Obama administration faces daunting energy challenges

Falling fuel prices haven't altered the fundamental energy challenge the United States faces. "Even as we work to increase our global oil supply in environmentally sustainable ways, we also must decrease our reliance on it," Energy Secretary Samuel Bodman said on Wednesday.

"Growing global demand, volatile prices, and an urgent need to produce and use energy in ways that reduce greenhouse gas emissions and do not harm our shared environment or our security," will confront the Obama administration in January. "These challenges are so often stated and discussed that we tend to lose sight of how really significant they are," Bodman told attendees at an energy forum sponsored by The Atlantic, a sister publication of Government Executive.

By 2030, the world's energy needs are projected to grow by more than 50 percent, with about 80 percent of that growth coming from emerging economies like China and India. China's estimated annual CO² emissions already have surpassed those of the United States, and by 2020 its energy consumption will as well. Between now and then, China is projected to account for more than two-thirds of the increase in coal consumption -- a major culprit in greenhouse gas emissions.

"We cannot afford to separate out the discussions of our energy challenges and our environmental ones," Bodman said.

More than two-thirds of the oil consumed by Americans each day goes into the transportation sector -- making alternative fuels, new vehicle technologies and massive efficiency gains imperative. Addressing those issues during the current economic crisis will be difficult but necessary, Bodman said.

He declined to speculate what, if any, relief Congress might provide to ailing automakers beyond $25 billion appropriated to the Energy Department in September to help them retool operations to build more fuel-efficient and alternative-fuel vehicles. "There is not any enthusiasm within the administration" for bailing out Detroit with funds from the $700 billion Congress and the White House allocated for the Troubled Asset Relief Program last month, he said.

Energy now is reviewing five applications from automakers for the retooling funds, Bodman said. The funds are restricted to advanced technology vehicle programs, he added, but said automakers could use the funds for cash flow problems related to the retooling.

President-elect Barack Obama on Tuesday said he would quickly seek to impose a carbon cap and trade system that would provide strong economic incentives for industries to reduce their carbon footprints. He reiterated plans to reduce emissions to their 1990 levels by 2020, and reduce them by another 80 percent by 2050.

Several energy leaders speaking at the forum agreed that putting a price on carbon emissions would be essential to moving the U.S. economy toward cleaner, renewable fuels.

"Price matters," said New York Times columnist and author Thomas L. Friedman. "Without a price signal there will not be a green revolution. [Advanced energy technologies] are competing against existing, cheaper, dirtier fuels."

"We need to shatter oil's monopoly on transportation," said James Woolsey, former CIA director and now a partner and senior adviser at Vantage Point Venture Partners.