Can the fossil fuel boom and subsequent push for exports be used to support clean energy? During today's OnPoint, Joshua Freed, vice president for clean energy at Third Way, discusses his group's new proposal that pitches charging a fee for fossil fuel exports and using the money to support clean energy research and development.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Josh Freed, vice president for clean energy at Third Way. Josh, thanks for coming back on the show.
Joshua Freed: Thanks for having me.
Monica Trauzzi: Josh, at a time when the conversation surrounding fossil fuel exports is driving the headlines, Third Way has released a report saying that exporting fossil fuels could actually help boost clean energy. Walk us through the logic of what you're arguing.
Joshua Freed: Yeah. So we started looking at the reality that the U.S. over the last 10 years has gone from being an importer of energy to being a global energy superpower. And it's created what we believe is a false choice between those who would say, "We cannot export any fuels whatsoever," and those who say, "We should just export whatever we have the opportunity to where global demand is." And we realized that there's an opportunity here to capture part of the revenues from fossil fuels that are exported to help alleviate what we believe is a crisis in clean energy R&D. It could generate as much as $20 billion, maybe even more depending on how the fund is set up, to invest in the next generation of fossil fuels that are much cleaner and that won't emit carbon.
Monica Trauzzi: In the report you call it a fee; some might call it a tax. Is it a carbon tax?
Joshua Freed: No. First of all, we don't suggest on how the fee would be levied. It could be levied based on million Btu of the fuel. It could be levied in any number of ways. The other important thing is the money does not go into the U.S. Treasury. Our proposal is that whatever money is raised is then spent by either the private sector or goes to the states so that the states that are producing the fossil fuels have an opportunity to develop cleaner technologies and be part of the clean economy as well as the fossil fuel economy.
Monica Trauzzi: I'm curious what the reaction from industry has been thus far, I mean, because generally when something like a fee is involved they get a little nervous. Is this dead on arrival when it comes to industry?
Joshua Freed: I don't think it's dead on arrival with anyone right now. Look, we're at the beginning stages of the debate over fossil fuel exports. There's still a lot of questions about how much we'll export, which fuels we'll export, but this creates an opportunity to develop a whole series of new technologies that private sector will built, private sector will either deploy here at home, or export. It's more revenue. It's more jobs. It's a real opportunity.
Monica Trauzzi: So once the fee is collected, how do you pick the clean energy winners and losers as to who gets the funding?
Joshua Freed: We don't believe that winners and losers should be picked. One of the models that we look at is the clean energy bank that's set up in New York, and it could be something similar to that. It could be another mechanism. But our goal is to have some private-public partnership, get the money, manage it and determine where to deploy it ideally in the states, like West Virginia, like Louisiana, like Wyoming that are the beneficiaries of the fossil fuel boom we have now so they can also be the beneficiaries of clean energy.
Monica Trauzzi: You've sent this over to the Hill, to the House and Senate, the committees of jurisdiction. What has the reaction been and what are the prospects for actually moving any legislation at this point, but this specific type of legislation?
Joshua Freed: We've been really pleased at the reaction that we've gotten from the Hill. I think there are a lot of senators and members of the House on both sides of the aisle that are looking for a different path on fossil fuels between either the no exports or the export as much as possibly can that are currently the parameters of the debate. And they see this and they see a path for fossil fuels to be part of the climate solution as something that's critically needed.
Now the prospects on any legislation, particularly in an election year, are tricky at best. But we view this as the start of the process, and where it will go will evolve ideally over the next one, two, maybe even three years. But we're patient. Our goal is to get this done, not see what the progress is in any month or years.
Monica Trauzzi: There are many factors at play here. Do you assume that the ban on crude exports will be lifted, and do you also assume that a great number of LNG export facilities will get financing?
Joshua Freed: No particularly on whether the oil export ban will be lifted. We think this is a good proposal either way. We as an organization don't have a position on the oil export ban. But we do believe that coal is being exported now. There's a lot of global demand for additional coal from the U.S. Some natural gas is likely to be exported. If and when that happens, clean energy should be a winner as well as the fossil fuel sector, and we can do that with our proposal.
Monica Trauzzi: So if the overarching theme here is the need to address climate change, then do the clean energy R&D benefits outweigh the costs that might be associated with all of this extra fossil fuel use and exporting these fossil fuels?
Joshua Freed: Look, we don't view it as a zero-sum game. The fossil fuels are likely to be exported regardless of whether there's a fee placed on them. And the fossil fuels are likely to be burned whether it's the U.S. supplying it or another country. Our strong preference is that we leverage the demand for fossil fuels so that over the next five, 10, 15 years they become much cleaner thanks to U.S. innovation.
Monica Trauzzi: All right, very interesting. We'll end it there. Thank you for coming on the show.
Joshua Freed: Thank you very much, really enjoyed it.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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