 Okay, we're back. We're live. This is ThinkTech, and it's Energy in America. I'm Jay Fiedel here in Honolulu, and by Skype we have Lou Pooley-Racy, and he's the president of the Energy Policy Research Foundation, E-PRINC, in Washington, D.C. Welcome again to our show, Lou. Nice to have you. Nice to be here, Jay. Thanks so much. So we were going to talk today about a subject that is similar to other discussions, namely how is this new administration likely to affect policy? We've seen a lot of campaign promises and threats, and now we're seeing some appointments, and soon enough we're going to see some real revelations in policy or not. And I wanted to chat with you about what it looks like. Mr. Trump has denied climate change. He's made it clear he's not crazy about renewable energy. He's made it clear, however, he's going to change things, and there's going to be a shake-up of some kind. So what do you think, based on his statements anyway, what do you think he's going to do? So let's maybe break it down into two pieces. One is what's going to happen in terms of policy, the development of U.S. energy resources, domestic energy resources, and then how's that going to crosswalk, what's going to happen to the research program, including climate research, incentives for GHG controls, things like that. So the first point is we don't have any appointments in the key agencies that are going to shape that policy. We don't have an EPA appointment yet. We don't have a Department of Energy appointment. We don't have a DOD appointment yet, and we don't have an Interior Department appointment. Those are the kind of agencies which play in this sandbox to one degree or another. But we can sort of outline, let's start with the development part. I think it's almost sure that we're going to have a much more aggressive development program on public lands. That means Alaska, that means offshore Atlantic, Gulf of Mexico, possibly even the Arctic. Then I think a second part of this is we're likely to find less federal intrusion into state agencies which now control the development of well-in-guess on private lands like Texas, Oklahoma, West Virginia, Pennsylvania. So things like the methane rule, which is a big contentious one, particularly the methane rule for older facilities, I think that's going to be punted to the state's to worry about. I think, you know, Trump is likely to stop that. Today, EPA actually tried to issue a preliminary warning that they were going to go forward with the CAFE standards. These are the corporate average fuel economy standards. And already the House Committee that has jurisdiction fought back. And we talked about this last week, you know, the average automobile in the 60s generated about one ton of criteria pollutants that's like sulfur, volatile organic compounds, nitrogen oxides, things like that. About one ton for every 100,000 miles. And now today they're down to 10 pounds. So the question is, are we done or not? Should we do more? And so I think that those kinds of regulatory policies in EPA is going to be very contentious. And the kinds of people that are part of what they call the landing teams of EPA are very suspicious of all these climate initiatives. They're very suspicious of the Clean Power Plan. And while these changes in these policies I think are not going to have as fundamental effects as people think, most of the big changes in U.S. on emissions reductions for GHG, let's say, are driven by cheap natural gas. That has done much more damage to the coal industry than all the EPA grants. Politicians like to take credit for it and it's not really smarter than to do that. I can't help them there. But so I do think in that area you're going to see much more promotion and permission for fossil fuel development in the U.S., particularly oil and gas. So then on the environmental side, I think you're going to have a much less aggressive regulatory format which people, there's a big belief that the regulatory state is out of control. We have too many regulations that EPA is in every aspect of our life and that it's okay to slow this down a bit. So I think that's a big theme. That goes back to the CAFE standards. Let them stay as they are and not try to turn the screw anymore. That gets to the next point of what's going to happen to renewable fuels, what's going to happen to electric vehicles, all this stuff. Now, renewable fuels already have in place a set of subsidies that work out over the next four years. They were set a year ago at five. So tax credit... Will he be able to stop the existing subsidies, stop the existing tax credits? Will he be able to change the support mechanisms for the development of renewable fuels? Yeah, so I think two things there. One is, yeah, they're probably a little vulnerable, but there are lots of people on both sides of the aisle that like those subsidies. And they have constituencies that tell them that. So I don't think that's going to be so easy to fix. Second, even if they are banned in the clean power plant, the states are still free to go ahead with renewable portfolio standards to pursue their own solar programs, their own renewable initiatives. It's just the money though. I mean, for example, you have federal tax credits in Hawaii anyway that persist, even when state tax credits and support doesn't... Exactly. Now, here's the thing to watch for. I think people aren't thinking about this yet. Trump has this big grandiose plan for infrastructure. The Republicans want to pass a massive tax reform program. And whether they say it or not, there's going to be a lot of interest in looking for ways to pay for that. And the stuff that's vulnerable, I believe, are these very expensive research programs in carbon capture storage. I suspect some of these exotic things like OTEC and some of these other programs are also going to be on the chopping block. Unless you have... these congressmen and senators, they have constituencies and they'll be bargaining, but you have to ask yourself for the programs which are very Hawaii specific. How much juice do your two senators have? And with this group, probably not a lot. Well, we were talking before about OTEC. In fact, we had a show about OTEC just a couple of hours ago here. With one of the engineering founders of OTEC, a fellow named Hans Kroc at University of Hawaii. And, you know, we have experience in it, but we don't have success. And that's linked to putting additional research funds into development of OHA. And the deployment of OHA, which is not cheap, because OHA has to be done on a scaled basis. Same thing with Wave Energy. OHA is a program at Kanioi Marine Base, been going on for many years now. And when you look, it always seems to be about the same as it was before. In other words, there's no great progress. So, you know, a question is, if you remove... this is very interesting. If you remove the funding, and it's federal in both cases, I think that would make the difference. If you remove the funding, those programs are probably going to stop in their tracks. And there will be no significant research going forward. No significant research to the point of taking it commercial, you know, of deploying it and satisfying state government that it should be deployed and get, you know, permits and what have you. So my question to you about that is, will that mean anything? Will it mean... will it be significant that we don't do OTEC ultimately? Will it be significant that we don't do Wave Energy ultimately? Yeah, so I believe that the... if they get traditional, let's say, conservative thinking, they will be a lot more emphasis on basic research, on maybe some applied research, and that applied technology is applied programs. But they will view that as more something entrepreneurs should undertake, that the federal government should retrench to fundamental basic research, mathematics, physics, material science, chemistry, and that those breakthroughs in those areas should be widely distributed and disseminated so that entrepreneurs then can come forward. Now, I'm really bad at picking the outcome of the political process. I would have told you there was no way Trump could win. You know a lot of other people. So, you know, but I do think, you know, I do know that Trump is thinking, talking to people, I know some of the people in the transition. Trump is thinking about, well, what can I do the first day? You know, he's got this apprentice TV mentality. Oh, don't we know. I wouldn't be surprised if the first day he announces certain things like, he's approved the Keystone public. He's approved the Dakota Access public. He's done this or that. I mean, the fact that he put this carrier deal together, even though he's not president, I have no idea what he promised these guys. That's fairly remarkable. But, you know, it's certainly a public relations coup. On the other hand, does it really have legs going forward? Is it a template or is it merely, you know, a flash in the pan? Yeah, no. And I, so I do think that if I were, you know, a planner in Hawaii, I would definitely start thinking about, well, how does this, you know, how does this shape what we want to do? How does this shape where we want to go for? Yes. And there's other things besides energy. Yes. Government spends money in medical, you know, research in lots of areas. Yes. And Hawaii is still a good test bed for renewals. Well, you know, our primary success so far has been in solar. Yeah. You know, there were many contenders a few years ago, but solar has emerged as the one that's politically most acceptable. People like solar. The solar industry has grown, although it's on hard times right now. And the question, you know, is so if you, if you want to find one, you know, canary in the coal mine here, one indicator on the success of our, you know, efforts to get to 100% renewables, solar and storage of solar during, you know, nighttime. Yeah. I mean, if I were, if I were appointed Secretary of Energy under the main sort of mandate from this new administration, I would say, look, you know, this is a kind of whack-a-mole program. We're working on every kind of cookie thing in the world. Let's focus our research on the fundamental issue of how do we fix the intermittency problem in the utility sector for renewables. Well, they've got the, you know, they know how to do the wind. They know how to do the solar. They haven't fixed the storage issue. So we don't really, we can start slashing away at everything else and maybe make a big push towards fundamental research into storage. To me, that's more valuable than carbon capture and storage. That's more valuable in a lot of things because it solves the fundamental problem of intermittency and makes the renewables which appear to be pretty competitive. Yeah, and it plays on known strengths already. It plays on, you know, known advances. Let's take a short recess, Lou. I'm going to come back and I would like to talk about, you know, how policy is going to change so that it affects industry in Hawaii and elsewhere, especially around the issue of the development of, is it a zero-sum game, the development of fossil fuel infrastructure versus, you know, the development of renewable infrastructure? Are we making a choice here and will that choice undermine, you know, the current momentum in terms of renewables? That's Lou Pulirisi. He's the president of the Energy Policy Research Foundation, an energy policy think-tack in Washington, DC. We're going to take a short break, come back, and talk some more about the Trump effect in energy. Hi, I'm Stacy Hayashi with the Think-Tack Hawaii show, Stacey to the Rescue, highlighting some of Hawaii's issues. You can catch it at Think-Tack Hawaii on Mondays at 11 a.m. Aloha, see you then. Hi, I'm Stan Energyman and I want you to be here every Friday. Noon! ThinkTackHawaii.com. Watch the show. Be there. I'll pin it a full weight. I'm Ethan Allen, host of likeable science here on Think-Tack Hawaii. Every Friday afternoon at 2 p.m., you'll have a chance to come and listen and learn from scientists around the world. Scientists who talk about their work in meaningful, easy-to-understand ways. They'll come to appreciate science as a wonderful way of thinking, a way of knowing about the world. You'll learn interesting facts, interesting ideas. You'll be stimulated to think more. Please come join us every Friday afternoon at 2 p.m. here on Think-Tack Hawaii for a likeable science with me, your host, Ethan Allen. We're back, we're live. I'm Jay Fiedeler on Think-Tack, and we're talking about energy in America with Lou Fugiarisi. He's the president of the NG Policy Research Foundation, EPRINC, in Washington, D.C. And we're talking about the Trump effect in energy on the national and possibly a local point of view. So the question I would pose to you is, you know, clearly, although he's not going to be able to get very far on coal, he does question climate change, and he does talk about, you know, returning some more emphasis to fossil fuels, including the pipeline and all that. And I agree with you that it's a fair chance that on day one, make that January 20th and 21st, he's going to, you know, do what he can to approve the pipeline. The keystone, isn't it? So the question is, if you put all your or more marbles on developing fossil fuel, do you undermine the, you know, the initiative around the country and in the states on developing renewables? Is it a zero-sum game? Can it coexist economically? What will happen? So I don't really think this is a zero-sum game in terms of oil and gas. I mean, there may be, first, if he goes forward and sort of restrains the regulatory state on, let's say, oil and gas development, we're likely to get, this is largely going to be private sector, it's going to be entirely private sector investment. And a lot of it is dealing with the Nimbian, not my backyard issues, getting the gas pipelines built, getting the oil pipelines built. And that would lift up U.S. production and oil and gas. The U.S. is into the open market now. We export oil, we export 3.5 B7A gas to Mexico. We export petroleum products. So the U.S. will look a little bit like a highly diversified petro state. I mean, we already are. We are a big feature in the world market. That is kind of, and the only aspect of that that affects the utilities sector, I think, would be to what extent does gas-fired electric generation, at least in the continental U.S., kind of edge out the pace of renewables? And I don't think we know the answer to that yet. But the states will have a lot to say about that. But cheap gas is going to continue to be a problem for coal and a problem for renewables. But as we talked about, so for infrastructure, there's a sort of public spending in infrastructure, let's say public utility spending of infrastructure, which is for wind largely in the U.S., is to build out the grid. So if I were designing this, I would say, okay, well, we have this highly valued traditional oil and gas resource base. Just turn it a little so that we can export it, you know, help raise income and wealth of the U.S. and it can be done in a very environmentally acceptable manner. Then, as we talked about earlier, I think the real issue is who's going to pay for things like building out the grid and who's going to pay for solving the intermittency problem? And are we going to then back off of some of these things which are viewed as very problematical in terms of cost and benefits, like heavy subsidies for electric cars? I wouldn't be surprised if you see the federal program for that start to fail. You know, one thing that strikes me, you talk about building out the grid and, you know, when you talk about oil and gas, it's a one-way street. In other words, the oil and gas is at the utility side of the line and they're sending out energy to, you know, to users. Yeah, to the existing grid. Yeah, it's existing. You don't have to do a lot in order to make that work. If you can get the fuel from a fossil fuel and if that's acceptable from a public policy point of view, you know, the grid doesn't require that much time or effort or money. But if you are doing renewables, that's a different story because then you have to do a lot of work on the grid. It's a two-way street. It's a distributed, you know, collective, shared kind of arrangement and you have to have energy flowing two ways and you have to put a lot of new technology in. And that's big money. And, you know, talking about energy infrastructure, looking for a place to spend big money, that would be very helpful assuming, you know, you wanted to build out renewables in this country. Question is, you see that as a possibility in this administration? That's a possibility. I'm almost positive what's going to happen there is you might see some interest in the government to cost share some of the stuff, but I suspect these guys have to pay for this tax program and this tax reform effort and they have to pay for the bridges and the roads and everything. So if I were trying to guess, I would say, well, you know, let's sweeten these deals up with the public utilities, but they should just get the goods. If it's such a great deal that the consumers pay for it. I mean, I think in the early stages, that's what's going to be said. Let the utility customers pay for it. Why should the government pay for this? That's going to be a debate. Now, Congress is going to have a lot to say about that. They're not necessarily going to roll over. They have constituencies and they're going to respond, but they're going to be in a position to make trade-offs. If I were to guess who the big losers are going to be right off the bat, I would think some of these exotic technologies, biofuels, I think biofuels have to be on the chopping block. They're not really that great for the environment. They're, you know, it's using food for fuel. People are just getting, people are kind of getting tired of the mandates. So I suspect we might see some reform in those areas and a real pullback. Well, what I get here is that he's going to cut regulation, particularly around the development of fossil fuel. He's going to want to spend less money in general. He isn't going to be particularly interested in building out a grid. He's going to leave a lot of stuff to the states. This is going to be sort of a defederalization coming forward. Yeah? I think that's actually a good analysis on how they're going to do it. And that means the states will have to pay, including state government, county government, and of course the utilities themselves, which is going to be costly to consumers, because if they want to build out renewables, they're going to have to, it's going to be on their dime. So that could change things in Hawaii, I think. Yeah. I mean, the Hawaiian people will have to decide what is the, do they want to, is there first a divergence between a low-cost option and the current non-pipe dream, you might say, 100% renewables, and then what, how are they going to fund this then? Yeah. So all that considered, Lou, all of that considered. I mean, you know, Trump's predilections and his statements so far about climate change, about reversing Obama's policies across the board, and spending money on infrastructure was not necessarily energy infrastructure. I wonder what advice you would give to the various players in Hawaii and elsewhere. What advice, for example, would you give to utility companies who are trying to cope in a, you know, a dynamic environment? What advice would you give to homeowners who are considering solar installations? What advice would you give to these entrepreneurs who are trying to develop new solar technologies and battery technology? The landscape is changing, so they have to be very akamai about keeping up. Yeah. And you are, in the end, of course, you need something which is relatively robust against the uncertainty, the political uncertainty, not just the market uncertainty, but the political uncertainty. And my, and I think in a political sense for your two senators and two congress, you know, members, they ought to focus their attention on where they think the high payoff is and make the pitch. You know, Hawaii does have a good, unique test bed for renewables. So if I were, if I were them, I wouldn't get too fixated on this 100% renewables. I would put most of my efforts into, I think a basic fundamental physics of solar and wind are solved. We sort of know how to make those machines and those receptacles. What we need to do then is, you know, if I were the research division of the University of Hawaii, I'd say, well, let's go make ourselves a test bed for battery storage. Let's sort of show that we can solve some of this problems. Put some of our smart people on this, go to DOE instead of asking for, you know, gazillion dollars on 40 different things. Let's focus on where the big payoff is going to be. That would be my advice. How about state government? How about state government, you know? State government in general, you don't hear why. It's had a problem maintaining focus on development of energy, including the legislature and the regulatory agencies. And I guess, you know, in the dynamic change that's going to happen that is happening, what advice would you give them? What should they be focusing on in an administration which is moving, say to the right, on energy in general? What should they be doing, thinking about what plans should they be making to, you know, move in whatever direction they think is appropriate? Well, the first thing is they should be very hard headed about how they spend money and what it means to electricity prices. I would really be tough on that because they may find themselves moving into an arena which is more or less determined on the market price of whatever commodities and renewable facilities they're going to have to use. And if they end up with a series of scenarios which are unrealistic, it could get quite expensive. So that would be the first thing I would ask. What is... You know, there's this dream world we have where Hillary won and, you know, everyone's going to go to school for free and they're not going to have to pay for electricity. Well, that world's over, okay? I mean, they may come back. They're hitting a wall of reality. Yeah, but that's over for four years. Yeah. And that's where I would... I'd put some, you know, some real break up around that problem and some realism on what's going to be happening. Yeah. I mean, there are people in the transition team who just as well get rid of EPA if they could. They can't and can't do that. I can tell you there are people. Well, you think that there will... I mean, it's an interesting point. We do have, to use the word infrastructure loosely, we have an infrastructure of people committed to climate change remediation and to, you know, dealing with renewables and advancing renewables in the country. You know, we probably have millions of people in that industry at one level or another, not just the guys who are selling the solar installations but the researchers and the community groups and you name it. I'm almost positive we're going to see cuts in climate research. Yeah, so question is, you know, will they be able to have the significant effect going forward in this administration? Do you think all things considered? I guess it's a kind of political question I'm asking. Yeah, sure. Or will they just be muzzled and frustrated? Well, latter is the most likely option, but... But, you know, once again, I haven't really thought this was hard to know to make these appointments. But I do think the enterprise around, I'll tell you a story, about three or four years ago I went out to the energy modeling forum in Stanford. And they had their big 25th anniversary. And they had people from around the world. And the first thing that I was stunned from almost every country in the world, they had great people, right? And they were all working on climate models. And I felt like, you guys should be maybe building bridges or doing something. I mean, there's so many of you guys working on this. And you're so smart and so much brain power. And that is going to be the big dilemma because we have a huge amount of brain power working on climate models and climate issues. And I think, at least in the early years, there's going to be very little interest in that. It's not going to go to zero. But there will be cuts, and they could be big. Oh, so exciting looking forward. I'm not sure I'm looking forward, but we'll be journalistically looking forward to see what happens. And to see what happens, you know, from your point of view also. Lou Pudirisi, president of Energy Policy Research Foundation, EPRINC, an energy policy think tank in Washington, D.C., joins us at this time and station, three o'clock on every Wednesday or every other Wednesday. Thank you so much, Lou. We'd really like to have this discussion. Thanks, James. Have a lot of fun.