Climate and Insurance.org | takefive with Richard G. Lugar

U.S. Sen. Richard G. Lugar (R-In) has been an unwavering advocate of U.S. leadership in the world on strong national security, free-trade and economic growth issues during his six terms in office.

Sen. Lugar has been a leader in reducing the threat of nuclear, chemical and biological weapons. In 1991, he forged a bipartisan partnership with then-Senate Armed Services Chairman, Sam Nunn (D-Ga.), to destroy these weapons of mass destruction in the former Soviet Union.

As Chairman of the Agriculture Committee, Sen. Lugar built bipartisan support for the 1996 federal farm program reforms. He also initiated a biofuels research program to help decrease U.S. dependency on foreign oil.

Combining his experiences on the Foreign Relations and Agriculture Committees and recognizing that energy security impacts every aspect of life in the United States, from the cars we drive and how much we pay at the gas pump to our vulnerability to foreign terrorism and our relationships with other countries, Sen. Lugar has launched the Lugar Energy Initiative.

He is a graduate of Denison University in Granville, Ohio, and attended Pembroke College at Oxford University as a Rhodes Scholar, studying politics, philosophy and economics.

Takefive:
Senator Lugar, in recent weeks, President Bush has unveiled an energy initiative. Bipartisan business and environmental coalitions like the Energy Security Leadership Council and the U.S. Climate Action Partnership have also offered their own energy recommendations. Given these developments, do you think Congress is ready to move forward this year on what you have described as a need to develop a U.S. energy security policy?

Senator Lugar:
Our national security and environment demand that we be aggressive in development of renewable and alternative clean energy resources. This will be a major focus of debate in the 110th Congress.

In his State of the Union address, President Bush proposed to reduce petroleum-based gasoline usage by 20 percent in the next 10 years. These proposals can propel bipartisan cooperation on an energy agenda that will bring meaningful reductions in U.S. oil dependence. Congress has already begun debate on proposals, and I have introduced legislation with my colleagues from both parties that offers possibilities for joint efforts with the White House in meeting our shared vision to move beyond a petroleum-based economy. I look forward to working with the president and with senators on both sides of the aisle in the drafting and passage of important energy policy legislation.

Takefive:
You have already introduced or co-sponsored three bills (S. 23, S. 133 and S. 162), which address various components of a domestic energy security policy. Can you briefly describe what each bill hopes to accomplish?

Senator Lugar:
The heart of America's geostrategic problem is reliance on imported oil in a market that is dominated by volatile and hostile governments. The key to a successful strategy lies in reforming the transportation sector. I have advocated a plan that could displace the equivalent of half the oil we use today. Renewable fuel use and fuel efficiency can be dramatically increased in the near term and will complement other innovations, like hydrogen, in the decades ahead. Key elements of the strategy I offer are included in the following bills, which I have introduced:

The National Fuels Initiative, S.162, seeks to diversify the fuel mix in our transportation system by encouraging sustained production and use of non-petroleum-based fuels. Most notably, the bill proposes to create long-term assurances that alternative fuels could remain economically competitive if oil prices were to drop below $45 per barrel. In return, the bill would reduce taxpayer-funded subsidies when high oil prices result in highly competitive and profitable alternative fuels. The bill would also reserve a larger share of domestic fuel markets for alternative fuels, promote the installation of E-85 fuel pumps and the supporting infrastructure, encourage the manufacture of flexible fuel vehicles, and increase fuel economy standards.

The current bill also would increase federal fuel economy standards by taking a new, more flexible approach, breaking a decades-long logjam on the issue. Specifically, the bill would create a 4 percent target for annual increases in Corporate Average Fuel Economy (CAFE) standards. This target would be subject to revision if National Highway Traffic Safety Administration experts conclude the targets unachievable with current technology or are unable to guarantee fleet safety, among other considerations.

I have also introduced the American Fuels Act, S.133, : with Senator Obama that would use alternative fuel technologies to reduce America's dependence on foreign oil in a four-step approach. First, the bill would spur investment in alternative fuels by increasing the production of cellulosic biomass ethanol to 250 million gallons by 2012. It would also create an Alternative Diesel Standard that would require 2 billion gallons of alternative diesels to be mixed into the 40 billion gallon annual national diesel pool by 2016. Second, the legislation would help increase consumer demand for alternative fuels by providing a short-term, 35 cents per gallon tax credit for E-85 fuel and by providing automakers with tax incentives to produce additional Flexible Fuel Vehicles (FFVs). Third, it would require the U.S. government to allow public access to alternative fueling stations on government property. Finally, the bill would create a Director of Energy Security to oversee and keep America focused on the goal of energy independence.

There is no excuse why a car should not be flexible fuel, a blend of 85 percent ethanol and 15 percent gasoline. The cost of this technology is low, but the benefits in giving consumers choice in fuels are high. From a practical perspective, we must then make E85 available at the pumps to consumers by requiring filing stations to install the appropriate pumps.

This is why I have introduced S.23, the Biofuels Security Act with Senators Harkin, Biden, Dorgan, and Obama. This bill would require all U.S.-marketed vehicles to be manufactured as FFVs by 2016, require the major U.S. gasoline companies to carry E-85 renewable fuel in 50 percent of their gas stations, and extend and increase the Renewable Fuels Standard (RFS).

Currently, the RFS sets a benchmark of 7.5 billion gallons of renewable fuels produced by 2012. In 2005, active ethanol production exceeded the 2006 RFS levels by 300 million gallons. The new legislation would set three new benchmarks:

Additional information on all of these bills is available on my website: www.lugar.senate.gov/energy.

Takefive:
Senator, you also have introduced S. Res. 30 and S. 193, both of which call for actions by the United States on the international climate change stage. Can you talk about your rationale for introducing these initiatives?

Senator Lugar:
In the past there has been a false political division between energy policy and environmental concerns. The reality is the United States faces both a national security emergency and an environmental emergency.

The environment and energy security are interlinked priorities, the advancement of which increases the welfare of all Americans. Conversely, the deterioration of either will harm our national security interests, economic well being, and our way of life. We must craft a new environmental program that will meet the complementary demands of economic growth and combating climate change.

An important component in this strategy is coordinated and sustained energy diplomacy with our partners abroad. Energy cooperation with large energy consuming nations and producing nations offers a chance to improve our energy security and broaden relationships. One pressing area of need is to expand international emergency response mechanisms, such as formally bringing India and China into the international strategic petroleum reserve mechanism.

The Energy Diplomacy and Security Act, S.193, which I have introduced, is intended to reduce U.S. vulnerability to disruption in oil supplies and price spikes, increase our own security of supply, reduce the propensity for energy to be a source of international conflict, and blunt the ability of producer states to use energy as a weapon.

The bill calls on the administration to pursue new avenues of international cooperation on energy security with our partners around the world, with a special emphasis on increasing the use of sustainable energy sources. It would invigorate existing international energy partnerships and seek new ones with key producing and consuming countries. The bill also calls on the administration to weave a more reliable energy security fabric within our own hemisphere, working more closely with Canada and Latin America on emergency preparedness, conservation, sustainable energy, and energy access for the poor.

The bill also directs the administration to seek formal agreements with India and China that commit those countries to establish their own strategic petroleum reserves that are coordinated with other consumer nations. Such a move would give the U.S. and other oil consuming nations more leverage and flexibility during international oil supply disruptions and help stabilize world oil markets.

Finally, the bill would strengthen our diplomatic capacity in international energy security. Currently the highest ranking State Department official solely dedicated to these issues is only at the office director level - not even a deputy assistant secretary. The bill calls for a coordinator position at the State Department in order to integrate international energy security priorities with our diplomatic efforts.

Just as securing our energy requires international agreements and cooperation, so too does securing our environment. As China, India, Brazil, and other industrializing countries come on line as major energy consumers, they will increasingly become a source of global climate change and environmental degradation. It is in our interest to coax these countries into international environmental frameworks by actively participating in the agreements ourselves. For this reason, I have co-authored with Senator Biden S. Res. 30, which calls on the United States to pursue agreements under the United Nations Framework Convention on Climate Change.

Takefive:
The latest Intergovernmental Panel on Climate Change assessment notes, among other things, that there is a 90 percent probability that human activities are to blame for most of the global warming in the past 50 years. In light of that statement, do you see Congress possibly developing initiatives that would encourage Americans to develop their individual carbon footprints?

Senator Lugar:
The United States needs effective programs that harness market forces to prod carbon constraints and cuts. Such programs should include a carbon trading mechanism. Last year, I listed my farm in Indiana on the Chicago Climate Exchange to set an example for farmers and foresters in my state and throughout America. The hardwood trees on my farm sequester 3,400 tons of carbon, which have market value on the exchange despite the lack of a broader cap and trade system in America. Changes sometimes come slowly, but I am hopeful that the Chicago Climate Exchange will illustrate how easily market value can attach to the most rudimentary of carbon reduction efforts.

For example, the exchange mechanism could be utilized by turning unused farmland into tree farms that sequester carbon while providing farmers with extra money. Or, farms could be used to grow grasses, which are then converted into cellulosic ethanol. I was pleased to learn of farmers in Iowa who use no-till cultivation practices, thus keeping carbon in the ground, and have subsequently placed their farms on the Chicago Climate Exchange. In short, American farmers could become the vanguard in using market forces to the benefit of both the environment and the pocketbook.

Takefive:
Finally, what role, if any, should the insurance industry play in the energy security debate?

Senator Lugar:
The urgency of moving beyond a petroleum-based economy requires stronger commitment by our government and by industry and non-governmental leaders. Currently, even some of the largest energy companies foresee a carbon-constrained future and are planning future business models accordingly. Likewise, the insurance industry may choose to assess the catastrophic risk that accompanies threats to energy security and climate change and be a voice in developing strategies for dealing with environmental calamities related to climate change. For example, soybean rust has already migrated from tropical areas to the detriment of crops as far north as Indiana. The spread of disease or pest infestations could likewise cause political, economic, and social disruption through the world.

Addressing the joint priorities of energy security and the environment present an opportunity to foster greater economic development and job growth for many Americans.