HardAssetsInvestor

Written by Brad Zigler  |

October 20, 2008

Ag Secretary Defends Ethanol

Details

HardAssetsInvestor.com's managing editor talks biofuels with Ed Schafer.

• Optimizing domestic fossil fuels
• Fractured focus stalls national policy
• Orange juice industry reuses discarded by-product

 

Ed Schafer was sworn in as the 29th Secretary of the U.S. Department of Agriculture in January 2008. A two-term governor of North Dakota, Schafer chaired the Republican Governors Association and co-founded the Governors Biotechnology Partnership to increase public understanding and support for the benefits of agricultural biotechnology.

 

Hard Assets Investor Editor Brad Zigler (HAI): How do you see biomass and biofuel production fitting into a solution to our present energy problem?

Secretary of Agriculture Ed Schafer (Schafer): Well, I'm in that "all the above" category. I think we need to be pursuing all kinds of energy sources.

In 1996, I was the chairman of the Interstate Oil and Gas Compact Commission, an organization representing all the states that produce oil and gas. We developed a public policy and issued a booklet called "America, a Dependent Nation." At that point, a little over 40% of our energy came from nondomestic sources. In other words, imports - mostly of oil.

We projected at that time that if we didn't do something about developing domestic sources of energy, we would see the day when 60 or 65% of our energy would be imported. In 1996, we made a presentation to then-President Bill Clinton and presidential candidate Bob Dole and said, "We need to enter this into the public discussion in the presidential race." Of course, we all know we didn't hear anything about that in the presidential race. Today, we're looking at 65% of our energy needs met by imports.

It behooves us to put on the table a national energy policy, and that national energy policy, in my view, must include the enhancement, discovery, recovery and use of traditional fossil fuel resources in this country.

I think it must include biofuels, but we also have to look at incentives for wind, natural gas and solar. As an example, the solar tax credits are about to expire. Why would you invest in a very expensive energy-generation resource today without good public policy?

So it would help if we had an overall, overarching national energy policy that says this is where the country needs to go. If we don't have one, then we can't develop public policy, whether it be tax incentives, regulatory issues, whatever.

HAI: Could you speculate on why there is no national energy policy?

Schafer: It's dangerous to speculate. But here's my belief. I think that a representative form of government helps divide us and really pit one source against another. What we have said is, "Okay, in my state I have the potential for wind generation, so I'm going to have to champion that." Someone else says, "In my state we have coal production, so I'm going to champion that." Another may say, "In my state we have oil, and I'm going to champion that."

Because we don't have unlimited resources, we pit one against the other. We don't look at overall policy. We say we don't have enough money, we don't have the resources, so a representative has to get enough votes for wind, or enough votes for battery oxide cells for hydrogen, or whatever it is. Because of this, we have fractured the focus so much that we don't get an overall public policy.

I think it's going to take some real strong leadership to say, "This is the overall policy; we're not choosing one or another, we're not trying to pit one against the other or take away from one to advance another. We're not going to trash the coal industry, and were not going to champion wind energy at the expense of coal. This is the direction that this country needs to take."