IHS CERAWeek 2013: A summary of Daniel Poneman's keynote address

The following is a summary of the keynote address Daniel Poneman, US Deputy Secretary of Energy, gave on day four of IHS CERAWeek 2013. You can access more summaries like this through IHS CERAWeek On Demand.

Daniel Poneman, US Deputy Secretary of Energy, gave the Thursday morning Keynote Address on the United States' approach to energy policy. As the imperative to act on climate change grows stronger while population and economic growth continue to drive energy demand, the United States is taking an "all-of-the-above" approach to developing energy resources.

Mr. Poneman emphasized the important and growing role of fossil fuel production. US oil production has rapidly increased as the result of technological innovation; the United States is now a net exporter of oil products and is expected to cut its oil imports in half by 2020. Likewise, Mr. Poneman noted, the shale gas revolution is the most innovative development of the new millennium. However, an emphasis on environmental stewardship is necessary to ensure that this opportunity is fully developed. Despite low natural gas prices, the United States continues to rely on coal for power production. Greater investment in research on cleaner and more efficient coal-burning technologies, including carbon capture and storage, is needed in order to meet climate goals.

Mr. Poneman encouraged the development of new nuclear power capacity in the United States and elsewhere. He identified the high cost of capital investment, waste management, and proliferation risk as the three primary challenges. The global response to the Fukushima disaster has varied considerably across governments. During the question and answer session, Mr. Poneman asserted that new nuclear power capacity is viable in regulated markets in the United States, supported by the Department of Energy's Loan Guarantee program, but that deregulated markets are less supportive of new nuclear capacity.

Renewable energy and efficiency also remain cornerstones of US energy policy going forward. The $55 billion in investment in clean energy technology from the American Recovery and Reinvestment Act of 2009 has stimulated the growth of wind and solar; now new policy and market drivers are needed to encourage development since no new legislation similar to the Recovery Act is expected. One such new initiative is the Department of Energy's (DOE) "Energy Efficiency Race to the Top" program for energy-conscious projects. DOE is also exploring policies aimed at decreasing the cost of equity for investments in renewable energy projects.

Daniel Yergin, Vice Chairman of IHS, prompted a discussion of cyber security threats to the energy industry during the question and answer session. Mr. Poneman explained how the nature of the attacks has evolved from data extraction to operational threats. Given that energy assets are owned by the private sector, DOE is collaborating with industry to help assess and fill gaps in protection.

Mr. Poneman emphasized the importance of research and development as well as collaboration between the government and industry. DOE supports science and engineering education through student fellowships in order to encourage future generations of scientists and engineers to solve energy challenges. He is optimistic that the United States will be able to combat the climate crisis effectively, asserting that "failure is not an option."

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.