Center for a New American Security

Capitol Hill was active in the energy security arena this week.

On Wednesday, Secretary of State John Kerry testified before the House Foreign Affairs Committee and responded to questions about the Keystone XL pipeline. Secretary Kerry said he is “staying as far away from that as I can” because the Keystone review process is not complete. Kerry will make the final decision, but he believes “it is not yet ripe” for him to do so. The review process continues on Thursday with the State Department’s public hearing on the pipeline in Grand Island, Nebraska.

In other news, Deputy Secretary of Energy Daniel Poneman testified before the Senate Energy and Natural Resources Committee on Thursday. Poneman stated that DOE is nearly ready to make decisions on applications for the exportation of liquefied natural gas (LNG). These decisions will likely ultimately fall to Ernest Moniz, President Obama’s nominee for Secretary of Energy. Moniz has signaled support for natural gas, but has not yet been definitive on his position on LNG exports. Moniz received bipartisan support in a 21-1 vote in the Senate Energy and Natural Resources Committee on Thursday and will face a confirmation vote before the full Senate in the near future.

Congress is continuing to give increasing attention to the changing energy landscape.

This morning at 10 a.m., the House Energy and Commerce Committee will hold a hearing on “American Energy Security and Innovation: An Assessment of North America’s Energy Resources.” Check out the complete witness list here.  

Adam Sieminski, administrator of the U.S. Energy Information Administration, is among those expected to testify. In his prepared statement, Mr. Sieminski sizes up the recent boom in U.S. crude oil production, which he notes is driven largely by production of unconventional shale resources:

EIA estimates that U.S. total crude oil production (which includes lease condensates) averaged 6.4 million barrels per day (bbl/d) in 2012, an increase of 0.8 million bbl/d from the previous year driven largely by growth in tight oil production (Figures 1 and 2).  This increase in U.S. annual production is the largest since Colonel Drake drilled the first crude oil well in Pennsylvania in 1859.  EIA forecasts that another record increase in production will occur this year, with domestic crude oil production expected to increase to 7.3 million bbl/d in 2013.  The 7.9 million bbl/d EIA currently forecasts for 2014 would mark the highest annual average level of production since 1988.  Central to this projected growth will be ongoing development activity in key onshore basins.  Drilling in tight oil plays in the Williston Basin’s Bakken formation in North Dakota and Montana, the Western Gulf Basin’s Eagle Ford formation, and the Permian Basin in Texas is expected to account for the bulk of forecast production growth over the next two years.

Later this morning the Senate Foreign Relations Committee will examine the national security and strategic imperatives for ratifying the Law of the Sea Convention (LOSC). Secretary of State Hillary Rodham Clinton, Secretary of Defense Leon Panetta and Chairman of the Joint Chiefs of Staff General Martin Dempsey are scheduled to testify. (View the live webcast here starting at 10 AM.)

In preparation for today’s hearing, below is a primer on what I see as the national security rationale for ratifying LOSC. As I have written before here on the blog and in a recent policy brief on Security at Sea, ratifying the convention will serve a range of national security interests. For example:

• Ratification would lock in critical navigational rights and other customary practices that are codified in the treaty and, perhaps more importantly, give the United States a seat at the table to rebuff attempts by rising maritime powers to redefine or reinterpret practices that have been so beneficial to the global economy and U.S. national interests, such as the right of military vessels to exercise innocent passage through a coastal state’s territorial waters.

• Ratification would strengthen the ability of the U.S. Navy and the U.S. Coast Guard to do their job and work with others to protect U.S. interests, including counterproliferation and counterpiracy missions, by grounding those activities in international law. Indeed, as Secretary of Defense Panetta recently remarked, “Treaty law remains the firmest legal foundation upon which to base our global presence, on, above, and below the seas.”

• Ratification would allow the United States to lay sovereign claim to the potentially trillion dollars of deep-sea oil, natural gas and mineral resources on our extended continental shelf – an area beyond our current 200-nautical mile jurisdiction – through an internationally recognized claim to the Commission on the Limits of the Continental Shelf. Accessing these resources is ever more important in promoting U.S. domestic energy and minerals production and all the benefits that would accrue to U.S. economic and national security.

• Finally, ratification will put the United States in a position of strengthen and restore its maritime leadership in strategic regions around the globe, including the Arctic and the South China Sea. Being party to the treaty would allow the United States to secure its right to resources in the Arctic, take part in crucial conversations at the Arctic Council and rebuff attempts by other powers to infringe on U.S. interests. Ratifying the treaty would also give the U.S. more credibility with allies over the dispute in the South China Sea by encouraging those in the region to abide by the treaty’s laws and seek resolution through the convention’s recognized legal framework. As Secretary Panetta put it recently, “How can we argue that other nations must abide by international rules, when we haven’t officially accepted those rules.”  

To learn more, check out our recent study, Security at Sea: The Case for Ratifying the Law of the Sea Convention.

For additional resources, visit The American Sovereignty Campaign. 

There is a good discussion going on at the National Journal this week on the role of clean energy in powering the U.S. military. The discussion comes on the heels of an effort by the House Armed Services Committee to constrain DOD’s ability to procure biofuels that are not cost competitive with conventional petroleum.

As I noted in the National Journal yesterday, recent congressional activity suggests to me that there is a bit of confusion about the military’s motivations to invest in biofuels. To be clear, these efforts are not, as some headlines suggest, for the sole purpose of combating climate change or promoting eco-friendly interests over military ones. Although being environmentally sustainable and promoting energy security are not mutually exclusive, it is important to understand first and foremost why the military is undertaking this effort: It is all about mission effectiveness and ensuring that our soldiers, sailors and airmen have access to the fuel they need to conduct their operations and protect U.S. interests. (Read more on this point here.)

Nevertheless, the rumblings on Capitol Hill suggest that the role of the military in advancing alternative energy solutions could be a chokepoint for congressional action as both chambers seek to reconcile their own versions of the 2013 Defense Authorization bill. Senator Mark Udall of Colorado weighed in on the National Journal discussion this morning, stating that “As the Senate Armed Services Committee marks up our version of the 2013 defense authorization bill this week, one of the key provisions under scrutiny will be how we approach the military’s use and development of alternative-fuel technologies.”

To that end, the National Journal discussion is an important and welcome one. The country should be having a public debate about the role of the military in advancing alternative energy solutions and clarify any uncertainty or misconceptions about what the military’s motivations are for advancing clean energy solutions. Simply put, it is first and foremost about preserving the military’s ability to protect U.S. national security interests by hedging against uncertainty around petroleum prices and supply, and ensuring that the military has the energy it needs to fuel the force.

Learn more about the challenges DOD faces with sustainable access to petroleum in our 2010 study, Fueling the Future Force. 

Follow the National Journal discussion here.    

Tomorrow, the House Transportation Committee’s Subcommittee on Coast Guard and Maritime Transportation will hold a hearing on “Protecting U.S. Sovereignty: Coast Guard Operations in the Arctic.”  (Available for viewing by webcast.)

According to a background memo provide by the subcommittee, the purpose of the hearing is in part to examine if the Coast Guard has the ability to execute its statutory missions in the Arctic. Capabilities, including Coast Guard icebreakers, are obviously an important element in evaluating if the Coast Guard is setup to fulfill its missions in the High North, so I’m hopeful to see some discussion about the lack of U.S. icebreaking capabilities, and how that affects the Coast Guard. I wrote a post exploring this issue last week that I think is worth revisiting. Here’s hoping it tees up some of the questions we’ll hear asked by the members tomorrow.

Tomorrow, Christine will testify before the House Committee on Foreign Affairs, Subcommittee on Asia and the Pacific about China’s monopoly on rare earths where she’ll speak to the implications for U.S. foreign and security policy.

The timing for the hearing is appropriate given the recent reports that China is consolidating its grip on rare earth materials. According to The New York Times on Friday, “By closing or nationalizing dozens of the producers of rare earth metals — which are used in energy-efficient bulbs and many other green-energy products — China is temporarily shutting down most of the industry and crimping the global supply of the vital resources.” The economic implications are becoming increasingly clear, according to statements by major consumers: “General Electric, facing complaints in the United States about rising prices for its compact fluorescent bulbs, recently noted in a statement that if the rate of inflation over the last 12 months on the rare earth element europium oxide had been applied to a $2 cup of coffee, that coffee would now cost $24.55.”  

Christine’s testimony will build off her extensive work on critical minerals. In June, she published her most recent report, Elements of Security: Mitigating the Risks of U.S. Dependence on Critical Minerals, where she examined a range of potential vulnerabilities that stem from dependence on several minerals that the United States will need for defense supply chains and clean energy goals in the decades ahead. (The Times report noted the particular impact of China’s rare earth consolidation on the prices of energy efficient bulbs: “A pack of three 11-watt G.E. compact fluorescent bulbs — each the lighting equivalent of a 40-watt incandescent bulb — was priced on Thursday at $15.88 on Wal-Mart’s Web site for pickup in a Nashville, Ark., store. The average price for fluorescent bulbs has risen 37 percent this year, according to the National Electrical Manufacturers Association.)

Christine will give her thoughts here on the blog later in the week, but if you’re on Capitol Hill tomorrow you should stop by the Rayburn House Office Building (Room 2172) at 1 PM.

The Senate Armed Services Committee’s approved its FY2012 National Defense Authorization Act  (S. 1253), which we’ve been anxiously awaiting. First, I’ll start with an omission.

The House version of the 2012 NDAA included a requirement for a “Report on the Manufacturing Policy of the United States,” which included “An analysis of the ability of the United States to access necessary raw materials for the defense industry, including rare earth minerals.” From what I found over the past few years researching globalization and supply chains and whatnot for our recent minerals report, this is definitely warranted. (I recommended updating the last major Defense Science Board report that covered such matters.)

The SASC version does include several measures on energy, most of which fall into its operations & maintenance language. One major section is 311, which modifies renewable energy goals:

(A) to produce or procure not less than 12 percent of the total quantity of facility energy it consumes within its facilities during each of fiscal years 2015 through 2017 from renewable energy sources;

(B) to produce or procure not less than 16 percent of the total quantity of facility energy it consumes within its facilities during each of fiscal years 2018 through 2020 from renewable energy sources;

(C) to produce or procure not less than 20 percent of the total quantity of facility energy it consumes within its facilities during each of fiscal year 2021 through 2024 from renewable energy sources.

I love these specifics. In my report last September with President Nagl recommending a DOD energy strategy, one of the flaws we identified was that DOD’s energy goals tended to run out between 2012 and 2020, with most extending only to about 2015. For the sake of sending strong demand signals to capital markets and innovators so that they invest in developing what DOD needs, we thought simply extending the requirements in time would help.

Another big thumbs up to the SASC members and their staffs should be awarded for thinking about what’s needed for actually meeting these goals. In section 331, for a “Study on Air Force Test and Training Range Infrastructure,” it requires DOD to:

identify which parcels identified pursuant to subparagraph (F) could, through the acquisition of conservation easements, serve military interests while also preserving recreational access to public and private lands, protecting wildlife habitat, or preserving opportunities for energy development and energy transmission.

One big snag for DOD improving power generation on its own land has been a lack of process to hammer out where major projects would or would not interfere with normal military operations. DOD appointed a top-notch official to handle the problem, but it’s still good to see the Senate recognize the role specific mechanisms like this may play in meeting broader energy security goals.

I’ll note 2 final measures focused on electricity supply security. Section 345 requires the SecDef to “develop guidance for commanders of military installations inside the United States on planning measures to minimize the effects in the event of a disruption of services by a utility that sells natural gas, water, or electric energy to a military installation in the United States.” And finally, section 2831, on investments for modernizing Navy shipyards, includes a requirement for assessing “the adequacy of each facility…to meet the energy savings goals of the Secretary of the Navy for military installations.” Given how ambitious the Secretary’s energy goals have been, it’s great to see this in language from the Hill.

The bill requires additional measures on reporting and structural issues, and there are some major differences on energy between the Senate and House versions. And there are important measures in the bill introduced by Rep. Giffords and Sen. Udall a few months back that I hope to see in future votes. We’ll continue to keep an eye on all this for you.

Today’s post is a recap of David Sandalow’s June 14 testimony before the House Committee on Science, Space, and Technology and Subcommittee on Investigations and Oversight on “The Federal Perspective on a National Critical Materials Strategy.” David Sandalow is the Assistant Secretary for Policy and International Affairs at the Department of Energy. His testimony follows up a hearing held last year examining the U.S. government perspective on a national critical materials strategy.

Sandalow’s main point:

“The issue of critical minerals is important and needs priority attention…The Department shares the goal of establishing a stable, sustainable and domestic supply of critical minerals.”

The Department of Energy (DOE) is currently:

• “Analyzing the use of critical materials in petroleum refineries and other applications.”
• “Identify[ing] specific strategies for materials identified as critical, including strategies with respect to substitution, recycling and more efficient use.”
• “[Has] issued a Request for Information that focused on critical material content of certain technologies, supply chains, research, education and workforce training, emerging technologies, recycling opportunities and mine permitting.”

Upon catching up on my email and RSS now that I’m back in D.C., I realize that I missed quite a lot of activity in the DOD energy realm. True (sad?) story: while abroad I heard a lot about Weiner and Tressel, but nothing about the Defense Authorization passing.

To start with the biggest news: yesterday morning new DOD energy legislation co-authored by Arizona Congresswoman Gabrielle Giffords and Colorado Senator Mark Udall dropped. The DOD Energy Security Act (DODESA), an updated version of their bill from last year, would, for example, provide for energy efficiency and conservation measures, support DOD’s use of its bases as energy test beds, promote cross-service energy initiatives, allow long-term contracting for alternative fuels and support stronger energy management training. All great, budget-wise stuff for promoting DOD’s energy security. I don’t see the full text online quite yet (we'll post it when it hits), but the summary is on Scribd, and you can watch the 2011 DODESA’s announcement with Senator Udall and others on YouTube.

Thankfully, DOD Energy Blog also faithfully tracked and commented on some of the other major energy movements that went down the past two weeks. Among other energy measures introduced, it appears that the House passed a measure in the FY12 NDAA to state that the 2007 Energy Independence and Security Act requirement that federal agencies only purchase alternative fuels with lower lifecycle greenhouse gas emissions than the petroleum they’d displace “shall not apply to the Department of Defense” (Section 844). This is to pave the way to DOD re-engaging in coal-to-liquids fuel ventures – a measure that I disagree with in the strongest terms. Luckily, Navy officials and others have already vocalized that this is not the path they wish to take. Or as Dan Nolan summed it up nicely: “Congress would now be giving the Military permission to act contrary to its own best interest. Hopefully, having the ability to do a dumb thing and actually doing it are separate events.”

Later this morning, John Nagl and I are going up on the Hill where John will join a panel of experts to discuss military fuel convoys, energy for our bases in Iraq and Afghanistan and DOD’s need for a long-term energy strategy that moves the U.S. military away from petroleum over the next 30 years (very much in line with the report John and Christine wrote in September 2010, Fueling the Future Force).

In the spirit of the day, I wanted to draw attention to this very thoughtful report published last week by ClimateWire assessing the challenges the U.S. Army is facing with its renewable energy goals in Afghanistan. The report is very good and is worth reading in full if you haven’t already.  It reports on the environmental challenges that the U.S. Army Corps of Engineers is attempting to adapt to in order to build wind turbines and other renewable energy projects that are difficult to build in the easiest conditions, let alone in a war-torn country. To cite just one example, a 1 megawatt wind turbine the U.S. Army hoped to build to provide power to a new facility for Afghan security forces can’t be built because the facility is remote, and the roads won’t support a crane large enough to construct the turbine. Instead they have opted for smaller 10-kilowatt wind turbines. The challenges of turning the blueprints into reality are not surprising, and this is a theme that runs through the report.