Annual Energy Projects Conference: Challenges Facing the Renewable Energy Industry
Reed Hundt to Present Keynote Speech on Monday, May 9th at 7pm.
Energy Reform From 2011 and Onward
By Reed Hundt
Senior Adviser to Skadden, Arps; CEO of Coalition for Green Capital
May 9, 2011 speech delivered at Skadden Energy Conference
I hope that the Senate passes a bill creating the green bank called CEDA – Clean Energy Deployment Administration. I hope that the House passes a similar bill and that CEDA is well-funded. We need to put in the Department of Energy’s toolkit a useful, continuously available financing arm, so that projects that emerge from research and development can get access to deployment capital. Private investors at later stages need to help DOE routinize the financing process and early stage investors need to have enhanced prospects for rewarding their risk-taking.
Everyone wishes we could have a do-over of the energy reform legislative effort of the Congress of 2009-10. If we had another try at the process, we would all want to break the process into what the President has called “chunks,” and pass as much as possible. One reason is that the different pieces travel different pathways through the maze that is Congressional jurisdiction. Best to let each sojourner make its own way through ENR, EPW, Finance, Banking, Foreign Affairs and so forth, with a hope that all will make it but a sense of satisfaction if any come through. Another reason is that the politics of each piece vary quite a bit from the politics of other pieces and the complexity of comprehensive legislation proved too difficult for our not always ideally functioning politics. Finally, events shape history, and as oil spills, commodity price spikes, scientific breakthroughs, and climate change data show up like flocks of black swans those legislators who want to do the right thing for the country should have different bills they can pass as responses to particular events. An overarching real but comparatively slowly developing crisis like the desertification of the middle latitudes is, like it or not, as useful a motivating phenomenon as a gas price hike; we should take advantage of what is advantageous by the terms of the culture we have and not the culture we might wish we had.
Here are the chunks I think are important. You can add to this list as you may wish.
First, we need a CEDA to assure that the fruits of the massive R & D underway at DOE are translated into deployment.
Second, in order to lower the delivered cost of clean electricity, we need to attract private capital to reliable single digit return investments in sustainable energy projects. This is the germ of the idea in what our coalition for green capital calls the Energy Independence Trust. The Trust would not be a part of the government. It’s time to recognize that in energy and all sectors the management role of the government cannot be expanded. We would capitalize it with private sector funds and have special drawing rights from Treasury. Details are at our website, www.coalitionforgreencapital.com.
Third, every state should have a green bank that provides low cost long term financing for energy efficiency projects. These banks should also finance rooftop solar. State green banks should be able to borrow from the Energy Independence Trust. They should have recourse to state regulatory power in order to provide guarantees behind their loans.
Fourth, as part of any budget deal Congress should impose taxes on carbon-intense commodities high in the value chain. It’s impossible to balance the budget without new taxation but many taxes we have and many that are under discussion are far less wise than a carbon tax. The whole energy and efficiency investing sector should make this point often and loudly.
Fifth, EPA should protect us all from mercury and other poisons. Not since the hatters went mad in the mid-19th century has there been a pro-mercury faction in the reasoning world. It’s hard to imagine in the 21st century that any of us want this poison in the air or in the food chain.
Sixth, when utilities merge, regulators should not translate efficiency gains into reduced electricity prices. Instead, such utilities should help themselves and the rest of us by capitalizing state green banks for efficiency investment.
Seventh, the energy generation, transmission and efficiency investment in America needs to be integrated with the rebuilding of our transportation infrastructure. I suggest that Congress allow firms with offshore, untaxed profits to repatriate that money without incurring taxes if it goes to capitalize an infrastructure bank, with a modest return. If the firms held the capital for a defined time period, they could sell their stakes without taxation. This technique would not require a Congressional appropriation.
Eighth, I think democracy is the best of all forms of government but we might want to emulate Communist China in at least one respect: we need a national energy plan. Our Coalition will try to raise money to create that plan. We have a national broadband plan; we have plans for renovating air travel management; we have plans for public safety networks on the Mexican border. We don’t have a national energy plan that integrates all related activities into a coherent whole. That’s what our Coalition proposes to write; maybe some of you will help.
Ninth, we have to keep funding R&D not only at DOE but in academic centers. We definitely need breakthroughs in energy generation, transmission and efficiency.
Tenth and finally, the United States needs to sponsor an international green bank. We aren’t going to be able to negotiate a climate change treaty. But we can lower the cost of creating sustainable electricity in the developing world, and in that way complement the efficacy of the cell phone in creating good growth for the bottom 5 billion of the world’s population.
That’s my top ten list. I would accept friendly amendments and comments of any kinds. But what I do not think any of us should accept is inaction. We don’t need Congress for all these purposes but we do need some help from Capitol Hill. We all know there’s not a moment to lose.
By Reed Hundt
Senior Adviser to Skadden, Arps; CEO of Coalition for Green Capital
May 9, 2011 speech delivered at Skadden Energy Conference
I hope that the Senate passes a bill creating the green bank called CEDA – Clean Energy Deployment Administration. I hope that the House passes a similar bill and that CEDA is well-funded. We need to put in the Department of Energy’s toolkit a useful, continuously available financing arm, so that projects that emerge from research and development can get access to deployment capital. Private investors at later stages need to help DOE routinize the financing process and early stage investors need to have enhanced prospects for rewarding their risk-taking.
Everyone wishes we could have a do-over of the energy reform legislative effort of the Congress of 2009-10. If we had another try at the process, we would all want to break the process into what the President has called “chunks,” and pass as much as possible. One reason is that the different pieces travel different pathways through the maze that is Congressional jurisdiction. Best to let each sojourner make its own way through ENR, EPW, Finance, Banking, Foreign Affairs and so forth, with a hope that all will make it but a sense of satisfaction if any come through. Another reason is that the politics of each piece vary quite a bit from the politics of other pieces and the complexity of comprehensive legislation proved too difficult for our not always ideally functioning politics. Finally, events shape history, and as oil spills, commodity price spikes, scientific breakthroughs, and climate change data show up like flocks of black swans those legislators who want to do the right thing for the country should have different bills they can pass as responses to particular events. An overarching real but comparatively slowly developing crisis like the desertification of the middle latitudes is, like it or not, as useful a motivating phenomenon as a gas price hike; we should take advantage of what is advantageous by the terms of the culture we have and not the culture we might wish we had.
Here are the chunks I think are important. You can add to this list as you may wish.
First, we need a CEDA to assure that the fruits of the massive R & D underway at DOE are translated into deployment.
Second, in order to lower the delivered cost of clean electricity, we need to attract private capital to reliable single digit return investments in sustainable energy projects. This is the germ of the idea in what our coalition for green capital calls the Energy Independence Trust. The Trust would not be a part of the government. It’s time to recognize that in energy and all sectors the management role of the government cannot be expanded. We would capitalize it with private sector funds and have special drawing rights from Treasury. Details are at our website, www.coalitionforgreencapital.com.
Third, every state should have a green bank that provides low cost long term financing for energy efficiency projects. These banks should also finance rooftop solar. State green banks should be able to borrow from the Energy Independence Trust. They should have recourse to state regulatory power in order to provide guarantees behind their loans.
Fourth, as part of any budget deal Congress should impose taxes on carbon-intense commodities high in the value chain. It’s impossible to balance the budget without new taxation but many taxes we have and many that are under discussion are far less wise than a carbon tax. The whole energy and efficiency investing sector should make this point often and loudly.
Fifth, EPA should protect us all from mercury and other poisons. Not since the hatters went mad in the mid-19th century has there been a pro-mercury faction in the reasoning world. It’s hard to imagine in the 21st century that any of us want this poison in the air or in the food chain.
Sixth, when utilities merge, regulators should not translate efficiency gains into reduced electricity prices. Instead, such utilities should help themselves and the rest of us by capitalizing state green banks for efficiency investment.
Seventh, the energy generation, transmission and efficiency investment in America needs to be integrated with the rebuilding of our transportation infrastructure. I suggest that Congress allow firms with offshore, untaxed profits to repatriate that money without incurring taxes if it goes to capitalize an infrastructure bank, with a modest return. If the firms held the capital for a defined time period, they could sell their stakes without taxation. This technique would not require a Congressional appropriation.
Eighth, I think democracy is the best of all forms of government but we might want to emulate Communist China in at least one respect: we need a national energy plan. Our Coalition will try to raise money to create that plan. We have a national broadband plan; we have plans for renovating air travel management; we have plans for public safety networks on the Mexican border. We don’t have a national energy plan that integrates all related activities into a coherent whole. That’s what our Coalition proposes to write; maybe some of you will help.
Ninth, we have to keep funding R&D not only at DOE but in academic centers. We definitely need breakthroughs in energy generation, transmission and efficiency.
Tenth and finally, the United States needs to sponsor an international green bank. We aren’t going to be able to negotiate a climate change treaty. But we can lower the cost of creating sustainable electricity in the developing world, and in that way complement the efficacy of the cell phone in creating good growth for the bottom 5 billion of the world’s population.
That’s my top ten list. I would accept friendly amendments and comments of any kinds. But what I do not think any of us should accept is inaction. We don’t need Congress for all these purposes but we do need some help from Capitol Hill. We all know there’s not a moment to lose.
