretary of Energy knew more about most topics he's being briefed on than most people briefing him?

Secretary Chu is also a superb manager. That's important for any organization the size and breadth of DOE, but I think it's especially important because of the topic that we're here to discuss today.

DOE's annual budget for energy, science and cleanup programs is roughly $17 billion. Through the Recovery Act alone, DOE received almost $37 billion in appropriations, and these funds must be awarded in less than 20 months, by Sept. 30 of this year, and spent very promptly.

And so at DOE we faced an enormous challenge. The Recovery Act asks us to manage more money than we've ever had, on tighter timetables, giving money to more entities than ever before.

To meet this challenge, Secretary Chu brought in a team of highly qualified managers and experts. The leader of these efforts, as Frank has already referred to, is Matt Rogers, the secretary's senior adviser for Recovery Act implementation.

Matt comes to DOE from McKinsey & Co., where he was a senior partner with more than 20 years' experience in the energy industry. He is also, quite simply, one of the most talented and dedicated public servants that I've ever known.

He and his team have worked tirelessly to lead the department in spending DOE's $37 billion in Recovery Act funds with speed, transparency and accountability.

Now, in making these historic investments, DOE has had six substantive goals, and I thought I would spend the bulk of my time today talking with you about them.

First, our first goal has been to dramatically improve energy efficiency, saving Americans billions of dollars. Under the Recovery Act, we're making the largest single investment in home energy efficiency in U.S. history.

For low-income families that are hit hardest by utility bills, the Recovery Act provides $5 billion for the Weatherization Assistance Program, which funds local agencies to perform home energy audits and weatherization services.

As a result of the Recovery Act, we expect to weatherize about 650,000 homes for low-income families by the end of the year, improving energy efficiency and cutting energy costs.

Over the next several years, our investments will help millions more Americans cut utility bills by making their homes and appliances more energy-efficient.

Within the Recovery Act is an expanded tax credit for energy efficiency, which covers upgrades up to 30 percent of the cost of improving your home, up to a cost of $1,500.

The Recovery Act also includes $3.1 billion for a DOE state energy program, showcasing cooperation between federal and state agencies.

Historically, the state energy program and its partners save more than $7 in energy costs and leverage nonfederal investments of over $10 for every dollar of federal investment.

And the Recovery Act also funded, for the first time, $3.2 billion in energy efficiency and conservation block grants, which will assist cities, counties, states, territories and Indian tribes to develop their own efficiency programs.

This will include improvements in building codes, energy audits and retrofits, efficient public lighting and landfill gas capture. As part of this block grant program, we've launched an innovative effort called Retrofit Ramp-up.

It's going to award almost $400 million for innovative programs to provide whole-neighborhood building energy retrofits. These projects will demonstrate a sustainable business model for providing cost-effective energy upgrades for a large percentage of the buildings in a given community.

So the first goal that we've identified and pursued is dramatically improving energy efficiency. A second is building the strongest renewable energy industry in the world.

Recovery Act investments totaling $23 billion will put us on track to doubling both renewable and energy generation and advanced energy manufacturing by 2012, while leveraging over $43 billion in additional investment.

We expect these investments to create hundreds of thousands of jobs. We're funding across the range of renewable energy technologies in the power mix, including wind, solar, geothermal, hydro and efficiency.

We're also investing both in research and development and deployment of renewable energy. As just one example, up to $24 million in Recovery Act funding has gone to three universities around the nation to improve land-based and offshore wind turbine performance.

I was in Maine recently, where experts told me they call Maine the Saudi Arabia of offshore wind and they said that wind resources there could provide enough electric power for the entire state in the decades ahead.

At the same time, the Recovery Act has so far provided more than $2 billion in so-called Section 1603 grants in lieu of tax credits, where energy producers receive cash up front instead of waiting for tax credits, which has helped companies access the capital they need to deploy renewable energy resources, renewable energy now.

So by the end of the year, we'll have supported more than 15 gigawatts of new wind, solar, and geothermal, enough to power 4 to 5 million homes.

Our domestic renewable energy industry has made clear that the Recovery Act has been crucial to unlocking financing for these kinds of projects in recent months.

DOE has also worked closely with the Treasury Department on the tax credit for clean energy manufacturing under Section 48C. The president announced last month that 183 manufacturers in 43 states would receive 2.3 billion in tax credits.

The interest was extraordinary. The program has been oversubscribed by 3 to 1. Now, instead of turning down worthy applicants, President Obama and Vice President Biden have called for Congress to provide an additional $5 billion to expand the program.

Because there's already a deep pipeline of projects, these funds will be deployed quickly to create jobs and support economic activity. So the first substantive goal is in efficiency, a second in renewable energy, a third goal is in transforming transportation.

I have to say, as I was working on and writing this speech, the numbers just in the billions of dollars and the extraordinary number of projects here, it's just overwhelming.

For example, in the transportation area, we're investing more than $4 billion with Recovery Act funding to develop the next generation of vehicles, plus 8.5 billion so far from our Advanced Technology Vehicle Manufacturing Loan Program.

These programs are going to transform the transportation sector, supporting electric and natural gas vehicles, advanced biofuels and projects that will improve the efficiency of internal combustion engines.

Over the next six years, three new electric vehicle plants, the first ever in the United States, and 30 new battery and other electric vehicle manufacturing plants will be fully operational.

We've made investments in battery and component suppliers like A123, EnerDel, and Celgard, as well as manufacturers like Nissan, Tesla, Fisker and Ford to make advanced vehicles right here in the United States.

These plants will have the capacity to produce 250,000 electric-drive cars and batteries to power 500,000 plug-in hybrid electric vehicles.

We're also building the infrastructure to support these vehicles, including more than 10,000 charging locations in a dozen cities. We've awarded $300 million in Recovery Act grants to 25 clean city coalitions.

These grants significantly expand city- and county-led efforts to reduce petroleum consumption, deploying high-efficiency cars, trucks and buses.

At the same time, Recovery Act investments are supporting the development and deployment of the next generation of biofuels. Over $600 million in Recovery Act grants, along with federal loan guarantees, will support 19 pilot demonstration and commercial-scale biorefineries.

These facilities will convert biomass into fuels and chemicals that otherwise would be produced from oil, creating jobs and raising incomes in rural communities across the nation.

Before these investments, the development of an advanced biofuels industry was at a virtual standstill, as numerous facilities at the pilot stage faltered during the economic downturn.

And more than $100 million from the Recovery Act plus an additional $87 million from other sources will go to improving the freight-hauling efficiency of heavy-duty trucks and fuel efficiency in passenger vehicles by up to 40 percent.

And, finally, in the transport sector, the Recovery Act grants totaling $8 billion will spur the development of America's first nationwide program of high-speed intercity passenger rail service.

The awards will go to develop 13 new large-scale high-speed rail corridors across the country. It's the Department of Transportation, not DOE, which is in the lead on these high-speed rail investments.

So efficiency, renewables and transportation. A fourth area is in building a 21st-century power infrastructure. Our electric grid is a critical piece of infrastructure, but today it uses century-old technology.

It's been said that Thomas Edison would recognize very well our modern electric infrastructure if he came back and saw it today. The infrastructure wastes too much energy, it costs us too much money, and it's too susceptible to outages and blackouts.

Just as President Eisenhower's investment in an interstate highway system revolutionized the way Americans travel, our Recovery Act investments in the smart grid and new transmission lines will revolutionize how we produce, transport and use energy.

More than $4 billion in Recovery Act smart grid investments will be matched by more than $5.5 billion in private-sector funding for nearly 140 projects that will reduce costs, increase reliability and give consumers more choice and control over their energy use.

These investments will support the installation of 18 million smart meters which allow homeowners to monitor energy use by the month, week or even the hour.

By 2015, we expect a combination of public and private investment to lead to the deployment of 40 million smart meters nationally. The Recovery Act is also funding the installation of over a thousand sensors on the electric transmission system to improve reliability and security, for the first time, covering the entire U.S. transmission system.

We expect these investments to create tens of thousands of jobs. A fifth area is demonstrating carbon capture and storage and demonstrating that CCS can be economical in eight to 10 years.

With $3.4 billion from the Recovery Act, along with funds from other programs, we are making unprecedented investments in CCS, already attracting roughly $7 billion in private capital.

Projects we're supporting are projected to capture 12 million tons of CO2 annually by 2015 and much more in the years beyond. Realizing the promise of low-carbon electricity from coal requires an economical solution to capturing CO2.

The leading processes today are amine- and ammonia-based processes that cost $60 per ton and have a very significant energy penalty, which has prevented them from reaching widespread commercial implementation.

New CO2 capture technologies using different solvents, adsorbents and absorbents hold the promise to significantly reduce the energy penalty, cut capital costs and reduce the cost per ton by more than half.

Our grants are funding entirely new approaches such as synthetic enzymes or conversion of CO2 into valuable fuels and chemicals that could reduce the cost even more.

And a final, sixth area is re-establishing U.S. leadership in science and technology. The Recovery Act is accelerating the pace of technical innovation in the energy sector, which can serve as the basis for sustained future economic growth.

We're restoring U.S. leadership in science and technology so we can lead the global competition in clean technology. For instance, the Recovery Act included $400 million for a unique program called Advanced Research Projects Agency-Energy, or ARPA-E, modeled after the Defense Department's famed DARPA.

DARPA is widely credited for inventing the Internet, among other things. ARPA-E will fund high-risk, high-reward energy

technologies.

As Secretary Chu likes to say, in baseball, ARPA-E is like swinging from the heels. Not every project will succeed, but those that do have the potential to radically transform our energy system.

Game-changing research funded through ARPA-E so far includes grid-scale liquid metal batteries that could cut battery costs by 90 percent while doubling energy density; direct solar fuels, photosynthetic organisms that produce hydrocarbons instead of carbohydrates combining CO2, sun and water to produce ultra-clean gasoline; and super high-efficiency small wind turbines, leveraging advanced aerospace designs and materials to reduce the cost, improve the reliability and expand the range of wind energy.

Taken together, the projects we funded under the Recovery Act and the many oversubscribed opportunities that we have not been able to fund highlight the opportunity for the United States to accelerate clean-energy innovation and take a global leadership position in clean-energy industries globally.

As I mentioned briefly before, DOE also has the important role of managing our nuclear arsenal in cleaning up sites across the country associated with the legacy of our nation's nuclear weapons program.

DOE's Office of Environmental Management oversees more than 80 active sites across the country, 17 of which received $6 billion in Recovery Act funding to accelerate ongoing cleanup work.

These shovel-ready projects quite literally have created or saved more than 12,000 jobs to date, helping to get local economies moving again while eliminating Cold War-era contamination.

So, to sum it all up, how have we been doing overall? Some more numbers: To date, DOE has selected $31 billion and obligated $25.5 billion of our just under $37 billion in appropriations under the Recovery Act.

We've also underwritten $5.6 billion in clean-energy tax credits and grants in lieu of tax credits and identified more than $1 billion in projects that will be financed through loans and borrowing authority.

These funds have been matched by over $28 billion in private capital, supporting around $65 billion in projects. As we move into 2010, we're focused on delivering on the president's objectives for the year.

Our goal is to reach 100 percent selection and obligation of projects by Sept. 30. We're also working with recipients to get projects started and accelerate hiring.

We expect that the first half of 2010 will be a period of increased clean-energy job creation, reaching 60,000 jobs created and saved as a result of DOE stimulus funds.

And what more must be done? The Recovery Act is a down payment, hugely significant, but alone not sufficient to drive the kinds of investments we'll need to reach our goals.

To transition into a clean-energy economy, we must create a system of incentives to make clean energy the profitable kind of energy. That means putting a price on carbon pollution through comprehensive energy and climate legislation.

With such legislation, we'll establish clear targets and stable rules that will allow American industry to confidently scale up clean-energy infrastructure and remain competitive in the 21st century.

There is real common ground on comprehensive energy and climate legislation. We must overcome our differences and pass such legislation for ourselves, our children and our grandchildren.

We must also work tirelessly in other ways to build on the Recovery Act, seizing opportunities under, for example, highly successful and oversubscribed programs such as the tax credit for clean-energy manufacturing.

The American Recovery and Reinvestment Act has helped teach a lesson. When times get tough, government is often part of the solution.

Today, millions of Americans are in jobs made possible by public servants in Washington who worked tirelessly to shape the Recovery Act and make it effective.

Millions of Americans are in jobs made possible by public servants in state governments who worked in partnership with federal officials to restore hope for families across the nation.

Governors across the political spectrum have joined in public events to celebrate the arrival of Recovery Act funds in their states. This is part of a great American tradition.

When our nation faced 25 percent unemployment in the Great Depression, the federal government stepped in to stabilize the financial system, establish Social Security and create millions of new jobs.

When our nation was fighting the Second World War, the federal government led efforts to retool our factories, summon us to a great cause and defeat ruthless dictators on two continents.

When our soldiers returned home triumphant, the federal government paid for their education under the GI Bill, giving a generation of Americans a chance for a better life.

It was the federal government that built the interstate highways on which so many of us depend, the federal government that provides health security to our nation's seniors with Medicare, and the federal government that conducted the research that led to the creation of the Internet.

Every day, Americans enjoy these and many other benefits worked on by their federal government. These are Americans like Wendy Van Zandbergen, a single mom from Durant, Okla., who lost her job as a home health-care manager when the job market went sour.

She sold her house, exhausted her savings and emptied her retirement plan to stay afloat. Thanks to the American Recovery and Reinvestment Act, Wendy is now an energy education trainer with a solid and steady job in her community.

These are Americans like Dom Ross, who served for seven years in the U.S. Army, including a tour in Iraq. Back in civilian life, he landed a job making pizzas, but hoped for more. Thanks to the Recovery Act, last year he received training in home weatherization programs and now has a steady, long-term position in southern Colorado.

They're Americans like Tim Rosandick, superintendent of the Homedale School District in Idaho. Thanks to the Recovery Act program to make schools more energy-efficient, he says his school district will now save more than $13,000 each year. The Idaho state government estimates that school upgrades will create more than 250 jobs statewide in the next three years.

And finally, there are Americans like Dave Vieau, president of A123Systems, a battery manufacturer that started as a spinoff from MIT's labs in 2001 with the help of a $100,000 DOE small-business innovation research grant.

Since then, the company has raised over $350 million in private capital. Today, A123 is using a $249 million Recovery Act grant to build factories in Romulus and Brownstown, Mich.

Thanks to the Recovery Act, A123's first large-scale battery plant will be built in this country, creating jobs here in some of the hardest-hit communities in the United States.

The American Recovery and Reinvestment Act helped kick-start a sputtering economy and is making investments that will matter for years to come.

But even the historic investments under the Recovery Act will not be enough. They're just a down payment. The most powerful engine of innovation and job growth in our country is the private sector.

In the months and years ahead, our success will depend upon both our willingness to use the federal government wisely to help all Americans, as we have so often throughout our history, and upon the entrepreneurial zeal and innovative spirit of the American people. Thank you very much. Delighted to answer a few questions.

Frank Verrastro: We have a couple of simple rules here. Identify yourself and put your question in the form of a question. It would be extremely helpful and move things along. We'll start right here.

Bill Murray: Bill Murray with Energy Intelligence Group. You mentioned how important the price on carbon would be in terms of pushing forward in clean energy that the administration has plans for.

If we don't get a price on carbon through legislation in the next year, where does that leave the Obama administration's policy?

David Sandalow: I don't want to speculate on what will or won't happen, but I think the president has made clear, Secretary Chu has made clear that putting a price on carbon pollution is a priority and has called upon Congress to pass legislation and move it forward.

This is an issue of both economic competitiveness today and in the future, and we need to put in place the right type of incentives to make sure that American businesses can be competitive over the long term.

You know, one of the things I often hear are businesses bemoaning lack of stability in regulatory systems. And businesses have often made the point that once the rules are set, they can plan accordingly.

I think the time has come in the United States, the time is now. The president has said and Secretary Chu has said the time is now for us to be putting a price on carbon pollution and creating a set of incentives that American businesses can plan on in the years and decades ahead.

Frank Verrastro: All the way in the back.

Lee Patrick Sullivan: Lee Patrick Sullivan, Clean Skies News. In the president's economic report, I believe it was last week or the week before, he mentioned that the overwhelming majority of the stimulus money has yet to be spent.

What's the holdup? Is it red tape? Is it permitting? Why hasn't a lot of the money been spent?

David Sandalow: I talked a little bit about that in my remarks. Spending this money has required extraordinary mobilization of managerial talent and resources.

At the Department of Energy, you know, we brought on board top managers and a first-rate team in order to do it, and I think around the government, the same type of thing is happening.

So a huge effort is going into spending this money well -- by the way, also with unprecedented transparency and unprecedented accountability. I would urge everybody here to go to Recovery.gov, www.recovery.gov, if you're interested in kind of more detail on any of the items here.

Recovery.gov explains a lot of what's happening in the Recovery Act implementation sphere. So, it's an enormous and big effort.

Lee Patrick Sullivan: Can we assume that it will be spent at a quicker clip after they get management in place?

David Sandalow: I mean, I think the money has already been spent at unprecedented rates, so I think it's an enormous credit to the people working on this at DOE and elsewhere, the enormous work that's already been done. It's the type of things I talked about in my speech.

In terms of the exact pace, I guess that people have to look at the exact numbers, but it's really an incredible effort that's under way right now.

Frank Verrastro: There's a microphone coming.

Tim Gardner: Hi, Tim Gardner at Reuters. At the start of your remarks, you mentioned Secretary Chu is going to the Middle East. I wondered if you could just tell us a little bit why he's going and if he's going to Saudi Arabia, and if it's a conference or if he's meeting with individual ministers.

David Sandalow: He is going to Saudi Arabia. He's going to Saudi Arabia, the United Arab Emirates, and Qatar. He has a series of both private meetings and public events, and beyond that, I'll let him speak when he gets to the region.

Christopher Paine: Christopher Paine at NRDC. You said you were going to talk a little bit about the international dimension, but I guess you weren't able to get to it in the talk.

Can you say a little bit about how the administration is organizing itself to promote green energy abroad, specifically with respect to both nuclear nonproliferation and climate change goals?

David Sandalow: Actually, Frank said I was going to talk about the international dimension. I knew what I was going to talk about, but I'm delighted to answer your question, Chris.

This has been a huge priority of ours, and it's one that I've worked on quite a bit personally, a lot to say about it. Personally, I was five times in Beijing last year, and when the president was in Beijing in November, he signed a series of agreements on clean-energy cooperation across a range of areas, and which we're marching forward to implement today, and that's just one example.

Prime Minister Singh was here in November, and in the course of that meeting, clean energy was high on the agenda.

And in all of these discussions, I think the clean-energy stimulus spending happening in a variety of different capitals plays in and is highly relevant.

The international cooperation has got enormous potential, I believe, to make a big difference on the clean-energy front. And among the things we're doing this year on this is that Secretary Chu is going to be hosting a clean-energy ministerial.

We're just looking right now at exact dates, but he's going to be hosting his counterparts from around the world for a ministerial meeting focused specifically on clean energy.

In the nuclear area, which you asked about, the president will be hosting a summit in April, a nuclear security summit, and there is tremendous attention on this, as well.

Frank Verrastro: Let me take the prerogative of the chair here. So, you talked about down payment and we talked about jump-start, right?

So, in the context of, in the absence of a carbon tax or establishing a price for carbon through cap and trade, when you look at deficit spending and the inability to continue top-down spending, what's the kind of game plan as we get into 2010, 2011? How do you sustain this?

David Sandalow: That's a key question, Frank, and I point to two things. First, there are programs that we're proposing to extend, and I mentioned one of them in the speech, and that's the president has proposed to extend the tax credit for advanced energy manufacturing.

And I think that's part of the answer, but another, perhaps bigger, part of the answer is spurring innovation in the private sector, and that has been a driver of all of the decisions that we've made under the Recovery Act, is recognizing that what we can do with the Recovery Act is spur innovation more broadly, and unless we can make investments that we believe will be sustainable, in terms of business models in the private sector, we won't be able to achieve the results that we're hoping for, so, for example, if you look in the electric vehicle area what we're doing is funding a core of activity here in the United States that we believe can be the center of a very vibrant American advanced electric vehicles industry and lots more.

Alan Tonelson: Hi, I'm Alan Tonelson with the U.S. Business and Industry Council, and it's often the case that government is a lot more effective at writing rules than in actually monitoring compliance and actually enforcing them.

And, in that vein, I was hoping you could talk a little bit about the kinds of resources that DOE, in particular, has been devoting to enforcing the "Buy American" and various U.S. content rules that have been attached to its efforts, especially regarding green manufacturing and advanced vehicles.

David Sandalow: Key point here is that every dollar that is spent under the Recovery Act is going for U.S. jobs and U.S. job creation, and that as part of any application process, the focus is on what jobs are created in the United States. And I guess another point related to the question you just asked on an enforcement, because the Department of Energy, in another sphere, we've just launched enforcement efforts that are unprecedented.

It's slightly different than the question you're asking me. The Department of Energy is enforcing the Energy Star label and looking at the compliance of appliance manufacturers with the actual claims made in the Energy Star label.

You're asking a good question in terms of precise resources, on enforcement and follow-up, and we can get back to you on that, but I don't have those at the tip of my tongue.

Joe Dukert: I'm Joe Dukert, an independent energy analyst and also a senior associate in political economy here at CSIS. I have not read your latest book, but I did read "Freedom from Oil."

David Sandalow: Thank you.

Joe Dukert: And I thought it was a very fine book.

David Sandalow: I hope you bought it, too.

Joe Dukert: Oh, I bought it! I bought it. So, this is not a gotcha question. One of the recommendations of the president in his final speech was to increase gasoline taxes 10 cents a year for five years. Now, I wonder if you tried to push that after you came into the administration, and whether or not you've given up.

David Sandalow: I look forward to your gotcha questions, I mean that's -- you know, like most public officials I don't want to comment on private conversations.

But I would also say in the book, I talk about some of the political challenges associated with the proposal you just referred to and kind of the tension between some of the ideas that emerged from think-tank communities and ideas that emerged from the political setting.

So I appreciate you reading the book, and I would go back and read that part of it, too. It would be relevant to that.

Frank Verrastro: Since I can't see on that side of the room, all the way in the corner, and we'll come back to the middle.

Kate Howard: Thanks, I'm Kate Howard from NRDC, just a quick question. Sort of drilling down beyond what you had asked about the clean-tech manufacturing credit. Are there any other credits -- for example, like the 1603 grants in lieu of credit -- that you guys would like to see extended, or are you simply going to focus more closely on the manufacturing tax credit?

David Sandalow: At this point, that there's a proposal on the one that I ... yeah, advanced energy manufacturing and that's it, yeah.

Kate Howard: Thanks.

Frank Verrastro: It's coming -- right here.

Leonard Oglelander: Leonard Oglelander, independent consultant.

David Sandalow: Hi, Leonard.

Leonard Oglelander: Aside from the job creation that you have described, can you tell us something about what is being done to create, but also to sustain the research and development efforts that are going on at universities and in start-up endeavors in the private sector to bring to market new technologies, to develop them and bring them to market in today's economy?

David Sandalow: That's a great question to close on, because this has really been a priority, if not the priority for Secretary Chu, who comes out of this background and who believes that the United States can transform its R&D energy base.

The department has advanced a series of proposals in this area, including for so-called hubs for energy innovation, and Secretary Chu spends a lot of time talking to scientists about this.

We have actually a number of other distinguished scientists in senior positions in the administration. Kristina Johnson is our undersecretary and comes out of a distinguished background in electrical engineering.

Steve Koonin, who was a dean at Caltech, is another undersecretary at the department. So there's an enormous amount of effort in the department going into this across a range of different activities.

We're funding, not just under the Recovery Act, but funding in our hubs program, funding in our basic science program really to try to revolutionize American energy R&D.

So, with that, I want to end by thanking CSIS for both the great idea of doing this and the opportunity to talk to you all. Thanks for very much for listening.

[End of Audio]

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