 This is your host Guillermo Salvatier for Perspectives on Energy here on the Tech Tech of Hawaii. And thank you all for joining us. Again, I am the Director of International Services for HSI, the Health and Safety Institute. And our discussion today revolves around the Energy Information Administration at the US Government's website, EIA.gov. And we will be discussing their energy outlook that they published in March of 2023, it's a year ago. I am eager to see what they're going to do when they publish 2024. But I want to and I want to see how those projections vary from one year to the next because these go out to 2030, 2040, 2050. So definitely something to consider. This is information that's available for the general public and it's accessible at EIA.gov slash AEO. So that is on that site and you're welcome to look at it. I will go ahead and cover that today, give some opinions, important things to consider when we're discussing the, for example, the energy outlook. So let's go ahead and go into the next slide, if you will, please. All right, so what does the EIA do, right? And that's the Energy Information Administration and they would provide statistical analysis and it's an agency basically that allows them, it's not just power, but also they look at all forms of energy and they are, they work in conjunction with the Department of Energy, right? But here in this case, what they're concerned with is the statistical and analytical aspects of projecting trends for the, any aspect of the energy in this country, right? Their premier source for energy information and the important disclaimer they put that on that third bullet is by law, are data, analyses and forecasts are independent of approval by any other officer or employee of the U.S. government. So again, a lot of these like government websites or government organizations usually have appointed employees. So important thing to put as a disclaimer, I was wondering why they have to put that there to me and kind of now it alerts me to figure out, okay, so what's, what's some motivation behind some of these reports? So independent of approval, but I'm sure there's some influence. So, and we'll go into why that's in there and I don't want to cast doubt on what these administrations are published given under the current, current administration, right? But see the White House policies, but we'll get into more details there and I'll see where we're at and one of the things we're looking at. So again, this energy outlook, annual energy outlook for 2023 looks at the long-term trends of the United States. And of course, this ultimately affects the things that happen in Hawaii, specifically so far off and they're not connected to any other regions. In a lot of cases, for example, whatever happens in the, in the mainland does have an impact on what happens on the islands or some of the outward territories. So next slide. So focus on a narrative, right, in this case. So one of the things that they're, they're basically talking about it's what's new on this energy outlook, okay, they want to focus on a narrative, which I feel is, is basically the energy mix in this case is really changing from fossil fuels to renewables. Yes, that is the narrative that is the policy that is the motivator and driving force behind this current administration's change. However, it's kind of hard to see in this particular slug as the text is really, really tiny. And I don't know if that's on purpose or not. But yeah, you're going to see a lot of a lot of baseload generation being replaced by renewables. To me, that presents a problem because of the fact that it's going to have an impact on reliability, right? Of course, you look at the whole, the whole fine print right there, power demand is increasingly met by renewables throughout the projection period. The share of natural gas, coal and nuclear generation declines, okay, natural gas remains pretty steady, so does nuclear. But at the same time, nuclear power is, and I'm looking at the fine print here some more, nuclear power is looser, is outcompeted by renewable power, even in the low zero carbon technology. Of course, you're making a lot of assumptions here and I have a feeling that they're looking at large-scale nuclear facilities, the traditional pressurized water reactor stuff. And I think in this case, you know, they may not be taken into account the impact we're going to see with small modular reactors. And I think that's coming. So that's an important thing in that narrative. And I know that they focus on that. But they have three different cases with three different types of scenarios and a lot of them impact with the infrastructure, the administration infrastructure. Also the range of results are looking at whether they take into a high acceptance, low acceptance, they also look at the combination cases depending on how that is, how the infrastructure act has taken what impact it's had on this particular project. Next slide, please. So in this case, a lot of numbers, but one of the things you look at here is that they're definitely expecting a lot of growth. When it comes to oil and gas supply, they're looking at quite a few changes, but still quite some consumption, higher drilling costs relative to a reference case. And then whether it's a higher or low projection on the forecast, you're still going to have resource recoveries happening, right? 50% lower oil and gas resource recovery and 50% higher drilling cost, whereas a high, you're going to have 50% higher oil and gas resource recovery. So it all depends on how much on these projections they lean depending on the consumption of demand, right? So when they say also zero carbon technology on the electric power sector, and if you have, for example, a low uptake, it's about 40% reduction in cost by 2050, high, there's no reduction in cost. So ultimately really it's, I think we're getting to the point where this tells me is that we're getting to the point where we're approaching the renewables need. Every extra renewable we're putting in service is forcing us to back down much needed base low generation, which in itself, and I'll show in a graph later, how they're even showing you that, you know, curtailment is going to be a factor unless you change that with more dispatchable generation. Also with combinations, right? You're looking at different projections here and so many projected cases. So we'll be looking at that as well for the next slide, please. Okay. So the Inflation Reduction Act issues in focus, for example, that we're looking at no IRA case, a high uptake case and a low uptake case. We'll see that in some of the graphs and projections. So in the upper bound, the lower bound and that's the middle, I won't call it a middle bound, but a middle track, right? And we'll see some of that whatever it's like. And we'll look at some of those assumptions. Now, the IRA, the Inflation Reduction Act also has entered the Infrastructure Act, and that plays a role in how this took into effect. Next slide, please. A lot of incentives, right? Especially when it comes to those caveats. So some of these incentives, again, throw off the whole projection and throw off the cost in the case. I did notice a really, really heavy incentivizing of like some renewable solar. They kind of pulled away from wind. And the interesting thing with solar is that the majority of this, like, of this dispatchable base load is going to be replaced with this renewable solar, which really, all you can do is really curtail it, right? Which I'm wondering what's going to happen and when it comes to reliability, are they going to pair that with energy storage or are they going to rely on something else to actually be dispatchable? Are they banking on being able to back down and re-dispatch, dramatically re-dispatch natural gas fire generation? We shall see. And so next slide, please. So one of the things that are interesting here, right? For example, is that regardless of the scenario, you see CO2 emissions fall across all of those projection cases. Some more than others, but in the worst case, you're going to see a 20 or 30% reduction on some of those CO2 emissions, which is great news, right? By 2030 and 2050. But I think as we're trending forward, we're making these changes in our, particularly in our energy production. Now, the rest of the world may not be trending in the same direction. I mean, for every coal plant that we're shutting down in the U.S., we see maybe four or five new coal plants coming online in either the industrialized part of the world and then, of course, also in developing parts of the globe. So I'm not going to name which contents they are or what countries, but as we're shutting them down, other countries are, of course, putting them online, brand new carbon plants. So it's an issue right there. But again, in spite of that, right, hopefully we'll see a general downward trend in the carbon emissions. The other thing, renewable capacity grows in our regions in these 2023 cases looking at the future. But of course, they're saying here, supportive growth of installed battery capacity. I think that's optimistic at this time. I think they're overlooking the fact that batteries are really expensive. They're having trouble quantifying that cost. And they still haven't quite gone around that even at this point. So I think it's an optimistic projection. I'm not sure where they got a lot of those numbers. I try to find that on the actual report. And I had trouble seeing that. So in a lot of cases, they were hoping that the cost over time was reduced like based on the example of what happened to solar or happened to wind where the production cost went down or the capitalization cost for construction went down. So also, and that's what they're saying, technological advancements and much more a dry projected decrease in demand, slight energy intensity. So one of the things that I think they're assuming is that we're going to consume less power on our side, maybe at a residential level, but industrial as economic growth happens, that is that doesn't drive consumption up. So I'm curious to see what that will do with gas emission with the carbon emissions going forward. And the last bullet point here, the highlights is that basically says that the US remains a net exporter petroleum products and natural gas through 2050. Maybe we'll be consuming less of it. So we'll be able to export it. But that tells you it's going to be consumed in other parts of the world. That's right with an astronaut with the world net exporter of those products. I'm likely to be that way through 2050. Next slide, please. So on this graph, we're looking at, again, some good news in this case, depending on what projection you look at. If you have, you see the blue, kind of like the dark red, black and green, right? So if you have high economic growth, you're going to see a slight increase in carbon dioxide emissions in this country, starting at 2035 and going up slightly with 2050. If you compare 2030, right, and to 2005, we fell 25 or 38 below 2005 levels. So it is a definitely huge improvement by 2030. So I think it's great. But again, we've got to watch what happens with high economic growth when you're looking at 2035, where it begins to creep up again up to close to 80%, right, to where it was before. If there's no IRA, then it kind of stays flat. If there's, the reference right here is kind of below that. And then if you look at low economic growth, one, of course, has a certain decrease at that point, because naturally the way we're implementing these new renewable resources and also changing the way we consume our behaviors and our industrial needs and technology, that's going to inevitably change the way we create carbon emissions. So a lot of that really has to do with the fact that, you know, we'll become more efficient. Next slide, please. Okay, a little bit more on what happens with CO2 emissions that you can see here. There's a lot of focus on CO2 emissions and a lot of focus on where we're going to be trend-wise. Maybe I think that comes in a later slide. But as you can see here, the dominating force in this presentation, of course, carbon emissions. So that tells you a lot about what the narrative is regarding this administration and the reports and how that is probably influenced by the White House, right? So again, in this case, where I see CO2 emissions, again, general projections 2022 going forward, for the most part, a lot of them are, you see a reduction, right? And then high uptake is a little further in the reach reduction of 34 and 33 and 34 respectively. So again, really optimistic, I think, and this is pretty realistic in this case. But then again, a lot of that depends on how much we replace base load generation that's called with carbon, zero carbon generation. Like it'll be solar, by my opinion, I think it's going to end up being nuclear. The next slide, please. And we're talking about capacity. Oh, boy. And here's where that's a touchy subject, right? Renewable generating capacity grows. Of course, they're replacing coal with renewables. Just great. The problem is they're going to need to support that with installed battery capacity, which I think is not realistic. I think more than likely it's going to be more of a nuclear thing where they're going to have to react with the variability or likely they're going to be doing a lot of curtailments. We'll see quite a bit of that. Next slide, please. Looking at the different scenarios here, right? More scenarios, total install, generating capacity, more than doubles across most scenarios. And yes, that's kind of what you're going to look like. But 2022, history and 2050, here are what's right. So 2022 is a very top horizontal bar and everything else, but beneath that are different scenarios, right? When you're looking at that. In most cases, you're going to see a lot more solar and that is their projection. And then, of course, some standalone storage. What they don't tell you is that the nuclear, they're only counting one type of nuclear. So they're not really even looking at small modular reactors, playing a role in this. We should see what happens. My concern here is that you're going to see a lot of baseload generation being changed by highly variable and problematic solar in this case. So we'll see what happens. A lot of duct curves are going to happen in this case and then middle of the day value issues. Next slide, please. And again, some more projections. This is looking at how power demand will be met by renewables. So sure. And then again, the whole trend here is most of us going to be solar, right? In this case, because it's going to get cheaper. And that's going to be the thing that they're going to tend to install throughout the country as they replace the typical whole fire generation, which is baseload. My concern is that it's baseload that they're replacing with variable renewable resource. Now, if you look at natural gas over there at the top right, that seems to decline a little bit, but then it kind of goes up again and past 2030 between 2035. And that's consistent with the expected economic growth that they might project at that point. So again, you may need, for example, natural gas to be able to manage, for example, the variability of some of this like wind and solar that will be on the system. If you also know that 2030, wind points tend to stay flat. They're not going to add any more new wind capacity at that point. And there's a couple of good reasons for that. Next slide, please. Solar and wind generation, that would generate the majority of power in the U.S., which again, it's great, but it's a little concerning because you're noticing in blue here how you're replacing natural gas, of course, is declining. And with high uptake, you do low uptake. You're going to see natural gas playing a bigger role, whereas solar is going to play an outside role between 2020 and 2050. Concerning for me in the sense that they're trying to get into, for example, it's starting to eat away at a base load generation and you're relying mostly on natural gas generation to be able to absorb a lot of that variability. That's going to present a problem, especially when you get to the graphs on the high uptake where you're seeing a lot less generation that's fired by the gas, which is dispatchable. What I foresee is a lot of perhaps curtailing some of these solar side outputs, we'll see. But again, they're making no mention here that nuclear really is that conventional large-scale nuclear solar. I mean, nuclear sites and not the SMRs that are dispatchable. Next slide, please. And here we go. This is an example of what happens with intermittent renewables. And they admit it here. They're not shy from the fact that they, and they embrace the fact that more intermittent renewables lead to more curtailment and use of the battery storage. So they're betting a lot on battery storage where the technology is not even there yet. So again, really optimistic, really, really best case. I'm not going to say it's unicorns and rainbows, but I have my doubts in some respects when it comes to batteries being that predominant support system for the renewable variability. I think you're going to see if this falls short and we don't have SMRs or a lot of natural gas in place, you're going to see a lot more curtailments like you do on that low zero carbon cost case on 2050 on the graph on the far right. That dark gray image there at the top is going to be curtailments. And that's how they're going to manage that load versus excess generation of that particular event. Next slide, please. So tech advances, right? And they're hoping that's going to drive a decrease in demand side energy intensity. So yes, I definitely see more efficiency and technology changing and how that's driven. My concern here is that transportation is going maybe electric vehicles, but I'm seeing a lot of manufacturers are getting away from that and they're getting more towards maybe hydrogen or a different type of source. Toyota, for example, decided to completely abandon the whole EV push whereas others have changed the way they're looking at it. So there may be an EV component out there. I think in a lot of cases EVs will become part of the energy storage system in most residential areas. I think that would be ideal, but you're not seeing a lot of drivers rushing to buy electric vehicles. In fact, you're seeing some of the rental car markets starting to dump a lot of these EVs. Perch, for example, has done quite a bit of that. And some of these EVs are being sold way, way, way under market as they were the year before. Also, these projections you're looking at on slide 17, you're looking at, sorry, slide 17, you're looking at projections, for example, of industrial load. Whether one way or another, that economic growth is going to drive a great deal of consumption. So that's a big deal. That's a concern in some cases because industrial load really has a bigger impact on supply, transportation. A lot of that could be electric, but you could also be looking at different types of combustible fuels. Residential and commercial are not going to change your whole life in this case. And a lot of that, for example, not very residential consumption is not really very sensitive to change the technology. A very small scale, but industrial is going to be interesting because you may actually, it's not really becoming more efficient, but rather you're going to have a lot more industry and industrial manufacturing and processes coming back to the U.S. over the next 20, 30 years. Next slide. So energy in Ten City, right? So we're looking at, is it going to be a decline in that residential? Yes, residential for sure. I can definitely see a noticeable decline in how we consume power in the household. Perhaps we're going to be a lot more efficient. Perhaps we're going to be prosumers because maybe we're installing energy storage at home at a residential scale, or perhaps we're going to be using a different type of energy efficient cooling or heat. Same thing with commercial. As the projection are seen, pretty narrow bands going over so it's not going to be too severe compared to the others. But on the next slide, however, we go to slide 19, that light duty vehicle fuel economy is going to improve. So one of the things we're looking at is perhaps the way they consume fuel. In this case, high price of oil, low price of oil, and the market share of electric light duty vehicles. So you're going to be seeing quite a few of them as well, especially if the price is higher, you're going to be seeing a lot more EVs in the road. Price of oil is lower. You will be seeing, of course, naturally a lot more, a lot fewer vehicles on the road. Next slide, please. Incentives, again, it's another projection of how, for example, incentives help for the sale of EVs. That is changing. Right now, I'm kind of concerned again. This was back in 2023, 2024, a lot of different than Lucid and a lot of other companies, even Rivian, is having trouble staying afloat. Right now, even Tesla, for example, has been reducing, dropping their prices to the point that even the used car market, of course, is way lower than the new car market. And of course, a lot of that, these incentives have to do, for example, with the federal tax credit, right, where you can only get them on the new cars and that use. So these projections, okay, they're affecting how many people buy market share. But again, you know, the saturation past 2030, the market pretty much saturates at between 50 and 20%, doesn't go beyond that. It's something important to consider. All right, next slide, 21. And next, exporter of petroleum, which is, again, tells you that right there, that means somebody else in the world is going to be consuming all that petroleum and all that fossil fuel, right? So in all cases, right, we're going to become, still remain the net exporter of fossil fuels throughout the near and far future, right? So many of barrels per day, projections, it's still going to be significant throughout the world, right in this case. And that is something that we got to consider as we made these decisions and policy decisions, right? Again, with liquefying natural gas, again, that's going to be popular in the rest of the world, especially as we compete with Russia. Problem is with that is that there was a pipeline, whereas here we're shipping that in ocean-going vessels, which is not that economic compared to others. So that is all I have for today. I think one of the things I want to look at next is how LNG and drive versus press natural gas, liquid natural gas is going to impact the markets. One of the things that I think I really want to present coming up next is when they issue the next release. You'll see this one was next slide, please, on the last slide. And you're going to see how that one, for example, has, we're pretty much due for the 2024 AEO. And I'm curious to see how those projections may have changed or maybe how the narrative changed. So again, definitely a lot of information on these sites. I really encourage you all to take a look and go to the EIA.gov slash AEO and the energy outlook. And that'll be a great thing to understand. All right, thank you again. And join me again soon in the next episode. Have a great day. And feel free to make comments and like and subscribe. And I make comments and I'll do my best to respond to them as soon as I can. Thank you.