Will the Department of Energy's agenda shift if former Texas Gov. Rick Perry (R) — President-elect Donald Trump's pick to lead the agency — is confirmed? During today's OnPoint, Jeff Navin, co-founder and partner at Boundary Stone Partners and a former acting chief of staff and deputy chief of staff at DOE, explains how Perry could shape the agency's future. Navin also discusses the confirmation prospects for Trump's picks to lead U.S. EPA and the State Department.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Jeff Navin, co-founder and partner at Boundary Stone Partners and a former acting chief of staff and deputy chief of staff at the Department of Energy. Jeff, it's nice to have you back on the show.
Jeff Navin: It's great to be here.
Monica Trauzzi: So, Jeff, a wide range of opinions on Donald Trump's nomination of Rick Perry to lead DOE. He's the former governor of oil-rich Texas, but he's also credited with pushing a strong renewable energy standard in Texas. He's also a critic of climate science, so your thoughts on this nomination.
Jeff Navin: Well, there's — the question is which Rick Perry are we going to get? If we get Gov. Rick Perry, I think, as you pointed out, he's pretty diverse set of activities and interests that he took as governor of Texas, obviously pro-oil and gas. Permitted a pipeline that made a lot of wind power possible, supported nuclear power in his state, you know, as well. When he ran for president, you know, he took a more aggressive approach on things like climate science and things like wanting to dismantle the Department of Energy and the like. If we get Gov. Rick Perry, I think the department looks one way. If we get presidential candidate Perry, it's going to look a little different.
Monica Trauzzi: So taking a look at the DOE transition itself right now, what's your take on how things are progressing and what we've been hearing coming out of the transition team?
Jeff Navin: Well, the big news obviously was the, you know, request for the list of people who've been engaged in some of the climate negotiations. That's pretty troubling, and I think they recognized it was a mistake. You saw some move by the Trump organization to distance themselves from that a little bit. It is a big agency, it is a very diverse agency. I think the transition team is finding that out. The good news is there's a pretty dedicated group of career officials there that are going to make sure that the balls don't get dropped between the Obama administration and the Trump administration.
Monica Trauzzi: But going back to this request for the list of names that had attended climate conferences and dealt with climate issues, like you said, the Trump team has walked back from that and said that was an unauthorized request. However, what could the intention be there of asking for those names?
Jeff Navin: Well, it's — I can't get my head into where they are and to try to figure out what they were intending. I do think it's going to send a pretty significant chilling effect through the agency. You know, that request went to career staff, who many of whom probably worked on some of those issues. I think it'll be really important for Secretary Perry, if he is confirmed, to send a very clear message early on about the important role that the career staff play to that there's room for everyone and that he recognizes that. You know, you shouldn't be punished for following out the orders of the previous Energy secretary.
Monica Trauzzi: How much are you anticipating that we could see DOE's work actually shift under a Trump administration? How quickly could things happen? How realistic that we see a dramatic shift?
Jeff Navin: Yeah, the important thing to remember about the Department of Energy, I think a lot of the people who don't pay close attention, you know, don't really appreciate this. Forty percent of the budget is nuclear weapons, the nuclear deterrent, maintaining and dismantling nuclear weapons. Another 20 percent goes to the Office of the Environmental Management, which is cleaning up the old nuclear weapons facilities and sites. Another 20 percent roughly goes to the Office of Science, basic energy science, not particularly related to what we think of as energy. And then you've got about 15 percent that's actually the energy programs, the things that tend to be somewhat controversial. So even within that small slice of the Department, where there's some political difference potentially between the two, between this president and President Trump, you know, there's still a lot of support in Congress for an all-of-the-above energy strategy. There are people in both parties who support continuing the really good work that's happened in renewable energy. You see issues of nuclear energy where you've got bipartisan groups of people working together on those issues. There will be shifts here and there in terms of the priority, but there's 115,000 people that work in the DOE enterprise. Most of them are working on things that aren't directly related to those sort of hot button energy political issues. They're going to continue to do the work that they were doing on January 19th.
Monica Trauzzi: But when we focus in on programs like ARPA-E and the loans program, do you think that those are potentially at risk for being on the chopping block or being cut back?
Jeff Navin: Well, there will be targets placed on those because there, you know, have been critics of those programs. I would say that both of those programs, however, do have pretty broad bipartisan support. You know, ARPA-E started off focusing a lot on renewable technologies. In the last couple of years, they've brought — they do fossil research, they do nuclear research, they do a whole host of things, the biofuels and the like. And so there are Republicans that support that agenda. I think by and large, if there's been any bipartisanship and agreement on energy, it's that early stage R&D is a right — is the right kind of thing for governments to focus on.
The loan program obviously gets tagged with Solyndra, but that program is returning billions of dollars to the taxpayers. It's been very successful in launching a whole range of industries, and people forget that there's a lot of money on the table for the loan program for nuclear, for fossil energy projects and for the kinds of advanced manufacturing through the vehicles program that President Trump has said that he wants to bring back to the United States. Now, Trump as a private businessman had no fear of using debt to build things. He's indicated that he wants to be able to use debt to build things in the United States as president, and he can do that right now with that program without having to go to Congress. So I think they'll probably take a look at it, there will be some questions asked, but at the end of the day, I think that program survives because it's one of the best tools available for Donald Trump to do the things that he says he wants to do.
Monica Trauzzi: And there's a big energy angle also over at EPA with what we might see energy markets evolve to do over time. Obviously the Pruitt nomination there means big things for the Clean Power Plan. How quickly could we see the Clean Power Plan potentially dismantled?
Jeff Navin: Well, the Clean Power Plan is — has gone through the formal rulemaking process, so there's no magic wand that he can wave to eliminate that. Now, it's going through the courts now. If the D.C. Circuit or the judicial system determines that the Clean Power Plan is improper and throws it out, that's a huge help to Mr. Pruitt and the Trump administration and their efforts to get rid of that plan. I will say, however, that the EPA is still under obligation from the Supreme Court to regulate CO2, so they're going to have to do something. If the plan is upheld, it comes back to EPA and they want to undo it, they've got to go through a formal rulemaking process to do so. That said, it does send a signal to the states, pretty strong signal that they don't have to put developing compliance plans on the front of the burner.
Monica Trauzzi: But energy markets are still sort of moving in that direction regardless. Investments are being made that are in line with the power plan.
Jeff Navin: That's right. I think regardless as to whether the Clean Power Plan is enacted, you're going to see coal plants being retired, and that generation's going to be replaced with a combination of renewables, natural gas and some of the new nuclear that's coming online. The rates of those change — of that change will be impacted by whether or not there is a federal policy, but you just saw, you know, this week in Indiana an announcement that they're going to shut down two coal plants that are almost literally sitting on top of coal mines, and they're doing it for economic reasons. And if I'm a utility CEO and I've got to make a decision about building a new coal plant, I've got to make a bet that that plant is going to be allowed to operate for the next 40 years. There are eight presidential elections between now and 2050, and if you're going to make the bet that not one of those presidential elections is going to result in some kind of regulation on CO2, that's a pretty tough bet for an executive to make.
Monica Trauzzi: So any predictions on which energy technologies and industries stand to gain the most over the next four years?
Jeff Navin: I think that the market's going to have a much bigger impact on that than the policy lovers. We continue to see decreasing costs for renewable technologies like wind and solar. We've seen them be the bulk of new capacity that's been added in the United States. Natural gas obviously has gone gangbusters in terms of its growth, and I haven't seen anything that gives me any reason to believe that those prices are going to kind of come up significantly in the near term. But I'm really excited about some of the things that are happening with advanced nuclear. You know, there's a lot of work to be done there, but some of those breakthroughs could have pretty profound impacts on the markets.
Monica Trauzzi: So ultimately do Perry, Pruitt and Tillerson over at State, do they all make it through their confirmation hearings?
Jeff Navin: I — you know, Perry I think probably, you know, if he handles — you know, you never know, right? Things come up through these processes, and the things that tend to derail the nominations are generally not positions on issues; they're sort of extraneous issues, so one, we'll see. But given what we know, Perry I think has a pretty strong likelihood of going through. Tillerson's problems are really about sort of Russia, and it's a handful of Republican senators on his side that he's going to have to spend some time with. I think he can probably get there. The interesting thing about Pruitt is there's this renewable fuel standard issue, and Joni Ernst was very quick to make clear her position on that issue and her expectation that Mr. Pruitt adopt Donald Trump's very strong support of the renewable fuel standard. So if he navigates that successfully, I think it becomes much easier for him. I think he's probably going to have to win that battle with almost all the Republicans, however. Many Democrats are going to oppose him just because of his point of view on climate science.
Monica Trauzzi: Very interesting stuff. Thank you so much for coming on the show. It's nice to see you again.
Jeff Navin: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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