 Get started, ladies and gentlemen. And because you're a beautiful audience, I'm going to tweet you. Welcome, welcome, everyone. Let's get settled. Welcome to New America. I'm Sharon Burke. I'm a senior advisor here, and I run a new program called Resource Security, which is looking at energy, water, food, climate, and also how it all fits together. So I'm delighted to be here today for this wonderful event. Our partners today in this event are the Pew Charitable Trust. Heather Messara and Lynn Abramson are here in person, and we have the Clean Energy Business Network from the Pew Charitable Trust is live streaming. I think some of you are here in person as well. So a lot of this event today is thanks to them and also to the Clean Energy Business Network. And we are just delighted today to have with us Secretary of the Air Force, Deborah Lee James. She is the 23rd Secretary of the Air Force. She has very deep experience in the defense sector. This includes, I think, 10 years with SAIC, including most recently, president of the technical engineering sector, is that right? Exactly. And also spent some time in the Clinton administration as assistant secretary of defense in the office of the secretary of defense. She has worked on the Hill, on the House Armed Services Committee. Turnabout is fair play, right? And also most importantly, she went to Columbia University, CEPA, right? Which I am also a CEPA grad, which is why I'm gonna put the gratuitous plug in. Now, today she is the CEO of a very large business. 660,000 people and $139 billion budget. And it is really important to think of it that way. That is the United States Air Force, a very large company with worldwide commitments. And she's the boss. So I'm gonna talk to you a little bit about what we're gonna do today and then we'll jump right in with the secretary. We're gonna talk for about, I think, 40 minutes or so about the future of the Air Force, the Air Force priorities, the secretary's priorities, and then her new energy policy and how it all fits together. Then we're gonna come to you and also I have questions that have been submitted through the Clean Energy Business Network that we will pose as well for the next panel. And the next panel will be the top DOD energy leaders who help you actually do business with the Department of Defense. So you can hold those questions too for that panel in particular. So let's get started. All right. So the Air Force's mission is to fly, fight, and win in the air, space, and in cyberspace. And that's not necessarily as simple as it sounds. You know, when you started your career, there was one domain short of where we are now. Cyber wasn't even a domain at that point and now it is. So the mission is more complicated than it ever has been before. Can you talk to us a little bit about how that mission's changing and what it means to be the leader of an organization that's in constant state of change? Well, first of all, Sharon, if I could begin just by thanking you, thanking New America, thanking the Pew Charitable Trust and our partner that is also live streaming today, really appreciate all of you collaborating to put on this important dialogue. These are important matters that we need to discuss and continue the dialogue even beyond today. And really appreciate that you including me. So thank you for that. Everybody in the Pentagon misses you, by the way. They want you to come back. They say that's all the former employees. Now, let me say you are absolutely right. Cyber is our newest domain. In many ways, it is the most complex domain. It's the domain that we're still exploring that maybe some of us think we fully understand, but I would assert that none of us fully understand. And it is something that can sneak up on you. We depend on software. We depend on our networks. We depend on our weapon systems, all of which depend on software solutions nowadays. And if you're not careful, cyber can hang you up from a defensive standpoint if we're not defending against that. Likewise, cyber can be a force multiplier for us if we can figure out how to go on the offense in certain good ways that can help us from a war fighting perspective should we get into a war. So it can cut both ways. I will tell you that as a practical matter, in our Air Force, when I think of cyber, I'll just give you a few factoids and then give you a few challenges. Right now, we probably spend a slightly upwards of $4 billion a year in what we call the cyber area. And by the way, cyber is a word that means different things to different people. But let's call it about four billion-ish dollars on cyber. We also have tens of thousands of people who are in one way, shape, or form connected with this world. But here is the big however. The vast majority of the people and the dollars at present go to operating our network. Now operating our network, keeping it running, patching things, bringing it back up if it goes down. This is important, but it is insufficient by itself. We also have dollars and we have people who are destined for the defense arena, so protecting our networks, protecting our weapon systems. And then we have a third category of dollars and people that are more focused on the, let's go on the offense, let's figure out how we can use cyber as a substitute for kinetic effects. Our challenge, here comes the big challenge over the next few years is going to be to gradually shift dollars and people, manpower, away from the network ops and more to focus on defense, as well as substituting cyber for kinetic effects. So that's gonna be a tough challenge. I think leveraging the private sector to help us more in network ops is certainly going to be part of that. But that's the big challenge, how to shift to more defense and the ability to substitute for kinetic effects, call it the offense. Now, if I could just one more minute on cyber and bring it back home to the real subject of today, and that is energy and the importance of energy for what we call mission assurance. I was recently in Europe and among other countries, I visited Ukraine and I visited Estonia. So in case anybody doubts that cyber is an important issue these days, go tell it to Ukrainian and Estonian people because in talking with their governments, they have both gone through over the last several years major cyber attacks and they believe these attacks who have been malicious and deliberate. In the case of Ukraine, the entire electric grid structure was brought down in certain sections. First time that an attack like that has succeeded. Of the country. In the case of Estonia, which just FYI, a very interesting NATO partner, which is very, very dependent, much more than the United States, on e-governance as well as on e-commerce. So we all do e-governance and e-commerce to a degree, but Estonia is extraordinarily doing this, very, very far reaching amongst the entire population. They suffered a cyber attack as well, which brought down their e-governance and their e-commerce, which had a paralyzing effect for the period of time. So this is real, and that's one form of a cyber attack. Another could be against our energy infrastructure and think of it in the case of aircraft. Our aircraft can't run without jet fuel. Well, jet fuel to aircraft electricity is to cyber. If someone were to stop the electricity to a certain base, it could very much affect our cyber activities and activities beyond cyber. And so that is why we are so focused increasingly on energy assurance. We say mission assurance through energy assurance. And let's pick up on that a little bit more. And I do wanna get some more big picture Air Force, but I'm curious, I mean, mission assurance is a shift. In the past, the Air Force energy policy has focused on saving money and on operations, but mission assurance is really a shift in nomenclature of nothing else. Is this completely different? Are you moving away from the Air Force's past policy? We are not moving away from our past focus. We certainly still want to save money wherever possible and we are saving money through efficiencies in the energy arena. We wanna continue to focus on cleaner forms of energy and we're continuing that march. We're also trying to create a culture of energy awareness amongst our airmen. So we're trying to put out more educational materials so that people will be aware of their impact on the energy portfolio and on the cleanness of our planet and so on. But you're right, the mission assurance is a new doubling down for the Air Force. So we've started a new team of people who are gonna focus on this going forward. We're taking a page out of the Army's playbook because the Army we feel has done a great job of focusing on mission assurance and we wanna now replicate that. And it's really a recognition of the new world order and it's a recognition that several of our key, I'll say core missions are really, really dependent on access to energy and I come back to electricity being a key fuel once again. So I mentioned cyber, very, very important electricity to cyber, also very important for our ISR, our intelligence surveillance and reconnaissance. People call them drones, we call them remotely piloted aircraft. And the third one I'll give you is space. So we have space operators sitting on planet earth at certain locations and they're operating satellites that are in geosynchronous orbit in some cases. Just imagine if they lost connectivity. Co-GPS went out. Just imagine. So this is why mission assurance through energy assurance, particularly in those three areas. So the Air Force is, the Department of Defense is the single largest user of energy, arguably in the country as a single institution, definitely within the federal government and within that it's the Air Force is more than 50% of DoD's energy use. So to say that you're shifting to a mission assurance, I mean it sounds like this is threat-driven to some degree. Like we talked about Ukraine and the threat to the grid. Is that an important driver here? And the reason I asked that too is that that's a sustainable driver. Leadership changes, people have different priorities, but when it's threat-driven and is about the Air Force mission, which is, again, make sure I get it right, fly, fight, win, then are these things that last and that outlasts the tenure of this administration, which is obviously a pertinent question at this point. So I believe the answer is yes, of course you can never know that for sure and I will, in my final months, I hope have the opportunity to interface with the transition team and perhaps my successor to be able to emphasize this important area as well as several others. But I think what makes this most enduring, and I come back to that word mission, our biggest cheerleaders for this approach, believe it or not, are some of our most senior general officers, some of our four stars. Why? Because they recognize the threats around the world have changed. Certain of our core capabilities are very, very much reliant on energy. So we've gotta get it right and we need to make sure that we have that mission assurance. Let's pick up on that threat question a little bit because you've talked a lot about that in recent days about Russia and the nature of the Russian threat about Daesh or ISIS and the nature of that threat. China, North Korea has helpfully put itself in the news as it periodically does with ballistic missiles. Can you talk a little bit about in general terms how you're looking at the threat environment for the Air Force? If you wanna relate it to energy security, that'd be great, but I think it's helpful to know in general terms what you think are the drivers right now in terms of the threat environment and where they're gonna go and are there threats that are emerging that you're particularly concerned about? I think we are in the most complex, uncertain and rapidly changing threat environment. The greatest challenges, if you will, to the national security of the United States and to our partners around the world that I have seen in my 35 years of working on national security issues. You just don't seem to, we never seem to predict correctly what's going to happen next. So you just mentioned the top threats that we are worried about around the world and many of those threats either emerged or they certainly have gotten worse, I'll say, in the last merely two and a half years that I've been Secretary of the Air Force. So for example, if you go back a mere three years, we were still partnering with Russia on many different aspects and then it all changed when they invaded the Crimea and of course they're continuing to stir up trouble in Ukraine. They're investing and testing in space and nuclear in ways that are worrisome to us. They're in Syria. Different, qualitatively quantitatively different. That are different, that's right, that are more worrisome. So all of this is. These are all Air Force missions that you watch very closely. These are Air Force missions and of course our missions for the entirety of the Joint Force and including our partners frequently because much of what we do enables others. So again, the whole picture has changed on Russia and to me that is the top threat certainly from a long-term perspective because they are a major power that is acting in ways that are very worrisome. So that's relatively new, changed fundamentally and then we have much more activity that is worrisome from China in the South China Sea as an example. China also is investing and testing in space and in different capabilities that are worrisome to the United States. Talk a little bit about what China is doing in space. Well, the best example is several years ago China tested an anti-satellite weapon and they successfully launched that weapon from their territory and they blew to kingdom come one of their own satellites which caused thousands of pieces of debris many of which, most of which are still in orbit and by way of background even small pieces of debris when it's whirling around at something like 40,000 miles an hour can do significant damage to a constellation which is not only our constellation a worldwide constellation of all different types of satellites. So debris in space is bad and testing of anti-satellite weapons generally doesn't give us great comfort. Now there hasn't been a similar test where they've actually done the destruction of a satellite since that time but they have continued to- That they have the capability. They have continued to test and you have to assume that if a country is spending money and testing and is going on for years that there's a purpose behind this. So that is probably the top concern. Having space as a contested domain is new for us. Exactly. It's been, we've had dominance in that area but we're looking at a future where that may not be the case and that directly impacts the Air Force. Well, we have to of course remain in defense of our assets. We have to remain in control of the situation and so we've got to make sure that we're doing the correct responses. The biggest thing in space for us is yes we're shifting dollars and manpower and new types of systems space situational awareness understanding what's going on in orbit is critically important but even more important is we're shifting the culture of the people who are focused on space. Because this is a domain where we hope not but it is certainly possible that a conflict on earth could bleed into space and if that happens what do we do? So just like we have war games and exercises and we create tactics, techniques and procedures for all kinds of eventualities on earth we're now thinking this way as well for the space domain to make sure that we're ready should this occur. And you mentioned culture and that part of being ready is a culture change and this fits very nicely into the top three priorities that you talk about quite a bit which is people balancing readiness and modernization and money. So I wanted to talk to you a little bit about those three things. Culture in particular, so you've talked already about the changing mission in cyber and in space which is the dominant culture going back to the dominance word for at least the image that you have of the Air Force is the fighter pilot, the fighter jock and that's kind of been the soul of the Air Force for a long time. Are we looking at a very different Air Force where it's no longer a culture with the fighter jock it's now gamers in dark rooms with joysticks? I mean, how do you manage that kind of culture change? Well, our fighter pilots and our other pilots remain very important to us but if you add up all of the people in the Air Force who are pilots, it's actually a relatively small number vis-a-vis the entirety of the Air Force. So the way I like to think about it is we are focusing some additional attention on other communities that haven't received quite as much attention in the past. So we've talked about cyber, we've talked about space, we have the nuclear enterprise. So very early in my tenure, some of you may recall, there was a cheating incident that occurred at Malmstrom Air Force Base and that caused me to shift what I was doing. I went out to kind of look at what was going on at Malmstrom, talked to not only the leaders but some of the airmen as well and I did it at all the nuclear bases and other leaders in the Air Force were doing a similar program and we all came back to Washington and compared notes and we realized that there was some cultural issues going on here. There was some systemic problems with the way we were training, the incentives that the airmen had in place to do well and so on and that we had to fundamentally look at that and make some changes. So that's another community that we've focused on and then the final community I'll tell you about is the world of the RPA, the remotely piloted aircraft which have been absolutely critical in a number of ways but particularly in another threat that we're facing and that's the threat of Daesh in the Middle East and I'll say extremism in all of its form. So having that ISR and that strike capability has been extremely important for us and yet the pilots who albeit are not in the air, they're on the ground but they are piloting these aircraft, they haven't necessarily received the full up attention and culturally at least in the beginnings, they weren't fully I think viewed in the same light as other types of pilots and we've been working to change course on that ground as well. So you see, I wouldn't say that we're reducing the importance of any one community, I prefer to think of it as we're elevating and we're giving recognition and we're giving focus to some of the other communities. So we'll multivariate community at this point going forward and does that affect how you recruit and retain people as well? You mentioned a little bit in there about the nuclear community and that you needed to go almost a full vertical rebuild for the incentive structure. We are our focus for recruiting and retaining and there's also developing in there because in order to retain, of course we need to develop, we need to take care of families. So there's a lot that goes into it but the type of airmen that we need in the future we wanna continue to get very high quality people who have come through high school. Some have already received some college education. We need agile, quick thinkers, people who are prepared to run with ambiguity at times because we don't always have full information. So what we're looking for are those sorts of qualities obviously people who respect our core values, prepare to live with core values of integrity and service before self excellence and all that we do. And then of course when we get them in the front door we're prepared to give them a lot of training. Training specifically in the area that they will enter so whether it's the nuclear enterprise, whether it's the world of the RPAs, they'll get all of that necessary training for us. Obviously we like people who have a tendency towards science, technology, engineering and math but there's openings really for all sorts of people, liberal arts. About being able to compete for those people long term. We are as the United States of America we're probably not producing certainly not enough graduates at the more senior levels college, masters, PhD but nor are we producing enough high school students who have an affinity for science, technology, engineering and math. But I think we're all worried about that. The Air Force is in the so-called war for talent along with the other services along with the private sector. So it is a concern so far though we're holding our own. We've got high quality young people coming in. So you're modernizing your people but you're also modernizing your force structure and your actual equipment, your platforms. And I wanted to ask you about one in particular. I'm sure you know it's coming. Which is, you talk a lot about that tension between readiness and modernization. How does something like the F-35A which the Air Force just you just announced is ready. How does, what's the opportunity cost of a big expensive platform like that when you're talking about across your entire force structure nuclear, space, cyber, how do you balance that? Well you just said it. It's a balancing act. There's no secret sauce formula. These matters come down to judgment calls. So if we look back at the history of the F-35 it's a history which if I had the power to rewrite it I would because of course overall it's taken too long and there were too many schedule slips and of course it's gone over budget. And that's the part I would love to rewrite. But the part that I am really bullish about is the fact that we're there now with what we call the initial operating capability that's combat capable. But it's not yet full war fighting capability. So over the next few years the plane will get better and better and better and more capable. The thing I'm bullish about is it's exactly the type of aircraft we need for some of these high end threats around the world that we believe are going to be the key threats of the future. And by the way when I say high end threat I mean anti-access aerial denial types of environments. That is to say the type of an environment where we have integrated air defenses, surface to air missiles, the ability to shoot us down or the ability to interfere in some substantial way in cyber space. So to stop us from achieving our own aims. Those are the high end fights. The fight of the Middle East of today is a much more permissive environment. That is to say the enemy on the ground does not have the ability to shoot us down. They can't reach as high as we are. They cannot interfere in a substantial way in cyber. They can't interfere in space. So that's a much more permissive environment. So we're building for the high end threat as well as taking care of the more permissive environments along the way. And the F-35 will be the core of our fighter force, the core of that high end capability for the future. So that's why I'm bullish. So to put a fine point on it, are we gonna have the money for all of this? Including, you know, you've laid out a new energy mission, mission assurance, which has a price tag with it, presumably, you know, if you're going to start building up, you know, being robust to threats and risks in the energy space, there's a price tag and there's a price tag for the F-35 and there's a big price tag for space and there's a big price tag for nuclear modernization and we're in an incredibly turbulent budget environment. I believe this is the eighth consecutive year that Congress has not passed a budget on time, is that right? That sounds about right. Yeah, are we gonna have the money for this? Is this the new normal that we never know what we're gonna have and it's never enough in the defense sector? Or is it enough and we just need to be smarter about how we use it? Well, in my 35 years of being an observer on this scene, there has never been enough money to do all of the different tasks that we as military authorities would like to do. So it is always, to a degree, a balancing act, not being able to do everything in year one, maybe you have to wait a while, et cetera, et cetera. So I think that will be the forever story. There will be never enough to satisfy every combatant commander, every what the services feel they need and this is why it comes down to judgment calls. Now with that said, the environment that we have here now in Washington is not healthy. The fact that we have a bipartisan budget agreement which we all literally celebrated because we thought it would reduce the divisiveness, we thought that it would give us some very needed stability, hasn't produced as much of that stability and as much of that denigration of divisiveness as we had hoped because we're still arguing about way too many things here in Washington. So it's not healthy and I would like to think we could get over the hump and get back to the way I remember it when I was a much younger person starting out in my career where if there were disagreements you sat down and you compromised and it was much more civil and above all else we needed to get the bills passed and we needed to get it done on time. You're right, that hasn't happened in recent years. It's very unsettling for the people who have to plan and execute. Can you imagine if you were a private business if you didn't know how much budget you would have to be able to accomplish your goals and you didn't know when you would know and yet you had to come forth with a proposal anyway and you had to do it not only for the next year but a five year plan. It just, first of all we have to do things three different ways. It's hugely inefficient. So I never miss an opportunity to call upon Congress please get those bills done. Please get them done on time. If you can't quite get it done by October 1st get it done within a couple months after that but don't let it go into a long term continuing resolution and for heaven's sakes lift sequestration which remains the law of the land. It will come back to us in FY 18 if they don't affirmatively act to lift it. I suspect we'll go down to the wire on that. I wish that weren't the case because again going down to the wire plays havoc on the people who are charged with planning and executing. I think so I have a bunch of questions from the Clean Energy Business Network and most of them I think are better directed at the panel but I think I can extract a couple of themes that would be great to ask you and one is even relating what you just said about sequestration. A lot of businesses find it hard to do business with the Department of Defense, with the Air Force. Can you talk a little bit about that and about what sequestration might mean for businesses why they should care? Because I've gotten that question to you especially out on the West Coast once was talking to a bunch of energy businesses and they saw no reason why they should care about sequestration. But it's about what's gonna be available to pay people at the end of the day. So can you talk a little bit about the business climate and the Department of Defense and the Air Force and how you work with the private sector? So let me take the second part of the question first. Why should businesses care? Well if you are a business who is doing business with the government you should care quite a lot. Speaking as someone who was in a company prior to being Secretary of the Air Force who was doing business with the government it played huge havoc on our business as well. We didn't once again there were very few mechanisms to be able to project exactly how sequestration would be implemented. At the time we heard it was gonna be in across the board decrement to every single program but then there were gonna be protections for military personnel and maybe for this area maybe for that area over here. So it was as difficult for us to plan and we were telling our employees with 30 or 60 or 90 days advance notice depending on what states they lived in because there's state law that governs that there was the possibility of layoffs. There was the possibility of furloughs for our private sector employees. So it wreaked havoc on our people and it wreaked havoc on our business planning. So that's why businesses should care first and foremost. I have often first part of the question I've often heard it said that for companies who don't typically do business with us we're a difficult customer to work with and to understand and I totally get that. The big companies, the Lockheeds, the Boeing's the ones that know us well that have worked with us they have whole departments that track what we do and have cost accounting systems that can do business with us et cetera and small businesses or new businesses of course that have never done business don't have those things. So although this was not directed specifically at the energy sector let me tell you about something that was more directed at IT and cyber high tech sector high tech in that regard that could be of interest as well to the energy sector. So we fairly recently through a series of initiatives we call Bending the Cost Curve introduced a new contract vehicle approach which is more understandable less pages of legalese to get in government speak to work through and if we like the offering we can get you under contract within weeks rather than months. It's called OSSA is the acronym for this contracting vehicle. Matter of fact I see Dr. Cameron Gorgonpour right here in the front row who sort of was the one who came up with this approach and the OSSA which stands for open systems acquisition and perhaps we could look at doing something like this for the energy sector if it doesn't apply as it currently stands but the whole idea was let's see if we can speed it up and get some new companies to do business with us so we can get access to some of those innovations. That's great and I wanna give the audience a chance now to ask some questions so if you'll hold up your hand we have microphones please wait for the mic because we have a big audience online and we wanna make sure that they hear your question. Okay we'll have this gentleman in the front while we're waiting for his question I'm gonna sneak in one last zinger which is it is significant to have a service secretary committing to an issue like energy security. Is there gonna be money for this in the Air Force budget for mission assurance in energy? Well we're gonna have to make sure that there's some money there and of course like with any new approach you perhaps start on the smaller side and then you scale from there. So what we have done so far is thanks to Miranda Ballantine who I wanna give her a shout out and she'll be on your panel of course following our panel. Miranda is our assistant secretary of the Air Force for installations, energy and the environment and this was her brainchild. How do we advance the ball in the Air Force to focus more on this critical aspect of resilience and mission assurance. And so we again took a play page out of the playbook of the Army we felt they were doing a pretty good job and we wanted to learn from them and so we've set up a team and we're gonna take it from there to focus on this. Okay and we'll look forward to hearing more about that. If you would please identify yourself, who you're with and if you ask, if you give a treatise I may look nice but I'm not and I will cut you off. So please in the form of a question. Yeah hi James Drew from Aviation Week. Secretary James, the Air Force just launched its next generation ICBM and cruise missile programs competitions just last week and so with this close to a presidential election and a new administration, what are you doing with those programs to ensure that the next president will have the flexibility to either speed those up, slow those down or make alterations to those programs. Well first I'd like to say that you're right James that we are approaching a presidential election but even in a year or in a several month period leading up to a presidential election the work of government needs to proceed and the fact of the matter is we in the case of these two RFPs that you referenced one is for the next generation of ICBM the other is for the long range standoff weapon which will replace the aged outcome so that's a weapon that would go on an aircraft. Both of these are to replace systems that will age out and if we don't take action we may find ourselves behind the eight ball and our nuclear deterrence which is the triad of course has three legs and we the Air Force are responsible for the bomber leg which the LRSO is associated with that and we are associated with the ground base then the ICBM replacement is associated with that. We are responsible for making sure that those two legs are credible and effective and it's not very credible to a potential adversary around the world if they know that your systems are aging out and they aren't gonna work beyond a certain date so we felt that this is part of our charge as government officials we need to keep advancing the ball now of course any new team can come in just as when President Obama came in there was a nuclear review conducted at the time that nuclear review essentially endorsed what I just said that we need to proceed to modernize appropriately to make sure that our triad remains credible into the future and that the systems are safe and secure and work. A new team could likewise do a similar review and if there's a course change that would of course be up to them but for now for as long as we're here we're charged with doing our very best to fulfill the objectives of government. We'll take a couple of questions but you made a comment yesterday about the no first use policy which is germane to this can you comment on that as well? Well that question had to do with the person asking the question had heard that there was some discussion in the White House about different nuclear matters and what about the no first use policy? What I said was I would be concerned about such a policy it's above my pay grade time will tell what happens with that but having a certain degree of ambiguity is not necessarily a bad thing. You certainly want to communicate certain things to your allies and to your potential adversaries around the world but you don't necessarily wanna show all your cards all the time and so that would be my question. Now I'm personally not in those discussions but I would be your advice. But my thought there is a certain degree of ambiguity could actually be helpful, okay? Questions please. Let's take a couple if we could right there. Go ahead. Ken Meyer, Court of World Oaks. Last December Russia introduced a resolution in the UN General Assembly to ban the first placement of weapons in space. The vote was 129 in favor to three opposed the three being Ukraine, Georgia and us. Not even Israel voted with us this time. Are we planning to be the first to place weapons in space? We don't have weapons in space and my understanding we voted against that resolution because we were not convinced that it met several key criteria that we consider to be and when I say we I mean the US government at large. So certainly DOD had some thoughts on that but there were other parts of government that also checked in. I would say a key position for the Department of Defense is we want to see any sort of an agreement of this nature have the property which first of all says no debris or at least minimize debris. I gave you the example of the Chinese ASAT created thousands of pieces of debris. So we think any kind of an agreement or treaty or accord ought to have front and center of this question about debris. So you can have a weapon on planet Earth that's gonna create debris and just simply saying something about a weapon in space wouldn't have covered that. So that's an example we just didn't feel that that UN resolution had enough of the criteria that gave us comfort. The other one was no matter what we reserve the right to always defend. Defend ourselves on Earth, defend ourselves in space and that particular resolution didn't contain those words. So for those reasons we were against them, against it. Lee Andrew Bernstein with Sputnik International News. Another question about the nuclear enterprise. With the B61 modernization, the Russian foreign ministry yesterday raised some concerns that I'm assuming related to the possible lower yield of the modernized B61-12 that it could lower the threshold for using those weapons. So I'd like to know how you address those concerns specifically with the range of yields and the fact that those are gonna be, I believe primarily deployed, the US weapons that are deployed in Europe. There is no effort afoot to lower the threshold for using nuclear weapons. Nuclear weapons use is about the worst thing that I can think of. So the B61 program is like these other programs I described, it is designed to replace something in the inventory which will not in the future be credible and will not work. So it is simply designed to make sure that we maintain our ability to use that sort of an approach God forbid should it ever become necessary and it would go on a variety of aircraft. It would be able to be used on a variety of aircraft. Any other questions? Right here, this gentleman. Yes, Mr. Secretary. Are you happy with the boundary line between DOE and DOD both in terms of energy initiatives like R&D and also on the nuclear front because DOE does a lot of the nuclear stuff. So if you had a new administration, what kind of split would you like to see between DOD and DOE? I have been happy, the degree of partnership that I have felt with DOE. So I'm not aware of any huge controversies there. Certainly not at my level. We have worked very collaboratively with them. There have been times when their piece of the program and our piece of the program because of developmental issues perhaps gets out of sync where one side is the head of the other. But I've seen this happen within the Pentagon as well. So I would not lay that at the feet of the fact that we're two different agencies. So I'm sure there's always room for more collaboration and more improvement, but I've been very satisfied with the relationship. If there's no other questions, I have a question for you to wrap it up. My colleagues here in the International Security Program under Peter Bergen have done a great deal of work on what they would call drones and what you would call remotely piloted vehicles. And they've looked at the full range in their work of everything from the human rights connotations to what it means for a counterinsurgency strategy to be using these kinds of weapons. Do you have any comments or thoughts on that? And are these different weapons qualitatively? Do they have a different world dimension of war when you start using artificial intelligence and unmanned vehicles and robotics? Have you thought about that and any comments in that area? I have thought about it and I am a big believer in these systems. And the reason why we are sticklers and we don't like the word drone, but we do call them remotely piloted aircraft is because the word drone gives the connotation, I think on a lot of the American people perhaps feel this way, that there's no human in the loop. And let me assure you, there are quite a few humans in the loop, it just so happens those humans are controlling the aircraft on the ground. So we have not only the pilots, which we've talked about today, we have sensor operators, we have intelligence analysts that take the feed who makes sense out of what is being seen. And then yes, at times, there are precision strikes that occur from those vehicles. And I wanna underscore the word here precision. So let's just take the operations that have been ongoing now in the Middle East for some number of years. The operations in the Middle East and the coalition, particularly led by the United States and big chunk of that has been the United States Air Force, has been remarkable in the history of warfare. There has never been a more precise campaign. All of the weaponry that we are using is precision weaponry. Now that's not to say it's perfect, war is ugly, and it can become confusing. So there have been some mistakes made, but if you look at the totality of the operation and the number of strikes, it is remarkably small. To me, it's a miracle. But that's the power of precision and not all, but some of that has come from the unmanned systems. So I'm a believer in these, and to the extent we can use those systems, that puts fewer of our own pilots at risk, and I would turn that around and ask, well, what's the morality of not doing our very best to keep our own people safe? To me, that's a very moral position. So I have done some thinking about it. I am a believer, and I do think we have all kinds of checks and balances in the system, not to mention the rules of engagement, which place a high premium on take good care and be as sure as you can be before a strike occurs, and then we use precision weaponry, and the vast majority of the time, we hit precisely what we are trying to hit, and they are the bad guys and the infrastructure surrounding the bad guys. You know, we started out with how much has changed since you started in this business, and so just for a last comment, what do you think the future of the Air Force looks like, and where do you think there's gonna be a lot of change going forward? Because I mean, it seems sometimes like the pace of change is just so fast now, and it's almost hard to imagine where we might be 10 years from now, but you have to do that when you run an organization like the Air Force. So what do you see coming down the pipe? 10 years from now, I hope to see an Air Force, which is somewhat larger than the Air Force of today. You know, we've been downsizing for 25 years that stopped a couple years back and we've been on a modest growth path ever since, which is crucial we keep that up because we've probably gone too far in that downsizing. So we need to recover from that and we need to grow certain key areas. So I see an Air Force that will be somewhat larger. I see an Air Force that will be more modern in terms of our systems 10 years from now. So by way of background, our aircraft inventory is on the order of 27, 28 years old as an average, but we have some that are 50, 60 years old and we have others that are newer than that. So on average, we ought to see a newer Air Force. We'll have more F-35s, we'll have KC-46 tankers online by then. We'll maybe have, we will have the first B-21s by that point. That's the new bomber, we'll be more modern and more resilient in our space architecture. We'll be more advanced in cyber. We'll perhaps have a new generation of ISR 10 years from now. So I see a more modern Air Force in all of the key ways. And I also hope that we will have, by our own measurement system, a more ready Air Force. So it doesn't give me great comfort that on the order of half of our combat Air Forces are not what we consider, or I should say that our top commanders consider to be sufficiently ready in the case of a high-end fight. I wanna get those numbers up. And 10 years from now, I would certainly hope that that will be the case that we will have moved the needle substantially. And then finally, because 10 years from now, I suspect we're still going to be concerned about money. And why shouldn't we be? Because this is the taxpayer dollar we're dealing with. I hope we'll be an even more efficient Air Force. And that's why I always talk about make every dollar count and looking for efficiencies wherever possible. And energy is just one of those elements where we hope to do better and better. That's a great note to end on. And thank you very much for your time today and for sharing your thoughts with this audience and with New America. So, let's give her a hand, please. Thank you. Thanks, everybody. If I could ask our wonderful panel to come up to the stage, we'll reset the chairs for you. Go ahead, sorry Simone. You can come up slowly, so we get the chairs in place first. Oh, okay. Yeah, I don't know my left or my right. All right, please. Mike, can you sit right there? Great. Hi, Larry. It's nice to meet you. I almost catapulted off the stage there. Come on up, John. Have a seat. All right, let's get started. Okay. Round two, here we go. So, I'm going to introduce our panel and then we'll give them all a chance to speak. And as I said, I do have some advanced questions for all of you from the Clean Energy Business Network, which I'll give you a chance to talk and then we'll come back and start posing the questions. First, immediately to my left here is the honorable Miranda Ballantyne and for those of you who don't know what honorable means, it means Senate confirmation, which is just a ball of fun, I can tell you. So she is the Assistant Secretary of the Air Force for Installations, Environment and Energy, which I'm going to tell you what that means. It means she has oversight, formulation, review, and execution of plans, policies, programs, and budgets for installations, energy, environment, safety, and occupational health. It's a very important role for all the services and she is the one who's in charge of the vision for that and we're lucky to have Terry Yonkers here who has played this role in the past. So thank you for joining us as well. And I hear Bill Anderson is here but I have my reading glasses on so I can't see that far, who has also played this part in the past. So it's an important leadership role for the Air Force for all the services and Miranda will tell us a little bit more about why. Now she has a lot of background in the private sector which I think is very, we're very fortunate that the Department of Defense is able to attract leaders like that. She was the chief sustainability officer, director of sustainability for Walmart which is probably one of the few organizations that scales the way DOD does. And we're fortunate to have her here. I'm going to turn to her in just a minute first to give an overview, talk a little bit more about what this energy policy, this mission assurance policy really means. Next we have Mike McGee who's the executive director of the U.S. Army Office of Energy Initiatives and I have to read it because the title changed since I've been in the Department of Defense which is responsible for large scale renewable energy projects bringing energy security to army installations and specifically for leveraging private sector financing. That is the purpose of that office. Now to you folks in the Air Force he should look very familiar because he was the deputy assistant secretary of the Air Force for energy. So he is a happy face for this group. He's an engineer I believe in his background and also has active duty time with the Air Force. Next to him is John Klein. John is the deputy director of the U.S. Navy Renewable Energy Program Office or RIPO as it's known, he's the RIPO man. He is a recently retired captain with the United States Navy and a CB. So also an engineer and I had the great pleasure of working with John when I was in office to know that he's a wonderful person and does a great job. And his role in the Navy is very similar to Mike's in the Army and I think he's gonna tell us all about you met your one gigawatt clean energy goal, right? So we'll look forward to hearing about that from you. And then last for a little change of pace we have a special guest. This is Larry Richardson. He is the CEO of Re-Energy Holdings which is a company you founded in 2008, correct? He has a long history in the field of energy and clean energy. His company operates in five states, has about 300 employees or so. And most importantly, one of the reasons, well not most importantly but for us today, most importantly, one of the reasons we wanted him to come is that in October, 2014 he entered into a major contract with the Army at Fort Drum. And so he can give us a view from the other side of what's like to be a company doing business with the Pentagon, what works and how it's going really. It's a biomass energy project. So we're delighted that you could join us today. So what I would like to ask all of you is to talk about what you're doing in your offices and how companies can do business with you. But Miranda, get us started with sort of the high altitude view, so to speak, appropriate Air Force metaphor. What this new energy policy is and what it means and why you did it. And you know, I did get your boss committing to money there, I hope. Well, in fairness, she already had. I figured. So. It wasn't just me, right? But it certainly reinforced it. Always good to have it on public record. Have no bludge. So thank you, first of all, for hosting this panel and for the wonderful opportunity to have Secretary James tell a little bit about where the Air Force is. So since you all just got an hours' worth of background on the Air Force mission, what we do, where we are, where we're worried, what we're worried about, I'm not gonna go into that in much detail. But what I will do is pull the thread a little bit on the elements related to energy assurance that the Secretary began to touch on. So the new direction that we'll be taking that's focused on mission assurance through energy assurance, as the Secretary said, does not leave behind our prior focus on cost-effective power and cleaner sources of power. It really seeks to bring those three worlds together. So if you imagine in the consulting world, the Venn diagram, if you have three circles, we have always worked on energy resiliency on our basis. We've just taken a fairly, what I call, 19th century approach to it, which is basically a bunch of diesel gen sets with taxpayer dollars, milkon in our language, and slap them onto buildings for a short outage generally due to weather events. So we've always done that circle, energy resiliency. We have- And it's been good enough. And it's been- For the most part. For the most part good enough. Although we do have some examples of lost mission opportunities and I can talk about those. You can probably think of a few. So the second circle in this Venn diagram is cost-effective power. We've always worked with PUCs and utilities to try to get the most cost-effective power we can. We've worked on energy efficiency for a very long period of time. At various times we've had energy focus funds. There was a very long period of time where we were investing a quarter of a $250 million, so a quarter of a billion dollars a year of our own money and energy efficiency and this budget environment's hard to do that. So we're now using ESPCs a lot more as all of the federal agencies, energy service performance contracts. So we've always worked on that cost-effective piece. Cleaner sources of power's a little bit newer, but certainly the last five or 10 years we've been focused on cleaner sources of power. So large renewable, we have 300 renewable energy projects across 100 different installations, all different types of renewable energy projects. But each of those three circles were not necessarily done in concert with one another. So I'll just give you an example. We have a 14 megawatt solar array at Davis-Monthan Air Force Base. Inside the fence line, it's a big solar array. During peak sunlight, it can power 100% of Davis-Monthan Air Force Base. Set a pay an eight cents a kilowatt hour, we're paying four and a half cents a kilowatt hour. It's cleaner, it's cheaper, great. Grid goes down, solar array goes down. No resiliency built in. So what we're trying to do is bring those three circles together and that kind of project in the future, we might ask ourselves instead of paying four and a half cents a kilowatt hour, should we pay five and a half cents a kilowatt hour? I'm making the numbers up, so don't hold me to them, you developers out there. Should we pay five and a half cents a kilowatt hour and build in the switches to allow ourselves to sever from the grid and keep those electrons pumping if there's a grid outage? Should we pay six and a half or seven and a half cents or even meet grid power and pay eight cents a kilowatt hour and get the switches and battery storage and controllers and smart inverters and begin the elements of creating a microgrid which gives us that next step of resiliency. So we're just bringing these three circles together and going for the sweet spot in the middle. It'd be better if I could draw it for you on a whiteboard but I think you can imagine in your mind what that looks like. So that's really the direction of mission assurance through energy assurance. And that's that kind of continuity of operations. The Air Force has always talked about that you fight from your bases. So what does that mean? I mean, the secretary talked about space operations and cyber, what does it mean to fight from your bases? Let me give you one example. I'm gonna pull the thread a little bit on the remotely piloted aircraft example that she gave but she's absolutely right that space, cyber and more and more traditional air dominance is dependent on not just jet fuel but electrons at our bases. So if you imagine a remotely piloted aircraft, so global hawks, predators, reapers, they could be flying anywhere in the world. They have pilots, much too, even though a lot of folks don't think they have pilots, they have pilots. What we've done is taken the cockpit out of the air and put it on the ground. Generally, several continents away from where the airplane is flying. Actually, there's two sets of pilots. There's often a set of pilots closer to the aircraft to launch it and a separate set of pilots, many continents away to fly the thing. And in between, those aircraft are dependent on intelligence officers. They're dependent on satellite systems. All those nodes, again, I could draw you a picture, all those nodes are dependent on electrons on the ground. So if there's a disruption of electrons on the ground, at any point along that, in my old job at Walmart, we'd call it a supply chain. In my new job, we call it a kill chain. So if there's a disruption of electrons anywhere along that kill chain, we can lose the connection between the pilot and the aircraft and lose the opportunity to conduct a mission. And the same goes for space. And the same goes for cyberspace. And increasingly, the same goes for traditional F-16s, F-22s, F-15s, and F-35s. They need that horizontal continuity of mission as well as, right? Absolutely. That is, it's an interesting shift to a mission focused, but I see what you're saying too, is that it's not a major break. It's just sort of a gathering together and putting a drive behind what the Air Force has always done in this space. I would say that for many people, it feels like a major break. So I have had people literally say to me, well, ma'am, we don't pay for energy assurance. I say, well, yes, we do. We're buying diesel generators. We're buying diesel. We're paying to maintain them. We're paying to replace the diesel when it gets old. So we need to bring these realms together. And I will tell you, the secretary sort of slipped in her talks that the biggest advocates for this program are our top military leaders. There has been a latent anxiety about the changing threat environment and our increased dependency on our national utility grid and the national utility grids everywhere that we work for quite some time. And people really do understand that the threat environment has changed. People really do understand that we are no longer just worried about a two or three or four day outage because of a windstorm or a hurricane or an ice storm or a squirrel or routine maintenance or a pole falling down. They understand that our adversaries are actively targeting us for long-term outages specifically to disrupt our mission. That is in case anyone's wondering why this event was called Blue Skies to Black Starts because Black Start is a term in an electrical outage. It's a worst case scenario. So that is a shift change, looking at the grid and the fact that we rely on the civilian grid for military goods. So there's a significant shift in emphasis. Is it gonna mean new business for companies? I think, I hope it will. Certainly standing up a new Office of Energy Assurance gives us more resources, both people and money to take in projects and build them out. It also will mean, I think, different business. So we know how to stamp out the Davis-Monthan solar array that I just talked about. Most of you in the room know how to stamp that out. It's still newer territory to really build out fully severable smart microgrids that allow us to have continuity of operations. There is not an off-the-shelf solution yet, at least that I've seen, that allows us to do that in a rapid way, the way that we now do solar PPA as a society. So I think it's slightly different business, and the natural question, and you brought it up, is okay, well, what is the value of resilience? In that Davis-Monthan example, is it five and a half cents or six and a half cents versus the four and a half cents for just the PV? And so we can talk about that. I'm sure all of us have opinions and perspectives on that. I think that DOD has wrestled with is how to put a dollar value on energy security. And Mike, the Army's really led the way on this. The Army went hard and fast into how to build energy security at basis. So can you tell us a little bit about what the Army's done and what the business model is? Sure, I can tell you a lot about what we've done, but I'll try to keep it to a little. Thank you very much for having the Army here today. I'm very delighted to be with you and all my colleagues as well. And what a great setup you had with Secretary James here. Boy, she nailed it. She really set the stage that allows us to talk about energy security here. So thank you for that. And Honorable Burke, I know you've asked me to call you Sharon, but culturally I just can't do that right now while wearing this Army lapel pin. But it's necessary to emphasize through repetition, it's about mission. If you're not from the military establishment and you're thinking perhaps a corporate entity that was alluded to with Secretary James, how the Air Force could be viewed as like a corporation, we're the Army. But in fact, there is no profit and loss consideration that we do. There is a bottom line, but our bottom line is mission. And so you're gonna hear that over and over and over. So how do we deliver mission? How do we ensure that we're ready to fulfill the mission requirements? And so through that lens, then we look at all things to include energy. So how do we assure that we have the mission enabling energy that we need to fulfill that mission? And that's where we start using terms like energy security and energy resiliency. I think those are important terms to talk about briefly about the Army's structure, which is that if you talk to someone that's in the power, sort of the traditional power delivery business, one of your utilities, a power plant operator, they will talk in terms of safety, reliability, and affordability. And that's sort of been their mantra for decades, safety, reliability, and affordability. Is it safe to use? Is it safe for them to do? Is it safe for you to get access to? Is it reliable? Does it stay up? Is it going to just break and drop? And then affordability, can you afford to use that energy? You'll hear us talk about energy security as an extra dimension, which to me is if there is someone who is trying to do harm to your energy delivery system, are you ready? And in the safety, reliability, affordability world, yes, nuclear plants have some provisions for a determined attacker scenario by all means, but at many of your components of your delivery system, you'll see a chain link fence and a keep out danger sign, and that constitutes security. That's really just more safety than security. So we'll talk in an additional dimension of security. What if there's a determined attacker looking to bring down your power systems in the United States? There are scenarios that are realistic that may be at low probability, but the consequences are extremely high. We've been asked to contemplate those. Then further, there's another dimension that we call resiliency. What if your plan fails? What if your security setup does not do the job? What does your plan be? For the power industry, they've signed contracts and agreements with linemen from other power companies in other states, and they'll be there to repair the system and get it up as soon as they can. With us, we need 24, 7, 365 operation of these systems that are executing missions right now today. There are lives at risk and there are lives on the line. And so we cannot afford disruption to power as was articulated by Honorable Valentine. So through that lens then, what can we do about that? Well, there was another topic that was raised substantially, which is budget. And you can do everything that you can imagine as long as money is no object. So if you've got the money, you can do everything. We do not have the money to provide the level of energy security and resiliency to our nation's power system that we rely on. We are almost utterly dependent on that. Of course, we have backup generator sets at many of our critical facilities. That's a pretty common place, not just in the military, but also in the private sector. But that is not sufficient for the kinds of threats that we envision are out there and that we've been asked to contemplate. So with that then, what can we do about this? What can we bring to bear to ensure that there's enhancement energy security lacking the budgetary resources to do so? So the Army recognized, I think rather early, that there were several trends developing. One is there's a substantial amount of investor interest in investing in this space, the renewable energy space. There is money out there that's looking for a home, that's looking for an investment opportunity. If you've got a big enough pocket, you're probably looking for a way to get a piece of that, but they are looking to invest in renewable power. There's investors out there looking for that. The Army recognized that. How can we capitalize upon that? Second, there is an increasing demand. There's certainly a desire, but a demand by the American people to increase renewable power as part of the power mix. That seems to be a prevailing trend that's continuing. And then that's another trend the Army recognized. Another trend is that the, I believe the utility business for the bulk power system at large is warming up the idea of the distributed generation model. That is the older model of a large centralized power plant, typically powered by cheap coal, pushing power long distances, is not going to be the model of the future, is going to be more power plants, smaller, perhaps instant on kind of plants that may be powered by natural gas or another component. But then also that's where renewables can have a place. A distributed generation model with smaller power generation assets is where renewables can find a comfortable home. So these trends, when you start to look, to divine away through them, the Army created the, what is now known as the Office of Energy Initiatives, the OEI, my office. The OEI was set up and tried to divine away through these various trends and align them to intersect at a place that brings benefit to the Army. Why would the Army care? First, the Army's interest in energy security, as I mentioned. If we can get that power generating asset closer to my base, that's of interest to me as an Army person because I have less uncertainty between me and the power generating asset. If the power generating asset is 60 miles away, a lot can happen between me and 60 miles. If I can get the power generating asset just a few hundred yards on my base behind my physical security perimeter, that has value to me. I like that. I may not be able to take power directly from that plant, but that's feeding the grid that I rely on and it's much closer to me and I'm more certain about its safety and its security. So I like that. I like having the generating asset close to me. That's one benefit to the Army. Second, it may be possible with certain configurations to turn that power inward in the event of a contingency. That is, if the grid does go down, that asset might be configurable where we can put switches and other devices in place where we can turn that power inward and drive our whole base or parts of our base. We have a couple of projects where we have that exact scenario in place. We've been able to put renewable power plants on our bases, two cases, where if the grid goes down, the power can be converted into power to drive the base. One of these is already up in operation. The other one is about to go into construction. The leases are being signed and the agreements are being signed as we speak. So that has interest to the Army. So the real trick is figuring out the economics. Frankly, this is where the difficult work begins. There's financing behind these projects and the Army was not conversant in this type of world. We did not understand how this worked. So we've brought on board technical experts, people with a financial background, people from the power development industry and we've been able to understand what industry is after because frankly, it's what they want that's gonna make this project successful, not what you want if you want them to pay for it. So we talk about opportunity development, not about project development. So project development is more of the conventional thinking of the government where I have a requirements, I'm gonna program for money for it, I'm gonna get a budget to receive and I'm gonna let a contract to buy something and I'm gonna buy something. And that's the way we typically have operated in many of our requirements. In this case, we're not bringing any money to the table. We're asking others to bring their money to the table. So we're trying to create investment opportunities that attract investor interest. How can we de-risk these opportunities that make them more compelling and more interesting to investors? Again, capital is looking to flow toward investment opportunities. We want them to view us as one of the attractive investment opportunities. They're not doing this out of charity, they're not doing this out of necessarily national security interests, they're happy to participate, but there's a bottom line in the real sense of a bottom line to these investors. How can we make this an attractive investment opportunity? So the OEI was established to de-risk project opportunities for investor money to flow to bring renewable energy assets on or near army installations in a manner that increases energy security to some posturable degree for the army. But then another dimension is there could be an economic benefit. In many parts of the country, the price is dictated basically by regulation. I cannot pay any more or any less for power. It is what it is, it's required by regulation. I cannot achieve an economic benefit in terms of the price of power. But in some places I can. And in some cases there's an economic proposition at our basis where renewable power products can be built in a manner that is less expensive than the conventional power we would buy off base. There can be an economic advantage, we might take advantage of that. And third and finally, another benefit to the army is we have renewable energy mandates and goals that have been given to us, that have been committed to by the army and the other services to the president, but also that have been given to us by the law, by an act of Congress. We are desirous to find new renewable energy generating assets and buy power from those generating assets to achieve these goals and mandates, but that's the third value proposition. First is energy security, second is the economic benefit potential, and third is the renewable energy goals and mandates that we have. So our office is in Crystal City, Virginia, www.oei.army.mil. If you wanna engage, we're happy to talk with you, go there first or come see me afterward. We've got investment opportunities for you. And your office is specifically set up to help businesses connect with the army and that's also, John, what your office is, correct? And also the Navy, all the services have had great leadership support, but Ray Mavis, the secretary of the Navy, was there early, there first, and has had a very strong commitment to promoting clean energy. And I think the Navy's benefited from that, so maybe you can tell us a little bit about that and about your office and how it works and if it's different from what Mike just described. Yeah, absolutely, and it's really an honor to be here on the panel. What a great opportunity to talk about the Department of Defense's opportunities. But before I start, I was reworking in my mind my remarks this morning because when I heard Ms. Ballantine use the word kill chain, I thought, yes, I can talk about kill chain because when I hung up the uniform, folks said, all right, now when you're a civilian you gotta talk different to civilian audiences. You can't use the same term. So I said, all right, well kill chain describes what I wanna talk about best, but I cut that out, but now I know it's okay to use that. So I'm gonna talk about kill chain. So Secretary made this. And by the way, it means being killed, not killing when we talk in this sense about kill chain. Yeah, well, and it'll make more sense when I go through it, but kill chain really describes what we're trying to do and what this is really about. And the mission of the Navy is to fight and win our nation's wars and maintain freedom of the seas. That has to be done by a presence. Whenever there was trouble in the world we would send a battleship and now we send a carrier to make a point to establish a presence. In order to have that presence you need access to safe and reliable power. Both at sea and at shore because shore is the start of that kill chain. That is where the ships sail from, they sail from our piers and the planes take off from our runways. That's the start of the kill chain and in order to get the ships to the place where we need to establish the presence we have to have access to safe and reliable power. And so accordingly, the Secretary of the Navy early on said, hey, we need to diversify our power portfolio and we need to add renewable energy and we need to do that for three reasons. First is economic, renewable energy is cheaper and it acts as a hedge against the volatility of brown power. Second was power surety. If we have renewable energy on our base tied to our kill chain, like Mike was talking about, that helps us get that power surety, that safe and reliable power that Secretary wants. Finally, it's resiliency. We can go from a black, we can have a black star capability. That's really what we're after and so accordingly the Secretary of the Navy set a one gigawatt goal and that was done in 2009. Unfortunately or fortunately, the President grabbed hold of that and he reannounced that in his State of the Union pitch. Well, fast forward to 2014, the Navy, we had only gotten about 83 megawatts of that 1000 megawatts or one gigawatt that we needed. So you can imagine that he was a little stressed because the administration was coming to the end and so he copied a playbook from the Army where he stood up a Renewable Energy Program Office to maintain laser focus on achieving his goals of renewable energy for those strategic war fighting capabilities that I described earlier. And the first thing we did was we established strong partnerships with industry. Southern Company was an early partner. They helped us define three business models that were structured and aligned to operate at the speed of industry. Those three business models that we're using today are buy it, book it, and build it. Very simple. The buy it model is illustrated in a project that we actually were gonna throw the switch on this month. And it's the, we call it the WAPA project. And what we did was we aggregated the electric loads of 14 bases in the Southwestern United States to buy 210 megawatts of power for those 14 bases. And that field is located in Arizona, but the power is piped to those bases through WAPA, which is part of the Department of Energy. WAPA stands for the Western Area Power Administration. And they brokered the deal. And over the term of the deal, the Navy's gonna save $90 million. And a third of our power for the Southwestern United States is gonna be provided by that. So that's valuable to us because we were able to take a portfolio approach to solving a problem. The next model is the book it model. And what that is is it's a real estate out grant. And instead of us collecting rent on that, we get infrastructure upgrades. And so an example of that is a project that we're finalizing negotiations on that now. John Baxter's here, he's negotiating that project. What we're doing is we are closing in on a deal of 900 acres, 150 megawatts. And what we're gonna get from that instead of rent, we're getting enhanced bird, air strike hazard management, which is a real problem for us. And catch me offline, I won't go into the bash problems, but it's really important to those of us that fly planes. The second piece that we're gonna get is we're gonna get a load following generator and microgrid controls in support of the joint strike fighter that's gonna be fielded at LaMoure. That's gonna give us black star capability and mission continuity at the start of our aviation kill chain, because that's where we train our pilots that fly out to join the aircraft carrier that go to the Western Pacific to sail in the disputed waters that I talked about earlier. So this project is really important and it illustrates how we can quickly use this bucket model to achieve the energy security goals of the United States Navy. The last model is the build-up model. And what that is is it's an on-site power purchase agreement with the developer that provides power directly in support of the base. Example of this project is in Hawaii at Joint Base Pearl Harbor Hickam. We're doing a 17 megawatt project that will provide power to the Navy and the Marine Corps and the Air Force that is at Joint Base Pearl Harbor Hickam. That project will save us money over the term of the lease, but more importantly, it provides us power surety. So along the way of achieving the Secretary's one gigawatt goal, which we got last December, we got 1.1 gigawatts under procurement. We learned a few things. We learned first that we can achieve savings from the buy it in the bucket model. We also learned that we can get valuable infrastructure upgrades. We got $63 million of infrastructure upgrades in the form of microgrid controls, undergrounding of electrical distribution lines, and black start capability. $63 million of money that Congress would have never appropriated for us, but we did that by taking either underutilized land and putting it to a valuable purpose that serves both the base and the community. One thing that, why this is important to us is in 2015, we had 47 outages of eight hours or more. Across the name, it's pretty significant and direct impact to our mission and that kill chain that we talked about earlier. So these projects directly impact that. One other thing that we didn't realize until we got to the end was that we've averted about 22 million tons of greenhouse gases and we caused about a billion dollars of economic investment to local communities and created 240 jobs. So when we hit the goal, we expected to go back to our day job and we were all gonna go back to the Secretary of the Navy said no, that $63 million of infrastructure upgrades that you got that I didn't have to go to Congress for and we got that through our real estate authority, I want you guys to keep doing that. I want you guys to get us more onsite generation for that black start capability. And so our new mission is to focus on resiliency like Mr. McGee was talking about and that's important because the American side of civil engineers said that our nation needs $10 billion in upgrades to our electrical infrastructure. The Navy is no different. Our electrical infrastructure is not in the best condition. We need major upgrades and we don't have the budget to do that. So the only way we're gonna get there is partnering with industry like my colleague from the Army said and through third party finance projects where they finance it, they operate and maintain it. So we're looking to do projects like we did at Marine Corps Station in Yuma where we put in a 25 megawatt diesel peaker plant that allowed us to get rid of 41 diesel generators because that peaker plant was directly wired to our critical facilities. Those 41 diesel generators and I see some guys in uniform in the audience. What I remember from my days in uniform is what I can count on about the diesel generators when I most need it, it won't work. Why won't it work? It's because my favorite is we forgot to put fuel in it. My second thing is we didn't maintain it and so it seized up because we didn't change the oil or whatever and the last thing is it was not connected properly so that it would convert over the uninterrupted power supply wouldn't work. So we're looking to do more projects like that like we did at Yuma where we've got onsite generation for Black Star capability that we can get rid of diesel generators and all that whole environmental load, that environmental permitting process that goes with that and having industry operate and maintain that for us. So we're gonna have this fall, we're gonna have a lot of offerings. Right now we have an RFI on the street for a geothermal plant in Corpus Christi, Texas that RFI closes on 16 August. And an RFI has a quest for information. Oh, I'm sorry, there's no quest for information. That is in FedBizOps right now so if you are interested in geothermal energy, Corpus Christi is the place to go and please respond to our RFI. We'll be having an industry day in the fall. We're gonna have a portfolio approach to three bases in Southwestern United States, RFI will be out in the fall at Camp Pendleton, San Diego and Coronado. Now we're gonna have an RFI in an industry day and this one's really popular with industry on the Island of Kauai at Barking Sands Missile Range. I know all y'all will be there for it. That one is gonna be onsite utility scale storage with PVs array. So be looking at FedBizOps because we're gonna have a lot of opportunities coming out. So I look forward to your questions. Thanks for the time. Thank you. And so Larry, I gotta tell you, I have here a bunch of questions that our friends at the Pew Charitable Trust have collated for us from the Clean Energy Business Network. And for those of you who are listening, if you wanna pose other questions, you can do it at the Twitter hashtag, which is energy DoD. But the essence of these questions is exactly why we're so pleased you could be here today, which is, if I had to sum them all up, it would be it's really hard to do business with DoD. Tell me how. Can you talk to us about your experience and what you did and how it's working for you? Certainly. Well, to answer the last question first, it is working very well for us at the end of a rather long process that really began in 2011. We saw an opportunity to acquire what at that point was a shuttered coal-fired plant not operating for financial reasons that was located inside the fence at Fort Drum in upstate New York, which is the home of the 10th Mountain Division of the U.S. Army. Very busy part of the Army. It is a very busy part of the Army. I think the most deployed division in the Army. But we saw an opportunity here in that situation where that facility, albeit located inside the fence, had never provided electricity to the Army. And the plant was about 20, 25 years old, but we saw an opportunity strategically to do two things. One was to convert that plant from coal to use sustainably harvested biomass as its primary fuel, to turn it from a coal plant to a carbon-neutral renewable energy facility. But as importantly, we saw an opportunity with this plant to provide 100% of the energy needs of Fort Drum. The plant itself is 60 megawatts in size, the largest in our fleet. And the annual average demand of Fort Drum is about 22 megawatts, peaking in the summer at about 28 megawatts. So we saw an opportunity to provide 100% of Fort Drum's needs. But also generate and sell the balance into the wholesale grid. Now we have a lot of flexibility in New York State because it is a state where the utility sector has been restructured, where independent power generation is certainly flourishing. And the renewable energy sector also is supported significantly by state policy. So through what ended up being a three-year process, we procurement process from the Army's issuance of a RFI in August of 11, as you alluded to earlier, Sharon, we finally executed an agreement in October of 2014. So three years. And I think Mike would agree that that was three years of learning experience, not only for us, as it was our first contract with a federal entity, power contract with a federal entity, but I think also for the Army as well. In fact, when we started, the OEI was actually the Energy Initiatives Task Force in its early stages of development. So the process matured, the OEI matured, and we certainly came up the learning curve pretty quickly. But in the end, through the retrofit of the facility, and then the interconnection, the physical interconnection of our facility to Fordrum's two substations, we have deployed over 50 million in capital, private sector capital, as Mike alluded to, with the support of a 20-year power purchase agreement with the Department of the Army. And also an agreement with the State of New York to sell the renewable attributes into the State of New York program. Now, we are a renewable energy source, but probably most importantly, as has been highlighted in the panel discussion thus far, we provide resilient and secure energy to Fordrum as well. As I mentioned earlier, we have created a microgrid at Fordrum. Fordrum's a large installation, I think well over 10,000 acres in size, the condonement area much smaller than that. But for redundancy purposes, Fordrum already had two substations linking the two transmission feeds from the T&D utility there. But what we have done is really physically connected our facility behind the meter, and the default position of the switches in that whole complex network is us feeding energy into those two substations. And we have backup power feeds from the utility, but the fuel that we store on site, which is primarily residues from the forests surrounding Fordrum from commercial logging operations that those residues are chipped up, brought to us as fuel. We on any given day have four to six weeks of fuel on our site that will allow us to continue to feed energy and support the mission of the 10th Mountain Division for four to six weeks, even if the transmission grid goes down around the facility, if the roadway networks went down around the facility by a natural or man-made disaster. And we also have black star capability. So we are, I think, a great example of the Army's initiatives here to provide not only renewable energy to support the mission, but also secure and resilient energy. And I will say, without equivocation, through the negotiating process over that three year period, it a key mantra that we heard many times and ultimately arrived at was a pricing structure that was equal to or less than what the installation was paying at that time to buy brown power off of the grid and in the future as well, based on the projections that the Army was making. So affordable, secure, reliable, and renewable energy. So those are great tips for anybody that's watching is that first of all, these are customers like any other customer on some level in that they want a good price for their electricity, but they're also customers not like any other in that you've got to bring something else to the table. Like what does it do for my mission? Which I think the Air Force has really driven a refocusing on mission assurance. And so I think that's important for the listening audience. And now I'm gonna go to some of the specific questions from the Clean Energy Business Network. I mean really they were mostly asking in a variety of ways about doing business and about policy changes underway that will help streamline the opportunities about the level of bureaucracy, reporting requirements, these things that kind of can sink it down. So Larry, I do think if you have any tips for those things specifically for businesses listening, there were some specific questions that if our colleagues can answer that'd be great. One was, do businesses who wanna work with DOD also need to go through the GSA scheduling process? Should Clean Energy Technology Providers and Installers generally look to work with the local utility that serves a military base or with DOD directly? Maybe all of those, let's start with those and then there's some other leading a very specific one for you Miranda. Well I think Sharon I would say that one of the things that was most helpful to us while we saw the opportunity advocated for the opportunity, we retained the services of folks who had navigated the procurement process, navigated the halls of the Pentagon. And without that expert guidance, I think we definitely would have been lost and may not have ever gotten to the goal line because as an example, one of the things that we discovered unlike other typical commercial negotiations for a power purchase agreement, we did not have one counterparty across the table from us. We had a half dozen counterparties from within the Department of the Army, the Corps of Engineers on the real estate side of the transaction, the installation management command, the Army Secretariat, the Office of Secretary of Defense and had we not had that kind of expert guidance we would never have gotten to the goal line. I think we probably would have quit in frustration frankly, but knowing that we had those a variety of constituencies across the table from us was important and to navigate the complexities of the Department of Defense procurement systems as well. Are you structured to help with that? Is that part of what your goal is? So I wanna chime in with a little bit of a private sector story to give us all a little bit of historical context to remember that what seems like standard business practice today, power purchase agreement with independent power producers for renewable energy is actually still a fairly new approach to procuring power. And I'm gonna tell a story from my Walmart days. It took Walmart three years to sign their very first solar PPA. So they set a goal in 2004 to be 100% renewable. It took three years to sign one PPA because it was new. It took five years to get the first 100 done. It took one year to get the second 100 done because it takes time for organizations, lawyers and contract officers and everybody to get their head around a new way to do business. And frankly, that's why the Air Force when we stood up our Office of Energy Assurance went to these two and said you've had the Office of Energy initiatives for a long time. You've figured out how to do the contracting, how to get the lawyers comfortable, how to work with the regulatory environment. You've figured it out as well. Rather than us starting from scratch, let's build it within. So we're also now talking about a new model. What we just talked about at Fort Drum, that is a new model. That is not a standard PPA for an onsite solar project. That includes resiliency, switches, feeds into, it's a more complex project. So as all three of us move in that direction we all have pilot projects and completed projects moving in that direction that incorporate a bunch of other values. It's gonna take us a little bit of time to figure it out. Now you add on top of that the complexities of the federal government acquisition rules and the fact that we use DLA energy to do our contracting. Sometimes we use the Army Corps of Engineer to do our contracting. Sometimes there are different contracting types. It could be commercial contracts. It could be non-commercial contracts. And each of those standard contracts have different provisions. We just had a whole discussion about some provisions that are really the risk provisions, the determination clauses, which really are almost always the clauses that cause us consternation. And frankly, same in the private sector. For those of you that are developers you're probably not in your head. But the determination clauses are different between the commercial and non-commercial. And we use both contracting tools for renewable energy projects depending on which contracting agency is doing them. So those things can get a little bit confusing. But these three organizations which are working very closely together. In fact, OEA is sitting with OEI in the same, literally in the same office space. That's a vowel of heart. That's correct, just a vowel of heart. But we're also working very closely with repo in particular to understand the utility scale offsite approach to doing business which doesn't give us as much of the resiliency side but does give us the cost effective and cleaner side of the three pieces of the equation. But as we figure these things out we're gonna turn them much faster. And these folks already are turning them much faster. So I'll say that from the macro level these guys can talk about the details of how you do contracting. Yeah, and I think as you do give some concrete examples or advice, one of the things I think was also a consistent question we got, does, you know, if you're a small business and you can't afford a consultant, does this mean that you shouldn't even look at DoD? You're shaking your head. No, and so what we're doing, and I know all three of us are working that is to make it easier for industry to work with us. And so what we've done is we've aligned the acquisition, the attorneys and the real estate people under our leadership in the repo office so that there's only one person that they're negotiating with. Even if it's DLA and we're working through that and we'll get there where it's just one person that they've got to negotiate with and that makes it easier for the small business guys to come in the door. And I would encourage the small business folks to come talk to us because we can team them up with partners that we are working with. And so one of the things you said earlier was, well, who do we work with? We go to the repo or OEI or OEA already or do we work with the utility company? And they've kind of got to have some market awareness and maybe come talk to us because right now I would say, yeah, you need to go talk to Hawaiian Electric and Guam Power Authority because they're looking for partners to execute the real estate out grants that we've got with them for 44 megawatts and 28 megawatts in Hawaii and Guam respectively. Go reach out to them. In other cases, they need to respond to our RFI and work directly with us. But if you're a small business, come talk to us. We'll hook you up with the other developers that we know need their information. Absolutely, the federal government is always interested in supporting small businesses. That's how we grow jobs in our economy. And there's definitely plenty of opportunity for small businesses. That being said, some of these projects are large scale and the small businesses may find it difficult to compete in that space. But if I could address some of the concerns I think that are in the questions that you've received, right? So to be a little bit expressive here, there's a view in the federal agencies that you are not specifically authorized to do anything that you have not been specifically authorized to do. Which means that if you haven't been, then you aren't. And there's almost no example where someone is broadly authorized to do whatever they think makes the most sense. So it's sort of a specific authority that's been granted by Congress to the departments. And we exploit those authorities to the benefit of the Army, but we have to remain within the boundaries of the guard reels of those authorities. And so I think that's what some of our, the parties on the other side see as a frustration that he has the authority for that, she has the authority for this, nobody seems to have the authority for that. And by authorities you mean the legal boundaries, right? That's right. So anybody who's not sure what that means, we're talking about Congress, right? So something as obvious as, are you authorized to purchase power? We have to have an authority to do that. It may be a given to people that, well, of course you can buy power, but actually you can't unless you have an authority to go buy power. And so we have specific authorities that grant us the authority to buy power by law. So those may not be obvious to some of the industry participants. It's why the government can be difficult. As a taxpayer, I view it as, it's a way to avoid the consolidation of use of power. They divvy up the power amongst the many. So that's the way I live with it anyway. So the idea of where do you go for contracts and where much you find these opportunities? One thing to remember is many of these could be something like a zero cost contract. It is, as I mentioned in regulated states where we are not able to pay any more or less for power that's different from the price that's already dictated, we're already buying power via another contract vehicle which won't come into play in a new renewable energy project because we can't buy power any differently than we already do. What we can do, however, is cause the creation of a renewable energy project via something that looks like a contract. And a lease is a contract. And we may use the lease as a vehicle to have a contractual relationship with you as a developer to construct, own and operate a plant that has mutual benefit but I'm not buying power from you in some cases, right? So there is no purchasing of the power that goes on. There needs to be a contract to seal the deal. So it's something like a no cost contract. And there's various authorities we have frankly bent, B-E-N-T bent to serve this purpose. And with, you know, some trepidation but we have now come with some normal channels that we follow to utilize these authorities to cause these projects to come to fruition. Sometimes we use contract vehicles from the Mission and Installation Contracting Command out of San Antonio and Army Entity. Sometimes we use GSA and their contract vehicles, the General Services Administration. Sometimes we use the US Army Corps of Engineers particularly out of the Huntsville Energy Center in Alabama. Am I missing one? DLA, sorry, DLA Energy, thank you. And their contract could be as well because their different contracts have been set up using these different authorities in different manners that serve our interests. So there are multiple places. There's not just one. There's not just a GSA schedule. There's the room for the small businesses to participate. And frankly, there's always need to be creative in how we go about this. And I just wanna, we're not gonna have a whole lot of time for audience questions, but I do, I'm gonna ask Lynn Abramson from the Pew Charitable Trust. We've been getting questions from the Clean Energy Business Network all throughout the event. So did you have any new questions to throw up there? So before we return to some of the general issues about how to contract with the DOD, we do have a couple of specific questions. We've talked quite a bit about purchasing energy, but certainly energy efficiency upgrades, water efficiency upgrades. Some of our businesses are working in those fields as well. And so we have one question asking if you can explain your service branch's requirements for certifying green buildings. I understand there's been a little bit of a movement away from exclusively using lead rating systems. So if you could talk a little bit about how you do that and what is the role of lead in that certification? I think we're going with like a, we're not going with the gold plated. I think there's a silver lead is kind of our baseline that we're going for. And we're looking for sustainable building practices, but that's kind of the baseline of where the Navy's at. And it's really about what is the most cost effective, sustainable military construction project that we can get. We are working to build into the projects some micro grid controls. And I know that Camp Pendleton has done that with their fractal grid. And if you're interested in that, I can talk to you later about that. So we're experimenting with that, but it's all got to be part of the requirement. And so Congress has kind of laid down the law with us and you might can talk more about that, but we're really focused on not gold plating it to hit the bare minimum requirement with the least amount of cost and maximize the efficiency. So that's kind of where our services at. We have official policy on that. And frankly, I'm not proficient or current. It's not in my job jar, but I'd be happy to follow up on that question. But frankly, there is something, as John mentioned, there's a certain sort of maximal standard rather than a minimal standard for lead that we're not looking to gold plate these facilities to have a pride of ownership necessarily. There's a business case basis to the lead certification type of status that we want to achieve for our facilities, but I'd like to follow up with the official army policy for that. I think there's an OSD policy that's out on the street that they can Google to pull that. I seem to remember there was something that was issued. Yeah, so I would say that the Air Force policy right now for new facilities is to be lead certifiable. We are looking at and actually using some other certification systems that certify the greenness or the sustainability-ness to the federal government standards, which in some cases actually are higher than lead levels. But I want to caveat that by saying that that's for new buildings. The Air Force has somewhere between 40 and 60,000 existing buildings that are gonna be around for a very, very long time. So if we really wanna get at energy efficiency, and frankly from the perspective of resiliency and energy security, whatever phrase you wanna use, a kilowatt hour we don't use is one we don't have to buy and one we don't have to replace if there's a disruption. So energy efficiency is absolutely critical to all three of the circles that I was talking about before, cost effective, cleaner, and more resilient. We have got to get after our existing buildings. And there is a combination of ways we can do that. We can invest our own money, which we have done historically and are doing today at lower levels because we don't have the money today for the reasons Secretary James talked about before. And we can also use third party dollars through the energy service performance contracts or utility UESCs, which are essentially the same thing that the utilities provide them. So certification, good, well, to be totally frank, it's not my top priority. I'm much more focused on our existing buildings and then getting our specifications for new buildings right, so that we're incorporating the best and latest and greatest and we're not just letting inertia have us build the same old things that we've always built. And I think we really, really need to get over the idea that a more efficient building needs to cost more at the beginning and we'll pay back over some period of time. A lot of these technologies are passive technologies. They're easy, they're affordable and don't need to add incremental value. And I would say that again, sort of juxtaposing where I came from, Walmart is well known for being a low cost company to come into the federal government where I think a lot of people in particular see DoD as deep pockets and they see, oh, federal government has given you all these regulations, that means you're gonna have to pay more to get a building that looks like that, maybe. But I think we all need to be pushing ourselves and industry to get a high efficient building for at or below the same first cost. Yes, we need to look at life cycle costs. Yes, we need to be willing to invest more if it makes sense, if it pays back in short periods of time but we gotta be pushing ourselves to make it cost the same amount at first cost. So we're just about out of time. I'm going to pose the last question for all of you and then I'm gonna put out a little commercial for the audience so you'll have a second to think about it, which is why should people care? First of all, are these things gonna persist beyond this administration? We're at the end of an administration. There could be a radically different one coming in, we're not. Will these things, are these lasting values? Does the uniform military support them? And also is there a broader market impact? And you know Larry, are there jobs at stake here? Where, what value did you create? So I'll give you a second to think about that. And I'm just gonna say that we're gonna work with Pew Charitable Trust to gather some of this information with links where you can go to get more information and to get help if you're a business. So we will post that on our website and I believe we will also on the Clean Energy Business Network website. So we're gonna work together to make sure that all of this that you've heard today and that we had discussed in a prior conversation with Cameron and others is available to you in a page that you can just click on and get to the right places. So Larry, let's start with you. Well I certainly believe that the program in the case of the Fort Drum Project has created value in a lot of ways. Primarily supporting the mission of the 10th Mountain Division and I think that is indisputable and undeniable. But the project has also created value locally as well. We support over 150 jobs from the loggers out in the forest to the folks that we employ at our facility and all of the suppliers that support the facility. The project has had great support from local, state and federal level elected officials because of the win, win, win situation that was created. Okay, is that gonna be typical? We're just, we're right at the time. So is this gonna last? I mean you two are career. So I was political, you are political, but you're career. Is this gonna last? Yes, it's gonna last because we bring value to the uniform service in the form of enhancing their mission. And I've got skippers that are reaching out to me every day want me to do a project on their base. One of them found out I was in Oahu and sent a plane to pick me up to go out to Kauai to work on a project. So that is key because we enhance the mission. You agree with that? I think that's very well said, John. I think that in my opinion, this is gonna survive. I think also you have to remember that we're relying upon the bulk power system outside the gate. That's where the change is happening. It's not that we're driving it. That's where the change is happening. Randall, last word. So is it lasting? Yes, he's got skippers calling him. I have four stars calling me. Do projects on my basis. It's going to last. Second, why should people care? The enemy's at the gate. I'm a very impatient person as my team and my former team will tell you by nature. And the enemy is at the gate and there are two of them. One, the threat against our utility power grid has increased dramatically in the last five years. You all should care about that as citizens. We care about it as your military. We have a short period of time to get after solving this problem. And second, the changing climate is another enemy at the gate. We have a short period of time to solve that. So we've got to have a sense of urgency about solving this problem. So it's really win, win, win, win, win. Well, we got it. Well, thank you. Four wins for four panelists. That's a good record. Thank you all very much for joining us today. Let's thank our panelists.