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Cantwell Lays Out a "Smarter Way" to a 21st Century Clean Energy Economy in Keynote Address to Brookings' Hamilton Project

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Location: Washington, DC

In a keynote address this week, U.S. Senator Maria Cantwell (D-WA) called for ending the "rollercoaster ride" of energy prices by diversifying our nation's energy supply using an accurate price signal to harness the focus of the free market and secure the most cost-effective solutions.

Speaking at a forum on "America's Energy Future" hosted by the Brookings Institution's Hamilton Project Wednesday, Cantwell discussed the importance of getting the right policies in place to protect consumers and capture the largest market opportunity of the 21st century -- clean energy. Cantwell is Chair the Senate Subcommittee on Energy and author of an innovative policy alternative to addressing our nation's energy and climate challenges called the Carbon Limits and Energy for America's Renewal, or CLEAR Act.

Speech excerpts (complete transcript pasted below):

"Instead of waiting 30 years to get to the point where we really wish we were off of fossil fuel, and to start to gradually reduce our reduction, it's like we are a 55-year-old who has been gorging on fast food every day. And after 30 years, the doctor tells us that our arteries are clogged, that the options are to go on a crash diet or do a dangerous bypass procedure, or maybe staple your stomach, severely limiting your consumption -- all of those very unpleasant, risky options."

"The smarter way to move forward is to wean ourselves off of these habits and to institute new habits. You do this gradually to give yourself and our economy time to respond to the new system and to make adjustments. But while you are starting a more diverse diet, you start to focus on healthier, stronger ways to avoid costly actions in the future. And let's face it, right now America is CO2 energy obese. We are just four percent of the world's population, but we use 25 percent of the world's fossil fuel."

"The healthy diet we need is a predictable path forward that provides the certainty that all businesses need to survive. Doing nothing or half measures or trying to drill our way out of the problem when we have less than two percent of the world's oil reserves means that America could stay shackled to this rollercoaster ride for the next 30 years. But done right, and given a generation of more free market orientation, we could come up with smarter, more efficient ways and more distributed energy sources."

"The smart way to create an energy policy, in my opinion, is to figure out the predictability and accurate price signals that we want to have to unleash that tremendous amount of new capital investment. An energy policy that creates critical sustained incentives needed to capitalize new technology and innovation and entrepreneurship, and one that leads the United States to become the market leader in this 21st century energy sector."

"Because there is only one thing that there is agreement on in the United States Congress today, and at least in the Senate, and that is that it is preferable to have Congress legislate a more flexible, market-oriented, cost-effective way of reducing greenhouse gases rather than simply allowing EPA to act."

"Having been in the software business, I like to say that the opportunities for clean energy technology are even bigger than the market opportunities for the Internet."

"I know coming from the Northwest perspective, where we already ship software and coffee and airplanes to China. We want to capitalize on the economic opportunity of selling clean energy solutions to China."

"That's why I think that the way to a smart transition to this 21st century energy policy is a sensible diet that will help win a majority in the United States Senate. One that is gradual, predictable, that unleashes private sector investment to growing our economy. That's why I introduced a 39-page CLEAR Act proposal, along with my colleague Susan Collins,which embraces these approaches diversifying our nation's energy supply, using an accurate price signal to harness the focus of the free market, and securing the most cost-effective solutions."

Listen to full audio or watch a video of Senator Cantwell delivering the keynote address and participating in Q&A at Wednesday's Hamilton Project forum.

Since coming to the Senate, one of Cantwell's top priorities has been making our nation's energy system cleaner, more efficient and more diverse. She is co-author of the bipartisan CLEAR Act, a breakthrough bipartisan, alternative climate bill that uses a simple, market-based system to spur clean-energy job growth, protect Americans from energy price increases, and reduce global warming pollution.

The CLEAR Act's "cap-and-dividend' framework will harness American innovation and enterprise to create jobs and spur new technologies, guard all low and middle income households from energy rate increases through monthly rebates, get government out of the business of picking energy technology and special interest winners and losers, and avert the worst dangers of global warming.

Below is a complete transcript of Senator Cantwell's remarks Wednesday:

Well, thank you Roger, it's great to be here with you today, and thank you for that introduction. And thank you to Brookings and the Hamilton Project for inviting me here today. It's good to be here with my former colleague, John Warner who I certainly appreciated working with on so many issues, and it's great to be with so many leaders of the energy industry and innovative thinkers who are at this conference.

I heard a little bit of the last panel discussion and I know that you have been coming up with some incredible ideas here this morning on how we move forward in shaping energy policy in the future.

This is an important and timely conference because I really believe that we have an opportunity for a more diverse, distributed energy system, and that it is one of the preeminent challenges that we face. But it is also a huge economic opportunity for America. And getting the policy right is key to whether America is going to continue to prosper in global competitive challenges that we face. And getting it wrong, I also believe, could have dire consequences and endanger America's status as a global super power.

In my opinion, we are going to get to a 21st century energy system one way or another. That's because there's going to be less and less fossil fuel and more and more demand. OPEC will continue to increase its hold on the world's remaining fossil fuel reserves, and the environmental impact of fossil fuels is only going to increase.

The question is, are we going to get there the hard way, or, are we going to get there the smart way? That is to say the next 30 years can be a rollercoaster ride of price volatility with the end of the ride leaving us in the same place we are today -- needing to diversify. Or, we can start now with a gradual diversification and protect our economy and consumers in the meantime.

Let me be clear, the hard way is keeping the status quo. The chief economist for the international Energy Agency was very direct in this point last October when he said, quote, "The era of cheap oil is over, and each barrel of oil that comes to the market in the future will be much more difficult to produce, and therefore, more expensive."

Yes, it's true. We can find more oil if we drill deeper and deeper in the waters farther and farther offshore. And we can squeeze out more and more oil from the tar sands or shale, but all those options greatly increase the cost and the environmental impacts.

The reality is that today we are overly dependent on conventional oil fields discovered back in the 50s and 60s, and that production from those fields is declining four to six percent a year meaning the world will need the equivalent of five new Saudi Arabias to meet demand in 25 years.

It is important to know that this supply crunch starts happening at the very same time that world oil demand is expected to increase rapidly. According to the International Energy Agency, not only will oil demand grow by 25 percent by 2030, but 93 percent of that new demand will come from non-OECD countries -- mainly China and India. So not only will there be more people demanding access to a shrinking oil supply, we will be fighting China and India for this finite, currently irreplaceable resource.

Even a top Saudi Arabian energy official recently expressed serious concern about world oil demand when they said that it could peak in the next decade, which explained why theywere working to diversify their country's economic base.

If Saudi Arabia is diversifying their economy, surely the United States should be diversifying its. According to the International Energy Agency, investment totaling $45 trillion dollars might be needed over the next half a century to prevent energy shortages and greenhouse gas emissions from undermining global economic growth.

Another inevitable reason that we should act, in this Senator's opinion, is the role of EPA in limiting greenhouse gases. We all know that the 2000 Supreme Court ruling on Massachusetts vs. EPA was groundbreaking. The impact of that ruling is just starting to play out. Some may have thought that stronger Republican majorities would be able to spike progress on Clean Air Act enforcement, but in the Senate, recent efforts to overturn EPA could not even secure a simple majority. And I am confident that as long as Barack Obama is president, he will never allow an attack on EPA's responsibility under their endangerment finding.

So as these greenhouse gas regulations start to kick in, and begin to bite, I believe that this will create pressure on Congress to consider solutions that provide regulation, but also provide for a gradual diversification off of CO2. Because there is only one thing that there is agreement on in the United States Congress today, and at least in the Senate, and that is that it is preferable to have Congress legislate a more flexible, market-oriented, cost-effective way of reducing greenhouse gases rather than simply allowing EPA to act.

So, my point is this: Instead of waiting 30 years to get to the point where we really wish we were off of fossil fuel, and to start to gradually reduce our reduction, it's like we are a 55-year-old who has been gorging on fast food every day. And after 30 years, the doctor tells us that our arteries are clogged, that the options are to go on a crash diet or do a dangerous bypass procedure, or maybe staple your stomach, severely limiting your consumption -- all of those very unpleasant, risky options.

The smarter way to move forward is to wean ourselves off of these habits and to institute new habits. You do this gradually to give yourself and our economy time to respond to the new system and to make adjustments. But while you are starting a more diverse diet, you start to focus on healthier, stronger ways to avoid costly actions in the future. And let's face it, right now America is CO2 energy obese. We are just four percent of the world's population, but we use 25 percent of the world's fossil fuel.

The healthy diet we need is a predictable path forward that provides the certainty that all businesses need to survive. Doing nothing or half measures or trying to drill our way out of the problem when we have less than two percent of the world's oil reserves means that America could stay shackled to this rollercoaster ride for the next 30 years. But done right, and given a generation of more free market orientation, we could come up with smarter, more efficient ways and more distributed energy sources.

The smart way is to figure out how we provide that true energy price discovery. Not just the price at the pump or what's on the electric bill. And the smart way to create that predictability in the rules of the road, I believe, is to have a gradual transition for America to that new energy paradigm. One that unleashes the level of private sector investment we hope to see for the future, but minimizes the risks. To me, that means we want to clearly lay out a path for the future so that investors know what's coming.

Michael Livermore said in a 2008 study on "Unlocking the Green Economy" that, quote, "Carbon pricing will cause immediate adoption of existing energy efficiency measures and spur investment and research and bring new technologies to the market, and that these technologies would help in instituting significant energy efficiency impacts, and a potential of annual net savings of $37 billion to the U.S. economy. The present value of this savings would exceed a trillion dollars."

So, the smart way to create an energy policy, in my opinion, is to figure out the predictability and accurate price signals that we want to have to unleash that tremendous amount of new capital investment. An energy policy that creates critical sustained incentives needed to capitalize new technology and innovation and entrepreneurship, and one that leads the United States to become the market leader in this 21st century energy sector. According to a recent Pew report, $2.3 trillion will be invested in clean energy power assets over the next decade. Having been in the software business, I like to say that the opportunities for clean energy technology are even bigger than the market opportunities for the Internet.

Let's face it. We have made some progress in the last several years. I think that's good news because over the last seven years we've enacted two major energy bills, passed a number of other small provisions, like clean energy tax credits, and dedicated about $90 billion to clean energy in the stimulus bill on smart things like Smart Grid and energy efficiency.

All those policies did help us move the ball forward, and three measures in particular: One, increasing fuel economy standards; two, renewable fuel standards; and three, energy tax credits -- did something very important. They created jobs, they created new market opportunities, and they generated economic growth for our economy.

The Energy Information Agency says that CAFE increases in RFS -- the Renewable Fuel Standard -- in the 2000 energy bill were the first policies that actually reduced our nation's dependence on foreign oil after decades of trying. Together they will reduce greenhouse gas emissions from cars and trucks by 28 percent by 2030. So, nationwide that is a 5.5 percent reduction in all of our nation's greenhouse gases. Or, put another way, that's like reducing the same amount of emissions that Canada produces today.

My point is that while there was opposition to these policies when we passed them, senators can now see that America can reduce carbon pollution without the sky falling or economic ruin.

Detroit is producing a wide range of fuel-efficient vehicles that consumers are liking and are helping them with their profitability for shareholders. And the old talking points that helped to block these efforts in the past -- that it would cost us jobs, that we couldn't produce the cars, that it would make the cars unsafe -- that all of those things have proven to be bogus allegations. I don't hear any of my colleagues, including the ones from Michigan, complaining about fuel economy standards. There aren't any bills out there calling for the elimination of fuel economy increases set through 2016. And the flipside of these policies are they are actually spurring America's innovation in creating new market opportunities for all of us.

So, that's why I think that the way to a smart transition to this 21st century energy policy is a sensible diet that will help win a majority in the United States Senate. One that is gradual, predictable, that unleashes private sector investment to growing our economy. That's why I introduced a 39-page CLEAR Act proposal, along with my colleague Susan Collins, which embraces these approaches: diversifying our nation's energy supply, using an accurate price signal to harness the focus of the free market, and securing the most cost-effective solutions.

Now, I know that many of you have been involved with these issues for a long period of time. And I can only tell you what brought me to instead of doing incremental changes like you've been discussing here today or the ones I've just discussed, why I thought it was worthwhile to put my name on something that was a broader piece of policy.

The polling shows that the American people believe that not only do we need to make this change, that we are going to make this change. What they're worried about is how we make this change and whether they are going to be negatively impacted. So, one of the first principles that I was attracted to in the CLEAR Act is that the path to ensure a measured transition in which capital investment won't be retired prematurely, but it would allow for the optimization of new technologies to switch over while you were making those reductions. That is to say, in the CLEAR Act, the reduction in other greenhouse gases, which are easier to achieve coming first while we gradually make the harder reductions.

The second principle to CLEAR that attracted me was a monthly dividend, which would ease the consumer's anxiety on the price of carbon. They worry that the impact on their pocketbook will be very high in the short term. So, returning 75 percent of the auction revenue to every citizen of the United States -- and that's equally divided -- would average about $1,000 dollars for every family of four each year. And according to the University of Massachusetts, this CLEAR Act dividend would help keep all low- and middle-income households whole from the increases they might see in energy cost. Those protections would help us in making sure that even if you had a different energy mix because of carbon use per-capita, there would be very little difference across America.

And the last principle that attracted my attention was a more sensible and flexible way to process the investments that we would make by allocating $20 to $40 billion dollars a year to various efforts of financing clean energy, research, and development; reducing efforts of helping agriculture, forestry, and the manufacturing sector; transitioning workforce communities; and helping vulnerable areas to adapt to climate change issues because of increased flooding or destruction, changes in weather.

I thought the CLEAR Act was an idea that allowed that transition to happen embedded in an annual appropriation process. I thought that that appropriation process where we continued to look every year about positive policy changes was an easier process to manage than the one big-time, back-of-the-room deals that had been so much part of the discussion of cap-and-trade in the last several years.

I thought that the revenue could also, in today's discussion, be used for a more robust funding system to reduce our nation's chronic budget deficit. Or it could potentially be used for new sustainable robust solutions to the chronically underfinanced highway trust fund and other challenges that we face with infrastructure.

So, I know the conventional wisdom is that Congress cannot pass climate legislation and that putting a price on carbon is impossible, particularly with the new crop of people that have come to the Senate. But I'm saying the 55-year-old fast-food dieter and their consumption of carbon can't really be denied. Gas prices and EPA are going to continue to be a thorn in our side.

So I am optimistic about the future. Yes, we have a daunting task in front of us with $4 gasoline prices, and the burdens on the American family, and we know that we are going to have to outbid China and India in the future if we don't act. But as Secretary Chu recently said in a speech before the ARPA-E summit, there is a huge spike in demand for clean energy around the world. Our strategy should not be hoping for the best; let's plan for where the world is going to be.

I know coming from the Northwest perspective, where we already ship software and coffee and airplanes to China. We want to capitalize on the economic opportunity of selling clean energy solutions to China. So, we are all here today -- you, the thinkers, the innovators, the advocates, the free-market capitalists that can help us validate this pathway our nation's urgently needed transition.

I am sure that we can make this transition. And as Michael Greenstone urged this morning, the impact of energy use on our health and our environment and our national security means that we need to act.

I know that many of you know the cost of our current policies, particularly as it relates to your own utility bills or to the unfairness of the system. Or, to put it more bluntly, the coal-fired electricity user is getting a free ride at the expense of the kid on asthma, or those who depend on a water source not destroyed by a mountaintop removal, or the fisherman whose catch is filled with bio-accumulated mercury.

I know you are the key to solutions that will help us change that dynamic and push America forward with clean energy solutions at reasonable prices that will help stimulate the economy of the future.

So, thank you for giving me this opportunity today, and I look forward to working with many of you on these options and solutions for a clean energy future.


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