Jonathan Elkind：Our clean energy collaborations are a mater of our mutual necessity

Thank you, LIU Ke, for your introduction.  It is an honor to be here.  Perfect time to join with this audience and address U.S.-China leadership in the critical area of clean energy and climate.

Just over one month has passed since the success of the 21st Conference of the Parties (COP-21) under the UN Framework Convention on Climate Change.  Many have stated — and I would strongly agree — that the COP meeting would not have been a success without the early, clear leadership that was provided by Presidents Xi and Obama, and by the sustained focus of our two countries on energy collaborations.

Today I want to share and discuss with you some thoughts about where we go from here — where we go together. The challenges ahead of us are not simple, but there are solutions within reach if we work together.  In fact, the prospects for global success simply require our working together.

President Obama and President Xi have demonstrated by their actions that they see climate change as one of the greatest threats facing humanity. In November of 2014, they stood together on the margins of the APEC Summit here in Beijing and laid out ambitious plans.  China for the first time declared its intention to reach a peak of emissions no later than 2030, and earlier if possible.  President Xi also indicated that non-fossil energy sources would reach 20% of China’s total fuel mix in that same timeframe.

On the U.S. side, President Obama committed us to a reduction of 26-28% of emissions by 2025 from a 2005 base level.  To get there, we will have to double the pace of our emissions reduction to roughly 2.5 – 3% per year.  And this medium-term goal is accompanied by the long-term goal of an 80% reduction in emissions by mid-century.

These are clear, bold undertakings that some in the international community did not expect from our two countries.  And the Presidents’ statements created a very positive backdrop for the remaining year of preparations before COP-21 — a clear sense that success was possible.

This underscores a simple fact: There can be no successful solution to the climate change challenge unless our two countries work together and unless we each achieve progress.  This is not over-blown political rhetoric; it is a reflection of the basic arithmetic of GHG emissions.  We must find solutions that result in positive outcomes for both. This means that our clean energy collaborations are more than a good idea — more than a matter of commercial opportunity for our respective companies.  They are a matter of our mutual necessity.

Now, before getting into a more detailed discussion about some of the key elements of the collaborations we have, and the collaborations we can build on, let me mention two other features of President Obama’s approach to the clean energy and climate problem, because they may help to frame the approach that we are pursuing.

We believe that success in the climate solution requires use of a wide range of technological and market solutions — some of which make sense in certain settings, others of which make sense elsewhere.

President Obama has set out a highly-diversified approach that we refer to as the “all-of-the-above” energy strategy.  It prioritizes investments in clean energy technologies all along the innovation chain from early stage research to accelerated deployment. It very consciously includes attention to zero-emissions technologies like renewable energy and energy efficiency, but also emissions reductions from our fossil fuel plants and transportation sector, and to important suites of technologies that people sometimes neglect — safe and secure use of nuclear power.

Success in our view also requires market-based approaches and especially technology innovation.  This means we think that we must emphasize expanded research and development, and close partnerships among governments, businesses and scientific institutions.

We think that the determination, vision and drive of the private sector will drive the cutting-edge technologies of the future.  And that means that the clean energy economy we seek to build is all about job creation and new opportunities.  But to get to that outcome, governments must define the rules for the economy of the future and develop the collaborations that we need to succeed.

U.S.-China Energy Collaboration and Leadership

The progress we have seen at a global level in addressing climate change builds on years of practical, clean energy cooperation between our two countries, including joint research through the U.S.-China Clean Energy Research Center (CERC).

In CERC, we began by jointly developing solutions to improve energy efficiency in buildings, advanced electric vehicle technology, and accelerate research and development of carbon capture and sequestration. We have now expanded the CERC reach to include Energy-Water technologies and improving the energy efficiency of heavy duty vehicles.

Energy efficiency of medium-duty to heavy-duty trucks can accelerate the development of high energy efficient trucks and their introduction into the markets of both countries, leading to significant reductions in oil consumption and greenhouse gas emissions from the transportation sector.

This long-standing bilateral collaboration is serving as a model for new multilateral collaborations. Let me provide just two examples of this global leadership.

Mission Innovation

The Obama Administration feels strongly that clean energy technology innovation that drives strong cost reduction is ultimately the solution to climate change. Low cost makes policy easier – and this will be a major focus of our efforts beyond Paris.

During the Paris COP, President Obama and leaders from 19 other countries, including China, announced a major global initiative called Mission Innovation.

Under this initiative, these global leaders pledged to double their respective government’s investments in clean energy R&D over the next five years – collectively, from about $10 billion to about $20 billion a year.

Because Mission Innovation nations account for over 80 percent of all the government investment in clean energy R&D throughout the entire world, doubling our budgets is a big deal and represents a significant step for energy innovation worldwide.  Our goal is to develop breakthrough technlogies that change the energy marketplace in the timeframe from 2025 to mid-century. We aim to cut costs, to increase access to clean, affordable energy, to strengthen energy security, to support economic development, and to create millions of new jobs worldwide.

The government efforts through Mission Innovation will be complemented by a separate private sector-led effort, the Breakthrough Energy Coalition, spearheaded by Bill Gates. So far 28 significant private capital investors from 10 countries have joined in, including Jack Ma of Alibaba, Neil Shen of Sequoia Capital China, and Zhang Xin and Pan Shiyi of SOHO China.

These investors have pledged to make significant, incremental investments – patient and risk-tolerant capital – in early-stage clean energy projects. This is a huge complement to the government R&D budget increases.

Clean Energy Ministerial

A second example that I want to focus on is the Clean Energy Ministerial. Created in 2010, the CEM is a forum in which the world’s leading clean energy countries work together to accelerate the global transition to clean energy. In fact, we think that CEM can serve as a premier implementation forum for the clean energy goals that are part of the INDC pledges. China is a strong member of the CEM, and its leadership in this forum has already grown with its offer to host the eighth session of the CEM in 2017.

The CEM is made up of twenty-three countries and the European Union. These nations account for 90 percent of clean energy investment and 75 percent of global GHG emissions. If we get it right with this relatively small, efficient group of countries, we can change the energy trajectory for the entire world.

The CEM has attributes that make it particularly effective. It’s bottom-up, voluntary, and collaborative. It pairs the high-level political engagement of energy ministers with sustained initiatives and high-visibility campaigns to provide a powerful combination for accelerating clean energy policy and technology deployment.

In Mexico at the sixth ministerial meeting, we announced the Global Lighting Challenge, a race to deploy 10 billion LED or other super-efficient lamps.

I should add that although CEM initiatives may be led by the major countries of the world – the CEM countries, participation in initiatives is open to any country, and, in fact, warmly welcomed.

The next meeting of energy ministers, the seventh Clean Energy Ministerial meeting – CEM7 – will be hosted by the United States in June in San Francisco.

I am pleased that China plans to host CEM8 in 2017. The importance of the world’s top two emitters leading this clean energy forum cannot be overstated.

Nuclear Energy

I would like to take a few minutes to focus on nuclear energy. At DOE, we view nuclear power as a key solution and low-carbon energy source in reducing emissions from the global power sector in an effort to address climate change.

China’s nuclear goals are impressive:

China’s current nuclear capacity is 23.2 GWe
It has a nuclear capacity goal of 58 GWe by 2020
It has a nuclear capacity goal of 150 GWe by 2030

I am also excited to be traveling to Xiamen on Wednesday. I have never been there, and I understand that it is not only beautiful but also that Fujian Province is a major nuclear power region in China, with capacity reaching 3.27GW or 12.8 percent of China’s total. Fujian’s nuclear units are expected to exceed 10GW by 2020–accounting for more than one-sixth of China’s 2020 target of 58GW of nuclear capacity.

China is not alone in considering expanding nuclear power.  Indeed, a number of countries are considering either expanding their nuclear power programs or adding nuclear power to their energy mix to meet their climate change goals.

To start, we should be very clear why we need nuclear power.

In the United States, switching from coal to natural gas has already resulted in signficant greenhouse gas emissions reductions. Nonetheless, to meet our emissions reduction targets and avoid the worst effects of climate change, we need to further reduce power sector emissions.

Please remember that President Obama has set out the goal of an 80-percent emissions reduction by 2050. To achieve this, we will need to virtually decarbonize the power sector.  Nuclear plants provide inexpensive carbon-free baseload power.

Worldwide, nuclear power produces more energy than hydro, solar, wind, and geothermal power combined.

In the United States, wind and solar generation capacity is growing rapidly, but still contributes only a fraction of our carbon-free electricity.

The bottom line is that to achieve the pace and scale of worldwide carbon reductions needed to avoid climate change, nuclear must play a prominent role.

So the question is, what does it take for nuclear to be a significant part of the equation?

First and foremost, implementing a global nuclear liability regime, the Convention on Supplementary Compensation for Nuclear Damage (CSC), is a priority for the United States.  It must include not only China but also other countries with and without nuclear programs.

Thus, we are encouraged that one of the outcomes from the U.S.-China Strategic Dialogue this past June was a reiteration of the commitment of the two countries to work together to establish a global nuclear liability regime that includes China, the United States, and other countries that might be affected by a nuclear accident. The entry into force of the CSC upon its ratification by Japan last year represents a significant milestone in linking a patchwork of different but non-mutually exclusive liability regimes.

Secondly, in the near term, we have our existing reactors.  Keeping those reactors running safely and securely is vital.

In the United States, 99 reactors currently provide 19 percent of American electricity overall, and they account for more than 60 percent of non-greenhouse gas emitting electricity.  In addition, 5 new reactors are under construction. One of these, the first new nuclear reactor in the U.S. this century, is projected to begin producing electricity this spring.

Then, in the medium term, we are seeing the arrival in our market of Generation III+ reactors; they are now under construction in the United States and around the world.  These have significant safety advantages over their predecessors and are being closely watched by many to see if they will become a major cost effective part of the climate solution.  A critical factor will be whether they are built on time and on budget.

The capital cost of each reactor is high, and in order to ensure sustained nuclear investment, each vendor and construction company all need to work hard on cost control.  It’s imperative that the global nuclear industry applies learning and shares best practices from project to project.

One way the U.S. Federal government is reducing costs for new nuclear plant designs is through the DOE loan guarantees program. Under this program, DOE helped finance the first two new reactors licensed in the United States in thirty years at Plant Vogtle in Georgia.  Each reactor will produce 1,117 MW of zero-emissions electricity. I want to emphasize that this project is using the same AP-1000 technology that is now being constructed in four sites across China.

Another important element in ensuring that nuclear plants can compete includes structuring energy markets to appropriately value the benefits nuclear reactors provide – like reliability, and provision of carbon-free electricity.  And ensuring that reactor and fuel service markets are open for international competition will help keep costs down and provide energy security benefits.

I think that sustaining nuclear power also requires addressing nuclear waste.

In the United States, we embarked last week on a new consent-based approach that looks first at the interest of localities to be considered as places where nuclear fuel could be stored for the long term.

And over the longer term, today’s research and development will produce new technologies that we can put to use.  That’s why current research and development includes small modular technologies looking beyond the light-water reactor paradigm.

Looking at the longer term, beyond 2030 and the subsequent wave of reactor retirements, we need to innovate.

I have mentioned Mission Innovation, and our investments in the initiative will include nuclear R&D, along with a diverse portfolio of other low- and no-carbon technologies like renewables, energy efficiency, and carbon capture utilization and storage.  As with these other areas of research, the Mission Innovation commitment will enable DOE to expand our efforts on nuclear power and our collaborations with bilateral and multilateral partners.

The U.S. Department of Energy and the global nuclear industry are already investing across a range of ideas for the future of nuclear power.

For example, in 2012, DOE committed $452 million over six years to invest in licensing and technical support of Small Modular Reactors.  If many small reactors can be assembled at one location and shipped to their operating sites, this may help make nuclear power less expensive and more accessible.

Conclusion

In conclusion, I would note the following. We spent so much of the last couple of years focusing on getting to Paris. Now we have the opportunity and the obligation to deliver on the agreement that was reached in Paris. The kind of U.S.-China leadership we saw from our leaders on the way to COP-21 will now be required again–both in terms of what we each do domestically and in terms of how our countries collaborate in order to deliver the low-carbon future that our societies need and expect from us.