Energy Secretary Ernest Moniz on U.S. Energy Policy

Energy Secretary Ernest Moniz on U.S. Energy Policy

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Energy and Climate Policy

U.S. Energy Secretary Ernest Moniz joins Matthew Winkler, editor in chief at Bloomberg News, to discuss the "all-of-the-above" energy strategy of the United States. Moniz describes investments and advances across the oil, gas, alternative, nuclear, and renewable energy fields, all geared toward lowering carbon emissions. Moniz also discusses working internationally on energy security issues, and projects that natural gas exports will begin in 2015 or 2016.

Please be advised that due to technical difficulties, there is a gap in the video at 15:34; the full audio and transcript are available below.

WINKLER: Good morning. Good afternoon, soon. You know where I'd like to begin first, Mr. Secretary, is the U.S. energy and security. You spent a lot of time lately talking about that. Maybe you could give us your perspective of the U.S. and energy security.

MONIZ: Sure. Well, first of all, I think by any, you know, any standard, or perhaps not even so-standard metrics, the United States would not be classified as being very energy insecure in a direct sense.

However, I go back, I don't know, maybe a decade, actually, to a CFR task force that I served on, chaired by the late Jim Schlesinger, actually, and John Deutch. And in that report, and today, particularly in the context of the G7, we have very much taken the view that energy security has to be viewed as a collective issue that, for example, the energy insecurity of our friends and allies we see playing out today in Europe, driven by the Ukraine crisis, for example, is one that clearly impacts our national security, clearly impacts the—you know, the option space for our friends and allies.

In fact, President Obama, this spring, really was a driver in the G7 context to have the energy ministers, together with the EU, look at energy security in this collective context. And there, we came to a consensus that, first of all, looking at energy security, it was a lot more than the old business about, "Where's the oil come from?"

Oil diversity of supply clearly is important for oil and gas, so are diversity of supply routes, so is energy intensity, so is fuel substitution, so is developing indigenous resources. A whole set of criteria there.

So what we are doing right now—and we could talk more about it if you wish—is specifically right now, the G7 with the EU, and DOE in particular, we have a team on the ground right now that we are leading in Ukraine. We are looking first at the immediate issues of this winter, the energy contingency issues, humanitarian issues, which may arise, trying to help Ukraine put their plan together. It's got to be their plan, not ours.

Secondly, we are engaged with the EU in a series of—maybe a bad term—stress tests in terms of how the energy situation in all of our countries, and friends and allies, racks up against this set of principles that I alluded to earlier; and third, to start putting together a medium- to long-term plan, again, among our allies and friends, for a better energy security posture for all of us together.

WINKLER: So is there anything specific you're thinking about with respect to Ukraine that could happen with us?

MONIZ: Well, again, right now, we have a team. And I might add, the team involves the U.S. government, it involves some experts from our national laboratories, but also importantly, it involves Canadian experts who have joined with us. The U.K. is also offering direct support.

Looking at the facts on the ground, the issues are, unfortunately, challenging in the sense that even—for example, even if Russian gas flows this winter, let's say uninterrupted, or becomes again uninterrupted, the fact is there's been such extensive damage to the infrastructure that it will still be difficult to deliver, you know, energy services well.

So we are looking at specifics, such as, for example, what can be done quickly to improve fuel substitution possibilities for their district heating systems, which is where a lot of gas gets used. Gas is not used for electricity to any appreciable extent, but for heating, for example. And then, how can we get the fuel to substitute for gas so that at least a good deal of the heating can be supplied this winter?

Those are examples of the kinds of things we're doing. We might also add, from the point of view of energy security, that there are other, of course, very, very strong ties of Ukraine's energy system to Russia's--the grid, and compatibility to the East versus the West, in terms of how the grid operates. There are issues of nuclear fuel supply, which is entirely—essentially, entirely Russian today, et cetera, et cetera.

So there are many issues. Obviously, we all hope that the situation resolves itself in a way that avoids, you know, serious humanitarian impacts this winter. But we have to plan for it, and again, we are helping them put together an energy contingency plan.

WINKLER: The administration's energy policy is, to quote the department, "all of the above," or all of the technologies; oil, nuclear, renewables, coal. How can taking every form of energy be compatible with cutting carbon emissions?

MONIZ: The president has been very clear about all of the above, and I have been as well, as you state. So what it means is the following: First of all, we start out with a boundary condition that everything we do is geared towards a lower carbon future.

Within that constraint, then we do indeed make large investments, for example, serving in the technology space, across all of the fuels. So for coal, that's fairly obvious, it's a very large focus on carbon capture, utilization and sequestration. And again, these are not just words. I mean, there's $6 billion in demonstration projects. There's $8 billion in a loan-guarantee program, and we're pushing that.

There's been some real progress. A new project just reached the megaton level, for example, in Texas. Most of the projects involved enhanced oil recovery to buy down the cost, if you like. So that's coal.

If you go to oil, we're clearly the boom in the Eagle Ford, the Bakken, et cetera, has dramatically increased production, decreased imports. But still—and this has been an enormous boom to the economy, it has raised infrastructure challenges. But the point here in the carbon context is it has in no way deflected us from aiming to reduce our oil dependence; so efficient vehicles, technology, and standards, CAFE standards.

Alternative fuels--I'll be dedicating a new bio-refinery in Kansas in two weeks. Electrification of vehicles, dramatic reduction of cost. Battery costs have come down 70 percent in four years. Still, a little bit high for the commodity market, but down to, you know, arguably, say $300 kilowatt-hour storage.

So we are pressing on reducing oil dependence dramatically. The main—a main impact of the production boom has been—and frankly, in declining imports, incredibly. In fact, last month, our oil bill, external oil bill, went down by almost 10 percent. Gas is part of the solution, at least for the moment.

And then, obviously, nuclear renewables efficiency, nuclear, big loan guarantee, first four Generation III plants being built in the Southeast. Their cost performance will be important to see, and we just heard about a delta on the South Carolina plants.

The renewables, again, cost reduction, very dramatic. It shows in the—in the deployment quite literally, like 10X on solar. In fact, wind is now beyond sixty gigawatts of capacity, and approaching about 4.5 percent of national electricity production. And solar, while more regional at this stage, but in the California ISO region a few months ago, solar electricity production, went over six percent.

These are becoming material, I think, in the marketplace. And on the efficiency side, lots of things. But again, if I stick to technology, the LED story is just dramatic. LEDs is now about 40 million deployed, and that's a factor of 100 from less than three years ago. It's—you know, it's a great economic deal, frankly.

So you're now down to a one-year payback period. So we're pushing the technology towards lower cost across the board, but everything is still with the lower carbon emissions as a guide to everything we do.

WINKLER: With all that said, fracking has brought us so much natural gas at such a low cost, that hardly any other form of energy at the moment makes economic sense. And you've written about—and talked about just now—gas being a bridge to a low-carbon future. But isn't gas just a bridge to more natural gas?

MONIZ: Well, we think that—first of all, the bridge is—it's got a very long span. So it's not—you know, we're talking about decades, not years. Clearly, there have been concerns expressed about gas kind of crowding out everything. And we know that the price does have impacts.

Coal clearly has—a fair amount's been displaced by gas. Some nuclear-plant closures have—as one factor, gas prices. But the fact is, you can argue about there being various policies in place. But the fact is, as I just said, it's not as though the renewables aren't growing dramatically. They are.

And I just think we're going to have, quite appropriately, pretty much an all-of-the-above mix of fuels and technologies for—well, for going forward. Because in fact, another point I would make is—which is important about all of the above, is that when we talk about a low-carbon solution, what we really mean is low-carbon solutions.

The low-carbon, quote, "solution," is going to look very different in different countries of the world. It's going to look very different in different regions of our country. And that's another reason why we feel that we really need to invest across the board. And I think we are doing that quite dramatically.

WINKLER: With that perspective, would you say that the industry perhaps has put too much emphasis on fracking as a panacea? And should we be more concerned about putting emphasis elsewhere, especially since fracking wells have a quick decline rate, there are all kinds of environmental impacts that we know about from fracking?

MONIZ: Well, first of all, on the environmental impacts, there's no question that we have to keep working to reduce the footprint as much as we can. And I think there is a lot of progress being made there, including on issues like methane emissions, for example.

Frankly, methane emissions, as an aside, is—and we are, by the way, looking much more downstream. It's on the transmission pipes, the distribution pipes, where it's probably the major issue there. We are seeing a lot more water recycling. We're seeing diesel engines replaced by gas engines, which are much cleaner.

We are seeing, of course, much more disclosure of fracking fluids. We are seeing better well completion standards being put—being put in place more broadly. We can never eliminate environmental footprint.

Obviously, it's such a major industrial activity. In particular, the industrial activity means you're going to have truck movements, all kinds of issues. But we are, I think, we, the industry, various forms of regulation at the state level and federal, we are reducing the footprint.

The other side of the coin is there's obviously no disputing the major economic impact that we have had from the unconventional developments, and we cannot deny that there's been a little uptick in the last—certainly this last year. But our CO2 emissions are down substantially from where they were in the 2005-2007 time frame.

So, you know, bottom line is the ground truth is a lot of things are going in the right direction. Doesn't mean we can, you know, cease to be vigilant about it. I might say the—as an anecdote, on Friday, I saw a lot of things come together when I was elsewhere in New York State visiting the Corning plant. You know, Friday was National Manufacturing Day, so we went to a manufacturing plant.

And this was a plant that—very high-tech manufacturing of, essentially, filters for diesel, for large diesel trucks, really high-tech. Tax credits from the government, 48C tax credits that we issue to Corning. We're part of an expansion.

But the other thing was when you're making these big filters, guess what? You've got rows and rows of enormous kilns. They burn natural gas. And so all of these things come together in terms of a tremendous competitive edge for that.

So these indirect effects as well, in terms of supporting our manufacturing competitiveness, are quite important. So the issue is—the president has been clear, we are very supportive doing what we can to support the expansion of these new hydrocarbon production opportunities but we will continue to work on the environmental side as well.

WINKLER: Meanwhile, the World Bank says we’re on track for global warming of more than 4 degrees celsius, which would be double the target the U.S. has agreed to—and that’s the fastest change to the climate since the end of the last ice age 10,000 years ago. What would success look like coming from these UN led talks—what changes to the climate would you expect if we get a deal in 2015, and what’s the alternative?

MONIZ: Well, certainly we feel very strongly that 2015 has to be a year of ambition in setting carbon goals and in getting national programs geared to trying to beat them. Obviously we feel—and we feel the president in his Climate Action Plan—put forward a program to be ambitious. By 2020 we think—we have a good shot—at the 17% reduction that was committed to, and then at least in the electricity sector, with the proposed so called 111(d) rule from EPA we may be talking about say, a 30% reduction in the electricity sector—which of course is complimented by other policies already in place, such as the doubling of fuel efficiency standards for light duty vehicles to 50 plus—54 miles per gallon roughly—in 2025. There will be additional heavy vehicle standards coming out. So, while we are not in a position legislatively to have kind of an economy wide approach sector by sector, we are approaching that and we hope that this will provide something of a leadership position in the United States in these discussions.

Now clearly we can’t meet the global challenge without—not only Europe, not only the developed countries, but the larger bridging economies—being part of it. We are working very hard with the Chinese. I think we saw—was it last week or two weeks ago at the UN—head of the Chinese delegation did make some encouraging statements and that’s followed a very strong engagement in Beijing in July, I was there with four other cabinet members. The president will be there again this year—we heard from Prime Minister Modi—again, more forward leaning statements that I think we’ve heard previously from India. No one’s claiming it’s easy, but we are making a big push to try to get again, ambitious statements to come forward for Paris next year.

We recognize—and that’s been our negotiating posture now for a couple years at least—that we’re going to have to have flexibility, we understand there are going to have to be different kinds of national goals and national programs set in this round, but the issue is, if we don’t really get some solid commitments and motion towards satisfying those commitments from this round of negotiations, the clock is running pretty fast in terms of anything approaching a two degree --

WINKLER: Is a two degree target for warming realistic?

MONIZ: It’s challenging.

WINKLER: So the International Energy Agency says that if we want to keep global warming to two degrees we can only burn 20% of the oil that we know is in the ground. There’s obviously huge amounts of fossil fuel reserves which would be off-limits—and if that’s true, the world’s oil industry faces a real day of reckoning. Is there anything wrong with that logic, what's your thinking?

MONIZ: Well, first of all, I would focus frankly first on the—on coal and what I would say is that you know, and we all know this, with China already up to about roughly 4 billion tons a year of coal—probably on the way to five—that is a very, very discreet identifiable challenge that must be met. And again, I think the Chinese in their comments here in New York this month made the point about their working hard to bend the curve faster and earlier, moving up the—they say, and frankly it’s hard to avoid the idea that their carbon emissions will for some additional time go up—the question is when can we get that peak to occur, how low can we get it to occur, and I think the Chinese are very committed to doing that.

They clearly have the conventional pollution driver as well. That’s almost a gimme if you in fact address carbon emissions. So we will just keep—all I can say is that we will just keep working with China and with others of our—you know, others in the global marketplace to keep pushing down on carbon.

WINKLER: What technologies do you see emerging as something that could cut, or help cut emissions, or produce energy with less pollution?

MONIZ: Well again, you know, I’m really kind of an all-of-the-above person. If I start talking about areas that I think are going to grow very dramatically...first of all I think we are going to see a lot of work on the demand side. I think energy efficiency, conservation, will play a huge role. You know, at least, as we all know, many of the steps—at least to get lower demand—can be quite economic, with short payback periods. We may need to get more original in terms of what are the financing mechanisms to get those technologies in place. I don't mean only nationally, I mean internationally, but that clearly is going to be a very, very big issue.

It does raise another issue that we could come to in terms of...historically, I would say the major transformation of the energy system have come at times of increasing demand. In fact, if you look at the role of different fuels in the United States over the last, say, one and a half centuries, what you find is that more or less, nothing ever went down. It's just that the market share went down as the demand went up.

Now we are faced in the situation where clearly if we are to succeed in our carbon goals, we will have to have had substantial success on the demand side. And that will raise additional challenges for business models. We've seen some of that today in the utility sector, for example, as demand has been flat, or even declining, for a number of—a number of utilities. So those are all major issues.

Now another—going back to your question, the other one, another one what I feel very bullish, frankly, is on solar. Clearly, storage will be an important complement to that. But solar has got, you know, a lot of attractions in the end, and the costs are coming down. I see that as a big—a big part of the solution.

I will mention, going back to DOE, an example of what I think is great success, if you take utility scale—utility scale photovoltaic plants, in 2008-2009, there were none in the United States. The loan program from DOE supported five, all successful. And now there are twelve under construction with purely private—private financing.

Now clearly, there are some incentives. But the fact is, they have been able to get purchase-power agreements, and these are completely bankable. So I think we're seeing a lot of progress, and I think within the decade, you're going to see tremendous deployment.

WINKLER: You mentioned the Paris talks next year. And we've just alluded to some kind of credible carbon-reduction policy. And clearly, you're not done making policy yet. So what's going to happen between now and then? Or what can you tell us will happen between now and then?

MONIZ: Well, first of all, we are committed. The president has stated very clearly a commitment to make our carbon—our Paris goals known in the first quarter of next year. And again, the hope is that we can, with others—Europe, for example—show some leadership in terms of some ambitious targets for Paris. Obviously, our hope is that that will bring along others.

We will continue to work with the large emerging economies—China, India, Brazil, et cetera—to certainly encourage their participation. So basically, it's—we'll be on a lot of airplanes over the next—over the next six months working with other countries to hopefully have programs commensurate with our own at least.

WINKLER: You've at least been interpreted as suggesting the time may have come for the U.S. to end its forty-year-old ban on exporting oil. Is now the right moment to move forward with that?

MONIZ: So first of all, let me clarify what I actually said. We have to go back to the original source here, as opposed to the secondary journalistic sources.

So what I said roughly a year ago, actually, in New York City, was that clearly—and by the way, this was in response to a question about oil and natural gas exports. And what I was pointing out was the difference, first of all, the substantial difference between those issues, and pointing out that the international energy markets clearly look very different (AUDIO GAP) they looked like in 1975, when the Energy Policy and Conservation Act, I think it is, was passed.

And in that context, when the markets looked totally different, I said, well, as with a lot of issues, it's worth a re-examination. I might add that one of those inititiaves of that time period was to create the Department of Energy and maybe that should be relooked at, too. But—it's only a joke. But a lot of things. The petroleum reserve was established. Are the rules of the petroleum reserve the ones that we should have in a very different oil market, and certainly a very different oil production profile for the United States?

So on the exports, as has been said—well, again, as I think most of this audience knows, that is ultimately—that's a Department of Commerce responsibility, not the Department of Energy. But the statement has been made very clearly that first of all, there's been no policy change, I mean, in terms of crude oil exports.

We—and that we are—and a number of members of the administration have said that we are actively looking at the issues of change; the changed production profile, the changed nature of the oil being produced, the refinery situation, et cetera. So there is consideration of that going on. And if there are policy—new policies called for, well, then those will be considered.

But the issue—it's equally true that crude oil processed into a product is not subject to a license. And I think that's where there are lots of issues in terms of interpreting some of those—some of those words.

WINKLER: Do you find it strange that the U.S. is still importing oil from Russia, even after all the attentions the sanctions are getting?

MONIZ: It's a global oil market. And I think the other part we should remember in the whole oil-export question is that we remain very large oil importers. And that's why there's a little bit of unreality about some of the discussions around oil exports, when we remain—I don't know if China may have passed us, I'm not sure. But anyway, China and the United States are the largest oil importers in the world. And it's a global market.

WINKLER: Mr. Secretary, there are, doubtless, people here who have questions that I haven't asked. So let's, if you don't mind, turn to them now, and we'll take your questions. I see a hand in the back, all the way in the back.

QUESTION: Bill Schneider from the Defense Science Board. Mr. Secretary, I'd be interested in your observations about what outcome you would like to see from the currently impaneled congressional advisory panel on the nuclear enterprise?

MONIZ: But you're part of the panel.

QUESTION: Yes.

MONIZ: Wouldn't this be kind of leading the witness? Well, the—so just maybe to explain a little bit. So the panel, there's a congressional panel, that is looking at the relationship—Bill, you know better than I what your exact charge is, but looking at the relationship of the National Nuclear Security Administration, which does—maintains the nuclear stockpile. This is part of the Department of Energy.

It deals with nuclear materials globally, and their security and/or elimination. It deals with Naval propulsion, nuclear propulsion, submarines and aircraft carriers, basically, and a few other issues.

The—there have been a number of issues over the years in terms of execution of those programs, most especially around the issues of costs and project—project cost and schedule change. And the commission obviously is looking at a whole variety of organizational approaches.

Number one, I think it is very important to keep in mind, and keep in the foreground—and I have stated this to the commission—that when all is said and done, the number-one clear responsibility of the NNSA, DOE, and the secretary of energy, and the secretary of defense, is to certify the safety and reliability of our nuclear weapons stockpile, even as it is drawn down, as it has been. I mean, we are 85 percent below the peak in terms of strategic weapons.

In terms of that core responsibility, it has been twenty-two years since a nuclear test was done. The program had to be reinvented as a science-based program, and it has succeeded for twenty-two years. And the directors of our weapons laboratories will tell you that they understand the stockpile not only better today than they did back then, but better than they would if we had kept testing.

So since we should be output-focused, we should not lose sight of the fact that this has been a tremendous success that we continue to move forward, and it is central to our strategic thinking and our ability to negotiations, to maybe do a CTBT, et cetera, et cetera.

So having said that, then there are organizational issues, and I don't want to bore this whole audience in detail. But, frankly, we also have evidence that when certain functions have been reintegrated into the department, they have to perform better, and that there are opportunities in my view for additional savings, and, frankly, better management in some of these cases.

So I think my view is I hope the panel will be able to differentiate these various aspects, to look at the places where clearly NNSA has to retain, you know, as with any of our programs, they have to be the principal deciders in terms of specific program directions. But we could get rid of some layers of complexity by some additional reintegration of certain functions.

QUESTION: Richard Huber. Mr. Secretary, you mentioned science-based regulatory approach. With that in mind, the inability or reluctance to decide on the Keystone pipeline is puzzling. Would you care to comment?

MONIZ: Well, once again, I have—you know, as you know, the responsibilities for various decisions are fragmented across the government. And this is the secretary of state's responsibility. There are issues going on, including in Nebraska, for example, in terms of some activities. But all I can do is refer you to the secretary of state.

QUESTION: Bob Belfer, Belfer Management. As you've pointed out, the U.S. is still importing large quantities of crude oil used primarily to make gasoline. We now mandate ethanol as a gasoline additive. Since we now have a great abundance of natural gas, which can easily be converted into methanol, could you tell me why it is that we aren't using methanol more as a gasoline fuel or a substitute?

MONIZ: Well, there are, as you undoubtedly know, there are discussions certainly going on about a so-called open fuel standard, in which gasoline, ethanol, and methanol would be at least options, presented to the consumer.

Now, methanol, frankly, it does have a hangover from the 1980s in terms of what was probably generally agreed to be as a less-than-successful introduction. The—it's also often confused in the public discussion with MTBE.

But the fact is, methanol does have some attractive features, like ethanol, high octane. It does have the disadvantage of ethanol, even a bigger disadvantage in terms of volumetric energy density. And then one can ask whether or not using an alcohol like that would, in a volumetric way, is the optimum way of doing it.

But nevertheless, I'm very sympathetic to the idea of looking at this carefully. Frankly, I think that there is inadequate reliable public information about the performance in an open fuel standard regime, and in particular, about the emissions from engines running particularly on a tri-fuel mixture.

So I think that's something that we need to look at, frankly, at the department, in terms of—and with other agencies, in terms of at least establishing that base as—because, frankly, you'll hear very different things from different automobile companies about the environmental performance at different ranges of a drive cycle.

QUESTION: Thank you. Phil Huyck, Encite LLC. There is a school of thought that in the long run—and we're all aware of Keynes' dictum about the long run—that in the long run, we need to move to a hydrogen-based energy infrastructure. Would you comment on that, and what, if anything, the department is doing on that front?

MONIZ: Well, the department is engaged clearly in that. It's, you know, on a relatively low level, but we are engaged in, first of all, supporting, of course, fuel-cell work. We're involved in terms of the material science for very high-pressure storage. And we are involved in some fueling infrastructure, particularly with California at the moment. So I think this—you know, there's progress towards this.

But there's a long way to go in terms of—especially the infrastructure requirements. So I think that's where we are. It'll be a while, I think. But I think—but that's again an example of—it's important that we maintain, as the Department of Energy, I think, a focus on all of these options, because it could be something quite attractive down the road.

QUESTION: Hello, Mr. Secretary. My name is Kassia Yanosek, and I'm with McKenzie & Company. My question's around energy decision-making in the administration, which as you alluded to earlier, is quite fragmented across different agencies.

And I'm particularly interested in your perspective on the Quadrennial Energy Review, which is a new program that was launched by the president, and what your vision is for this tool as a coordinating and decision-making entity that can be used to better coordinate energy policy?

MONIZ: OK, well, I'll start with the vision, and then we can talk about translating that into reality. I might add that here in the front row is Mr. Joscow, who is chairing a task force of the secretary of energy advisory board, in terms of working with our QER group in terms of the progress going forward.

So the—maybe it's worth describing briefly, at least for the rest of the audience. So the starting point is that, as stated, equities in the energy—in energy policy spread across the entire administration; obviously, defense, and commerce, and agriculture, interior, Treasury. We could go on and on, not to mention Department of Energy.

So the idea was to get a process in place convened by the White House, essentially implemented through the Department of Energy, to bring all of these threats together into a coherent policy. The president charged us to do this, first in the Climate Action Plan, and then by executive order in January.

And we have set up, at the Department of Energy, first of all, a significant shop, the Energy Policy and Systems Analysis Organization that is the point for this. The first year, we decided to take this nominally four-year process, first of all, at least, starting out one year at a time.

And so from this first year, we are focussing on energy infrastructure, transmission storage and distribution of energy. And by the way, there is a meeting that I just left going on down at NYU today looking at energy finance as part of the infrastructure build-out that's needed.

So the idea as well is that if we can bring together, through this kind of a process, again, a coherence across all of the agencies, that will in turn provide a major leg up in trying to have discussions with Congress, which has the same kind of fragmentation across, for example, its committee structures.

So that's the general concept, and again, the focus on energy infrastructure this year. Where we are, it's a big lift. I mean, there's no—there was never any illusion about it being easy. But on the positive side for sure, we have gotten a lot of—and we are getting a lot of collaboration across the administration.

Secretary Foxx, Secretary Jewell and I have co-chaired regional meetings on this. John Holdren has run meetings. Council of Environmental Quality has held meetings. So that's very good.

We have a tremendous amount of input and analysis that has been done on infrastructure issues; partly in our old shop, partly by contract to those outside, partly from our national laboratories. And now we are in the synthesis stage, and this is going to be a big challenge.

But we feel confident that by January, we will come out with a—you know, it won't cover everything, even in the—even with the energy infrastructure restriction. But it will address, I think, most of the major issues for building a 21st century infrastructure. Proof will be in the pudding, and check back in January.

QUESTION: Tracy McKibben at MAC Energy Advisor. Mr. Secretary, I appreciated your comments earlier about energy security, and working with Ukraine specifically. I do a number of projects in Eastern Europe.

And I'm wondering—I'd like to hear a little bit more about what you're doing to work with not only the Ukrainians, but some of its neighbors, who are also dealing with sort of energy dependence on Russia, and making sure that whatever you decide now are not just short-term solutions, but looking toward their long-term energy strategy, and how energy efficiency and energy conservation fits into the dialogue that you're having currently with the Ukrainian administration?

MONIZ: I think you practically gave the answer along with the question. As I said earlier, first of all, we do have this very short-term project, because of the winter.

And again, I want to re-emphasize what I said earlier, that we are not there to try—to try to write a plan as opposed to assist Ukraine in writing its contingency plan for the winter. And I might say that President Poroshenko has really put kind of all hands on deck to work with the team that we've assembled, to get that done.

I think the bigger issue—and by the way, efficiency conservation are central to both the short-term and the long-term plans. In fact, frankly, you know, if Ukraine had an energy intensity that was more nearly typical of other European countries, nature of their problem would be tremendously diminished. So that's a big focus. They know that, and that's part of the focus.

For the longer term, I'll be honest, we're probably a little bit behind where we wanted to be because of the focus on the short term. But we are working with the G7—it's been termed the "Rome Initiative," because that's where we met—and with the EU to formulate first the so-called stress tests, and then building on that, to talk about how are we going to go forward collectively with—to enhance energy security collectively.

There are challenges. For example, one of the principles is clearly to use indigenous resources to the extent possible. Well, you mentioned earlier, fracking. Clearly, there are issues in parts of Europe on that. There are issues around nuclear power in Germany, for example.

But again, our view is that there can be different solutions in different countries, and obviously public preferences are important. The only issue is to have a solution that both provides the security and the climate imperatives that we need.

So we are also waiting, obviously, for significant change in the EU in terms of, for example, the energy portfolio will be changing. So once the EU reconfiguring is completed, that will be the time when we will have—we will be basically finished with the winter planning, and, frankly, we'll have to pick up the pace in terms of the mid- to long-term planning on energy security.

We are due--we have an assignment, the energy ministers. We are due to present the proposed plan to the leaders in their summit next June. So that's the time frame.

WINKLER: Ma'am?

QUESTION: Hello. Florence Hudson from IBM. My question is about innovation. I agree that we have made good strides with energy storage, with solar energy, but much more innovation is needed.

So the question is, how do you plan on balancing policies and incentives to incent people to use today's technology for carbon mitigation, while investing more in R&D and innovation for more efficient energy storage, solar and the rest?

MONIZ: Well, first of all, I think—I think that we are heavily investing in innovation. And in a number of ways, from energy frontier research centers, which are major commitments to addressing the fundamental science challenges that will underpin future energy technologies. We have more than forty of those, mostly at universities, some at companies, some at labs.

We have ARPA-E, that is in that kind of translation into the marketplace. And then we have our loan program, which is about getting current technologies out there. And there, I might add that in addition to having deployed $30 billion, and I would say very successfully as a portfolio, we have $40 billion left of remaining authority, and basically with every intention of exercising that, of course, assuming that there are projects that satisfy the criteria of technological innovation, not huge leaps, but enough to go out into a real market at scale, and of course pass the due-diligence test.

So first of all, I would say that we are operating across the entire innovation chain, if such a thing exists. Secondly, we very much view this as multiple time scales.

So for this decade, which we view as critical, it's clearly around today's—today's technologies. And that's where something like the loan program comes in. I mentioned earlier the utility scale PV as an example, or soon we will dedicate a solar thermal plant in Nevada where the innovation is pushing out to ten hours of storage, which will be the first time that that kind of storage has been attained. So it's all the above. Those are just two examples.

Now, as far as the potential—the next—the next game-changers, you know, I think it's—the changes in the energy infrastructure don't come overnight. And they will all get introduced over some time period, probably more decadal time scale. As we know, for example, materials for the energy sector typically have a nearly two-decade gestation period before they are really introduced.

So part of our push is not to make that one year, but to make it ten years. You know, it's factors of two here, factors of pie there. And I think these technologies will come in over the next decades.

But I think we have to deal with it in that sense, that it's going to be kind of waves of new technologies that probably, you know, they don't provide new services, typically. But they keep driving the cost down with cleaner performance.

QUESTION: Thank you. Stuart Rabin, Nine Thirty Capital, and Decision Sciences. I'd like to return to the topic of nuclear security, specifically counter-proliferation and cargo security, counterterrorism efforts.

Can you comment on the Megaports Program, and the 100 percent cargo scanning requirement, and the extent DOE has a role to play in that, and specifically whether you're aware of, and have focused on, the possibility that muon tomography can play a critical role in passive quick scanning of cargo and conveyances coming into the United States? Thank you.

MONIZ: Well, OK, that's, I think—as you know, that's in—principally in the hands of the Department of Homeland Security. And to be honest, I don't believe that we have a major program in this area.

We have supported muon tomography, because that's clearly strongly coupled to the technologies that we have, especially in our high-energy physics laboratories. And actually, it goes back also to Alvarez at Berkeley, using muon tomography for the pyramids.

But we are—we are using those technologies—we are supporting more work in those technologies, using them right now in some national security programs that I would prefer not to talk about at the moment, or more technically, or more precisely cannot talk about at the moment.

QUESTION: Thank you. Stephen Kass. What role, if any, do you see for U.S. or potentially even Israeli natural gas in helping Ukraine and Europe break its dependency on Russia?

MONIZ: Well, OK, first of all, I think it goes without saying that our natural gas exports will not really start until the end of 2015, or maybe early 2016, and certainly to reach significant proportions, let's call it somewhere up in getting into the, say, ten BCF-per-day range. That's clearly the end of the decade.

So number one, this is not—there's no quick fix here. And that is certainly the case as well for the Eastern Mediterranean gas, which has got a ways to go for its development, and for decisions on how it ties in potentially to a broader European network. There are some political issues there in terms of where—how it might feed into Europe.

But the—our LNG export decisions involve a public interest determination for export to non-free-trade-agreement countries. They do not determine the destination. So we license a company to export two BCF per day, let's say, to non-FDA countries. Where those cargoes go is based upon commercial contract.

Now, having said that, I personally expect that we will be having these substantial exports. By the way, to give a scale, 10 billion cubic feet per day is roughly a third of today's global LNG market. So that's not a trivial amount of gas. And I think most economist predictions would say something in that number is probably where we will go in this country, maybe eventually larger, but substantial.

Just getting all that gas out into the global market will have ramifications more globally, particularly if it affects pricing. Because right now, as you know, probably know, in Europe, for example, a lot of their LNG terminals were not being used very fully, because, frankly, the price was much higher in the Far East. So even cargoes that were destined for Europe were being essentially resold to Japan, for example.

So it's a question how this pricing—pricing evolves, and that's where the evolution of the global market will matter, as more and more LNG from the United States, and other sources, gets out into the market.

WINKLER: Mr. Secretary, I'm obligated to suggest that the time has come. We're out of time. So on behalf on the Council on Foreign Relations, I want to thank you very much for your perspective today.

MONIZ: Thank you.

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