With Secretary of Energy Steven Chu set to depart his post in the coming weeks, many are watching for clues as to who President Obama will pick to be his successor. Some hope for a more industry-friendly pick, such as Duke Energy’s CEO Jim Rogers. Environmentalists have been pulling for names like Tom Steyer, billionaire investor and cleantech enthusiast, or John Podesta, head of the Center for American Progress. Considering Secretary Chu’s struggles with Congress, many want a more politically-adept pick like former Senator Byron Dorgan (D-ND).
Whomever President Obama chooses, the nominee will be critical in laying out the energy agenda for the next four years.
Or will they?
Aside from the surge in funds from the stimulus act in 2009, much of DOE’s annual budget is not allocated to energy technology development. Fully two-thirds of DOE’s budget is dedicated to the stewardship of the nation’s nuclear weapons stockpile, while only about 19% of the budget is dedicated to the Office of Science, which is where research for energy technologies is conducted.
Despite its namesake, there are other agencies that are actually more influential over America’s energy industry than the Department of Energy, and they will be at the center of how the Obama administration deals with the critical energy choices it faces in a second term.
One of these choices is how to reduce greenhouse gas emissions in the electricity sector, which will depend on rulemaking from the EPA. If Lisa Jackson’s successor at EPA decides to follow through on tougher carbon limits from existing power plants, building on last year’s rule for new power plants, it will accelerate the demise of the coal industry that is already underway.
The Department of Interior is central to another critical energy choice over the next several years: how to manage America’s newfound fossil fuel abundance. The US is blessed with abundant resources of oil and natural gas, and advances in hydraulic fracturing and horizontal drilling have opened up vast new reserves. Oil production is at its highest level in 20 years and America is awash in natural gas.
However, the surge in drilling has resulted in political blowback, as communities around the country have raised alarm over the effects on water and air quality. EPA is conducting a major review of the effects of fracking on groundwater, and it will be up to the Interior Department to issue regulations based on these findings, which will have a huge impact on the future oil and gas drilling in the US
Similarly, the production of energy – both fossil fuels and renewable energy – on public lands was a contentious issue during the Presidential campaign last year. The Department of Interior manages 500 million acres of land, equivalent to roughly one-fifth of all surface land in the United States. Balancing energy development with conservation will fall to Secretary Ken Salazar’s successor.
Interior also has the authority over the outer continental shelf (i.e. offshore oil, gas, and wind). In particular, how DOI handles Shell’s mishaps in Alaska will have huge bearing on the future of energy development in the Arctic.
Another energy decision is the fate of the Keystone XL pipeline. The State Department, presumably led by Obama’s nominee Senator John Kerry (an ASP board member), will decide in the coming months whether or not to grant a permit for its construction.
The US also plays a critical role in international negotiations over a climate treaty, which would have large impacts on the domestic energy industry. While little progress is expected, to the extent that the US engages on this issue, the State Department will be in the lead.
As the largest single user of energy in the country, the Department of Defense has a lot of influence over the deployment of new energy technologies. DoD is investing in biofuels to fuel its fleet, renewable energy to power its bases, as well as a variety of energy efficiency initiatives to cut down on its energy use. As a large consumer, the “demand pull” from DoD has great influence over energy markets.
These issues will greatly shape America’s energy picture in the coming years, yet all of them fall outside of the jurisdiction of the Department of Energy.
Therefore, as we await President Obama’s announcement for Secretary Chu’s replacement, it is worth remembering that much of the nation’s energy policy gets sorted out in agencies other than the one with “Energy” in its name.
Nick Cunningham is a policy analyst at the American Security Project, a non-profit, bipartisan public policy and research organization dedicated to fostering knowledge and understanding of a range of national security issues.