ASSISTANT SECRETARY PYATT: Thank you very much and good morning. Thank you to the Chamber for the invitation. This is a perfect setting, and the last presentation was really a perfect setup.
My decision to make this event one of my first public speaking engagements as the newly appointed Assistant Secretary for Energy Resources reflects the U.S. government’s recognition of how important the private sector is to facilitating an energy transition. But it also reflects my own commitment as a career State Department economic officer, to making sure we are mobilizing all of our tools of economic statecraft in order to support American business abroad.
I joked with Roger after the last presentation, I feel like I’ve been working for GE for 30 years in different parts of the world. I’d say the same about Honeywell and a lot of our other companies. Throughout my career I have seen first-hand what the deployment of innovative technologies developed by America’s unmatched private sector can do to create opportunity when that technology is combined with the right policy environment.
And that’s why the State Department’s ENR bureau has a mission to support countries in developing policies that will help them to mobilize investment for energy infrastructure.
Energy resources and our American energy companies have been central to America’s position of global leadership for many years. The Biden administration’s recent accomplishments are helping to ensure that we retain that leadership position through the ongoing and dramatic transformation of the global energy system from one built around fossil fuels to one focused on renewable sources.
As we are seeing in Europe’s efforts to curtail reliance on Russian gas and oil, the energy transition is about more than just decarbonization. It’s about national security. It’s about affordability. And it’s about the future of our shared environment.
We are at a unique moment in history. Global energy markets are in the midst of a profound shift as falling clean energy technology costs and shifting regulatory priorities upend the economics of the power sector. Renewables are increasingly cheaper than their fossil counterparts and coupled with new energy shortage and efficiency options are disrupting traditional energy market models.
Just look at the numbers. Over the past decade solar PV costs have fallen by 82 percent. Onshore wind costs have fallen by 39 percent. And lithium-ion battery costs have fallen by 90 percent.
Renewables are now the least cost source of new bulk electricity generation in countries that together represent two-thirds of the world’s population and about 72 percent of global GDP.
Last year global investment in energy efficiency by leading American companies like Dow, GE, Google, Citi, reached $290 billion dollars. Energy efficiency accounts for 2.1 million jobs in the United States. And I believe our private sector is uniquely positioned to bring capital and technology to bear on this climate challenge more quickly than any other country in the world.
At the same time in order to transform the energy system we need to tackle hard to abate sectors like shipping and aviation, and that means significant investment in technologies that are not yet at commercial scale.
Unfortunately, the organic pace of energy transformation is not sufficient to meet either our climate goals or our energy security requirements. And that’s where government policy comes in. The Inflation Reduction Act represents a game-changing investment of $369 billion dollars in climate and clean energy. The IRA will drive innovation and create unprecedented market demand for the technology and resources required to meet climate goals in the United States and globally.
As the IEA Executive Director Fatih Birol put it to me yesterday, globally the IRA is the single most important energy sector development since Paris in 2015. And I was very glad in this regard to hear Chevron’s Jeff Gustavson make exactly the same point in the panel just before us.
We are working flat out to leverage innovation and the private sector’s clean energy goals to support national climate targets to meet their corporate net zero commitments. Over 1000 companies worldwide, across all sectors, have committed to using clean energy to power their global operations and supply chains.
Many of these companies’ energy requirements are as large as a small nation and if they can meet their targets, imagine the effect on global emissions and economic growth.
Despite the demonstrated demand and potential for driving new investment there are challenges for companies buying clean energy and power systems that have been built around fossil fuels. In some cases, this requires policy reforms that are unfamiliar, while in others it involves strengthening the electricity grids. These actions are important in their own right but sending the demand signal for clean energy can drive innovation and the policy reforms needed to support clean energy procurement.
That’s where the Clean Energy Demand Initiative or CEDI helps provide a platform to aggregate company demand, to understand where the policy bottlenecks are in energy systems, and to support impactful policy and regulatory reform.
Through CEDI, countries can also signal that they have common goals to deploy clean energy in an affordable and a reliable manner. In this regard I want to congratulate Nigerian Environment Minister Mohammed Abdullahi who was on a previous panel for his signing of the CEDI Letter of Intent just last week. By signing the Letter of Intent, Nigeria signaled that it welcomes private sector investment in the clean energy infrastructure and is committed to implementing policy that will drive innovation.
Through CEDI, companies have indicated investment interests that could drive up to $100 billion dollars in renewable energy infrastructure across 14 countries including Australia, Brazil, India, Indonesia, Japan, Malaysia, Mexico, Nigeria, Singapore, South Africa, the Republic of Korea, Thailand, the Philippines and Vietnam.
I saw the power of this demand signal as Ambassador in Greece where Microsoft’s commitment to running their new hundred-million-euro data center complex on renewable energy is stimulating the rapid buildout of wind, solar, and grid infrastructure. And apropos of Roger Martella’s presentation from GE, I was also glad in that context to partner with GE Wind in GE’s Gas Turbine Division to leverage this demand for clean energy sources and to make sure that American companies were at the front of the queue.
I’ve also seen how the reliability of renewable energy is a serious consideration for American companies looking to make decisions on where to expand and to invest. So, getting the regulatory environment right is crucial.
In this regard I also commend Google on its groundbreaking work to explore how systems can run 24×7 on renewable energy and how to lessen the burden on utilities by matching power demand.
Improving energy efficiency in the rapidly growing air conditioning and refrigeration sector apropos Honeywell is another important element of the energy transition, as well as climate change mitigation. The work that Honeywell and Chemours are doing to merge HFC phaseout with cooling efficiency will have a profound effect on the new energy system.
For example, in Southeast Asia cooling accounts for one-third of peak demand in a region where energy requirements are projected to grow 60 percent by 2040. With a combination of targeted policies to accelerate energy transition and technology and capital from the American private sector, there’s a fantastic potential to lower emissions, improve energy reliability, and expand economic opportunity.
The United States intends to lead this next phase of energy developments just as we have done for decades before, through previous global energy transitions. American energy technology and finance firms will be indispensable partners in this effort. I look forward to partnering with the Chamber in that regard, and I thank everybody for the opportunity to be with you today.