Dan Reicher Goes to Stanford

DAN REICHER WAS FRONT and center during several hugely visible energy deals announced by Google. Among them was a recent plan to build a revolutionary transmission line in the Atlantic to jump-start offshore wind generation.

Now Reicher is headed back to school - specifically, Stanford University, where he will become the executive director of the Steyer-Taylor Center for Energy Policy and Finance. The new effort, launched with a $7 million gift, is tied to the university's law and graduate business schools.

Reicher was assistant secretary of energy under President Bill Clinton and director of climate change and energy initiatives at Google. It has been reported that he was considered for the post of secretary of energy in the Obama administration. Reicher recently spoke to EnergyBiz magazine about his new job. His comments, edited for style and length, follow.

ENERGYBIZ What is the new initiative you are heading up at Stanford?

REICHER It was recently funded by a husband and wife, Tom Steyer and Kat Taylor. I led my career in the energy world based on this triangle of technology, policy and finance. I'm quite convinced that if we are going to make progress on building and rebuilding our energy infrastructure to be cleaner, more economical, more secure, then we've got to be working at all three points of that triangle. There is obviously a great deal of interest in technology to advance energy. Is there the massive amount of capital we are going to need to fundamentally restructure our energy economy? We need policies and we need more capital. So we're going to do what we can to look at the challenges and opportunities. We will particularly be focused on the intersection between policy and finance.

ENERGYBIZ Some would argue that given your role at Google, you were probably tapped into the richest vein of finance for energy change. And certainly a lot of federal money is spent on energy.

REICHER The company has made some modest investment in energy technology companies and is beginning to make some investments in energy projects.

ENERGYBIZ When you were in the federal government you oversaw billions of dollars worth of investment.

REICHER My budget at the Department of Energy was $1.2 billion a year in efficiency and renewables. It's interesting. A billion dollars on the one hand is a big number, but in the energy world it turns out to be rather a small number. There certainly is a lot of good money going into energy R&D and into venture capital backed startups. But we really face a serious issue when we need to take those technologies that seem to work at pilot scale and move them to full commercial scale. That's where your capital needs are measured literally in the trillions of dollars in the United States and globally. That is where the capital needs are a real problem.

ENERGYBIZ Do you think that the bulk of capital needed for energy investments will come from utilities or new players like Google?

REICHER It mostly is going to have to be coming out of the large investment firms around the world. Yes, the utilities will be raising some of it. But a vast proportion is going to come from the banking world and the equity world.

ENERGYBIZ What about Google?

REICHER Google made investments in energy technology companies. Google is beginning to make investments in energy projects.

ENERGYBIZ Do you think they are going to step up the pace?

REICHER It is hard for me to say.

ENERGYBIZ Why did you think the time was right to leave Google and move to Stanford?

REICHER The whole area in which policy meets finance is critical to dealing with these big economic, environmental and security challenges we face in the energy world. There's a lack of creative thinking about the policy mechanisms that could be helpful about how to raise vast amounts of capital. It's unlikely, for example, that we are going to see carbon legislation adopted anytime soon in this country. So the question becomes what are the other ways that we could actually cause big changes in energy infrastructure to occur to result in cleaner systems, more secure systems, more economical systems? This is a moment at which a lot of thinking needs to go into how to better shape energy policy and finance. Stanford offers a wonderful, wonderful opportunity to do that. With a new Congress coming into power and with the Obama administration looking at its next two years, this is a critical moment to put some new strategies on the table.

ENERGYBIZ If a carbon cap is not going to happen and if a price on carbon is not going to be established by Congress, what new policies should be pursued?

REICHER There are a lot of categories in which one could work. There's tax policy. There's investment policy. There's R&D spending. There are regulatory approaches. The Senate Energy Committee passed out a very interesting energy bill in the last session with strong bipartisan support.

There are some fascinating ideas in there. For example, I have been a big fan of the Clean Energy Deployment Administration or CEDA, which would be a semi-private entity that would have a whole host of tools to invest in the scale up of technologies from pilot to full commercialization. It would consider projects with too high of a risk profile for the traditional investment community to take on.

ENERGYBIZ Are we going to see a global trade war over renewable energy?

REICHER Increasingly, we are going to see this emerge in the trade context. The good news there is that this clean energy technology is now big enough that people begin to scrutinize how it is being handled in various countries. People see this as one of the big economic opportunities of the 21st century. Countries will be pointing fingers at each other as to how they try to advance the clean energy industry in their individual nations.

ENERGYBIZ If the United States is successful forging policy and financial incentives to get our act together on energy technology, what might our energy economy look like a decade from now?

REICHER That's a great question. We have the opportunity to fundamentally reshape our energy economy to make it more secure, more economical and cleaner.

ENERGYBIZ Do you think we could be off of fossil fuels in the next 20 or 30 years?

REICHER No. But we could certainly use them far more efficiently and more cleanly than we do today. There's a range of opinions about where coal ends up in this equation depending upon how quickly and how cost competitively clean coal technologies can be brought to full commercial scale. Renewables are also at a crossroads.

ENERGYBIZ And energy efficiency?

REICHER We already have cost-competitive energy efficiency opportunities available in the industrial, commercial and residential areas. Why aren't we seeing a greater uptake in our economy and in other parts of the world? That is going to be an area where you are going to see very significant growth because it is the low-hanging fruit. How would you take what is already cost-effective and set up energy tools and really deploy them much more significantly than they have been to date?

ENERGYBIZ You were involved in advising the Obama transition team on energy policy. Are you pleased with where the administration has gone on energy initiatives and what has been its greatest success and failure?

REICHER I was on the Obama transition team and I think we made a good strong proposal on the energy portion of the stimulus package. Congress ultimately adopted a strong energy stimulus package. It is taking longer than all of us had hoped, but that shouldn't be surprising. The money is moving. It is going to good projects. The administration has pushed hard for comprehensive energy and climate legislation. We saw the House adopt that in the last Congress. We saw some progress in the Senate but not fully what was anticipated by the administration. Going forward, I think the administration will be looking hard at what the opportunities are to recraft its approach to climate policy and build an approach to energy policy that can make its way through the new Congress.

ENERGYBIZ Would you like to be energy secretary?

REICHER I'm always open to serving my country. If someone would approach me about it, I certainly would take a very serious look.

ENERGYBIZ How do you think Steven Chu is doing?

REICHER It's been good to have someone with his strong technical creditentials at the Energy Department. The department has been making good progress on a number of fronts, and I think he gets good credit for that.