The Full Transcript
Elizabeth Wason: Welcome to the Policy Leadership Series Podcast from Resources for the Future. In every episode, leading global decisionmakers speak to RFF President and CEO Richard G. Newell about big environmental and energy policy issues. In this episode, Richard speaks to the Deputy Secretary at the US Department of Energy, David Turk. Their conversation took place on August 11.
Richard G. Newell: It's really a pleasure to have you here today.
David Turk: Thanks, Richard. It's great to be with you and with everybody here. And let me give a special shout-out, Richard, for you and your career not only at RFF but also at the Department of Energy (DOE), including leading our Energy Information Agency, which is just an incredibly important part, putting out nonpartisan, independent analysis numbers—and just a special shout-out to RFF for those colleagues who are part of RFF. Thank you for what you're doing: incredible work for many years, putting out terrific analysis. I think my DOE colleagues would agree. Thanks for having me here.
Richard G. Newell: I appreciate that.
For our audience in the room and virtually, I'll take the next 45 minutes or so to engage in conversation. We'll talk about Deputy Secretary Turk's experience and how that influences the way he's approaching his role at DOE. We'll talk about the ongoing challenges with high energy prices. We'll talk about policies and technologies that can help support a clean energy transition while maintaining US economic competitiveness. And we'll also talk about approaches to ensuring that that transition is just and equitable. We'll touch on a lot of different things.
Following that, we'll move to an audience Q&A; for those of you tuning in online, you can enter any questions into the question box at the bottom of your screen. We've also been taking some questions in advance, and I'll weave some of those into our initial dialogue. Lastly, if you want to join the conversation on Twitter, please use #RFFlive.
So kind of where to begin, There's no shortage of things to talk about. There's been a huge amount of news and also work that's been done over the last several months. August is supposed to be quiet, but I think it’s been anything but that so far.
Let's start first on how your background influences how you're approaching your role at DOE, your goals at DOE, your background, both of the US government, but also working internationally in the International Energy Agency, both on climate issues and also energy issues. Give us a sense of how that's influencing the way that you're approaching the job.
David Turk: Thanks, Richard. I've been incredibly lucky and fortunate in my career. I've had some really interesting positions and, hopefully, real-world impactful positions. Certainly, it's an honor of a lifetime to be the deputy secretary at the Department of Energy, especially at this moment where Congress is giving us all sorts of funding and authority to accelerate the clean energy transition.
Secretary Granholm, who's just a phenomenal secretary for anyone who's had a chance to meet her either professionally or personally, the kind of person who is the same in private as you get in public, which is a really strong indicator of her character and her as a person, as well.
A couple of things I'd say: One, early in life, we all have formative experiences. For me, there were a couple that really stick out.
One is that I had the fortunate consequence to live abroad for the first six years of my life. I was born in Ecuador, lived in Chile and in Brazil, and then moved to a small town in Illinois, which I'll get to in a minute. For me, that was incredibly fortunate to have that perspective, even as a little kid. Little kids, for those who have little kids, they pick up on more than we think they pick up. Sometimes they’re little sponges and really useful to get a sense of perspective. As we all grow up, as we all start our careers, sometimes we don't have perspective. For me, especially for the international work that I've been able to do, it's good to be able to see, to empathize, to understand where others are coming from. And so I think that's been very influential for me.
Then, when I moved to a small town in Illinois, it was an agricultural and steel mill community. And the steel mill, as in a lot of small towns and in the Midwest and throughout the country and other places in the world, was basically closing down throughout my whole childhood. That had a real impact on me in terms of what it means when you have those economic challenges. When jobs are being lost, when dads and moms are losing their jobs, families are being put in incredibly tough circumstances—which, again, makes me feel personally very fulfilled to be in a job like this, with the funding, the support, the programs with which we’re able to not only accelerate the clean energy transition but also build out jobs and manufacturing, have the supply chains, and have all the other things that we're talking about on this front because I saw that in my community, and we see that certainly in communities as the president has spoken about so eloquently; Secretary Granholm, as well.
I've had a chance to work in the government: the US government, the State Department; a couple of times in the White House; Department of Energy a couple of times. It’s useful to work in different agencies to understand those perspectives. The job that I held previous to this was at the International Energy Agency, the IEA, a phenomenal organization based in Paris, which was not a bad place to live and work for four years. Phenomenal colleagues from all over the world, working in a multicultural setting, phenomenal analysts—the boss of the IEA, who's one of my mentors and a good friend, Dr. Fatih Birol, a visionary in the energy world, including in the clean energy transition space.
So, I've been open to different opportunities. Luckily I've been able to take advantage of those opportunities when they've come.
Richard G. Newell: We're really lucky to have somebody with such a diversity of experience in that position because, as you know from being at DOE a few times, it does bring together an unbelievable number of different issues, which have only increased in importance over the last year.
One of the things I want to turn to, that is on many people's minds, is gasoline prices and oil prices. It's all over the news today that the retail price of gasoline in the United States dipped down below $4 per gallon. It was as high as $5 per gallon. The price of oil has come down by about $30 per barrel, and that translates directly into lower gasoline prices.
Give us a sense of the actions that the Department of Energy and the US government have been taking on oil. There've been releases from the Strategic Petroleum Reserve (SPR). There's been collaboration and coordination with other countries, both consumers and producers, globally. Give us a sense of what actions have been taken and where that stands. Is that finished? Is it midway, and has it made a difference?
David Turk: Thanks, Richard. And since you mentioned Department of Energy and our colleagues there, I have to make a plug. I'll make this at least seven times during the course of this conversation as we implement all this great clean energy transition stuff. It literally is billions, tens of billions of dollars—a huge opportunity space.
We're hiring up significantly. We've got something called our Clean Energy Corps, where we're trying to make it easier for people to get into the federal government, to try to streamline the processes. For those who are interested in being part of the government right now—this historic opportunity of executing on the clean energy transition—please apply. I'll get to that at least six more times in the course of this conversation.
Richard G. Newell: I've heard it’s close to 1,000 people that DOE needs to hire. Is that about right?
David Turk: That's right. As important as the number is—and it'll be at least 700 people—we're trying to do this in a bottom-up way. What are the needs? How do we actually build up the team?
The quantity is impressive, but even more impressive—and I think you can hopefully agree from your time at DOE—is the quality. We've got some phenomenal talent at the Department of Energy already: experts, literally top experts in their fields. But we need more talent. We need diverse talent. We need talent that represents America and has a huge amount of skill set.
Government service is not for everybody, but this is a particularly good time to think about a stint in government, whether you're starting your career or a little further along in your career. We'll do it six more times and make the plug.
So, gas prices. It may be useful to start and put politics aside, especially with an analytically rigorous organization like RFF—there are a lot of politics played on this issue—and actually talk about what caused gas prices to be high, and then what we're trying to do in this administration using the tools that we have to try to help.
What caused gas prices to be high is a combination of two things. One is COVID. Like everything in life the past couple of years, COVID has thrown international energy markets and gasoline, which comes from crude oil. Crude oil is traded globally. It is a global commodity. There is a global price associated with crude oil. It's demand-supply, basic economics 101. COVID threw international crude markets completely out of whack.
There was a time not too long ago—although it seems like decades ago at this point—where demand just plummeted. We all started working and doing school from home and doing a lot less driving. Demand plummeted, and we actually had negative oil prices for a limited amount of time, which had never happened before. People were paying others to take their oil. Gasoline at the pump was incredibly cheap. Oil was incredibly cheap along those lines.
As economies have recovered, the demand has increased, but the supply then went down because the supply was down from that sharp crash. Put simply, supply has not matched up with demand until more recently. COVID has caused a big whack, a big anomaly, in terms of the price of gasoline that we pay at the pump.
Put on top of that Russia's invasion of Ukraine. Russia is an incredibly large producer of oil and exporter of oil. And the invasion of Ukraine has further thrown international oil markets into some real challenges along those lines.
That's historic to have both of those together. That's why we saw oil prices go up the way we did, and that's why gasoline prices went up at the pump, and they're lower now. We're down to under $4 per gallon. That's great compared to being over $5 per gallon just a month and a half or so ago.
But to answer your question directly: certainly, from this administration, that's too high. That is pain at the pump. It's part of what's driving inflation. We need to drive that down to a level that Americans around the country can afford so that it doesn't impact their household spending in the way it does now.
How did we get from over $5 per gallon down to $4 per gallon? In the federal government, we tried to use every tool that we had at our disposal in order to make progress on that. One that I’ll highlight in particular at the Department of Energy is our Strategic Petroleum Reserve, which was set up back in the '70s to have a big reserve of oil in the United States so that we could put that into the market if there were a hurricane or other disruptions into the supply and demand balances along those lines.
What President Biden, Secretary Granholm, and the rest of us worked on is putting in place the largest historic release of the Strategic Petroleum Reserve at this time where demand and supply were not matching up in order to have that be part of the solution, which had some downward pressure on the price at the pump. And we're seeing the SPR, among a number of other things, causing supply-demand to match up more, and that downward pressure is getting us down to less than $4 per gallon.
It’s still not good enough. We're going to work at it. We're going to keep working at the tools and the tool belt, but that is a big priority. As the president has said, it's priority number one to provide affordability for every American across the country.
Richard G. Newell: I think about 120 million barrels have been released since February. Are we midway? Is it done for now? And a quick follow-up on that: Is there any longer-term philosophy? Depleting the SPR and keeping it low? Is that the endgame? I've also read that there are some new ideas for how it might be filled up more efficiently in the future. Give a sense of that longer term, as well.
David Turk: Absolutely, Richard. The SPR is one tool in the tool belt. In and of itself, it's not going to solve the problem, but it is an important tool that we have. It's also useful to point out that it's not just the United States that has reserves. We actually have countries around the world and key allies who have reserves as well.
As we've been releasing oil out of our Strategic Petroleum Reserve, we've done that in concert and collaboration with other countries through the International Energy Agency, the IEA. There've been releases of millions of barrels—tens of millions of barrels from other countries around the world that help the global market match up more generally.
What the president did—and this is unprecedented—is make an announcement that we're going to have a six-month bridge of time to use the Strategic Petroleum Reserve: around a million barrels per day just out of our US Strategic Petroleum Reserve. That's complemented by other countries along those lines so that we can get to a point like we're getting to now, where supply and demand match up better, and there's downward pressure on that price.
We talked about it as a bridge. Right now, we're well along that bridge, and we want to make sure that that bridge is as long as it can be, and as and as flexible as it can be, so that we can deal with further challenges as we have them, whether they’re hurricanes or otherwise. We've used the Strategic Petroleum Reserve to deal with hurricane disruptions in the past and want to make sure that's available.
What we need to do is use the Strategic Petroleum Reserve when we have extraordinary challenges like we're currently facing and then fill it back up when the price is low. Right now, we're selling it when oil is really high. That is a lot of money coming in. Then, we'll use that money to buy back oil when the price is a lot lower. We get a better bargain on those kinds of things, and we fill it up so that we're ready for the next time.
Richard G. Newell: I want to stick with global energy markets and energy security for a moment and talk about the other gas—natural gas—in contrast to gasoline. Given the state of geopolitics that are shaping and shifting current energy markets, there's interest—including some of our online questions—about US viewpoints and administration viewpoints on global gas infrastructure, especially in countries that have historically relied on Russia for natural gas, including in the European Union, which is connected by pipelines to Russia.
We've got a question that came in from Maya Weber. Maya's the Senior editor at S&P Global Commodity Insights. She asks, "What is the administration's posture towards supporting natural gas infrastructure overseas?" Then the flip side, or other part of the equation, on a related note from Michael Huber, a reporter from Japan's Asahi Shimbun newspaper: "Are there any plans to expand US liquified natural gas (LNG) refining capacity to help cover energy needs over the short term?"
So, what is happening domestically on natural gas and LNG? And then also global infrastructure outside the United States, and how you all at the Department of Energy and the administration are thinking about that.
David Turk: It’s important to understand as context here: Russia is not only a big exporter of oil onto the global market, but they're also a major exporter of natural gas, especially to Europe. Now we've been talking with our German colleagues for many years, actually, and with others in Europe. Maybe it's not so great—understating it—to be so dependent on one country for such a critical part of your existing energy needs.
Unfortunately, countries made decisions. It's in their right to make sovereign decisions along those lines. Nord Stream 2 may be something that some of you are familiar with. Europe got itself overly dependent on Russia's natural gas.
Now in normal circumstances, it’s relatively cheap coming in, but in a situation and with a country and with a dictator who is willing to use energy as a weapon—and President Putin is using energy as a weapon—that is not good for your own security, your energy security, your ability to heat your homes in winter and keep your businesses with the gas that they need.
In this time of need, where Europe is appreciating that they need to get off of Russia's natural gas and do it as quickly as they possibly can, they're going to need a bridge of their own on the natural gas side of things. And right now, one of the ways that's being fulfilled is US LNG from the United States being shipped over to Europe.
Our natural gas through LNG goes to Asia, to Japan, to Korea, and elsewhere, but a significant percentage of the natural gas to LNG is going to Europe right now, helping the Europeans prepare for the winter—in particular, building up their storage so that they can weather the winter and all the challenges that might be thrown at them. Our US natural gas has been incredibly important for our European allies in this time of need.
Now, the Europeans are also leaning in on the clean energy transition, just like we're leaning in on the clean energy transition, but you can't do that all in the span of a few months period of time to get ready for winter. They've got to do what they've got to do to be prepared going forward.
In order for Europe to accept the volume of natural gas, right now the vast majority of natural gas coming from Russia is coming through pipeline. We do not have a big pipeline from the United States going to Europe. If Europe is going to take US natural gas, international gas from Qatar, or from others, then they need to build out some of their infrastructure in order to be able to import LNG. So there is a need. Germans and others are making some investments along those lines.
US natural gas is playing an important role internationally, no doubt in Europe, but elsewhere along those lines. What we need to be thinking about is making that natural gas in the system to be as clean as it possibly can be. Many of us have spent many years focused on methane emissions in natural gas and the natural gas life cycle. Methane is a super greenhouse gas emitter, even more so than carbon dioxide. We need to make sure there are no leaks. We need to make sure that that's not just being emitted and causing challenge in the atmosphere.
We also need to be thinking about, What's the ultimate play? How do we ultimately get to net-zero emissions, to the kinds of dramatic emission reductions scientists have warned us for many years about, that science is only improving upon. On this front, we need to be thinking about natural gas facilities that are hydrogen-ready so that we can be part of that transition, so that we can lean into that transition.
Richard G. Newell: The United States signed the Methane Pledge last November at the COP, the Conference of Parties. We'll come to that in just a minute.
The Inflation Reduction Act also has some methane provisions in there, as well as Environmental Protection Agency (EPA) rules around methane reduction. What I hear you saying is that both addressing the methane emission leaks to ensure that the gas is as clean as possible, building up European infrastructure, and then, now, the United States is the largest LNG producer now, even larger than Qatar.
In response to one of the questions that came up, the United States is in fact very significantly expanding its LNG capacity currently. It's not even done yet. Does that sound right to you?
David Turk: As with much in the United States, this is private-sector decisionmaking. This is driven by the private sector. What we need to do is walk and chew gum at the same time. We've got some particular energy security challenges right now—Russia, Ukraine, coming out of COVID, the energy balance, the energy imbalance—that we're still working through on that end.
There are certain things that we need to do in the near term to provide affordability for Americans, to make sure our economy is as strong and as resilient as it possibly can be. We can do that and do things like the Strategic Petroleum Reserve release and methane emission reduction and getting more of our LNG over to Europe. At the same time, we can further accelerate our clean energy transition and make sure we're doing everything that we possibly can to have more offshore wind, to have more solar photovoltaic (PV), to have more batteries, to have more onshoring of critical minerals and supply chains.
We have to do both of those, and we can't lose sight of—and this administration has not lost sight of—the historic legislation that's already been passed and the other one that'll be passed shortly from the House. It looks like the House is going to pass the big Inflation Reduction Act tomorrow; we'll wait until they do because it's a different branch of government, but that is a huge deal: tax incentives, other tools, including a lot of funding that goes to Department of Energy to further accelerate the clean energy transition in a way that's good for energy security in the near term, medium term, and long term, but also gets us to climate reductions and the carbon dioxide reductions that we need.
Elizabeth Wason: Each episode of RFF’s Policy Leadership Series Podcast is made possible by listeners like you. This series provides thoughtful conversations with leading experts to better connect and inform our community and the latest environmental and economic issues. And you can help us by supporting RFF. Join us in our mission to improve environmental, energy, and natural resource decisions through impartial economics research and policy engagement. Learn more about contributing to RFF today by visiting rff.org/support.
Richard G. Newell: The Senate passed, by a 51–50 vote on Sunday, the Inflation Reduction Act. The House is scheduled to vote as soon as tomorrow. I'm presuming that the president would sign it. I guess I shouldn't presume those things, but I–
David Turk: I can guarantee that.
Richard G. Newell: Indicators are that if that passes, the president will sign it. So maybe next week we've got, through the budget reconciliation package, the largest infusion into the US economy ever for funding around decarbonization, clean energy, and also significant elements of domestic economic competitiveness.
It's taking the form of tax incentives for electric vehicles (EVs), for clean power, for residential home retrofits and electrification. Can you speak to what you all are seeing as the biggest impacts of that legislation? And then also speak to DOE's role—what is DOE's role in its implementation? Are there any other ripple effects that influence what you'll be doing at DOE?
David Turk: First, I need to—especially for those in our audience and those online who have been advocating for climate legislation, who have been working for climate legislation in one form or another, whether in the government, whether in an nongovernmental organization (NGO), whether in a company—just give a big thanks. This is a historic achievement. We should all feel incredible pride that democracy here in the United States has worked. We have the biggest, most historic piece of climate legislation that we've ever had in the United States.
I remember the Waxman-Markey days and other attempts and challenges that we've had along the way. $369 billion of investment, all the tax incentives—but there's an awful lot more in the Inflation Reduction Act for those who've looked at the details. Different modelers, and other RFF colleagues who've taken a look at it know something about this, are very consistent with our own internal modeling. This bill will help us along with a lot of other things and get to 40 percent reductions in our greenhouse gas emissions by 2030. That is an incredible achievement. That is not something that is inevitable. That requires an awful lot of work by a lot of people and a lot of decisions going forward.
Now, is a 40 percent reduction where we need to be? No, it's not. The president has put on the table 50 to 52 percent reductions by 2030. We still have some additional work to do, but 40 percent is a big step going forward. Again, a big thanks to everybody who's worked on that. The legislation will be passed by the House, and the president will sign it.
The way to think about the Inflation Reduction Act is that it gives a wind at the back in a very diversified way for a whole range of clean energy technologies and a whole range of sectors. It's the tax incentives, but there's a lot more in there, as well.
One of the key challenges and opportunities for us at the Department of Energy—where we've got experts on solar and wind who've been pushing these for years and years; we've got folks working on our 17 national labs who've done a lot of the research and development to get us to the point where we have some of these cost-effective solutions—is we need to take advantage of that wind at the back. We need to take advantage of all of the programs, the tax incentives, the grant programs. We got $62 billion additionally in the infrastructure bill that passed late last year. That's the amount that came to DOE to work on clean hydrogen hubs. That came to DOE to build out our EV charging system—$7.5 billion that we're working on hand in hand with the Department of Transportation to build out part of it.
All of these individual efforts have individual wind at the back. Together it's a wind at the back of the overall clean energy transition, and we've got to execute. We've got to make sure that we harness that wind at the back, just like our wind turbines harness as best they can the wind that's blowing across our country, to get the maximum benefit as quickly as we possibly can because we don't have time to wait on that front. But we need more legislation. There's no doubt about that. We need additional work from Congress. We need additional work on execution from not only Department of Energy.
One of the things that I think is not focused as much as it should be is how much we need departments working together and with other key actors out there—whether it's businesses, entrepreneurs, NGOs, or universities—to really accelerate the transition. We work with the Department of Transportation on EV charging infrastructure, which is a critical part to get the EV revolution happening right now, and we need to accelerate it further.
I was just meeting with my Department of Treasury colleague. They'll be doing a lot of the execution on the tax incentives. We were talking about making sure that, as we're doing our big grant programs and demonstration programs—$62 billion—that this dovetails with, harnesses, accelerates, and catalyzes the tax incentives, and vice versa. We'll be spending a lot of time working on that.
Richard G. Newell: I assume what has caught the attention of DOE is that the formulation of the tax credits, which have historically been technology based—production tax credits for wind, investment tax credits for solar—something for carbon capture and storage and for the power sector is that there’s going to be a transition of that approach to being more technology-inclusive: not targeting specific technologies, but targeting the zero-emission nature of those technologies.
From a DOE point of view, what seems to open up the potential and the aperture for new innovations technologies without preordaining that they have to be of a particular type in order to receive these tax credits? That's good new
