 Okay, we're back, we're alive, we're so happy to be here on Energy in America every other Wednesday. And this time we have Jeff Kissel from E-Pring who has written a paper, we're going to talk about the paper. Welcome to the show, Jeff Kissel. Thank you, Jay. Aloha. Kako. It's nice to be back even though I'm only halfway between Washington, D.C. and Honolulu. I'd like to introduce you to Keisha King. She's co-host today, she's one of our hosts here at Think Tech and she has agreed to sit with me on this and other shows to help me host and I really appreciate that. So say hello to each other. Hello, Jeff. So good to see you. Keisha, it's wonderful to see you and it's nice to enjoy some company with Jay. You know, he and I have had some great times together over the last 47 years. 47 years. He's not kidding. It's a true statement. He's not kidding. I'm not kidding. Yeah. And we were 9 when we met, yeah. Oh, wow. You were saying, Jeff. So it's wonderful to have someone introduce some new topics and new ideas to the conversation because, you know, Jay and I talk about things that we remember which usually involves landmarks that were torn down 40 years ago. I can imagine. It's true. It's all true. And it's sweet though. These memories are sweet. Hawaii is loaded with nostalgia, so many things. So, you know, you have written a paper about energy. You are a past master expert in energy, having been the CEO of Hawaii Gas and participating in the conversation. We're on for some years around it about energy and the technology of energy. And now you wrote a paper which I find a very provocative title. It's called Consequences of Resource Pessimism. Gee whiz, that makes your head spin about what you might want to talk about. So let me turn it over to you, Jeff, and you can tell us. Well, look, that's a scholarly paper. And it wasn't actually me. It was one of my colleagues at the Energy Policy Research Foundation who took the time and the effort to put together quite a wonderful document which we certainly are glad to make available on your website. What I did, though, is I took it apart a little bit and changed it so that we could really get a hold of the topics and make them relevant to Hawaii. And resource pessimism is another way of saying, oh my goodness, we're going to run out of space. We're going to run out of food. We're going to run out of energy. You know, eventually the 10 billion people who are due to be living in this environment on our planet in another 10 or 20 years are supposed to not be able to make it because we're going to run out of stuff. And if we think that way, which I understand why people do think that way, we will end up making some really dangerous policy decisions, kind of like the ones that have been made in Hawaii and are being made in a number of states, including the one where I live, which is California. That is, we're going to run out of clean air. We're going to run out of oil. We're going to run out of food. And as a result, we've got to make a major change without giving proper thought to the consequences of that change. So I brought some slides around because Hawaii has made a change in their energy policy, which is already having very serious unintended consequences. And Hawaii has decided, what, seven or eight years ago now that it will become independent of hydrocarbons. Now I'm using that word quite deliberately because Hawaii calls it fossil fuels. It's not. Hydrocarbons are carbon-based energy sources. And those include the fossil fuels, oil, coal, that sort of thing. But it also includes methane. Methane is a hydrocarbon, but most of the methane on Earth was here when the planet came together, when it coagulated from cosmic dust. And so that would really make me nostalgic. I know that you and I go back a long way, but we don't go back that far, Jeff. Not quite that far, but close, you know. Because you and I had alternate weeks when we mowed the lawn in the garden of Eden. Cute. But I'm curious though, what is the difference between the... So are you saying fossil fuel does not have methane in it at all? A fossil fuel contains methane. But methane is huge. There's a moon of Jupiter made out almost entirely of methane. Methane is a naturally occurring substance in the universe. And it's a hydrocarbon. It burns. And it's essentially natural gas. So natural gas can come from decaying plant matter, but it also is naturally occurring in the universe. And natural gas makes most of the electricity in the United States to death. That's a remarkable change in the world. That's a remarkable change. It wasn't that way a few years ago. We have been involved in a revolution about natural gas, haven't we? Right. Most of the natural gas in the United States, of course, came from beneath the surface. And it came from naturally forming formations. And they were, generally speaking, decaying plant matter. Now that we have explored unconventional gas, that's getting back to the stuff that was here when the planet was formed. And that stuff is a lot cleaner than coal. It's certainly not 100% clean. But it's also a very economical way to extract energy and use it for the benefits of all of us while we are developing alternative technologies. Jeff, you want to use your slides? You had a bunch of slides. You want to refer to them? I would love to put some slides out. OK. So this one is entitled, 2019 Fuel Isolation Policy, Impacting Energy Costs in a Hawaii Economy. I don't want to throw you off your track of discussion, but refer to them as you will. Sure. So let's go to the next slide in the pack and talk about what's happening. Hawaii declared itself, quote, fossil fuel independent. And what it really is is an anti-hydrocarbon policy, which means it wants only renewable energy resources. That would be primarily in Hawaii, wind and solar, some plant matter, you know, biodiesel and ethyl... I'm sorry, I missed the word. Synthetic plant fuels and things like that. Well, what that means is that you've taken the energy equation and said, OK, I'm going to make an investment only in non-hydrocarbon, non-fossil fuel energy. I don't even like what they're doing at Pune Geothermal. Well, that limits your choices. And it also concentrates your bet. It's like taking all of your money in your IRA and buying one stock and hoping that you can make your retirement on that. Well, that consequence is really terrible and the problems that it's going to present are now beginning to develop in the Hawaii economy. Because renewable resources in the definition that's being used in Hawaii are very high-cost relative to conventional resources that are hydrocarbon-based. Effectively, we are taxing ourselves in Hawaii and using that money to pay higher energy costs. So we're limiting our investment capital. We can't invest it in education. We can't invest it in a lot of other things. For an example, helping the homeless. And so we're also limiting the number of jobs that are growing in Hawaii and contributing, as you may have read in the papers recently, to the intellectual exodus from Hawaii. The National Press is watching Hawaii as it aims for 100% renewable energy. And they're wondering what the consequences are likely to be. What I hear you saying when it resonates for me is I'm into diversity. I'm into diversity of sources of energy. And we've always talked about that. I mean, for as long as renewable energy has been on the table, we've also talked about having a broadly diverse portfolio. And you don't want to get stuck on one thing. But I agree with you that there's a definitional problem here. People only talk about clean energy in a very limited context where they really shouldn't. The other point I want to make, and it drives off what you were saying, is that energy touches everything. It touches everything. You can't look at energy in a silo because it has a direct effect on the economy. It has a direct effect on our quality of life. And we must consider it alongside other issues, especially economic issues, quality of life issues. And we can't just pour money into it without dealing with other planning issues that we need to address. You're absolutely right. And just take a quick look at the next slide because it's going to bring it home to Hawaii. It's very important. The very first cruise ship powered by liquefied natural gas was just delivered to Carnival cruise lines. That ship cannot pick up fuel in Hawaii. It may not need to because it has a longer range than it would need just to stop and be fuel-dependent on Hawaii like airplanes are. But it means that Hawaii will not generate any revenue from any of the work to bring the fuel in, to deliver the fuel, to put the fuel on the ship. And Carnival cruise lines may decide that it's not economic to call in Hawaii. I know Keisha is going to ask you a question about this. You're going to say, do you really think that, assuming the availability of the LNG fuel, that this is the future, that cruise ships powered by LNG, that's what we're going to see increasingly? I know she's going to ask you that. Well, I was thinking of asking you that, Jeff, because I'm very curious. This is the first. What records or what history do we have to show the sustainability of something like this and what great effect it may have in the places that it has worked? Do we have any record or documentation for that? It's a terrific question. And what's happening now, if you look at the next slide, I provided some statistics. I know you peaked at the next slide, so that's why you're asking this wonderful question. Here's what's happening. The fleet, the industrial and the cruise fleet is converting now to liquefied natural gas for a variety of reasons. In addition to the fact it's cost-effective, the fuel standards, and I'm not going to read all of this, incidentally, I do want to call your attention to one point. Crowley Maritime operates in and around Hawaii, and they're not going to be able to fuel their vessels in Hawaii. They're going to have to fuel them somewhere else. The jobs relating to fueling those vessels are going to be somewhere else. So if you go to the next slide, I'll explain one of the reasons why LNG is becoming an important fuel in the world shipping industry. And that is that the International Maritime Organization has decreed, and this is the organization that governs all shipping in the world, has decreed that the amount of sulfur in the fuel can't be more than one-half of one percent. And most fossil fuels, hydrocarbons, diesel, don't meet that standard. LNG does. So it's a huge incentive to build new ships that operate on LNG versus conventional fuel. So in addition to the fact that it's less costly, Keisha, the answer is the regulations are putting it there, just like the regulations have changed the way you and I drive vehicles so that we can't drive a 500-horsepower, 12-mile-per-gallon vehicle without paying the cost and the consequences. Well, that being the case, all that being the case, Jeff, what could, should, would Hawaii have to do in order to be able to provide LNG to these ships? The infrastructure to install LNG is relatively cost-effective, but it needs permitting and it needs government support. And right now, not only does it not have government support, it has opposition from the state government. So getting the infrastructure in place, other than the small-scale LNG that the gas company is using, is going to be a big challenge without the support from government. So why then do we have this pushback from the government? Why wouldn't they just immediately make the adjustments and the changes if it's so economical and important? Now, that's a hard question. Government... I think it's a loaded question, right? Government is complicated because what's logic to me is not necessarily logic to very well-meaning, very dedicated public servants who are helping us run our government. And it takes time and I encourage public debate. I know it's unpopular not to be a populist, but really I think public debate and public discussion is really important to these issues. And rather than shut it down by making a decree that fossil fuels slash hydrocarbons are not the way of the future, I would encourage government to foster the environment where these issues, even nuclear, could be debated and understood in an open and unbiased environment. Essentially, that's what the Energy Policy Research Foundation is all about. We're not advocates for any one solution. We're advocates for public discourse. I feel like we're zeroing in on what you mean or the authors of that paper mean when they say consequences of resource pessimism, because sometimes pessimism is not logical and there is no good evidence for it. But let's take one minute break, Jeff, and Kisha will take one minute break and we'll come back and we'll find out more about what has happened, is happening, and will happen with regard to this pessimism and to LNG. We'll be right back. We'll look forward to it. See you in a minute. See you in a minute. Aloha. I'm Gwen Harris, the host here at Think Tech Hawaii, a digital media company serving the people of Hawaii. We provide a video platform for citizen journalists to raise public awareness in Hawaii. We are a Hawaii nonprofit that depends on the generosity of the supporters to keep on going. We'd be grateful if you'd go to thinktechawaii.com and make a donation to support us now. Thanks so much. Aloha. I'm Cynthia Sinclair. And I'm Tim Apachella. We are hosts here at Think Tech Hawaii, a digital media company serving the people of Hawaii. We provide a video platform for citizen journalists to raise public awareness in Hawaii. We are a Hawaii nonprofit that depends on the generosity of its supporters to keep on going. We'd be grateful if you'd go to thinktechhawaii.com and make a donation to support us now. Thanks so much. Thanks so much. Okay. We're back. We're live with Jeff Kissel and Keisha King talking about pessimism and we have some slides to go yet, you know, in trying to understand what a proper portfolio should be in these times. Because times change, right, Jeff? They certainly do. And you have to excuse me. I was busy for a moment making my contribution to thinktechhawaii because I think it's a valuable resource and worthy of Hawaii citizens supporting it wherever we live. Thank you very much, Jeff. Thank you. In many ways. Yeah, let's take a look at the next slide because I think it's got some information that is important. Let's think about what happens if we shut ourselves off from LNG, which is one of the fastest growing capital investments in the world. Hundreds of billions of dollars are being invested in moving this greener, more efficient and cleaner energy product all over the Pacific except for Hawaii. Because Hawaii has decided to exclude it from its portfolio, it faces higher oil prices, a drain on the capital from the economy. It also slows down the implementation of renewables because the money isn't available to invest in solar and wind, which are expensive. And it pushes the cost of those renewable resources up. The only way I know to change that profile is to acknowledge that we really need to diversify our energy sources and mitigate the impact. And on the next slide, I talk about some of the jobs that are not going to be available because Hawaii has decided to exclude LNG, especially from its port as a port of call. So we will not have the jobs to fuel the ships in the harbor. We won't have the jobs involved in freight forwarding. The professional building trades, the welders, the electricians, the safety people that are needed to support an LNG infrastructure are not going to be there. And as a result, tourism will suffer and support services will suffer. One thing that strikes me is that on this show, Energy in America, we have often described with you and Lou Fulirisi, the prospect of American export of LNG to all of Asia, through Japan and I guess, you know, to all of Asia. And so if assuming that happens, assuming that is all packaged and we have LNG going back and forth, Hither and Yon across the Pacific, it seems to me that if Hawaii doesn't get involved in that, we somehow will be affected by turning our backs on LNG while LNG is crisscrossing the Pacific. Am I right? What do you think about that? LNG will bypass Hawaii, just like the trans-specific airlines have unfortunately in large part bypassed Hawaii for commerce, even though people are flocking to Hawaii for tourism purposes. And it's a total shame and it's totally unnecessary. The deficit that China suffers, sorry, the deficit that we suffer with China is approximately $100 billion a year. China imports $300 billion a year in energy from various sources. Certainly some of that could be filled by U.S. domestic gas in the form of LNG. I want to go back for a second, Jeff, and talk about the loss of jobs. I kind of feel like this is the middle-class America that is going to be affected the greatest when we talk about tourism. We're talking about average Americans, their hotel industry, welders. These are your average Americans who are being affected by this, whereas it seems as diversification is the simple solution and it also seems as if this isn't talked about enough and on the forefront. Would you agree? You're correct. Hawaii had a very diverse economy up through the 1980s when agriculture and other industries were part of its diverse workforce. We had machinists, welders, electricians who did a lot of sophisticated work in the plantations and the shipyards and other places, and these industries shared this labor, this highly skilled labor. If we could bring energy back into the forefront, it would be an industry that could share skilled labor that would benefit all of Hawaii's industries from tourism through, for example, the Pearl Harbor Shipyard, which is the least competitive highest-cost shipyard in the whole Navy system in the world today. That goes back to the point I was trying to get at before. You can't look at energy in a silo. It's connected to everything in our world, and so we have to see the issue about jobs. We have to appreciate that. There have been assurances and aspirations about having an energy industry that actually employs a lot of people. Back from going to nostalgia again, back to the time of the early ought years, about all these jobs that we're going to cover. We don't have that many jobs in energy. We have to find a way, figure out a way, so that energy becomes an industry that employs a lot of people, affects a lot of people, and does a lot of what do you want to call it, nutrition through the middle-class job market. We haven't yet figured that out. Well, think about it, Jay. The more skilled labor that exists on the island of Oahu, the island of Maui, the island of Hawaii, Kauai, and the others, the lower the cost will be for you and I if we want to put solar panels on our roof, if we want to put windmills in wind farms, if we want to develop other alternate sources of energy, because those skilled workers make putting those renewable, purely renewable resources in place at a lower cost for all of us, and it drives our economic engine, and it gets the tents off the streets, which is the huge tragedy of this misguided policy that we're now pursuing. Amen to that. So let's go forward with your slides. Are there more? There's just a couple. It's my point. And you notice I've talked about diversification as something that brings about that equals economic security. We're not talking about any one answer. You know, America, ever since the Second World War, has wanted to take my generation, has wanted to take a pill or perform an act or do something, you know, do a workout on a treadmill, or find a fashionable way to diet, you know, where you don't have to put out any effort, you get somebody to clamp down on the size of your stomach, or do something else, a quick and easy solution. There ain't no quick and easy solution. And diversification is one of the most important things we can do in terms of energy supplies and energy investment. And it's called investment for a reason, because it's part of what we get back in the future, not part of our instant gratification for today. I think what I hear you saying is it's all about planning. It's not just looking at it as diversification right now for this moment, but it's looking at it as a planning point going forward. It's wrapping our minds around things that will come up in the future, wrapping our minds around options that relate to other options. It's being smart, isn't it? It is being smart, and it's being alert to the changes that are going to be occurring and observing them, and responding to them in a rational manner, and doing something tomorrow for a reason other than it's just because we did it yesterday. I love that point. You do something tomorrow that is going to affect the future, not doing the same thing that you've always done simply because you've always done it. I think, and another point I wanted to bring up about the liquid natural gas is that there is enough of it to supply the world if I'm not mistaken. Would you agree with that? But by the same token, we don't want to invest in just that because it happens to be handy and cheap today because it certainly won't be in the future if that's the way we treat it. We want to diversify it so that, like anything else, there can be competition, and we certainly don't want to put more greenhouse gas into the atmosphere than is absolutely essential to get up to the point where we're reducing the level of greenhouse gases. Well, let me offer the thought that LNG and, you know, the American supply of LNG is a significant phenomenon in the world today. It didn't exist a few years ago, and the world is waiting for energy. The health of the global economy depends on energy, and so having this supply and building out infrastructure to deliver it in various places in the world, the whole world, actually, assures American leadership in global affairs. It's part of soft power. It's part of being a leader in the economic global economy, isn't it? You've touched on that, but I wonder what your thoughts are on it. Well, it is. And, you know, Hawaii had, for many, many years, led the nation in some of its fundamental principles and core values and implementing, for an example, health insurance for everybody, the first state to ratify fortunately it was not successful, the Equal Rights Amendment for Women, things like that. And I'd like to see Hawaii get back to the forefront of leading this country at least in developing more humane core values and forward-thinking thoughts and not being as provincial as it is today in its energy policy because it's weakening our influence on the world. It's also weakening our own economy. Wow, couldn't put it better than that. You know what? It's our time. That's right. It's our time to close. We want to thank you so much, Jeff Kissel, for being with us today. It was great to meet you, but it was enlightening to have this very important discussion and we hope to hear more from you about it. You've been watching us today, right here with our very own Think Tech Hawaii CEO, this guy, Jay Fidel, and we're going to close out today and see you next time on Energy Matters. Aloha.