Is there a path forward for the United States to address climate and energy challenges without action from Congress? During today's OnPoint, Bill Ritter, former governor of Colorado and now the director of the Center for the New Energy Economy at Colorado State University, discusses a road map, based solely on executive agency action, that tackles the policy and economic barriers facing climate action and energy development in the United States.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is former Gov. Bill Ritter of Colorado and now the director of the Center for New Energy Economy at Colorado State University. Governor, it's nice to have you here.
Bill Ritter: Thank you. It's good to be here, Monica.
Monica Trauzzi: Governor, you were part of a group that met with President Obama last March about the administration's steps to address climate change. Coming out of that meeting, you were nominated to lead an effort to address critical policy issues surrounding energy and environment issues, and today you're officially releasing recommendations for the administration on how to move forward on that. How does this all play into the Climate Action Plan that we've already seen coming out of this administration?
Bill Ritter: There's a big overlap between our recommendations and the Climate Action Plan. Quite frankly, there are things, because we've been submitting these recommendations to the White House really since the end of August, there are things that the federal government, the executive agencies, may have already done that show up as recommendations. So the president met with a group of us, really wanted to know how to move a clean energy agenda over the rest of his term, at that time it was the beginning of his second term, and wanted to understand how to do that without congressional action. And that's really the bulk of these recommendations are about the president's authority to really act and about executive agencies and their ability to move an agenda on clean energy if Congress doesn't act.
Monica Trauzzi: This administration has already received quite a bit of negative attention, though, for its use of regulations and moving forward on the executive front. Is there a risk, then, that some of these recommendations could get tied up in the courts?
Bill Ritter: Well, quite frankly, a lot of risks exist any time you're in public life and you're trying to move an agenda. I think not a lot of the things that we're suggesting here could wind up in litigation. They very much exist within the present authority of the president and the executive agencies, but I wouldn't say, we're kind of a litigation-happy world sometimes, especially where energy and environment's concerned, and so there might be some things that somebody might sue you over.
Monica Trauzzi: So let's talk about some of the recommendations. One of the key issues that you address is changing the utility business model. I mean, this is an industry that hasn't seen much change since the 1800s, and there seems to be on some fronts some resistance to really adapting and changing. So how do you help spur that sector to innovate and adapt?
Bill Ritter: It's fascinating. Out of all the discussions we had, I would say that was one of the most heartening discussions. It was Chatham House rules, so I can't say this person said this thing, but generally the CEOs and CFOs who participated in the utility conversation understand the world is shifting underneath them, Monica. They understand that the ground is changing underneath their feet. Now, they're in an industry that's typically used to being regulated, so they really are asking us to do what we can to try and help inform regulators and lawmakers about the need for a different revenue model that's really about performance-based resource planning and a different way of designing rates.
Monica Trauzzi: And are the president's New Source Performance Standards for power plants the way to get the industry to move forward?
Bill Ritter: I think there's an intersection in there. You'll see in this report that we tell, we recommend to the president, to executive agencies to do all they can to work with states, providing the maximum degree of flexibility for both states and for utilities with not just the New Source Performing Standards, but, really, when they adopt their existing plant rule, they're going to propose it in June, finalize it the following June to work with states to give them maximum flexibility in how they meet that rule and really the ability to use energy efficiency, renewable energy. Utilities want this as well. That's really our sense about that, so the federal government's intersection with utilities and states was a part not just of the utility meeting, but everything that we did, it was about how to intersect with states.
Monica Trauzzi: But how do we address the political and economic challenges that come with making serious changes to the coal industry?
Bill Ritter: Well, listen. If you're focusing on a clean energy economy and you make it about emissions, and one of the things that we say is we should fully cost out what it is to generate electricity from any of several different means, to do some life-cycle analysis and then make it about how you generate an economy and generate jobs doing this, how you actually protect rate pairs in the process but how you keep emissions down. That's what the federal government should be about, incentivizing and really about advancing. States have proved that you can do this. The state of Colorado has a 30 percent renewable energy standard that we put in place. We transitioned a gigawatt of power from coal to natural gas, and yet we've seen our rates actually remain fairly steady and become cheaper relative to the rest of the company at a time when we had this real serious advanced energy policy in place or agenda in place. The federal government can be a part of that. The states approved it.
Monica Trauzzi: So let's talk about renewable energy development. It's one of the other areas that you focus on. Much has been made of failed projects, failed loans that we've seen coming out of the federal government in this space. Is there a better, clearer way for word on propelling this industry forward, perhaps with not as much federal assistance?
Bill Ritter: Well, we think there is a lot of, there were a lot of discussions that we had respecting renewable energy and energy efficiency that was about market certainty. There's a lot of capital that's sitting on the sidelines. Now, there are policy levers that don't involve the federal government actually financing programs, financing projects, policy levers that can provide that kind of investment certainty. We do talk about carefully targeting financial assistance to states in arenas like where you're trying to advance the research around renewable energy or even some of the technologies, but there are these big policy levers. If the federal government as a consumer was really ambitious in how it looked at purchasing renewable resources or finding ways to inspire states to do that, that creates a market and we think develops a market above and beyond what you would do with just the financing end of it.
Monica Trauzzi: Your state of Colorado has been central in the debate on fracking. How does the U.S. responsibly but effectively promote and use natural gas?
Bill Ritter: So, you see, that's one of our chapters. It's about the responsible production of natural gas. We met with the president. It was clear to me that he wanted to be able to use this resource but be able to get it out of the ground in a responsible way. We make a variety of recommendations about that. States are really developing a leadership role here. I think, Monica, over time there's going to be a convergence of rules that will be kind of the set of golden rules in the United States, and they're going to be led by two things: led by states doing it, but the federal government can model a variety of those when they do their own rulemaking on BLM land. So it's going to be this convergence. The governor of Colorado just proposed a new sort of set of methane rules. I'll bet you that in five to seven years, every state that's extracting is going to have a methane rule not unlike what the governor's proposed in Colorado. We see states continuing to lead this dialogue, industry continuing to meet it, and the public wants it. We call it the social license to operate.
Monica Trauzzi: Some of the recommendations that you make can be implemented immediately. What have you heard from the administration? Are there certain things that we can expect from them in the near term?
Bill Ritter: We've already seen some things happening even as we gave the paper to the White House. The White House was moving on some of these things apart from these recommendations. This is really a group of outside experts that was trying to help the White House, help executive agencies, and so we do this with a lot of deference toward people inside the departments who are doing fabulous things already.
But, yeah, we think on energy efficiency to be able to demonstrate the benefit of energy services performance contracting, ESPCs, performance contracts, if we really revved up what the federal government can do as a consumer and demonstrate how you can actually reduce energy prices that over a period of time there's a savings, score those differently in CBO and OMB, those would be really a way to create a market around energy efficiency, because you're the largest consumer of energy in the United States of America; you're the federal government.
Monica Trauzzi: What role is John Podesta playing in the implementation of these recommendations?
Bill Ritter: So, we briefed the Cabinet last week. Mr. Podesta couldn't be there. I know John from my work as governor and his work at the Center for American Progress, and hopefully we are in the process now of scheduling a meeting this week. I think John Podesta coming to the White House is a fantastic thing for the president's agenda around energy and environment.
Monica Trauzzi: So, this is all being released the week before State of the Union. You met with the president recently. What role do you think climate and energy is going to play in the president's speech next week?
Bill Ritter: So, I haven't met with the president since last March. We did brief the Cabinet, and, again, where State of the Union's concerned, the president has always had a place in there for it. The president having introduced a Climate Action Plan on June the 25th of this past year, in 2013, leads me to believe that it's going to play a prominent role. I can't pretend to have insider knowledge. I hope we've been able to help them think about it a little bit with this set of recommendations.
Monica Trauzzi: All right, governor. We'll end it there. Thank you so much for coming on the show.
Bill Ritter: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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