Secretary Moniz on the Future of U.S.-Japan Energy Cooperation

Energy Secretary Ernest Moniz
At the Sasakawa Peace Foundation
Tokyo, Japan

October 31, 2013

ENERGY SECRETARY MONIZ: Thank you, Tanaka-san. We do indeed have a history together. In fact, his kind introduction was simply a repayment for my kind introduction of him at MIT a few years ago. I also want to thank Chairman Hanyu for his remarks, and for the hospitality of the Sasakawa Peace Foundation for hosting this event.

I'll also go back with Mr. Tanaka and just note that it was a pleasure, certainly, working with him at the IEA and of course subsequently, and I just want to say that I think he really was a pioneer in bringing the focus of IEA on climate change issues, and I think that's something we appreciate very much and will be a lasting contribution to that.

The relationship between our two countries remains one of the cornerstones for peace and security throughout the world. I think our countries have - as you all know - forged a robust and unshakable partnership that embraces trade and commerce, finance, security, science and technology, and energy. And together, I think we are and will tackle some of the major global challenges in a world that is changing quite rapidly.

President Obama is very committed to the bilateral relationship with Japan. He has been here twice. He has hosted Prime Minister Abe at the White House in February. President Obama has also emphasized an increased emphasis in our foreign policy to refocus priorities in Asia - even as we maintain commitments in the rest of the world.

The President said: "The United States has been and always will be a Pacific nation, and here we see the future."

So when we look at where America's priorities lie now and for years to come, it is clear that nowhere in the world are there more critical opportunities to advance our economic interests, our security interests, and our enduring interest in promoting universal human values than in the Asia-Pacific region.

Climate and energy lie at the heart of this focus. Both are key components of the U.S.-Japan bilateral relationship. Demand for energy has increased dramatically as Asian economies continue to grow, creating many opportunities for economic cooperation, and a clear need for smart growth. In Japan, especially following the Fukushima Dai-ichi Nuclear Power Station accident, energy security has taken on even greater significance here and elsewhere.

Turning to the climate challenge, I want to say that our view is that we are past debating whether we need to respond. Debate with Congress and internationally is now much more focused on what is it we do, how much do we do, how fast do we do it.

How fast we do it is a critical issue, because of the cumulative effect of carbon dioxide in the atmosphere, remembering that carbon dioxide has centuries of residence time in the atmosphere. Every ton of CO2 that we release counts against the emissions for our generation and for the next generations. As the IPCC report recently stated, if one looks at what you might call the human emissions budget for carbon dioxide, to stay within the kinds of bounds we think are prudent - which is to have a high probability of no more than 2 degrees centigrade temperature rise - we will run out of room for more emissions in about a quarter-century if we keep doing what we are doing today. That's not a lot of time to change our energy system, and so in fact the time really is now for all of us to work together to change the system.

But I do want to emphasize that the risks of climate change certainly are tremendous for our children and grandchildren, but we should also not overlook the fact that there are risks today as well. Two days ago was the first anniversary of Hurricane Sandy that hit the New Jersey/New York area of the United States so hard. More than $60 billion of damage - tremendous damage to our energy infrastructure, a harsh lesson of how our infrastructures are inter-dependent - electricity infrastructure, information infrastructure, fuels-delivery infrastructure - so that frankly in an very advanced country, in a wealthy region of the country, weeks - literally weeks of not being able to restore full energy services.

Now we cannot attribute any individual storm specifically to climate change, but neither can we ignore that statistically we are seeing exactly the patterns of storm intensity, droughts, floods, wildfires that were predicted a quarter-century ago. And so we do need to think that this is costing us today, and not only creating major challenges for our children and grandchildren.

Japan itself has experienced two major typhoons in the last three weeks - and again we know that these types of extreme weather events are becoming more intense and more frequent.

So in this context I should also say that we certainly are increasingly viewing climate change as not only an environmental threat, but also a national security threat. For example, in parts of the world, particularly in parts of the world where societies perhaps are not well organized, not well off economically, climate change - because of major environmental dislocations - can also be a huge threat multiplier in this world of global terrorism. So addressing climate change again has enormous consequences in many dimensions.

So this provides the backdrop for President Obama's Climate Action Plan that he put forward in June. The plan has several elements, and I want to emphasize three major points about it. The first point is that the action plan has three pillars. One pillar is mitigation. That is reducing greenhouse gas emissions so that we can in fact avoid major increases in global temperature and major implications of climate change. This of course will bring us to the clean technology agenda to which I will return.

But a second pillar that the President emphasized is adaptation. That is, the President recognized that - as I said earlier - we are already experiencing the effects of global warming. We're going to experience more even as we mitigate, and we have to face this and start the process of adapting. For energy, what that really means is - and certainly in our case - that we will incorporate resilience to major disruptions as one of the key criteria as we develop the energy infrastructure of the 21st century.

The third pillar is international cooperation, recognizing of course that a solution to climate change, to global warming, can only be won ultimately when all of us are doing our part across the globe.

And this is a major focus of our trip this week in the Asia-Pacific region. As we head to Warsaw on the road to Paris in 2015, it's really important that the United States and Japan stay aligned in our approach to international commitments. Our climate action plan in the United States gives us a strong platform, and of course we understand that Japan still needs to work through its energy policy in this post-Fukushima period. We've heard that already in the introductions, but again it's critical that each of us presents our commitments and again stays well aligned as we go forward.

So the first point was that the President has these three major pillars, including a new focus on adaptation. The second basic point concerns the question about whether the United States or other countries will in fact carry through the commitments that it announces. So this is where I want to stress - this may involve the niceties of our government system - that the President's plan, very extensive and very ambitious, is however based exclusively on actions that rely upon the authorities the administration already has. That is, it does not rely on any further actions in the Congress. The conclusion of that is, we will execute this plan. And I think that's very important, again, as we head on the road particularly to Paris for the COP meeting at the end of 2015 for international discussions that we will be vigorously executing our climate action plan.

As an example that we are pursuing this, I would not that in the area of coal the Environmental Protection Agency has already put out, as promised, a draft rule that says that any new coal plant built in the United States already must have carbon capture and sequestration technology. The Clean Air Act, which provides the authorities for such rule-making, has always been there to push technology. So this rule push to technology, but then the Department of Energy responsibility is to push the technology forward and to lower the costs. And so on top of the $6 billion that we have already committed to carbon capture and sequestration technology, we have already committed an additional $8 billion of a loan-guarantee program to stimulate the deployment of low-emitting fossil technologies.

So again, what I really wanted to emphasize is, this is a plan that you should expect will be executed, and that will have enormous implications for the United States, but I think it will have implications as well for all of our international relations and provide a platform for leadership in the international climate change discussions.

The third point that I want to make about the plan is that it reflects the President's "all of the above" energy strategy. So what does this mean? First of all, make no mistake - all parts of the plan are put in place in the context of moving to a low-carbon economy. However, to do so, what we are committed to do - and the Department of Energy has again a major role especially in terms of technology development and deployment - we will pursue the technology directions so that all our fuel sources can be competitive in a future low-carbon marketplace. Whether it's coal, gas, nuclear, renewables, efficiency - we are aggressively pursuing all of those directions.

If I look at renewables, for example, I think many people have felt that renewable technologies are and always will be five or 10 years away. We are saying we don't believe that's correct. If one looks at the facts on the ground, the tremendous cost reductions in wind - on-shore wind especially - photovoltaics, LED lighting, even vehicle electric batteries - what we are seeing is tremendous cost reduction, associated tremendous deployment increases, and we believe we are right now at the beginning of that true revolution of tremendous introduction of these technologies.

In 2012, for example, wind was the largest new electricity source deployed in the United States. In just five years, photovoltaic panels have had deployment increased by a factor of 10, certainly in part because of a 75% decrease in the cost. Here in Japan we know that the government has introduced very strong feed-in tariffs, and this is certainly generating substantial investment in the renewable sector, including from U.S. companies. And power generation from solar PV therefore has increased dramatically with almost 4 gigawatts of new capacity installed in the first year of the program alone.

Similarly, we see wind, geothermal energy all coming forward under the umbrella of these government policies to stimulate renewables deployment.

Electric vehicle technologies are also seeing remarkable breakthroughs. Now clearly we have still small deployments here, but in the United States in the first half of 2013, there were more than 50,000 plug-in electric vehicles sold, again more than twice as much as the previous year. So this year we will probably top 100,000 vehicles, and this rate of increase is actually higher than the comparable rate of increase that we saw, say, 15 years ago. And of course here Toyota, for example, has been a real pioneer in hybrid vehicles. So we are seeing a very interesting mix of new vehicle technologies that include high efficiency and electrification at the same time.

In the United States I should add, in fact, that we have again - I always talk in terms of three, apparently - we have a three-pronged strategy for reducing oil use, for purposes of both security and climate. So one is dramatically increased efficiency, and there the President put forward efficiency standards that roughly speaking double the previous existing requirements by 2025, and we are already seeing the benefits of that policy in terms of efficiency.

The second direction for reduced oil dependence is alternative fuels, and we are developing - and again, having substantial cost reduction for next-generation biofuels, and of course there is a lot of interest right now, because of our abundance of natural gas, to looking at natural gas as a major transportation fuel, and third, what I already discussed - electrification. So again we see a multi-pronged approach that is addressing security and environmental concerns at the same time.

On efficiency, again we have a technology story: LED lighting. The costs of LED lighting have dropped by about a factor of five in only a few years, once again leading to enormous deployment. In fact, about a month ago we released a report that showed the drop of a single LED bulb from about $50 in the United States to about $15. Well, we can't keep up with the progress. Within two weeks Wal-Mart announced it would be selling some LEDs below $10, dropping very rapidly. And the lifetime energy savings for U.S. energy costs, which are not the highest in the world as you well know, but even for the United States the lifetime energy saving cost for that one LED light fixture is about $125. It's a pretty good deal for the lifetime costs.

Another area of efficiency: In the Climate Action Plan we pledged to dramatically accelerate the pace at which the Department of Energy issues rules increasing the efficiency standards of appliances and electronics, and in fact we have done so, and as we look through 2030 we anticipate that the standards for appliances and electronics issued during President Obama's first and second terms will cut almost 2 billion tons of carbon pollution and save enough electricity to power more than 85 million homes for two years.

Now Japan is already a world leader in energy savings and energy efficiency, and this is again an area for great collaboration, and I would just say that I think energy efficiency demand-side management is an essential item if we are to meet our carbon goals going forward.

Now again, Japan is and will be an important partner in promoting global climate change solutions, and we will continue to work closely with Japan and deepen our collaboration. The Clean Energy Policy Dialog is one mechanism for that discussion, and it's a place for us to coordinate our clean energy policies and technical activities. Through the Energy Policy Dialog, for example, we have coordinated activities in an Okinawa-Hawaii Clean Energy Partnership, focusing on island technology solutions. Under the Tohoku Green Communities Partnerships we've hosted government and business representatives from the Tohoku region at DOE's National Renewable Energy Laboratory as well as Greensburg, Kansas, a town that had been devastated by a tornado and then rebuilt using clean energy and technologies with DOE support.

So we hope that we have provided some ideas and images for revitalizing areas in Tohoku damaged by the great earthquake and tsunami with clean energy.

Microgrids - I already mentioned a little bit about that. US-Japan collaboration could stand as a model for other countries looking for climate resilient energy solutions. Microgrids, as I alluded to earlier, have the potential not only to promote the use of renewable energy sources; they can help communities recover from natural disasters that are becoming more frequent with increasing global warming. The ability of microgrids to do this was demonstrated in Japan in March 2011 when a microgrid serving facilities at the Tohoku Fukushi University in Sendai was able to continue supplying power and heat to customers while other power supplies in the region were disrupted by damage from the earthquake. So achieving greater resiliency of Japan's power grid is also one of the lessons learned from the March 2011 earthquake. In the United States, we have embarked on a major effort - as I noted earlier - to develop microgrid technology to provide the same kind of resilience.

Fuel cells - Another area where Japan is at the forefront in developing hydrogen and fuel cell commercialization, with major companies including Panasonic and Toshiba installing several thousand residential fuel cells operating on natural gas and Toyota, Honda and Nissan planning commercial fuel cell vehicles in the next few years. DOE's Fuel Cell Technologies Office works closely with Japanese researchers and companies in these areas, including development of codes and standards.

A prime example is the nearly decade-long support that DOE laboratories have provided on hydrogen technology applications to the Institute of Carbon Neutral Energy Research, a partnership between Kyushu University and the University of Illinois. Together, our researchers are accelerating the development of fuel cell electric vehicles.

So we really have tremendous collaboration and tremendous promise in these areas of renewable technologies.

Let me turn to fossil fuels. As you know, natural gas burns cleaner than other fossil fuels, releasing about half of the CO2 compared to coal, for example. In the U.S., the abundance of shale gas has played a very important role in increasing our energy security, decreasing our energy imports, decreasing our CO2 emissions, and providing a bridge fuel to the clean energy technologies of tomorrow. Thanks to shale gas, the U.S. is again the largest gas producer in the world. And this revolution has come as the result of years of public-private partnership starting with Department of Energy research in the late 1970s, passing to demonstrations by private companies, supported again in a public-private partnership, and now of course the deployment of these technologies to extract shale gas from rather deep formations.

As I already said, the "all of the above" strategy means that we will continue to emphasize clean fossil fuels in the President's Climate Action Plan. Now we recognize, as was already stated, Japan's interest in LNG exports from the United States, and two projects with strong engagement from Japanese customers - the Freeport and Cove Point applications have been conditionally approved; another one, Cameron, is now second in our queue for looking at licenses. We know that many in Japan are extremely happy with these developments, looking forward to LNG exports to Japan. I do just want to provide a little caution in terms of time frame in that we provide the initial approval, this then goes to the Federal Regulatory Commission for environmental review, it comes back to DOE. We are working as fast as we can. There are several steps, but hopefully LNG exports will flow to Japan within a few years.

Another very important area is carbon capture, which I already alluded to, and Japan is also demonstrating the ability to capture carbon from thermal power generation and to sequester it below the seabed. This effort, funded by METI and implemented by the Carbon Dioxide Capture and Sequestration Corporation, is working on two projects to store carbon below the seabed off the coast of Hokkaido.

This is another example of common interest where collaboration is possible, because we are also very interested in looking now at these off-shore under-seabed opportunities for sequestration, and in fact next week we will host in Washington, D.C. at the ministerial level the Carbon Sequestration Leadership Forum, and this is certainly one of the areas that we will want to explore.

Japan is also a leader in methane hydrates research, again an area of common interest and collaboration. In the spring of this year, Japan succeeded in extracting gas from a methane hydrate deposit in the Pacific Ocean offshore in a first-of-a-kind operation. We have also worked together in 2012 in a test on Alaska's North Slope. Japan has also partnered with the Department of Energy and industry on methane hydrates research in the Gulf of Mexico for over a decade. Our continued collaboration is vital here. Methane hydrates represent research challenges but a very important resource potential.

In my former life at MIT, when we wrote on natural gas, we noted that methane hydrates could be the next big revolution following shale gas, although it will take some time certainly to make this a commercially viable activity.

Let us now turn to nuclear energy - another part of the "all of the above" strategy.

President Obama again has made clear that secure nuclear power is part of our low-carbon energy future. Today it accounts for about 60 percent of electricity from low-carbon sources in the United States. While we had seen stagnation in new reactor construction in the U.S. for many years, there are currently five nuclear reactors under construction, including the first reactors to be licensed in the United States with new passively safe features, so called "Generation 3" technologies. Once again I would note the Department of Energy's been strongly involved as we have roughly an $8 billion loan guarantee offered to help with the construction of some of these new plants.

Of course, Japan has been a world leader as well in the development of nuclear energy, and nuclear energy for peaceful purposes. Our nuclear energy industries are, as is well known, closely connected. Nevertheless, of course we also understand and respect the complicated context of the nuclear energy discussion in Japan following the Fukushima accident and are prepared and willing of course to engage in all discussions as we resolve this going forward.

In the days and months after the tragedy, the American people, I think, stood firmly with the people of Japan. As President Obama said at that time, and I quote, "The Japanese people are not alone in this time of great trial and sorrow. Across the Pacific, they will find a hand of support extended from the United States as they get back on their feet."

From the beginning of the Fukushima accident, the United States worked to support the Government of Japan in the immediate response efforts and in recovery, and are prepared to do so as well in the cleanup and decommissioning activities that will still take quite some time in the years ahead.

The Department of Energy, within days of the accident, sent a team of 34 experts and more than 17,000 pounds of equipment in support of the efforts to manage the crisis. We deployed our Aerial Measuring System and Consequence Management Response Teams to assist the Government of Japan with radiation measurements. And our Environmental Management team has leveraged and made available the experience and technology from the Department of Energy and our national laboratories to the Tokyo Electric Power Company, TEPCO, for its decommissioning activities, including groundwater management and treatment and disposal of contaminated water. Our national laboratories have established a direct relationship with TEPCO to provide analysis and experts to support these efforts. We expect the relationship in the area of decommissioning between TEPCO and our national laboratories to expand and deepen in the coming years.

Just as the tragic event had global consequences, the success of the cleanup also has global significance. So we all have a direct interest in seeing that the next steps are taken well and efficiently and safely.

American companies have extensive experience in dealing with large, complex clean-up and decommissioning projects, more than we like in fact at the Department of Energy. Some of our companies have worked closely with TEPCO and Japanese business counterparts on Fukushima decommissioning activities since the days immediately following the accident in March 2011. Our decommissioning and decontamination industry again stands ready to support the Japanese Government and TEPCO on decommissioning activities and contaminated water challenges, should Japan need their help.

As Japan continues to chart its sovereign path forward on the cleanup at Fukushima and works to determine the future of their energy economy, the United States is ready to assist our partners in this daunting task. In 2012, the United States and Japan created the Bilateral Commission on Civil Nuclear Energy to strengthen our strategic and practical engagement on Fukushima clean-up, emergency response, nuclear safety regulatory matters, civil nuclear R&D, and nuclear security and nonproliferation. In all these areas, it is critical that we achieve concrete results.

We welcome the Japanese Government's decision to increase its direct involvement in the clean-up efforts at Fukushima Dai-ichi and to reach out for assistance, following the recent contaminated water incidents at the site. The International Research Institute for Decommissioning, IRID, on behalf of the Japanese Government, recently published a Request for Information to solicit international technology, knowledge and experience to help address the water challenges at Fukushima Dai-ichi. This is an excellent first step toward establishing international collaborations to support clean-up. Our DOE national laboratory staff are supporting IRID's review of the information collected.

We know that TEPCO and the Japanese Government are facing significant challenges from contaminated water, but we should not lose sight of the fact that TEPCO has continued to work on spent fuel removal activities while addressing these water challenges. I understand that TEPCO will begin to remove spent nuclear fuel from Unit 4 on schedule in mid-November. This will be a significant milestone for TEPCO and the Japanese Government and a significant step in the process of decommissioning the site.

With respect to nuclear safety and regulation, we would also like to commend the Government of Japan for establishing the new Nuclear Regulation Authority in the wake of the Fukushima crisis. An independent and transparent regulatory authority is essential for ensuring the safety of any nuclear program. It's important for all of us to continually examine our national programs so that regulatory independence is practiced and protected. As we have learned in the United States, integrating lessons learned into the overall regulatory approach is the next step in a steady process that will ensure the appropriate prioritization of actions and long-term sustainability. We have seen evidence of the NRA taking those lessons learned into consideration as it reviews Japanese applications for reactor restarts.

In the United States, we experienced the Three Mile Island Accident in 1979 and we learned a great deal from that experience. Those lessons have translated into high public confidence in nuclear power and I believe that nuclear power can follow a similar trajectory in Japan. We cannot lose perspective of nuclear power as a clean, reliable source of baseload, while recognizing that each nation will make its own choices on how to meet its low-carbon obligations. As our President has repeatedly stressed, we need an "all of the above" strategy to maximize our use of all clean energy sources and reduce our carbon emissions. The President, as I said earlier, definitely includes nuclear power as one part of that "all of the above" strategy.

Let me turn briefly and move to the end of my remarks on nonproliferation. Japan and the United States have a shared commitment to preventing the proliferation of nuclear weapons. From the foundations of the Non-Proliferation Treaty, we've worked together to build an effective global nonproliferation regime and to address challenges from North Korea, Iran and others. Within the Nuclear Security Summit framework launched by President Obama, we are collaborating closely to strengthen international standards, improve security of nuclear materials, and convert or dispose of nuclear materials that could pose a proliferation or terrorism risk.

Just as Japan has led in the development of peaceful nuclear power, so too Japan is among the world's leaders against the proliferation of nuclear weapons. The United States continues to believe the separation of plutonium needs to be in balance with a corresponding pathway for the eventual consumption or disposition of that material. We realize the challenges that Japan faces in this regard, given the uncertain future of nuclear power. Nevertheless, we have welcomed Japan's long-standing support for this principle of balance between plutonium separation and consumption and emphasize the importance of developing plans that will remain consistent with this policy.

Japan also has an opportunity to lead by ratifying the Convention on Supplementary Compensation for Nuclear Damage or CSC. Japan's ratification of the CSC will bring the convention into force and facilitate U.S. commercial participation in Fukushima cleanup and decommissioning, and of course it will facilitate our U.S. and Japanese activities in international nuclear commerce. It will also set a leadership example for other countries in the Asia-Pacific region and around the world, and reinforce the CSC as a global nuclear liability norm. I believe that, as in so many other areas, Japan and the U.S. are fundamentally aligned on these issues and will move forward together.

In concluding, I say again the United States is a Pacific nation with a long history and deep relationships with many countries in this region, most especially Japan. The U.S.-Japan partnership continues to grow and flourish to the benefit of both of our peoples. As partners, we can build on our strong relationship and shared interests in energy, environment, and security to create a better future for both countries.

We can always achieve more together than we can alone. We will find the best path forward through cooperation and dialogue, build on our strong relationship and shared interests in a diversity of energy technologies, as well as environment, safety, and security to create a low-carbon energy future. And together we will seek to prevent the devastating effects of climate change.

Our task is not simple, but it could not be more pressing and important. Thank you and I'll be happy to hear your comments and respond to your questions.