With a broad group of stakeholders all calling for comprehensive energy policy reform, could Congress be swayed to move legislation this year? During today's OnPoint, Karen Harbert, president and CEO of the Institute for 21st Century Energy at the U.S. Chamber of Commerce, introduces the chamber's "Energy Works for US" platform and gives her take on the political feasibility of energy policy action this year. Harbert makes the case for master limited partnerships for renewable energy investments and talks about the Obama administration's recent launch of a Quadrennial Energy Review.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Karen Harbert, president and CEO of the Institute for 21st Century Energy at the U.S. Chamber of Commerce. Karen, thank you for coming on the show again.
Karen Harbert: Delighted to be back.
Monica Trauzzi: Karen, the institute this week is launching its "Energy Works for US" platform. You're making specific recommendations that you believe will improve the U.S. economy and also make the country more secure. How are you hoping this report will influence the congressional discussion on the potential for energy policy?
Karen Harbert: Well, we think it's time that everybody wake up to the fact that we are in a very different place. There's been tectonic changes in our energy landscape, and yet for all intents and purposes our energy policy hasn't moved an iota to recognize that. And if we're really serious and if policymakers are serious about getting the economy back in shape, creating jobs, revenue that we so badly need, energy's a pretty good place to start. So we'd like to see a much more permissive, almost an embrace of energy rather than what we see is more hostility towards the sources of energy that we have here in our country.
Monica Trauzzi: So how does this report differ from the array of other reports that we've seen focused on energy policy and security?
Karen Harbert: Well, I think first and foremost it talks about every form of energy. We're not advocating for one particular source or another, because in reality we are going to need all forms of energy. And it really gets into infrastructure, because we may have a lot of molecules and a lot of electrons, but if we can't move them they're not of use to our economy. So we have to get serious about building the things we need to take advantage of this revolution, and a lot of people avoid that. They're just talking about getting it out of the ground or making it generate, but we've got to get it to where it's needed so that we can see the type of economic activity, the manufacturing renaissance, the investment we need. It's all because of affordable energy, but if we don't have it, we won't get the investment.
Monica Trauzzi: So you address coal in the report, and one of the things you call for is maintaining coal's role as a vital part of a diverse energy portfolio. Isn't carbon capture and storage technology the path forward to doing that? And aren't EPA's regulations sort of pushing the industry in that direction?
Karen Harbert: Well, there's the conundrum. Carbon capture is obviously the way forward, but we have learned through EPA previous mandates like the renewable fuel standard just because you mandate a technology, it doesn't necessarily exist and is commercially viable. So we need to continue to invest in carbon capture so that it can be more broadly deployed, because it's very important that coal remain a part of our electricity supply. We do need a diverse supply, just like in Wall Street. You don't benefit from a single investment portfolio, just like in electricity. We need a diverse portfolio, and that means coal has to exist, as do renewables, as does nuclear, and we have to make better efforts to have all of those remain viable.
Monica Trauzzi: And on renewables you call on Congress to pass legislation that will allow for master limited partnerships for renewable investments. How would that work as compared to the way MLPs have worked in the oil sector?
Karen Harbert: Well, we think it's important, this is an important business model, and for it just to be available for one sector doesn't really make a lot of sense. We have to find ways for renewable energy to be more competitive, and we think this is one way to make them more competitive so that they can be out there and compete in the marketplace, because there is a place for them, and a growing place. But if we continue to subsidize them, that's not really the most efficient way to get them to be cost competitive, so we're looking for new business models.
Monica Trauzzi: So that means what on the PTC?
Karen Harbert: That means, and we have called for this since 2008, we need to phase out the PTC, but it has to be done in an ordered way. You can't just fall off the cliff. That doesn't bode well for capital formation. So we need to send a signal that these subsidies are coming to an end, and that will be the biggest incentive to be more cost competitive.
Monica Trauzzi: Education is a key piece here. How does the United States stay ahead of the curve in terms of competitiveness among its workforce?
Karen Harbert: Well, the most interesting thing is the energy industry is hiring, hiring and hiring, and yet they have so many vacancies because we don't have the skilled labor and the professionals they need. And with half of the energy industry up for retirement in the next 10 years, we need to focus like a laser on having qualified workforce. And we're falling behind. We're not graduating enough engineers. We're not having enough welders in this country. When you look at some of the big energy companies and they start projects already short on labor, that's not what we need to be as a country. We need to be more competitive, and having that workforce, having the people graduate with the skills they need will ensure that people have jobs in this country. We do see right now from high school, I mean, half of minorities don't graduate from high school right now. That is not a recipe for a competitive America, and energy opportunities are there. We just need to match the graduates with the opportunities.
Monica Trauzzi: So you're making the case for comprehensive energy policy reform. Many have done that, but how do we look at the political feasibility of something like that, and how likely is it that we could see Congress move on this in 2014?
Karen Harbert: Well, you know, we're in an election year, and right before us we see energy is a big opportunity to evaluate people that are in the political process. Are they living up to the promise? Are they unleashing this potential? And right now you're looking at a Congress and an administration that is looking like they're hostile to this opportunity. And we think that by bringing the American people all across the country into this discussion and using it as part of the political process, we will eventually get a better outcome. Are we going to see big, big energy legislation? The prospects for that, for any big piece of legislation are probably dim. But what we would like to see is a push back on some of the onerous things that are coming out of the regulatory process and an unleashing of some of the opportunities out there.
Monica Trauzzi: So how will you be concentrating your congressional lobbying efforts this year?
Karen Harbert: Well, first of all, we'd like to get out of Washington because I think members are listening more to their constituents than they are listening right here when they're in Washington, and they're spending more times in an election year out in their districts. So we're going to be out in the field in all of the important states talking about energy and preparing our leadership, our chamber leadership, our business leadership, to really push the issues at home.
Monica Trauzzi: President Obama last week announced the launch of a Quadrennial Energy Review to study transportation, transmission and delivery as it relates to energy. Is the institute in support of this? And what would be the net benefit of the administration taking such an aggressive role at this point?
Karen Harbert: Well, you know, you can study something to death, and I hope, I wish them well. They've done this on the technology side. We do have big blockages in the infrastructure space. I think the most important they could do rather than study it for the next year, and we're not going to oppose that, but they could right now do permitting and siting reform so we could get some things built. We can't build the Keystone pipeline. We can't build transmission lines. And that's important for the renewable energy. If you can't build the transmission lines to move these electrons to where they need to be, the renewable projects sit on the sidelines. We need natural gas pipelines built so we can move things around. We need more ability to move oil around in this country. So if they wanted to get serious right now, rather than wait for a year from now when the review is over, let's do some siting reform, some permitting reform, and get beyond this "build absolutely nothing anywhere near anyone" mentality, and build it.
Monica Trauzzi: Is there a concern that the review could lead to more regulation and less of sort of the streamlining that you're calling for in this report?
Karen Harbert: Well, if it's reflective of industry and if they listen to industry I think it won't, because industry is saying we've got the appetite, the capital, and we've got the opportunity. Let us build some things. So hopefully it won't be a recipe for more regulations. Hopefully it will be something about peeling back some of the regulations that are holding these opportunities back.
Monica Trauzzi: All right, we'll end it right there. Thank you so much for coming on the show.
Karen Harbert: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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