April 7, 2010

White House National Economic Council Director Larry Summers sees addressing climate change and energy policy as key elements of the economy's long-term success, he told the EIA-John Hopkins SAIS Energy Conference yesterday (SAIS stands for School of Advanced International Studies).  When Summers first reentered government in November -- the former US Secretary of the Treasury was teaching economics at Harvard -- the focus of his job was on avoiding another Great Depression, he noted, and that was accomplished.

          The economy still has a long way to go to get back to where it used to be but signs are encouraging such as the 162,000 jobs it added last month.

          Now the Obama administration has started to pivot to longer-term issues and energy is one the major items it plans to address to boost economic competitiveness in the 21st century.

          But energy is more than an economic issue.  It's clearly an environmental issue plus it has national security implications, said Summers.

          The need for broad, national energy policies has been hotly debated since 1973 and the first oil shock, he added -- though it's been couched in either-or terms with groups pushing for one resource and another.

          "Those debates have their place and they have illuminated tradeoffs that policymakers ignore at their peril," said Summers.  "But I would say to you that if ever there was an issue where we need to move from 'either-or' to 'both-and,' that it is energy." Policies should embrace the priorities of multiple camps with market-based systems ultimately picking out what gets built.

          Summers wants to see America become the main builder of the technologies needed to address climate change, but it should also be the largest market for them.

          Markets can work well but it's clear some technologies such as renewables will need subsidies for the foreseeable future as they can't compete on their own, he added.  People looking back will probably be able to find misspent money on that front but it's a necessary evil.

          The US hasn't turned to the free market for everything, notably national security was always run by the government and energy carries with it implications beyond the economy, thus Summers is fine with subsidies to emerging technologies.

          Summers was previously a professor at Harvard University where he served as its 27th president from July 2001 until June 2006, said the White House website.  From 1999 to 2001, he served as the 71st US Secretary of the Treasury following his earlier service as Deputy and Under Secretary of the Treasury and as Chief Economist of the World Bank.

          Summers taught economics at Harvard and MIT and his research contributions were recognized when he received the John Bates Clark Medal, given every two years to the outstanding American economist under the age of 40 -- and when he was the first social scientist to receive the National Science Foundation's Alan T Waterman Award for outstanding scientific achievement.