 Good morning. As one of my panelists have already astutely pointed out, my name is not Sarah Ladislaw, who unfortunately has been detained for family responsibilities related to the weather. So I've been called to come to bat at the last minute. I don't know whether this is an annual event or not, but if it is, I would do have a suggestion that if you're going to do it in January this time of the year, maybe we should do it in Melbourne. And we can catch the nice session at the Australian Open after the conference. But I caught a bit of the last panel, so as I understand it, the format is for the moderator to speak as little as necessary. And then to give our panelists a few minutes to tee up their thoughts and to help us with what was definitely a very robust discussion in the previous panel. We're going to be addressing resources and sustainability, and I should point out that our two countries have certain similarities in terms of resource endowment, generally speaking, but also, and perhaps particularly, in the energy sector, which is one of the areas that we will be addressing. My name is Edward Chow. I'm from the Energy and National Security Program at CSIS here. We have a distinguished panel who will be talking about the issues that our two countries have in common, as well as areas of cooperation between our two countries, as well as throughout the region, particularly in Asia, which is the theme of this conference. So with that, you have the bios of our speakers, so I won't take the time to introduce them properly. But I would ask Mr. Hill to just get us started. Thank you for moderating our panel at such short notice. I wear many hats. As a former Australian Defense Minister, I would have liked to contribute to the last panel. As a former Australian Environment Minister for six years, I'm happy to contribute to this one. The next 30 years pressure on the world's natural resource base is going to grow enormously. As population rises, the global population rises to over 9 billion people. And with rising standards of living, which will mean greater per capita consumption, demand for food, water, and energy will be great. Already, we have a picture of degraded soils, significantly depleted freshwater reserves, both surface and groundwater, and over-exploited ocean resources. And this is likely to be exacerbated by climate change with increasing temperatures, more extreme weather events more often, and rising seawater levels. Now, I'm not seeking to paint a picture of doom and gloom. In fact, it can be argued that this is a success story. Less major wars, better education and health care, and the technical ability to exploit natural resources at scale have led to this dramatic change. But it will require a much greater effort to utilize the planet's natural resource endowment sustainably. We've developed an enormous capacity to exploit these natural resources. We need to put the same effort into learning how to produce more from less, how to take a greater return from our natural capital with reduced depletion of that capital base and the production of less waste. And that's our global challenge. And nowhere is this challenge going to be greater than in Asia. Air quality issues in China are one obvious example. Pressure on water resources in India is another. Yet nowhere in the world is the capacity to address these great issues more than in Australia and the United States. We just need to look at the ingenuity of Australia's dry land farmers and the technological brilliance of the US in the extraction of unconventional natural gas. What we've found, however, is that as developed economies with major natural resource industries and a strong education base, we can collaborate and achieve more in the sustainability challenge than working alone. This is not only at the technological level, but also in the development of a new generation of public policy that will better encourage the development of natural resources sustainably. As we know, this conference Australia in the US is Australia in the US in and emerging Asia. And as we just said, we're both major suppliers of natural resources to Asia. These resources are contributing to achieve the Asian miracle, contributing then in order to both economic and political stability in the region. We both believe in the importance of open markets in natural resources. We've seen in the past the dangers of resource scarcity. So we compete as suppliers, but we also collaborate in the objective of avoiding scarcity. What we now need to do is to collaborate in sharing our expertise in sustainable development to an emerging Asia, both in the technologies and in the public policy. And I'll give you two minutes, just a couple of examples in which we could do this. Lessons that I've learned. My first is Northern California in the central food basin, where I've seen the extraordinary ability of the land managers to extract groundwater to fuel that great agricultural asset, whilst at the same time, recognising that that groundwater is a barrier against inflows from the seawater through the San Francisco base and therefore being able to extract just the right amount of water to maximise the agricultural return, whilst at the same time taking full benefit from the ecological services that nature has provided. The alternative would be massive engineering works to stop the inflow and obviously a less sustainable outcome. When you look at the challenges of groundwater and surface water management in both China and India, for example, taking those experiences, that sort of expertise to the region would be extraordinarily valuable. And from Australian perspective, I'll give you the example of soil security. Up to 75% of the globe's soils and particularly in Asia are now significantly degraded. And a lot of it has been the consequence of loss of carbon from within the soil, which has led to a breakdown of structure and a loss of the biological processes of the soil through unsustainable farming practices over a long period of time. Both Australian farmers in collaboration with Australian science and also in the United States have learned there are better ways to farm that can actually restore the carbon to soil, repair the damage that was done and allow for the production of the sort of food demands that we have in the past. And from a public policy and obviously from a science policy, the development of modern herbicides that avoided the tilling of the land has been a big part of that. But at the public policy level, the development of public policies that is going to enable to encourage and support the adoption of those techniques by farmers that will reintroduce carbon to the soil. So again, potentially together, we can work in the region and take these experiences to Asia in a way that's going to help them to be much more sustainable in the future. And I think I'll leave it at that. Thank you very much, Robert. Mr. Wood. Thank you and thank you for the opportunity to be here. I have the opportunity to... Sorry, thank you and thank you for the opportunity. I was here at the Alliance 21 meeting last year where we had a full day specifically talking about energy and resources. And it's interesting that some of the themes we discussed there are reoccurring today. I wanted to touch upon maybe three or four things and link them together that seemed to me to be framing a lot of the things that will play out on energy particularly and energy and sustainability across the region. One is the way in which China is approaching some of the issues and China obviously is featuring a lot today. A second is a very specific issue that's playing out still in Japan in relation to its nuclear power fleet. A third is the common and different approaches that have been taken to the development of unconventional shale and coal seam gas in Australia and the US. And fourthly touched very briefly upon, again, the similarities and differences in terms of how climate change policy is going to start to impact at some point in the near future. Firstly, in relation to China, I was in China last week and some of you may have seen the air pollution indices. I mean, the outlook, look out the window today. I mean, in China, Beijing last week, it was like yesterday in Washington. Unfortunately, it didn't go away the next day. It's a real problem. It's just as bad as it was last year despite the fact that power stations have been shut down. So this is a real issue. And the policy makers that I've been talking to in some of the work we've been doing there is are very acutely aware of this and themselves have linked this to the things they need to do about reducing the dependence on coal. Moves to gas and increasingly removes towards renewable energy. But at the same time, they share exactly the same use that the policy makers in Australia and the US have. And that is, they don't want to see electricity prices go up. They may very well have a fundamentally different approach to the way the markets operate, but they're just as concerned about the impacts of electricity prices that they start to impose higher costs on their energy supply system. They had a major problem with the way in which the PV industry played out in China went from boom to bust and may be coming back again. And they're very concerned to make sure that that doesn't happen in relation to solar thermal energy. And the piece of the work that I've been working on with them at the moment is how they think about a technology that is simply going nowhere really in the case of the United States and Australia. And that is technologies called carbon capture and storage, which have particularly interesting opportunities in China. I think also the Chinese policy makers in the NDRC that I've been talking to are very committed to the 40% target that they have to improve the energy intensity of the Chinese economy. And they're seriously starting to talk about what they might put on the table in 2015 ahead of the meetings in Paris. And finally, I think equally importantly in this area, they are seriously concerned about the way in which the emissions trading schemes that they're starting to implement will work. It looks like they're starting to work. The companies I've spoken to are very comfortable with the way it's going. The carbon prices will probably be in the similar range to the carbon prices in California today. And we'll see how that plays out. But a lot of the things that we see being discussed in Australia and the US are also being debated in China. So I think there's some very important issues that are going to impact on us. The second issue is Japan. I mean, this time last year, I think it was a bit later in the year, Robert, we had the Alliance 21 discussion about energy and resources. And one of the Japanese companies there was saying that they expected that somewhere between a half and two thirds of the 50 Japanese nuclear power stations might come back on stream in the near future. And as most of you know, none of them has come back on stream yet. And talking to people from the Japanese Atomic Energy Commission only in November, they were telling me that now they think somewhere between a third and a half might come back on stream. But that has a lot of implications, not just for Japan, but of course, the Japanese are paying very high prices for gas. $18, $19 a gigajoule MMB to you. And we're complaining in Australia about paying eight on nine. And of course, in the US, gas prices have been around three or four. So the dramatic differences in that, how that plays out is gonna have an impact because not surprisingly, the Japanese, Chinese, Koreans and Indians are very concerned about the prices they're paying for gas into the region and are starting to put some real pressure on what have traditionally been the way in which the gas prices have been set. That has big implications for us as suppliers to the region, both as competitors and as cooperators, if there's such a word. So I think how that plays out will be important. The third issue is I want to touch upon briefly because it has so dramatically changed the scope of the energy sphere and that is the unconventional gas and oil. But it had differently in how much the same these two things have played out. The technologies that are being used are almost exactly the same. For example, Conoco Phillips came to Australia in the 90s and brought into Australia into Queensland calcium gas rucking technologies. They had a lot of trouble getting it to work and left Australia having spent something of the order of $100 million. But now they're back in a joint venture with one of the Australian listed companies that I used to work for and now are going strongly ahead as part of a $60 billion expansion of LNG facilities in Queensland, such that within only a few years, Australia will almost certainly be the number one exporter of LNG in the world going past Qatar. How long that will be sustained, of course, is also challenging because at the same time as this is happening, the cost of doing business in Australia has been increasing. And already, it looks like the fourth of what was going to be four large LNG facilities in Queensland supported by Petra China and Shell may not go ahead. That last comment I made also, I think to me, is also interesting in that I mentioned the word Petra China because what you're also seeing in this sector is an awful lot of cross ownership companies who are taking equity positions in the assets in other countries to provide greater security of supply, obviously. But the way in which those commercial relationships will interplay with the political national interests is not going to be simple and the way policy makers respond to that, I think is going to be challenging. The technologies associated with unconventional oil and gas are challenging. In Australia, we have a moratorium on fracking. In Victoria, we have a very vigorous debate about the technology in New South Wales and yet we have over 4,000 individual deals have been signed with agricultural farm owners in Queensland. Remembering the big difference, by the way, in Australia and the US is that in Australia, the farmers don't own the assets under the ground, the poor space, whereas in the US, obviously, it's quite different and that has some big implications for where this plays out. The other thing I mentioned just very briefly is the very interestingly and different ways in which the response to climate change is playing out in our two countries. In China, as I mentioned, they're taking a somewhat multi-directional approach. There's a lot of things starting to happen already. In only a few years ago, I think people would have thought it's quite possible that Australia and the US would both have had cap and trade emissions trading schemes. Now in both countries, within probably a year or so, that will be the case that neither of us will have such a scheme. But on the other hand, in both countries, greenhouse gas emissions have been going down for slightly different reasons. And in the US, gas has been a large player, it's taken a large responsibility for the reduction in greenhouse gas emissions with a move away from coal to wood gas. In Australia, emissions have gone down, but gas has actually played a very small part. So in despite the fact that Australia is going to be the largest, one of the largest producers in the world of LNG. So the dynamic, while there are similarities, there are also big differences in the way this is playing out. So in summary, it seems to be that what's emerging is not so much uncertainty because we've always had uncertainty. But it's the range of plausible scenarios which seem to be much wider than they've been for a long time. And I don't want to give Ian too much of a hard time, but I can remember someone from Exxon coming to Australia not very long ago and talking about how the Exxon's view of the world's supply and demand was looking and gas hardly figured at all. And it wasn't that long ago as most of you would know that the US was looking to import LNG into this country. How dramatically that's changed. And when you look at the current forecasts from companies like BP, and I suspect to some extent ExxonMobil, which now show 30 or 40 years of growth in the US becoming an exporter of natural gas, do you really believe those forecasts or do you simply take them into account in the way you're thinking about policy and the way you're thinking about investment? So for me, the questions that are emerging are will Australia and China have their own? Shell gas booms is quite possible. The in place reserves, the resource looks to be there, but are they recoverable? If and when will Japan return to nuclear power? Who will be the other competitors and where will the gas prices settled in the region, Canada, Mozambique and so forth? How will those commercial cross ownership arrangements impact on national interests? And finally, when and how will climate change policies start to bite in the region? Thank you. Thank you very much. Ian, as a relative newcomer in ExxonMobil, you don't have to defend their past forecast, but you can perhaps tell us of the company's current outlook as well as your experience in the region. Thanks so much. I'll do exactly that. In fact, I'm very grateful to Tony for that lead-in. I just want to say though to begin with that, like Robert, I understood his temptation to get involved in the previous regional security panel surrounded by former colleagues and as a former Australian diplomat and foreign policy advisor, I do need to remember who I currently am and that is the Head for Asia Pacific of Government Relations for ExxonMobil. I do want to, along the way, draw on my most recent government experience as Australian High Commissioner in Papua New Guinea, but I would indeed like to begin with a very quick set of points drawn from our current energy outlook. I wasn't there at the time, Tony, but if that is the case, it certainly has changed. Let me give us a quick plug. Our expectations and calculations for energy outlook through to 2040 are contained in our very recently updated and reissued energy outlook. It's available, of course, on our website and I will be drawing a bit on that. Let me say a few things about global and regional, importantly, regional energy demand. We expect that as global economic output more than doubles by 2040, energy demand will increase by about 35%. Energy demand in Asia will drive nearly all the global increase, rising by about 60%. So at one level, the demand will continue in the foreseeable future. I would argue creating opportunities for both Australia and the United States and others. The question of sustainability is a very important one. The climate change challenge on a global level manifests itself in very serious national and regional environmental concerns across the Asia Pacific. We expect, and our energy outlook goes into this in some detail, that gains inefficiency across economies worldwide through energy saving practices and technologies will calibrate growth in demand. We expect that efficiency alone will account for energy savings in the order of 500 quadrillion BTUs between now and 2040. Thinking more about this picture in the region, economic output will triple in non-OECD Asia Pacific between now and 2040, but demand will increase, as I've mentioned, only by 60%. Reflecting a high level of energy improvement, even in that region, and some shift of the economy towards the services sector, particularly in China. Growth in the mix of energy resources available to the region will also make a contribution. Here we get close to Tony's point. Demand in the Asia Pacific for natural gas, which compared to other sources, is widely available, versatile, affordable and produces low emissions, as expected to nearly double by 2025 and continue to grow through to 2040. Here in the United States, the IEA states that there has been a 7% reduction in global greenhouse gas emissions since 2006 and that the shift from coal towards natural gas in the power generation sector has been a significant element in that shift. Domestic gas production, we believe, in Asia will continue to climb, but at a slower rate than demand, meaning we'll see a growing reliance on gas imports in Asia and continuing opportunity for countries like Australia and the United States. Returning to my more recent experience in Papua New Guinea, it's worth talking to you a little bit about that because it serves, in my mind, as the perfect totem for collaboration between the United States and Australia and the Asia Pacific region. The ExxonMobil-led PNGLNG project is exactly that. It's a project which is viewed, I can say, with some certainty by the government and people of Papua New Guinea as central to their national development aspirations. It's a big project, 6.9 million tons per annum, an investment of something in the order of 20 billion US dollars. And despite challenges, it's now 90% complete. Hundreds of miles of pipeline have been built. A major LNG plant has been built outside Moorsby, and the first car goes to key strategic markets in Japan, Korea, and China will commence this year. It has strong Australian involvement. Apart from ExxonMobil, our largest two commercial code venturers are Australian registered Santos and Oil Search. The Australian government's decision to provide initial finance through the Export Finance and Investment Facility was crucial to the accumulation of finance that led to FID in late 2009. The Australian government has been working alongside the project helping Papua New Guinea develop sovereign wealth fund mechanisms to manage the revenue from this project and others across the country. So there has been very strong collaboration at that level. At the strategic community investment level, the sorts of things that companies like ExxonMobil, we're not alone in this, colleagues and competitors represented in the room are also good in this area. But our work in education, women's empowerment, health and the environment in Papua New Guinea complement very well the very significant development resources that are put into that country and have been for 40 years now by the Australian government. Training collaboration between US industry and the Australian government has been very strong in the context of building a 9,000-person Papua New Guinea workforce. And the involvement goes on, including in areas like child and maternal health. On Papua New Guinea, I would just say this, I would say that Papua New Guineans themselves are the first to point out and recognise that it is for their own government to lead the way in translating the revenue that comes from a project like this into genuine and sustainable development for all. But I think Americans and Australians recognise that there is a role for sensibly getting involved in support of government's national development strategies. So a very good example, I think, for collaboration between the two countries. And collaboration remains my theme as I just moved to the last part of these few remarks, I'd take a step back and refer to a couple of the points that have been made earlier. Yes, the US now has access to abundant natural gas resources, which can meet and exceed its domestic needs and allow for exports. And yes, projects in Australia and Papua New Guinea are set to be important elements in LNG supply to Asia in coming years. Very important. I think it'd be simplistic and wrong to reduce the picture to one which highlights potential competition between the United States and Australia. Yes, changes in the US will likely form part of the global energy landscape over time, but there are many other variables at play in Asia. If you look at China, for example, there's so many factors, the scale of pipeline imports from Central Asia and Russia, the future of domestic shale production, domestic demand policies, resource pricing, industry reform. It's a complex picture and should not be simplified. And of course, in thinking about our respective interests in Asian energy supply, it's useful to reflect on the extent of US investment in the Australian gas sector. My company is one of several represented here today that is involved. It provides a good example through its long-standing involvement in domestic supply in Australia, through its bas-straight operations and associated onshore development in Gippsland, through its partnership with Chevron in the export-focused Gorgon-Jantz LNG project as well as with BHP Billiton and the Scarborough LNG development effort. In any case, experience in both our countries tells us that evolving demand and supply patterns will open the door for increased global trade opportunities. And that change in landscape will help create higher overall value for the entire global economy and improve standards worldwide, including for Australia and for the United States. Thanks. Thank you very much, Mr. Hawkins. Very good. First off, thank you everyone for making it out. I know that Washington's often challenged in snow. I also wanna thank the Alliance 21 team for putting this together. I attended one of their meetings in Sydney not too long ago, and this is an incredibly important project, and I think the discussions here today will help fuel good thoughts and good work between our two countries. Ambassador Hill already got into sustainable development. It really is the issue for our time. It's geopolitical, which many of you care about. It's scientific, it's engineering, but it's also economic. And so as a framing, I think we have to think about global climate change, food and water for the emerging population on the planet, public health. These issues like air pollution, which were already mentioned, are extraordinarily severe in some cities. So what does Dow Chemical do, and why am I up here? The key reason is we're a science and engineering company, and we really operate at the intersection of energy and material science. And so when you think about chemistry, material science, you might say, well, why do I care if I'm sitting in this room? Well, almost every product you buy, if you go to Ikea, you go to Kroger, almost every product you buy is enabled by chemistry. If you take something like your iPhone, virtually every part of your iPhone was enabled by chemistry, and the chips, the screen, everything. And so you need to have a context that chemistry, not just my company but this whole industry, is really providing these products or enabling companies to make them in the automotive sector, lightweighting of vehicles, food, production, water, medicines, public health, building materials, energy efficiency was already mentioned. That gets back into insulation and other technologies, personal care products, and actually the direct production of energy from oil and gas fields is enabled by chemistry, but also solar technology, wind and others. So chemistry and material science is kind of right in that sweet spot. And therefore it really underpins manufacturing and products and therefore unsustainable manufacturing or sustainable manufacturing or unsustainable products or sustainable products. So we've got to give a lot of thought to these areas. It's very complex. There's a lot at stake for our two countries in terms of policy and technology, but really for everybody on the planet. So when you get into chemistry and advanced materials, how do you actually produce these things? There are really three key components. One is know-how. This is really high-tech, it's not low-tech work. There's a lot of PhDs, I'm talking hundreds of thousands in our companies that are experts in how you convert materials. And so at its core, stem and science and engineering education is very important. But what do those people with the know-how take and do something with? Two things, raw materials and energy. To really be in the world of materials, that's what you have, raw materials and energy. And often, and this is the key point, often people don't realize they're the same thing, okay? Not with nuclear in Japan, but with virtually most of the other major energy sources, oil, it's energy but it's also raw material, coal, energy but it can be a raw material, natural gas, energy and raw material, biomass, so things growing out in fields. And then ultimately later, recycle materials. So what you throw in your trash is also a source of energy potentially as well as a raw material. So when we go all the way back up to where Ambassador Hill started us in sustainable development, you really have to, I think, make your way back through this whole materials issue as well. It ends up with the energy issues. And to me, that's really a sweet spot for Alliance 21, for the US Study Center and really for our two countries. We need to be very smart, very astute in how we think about these opportunities. We're private sector people here but we're also government sector as well as NGOs and there's a role to play in thinking about policy. So when you get into shale gas and unconventional gas, this is a gift that we're all blessed with in our two countries. But you need to think about the feed stock value and the energy value of those and the relative balance. Also the special role gas has to play, it was mentioned earlier, in helping transition to a more sustainable energy future for the planet. Gas is one of the only things we have in our quiver right now to really get at a transition to address global climate change. And where you're using gas to produce plastics and polymers, what a lot of people don't realize is that when you put that into play in the right form of plastic, it can be recycled. But at its end of life, it is an energy source. Europe uses a lot of waste, for example, in providing power. So we need to think about that coal, already mentioned the greenhouse gas side but also the air pollutant side. And in China in particular, that's become a crisis, a real crisis in Beijing. Biomass, it sounds good and everybody wants to get excited about fueling their vehicles off of solulosic materials but there's a lot of research and technology to go there. And there are a lot of other considerations in biomass in terms of taking over fields that are needed for feeding people and destroying ecosystems. So you need to be looking at life cycle analyses of comparing coal, sorry, coal, gas and biomass and sometimes you'd be surprised at those results. And last, this whole recycle of materials like plastic as well as waste, there's a whole host of issues there we could begin to address. But how we manage across all of these energy sources and material sources in my view will determine if we as a people can achieve sustainable development on the planet. And that to me is the key thing that we have to work on. But it requires us to work and think about balance between economy, social issues and environment. So unfettered anything in this context is not necessarily the best thing but I would say as I watch and I'm not a diplomat like some of you in this room and here on the panel, I don't see where we're having the debates as a people when I say a people, I mean the global community on what do we wanna achieve in global sustainable development. And I'm saying including economy, including social including environment and that to me is a big opportunity between our two countries. We have a lot of similarities in terms of our supply of energy, a lot of similarities in our economies, a lot of similarities in values. And it's really important that at the 30,000 foot view there is debate about what we're trying to do as a planet. I believe next level below that is what is an advanced manufacturing policy that leads to more sustainable manufacturing and more sustainable products. But again, there needs to be a thought process for that. Next level is energy and raw material policy, how that all fits. And then I think the last area is technology and how the technology policies that would enable it. So to me, that's where the real opportunity lies and I applaud Alliance 21 for making that a key priority of its policy work. Thank you. Thank you very much, Neo and thank you for reminding us that innovation takes place not only in extraction but also the use of resources and energy. And as well as the policy environment that is necessary to nurture and advance the kind of technology necessary for future more sustainable use of resources. We have maybe 20 minutes for Q and A. I would remind you that this panel is between you and lunch. So please make your questions succinct so that we can take full advantage of the expertise that's on the panel. First question, sir. It addresses to Tony Wood, you mentioned that the evolution in gas production and gas pricing between markets is leading to pressure on the traditional long-term system of pricing gas through long-term contracts. Do you think there's a possibility of seeing a serious or accelerated development of more of a market that's based on short-term contracts of LNG deliveries or perhaps even a spot market? And if so, what are the implications of that for both Australian and American producers and possibly the competition between them? Because I had nothing better to do over Christmas, I read one of Daniel Juergens books. And many of you tried to read these books, they're very readable but they're slightly thick. And the question reminded me of some of the content of that because he told some of the stories about the way in which these markets tend to move through cycles. And it seems to me we are moving through that cycle at the moment, so I think we are going to see a move in which we'll see more spot market and less long-term market. But as you're also at the same time as that, and that tends to reflect maturity in markets generally, but at the same time, we're also seeing this expansion of new markets and that means usually more longer-term contracts to underpin those. So for example, those big LNG projects in Australia that I mentioned before, the ones that are going to start producing gas this year are underpinned by long-term contracts. The next transfer projects may not be. So I think we are seeing that cycle. I'm not suggesting for a second that it's going to be a fundamental and quick change, but I think both in Australia, in the region and in Europe already, you're starting to see a move in which greater emphasis on spot markets will occur. Now that doesn't mean that it's going to mean necessarily high or low prices for anybody. I think that dynamic is very challenging. And as I said before, there are very divergent plausible scenarios depending upon supply and demand. Right now, there will be people who could give you a plausible gas price in Asia, which will stay at close to $18 or $19. Equally, you can come up with a plausible scenario which brings you down to $12 or $13. I wouldn't bet my money on either of those two. Some people will bet their shareholders' money. And if I was government, I'd keep away from it for a while yet from a policy perspective. Thank you very much, Tony. As you've already pointed out, many of our export projects, the ones in Western Australia, are very expensive projects. And so they're likely to be a period of time, a transitional period, where long-term take-off pay contracts, index to oil or some other price stabilizer would be necessary to make those projects financeable, if nothing else. The other issue in terms of US LNG exports is that Henry Health prices may be 440 this morning. It's already risen quite a bit from the lows below $3, but it's gonna take another $7, $8 per million BTU to get it to the Northeast Asian markets and on terminals that are not yet completed. So it's probably gonna be a longer transition that some people would wish. Next question. One thing we didn't talk very much, although it's touched upon in terms of greenhouse gas emissions, as well as sustainability, is that both of our countries are big co-exporters. Australia is among the top two, I believe. US co-exports are increasing, particularly because of the substitution of natural gas in the power sector. We've seen, ironically, European co-inports increasing. Coast to Newcastle is kind of an outdated thing now because they are importing coal in Newcastle. Germany's greenhouse gas emissions have increased. We've seen European at both at the national level with the new German government, as well as the EU just today announcing a rethink on the policy on renewables and so on. I might just pose this to the panel. Where do you see coal fitting in to the energy mix given sustainability, greenhouse gas emissions concerns, but the stake that both our countries have on a more effective, efficient use of coal? Yes, it's interesting for us from an Australian perspective, as we normally say, we're the world's largest exporter of coal and we're about to become the world's largest exporter of LNG. But from a global... Well, the first point is that demand for both within Asia is expected to grow for the foreseeable future. From a sustainability perspective and climate change in particular, the better solution is natural gas by far. And from an air quality perspective, it's also natural gas by far. So, we're not going to... I mentioned resource scarcity. If China still requires coal to feed its growing economy to lift more millions, hundreds of millions out of poverty, then Australia will help meet that market. But if a result of our policies, there is more natural gas available and they would prefer to purchase that subject to price and other considerations, then we would want to be contributing to that growth as well. I think you've put your finger on what seems to me to be one of the significant conundrums in this whole debate around sustainability and energy and supply and climate change because, you know, you just look at the numbers and the numbers tell you that... And IA numbers, OECD numbers, World Bank numbers, tell you that we already have four times the amount of gas on our reserves in the world that will ever burn. If we're going to supposedly meet the climate change objectives, which are consistent with the two-degree target to which all the countries are supposedly signed up. And so how do you square that circle? We had a bit of this discussion at the Alliance 21 meeting last year, and one answer is, well, financiers don't believe that countries are actually going to move on climate change. Or the markets have got it wrong. Remember, there's going to be an enormous correction at some point. Or it's all down to solar flares. Or... And I don't know what the answer is yet, but I guess it's one of the interesting questions as to how that's going to be resolved. The only other technology answer I can think of, and Neil mentioned technology, is the technology is known as carbon capture and storage. But there wouldn't be... I suspect many of the people in this room would say, well, that doesn't work, it's too expensive or something else. So I don't... At the moment, I don't see the answer that connects those two questions and for me it remains the fundamental conundrum, as we have seen a move away from what was supposedly peak energy to the point where it's an enormously fantastic opportunity for the people in the world who do not have access to energy to underpin their economies, and yet we have this conundrum of climate change. I'm Andre Silverzo and I'm the chief representative for the interstate travel company in Vietnam. My question is just kind of US-centered, but since we do have such copious natural gas resources, why don't we use CNG, that is compressed natural gas, to fuel our own automobiles, filling stations for them and stuff like that, instead of exporting it to countries like Pakistan, which I understand use CNG for about 70% of their personal automobiles already. That's my question. So perhaps I refer this question to Mr. Hawkins because Dow does have a position on the scale of potential US gas exports. Yeah, I'm not gonna get into the specifics that we're underpin the question, but I think without real policy agreement around what we're trying to achieve, including in the last question, which was about coal, you have confusing signals to companies that are making the investments. Most of the investments are being made by companies, not by governments. And so when you have a cacophony of signals around where things will end up, no one is going to invest, my opinion, in a natural gas distribution system for automotive without a policy environment that guarantees that for the next 30 years, there's a real market for that. And so to me, all of this comes back to a lack of a policy environment. The companies involved, and there are thousands of them, not a few, are reacting to opportunistic sales and they can't be faulted for doing that. But I think we as two countries and governments and others that are here, if we really want in 2050 to have a more sustainable planet, we need to actually be thoughtful around what do we want our automotive situation to look like? What do we want in terms of technologies for coal to make it more sustainable so that it has a longer life? But right now, none of that is defined. And I think that's the fundamental, and I can't see you there, sorry, sir. The fundamental reason why you have conundrums like that is there's no agreement and you have companies that need to sell product today. And that's where we are. Ian, I'm sure Exxon looked at this in your latest forecast and there have been developments in terms of CNG use and transportation fuel, heavy trucks and so on, so please. Certainly it's an area of focus, but I don't really want to get into the specifics. What I do want to say is that where we would very much agree, Neil and I, is on the importance of policy clarity from governments, we take a view, as I mentioned earlier, that it isn't a zero-sum situation that the abundance of gas here in the United States allows for domestic and international needs to be addressed. But I would also say that in whatever policy environment evolves, a central emphasis needs to be put on the importance of the free flow of investment and of trading decisions. Can I just say that from an Australian policy point of view, Australian government, the new Australian government is in the process of developing a new white paper on energy and to facilitate that process just before Christmas, put out a discussion paper. And I think for the first time, seriously raise the issue of a natural gas infrastructure in relation to heavy transport vehicles for Australia. So the public policy is still a way out there, but the discussion is starting and from sustainability perspective, I would argue, of course, that that is a good thing. It's interesting to hear both folks on the panel with government experience as well as industry experience to ask for a better government policy. Sometimes you don't really want what you wish for. We've seen in our country here the sort of unintended consequences of ethanol mandates in the transportation fuel sector that may be assuming that a better knowledge of the future than sometimes we can forecast. So I'm sure you're all talking about sound policy environment that will be generated by discussions like this. There was another question over on this side. Yes, sir. Thank you. My name is Alan Lee. I'm a climate risk specialist at the World Bank here in Washington. My question's for all panellists, but in particular, Ambassador Hill. The World Trade Organization rules currently have an intention to provide for clean technology to provisions to be enabled, and yet the same rules also prevent them because they haven't had specific enabling regulation. So the question is, what role do you think trade agreements, whether through the WTO or perhaps bilaterally, pluralaterally, can play to allow for countries to pursue well-intentioned clean technology policies domestically? Well, I don't know. Probably better directed to the next panel that's dealing with the specific trade issues. It's the clash between environmental policy and the goal of free trade has always been there and always been part of the debate. But I don't think I can contribute any more. Tony, have you got a view? Again, I'm certainly not an expert on the trade side of things. I'm aware of some of the issues. In fact, we were discussing some of these a couple of nights ago. But I think the underpinning thing, and Neil referred to this, and that is that the interplay between policy and technology is so fundamental. We've seen so much of what we enjoy today in the West and even the developing economies being driven by that combination. And how that's going to play out, particularly in relation to climate change, the point you raise, is fundamentally important. Clearly, intellectual property rights are going to have to be protected, and I guess that will come up in the next session. But the issue of how technology gets dispersed is fundamental. I mean, look what happened with solar PV. I mentioned before about how difficult it is to forecast anything in this whole space. No one, but I know I've got that right in terms of how quickly solar PV costs would fall, and particularly as you saw the movement of the technology around the world. I mean, BP in Australia had a 20 megawatt facility for a year, and that was world scale. And now we've got companies, many gigawatts of capacity in China. So that happened dramatically. So for me, that whole interface between technology and policy is going to be fundamental and getting clarity around the sort of policies that are going to underpin putting a value on emissions is going to be core to the way in which technology gets initiated and gets deployed. I would only add that as with government policy, the shape of international trade negotiations needs to, as I mentioned before, continue to support the free flow of capital goods and services. Research and development technology is something that's very important to any company involved in this sector. And like us, other companies invest a great deal in it. It's important that continue. It's important that that collaborative spirit continue in the partnership between Australia and the United States. But it's that point about the importance of the free flow of goods, services, and capital. That means that we and many others in this room support the general shape of the TPP and negotiations that are currently underway. Hi, Jenny Mandel with Energy Wire. I have a question specifically for you, Mr. Hawkins, about Dow Chemical. It's been a company that's been very active in the debate about natural gas usage and exports in the United States. And because Australia is further along in that process, and it's a little bit easier to see where markets are heading, interested in how you see that the pricing pressure is shaping up. And to what extent is the position that's being advocated here in the US about moving more slowly with exports? To what extent is that informed by the Australian experience? And where do you see the Australian interest for companies like yours shaping up over the next number of years? Well, what's driving or thinking more than anything else is the destruction of manufacturing industries in this country. And I would guess also in Australia there's been similar change where the lack of a policy environment of supporting manufacturing has led to a lot of problems here. And the natural gas that's been found in the United States, the lower cost gas, has enabled a tremendous amount of investment. We're investing, I think, $4 to $5 billion in the Gulf Coast area. And that could not have been foreseen a decade ago or five years ago even, probably. So it's created opportunities in the United States. I would assume there are similar opportunities that have been created in Australia to build more value-added manufacturing and supply for local economies. We're very strong supporters of free trade. But we do believe there needs to be a policy environment around advanced manufacturing that leads to that kind of economic development within countries as well. Can I just add one point to that? I think just in relation to the Australian context. And it's certainly not a debate-free area in terms of the impact. Because I think when you look at what happened in the two countries, in both cases, markets worked and price worked. So in the US, you had very high gas prices drove, combined with technology, it drove down the price of gas and the availability of gas. In Australia, it wasn't the domestic high prices that were the issue. It was the attraction of the high prices in the Asian region, where you could see the opportunity to develop, LNG, and export the gas into Asia, which drove those investments. So these wouldn't have happened without the export market. In Australia, you will end up exporting something like 90% of the gas it produces, whereas the US was almost exactly the opposite, I suspect. And that has meant, of course, that the gas prices in Australia, which had been $3 or $4, have risen very quickly and look like they'll go up high and then probably come back down again as competition starts to work. Therefore, you end up at exactly the place near was. And what do you do about the manufacturing that's impacted by these movements in gas prices? And this has been a challenging issue for the government in terms of policy. From a policy perspective, the position we've always taken at Gratin is that, generally speaking, the history of Australia has been more free trade is better and less free trade is bad. How you think about that becomes very important. And it is a furious debate. It's taking place right now in Australia, and it's not finished yet. John Brenton, I'm the Australian Vice Consul based in LA. You've talked a little bit about how the West is moving away from carbon pricing, and we've talked a little bit about energy prices. But you haven't touched on the cost of mitigation. So I was just wondering, when we're talking about global energy prices and global demand, how consumers are end up going to pay for the mitigation of climate change on the other end, and how you see that factoring in current discussions in a public policy point of view? Well, in this country, one thing we don't see is tax, which I understand has also been an election issue in Australia recently. So who on the panel want to tackle that? Well, I know that there's an argument to read the Stern Report and so forth about the costs of inaction that need to be fed into the debate as well. But basically, leading that to one side, public policies for mitigation are going to cost. And that can be managed through a whole range of different ways. And you're seeing it within the United States, where in California, and I think now Washington and Oregon are joining, the principal policy lever is, and it's going to further develop as a cap and trade scheme. Whereas from a national perspective, President Obama is principally using his regulatory powers. And so mission prescriptions on power stations and the like of the tools that he can use. But in the end, it nevertheless gets fed into price. In Australia, we'll be moving into a new experiment where the new Australian government is adopting what it calls a direct action plan, which is basically purchasing the cost of, with public money, purchasing the cost of reductions in carbon intensity. So businesses will be able to bid for part of that public fund if they can demonstrate improvements from a business in reducing carbon from a business as usual trajectory. And if their improvements are more cost effective than their competitors, if I'm making that clear. So and that will be another experiment and less market orientated, not as prescriptive as the Obama approach somewhere in between. But it is still going to cost the public purse in the end. And that's in the end is a cost to consumers. The other issue about this is two things. One is the evidence is that markets produce lower prices than other mechanisms. So if we are going to start to move on this, then mechanisms that look more like markets will produce a lower outcome. And we certainly done research on that and compared all sorts of other possibilities. The evidence is very clear. Now, whether or not the current approach that the Australian government is taking will actually end up being a pseudo market anyway and will produce effectively a shadow carbon price as a somewhat esoteric debate for policy wonks, I suspect. The other side of it is interesting and it comes back to this point about the need for clarity in terms of long term approach to this because the investments that many companies are making in coal, oil and gas and so forth are long term investments and worrying about are we going to meet our 2020 targets seems to almost, I wouldn't say it's trivial by any means, but it doesn't help the discussion about those investments. So what's interesting is, and I might refer you to a short article that was in The Economist in December and it looked at the internal carbon pricing that was being used by major corporations in this country, in the United States, and large companies, ExxonMobil, Shell, BP and so forth, they're using carbon prices internally to assess long term investments all in excess of $30 a tonne. Now, that number is well ahead of the number that's currently on the table in Australia that we're debating furiously is being too high. So there's interesting tensions about why are companies who've got that long term view taking that perspective when at the same time you've got this furious discussion about whether we can afford to have carbon prices which are well below $20 a tonne. It's again an interesting conundrum I think. Yeah, I would just add on the cap and trade question, down was part of US cap and we put a lot of capital into trying to get cap and trade through and it failed and the policy environment here now is that is evaporated. That is not gonna happen here anytime soon. So to the other part of your question, the models are pretty clear. So if you believe the models, we're in for trillions and trillions of dollars of investment that's going to have to be made. So it's kind of like the old commercial, you can pay me now or you can pay me later. And because there's no debate, meaningful debate that could lead to answering these kind of policy questions, it puts you more in a pay me later mode. But when you start looking at the totals for a New York city, how much money it would take for them to deal with sea level rise, as soon as that begins to get close to really needing to happen, that will force an investment, I mean a debate, because New York won't want to pay for that by itself. Okay, the other thing is insurers. You can back, you can back carbon pricing back into a system through insurers, but that will take a long time. And so the issue is do you try to get ahead of it to slow the emissions or do you write it off and say we'll deal with it later? But it gets very expensive and there are a lot of ecosystem impacts and other impacts to do it later. And that's the dilemma we have. You know, one of the themes, I guess the theme of this conference is how the, our two countries are going to address in emerging Asia. And there's no area where that is brought to sharper relief, it seems to me, than in energy where are both large energy producers are countries and exporters as well. Asia is clearly the region of the world where energy demand growth will be continued to accelerate not only in China, which is mentioned a great deal, but also Southeast Asia, which had been a net energy exporter is now becoming a net energy importer. We've got India, maybe already over the horizon. I was wondering whether the panel address whether, I'm sure both our countries, certainly the United States has bilateral energy dialogues with China and other countries that frankly hasn't borne much fruit. On the other end, we've had a hundred plus country UN managed process that also haven't gone very far in terms of addressing the issues that you brought up. Do you see scope for a Pacific, Asian, ASEAN plus some kind of multilateral dialogue that involves both energy producers such as ourselves as well as major energy consumers in Asia to cooperate more in this area, including on more efficient, effective use of energy and mitigating greenhouse gas emissions? Well, there's actually a lot of discussion of the issues that within all of the regional organizations as well and bilaterally say between us and us and China. But in the end, things were supposed to happen differently after Kyoto, Kyoto was the only binding agreement on climate change that's been reached and that was only among developed countries. The plan was ultimately that there it would be expanded into an agreement developing countries and that is still a work in progress and personally I think it's still a fair way out there if in fact it ever happened. So in the end, it's domestic decisions that count. But the reality is that in the developed world basically emission levels have reduced and they're going to reduce even more. Part of it's a transfer to natural gas. A significant part of it is in the take up of energy efficiency opportunities. So the challenge is now the developing world and how we can transfer what is necessary is not only to encourage the uptake of the technologies and the adoption of the best policies in the developing world but for that it requires capital, it requires technology transfer and we still haven't found the tools to really make that work effectively. So the sad thing Neil is that if the seawater rises in New York City, good folk of New York City, it's actually not going to be a result of what's occurring in the United States. It's going to be a result of what's occurring in the developing world but on the other hand what's occurring in developing world as I said is lifting hundreds of millions of people out of poverty so it's a bit rough to criticize them for that. Yeah, just very quickly. I would note there's no one from the US government at the moment as we understand it, a new US Asia Comprehensive Energy Partnership. It's something that we need to understand better and learn about from the US government. As a general principle dialogue is always a good thing. Business is always going to take the view that a conducive operating environment is what it will want out of any dialogue but certainly this should be an issue for open discussion. This is why we very much support this kind of forum. Well, thank you very much for your attention. There certainly has been a very informative and stimulating this discussion. I don't want to hold you back from lunch too much longer so please join me in thanking the panel.