Ernest Moniz has been Secretary of Energy since May, that is, for about a month prior to President Obama’s announcement of his Climate Action Plan. Before joining the President’s cabinet, Moniz was Director of the Energy Initiative at MIT and also served as undersecretary to the Department of Energy between 1997 and 2001. He has made the case for a substantial price on carbon. While the Senate voted 97-0 to confirm Moniz, he has received criticism from the environmental community for his strong support of Obama’s “all of the above” energy strategy and his assertions that natural gas is a key bridge fuel.
Secretary Moniz joined outgoing FERC chairman, Jon Wellinghoff, for a keynote discussion at the sixth annual National Clean Energy Summit in Las Vegas this week.
I caught up with Moniz shortly after his panel appearance. Below are excerpts from my interview edited for brevity and clarity.
Q. Secretary Moniz, you touched on this subject during your panel discussion, but what do you see as the role of the loan guarantee program going forward? Is it still important and why? Are there any lasting consequences of Solyndra’s failure?
A. Solyndra will probably remain a talking point, and in many ways it is very unfortunate that the first loan is one of the very few in the portfolio to fail to perform. But it is hard to figure out what any objective measure for an investment portfolio of this type could have better success. Remember, if we take all of the loans which have defaulted or are at risk of defaulting, that’s just two percent of the portfolio.
You know it’s very interesting, some loans seem pretty secure like to Ford to retool lines for advanced vehicle manufacturers in eighteen states. But Tesla was considered a huge risk and they paid back nine years early.
I will remain very insistent in the department that our posture on the loan program is not defensive, and in fact what I didn’t mention on the panel earlier, is that as part of the climate action plan, we announced another eight billion dollar loan program on fossil fuel greenhouse gas reduction. As far as we are concerned we are still in business.
Q. Moving on to nuclear, what effects will the ongoing situation in Japan have on the future of nuclear power in the U.S.?
A. Fukushima clearly has significant impacts in at least two dimensions.
Clearly, and I would say, appropriately, it has led to NRC consideration of additional safety requirements, such as periodic review of seismic conditions — very clearly a Fukushima-driven approach.
The second way Fukushima has affected things in the U.S. is to increase the focus on the need to get spent fuel management moving. This is very much in line with the Blue Ribbon Commission recommendation that we need to have parallel tracks of consolidated storage and geological isolation. The new thing there, being the consolidated storage track. We need to start moving fuel as soon as possible.
And then if I could add a third thing, which is not Fukushima-driven but is critical and related to the loan guarantee program we were discussing — there are four AP 1000 reactors being built in Georgia and South Carolina, the first in a long, long time. We have conditional loan guarantees out there for the Georgia plants. And a huge issue for nuclear power going forward in the U.S. is the cost and schedule performance of those reactors. Frankly, if they have cost overruns like some of the recent construction in Europe — Finland and France — if they have that kind of performance, I think it is very hard to see a future for nuclear power plants unless a new technology like small modular reactors becomes available in say, the next ten years.
If, on the other hand, they perform well, and the recent news – just in last few days actually, about cost and schedule performance has been on the positive side – if that happens, then a lot of the utilities, especially those in traditional regulated areas will start expressing a lot more interest. And for the future, we’re investing in trying to get licensing of these new small modular reactor designs, so that’s the next phase.
We have provided assistance for one project, a Babcock & Wilcox reactor to be built in Tennessee. Our support is for them to get to the licensing of that reactor. They are committed to do that and have first the plant operating in 2022.
Q. Energy efficiency was clearly highlighted as one of Obama’s key strategies in his climate action plan, but somewhat infamously, there have been a handful of energy efficiency rules gathering dust at OMB for upwards of two years. What are you doing to get these rules finalized?
A. First of all, when I came into office, I committed to working hard on that. I have been. I have been collaborating with Sylvia Mathews Burwell at OMB. She and I were nominated together and we are working on this, but of course, I think the proof will be in the pudding.
Of those rules that was well overdue, we published a schedule on July 5, which stated that we would have drafts of four of those proposed rules, three in August and one in November and final rules between January and May 2014. This morning, about two hours ago now, the first of those rules was signed out. This was for metal halide lamp fixtures. We will have walk-in freezers and commercial refrigeration this month.
The electric motor rule is slated for November. We are committed to that, we actually recently committed to that to a bunch of states who were talking about intervening and I think we convinced them that we’re doing it. And we’re doing it!
Q. Can you identify what has caused the delays in the past?
A. You know, I wasn’t here during that time, but I think there needed to be a driving force. I can’t speak for anyone else, but certain agencies were going through transitions and there were several key positions vacant.
But now we have confirmed leaders in those key positions and the president made it pretty clear in his climate action speech that this was a priority. We needed to make it a focus and we now are. We are working on a schedule for ten more rules.
I think going forward, DOE can also help relieve some of the chronic problems with insufficient manpower at the Office of Internal Review. We can help them in terms of a lot of the analytical stuff that they need to help move this along. We are committing the manpower on our end to make that happen.
Q. Finally Secretary, what do you see as some of the most exciting breakthroughs in renewable energy over the next few years?
A. (laughter) Well it is always hard to predict a breakthrough, but when all is said and done it is about cost reduction. So if you take wind, for example, well wind technology for good onshore wind sites is pretty good, levelized cost estimates at like six cents a kilowatt/hour. What are the challenges and possible breakthroughs there?
One challenge, which is not technology dependent is getting the grid infrastructure in place.
The second, which is technology dependent is the development of offshore wind — going out into deeper water which should simultaneously maximize wind power and minimize public concern. DOE is just now looking to fund one to three offshore demonstration projects and try to bring those costs down, that would be a big deal.
Let’s talk about solar too. If we look at distributed solar, so rooftops, we have a ways to go on the module, right now though, eighty cents a watt, we are almost to the holy grail, but we need a breakthrough on the soft cost side. That would be a big deal.
Third area, I would say is electric vehicles, where it’s all about batteries. We have had a factor of two reduction in costs over the last five years, but we are still about a factor of four away from where we need to be for mass market penetration. EV market is small but we may hit 100,000 this year and a couple more doublings and we are at the million mark. At Argonne National Laboratory, we are looking at novel chemistries, maybe lithium will not get us that next factor of four, but maybe a new chemistry will.