Remarks at the Petroleum Club, hosted by the First Reserve Corporation

Chief Operating Officer Paul Dickerson's remarks at the Petroleum Club in Houston, Texas

March 13, 2008

It's great to be back in Houston. And here we are, at the Petroleum Club, discussing alternatives to petroleum. My friends, we have come a long way in a short period of time.

I don't know if you saw it, but last July, the National Petroleum Council—chaired by former Exxon CEO Lee Raymond—issued a report titled "Facing the Hard Truths About Energy." It said that, to remain competitive, America will need to expand and diversify its energy production to include biomass, wind, solar, clean-coal, and other technologies.

Experts in the petroleum industry advocating for renewables. There can be no doubt this is a pivotal moment in this nation's history. And it is not just about crude oil prices above $100 a barrel. It's about our security, our climate, and our economy.

This, my friends, is a new day. America's "clean energy" appetite has never been greater. What I'd like to do this morning is tell you how your federal government is working to feed that appetite. And once I close, I hope you will see how my office is behaving differently in addressing our nation's challenges and, more than ever, helping U.S. companies win.

Let me begin by offering a brief overview. With two exceptions, my office generally manages all of America's investments in the research, development, and deployment of clean energy. We do not handle nuclear. We do not handle clean coal. The rest belongs to our team—from CFLs, to vehicles, from geothermal, to green buildings—if it is cleantech, we do it.

Our mission is two-fold. First, we seek to drive down the cost of technology, something we have done for the past 30 years. Second, we work to clear the obstacles preventing technologies from winning in the marketplace, an effort we started two years ago.

In our solar program, we're driving down the cost of solar panels by pursuing thinner silicon wafers while improving cell efficiency. In wind, our research is targeting the efficiency and durability of turbines. In biomass, our scientists are focused on developing cellulosic ethanol.

To make sure my team is aware of the specific hurdles cleantech companies face, about two years ago we opened our doors even wider to better keep our fingers on the pulse of the market. I personally carve into my schedule four to six meetings each week for business leaders like you to come to DC to meet our experts, so we can learn about their challenges and find ways for us to work better together.

We have learned much from these conversations. In solar and wind, the CEOs told us of the delays they experienced trying to site technology on federal land. So last year, we worked out a plan with the Bureau of Land Management to fast track this process by approving large areas of land ahead of time. During meetings with the finance community, we learned how Wall Street needed help quantifying demand for solar. Our analysts have since spent countless hours creating statistical models to share with the nation's top equity research houses, helping them devise more accurate forecasts for investors.

By opening our doors and listening to the market's concerns, we've been able to craft solutions to help companies in this space concentrate on what they do best—innovate.

By far the biggest push we've made since coming to DOE is setting up a system to promote the deployment of cleantech. The ROI on taxpayers' cleantech investments is zero if we can't commercialize them. Our success is tied directly to the success of VC and private equity firms. If they win, American innovators win.

So shortly after taking office, we formed a commercialization team, hiring three venture capitalists and charging them with promoting the pool of quality IP still collecting dust at our national labs, creating financing mechanisms to help investors manage risk, and helping establish new markets for the companies behind this innovation.

We knew we had a great product to sell: a wealth of valuable IP at 17 of this nation's labs. But we were suffering from the same problems faced by our nation's universities—brilliant researchers are often not the best entrepreneurs.

At our Sandia National Lab in New Mexico, for example, our scientists are working on a project called "Sunshine to Petrol." They're using concentrating solar power to make synthesized liquid fuels. They estimate the process could be up to 10 times more efficient than most biofuel related options. And it has two huge benefits: it recycles carbon dioxide and it stores solar energy to be used when the sun isn't shining.

It is fantastic technology, but we quickly learned that VCs had no information on treasures like this at our nation's labs. It makes sense, as prior to 2005 few VC or PE firms in the U.S. were interested in cleantech or our labs. So, to smooth the path for firms newly interested in cleantech and to bridge the valley of death between innovation and first round funding, our commercialization team focused their efforts in three areas: information, talent, and capital.

On information, we first set out to make the IP easier to find. To do so, we produced a book of our best intellectual property. It showcases technologies under development in each of our main programs: solar, wind, biomass, geothermal, hydrogen and fuel cells, industrial technologies, vehicles, and buildings.

But, as you know, valuable IP is only a piece of the puzzle. To fund a business you need a technology that works, a market you can sell into, and an entrepreneur who can execute.

For talent, we turned to the VC community, creating my office's first ever Entrepreneur in Residence program. The EIR will work with scientists at three of our labs to identify promising technologies, build business cases for commercializing them, and ultimately spin out new companies. Two weeks ago, we announced our first investment partners: Kleiner Perkins, ARCH Ventures—with offices in Austin, Texas—and Foundation Capital.

And we are not finished. We had so much interest that we're going to roll out an extended EIR program to more of our labs this year. By connecting investors with our labs, we find they are providing early stage funding for promising technologies, technologies which have not seen the light of day.

On funding, we have tried some innovative approaches, at least for government. Initially, we set out to invest your tax dollars in more focused ways, by listening to the market. To do so, we increased our outreach to the finance and CEO communities, and in doing so, became smarter in deciding where to place our bets. In the cellulosic ethanol space, we learned how no banks were willing to finance the first few biorefineries—refineries this nation needs to scale up this technology. So over the next four years, we're investing $385 million in six commercial-scale refineries—actual steel in the ground—to help produce up to 130 million gallons of biofuel each year.

Next, we set out to bridge the divide between research funding and VC funding. This year, we announced our Technology Commercialization and Deployment Fund. The TCDF bridges the funding gap by helping to pay for business plans and models, the information VCs need prior to committing capital. We set aside $7.2 million at three of our labs to be invested in energy technologies showing the most commercial promise.

But information, talent and capital don't solve all of our issues, we also needed to establish new markets for these technologies both here and abroad. Domestically, we are helping cleantech companies sell their technology to the federal government. As the nation's largest energy consumer, your government must practice what it is preaching, and we must lead by example. We should also act as the first consumers of these technologies to help create a market and jumpstart demand.

And we are making real progress.

At Nellis Air Force Base, I had the opportunity to unveil a new solar PV array—the largest of its kind in North America. The solar power system produces 14 megawatts of electricity, enough to handle 25% of the base's electricity needs. The installation helps us save money and energy, and shows off the brilliant work of SunPower Corporation.

We're also making great strides overseas, promoting U.S. technology through trade missions. Last year, I hosted the federal government's first ever cleantech trade mission to India and China. We hosted 16 U.S. companies, from small startups like an Arkansas clean coal company to large companies like DuPont and GE, and each returned with new opportunities from these countries.

Our efforts are helping developing nations continue to grow in smarter, more efficient ways. We are helping U.S. companies extend their reach, and get a leg-up in emerging foreign markets, so they can prosper over the long haul.

So my friends, this is your new Office of Energy Efficiency and Renewable Energy. We have changed our direction and quickened our pace. We are helping connect great ideas with smart money. We are behaving differently and working hard to make sure American companies win in the global marketplace.

But, my friends, as you may have heard, my colleagues and I get fired in nine months. So, as with my former legal clients, we have spent the last six months, and will spend the remaining nine months, focused on succession planning. Our current clients, the business and finance communities, need durable, predictable policies that will survive this administration. Our new market focus is not partisan. For the first time in our lives, being green is not a partisan issue, and we want to make sure our commercialization focus endures and grows in the next administration.

To that end, we are in the process of hiring three senior level career executives who will survive this administration—who will focus on commercialization and spearhead our transition under our next president.

So there you have it. This administration has been at this for a little over seven years. One thing we've learned is that this is the work of generations. It took us a long time to get into this mess, and it's going to take a long time for us to get out. But just because the solutions aren't easy and fast doesn't mean they're not worth doing. We can temper expectations and identify our challenges, yet recognize there is going to be a great deal of growth and prosperity in this sector. This is not a charity project. People who do well with this are going to make a lot of money—and they're going to do a lot of good.

Ten years from today, the world will look back on this as the time when our nation rose to the challenge and engaged in one of the greatest market transformations of all time. For our economy, for our climate, for our security, and for our way of life, we must act—and we must act together.

Thank you.