CHICAGO -- President-elect Barack Obama is set to name Sen. Ken Salazar as his choice for interior secretary and Chicago public schools boss Arne Duncan as his pick for education secretary, a source said on Monday.

Video: Obama Plans 'Energy Economy'

Obama planned to announce Duncan as his choice for education secretary on Tuesday morning, according to two people with knowledge of his decision.

Duncan has run the country's third-biggest school district for the past seven years. He has focused on improving struggling schools, closing those that fail. Obama highlighted this work by choosing a turnaround story for Duncan -- Dodge Renaissance Academy, a school Duncan closed and then reopened -- for the announcement.

The two had visited the school together three years ago, although they share more than an interest in education: Duncan has played pickup basketball with Obama since the 1990s. In fact, Duncan co-captained the Harvard basketball team and played professionally in Australia before he had a career in education.

Duncan ran an education nonprofit on Chicago's South Side before working in Chicago Public Schools under former chief Paul Vallas, now the schools chief in New Orleans.

Obama's choice has been anticipated, and argued about, by education groups anxious to see what Obama will do to fix the country's ailing schools.

The appointment of Salazar to the interior secretary post is expected to come later in the week.

Salazar is a first-term Colorado Senator who has established a name for himself on public lands and energy resources issues. He headed the Colorado Natural Resources Department from 1990 through 1994. The Interior Department has broad oversight over the nation's energy resources and environment. It oversees oil and gas drilling on public lands and manages the nation's parks and wildlife refuges.

Obama unveiled most of his energy team on Monday and said that fighting global warming required "all hands on deck" to create a new environmentally friendly economy.

Obama selected Nobel-prize winning physicist Steven Chu as energy secretary and Carol Browner, a confidant of former vice president Al Gore, to lead a White House council on energy and climate. Browner headed the Environmental Protection Agency in the Clinton administration.

Chu is director of the Lawrence Berkeley National Laboratory and is an leading advocate of reducing greenhouse gases by developing new energy sources.

Obama also has announced his choice of Lisa Jackson, former head of New Jersey's environmental agency, as EPA administrator.

"Chu's appointment "should send a signal to all that my administration will value science. We will make decisions based on the facts, and we understand that facts demand bold action," Obama said.

"We can spark the dynamism of our economy through a long-term investment in renewable energy that will give life to new businesses and industries with good jobs that pay well and can't be outsourced," Obama said. "We'll make public buildings more efficient, modernize our electricity grid, and reduce greenhouse gas emissions, while protecting and preserving our natural resources. We must also recognize that the solution to global climate change must be global."

Obama began the day on Monday meeting privately with his national security team, including Vice President-elect Joe Biden, incoming Secretary of State Hillary Rodham Clinton and Defense Secretary Robert Gates.

Obama is planning to leave soon for a more than weeklong trip to Hawaii to celebrate the holidays and relax before his Jan. 20 inauguration.

Here are the president elect's current Cabinet nominees and appointments.

• Treasury Secretary: Timothy Geithner, president of Federal Reserve Bank of New York.
• Secretary of State: Sen. Hillary Rodham Clinton, D-N.Y.
• Attorney General: Eric Holder, former deputy attorney general.
• Defense Secretary: Robert Gates, holdover from Bush administration.
• Homeland Security Secretary: Gov. Janet Napolitano, D-Ariz.
• National Security Advisor: Retired Marine Gen. James Jones.
• Commerce Secretary: Gov. Bill Richardson, D-N.M.
• National Economic Council Advisor: Lawrence Summers, former treasury secretary.
• Office of Management and Budget Director: Peter Orszag, director of Congressional Budget Office.
• Health and Human Services Secretary: Former Senate Majority Leader Tom Daschle, D-S.D.
• Veterans Affairs Secretary: Retired Gen. Eric K. Shinseki.
• Housing and Urban Development Secretary: Shaun Donovan, New York City housing commissioner.
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