Obama's Energy Secretary Defends His Legacy Against Trump

Ernest Moniz reflects on withdrawal from the Paris Accord and his tenure at the helm of America’s energy R&D program.

Barack Obama arrives at a Cleveland airport in 2013, accompanied by the former Energy Secretary Ernest Moniz and Congresswoman Marcy Kaptur. (Pablo Martinez Monsivais / AP)

Ernest Moniz is the antithesis of Donald Trump. As the head of the Department of Energy throughout much of President Obama’s second term, he was responsible for championing the Paris Climate Accord, negotiating the Iran nuclear deal with former Secretary of State John Kerry, and diligently pursuing a broad-based energy strategy often called the “all of the above” option. He is as comfortable testifying before the Senate as he is leading rigorous research efforts into the future of energy systems. There are few theoretical physicists who seem to enjoy the grind-it-out politics of Congressional appropriations, but Moniz is one of them.

Perhaps it is not a surprise that Moniz’s accomplishments have come under attack by Trump’s administration. The biggest move was the president’s announcement that the United States would pull out of the Paris treaty, much to the dismay of the international community and American business leaders.

When I spoke to him recently, Moniz spelled out his legacy, as he sees it, and the various ways that the current administration is undermining the very programs that, as he put it, “have clear track records of tremendous success.”

For Moniz, that includes the Loan Programs Office, which made capital available for the deployment of energy technology. After—and despite—the well-publicized Solyndra debacle, that program has experienced few losses and generated substantial returns for taxpayers. Also on Trump’s chopping block are ARPA-E, a research program modeled on the famous Defense Advance Research Projects Agency, and a new structure Moniz created at the Department of Energy called the Energy Policy and Systems Analysis Office, which he says was designed to and received bipartisan support.

But you’d be hard-pressed to find anyone who understands the politics, policy, science, and technology of energy as well as Ernie Moniz, so the discussion covers a lot more: the growth of solar, government support for drilling technology, the continued sluggishness of innovation in nuclear power, and the current Department of Energy “review” of base-load power, which has renewable-energy advocates worried.

Perhaps most intriguingly, Moniz calls attention to the fact that the job losses in the coal industry have been primarily driven by technological change in fossil-fuel extraction, namely the development of fracking and other drilling technologies. That allowed for a massive ramp in the production of natural gas, which made it less expensive than coal. And he is founding a new organization that he calls The Roosevelt Project to try to address, on a community-scale, the dislocations that workers will face in a deeply decarbonized world, underpinned by new energy technologies.

A lightly edited and condensed transcript of our conversation follows.

Alexis Madrigal: How did you think about your overall remit at the DOE?

Ernest Moniz: I always looked at the overall portfolio of the department as addressing three different time scales. So, the loan program is addressing the decadal time scale. The idea was to provide relatively low-cost capital to get these technologies out there: go down the cost curve, go up the experience curve.

Then, you have something like ARPA-E, which addresses maybe the mid-term. These are still pre-commercial, taking a lot of risk, but something that could hit a few triples and a couple of home runs, a bunch of doubles, and in that 10 to 20 year time frame, hopefully we’re going to see a number of those technologies scaling.

A number of researchers have formed companies. There has been $1.8 billion in follow on private capital [funding those companies].

Then for the long-term, going to mid-century and beyond, when I think the industrialized countries, obviously including the United States, will need to be into a deep decarbonziation mode. The Paris targets are only a first step: 25, 27 percent in 10 to 15 years. We’re going to need 80 percent reductions, and that’s where much of the early-stage basic science comes in.

For example, at DOE, the Energy Frontier Research Centers. They’re fantastic. They’re run out of the Office of Science and they are addressing a whole suite of very fundamental challenges that could enable the big breakthrough technologies for the longer term.

So, it’s a portfolio and there is often a knee-jerk mantra that, “Oh, the government should only invest in the earliest stage science.” Well, okay, that’s a possible point of view. I don’t think it’s a point of view that’s going to get us to the kinds of solutions that we want and need and that’s going to give us the economic edge we need in a multi-trillion dollar marketplace.

Madrigal: You were tasked with executing on an “all of the above” energy research plan while you were the head of the DOE. Do you think you were able to support all of the energy technologies adequately? Or do you, looking back, feel any got the short stick?

Moniz: I think, overall, we did pretty well. Certainly efficiency, renewables. Fossil, we put quite a bit of money into the carbon capture. That was the focus of the administration. On the nuclear side, I would have liked to see a bit more, to be honest. We did some good things, but we could have done more.

I think a big area that still needs a lot more is on the system side, especially the electric grid, but also the integration of energy infrastructures—electricity and gas. Obviously now the cyber component has come up big. I think a lot more could have been done on resilience of energy infrastructure. We went in the right direction but not quite as fast as I would have liked.

Madrigal: What would you have liked to have seen done with nuclear power?

Moniz: I think there could have been a lot more done—though we were a little bit hamstrung—on the back end, on spent fuel-disposal approaches.  I would have liked to have seen more done on various small modular reactor concepts, for example.

Madrigal: If I compare my own expectations from five years ago, I would say I expected more reactor concepts and things to be farther along than they are. There seem to have been a lot of ideas that never got off the drawing board.

Moniz: In nuclear energy, it’s somehow very slow moving. Part of it is that—for obvious reasons—the regulatory process, the safety process, is so complex.

And a lot of people who are very interested in alternatives to light-water reactors feel they are boxed in because the regulatory process may not have the expertise it needs yet. And of course, that’s difficult for NRC [the Nuclear Regulatory Commission] to do because most of their funding comes from fees. And by definition, if you don’t have an industry of, say, fast reactors, well, where is the fee coming from?

I would have liked to have seen not only DOE but NRC to have more appropriated funding to allow for more alternative approaches.

Madrigal: Carbon capture and storage has encountered a lot of difficulty in scaling up and becoming a practical, usable part of the energy system. What’s the argument to keep spending research dollars there?

Moniz: We’ve seen the cost of lots of stuff coming way down—like wind—after deployment. Carbon capture is at a very early stage. After all, to a very good approximation, it’s always cheaper to release the CO2 than to capture it. In the absence of a carbon charge or a policy to cap CO2, it’s got to be government funding to move forward. Ironically, it is the carbon capture which I could argue is the only part of the energy R&D portfolio that really has only climate as its motivation, as opposed to other possible benefits.

I would also note that carbon capture is much less expensive for many industrial facilities. And if nothing else, this may be an important use of carbon capture and sequestration. Frankly, to be perfectly honest, in electricity production, we know we have multiple options with low carbon, CCS would be one option. In industry, we may be hard pressed to find alternatives to carbon capture for large facilities that produce large amounts of CO2. And often, the cost is much much less because in their chemical-process stream, they have to separate CO2 anyway. And a big cost in the power plant is the separation of the CO2.

Madrigal: Looking back over your tenure, what do you think your biggest accomplishments were?

Moniz: On the big scale, obviously, the role the department played in Paris and, most specifically, the Mission Innovation commitment in Paris, for countries to double R&D investments over 5 years. And then, of course, the Iran Deal, in a different space. Those were the major advances in the Obama administration.

Madrigal: What about things you were able to do inside the institution that maybe didn’t get as much attention as the climate accord and the Iran deal?

Moniz: There were a lot of other things that are very important for the department going forward. For example, I think the relationship with the 17 national laboratories of the Department of Energy and the way they became much more a part of the department’s strategic planning. I think that was important and I hope that will be built upon.

Another thing, if you go really inside baseball, there are some of the reorganizations we made were quite important and helped the department function more effectively.

Madrigal: Like what?

Moniz: For example, I rearranged the responsibilities for the undersecretaries. There were three. What I think was very important was combining the science and energy portfolios in one secretary. The first undersecretary in that role, Franklin Orr, was a professor at Stanford.

Another one: The department always had some energy-policy function, but when I arrived, it was combined with the international affairs office. I never understood the logic of that. The policy got second shrift but it’s a core function for the department. So we split that off. But in splitting it off, it became named the Energy Policy and Systems Analysis Office. The “systems analysis” words were very important. That was the signal that this was going to be seriously analytical. And the hope was that in doing so, it would provide the foundation for a serious bipartisan response in Congress.

That played out dramatically.

That office, EPSA, was the tip of the spear on the Quadrennial Energy Reviews [a duo of reports examining energy infrastructures in the U.S.]. The first one came out in April 2015 and, as you know, these were not years of great political comity, and yet that first report installment had 21 policy recommendations fully or partly put into law. It received very, very strong bipartisan support.

The person who headed that was Melanie Kenderdine, my long-time colleague. She did a fabulous job and Congress even dramatically increased its budget from when we formed it because the response was so positive. That’s the kind of thing that should continue.

And yet the budget proposal from the administration proposes to end it. As they do ARPA-E. As they do the Loan program. It’s almost selectively going after programs that have clear track records of tremendous success. The budget proposal undercuts, in many ways, the entire energy and Paris agenda.

Madrigal: Okay, let’s talk about the U.S. pullback from the Paris Accord. You were intimately involved in the Accord negotiations. How big of a setback is the U.S. pullout for the global effort to prevent the most dangerous levels of warming of the earth?

Moniz: The Paris Accord is extremely important as a great first step towards significant decarbonization. The administration’s decision to announce the intent to withdraw—I think as you know there are some steps that are required and that will go until November of 2020—that obviously was very bad news on many grounds.

For one thing, it certainly flies in the face of the science that clearly calls for some robust response. But beyond that, I’m going to respond to both the announced withdrawal from the Paris Accord and the administration’s budget proposal to Congress. They kind of go hand in hand.

The latter would also, if followed by the Congress, undercut the innovation agenda that both provides solutions to climate risks and, frankly, positions those who innovate to be able to capture a good part of a multi-trillion dollar clean-energy economy. What it does do for sure, at least, for the near term, is abdicate U.S. leadership in this issue of such great global concern. Leadership that was essential for reaching Paris. I would argue, as many would, that the leadership of President Obama in producing the joint announcement with President Xi of China in November 2014  was really the turning point for the road to success in Paris.

And finally this announcement by the current president comes in a string of statements that together really have shaken the confidence of our allies and friends in the reliability of the United States, in terms of the commitments it makes and the leadership it offers. So, it’s a pretty broad-based set of negatives there.

Madrigal: Are there ways to make progress on climate during this administration?

Moniz: I am strongly convinced that the world is going to low-carbon. I think there’s no doubt about it. That’s why that big market is forming and will form even more strongly. So, in the end, I believe the administration’s actions will not deflect the United States from being part of that low-carbon future, but it will slow things down. It will create some bumps in the road and ultimately that will just come back to haunt us by making it more costly to resume the path to low carbon.

In terms of maintaining momentum, clearly, mayors and governors and business leaders have all made it pretty clear that they have the intent of continuing on the pathway because they know that’s where the future is going. Certainly, as far as the business community goes, they are not going to make long-term large capital allocations based on anything other than a low-carbon future.

I don’t want to minimize the impact of the president’s announcement in terms of getting to the climate solutions as efficiently as we can. But I think there is also the near-term damage in terms of American leadership and reliability in the eyes of the world and in the eyes of our allies.

Madrigal: If you were advising young climate researchers, would you tell them to take the offer by Prime Minister Macron of France to go work there on climate? Would you have taken him up on it?

Moniz: I did in a certain sense, take him up on it, in that I was a post-doc in France. It wasn’t Macron, but one of his predecessors. I certainly would do that again and in fact that’s where I met and married my wife.

But look, climate science is obviously an international collaborative effort. I wouldn’t leave the United States just for the reasons you are implying, but I would say there are great opportunities in France and Germany and the U.K. in terms of advancing climate science.

Madrigal: While we’re on the topic of the new administration, there’s currently a review of “base-load power” under Department of Energy Secretary Perry’s direction. [Base-load power is steady, nearly-always-on power currently provided by large fossil fuel, nuclear, and hydroelectric plants.] What do you think of it?

Moniz: It is an important issue today as we are looking at the uncertainty of operations of existing nuclear plants, which are essentially carbon-free. What is the value of base-load power in the mix as part of the overall system design and system reliability? With some colleagues, we’re starting up a small non-profit in the energy space and this was also a question that we intended to look at.

However, a review of this type also needs to look at the emerging technologies. For example, the utility in Tucson recently announced a long-term, a 20-year purchase-power agreement for solar energy plus storage at a pretty attractive—stunning, actually in my view—price. They quoted less than 4.5 cents per kilowatt-hour, including the storage.

Madrigal: Wow. [In Arizona, the average cost of electricity in March 2017 was 9.7 cents per kilowatt-hour. Electricity prices vary around the nation, but the U.S. average was 10.3 cents per kilowatt-hour in March 2017.]

Moniz: That’s with a subsidy, of course. So, without subsidy, maybe it’s twice that. But still, it’s amazing how rapidly these costs are coming down. The extent to which something like storage coming in big time at large scale affects the equation in terms of baseload power. Obviously, that can address a great deal of the non-dispatchabilty of solar or wind.

The critical issue is that these reviews have to be done in an objective, analytical fashion with transparency about assumptions—for example, assumptions on the trajectory of storage costs and deployment would be important in terms of the role of inherently intermittent sources in the grid, as well as nuclear, natural gas combined cycle plants, and the like.

Madrigal: From what you know about the review, as it is, do you think it is being approached in an objective, analytical way?

Moniz: I just don’t know. I certainly haven’t seen a lot of transparency. If the outcomes are not transparent, I don’t see how it is going to have much influence. My impression is that there has not been a wide set of inputs being solicited to the study.

Madrigal: In the past, you’ve said that restricting climate emissions will have a negative impact on some sectors, so in crafting policy, the emphasis should be on “workers.” What do you mean by that?

Moniz: As in any significant transformation, including those in many sectors through technology advances, the economy is dynamic and some areas will directly benefit and some areas will be directly challenged.

The obvious example is the decrease in coal, although I want to emphasize that up til now, that’s had very little to do with climate. That’s been natural gas prices being low.

The job losses in the coal sector have been there for decades. This is not a recent thing. A small impact to date from things like the mercury rule and a very substantial impact from technology development.

Now clearly, if one is going to a very deeply decarbonized economy, then you need to invest in two things, it seems to me. And I would say that the Obama Administration, we did. One is help for communities in transition. That could be retraining. There are lots of approaches. And two: the innovation investments that, for the example we are discussing, can actually permit coal to be a player in a very low carbon world, specifically carbon capture and storage or carbon capture and utilization and storage.

But there are other communities that are affected in very, very different ways. There are all kinds of possibilities, but what we’ve done is think there is a one-size-fits-all solution. Rather than having the headwinds from some of the real or asserted job dislocations, why don’t we start with the workers and the jobs and the communities and build up solutions for their regional development that are consistent with a long-term low-carbon economy?

I will say that is a project that I am intending to carry out. We’re calling it The Roosevelt Project. That will be in concert with the Emerson Collective, which is out in California.

Madrigal: Can you tell me more about that?

Moniz: The idea is to do studies over several years of exactly the type that I’ve described. The reason it is being called The Roosevelt Project, or the reason I called it that, is because Teddy Roosevelt is identified with environmental stewardship, Franklin Roosevelt with the New Deal and jobs, and Eleanor Roosevelt with social justice. And so I think it all comes together as the Roosevelt Project.

Madrigal: One of the things that I want to pick up on is that coal-job loss is actually due to technological development, not regulation. And drawing out your implicit assertion—that’s because drilling technology allowed for access to new reserves, which drove down the cost of natural gas, which then put coal operators in a tough position. And it’s my understanding that these drilling technologies were developed with government assistance at multiple levels. How did the DOE support the project of reaching unconventional natural-gas reserves?

Moniz: When you go back to the late ’70s and early ’80s, the DOE supported a variety of programs involving the drilling technologies but also involving the characterization of unconventional reservoirs. Then in the ’80s to ’90s, there was what I would call a public-private partnership that carried on. This was run by GRI, the Gas Research Institute—

Madrigal: Which was created by that distribution tax?

Moniz: Technically it wasn’t a tax. But you’re on the right track. FERC [Federal Energy Regulatory Commission] allowed a small fee on interstate gas transmission, and that went to provide half the funding because it had to be matched by companies. That research fund, if I recall, grew to something over $200 million a year, and the Gas Research Institute was established as a non-profit organization to manage it. And George Mitchell, the famous George Mitchell from Texas kinda viewed as the father of shale gas, he was on the board of GRI, and helped advance that. That was in effect a public private partnership. They did a lot of demonstrations, demonstration wells and the like. That built up to the coal-bed methane, to tight sands, and to shale as unconventional resources.

At the same time, very importantly as well, there was also finite-time tax credit. So you had the DOE early-stage stuff, you had the GRI developing the technology, and you had the tax credit for the initial deployment, and when the tax credit went away, the production kept going up, up, up, because by that time, the cost had been brought down to a level where it obviously competed on its own.

Madrigal: Another area where the government appears to have jumpstarted a major movement is so-called utility-scale solar—big photovoltaic farms put in by energy companies. And the mechanism was the Loan Program at the DOE, which was made kind of infamous by the collapse of Solyndra. How did the Loan Program work in this case?

Moniz: When the loan program made its first commitments, there were zero [utility-scale solar PV projects]. Partly it was the time period: 2009 to 2010, debt financing was a little bit tricky in general. But the reality also is that banks and investors, unless they are specialized, have a hard time going into new areas, so I think the DOE program and the tremendous diligence process that they developed over several years really gave a lot of confidence to investors.

So, in this case, there were none. The first five got loan guarantees. And that was the end of DOE supporting PV farms. And now there are 10 times as many with private money.

Madrigal: How has the loan portfolio performed generally?

Moniz: Certainly, these [solar-farm] loans, they’ve had no losses. The projects all had power-purchase agreements to cover the cash flow requirements. And certainly there were other successes including the loan to Tesla for their factory in Fremont, which they then paid back nine years early, but it got them going.

If you look at the portfolio overall, clearly there have been losses and Solyndra is the famous one. I might note, I don’t know the exact numbers today, but I believe the total losses in the entire portfolio are in the $800 million range. Over $500 million was Solyndra alone. It is the biggest loss item on the book of the portfolio.

However, the portfolio as a whole has generated I think it is now $2.5 billion of interest payments to the Treasury. And second, when Congress formed the program, they created a $10 billion reserve anticipated for losses. You might argue we’re way behind in the losses. And that may come to the risk level that’s being tolerated.

Madrigal: Let’s turn to your other big accomplishment, the Iran nuclear deal and nuclear non-proliferation. Do you think you’ve stopped Iran from getting a nuclear weapon or more kicked the can down the road? At this point, thinking about Iran’s behavior since the deal and all the geopolitical factors, how do you see the Iran deal?

Moniz: Let me emphasize what I consider to be the most important part of the deal, which is verification. Certainly the bar to any covert weapons program has been raised a lot, and will be quite high.

Now, what I want to say is, first of all, you may know that I now have another job as CEO of the Nuclear Threat Initiative, so proliferation in general is something I’m also working hard on.

Our hope, as was President Obama’s hope, was to minimize the role of nuclear weapons over time and certainly to prevent the further spread of nuclear weapons. With Iran, they have made a very strong commitment to never having a nuclear weapon. So, it is my expectation that Iran will never have a nuclear weapon. If they attempt to go there, it will be known and actions will be taken to, shall we say, discourage that.

The Iran agreement stands on its own: If 15 years from now—or whatever is left of 15 years, 13.5 years—we chalk up the score, and say, yup, the [deal] was followed to the letter and now Iran is free to develop its peaceful nuclear program as it chooses, the deal was a success.

However, I have to say that those of us who were engaged in it so heavily, along with many others, are hopeful that over this time period, 10, 15 years, that there will be other more fundamental changes in that whole regional dynamic. Because obviously we have a lot of problems with Iran in the regional context. If this can help push that society in the right direction, that would be great, but the deal stands on its own as well in terms of nuclear activity.

Madrigal: Looking out 50 years, say, do you expect a greater or smaller number of nations to have nuclear weapons?

Moniz: In 100 years, I would hope that the answer is zero. Let me add an important word. It’s a word I just used in the Iran context. When we talk about a world without nuclear weapons, what I always talk about is a world verifiably without nuclear weapons. The word verification is critical.

What is the success path that is practical? I strongly believe in the goal of a world without nuclear weapons, but that doesn’t help if we don’t have something that is pragmatic that can survive in the political realities of all the countries that have to play in this.

It’s a very, very tough problem. I think we are decades away from reaching that kind of a goal, but we’ll be even more decades away if we don’t start thinking about it now.

Madrigal: Sounds like it’s time for some game theory.

Moniz: Yup. Tom Schelling [the eminent strategist and an important contributor to game theory].

Madrigal: I read in The Boston Globe profile of you that you’ve literally never taken a vacation? Did you finally take one after you left the DOE?

Moniz: Yeah, I took … My wife termed it the anti-Genesis strategy, I slept for six days and worked on the seventh.

Madrigal: Really?

Moniz: Yes.