Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

• Economic Development and Commerce Committee (EDC) – Shaping the Future of National Surface Transportation Policy and Finance
• Education, Early Childhood and Workforce Committee (ECW) – Innovative Governor-Led Strategies to Turn Around Struggling Schools
• Health and Human Services Committee (HHS) The Future of Long-Term Care: Challenges and Opportunities for States
• Natural Resources Committee (NR) – Traditional Domestic Energy in a Clean Energy Future
• Other Sessions (Task Force) – Securing a Clean Energy Future Task Force: The Role of Coal and Nuclear Power in a Clean Energy Future
• 2007-08 Chair Minnesota Gov. Tim Pawlenty’s Initiative: Securing a Clean Energy Future
• Plenary Session Discussion Subjects: Securing a Clean Energy Future: The Case for Action; and The Role of Technology and Innovation in Securing a Clean Energy Future

Points of Interest:

The opening plenary session highlighted successes and planned actions with regard to "Securing a Clean Energy Future," the 2007-2008 initiative of NGA's Chair, Governor Tim Pawlenty of Minnesota, who noted in his opening address that in the short period since July 2007, the price of oil has risen from $70 a barrel to between $85 and $95, and that for every $10 per barrel increase in the price of oil, the U.S. sends another $50 billion annually to foreign nations, resulting in a significant export drain. Governor Pawlenty emphasized that reliability, affordability, and environmental integrity must be factored into the pursuit of a shift to the use of domestic energy sources. Accordingly, the 2007-2008 initiative is focused on: (1) improving the use of cleaner domestic fuels and advanced vehicles; (2) improving energy conservation and efficiency; (3) diversifying our electricity portfolio by using other types of energy; and (4) leveraging opportunities for clean energy research and development. Governor Pawlenty also mentioned upcoming meetings on Research and Development (Seattle) and Clean Power and Energy Efficiency (Kansas City); NGA's partnership with the Discovery Channel to air public service announcements associated with energy usage; and the Climate Savers Computing Initiative through which he and Governor Kathleen Sebelius of Kansas are asking states to consider buying computers that are 20 to 40 percent more efficient with respect to energy conservation.

Governor Pawlenty also announced a partnership between NGA and Wal-Mart designed to provide governors an opportunity to reduce the overall energy consumption of their state capital complexes by having a team of Wal-Mart energy experts conduct clean energy audits of the facilities.

NGA officially released a new report titled "Greener Fuels, Greener Vehicles: A State Resource Guide," which provides an overview of the economic and environmental implications of an oil-dependent transportation sector and looks at state policy tools—such as financial incentives, rules and mandates, purchasing power and research and demonstration projects—that can encourage greener transportation. Governor Pawlenty also shared with his colleagues the recently released publication "A Call to Action," a report declaring America's current energy path unacceptable because of escalating economic risk and serious environmental consequences.

Governors then heard from two notable clean energy advocates. Three-time Pulitzer Prize winner and New York Times columnist Thomas L. Friedman opened his address with mention of a book he is working on titled Green is the New Red, White and Blue: America's Role in a World that's Hot, Flat, and Crowded—'hot, flat and crowded' referring to a convergence of global warming; global demand for services, jobs, and production across national borders; and a projected world population increase to 9.2 billion people by the year 2053, triple the population in 1953. This convergence, Friedman said, is driving increased energy usage; climate change; 'petro politics'—meaning the use of oil for political leverage; energy poverty—such that those who lack energy are falling behind exponentially; and biodiversity loss. Friedman said that the common denominator to solving theses problems is the development of clean, abundant, cheap, renewable fuel. And he argued that political leaders—Governors among them—can help put the United States in the forefront of this effort by giving direction to utilities and large manufacturers. He said that the innovation to achieve solutions already exists in business and academic research facilities around the United States. It need only be properly tapped, along with government-established cost incentives—e.g., tax on carbon, or cap-and-trade law. Under cap-and-trade, an overall emissions cap is established under which permits are issued to producers equivalent to the maximum emissions each is allowed under the cap. In turn, a producer that is able to reduce emissions below its permissible amount can sell its excess permits to a company that is having more difficulty meeting its cap.

Jeffrey R. Immelt, Chairman of the Board and CEO of General Electric Company, provided insights into the role that businesses and government can play in advancing clean energy technologies. He spoke first of GE's "Ecomagination" campaign, a business strategy to meet customer demand for more energy-efficient and greener products. He went on to discuss how a green energy future can be achieved in accordance with three philosophies: (1) energy diversity; (2) making an economic impact by lowering costs or creating jobs; and (3) assuming a market in the future. In keeping with these goals, there must be a massive infusion of innovation and technology, an effort to sell clean products around the world, and an engagement between government and business and a construction of public policy to enable that engagement. Immelt said that a major obstacle to be overcome is the lack—up to this point—of an investment in innovation and technology in the energy business. Investment must be devoted to making energy more efficient, to incentivizing conservation, to focusing on renewables, and to exploring more energy sources. He argued that government's role is to establish the framework and targets for achieving a clean energy future and then to allow the market to make the necessary innovations happen in the United States for export abroad. And he urged states to be front and center in this effort by promoting innovation through: establishment of performance standards; driving technologies in nuclear energy and coal gasification with sequestration; updating regulations to incentivize every aspect of clean energy, including—for example—storage and transportation; and making use of university research facilities. Finally, he argued in favor of national energy standards.

During a question and answer session, Michigan's Governor Jennifer Granholm asked what the speakers felt should be the top policy items on governors' agendas with respect to energy. Friedman argued that one priority should be to incentivize utilities—e.g., to remunerate them for the amount of energy saved rather than the amount of energy sold, and approve rate increases based on the utilities' investment in clean power. Immelt argued in favor of creating incentives for job creation and export and promoting a market that values innovation. Governor Elliot Spitzer of New York asked how to address business resistance to government attempts to incentivize. Immelt responded that business recognizes now the inextricable link between government and the market (the concept of cap-and-trade having come to be accepted). Friedman cited the example of the trade surplus that exists between Erie, Pennsylvania and Mexico and China, from the sale of trains whose energy efficiency resulted in large part from national regulatory standards around NOx and SOx.

Governor Joe Manchin of West Virginia noted that coal-producing states such as his want to be part of the cleaning and greening of America but must deal with the dilemma that passing the costs on to their base-load customers would negatively affect their economies. Immelt responded—and Friedman agreed—that he envisioned a national framework initially to help spread costs evenly among coal producing and receiving states, with an assumption that over time costs would fall as the technology improved. Friedman also emphasized the importance of recognizing the value in investing in clean technology now to enable America to be the leader—and therefore ultimately a financial beneficiary—of its export. Governor John Hoeven of North Dakota pointed out that many of the key players in the energy field are reluctant to move forward without knowing which energy sources will be in top demand in the future. Immelt responded that the smartest action is to bet on all energy sources. Governor Janet Napolitano asked what role the speakers felt nuclear energy would be playing. Immelt responded that notwithstanding concerns such as those surrounding storage and waste, nuclear energy prospects should be kept on the table. Friedman said that coal and nuclear energy are the likeliest prospects for clean energy in the future. Governor John Baldacci of Maine recommended giving greater attention to the potential for wind-source energy, in response to which Immelt and Friedman acknowledged that the key to advancing such energy sources is to promote investment in their development. Governor Ed Rendell of Pennsylvania urged that governors draft proposals for federal action to assist states in the development of clean energy.

At the closing plenary session, James Woolsey, former CIA Director and currently a senior executive advisor to Booz, Allen, divided international problems into two categories: malevolent (intended) and malignant (unintended). In the malevolent category lies the potential for terrorist acts against our electricity grid and the potential for the Middle East oil on which we have become dependent to be held literally or figuratively hostage. In the malignant category lie such problems as our carbon footprint causing global warming. Woolsey went on to suggest that the proverbial 'hawk' will be focused on malevolent concerns while the proverbial 'tree hugger' will focus on malignant concerns. But using a fictitious conversation between General George Patton as the hawk and John Muir as the tree hugger, Woolsey pointed out that ultimately, each side will recognize how it can be helped by the other. For example, the tree hugger's efforts to find clean fuel alternatives helps reduce our nation's dependence on foreign oil and with that dependence, our susceptibility to blackmail or destabilization.

The next speaker was John Doerr of Kleiner Perkins Caufield & Byers, which has invested $250 million in 25 new greentech ventures. Echoing emphasis that had been made during the first plenary session on the absence of investment in clean energy, Doerr told governors that annual private investment in North American greentech ventures rose by one-third between 2006 and 2007, from $3 billion to $4 billion, but that amount is still the equivalent of just four days of revenue for Exxon-Mobil. He went on to say that key to achieving a clean energy future are the three 'c's': cars, coal, and conservation. With respect to cars, Doerr asserted that synthetic biology is the technology by which superior biofuels can be produced. For example, scientists are experimenting with the use of bugs to eat sugar and excrete biofuels. With respect to coal, Doerr referred to creating clean coal solutions by converting coal into a lower-cost synthetic natural gas while capturing and sequestering the CO2, thereby reducing CO2 emissions by 50 percent from coal-fired power plants. And with respect to conservation, Doerr talked about a variety of innovative projects taking place around the country that involve clean energy production and conservation, among them: Geothermal—or drilling down to hot rocks beneath the earth's surface to generate electricity; conversion of cellulose to ethanol; production of solid oxide fuel cells; and production of thin-film solar cells on flexible sheets of stainless steel that reduce the cost of conventional solar cells by three-quarters. And the development of each of these technologies helps create jobs. Doerr recommended that governors take five actions to help promote a clean energy future.

1. Urge the federal government to put a cap and price on carbon, including a carbon tax.
2. Demand that Congress extend the federal investment tax credit and production tax credit for renewables for at least ten more years.
3. Extend, set, and enforce renewable portfolio standards. Twenty-seven states currently have such standards.
4. Revise the rules that govern utilities to provide rewards for cost savings in the delivery of energy, which in turn will be an incentive for the producers to invest in research and innovation in order to make energy less costly and more efficient to deliver. Also consider permitting homeowners and businesses that use solar energy to sell their surpluses to utilities.
5. Toughen construction standards to reduce energy consumption. Doerr pointed out that energy consumption in buildings accounts for one-third of all energy in the United States and two-thirds of all electricity demands.

And Doerr urged NGA to create a task force to work with the federal government to develop a nationwide smart grid to bring clean, cost-effective energy to all of the states.

During a question and answer session, Governor Granholm of Michigan asked about the prospects of converting municipal waste to energy. John Doerr responded that advances are being made in this area. And governors talked of ventures in their states involving the conversion of waste—including manure—to help produce high-grade diesel. James Woolsey pointed to a joint venture between a turkey processing plant owned by Conagra and a company called Changing World Technologies, by which waste from Conagra's facility is being converted to energy. In response to a question from Governor Hoeven about the best way to promote clean energy—particularly with respect to coal—through public policy, John Doerr reiterated the importance of setting a national price on carbon such that clean coal becomes cheaper than dirty coal to produce. Governor Mike Beebe of Arkansas asked whether the experimentation with 'designer bugs' that eat sugar and excrete fuel can extend beyond the production of ethanol to the production of gasoline. Doerr answered that research in this regard is still ongoing. In response to a question from Governor Linda Lingle of Hawaii, John Doerr said that he would be happy to direct her to the sources of the technology for the promotion of geothermal energy.

NGA honored Google Inc. and Barrick Gold of North America, Inc. with its annual Public-Private Partnership Awards, which were established in 2007 to recognize NGA Corporate Fellow companies for noteworthy partnerships with governors and states and to honor companies that have partnered with governors' offices to implement programs or projects that positively affect the citizens of those states. Google Inc. was honored for its collaborative work with Alabama's Department of Homeland Security to create Virtual Alabama, the nation's first comprehensive database of imagery and geographic data to assemble, display, evaluate, and share information for emergency responders. Barrick Gold of North America, Inc., headquartered in Salt Lake City, Utah, was honored for its partnership with the South Dakota Science and Technology Authority—a partnership that helped the state secure the National Science Foundation's Deep Underground Science and Engineering Laboratory at the old Homestake Mine in Lead, South Dakota, enabling transformation of the historic Homestake Mine into a vibrant center for world-class scientific research and discovery.

Memorable Quotes:

NGA Chair Tim Pawlenty of Minnesota said: "For the better part of the past century, our nation has enjoyed an energy system that's been relatively inexpensive and easy to use. But our continued reliance on this system makes us vulnerable to unstable and sometimes hostile countries that control vast amounts of the world's energy resources and has created environmental concerns. Governors and states are stepping forward to lead an energy revolution that will 'Americanize' our energy production in order to improve our national security, our economic well-being, and our quality of life."

John Doerr of Kleiner Perkins Caufield & Byers said with regard to the rising financial and environmental costs of energy: "The word 'crisis' comes from the Greek. It means to choose. This crisis is an opportunity that presents us with choices, and the [choice is] definitely not between Republicans and Democrats or between red and blue. The choice is between America leading or following in the new energy economy. It is between creating green jobs at home or importing green products."

Selected Policy Positions Adopted:
(1) Supporting the development of national policies and programs to ease the pressure of economic downturns on state and local government—e.g., federal efforts to assist states and stimulate the economy through temporary increases in the federal matching rate for Medicaid and flexible block grants for states, which have proven effective in the past to stabilize the economy and maintain health care services for the most vulnerable populations; and urging federal adherence to the principle of "do-no-harm" by avoiding policies that shift additional costs to states or impose new unfunded mandates, because such actions undermine state efforts to maintain services, balance budgets and speed economic recovery; (2) reaffirming the commitment of governors to reform education and ensure state flexibility in the federal education law; (3) supporting the eligibility of state-run veterans' homes for federal reimbursement of operations and construction, medical advocacy for all returning veterans, and mental health services for veterans; (4) strengthening the commitment of governors to the improvement of Food Stamp program benefits for the elderly and disabled, asking Congress to consider raising the minimum benefit and making the medical deduction a standard deduction in order to increase participation among the elderly and disabled, calling for removal of a policy limiting certain unemployed adults to three months of Food Stamp benefits within a 36-month period to enable states to incorporate this population into their existing employment and training programs, recommending consideration of permanent inclusion of consistently approved state waiver requests as an option in future legislation, and supporting implementation of the same Food Stamp program in Puerto Rico that the states use; (5) requesting: streamlining and coordination of emergency management requirements and timelines, consistency in determining eligibility for a presidential disaster declaration, prohibition on new restriction on use of administrative and management funds, consideration of the cumulative impact of disaster to affected states, and consideration of reimbursing the responding state directly for providing assistance under the Emergency Management Assistance Compact (EMACT), and asking FEMA to recognize the substance abuse and mental health services needed in response to disasters and emergencies; (6) calling on Congress to fund the Low-Income Home Energy Assistance Program (LIHEAP) at the authorized level of $5.1 billion at a minimum for both heating and cooling assistance, with a hold harmless provision protecting all states from a reduction in funding; (7) with regarding to environmental compliance at federal facilities, recommending that the federal government provide adequate funding for cleanup and oversight; and (8) updating the governors' recommendation that the federal government honor long-standing commitments to reconcile the fiscal impact on state and local governments that host federal public lands.