 One. Okay, we're back, we're live with Energy in America with Lupu Yurishi of E-Princk in Washington, D.C. except this time it's not exactly like that. It's Energy in America from Japan because that's where Lou is. Lou is in Tokyo? Yes. Hi, Lou. Yes. Tell us about Tokyo and tell us why you're there and tell us how that all connects with Energy in America. So, as you may know, Prime Minister Abe visited Washington, D.C. and met with President Trump and then they went to Mar-a-Lago and Florida and played golf. And during that visit they discussed a lot of the issues including the mutual security interests in the Pacific Rim, particularly concern over the ballistic missile test by the North Korean government which is up to a lot of interesting shenanigans these days. And they also discussed finding ways to expand trade and Prime Minister Abe raised the issue of expanded LNG exports from the United States, not just to Japan, but to other countries in the Pacific Rim. And finally, I think, since they don't have a lot of officials in place yet, they started to initiate a trade dialogue through Vice President Pence and media, Ministry of Economy, Trade and Industry, Minister Seiko. So that's the main accomplishment. I don't think there were not a lot of details about LNG exports, but in my meetings with ministry officials yesterday, a question came up of LNG deliveries to Hawaii. Ah, and what was the discussion around that question? We really care a lot about this. There were two questions that were raised. One, would it be possible to get a Jones Act exemption so American ships could be used? Or, no, if American ships were not used, which would probably be the likely case there. No, American LNG carriers as far as I know. And my answer there was, I think you could get an exemption for something like that because the shipments are small and we already do some exemptions in the cruise lines for special cases. So you would have a large shipment, say, of LNG to Japan or Taiwan. And some small volumes could be dropped off for either military use or power plant use in Hawaii. I pointed out that the governor of Hawaii was opposed to any LNG shipments and they might have to wait a few years for a change in the administration. Let me, you know, I don't have to tell you that LNG is in, what shall I say about LNG in Hawaii? The governor doesn't like it. The Hawaiian Electric has not embraced it. I don't know if they have turned it off, but they haven't embraced it. And I think it has a very questionable future. It has a questionable future in Hawaii. Yes, I agree. And that was actually the message. Because of my discussions with you, Jay, I passed that message along. So it's not a critical issue for the efficiency of LNG shipments to Pacific Rim. It gives a kind of nice gesture, in a way, connection. But I don't think, as I say, it would require a change of administration policy or administration in the state of Hawaii. Yeah. Well, yeah. It has to be a pretty dramatic change because so much of energy policy in Hawaii is made by, I want to know, the people. The people who come and take advantage of the transparency and who speak about it. You know, a lot of environmentalists who characterize probably accurately LNG as a fossil fuel. It's a fossil fuel and they're dedicated to stopping old fossil fuel. Right. If it turns out that the renewable program in Hawaii reaches some limit, let's say, and that they're stuck with a certain volume of fuel oil as the fossil fuel, I suspect it could be raised again. Yeah, I don't think... No, I agree with you. It remains a possibility. And I don't think everybody can say the door is closed on LNG. We've got to see what happens in the next few years. It could be that we do need it as originally contemplated as a bridge fuel and to hedge against increasing prices for other sources of fuel, including oil, of course, and renewables. So it's a market. Among other things, it's a market issue as well as an environmental concern. Exactly. Yeah. So how do the Japanese feel about LNG? Is it an important part of their portfolio? Yeah. So as you know, a couple of issues for the Japanese on LNG. The first is that after Fukushima, virtually all the nuclear power plants were shut down. I know I sent you some data from 2014 which shows no nuclear power in Japan, but in fact, I think they've got at least a couple running another one scheduled to come on soon. The basic issue for the Japanese there is that when they lost their nuclear power, they had to switch to both fuel oil and direct crude burn to make up some of the shortfalls. So they had an aggressive renewable program. So this is one of the reasons. There's two reasons for LNG. One, it's a clean fuel that fits into their portfolio. And specifically, they're interested in the U.S., not just for sort of reinforcing trade and security relationship, but also that if you're a big purchaser of LNG, such as the Japanese, you want to have a portfolio of sources. You don't want to rely just on the Middle East or just on Australia. You want to have a broad set of suppliers. Isn't that true? You know, we talked about that here in Hawaii and, oh, way back in 2008 anyway, if not before, if not way back before then, that we don't want to be dependent on any particular geopolitical region. And since then, in recent years, gee, in the last three or four years, it became clear that geopolitical regions from which we obtain oil could be destabilized any time. And if that's the case, it's not even a question of price. It's a question of whether you can get it at all. And I think that thinking is now international. It's global thinking. If the region from which the fuel comes from is not reliable, you shouldn't rely on it. Simple, yeah. Yes, but oddly enough, I would think that most of that risk for oil, for crude oil, is it's lower in terms of reliability, you know, in terms of where you get it, because there are lots of production centers. So I just don't think it's a big problem. But it does have a higher price risk. But LNG, I would say, because the number of production centers are small, are relatively few, it may have a relatively low price risk, but it will have more of a diversification risk is high because there aren't that many places you can go to. Well, that calls for an interesting point. And that is if the number of processing plants which create LNG is small, but the market seems to be growing worldwide for LNG. I mean, people like it. They're finding a place for it in many countries. Then does it follow that we will soon enough have more processing plants in more places? It would be more commodification of LNG, don't you think? Absolutely. That is actually the theme of the Japanese policy initiative. And to make the LNG market look more like the crude oil market. And how you do that is you encourage the development of LNG sources outside the traditional suppliers, which they are doing. As you get more supplies, the Gulf Coast or the West Coast of the United States, it could be Rosarito, Long Beach, Jordan Coast, Oregon, Sabine Pass and the Gulf. All these different places do raise the potential for more suppliers. In fact, even Mexico is looking at in Baja, California where they have a big input facility to bring U.S. gas by pipeline to Baja, California and then re-export it there as LNG. That also takes me to the question of whether that would be subject to these new tariffs that the Trump administration is considering. If we're going to import oil from say Mexico or LNG from Mexico, whatever kind of fuel we import from that, is that subject to that 20% tariff they were thinking about? That would be subject to the border adjustment tax, which really is not a Trump proposal as much as a Republican House proposal from Speaker Ryan. But the information from the last couple of days and folks have talked to suggest that there isn't a very warm welcome for this border adjustment tax in the Senate. But it is a dilemma because if we're going to get tax reform, both corporate tax reform and personal income tax reform, they're going to have to find money somewhere else. And there is some discussion, you know, recently a lot of Republican luminaries like former Secretary Schultz, former Secretary of State Baker, George Mankow have all written op-eds and even met with White House staff to talk about that carbon tax. We're in transitional times. But let me ask you, before we go to the break, Lou, I just want to know why you're in Japan. Is this professional or is it personal? No, I was in Japan and I participated in an annual petroleum and energy seminar for both the government and industrial and petroleum companies in Tokyo. We do it every year. And there were three of us. There was Basim Patu from the Oxford Institute of Energy Studies. There was me and Mr. Deserion from France who had a very bleak picture about Donald Trump. So he was very entertaining. It wouldn't be the only one. No, so you're going to present and give them, you know, your think tank views about energy? I hope he did it. I'll send you the PowerPoint and let me hang up so you can enjoy it. You can have trouble sleeping at night. But what do you get from them, Lou? I mean, you know, you're there and of course you're in a dosy dough, elbow to elbow with all these people who are interested in energy from the Japanese point of view, and maybe from other countries too who attend the conference. What are you getting from them? Who are they and what are you getting from them? So what I'm getting from them is that actually the Japanese are quite relaxed. I feel that actually Prime Minister Abe, like President Trump, have some similar outlook on the world. The primary concern is that there'd be no deterioration of security relationship. They're absolutely concerned about two major trouble spots. One is the expansion of the Chinese. They're completely naval forces throughout the South China Sea, the North Koreans, and I think behind the scenes also the Northern Territories or Irons, you know, the Japanese still do not have a peace treaty with the Russians from World War II, and they're still working on that. And there's some Northern Territories they would like to be returned. Well, let's take a short break, Lou. Lou Putirisi of E-Princk in Washington, but not in Washington in Tokyo instead, attending and presenting at a conference about energy there. When we come back, I want to talk more about geopolitics and how the formula, how the algorithm has changed in this administration between geopolitics and energy. We'll be right back. Aloha, Howard Wigg. I am the proud host of Code Green Think Tech Away. I appear every other Monday at three in the afternoon. Do not tune in in the morning. My topic is energy efficiency. It sounds dry as heck, but it's not. We're paying five billion dollars a year for imported oil. My job is to shave that, shave that, shave that down in homes and buildings. While delivering better comfort, better light, better air conditioning, better everything. So if you're interested in your future, you'd better tune in to me, three o'clock every other Monday Code Green Aloha, and thank you very much. Well, bingo! It's almost lunchtime in Tokyo, and Lou was talking about the sushi place around the corner, and the food is so good in Tokyo. No kidding, are you enjoying it? Yes, I come here a year, and I'll probably be coming back in a few months. Are you staying in downtown at the Ginza, or where? I'm very close to Ginza, not too far. I'm at the cross the street from the United States Embassy. Oh, very nice. Very nice, very nice. It's a lovely trip, and if you go every year, I'm sure you know the ropes, you know how to get along, you know where to go, and all that. Japan is such a comfortable place to travel to, isn't it? So revisiting the issue you raised just before the break about, you know, the geopolitics in the South China Sea and elsewhere in Asia, what you have is an uncertainty and maybe an intimidation factor from China. That's got to affect, you know, the cost and risk of shipping, fossil fuel including, I suppose, not only oil but LNG, and therefore it's got to have an effect on global markets for fuel, and therefore it's also got to have an indirect effect on portable tech and renewables as well. So can you talk about how, you know, all this trouble in the South China Sea and maybe other places coming soon affect the global markets and affect the way these countries and the entrepreneurs, you know, reshape their ways of getting sources of fuel of energy? So, you know, historically there has been concerns about security supply and the potential for at least prices to spike because of insecure and expensive supplies of food oil. I do think the oil share revolution, the diversification of supplies, a lot of the measures and efficiency that we've undertaken in the West have changed the dynamics of that issue. I'm not saying it's not a problem. It is a problem but for Japan, they're concerned about access to, let's say, overseas supplies of OMG or crude oil are less concerned about sea lanes and communication and more about problems at the production centers. And also keep in mind that some of the Chinese build out, of course, is to spread their influence and power throughout the South China Sea. It's also because they import a lot of things and want to keep those supplies flowing. So it's an interesting diplomatic and security issue that's going to be worked out. But to your point, I would say, yes, concern over geopolitical risks, concern over financial risks and concern over climate have led the major countries of both the Pacific and the U.S. to begin to install more renewable power, particularly in the pro-electric generation. I think we might have a table you can pull up. If not, I can give you some of the number. Well, there's a table for you. Yeah, okay, so if you look at this date, one thing is that I really, all your readers, when they ever see this presentation, you'll see a very big renewable number. It's very important to ask how much of that renewable number is hydroelectric power? People like to show enormous progress on renewables, but they forget to tell us that sometimes a large percentage of it is hydropower. U.S. analysts, U.S. policy folks do that a lot. They say, well, we're up to 12% renewables in the U.S. Well, that's actually not true if you're thinking just about solar and wind. Actually, all renewables are 6.9% in 2014. They're slightly larger. Also, this table I believe, and I need to double-check this, is not necessary how much is generated, but it's installed capacity. So that's something to keep in mind. I am impressed at the high level of renewable penetration by Germany and Spain. You'll notice that the U.S. and Japan are at the lower end. And still a lot of reliance upon coal. If you look at the issue of coal, you know, any U.S. coal will continue to be to continue to struggle even with the new regulations and policy initiatives promoted by President Trump. And the reason for this is that natural gas is really cheap. And decisions on power plants are not made by the federal government. They are made by the states and the public. And I think that with the article that I saw in the Times this morning to the effect that coal mining companies are now making money and that they're in the black, that's a pun, you know. That's definitely a play on words. They're now in the black. It could be that first, you know, they sort of had their cost structure beat back. There's a lot of people who used to be due coal mining in companies and there may be a set of expectations that could do more exports. And I do think the big change for Trump will not be that we'll be expanding coal. But the way the client will clearly slow down a lot. So without the clean power plant the number of coal plants in the U.S. will not be quite as rapid. Well, you know, so wrapping around this seems to me that when I was a kid and you probably had the same experience back when, Lou, my mother used to say to me it's so great that you live in the best country in the world. You should wake up every morning and give thanks to God that you live in the United States of America. You know, and I mean, people have been questioning that and I've been questioning, you know, maybe if she were alive today, they would have a different view of things from what's going on. And I saw in the paper also this morning that life expectancy in this country which used to be so terrific is actually not as good relative to other countries anymore. And, you know, we have problems. So the question is... So I can tell you, interesting statistic. Yeah. If World War II, almost overnight armed forces removed 40% of the doctors, right? Mm-hmm. They put them in the armed forces. Mm-hmm. And the health data used to not deteriorate at all. So, the factors that affect... I mean, any health care is quite important, of course. I don't want to make a joke of that, but, you know, I have a friend who does a lot of research in this area. And there are other factors that affect your, you know, of opioid use. And there's a lot of other things having little to do with the delivery of health care that affect people's longevity. So I would be careful with those immediate conclusion on those. And income levels. Income levels hurt your ability to live a long life. A direct effect, sure. But let me, you know, take that down the road to the question of energy. Now, you show us a chart, and the chart shows, you know, distribution of, you know, distribution of energy sources in various countries. And I would say that, you know, the U.S. is better than all of them, I'm not sure. Certainly there are countries elsewhere in the world that are trying really hard to be renewables. I remember I was traveling in Europe last summer, and there were a couple of countries in Europe that, for a time, because they were using wind, well, 100% renewable. 100%. Here's the problem. If this is not a local air pollution pipeline, which is low means of carbon, or carbon dioxide into the atmosphere, or another so-called global warming gases, if this is the central problem, this is an Asian problem, because the U.S., as the U.S. has, its carbon emissions have declined dramatically. And if you take all the measures that President Obama was so interested in, for example, stopping the Keystone XL pipeline, or implementing the Clean Power Plan, those measures in themselves had no effect on estimates of global warming or climate. If you ran the IPCC models from the United Nations, we would have been no effect. The problem is what would China and India do? This is like all those silly stuff people do in Hawaii. It's a small country. It's a small state. Small population. Who cares what Hawaii does? This is really a Hawaiian's want to wear a hair shirt. It's their business. I know a large delegation of energy analysts and climate specialists went to India about two months ago, and they went through all the climate things the Indians could do. The efficiency and stuff. At the end of this meeting, the energy minister got up and he said, thank you for all coming. As you may not know, we don't like to take advice from you guys. We're going to go ahead and build a lot of coal plants because we're a poor country and we need cheap power. But thank you nevertheless. So this is a real problem. Our climate strategy is focused on leadership which would get other people to go. And no one is talking about whether that's working or not. What would you say if I suggested that over time some of these other countries are going to be focused? Not today necessarily and economics rules, of course, but they're going to be focused on going through renewables for various reasons, including geopolitical reasons. The Trump administration is trying to encourage coal and oil pipelines and what have you. And not focusing so much as it was under Obama on renewables and solar and all that. So we're going one direction. Some of these other countries are going in other directions. There may come a time when the course has match and in fact the U.S. is doing less renewables than some countries that surprise us with their progress in this area. Will that come soon? That's quite possible but there are two facts alive. One, power demand is growing extremely slow in the U.S. We are going to naturally go through a process where coal plants retire and they are substituted by natural gas or renewables or fuel or efficiency standards, right? We are not going to see big growth in electric generation in the United States. You can spend a lot of time spending your wheels on this and gnashing your teeth. You can't really move the numbers a lot. A lot of this is symbolism that politicians love to play with. Sure. Well, if we lived in a world in which we just had people who were all very reasonable it would probably be the cheapest solution would be for the U.S. and the West to pay the Indians and the Chinese to convert at a faster rate. There you go. You are out on think-tech. There you go. A great solution. But let me ask, in Japan this is my last question of our show here today in Japan we are enjoying not only the sushi but the environment in general how much fervor is there? How ardent are people in a clean energy initiative? I guess they got concerned over the nuclear incident a couple of years ago. Are they running a mile a minute away from that? Are they running from coal? How ardent are they in moving to renewable? The Japanese will be building a new coplan, a super critical coplan not carbon capture in storage but a super critical one is on the board. And I don't think you can overestimate the driving force for renewables is really the concern over nuclear power. And that's a much longer story than we can do today because in Fukushima there were such greats at Fukushima but the real problem was the tie-away. And the way some of the safety procedures of the nuclear power was Fukushima. Something like that comes along and gets everybody's attention and that's likely to happen again if the same kind of tragedy repeats. I really love talking to you in Japan you know Hawaii is so interesting in everything that happens in Japan and we are interested in your adventures in Japan and I'm so glad we got the hook up with you and I guess if I next show you'd be back in Washington is that true? I will, I'll be in Cyprus next week but the week after I'll be in Washington. I hope you like and enjoy and I look forward to talking with you again catch up again, it's great to talk to you Lou Pululisi of E-Print talking about energy in America and elsewhere.