Make energy policy boring again: Fmr. Trump official’s case for energy security

Simone Del Rosario: I think you’re hired. We’re gonna hire you to do the energy transition. You’ve got it again.

Neil Chatterjee: I had that job. I got fired.

Simone Del Rosario: Liquefied natural gas. Nuclear energy. Fossil fuels. Electric cars.

How Americans will power their lives for years to come is an issue that divides Americans.

Neil Chatterjee: I don’t say this to be funny. To me, the solution is to make energy policy boring again.

Simone Del Rosario: We’re going into the vault to bring you this never-before-seen conversation I had at the end of 2023 with former President Trump’s top energy regulator. He was demoted from chairman to commissioner at the tail end of Trump’s term, he believes, because of his support for clean energy.

Neil Chatterjee: I’m a big believer in innovation and in markets. And I would like to see more and more conservatives embrace this, and not cede the field to the other side.

Simone Del Rosario: We’re going to get into what that looks like, plus how does the US act now to avoid having to rely on adversaries like China for energy. Here we go.

Neil Chatterjee: I’m Neil Chatterjee, I’m the former chairman of the United States Federal Energy Regulatory Commission. Prior to that, I was a long term aide in the United States Congress working in both the House and the Senate, and was the principal energy policy adviser to Senate Majority Leader Mitch McConnell of my home state of Kentucky.

Simone Del Rosario: Awesome, Neil. And now to the topic at hand, what does energy independence mean to you?

Neil Chatterjee: To me, the real focus is on energy security. When I served as chairman of the Federal Energy Regulatory committee commission, I felt my primary obligation and the obligation of my colleagues was our responsibility for the oversight of the grid, of the reliability of the grid. What does that mean? That means that when Americans hit the switch, the lights would come on. And it’s something we took very seriously. And I think it’s, quite frankly, something that we oftentimes, as citizenry, take for granted, that in America, we have energy security, we know that we can have electricity when we need it, we can fuel our vehicles when we need it, that we have our basic energy needs met. That is not the case everywhere in the world. And if we’re not smart in how we proceed from a policy perspective in the US, it might not always be the case here at home.

Simone Del Rosario: What would you say are the biggest threats to the US energy independence, energy security?

Neil Chatterjee: You know, I think it’s just making sure we get policy right in regards to the clean energy transition. I think what has happened in the past few years in that, in our zeal to decarbonize, we’ve sort of taken our eyes off of reliability and energy security. And what we’re starting to see now in different regions of the country is energy shortfalls, electricity shortfalls, an uptick in a number of blackouts and brownouts. And that has consequences. And if we don’t, you know, take a more sort of steady approach to policy in the midst of the energy transition, that could become more and more of a daily reality. The other thing we need to do is to make sure that we’ve got a strong domestic supply of energy, whether that’s domestically procured fossil fuel resources, or to ensure that we’ve got the workforce and the critical minerals in place so that we can build out the clean energy technologies of the future here at home, and not be in a position where we could be reliant on adversarial nations for the component parts of the clean energy transition.

Simone Del Rosario: There’s a lot of, I think, misconceptions about energy independence and what it means. I believe the phrase and the definition has probably changed a lot over the past several decades. What would you say are some common misconceptions about energy independence?

Neil Chatterjee: You know, I think there’s a sense that you know, we’re in global marketplace. And you know, what does it really mean to be energy independent? Do we want to be in a place where, you know, all of our domestic energy needs are met here, and we’re not exporting or we’re not importing? And so I think, you know, sometimes these issues can get conflated with foreign policy and with trade policy and the like. To me, energy independence and energy security are so important and are intertwined. And we need to look no further than what is happening with our European allies right now, particularly in the aftermath of Russia’s invasion of Ukraine. In many ways, the Ukraine war is an energy war. What do I mean by that? Europe writ large, and Germany in particular, made a series of energy policy decisions that made them uniquely vulnerable to Vladimir Putin. Germany moved away from coal fired generation to meet some of their decarbonization goals. In the aftermath of the Fukushima nuclear disaster in Japan, they moved away from nuclear power. And they essentially found themselves totally dependent on Russian natural gas. And I think Vladimir Putin understood that, in many ways, was emboldened to invade Ukraine, because he believed that because Germany was not energy independent, because they were dependent on Russian natural gas, that ultimately German support and broader Western European support for Ukraine would wane in the face of the dependence that they have on Russian natural gas. And I just don’t ever want to find the United States of America in that position, which is why I think it’s so important that while we decarbonize, we still maintain a critical focus on energy security, independence, and reliability.

Simone Del Rosario: Do we have any red flags like that? Do you have any dependencies that you say, are an issue for us?

Neil Chatterjee: So, you know, as I mentioned, with the clean energy transition, the Chinese Communist Party, you know, has a monopoly on the component parts for a lot of the clean energy transition for solar, for wind, for battery storage. Other adversarial nations, you know, have the critical minerals that are necessary to build out these component parts. And so as we are retiring traditional sources of generation here in the US in anticipation of the energy transition, we have to make sure that we don’t find ourselves in a situation where we’re reliant upon the Chinese Communist Party for our electricity. Because the reality is when you shut down traditional baseload power plants here in the US, whether they be nucula,r natural gas, or coal, when they’re shut down, they’re very, very difficult to reopen. And so we’re taking generation off line. And we need to make sure that we have the replacements in place and that they are ready to go. And from my vantage point, we need to make sure that those replacements are built here in the US, that we have the component parts here in the US and that we have the critical minerals here in the US so that we don’t find ourselves in a situation where we’ve shuttered our existing sources of energy generation, and we’re suddenly dependent on others for their replacements.

Simone Del Rosario: Do you think the Biden administration is moving too fast?

Neil Chatterjee: I don’t think the Biden administration knows what they want to do. And I think they’re sending conflicting messages. On the one hand, they want to be tough on China. On the other hand, they don’t want to do anything to slow the energy transition and their climate agenda. It’s a similar situation when it comes to gas. On the one hand, they’re very understanding and supportive of and agree that our European allies can benefit from US LNG, liquefied natural gas and liquefied natural gas exports from the US. We do it cleaner and better than anyone else. It gives our allies alternative to Russian gas, it creates jobs here at home and a displacing dirtier sources of energy overseas and actually lowers global carbon emissions. This should be a no brainer, this should be a win win win. But the Biden administration is wrestling between their, you know, their foreign policy agenda, their economic agenda, their climate agenda, and they’re sending mixed signals about what the United States policy and position is towards natural gas. And that’s frustrating investment and creating a lot of uncertainty.

Simone Del Rosario: I’m thinking about this right now as you’re talking and you’re making a lot of really good points. And it does appear to be mixed signals. But could it also be more of a balanced approach? “This is the direction we’re heading but we need our existing infrastructure.”

Neil Chatterjee: The problem is energy policy decisions are not one year or two year decisions. These are long term decisions, 5, 10, 20, 30 year investment decisions. And so, government policy and signals are important to investors. We need investors to put forward the capital to build out the supply chain and the workforce for the clean energy transition here at home. We need investors to put forward the capital so that we can invest in our natural gas infrastructure and our liquefied natural gas export infrastructure so that we can play that important role on the global stage, exercising America’s sort of energy prominence and dominance. And so it’s in trying to strike that balance, the administration is sending conflicting signals to investors. And by stifling investment in many ways, they are inhibiting America’s ability to take advantage of its energy prominence and independence.

Simone Del Rosario: It sounds to me like you’re saying the conflicting messages are stifling that investment in traditional fossil fuels and in clean energy.

Neil Chatterjee: That’s right. I mean, where do we invest? Are we investing in bringing the supply chain for clean energy here at home? Or are we going to continue to rely on imports from Asia? Are we exporting US natural gas in the form of LNG to aid our allies? Or are we saying, you know, in order to meet our decarbonization goals, we’re going to phase out natural gas in this country. The reality is, government is only part of the process. The private sector, the investment sector, they play a critical role. And when you’re trying to enter into long term contracts, if you’re concerned that public policy is going to shift dramatically in the US, you might be reluctant to enter into that long term contracts. And without those long term contracts in place, you’re not going to be able to get access to the capital that you need to build out energy infrastructure for both traditional sources of fossil fuel generation and clean energy.

Simone Del Rosario: Neil, I will say and, you know, obviously, having done the research into you and your background, it’s not as big of a surprise to me, but I would say on the face of it, people would be surprised to hear how much you’re using words like decarbonisation and transition for someone who was in the Trump administration and served there.

Neil Chatterjee: Look, I see huge opportunity here. And I think, you know, the manner in which I talk about the energy transition, I’m not coming in here pushing regulations, or mandates, or really subsidies. You know, I’m talking about market based solutions and the opportunity to take advantage of that. And I’m optimistic and hopeful and have been working with a lot of my Conservative colleagues in Washington and around the country to point out that, you know, the energy transition could be the single greatest monetary opportunity of our lifetime, maybe second only to digitization and perhaps in combination with digitization, it would be the greatest ever. And so I think there’s real opportunity in the energy transition. I think, as the economic case, the business case for clean energy has improved and continues to improve, you know, we should take advantage of that. And I think it’s in conservative interest in in the Republican Party’s interest to find those opportunities. There’s no question that at their onset, the growth and the deployment of clean energy was driven by subsidies and mandates and regulations. I don’t think this is the case anymore, I think there’s a real business case to be made for these resources. I’m a big believer in innovation and in markets. And I would like to see more and more conservatives embrace this, and not cede the field to the other side. I actually am really frustrated by this kind of antiquated notion that if you’re for fossil fuels, you’re of the political right. And if you’re for clean energy, or of the political left, I truly am an all of the above guy.

Simone Del Rosario: Let’s talk about the free market. Gas prices go up, conservatives blame President Biden for it. Who sets gas prices, Neil?

Neil Chatterjee: I mean look, both parties play politics with gas prices. I think, in particular, in the past couple of years, because of, you know, inflationary pressure that’s just hitting Americans, you know, across the board, gas prices are the most visible sign of inflationary pressure, which is why Republicans are using it. And I think it’s effective. Gas prices are just a potent political thing, which is why both parties hammer the party in power when the price of the pump goes up. When the price goes down, presidents all take credit for it. When the price goes up, they all say, Well, this is out of my control. I can’t do it. It’s just politics.

Simone Del Rosario: But I mean, where’s the truth in this, the truth is that they don’t have the control to set global prices.

Neil Chatterjee: No, it’s supply and demand, there’s so many dynamics in place. And I think presidents of both parties, you know, try to pursue policies that they think will bring down the price. The Biden administration tried it with draining from the Strategic Petroleum Reserve, the Trump administration tried to focus on, you know, leases and greater domestic production. And so, you know, there’s many, many factors that come into play with the price at the pump. And I think too often, we just simplify it to black and white and say, This person is to blame, or this policy is to blame. And there’s no one policy that, you know, can impact the price of the pump like that.

Simone Del Rosario: Even when the US does ramp up production, the risk if we are driving down prices would be that OPEC turns around and says, errr, we want to, you know, stifle this a little bit because we want more money, isn’t that right?

Neil Chatterjee: Sure. I mean, you do have these global players that have it in their own interest to cut supplies, whether for political or monetary gain, which is why again, the premise of this conversation is around energy independence. The more that we can, you know, produce domestically and be less susceptible to, you know, kind of other international actors making decisions that are in their interest and may not necessarily be in the American consumers’ interest, you know, the better it is for the American consumer.

Simone Del Rosario: Yeah, but we’re not a socialist country, if US producers aren’t getting that much for their oil, they’re not going to produce as much. These are private companies, or they’re publicly traded companies, but they’re not state companies. And they have it in their own interest to produce when it’s advantageous for them.

Neil Chatterjee: No question. But there is, again, back to the earlier points I made about investment and investment certainty. You know, there has been, you know, kind of a lack of investment in some domestic production because of a lack of confidence as to whether, you know, when the permits will come through, whether areas will be, you know, taken out of play. I have a fundamental belief that if we had investments in as security, and we have stable policy, that you could, you know, safely and cleanly produce more oil here in the US, which would better insulate the American consumer. I agree that these big companies have to make these decisions about what is in their best interest. But there’s two sides to that. If was more policy certainty, I think they have more confidence making investments in domestic production.

Simone Del Rosario: Talk to me about the energy transition a little bit more. You clearly believe that that is a future and one that can be pretty lucrative. Are you concerned about the extreme on the left, that wants this to be done ASAP, that is even criticizing the Biden administration for the very few leases that they’ve put into their plan in the Gulf of Mexico saying there shouldn’t be any new leases for drilling there? Are you concerned about that kind of pressure from the left?

Neil Chatterjee: I’m frustrated with both sides, to be totally honest. And particularly when I mentioned, reliability and how important reliability is. I think both sides are being irresponsible right now when it comes to reliability. I think on the political left, you do have actors who are sort of sweeping concerns about reliability under the rug, who say that the urgency of meeting our decarbonisation goals is so critical at the timeline that we need to meet them, that we’ll just worry about reliability later. And I think that is just really, really irresponsible. At the same time, I’ve got friends on the political right who I believe are weaponizing reliability to slow down or kill the energy transition. And so to me, I think we need to have a rational conversation about how we can transition, how we can continue to squeeze carbon out of the energy economy, while simultaneously maintaining reliability, affordability, and energy security. And we can do that if we take the politics out of this. And so I’d love to remove the politics on the left and the right and start to get to kind of rational, responsible solutions. You talked about, you know, some on the political left, you know, who are pushing, you know, for speed and certain policies. I’m also frustrated about, you know, what I view in some ways as sort of a lack of seriousness around decarbonisation, if it’s truly about climate change. There’s some on the left, who in the name of decarbonisation and combating climate change, pursue certain policy objectives, but then not others. Like why isn’t there total support for carbon capture and sequestration? Because if it actually works and can be deployed at scale, suddenly, you might have natural gas and coal forever. Natural gas is a really, really good fuel. It’s cheap, it’s abundant, it’s accessible, it’s easy to transport. It’s only downside is when you burn it. It emits carbon. So if you could capture that carbon, why not have natural gas that we can capture the emissions available for the foreseeable future, because I actually suspect that the motivations of some are not just focused on decarbonisation and climate change, but on kind of reorganizing society and redistributing power within society. And that frustrates me. Similarly, when it comes to nuclear power, nuclear power is our single greatest form of baseload generation. And it’s carbon free. I don’t see how any serious person who’s focused on climate change shouldn’t be concerned about the future of nuclear power and the role that nuclear could play. But you have some of the same actors and activists who are opposed to nuclear power, because again, I think they have motivations that go beyond climate change. I think this is about social engineering. And that, to me is very harmful, we got it, I am fully prepared to engage with anybody on a discussion about, you know, policies to decarbonize. But what I won’t accept is people who have ulterior motives, whose goals go well beyond in energy, or climate conversation, and have brought broader societal implications.

Simone Del Rosario: You talked about making sure that we’re not too specific. For those that are doubling and tripling down on the fossil fuel industry. What is the risk there? If you’re saying that, no, this is it, and we’re just going to keep doing this, we’re just going to keep riding this train.

Neil Chatterjee: So I do think that, you know, to maintain energy security and reliability, not just here in the US, but globally, we are going to need fossil fuels for the foreseeable future. And so that’s why I think it’s incumbent upon all of us to figure out how we can continue to utilize fossil fuels, but in a more climate friendly way, and in ways to capture their emissions or reduce methane leak, things that companies are doing. And so instead of, you know, kind of pie in the sky goals that we’re going to be carved in net zero by date, certain, instead of trying to force these arbitrary goals for political purposes. You know, I say this a lot. And I don’t say this to be funny. To me, the solution is to make energy policy boring again, when energy policy is really boring, and you let the engineers and the economists and the lawyers sort it out, you can get constructive outcomes without all of the drama. The problem is that energy policy has gotten really exciting. And suddenly politicians, and corporate executives and Hollywood are really interested in energy and climate policy. And as a result, we’re not able to have this rational discussion about how to transition while maintaining reliability, security and affordability. It’s all about, you know, you know, winning in the court of public opinion. And to me, I’d much rather let the engineers make the discussion decisions, instruct them, hey, our goal is to decarbonize without sacrificing, you know, our way of life. I’m confident the engineers can sort that out.

Simone Del Rosario: I think it’s almost a fair point, I would say that I don’t think we would be talking about decarbonization, and, you know, green energy without some political pressure.

Neil Chatterjee: I don’t know, I actually think that, you know, as consumers have become more aware of their energy usage, of their carbon footprint, as technologies like the phone, and the iPhone enable us to kind of track our energy usage. As the business case for clean energy improves. I think more and more consumers from Fortune 50 companies to small mom and pop businesses to individual households are clamoring for cleaner sources of energy. I think there’s a lot of folks who wants to drive electric vehicles who aren’t concerned about climate change, they want to drive a Ford F 150 Lightning because they think it’s cool. There’s a lot of folks who want to have solar plus storage on their house, because they think it’s more economical than what they’re paying their utility company. So I think there’s a lot of people that are making decisions in their lives that can help us decarbonize, that aren’t doing it to make some kind of political statement, they’re doing it because it’s in their interest.

Simone Del Rosario: Neil, thank you so much. I’ve really enjoyed this conversation. I just want to bottle it all up.