 Okay, we're live. I'm Jerry Feidell. Here we are at 3 p.m., 3 o'clock rock on a given Wednesday, and everybody knows that energy is Wednesday, Wednesday energy. Hawaii is the state of clean energy, and we like to cover that as much as possible. And so we have Jeffrey M. Kissell, an old friend, a neighbor for a long time, and the CEO of Hawaii Gas for a long time, and now in what? Washington, D.C., with an energy policy think tank called EPRINC, dot o-r-g, talking about national, international energy policy. Welcome, welcome, and we're honored to have you on the show, Jeff. Thanks, Chase. Really nice to be with you again, in spirit, if not present exactly in Hawaii. I know that. So tell us about EPRINC and your life there. EPRINC is an organization that dates back to the Second World War. It is non-political, non-partisan, and non-profit. It's supported by all parts of the industry. And basically what we do is we do research on energy policy, look at the different alternatives, and we try to help shape the national debate on energy alternatives and energy strategy. And we do this by bringing data and facts to the table as opposed to a political argument. Oh, that's terrific. This is a great continuation of what you were doing in Hawaii with Hawaii Gas, no? It's a logical extension of that, and I'm really pleased to be able to kind of expand the reach to outside of Hawaii. But really the Hawaii model is something that the United States and the world as a whole have got to look at seriously and consider adoptable, because Hawaii, ever since I got there in the 1960s, has been a forward-thinking and really innovative leader in all kinds of public policy issues, starting from our Hawaii-prepaid healthcare to the fact that we were the first state to actually ratify the Equal Rights Amendment from the Constitution, even though it didn't pass, and a lot of other things. Energy policy, I think, is important now. We are a respite from high prices of oil, but we need to make some intelligent decisions on where we go from here. Yes, we do indeed. So what kind of issues are you working at, Ed Prink? What sort of papers are you writing? What sort of discussions are you organizing? Where's your head at these days? Well, we just looked at cafe standards, which is the fleet average mileage for automobiles. And we looked at the impact that that has had over the last three decades, and looked forward for another three decades to see what we might do to continue to minimize greenhouse gas emissions and improve the usage of fuel in transportation, not necessarily in terms of miles per gallon, but in terms of other things that might be additive, because at certain points you reach the law of diminishing returns. You can't squeeze more juice out of the lemon once you've squeezed a bunch of it out. And we have a couple of slides that I brought with me today that kind of demonstrate that. What we did was we looked at what happened with respect to greenhouse gas, and we looked at what happened with respect to fuel savings when we went from an average of 10 miles per gallon. We're looking now, Jeff, at a slide called, A Comment on Environmental Regulation. How much should we pay for the last 10 yards? Is that the one you're referring to? Precisely. And I'd like to use that as the basis for our discussion in Hawaii. You can see the savings were very, very substantial when we went from 10 or 12 miles to the gallon to 40 miles to the gallon. When we cut greenhouse gas emissions by three quarters, we improved the savings for the individual motorists by thousands of dollars. Now, if we were to go from 40 to 80 miles to the gallon, you look at the savings and the law of diminishing returns is really applying and clamping down on our ability to get much more out of just raising the mileage standards. We need to take a look at alternatives to driving and how we can actually utilize fuel more efficiently, reduce greenhouse gas emissions, as well as improve mileage per gallon. Hawaii's renewable energy standards, generating nearly all of our power from solar, wind and other renewable sources, will go a long way to helping us go forward in that endeavor in the national debate, not just in Hawaii. Well, you know, it strikes me that there's a big lesson in that curve you just described, that after a while, we can't continue to focus simply on cafe standards. We have to think of other things. And one of them, the first one that comes to mind, in terms of fuel, to my mind anyway, is electric cars. So what do we learn from that chart of these electric cars? And what kinds of thinking and think tag conclusions have you and Eprink reached about the value of electric cars nationally and in Hawaii? We're writing a series of articles now on converting Hawaii's electric power generation from a petroleum and coal-based system to a renewable-based alternative. It's what Governor Ige in a very, very forward-thinking mode has proposed for the state. And I think it should be supported. Again, the law of diminishing returns has to be observed. But we got a long way to go before we start to run into that barrier. Think about it in these terms. Electric cars are one solution. There are other solutions. Get out of the car. Improve public transportation. Move your place of work closer to your place of residence. All of these factors need to be considered. And you've got to do it honestly. You've got to look at the total cost of generating electricity today for an electric car, in terms of greenhouse gas emissions, as well as dollars. Think about this. Hawaii takes three barrels of oil, almost four, to generate one barrel of electricity equivalent. Today, putting an electric car on the road actually costs Hawaii more in terms of greenhouse gas emissions and fuel consumption than using a standard economy vehicle. That doesn't mean we shouldn't do it. It means that we need to get prepared to reduce the cost of generating electricity and generate it from clean renewable sources. Well, we're involved right now in the World Conservation Congress, which is kind of related to the COP 21 conference a few months ago in Paris. It's all about sustainability. It's all about climate change. It's all about conserving, protecting the environment. And so my view, and I like your view, is that if you want to move to non-fossil fuel in order to conserve and protect the environment, you have to have new infrastructure, new ideas. I mean, you talk about multimodal transportation, it doesn't come free. Somebody has to design a new world around multimodal transportation, and that costs money. Do people understand that it costs money? It costs money, and you have to make choices. If you don't maintain your roads, no matter how efficient your vehicles are, they're going to be destroyed by the roads. So you've got to decide what pieces of infrastructure you need to invest in and when to time those investments. If Hawaii were to convert today, our report and our research shows, if Hawaii were to convert today suddenly to all renewable energy, you're talking about billions and billions of dollars that would be diverted from other infrastructure projects which may actually help Hawaii reduce its energy consumption and achieve its goals more quickly. It's time and speed versus money. It's planning, it's strategic planning. And a think tank like yours, an energy policy think tank like yours, could really lend some great lessons and great planning points for us. And I wonder how you see all of that, because I totally agree that if you do it all right now today, it's going to cost so much money that you won't be able to do anything else. And your list of priorities will be upside down. But if you do it over time and in a strategic way, then you can manage it or hopefully by virtue of the plan itself you can manage. But question, how do you do that planning? And I'm interested in your thoughts about who does it. And the methodology, the people, how do you get it to stick? How do you get the public buy-in on that plan? You know, these public discussions are very important. And I'm happy when people, regardless of their point of view, offer their information in the public forum so it can be critically analyzed. We'll crunch the numbers and we'll produce data. Other organizations are very much like us. They produce good data and crunch the numbers and they can fact check a lot of what people who are really good public speakers and are really good and authoritative people representing their own special interests say. But you've got to have that public discussion and public discourse. Well, you know, one of the things that strikes me about public discussion, you know, in Hawaii is a special place, of course. But, you know, we learned basic, you know, truths about humanity here is that when the public comes into the discussion, the public is uninformed. They start out uninformed. In fact, they've been informed by the six o'clock news, which doesn't tell them anything of consequence. And so the problem is that if you have a public discussion and you bring people in on the choices, first you have to educate them. And, you know, I mean, you groom them, if you know, if you will, to participate in a valid public discussion. How do you do that? Well, the first thing you've got to be is honest. And you've got to lay out all the facts, the good and the bad. My colors on rail are flying from the mast. I advocated rail from the very beginning still do. The problem we had in Hawaii was that the people who advocated rail, just like if you recall, I was involved in healthcare, the people who were advocates of that were not fully honest with the constituents that they served. They didn't talk about the full cost. They talked about the part cost. That's what's going on right now in some areas of renewable energy. The renewable energy you get on your roof is not free. You pay $30, $60, $90,000, depending upon the size of your house, to put your solar energy converters on your roof. It is not free to you, and it's not free to the community. However, it doesn't mean it's bad. And the fact that it's not free is something we shouldn't be ashamed to discuss. Rail is not free. And we talked about its true cost. We wouldn't have had to fall back to these schemes for enhancing its value, shortening its length, and doing all this stuff when we got into trouble. I believe that advocating from a non-partisan, non-political position is really good for the community. That's why I'm involved myself in this work. That's great. And by the way, this discussion is so timely, topical, really. These are the issues that are being discussed. In fact, I just finished the morning paper and it led us to the editor on both of the points you raised about the health of the solar industry and about misrepresentations made to the public at the time rail was first adopted. We must be talking out of the same book, Jeff. Anyway, let's take a short break. We'll come back and we'll find out how you really feel. We'll be right back. Hey, Jeff Kissel. Aloha. I'm Kaui Lucas, host of Hawaii is my mainland every Friday here on Think Tech Hawaii. I also have a blog of the same day at kauilukas.com where you can see all of my past shows. Join me this Friday and every Friday at 3 p.m. Aloha. Hello, this is Martin Despeng. I want to get you excited about my new show, which is called Humane Architecture for Hawaii and Beyond. And it's going to be on Think Tech Hawaii from downtown Honolulu on Tuesday afternoon's 5 p.m. And we're going to talk about to make architecture more inclusive on the islands, which is one of the definitions of humane, which is being tolerant of many people, of nature, of many other influences. So we're going to have some great guests, like today's guest, for example, my collaborator, David Rockwood, who is the author of the awesome manifestation of humane architecture in the background. So see you on Tuesdays 5 p.m. I look forward to. We're back. We're live. We're in Skype with Jeff Kissel, Jeffrey M. Kissel, and he is a fellow at Eprink.org, which is an energy policy think tank in Washington, D.C. He's had years and years of thinking, writing, planning around energy as the CEO of Hawaii guests. And we are delighted to have him on the show to talk about energy policy and some of the work he's doing at Eprink in Washington. So, Jeff, where does this all go on rail? Right now, I don't know. I guess you'd say we're a tipping point. I have felt we were a tipping point for a long time. Then I'm not sure what's going to happen here. I don't think people really know. Everybody's got an opinion, but does anybody really know what's going to happen? Where do the economic forces, where do the energy policy forces take us on the question of finishing rail or not in Honolulu? You've got to look at the cost-benefit analysis critically. One of the benefits that has not been examined is the ability to get people to slam the door on their car and leave it shut. That is enormous. Now, a lot of people can make a lot of different arguments about ridership and convenience and all that stuff, but unless you actually do a deep dive into the statistics and see what a one, two, three, four, 10 percent reduction in passenger vehicle miles travel does, you won't have an ability to make a rational argument. Right now, shortening the rail line is going to reduce, we know this, it's going to reduce ridership. The question that should be examined, and I'm not telling you I know the answer, I just know the question, is what would happen if instead of shortening the rail line, now that we're in for all these costs, we actually extended the rail line and made it so that we could get a lot of people on that rail and let it be accessible and usable for the bulk of the population. That question needs to be looked at. Yeah, it's a question of money, a question of tax policy, it's a question of the economy, and whether the economy can support an increase in real property tax or gross excise tax. But one thing that came up, and I really am interested in your thought about it, is that this is money, it's just a question of money, and why should, there must be an answer one way or the other, why should we have to pay for rail at the same time as we build it? Sort of on a cash basis. Why don't we do it on a credit basis? Why don't we borrow the money and pay it off over time? Is there a rush here and spending it right away? Can't we do bonds? And Richard Borreca raised that in his column this week. Why can't we do bonds? There are people in the legislature actually lining up to suggest that, and that may be a solution to doing rail all the way as planned and finishing it, and then paying it off over time. What do you think? I think there are paths to success there. One of them that has to be looked at is doing bonds and raising fuel taxes, fossil fuel taxes, in order to pay those bonds all. Because the goal, as stated by the governor, and as advocated by most responsible leaders in the wise business community, is to reduce the dependence on petroleum and related fuels. You do that by bringing in alternatives. It is a perfectly legitimate use of the tax system to tax those fuels, and then use that money to bring in the alternatives. And that's a return on investment that really is worthy of understanding. You know, when I went to law school, my criminal law professor, his name was Gerhardt O. W. Muller. I still remember his middle initials, how do you like that? We're talking about, I don't want to say, 55 years ago. But in those days, he said, when the legislature actually adopts a bill that it cares about, it should say at the bottom right next to the effective day provision, it should say, we mean it this time. We really mean it. And if it really, really means it, it ought to say that twice. And so the problem is, like with the barrel tax, you know about the barrel tax, that was an idea where you taxed the thing you wanted to dis-incentivize, and you gave the money to something you want to do incentivize. It's got a beauty about it, a balance. It's a poetry in motion to do that. Unfortunately, what happened is the barrel tax got spirited off. The receipts got applied by the legislature. There's something that was not contemplated, that was not part of that formula, and it was not part of the spirit of the bill. And you worry about that happening again. We can make a really stiff barrel tax and collect a lot of money that should go to developing, you know, the things we want, multimodal transportation, for example, and then find that the next political cycle takes that money away from us and applies it to something else that it feels is more important. Where is my professor now? What do you think? Well, I, of course, read his treatise on the use of the rack. So he does take back a ways. I know this guy. If, you know, the financial system in America is a wonderful system, and you can do things that will enforce discipline if you use that system correctly. By that, I mean if you issue a bond and require that the bond be funded by a petroleum tax. I'm reluctant to use the barrel tax because that's kind of a misunderstood effort. I think so. If you indenture that tax to pay off that bond, face closed, it's done. And we know for sure, and we have lots of statistics nationally and internationally, that when oil hits the equivalent of $5 a gallon for gasoline, consumption starts to fall off and people start to move into fuel efficient vehicles. So as you raise that tax to the point where you are incentivizing people not only to get out of their cars and use the alternative transportation, but also generating sufficient revenue to pay off your bonds, you're achieving the goal. I'm not telling you this will work in Hawaii. I'm telling you it's worthy of study. Well, we're in a transition for sure, and one of the issues is solar. We are having bankruptcies and failures of the big solar companies. Solar is in a bit of a tizzy, it seems like to me. And I think we have to find innovative solutions to either keep on going with solar or to modify the whole model about solar, including self, what do they call it, self-supply in a way so that it doesn't burden either the utility or the people in the community that don't have solar. Has your think tank been thinking about that? Because Hawaii really needs to hear some wisdom on that one. Hawaii made a mistake. And that is not that they went for solar or didn't go for solar, they moved too quickly in one direction. That happens occasionally when there's a crisis. And in my opinion, $110 to $140 oil is a crisis. And when you're raising the cost of an airplane ticket by $400 and $500 from the West Coast, you're entitled to make a mistake. What many, many states have, Texas is one example. They don't have net metering. They don't have the system where you can sell back all the electricity you make to the electric company. They modify that. And Hawaii decided for perfectly legitimate reasons at the time that they wanted to go net metering. And then all of a sudden, they cut off net metering. The mistake was not to go there and the mistake was not to cut it off. It was to do both too quickly. And we... We're on a Skype call. That's Jeffrey M. Kissel. He's a distinguished fellow at Eprink, which is a think tank, an energy policy think tank in Washington, D.C. Jeff most recently in Hawaii was part of the exchange of the connector, which is no longer connecting and exchanging. And before that, he was the CEO for some years of Hawaii Gas, where he learned a lot about energy policy, of course. He'd been associated with the issue for decades since the 60s when he first arrived in Hawaii. Very akamai about energy in Hawaii. And we have him here and hopefully we'll have him again to give us the views of Eprink and some of the think tank fellows at Eprink. Insofar as national thinking and think tank thinking can help us determine good policy in Hawaii. So we've had him on for this show. I'm delighted that we did. We unfortunately lost him to the wiles of Skype. But we'll have him back. Give us a week or two. We'll have Jeff Kissel back to tell us more, lots more about what they are doing, what they are thinking, and what the country is doing and thinking in areas that are relevant to our development and our policy here in Hawaii. Thanks for watching. This is Jay Fidel. I look forward to seeing you again soon. For example, in half an hour on Hawaii, the State of Clean Energy with the Hawaii Energy Policy Forum, where we'll be having further discussions about energy policy and events and developments in Hawaii.