Conference Call With John Kerry on American Power Act

I just got off a conference call with Senator John Kerry and others regarding the American Power Act.  Here are some highlights from notes I typed while on the call. Note that I specifically asked him about this issue, that “neighboring states would also be allowed to veto [offshore oil] drilling.”  In brief, Kerry’s response was that states have to have some voice in determining whether they are exposed to the “significant risks” entailed by offshore oil drilling in neighboring states, so they get to vote – the “ultimate democratic process.”

Now, on to my notes, which are not exact quotes but a rough account of what each speaker said.  My understanding is that the entire call will be available later today at this address.

Senator John Kerry

Joe Lieberman and I believe very strongly, and Lindsey Graham believes in the principles of it, that this is a major opportunity for the US to pick up its economy, create millions of jobs, move towards energy independence, increase America’s national security, reduce pollution. Big returns on a bill that does this in a way that is protective and sensitive to the consumer and American business. Unique coalition that has been built here – faith based, national security, former generals and admirals, environmental community, major American businesses (small and large), environmentalists, nuclear industry, oil industry, natural gas…coal…utilities…major business ranging from GE to Dow Corning, FPL, American Electric Power.  China, India, Mexico Brazil, Europe are moving ahead faster than we are to capture the energy market of the future.  This market is a $6 trillion market, with 6 billion potential users. Technologies we invented here in America are being taken to the market by other countries far faster than we are doing.  Of top 10 solar companies in world, for instance, the US doesn’t have one company. All of this can happen here.  This bill gives coal the opportunity to proved it can burn clean. Natural gas gets a fair playing field. Gas is 50% cleaner than other fossil fuels.  Encourages the rebuilding of the nuclear power industry in America. We’re convinced there are millions of jobs to be created for Americans.

Most importantly, this bill cushions any impact of rise of energy prices for home energy, heating, fuels, etc. by refunding the proceeds to the American consumer. On Day #1, 2/3 of proceeds go back to consumers as a rebate on their utility bills. By the time the transition is finished, 100% will go back to the consumer. Utilities have until 2013, and also get significant additional allowances, to mitigate against cost increases to consumer. This is the biggest single kick we can give to our economy, we hope we can get it adopted.

Also, agriculture is exempt, small business is exempt.  We get at CO2 emission reductions without an overall impact on economy.

John Rowe (Chairman and CEO of Excelon Corporation)

I strongly concur with the things Sen. Kerry has said. This is the most complete and practical measure we’ve yet seen for dealing with climate change and to help the economy. Kerry, Lieberman, Graham have made sure they’ve put a cap on how much this can cost in early years, made sure all technologies have a chance to compete by putting a price on carbon slowly, over time, will let the market work to get lowest cost solutions.  Right now, what we’re doing is expensive and ineffective. This bill will lead to competition in the marketplace to create clean energy here at home. They got the balance right, will make a real difference for economy, national security, environment.

Retired 3-star Lieutenant General Norm Seip

(Operation FREE – coalition of leading veterans and national security organizations)

Climate change is a major threat to our national security. We support American Power Act, very simply, this will put us back in control of our energy future. Each day, we send $1 billion overseas for the oil we by, funds hostile nations and extremists.  We are funding both sides of this conflict. Money to buy RPG’s, roadside bombs, etc. used against us.  Strong carbon cap can drive oil prices down, since we are such a massive user of oil.  Deprive Iran of $100 million a day.  Climate change and disruption is a security threat.  Destabilizes weak nations, creates safe havens and breeding grounds for terrorist organizations. This will make us more secure.

David Vieau  President and CEO of A123 Systems

I strongly support the bill.  Transitioning the energy economy takes decades. Business is looking for commitment of American people to make this fundamental transition. Once it knows that commitment has been made, business will invest. We need this bill. Put a value on CO2 emissions, kick start a great new economic opportunity for this country.

Questions

Stephanie Tavaris of Las Vegas Sun – How is money raised in this bill?

Kerry – We give allowances to utilities, based on amount of emissions they put out and the amount we need to reduce.  Revenue is returned to the consumer, not taken by the government.  There is no tax in here, there is no direct fee, the money comes from the mechanism through which they buy their allowance.  This is a private sector solution to a public problem.  It actually was put in place in 1990 by George HW Bush to reduce SO2 emissions that were causing acid rain. It’s a free market mechanism that allows CEO’s of eompanies to make decisions. It is NOT “command and control.” It’s entirely up to the business community.

Amy Quinton of New Hampshire Public Radio – What happens to states’ rights to implement their own cap-and-trade programs, RGGI for instance.

Kerry – We are not hearing complaints from Massachusetts.  Over half of the American economy, 33 states, are under mandatory reduction already.  States have been leaders.  We need to give the business community the certainty that if they sign up to this – and it was one of the reasons they were willing to – that they won’t be subject to an individual state changing the rules mid game.  We’re picking up where the states have led. This is a 50-state, national structure that will hold the states harmless, make up revenues from existing programs, build on states’ leadership.  EPA is left in place as the monitor, right to enforce. We will far surpass targets with energy efficiency, etc. The marketplace will be the real winner here.  RGGI would be supplanted with the national programs. States can still do their fuel standard programs, efficiency programs, but with regard to CO2, RGGI will be supplanted by national standards. We are not undermining states’ goals one iota.

Rowe – By doing it together, it’s cheaper for everybody.  From a business point of view, to make the right investments, you need to know what things will cost 10 years down the road.

John Downey, Charlotte Business Journal – Changes to EPA authority?

Kerry – Only changes to EPA is with regard to CO2 component only.  

My question – Here in Virginia, as you know, there’s strong consideration of offshore oil drilling. This morning’s Washington Post reported that the American Power Act will “give states the right to veto offshore oil drilling in a neighboring state.”  I was wondering if that’s true and if you could comment.

Kerry – Events in the Gulf of Mexico have dramatized dangers to neighboring states from offshore oil drilling.  There are significant risks. States can’t just be cast aside, they have to have some voice. What we do is give a vote to them. This is the ultimate democratic process, people decide.  First there has to be a finding by Interior, Commerce and EPA for potential harm to state, then states get an opportunity to vote.  This bill is the steppingstone to a new energy economy for America where we’re not spending $100 million a day to Ahmedinejad, but we’re producing our energy here at home. We’re the Saudi Arabia of natural gas.