Energy Policy:

Deloitte's Stanislaw says 'green' focus has distorted energy debate

As Senate leadership decides how to move forward on climate and energy, how can the United States remain competitive in the international energy marketplace? During today's OnPoint, Joseph Stanislaw, independent senior adviser for energy and resources at Deloitte, discusses a new white paper focusing on clean energy's role in building a strong economy. Stanislaw explains why he believes the United States' "green" focus has distorted the energy debate and explains how the United States can stay competitive in the international marketplace.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Dr. Joseph Stanislaw, independent senior adviser for energy and resources at Deloitte. Joe, it's nice to see you.

Joseph Stanislaw: Nice to see you again, Monica.

Monica Trauzzi: Joe, you've just released a new white paper focusing on the path forward on clean energy and you make an important distinction between clean and green. What's the difference between green energy and clean technology and why do you think it's more important to go clean rather than green?

Joseph Stanislaw: Well, in my understanding of how the world thinks and perceptions, green means new renewables and there's even a question mark whether hydro is included under that definition of green. And my view of the future we're going into is a low carbon or carbon neutral future and that means clean. And clean can be anything. It can be oil. It can be gas. It can be coal. New renewables can be nuclear. It's how we define it and let people operate on the playing field which is called clean. Clean means no CO2. It means there are other concerns about environmental issues that make it clean and everyone should be able to compete on the playing field, not just green, but all fuels. And all fuels have the potential to be CO2 free. It takes cost and some investment and we have technology developing to do that. And then most importantly clean also means how we use energy and how we don't use energy or don't need energy. So it's just a broader definition of how we can develop the country's economy, not just in energy infrastructure.

Monica Trauzzi: So, why has the heavy focus on green distorted the energy debate up until this point?

Joseph Stanislaw: It's basically just said these green technologies, the solars, the winds, the biomasses, which are important and they have their role to play, it almost as they can solve the problem on their own. They cannot in the short term. We need to have a bridge to the future and that bridge includes what I call the clean technologies. Again, the demand is part of that and that's the coals, the oils, the nuclears, the gases and those green technologies and have a bridge that's wide enough and long enough to get to where we're going to go to tomorrow to have a secure energy future.

Monica Trauzzi: So, how does this all tie into jobs expectations and jobs growth? Have we been sort of minimizing that potential by only focusing on green?

Joseph Stanislaw: I think to some degree we have been minimizing it or not optimizing it or not really thinking broadly enough about it. I think it's not thinking broadly enough. We need to think about energy being a jobs policy. We need to think about climate as a jobs policy. And that means technology. We need to think about energy not just how we produce, have a supply source or a commodity, we have to think about energy being a technology continuum that we can develop going forward this decade to the next decade and the whole century, the 21st century. A continuum of development of technologies that are Clean 1, Clean 2, Clean 3, like Windows 1.0, 2.0, 3.0, be it Solar 1.0, Solar 2.0 or Insulation 1.0, Insulation 2.0. Think about it that way in that continuum and develop a comprehensive strategy for development of the economy which happens to be based on energy and energy needs and energy drives. It's the technology that will drive our industries going forward.

Monica Trauzzi: You mentioned oil and gas, specifically expanding domestic oil and gas supplies. This is obviously something that's controversial and very much in the news right now with the recent oil spill in the Gulf. Has the Obama administration done enough in terms of expanding drilling and exploration of these resources, sort of looking at the Gulf oil spill in the background?

Joseph Stanislaw: It's hard to say using the language enough. I think part of what I'm trying to suggest in the paper is have a balanced approach to energy policy and put on the table that all energy forms, the sources in this case, the supply sources, should have the opportunity to compete if they meet the criteria that our society and our government says we want to have. That means meeting all the environmental considerations and doing them effectively and correctly and having the failsafe mechanisms and managing the risk around those, but recognizing all supplies have risks. But try to have policies that say you, as a company, have to have responses to address this. If we can do that in a balanced way to then encourage the production in locations we think is the most likely in the most desirable that meets all these considerations that the government says and society says we want to have met, then I think we can have a balanced policy going forward.

Monica Trauzzi: So, do you think the oil spill will have long-term impacts on the energy policy discussion in the U.S.?

Joseph Stanislaw: It would be surprising if it did not. And I think once you look at this in terms of not today, but think out 5, 10 years and say we're going to learn from this event. It's a tragedy, that we know, but we're going to learn from it and we're going to improve from this. We'll have better policies. We'll have better permitting policies. We'll understand better the risk associated with all energy sources and infrastructure. This is an infrastructure issue, not just oil, not just gas. It's the infrastructure in general and we'll have a better appreciation of those events that aren't supposed to happen that could happen and then we have to address those and how can we do that in a satisfactory way to have all of our objectives met in a balanced fashion. Again, there's the issue of national security, there's issues with climate change and immediate short-term environmental impacts which have long-term ramifications, how to think about that in a comprehensive way. But all energy forms will be affected. All infrastructure projects will be affected.

Monica Trauzzi: Subsidies, are we offering too many subsidies for renewable energy jobs? And why are you skeptical about the number of jobs in those sectors that might actually stay in this country?

Joseph Stanislaw: I'm skeptical in the short run, not in the long run and what I'm trying to argue in the white paper is this continuum of thinking about how we could construct economic policy, not just energy policy, an economic policy, a development policy, a clean path to have durable, sustainable jobs going through time and encourage research and development, demonstration, encourage faster implementation so we can go from 1.0 to 2.0 to 3.0 faster, which creates a continuum of jobs going forward. Why am I skeptical somewhat? Only from the experience one has seen in Europe, where you have Germany and you have Spain, and where Germany was the center of the solar PV industry and Germany has the largest penetration of solar PV modules in households. And they created subsidies, we call it tariffs, feed-in tariffs to encourage people to put those panels on their roofs. Well, as it turns out, people are doing the panels, but they're buying now Chinese modules. That wasn't the purpose of the policy and they were meant to buy the German modules that were being produced. Now we have globalization, international trade and the Chinese have effectively in the downturn commoditized the PV market. So those are going into the Spanish household and the Germans saying, oh, those were meant to help support our jobs and it didn't happen. So, that will happen, trade will happen. Things will go to low-cost locations, no question of that, but how do we think about our own economic policy to design what we want to see happen with clean technology so it supports American jobs where they should be? How we license those technologies that may go to other countries over time, etc., but that's the driving force.

Monica Trauzzi: Let's talk about legislation for a moment because you do, in the white paper, say that a federal framework is critical. How likely is it that a climate or energy package of some sort will pass through the Senate this year and, if it doesn't happen, what does that mean for this discussion that we're having right now and energy policy moving forward?

Joseph Stanislaw: If you had asked me 50 days ago what is the likelihood of legislation happening this year I'd say very, very slim chance, not very likely. What's happened in the Gulf and now what we see happening and being discussed in the country in general and the new what I will call presidential leadership taking place around this issue, the probability improves that something may well happen this term and before the elections. May, underline may. Do I think it will actually happen? I think the probability is still the bet is it probably won't happen, but it improves every day with more presidential leadership and administrative drive. And that's beginning to happen in a very what I would call an aggressive way. If you go back to Pittsburgh last week and hearing that speech, that's very strong stuff and very important stuff to say the least. What if no legislation actually happens? I'd still be referring to the private sector, the private sector is still moving on its own, not as aggressively as they might do given the opportunities that lie ahead because they still have the uncertainties around will the carbon price come into play? What will happen with different bills related to oil? What will happen related to gas? What will happen to coal? Those uncertainties slow things down, but the industry knows, in general, where things will go ultimately. The sooner that's fixed, in the sense of a framework, not necessarily the rules or the terms, but the framework, the faster they'll move. But the industry is still moving in that direction already on their own, because it makes eminent sense, because it's happening globally, it will happen more here as well.

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

Joseph Stanislaw: Thank you very much.

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

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