Thank you very much, Chairman Majoras.  It’s a pleasure to be here as you begin this important conference.  I want to thank the FTC for hosting this event and for the opportunity to address you all.

By working to ensure an open and competitive marketplace, the FTC promotes the twin objectives of protecting consumers and promoting choice, while also ensuring a fair and level playing field for American businesses – two paramount goals of any well-functioning economy.

Of its many important functions, the one at the forefront of my mind today – and one certainly evidenced by this conference – is the FTC’s long history of disseminating clear, useful and timely information to the American people information that we all use to make decisions that impact our safety, health and financial well-being.  As our economy continues to grow larger, more complex and more globally integrated, this function will only grow in importance.  And in my view, it is particularly important in the energy arena.

Today, Americans have many choices when it comes to how to heat and cool their homes, how to run their businesses, and – more and more – how to power their vehicles as well as how to improve the energy efficiency of their homes and offices.  And, those choices should multiply over time as new technologies and new and improved fuels enter the marketplace and offer cleaner, more affordable choices for consumers.

In fact, it is not really enough to say that we should expand – or should diversify – the energy options available in this country in reality, we simply must do so.  As President Bush has said, the United States must take steps now – some of which are already underway – to ensure a future energy supply that is clean, affordable, reliable and secure.  Such an outcome would undoubtedly benefit individual consumers, families and businesses but it would also benefit our national economy, the world economy, and our earth’s environment and perhaps most importantly, our national security.  In short, our energy security is inextricably linked to our national interest.

And so, we must look to improve our energy security in the most rapid, most efficient and most equitable ways possible.  As we have seen throughout the history of the last century or so, energy markets function most efficiently – and ensure the best results for the American people – when they are open, transparent, well-regulated and competitive.  From domestic production quotas in the 1930s and 40s to import quotas on oil in the 1950s to price controls in the 1970s we have experienced the negative consequences of meddling in the competitive marketplace for energy.  But, of course, we also have experienced the benefits of numerous policies that do work – energy efficiency standards for consumer products and vehicles, for example a long history of successful energy R&D programs and targeted tax incentives to support new technology development and encourage commercialization.  I think it’s fair to say that energy policies work best when they stimulate American innovation with positive reinforcements.

I would argue that this is true on a global scale as well.  The United States, after all, operates in the world energy market.  In order to increase global access to energy – be it from conventional or alternative sources – we need stable regulatory frameworks, open investment climates, adherence to the rule of law, transparency in decision-making, and market-based pricing of energy resources.  As we have seen, moves to restrict foreign investment and increase the reach of state-run energy industries limit access to capital and to the necessary expertise to access resources.  While this type of behavior may garner some short-term advantage for certain nations, in the long-run it deprives countries of productivity and prosperity.

And let me be very clear about one additional point today: attempts by market suppliers to interfere with – or threaten to interfere with – the free flow of energy and to circumvent the role of the free market to set prices are unwarranted and inefficient.  These kinds of actions will hurt not only those nations that depend on the supply – both developed and developing alike – but also, in the long run, will damage the interests and the global standing of the producing nations themselves.   In order to effectively and efficiently settle issues of supply, demand, and price, we need markets that are fair, open and free of collusion.

In short, domestically and internationally, an open and competitive market for energy trade and investment is essential to increasing energy security around the world.  These conditions, not coincidentally, fuel the investment and innovation – in the private sector – that has always been necessary to solve our world’s most fundamental challenges.  And the energy arena is no exception.

Now, I am not suggesting that governments do not have a role here.  They do, and a quite clear one.  After all, energy is not “just another” product or commodity.  As I said earlier, a stable, secure and clean energy supply goes directly to our well-being, our economic competitiveness and our environmental health.  In the effort to ensure this supply, the role of government is necessary – even critical – but not sufficient.

What governments can do is two-fold.  First, they should provide the substantial funding needed for basic research and, in some instances create incentives to push along the most promising technologies to commercialization.  Secondly, governments must provide the right policy environment to encourage investments in all parts of the energy supply chain and stimulate new R&D in the private sector.

To this first point, over the past several years, President Bush has proposed a dramatic set of increases for federally-funded research in the physical sciences.  Aptly called the American Competitiveness Initiative, the President has proposed a doubling of the Energy Department’s research budget over ten years.

DOE is already the world’s largest funder of R&D in the physical sciences. The ACI will make us that much stronger.

The initiative recognizes two fundamental truths.  The first is that in order to maintain this country’s economic preeminence in an increasingly competitive world, we simply must maintain our scientific and technological superiority.  And the second is that doing so requires a substantial and sustained investment from the federal government.

At the same time, President Bush has laid out an aggressive strategy to reduce our nation’s dependence on foreign oil by expanding the availability of clean, affordable renewable energy.  Known as the Advanced Energy Initiative, our goal is to identify the technologies that could have the greatest impact on the marketplace in the relatively near future, and then really go after them with increased resources and aggressive timelines.  These are things that are already in the pipeline and, as a matter of sound public policy, need to be pushed more quickly to market.  Let me provide a few examples.

Just last month I had the privilege of announcing the first two sets of federal investments under the Advanced Energy Initiative.  They will advance our nation’s alternative energy goals in two key areas: cellulosic ethanol and solar power.

First, the Department announced that we will invest up to $385 million for six biorefinery projects over the next four years.  When fully operational, these biorefineries are expected to produce more than 130 million gallons of cellulosic ethanol per year . . . that’s ethanol made from a wide variety of non-food plant materials like switchgrass and industrial plant waste such as saw dust and corn stover.  It’s important to point out that this federal investment will be bolstered by significant industry cost-sharing – for a total expected investment of more than $1.2 billion.  This project will help our nation meet an important goal – making cellulosic ethanol cost-competitive with gasoline by 2012.

Under the second set of grants, 13 projects focused on accelerating the commercialization of solar photovoltaic systems were awarded (in total) up to $168 million in federal funding over the next three years.   Again, I would note that these awards really embody the definition of public-private partnerships.  Over 50 companies, 14 universities, 3 non-profits and 2 national laboratories are involved – in 20 states.  And, the industry-led teams will contribute over 50% of the total funding – an expected investment of $189 million over and above the federal commitment.  So, we are anticipating a total investment of more than $350 million (over three years) in solar power – a clean, abundant and renewable energy source.

And this is just a start.  There are more such projects underway, and I look forward to continuing to work with the Congress to aggressively push forward with these important programs.

These examples illustrate one of the critical functions of government that I mentioned earlier – setting the right policy environment and incentivizing private sector investment in energy.  To that same end, let me provide a slightly different type of example.  In his State of the Union address earlier this year, President Bush announced a plan to reduce projected U.S. gasoline consumption by 20% by 2017 – the so-called “twenty-in-ten” program.  As part of the plan to achieve this goal, the President called for increasing the Renewable Fuels Standard (RFS) to displace 15% of America’s gasoline consumption by 2017 – up to the equivalent of 35 billion gallons of alternative fuels.  Some have questioned whether this type of regulatory proposal is overly ambitious – can the United States really produce that much alternative fuel in the next decade?  To that, I say: that is precisely the point.  This is the definition of an aggressive challenge.

If we are to truly expand our energy horizons, then we must set the bar high.  We must bet on technology. And, we must signal to private investors that our policy environment supports sustained investment in renewable and alternative fuels.

So, government has a role, to be sure.  And an essential element of that role is the active recognition that the real breakthroughs are likely to happen in the private sector.  In fact, I would argue that the possibility that private investment – on the scale that is required – will not happen is perhaps the biggest threat to our world’s energy future.

Personally, I believe that it will – and that we are already seeing results.  Having spent a good chunk of my career in the financial sector, I can honestly say that for the first time in my life we are seeing the venture capital community put sizeable amounts of money into energy.  This is real money.  They are betting – to the tune of more than $2 billion this past quarter along – that clean, safe, affordable energy represents the new innovation frontier.

In my view, when it comes to making public policy decisions regarding our energy security, the bottom line is this:  the key to unlocking our energy future is ensuring that the innovation cycle continues at a rapid pace.  And that will occur most efficiently and most quickly when open, competitive markets are functioning well and supported with sound public policies that encourage the development of breakthrough technologies. We must leverage the tremendous power of the private sector, while also making smart public policy decisions, to unleash the world’s best scientists and engineers on this problem.

As I said at the start, this is not a question of what we should do, it is a question of what we must do.  We cannot let energy become a variable, a risk, a question mark in our nation’s – or our world’s – economic and security equation.  We must take steps now to ensure a reliable, affordable, clean and secure energy future.  And, I for one believe that we will.  In fact, we are already on our way.

I thank you all for the opportunity to be with you this morning.  I wish you a productive, informative conference.  Thank you.

Location:
Washington, DC

Media contact(s):
Craig Stevens, (202) 586-4940