Blake Hounshell is deputy editor of Politico Magazine.

Former U.S. Energy Secretary Steven Chu, now a professor of physics at Stanford University, talks with Politico Magazine ’s Blake Hounshell about what he learned in Washington, why Solyndra wasn't a scandal — and what politicians just don’t get about the science of energy.

On the government’s role:

Absolutely you need the government’s thumb on the scale to capture carbon — just as you need a regulator to tell the chemical industry, you know, “It’s not OK to dump stuff into the river,” because it’s always going to be cheaper to dump it in the river. If you’re downstream, it’s a much higher cost. And that’s why you have regulations in clean water and clean air.


If you look at what we started funding that was new and different at the Department of Energy, it’s those things where we’d say a little bit of government support in the early R&D stages can go a long way. So, while I was secretary, we brought in very talented people, and we’d sit around and discuss where the white spaces were—where we could make the most impact. It’s always in the front end with R&D. Once you get it going, you want industry and the private sector to take it over. It’s like in shale gas, in horizontal drilling—the Department of Energy supported it from ’78 to ’91. No one else. The oil industry didn’t think it was going to work. No one thought it was going to work, and they showed this might work.

On climate change and the future of energy:

By 2009, [the climate change bill] went through the House but was having a rough time going through the Senate. And the president had to prioritize whether he was going to push a health care bill or the climate change bill. And so he decided to push health care, thinking, “We’ll come back to the climate, though.” But the midterm elections really changed things. And then what was happening was that hydraulic fracturing and horizontal drilling for oil also really changed things.

Now, that doesn’t mean that we don’t have a climate problem—the climate problem’s there and it’s getting worse with each passing year. With each passing year, the science gets more and more compelling that we are in deeper and deeper trouble.

So here’s the thing: You can look at, let’s say, the natural gas [boom], as, “Oh, this is terrible.” We can expect natural gas prices to be low for the next two to three decades—maybe further—and that’s going to be really bad for renewable energy. Or you can say, “No, that’s OK,” because natural gas produces fewer carbon emissions than coal. But in the end, if we’re going to use coal or natural gas in the future, we’re going to have to capture the carbon emissions from both.

On electric car batteries:

From about 2008 to now, the manufacturing cost of batteries of the scale of what’s in a Nissan LEAF, a Chevy Volt or a Tesla has dropped about twofold. If you talk to most battery manufacturers and the purchasers of high-volume batteries, they expect it to drop another twofold within a five- to six-year timescale. That’s pretty darn good.

The price is roughly $500 per kilowatt-hour of storage. We set a very ambitious goal of $160 to $200 per kilowatt-hour of storage, depending on whether it’s mobile or not. Now, at that price, then you could have the 300-mile, Tesla-like range in a $25,000 car. And if you get something like that, I can see, in suburbia and in cities, electric vehicles and plug-in hybrids just becoming mainstream. If you can plunk down $25,000 to get a car that’s comparable to a 40-mile-a-gallon internal combustion engine at $20,000, you’d buy the plug-in hybrid or the EV. I would. I wouldn’t even blink. And that’s even with today’s gasoline prices. But one would be foolish not to assume that 10 years from now the gasoline prices on average would be higher. They’re gonna be higher. And they’re gonna go up higher than the cost of electricity.

There are lots of bureaucrats who never want to own anything. They’ll hide behind a committee; they’ll hide behind God knows what. You couldn’t hide behind a committee on this one.

On what he would research if he were starting his career today:

I would probably work on a systems approach to a particular energy field. For example, a battery is not only just a battery. So I’d be working on the chemistry and things like that, but I’d also be working on internally sensing the condition of the battery. It’s that systems approach to these things where one would have a lot of impact.

On plugging the Deepwater Horizon leak:

I did play a role in doing it. I think Obama overstated it. But never contradict your president, your boss, in public. [Laughs.] I had made a suggestion early on about how to diagnose whether the valves were open or closed. BP first wrinkled their nose at it and said, “That’s ridiculous.” And then after a couple days they said, “You know, he’s right.”

And so, after the president heard about that, he said, “Chu, go down and help them stop the leak.” So, I called a bunch of really smart people—about half a dozen people that I knew personally—and said, “Come on, help BP stop this.” It wasn’t just me—it was my team. But it wasn’t just my immediate team. We had a huge army of people within the Department of Energy and outside there.

The toughest call I made was: I think we have to begin to start to tell [BP] what to do, or at least stop them from doing things until we approve of them. And another person on my team said, “If you start doing that, then you begin to own it. So you should not do that.” And I said, “That’s OK, I’ll own it.” There are lots of bureaucrats who never want to own anything. They’ll hide behind a committee; they’ll hide behind God knows what. You couldn’t hide behind a committee on this one.

We had a committee, but it wasn’t a committee vote—there was nothing like that. We had six very, very smart people and we’d all sit and listen to each other. But in the end, I had to make calls. And that was the toughest call I made. I said, “I think we have to be much more proactive.”

There’s this scene from The Guns of Navarone where David Niven plays this explosives expert—he’s an academic explosives expert—and Gregory Peck says at one point, “They tell me you’re an explosives expert. Well, you better show your genius because we’re in it now! All the way.” So I sent an email to my team saying, “I’m sorry, we’re in it now!” That’s the call I’m making. But in the end, it’s not them; it would be me.

On whether the Solyndra episode had a lasting impact:

A lasting impact? I mean personally, no, because I was only in office for four and a quarter years.

At the time we made the loan, one has to understand that, first, the career people put that at the front of the line. They put it at the front of the line during the Bush administration. They said, “This is a company to watch.” The Wall Street Journal in 2009 or 2010 said, “This is one of 25 companies to watch, we expect great things.” And I think there were other things similar to that. So, if you go back and look at what people were saying at the time we were considering making the loan, it looked like a good thing to do. And that’s why the career people put that at the front of the line.

Then what happened, as it progressed, is there was an exuberance, an abundance of investment [in solar technology], particularly in China because the Chinese companies had access to a lot of inexpensive capital. And the business strategy there was, No. 1, they think that this was going to be a growing world market. And if you have half-a-billion-dollar plant, vs. a billion-dollar plant, vs. a two-billion-dollar plant, the economies of scale of the two-billion-dollar plant are just better. OK? And so, you could be equally good in the plant, but when you go from half a billion to two billion, you’re just a more dominant force.

So the Chinese companies expanded very rapidly, with multiple billion-dollar plants. Then the bottom falls out, end of 2008, 2009—worldwide recession. We’re in oversupply. So Solyndra goes bankrupt; a couple of other companies go bankrupt. The German companies are going bankrupt. The biggest Chinese solar company went bankrupt—not widely known.

Now, what China did when this was happening—this was now 2010, 2011, when everything’s hitting the fan, including Solyndra—I have to say, what China did maybe makes a little more sense. They were saying, “We’re going to let some of these smaller players consolidate, go under, whatever. But we’re going to have a policy that creates the demand domestically, so that we can keep the good guys alive to weather the storm.” Which is what they’re doing—they are the biggest installers of wind and solar in the world today, domestically. Because they want to weather the storm.

By the way, in any new emerging technology, having lots of flourishing of companies of which most go bankrupt historically is what always happens. Look at car companies, look at the airplane companies, look at anything, and you find the same. There’s a shakeout; there’s a consolidation, and a lot of companies just go under. We went from 120 car companies in the 1920s to three in the ‘60s and ‘70s. And there was a consolidation—you know, competitors were bought out. And a lot of companies just went bankrupt. So that is a natural thing in rapidly developing sectors of technology—that happens all the time.

It happened that that became a political problem. Well, that’s a history lesson, right? In airplanes, in cars, in electronics, you name it. Just go down the list: computers, chip makers—it happens all the time.

So, at the time, the bottom was falling out. That was a tougher decision. (It had been a no-brainer that it looked like it was going to be a good thing when we made the loan.) And there I was assessing, you know, there’s a better than 50 percent chance this company is going to go under, when it came time to refinance. And by that time we had disbursed half the loan, roughly, maybe two-thirds. And we could have said nope, no more. That would have guaranteed the company went under. But even then I was thinking the probability was greater than 50 percent (could have been two-thirds, could have been four-fifths). So the question was: Is half the factory worth more than a full factory, OK? And that’s the judgment call that I eventually made—that maybe a full factory is worth more than [half a factory]. But because of the oversupply, you could have said, well, that may not have been a good call.

So, now, since that time, since Solyndra—and I began to get much more involved in the other loans and not as much listening to the people in the program and below—in more instances we’re saying “Nope, were gonna pull the plug.” And even after Solyndra, there would be some rumblings and some of the career guys would say, “No, no, no—you can’t do this. You’re obligated to put in the next $30 million.” And I’d say, “No we’re not. What are they gonna do, sue us?”