The Top Ten Energy Questions for Treasury Dept. Nominee Jack Lew

Posted January 18, 2013 | folder icon Print this page

President Obama recently submitted his chief of staff Jack Lew’s name to fill the post of Treasury Secretary after Tim Geithner vacates later this month.  Mr. Lew’s long history as an advocate for green energy interests and the Treasury Department’s role in doling out green energy grants mean that he has some important questions to answer.

10.  The Internal Revenue Service, which is part of the Treasury Department, administers the recently-extended Wind Production Tax Credit (PTC).  The PTC, which will cost taxpayers $12.1 billion or $300,000 for each active wind energy job in the industry over the next year, has led to absurd market distortions.  For example, wind producers produce most of their electricity at the times it is least needed, simply so they can collect the PTC subsidy to make profits.  Given the high cost and terrible effects on the energy market, will Mr. Lew advocate for ending the PTC once and for all after the current extension?

9.  In order to receive the PTC subsidy, wind companies must begin construction on their project by the end of 2013, a massive expansion of the existing law, which said the units had to be completed in order to be eligible.  While most ordinary people would say that “begin construction” means that physical construction must begin, wind-industry lobbyists want the phrase to be interpreted as meaning that the companies have invested some token amount of money upfront.  Given that the Treasury Department may end up issuing guidance on this question, will Mr. Lew advocate for the plain English meaning of the phrase or the meaning favored by industry lobbyists?

8.  Lew played an important role in creating the Electric Drive Transportation Association, a lobbying organization promoting electric vehicles.  The Chevy Volt, GM’s highly-publicized (and highly-subsidized) electric vehicle, has repeatedly failed to meet GM’s sales goals. Given that the Treasury Department still owns 500 million shares of GM stock, will Mr. Lew promise American taxpayers that he will not use the Treasury Department’s leverage over GM to promote unpopular and uneconomic electric vehicles?

7.  During his time at the White House Office of Management and Budget, Lew worked to increase funding for ARPA-E, the Department of Energy’s research program.  Explicitly modeled on the defense technology program DARPA, ARPA-E’s mission is to fund high-risk, high-reward energy research.  However, DARPA funds research for important military applications which the market would otherwise have no inherent reason to support.  Does Mr. Lew believe that there is no incentive for private companies to invest in energy technology?  If so, why has the Obama Administration been playing investment banker in an unprofitable field?

6.  According to the environmentalist group Alliance to Save Energy, Jack Lew was instrumental in protecting the Department of Energy Building Technologies program from budget cuts.  The program, largely concerned with weatherizing buildings, is justified on the grounds that it will help reduce greenhouse gas emissions.  According to the Department of Energy’s own report on the program’s effects written in April 2012, the specific, confirmed cuts achieved by the Building Technologies program total a paltry 7,046 tons, about a thousandth of a percent of national annual emissions.  What are Lew’s economic standards for success for energy subsidy programs aimed at carbon emission reductions?

5.  Jack Lew was similarly instrumental in directing funding toward the Department of Energy Industrial Technologies program.  The most recent publicly available report on the results of the program, published in 2010, claimed 206 million tons of carbon emission reductions over the past eighteen years, or about 11,444 tons per year, which amounts to about two-thousandths of a percent of national annual emissions.  If DOE is correct , will Lew advocate for still more funds for this effort?

4.In its last four budgets, the Obama Administration has advocated increasing taxes on natural gas, oil and coal produced in the United States.  The Treasury justification for increasing taxes is that “to the extent the lower tax rate encourages the overproduction of oil and gas, it is detrimental to long-term energy security and is also inconsistent with the Administration’s policy of reducing carbon emissions and encouraging the use of renewable energy resources.”  Does Jack Lew think we are “overproducing” oil and gas in the U.S. and, if so, why does President Obama continue to herald increased production of oil and gas on non-government lands that has changed the energy outlook in the U.S. and around the world?   

3.  Recently, the EPA suffered public embarrassment when Administrator Lisa Jackson was found to have conducted EPA business on an EPA email account under the alias “Richard Windsor”.   Mr. Lew was Chief of Staff at the White House at that time.  Given Mr. Lew’s past association with lobbying groups, how can he assure us that such non-transparent practices will not continue on his watch?

2.  During his stint at Citigroup, Mr. Lew made money betting against the housing market.  Given the scandals surrounding the financial crisis of 2008 and the subsequent bailouts, can American taxpayers trust Mr. Lew to represent their interests in his role at the Treasury Department, and didn’t he, given his long government service, have an obligation to alert the public to the coming disastrous housing collapse?

1.  In November 2012, Senator David Vitter probed the Treasury Department’s withholding of thousands of pages of emails concerning a potential carbon tax bill in response to a Freedom of Information Act request.   In keeping with President Obama’s vow to create the most transparent administration in history, will Jack Lew ensure that the Treasury Department carbon tax emails are released?

Jack Thorlin (JD, Harvard ’12) is a 2012-13 legal fellow with the Institute for Energy Research. Thorlin’s first novel, Stand of Knights, tells story of a group of American soldiers fighting to protect Taiwan and preserve a last bastion of freedom in the 21st century.

Jack Thorlin