Dan Brouillette
Deputy Secretary of the U.S. Department of Energy

On a special episode of Columbia Energy Exchange, Jason Bordoff and Deputy Secretary of the U.S. Department of Energy, Dan Brouillette, discuss energy policy under the Trump Administration. This conversation took place in front of a live audience at the Center on Global Energy Policy's fifth annual Global Energy Summit in April. 

Deputy Secretary Brouillette has three decades of experience in the public and private sectors. He served as Senior Vice President and head of public policy for USAA, and Vice President at Ford Motor Company where he led the automaker’s domestic policy teams and served on its North American Operating Committee. He served as Chief of Staff to the U.S. House of Representatives Committee on Energy and Commerce, and he was Assistant Secretary of Energy for Congressional and Intergovernmental Affairs in the George W. Bush administration. He is also an Army veteran.

Jason and Deputy Secretary Brouillette covered a range of topics including the outlook for nuclear energy, shifts in natural gas markets and U.S. energy exports, as well as what "energy dominance" and "energy realism" mean to this administration and how they are guiding policy.

 

VIEW THE TRANSCRIPT

[00:01:43]

Dan Brouillette: Thank you Jason.

 

[00:01:44]

Jason Bordoff: Thank you for –

 

[00:01:45]

Dan Brouillette: Did I hear you say I worked for both sides of the aisle?

 

[00:01:48]

Jason Bordoff: Well, didn’t you work for Billy Tauzin when he was a democrat?

 

[00:01:51]

Dan Brouillette: I did, I did. I’m just surprised that you know that.

 

[00:01:54]

Jason Bordoff: We do our research. It’s a university.

 

[00:01:56]

Dan Brouillette: It’s a university.

 

[00:01:57]

Jason Bordoff: We’re in a big library, right over there with all sorts of information and we don’t have enough bipartisanship in Washington, people talking to each other across the aisle. So, there’s so many things I want to ask you about. We don’t have enough time to get to it all, but we do have a lot of students who are here. And I think we talked so much about energy policy issues in the news from the clean power to plant, café standards, offshore drilling. I’m not sure people fully understand what the Department of Energy actually does, what the scope of its work is, how important nuclear is as one example and also hat you do as Deputy Energy Secretary. Maybe we could start with that and then I obviously have lots of issues I want to ask you about.

 

[00:02:34]

Dan Brouillette: Sure. Thank you, Jason. Thank for inviting me today. Just really honored to be here with you.

 

[00:02:38]

Jason Bordoff: Thank you.

 

[00:02:39]

Dan Brouillette: You're doing great work here. Thank you on behalf of all of us, we thank you. Very proud of our alumni at DOE. The Department of Energy is a very different sort of government agency. It’s a hybrid agency. We do focus on energy policy of course. We have offices of nuclear energy and fossil energy and energy efficiency. So, we do focus on both the production of energy and the use of energy. But importantly at the department, we have a mandate that extends all the way back to our earliest days as the atomic energy commission to maintain and to manage the nation’s nuclear weapons stockpile.

 

The Manhattan Project was born at the predecessor to the Department of Energy – the U.S. Department of Energy and we still maintain that responsibility today. So, as Deputy Secretary, my job sort of goes all over the place. I can talk oil one day and be in a skiff talking about a warhead the next day. It’s a very interesting place to be.

 

[00:03:38]

Jason Bordoff: I guess. What we try to do at the Center on Global Energy Policy is cover the broad range of energy policy issues. One of the policy issues that sometimes doesn’t get talked about maybe as much as it should be in discussions where renewables and clean energy technologies are going on oil and gas, nuclear power. And so, we haven’t talked that much about it today so far. The U.S. Department of Energy has a review of U.S. nuclear policy underway. First, tell us a little bit about what that involves, what the timing is and what questions you're going to be trying to answer.

 

[00:04:10]

Dan Brouillette: We’re very close to releasing that study. It’s still a work in progress. We have an inner agency process within the U.S. Government that we abide by and we have engaged all of our partners to help us to move forward on what we feel is a strong future for the nuclear industry. It’s had it’s tough times and let’s say and I must admit, U.S. civil nuclear generation here has been in a bit of a tough spill.

 

That being said however, there are m any many opportunities for this industry overseas. The Secretary was just in India. He returned last night and he had some really good conversations with the Indian Government. We’re excited about the opportunities that exist there. And as you may have read about, we both just returned from Saudi Arabia, separate trips. He went first, I went second to do some follow up work to talk to the Saudis about potentially engaging with them on civil nuclear agreement that will allow U.S. companies to do some business in Saudi. So, on balance, we are excited. We recognized that there are some challenges here within the U.S. and we look forward to addressing those as well.

 

[00:05:21]

Jason Bordoff: And in order for U.S. companies to work with the Saudis on their pursuit of civilian nuclear, that requires in agreement on the peaceful use of atomic energy, the so-called one, two, three agreement. What can you tell us about whether the U.S. is going to take a strict line and require the commitment from the kingdom not to engage in enrichment or reprocessing or maybe compromise in order to avoid Saudi potentially turning to other countries for that technology?

 

[00:05:48]

Dan Brouillette: Well, it’s an ongoing conversation. So, I won't get too much into the details. There’s been a lot of talk around the agreement that was struck with the UAE. That’s certainly something that we can look to as perhaps a model. But there are other agreements too that might serve as appropriate models. We have just begun the conversations with the Saudis. They’ve indicated their preferences. We are going to, as a U.S. government sink us closely as we can to some of the existing agreements that we have in the non pro area.

 

We think those are very important. Saudis obviously have choices to make. They have a free and capable mind. They will make up their own decision about who – what technology and from who to buy from. But we hope that they will consider doing business with the U.S.

 

[00:06:33]

Jason Bordoff: And when you look at what some other countries like the U.K. are doing, is it sensible for governments to subsidize new nuclear that would be out of the money without that support? Do you think the fact that the economics of nuclear don’t look good in the U.S. now, is that a problem that U.S. policy should step in to try to address?

 

[00:06:53]

Dan Brouillette: You know, where the Congress wants to spend its money is up to the Congress. But I don’t foresee us as a Department of Energy advocating for subsidies if you will in the pure sense of, you know, we need to give people money to build products. We’ll certainly use government programs to assist and we’re doing that with, you know, the facilities down in South Carolina and in Georgia in particular. We are working closely with Southern Company. We have a program that the Department of Energy, it allows for a loan guarantee.

 

They have approached us about that. We are working closely with them. And I can foresee us moving forward on something like that assuming of course, the economics of the deal work. But in terms, if your question is more related to things like direct subsidies as I see some of the states are taking steps to do, what are commonly known as ZECs, I don’t know if the U.S. Government will do that. It’s more of a Congressional prerogative. I don’t see us doing that at the Department of Energy.

 

[00:07:52]

Jason Bordoff: Yeah. I mean that was – part of this is economics and new nuclear part of it is the economics of existing nuclear and we’re seeing some nuclear retire. That was one of the concerns that were raised when the Department of Energy asked FERC to consider a rule making process that would compensate fuel that could be stored on site, that was often framed in the public debate; I think it’s about coal. But it was coal and nuclear.

 

I guess just to start on that, is there a grid reliability problem that we need to solve? There is a lot of response to that request to FERC saying there actually isn't a problem and FERC reached a unanimous decision not to go down that road. Is there a grid reliability problem?

 

[00:08:31]

Dan Brouillette: We think there will be. We think there will be. We’re very concerned about some of the results, if you will, of the so-called markets that FERC has set up. We proposed – just to back up a second, we did propose that the Department of Energy what is known as a notice or proposed rule making, a _____ [00:08:48] in the legal parlance. What it was, was a suggestion or proposal to FERC to look at grid reliability and to more specifically take an approach that would – not subsidize, but begin the process of establishing a price regulatory scheme that compensates nuclear and coal for the provision of what is known as base load generation.

 

So, we approached it from a policy standpoint, not a single company or not a single industry standpoint. We do think that some of the subsidies that we talked about earlier, things certain states will provide certain tax incentives for solar and wind. While they are good to initiate innovation in these types of industries, what typically happens however when you come to an auction market like we see here in the northeast, it allows certain providers of electric generation to price their product at below zero pricing.

 

So, if you enter an auction at below zero pricing, then other generators, i.e., coal, nuclear, others are going to be disadvantaged by that. Now, gas – natural gas is less disadvantaged today obviously because of the lower price of natural gas. But for those two base load generators, it becomes an acute problem. And if that – if FERC does not act very soon, we think there will be a grid reliability problem coming up.

 

[00:10:16]

Jason Bordoff: From the expansion and the share of the energy mix of gas and renewables, even renewables with grid scale storage, that’s in some ways becoming more economic?

 

[00:10:26]

Dan Brouillette: Yeah, I think if we can get to a world in which we have better battery storage and we’re doing a lot of that work at DOE, we’re moving hopefully beyond lithium – if we can get to a world where there’s better storage and I can see wind and solar becoming a bigger and bigger part, perhaps even as larger part as to become part of the base load generation.

 

[00:10:44]

Jason Bordoff: And so obviously FERC is undertaking an analysis now to kind of understand the grid reliability questions, decided not to act immediately on that proposed rule making. This has come up in another way with one bankrupt energy company, First Energy that recently asked the DOE to use a provision in the 1935 law that allows the government to mandate power plants, stay open in emergency circumstances and President Trump said that was under consideration. Do you think First Energy’s economic situation constitutes in emergency circumstance?

 

[00:11:21]

Dan Brouillette: I don’t know much about their bankruptcy filing. I can go back to what I said earlier. We’re going to approach this as a public policy matter, not as an economic emergency matter for one or two companies. We’re going to look at this again from the point of view of the grid, its reliability, importantly its resiliency. So, the decision that we make or the proposals that we make are going to be on that basis. First Energy is in a bankruptcy proceeding. They're going to do whatever they do in a bankruptcy proceeding that may or may not emerge. But that’s not going to drive our decision on this public policy.

 

[00:11:55]

Jason Bordoff: One of the other issues around resilience of the grid, but not only of the grid in the energy system are risks around cyber. The Department of Energy recently created a new office looking at cyber security threats and other issues with infrastructure and resilience. We saw an attack I think last month on a natural gas pipeline network in Texas. How big a risk is cyber attack to the U.S. energy sector and help me understand the role of the private sector and the government and who is responsible for what to address that risk?

 

[00:12:24]

Dan Brouillette: Sure. It can be a big confusing on any given day. The Department of Energy was called a sector specific agency. By statute, it is a charged with addressing cyber security issues within the – not only the electric sector, but the entirety of the energy sector. So, we’re on point for that. Those responsibilities are further spelled out in what is known as the fast act which is a federal law that was passed at four, five, six years ago in that timeframe.

 

We work closely with DHS and keep them upraised of what is happening in the industry. The secretary is a part of what's called the Electric Sector Coordinating Council. So, we meet with the electric company CEOs on a very regular basis. I’d say we talk perhaps as often as once a month, sometimes every other week depending on the issue. It’s a collaborative effort. We serve to advice them on what we see as the threat because typically it’s through the intelligence community of which the Department of Energy is a part.

 

We will see more specifically what is the exact threat. We try and communicate that to the industry and then we work collaboratively because the industry owns the network itself. They own the grid and they own the computer systems and the operating systems and the SCADA systems that manage the grid. So, we can't direct them exactly what to do in any given case, but we do work very closely together to address whatever our issue maybe before us.

 

We have created a brand new office at the Department of Energy to address not only cyber security, but emergencies – our emergency response operations within DOE are all going to be consolidated under this new assistant secretary. When I first got to the department, I noticed that there was very – where there was just a multitude of different organizations within our department that did “cyber security”. A lot of this is a consolidation of those offices under one management team.

 

That office is being stood up as we speak. The president put it into his budget. The Congress acknowledged that and provided funds for it. So, we’re in the process of standing that up today.

 

[00:14:38]

Jason Bordoff: And just to characterize how bit – do we under appreciate how big a risk cyber is to the energy system?

 

[00:14:44]

Dan Brouillette: In some respects, I don’t know that we underestimate it. It’s such a changing target. It’s every single day we see a new state actor or every single minute of every single day we see a new threat that comes. I don’t know that we’re underestimating. It’s just it’s a constant vigilance that we have to provide every single day.

 

[00:15:07]

Jason Bordoff: I just want to step back and sort of ask a little bit broader from – the overarching policy objective when it comes to energy from this administration, people have talked about energy dominance, Secretary Perry talked about new energy realism. Help us understand what those terms mean. What's the goal of energy policy in this administration?

 

[00:15:29]

Dan Brouillette: It’s the increased production. It is the increased production; it is the increased innovation within the energy space. We’re building candidly – we’re building on a lot of the good work that you started under the Obama administration. So, I go back to things like Exascale Computing, grid modernization, those were all programs that began under your tenure at the Department of Energy. We’re continuing some of that.

 

We are taking perhaps a little different approach in other areas. We want to – oops, is it on, is it off? We want to increase innovation within the energy space and we’re doing that in a number of different ways. It’s just we’re talking to some of the laboratories. That’s the other important part of the Department of Energy that perhaps many don’t realize. We have 17 national laboratories at the department.

 

Many are run by universities, Cal – Berkeley out in California, Stanford University runs what we call Slack, Argon is up in Chicago near the University of Chicago, sort of a great partnership with the universities across the country. What we want to do is use those laboratories to advance energy production here in the United States and from an energy dominance standpoint; we do want to begin to export that product around the world.

 

And again, building on the great work of your administration, the lifting of that export ban for crude oil was key. I think it’s a seminal moment in U.S history and we’re seeing that today.

 

[00:17:02]

Jason Bordoff: I want to ask you about both of those. So, on the innovation point, I mean you visited and spoken a lot about what jewels the national labs are. Secretary Perry has done the same. I think there’s some perception that – maybe that’s inconsistent with proposing steep cuts to the R&D budget. So, can you comment on that?

 

[00:17:22]

Dan Brouillette: Yeah, sure. I mean I think we’re talking about this earlier with Dr. Berol. I don’t know if he’s still here or not. There he is, right there. Dr. Berol. We were talking about this earlier. I think it’s easy to look at the absolute numbers and say, well, you’ve reduced this $1 to $0.50, therefore you're anti this. And that’s not what we’re doing at the Department of Energy. We’re moving away from applied programs, it’s a philosophical difference. We’re moving away from applied research more into the basic research.

 

So, for instance, if you look at things like the solar photovoltaic technologies, I think years ago and I don’t know when it began, but many years ago, I think the government rightfully incentivized those technological developments. They're now at a point however that solar panels are, with all due respect in some cases horse and buggy or horse and whip technologies, it’s ancient. Everybody is using photovoltaic technologies in the solar industry.

 

We would like to see some initial or perhaps some additional basic research done so that we can get to the next generation of solar. And those programs are not solely within things like our energy efficiency program in DOE which is where you saw the budget cut. We have bumped up other areas within the offices of science which are the more basic research functions within the department. So, it’s a shifting more than it is an axe across the –

 

[00:18:51]

Jason Bordoff: The overall science budget I think was cut in FY18.

 

[00:18:56]

Dan Brouillette: Well, the president –

 

[00:18:58]

Jason Bordoff: And RPE was almost --

 

[00:19:00]

Dan Brouillette: Yeah, the president’s budget, yeah. But the on the Congressional budget, no --

 

[00:19:02]

Jason Bordoff: Yeah, that’s right.

 

[00:19:03]

Dan Brouillette: Yeah, went up.

 

[00:19:04]

Jason Bordoff: Yeah, yeah. No, right. So, I think that sometimes -- I wanted to understand kind of what signals people should take. And there's always a negotiation, what comes out of the White House; understandably people expect will lead to negotiation; that was true with the prior administration too. But, I just wanted to see if that’s --

 

[00:19:18]

Dan Brouillette: No, that’s it. I mean I don’t think we have any fundamental heartburn about the direction that we’re taking and the Congress appropriated the funds. They set the budget, we understand the process. It was the President’s opening mark if you will in negotiation that occurs with the Congress. At the end of the day, we are the executive branch. We’re charged with executing the laws of the Congress rights. We will abide by their law.

 

[00:19:39]

Jason Bordoff: And to my understanding, your kind of support for basic research, your kind of indication, that’s what the role of government should be as strong support for RPE, notwithstanding what was that initial budget mark.

 

[00:19:50]

Dan Brouillette: Right. No, I think if you’ve heard the secretary talk about this, he understands the importance of _____ [00:19:55]. Again, you know, we may have different prerogatives. We have maybe a different point of view on some of the investments that were made in RPE, but I think by and large, the program has a track record of success.

 

[00:20:11]

Jason Bordoff: You mentioned innovation, then you also mentioned production as a part of the policy goal and I think the easing of some regulations in order to help spur production has been most visible when it comes to hydrocarbons. What role does clean energy play in energy dominance?

 

[00:20:28]

Dan Brouillette: I think – well, we just mentioned some of it. With regard to battery storage, we think that’s obviously a breakthrough technology. We need to incentivize in a number of different ways. We’re working on right now, in two of our labs that I’m aware of, lithium ion batteries are sort of the gold standard today. It’s the best that we have. It’s a really good technology. However, it’s not getting us where we need to be on battery storage, to have these global technologies really take a larger place in the market.

 

We’re working with two of the labs to produce what we hope will be a breakthrough technology in the use of magnesium ion. Magnesium has a much denser quality about it; the storage capacities are much higher. It’s also more abundant in the world. It’s easier to mine. You can find it in places that you can't find lithium. So, we see that as a real step forward. That being said, if you look the charts, solar and wind are bigger and bigger part of electric generation in the future if we simply do nothing. They’re going to continue to increase their positioning within the market. We think that’s a great thing. We think it’s a great thing.

 

[00:21:45]

Jason Bordoff: I think if you would probably ask the prior administration about the goal of energy policy, you would have heard about innovation, you would have heard about production and you would have heard about climate change. I just want to ask from your standpoint, from this administration’s standpoint, is climate change a serious threat that government policy needs to solve?

 

[00:22:03]

Dan Brouillette: It’s something we need to work on. Is it a serious threat? I think we can debate that. I don’t know. You just brought Dave Banks here. So, I think -- if I understand Dave’s position and Dave was a policy advisor to the president within the White House staff, we have some big challenges elsewhere. And right now, if we had to prioritize this administrations rank order of things, climate probably wouldn’t be “threat” at the top of the list. It is something we need to address however. I think again going back to the work of the DOE, going back to the laboratories, there's a lot of good work that's being done we need to continue doing it.

 

[00:22:46]

Jason Bordoff: And, what does it look like to address it? I think people see some of the regulations being eased or rolled back. Aside from innovation –

 

[00:22:55]

Dan Brouillette: Like what?

 

[00:22:55]

Jason Bordoff: Like what? Well, I mean –

 

[00:22:55]

Dan Brouillette: DOE regulations or --?

 

[00:22:56]

Jason Bordoff: No, not regulations. I mean I think there's a long list of the executive order of regulation related to the clean power plant or fuel economy or other things that the president has said. He would like to reverse. So, I’m just – in addition to innovation, R&D, new technology, what else does this administration think government should be doing when it comes to the issue of climate change?

 

[00:23:20]

Dan Brouillette: I think what we can do – we’re going to use coal for a long time. We’re going to use fossil fuels for a long time. So, I think developing technologies that allow us to use those fossil fuels, use those energy resources more cleanly, more efficiently than it has been done in the past is important for us to do. If you connect that to a climate change goal, that’s fine. We think it’s the right thing to do. So, we’re going to continue to do those types of work.

 

But it’s the approach that we take; it’s the innovation around those technologies that we think need to advance even faster, rather than a regulatory approach that says you must do this. And I think it’s just a different of philosophy that we will approach these issues with than perhaps other administrations have done.

 

[00:24:03]

Jason Bordoff: You mentioned the importance of U.S. energy exports and we’ve seen this stunning turnaround in the outlook for U.S. natural gas exports 10 years ago was projected to increase as far as the eye could see and we’ve just become a net gas exporter and oil exports, even though we’re net importers, still very high and projected to rise. Just help us understand why that’s important, why is that important for the -- why does that enhance U.S. strength economically or geopolitically when we are exporting our energy?

 

[00:24:30]

Dan Brouillette: Because we believe strongly that energy security is national security. So, if we can increase production here and importantly if we can export that -- thank you – if we can export on the spring time, I get these allergies going on, I’m about to cough. If we can export those products, we think it increases the security of our allies as well and our partners around the world. We’ve just had long conversations throughout Europe on things like Nord Stream II. We believe the arguments that we may there. Diversity of energy supply, diversity of energy suppliers.

 

If you can produce your own energy and use it cleanly and efficiently, then that increases your own security. And, that’s the mantra that we have shared with others. We have gotten very positive feedbacks around that. There’s also an entire another component around this and that’s jobs. So, we’re producing here – we’re creating jobs here and that’s very important for the U.S. economy. It makes us strong economically, it makes us stronger in a national sense and that’s why we’re pursuing these types of policies.

 

[00:25:34]

Jason Bordoff: And this administration has also – talk about the work you’re doing to enhance energy security in other ways, particularly in Europe and Europe’s concerns about dependence on certain countries, notably Russia for natural gas. This administration, like the prior administration I should say has been strongly opposed to the Nord Stream II pipeline from Russia. Is that – some people have said, well, that’s because the U.S. wants that market to some more of its own gas. So, help us understand the rationale for that position.

 

[00:26:05]

Dan Brouillette: As part of – I mean we’re in the export business. We have to have markets to sell to. So, of course, we’d like to see U.S. LNG be sold in Europe and would like to see Europeans purchase our gas versus other nation state producers of gas. Our issue with Nord Stream II pipeline and for those of you who are familiar with it, it’s a second pipeline that would be built from Russia into Germany to serve not only Germany, but other European countries, but primarily Germany at this point.

 

We feel that the economics of that really don’t make a lot of sense. There's one pipeline that already exists. There's another transit pipeline that comes through Ukraine. There are other options available to not only Germany, but other European nations. Again, getting back to that point, if you are too dependent upon one supplier or one type of energy source, you’ve made yourself vulnerable. So, that’s our going imposition, that’s what we’re going to continue to argue for. Importantly though for us, with regards to the export of energy, we think that we’re not only exporting oil and gas which is important obviously for economic reasons. Getting back to this very fundamental point, we’re exporting freedom and that matters throughout the world.

 

[00:27:17]

Jason Bordoff: Explain what that means. I've heard Secretary Perry say that before. What does that mean?

 

[00:27:21]

Dan Brouillette: Yeah. Well, again getting back to it, it’s just -- when you are secure, you have options. If you are dependent, you probably do not. So, as we see aggression throughout the world, be it cyber aggression, be it kinetic aggression as we saw in Syria last week, those types of threats are going to continue to exist and they may increase. If you can be – if you have options, that in our view is going to be your strongest security position.

 

[00:27:55]

Jason Bordoff: More options, meaning more diversity of gas supply in the market?

 

[00:27:56]

Dan Brouillette: More diversity of gas supply. And you know, the secretary just you got back last night from India. We had a great conversation with them. They just received a new shipment of LNG for the southern part of U.S. around Louisiana and Texas. We’d like to see more of that activity occur. China and Japan --

 

[00:28:13]

Jason Bordoff: Is there anything the government, DOE or the administration, more broadly can do? When you say you’d like to see more of that occur, these are – you get a permit and several projects are projected to come online because already they have their permits and then there are economic decisions about whether it make sense to be able to sign those contracts, is there anything this administration is doing or could be doing if it would like to increase volumes of exports?

 

[00:28:33]

Dan Brouillette: No, we’re just going to incentivize more facility development. We talked briefly about small scale LNG. We’ve taken a couple of small steps. We’ve initiated a couple of rule makings there to produce what is known as a public interest determination on the front end of a small scale LNG. For those of you who are not familiar with the process, you have to come to DOE. We would give you a public interest determination, basically an economic analysis. And that began the process of you then going over to the FERC to get the actual permits you needed to build the facility.

 

We decided that because these were small scale, because we’re not economists that the Department of Energy for the most part. We have some very small people. But that’s not in our view our primary function. We just waive that requirement – that all of these are going to be in the public interest. Go get your permit at the FERC. We’re going to be more of that type of activity. Anything that we can do to reduce hurdles to the construction of export facilities here in the U.S. we’re going to pursue.

 

[00:29:31]

Jason Bordoff: So, I think people who are trying to pursue those facilities, build those facilities or build production or build pipelines or want to see increased demand growth elsewhere in the world are worried about a possible trade war. So, can you talk a little bit about how concerned they should be and what the potential impacts of this administration’s posture toward trade, what might that mean for the energy sector?

 

[00:29:57]

Dan Brouillette: I think folks are at the moment focused on the short term, maybe even appropriately so, I’m not really sure. If you take the longer view though, these are not really wars in the sense or a negotiation between countries and between nations. And over time, they tend to not last very long and they tend to work themselves out. If you look at the long term, I think you're going to see great opportunity for U.S. business in China. Right now, it exists to some degree, but it comes at very steep price.

 

You must share your innovation; you must share your technology with the Chinese. It is not an options if you want to do business there. Certain products are simply not allowed. I used to be in the – I was at Ford Motor Company, prepared to join in USAA and I can tell you they would have loved to have sold more Fords in China; not allowed. I think the President’s approach – it’s obviously not my lane. We don’t do tariffs; we don’t do sanctions at the Department of Energy, that’s for the treasury department, the White House to determine what they want to do. I see it as an opening bid from the President to address some of these imbalances. I think over the long term, both the Chinese and the American economy will grow as a result.

 

[00:31:11]

Jason Bordoff: This is in DOE’s lanes, so you don’t have to answer it. But I’m curious because you mentioned Ford where you previous worked and you have the CEO of Ford come out with comments saying, we like some regulatory certainty, but fuel economy standards and we don’t mind higher fuel economy standards. This administration has said it will reconsider the 2022 to 2025 increase. What are your kind of views on fuel economy standards?

 

[00:31:35]

Dan Brouillette: On Café? I think – I have to take my Ford hat off. It’s been long gone now. I guess I don’t have to worry about taking it off too much. Look, I think certain types of incentives within the government are good. Over the years, and coming out of the insurance business, we worked closely with the auto manufacturers and I’ve done the Department of Transportation to develop standards around things like seat belts and Americans have benefited from that.

 

I’m not quite sure Café fits that in that category. But I think you have to marvel at that amount of technology that’s comes as a result of the government collaboration with auto industry over the period of years. I happened to be Mustang guy. I’m a car guy. I’ve owned old Mustangs, that got 12 miles to the gallon and went about a third as fast as a new one. So, the fact that I can buy a 650 horsepower Mustang that gets 20 plus miles to the gallon, as a consumer, that’s a pretty good thing.

 

And to the extent that government has had a role in that, then I applaud them. To the extent that has been heavy handed and I don’t know the latest round of conversations between the car companies and the government. To the extent it’s been heavy handed, I think we have to evaluate them. I would expect that that’s what EPA is going to do. They're going to take a close look at them. If changes need to be made, they’ll adjust. But I don’t really have any strong opinion one way or the other.

 

[00:32:58]

Jason Bordoff: One of the other things that DOE is responsible for in R&D in the fossil energy office is carbon capture and storage. What are your thoughts on the role -- on the outlook of CCS and on the role it’s likely to play -- could play, should play in the energy mix?

 

[00:33:16]

Dan Brouillette: It’s been an important component in the oil production area. I think we have to address the economies of carbon capture and utilization, CCUS if you will. If you talk to the coal industry today, they’ll tell you it’s quite expensive and it further harms their positioning in the market, taking this technology to their facilities. But I think if you talk to others, if you talk to the guys who produce shale or gas or other types of fossil fuels, they see it as a very important component.

 

I think when I think about carbon capture, my guys over here are going to yell at me for saying this. I just wonder if we can get to a world where carbon is just viewed differently. Rather than viewing it is a pollutant, what if we reached a world where we viewed it as a commodity that had value? Would we treat – would that change the entire regulatory structure around the oil industry, around all of the production industry? Maybe carbon capture gets us a little closer to that world. I hope it does and I think we should work toward it.

 

[00:34:27]

Jason Bordoff: And there are a lot of people at Columbia, Lisa Park in the engineering department and others who are working on carbon utilization research, ways to use it as a commercially valuable product, it was interesting to see in the most recent budget, a tax for carbon capture and storage up to $50 per ton. I was wondering what your reaction to that is, government -- financial incentives, subsidies effectively; does that sound like the right value for you to -- for the government to spend a ton to avoid putting a ton of CO2 in the air?

 

[00:34:59]

Dan Brouillette: I don’t know what the pricing is $50. I’m not a big fan of direct subsidy. It’s just my personal, philosophical view. But looking at certain instances, if that’s what it takes to get the market moving in a certain direction, that’s going to be a decision of the American people and I'm fine with that.

 

[00:35:21]

Jason Bordoff: So, we only have a minute or two left and again, we do have a lot of students here who are interested in careers in government services. You’ve worked in the military; you’ve worked in public service, both ends of Pennsylvania Avenue, on the Hill and in the administration as well as in the private sector. I was just wondering if you could talk a little bit of that kind of your advice to folks here who are interested in future careers in Government?

 

[00:35:48]

Dan Brouillette: That’s an interesting question, thanks for that. My only piece of advice is don’t plan. Don’t plan too much. Don’t over think it, if you will. My career began in the army really; it was my first full time job. My wife was an army officer. We moved to Washington D.C. I didn’t have a political bone in my body. I really didn’t understand politics at all and a friend of mine said what are you going to do. I said I have no idea. He said why don’t you then turn on the Hill. I said – but I don’t know anything about politics. And he said that’s okay, just go meet some people and things will work out and they did

 

I know that not everyone is going to pursue that path. You don’t want to be as perhaps loose as I was. But my general advice would be don’t over think it. Get to know people, get your rolodex in order, make a friend, treat people with respect, honor their service wherever it might be and things will work out for you as well.

 

[00:36:45]

Jason Bordoff: Well, thank you and thank you for your service in Government and the military. Thank you for joining us here today and sharing your thoughts at Colombia University. Please join me in thanking Deputy Secretary Dan Brouillette.

 

[00:36:57]

Dan Brouillette: Thank you, guys

 

[00:37:00]

Jason Bordoff: Thanks for tuning into Colombia Energy Exchange. As always, please take a moment to rate our podcast on iTunes or another preferred podcast provider and leave a review. For more information about the podcast or the Center on Global Energy Policy, visit us online at energypolicy.colombia.edu or on social media colombiauenergy. From New York, I'm Jason Bordoff we’ll see you next week.