Quick Hit Ellyn Fortino Tuesday February 18th, 2014, 4:29pm

Obama's Former Energy Chief Talks Cap & Trade, Disappointing Energy Efficiency Standards

Steven Chu, former secretary of the U.S. Department of Energy, said the 2009 landmark climate and energy bill that would have set up a cap-and-trade system got too complicated, which contributed to its downfall in Congress.

The mammoth bill was designed to address climate change and limit carbon emissions by placing a cap on greenhouse emissions, among other provisions. Essentially, companies that emit greenhouse gases would have had to comply with emission limits or be required to buy or trade credits to continue polluting. The measure, the American Clean Energy and Security Act of 2009, narrowly passed the House in June 2009 but it died in the Senate.

"The House bill got way too complicated," Chu said at a discussion Thursday night at the University of Chicago. "They let all the special interest(s) …make an 800 page bill to make little advantages here and there, and that just was wrong."

Chu, who served as energy secretary from January 2009 to April 2013, said the measure also lacked leadership from the White House and the Senate.

“Here’s what I would do today," Chu told a packed room at the university's Quadrangle Club. "You have to keep it simple. Cap-and-trade philosophically does work, but you have to keep it brutally simple."

He said a very simple tax on carbon that would rise slowly over time could work. Such an approach would provide companies with time to comply with carbon standards. The tax would also provide certainty about their costs in the future.

What would Chu do with the tax revenue?

"Give it back to the American people," he responded. "Mail them a check each month. It’s a progressive way of giving back the money … you can spend it on whatever you want. The big bad government’s not going to tell you want to do. So if you want to buy a 15 mile-per-gallon car, that’s OK. Here’s the money, you decide. No government program. Revenue neutral." 

Also at Thursday's discussion, hosted by the university's Institute of Politics, Chu touched on the current state of oil production in the country. 

By the end of 2013, the United States produced about 1.3 million barrels of oil a day. And once 2014 comes to a close, the country will be producing some 8.5 million barrels a day, he said, adding that there is "enough oil and gas in the earth to cook us."

"We’re not going to run out [of oil] in this century, certainly in this half of century,” he said.

Chu made a point to stress that he does not want to "paint oil and gas into a corner and make them the bad guys" when talking about climate change.

"Because if you do that, what you're going to do is you're going to end up having a 'we' and 'they', and then money talks," he explained.

Chu believes natural gas, oil and coal can be used appropriately in electricity generation, "but you better capture the carbon."

Currently, it costs about $80 a ton to capture carbon as part of energy production. It costs another $20 to pipe and compress the carbon after it is captured, he said.

That is simply too costly, and there needs to be more progress in advancing carbon capture utilization and storage (CCUS) technology. Once the technology catches up, Chu said it would be possible to capture carbon at $15 to $20 a ton.

Energy Efficiency 

As energy secretary, Chu said he tried to drive energy efficiency for cable and satellite TV boxes, but was unsuccessful. The set-top boxes, which plug into TVs, are unnecessarily kept on 24/7, and they eat up more electricity than people may think, he said.

"When you put your hand on those little boxes, they're warm," Chu said. "When you think you’ve turned it off, you’ve only turned off the LED display."

Chu estimates the boxes use about $12 billion worth of electricity each year, which he said is equivalent to the power produced by all of Ohio's coal plants or 10 nuclear power plants.

He was not thrilled when the federal government agreed in December to voluntary energy-efficiency standards for the TV boxes.

As part of the voluntary standards, the pay-TV industry will improve set-top box efficiency by 10 percent to 45 percent, (depending on the box type) by 2017. According to the Department of Energy, the move will save consumers $1 billion annually on energy bills. 

But Chu said he was "crushed" when he heard of the recent efficiency deal.

"I was telling the manufacturers that you can really turn (the boxes) off, really dead off," Chu said.

He said the TV boxes simply need some low-cost memory and could be turned completely off except for the crystal oscillator, a device that keeps track of time and does not require much electricity. The box could wake itself up in the middle of the night to download TV programming data and then shut itself off again, Chu explained.

"I was saying, 'You can do this,' and I said, 'Instead of 30 watts, you can get down to one to two watts,'" Chu stressed.  

The idea was met with push back from the pay-TV industry, Chu said, because such a change would require new equipment. He said pay-TV providers, including cable, satellite and telephone companies, typically reuse the old and less efficient internal parts from the boxes, "Because hey, they don’t want to spend money." The companies are not compelled to install new, more efficient equipment because they do not pay for the boxes' electricity, he added.

"There was a lot of pressure from industry, and then industry tried to snowball the people who don’t know a lot about electronics," Chu noted. "It helps to have a Secretary of Energy who really gets in the nitty gritty and pays attention to this stuff and says, 'I'm not going to sign off on this.'" 

Current Energy Secretary Ernest Moniz touted the voluntary efficiency standards, saying they "reflect a collaborative approach among the energy department, the pay-TV industry and energy efficiency groups – building on more than three decades of common-sense efficiency standards that are saving American families and businesses hundreds of billions of dollars.” 

TV boxes, however, are not the only energy guzzlers that worry Chu.

He noted that data centers in the country use 30 gigawatts to 40 gigawatts of electricity a year. Just 6 percent to 12 percent of that electricity is used to do something, like send information or crunch numbers, Chu said. The rest of the electricity is used to keep the electronics ready on standby and to cool them down.

"The standard is that you put the electricity into the electronics, most of which is wasted because it's on standby, and then you spend another 50 percent of electricity to cool the electronics," Chu said. "Five years ago, 10 years ago people weren’t concerned about this, but it’s getting to be a big deal.”

He pointed out that data centers use 300 megawatts to 400 megawatts of electricity around the clock.

“I'm talking about the Googles and the Yahoos," he said. "I'm not talking about (the National Security Agency).”


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