Welcome back, everyone.
Good afternoon, good evening, wherever you are.
I'm Derek Brower, the FT's US energy editor.
I'm in New York, so anybody joining me
on this side of the Atlantic, welcome.
One person who is, and I am delighted is joining us,
is the United States Secretary of Energy Jennifer Granholm
for the conference's last session.
Truly leaving the best last, I think.
I don't know about that.
Before we begin, a note of housekeeping.
Please, any questions that you have for Madam Secretary,
please send them in using the box, chat box,
on the right of your screen.
And second, if you want to tweet about this,
please use the hashtag #FTEnergyTran.
Madam Secretary, welcome.
Let's begin.
If I could I'd like to start with Europe
because a lot of our audience is there.
There's an energy crisis under way, as you know, in Europe.
Gas and electricity prices are at historic highs.
Do you blame Russia for this?
Well, we're certainly watching it.
I'll say this.
I just got back from Poland and met
with a number of the eastern and central European countries,
and there was a deep concern that there was withholding
of supplies and manipulation of the market
in order to demonstrate, if you will,
the indispensability of Russian gas as Germany
considers its Nord Stream 2 approvals.
However, I don't have information
to say that that is the case.
We are watching it very carefully.
Obviously, the US wants to make sure...
and there is a ripple effect in the United States, as well.
We are seeing natural gas prices shoot up also.
So we are undergoing a process internally
to the federal government just to let
you know to look at this issue and to make sure
that we're doing all we can, both here
and in Europe, to ensure that people
have the supplies they need.
Does that include the possibility
of investigating market manipulation by Gazprom
as the Polish government has called for?
Well, I know the Polish government was very concerned
about that as well.
Suffice it to say we're aware of the request.
We're aware of the fact that there does seem to be what...
well, I say a choke point and not as much supply.
But there are also, I understand -
and it's true in the United States, too -
this ramp-up after Covid takes a little bit more time than
people would like given how quickly winter is emerging.
And it is projected to be a bit of a colder winter.
So there are those issues.
Let me just say that we are looking at it.
It sounds...
I mean, those are fairly moderate comments.
It sounds like you're trying to cool some of the rhetoric.
Because some of your colleagues in Europe are talking about
this as an energy war almost.
We're in the grip of another energy war.
Do you fear that it could spiral into that?
I worry about that, certainly.
I mean, you don't want to see energy made into a weapon.
And the weaponisation of energy is a serious problem.
I'm not saying that is happening right now.
I am saying that we understand the concerns,
and that, given the enormous jack-up in prices,
there deserves to be special eyes on it,
and we are looking at it.
But at the moment, we don't have a conclusion on that.
Is there anything you think the US can do on the supply side,
for example, to help?
And I ask because the previous administration, as you know,
talked of freedom gas and so on helping to break Europe's
dependence on Russian gas.
Should the US, or can the US, send more gas right now?
Most of the cargoes that are sold in the spot market
seem to be bought by Asia right now,
and the market is sucking them in one direction
and not arriving in Europe.
Is there something more that the US
can do to help relieve Europe?
You know, again, we have an inter-agency process looking
at this.
I mean, as you know and as Europe knows, I mean,
we are in a position where we preside over a free market.
And so we don't own the means of supply
and we don't own the ability to direct.
And so the question is, what are the tools at our disposal
to make sure that there is supply
that's adequate both for Europe, as well as for the United
States.
I will say that our LNG supply at this moment
is almost to the cap of the existing capacity.
So you'd have to build out... even though new terminals are
authorised, they have not been built out yet.
It would take, obviously, some time for that
to happen to jack up additional supply.
So it's not as obvious of a solution
as one might otherwise think.
The capacity limits are almost reached.
Let me stay with the international mark
and ask about oil prices because WTI, West Texas Intermediate,
the US benchmark is near $80.
Brent is above $80.
Levels that some economists say will
start to slow the recovery, the economic recovery,
from the pandemic.
The administration has expressed its alarm
about gasoline prices, and President Biden
has talked about them.
Do you think Opec is doing enough?
Last week, they met, or earlier this week, they met.
And after the US asked for more supply
they stuck to their existing plan.
Is the Opec group of producers, Opec-Plus,
are they doing enough to cool what could be a damaging oil
price rally?
Well, I think that everybody was hoping
that there would be additional supply made available
so that prices would not be jacked up.
And the president, President Biden,
has made it clear that he wants Americans to have access
to affordable and reliable energy, obviously, at the pump,
but natural gas too.
The administration really is committed
to doing everything we can to make sure that everybody
is paying - that Americans are paying -
fair and affordable gas prices.
This is a similar problem, right?
We don't own our own gas supply or oil supply.
And so the market is what the market is.
Presidents don't control the cost of gasoline.
And we also are aware that we want
to move into a clean energy environment,
and that, while this transition occurs,
we want for people to not bear the cost of that
in terms of at the pump.
And the president, even in deciding
on how to pay for his big agenda in Congress,
he made it clear that raising gas taxes, for example,
is not on the table.
He drew a red line for that.
So he does not want to raise costs
on everyday people for anything.
And so, while we go through this transition,
he wants to incentivise the development
of clean technologies and clean fuel supplies
without having everyday citizens pay for the cost of that.
And the White House has said that all tools
- I think Jen Psaki said this earlier this week
- all tools are on the table in terms of trying
to deal with this price surge.
Does that include releasing oil from the Strategic Petroleum
Reserve, for example?
Yep, it's a tool, for sure.
And is that a possibility in the next coming weeks?
Well, it's a tool that's under consideration.
There are regularly scheduled sales already set.
A regularly scheduled sale set.
So that might provide some.
But again, it's very much marginal assistance
overall given the scope of the problems.
But nonetheless, that is a tool, and certainly the president
will consider that.
And possibly restricting exports.
Is that also on the table?
That's a tool that we have not used, but it is a tool as well.
And as I say, we have an intergovernmental process
that is going on.
And as Jen Psaki said, all tools are on the table.
But some are more readily available than others.
Let me turn to the US now and ask about...
we'll stick with the oil for a sec.
Oil and gas.
US producers, the shale producers, as you know,
say these price rises are the outcome of policies
from the Biden administration.
In particular, they cite the moratorium on leasing
of federal lands for fracking.
Do you think producers in the US should
be doing more to increase production
right now themselves?
Let's be clear that the moratorium was on new leases,
and there were a whole lot of existing leases
that were not even being used, that
were available, that are available,
to be able to be taken advantage of.
We want to see supply and demand be at a place
where we don't see huge increases in prices.
So I'll just leave it at that, and the president
is very concerned about that.
OK.
Let me turn to Congress.
The president has been adamant that his sweeping clean energy
agenda will go ahead.
These are huge plans, as we all know
and as we've discussed a lot in this conference.
And his agenda rests on Congress's approval
of these plans later this month, potentially,
or when the vote comes in the coming weeks.
You've been following the machinations and the debate
in Congress closely, of course, and are very
familiar with what's happening.
What do you think is likely...
not what you want to come out of this process,
but what do you think is likely now to emerge from Congress
in terms of how much of the $3.5tn reconciliation package,
how much of the $1.2tn bipartisan infrastructure bill,
how much of these packages will survive by the time Congress is
done with them?
I mean, as you're aware, the bipartisan infrastructure deal
will largely stay intact, I predict.
And I think that's pretty clear.
It's just a question of the size of the Build Back Better,
the second piece, the Build Back Better agenda.
You're aware, of course, that the president
spoke with members of his party over the past couple of days
and told them that they would have to pare down the ambition.
And so whether the real question is whether they pare everything
back, or whether they put certain categories off
to the side and fund others fully.
I know that even just as I was coming on to this call,
I saw Senator Manchin describing what he thought
were his priorities.
And he has a pretty big say in how this is shaped.
So I do think that, combined, this is still
going to be a huge investment in our nation.
And from my column of the world in the Department of Energy,
it is going to be a huge investment in technologies,
and in projects, and in a grid deployment authority that
really takes us to the next level
and knocks down a lot of the barriers
that we have seen in the past.
So the issue really comes down to, quite honestly,
whether there will be this clean electricity performance
programme or some version of it that incentivises utilities
to do the buildout and has both incentives and penalties
and goals.
And so is it the CEPP, as we call it?
Or is it something that's got those elements?
That is part of what the last bit of negotiation is to occur.
I think there will be consensus around the investment in tax
credits to incentivise the buildout of clean energy.
We have been eager to incentivise
all kinds of clean energy.
- clean broadly defined.
That includes, obviously, wind and solar and renewables,
but it also includes decarbonisation
of fossil fuels.
It would include nuclear.
So we are...
I continue to say, this is about silver buckshot, not
a silver bullet.
To incentivise all of those in the way that this bill does,
I think, will be enormous for America
and enormous for the movement forward of these technologies.
And most importantly, from the president's perspective,
is jobs in this overall sector.
It's not just one industry.
It is a sector that includes a whole slew of industries
that provides jobs for people.
I'll come to jobs in a sec.
Let me just, if I may, ask a couple of follow-ups.
So does the silver buckshot, does
that include natural gas in the CEPP?
Because it seems that that may be a sticking
point for Senator Manchin.
If the CEPP can include natural gas
- broadly defined, if natural gas can
be included in a clean energy package - he may approve it.
Would you be happy for natural gas to be in the CEPP?
Natural gas with carbon capture technology, yes.
I will say that Senator Manchin has
been a huge advocate, as have a number of decarbonisation
technologies, like carbon capture and sequestration.
And so presumably, then, if natural gas with carbon capture
could be in it, coal with carbon capture could also be in it?
Yeah.
I mean, part of the...
decarbonisation is decarbonisation.
And so the question for coal has been, does it pencil out?
But the CEPP provides the means to build out that technology.
And that's what it funds.
It doesn't fund shareholder profits.
It funds the buildout of these technologies.
And we want to take these technologies to scale.
It's not just the US that is looking
at these decarbonisation strategies.
We want to prove it out.
Part of the infrastructure bill that was passed
includes carbon capture and clean hydrogen hubs,
demonstration hubs.
So we want to take it to scale so
that we can reduce the cost of it,
so that it can be one of the pieces of buckshot
that's in our goal of clean, dispatchable baseload power.
Right.
And just to be clear, so a new natural gas-fired power station
with CCS could be part of the utilities...
Could be.
...programme. Could be.
OK.
Let me ask about jobs because I know, as you said,
this is very dear to the administration
and President Biden's agenda for clean energy.
Nonetheless, the pushback from some people
in the traditional fossil fuel jobs
is that clean energy jobs are less reliable, less long term,
lower pay.
Frankly, they come with higher risks, and some of the skills
aren't necessarily transferable in the way
that some people claim.
How important do you think it is, first of all,
for these communities in fossil fuel areas of Wyoming
and non-Democrat voting areas of the country,
frankly, to be brought alongside,
or be brought in, along while you push this energy
transition?
Or do you just think that some of these
will essentially be casualties of a necessary shift?
Yeah, this is a great question, and hear me loud and clear.
The president doesn't want to leave anyone behind.
And he feels very strongly that these communities in particular
- he has a whole Justice 40 initiative.
And that Justice 40 initiative and the focus on coal and power
plant communities, and the focus on communities
that have been left behind because they have perhaps
been located in the shadows of smokestacks
and have disproportionate amounts of asthma, et cetera.
Both types of communities, Just Transition communities
and Justice 40 communities, are going
to be part of our place-based strategy for targeted focus
on investments.
We have not really had that before.
I mean, other countries have.
Europe has.
But we have not really focused as much
as we should have on these transitioning communities.
I tell you, the reason why I think the president asked
me to be Secretary of Energy is because I
was governor of Michigan.
And we were in that situation.
Our main product is a product that
uses fossil fuels with an internal combustion engine.
And so we saw our industry on its knees
through the Great Recession.
And a lot of that was the Great Recession compounded
by the fact that we saw a lot of imports
that were much more fuel efficient, honestly.
Japanese imports, et cetera.
And people were expressing a preference.
And so we had to make a decision.
And this is why the president is so key on this
because during the Recovery Act, they funnelled money
to Michigan to help us diversify into areas that we knew
we could be competitive in.
Including car 2.0, which is the electric vehicle.
And the guts to that vehicle, which is the electric vehicle
battery.
So that experience... and now, of course,
Michigan is on the rebound.
Electric vehicles.
You saw all of...
I know you want to have a separate conversation
about vehicles.
But I just have to say this is near and dear to me.
And the point is that the president sees that example,
and sees what's happening in these coal and power plant
communities, and says, we can offer them
an ability to diversify.
I say this to Senator Manchin all the time.
West Virginia powered this country for hundreds years
on coal.
They can power our country for the next 100 years,
but using clean energy.
And we can figure out what are the technologies that
are consonant with the experience and the skill
set of the workers there.
So do they have expertise in subsurface?
Yeah, let's look at the hot spots in West
Virginia for geothermal.
Let's give people the ability to attach carbon capture
and sequestration technologies to existing power plants.
Let's make sure we have clean hydrogen hubs.
And that, by the way, might require the ability
to lay pipe underground to move carbon, et cetera.
So there are tonnes of skills in this clean energy world that
are good skills, including...
I mean, Senator Manchin would love
to put nuclear on top of coal plants,
like they just did in Wyoming.
TerraPower, founded by Bill Gates,
just put, or is slated to put, a small nuclear reactor
adjacent to a coal plant.
That is a huge opportunity.
Good paying jobs.
Union jobs.
We do not want to leave any community behind.
We are not going to leave any community behind.
And we're going to direct investments
into those communities.
OK, let me ask about cars.
Ford and SK Innovation recently announced this huge $11bn
investment plan to build assembly and battery plants
in Tennessee and Kentucky.
And there's this big EV rollout that they're planning there.
Do you see that region of the country...
is Tennessee about to become the Detroit of EVs?
Don't say that to me.
I mean, good for Tennessee, but I still...
I mean, I have my home team, you know?
But honestly, I mean, there's enough love to go around.
I mean, we want to see these investments
in batteries in the United States,
and the supply chain for those batteries.
The anode, the cathode, the separator material,
the electrolyte.
Those are all separate companies,
different kinds of investments.
We want them all in the US.
And that includes, by the way, responsible extraction
of lithium and cobalt and the materials
that go into those batteries.
And we don't do that as much in the United States.
Very few places.
We end up importing.
And that's true with processing those materials.
We don't have a single processing
facility in the United States.
It's one of the reasons why the president is focused
on the battery supply chain.
To be able to get the whole value chain
associated with electric vehicles in the United States.
And I'm sure Tennessee wants it.
Michigan wants it.
Georgia wants it.
They all want it.
And you know, good.
Let's compete.
Let me ask you a question about infrastructure,
and energy infrastructure in particular.
There is obviously a huge focus from the administration
on infrastructure, full stop, period.
But the energy infrastructure seems
to be a particularly thorny matter for this energy
transition because, as you know, transmission lines need
to cross states, and some of the permitting for this
is difficult.
I spoke to an offshore wind developer
who talked about starting the permitting process in 2007
and only getting approval for it last year.
But the problem is not just on clean energy either.
Pipeline developers say that they can't get approvals.
And we saw the vulnerabilities when the Colonial Pipeline
went down earlier this year of the US energy you know consumer
to the vulnerabilities in the energy infrastructure
system in the US.
How can you, how does the federal government,
fix this problem, speed up this process,
that this isn't hindering the transition,
or even hindering energy security?
Yeah, this is a great question.
I mean, the permitting for some of these projects,
especially on the transmission side, it is just...
any type of infrastructure that runs across multiple states
is going to be onerous.
But there are steps that we're taking to help clear
the obstacles to approval.
I hear more about it on the transmission side.
For one thing, here's an example.
The Department of Energy already has
authority over public highways and other rights of way.
Public lands where we can site and permit
new transmission lines quickly.
And so if we can use those existing rights of way
and create and just put them up in easements, that's fantastic.
Earlier in the year, I know the Department of Transportation
issued new guidelines on how to leverage these rights of way,
public rights of way, for high-priority transmission
projects.
And, by the way, to serve as a model for private partners,
like railroads, to do the same.
And part of that infrastructure, as well,
is building out the infrastructure
for electric vehicles.
And so you can imagine a combination
of perhaps transmission, EV buildouts,
along public rights of way, which
lessens the resistance, of course,
since it is on public land.
Congress clearly wants us to address these bottlenecks, too.
And so that bipartisan infrastructure deal
includes a new grid deployment authority,
which would let us at DOE designate corridors
of national interests along those existing rights
away, allowing for quicker construction.
And would allow DOE to take a position on a proposed
transmission line because, as you know,
transmission lines are not built on spec usually.
We have to have offtake.
And if we see it as an important one
that we would take a position, potentially,
to do that offtake so that they can then afford the buildout
and surety that they will be able to have that offtake.
DOE and the FERC, the Federal Energy Regulatory Commission,
we both have roles in getting projects permitted.
And we meet every other week to make sure that we are in sync
and aligned to be able to move faster.
And then on the oil and gas side,
obviously, we need to invest in infrastructure
that's going to help us build our clean energy economy.
And while we still...
we obviously will also have pipelines into the future.
We want to make sure those pipelines are
leak free, particularly natural gas
pipelines as we're concerned about methane emissions.
And there will be more on that as you're probably aware.
But that's over in the EPA side of things.
We also, though, want to continue
to build out the infrastructure for the clean side
and emphasise that as well.
And I see that I'm bumping up against time.
I'm so sorry about that.
I may have to jump off at this moment.
Thank you.
But I really appreciate the chance to have a conversation.
Thanks for the smart questions.
Madam Secretary, thank you very much.
You bet.
That is it from the FT Live Energy Transition Summit.
It's been a provocative two days, I think.
The consensus from my panels and the ones I listened to
was that transition, energy transition,
to a cleaner energy future is well under way
and is probably irreversible.
The market is moving in that direction,
and policy now needs to follow more quickly, too,
to support it.
But there will, I think, this came up repeatedly.
There will be dislocations caused by this transition
and involved in this transition.
And these need to be addressed.
In particular, there are gaps in the technology
that needs to be filled.
That was clear from a number of panel discussions.
And there are fossil fuel communities that cannot be left
behind.
And we just heard the Secretary of Energy in the United States
talk about that.
These are hard questions and probably
need more than what Greta Thunberg describes
as "blah blah blah" from politicians in their bromides.
That's certainly not what we just heard
from the Secretary of Energy.
I was delighted with that conversation.
I have been intrigued to hear in a lot of the panel discussions,
and I think some of my other moderators at the FT
have felt the same way, the view that the fossil fuel supply
crisis that is under way now, soaring prices for fossil fuels
will not slow this energy transition
but will actually accelerate it.
Those are my concluding thoughts.
Thank you to everyone who participated.
Thank you to the excellent green room and backroom
staff who made all this happen, the planners and so on.
Thank you to our lead sponsors, Baker Hughes, Chevron, EY,
Mitsubishi Heavy Industries Group, Oliver Wyman,
to our associate sponsors, and Ansys, Axpo, Blackstone,
FuelCell Energy, Lundin Energy, National Grid, and Worley.
Thanks also to our supporting organisations,
Bioenergy Europe, International Solar Alliance, Eurelectric,
GasNaturally, and Commodities Trading Association.
Everyone who's still here, do you
remember you can watch these videos
from the conference on demand for the next 90 days
at energy.live.ft.com.
And finally, I look forward to seeing everyone
- I hope in person, for a change -
at the FT Energy Source Live US Edition in Houston
in early April with a date, an exact date,
to be confirmed soon.
See you there, and thank you for being here.