 So can I ask you to take your seats please so we can get started so for those of you that don't know me. I'm Frank Barastro I'm a senior vice president here at the Center Used to run the energy program, but now I am humbled and honored to be the James Lester chair here And I got to tell you this is one of those days that you just so look forward to Because the panel that we've assembled here this morning is just fantastic It spans six administrations Democrat and Republican house and Senate White House FERC. I mean, this is where the energy policy has been for the last 40 years And even as we talked about yesterday afternoon, we had Dan Jurgen here And we were talking about exports and the studies when we look at exports when you go back to in the 1970s We were in a situation where we had growing demand and we thought we were losing production We were running out and now we are in a decidedly different place the more so on the gas side a little less So on the oil side still a little bit uncertain. We still have the largest nuclear fleet in the world We have the Saudi Arabia resources of coal. We have renewables that are growing Efficiency has become the fifth fuel. We are in a new place with a new reality But in large part we're tied to policies that were developed in the 70s for good reasons And we need to revisit those and see how we are going forward. And now we also have the challenge of climate change There's a couple of administrative items I need to go through before we get started and the first is that you're all part of an experiment today So typically when we do these sessions, we try to do kind of Audience and speakers and we really wanted this to be participatory because I got to tell you I'm not sure when we get a group like this back again And we want to avail ourselves of that opportunity and there's folks in the audience that I want to draw into this Conversation so don't be surprised if you get called on But as a result of that we have this open square I will apologize to folks that are watching on webcasts. This is not the ideal situation We do this typically when we have the oil market study group or the gas market study group It's a smaller 25 to 40 person group. We've never done it this large before So we'll see how that goes Second administrative note is that you'll notice from the invite. We had a much larger panel We lost two in the last 24 hours. So a Heather Zykel who is now an affiliate with us at CSIS she was deputy assistant to the president She worked on climate and energy issues Senator Biden gave her a phone call and invited her to an event She was trying to de-conflict, but that was kind of an easy choice. So he gave her a pass on that and Rebecca Rosen who I'm sorry Vice President Biden, I'm sorry Okay, I'm gonna hear from that one Thank you very much we call him vice president So Rebecca Rosen was also supposed to join us Rebecca is vice president for Devin now But she was the lead energy analyst and advisor on the Romney campaign She texted me last night at 10 30 and thought she was going into labor So her doctor has advised her to stay home Which I think is probably you know we have a lot of excitement at this place But that's probably one thing we don't need at this point and she doesn't need so that would be just a wise decision But having said that we still can make up with this panel the discussion that we need to cover this topic You have in your materials Extended bios on all these speakers So I won't go into that I would want to say and I'm just so appreciative senator and Charlie and Linda Kevin Joe for you joining us. I Would urge you to Participate and pose questions and raise issues We're gonna do this in kind of a question-answer format that we can engage folks We don't want it to be one-sided I will give everybody on the panel the opportunity to say what they want to say if we don't draw it on the question I'm smart enough to do that Senator Bennett Johnson as you know worked on the Senate for many many years was chairman of the energy and natural resources committee senator from Louisiana has a Wide berth of experience on a lot of the legislation that was done in the 80s and 90s and was around 1970s Charlie Curtis. I first met when he was at FERC and I was at DOE. I was just a child at the time Charlie was chairman of FERC. He was the deputy secretary and under secretary of energy He was the founding partner of Van S. Feldman and a longtime friend Linda stunts. I have known forever from when she was counsel on the house side She also ran the policy office at DOE and was deputy secretary of energy She was also an advisor to the Romney campaign Joe Aldi. I actually knew by reputation, but didn't know well until 2009 So we worked together on the Obama campaign and one day early in 2009 He called me up and he said we need to do a download on information Because there was this rumor that I was going to the NSC and so we had lunch together. It was an exciting lunch But in fact, we never made the the handoff For a variety of reasons. Joe is now at Harvard, but he was a special assistant to the president He did energy and climate change at the National Economic Council He's a fellow at RFF and we're also trying to bring him on board here at CSIS Kevin Colovar is runs the washroom office for Dow He's the vice president for Dow, but Kevin was an assistant secretary at the Department of Energy So we've spanned between deputy secretaries, assistant secretary, White House, Senate, House, FERC This is the group that you need to discuss these issues with so Thank you all for coming and thank you all for participating and we'll try this grand experiment and see how it goes My leadoff question is is to this side of the table So I'm gonna draw back to the 70s before I go forward We we call this kind of it was should be looking back looking forward looking forward looking back However, you want to look at it? But in terms of perspective, it's really important to see how we got here and where we're going from this point on So what I'd like to do is to start with with Linda Charlie and Senator I'll let you go first But this whole notion of where we are now of all the things that you've seen over the last 35 years is this The newest iteration on a constantly changing landscape, or is this a new defining moment? Where are we in terms of the new energy reality that we're facing? Well, I I guess it's I'm the oldest person in this room. I may be ought to start out by saying that it's it's both new and different and And And the same old same old it's the same old same old in the sense that back in our day We had very very controversial issues sitting next Charlie Curtis who was Chief counsel to energy and commerce when we had the natural gas policy act now Many of you are not old enough to remember how controversial that was. I mean that was almost as controversial as Obamacare I mean it was Would and and the house had a Bill that they had passed which was regulation forever and the Senate had Deregulation and we had to come together in a conference committee and work it out now in those days We could and after some 12 months in a conference committee We found common ground and It was common ground that worked perhaps the most successful bill I've ever had anything to do with because it Deregulated gas increased supply and the price went down Now when I look at the situation today it is highly controversial global warming I'm you got you've got the deniers on one side and you've got the I'd call the regulators those who really think that by 2050 you can be 83 percent Free of greenhouse gases I mean the gap between those two is so great That it challenges their grasp of reality I Think we're in a brand-new paradigm as far as energy is concerned Natural gas is surely as good as they say probably better and when I talk about Energy I do so from a perspective of a lot of humility Because I've seen in 40 years of watching energy that there are surprises that come That nobody predicted Such a shale gas that changes the paradigm that said I think it is clearly true that natural gas and shale oil Have changed the paradigm give this country a chance to take off industrially and and and have a period of Prosperity such that we haven't had in a long time provided that the regulators those who want to do away with Fracking all together as opposed to just regulating it and those who want to make it difficult To extract this kind of energy or burn this kind of energy It is going to be a great conflict that's going to Transpire between now in the next few years When you look at the gap I Mentioned 83% the United States is actually signed on to the United Nations protocol that Puts us On a goal to reduce greenhouse gases by 83% by 2050 now being one who accepts the The diagnosis of Global warming I mean, I think you've got to be sort of anti-science if you don't accept that diagnosis, but the cure if that is the cure 83% off of greenhouse gases is totally unattainable and Is simply not going to happen and if you think it might happen look at the energy information administration predictions of What the future holds and energy? they predict for example that the GDP of the world will triple that greenhouse gases will increase by 56% by 2040 that Use of coal will go up and not down and When we look at that gap long for those days When Charlie Curtis was there and could find a way through this model it's a It's not going to be easy to find a real solution to these problems but Suffice it to say the outlook has never been brighter in terms of What we might do if we manage it correctly and is somewhat frightening if we do not when Frank first Conceived of this program. It sounded Dixonians like a Christmas Carol The ghost of Christmas past and Christmas present Christmas, so I'm the ghost of Christmas past. I thank you I started I was a treasury in the SEC and I went to the Hill In 71 to work on rewriting the securities laws young kipper war hit in 73 in the world changed Prices of oil quadrupled in the world market and in the US Double-digit inflation double-digit unemployment and The term was introduced into our lexicon of stagflation So we had a stagton economy and inflation at the same time it was a hell of a strain on the political system In the yam kippur war that provoked a Public response which took the form of legislation and The most important component at the time was to address What was in place as the remnants of the Economic Stabilization Act which for those who are students of history know that Under the Nixon administration there had been in effect a wage and price freeze that was throughout the economy and There were remaining in effect Price controls on oil and petroleum product beef and health services so the Congress's decision was whether to Allow price controls to expire on oil In the face of quadrupling of the world oil price That was a much harder political decision given the economic profile that I just outlined So oil was under price controls which contributed significantly to a growing and increasing demand for oil in the late 60s and early 70s because oil was cheap and its use was Inefficient in both industry commercial and residential context And gasoline was probably the signature cheap fuel of the day Natural gas. I mean gasoline was as I recall cheaper than water In those days and on a gallon basis So it not surprisingly put a tremendous demand burden on supply Interestingly enough as well natural gas had never been purposefully By legislative or executive decision regulated to price It resulted from a Supreme Court case that interpreted the Natural Gas Act of 1938 as Applying to well-haired sales for resale and interstate commerce So again the Congress was faced with Removing price controls in a circumstance where That would involve enormous wealth transfers from the northern part tier of the United States where natural gas was used for space heating and to the southern tier of the United States where natural gas was produced and Transfitted and those were tremendously difficult political challenges to our political system We developed something called energy policy in the 70s. Nobody knew what energy policy was in 1973 Most of the policies were reflected in acts that were written in the 30s Federal Power Act of 35 the Natural Gas Act of 38 the Regulation of interstate oil pipelines also in the 30s They were one-off policies That were not enacted with any sort of cohesive hole in mind The Environmental Protection Agency was wholly independent from any other aspect of the US government and Offshore leasing policy was administered by the Department of Interior with independent policy judgments being made again without any relationship to other Policies that were emerging in the 70s. So the first thing I wanted to point out is The energy policy that was first enunciated Was a derivative policy deriving from our overarching economic national security and environmental goals as such it those as we would recognize they're often in conflict and As such energy policy was itself Difficult to represent in any coherent form or comprehensive form yet, it was attempted by Jim Schlesinger in the April of 1977 With I brought along the national energy plan And there's a lot of interesting things in that because the basic decision at that time is we're running out of oil and gas We had to basically shift demand off of oil and gas develop renewables synthetic fuels and switch more of our electricity production on to nuclear and coal Global warming was not a concept or climate change was not a concept that entered into policy in the 1970s So as we look where we are today We had a Congress in the 70s That was divided between those who said just do it and those who said do this So there were the those who approached the energy crisis or problems that confronted the nation as letting the markets function efficiently and effectively to Produce outcomes in the best interests economic interests of the country or regulatory Structures that would produce policy outcomes that were dictated by those regulatory structures I think over time what's changed and I think this is fundamental change is That the reliance on markets I think is now deeply ingrained in our political psyche I think the And this is going to play out whether we're going to let markets, I think principles function in the decisions on whether to permit the export of oil into the global market and whether to permit exports or increasing exports of Natural gas into the global market The that those two decisions are not laydowns but my personal belief is that the principle of Relying on market outcomes as opposed to regulatory structures will prevail in in those context We have now we did succeed in deregulating the price of oil largely through a mechanism started in 75 the energy production conservation act and has been Suggested the natural gas policy act of 78 both very significant given the financial Stakes involved in the corresponding emotions involved that was a Tremendous Proudful accomplishment I think of our democratic system and I credit Bennett Johnson's leadership very very much for Allowing that result to happen So now we're in a situation where we seem to embraced The efficiency and outcome of markets rather than regulatory requirements Having an experience range that has kind of demonstrated the better outcomes that they produce and the efficiencies that they managed to accomplish and We are in our wrestles instead of switching As we were in the 70s on to more nuclear and more coal we seem to be switching off of nuclear and off of coal and Evolving a market that may be more single-fuel dependent on natural gas The nuclear resource in this country is severely strained in its Ability to continue operating under existing licenses because the Natural gas prices and supply are just on an economic dispatch basis are killing nuclear pricing and Coal of course is The as a dominant Source of greenhouse gas carbon dioxide Is under severe stress? by the environmental protection agency in 111 D and Any other manifestation of action taken to address global climate change? The those are fundamental differences That I think are at play the reliance on market outcomes except in the case of environmental regulation and An environmental regulation that is biasing toward a single-fuel dependence on natural gas in electricity production and a increasing Burden on existing coal and nuclear investments and whether that is at what the implications of that over time might be Will be the great challenge of the present in the future Thank You Frank thank you for having me it's a great honor and it's terrific to see so many familiar faces around the room As I have through much of my career in answering your question Frank I benefit from from what these gentlemen to my left have said already so With humility of course not With the humility that Bennett talked about having having been part of You know having seen Congress passed legislation in 1981 that forbade the burning of natural gas to to generate electricity Because it was thought that we were running out having worked on legislation involving the synthetic fuels corporation Which which manifested itself in a lot of taxpayer dollars spent to gasify coal in North Dakota? I do think and I look particularly at young people in this room I do think that things have changed for this country in a very important and fundamental way We have gone from pop from a situation of scarcity and a mentality of scarcity and policies to deal with scarcity To to an abundance that I don't think was imagined or imaginable not that long ago I saw an analyst last week who said that the combined oil and gas market in US and Canada is Experiencing the biggest change in a century because of shale oil and gas. I thought well, that's kind of a And then when you think about it, it is both Canada in the US And it's important to think about both together because although we focus on things like Eagle Bird and Bakken and Utica in the US there there are shale resources in Canada Which haven't even been talked or talked about a lot yet because Transportation and demand and so forth if you think about that together and what that means It is changing everything here. It is affecting refining. Is it affecting alternative fuels ethanol? It is affecting greenhouse gas emissions may I remind you putting aside the current current issues on the proposed rule EIA's base case looking out 40 years does not have US greenhouse gas emissions returning to 2005 levels That's that's not including the rule I mean that's pretty phenomenal when you think about it and you think about whether any other country in the world can be there I wonder It's affecting manufacturing. I know Kevin will speak to this We're having a rebirth of manufacturing that I think was again unimagined as we lost jobs and manufacturing capability Abroad it's because of low price inputs Again just a factoid because I like these things Eagle Bird itself by 2020 could produce 2 million barrels of oil a day Which is about what the North slope produced at its peak When you think about that that is what we are dealing with and in my career We haven't had something like that and I do think Those who follow and hopefully come come to these forums and learn it's going to be up to you And what is a more much more difficult political environment to figure out? How do we deal with that in an environmental responsible way and I say that because to me It is only in an abundance that really enables you to look at Sustainability as hard as we are looking at it and perhaps as appropriately as we are looking at it when when we are dealing with Stagflation and the kinds of things that Charlie talked about in the 70s in the 80s in the night Even into the 80s Where we thought we were running out of natural gas and we thought we were running out of oil You know those concerns and you can see it a play out around the world if you go to India or China When there is an issue of adequacy When you are denuding hills because you don't have energy It is very difficult to implement and talk about sustainable environmental policy. These are linked So I think we have opportunities now to do things not only in an energy standpoint but to link sustainability in a new way and so But as again as Bennett said that that could be squandered that can be squandered with inappropriate regulatory Policies and finding the right balance looking forward in an era of abundance I think it's going to be a great challenge and so I do think there's a big change back Can I ask you to turn off your microphones and then we'll run them back this way. Okay, great So not surprisingly that this is a great segue I'm going to turn to this side of the table and it's not age division here But for Joe and Kevin so when you look at this if you came out of the 60s and 70s when a lot of this energy Policy was formulated. It was on the basis of resource scarcity and growing demand and now we flipped it So the question I would pose for you all is is it part of its generational clearly? But are you encumbered by the policies of the past or do you look at this in a whole new light? Taking what we've learned from the past and the assumptions that were made And one of the things that and Charlie reminds me at this all the time But but some of the assumptions that were conventional wisdom, you know in the 1970s and 80s turned out to be wrong And so as we go forward we need to be mindful of the fact that this snapshot We should enjoy the moment, but we shouldn't get stuck in the moment and figure out where you need to be So where would you take this next? I mean so when you when you formulate? Policies for the next administration or order campaigns coming up or companies doing investing now What does that look like given the reality today tell them let me start with you and I'll work our way back Thanks, Frank Appreciate the chance to be here and seeing everybody You know, I think as we I appreciate all the points that were made before I don't disagree with them I think my sense of it would be to focus on the fact that It's it's a marathon not a sprint so we should be looking We think we need to get away from a view of hey We were Setting policies based on scarcity and now we should set them based on abundance We were wrong on scarcity right dramatically wrong We have import facilities that dot these coasts that that do no business because we were wrong And we can come up with other examples. So I think the sense that we have is We see we see abundance and in several areas certainly in the shale oil area shale gas in associated liquids But that doesn't mean that we we bet the farm on one policy approach and so so As we look at this right now It's our sense that this is the most appropriate time for the Congress and the administration to be looking at comprehensive energy policy and of course that's not happening in Congress today and and as a result the administration is moving forward Unilaterally and they're doing it through Regulatory mechanisms and frankly who can blame them right they came in this administration came in with stated policy objectives They're pursuing there was those policy objectives And and frankly they're doing it in a vacuum because there is not any kind of corresponding view From Capitol Hill now we see Rifle-shot bits of legislation that come out That seek to address, you know a pipeline issue or a permitting issue or something But frankly we should kind of be embarrassed. So for the last three years two years really we've had a Fairly vitriolic fight over the LNG export permitting process At the end of the day, there's very little substantive difference between Between where some of the chemical players are and where the producers are right? It's a matter of degree as opposed to you know one end of the spectrum being don't frack at all right natural gas is bad Too let's just leave it in the ground But realistically, I mean just take for example the 2005 Energy Policy Act right 18 or an inch and a half right of Statute that took four years To develop I mean this LNG expert discussion would not take half a page in That provision of law and and certainly we can point back to other provisions of law before that so We have shale abundance at least in the near term I'm happy to get into this if anybody has questions Dow has some concerns about mid-term Abundance just because of all the demands that are coming online from export from Carbon regulations and we probably have long-term abundance. We certainly have near mid and long-term abundance in shale oil We have coal the capacity to To burn coal for Safe reliable electricity in a much cleaner fashion than we've ever had We have new nuclear designs on the plans that no one really expects will ever be put into the ground And on the renewable side and and dows a big player on the renewable side We have we have a curve an efficiency curve on Solar cells that are starting to mirror the processor speed Increases that we were seeing in the 90s and 2000 right that they're starting to double every 18 months And there there are some pretty astonishing if you consider that that could happen for the next 10 years There's some pretty astonishing changes that take place in the country. So we could walk through all of these but Fundamentally we look at this and say this is really the time when we should be Considering all of these issues in one comprehensive fashion Everyone in this room understands how hard that's going to be to do with the current challenges We have in Congress, but energy legislation will never ripen if it's never introduced in the first place and so We would like to see that happen perhaps that could be That could be part of the platforms of one or both of the campaigns that we start to swing into action Post November and we'd be big fans to see in that First rank. Thanks for hosting this this event. This is a lot of fun. I I think Your question on should past policies and cumbers policies going forward Let me let me change that into a positive question, which is do the past policies and cumbers going forward And I think they had the past policies have Impacts along two really important dimensions one just given the long lifetimes of most energy capital The investments decisions that people have made in the past reflecting the past policy frameworks are going to have an impact Going forward and and so I think that's important when we think about what kind of potential changes to policies might have to those who have made those those investments and had Expectations on returns on those investments when they made them and I think the second important dimension is the fact that We are implementing energy policy with old laws today Because we aren't able to get a comprehensive energy bill or even a serious debate of a comprehensive energy bill in Congress We're seeing the use of of old laws In some cases applying laws for purposes that probably were not Considered when Congress first passed them and probably a prime example of that is thinking about how to use the cleaner act to address greenhouse gas emissions You know I when I think about sort of energy policy going forward You know I tend to think about sort of the three primary objectives that I think almost anybody regardless of political affiliation has when it comes to energy policy Which is we like to have our energy cheap we like to have it reliable and accessible and we like to have it clean Now it's important and I think the distinctions across parties and across regions depends on how we define some of those terms Right, so I would say in the Obama administration clean a very big important component of clean is dealing with climate change Whereas I would have said the previous administration the Bush administration clean was much more getting fine particulates Out of out of energy and there was more focus on on that dimension But I think the thing is is that in general everyone says we should have these three they're gonna define them a little differently They're gonna apply sort of different weights, but I think the Fundamental change in the energy system in America over the past decade or so Allows us to place less weight on accessible energy because we are no longer reliant as much on being able to bring in energy The fact that we are Self-sufficient on gas the fact that we've seen since 2005 a halving of our net imports of petroleum When we see forecast of the US eventually becoming The largest producer of oil in the world and debates on whether or not the US could become self-sufficient and liquids It allows one to put a little bit less weight on I think the accessibility dimension and allows one to focus on those dimensions Where there's been less attention and I think that's one reason why you see the Obama administration more focused now and trying to take on The challenge of climate change You know I think back to some of the the modeling analysis and economic analysis in the 1990s in the debate about climate change policy And if you sort of got into the weeds of the models you learned that basically one Factor in these models dominated everything else and that was the supply of natural gas if you thought you could supply a lot of natural gas Cheaply you would find that reductions and CO2 emissions in the US energy system would be pretty cheap You saw some people say the estimated cost of Kyoto back in the 1990s would be relatively low There were others who said we just don't have the gas and that's going to put an incredible burden on coal and as a result We're going to see really really high costs associated with complying with something like like Kyoto I think when you look at the world today with the dramatic increase in natural gas that we have in the US I mean we've seen coal share decline by about a fifth in the power sector And that's not because of EPA regulations. They're EPA regulations on a number of fronts coming down the road But that's because of natural gas pushing that out. We've also seen some push in renewables as a function of both of state policies and I think of some of the Federal support especially in the recovery act But of course the game changer there was cheap natural gas and that allows one to then think how can we push further? I think on the climate dimension going forward at least over the interim not not looking out to what is Admittedly as a senator noted a very ambitious goal for 2050 But how do you think about the policy going forward over the next decade or two? And I think that's important because as we think about energy policy a lot of times when we've Considered energy policy in the US has been very much focused on the domestic scene And I think we're have a growing appreciation now for the international dimensions when we think about climate Certainly more so now that we think we might become an exporter of crude And certainly on the issue associated with with natural gas and and LNG exports So I think there's a growing need for us to think about The international dimensions of our energy policy It's certainly issue that comes up more and more in our bilateral talks and some of our trade talks And certainly it's important in the climate dimension when we think about going forward and not just here's what we're doing to reduce emissions Here's the commitment we've made and here are the actions that we have in law and in regulation to implement those Hopefully that then starts to leverage Actions and efforts in other countries so that you get this kind of multipliers not just hear the cost of what the US is Undertaking to reduce our emissions of CO2 and hear the reductions in CO2 We may see in the power sector, but also here's how we're able to secure a more robust In a deeper agreement in terms of emission reductions from Europe Japan but most more importantly from the large emerging economies where we see and forecast the large growth and emissions So I think I think going forward There's certainly going to be a need for change to reflect. I think the changing Energy system dynamic. I think that should reflect in how we place our weights on these objectives That I think in general people share at least at the abstract level But it's important to also take into account what our role in energy policy should be vis-a-vis other countries in the world Sure I'd be interested My colleagues are my right and left of as I have participated in comprehensive energy Legislation or attempts thereof and I suspect we share a distinct lack of affection for that type of activity and So I'd my question is Whether an attempt at comprehensive legislation Would Simply by undertaking it In the political environment within which we now live Where Bennett Johnson's of the world do not exist in our certainly in in Double digits in our Senate or our house Do we think that we could really articulate something that would be better than What exists today and and whether that something would in fact reconcile the executive in the Congress in a Unified policy it's hard to imagine it being accomplished in anything less than two Congress's and In the interim that will Potentially freeze investment and de-bottle necking the infrastructure On that is has implications for both oil and gas production in the United States and a lot of other Investment and economic activity So I'd like to turn the question back to the last last two speakers Joe and that that What do you really think would be accomplished by comprehensive legislation if it were attempted? Well, let me just put it be the finer point on that because there's a little bit of mind-melt going on not surprisingly So this whole notion if you were to if you formulate a policy back in 2000 will go back to 2006 So he came off peak oil, right? So whatever candidate was running in 2007 oil went to $35 2008 it was 2007 it was 35 2006 2007 65 dollars a barrel by 2008 that summer before the convention was 140 right and moving north the notion that we were clearly running out New technologies needed to be on the fore push resource development and research Promote climate change because you had Copenhagen coming up the world so dramatically changed just between 2008 and 2010 Right. I'd so to Charlie's point. I mean, I'm wondering with the amount of Change that has occurred just in the last five years that had we decided to move away from the policies of the past Wholesale and try to put in place a new policy based on a snapshot How long lived that policy would have been? Just because the the technology and the price and on the natural gas piece it just strikes me that You know everyone talks about frack We've been fracking for 60 years right and horizontal drilling the extended length and the amount of the cracks has changed But it was $12 gas price that kicked this off and access to private lands where you could lease that acreage I think the oil story is a little bit different in the fact that now we can get into multiple horizons at the same time, right? But they're not uniform the shale gas is source rock, so we've got a lot of it Thousands of trillion cubic feet which from an industry perspective is like this is infinity. This is 8,000 trillion cubic feet so close When you start looking at the geopolitical ramifications and Bob's joined us from the State Department Bob's Cuda There's this notion of how energy used to be viewed as a liability and now it's an asset and then some people would even take it a step further That should we use it as leverage as opposed to the free market system and the United States being a reliable supplier to bring incremental barrels or MCFs of gas to the world It's a difficult time and then when you add climate and economics around this It's a difficult time to try to put comprehensive legislation. So I would echo Charlie's comments and and look for Advice guidance insight from anyone and we'll start that way and work on the Look, I don't disagree that it's incredibly hard. I think the challenges that the legislative challenges Are obvious to anybody that's been paying attention to the way Washington works or doesn't work lately But that can't be an excuse to do nothing you know to hit a couple of the specific points With respect to infrastructure today and Infrastructure inadequacy and aging infrastructure are some of the biggest impediments to increased efficiency whether it's you know product flow Or electricity usage and the like I do agree with some of the earlier comments that the market is penetrated To an extent where I don't think that a debate in Congress today about comprehensive energy legislation Would disincentivize companies from going out and looking to to invest in the bottleneck I think the market is going to incentivize companies to go out there and put new pipelines on the ground in particular That's what we're seeing on the electricity side to the to the extent that there's a disincentive It's a patchwork of laws that are on the books today That make exceptionally difficult cross-state transmission line of any significant size So that to me is an ongoing impediment to infrastructure development and debottleneck And you know I think the third point I would make on that is everybody understands right we talked about it Linda mentioned it in particular that we have this new paradigm we should be thinking about And energy surpluses going forward and how do we utilize that and I think the question we need to ask ourselves is Should we look at that in kind of rifle shot bits of legislation or regulation or not at all Or to the extent that people say we should be moving away from this scarcity mentality into another mentality How do you do that? Well I think the way you do that is you get the major policy leaders in the country to start discussing it And seeing where those lines of agreement can be And then the last point I would make on this is while it is less true than it was in the 1990s and a decade ago It is still the case that energy positions break very often along regional lines and not political lines And so this is the optimist to me but perhaps this is an issue where we can overcome partisan divides And find common ground because of the views that are brought by different regions, producing regions, consuming regions of the country So Charlie while you worked on energy bills that actually passed I got to work on one that did not So I recognize that it is very hard. I think energy policy feels to me more partisan than it did perhaps when I was naively an outsider to the process before Or maybe I was just optimistic when you see an energy bill pass in 05 and 07 you think oh we'll pass 1 and 09 But there are really important regional differences as Kevin noted I think part of it is that for us to finally see action people have to realize that staying in their trenches and fighting for the status quo eventually will be untenable And we could say look we have a clean air act it's not ideal for dealing with climate change it's a better way to go There's a way to go that will be more cost effective, better for the environment, better for investment incentives, better for innovation It didn't happen with Congress it became very clear it was not going to happen with Congress and so the President was using his existing authorities You know after the oil spill of 2010 we realized that the OCS Lands Act and the Oil Pollution Act could probably be reformed to make us more effective in how we manage offshore drilling and ensure the safety of offshore drilling Again a bill didn't pass Interior had some authorities where they could do some things At the end of the day it would have been better to have a new law that actually would for example enshrine the new division of effort among the divisions or the new offices within Interior To address some of the questions about safety rules address some of the questions about liability for spills etc I think it would have been better to have that We didn't get that I agree Charlie I think you're even optimistic to say just the next two Congresses it's not obvious to me when things will change But I think eventually what we will realize is that if you continue to use laws that were written some several decades ago to apply to the challenges we face today I think at some point people will realize there's got to be a better way forward and I just don't know how long it sort of takes the body politic to get there You know I would have thought if this event were held and say so you know spring 2008 we knew the two major party presidential candidates I would have been quite confident that there would be cap and trade legislation to deal with climate change because the two candidates had virtually identical positions And as it turned out of course the bill never moved in the Senate So I think what we've learned is not only can things change dramatically in the energy system but things can change quite dramatically in the political system So I think it's a challenge to assess what's the likelihood in the near term of moving legislation And so you know it's you then end up in a situation where you use the existing authorities and you know hopefully I'd like to see a more thoughtful energy policy going forward So hopefully at some point people realize the status quo isn't worth protecting on all sides of the issues and instead there's some thoughtful compromise that actually makes energy policy work better And promotes the achievement of the objectives that I think at least at the general level we all share Well I think it's out of the question that we would pass a comprehensive energy legislation in this congress and either this congress or the next congress or for the foreseeable future That said I think it is more important than ever that we begin the debate and that we try to get an informed public and informed congress And I think not to butter up to the think tanks in this room but it is the era of the think tank because we need the wisdom that comes out of the studies you do Here at CSIS for example Frank has done a lot of work on crude oil exports Now it is very important to have these studies that tell us whether the price of gasoline goes up, the price of worldwide crude goes up or the price of domestic crude goes up These are very very important questions that you can't really solve with uninstructed members on the floor of the senate just getting their wisdom from backyard barbecues You need this from people who really know the same thing is true of natural gas exports and the kind of studies And what you can do can inform those in the congress Nuclear, you know we need a very important debate on nuclear and the question there is going to be cost and you need a lot of these economists that can tell us what the eventual cost there will be We need to look at things like corn ethanol now how did that get passed, you think tanks and get into policy One of the things that needs to be really studied is the cost of renewables I was on the panel not too long ago with a great physicist who said that nobody knows what the cost of renewables are because there are all these unknown factors You know you've got the federal law and the state law and the tax provisions and the cost of transmission and all of that And that we need to know that because if we're going to base our energy policy which to a large extent it is today based upon renewables Then you need somehow to know what they cost and nobody really does know I mean I just saw a PhD study from Texas Tech that said that the cost of wind is 50% more than has been projected by EIA You know that's just one study we need a lot of attention to that kind of question Transmission is just huge it's probably in order to capture the high planes when you've got to have a whole new transmission system And it's got to be paid for in a different way the old way of having the generator and the user pay probably can't work for a nationwide system You have to socialize that cost that's a huge debate that needs to be done not only in the Congress but among policymakers I could go on and on but this debate needs to start these are incredibly important questions about which there is in some areas very little knowledge In other areas wrong knowledge and if you're going to have a real debate and if you're going to have a real change in energy policy It ought to be based upon an informed judgment which at this point it is not Well I came to CSIS just recently because I've been off doing national security issues for the last 10 years I was informed that this is a think tank not an answer tank But I would echo Bennett's we need to find a way of developing a better shared education of the public and the public's representatives in the Congress About some of the fundamentally determinative issues in our energy future Whether that gets feeds into some sort of legislative address I would reserve judgment on But it will be it would be I would say extraordinarily useful to have that educational process provide context to allow the individual rifle shot policies That will emanate out of an executive whatever the outcome of the next election or the Congress be as well informed as it could So I think your point is very well taken Yeah I would suggest we deflect away from legislation comprehensive or otherwise I mean one of the things I've learned over the years of successful and unsuccessful legislation you have to have at least some level of consensus on the problem And some level of consensus on the solution And one of the things that scarcity does or did is it brought people together in a common purpose to say oh my gosh we're running out We have to develop things to address this supply problem And frankly one of the consequences of the shift is well we have an abundance what does that mean is that a problem No, so what do I need to do about that now it's you know the elephant room here is climate change and most of what I heard Joe talk about is reforming the Clean Air Act to deal with climate change And I'm not going to go there but I would suggest to you that is you know is there a consensus on a problem and is there a consensus on a solution And if you see it like I do you come to the conclusion that we're pretty long ways away from legislation in that area But you know there may be the education is important The other thing I would suggest rather than sort of thinking about legislation I know we're in Washington But there is a lot going on in the state There are wonderful and terrifying experiments going on in California as always you know they lead boldly or not And what is happening with respect to renewable penetration what are the issues coming up with that Dry statistics coming out of places like FERC on the market summer assessment Talk about you know the incredible progress on solar and really interesting ways that people are coming up to try and deal with that California says we're going to mandate storage How does that it doesn't really exist but we're going to mandate it and they will come field of dreams they've done it before Maybe it'll work I don't know but that's the holy grail right because if we could come up with that then all these intermittent Renewables would become dispatchable would become controllable it would be it would be a breakthrough so so we need to think more broadly Than sort of what we can do here on Capitol Hill because I think I don't even think we've really defined the agenda I mean I mentioned in a sidebar to Charlie one of the things I've suggested to folks on the hill is you know What is the role of Sprow in the era of abundance now that might be an interesting question to think about and think about And think about not only in terms of how we use it and the old laws that govern when it would be used But is it the right size and we were going to have a certain import level coverage I mean all that's now stale And I think there is work in the administration on that that may be something you could actually get some collaboration on And it's not a trivial thing the government has invested billions of dollars in that and it's I think tens of millions of dollars a year If I'm not right not wrong Kevin just that just to maintain it so so I'm not averse to sort of starting with the doable You know in the energy side doing some things that might make sense if we really think the paradigm has changed We are going to have to deal with the export issues. I think Lisa Murkowski has been doing some really interesting work on her staff on White papers and research with GAO research with CRRS That helped build some of the information you've talked about there needs to be more But I think sort of putting some bogey of comprehensive energy legislation out there It isn't it isn't the time it isn't the place as far as I can tell I and I think it could distract us from doing things It might be useful. Maybe just aren't so grand All right since I promised you that this would be participatory It's time within we need to open this up. So I'm gonna actually a couple of people I've talked to in advance about calling on them And teasing out some of these topics and there's foreign particularly like to hear from them We'll open up for questions general questions and discussions. So Kevin I'd like to start with you and talk about the fuel mix and 111d, you know, so that the notion of natural gas being the fuel of choice and Moving away from coal, but what does it do to dispatchable? Renewables, what does it do with nuclear and then Charlie and Lynn? I want to draw you in that too I want to then go to Mike Bromwich We've talked a little bit about offshore. We've done a lot of unconventional onshore easy to be silly to drill for deep gas Offshore right now and we've got all this resource onshore, but other parts of the world as we move to the Arctic Technologically complex plays What's the next step up for for safety or regulation that we can share internationally would be a terrific thing to know Bob Secuda total surprise, but I would like to actually talk about the foreign policy consequences of this resource Anormony and what we do with it how we think about it and then my fourth choice is Lynn Coleman because my fourth choice is always Lynn Coleman He can add perspective and Insights that that a lot of us Can't even begin to touch so Let's start with you Kevin and then we'll work our way around. Thank you Thanks Frank The EPA rule is a gripping read at 645 pages. I encourage it to anyone who's had trouble sleeping lately But one of the things that you get out of the technical annexes which bring you to several hundred other pages Are some of the underlying assumptions that EPA is making Essentially a point five eight percent power demand growth in the base case between now and 2020 which is really the cutting year of the rule And you have to ask well so what are they counting they're already counting a significant reduction in coal fired capacity as a result of Retirements associated with the mercury and air toxics rule and on top of that they've got 46 to 49 Gigawatts of coal retirements and yet they're not counting on a lot of new natural gas combined cycle capacity the The embedded assumption of the rule explicit assumption of the rule is that they're going to try to encourage redispatch to existing capacity And in fact some of the least efficient natural gas combined cycle and their numbers Retires two or three gigawatts disappear So well that's great There is there is another alternative case which is that there's a significant amount of natural gas combined cycle built To solve the problem of how you get there There's also practical questions pipes and wires to make the power dispatchable pipes to bring the gas to the plants Those things have a cost they there are above ground impediments to getting them done But the rules the rule is effectively trying to get past the a priori assumption that the solution is to get to gas They've given you two options and in the first preferred option they're asking You know hey let's let's go ahead and count renewables and energy efficiency as part of the solution But they have also included a second option And they've also looked at sort of partial building blocks Where instead of all four building blocks you just look at the energy efficiency Gains at a plant that exists today and also natural gas And that's a very practical way of saying that perhaps what could be going on here is a very big natural gas Increment in their projections that they're only looking at between 2.3 and 4.9 BCF a day of incremental power sector gas demand between now and 2020 as a result That means that the upper bound which represents not doing the third and fourth building block But just using efficiency at reduced patch you're getting about the same increment that you've gotten from a price effect That's been locked in by the mats rule but that's a lot So there you know part of the part of what's happening here is a very big ask for natural gas When natural gas is at the center of a lot of other policy discussions LNG as mentioned before And for that matter the environmental questions that come along with producing a hydrocarbon as a bridge So EPA has pulled a lot of stuff together But there is a real politic element to this built into the role which seems to be saying Yeah the policy is gas Let me try just to add a little I agree with everything you've said on this One of the things that's happened in the last 10 years 15 years in the electricity side is As most know there's been a significant growth of pooling on a regional basis of generation that's economically dispatched On a megawatt neutral basis that doesn't differentiate any megawatt from the source or megawatt hour from the source So there's no capacity credit given to certain types of capacity I agree that both the market itself and then the impetus provided by 111D is driving to a natural gas select Which is both in substitution of coal and jeopardizing our existing nuclear plants within their existing license life So you're going to get early retirements out of that I don't care I would be one who cared about that But we don't have a policy on or measurement or discussion about the implications of ending up with single fuel dependency in our electricity sector And if you look at I was referred to nuclear as a brittle fuel because it was vulnerable to the next offense of radiological Offense or accident as it might occur anywhere in the world and certainly anywhere in the United States That would put a lot of political pressure on the continued operation of nuclear plant and it could take plant offline until defects were corrected etc I think we also have to think of natural gas as a brittle supply source If for example we had through operator error and bad practice a major aquifer implicated by shale gas development The public might not differentiate the cause and that could have significant implications at the margin for this fuel select in the future going on Also you're starting to see now more and more concern raised recently by a report out of DOE this last week That leakages of methane associated with the production of natural gas and its transportation may be contributing to global climate change In a way that basically equates equally with coal production so that you're not getting the global warming benefit that has been predicted or argued for I actually don't believe that science but that science is being argued and developed and that could change our discussion here as well Just a quick follow up I think I agree with you Kevin because it does seem to me a very central part of the rule In addition to the wires and pipeline problems sort of how you just go over a short period relatively short from the capacity utilization that is being produced by the electric markets we have today to a materially higher capacity utilization on existing plants I don't know how you do that Either the cost of alternatives is going to have to be increased so that ratchets up So you have economic issues are we going away from market based dispatch we're going to some other kind of dispatch If the states and maybe they're going to impose fees or something to do that and then there are just the simple logistical issues I mean it may be does the gas infrastructure exist to feed it at that level Does the transmission wires exist to transport power from there at that level Do they have gas contracts at that level how is all this supposed to happen I've had some conversations with folks and then the second issue is just the compatibility with electric markets as we've structured them under Hogan and others on locational marginal pricing So how is that I keep talking to people like Sue Tierney how is this going to fit together and I don't have that figured out yet So Kevin thank you for your comments they prompted Charlie to say something that I want to respond to So on this sort of natural gas and nuclear there's two things that I think are important One I think nuclear does okay under this rule especially with a broad fence That I don't think in a world in which you have some kind of carbon performance standard that natural gas actually then starts to out compete nuclear Especially if there's a broad fence where nuclear helps demonstrate your compliance with whatever is the final policy that your state is implementing This is just a clear sign of course of how unbelievably complicated this rule is And Kevin is a better soldier than I am to have had to have actually read this report or this proposal in its entirety The second thing I'd like to say in terms of how we think about the climate change implications of natural gas I think there are a lot of things we can do to make sure that we minimize the upstream emissions especially methane in the production of natural gas There's been efforts to try to deal with and promote green completions at oil and gas production facilities right now as a part of the administration's approach to methane They've had EPA issue a series of white papers that are very technical soliciting feedback from experts including those in industry on different ways in which you can further reduce the emissions of methane associated with oil and gas production I think there's ways to deal with this. I think there are those who just don't like fossil out there who are beating up natural gas There are also some of those who just don't like natural gas because they like coal and so they're trying to say look this isn't really better than coal And I think that if you develop the natural gas resource prudently you're going to deliver significant climate benefits relative to continuing to burn coal And that's even excluding the potential local public health benefits we have when we burn more natural gas for power than we burn for coal So it's certainly an issue that we need to address. I think we're in the process of better understanding the technologies to address the fugitive emissions and the upstream emissions associated with natural gas production We're understanding what kind of policy instruments can allow us to promote the deployment of those controlled technologies But I think at the end of the day we should be able to take advantage of this natural gas bounty in a way that delivers important climate benefits relative to the status quo in the energy system Let me just say Joe, I am very much, my comments may not sound like it but I am very much favor natural gas as the select fuel and I think that's a good outcome here for the climate and for the economy I think there is, it is true that the rule if implemented will create a value added likely depending on how the SIPs are written A value added to the existing nuclear plants but in the interim they run significant deficits on a current dispatch basis and there may be a need for a capacity charge that is simply to improve their economics to keep them on the system While we are developing this rule and seeing what its outcomes are One small point on nuclear, one of the reasons that some are being so challenged is that when with a 30% tax credit can actually pay to take their dispatch which nobody can compete with certainly not nuclear I mean that clearly needs to be changed Just by way of clarification the rule does give incentives to preserve nuclear capacity by counting nuclear, at risk nuclear generation in the denominator Sort of diluting the fossil intensity of state fleets But as you mentioned the capacity option and other encouragement may be required The rule mentions that and says you might consider paying for it because it's a pretty cheap offset between something like $13 and $17 per metric ton if you're paying $6 a megawatt hour to keep it alive I want to switch gears a little bit So the unconventional revolution, the fact that we are drilling wells now in eight days, eight days That's an average in certain fields which is absolutely phenomenal But they have steep decline rates So the recovery rate is low and the decline rates are high When you look at some of the offshore development, the typically big fields that we're going after produce for a long period of time But as we've seen in the condo and we had many discussion on that when that was occurring In the aftermath of that how do we ensure as we move to technologically complex wells To the areas like the Arctic joint development of the Gulf of Mexico with Mexico Sub-salt in Brazil to make sure this is done safely And Mike you've been doing a lot of work on this Well thanks very much Frank and thanks for putting together such a terrific panel Particularly hearing from Bennett and Charlie and Linda Reminded me of my early days in DC as a young lawyer who was trying to sift through the entitlements program Which was a remnant of the oil and gas controls program where we had itty-bitty refiners sprinkled across the south Making millions and millions of dollars hand over fist It's essentially brokers over pieces of paper that entitled them to refine oil On the offshore front I think our experience over the last four years And our specific experience with Macondo and Deepwater Horizon Really does bring home how many unknowables there are And getting back to the point Charlie made a few minutes ago How one incident or a couple of incidents can really change the landscape enormously Following Deepwater Horizon I think many people I think people in the administration and outside Thought that that accident constituted an existential threat to offshore drilling And particularly to Deepwater drilling I know many people in the industry felt that way as many of you know I was a newcomer To regulating offshore development but that was the message I got is my god We've got to do some dramatic things here to build and restore the public's confidence that this can be done safely And without any legislative support at all we did We developed safety regulations, we developed enhanced environmental and management regulations And I think very few people in May and June of 2010 when the oil from the Macondo well was still flowing Would have imagined that in June of 2014 we've got as many or more rigs offshore Deepwater Horizon Than we did before the spill So I think that underscores the unknowability of what's going to happen in the future The potential impact that accidents can have Because if we had another one within a couple of months game might have been over I know people in the industry thought so and I can't say that they're wrong I don't think anybody in this room can say that they're wrong And yet we see the resilience that the industry and the government executive branch of the government demonstrated there But as Frank suggests there is sort of a whole new and unknown world that remains out there in the Arctic But well beyond the Arctic I mean one of the things that I've had the opportunity to see over the last several years is the enormous appetite For offshore activity in parts of the world that I didn't know were interested I've been to New Zealand, I've been to Columbia In January I went with Senator Graham and Bill Riley and a delegation from the Council on Foreign Relations to Cuba There is an enormous appetite for exploration and development offshore in locations that again I would not have guessed there would be the interest Exists because the revenue is there as a huge lure for undeveloped economies that need to find a way to finance various governmental activities And so what that does is to present a challenge not just to us But to present a challenge on an international scale And one of the encouraging things I saw in the government and that I've seen since is an increased level of collaboration, consultation, learning one country from another In terms of what different regulatory regimes emphasize and what they're stressing So I think that's a very encouraging development I think it's one that's likely to continue We're going in this country through an enormous debate on what's going to happen in the Arctic People have focused on Shell's attempts to drill there and its misadventures a couple of years ago And I think what people need to keep in mind is it's one Arctic just as it's one Gulf of Mexico And whether or not Shell or any other U.S. company drills offshore in U.S. waters in the Arctic There's drilling already going on right now. Russia has begun to drill offshore in the Arctic Which simply underscores the need to make this an international place where we can converge, where we can discuss, where we can learn from one another And where we can enhance safety which is a prerequisite to further and better activity I want to switch to make this a little bit global So Charlie, actually a number of people on the panel have talked about the balancing and how we've had in the past Energy policy has been subordinate or at least impacted by and impacts as well Economic policy, environmental policy, national security, foreign policy Yesterday when we did our export session we had Dan Jurgen here We had put together a triangle for the National Petroleum Council study several years ago And we found efficiency to be the sweet spot but everything else was a trade-off And when you're on the government side you're constantly trading off these policies So our individual complaints about a certain policy being suboptimal from an environmental standpoint Or suboptimal from an energy standpoint it's because of these trade-offs And when you look at the foreign policy implications, and this is what I wanted to bring Bob in on This notion of energy resource as an asset So how does it impact our foreign policy considerations? How do we look at the world? Has that changed for us vis-a-vis China or all the discussions we heard about Ukraine and Europe? What does that look like now? And so Bob if you wouldn't mind take a shot at that? Sure Frank, thanks and it's really great to be here with all of you And it is an outstanding panel and kind of fun to sort of see all these people who we've read about And heard about Senator and so forth for years Thank you And thank you very much for laying the basis for what we're working with today Because there is this sort of like this concept I think of some of the things which we talk about Sort of springing forth like Athena from Zeus's head This was built for a long time And the question really does become, okay how do we use this now? We have as you as I think as we've said before this idea that For much of my career and the careers of many people around this room I'm looking at Rich Kozarec and other people around here We dealt with a world of scarcity We're in a sort of strange situation right now where we both have scarcity and surplus We have surplus in terms of the United States in terms of energy in North America And the revolution is going on here But we also have scarcities in a large number of places in this world We have scarcities in terms of energy poverty where you've got 1.3 billion people Don't have electricity, connection to the grid 2.7 billion they don't have a safe way to cook their food So when you've got that many people out there who don't have something that we have You've got yourself a foreign policy issue You've got yourself a national security issue How do we meet those needs? How do we transfer what we have acquired here in the United States And Canada and other countries to other parts of this world You've got some cases of countries out there that are very hesitant to take on some of the things we've done here The discussions about shale in Europe being a good example there You've got some places that come on the earlier discussion about offshore drilling Where they might take on our technologies but they might not do it safely If you have an accident in some place that we may not be thinking about What are the consequences going to be for shale gas production in the United States Or unconventional gas production in the United States How do we bring that together? There is very much the idea that as Frank you just said That we were in a situation many people sort of thought Oh well the problems of supply disruptions are in the past They're not We've seen that and let's face it There can still be a problem in the straits of foremost tomorrow We don't necessarily know what's going to happen And no matter how much energy we're producing here in the United States The consequences for us of a supply disruption in the straits Are going to be telling because they're going to hit the global economy and that's going to hit us What I'd like to try to though get is I think we do see the question of opportunities We see this in terms of engaging countries like China As they deal with the tremendous pollution problems As they need to move to cleaner sources of energy Is this something that we can try to move on? How do we move with countries Burma's countries like that that don't have grids right now that need power This is another area of opportunity So I think one of the things that we need to be looking at here is Not just sort of taking the sort of passively or rifle shot or catches catch can Opportunistically but how do we think more systematically About the foreign policy implications of today's energy world We are not just being the receivers of action in this energy world But we're also the ones that are creating the opportunities That are creating things that can be done Whether it's on gas, oil, nuclear, renewables or energy efficiency These are things which reach across to our country And frankly reach much deeper I think than we sometimes think In terms of companies not just IOCs But you know who's coming up with the software or so forth for the soft grids We're looking right now working on Power Africa and Connect 2022 And things in Southeast Asia Where we're trying to work with countries now to integrate their electrical grids And we see this as an opportunity and a way to sort of build more peaceful More integrated world but it isn't just going to kind of happen We need to be a little more systematic and we probably also need to have Where are our priorities, where are these going to kind of come through And how are we going to shape this So I think in one sense as we look ahead for what we're doing in the United States And as critical as that is we are going to need to keep Not just the back of our minds but actually as part of our debate How can we use this, how can the world use this In terms of building a more stable prosperous society Energy doesn't need to be a source of conflict Well and one of the interesting things is the dynamism that's gone on If you never believed or if you always believed in first movers having an advantage What the United States done over the last seven years has just been phenomenal I want to ask to engage Rich Koslerich When you looked at some of these areas especially coming out of the Caspian Or Central Asia what's the impact there We spent a lot of time on pipelines and projects But the interrelationship and the technology transfer is going to be key And meeting our economic goals, security goals and environment goals as well How do you look at this Thanks a lot Frank I'm not going to put myself in the same expert category that The panelists are in or Bob's current experience in this But a couple of observations I mean I did when we went into the Caspian as you know It was from this idea we're in an energy scarcity situation And that these resources are so profoundly important That we have to expend a lot of geopolitical capital to make that the case The lesson got across to people So much so that I don't think people in the region The Azerbaijanis and the Kazakhs really understand what's changed in the global energy game And their role in it So part of the education process I think Bob mentioned Has to be with these producers To help them understand what's going on in the global picture That may make their resources valuable as it might have been in 1994 Coming on 20 years now of the signing of the contract of the century Just isn't the same The second thing is the whole infrastructure situation The whole pipeline question I think is now really in a different situation Than we were in the 90s It is about gas And it's not so much about gas going west but gas going east And I think it's really very important to watch how this Russia-China gas agreement plays out in that respect And the last thing I guess I would throw out as a wild card that I don't hear discussed very much And that is the potential for Iran re-entering the global energy market as a responsible citizen And what the impacts that will have Particularly in this region on the competitiveness of Azerbaijan, Kazakhstan and maybe even Russia But those are the kinds of things I think that I sense out of that region where I've paid the most attention One last footnote I was struck as the panelists talked about the US policy environment It seems kind of similar in Europe as well I mean here's, you know, they are unable to get a European energy policy for many of the same reasons that we've been discussing And when we were dealing with a scarcity in environment It was easier to get the western countries together because we kind of understood what the issues are Now I think it's going to be even more difficult Because of our own lack of ability to lead in the way that we did then But the Europeans themselves who still ultimately are going to be our major partners in anything we do globally Are less unified than we I want to pick up on two points that both Bob and Richard raised So going back to the Caspian experience And Mike, you talked about this too When we first got into Caspian, there were no laws And I remember the companies initially thought, this is great, there's no laws We can write with a clean slate And then after about 48 hours we realized, oh my god, there's no laws This is not a good thing Liability, indemnity, environmental performance all had to be embodied in the contract And the contract got this thing, great So it was difficult But having said that, the companies voluntarily decided that we were going to use best practices For the Gulf of Mexico or the North Sea Because we wanted to be there for 30 years On the transit routes, clearly we've learned that gas is different from oil And so some of the experience from BTC were not transferable And not have been transferable to Nabucco for example LNG is going to play a bigger role globally Than we thought it was going to play before Because of enormous gas resources We could get increased regionalization So this notion of Iran or Iraq Bob, you talked about the Strait of Hormuz In the 1970s, 70% of what came out of the Strait went to Europe and the United States And now 75% hangs the left and goes to Asia A markedly different world that we need to be aware of So even as the dynamism changes And then the relationship between the US and China You can start seeing land routes being developed from the Chinese Because they're concerned about the US with the Blue Sea Navy Blocking their energy resources So they're competing in Africa and Central Asia as well So it's a totally different world Ben Atcher I'd like to respond to something Bob said Which is a little bit like the crazy uncle in the attic You don't want to talk about And that is the 1.3 billion people who have no access to any electricity And 2.7 who can't properly cook And what do we do about them And what do we do about climate change If they really want a piece of the economic pie How do we respond to that I mean, you know, we don't want to say it can't be done Because then that, you know We can't face the terrible reality of 6 degrees C Increase in climate by the end of the century I mean, that's pretty hot But what do we do about those people I mean, look at the projections of, you know International energy agency, IEA Everybody is projecting these huge increases You know, 3 billion extra people Triple GDP Doubling of the amount of light duty vehicles How do we deal with those things Consistent with climate change And what do we do if it doesn't work I mean, I'm glad we're doing Trying to do something to show American leadership But the premise that all we have to do is have American leadership and everybody's going to follow To me, it doesn't compute Something's missing and we've got to figure out What it is to make it work It's a little bit worse than that So the IEA does their projections on a 3.50 or 4.50 case But we're far off that trajectory So maybe that's a question So Joe, Kevin, Linda The question of squaring the circle here On climate change with a fossil fuel future That I think has been prolonged Maybe not perpetuated but because of oil and gas Where does that look like? You want to go first, Kevin? No, okay Those cap shoes You know, I think it is really tough Especially when we look at the growth We expect in the developing world And, you know, right now we look at For example, what's happened in China In a couple of decades I mean, in one sense, it's an economic miracle To see the hundreds of millions of people Who have been lifted out of poverty We see the emergence of a real middle class there You know, if anything, you know There are people in other parts of the world That can aspire to something that We used to call the American dream But, of course, part of that is You know, driving cars Being able to power your homes You know, drawing on energy And, you know, when we think about The prospects for the very poor If they are to follow a similar kind Of development route Then it's hard to imagine any kind Of world other than the very hot world That the senator just described So it is tough You know, this is one thing where I remember when I first started Working on this issue You know, we weren't as concerned About the growth in developing countries In the 1990s, China was actually Pretty modest emissions growth They had tremendous improvements in efficiency And then over the course of the next decade There was a debate on whether or not The statistic is they're building One coal-fired power plant a week Or two coal-fired power plants a week And it starts to sort of raise these questions And some people talk about it in our domestic debate Which is, you know, what kind of impact Is fuel economy standards Or power plant standards going to have In a world in which we see such rapid growth And emissions And I think for that It's hard to really demonstrate The commercial viability Of low-carbon and zero-carbon technologies For use around the world That's going to be critically important So it's the role that we play in innovation You know, it's this thing where It's, you know, there's perhaps An apocrypal story about how the first Estimate on the number of computers We needed when there was some initial Discussions about contracts With the U.S. government And we needed 50 computers for the world 50 There's more than 50 computers in this room right now When we think about our phones, et cetera And I think part of that Is just the fact that we had such incredible Investment in innovation We had there, I think, important When we think about computers in IT But this is true when we think about agriculture It's true when we think about medical And pharma research Important collaboration between The public and private sector Sort of going both ways With our quality of life I think we need that When we think about it in the energy sector If we're going to be able to support The quality of life that, you know, We've come to expect in the United States And that other people around the world aspire to We're going to need that kind of collaboration On the innovation front to have Technologies that allow us to do that Without seriously jeopardizing the climate And I think that's, you know, To me, the real frustration When I look at climate policy Is not just that there's sort of A lot of potentials to The really clever inventor The really clever entrepreneur Who works with the inventor And actually brings something from the lab bench Or the garage, actually to the marketplace That we don't actually see the kind Of thoughtful investments In the public sector To provide that kind of knowledge foundation For what could be game changing Technologies in the future It's difficult to imagine, Given the current investments In the energy sector around the world And the current stock of technologies On the shelf that we can actually Achieve our economic development And climate change goals Without, I think, some change in policy But it can't, as a policy matter, It can't be either or it's got to be both, right? So the notion that How you get there And maybe the narrative needs to be changed too We talk less about mitigation More about resiliency and adaptation So we're getting around to it But we're trying to embrace I mean, I think, you know, With climate change risk There's been perhaps too much focus Certainly in the 90s But even still today On trying to stop the problem from happening And that's reducing our emissions, okay? The problem is happening It's going to get worse than it is today There's just too much already baked into the system And so the second is Well, how do I adjust to climate change? How do I adapt? And so there's discussions about adaptation And thinking about how we can use better Data and information And I think that's important And I think to be honest, because I'm not optimistic About our ability to really limit emissions At some point we're going to have To have a discussion about geoengineering This idea that we're going to use technologies To try to somehow limit the amount Of incoming solar radiation There's just, I think, more and more Research is going on this front There's more and more research actually In the social sciences to think about the governance And the incentives for the use Of these kinds of technologies We've seen some sort of nascent research In various governments around the world Along these lines But it's the kind of thing which has just been Off of the table when it comes to international Climate negotiations And domestically there's been very little appetite To try to address this But at some point, if the planet gets too warm I think we're going to see Whether it's the US Whether it's some other country Whether it's a non-state actor Decides to actually implement some kind Of geoengineering intervention And I think we're going to need to think Of pushing all these margins How do we mitigate the emissions And keep the problem from happening Or at least happening as bad as it could be How do we adapt and become more resilient To the changes that will occur And then think about as sort of an insurance policy Whether or not we have a means To sort of fix the problem And bias more time for investments In adaptation and mitigation Through geoengineering I'm going to respond To first say Strongly, strongly endorse those goals And I think we're going to need to Have some experience here To talk about energy innovation Like Moore's law with computers I don't think quite works I was chairman of the Energy and Water Appropriations Committee Either chairman or ranking For 20 years And we did all the R&D And instead of having a Moore's law I can tell you the immutable law Was an energy policy Energy innovation First, it's going to cost more And secondly, it's going to take longer I mean the Rather than being like computers It's more like cellulastic ethanol You know Cellulastic ethanol Was supposed to just Found some magic somewhere That was going to It was going to make it work But it hadn't really worked yet I hope it does Hope it does And we have to keep trying So I endorse the goals But you know wishing doesn't make it so Senator, we talk about that Being it's just around the corner But it's a really long block So I think I think I would associate myself More closely with Joe Sauce on this I mean as I look at this You know it's kind of a It comes in two buckets On the first side You have The U.S. process whereby we are Identifying our global interests Relative to To the energy world And we are articulating those And socializing those So everyone at home understands What our national goals are And all of our trading partners Around the world understand what those are With that I think goes a recognition On our part Of understanding We need to recognize the limits Of what we can appreciably do So let's look at the EPA's proposed Carbon Rule What do we think is going to happen To this displaced coal Over the next several decades Is it going to simply go away Or is it going to be moved overseas That's got to be a part of the discussion I think the second part of that Is What we're going to do Is we're going to be able to Be able to achieve the dreams Of achieving these goals So let's just say Let's take for example Energy exports Do we really believe that Exporting energy to Europe Either in the form of LNG Or oil Is going to solve Europe's Economic woes Exporting oil Around applied In extraction processes And put to use That is the reason for this boom That we have today I think the same could be true For Japan They're in a situation they are Largely because of the policy Decisions that they're making today So focusing on innovation Is one of the keys to Meeting our national goals International goals, national security Is probably a bit of a restame But understanding that the world needs us To be the leader in this capacity Because if we're not, no one else will Or somebody else will And that's probably not something That we want to really envision In the near term And so that means that we need to be thoughtful About the steps that we take And it means frankly that we need to recognize Part of our national interest Is protecting our national interest As a global leader economically And recognize those And focus, you know, first on What we think is going to be best In the long term For the United States And by extension the world And looking at that capacity I think we have a better Outcome globally In terms of national security Regional conflicts and the like Lin Coleman It's time for you to impart your wisdom And then we'll open it up to general questions About the national gas lawyer I started off in Houston, Texas Sitting in very big rooms Of lawyers, all of whom are representing Producers in something called South Louisiana area rate case Which we were debating Whether the price of national gas ought to be 18 cents Or 20 cents The Federal Power Commission And its wisdom said 20 Was plenty enough And the consumer groups State commissions in the north And the courts in the south And y'all talked about Things that happened in the next 10 years when we went from Area regulation To national regulation To quasi-regulation The policy act And then ultimately to deregulation Those fights were as hard As any I can imagine Or have observed in my time In Washington But they were by and large They tended to be regional And Being regional Generally got down to being An issue over money When it gets to be an issue over money You can generally find a way to compromise It's much easier than An issue over philosophy Which That's what partisanship Is to my way of thinking right now I don't know how you Get any kind of a comprehensive To build the way People look at things right now I just don't believe That all those highly intelligent Republicans Five to ten years ago Who were saying yes climate change Is a problem The science is real And we need to do something I doubt they really changed Their mind about science But they've damn sure changed Their mind about what can be done And I talked seminars on climate change policy But I approached it both from a regular Energy and an environmental law All of that always seemed to me Just been Two sides of the same coin Really all the same type And I think we're hugely blessed We're lucky one or the other With Our ability to develop Shaled gas And shaled oil But the What we were saying two or three years ago About natural gas is so great So important And it's environmentally Sensitive and it's going to be The bridge fuel Until we get to a non-fossil fuel world That seems to have dropped out of the rhetoric It looks to me like Where we are right now We could wind up with a stronger Fossil fuel world For like the next hundred to two hundred years The climate Problem is not going away But nor Is our inability to solve it Go away, either it looks like I find myself Thinking more and more About what another old colleague of ours Is saying feels sharp Is we really all are focused On a carbon tax We need A cost on carbon And I agree With you that The impacts Have been over economic factors But part of that economic factor Is an anticipation in board rooms That one way One day One way or another We're going to place a cost on carbon And it's not wise To keep building Cold-fire power plants At least in this country That if you've got plenty Of cheap natural gas That is obviously the way to go The adverse impact on our ability To move to renewables Or to nuclear So I think we've got still Lots of problems Some sound very much like they did 40 years ago But our ability politically To deal with it is sadly Going way downhill Let me open it to general questions We have just a couple of quick rules And Charlie gets the first question But if you could identify yourself In your affiliation then Usually we ask that you dispense From the commentary and go to the question But in this case if you've got commentary I'd like to hear that too So Charlie Charlie Abinger from Brookings I was the other day reviewing Professor Sokolow's famous wedge theory Of what we had to do to deal With climate change by 2050 And was immediately struck That two of his major cornerstones And his thinking that we could not Get there without these cornerstones Were one the massive diffusion Of CCS technology And the massive diffusion Of nuclear technology Now we all know the problems That both those technologies Have encountered in the US But I would ask the following question Does anyone on the panel believe We can solve the kinds of problems Senator Johnson talked about With meeting the energy needs And Joe referred to it Without CCS and nuclear And if that is the case Even though they're expensive Wouldn't we rather be talking About setting a goal To prove that CCS technology Is both commercially and technically Feasible and finding a way To do that say over the next decade Leading the world then By exporting that technology Similarly proving that both Technically and commercially small Scale modular nuclear reactors Are viable and take a major role In the future export industry For the United States Rather than sitting back And talking about putting a price on carbon Put the money in the R&D To prove both these things can be done I'll step up and Charlie I will respect for you But I disagree on your assumptions I'm with companies That have worked hard on CCS I've worked with companies The biggest coal utility One of the biggest coal utilities in this country Has put a lot of money and effort into it And after thinking about it And working on it for a number of years I don't see how we're going to get there It is if you look at the whole cycle Capture, transport, storage, security I don't need to remind people in this room About how well we've done With Yucca Mountain Of putting something underground And saying it's going to stay there forever And monitoring it For the rest of our activity About storing carbon dioxide underground And the risks of that And I just, you know, technical liability Nuclear, you know, I am fine with nuclear Except that it is so We demand such perfection And perhaps that is required Of that technology That it is difficult for me To see how we deploy that In ways that are useful For the rest of the world That don't have power And if so, the best shot is going to be Probably to do something Like Phil Sharp talked about And put a price on carbon And let the markets work out What makes the most sense For me, and the reason I'm not quite as I mean, I agree with the thrust of Joe's Point, I agree that technology And innovation is the answer I'm actually pretty excited About solar at this point Which all my fossil friends I think is part of what I think Kevin mentioned earlier Based on what we're seeing in California What I'm seeing in Japan And as I go around the world Distributed solar, rooftop solar The technology on that is advancing At an unbelievable rate Senator, it's not approaching Maybe the computer law yet But the costs are coming down They're achieving the economies of scale They've developed the business models And in those places where you don't Have a grid, where it can be There's a lot of differences I think that could play a big role I don't think there's any magic bullets Out there, that's one of the things I've learned over my career Every time somebody says this is Going to be the answer You know, keep your hand on your wallet Because it's probably not But I think that plus storage Plus more innovation For me is a more likely path Than for us to sit here and say Nuclear and CCS are the answer And that's what we have to put We ought to pursue CCS I think there's been a lot of work Done over a period of Two or three decades On CCS And successfully But never on a huge scale And what you really need to do What the country really needs to do In my judgment is have Three or four commercial scale Demonstration projects And they, you know They would be fairly expensive But you could then demonstrate That you can keep it there And do it, as I say On commercial scale Now that won't be easy to do To get the money to do it To get the places to do it I mean you need to do it In several saline aquifers And other kind of aquifers Etc. But until you do that You really can't make the argument That we ought to pursue it Because it has not been demonstrated And we ought to do that But it's, but even getting The political will To demonstrate Is going to be very difficult So I agree with Linda of Let's let the market figure this out In terms of let's put a price on carbon And if there's better Lower cost technologies that debate emissions Let the market pursue them And complement that with What would be a thoughtful R&D strategy And part of that certainly Could be focused on CCS The thing that makes me reluctant To be that enthusiastic about CCS Is that doing CCS with a new power plant Is really hard and expensive But I think actually we think about this globally What we need is to be able to have Retro CCS on the existing coal plants Especially in the developing world And that's really hard To really do that With the CO2 and stick it underground That is really expensive And when you look at the kind of R&D We've been doing in the U.S. And in other parts of the developed world It's for the most part thinking about New coal-fired power projects Or fossil projects And how you'd integrate CCS In the design of those Which is important if we're going to Build new power plants But I think about all those plants In China and India And how you actually think You know, we're not just talking about Like do we have the political will To put more investment into this We're talking about some fundamental technical challenges And there's a question about whether or not We can ever really advance those in a way To bring this technology on in an economic way Relative to say investments That could dramatically bring down Further the cost of say other zero carbon technologies Whether it's small scale nuclear Or renewables One additional quick point You can actually do CCS With enhanced soil recovery In fact, my son and I are working on a plant Down Lake Charles right now to do that I hope we go to commercial close Within the next few weeks Maybe we won't Maybe the numbers won't work But I think it can work Yeah, I think I would just Summarize it to say Let the market drive the R&D And there is a place for CCS But as we look Broadly against the suite of technology options We think that solar is one of the We've heard it before Now we think it's real That it's the next disruptive technology And we put billions into R&D Several billions And we focus heavily on that side And we know some other Very significant players are doing the same And I think it's safe to say We look at that much more Intently than we look at CCS We think that We need to break out of the current paradigm We have right now And think about what a distributed energy model looks like In the other regions of the world And in some ways It may be harder to institute Here in the United States And absence some, as Linda said Absence some real breakthroughs On the storage side There will always be limitations But in the under developed world We start to see In a manufacturing process The kinds of efficiency gains That we expect The doubling that we see in efficiencies In a year to 18 month timeframe That's happening now Once we start to see that Become practical applications On rooftops I know we see it now What I'm suggesting is It will be much more cost effective And drive much more power Into distributed markets Residences and the like That's going to be a big game changer And that's not necessarily saying That's the only one We could see others out there I'm sure there are scenarios Where we see some advances In wind generation Efficiency and the like But we would just kind of We would prefer to Not fixate on one or two big winners Here And instead let the market push Also be a big component In terms of the variability Of renewables Once we get the breakthroughs And we look at natural gas Instead of a bridge So we look at it as the breathing space To figure out how do we get to the next point So we look at it as a boon there Other questions? Sure A slight Point perhaps I really liked Joe's Three point Coping strategy On global warming And what If we take Lynn's observation That we may be By reason of This extraordinary Unexpected source Of new fossil Fuel Production capability In shale Extending the fossil fuel Use And Both in time and amount Then You got a serious problem On your hands That Before we start modifying I would certainly One who have been Exhausting All research and development options That we might For those who have a technology Faith As I do Then I Believe we should have as robust A government R&D program That we should be investing in And if we can Incent Further investment in The private sector Through pricing carbon Fine But You know the department of energy Has the largest physical science enterprise Of the world We can't engage That enterprise more effectively In addressing This problem Than shame on us And we are not investing In it To the extent that this problem Suggest we should Hi, excuse me I'm Arbor Johnson with ETOCHU Simple question I don't know if the answer is simple But I'd like each of the panelists take on If and when the crude oil export ban Will be lifted Let me offer two comments That there are six studies underway All designed to show That you could safely and sensibly Do this My view is the studies are going to Unnecessarily complicate the issue Rather than improve understanding Because they're trying to say too much The And if we get it entangled In other issues You'll make it too politically hard I think it's really a simple question The prohibition on exports of oil Are vestigial To a circumstance in market And regulation that no longer exists It is a matter of principle The United States Stands for open markets And I don't understand If you will What the opposition Might be To the export If you can in fact demonstrate As the Ergun study did yesterday That it's unlikely to have An upward movement on price and gasoline Which is politically dynamite If it were to have that So I think that's the only issue Is it going to What's its effect going to be on Gasoline markets in the United States Let's act on principle And get rid of these vestigial things If you make the issue too complicated About refinery capacity And investment in the Gulf And whether it's going to wait Three years for the heavy crew To come in off the offshore And therefore they won't Make the investment to handle the sweet Oils and it's going to back up The infrastructure and create Gridlock or that was the phrase Of yesterday gridlock I think all that can happen And certainly will happen If the Congress dithers on this thing So I try to pose the question As simply and as straight forward To the Congress And not confuse them With a lot of information Which I think we're doing I say it happens in the next Congress Dan was here yesterday But in his book he makes the point That during World War II The United States supplied 85% Of the oil with all the allies Including their domestic as well Military requirements So we've done it before Most of that came out of Texas I think it's entirely I think it's entirely going to be Driven by politics I think if the Republicans take the Senate Then there's a decent chance That they'll recognize With the administration in the last two years I think notwithstanding what happens In the Senate If Republican wins in 2016 It'll be lifted in the first year or two It's an action that the Department Of Commerce can take And I think if a Democrat wins in 2016 Then it's debatable Whether it'll take place In those next two years I'm more optimistic I'll say yes and soon I should give the caveat But I think it's There's a little bit of the politics As Kevin was alluding to That's a little complicated on On the President's side But I think it's something which Makes sense I think it's consistent With a general approach to trade policy It's a little hard from a diplomatic standpoint To go around occasionally To countries that produce oil And say we'd like you to produce more oil We're going to produce more And we're not going to let anybody enjoy it So I guess I'm a little bit more optimistic That it can happen here In the near term Before we get to the 2016 fund Having sat through this yesterday I actually think that If a Properly thought and worded application Were to be submitted before the Commerce Department Under existing law You could actually get an export And we wait for a broad scale It's going to take legislation to do that Or a national interest finding I don't think we're there Certainly not between now and November We know this problem is coming Whether it's a gridlock Or a bottleneck or whatever We're going to have a different kind of widget Than we need We're going to have a lot more light oil When we probably want something else And I actually do think optimization And inputs and outputs of refinery Makes a difference And we're going to get a legislative action But I think you can see relief Actually earlier than that I'm hopeful at least My name is Thomas Lamero I'm a student at Georgetown University Pickybagging on that previous question You think in the near to medium term The US can become a swing producer And what will be The foreign policy effects Especially considering The amount of defense spending In the Middle East Or secure supplies internationally From gas Just to kind of kick this off And we will be exporting gas Within the next year and a half No question On the oil side We're still import dependent And we will continue to be import dependent Maybe for a different kind of crude One of the figures that was thrown out yesterday Is that we export 4 million barrels a day Refined products Which is true Our net exports are a million and a half Which means we're importing Can surpass Saudi Arabia We're at about 11 now in total liquids If you add biofuels and refinery gain That's huge But our demand is 19 million barrels a day So you have to keep that in context too So if efficiency comes down Or efficiency improves And demand comes down And we get a high resource case That we move up We can close that gap But I still think we're looking at a net 3 Of import dependence To the world as incremental production In the last two years It's the biggest increase That the world has seen in a long, long time And short of Saudi Arabia I think it's number 5 or 6 When you add oil to the market But it's 2 million barrels a day In a 92 million barrel a day market So you have to keep that in context too And Paul's sitting right next to you But the Canadian impact on this market Can also be huge They have 177 billion barrels of oil Which at $100 in the barrel Is exponentially larger than their GDP That's going to move too It's just a matter of time And the gridlock or bottlenecks That we talk about in infrastructure Have to occur at some point Can I just add one point to that I agree with all of that I'm not sure exactly what you mean By swing producer But as I said the outset Changes are already happening Because of what So light sweet crude oil Is now going somewhere else And by the way that's a country Very very worried about And the things that are going on there Some of which are better Just because we have this Doesn't mean there can't be upsets And that's one that worries me But already as we talked earlier Flows are moving to the east Instead of the west And you have to think about it As this giant swimming pool We're putting into this end That has consequences And there are better people in the room Than I am to talk about Sort of the political and foreign affairs Issues associated with that But it's not like okay We're going to get to zero net import And then all of a sudden There'll be an effect on the market There are already Significant effects on the markets That people are having to re-wrap People are finding maybe even A softening of price Or where they were getting a premium For certain sweet crudes Now they're getting a lot less And that's having an effect On their income And that has trickled down effects On their populations And so it's sort of a continuum Rather than a switch in time Where we'll be, I mean That's what I said It's changing everything in ways That we're still trying to figure out And that are still frankly Manifesting themselves out in the marketplace Hi, my name is Daniel Newman I'm a law student in a summer Law clerk at the EPA Now we've been talking a lot About how natural gas is Quite obviously going to be A major piece of this country's Energy future And if we're going to put A pro and cons column To this resource Obviously there are a lot of pros And by my count there seem to be Three major cons The first is the methane question Which you guys briefly Looked at The second is the water quality issue Which I believe Charlie Briefly talked about And the third which is my question Is what about water quantity How do you, what are your thoughts On, especially in this Increasingly dynamic climate Where water scarcity is going Is already increasing We just look at Phoenix And other parts of the American Southwest How is water scarcity Going to play into this equation From a technology standpoint We've actually seen the Industry move to Lower volumes of water Per frack Substitution And new alternatives As frack carriers And I would point to the fact That we have a G At this side of the room We have Bob Walker Sitting right next to you From Chevron The amount that the companies Are doing at this point Technologically speaking Is terrific Seismicity is another concern But that's mostly been tied To re-injecting of wastewater At some point If you segregate, treat, recycle You still have to dispose But you can reduce the amount And as we deal with climate Change We have thought that Don Paul Don Paul said USC Was the chief technology Officer at Chevron When he talks about Geo-engineering Or things that have to be Done to address climate change If you look out the next 25 Years East coast gets a lot of rain Air at southwest We may have to think about Things like embarking on Building water pipelines Right? And moving this stuff around Just like we may be looking At moving people off the coast We just haven't got to that Point of that discussion yet But there are major changes Coming But there's still ways Of addressing it When we looked at The issue of Especially on the gas side All the risks that we saw Were manageable And I think Charlie, your study Came out with the same Conclusion It's technological It's increased cost Methane emissions are Already changing Right? And you can capture them But you need to do a better job So you can do it cleaner, Smarter, safer I think that's the easy Answer Let me just say this So one of the Issues about Trying this experiment was I just got the signal That breaking down this room For the next session Takes a lot more work So we're going to conclude This a bit early But I thought And this might be useful So occasionally at CSIS We actually have senior staff That sits down and figures out How we try to do things better So we had one of those Sessions a couple of weeks ago And when we walked into the room This is what was on the board So any idea What this is? That's how I felt Going in folks So D is data So data minus Noise is information Information plus understanding Is knowledge And the bottom Which I think we've seen here In perspective and context Is that knowledge over time Is wisdom And I would argue That the panel That has been assembled today Has given you more Than a bit of that It's given us certainly New ideas for things We need to study In think tank land And I would hope We can do this again Because I found this Extremely rewarding And if you find it useful too We'll be certainly glad To invite you back But if you'll join me In thanking the panel And thank you all For your attention This has been our stand-up