*EPF310 01/14/2004
Transcript: Abraham Urges U.S.-Japan Collaboration on Technology, Security
(Q&A following January 9 address to Japanese business federation) (4720)

After addressing the Japanese business federation, Nippon Keidanren, on January 9, U.S. Secretary of Energy Spencer Abraham responded to questions from the audience on a range of issues related to energy security.

The secretary highlighted several potential areas for bilateral cooperation and collaboration between the United States and Japan, according to a transcript released by the press office of the U.S. Embassy in Tokyo.

New technologies in the nuclear field hold much promise, Abraham said, and the United States and Japan should invest in fuel cycle research and the development of a new generation of reactors that would be as "melt-down proof" as possible and resistant to proliferation.

The secretary called for the international community to redouble efforts to encourage adherence to the Nuclear Non-Proliferation treaty to guarantee energy security. He noted that the United States provides significant support to the International Atomic Energy Agency for this purpose and praised Japan's support for that agency.

Abraham also proposed increased research and development into breakthrough technologies that would reduce emissions of greenhouse gases, including hydrogen fuel cells, clean coal technology, and fusion.

Following is a transcript of the Secretary's question and answer session, released by the Press Office of the U.S. Embassy in Tokyo:

(begin transcript)

Spencer Abraham, Secretary of Energy
Address to Nippon Keidanren
Q&A Session

9 January 2004
Keidanren International Hall
Tokyo, Japan

MODERATOR: In the United States, the position is that the nuclear power will be continuously regarded as the basic power source and I hear that there are plans of constructing plant and you talked about Gen. IV, the idea of running Gen. IV together with our country within a new international framework. Japan will be taking part and the idea is for a joint promotion. You made some reference to Gen. IV. But regarding nuclear fuel cycle too, also you touched upon it. I believe that the U.S. is very eager to promote such advanced fuel cycle initiative. Now in the nuclear fuel cycle initiative field, what is the favorable and desirable modality of U.S.-Japan cooperation? Can you comment on that?

SECRETARY ABRAHAM: As I indicated in my speech, today nuclear energy provides about 20 per cent of the electricity generation in the United States. We have not, however, sited and approved a new nuclear reactor facility since the 1970's. When the Bush administration took office, we developed a national energy plan, in which we identified nuclear energy as a key component of 21st century energy production for America. To get to a new and successful deployment of nuclear energy facilities in America requires a number of things to take place. First, we felt it was important to address the question of dealing with existing nuclear waste. So our administration has now moved ahead as was indicated in the introduction. We made the decision to move ahead with the development of an underground nuclear waste repository in the state of Nevada, so that nuclear waste, which is currently contained and maintained at existing facilities, can be sent to a central repository for permanent storage. Another thing we concluded was that we needed to modernize and reauthorize the liability framework for the operation of nuclear facilities and so one of the key components of our national energy plan that's before Congress today are provisions which would reauthorize the liability framework called Price-Anderson provisions in order to make it clear in the future what the liability structure would be. A third thing we concluded was that the federal government needed to enhance and focus its research on nuclear energy science and technology programs. So we have on the one hand worked internationally on the Generation IV Nuclear Reactor Research Program and on the other hand, we have launched a new advanced fuel cycle initiative within our Department to look at 21st century technologies in terms of fuel cycle research. We certainly believe that the U.S. and Japan have many areas of mutual interest and opportunities for collaboration in a variety of these areas. Certainly the work we have already begun doing on Generation IV can be built upon and I think it will be. We hope to enter into an international nuclear energy research initiative agreement with the government of Japan which will allow us to explore a number of these areas together and certainly we look forward to being able to share the information we learn as we pursue advanced fuel cycle research in the U.S. and Japan as well.

The other area though that we must work on together is, as I identified in my speech, really is more in the area of education and information than anything else. The world is obviously made up of many people who are skeptical about the role of nuclear energy. There are countries who have basically decided and declared that they will not be involved in nuclear energy in the future. I think it is important for the major countries who work on nuclear energy to work together to better inform the people of this planet as to the progress which has been made on nuclear energy safety, on reactor designs, on the way that we deal with nuclear waste, so that there will be a greater international acceptance of nuclear power in the 21st century. The arguments for it and the advocacy for it seems to me are very obvious and clear. The environmental benefits of nuclear energy, the efficiency of its operation and the tremendous progress which has been made on safety during the last 20 plus years should all be, I think, a strong foundation for this case. But the case needs to be made and I think the United States and Japan need to play a major role internationally in making sure that the public truly understands that in the 21st century, nuclear energy can be an environmentally friendly and safe form of energy production.

MODERATOR: Thank you very much, Secretary Abraham. I would now like to shift our focus to the Asian region. You have touched upon Asia as well in your presentation. As you have correctly pointed out, the East Asian region is expected to be one of the most highly growing regions in the world in the upcoming years and we expect that there will be a very sharp growth in energy demand in this region. The stable supply and assurance of energy in the East Asian region must be a great point of interest for our two countries, Japan and the United States. Therefore, Japan along with the United States, must play a certain role in order to maintain energy supply security in this region. What should be the divisional role between Japan and the United States?

SECRETARY ABRAHAM: Well, I think first of all that energy security is a clear common challenge to both America and Japan. We both are significant importers of energy, we both recognize the delicate balance between supply and demand -- if that balance is distorted, the impact on prices and availability can be quickly felt by our public. One of the things that we have focused on and that I think is important for the years ahead, is diversifying the sources of energy supply in the international marketplace. We believe and are working as part of our energy plan, working very hard to develop multiple international sources of energy supply, not just for America, but for the world. We see the world oil market as one that can expand and should expand as West Africa, South America, as the Caspian region, as Russia become more active players in that marketplace. One of the things which our government is doing and which I would envision is something that other interested consumer countries like Japan would be doing as well is investing in the development of energy in new parts of the world, areas that have previously not contributed to the world marketplace. I see the same opportunities in the marketplace of gas -- another product which is increasingly becoming an internationally traded commodity. We have been working hard to find ways to energize the production of gas into the world market from places in our hemisphere. We also hope that Russia will play a more active role in the world gas marketplace in the future and we see other regions of the planet as being contributors to the gas market of the 21st century. I recently convened a summit in Washington of major producers of gas and we had attendants from a number of countries, 20 plus countries who have demonstrated that they have the capacity to be significant participants in a world liquefied natural gas marketplace that I see developing in the years ahead. What the United States or Japan, or other consumer countries can do in this is obviously to look for opportunities to stimulate investment in these new areas of the world to trigger their success, as they become more active players. We hope that will be one of the ways that we address this energy security challenge which not only affects East Asia, but certainly affects North America as well.

MODERATOR: Thank you very much for your reply, especially on the question on the Asian energy. All over Asia, there is a mounting interest in nuclear energy. We agree on the need to develop a proliferation-resistant system, especially in this part of the world, if a nuclear power is to be developed. That kind of system has to be developed, thereby making contribution to the regional security. On this point, can you dwell on that, the question of a proliferation-resistant system?

SECRETARY ABRAHAM: I think that there is sort of two parts to this equation. The first is the part that really relates to our scientific research and development. One of the reasons we embarked on the Generation IV Nuclear Energy Initiative on a global basis was our hope that we could develop a fourth generation of nuclear reactors that would be as melt-down proof as possible and as proliferation-resistant possible. We are very optimistic about our ability to successfully transcend the existing generation of reactors to ones that do address these issues, especially the proliferation issue. The same is true with regard to our fuel cycle research. The question posed in America and elsewhere in the world is that when one has a closed fuel cycle system versus open system, which is preferable and then of course part of that equation is the questions that relate to proliferation. We hope that the advanced fuel cycle progress that we are making and research we are conducting can help to answer that as well.

But the other side of debate of course, the approach, really is how the international community addresses proliferation issues. Here we look at the issues of safeguards and security. We have been concerned about the manner in which the international community, the issues that the international community has had to contend with when it comes to proliferation of nuclear materials and of weapons grade materials in particular. We think it's critical that the Nuclear Non-Proliferation Treaty be adhered to. We believe it's a central element in the peace and safety of the 21st century. We believe that all of the signatories to it have to work very hard to make sure that the treaty remains meaningful and remains effective in the 21st century. It's one of the reasons that our government has provided considerable financial support to the International Atomic Energy Agency, and we appreciate Japan's support of that agency as well, because it's work as the watchdog is a very pivotal component in our efforts to address proliferation of nuclear materials.

MODERATOR: Thank you very much, Secretary Abraham. Our next question has to do with global warming. Japan was of course the host to the Kyoto Protocol conference and therefore we have ratified the Kyoto Protocol and we regard this to be center in the promotion of global warming. But the United States feels that there are many elements, which are unreasonable with regard to the framework of the Kyoto Protocol and therefore the United States has gone out of the framework of Kyoto Protocol to come up with a framework unique to the United States to counter global warming. If the United States and developing countries at large are not participating in the Kyoto Protocol, then it means that two-thirds of the total global emissions will be outside the framework of the Kyoto Protocol and therefore we would not be able to resolve the problem of global warming. Therefore what is significant for us is of course each country must push forward with global warming countermeasures, but in the second commitment period of 2013, what kind of an international framework would be able to be set up? What are the measures that you feel that we should be taking?

SECRETARY ABRAHAM: Thank you. I am not sure that I can solve the entire challenge here today (laughter). Let me outline for this audience what America is doing and what we have invited others to join us in accomplishing. It is America's view that the most effective metric for us to use in terms of our approach to climate change and greenhouse gas emissions is a metric that tries to link reducing the growth of GHG emission with a growing economy so that we don't sacrifice our economy as we attempt to restrain the emission of GHG, of carbon and other greenhouse gas emissions. The metric we chose is one we call our 'carbon intensity' metric, in which we essentially measure the amount of carbon emitted per unit of economic output in the United States.

President Bush has committed our country to an 18 percent reduction or improvement in carbon intensity between now and the year 2012. To accomplish that, which would have the practical effect, to give you some perspective, it would have the practical effect of removing 70 million cars and motor vehicles from highways of America if we were to accomplish that improvement. To accomplish it, we have embarked upon a number of specific projects. One is a voluntary program in which we have enlisted a variety of industrial sectors to make voluntary reductions in their carbon intensity between now and 2012. We have secured the support of a number of major industries, including the energy industries, in this program called our Climate Vision Program.

Second, we have enhanced the research and support we are providing to our government's various incentive programs for the use of more energy efficient, renewable energy and other kinds of programs. This year, President Bush sent to Congress the largest budget for energy efficiency and renewable energy programs larger than any budget Congress has enacted in 20 years. Our department, which has the leadership responsibility for most of this effort, has launched a number of exciting new programs to translate into greater efficiencies for renewable energy programs and energy efficiency programs.

Third, we have launched a very ambitious, 8 billion dollar five-year program to study climate, to better understand exactly what the issues are that result in climate change so that we can simultaneously develop the technologies that will address it. That program is run by the United States Department of Commerce.

Finally, my department, I think, has the exciting challenge of developing the specific technologies to address climate change, both in the short, mid and long term. At the end of the day, whether one subscribes to the Kyoto Protocols or to the Carbon Intensity Standard Metric that we have developed, or some other system that might be developed in the future, the choices for obtaining those greenhouse gas emission reductions are really only two.

One option is to reduce one's economic activity, so that one produces as a nation fewer emissions. I would submit that no country is likely to follow that course. No country will reduce its standard of living in order to meet its GHG emission objectives. The other alternative is the goal of developing breakthrough technologies, new R & D to allow us to grow our economies while simultaneously reducing our emissions. It's that area that my department had responsibility for and it is an area in which we are investing considerably in the short term as well as the long term. I have already mentioned our hydrogen program in which we are investing in just over the next five years alone 1.7 billion dollars. We also have in the area of clean coal technology and carbon sequestration a ten-year, 2 billion dollar commitment to develop sequestration technologies and clean operating power plants of the future. We have rejoined ITER as I already mentioned. When you add up the investments that the United States is making on clean coal, on carbon sequestration, on hydrogen and on the basic research into climate, we are talking about a 10 billion dollar plus investment in this science and technology over the next five to ten years alone. I would submit that level of investment is comparable to, if not greater than, any investment being made by any country on the planet on these kinds of programs. In addition, we believe that these kinds of programs should be, where it's feasible, international in scope, and that's why we've developed an international partnership for the hydrogen economy that I mentioned. It's why we have developed a world organization called the Carbon Sequestration Leadership Forum, where we can work together to stretch limited research resources in order to accelerate the success we will have in developing these new technologies. That's again why we are invested so heavily in Generation IV and why we have rejoined the ITER program. So we see science and technology as the answer to this challenge. In the absence of transformational technological breakthroughs, the only choice countries will have is one in which economic consequences are severe. We think the better course is to make the investments that we're doing, that others are doing, and to work together so that when we succeed in this breakthrough research, the success won't belong to one nation, but rather will be something that can be shared throughout this planet, especially with the developing countries, so that we truly can surmount the problems of both greenhouse gas emissions specifically, but even more broadly, of other environmental challenges during this century.

MODERATOR: Thank you very much, Mr. Secretary. Changing the subject, in August of last year, there was a major blackout in the northern part of America. There were several questions asked about this blackout, so I will read those questions. In November, there was a U.S.-Canada joint study commission on power failure and an interim report was made. We understand that you are still working on producing the final report of this study based upon what happened. What are the things that you are considering in order to prevent the reoccurrence of such major blackouts? Going forward, how stable are you going to make the grid system so that energy supply security can be established? I'm sure there are many ideas in the United States. Can you talk about them?

SECRETARY ABRAHAM: When we suffered the blackout that affected the northeastern part of the United States and a major part of Canada, it was not the first blackout that has occurred in America in recent years. We've had several in the late 1990's and before that, one in the 1970's. Since the blackout in America, there have been blackouts occur in London, in Italy, in Moscow, and I know in other parts of the world. Some of it, I suspect, is inevitable, given the complexity of our infrastructure system for the distribution of electricity and the impact often on that system of matters of climate, weather and so on. In the specific case of the blackout in the United States, we concluded after significant study by a joint U.S.-Canadian taskforce that the principle cause, the blackout itself was caused because several important power lines in the state of Ohio went down when they no longer could transmit the electricity through them, the electricity was still being generated, it was forced onto alternative routes and pretty soon, when it hit those alternative corridors, it overwhelmed those corridors, so they began to shut down and after that it cascaded throughout the entire northeastern part of America. That's what happened. Why it happened, we concluded, was because some fairly fundamental and in some respects straightforward and fairly avoidable reasons.

First, it turns out that trees in the area in which the power lines went down had not been sufficiently maintained and trimmed and so they were in fact disrupting the operation of the lines. We found that the computer systems being operated in the control rooms of both the direct power company in whose region the lines were going down, as well as in the regional power organization that oversaw that part of the country, computer systems weren't operating effectively. They were literally malfunctioning and the operators did not know it. The conclusion we've reached is that this could likely have been avoided if the standards of behavior by the people who work within the transmission system were high standards that could be enforced by the federal government. But in America today, the standards of operation within the electricity grid are not mandatory standards. There is no punishment available to met out against anybody who operates within the system improperly or negligently or fails to perform a duty they should. So, we think the most important first step for our country to take is one in which we would establish mandatory reliability standards, standards of good behavior and make them enforceable by the federal governments' Energy Regulatory Commission. That's not my department, it's an independent agency in Washington.

The other thing which we have determined and really had decided long before the blackout itself was that the infrastructure of our electricity transmission system in America faces many challenges. It's probably in many areas of the country older than it should be, because of the escalating demand for electricity in America -- a demand level which will increase by about 45 percent over the next 15 to 20 years. The system right now just has more demand being placed on it than it's capable of handling, at least that will be the case as the demand level continues to grow. There's a great need for more investment in infrastructure in the electricity transmission system in America, and as a consequence, we are very hopeful that the energy bill before the United State Congress will ultimately be passed, because that legislation includes first of all, the mandatory reliability standards that I referenced, and second, a variety of provisions which, if enacted, we believe would bring about greater investment in the development of the electricity infrastructure of the United States. That combination -- modernizing the infrastructure and holding the participants to a high standard of conduct are in our judgment, the two most important steps that need to be taken, so that in the future we can minimize, if not totally eliminate the likelihood of a blackout of the sort that took place August 14th.

MODERATOR: Thank you very much. Well, we are approaching the final leg of our program and have some questions with regard to fossil fuel. Secretary Abraham, you have talked about the importance of diverse fuel mix, as well as diversity of supply. What should be the optimum balance between domestic development of gas and petroleum and imports of gas and petroleum? What is the optimum balance for the United States without undermining the balance of supply and demand of energy in the global market? What is the best mix of domestic development and imports for the United States for gas and petroleum?

SECRETARY ABRAHAM: In the United States, we have not set a specific target in terms of the percentage of domestic production versus imports. What we've recognized is that as it relates to oil, the United States is incapable from its existing as well as its potential reserves, to meet the growing demand levels we have in order to bring our import percentage back to the kinds of levels we had in the 1970's or 60's. With respect to gas, there's also a growing demand that no longer can be met exclusively by our domestic sources. So our view is that two things are important.

First, to make sure that the world supply is diverse, because even as America's demand or Japan's demand is great, the demands for oil and ultimately gas in the developing countries will soon make both of those commodities more scarce, or at least more demanded. So we believe that it's important for there to be as many places in the world producing oil and gas competitively as possible. It's one of the reasons we are looking for more trade partnerships, why we are working with countries who have the reserves to identify what the impediments are to the development of those reserves, that means in parts of the world that have never before had transparent laws. We encourage and urge the development of such a legal system. That's why are holding summits, in which we bring American companies together with companies from other parts of the world to find new opportunities for U.S. investment in the development of energy resources, not just in the Middle East, not just in the traditional sources of energy production, but in Africa, in Latin America, Central America, South America, in the Caspian region and elsewhere. So that's the first part of our strategy -- to diversify the sources and to help countries who have these reserves be better able produce from those reserves.

The second part of our strategy is something we have talked about several times here today, that is to develop a diverse set of fuels to be used by our countries, including not just the traditional fuels, but also new sources such as hydrogen. That's why I think the hydrogen economy discussion, which we have had here today is such a pivotal one. It's one of the reasons my trip here this week has been so exciting because I have found such a common interest between what we're doing in America and what my counterpart agencies are doing here, ministries are doing here in Japan and why I am so excited about the tremendous opportunities for us to work together on hydrogen. If we succeed in moving from a carbon economy to a hydrogen economy, we can simultaneously address both the issue of energy dependence on the one hand and the environment on the other. If we are able to produce hydrogen from domestic available sources, we tremendously lessen this energy security challenge we face. If we use hydrogen fuel cells to power our motor vehicle fleets, a fuel cell source that only produces as a by-product water, we are able to likewise address these questions of climate and pollution that so challenge us today.

So, the opportunities here I think are great, but I think you have to, for the short term, aggressively develop a more diverse source of fuel around the world and for the mid and long term, we have to find ways to use hydrogen as a major power source, to use fusion as a major power source and then to find technologies that render existing power sources more benign. One of the things we talked about is carbon sequestration, clean coal. The world has plentiful supplies of coal, much of it in developing countries -- it will be used. Those countries who have coal will use it. What we want to do is make it possible for coal to be used in a way that is clean and safe. So that combination, I think, of strategies for Japan and America brings us together, offers us real opportunity and hope and certainly will ensure that both I and my successors are here often to discuss these issues with you. Thank you very much.

MODERATOR: Thank you very much Mr. Secretary.

(end transcript)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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