 Good afternoon, everyone. My name is Bill Burns. I'm the president of the Carnegie Endowment for International Peace, and it really is a great pleasure to welcome all of you here today, and especially to introduce our keynote speaker and my friend and former Tuxteen. Over the past year and a half, I have discovered that there are many differences between life in government and life in the think tank, but there are also some important similarities. One of them is the peril of prognostication. If I had a dollar for every time I made an erroneous prediction during my diplomatic career, Warren Buffett would be calling me right now to sign the giving pledge. The hard truth is that for all the data we have about today's world, we're still pretty poor at predicting the world of tomorrow. One study, which I made short of banned at the State Department, showed that experts are only marginally better at predicting political outcomes than undergraduates. And last week's Brexit vote is just the latest and most vivid reminder of our collective predictive limitations. Few issues have humbled policymakers and analysts alike more than the future price of oil or the future of energy markets, and we've struggled, I think, to assess the effects of price disruptions and just as importantly to prepare for their consequences. But the best predictor of future behavior is not always past behavior. We can and we must explore alternative scenarios and think hard about their implications. This is precisely what today's event is all about. Two years into an unforeseen plunge in the global price of oil, we're getting a better sense of the economic, geopolitical, environmental challenges and opportunities in front of us. A significant new ingredient in this complicated landscape is the Paris Climate Agreement each last December, which is not only an historic agreement, but also a significant new market force. Tackling climate challenges is no longer synonymous with higher prices and slower growth. In fact, as the Oil Market Futures Report argues, tackling climate change is far more likely to lead to lower oil prices and higher economic growth. I cannot think of a better person to help us think through the implications of this new energy landscape than the very person charged with leading the State Department's energy diplomacy effort. Almost his experience in the private sector, Congress and the State Department has made him an indispensable partner on a wide range of issues. He led missions to a number of major countries to reduce significantly Iranian oil inputs at the height of the sanctions regime. He led efforts to ensure European energy security in the aftermath of the Ukraine crisis. He's led the integration of renewable and clean energy sources in our own hemisphere. And just this past week, after many years of tireless diplomacy, almost helped secure an agreement between Israel and Turkey on to normalize their relations. Almost as a skilled entrepreneurial and resourceful public servant as I've ever met over the course of my career. I'm delighted that he's agreed to join us today. And so I ask that all of you join me in a very warm welcome. Thank you. Thank you, Bill. I think it's extremely humbling not only to be here but to be introduced by you is a humbling experience that I think for anyone who worked in the State Department and I envy all who work at Carnegie under your leadership. We miss you at the State Department. I think more importantly the country misses you. But we are all grateful for all the great things that you've done in your career. And again, thank you for those warm, very warm comments. I want to start with saying a simple truth that I believe where we are in the world is a country when it relates to energy. I think it's important not only to understand the reality of the market, but the perceptions of the market are just as important. And when you interlink perceptions and reality, that's what makes for foreign policy that is a critical aspect. And that is the United States is a superpower when it comes to energy. We're once, we then weren't. And today we are not only arising, but we are the superpower in energy. And that's a big word and it's a big term. And the reason I think it's important to state it is because of what it means not only to us or to a market, but because that is how so many countries around the world view us today. They see us through that lens. But the question becomes, what does it mean to be a superpower in energy? And I'll get to that in a minute. This has been a transformational time. And I want to take just the last few years, so last five to seven years, and see what kind of transformation we have gone through. 2011 or 2010, the oil prices were hovering at around $100 a barrel. In fact, in the next several years post that, including all the way to 2014, we would have very well paid people and banks across the world declare $100 to be the new floor for oil prices for the future. And the question was not whether we're not, whether or not we will go below 100, but how quickly we would reach 150. At the same time, the U.S. production was at five and a half million barrels a day of crude oil. We were at the time imposing sanctions that Bill just mentioned on Iran. Libya was producing in 2011 1.3 million barrels per day. Saudi Arabia's sovereign wealth fund and international reserves were climbing at a rate of almost 20% per year. We were an importer of LNG and growing as a largest gas importer in the world. Solar and wind technologies were significantly less competitive with traditional energy sources. Let's fast forward. Just five years. Oil today is at 47, and that's after we've almost doubled the price from its low five months ago. Our production peaked last year at 9.6 million barrels a day. It's today just shy of nine. For context, we added in the last few years more than Kuwait or UAE produced in total. Our delta of what we added would put us on the list of one of the top oil producers in the world, just the delta. While sanctions on Iranian oil have ended, sanctions against Russia are now in place. Libya only produces about 200,000 barrels a day, and Saudi Arabia's sovereign wealth fund declined by over 15% last year and will decline more this year. We are now officially an exporter of LNG from the continental lower 48. We've already exported to Brazil, Argentina, Portugal, Dubai, Kuwait. Not the story any of us would have predicted in 2011. And global renewable energy markets are expanding at a record pace. Tom Friedman one wrote, bring on $200 oil. That was conceived and perceived of how we were going to get investment in renewable energy. Back in 2014, when we hovered at when we average $100 a barrel, in the United States, we had a saw investment of $38 billion in renewable energy. In 2015, when we were in the middle of this big decline in oil prices, we saw almost $45 billion in renewable energy investment. And now that we have the tax credits extended for five years and have the certainty of more than one year extensions, we can see according to Bloomberg, new energy finance, almost $70 billion of new investment into renewable energy, and globally at $330 billion. This is all during a massive decline of oil prices. So clearly, the dynamics of the markets have changed completely. Now, the question becomes, what does this all mean? And what are the lessons that we have to learn? So the first lesson that I learned is what Bill alluded to earlier. Be careful listening to prognostication on oil prices. In fact, run the other way. And if you get any analysis of it, because everything I just said, none of it was predicted in 2010 or 2011, five years ago, as what the five-year arc was. In preparing documents for the transition for President Obama coming into power, they were writing that gas imports would not only continue to increase, but they would become exponential increases where we would need to use diplomacy to attract natural gas resources. Today, as I said, we're exporting. And when people think about the gas export, the oil exports have declined as a result, our production has declined as a result of the price decline. But when it comes to natural gas, we haven't seen a decline in production. In fact, now that exports are starting, even with low prices, we're continuing to grow. And this margin is not only about the shale gas revolution. The resources that the United States has in oil and gas are vast. Look at what's happening in Alaska, where some of the increases in production of gas are new. We saw the story in Alaska has been a decline in oil production and exports. But now we're seeing increases in Alaska. And EIA estimates that at Prudhoe Bay, the nation's 10th largest gas field, while the oil has declined, the production has risen 3 trillion cubic feet. That is equal to the domestic gas consumption of either Germany, the UK, or Canada, and 14% of current U.S. gas consumption. That's its resource that is yet to be tapped for exports and can, as infrastructure and changes around the geographic changes, could lead that area to significantly export gas to Asia. Now here's another significant difference. Just a few years ago, Qatar was the single, really the single player in LNG by comparison to anyone else. They controlled the LNG export market around the world. By 2020, the United States will be almost equal to Qatar in exports of LNG. And Australia, not an often mentioned player in LNG in the past, will surpass both and become the largest LNG exporter in the world. These all have major implications because it means that if you go to the gulf, to the Persian Gulf, or you go to Asia, the conversation around energy surrounds, well, what are you, the United States, going to do? Every action we're taking is seen through that prism. How many articles have been written in the gulf among intellectual magazines about what is the covenant between the United States and the gulf? Now, I don't subscribe to this point of view. I think it is flatly false. We provide natural resources. You provide security and diplomacy. Now that that has been broken because you don't need our energy, what does that mean about the United States' commitment to the region? The easiest answer I usually have is have you seen Secretary of State's travel schedule recently, and you can conclude what, if we have moved away from the Middle East, quite the opposite. It's not energy-based, but it does mean that it changes the nature of our relationship. We have gone from a consumer equal to now a competitor, but not a competitor in an aggressive way, not a competitor in a negative sense of the word, but really a competitor as we are partners in the energy sector. Here's the next area of where the change has been so dramatic. That's on renewable energy integration. I believe that Washington, D.C., is one of the last places on earth that still looks at the words renewable energy as a mutually exclusive to everything else in energy, and it's a political tool of brown versus green. One has to compete with the other, and you say the renewable energy you either hear, that's terrible. It's against oil or gas, or that's great. We're going to undermine everything else. The reality is that when you talk about $45 billion of investment a year in renewable energy is not because of ideology. These investments are not ideological investments. These are because they make money, and at the end of the day the debate about renewable energy needs to move away from the 1990s and early 2000s into a new phase. We're going towards technological advancements and renewable energy that have reduced the costs so dramatically that they are becoming the energy future. It's not going to happen overnight, and we can't pretend that they are going to happen overnight. Natural gas can serve as that transition fuel into a renewable energy world, but look at where this is really making a difference. UAE, a country that relies throughout its history on oil exports for its largest part of its revenues, they have made over the last several years a commitment to renewable energy, fighting to host the international organization IRENA, the International Renewable Energy Agency, creating Mazdar, renewable energy city, and putting enormous amount of resources. And if you listen to the leadership that say publicly, we cannot have a future that is only on oil-based. It has to rely on renewable energy. And when oil prices declined, the result in UAE, the action that was taken, was removing the fossil fuel subsidies, understanding that this is the time to take advantage of a new energy future. So I don't believe that we are simply, as some would suggest, in another curve of decline oil prices will lead to a lack of investment, which will then lead to a shortage of oil, which will then lead to increasing prices, and the world will go back to what it was before the decline. The same as the 1980s, the same as 1998 when we had $10 a barrel. I don't believe that we are in the same cycle. I believe that fundamental changes have happened in the energy sector that have changed it forever. We just don't know exactly how it's going to play out. One factor is the rise of the United States. No longer a country, the rise of the United States as an energy producer, not a country where you have a single point of leadership to call. Nobody to go to an OPIC meeting even if we wanted to. We have over 4,000 producers. So no central figure can control production. That means that the market becomes the swing producer for oil. The market, the democratization of the oil market is subject to what price it will be at controlling production. That's a big change. The second is the renewable energy change and efficiency. And here is where I get to why I think we are a superpower and energy. It is not only because we have increased production of oil and gas. It's because of oil and gas and because we're the leader in renewables, in solar and in wind and in geothermal and in efficiency standards and in investments in R&D, in innovation. And in any way you look at the word energy, we are a leader. And the world is looking to us for that leadership. You expect around the world when you ask the question what are the states in the United States that are the leaders in renewable energy? Say California. Some say Washington state because they think the politics of the state mean translate into renewable energy. You say Texas. But it's true. If you look at the wind energy coming online in Texas, it ain't about the politics. It's about the business side. That's why Texas is a leader. So that's why when you see that the twin engines for renewable energy, Texas and the UAE, that's the new world that we are going to. The reason that I think Paris was such a success was not only because of the tireless efforts from the president of the United States and the secretary of state, but a recognition worldwide that we're entering into a new era. That we cannot simply stick to the old paradigms on energy of energy versus climate all now together. It's all combined. There's a recognition worldwide that energy, that energy policy is climate policy and vice versa, and therefore it will take diplomatic efforts to address it on the defensive side, on the aggressive side. We still have energy being used in pockets of the world as a tool, as a weapon. If you look at Europe and how Russia deals with Eastern Europe on the supply of gas or in our own hemisphere in the Caribbean and Central America, where Petrocaribe has been able to be used as a tool, as a lever for political purposes. But what's changed in the Caribbean and in Central America? The same thing that I just described in the Middle East. Caribbean states have access to 11 months of sun, wind, some cases geothermal, and the proximity to the U.S. gas market, where if you look at the size and scale of islands, they can, that it can access it. It changes the game. The innovation piece that I discussed before in the United States leads to what was completely impossible, gas exports to the Caribbean, to today be possible, is possible to some islands, and by the end of the decade to almost all. That is the change that every country around the world recognizes. They can diversify their supplies, they can see investment grow, and the United States is where they're turning to time and again for the support across that value chain. So I think as we discuss today, in this conference here in this day today, what the future of the market is, I have no idea what the price of oil will be next year. I know it probably won't be what everybody tells me it's going to be. So I try to make other plans, but I think it doesn't matter anymore. I think what matters is the extent to which we can continue to invest across the value chain of energy in renewables, but also in the fossil side, so that we can truly grow both our domestic economy, allow other countries to grow as well, and make sure that the basic rule of thumb and economics, you cannot grow an economy without access to affordable and reliable sources of energy. That part of the equation is removed because the use of technology, the use of innovation, and support from the United States and the international community coming together will solve that part of the problem. And I think we'll be able to take energy out increasingly of the geopolitics as far as manipulation of energy by making it more diverse across the planet. That will lead us to a better, easier foreign policy, fewer headaches, and a lot more support and interconnection and integration worldwide. Thank you very much. I appreciate it. Good afternoon. My name is David Livingston. I'm an associate in the energy and climate program here at the Carnegie Endowment. Almost has been kind enough and gracious enough to offer to answer a few questions before he has to leave. We're going to go around very quickly. Please state your name, please state your affiliation. Make sure your question is one sentence or less. Thank you very much. Good luck. Let's go. Who has one? Yes, we've got one over there. I'll take two more as well. We'll take them in a round of three. So we've got one question over there. Are there any other questions? Let's start with that. Let's go. Hey, Aaron Hurdis, Keter Communications. What do you think the foreign policy implications are of battery prices and solar prices and other clean energy prices dropping much more rapidly than expected? I think that the next big innovation that will be the game changer is going to be exactly described, the battery and storage capacity. Once I think we're, the question is no longer if but when and that I don't know, but it changes the entire dynamic because of how widespread we can make these changes. When you have a small country and a small economy that can now rely on storage, we're not only going to change their future, we're changing the nature of energy markets because utility will no longer be the main supplier but rather the backup supplier. And when Elon Musk made that announcement last year, I happened to be in Germany meeting with the CEO of the largest utility. And as that announcement was being made and he said, you don't understand what happened today, just means my company is now on a clock. It will cease to exist as we know it today. I don't know what it will look like anymore as a utility, but it will, we're now in the, it's now about time when we will stop and how ahead of the game we can get. So I think that's the next big changer. It changes foreign policy entirely because of the nature of dependency. Eastern European countries will be able to suddenly use renewable energy in addition to diversification of gas resources as their independence from control by other countries, bring down costs, etc. So I think it will have major implications just in different ways and forms. In some cases diversity, in some cases economic independence, island states will be able to change their entire dynamic. Do we have one more question? Yes, right up here. I'm a tricky energy analyst from Iran and I have a question about the LNG sector. As you mentioned in your presentation, US is going to produce as Qatar by 2022. And you know, Australia has a huge investment in LNG. Russia is planning to increase its share from 5% to 15% by YAML project and other countries has own project. Is it, from your point of view, is it beneficial for US to export LNG to Europe or Australia, such Japanese, you know, we can see oversupply in the LNG market and I think the price goes down. And is it beneficial for US to be more export and invest in LNG sector or not? Well, I think the price of LNG has already dropped. If you look at the prices a year and a half, two years ago, in Asia we were 17 to 20 dollars, in Europe we were at 11 to 14 dollars. Today we're in Asia at around 7, 8 dollars, and in Europe we're seeing prices as low as 4.5 dollars. So it doesn't have much room to drop below 4.5 dollars, and here in the US we're at 2 dollars and 60 cents or so, 2 dollars and 70 cents. So it's extremely cheap. But I think what you're seeing is just taking advantage of new technology. We are, there's, pipelines are just not as advisable anymore. I've called it before a Catholic marriage of sorts. You build a multi-billion dollar piece of infrastructure that connects it to a U and the supplier and consumer are now connected to each other. But if you take that element out and you make it flexible and you have, I can buy LNG from anyone. And I think that the by LNG terminals no longer being fixed assets on shore that cost billions of dollars themselves. And we move them to floating LNG terminals that cost two to four hundred million dollars. We've gotten to a point today that gas, gas traders and shipping companies are willing to give a country the LNG terminal, the floating LNG terminal for free. All they have to do is sign a contract for five years or seven years of gas. That's how cheap the infrastructure side of it is. But the flip side is the flexibility for the consumer. There's a reason why when Lithuania put in an LNG terminal, a floating LNG terminal, they called it one, the independence. And second, it was the first country to ever renegotiate a contract with Gazprom mid contract, mid term. It was the first but not the last. That is what this technological innovation has changed. And I think as we see this continue, you're going to see more. So I don't know oversupply. Again, that goes to prognostic as to how much gas is going to come into the market. If you tell me how much demand for LNG there will be in China and Korea and Japan and India, I'll answer your question as to whether or not we're going to have an oversupply or not. But that's hard to do. I think the dynamics of who's selling to where will change because with Australia coming on with this over a hundred BCM of gas, with its proximity to Japan and Korea, as take or pay contracts start expiring, you're going to see some of that, the nature of who's supplying whom will change as well. That again, I'm not here to represent the energy industry. I'm here as far as you as government. I think that's all a great thing. It doesn't matter if it's American gas or not. A flexible gas market is good for global national security. It's good for economic security and is a great transition fuel to renewable energy future. Almost. It's been hardly a quiet news cycle these past couple of weeks, and I think you've probably got some fires to put out. So we appreciate you joining us today. Thank you very much. You're always welcome back at the Carnegie Endowment. Thank you. Take care.