Obama's energy secy to push renewables, less oil

WASHINGTON (Reuters) - The change promised by U.S. President-elect Barack Obama will extend to the Energy Department, where the next energy secretary is likely to focus more than ever on renewable and alternative energy sources and less on traditional fossil fuels like crude oil.

Steven Chu, Obama’s pick to be energy secretary, will play a major role in implementing the incoming president’s plan to resuscitate the U.S. economy with millions of new green energy jobs that will cut America’s polluting emissions and the country’s addiction to foreign oil supplies.

“The biggest challenge for the next energy secretary is to develop, support, and adopt clean energy policies that put Americans to work and reduce global warming pollution,” said Dan Weiss, energy expert at the Center for American Progress think tanks.

“The Energy Department must shift its mission to speeding the transformation to a clean energy economy, rather than finding new ways to concoct or burn fossil fuels,” Weiss said.

Chu will have to work closely with a new White House council that will coordinate energy, climate and environmental policies among the various federal agencies. Obama wants former Environmental Protection Agency chief Carol Browner to head that panel.

Crude oil and gasoline prices have become less of an issue now that the U.S. recession and the weak global economy has reduced petroleum demand and slashed energy costs for consumers.

This should free up Chu to spend more time promoting renewable and alternative energy sources, which he has already been doing as head of the Lawrence Berkley National Laboratory in California.

However, bad economic conditions and low petroleum prices may weaken political pressure to spend money on developing alternative energy sources, according to Rayola Dougher, senior economic advisor at the American Petroleum Institute.

“It makes alternative energy that much more expensive because its competition is oil and gas,” Dougher said. “It makes it more questionable how much you’re going to put into certain resources that are not viable on market right now.”

Even with a big push for renewable energy under Obama, America will still rely on oil as a major energy source for the foreseeable future.

As a result, Chu will have to walk the diplomatic tightrope with OPEC, which provides the United States with part of its daily fix of oil. Staying in good standing with Saudi Arabia, the world’s biggest oil producer and most influential OPEC member, will be key.

“The best way for the new secretary of energy to deal with OPEC is to continue a good working relationship with Saudi leadership,” said Guy Caruso, the recent head of the U.S. Energy Information Administration who now works at the Center for Strategic and International Studies.

Boosting domestic oil supplies by the Obama administration announcing it will open more U.S. offshore areas to drilling would send a strong message to the producer group, said Brian Kennedy, spokesman for the Institute for Energy Research.

“Either we’re going to get serious about production at home, or we’re going to continue to flounder at OPEC’s whims,” he said. “The alternative energy future in which many people expect to live will never materialize unless we’re able to sustain ourselves with abundant and affordable supplies of conventional energy in the meantime.”

Other challenges facing Chu will be modernizing the U.S. electricity grid, whether to boost the size of the Strategic Petroleum Reserve and if the emergency stockpile should be used to lower fuel prices and how to store the millions of radioactive waste now at nuclear power plants and government weapons sites.

Editing by Christian Wiessner