Secretary Gary Locke's remarks at the CBCI White House Briefing on Commerce & Energy
Eisenhower Executive Office Building
July 22, 2010
Well thank you very much and it’s really a pleasure to be here. Thank you Art for all your great work and leadership with the Institute and all of our visitors here thank you for traveling great distances or just taking time out of your very, very busy schedules to be part of the this event. I want to thank the Congressional Black Caucus Institute for hosting us. I am here to talk about energy; I think you’ve had quite a few speakers framing up the issue throughout the day. I see that Becky Blank of our Economic and Statistics Administration is here and I think she kind of gave you an overview to what this means in terms of national economy.
I would really like to focus a little bit about energy, a policy issue that impacts every facet of American life from our economy to our security of our economy. But I want to focus on one particular area, jobs. And the potential for clean energy to create a lot more jobs. This is obviously a central, if not, a key issue for the Congressional Black Caucus. Because while all Americans have been impacted these last several years of financial turmoil, African American communities and people of color have been hit harder than most. With unemployment running sometimes fifty percent above the national average in some of our communities. But those of you who’ve gathered here today know that a lack of jobs and a lack of opportunity in African American communities didn’t just begin with the 2008 financial crisis. It’s been a long-standing problem with a variety of causes. One of them is the fact that good manufacturing blue-collar jobs that were once the ticket for middle class for so many African American families has been drying up, actually for several decades. You see the evidence everywhere you look, in the abandoned auto factories of Michigan and Ohio, to the shutter steel mills in Pennsylvania. Rick Wade, Deputy Chief of Staff, here Special Advisor often talks about the collapse of the textile industry in his hometown of Lancaster, South Carolina. These industries left, and took a lot of jobs with them. And many African American communities have been searching for something to fill the void since then. And I believe that as President Obama and many Congressional Black Caucus members do, that a thriving new clean energy industry can be a big part of the solution.
That’s why last year’s Recovery Act included some 90 billion dollars worth of clean energy investments. A report that was just issued by the President’s Council of Economic Advisors, estimates that these investments in areas like clean energy production, energy efficiency, grid modernization, and advanced vehicle manufacture will create 800,000 jobs by 2012. So these are what you broadly define as “green jobs”. But unfortunately there are some who are hostiled to climate change and clean energy investments and they’ve been taking to deriding and mocking these green jobs as little more than a marketing tool contrived by environmentalists. They’ll tell you that clean energy may be nice, that it might make us feel good, might even be worth investing in, but as they say, to imagine that it can produce a substantial share of the world’s energy that it might possibly be a significant driver of economic growth and job creation, well the critics say, that’s just not realistic. You’re just not being serious. But as President Obama said last year, there is a lot of misinformation that there is somehow a contradiction between clean energy and economic growth, because the choices between economic growth and clean energy is really a false choice. Consider the fact that a single commercial wind turbine uses an amount of steel equivalent to 225 mid-sized automobiles. It also contains 8,000 parts from iron, copper wire and gearboxes to electronic controls. From the people who form the steel and build the gearboxes to those who assemble the turbines and market them to customers, there’s a lot of jobs at every step of the economic value chain associated with clean energy. Since becoming Commerce Secretary, I have actually seen workers turning out cutting edge solar panels in old lime industrial towns of Michigan, in Atlanta, GA and producing advanced electric car batteries in Kansas City. A lot of this is actually exported to a lot of countries around the world; manufactured here in America and exported and sold around the world. That’s just the tip of the iceberg. Think for a moment about President Obama’s goal of reducing US carbon emissions by eighty percent by the year 2050. A goal that was also in the House Energy Bill passed last year, with a whole lot of help from the Congressional Black Caucus. You’re not going to meet those targets with a wind turbine or a solar farm here and there. What’s required is nothing less than a new industrial revolution.
For well over a hundred years, America has enjoyed two luxuries that helped propel the greatest burst of sustained economic growth in human history. Number one, fossil fuels were cheap and abundant. Number two we either didn’t know about or didn’t care about the greenhouse gas emissions or the environmental damage caused by using fossil fuels. Well these days are over and fuel is no longer cheap. And the BP oil spill in the Gulf has given us all the evidence that we need that there’s a heavy price to pay for our fossil fuel addiction. In the next few decades, America needs to rebuild and reinvent virtually every industrial activity from power generation and transportation to manufacturing and construction to run more efficiently and with cleaner energy. If we don’t we’ll keep sending billions of dollars a year to oil producing countries that are not friendly to the United States. We will suffer from the rising seas, increasing floods and pervading droughts caused by climate change. And we’ll fall farther behind other countries in the race to develop the clean energy efficiency technologies that might represent the most promising economic potential and opportunities of the 21st century.
When we talk about the potential of job creation from clean energy investments, we’re not just talking about someone who would work for a solar or a wind company. We’re talking about engineers developing, designing energy efficient lighting, meters and factory processes. We’re talking about mechanics who will rebuild rickety electric grids with sensors and controls that monitor and distribute clean energy more efficiently and effectively. We’re talking about construction workers producing and installing green building material. We’re talking about plumbers and technicians who will install smarter irrigation systems to feed fields producing next generation bio-fuels. The potential for new businesses and job creation is astounding. Yet much of this potential will continue to be unrealized and untapped until America develops a coherent energy policy. For all the historic and unprecedented steps President Obama and the Congressional Black Caucus have already taken to invest in clean energy, the United States still does not have the right incentives in place to get the full force of private sector investment flowing into clean energy. That’s what we’re going to need, to develop breakthrough energy technologies. That’s what we are going to need to spur the new businesses that can create the jobs and the opportunities in communities all across America. A recent report from the Federal Reserve found that the top 500 financial companies in the United States are sitting on 1.8 trillion dollars of cash reserves. But it's going to be tough to get this money off the sidelines and into the energy market place until businesses and investors get long term certainty in the energy market. And that simply does not exist right now. Why would any company or investors put money in research and development, and people into developing technology, let’s say technology A, if ultimately the United States Congress says we actually support technology B, or our energy policy supports this whole different sector. In the meantime everyone is just sitting on the sidelines waiting. And clean energy subsidies come and go depending who controls the Congress. The viability of energy investments rise and fall with the price of oil which means that with a $200 billion investment in wind turbine factories that is profitable, let’s say when oil is $100 a barrel, might become a money loser if OPEC decides to increase the money supply and drive the price down to $70 a barrel.
Last year’s comprehensive Energy and Climate Bill that passed in the House would end this merry go-round once and for all and create the certainty that investors need. That piece of legislation featured a price on carbon that would essentially put a floor under the price of oil and send a sure fire market signal to every entrepreneur and business in America that it’s safe and profitable to make long term investments in clean energy and energy efficiency. That’s why President Obama, along with entrepreneurs and investors and major US corporations like US Steel and Nike, to John Deer and IBM are pushing for the Senate to pass comprehensive energy legislation that also features some form of carbon pricing. Still many of the loudest voices in our energy debate continue to make overblown claims about energy reform that have a depressingly ring to them. Because over the last few years, short sided politicians and their industry allies have repeatedly predicted that sensible and environmental and energy regulations would spell disaster. Be it the Clean Air and Water Act or even the fight that we had a couple decades ago over a market based system to curb acid rain. In virtually every case those measures cost far less than predicted, and ultimately those measures spurred new innovations and new businesses, providing tremendous benefits to society. So the lesson here is simple, when you get the incentives right, the private sector can respond and will respond with the solutions that are both effective and affordable.
If the United States doesn’t act, other countries will. They’re happy to grab a share of the fastest growing segment of the $9 trillion global energy market. I just came back from China about a month and a half ago, we brought some 30 companies, mostly medium and small companies to China on a trade mission promoting US energy, alternative energy and energy efficiency; we actually made tremendous sales, tens of millions of dollars on behalf of US companies. But let me tell you that seeing China and seeing what they’re doing in energy is a wake up call for all of us in the United States. The Chinese are spending roughly $9 billion a month to develop a clean energy sector; and they’re doing this not just to meet the electricity needs of China with over 50% of the people of China living in rural areas, a lot of them without refrigerators, so there’s a huge demand for electricity as those people in the rural areas start to get refrigerators, electric appliances that we all take for granted. They’re developing this clean energy sector certainly not to reduce greenhouse gas emissions, as important as that is for the entire world, China is spending $9 billion a month developing, supporting, subsidizing, encouraging and incubating a clean energy sector because they want to be the supplier to the world of clean energy, technology and alternative energy. And they want the millions of jobs that come with that. If we don’t get our act together we’re going to be sitting here a few years from now wondering how is it that Shanghai, China or Berlin, Germany become the next Silicon Valley of clean energy with all the millions of jobs and we don’t have them. It doesn’t have to be this way; it just doesn’t have to be this way. These clean energy investments and these jobs can and should be flowing into communities all across America and benefitted every element of our society including African American communities. These green jobs whether it’s weatherizing old buildings or installing new solar panels, or designing and building electric cars are precisely the types of high wage, high skilled jobs that are the ticket to the middle class for the new generation of Americans, especially African American families. The Congressional Black Caucus and the Institute have already done so much to make this new clean energy economy a reality. But we’ve got to keep pushing; we’ve got to keep pushing because there’s a lot more work that needs to be done. It’s a matter of our economic well being as well as our national security as well as the health of our environment and planet. Thank you very much.
Question: We were actually one of the member companies on your trade mission to China and we were very happy to do that. I was wondering if you would, for the benefit of the audience, expand a little bit some of the experiences there, specifically the technologies that were being evaluated there.
Locke: We had a variety of different sized companies from major energy producers to some of the biggest corporations in America, to a lot of medium sized companies and often times the value of our trade missions is that we can actually attract potential buyers and customers for US companies, especially medium sized companies by hosting these match making services. We’ll bring a US company, we’ll sit them in the room and under our sponsorship maybe introduce them to 20-30 potential customers and then they’re able to sell themselves and perhaps find a match or a deal there. On behalf of the major, major corporations that have big projects that are planned and that they’re vying for in China that is simply the weight of the United States government, almost the stamp of approval and good house keeping seal of approval or endorsement that can go a long way to helping those corporations and companies to get that government contract, whether its from the national government, the federal government of China to the province or state level or to the local level. And we were very helpful in helping for instance showcase American companies, introducing them to the top level government officials of China and also actually helping the American companies sell their products and services. For instance we had a solar company in Michigan that sells solar panels into China and in China they actually put together the panels themselves with actually the (cannot make out phrase) are made in the United States and 90% of the content of the solar panel put together in China is actually made in the United States with components. We have a signing ceremony for them and at the signing ceremony, because of our presence and our endorsement of this company, they actually ended up, instead of selling five or six million dollars worth of supplies or components, they ended up with $15 million. On behalf of the small, medium size company, that’s significant. It was very, very successful. We’re still tracking the result s of that trade mission also because often times you make the introduction and it may take a few months before negotiations are complete. That’s the value of our trade missions. We also went to Indonesia and Indonesia has enormous potential for alternative energy and especially energy efficiency as they try to recapture a lot of the geothermal energy within Indonesia, as they also try to reduce burning their forests and burning and drying up their (pea pods), which then reduces a whole host of greenhouse gas emissions into the atmosphere. Incredible opportunity for US companies with the no-how, the technology, the expertise all around the world and so many of these countries would prefer to partner up with US companies than companies in let’s say China or elsewhere around the world. American products, American brands, American know-how are in great demand and highly desirable and highly valued all around the world. That’s what we in the Department of Commerce can do, not just Commerce Department, State Department, Energy Department, Agriculture, every cabinet agency has been charged by President Obama to constantly advocate on behalf on US companies all around the world. The President has a goal of doubling US exports over the next 5 years, which will support some 2 million new jobs in the process. So we’re here to help the US companies, large and small.
Question: Regarding the President’s export initiative, I know there’s an energy specific component to that and I spoke with the gentleman who is writing the policy part of it last week. I was curious if there will be an asserted effort to outreach to minority owned businesses as part of that (cannot make out word) great interest in the community for that? I would like you to extend on that.
Locke: Here’s the interesting statistic one percent of US companies export; that’s substantially lower than let’s say other European countries and other advanced economies. One percent of US companies export, but of those US companies that do export, fifty-eight percent export to only one country. Fifty-eight percent of all US companies who are involved in exports, export to only one country; and often times it’s to Canada or to Mexico. And if we can just help those companies, those fifty-eight percent export to one more country or two more countries then we can substantially ramp up our exports in the United States. The more companies export, the more they produce, the more they produce, the more people they hire, and the more jobs they provide. And exporting and manufacturing which is most of exporting, typically pays higher wages than the general economy. So, that’s why the President is really focused on this national exporting initiative. Often times it’s really the small/medium size companies that are not doing enough as they could in exporting. That also means that its really minority owned businesses and so that’s why we’re really focusing on helping those small/medium size companies including minority owned businesses understand the opportunities. We’re working with the Small Business Administration on financing, we’re working with the Export/Import Bank so when you do export and you have a buyer, you want to be paid up front and so we provide that financing through the Export/Import Bank and they are dramatically raising the amount or making available the amount of money that will benefit medium size companies that are able to land a sale or land a contract. They’re expanding their financing available to benefit medium and small size exporters by fifty percent. So we are focusing especially on medium size and small business and minority businesses, working with our Minority Business Develop Agency as well. We’re also partnering up with companies like FedEx and UPS and even the US Postal Service. These organizations have incredible database on who their shippers are, who they ship for. We can find out where they ship by product, country of destination, volume, frequency and so we’re really working with the private sector so that we don’t have to reinvent the wheel; take those existing customers that now export and say hey, “ You’re exporting to Mexico, you’re exporting to Canada, you’re exporting to, let’s say, Korea, well we want to help you now export to Vietnam, we want to help you find a market in Hungary, we want to help you find a market and a buyer or a customer in Brazil”. So we’re teaming up with those and again, companies that already export are ready and can jump into the game and intensify their game right now. And then the SPA is really going to be working with companies that would like to export, who have never exported before and it might take one or two years before they ever comfortable about exporting. The companies that only export to one country right now, the fifty-eight percent, they know about customs, they know about border issues, they know about logistics and transportation, they know a little bit about contracts with a foreign buyer; they are the ones that we can really help right now next month increase their exports to two or three more countries and immediately produce jobs for people in America.
Question: We’ve been thinking through this issue of job creation in the African American community around the energy three or four years ago. What we don’t understand is from what we see the opportunities of job creation and wealth creation in the African American community, the generation of clean energy is not small. But where we see the major opportunity for African American businesses is in energy efficiency, in urban areas especially because if you’re going to save energy, energy needs to be used. So industrial, commercial in urban areas is where we should be able to make our mark. Those sets of technologies and those business opportunities (inaudible phrase)…so to the extent that the Administration can balance out its commitment, its activity and its focus on energy efficiency as well as the traditional, visible examples of wind and solar. I think it would be important to help the people understand the enormous opportunity for energy efficiency and help also small businesses, minority businesses try to find a niche in that as well.
Locke: That’s an excellent point because all the studies will indicate that whatever clean energy technology we may employ, its very expensive still to build a new wind farm, a new solar farm. We can actually achieve much of out energy efficiency goals by retrofits, by energy weatherization programs, by insulation, by creating incentive for people to use electricity at different times during the day. Because if everyone uses their electricity, lets say turning on their electric clothes dryers at the same time, just like if you’re going to take a shower at exactly the same time, you have to build all of these power plants just to provide electricity during the one period of time. But if you’re able to…you’re not going to have a house with 5 bathrooms for 5 kids so that everybody can take a shower at exactly the same time. You stagger the use, you take turns, that way you don’t have to build as many power plants if you have the power plants available throughout the rest of the day. So really we need to focus on policies, and the President has in fact. We have the energy rebates and things like that for insulation and conking and all that, and that can really create an industry of retrofitting, not just residential buildings but major institutional buildings, colleges and universities, hospitals, office buildings. How is it that the energy retrofit modernization of the Empire State Building actually pays for itself in just a few years, creating thousands and thousands of jobs. When there is a huge potential all across America for this and that’s where we can revitalize a lot of our construction sector, which is really in the dumps right now because of the housing slow down. There is enormous opportunity to sell these weatherization products and support small hardware stores and things like that along the way. We also need incentives, quite frankly, for our utilities to pay for this because the more utilities can get people to conserve electricity, then they don’t have to….right now the whole economic model for utilities is that you get more money only if you build a bigger power plant. Well we can achieve that same amount of electrical consumption by energy efficiency and conservation and avoid these increases. Again we need to provide those incentives to the utilities to provide capital and programs that actually go in and retrofit homes and buildings in the commercial sector as well.
Question: Universities are incubators in innovation and technology in that green work force that you talked about. At the same time a lot of universities are based on state funding and if state funding goes down, tuition goes up and access goes down. How do we get in to think about, if the answer is innovation in the green work force (inaudible) and the green collar workforce, how do we get that attention, where universities right now can provide a lot of what you talked about and yet they really are relying on states to provide the funding and they do create a lot of jobs even regionally around them
Locke: Well, first having been a former governor and knowing how tight budgets are, let me just day you can never…we should very, very careful in reducing any funding for our colleges and universities. The business agenda always has to include the educational agenda. And we have got to make sure that we have good funding for our colleges and universities because our colleges and universities are really economic engines, incredible economic engines. Look at all the jobs of all the companies that are situated around our great, especially research institutions. When you start starving our colleges and universities, you are actually cutting back on economic development and job creation. Second of all we need to figure out how we can increase the commercialization of the great R&D that is occurring on campuses. We actually have an Office of Innovation and Entrepreneurship within the Department of Commerce that has been hosting forums throughout the United States with our college faculty and investors and entrepreneurs on how we can speed up that process of commercialization from the research labs into the market place. That also means we have to have more funding for R&D, and the President’s proposed 2011 budget, while keeping funding flat for discretionary domestic programs, nonetheless has an increase of about 6% for R&D to our colleges and universities and laboratories. So he’s very much committed to R&D and knowing that we have starved R&D over the last several decades in the United States. The final thing is that we have to speed up the process by which those great inventions receive a patent. We at the patent office need, quite frankly, need almost three years before we say no on a patent application. That is absolutely unacceptable. If you don’t have a patent and you have a great idea for invention, you go to the bank, you go to investors and say, “Hey, I got this great thing, I need some money, it’s going to be a great benefit to society, and it’ll create a lot of jobs”, you’re not going to get that money because you don’t have clear title to that invention or title. It’s like going to the bank and saying, “hey give me a loan to remodel my house, but by the way I cannot give you a piece of paper that says I truly do own this piece of property, but still give me a loan to remodel my house even though I cant give you clear title”. That’s the problem with patent pending, you don’t have clear title to the innovation or invention. We’re on a mission to reduce that time frame of yes or no on a patent application from the current 34 months down to 12 months. And we’re making great progress along the way. That’s another part of that whole equation of really getting all of that great R&D and innovation down to the market and creating jobs.
