Governor Kitzhaber Delivers Keynote Address to Future Energy Conference

It is an honor to be here once again with energy and business innovators and leaders who understand what it takes to build a clean economy: creativity; smart business thinking; and partnerships that cross borders -- both geographic and political.

Energy is the issue of our time -- both globally and here in the Pacific Northwest -- and no single issue will have a greater impact on Oregon in the coming decade.

When I spoke here last year, I said that "The central question is whether we will shape our energy future through intentional investment and development or whether it will shape us."

Today, that is still the relevant question -- and answering it is even more urgent than it was a year ago, and it's even more acute given the difficulties we are having making the complicated transition from a 20th century energy infrastructure to new business models that can unleash the job-creation potential of low-carbon energy innovation:

We see the challenges every day…

In the increasing conflict around the import and export of fossil fuels;
In the high cost of maintaining an out-dated energy infrastructure;
In trade wars aimed at locking up market share for next generation energy products;
and In heated policy debate about leveling the playing field for clean energy.

Most concerning to me, however, is the fact that a troubling narrative is beginning to reemerge in America: that sound environmental stewardship is a barrier to economic growth and job creation.

The Great Recession has created an understandable sense of urgency around job creation and economic development. But it has also provided an opportunity for some to use high unemployment as an excuse for relaxing environmental protections; and for backing away from the steps necessary to meet our carbon reduction goals.

As a consequence, the 2010 elections left America increasingly divided, with many states trending toward reduced support for clean energy and sustainable economic policies.

Washington, Oregon and California, however, have defied this trend -- retaining progressive leadership committed to clean energy and the belief that we can create jobs and economic activity without sacrificing long-term environmental stewardship; and that the clean economy offers us perhaps the only path to a sustainable future that is insulated from the chilling effect of fluctuating fossil fuel costs and supply.

I'm convinced that Oregon's success at building an enduring prosperity for our state is tied to regional success -- to providing the leadership in building on multi-state partnerships and strategies that realize the clean energy opportunity.

Oregon, Washington and California have a unique opportunity to change the national narrative and to demonstrate the value of clean economic policies through a collaborative approach.

That is why I am committed to strengthening partnerships with leaders along the west coast to accelerate the transition to a vibrant clean economy.

To move away from a boom/bust economic cycle that depletes our natural capital and leaves us highly vulnerable to fluctuations to global recessions;
To create and retaining economic activity and family wage jobs while reducing our carbon footprint; To minimize the need for imported energy, and;
To keep capital circulating in our region through local sourcing, and supply chains.

At last month's annual Pacific Coast Collaborative Leaders Forum, in Vancouver, British Columbia leaders from four jurisdictions -- British Columbia, California, Oregon, Washington -- reaffirmed that clean economy collaboration and low-carbon innovation are central to a win-win competitive strategy that has already created a $47 billion regional market.

I joined B.C. Premier Christie Clark, Washington Governor Gregoire, and California Governor Jerry Brown in signing the 2012 Jobs Action Plan designed to create up to 1 million more jobs in the next decade through new, measurable commitments to retrofit state-owned buildings, purchase advanced technology fleet vehicles, and create world-class energy standards to incentivize private sector leadership and advanced manufacturing.

Bound by a common coast -- and separated from our national capitals by majestic mountains -- we recognize clean energy for the economic engine that it is, rather than the political football some partisans would have it become.

Today over 508,000 Pacific Coast residents from California to British Columbia are cashing "green job" paychecks every week. We therefore reject the myth that jobs and the environment are in conflict -- because our own experience and hard data shows otherwise. We know what other regions have yet to learn:

That the cleanest form of energy is the energy we don't use and that there is tremendous economic potential in significantly scaling up investment in energy efficiency and conservation;
That the real potential of our extraordinary natural assets lies not in their exploitation, but in their restoration; and
That the global market is hungry for technologies, products and services that get things done more efficiently and at a lower cost -- the keys to a clean economy.

Here are the facts: Job creation rates in the clean economy are well above those for other shrinking sectors of the economy. They pay better. And they have been more resilient to the downturn of the Great Recession.

And now the new West Coast Clean Economy Opportunity Study -- commissioned by the Pacific Coast Collaborative -- estimates that the regional clean economy could triple in size to $147 billion by 2020.

Our success in meeting that goal will depend on our willingness to develop regional partnerships; and our willingness to pioneer ahead and embrace change -- tempered with a dash of west coast stubbornness to stay the course no matter which way political winds blow.

Success will also depend on our willingness to ask difficult questions -- and central among them are the many unanswered questions around our rush to become a major coal exporting nation.

As you know, negotiations are currently underway at many locations in Oregon and Washington to secure the necessary approvals for coal export facilities to ship coal from The Powder River basin to Asia. I have grave concerns about proceeding in this direction in the absence of a full national discussion about the ramifications inherent in this course of action.

The Environmental Impact Statement that the Department of the Interior is currently relying on to issue leases for coal extraction from public lands in the Powder River basin addressed the environmental effects of transport and use of coal in the mid-western and eastern United States for domestic energy production, but it did not evaluate the effects of coal exports to Asia.

The United States has the largest known coal reserves in the world, and currently exports approximately 80-100 million tons of coal each year. The current proposals in Oregon and Washington could result in an additional 157 million tons of coal exports, more than doubling the U.S. export capacity, with all of this increase going to fuel growth in energy production in Asia.

Most of the as yet unexamined environmental, health, community, economic impacts associated with this tremendous increase in coal transport to the west coast would be shouldered by Oregon and Washington. Further, the environmental effects of encouraging further long-term investment in Asia in coal-fired electric generation, in terms of air quality impacts on the west coast of the United States, have not been analyzed. Increases in ozone, mercury, and particulates could have both significant environmental and economic effects in this country, by requiring U.S. industry to adopt additional pollution controls in order to meet air quality standards.

A decision to proceed on this course has profound implications for our nation's energy security; and for the trajectory of the world's transition to cleaner sources of energy. If the United States is going to embark on the large scale export of coal to Asia it is imperative that we ask -- and answer -- the question of how this decision fits into the larger strategy of moving to a lower carbon future. In the lack of a clear federal policy on this point we will simply be deciding by not deciding; locking ourselves into a coal dependent future without the benefit of a full national discussion, consideration and balancing of all the associated economic, environmental and health problems related to such a course of action for the Pacific Northwest and for our country.

To address these important national and regional concerns, today I have asked the Federal government to prepare a full programmatic environmental impact statement under the National Environmental Protection Act to examine the effects of coal transport to the west coast and the use of coal for electricity production in Asia before any further permitting or leasing decisions are made.

While the question of coal exports needs demands and deserves more study, other opportunities await. One is the opportunity to finalize Oregon's 10-year Energy Action Plan -- which many of you in this room have helped to shape over the past six months. The goal is clear: to prioritize and act on initiatives to reduce our dependence on carbon-intensive fuels and foreign oil; to develop home-grown renewable energy resources; to mitigate greenhouse gas emissions; to improve energy efficiency and create local jobs; and to boost Oregon's economy through investment and innovation.

I received 198 recommendations from a citizen Task Force in March and am in the process of reviewing and synthesizing that work into a draft plan which I will submit for public comment by June 1st. The will be built on three pillars:

Maximizing Energy Efficiency and Conservation
Promoting the Development of Clean Energy Facilities and Infrastructure by Removing Finance and Regulatory Barriers
Accelerating the Transition to Cleaner Transportation

Each of these initiatives will involve bolstering existing programs, pursuing regulatory changes, and tapping opportunities for the state to be a market driver through creative finance, purchasing, planning and governance.

Maximizing Energy Efficiency and Conservation

For example, programs like the Cool Schools Initiative and Clean Energy Works Oregon have used on-bill financing and other innovative mechanisms to make it easier for homeowners and school districts to bundle projects, cut their energy use, and save money.

Cool Schools is attracting private capital and providing a proof of concept for increasing the energy efficiency of our built environment on a regional scale. We know that we face high unemployment in our building trades. We also know that new construction in the housing market is not going to bring us out of this recession due to the large stock of vacant housing. But we have an enormous inventory of residential, commercial and industrial property that could benefit from energy efficiency retrofits. My point is that the future of the building trades may not be in new construction as much as it is in making our existing structures more efficient.

There is much to recommend this approach. First, energy efficiency jobs cannot be out-sourced, and there are thousands of good jobs to be had right here in the region. Second, increasing the energy efficiency of our built environment keeps dollars here in Oregon and in the region that would otherwise be lost to imported energy. Third, a collaborative regional approach to energy efficiency can be a central component of fulfilling the Northwest Power Planning Council's finding that 85% of the region's energy needs over the next decade can be met through conservation.

Furthermore, a regional collaborative on energy efficiency offers a pathway to breathe new life into the effort to address climate change. By demonstrating that climate change can be addressed in a way that creates jobs, reduces cost and energy demand, and keeps more money circulating in the region, a multi-state regional effort provides perhaps the best opportunity to reframe the national narrative and drive significant change in federal energy policy.

Promoting the Development of Clean Energy Facilities and Infrastructure by Removing Finance and Regulatory Barriers

Over the course of the last five years Oregon has begun to significantly alter the way we power our homes and our businesses. Reducing our dependence on out-of-state, fossil fuel based sources, we now draw increased power through harvesting our state's wind, solar, geothermal and bio-energy resources. This is not just sound energy policy, it is sound economic policy. Since 2007, the wind industry alone has invested over $5 billion in Oregon.

How do we build on this momentum and push for a smarter grid infrastructure? How do we support the next wave of clean energy economic development in Oregon and continue to move our state toward a net zero future? Allow me to "geek out" for a moment. As we diversify our energy supply, there is an urgent need to demonstrate an alternate paradigm that relies on power consumers who are willing and able to alter their electric loads to help provide balancing services to utilities. It turns out that many power customers have flexibility in the timing and intensity of their demand -- principally commercial and industrial customers -- but some innovative programs are exploring residential uses as well.

Creating a smarter grid is the key. Eight Northwest utilities, including four from Oregon, are participating in a BPA-sponsored pilot tests. Some of these pilots are thermal storage options such as residential water heaters that can store temporary surplus energy from wind generation in the form of hotter than normal water. Others explore the value of using ceramic heaters and commercial and industrial cold storage; flexible demand response and storage resources. Hundreds of other examples are emerging as utilities, entrepreneurs and their customers become ever more creative.

Many questions remain about how to cost-effectively capture the potential. The 10-year plan will guide the state's effort to be an effective partner in moving the policy, programs and practices necessary to maintain and expand our clean energy infrastructure.

But let me take a step back for a moment to the bigger picture on America's aging infrastructure. The American Society of Civil Engineers recently identified $2.2 trillion of urgent infrastructure upgrades in this country. Oregon alone has billions of dollars in need for new public infrastructure like roads and bridges and schools. Twenty five percent of our brides are structurally deficient and in desperate need of upgrade.

And that doesn't include much of the crucial energy infrastructure I just mentioned. Yet the daunting fact is that while the need for investment in these resources in increasing, our ability to make these investments with public dollars is declining.

Despite this challenging outlook, these investments are absolutely critical to our future prosperity and will have a significant payback. I am therefore committed -- and my staff has started working on -- a West Coast Infrastructure Exchange concept with Treasure Ted Wheeler and partners from California and Washington to find a new model of public-private financing for our critical infrastructure needs. I also know that to do this we must take a broader view of infrastructure -- so we can aggregate opportunities and attract the right kind of capital; enhance our regional competitiveness; and create more good jobs. Investments in our grid, in our clean energy facilities, in our transportation and in related projects such as managing our water resources must be a part of this new, integrated picture.

We are a relatively small state, but we are an innovative state, and I want us to once again show the nation a new way of investing in our common future.

Accelerating the Transition to Cleaner Transportation

With regard to cleaner transportation, Oregon is one of only two states in the nation to have experienced a decline in vehicle miles travelled since 2000. Still, there is much more that can and must be done.

Transportation is the single largest contributor to Oregon's carbon emissions, accounting for 34% of the total. Oregon's roads accommodate four million registered vehicles for 2.7 million licensed drivers. Oregonians consume some 1.5 billion gallons of gasoline to drive 39 billion miles every year. That fuel costs Oregonians nearly 7% of their disposable incomes -- nearly double what it was ten years ago. Moreover, gas prices are projected to rise, so we can expect this trend to continue unless we reconsider our transportation system and our driving habits.

We need to rethink future planning for our transportation infrastructure with targets to reduce demand and strategies to achieve those targets. We must engage communities throughout Oregon and to better understand how each community can reduce carbon emissions within its own respective transportation system.

And we need to continue to transition from imported petroleum-based fuel to power our cars to locally grown organic material and renewable electricity. We are moving forward with implementing the state's low-carbon fuel standard and the state will continue to partner with utilities and others in the private sector to build out an EV infrastructure. We also must do more to accelerate vehicle and fleet turnover to high-efficiency choices.

Oregon consumers have already shown their willingness to be early adopters of new technology, and companies are investing in the next generation of innovation in clean fuels. ZeaChem, with a new cellulose-based biorefinery in Boardman is a case in point. ZeaChem is showing the potential for advanced biofuels to create Oregon jobs and new revenue streams for Oregon farmers, ranchers and private forest owners.

So let me conclude where I began with the question: Will we shape our energy future through or will it shape us?" As William Jennings Bryan once said: Destiny is not a matter of chance it is a matter of choice; it is not a thing to be waited for, it is a thing to be achieved.

With your help I am confident that our energy future here in the Pacific Northwest will be a matter of choice, not a matter of chance -- and that we will chose a path that leads to bright, prosperous and sustainable low carbon future.

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