Interview With President Bush:
Energy 

Wall Street Journal 29sep2006

THE WHITE HOUSE Office of the Press Secretary (Birmingham, Alabama)
Internal Transcript September 28, 2006
INTERVIEW OF THE PRESIDENT BY THE WALL STREET JOURNAL
Hoover Public Safety Center Hoover, Alabama
12:36 P.M. EDT

Q: I think I would like to just start on the topic that you were on just now — energy. Obviously, it's a huge priority for you and I wonder if you can just talk about where it goes from here.

THE PRESIDENT: I think energy diversification is a priority for the nation. And by energy diversification, I mean that a policy that promotes technological change so that we become less dependent on crude oil from overseas.

The best way to become less dependent on crude oil from overseas is to change the driving habits of the country. My vision is that, ultimately, we'll be using hydrogen-powered automobiles; in the meantime, we'll be diversifying our fuel mix from gasoline to more ethanol. Conservation will be achieved by new technologies, such as batteries that enable a car to go for the first 40 miles on electricity and your car doesn't have to look like a golf cart.

It's interesting, this diversification has required federal involvement — federal involvement through tax credits for ethanol, as well as research dollars. But those research dollars are being complemented by research dollars in the private sector. And one reason why the research dollars in the private sector are coming is because the price of crude oil, the rise in the price of crude oil has made it clear that there is profitability for private dollars when they invest — if they can come up with the technology that will ultimately be used by the American consumer.

I'm very optimistic about our national strategy to diversify our fuel usage when it comes to automobiles.

Q: Do you envision more policy down the road?

THE PRESIDENT: I envision more money being spent to accelerate that which is possible. You heard a full discussion today about the possibility of switch grass and two types — using switch grass as a raw material and two types of manufacturing processes.

The market for ethanol will evolve differently than the market for gasoline, because transportation is part of the bottleneck of finished product, and therefore in order to get ethanol penetration throughout the country, there are going to have to be locally-built plants so as to reduce transportation costs. And, therefore, there's going to be the need for locally-grown raw materials for those plants. And some places just aren't that good for growing corn or sugar, therefore, we're going to have to develop alternatives to be able to use to make ethanol.

Q: Is that where — I assume you're referring to federal dollars, more federal dollars being spent.

THE PRESIDENT: Yes.

Q: And do you envision the money being spent in that area, in particular?

THE PRESIDENT: Well, we're spending, since I've been President, about $29 billion on dealing with alternative forms of energy, which it affects the warming issue. In other words, as you diversify away and/or improve the capacity to burn certain fuels, you're developing environmentally friendly technologies.

And so our effort is multifaceted. You know, for example, you heard me mention the need to deal with nuclear waste. And I believe we ought to reprocess, as well as have fast burner reactors that can deal with that fuel, which reduces the amount of waste substantially, which then makes it easier to store, which then makes it easier to convince people that nuclear power is the way to go. Nuclear power is renewable. Nuclear power is going to be necessary for the production of hydrogen, which is the new kind of — which will be the new source of powering automobiles, plus it's clean. It deals with the warming issue.

Q: So that's another area, is it fair to say, where you envision some new policy?

THE PRESIDENT: Well, we've got the policy, now we want to see these plants built and we want to continue to facilitate the building of plants. But the new policy will come when it comes to the reprocessing and fast burner reactor. We're in the process of combining resources with Japan and Russia, Great Britain — I don't want to leave anybody out — France, in order to develop these new technologies.

In other words, what I'm telling you is, is that there is a multifaceted approach that is in process right now, to the tune of $29 billion since I've been President; that aims at reducing our dependence on oil and, at the same time, developing technologies that will make the air cleaner.

Q: In your budget for '07, I believe you proposed a doubling, roughly, of the amount of research money for biofuel — this is an approximation. Would you anticipate a further increase over that for — just for the broad area of biofuel?

THE PRESIDENT: I'd have to pull out my exact budget, because I don't want to guess on the numbers, but there's a strong commitment in the budget to continue providing money for research at the federal level on a variety of fronts: hydrogen, clean coal technologies — which is very important — the conservation measures, so that you have a house that ultimately will be conservation friendly, very conservation friendly — the ethanol research, the battery research.

In other words, in order to diversify away from oil, there has to be a multifaceted approach, and we have a very strong funding effort to achieve those objectives.

Q: And do you anticipate more increases in funding in the area?

THE PRESIDENT: Well, let me get this budget through, that you just described.

Q: Okay. Could you address, specifically, the bottlenecks that you talked about?

THE PRESIDENT: For ethanol?

Q: Right, transportation.

THE PRESIDENT: Well, for example, in order to make sure that ethanol becomes more widely used, there has to be — people will have to be able to buy ethanol in a convenient way. In other words, consumers are used to convenience when it comes to buying gasoline, and if they have to drive 10 miles to find an E85 pump, or one mile, or half-a-mile to fill up with gasoline, they're going to choose the gasoline. And, therefore, one of the real challenges is how do you make sure that retailers meet demand for E85 and make it convenient for people to but it.

You just heard one strategy is to use some federal grant monies to start a clean gasoline or clean fuel corridor between Michigan and here in Alabama.

The other bottleneck is that when you're buying ethanol from a plant in Illinois, like these people are, it ultimately could be cost prohibitive. Right now they're in pretty good shape, it sounded like to me, when they described the economics. Therefore, there has to be manufacturing plants close to markets where people will be using the ethanol.

Now, the good news is, is that the manufacturing plant is relatively inexpensive compared to gasoline refinery, for example. So there are two bottlenecks right there.

Q: But is federal policy going forward? Are you going to try to do more to eliminate those bottlenecks?

THE PRESIDENT: Yes. And the best way to eliminate the bottleneck is to encourage research into alternative feed stocks that make ethanol. For example, you heard the man from Auburn, he's very optimistic that there will be a technological breakthrough that will enable producers to use switch grass. Now, if you can use switch grass, switch grass can be grown in a lot of places where corn probably can't be grown.

So the more raw material — and you heard him talk about a plentiful supply of wood products here in Alabama. And, therefore, if they're able to develop a technology that can use woodchips to make ethanol, then you begin to envision more ethanol production facilities using different types of raw material, all of which have to be competitive in the marketplace. But it makes it easier, then, to set up a distribution network.

Q: And could you compare energy as a priority to some of the other things you've got coming up in the domestic area?

THE PRESIDENT: Energy is a significant priority. And as a matter of fact, it's one of the top priorities because energy diversification — in other words, diversifying away from foreign sources of oil not only has got economic implications, it's got national security implications.

It's very important for the President and the administration to think about that which has to happen in order to achieve long-term — positive long-term consequences for the country. Energy diversification is one. Encouraging conservation of energy, non-renewable energy sources, all goes hand-in-hand with diversification.

Social Security and Medicare are priorities of mine. These two are long-term issues facing the American people and the American economy. The overhang of unfunded liabilities is something that could affect economic growth in the out years.

So those two are — a President has got to think about how do we stay competitive? What needs to happen? Diversifying away from oil is one thing. Solving the — reforming Social Security, making sure that it's financially sound is another type issue that if we can get this done, we'll be able to look back and say we made it easier for future Congresses and future Presidents to stay competitive in the global economy.

Q: Do you envision an entitlement reform combining those two into one effort? In other words, Social Security and Medicare?

THE PRESIDENT: Well, it's an interesting strategy. I'm working with Secretary Paulson on that. We're obviously watching the elections closely, and we're strategizing internally.

You know, there's a — there are some who believe that it's easier to accomplish something that's hard to do when you combine Medicare and Social Security. I'm open for ideas.

Q: What about the cap and trade issues? A lot of states are now, as you well know, adopting a patchwork of regulatory programs. Do you see that as a potential concern or a reason for federal —

THE PRESIDENT: I have said that — you know, we laid out a program that we believe will reduce greenhouse gases relative to economic growth, and I put some targets out there and we're meeting those targets. But should we not meet the targets, then I said that the country ought to consider a cap and trade. So long as we're meeting the targets, it's what I described in my Rose Garden speech, then I think that we ought to pursue the current track we're on, which is the use of technologies to make us achieve energy independence, as well as dealing with the warming issue.

Listen, all these issues require intense — the issue of warming, the environmental issue, requires intense focus and dedication to new technology. New technologies will not only enable us to be good stewards of the environment, but will also achieve another important objective — it will achieve a national security objective and an economic security objective.

And that's what makes this debate — other than the politics, there is commonality between people who say, well, I'm worried about national security matters, others who say, I'm worried about global warming, achieve the same objective by the use of technology. And we're spending a lot of money on the issue. And we're taking the lead when it comes to the global warming issue.

Q: Let me switch to GM and Ford and the discussions about a meeting with some of their executives. I know you had some phone conversations with some of them. But is there a further policy response that you see to the problems that they have for dealing with health care costs?

THE PRESIDENT: First, I didn't want to have the meetings in the middle of a political season because people would politicize the meetings. I don't think you can have a constructive dialogue when everybody is thinking about how the conversation could affect a race or not. So I appreciated their understanding of that, and so we'll meet later.

Secondly, no question that the federal government can have a role in helping deal with rising health care costs. If that's what they choose to talk about, I'll look forward to talking about it. And there are ways for the government to encourage policy that will affect the rising cost, such as transparency in pricing. We're a huge health care consumer at the federal level, and Michael Leavitt has wisely said, if you're going to do business with the federal government, we want to know your price and we want to see a qualitative measurement.

We believe that when people have more pricing options and begin to have — when there's a feel for a market there, that they will make more rational decisions.

Secondly, medical liability reform is a way to help deal with rising health care costs. After all, if your medical providers are providing prescriptions and/or procedures that really aren't medically necessary, but are necessary to immune yourself from a lawsuit, that runs up the cost of medicine.

IT — medical IT — the government, in that we're a big consumer, can use information technologies to wring out cost inefficiencies in the health care system. Promoting of new products is an important way of controlling health care.

Health savings accounts are an innovative way to make sure that the consumer has got a health care account they call their own. In other words, if they change jobs, it follows them, and at the same time, it's an integral part of making rational decisions when it comes to health care decisions.

So I look forward to talking to them about that.

Q: Do you have any concerns about their — you know, the current financial situation —

THE PRESIDENT: About the promises they have made?

Q: Yes.

THE PRESIDENT: If they do, I do. But I'm looking — and I'd be interested to hear what their concerns are. If their concerns are rising health care costs, I fully understand. If their concerns are, we made some agreements in the past that we're not sure we can live with, I will be most interested in hearing what the prescription would be.

Q: Let me jump to Iran. You've said that they have a limited time frame to renounce uranium enrichment. There was an August deadline.

THE PRESIDENT: Actually, suspend.

Q: Suspend.

THE PRESIDENT: Verifiably suspend. Go ahead.

Q: There was an August deadline; now there's an October deadline. How long does Iran have? And could it be possible that we're asking this question at the end of December, as well?

THE PRESIDENT: I would certainly hope not. As a matter of fact, I talked to the Secretary of State about this very subject this morning, who agrees with me that we ought to give the Europeans time to see whether or not the Iranians will make the proper choice about verifiably suspending, and at the same time, she assures me that she's working with them to make sure that this process cannot go on forever.

Q: Any idea how much time you want to —

THE PRESIDENT: My judgment is, sooner rather than later, to make sure that these discussions are not their attempt to stall their way into us losing our interest in the subject.

Q: And if I can ask one on immigration?

THE PRESIDENT: Sure.

Q: You told Wolf Blitzer last week that you'd sign an immigration bill that includes only a fence and no comprehensive reform.

THE PRESIDENT: No, no, no, I didn't say that to Wolf Blitzer.

Q: Okay.

THE PRESIDENT: I said — he asked me, there is a bill moving through, and I said I would sign, like I did last time, appropriations measures that will enable us — but I said that we need a comprehensive bill. In other words, this bill shouldn't substitute for comprehensive reform. It's really important to know that.

Comprehensive reform is the only way that we're going to be able to deal, in the long run, with making sure the border is secure; secondly, to make sure that there is a rational way for people to do jobs that Americans are not doing; and, thirdly, a rational way to deal with the 12 million who are already here.

Q: If I can follow up on that.

THE PRESIDENT: Please.

Q: Why do you think that people seemingly need to see the enforcement side of —

THE PRESIDENT: I think people don't trust the federal government's ability to enforce the border. And I always felt like the comprehensive plan is necessary to enforce the border because people continue to feel like they can sneak across — or feel like they must sneak across to work, it's going to keep added pressure on the border. Therefore, there's a rational plan. So somebody can say, you can come here temporarily, and here's a card and here's the safeguards — that means they won't have to sneak across. If they don't have to sneak across, they won't pressure our Border Patrol.

And so what Congress — a lot of people in Congress are saying is, show us whether or not the monies that we have appropriated are being wisely spent. That's what they'd like to see. And I pushed hard for comprehensive. I will continue to push hard for comprehensive.

In the meantime, what you're seeing is members of Congress saying, we want to see better enforcement on the border. And they're beginning to see that. There was a process called "catch and release." And that was — as you can imagine, that would discourage the average Border Patrol agent who is working hard and finds a person and sends that person into the process and the process says, listen, we don't have enough space for you to stay. You can go out back into society and check back in, in 30 days. And of course, they don't come back. And the Border Patrol agent's work went to naught.

And so we've ended that. And one reason we ended it is because Congress appropriated money that enabled us to institute a strategy on the border that included more beds so that we can end "catch and release." And now we're in the process of implementing a hefty appropriations that I signed last year. I told Wolf Blitzer, you know, I signed the appropriations last year. If they appropriate money this year, I'll sign it again.

And the border modernization is now being in place. The best way to describe it to the American people, it's a combination of fencing in high density areas, berms, and traffic barriers in more remote areas, coupled with sensors, UAVs, and the positioning of manpower to be able to use the technologies and then be able to respond efficiently to people coming across the border.

Q: One more thing — this is the last one, I promise.

THE PRESIDENT: Sure. No, it is the last one.

Q: If we can go back to the topic of the day here. Do you — how soon do you envision people being able to drive along the interstate and get E85 wherever they want or biodiesel?

THE PRESIDENT: I think it's going to take awhile, but market penetration in the Midwest has been pretty significant. Listen, we've gone from — we're about 5 billion gallons of ethanol now, a year. And that is a substantial increase in a four-year period of time — a five-year period of time. My only point is, the markets are beginning to — the market is beginning to shift and beginning to change.

I think you'll see — I think what you'll see is regional penetration, depending upon where the feed stocks are being grown. And as you see new breakthroughs on cellulosic ethanol production, then you'll see production plants springing up around, where, you know, woodchips become economically feasible. As the guy said, he's thinking about converting a pulp mill into a place to manufacture wood chips.

So I think — I'm confident you'll see more ethanol use, and you'll see more penetration, a localized penetration — I guess, regional market penetrations.

I also believe relatively quickly you're going to see a new battery in your automobile, where you can drive the first — there's a total of 40 miles, they anticipate, on electricity. Which all of a sudden changes the consumption patterns significantly. You can imagine if the 10 major cities in the United States where people don't drive 40 miles a day were able to power their cars with —

Q: Plug-in.

THE PRESIDENT: New batteries — yes, plug-in hybrids. It really changed the consumption. And then all of a sudden, meeting the goals of reducing our dependence on foreign oil becomes realistic, more realistic. I guess what I'm telling you, John, is that the strategy is not a single strategy. The strategy is a multiplicity of strategies by developing new technologies that will achieve the objective I've set out. And we're going after it in a very focused, in a very smart way, in my judgment.

I guess part of my frustration is that what we have been doing hasn't quite penetrated into the American psyche. It was, why aren't you diversifying? Why aren't you doing something? But this administration has done more than any administration has done. And I believe that the investments we're making — the other thing that's important for people to understand is research and development takes time. You know, when you start a research and development project, there's a lot of trial and error and a lot of experimentation and a lot of money is required. And it's hard to predict when you'll see the breakthrough that enables one to achieve the objective.

But the American people have got to know there's a lot of research and development going on. And as I mentioned to you earlier, research monies come not just from the federal government — we're putting a lot in, but a lot of it's now coming from the private sector, as well. Which is an interesting sign, you know. And it's an encouraging sign.

Anyway, thank you.

Q: Thank you, very much.

THE PRESIDENT: I've thought a lot about the subject.

END

Source: The White House