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George Shultz on plug-in hybrids; Sen. Lieberman urges US-China R&D including PHEVs
Jan 3, 2006 (From the CalCars-News archive)
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Here's George Shultz, former U.S. Secretary of State, now at the Hoover Institution at Stanford, said on the PBS Charlie Rose show that aired Dec. 22, 2005:

Charlie Rose: I want to move to this question for foreign policy. Should it be a tentative American foreign policy to reduce dramatically our dependence on Middle Eastern oil?

George Shultz: Yes.

Rose: And how do we do that?

Shultz: You do it basically by figuring out alternative ways to do the things that are done with the oil now. I think it's okay to try to get more oil in the U.S., and more gas in the U.S. and Canada and so forth, but I think the basic thrust has to be on using less of it. There are all sorts of ways to do it.

Rose: Energy conservation.

Shultz: Alternative ways of getting the job done that you want to have done. I'll give you an example. Hybrid cars are catching on. Why? Because they use less oil. And it's high-priced now, so the people are doing that.

But I think the real payoff will come when you have a battery that can go in the hybrid car that is chargeable and which can carry that car for, say, 40 miles. So you have what you might call a plug-in hybrid.

And you could get in your car and drive for, say, 40 miles -- and most trips are less than that. You're back at your house after 40 miles. So if you had that, look at the amount of gas that you wouldn't be consuming when you traveled.

(Rose changes the topic...)

China-U.S. Energy Policies: A Choice of Cooperation or Collision-Remarks by Senator Joseph I. Lieberman

quick annotated news story on the event can be found at:­2005/­12/­senator_lieberm.html­publication/­9335/­ transcript of speech and following discussion at Council on Foreign Relations ( the full document has many other high-level questioners) [Rush Transcript; Federal News Service, Inc.] Speaker: Joseph Lieberman U.S. Senate (D-CT) Presider: William F. Martin Chairman, Washington Policy and Analysis, Inc.; former deputy secretary of energy

November 30, 2005
Washington, District of Columbia
Council on Foreign Relations
Washington, DC

SEN. JOSEPH LIEBERMAN: (In progress.) This morning in about an hour, the president will be speaking at the Naval Academy in Annapolis to define our strategy for victory in the war against terrorism, and particularly in the war in Iraq. But I want to argue to you today what I would guess most of you in the room believe; that notwithstanding the change in our own world on September 11th, the answer we would have given on September 10th is still largely correct and certainly still true, that appropriately managing our relationships with an emerging, complicated China - booming economy, growing investments in their military strength, different values than we have in some senses and yet remarkably similar circumstances in other senses - that that remains and must remain a critical priority of American foreign policy.
Today I want to discuss what I believe is one of the biggest sources of potential friction between the U.S. and the PRC, and that is our global competition for oil. The U.S. and China are now the world's number one and two consumers of oil respectively, with China's need growing as rapidly as its economy is. This could lead to Sino-American confrontations over oil that could in the years ahead threaten our national security and global security unless each of our nations - two great nations - develop and employ new technologies that will reduce our dependence on oil.

And let me point out here that though our economic circumstances are different, and painting with a broad brush if you will allow me to do that, there is a very comparable reality here that both countries face, which is that each of our energy systems depends on a form of energy - oil - that neither nation has naturally in abundance. And in fact, in some senses the pressure on the Chinese will be even greater in the years ahead because their economy is growing so rapidly. And I'll get to some numbers on that. Well, I'll say it right now. In the next 20 years, estimates show that the Chinese demand for oil will double as their economy grows. Estimates also are that they will need to obtain two-thirds of that from outside of the PRC itself.

So what I want to say today is that it is time for the U.S. and China not only to recognize the similarity of our oil dependency status and the direction competition may take us, but to begin to talk more directly about this growing global competition for oil so that we can each develop national policies and cooperative international policies, even joint research and development projects, to cut our dependency on oil before the competition becomes truly hostile.

The U.S.-China energy engagement that I foresee could be in one sense the 21st century version of what arms control negotiations with the Soviet Union were in the last century, but we got to start those discussions before the race for oil becomes as hot and dangerous as the nuclear arms race between the U.S. and the Soviet Union did in the last century.

And I'd point out what I think is a fortuitous difference in these two races, if you will. With arms control, we were focused on reducing dangers by destroying weapons systems. Here, we have a chance to reduce dangers by separately and jointly building new energy and transportation systems based on alternative fuels and new technologies to power our vehicles.

Let me quote from Bob Zoellick, the deputy secretary of State, who recently told the National Committee on U.S.-China Relations - and I quote: "Picture the wide range of global challenges we face in the years ahead - terrorism and extremists exploiting Islam, the proliferation of weapons of mass destruction, poverty, disease - and then ask whether it would be easier or harder to handle those problems if the U.S. and China were cooperating or were at odds." End of quote.

Well, that's a question that answers itself and should lead us in the direction of exploring each and every cooperative opportunity with China that we can.

Then Zoellick went on, relevant to the point I'm trying to make this morning, to talk about how China's drive - and I quote him here - "to lock up energy supplies" - end of quote - could put it on a collision course with the United States and other nations. Absolutely right. That's exactly my point. And let me give you a few examples of what I would call early but clear signs of an aggressive, nationalistic - understandably nationalistic - Chinese international energy policy.
The U.S. can and should make concrete proposals for joint projects with China, which would break both nations' - or help break both nations' dependence on foreign oil. As the world's two biggest consumers of oil, again, it makes sense for us to work together on this. But in the meantime, the U.S. has a responsibility to take our own steps to get our appetite for oil under control because our national security, not to mention our economic well-being and environmental health, require that we do that.

I cite briefly a recent report by the International Energy Agency, which says that global demand for oil, now about 85 million barrels a day, will increase by more than 50 percent to over 130 million barrels a day between now and 2030 if nothing is done. China's oil consumption surpassed Japan's in 2003. It's now at 6.5 million barrels a day. By 2025, that demand, as I said before, is projected to more than double, to 14.2 million barrels a day.

If we do nothing, United States demand for oil by that same year, 2025, will increase 8.7 million barrels a day, a 40 percent increase, almost double, to about 28 million barrels a day.

As the authors of the IAEA report say, and here I quote, "We are ending up with 95 percent of the world relying for its economic well-being on decisions made by five or six countries in the Middle East," end of quote. And that means practically that we could be one terrorist attack or political upheaval or a rogue leader's anti-American decision away from an overnight price spike for oil that would send the global economy tumbling but also send the industrialized world scrambling for oil, with the U.S. and China leading the scramble.

The fact is that history tells us that wars have been fought over such competitions for natural resources. In fact, as you all know, exactly such a competition is one of the factors that led to Pearl Harbor and World War II. So for the good of our nation and global stability, we've got to lead America into a new energy age by transforming, particularly our transportation system because it is there that we consume 70 percent of our demand for oil. And it is these facts that recently led 10 United States senators of which I'm proud to be one, five Republicans and five Democrats - not just bipartisan, but from every ideological point on the spectrum and every region of the country - who recently introduced what we call the Vehicle and Fuel Choices for American Security Act of 2005. This is going to put us on a path to energy diversity and greater strength, energy independence by reducing our demand for oil to power our vehicles.

Let me just give you a sense of the range of my colleagues. I'm proud to say Sam Brownback of Kansas was my main co-sponsor, Even Bayh, Jeff Sessions, Ken Salazar, Norm Coleman, Dave Pryor, Lindsey Graham, Bill Nelson, Dick Lugar and Barack Obama. Now, that's a very broad group of people. It's a bold program, which I'll describe in a moment, but the door that brought us all together was not just economic concern, but concern about the way in which our oil dependence can no matter how strong we are militarily compromise our national security.

Very briefly, the bill starts by making it our national policy to cut our oil consumption by 10 million barrels a day, progressively to that total - and I think we can even go higher - in 25 years. It will - this goal will be reached by the diversification of our energy sources and the use of new technologies. The fact is that gasoline is not the only portable source of energy - stored energy. Tons of agricultural materials and agricultural waste - materials like corn, of course, sugarcane and switchgrass - can be used to create billions of barrels of new fuels on acres - on millions of acres of both active and otherwise idle cropland.

And this is not a fantasy, a pipedream. It's a vision and a goal. And my most tangible evidence here is Brazil. The world's fifth largest nation gets 80 percent of its transportation fuel from sugarcane. In a few years, American farmers could be measuring production in barrels of energy as well as bushels of food.

Let me talk about the new technologies which are out there. They're not exotic, including not just the hybrids for which there are waiting lines at most car dealerships in this country today, but the use of alternative fuels in hybrid electric plug-ins. Electricity, a sector that relies on oil to fuel just 2 percent of its output, can further lower our oil dependence if we use it to power our cars. When I first heard about this, it sounded impractical. I was about to use the unsenatorial term, "flaky." But you know, we're all plugging in our cell phones and our blackberries every night, and we can get to the point where we're plugging in our cars as well at a time of day when the demand on the electricity grid is lower. And again, most of the electric power is not produced by oil.

To create the market for this new era of vehicles and reduction of our consumption of oil, this legislation requires that by 2012, 10 percent of all vehicles sold in the U.S. be hybrid, hybrid-electric plug-in or alternative fuel and biofuel vehicles. That number will rise by 10 percent a year until, by 2016, we require that 50 percent of all vehicles sold in United States be these energy alternative vehicles.

We also require that about a quarter of the total federal fleet purchases be advanced diesels, hybrids or plug-in hybrids by 2016, 10 years from now. In fact, that 75 percent be those or biofuels. This can lead to some really exciting options that are practical. Plug-in hybrid vehicles that I've talked about would be able to use their batteries exclusively for the first 30 miles of a trip. While Americans drive about 2.2 million - excuse me - 2.2 trillion miles a year, the vast majority of those trips are less than 10 miles. That means a plug-in hybrid would use just about zero gallons of gasoline or other combustible fuel for the vast majority of car trips that are made.

Passage of this legislation, I believe, would go a long way toward providing the U.S. not only with greater energy diversity and independence, but for all the reasons I've said with greater national security.

As we establish our own credibility and commitment to energy diversity, I think it is critically important that we set up an accelerated, cooperative technology research and development program with China. We still have time. As a recent report of the Congressional Research Service noted, and I quote, "Because China does not have an expansive oil infrastructure, it may have less vested interest in maintaining an oil-based economy, particularly if there are viable alternatives," end quote. But this window of opportunity that's going to close before long if we don't take advantage of it.

I propose that we expand the U.S.-China Policy Dialogue, established last year with a Memorandum of Understanding between our two nations, to specifically create joint programs for the kinds of new vehicles and new fuels that I've talked about. For instance, as we work to turn our idle cropland into fuels, why not share that knowledge and capability with the Chinese, and why not ask that they do the same for some of the steps that they are beginning to take for energy diversity and independence. Let's also work with them on alternative automobile technologies, while we have a window of time, before millions and millions of additional Chinese drivers hit the roads with gas-guzzling, gas-only vehicles.
Thank you very much. (Applause.)

WILLIAM MARTIN: Thank you, Senator. I think I agree with every sentence you had in there, especially Bob Zoellick's. When Bob said something about an aggressive nationalistic policy to lock up oil, well, you know, most of the world thinks that's what we're doing. And it was so strikingly clear that I've heard that overseas, and it didn't refer to China, it referred to the United States.

LIEBERMAN: Sure. Right. Again, I agree with just about everything you've said. In other words, these are - stepping back and looking at this, these are two nations that are acting, quite understandably, in their national interest. I would say that probably we haven't done quite as well as your vision of the Chinese vision of us would be. But it does make a point. I mean, we have an oil-dependent country. We have limited resources of oil left. And in any case, even if we depend on our own oil, we are - we pay prices set in the global market. So these are two nations now following quite similar international oil acquisition policies out of need.

And what I'm essentially saying this morning - just to say it quickly one more time - if we let it go, this could end up in real military conflict, not just economic conflict. So that's why I said at one point these aggressive policies, from a Chinese point of view, are quite understandable and logical, these policies to lock up energy, just as ours are at this point. But that's why we've both got to stop it and say that there is an alternative. And we got to break out of that mental box. And the alternative is these alternative fuels and new technologies, like hybrids and hybrid plug-ins.

Bud McFarlane is here. And remind me the name of the commission - the National - (chuckles) - you and I both! Are we having a shared senior moment here, Bud? (Laughs; laughter.)

MR. McFarlane: The National Energy Commission.

LIEBERMAN: The National Energy Commission, I guess, came up with - but Bud is part of a group called Set America Free. Quite an interesting - a remarkable group. Jim Woolsey, Bud, Frank Gaffney, George Shultz. You can go on and on - a lot of people in this room. Democrats, Republicans, but united particularly because they're national security experts and hawks. And, you know, they've cited this as a problem we've got to break out of for our own national security interests. As I said, that's what motivated the senators, the 10 who have joined.

BUD MCFARLANE: Senator, I wanted to commend you and Senator Brownback and your cosponsors for having put in the bill last week.

I just wanted to offer that one of the selling points that is perhaps useful to you is if we did what you're recommending, in terms of climate change it would go well beyond Kyoto standards in reducing greenhouse gases.

I wanted to ask you, as a political judgment, what is your prognosis about the bill? Do you think it will get through? And if it does, do you think the president will sign it?

LIEBERMAN: I'm hopeful, because this was very unusual to start with these 10 senators. You get a sense of the range ideologically, geographically, not to mention in terms of bipartisanship. So it speaks to a growing concern. It's even more significant in some ways because it follows the passage of energy legislation during the summer. And, you know, we have a - there's a sort of cyclical quality to legislating. You build up over years. It's been a long time since we had an energy bill - just passed, and yet we're back at it again. Why? Because of Hurricane Katrina and the enormous energy price spikes that occurred - the three-dollars-plus a gallon for gasoline. You've got Pete Domenici, chairman of the Energy Commission - Committee; Jeff Bingaman, looking at a second energy bill right after the first one because of these new realities that we're facing. It's going to be a tough winter for a lot of people who heat with oil and gas, but particularly oil.

So we think we've got an opportunity to make this happen sooner than normally would be the case. And right now we've asked the Energy Committee - Senators Domenici and Bingaman - to hold a hearing on this, maybe December, but certainly after the first of the year, and then bring this bill out.
And if not, we're committed to attaching it as an amendment to something moving through the Senate sometime early next year. We think it's really that critical. And, you know, obviously I don't know what the president would do, whether he'd sign it, but I don't see anything in this that would inherently stop him from doing that, particularly in light of the sense of new reality and new crisis that we're facing.

And I - you know, again, I take heart from the fact that we've got Brownback, Sessions, Lugar, et cetera, Coleman, with us on this bill. It's a good bunch of Republicans.


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