How do industry leaders in the United States believe energy policy uncertainty is affecting investments and innovation? During today's OnPoint, Phyllis Cuttino, director of Pew's Clean Energy Program, discusses a new report based on roundtable discussions with more than 100 industry leaders pointing to the need for consistent, long-term energy policies. Cuttino also discusses the potential for a clean energy standard under the new Congress.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Phyllis Cuttino, Director of Pew's Clean Energy Program. Phyllis, nice to see you again.
Phyllis Cuttino: Thanks for having me.
Monica Trauzzi: Phyllis, this week Pew has released a report outlining its recommendations to the administration and Congress on how to move forward on clean energy during the president's second term. The president's already made clear that he wants to address energy, is your sense that he may be though stepping away from the sort of all green approach and really focusing more on an "all of the above" policy?
Phyllis Cuttino: Well, I think he's been clear for some time, certainly during the campaign, that he really wanted to promote an "all of the above" approach. So I think clean energy is a piece of that, and certainly the clean energy landscape and he energy landscape in general is changing quite a bit. And so what's clear is, America really needs new policy or some national energy policy to really insure that we're maximizing the opportunities that are associated not just with clean energy but with energy generally.
Monica Trauzzi: One of the things you highlight in the report is the need for a clean energy standard, and Senator Bingaman was a champion of this type of policy. He's left the senate and now Senator Wyden is taking over the Senate Energy and Natural Resources Committee. How do you think Senator Wyden may shape the future of something like a clean energy standard, and where do you think it stands on his agenda?
Phyllis Cuttino: Well, I think what's very heartening is that he and Senator Makowski have really pledged to work together, and it seems that their staffs are already talking. We know there are some things on the agenda. I certainly think that Senator Wyden has been a champion of clean energy in the past, whether or not it's been from his perch on the Finance Committee or now as the Chairman of Energy and Natural Resources. So I'm hopeful that we're going to have a good discussion. Again, I think it's going to be a very broad discussion, given the multiple interests on the committee, but I think we can move forward with legislation at some point during this Congress.
Monica Trauzzi: What does that clean energy standard need to look like? I mean, there are lots of questions on what should be included, things like natural gas, so sort of broadly outline what you think it needs to include.
Phyllis Cuttino: Well, this report is actually - let me kind of make clear - this report is actually based on a set of industry recommendations. We really felt last year that one of the things we needed to do with our report is not just acquire kind of empirical data, look at trends and clean energy both here in the United States and around the world, but also really seek out what industry experts and business leaders have been saying about what they think the Congress and the administration need to do. So we had six round tables, we were in Ohio with manufacturers, financiers in New York, we were with innovators in Colorado, solar and biomass developers in Georgia and Mississippi, so we really talked to industry. And these frankly are their recommendations coming out of our conversations. So these really reflect what those participants said. And they said first and foremost that policy uncertainty was really holding them back. They're suffering from kind of intense competition, that is certainly something we're seeing all around not only the United States but around the world with so many new actors, there's a lot of competition, and they have some of the same problems that we've seen in other industries, tight access to credit other things. But they really have identified the lack of policy certainty as a hamper both in mobilizing private investment and planning and making their own investments. So they believe a clean energy standard should just be a set of guidelines, they think it ought to be broadly based, something we've talked about before, and they frankly think it ought to account for regional differences, it ought to have trading measures for cost savings, and it ought to include clean and cleaner forms of energy.
Monica Trauzzi: All right, and one of the things that industry wants are these incentives to move forward with business. This last round of fiscal cliff negotiations proved tough for incentives though because they really went down to the wire without knowing what was going to happen. Do you think that those negotiations marked a shift in what the future of government incentives might look like and how is industry preparing for that?
Phyllis Cuttino: Well, industry certainly believes that those incentives have been very powerful in mobilizing private finance. They also believe that government's role ought to be limited, and they think that while the investment tax and production tax credits have been very effective and need to continue for a time, they should probably be term limited. And when we really push participants on what they could identify as a time, they really thought perhaps out to 2020, but they strongly believe that this sector needs to stand on its own at some point. But they have pointed to the fact that the playing field is not level. That the United States has made all kinds of investments in various technologies, whether it's conventional, energy, and they would point to subsidies, permanent tax credits, some of them 100 years old, some of them 50 years old, for more conventional energy technologies compared to this episodic on again off again tax credits for their industry. But you know, they can point to telecom, to health care, to other things where government has set some rules of the road and has made some investments in the early stages, and they think that they are a good sector to invest in, because there's plenty of opportunity out there. Our research shows, with Pike Research, who worked with us on this report, that the revenues associated with clean energy installations around the world are going to be 1.9 trillion by 2018 cumulatively, and there will be 700 gigawatts of clean energy installed, 126 gigawatts of clean energy right here in the United States. So there's a lot of opportunity, particularly outside the borders of the United States. And so, you know, they had other recommendations in addition to a clean energy standard or incentives for a private investment, level the playing field, we talked about that. They do think the tax code already picks winners and losers. And many of the participants pointed to the need to invest in clean energy manufacturing and in STEM workers, and also, frankly, the government should work to expand markets for them. So they had a whole host of suggestions for this president and Congress.
Monica Trauzzi: And in terms of expanding markets, you talked about the international opportunities that exist - is the US currently just really missing out on a piece of the pie when it comes to its opportunity to exchange information and technologies with other countries?
Phyllis Cuttino: We do think that by a number of indicators that the United States is lagging. And this is a worrisome development from our point of view, because, after all, the United States has pioneered so many of these technologies and used to manufacture and export them in kind of greater numbers than we do now. There's a lot of competition, lots of new actors and countries getting involved. And particularly, even in R&D, we've seen a lot of investment in other countries in research and development while our R&D has really fallen off since the 1970s. So, yes, they are, the sector, at least those that we talked to, are very optimistic about what can go on in terms of the international opportunity for them, but they do feel as though they're being held back and we are lagging behind. We are behind in our rate of investment intensity, in our five-year growth rate of installed capacity. So there are a number of indications that we are lagging behind.
Monica Trauzzi: ARPE-E is considered to be a significant step that this administration took on funding for advanced energy technologies. So is that not enough and what needs to be done beyond that?
Phyllis Cuttino: Well, it's very interesting that you mentioned ARPA-E, because our industry participants did too. They had good things to say about some of these recent efforts, the frontier hubs, the ARPA-E, the way that the labs are increasingly working with industry to kind of drive down costs and production and other things. But they really believe that it's very difficult for the private sector to mobilize the kind of investment that needs to happen in basic R&D. And that is very important because what industry participants told us was that really the second kind of most principle benefit that the United States has is its ability to innovate and continue to innovate. And unless we're inventing new things, improving upon things, making technologies more efficient, it's going to be very difficult to continue to sell them into the international market.
Monica Trauzzi: All right, interesting stuff. We'll end it there. Thank you for coming on the show.
Phyllis Cuttino: Great, thanks, Monica.
Monica Trauzzi: And thanks for watching, we'll see you back here tomorrow.
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