Virgnia's Energy Future

(This is the text of a speech delivered to the Thomas Jefferson Institute for Public Policy on July 18, 2013 at its “Virginia’s Energy Future” Leadership Round Table Discussion in Richmond, VA. Over 50 key stakeholders attend this Leadership Round Table Discussion.)

Thank you Mike (Thompson) for inviting me to participate this morning.

I want to take a moment to welcome all of you – and especially the Thomas Jefferson institute – to the Patrick Henry building today.

In the three and a half years since being named Secretary, I have come to rely on the Institute’s policy ideas and always look through the newsletter and policy papers when they come in.

We share a common belief in free markets, limited government and individual responsibility, and how these ideas can reform government.

So I thank the board and donors who make this happen.

I also want to thank you for putting together such a strong program like todays on Virginia’s Energy Future.

I would say that future is still evolving and the speakers you will hear today on electricity (by the way, I’m for it) …and coal …and nuclear power ….and offshore oil and gas ….and hydraulic fracturing ….and alternatives….are all a part of that future.

Not to mention the importance of energy efficiency and even solar and wind, on-shore and offshore, waste-to-energy, and even biofuels.

A truly “all-of-the-above” energy policy will have room for all of this as long as, in my opinion, the costs to the consumer are market-based and subsidized to the largest extent possible.

Inexpensive energy is perhaps the strongest economic development driver in the Commonwealth and in the country.    Government has an obligation to do all it can to reduce energy costs to consumers and to business.

That’s why the Federal Government’s …and this Administration’s…war on fossil fuels is simply irresponsible social engineering.

A truly “all-of-the-above” energy strategy, including oil and natural gas, is essential to America’s economic and energy future.   And innovation and technology can produce more.

Who would have thought just a few years ago that the United States would today be the Saudi Arabia of natural gas?

While the administration in Washington claims to support an “all-of-the-above” strategy, it is, in fact, delaying or obstructing oil and gas development in the United States.

Just yesterday Interior Secretary Sally Jewell appeared before the House Natural Resources Committee and bragged that there are 1,000 more production rigs in the Gulf than there were before the BP Horizon accident.

But guess what…there still aren’t any off of Virginia even though President Obama approved it in March of 2010.   The delays associated with environmental reviews and use conflicts, I believe, are duplicitous.

The government knows there is oil and gas on our outer continental shelf.   Industry knows there is oil and gas on our outer continental shelf. Industry is ready to act.   But they won’t unless there is a scheduled sale.

And we are fortunate in Virginia to have strong support in Congress from our two US Senators and most of our Representatives.

With endless delays in permits for surface mines in the western part of the state, and for oil and gas development offshore, you would think the federal government would at least act quickly on approving Virginia’s off-shore wind development.  After all, that is their preferred energy source even though it has low efficiency and high cost.  But here we are ….still waiting for the announcement of a wind lease sale.  [NOTE: Subsequent to the delivery of this speech the Interior Department announced that the second offshore wind lease sale would be held off Virginia on September 4, 2013.]

And then there is MARCO.  How many of you have heard about MARCO?  MARCO is another Federal effort, by the way an “unauthorized” federal effort, to essentially zone the ocean.   MARCO stands for the Mid-Atlantic Regional Council for the Ocean.   Virginia is a cooperating member of MARCO although it was something signed by a previous administration.  It claims to have no agenda other than to develop a web portal that shows all the uses and resources in the ocean.   But guess what?…… MARCO has refused Virginia’s request to include oil and gas resources on portal maps of the OCS.  This, in my opinion, is just another effort to restrict development on the east coast.

When he was campaigning Governor McDonnell said, “Working together, we can make Virginia The Energy Capital of the East Coast.”

He continued, “In this global economy, we must tackle our energy needs with an ‘all of the above’ approach utilizing traditional, alternative, and renewable sources.    Wind, coal, solar, nuclear, biomass, oil and natural gas are all part of our energy solution.  By fully developing our domestic energy resources we can provide reliable, low cost power that will lead our country closer towards energy independence.”

So let me take a few minutes to tell you a few of the things this Administration has accomplished in the last 3 and a half years under Governor McDonnell’s leadership to prioritize energy.

Annual Energy Conference: The Governor established an annual energy conference to focus attention on and encourage growth in Virginia’s energy economy.  We have held three of those and the fourth is now in development.

Southern States Energy Board: The Governor was elected to serve as chair of Southern States Energy Board, and used the opportunity to develop a single regional voice to advocate for development of our domestic energy resources.

Governors’ Energy Summit: He also convened the first ever Governors’ Energy Summit, in his role as Chair of the Southern States Energy Board.  The gathering included Governors and U.S. Senators to discuss the need for an “all of the above” energy development strategy and national energy policy.

Outer Continental Shelf Governor’s Coalition: The Governor joined with other OCS Governors to initiate Outer Continental Shelf Governor’s Coalition to interface with the Federal government on OCS issues.

Appalachian Research Initiative for Environmental Sciences (ARIES) Consortium: Governor McDonnell supported formation of the Appalachian Research Initiative for Environmental Sciences (ARIES) Consortium, a five state public higher education research partnership to develop actual data concerning the environmental impacts of coal, and develop clean coal opportunities, led by Virginia Tech.

Interior’s Offshore Wind Consortium: The Governor joined and supported the work of Interior’s off shore wind consortium and the Secretary’s “Smart from the Start” program.

Virginia Offshore Wind Development Authority: The Governor proposed the creation of the Virginia Offshore Wind Development Authority (VOWDA) that oversees the data gathering, research and planning that must be done to support offshore wind development off of Virginia’s coast.

Virginia Energy Institute: The Governor established a new Virginia Energy Institute to bring together the academic research capabilities of our major research universities under one canopy.

Energy Team: The Governor appointed an Energy Advisor (Maureen Matsen) and created a new position and appointed the first Deputy Director for Energy Policy at the Department of Mines Minerals and Energy (Cathie France).  He also appointed a business support liaison at the Department of Environmental Quality to facilitate predictable and timely permitting for energy and other economic development projects.

Safe Offshore Exploration and Drilling: The Governor supported the safe offshore exploration and drilling for oil and natural gas 50 miles off the coast of Virginia.  We were awarded lease sale 220 although later it was canceled after the Gulf oil spill.  He has continued to push Congress and the Interior Department to approve lease sale 220, and include Virginia in the 2012-2017 OCS plan.

Offshore Revenue and Royalties: The Governor supported and signed into law legislation directing offshore revenue and royalties.

Offshore Technology Conference: He was the first Virginia Governor ever invited to speak at the Offshore Technology Conference in Houston, the nation’s largest offshore technology trade show.

Virginia Nuclear Energy Consortium Authority: He supported and signed legislation to create the Virginia Nuclear Energy Consortium Authority making the Commonwealth a national and global leader in nuclear energy.

Uranium Mining: The Governor directed and concluded the first and only state investigation and analysis of the possibility of uranium mining in Virginia, a multi-agency effort that set out the regulatory framework that would be necessary to protect citizens and the environment from the unique risks that would come with development of this valuable energy resource.

Green Jobs Zone: The Governor established Virginia as a “Green Jobs Zone” to incentivize companies to create quality green jobs.

Clean Energy Manufacturing Incentive Grant Program: He proposed successful legislation to create the new Clean Energy Manufacturing Incentive Grant Program to focus existing resources for energy development incentives on targeted nuclear, wind, solar and biomass alternative energy projects.

Coal and Natural Gas Industries: Governor McDonnell supported Virginia’s coal and natural gas industries.

EPA overreach in restricting coal: He has engaged the Congress, the military, the President, and the Federal Government on energy issues in general and on EPA overreach in restricting coal.

Natural Gas Infrastructure Expansion: The Governor proposed successful legislation to allow natural gas infrastructure expansion for the purpose of economic development projects where it is not already available.

Alternative Fuel Vehicle Conversion Fund: He supported and signed legislation that created the Alternative Fuel Vehicle Conversion Fund to assist in the conversion of the state fleet. And Virginia is currently evaluating private-sector proposals to convert the state vehicle fleet to an alternative fuel, one of the first states in the nation to do so.

Memorandum of Agreement with Oklahoma The Governor joined Oklahoma in a Memorandum of Agreement signed by 22 states to be used to  leverage the vehicle demand that 22 states can bring to the table to persuade automakers to manufacture more natural gas vehicles at a more affordable cost.

Virginia Alternative Fuels Revolving Fund: The Governor expanded the purpose of the Virginia Alternative Fuels Revolving Fund to include infrastructure such as refueling stations, to provide seed money and aggressively pursue additional grants.

Centralized Fleet Replacement: He signed legislation requiring the development of a plan providing for the replacement of vehicles in the centralized fleet that are rotated out of service with vehicles that operate using natural gas, electricity, or other alternative fuels, to the greatest extent practicable.

Electric Vehicle Charging Services: The Governor proposed, supported and signed legislation that expanded electric vehicle charging services.

Woody Biomass Fuel: He has supported the conversion of old coal plants to woody biomass, and seen an increase in wood pellet exports from our ports.

Permit By Rule: This administration adopted a “first of its kind” in the nation Permit By Rule to streamline permitting of small (< 100 MW) land-based and offshore (state waters) renewable energy projects.

Two Wind Research Leases: We also submitted applications for two wind research leases – one in the wind area designated by the Dept of the Interior in federal waters, and one in state waters – to facilitate turbine testing and future gathering of metocean data.

Virginia’s Offshore Resource: The Administration conducted several studies to quantify Virginia’s offshore resource, and the transmission resources needed and available to support development of that offshore resource.  And partnered with the BOEM to conduct a regional ocean geological survey, which will provide data about the ocean floor that will be made available to developers.

Renewable Thermal Energy: He supported and signed legislation that encourages development of renewable thermal energy and includes landfill gas in the definition of renewable energy.

138kv transmission lines: He supported and signed legislation that improves the process for approval of 138kv transmission lines .

SMART buildings: He created tax incentives to partner with demand response companies, use LEED standards as a model and build SMART buildings.

Energy Efficiency Programs: He supported and signed legislation to increase energy efficiency programs by requiring the SCC to consider all cost benefit tests.

Believe it or not, that is not the entire list.

There is no doubt that this Governor has focused on energy.  We have worked across all sources to lower regulations and incentivize development without market subsidies.

The Governor did all this because in order for Virginia to keep growing, she needs energy.

We are not done quite yet.   We have the energy conference in the Fall, and I am hoping we can announce progress on completing the EIS for seismic surveys for offshore oil and gas soon.  And then there is that pesky offshore wind lease.  We’ll have something to announce on that soon.  [NOTE: The following week the Interior Department announced the second offshore wind lease sale off Virginia will take place on September 4, 2013.]

So the work is not done but there is no doubt a solid foundation has been laid for Virginia’s energy future.   With your continued help I am sure we can make it a reality.

Thank you again for coming and I hope the conference goes well.

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