Stuff for Chu to chew over

He may be one of the best qualified cabinet secretaries ever named, and he’s not even Energy Secretary yet — but the honeymoon is over for Chu. Greenwire has a long list of things he should be worrying about (and they don’t even include the worst of it):

Everyone can agree on two things about President-elect Barack Obama’s choice to lead the Energy Department, Nobel Prize-winning physicist Steven Chu: He’s very smart, and he’s going to need every brain cell.

In officially announcing Chu as his choice for Energy secretary, Obama swiped at the Bush administration yesterday, saying Chu’s nomination signals a major change in direction for U.S. policies. “His appointment should send a signal to all that my administration will value science,” Obama said. “We will make decisions based on the facts, and we understand that the facts demand bold action.”

Chu, who is now director of the Lawrence Berkeley National Laboratory, will face enormous challenges. DOE’s mission extends far beyond scientific research to overseeing and securing nuclear weapons labs, conducting expensive cleanups of the waste from decades of nuclear weapons production and developing and helping deploy new energy technologies.

The phrase “ungovernable” is not uncommon in conversations about the $24 billion department, but Chu — who has been praised for his academic achievements and understanding of energy issues — must figure out how to govern DOE. What follows is a sampling of the challenges he will face.

The sprawling bureaucracy

Chu brings executive experience to the secretary’s post, having run the Berkeley lab since 2004. The lab employs roughly 4,000 scientists, engineers and other staff, but DOE is in another league.

“It is very difficult to do justice to the energy research, the scientific research, the energy side, the defense side and the cleanup side,” said Linda Stuntz, an energy lobbyist who was deputy secretary of the department under President George H.W. Bush. She served on the National Commission on Energy Policy.

Added Jerome Hinkle, a former DOE staffer who is now the vice president for policy and government affairs at the National Hydrogen Association, “He has got a lot bigger problems than just fuels and climate. He is an extraordinarily bright guy, [but] it is going to be difficult for him to turn his attention to such a variety of vectors that are all shooting off in different directions.”

Cabinet politics

DOE plays a limited role in setting federal energy policy, which is spread across several departments and agencies. There are also roles for the Interior and Transportation departments, and others. Obama is also trying to bring more coordination to energy and climate policy, appointing former U.S. EPA chief Carol Browner to be White House energy “czar” (her formal title is “assistant to the president for energy and climate change.)

“They really have to be careful to structure this in a way that fosters cooperation among these high-level folks,” said Rich Innes, a former Senate Environment and Public Works Committee staffer who served on the EPA transition team for President George W. Bush and now lobbies for conservation groups. “How they structure the relationship with the senior energy adviser is going to be so important, to make sure they don’t set up an incentive for turf battles, which could just eat them alive, and I am sure they are thinking about that,” he said.

Capitol Hill

Energy secretaries testify frequently before Congress, with cameras and tape recorders rolling. Just as current Energy Secretary Samuel Bodman has faced round after round of hostile questioning from Democrats, DOE’s upcoming budget and policy choices and policies are bound to offend some lawmakers, who often bring disparate ideas about how — and to what states — federal money should flow. Chu has appeared before Congress before, but he will face more intense grillings in his new role.

Distributing R&D cash

Expectations will be high here, given both Chu’s background and Obama’s commitment to expanding energy research investments.

In science, Bush and lawmakers are seeking to considerably boost funding for the Office of Science, which is already the country’s largest single source of funding for physical sciences research. Current funding is roughly $4 billion, but the last White House budget request, which got bogged down in Congress, proposed a roughly $700 million boost, and some lawmakers want to go even higher.

Chu himself helped craft a widely cited 2005 National Academies of Science report, “Rising Above The Gathering Storm: Energizing and Employing America for a Brighter Economic Future,” about steps needed to ensure U.S. competitiveness, including providing greater resources for federal research funding.

“It means deciding on priorities within the areas of science that DOE funds, what is going to be most productive in the long run in support for their mission, what are the scientific opportunities that have not been supported and where are the best people to take advantage,” said Al Teich, director of science policy for the American Association for the Advancement of Science.

“I don’t think a guy with his credentials is going to have any problems” spending the money responsibly, Teich added. “It will be interesting to watch what he does with it.”

Chu has also backed creating an Advanced Research Projects Agency for Energy to focus on transformational, breakthrough energy technologies. The new agency was authorized in legislation enacted last year, but it will fall to the next administration to get it off the ground.

In addition, DOE’s core venue for many alternative research programs — the Office of Energy Efficiency and Renewable Energy — could also see significant funding boosts.

Electric transmission

It is likely that Chu will quickly confront the need for new transmission to connect renewable power sources to city centers and a national grid, which includes possible siting authority for the Federal Energy Regulatory Commission, an independent agency under DOE. And long “direct current” transmission lines could be an important technology for a low-carbon economy, Chu said in a 2006 interview with the American Physical Society.

Obama, House Speaker Nancy Pelosi (D-Calif.) and many others have mentioned transmission and a “smart grid” as possible components of the economic stimulus package expected to be taken up by Congress in January (Greenwire, Dec. 15).

Some in the utility industry argue that solving the siting issue for transmission is more important than providing money. Melissa McHenry, a spokeswoman for American Electric Power Co. Inc., said that if Congress gives FERC-DOE — instead of state and local regulators — the authority to site the major transmission lines, companies could finance the projects. “It gives you an opportunity to put the capital support from the government toward some other priorities if you can address the siting issue,” she said.

But there are a host of conflicting jurisdictions and priorities that Chu would have to navigate, as demonstrated by the lawsuits and political backlash DOE is already experiencing as it creates the national transmission and Western energy corridors that Congress authorized by the 2005 energy bill.

“There are a lot of land mines waiting for him among state legislators and regulators,” an industry source said. Chu will “also need to deal with the environmental community, which thinks the transmission build-out should only accommodate renewable and exclude transmission to facilitate new coal and nuclear,” the source added.

Renewable energy mandate

Democrats last year failed to garner the votes for a renewable portfolio standard (RPS), or a mandate that a certain percentage of U.S. power originate from renewable generation, but experts are predicting it could be successful in the next Congress and could be taken up this spring in an anticipated energy bill. A renewables standard was also part of Obama’s presidential campaign platform.

Almost all of the legislation authorizing a national RPS has DOE as the lead agency. Chu would need to oversee the new renewable energy requirements and balance them to provide enough electricity for the forecast U.S. electricity demand — possibly reining in any overly optimistic RPS targets that industry says could cause the electric system to become unreliable.

“DOE for the first time could have regulatory authority about the mix of energy in this country,” said Greg Wetstone, senior director for government and public affairs at the American Wind Energy Association. “That is a big change. “

Yucca Mountain

Chu will not immediately be forced to deal with the Nevada nuclear waste repository. DOE submitted the repository’s license application to the Nuclear Regulatory Commission last summer, and regulators are not expected to make a decision for another four years. Obama said he does not support the repository, and Chu has similarly expressed skepticism about the project.

The question is how Chu handles the next steps — politically and legally.

Senate Majority Leader Harry Reid (D-Nev.) said he would “bleed” the project’s funding through the appropriations process, if not by pressuring Obama and Chu to withdraw the application.

But if the Yucca license is withdrawn, “our reaction might very well be in the legal space, depending on just what action is taken,” said Alex Flint, senior vice president of governmental affairs at the Nuclear Energy Institute, the trade association for the U.S. nuclear industry.

“Yucca is not only an option, it’s the law,” Flint said. NEI is open to discussing changing the law regarding nuclear waste, but a new consensus has to be reached in order to change the law, he said. If Obama wants an alternative to Yucca, Chu will have to take the lead in finding a new way to handle the waste that a bipartisan majority agrees on, which could be difficult.

The longer the waste stays on site at reactors, the more lawmakers with reactors in their states will push for the waste to go elsewhere, and the higher liability costs — at least $11 billion at this point — will become DOE’s problem. The department was contractually obligated with utilities to start taking away the waste in 1998.


If Chu and Obama want to push a low-carbon economy, the question of what to do with the coal-fired power plants that currently provide 50 percent of the nation’s electricity is pivotal and time sensitive. Chu is a supporter of a broad generation portfolio. But he has not been as supportive of “clean coal” technology — which would capture and store carbon dioxide emissions — as he has been of other generation, such as solar power or even nuclear power.

Chu inherits a DOE coal program that has lost focus and direction and should receive better funding, according to top lawmakers, including Sen. Byron Dorgan (D-N.D.), chairman of the Energy and Water Development Appropriations Subcommittee. DOE currently has several programs that research the retrofitting of current coal plants to reduce their carbon emissions, regional carbon sequestration testing and developing better technology to capture carbon from coal.

The current administration’s choices in these areas have been controversial, especially the decision to scuttle the original plan for a federal-industry project called FutureGen, a program to build an advanced coal plant with carbon capture and storage.

Chu will need to advise Obama relatively quickly on what to do about the original FutureGen project, located in Mattoon, Ill. The project has proceeded — organizers purchased land for FutureGen this month and are finishing the engineering blueprints — even as the current administration has moved on a “restructured” project. DOE announced a year ago that it intended to use the FutureGen funds to instead finance carbon capture and storage at multiple commercial projects instead of the single demonstration plant.

The Illinois congressional delegation was able to freeze the funding for the project through March to allow the Obama administration to decide whether to go ahead with the original FutureGen or move ahead with the new plan. But Chu may have to advise Obama and Congress on the project before then in preparation for the president’s 2010 budget recommendations due in February and perhaps even as soon as January for the anticipated stimulus bill.

“FutureGen could become a part of the economic stimulus by creating critical jobs in this area,” said Michael Mudd, president of the FutureGen Alliance. “We are looking at well over 1,000 construction jobs and hundreds of jobs in the operation. … There is probably going to be a need to come up with more capital projects like Futuregen at Mattoon” to stimulate the slumping economy.

The funny or sad thing is, that is only (part of) the list of the energy things Chu will be dealing with. The non-energy stuff at DOE is what makes it ungovernable — the weapons laboratories and the multi-billion annual cleanup budget for the gazillion Superfund sites, which are a legacy of the Cold War nuclear weapons manufacturing effort and which can never be clean enough for those who live near places like Hanford, Washington.


If Chu wants to focus most of his attention on energy issues, then he will need a first rate deputy and undersecrtary to focus on the dirty stuff that comprises three quarters of DOE’s budget.