 Good morning and welcome. Before we get started this morning, because we're expecting a larger crowd, so for both the courtesy of the folks around you and for our speakers and our panelists, if you could make sure your cell phones are turned off at this point, it would really be helpful. For those of you I haven't met yet, I'm Frank Verastro. I'm director of the Energy and National Security Program here at CSIS. It's my pleasure to welcome you this morning. We're going to explore the topic of energy security, climate change, and transportation, and options for transforming the transportation sector. To be sure, consistent with our economic, environmental, and energy security goals. Today's session is brought to you in partnership with the Natural Resources Defense Council, and dear and serious, you'll see them on a panel later today, and with a grant and support from the Rockefeller Foundation. So we appreciate that and we'll talk more about that later. Typically we like to open these sessions with some poignant and insightful framing. I'm actually going to save that a little bit because we have a special guest for you this morning. Beth Osborne from the Department of Transportation, and Beth is on a tight time schedule, so we're going to ask her to make some remarks and take some questions, and then we promise that we have her out of here by 9.40 a.m. So I'll save longer remarks for a little bit later on. Beth was recently appointed as the Deputy Assistant Secretary for Transportation Policy at the Transportation Department. She's focused on surface transportation reauthorization, which I'm sure there's many of you in the crowd that are interested in that. The Secretary LaHood's Livability Initiative, and she coordinates CAFE, tailpipe emission standards, safety, and climate issues. And in her free time, whatever that is, prior to joining DOT, she worked as a congressional staffer on both the Senate and the House side, most recently as leg assistant for Senator Tom Carper of Delaware, where she handled transportation, trade, and labor issues. Before that, she served as policy director for Smart Growth America and as leg director for environmental policy at the Southern Governors Association. She's a native of New Orleans, New Orleans, and she earned both her BA and JD degrees from LSU. She's graciously agreed to join us this morning. Next, we'll have some public remarks. This is all on the record. Take some questions. And, ladies and gentlemen, my pleasure to present to you Beth Osborn. Well, thanks for having me today, especially on my short timeframe. I appreciate it. I'm going to start off by just telling you a little bit about me, and it may sound like it's not related to this at first, but I swear it is. I started out when I came to D.C. as an air quality person. And when I was in law school, I thought I wanted to be an environmental attorney, and going to law school disavowed me of the idea that I wanted to be an attorney. But I definitely wanted to stay involved with environmental issues. And when I came here, I worked for Congressman Ron Clink, and he was on the Commerce Committee. We spent a lot of time on criteria pollutants and the beginnings of a global warming conversation. When I went over to Southern Governors Association, Governor Huckabee and Glenn Denning are responsible for switching me over to transportation. They coordinated on an initiative dealing with the impacts of compact development and smart growth on quality of life and transportation. And I was fascinated by it, and I never went back. But one thing I've discovered as a person who works on air quality and transportation issues during my career is not many people do. And you see that in the development of both the climate change bill and the transportation bill. The folks who work in air quality tend to be very focused on what the Clean Air Act focuses on, stationary sources, utilities, heavy manufacturing. Mobile sources come up in very particular ways, but rarely, and when they do, it's mostly focused on programs like transportation conformity, which a lot of people would argue has not been the most effective program, and most recently, tailpipe emission standards, which I'll get into. On the transportation side, you've got people very focused on transportation, but not focused so much on air quality, and they often see environmental issues as a barrier to getting transportation done. And so you see very different policies in the development of the two bills and almost no coordination. And the coordination doesn't fail just in terms of the policymakers, but really in terms of the interest groups too that work on the issues. There's just not a lot of crossover in transportation and air quality, which is a problem. We need to recognize the role that the built environment plays on energy use and greenhouse gas emissions. When people talk about the built environment in these terms, they will talk about building efficiency, which is a very important thing. Buildings are responsible for a great deal of emissions. However, a lot of the policies we put in place to deal with more efficient buildings has resulted in the buildings, new buildings being built that are very efficient, but moving buildings from the center of cities out to the exerbs and increasing transportation to that building by so much, we more than make up for all the benefits of the new building. You see LEED certified buildings on green fields out in the middle of nowhere. My husband works for the FBI and used to be downtown, and I think we can all admit that the FBI building downtown is not so great. And it's a beautiful building that they build out in Tysons, but now whereas over 30% of the workforce used to take transit down to the FBI building, now every single person drives out to the building in Tysons because they don't even have transit outside of a very, very small window and really only about two shuttle buses in morning and afternoon from transit. So it makes it incredibly inconvenient. And federal policy prohibits the use of a shuttle from downtown out to the building for anything other than making meetings. You can't be for commuting. So building efficiency without location efficiency is not a successful strategy. I get worked up about these things because I've seen us make these mistakes several times and there's a fear that we could make it again. In 75, when folks realized we needed to reduce our oil consumption, we created fuel economy standards. And we were very effective. Sometimes we feel like we weren't because oil usage increased, but we did increase the fuel economy of our fleet by a great deal. The problem was we allowed vehicle miles traveled to increase wildly. It went up 132% between the fuel economy standards in the late 90s. Only 13% of that was due to population growth, according to USDOT. And GDP growth was only about 60% over that time. So whereas people say that it occurred because of population economy, the numbers don't hold true. Last year, when gas prices shot up, we did see people change their behavior. We saw them buy more fuel-efficient cars, unfortunately just temporarily. They're now going back to the same gas guzzlers. And they shifted their ways of travel where they could. We saw transit ridership just go through the roof. We saw people try to walk and bike. But in the majority of communities in this country, those aren't really very viable options. And so what we discovered was people reduced their oil consumption by lowering their quality of life. This is a very disturbing situation because it sets up a competition in most people's minds between reducing oil usage, reducing greenhouse gas emissions, doing what's right for our national security, for the environment, and on the other side, their personal economic well-being. And the sad thing about this is this doesn't have to be the case. We have designed their communities so that they have no choice but to see that alternative. Another thing that it was a little frustrating is while the price of oil went up, we saw people talk about the fuel economy of cars, which is a good thing, though Congress had just increased CAFE the year before, and we've gone and sought a more aggressive increase in CAFE and tailpipe emissions through our most recent announcement on that. But a lot of the conversations centered around investment in alternative fuels and what they meant by that was wind and solar, which is very helpful in a state like Hawaii, which uses a lot of oil for its energy production. But until we've electrified the fleet doesn't really do much to lower gas prices for the average American, and electrification of the fleet is decades off at best. So the deal is we cannot succeed in reducing our oil usage and reducing our greenhouse gas emissions from the transportation sector if we're not addressing the transportation system and how far and how long people have to drive. We can raise CAFE, which we have. We can improve the use of biofuels, which I think you'll see in the energy bill. But while that brings the emissions and the oil usage from the transportation sector down considerably, it does not bring us to our targets or really even near our targets. So that means we either attack the issue or give up the goal or transfer the responsibility for the ever-increasing emissions from the transportation sector to another sector, which is a ridiculous prospect. We can absolutely take care of this problem with transportation. It just requires a coordination between these policies and a focus on the issue. A lot of folks will say that if we do a climate change bill with an upstream cap that we'll address this problem. An upstream cap means increase people's gas prices. And the problem is that, one, if gas prices are where they are today and a cap and trade system raised them even by the largest numbers I've seen, which is not very high, it would not do much to change behavior because gas prices are inherently so low right now. The other thing is that transportation or that price signal is sent to the user, but the user is not in charge of the transportation options they have. And that price signal doesn't go to transportation planners. So it's a mismatch in terms of creating a market. And cap and trade is a great market-based program if you have a market. But in the transportation sector, most people don't have a market in order to choose which mode they travel by. People need safe, convenient alternatives to driving, and that requires a major capital investment in transit, sidewalks, the redesign of our streets to support walking and biking, as well as a concentration of development, infill development, mixed use, mixed income developments. Make sure that people are close to the things they want to do. They're close to school, they're close to work, they're close to the grocery, they're close to restaurants. I think of my mother who does live very close to many of these things. So check box one. Box two is can she get there on foot? Well, she could, but she'd have to play a real-life game of Frogger for those of you all who remember Atari. And you do find some communities that have great sidewalks, though they tend to be disjointed, but they don't link to any place that anybody wants to go. So while they might be useful for taking a nice evening walk, they're certainly not a real transportation mode. To address, to get better outcomes, we're going to have to address transportation, the climate change bill, and climate change in the transportation bill. One thing we should be considering is the fact that success in terms of reducing oil usage and reducing greenhouse gas emissions has a very negative impact on the funding we raise through the user fee for transportation. And that is true both in terms of a gas tax and a VMT tax. If people have the alternative to get on transit or ride their bike, they're not driving as far. And of course we don't want people to have to spend two hours in their car a day in order to do what they need to do. So, and the other thing is historically raising money from road users has not resulted in the transit investment that a lot of people would like to see. So looking for other sources of funds that don't come with a historical break might be a useful conversation to have. The administration is working on a lot of these issues. We're working on a reauthorization position as well as our reaction to the Waxman-Markey bill. I don't have a lot of answers yet about where we're going to come down on these issues. What I can point to are things we're already doing in transportation. People have heard a lot about the high speed rail program and really just greater investment in intercity rail period which can do a lot to reduce greenhouse gas emissions and oil usage in intercity travel. We're also involved in a livability initiative with the Housing and Urban Development Department. We're looking to coordinate our programs to make sure the housing programs consider transportation. We're locating affordable housing close to transportation alternatives so that we're not locating people on property that might be inexpensive but requires them to increase their transportation so much that it comes out a wash. And transportation programs that look at the reverse where we're putting transportation what the impact is on household income, those sorts of things. HUD has a request into Congress for a new sustainability program to improve regional planning and we're looking at ways to make sure that if they get funding for that which we certainly hope they do it is fused with what we do in transportation planning to make sure that there's again not a mismatch in programs. The goal is to coordinate local economic development planning decisions with housing, water and transportation decisions in funding. We can do this in a way that lowers all our costs and comes out with better outcomes. Right now a lot of the investment decisions we make in transportation push off costs onto other programs like the water programs and housing and onto local governments and that need not be the case. We're also starting to see these issues, initial attempts to address these issues in Congress. The Waxman-Markey bill does address transportation planning. Unfortunately right now it addresses it in a whole new transportation planning program handled by EPA. And since we're trying to break down stovepipes in general and look for greater efficiencies overall creating an unfunded totally separate planning program in EPA versus a pretty well funded even considering the situation of the Highway Trust Fund at transportation might not be a great mesh for good success. In the transportation bill we're expecting to see a bill in the House soon but early indications are even though they want to look for performance standards which I think everybody agrees is a good thing the initial reports are those performance standards would be set by states and cities separately. And again if we're looking to coordinate policy and make sure federal dollars are spent well we probably need to discuss what we expect to get from those dollars from DC. So I can offer you almost no solutions today because we have no administration positions on these issues but I can lay out all the problems and things we're trying to consider and hopefully we'll be able to come back with our position on the near future and I'd be happy to take any questions. We only have two simple rules on questions here and those of you who've been here before you understand what they are it's when you're recognized identify who you are and to the extent you can state your question in the form of a question that would be real helpful. And why don't we go ahead. You want to start? Oh sure. I'm Mitzi Wertheim. I run something called the energy conversation and the whole objective was to bring together as many departments and agencies to get them talking to one another to do exactly what you're proposing. My question is I'm really excited about how you are bringing people in to think systemically about these issues. My question is how well is it going? It's a good question. I've only been on the job for about six weeks so far but we've already spent a very large amount of time together and there is extreme excitement and I think it's in a very productive way. There's been some encouragement from various sectors for us to form MOUs and formal agreements which we have tried to stay away from. We feel like that's a way to spend a lot of time negotiating one piece of paper but the second we change over personnel we lose the MOU to a great extent. Our goal is to figure out what we need for our programs through our various reauthorizations through our various funding requests and then make sure this stuff gets in constant law and regulations so that it lasts. And we are going through these programs systematically right now to figure out what that would mean. It's a lot of upfront work but we hope it will be very productive down the line. We have standing weekly meetings for our overall group. We're breaking out into working groups and meetings separately. There is a ton of work going on and I hope that we can show something very tangible for folks in the very near future. I believe you had your hand up first. For the last many, many years I've been working on something called the Climate Change Technology Program which is an interagency thing. I've worked quite a bit with transportation trying to get them to think big picture strategy on how to mitigate greenhouse gas emissions and I finally saw very encouraging signs of life in the last say eight months starting today going back. So a little bit of bridging the transition. They're working on something called a comprehensive strategy for transportation. And one of the problems I've always seen in DOT is that you're so stoked by highways and rails and green and freight and transit and read et cetera that you really needed somebody at the LST level to kind of bring it together. So I'm wondering how is the strategy going? Is it really going to catch hold and is the Secretary now standing up to lead and coordinate that which would be proud of you? There's some very, very positive signs initially. We'll start with the bad news first and head to the good news. The bad news is our program really doesn't support doing what you're saying. It's a very regimented, structured program. The funding flows by stovepipe and as long as the funding flows by stovepipe you are not going to get past it. It can't be done just by the mechanics of the program. Most recently in the Recovery Act Congress put together a discretionary grant program actually with no earmarks of $1.5 billion and our solicitation for that went out on May 18. It's been nicknamed Tiger Grants. I can't honestly tell you what that stands for. But transportation's something. But it is the first discretionary multimodal pot that's going to be managed out of OST and the goal is to do exactly what you're talking about and frankly we consider it kind of our audition to Congress. Look at how we can handle this so that you might consider that doing this on a more permanent basis is a good idea. Our applications are due on September 15 and there's a lot of anticipation on what we're going to receive. It's a Recovery Act program and therefore the projects have to be close to completion in the next few years to really be competitive. It has to be well distributed over rural and urban communities and across the country so there are some restrictions. It's not purely competitive. It's going to be interesting to see what we get in and how many people have had innovative proposals kind of in the bag waiting for something like this. But we're very sensitive to what you're saying and we're trying to figure out what that means for a long-term bill and hopefully we'll have some proposals out in the very near future so that we can tell Congress what it is we're thinking before they get too far ahead. With your counterparts dealing with the international aspects of climate and transportation if you could talk a little bit about that. Speaking of stovepipes, at DOT even within the Under Secretary for Policy's office there are two different offices. One is policy which tends to be domestic and surface and then the other one which is aviation international affairs. Historically these offices have operated almost completely separately and we've gone out of our way to stop that and to really cross over and make sure we all feel like we're part of the same office to start to look at what you're discussing. We particularly understand when it comes to aviation that most everything we do is going to be done on the international front because clearly planes don't stay very well within borders. So hopefully that will increase. A lot of this with regards to greenhouse gas emissions we are working with Congress and it's the best way to do that. But from the Department of Transportation's perspective we want to make sure that we are sensitive to the international processes that are in place. We feel like there's a lot of success we can have through that and we want to make sure that that's reflected in whatever policy we put together. But the coordination has improved really dramatically already. I tenor consultant. Could you comment on in the sense of coordination that went on to get NHTSA and EPA together on the CAFE standards and the tailpipe standards and does that bode well for the future? Yes, it really does. There are a couple things going on there. I don't think it's any secret that NHTSA and OEQPS have not had the greatest relationship over history. But this process was an incredible opportunity to break down some of those barriers. We spent a lot of time together. Our folks at NHTSA have worked unbelievably hard. And this is yet another example of a DOT program that is incredibly structured, incredibly dictatorial in how it will run versus an EPA program that almost has no structure whatsoever. It was amazing in our conversations. Under the Clean Air Act they could do almost anything they wanted to do. I would say, but the law requires us to do X, Y, and Z. So the coordination has been tricky. It's a joint rulemaking and we have to make sure we comply with our separate and extremely different statutes. But the process we've gone through to get to where we are today, while some serious bumps in the road has resulted in a much improved relationship and I think a lot more trust than we had before. We're already looking at other tasks that we're going to have to work on together and looking for excuses to continue that relationship in every way possible to continue to improve it and make sure that these programs are well coordinated. I do think it's a good example of what we can do when people really want to make those relationships work. And if we can make it work between the Energy Act and the Clean Air Act, there really isn't anything we can't coordinate. I'm Dick Van Adam with the Science and Technology Policy Institute and last week I spent a considerable amount of time at the Intelligent Transportation Systems Conference, which was a very long stove pipe. I couldn't figure out which sessions to go to, but there was kind of an interesting set of things on climate change way over here. Vehicle intelligent transportation over there, a little bit on public transit, very little, and no integration of them in any comprehensive or coordinated way. Part of the thing that struck me is that I don't see within DOT maybe there is some mechanism for strategically assessing the interrelationships between these in some sort of analytical way, region by region, area by area, providing support to the regions. San Francisco struck me as being particularly aware of the interdependencies and trying to build some planning capabilities, but I don't think there are any planning models and analytical tools to help do that. So where in DOT would that kind of strategic assessment, planning support come from and how would you get that to support the regions when they're trying to do that? You know, it's a really excellent question, and again it comes down to the structure of our program does not lend itself to a lot of that. We do have some folks in our planning office at FHWA who are looking at best practices and trying to pull people together and let them know what's out there and upgrade models, and that's very positive. But if you ask people what the transportation program is, they will say it's a federally funded state-run program. Well, a federally funded state-run program is not conducive to a federal bureaucracy that can provide the assistance you're talking about. So we need to look at this in reauthorization, look at the structure of our program in DOT and what our role is with regard to technical assistance and research and modeling and pushing technology out and those sorts of things. This has not been traditionally seen as the role of DOT. And certainly with some policy changes we could be a lot better in those respects. Thank you. I'm a fellow here at CSIS. I'm also a member of the Federal Biomass Technical R&D Advisory Committee and I drive a flexible vehicle. So my question is going to be about E85 and where we're headed with the biofuels program. As you know, there's a federal mandate in place that steps up the amount of biofuels that have to be absorbed in the market. It's a national program. I actually worked for the Senate when this was being developed and at that point a lot of us thought it didn't make sense to have it a national program given the concentration of production. Nonetheless, here we are. Now with what's happened with the auto manufacturers, GM, which was the only company that made a real commitment to producing flexible vehicles. It's not clear how much they're going to do. As far as I know, there's no mandate or even consideration of requiring manufacturers to start making most vehicles flex fuel. There are a number of people here in this room who have been dealing with this issue as long as I have and we see this sort of disconnect in public policy and within a few years and this is leading to redundant infrastructure, potentially infrastructure that will be abandoned soon because there will be enough ethanol to serve certain markets. Are you really discussing this? Is this a priority for the administration at this point in time? It's a... I was on the hill when this was developed as well and remember the discussions about whether or not a national policy had the chance to work. It has been difficult and frustrating. In the tailpipe emissions standard, CAFE standard, we have continued to include the flex fuel vehicle credit which we think will help with that. It's very interesting what some of the ramifications of this program can be whereas all three of the domestic automakers have made a commitment to build flex fuel vehicles, though GM to the greatest extent. Most of the flex fuel vehicles they tend to build are six and eight cylinder engines and a lot of these mandates we put very heavily fall on the federal government. The department with the largest domestic fleet, civilian fleet, is the post office which gets better fuel economy and uses less oil by driving four cylinder engines. So we have to figure that out. There's actually a fix that was put in place for that issue but flex fuel cars on their own is not... That's not a good enough goal. It has to be flex fuel on every type of car. Encouraging people to up-size in order to use a flexible fuel just does not get us where we're going. So it continues to be an extremely complex issue. You're right. There's a focus on other technologies as well and there seems to be a large movement of people that want to see us just simply electrify the fleet which may be a wonderful goal but again decades away. So I think people are trying to grapple with an extremely complex issue and try to figure out how this fits in with the rest of the goals and I don't know that we have answers right now. I probably have time for... Well, we'll do two more questions. Can I ask about the charging department? It's an excellent question and I would even back up and take it from 20,000 feet. A lot of people just don't want to deal with mobile sources at all. I've actually heard people, especially economists, say it's just hard. There are too many inputs and the car is creating a tight market cap when you've got inputs from the fuels and from the user and how they travel and from the way the community is designed and the transportation options provided and the types of cars and there's so many different points of contact there's not one place to leverage to shift these issues like you have with stationary sources. You also just have so many different little tailpipes that it's extremely difficult to control. I really would like to see people step back, admit that we're not going to fix this overnight, admit that we could make a big impact quickly though and start looking at all three legs of the stool. How do you deal in the short run with making a market for biofuels or for alternative fuels? How do we create a good market for fuel-efficient vehicles? How do we allow people to drive less in the first place? How do we convince people that a sidewalk is as sexy as a hybrid car? You know, I think that people, if they felt like we were on course to a good solution would be at rest with that. The discomfort is people are uncomfortable going into the issue of the transportation sector period and when they get there they discover there's not one quick answer like we'll just raise cafe standards and fix everything, which is what people want it to be. And then when they get there and they look at all the solutions, they recognize that it's a hodgepodge and it's difficult and they have to coordinate and even then it's not going to get fixed overnight. And that's a very disconcerting place to be, particularly for policy makers, that want to be able to explain very quickly how they're going to make things better. And so we need smart people helping us figure out all those individual pieces and then helping us frame how they all go together to make progress recognizing that this isn't getting fixed in the next 5, 10 years. But I think having solutions makes people more comfortable with that reality. Bob Hershey, I'm a consultant. You've talked about a lot of issues that have trade-offs. What kinds of technologies are you looking at which will improve the situation within these trade-offs? That's a big question. You know, within the transportation system there's a lot we can do in technology with ITS which was raised, just better operation of the system we already have. There's a lot of conversation about technologies that can go into vehicles that can help with better communication between them and therefore better operations, but also in terms of shifting us over from a gas tax to a VMT tax which is not the sexiest way to sell the technology. But, you know, again, while people really want to jump into technology and we discuss technology a ton with regard to the tailpipe emission standard and CAFE and safety and those sorts of issues, what we're talking about in terms of VMT isn't really a technology. It's things like inclusionary zoning which, again, will make most people start to snore, to hear, but it has such an enormous impact on how people get around. There are some technologies we can do to help with the planning to make it better in terms of better modeling, in terms of being able to overlay different impacts of separate transportation and land use decisions which will have remarkable impacts on quality of life, oil usage, climate change, air pollution, water pollution, affordability issues. You can go on and on and on but you do need some good technology and planning tools to allow people to compare what different things do to all of these various factors. I think of what Envision Utah did in Salt Lake City in the Wasatch Valley and they had four different proposals that looked at land use and housing and job and economic development and transportation decisions, A, being kind of business as usual, B, being a little more transit heavy and C, being a lot more infill development, transit heavy and then D, being the ultimate smart growth solution. And they found very interesting things out that surprised people. C, even though it wasn't the most compact, the most smart growth, the most transit, performed better than D because in the valley when you had development too compact you increased air pollution because it got trapped. You actually increased infrastructure costs because you were having to take care of so many people in a small area and these are things you can't really compare until you have the planning tools available to you to make these somewhat boring-sounding zoning and development decisions. So we can talk about vehicle technologies, we can talk about operational technologies but we do need to talk about these models and planning technologies not just in terms of helping policymakers make the right decision but helping them communicate what those decisions mean to the public because one thing Envision Utah did really, really well was get huge public buy-in by being able to explain a very graphic and tangible way that people got to interact with what these decisions would mean and so when a decision was made people were really bought into that decision. Yeah, Envision Utah.org, I believe. It really is the coolest program and I have a bias, I have a rule in my office that no one brings up Portland. No offense to Portland but we've heard about it. We need to hear about somebody else doing those cool things and Utah really has an incredible program that honestly started by extreme buy-in at each local government level. It's actually an outside group that came in and brought all those local governments in little by little but there's some lessons there that could be applied really almost anywhere in the country and I would love to see that repeated. Beth, I would tell you, I'm not only comforted by the fact that your substantive grasp of the issues is most impressive but the blend of enthusiasm and pragmatism but it's going to take a long time. This doesn't happen overnight. I appreciate your candor. I very much appreciate you coming. We may have you back if that works into your schedule. If you'll join me. Maybe if you do, I'll have something to say about the administration's position. Wouldn't that be exciting? No, you got time for that. Join me in thanking Beth Osborn. Thank you.