 There, that's encouraging. OK, so as was mentioned, I am running an experiment at Woods to try to connect Stanford more closely with energy and policy challenges that are being worked on in real policy processes, primarily in the United States, primarily at the state level. We played an important role and are continuing to play an important role in the extension cap and trade in California and in the discussions around the regionalization of the electricity market. And I'll touch on those in my remarks. But I just kind of want to structure this around sort of three big policy challenges that we see as important for Stanford students to be thinking about and thinking about how they might conduct research if you're interested in working with us, coming and talking to me about getting involved if you have bandwidth and time. And I should add that the work that we've done to date has really been a collaborative effort between faculty and students. A number of students were incredibly important in work we did for Senator Whitehouse a few years ago. More recently, I ran a small practicum that assisted the environmental justice community in engaging more effectively in the cap and trade conversations in California. And a number of Hebrew students last year under where I played an advising role were really engaged in the process in the state of Virginia and the Commonwealth in helping Governor McAuliffe think through the options for reducing carbon in the electricity sector there in the absence of a clean power plan option. And that process is still playing out. We're still engaged with Virginia executive branch officials on this question, but I just want to highlight what I see as three of the big challenges that are right now and maybe a little bit further down the line that matter for the energy system in the United States. And of course, more generally, at the international level as well, although the challenges are somewhat different when you go to that scale. The first is cutting emissions, cutting greenhouse gas emissions, how to do that, how to do that cost effectively, how to actually design and implement programs that can survive the political process, and yet are effective. This is not as simple as it sounds, right? It's pretty straightforward to identify kind of a science-based target. This is what we need to do to avoid two degrees C warming. Probably many of you have heard conversations like that. It gets a lot more challenging when you go to a state legislature and you say, well, what would we have to do to achieve that within this state? What are the economic impacts going to be? What are the engineering challenges? What about the legal challenges that might come up if we want to do this in our state but we have a neighboring state that feels differently? How can we prevent dirty electricity or dirty products produced in a less clean way from just substituting in by being shipped across the state border? These kinds of questions are important. Another one that's becoming really important, and we saw this, there's a recent DOE study, and I'll talk a little bit more about this. It's just the challenge of integrating renewables. As we move beyond renewables playing kind of a bit part in the power sector, and there are a number of really important legal questions that have to do with the design of the electricity system and importantly, how generators get paid, whether they get paid via a market or whether they get paid via state policy decisions, which are subject to all the usual things that happen when you have a regulatory body making decisions as opposed to a market-based outcome. And this cuts in a lot of directions, but I'll talk a little bit about that. And then this question of a really important question that folks who have worked on regulated industries, industries like the power sector, worry about is just managing risks during that transition. If we actually can achieve a transition to a clean, low-carbon, clean energy economy, is that transition going to happen via a series of really disruptive events, like giant bankruptcies and what are called stranded costs, but basically liabilities being socialized, being placed onto the backs of either tax payers or rate payers or somebody? Think about the financial bailout. That's one, we had this giant problem and we had to spend a trillion dollars. Well, had to. We did spend a trillion dollars to buy our way out of it. That's one way to get out of a problem where you've built up a lot of risk in a system and then the whole thing blows up, but maybe there are better ways. And especially if we plan ahead, maybe we can avoid spending that trillion dollars. And so thinking through that problem, the legal issues, legal aspects of that problem, the economic issues and the policy aspects of that problem is a really important question as well. So I like to, that's enough talking with words. This is just a picture to show you why the greenhouse gas emissions issue is a really challenging one. So this is a picture that shows, I do have a little pointer, that shows in black our, well, ARB's estimate of California's greenhouse gas emissions. This is a little bit dated. We actually have 2015 data now that kind of continues on a trajectory slightly downward, but it's basically where that green line is. And in red is the target that was set by legislation, AB 32, which is kind of a famous piece of legislation around here. It's the first circle. In the second red circle is the 2030 target, SB 32. That was a bill that was passed last year, kind of Fran Pavley's swan song before she was termed out of the legislature. And you can see that to get from where we roughly are to 2020 is like some work, but that's doable work, right? Cutting emissions to 2 million tons a year in an economy that produces something like 430-ish million tons of CO2 per year is like a problem that policymakers can probably solve at relatively low cost. You know, we can do some energy efficiency, we can get some EVs out on the road, cafe standards will do a little work, we can have a really aggressive RPS that's driving fossil-generated power out of the system as much as possible, and we can get there. The problem is this, right? This is 2020, first of all, is not far away, particularly when we're talking about long-lived capital infrastructure, right? Capital intensive infrastructure like electric power. And somehow, California says, we're gonna get here by 2030, we're gonna basically increase by a factor of 10, the rate at which we're decarbonizing the economy. That's a huge challenge. It's particularly a huge challenge because we have to somehow achieve that having already done the easy stuff, and it hasn't been that easy, right? The things that California has done to reduce its emissions have been politically controversial, sometimes expensive, and required a tremendous amount of work on the part of the regulators, but also on the part of all the companies that have to comply, right? And so now we're saying, okay, that's great, get us to there, then do 10 times as much. And it's also challenging because the, we're gonna run out of the easy stuff to do, right? So, so far, this is the recession, so we did a lot of work reducing emissions by having a giant economic recession, but what's notable is that the economy recovers, starting around here, the economy's been recovering and emissions are flat. That is a real accomplishment, the policy of structural change in the economy too, of low natural gas prices too, but the policy's in there somewhere in the mix, driving change. But this is, keeping things flat while the economy grows is not gonna get us to our 23rd target, and so that's gonna be a real challenge, and I'll just tell you that this is a bigger delta than there are power sector emissions in California, and the power sector is where we've seen reductions so far. So what this implies is we need to do hard things in transportation over the next decade. We've never been able to do that before. We've never successfully accomplished really dramatic reductions in transportation CO2 emissions. We need to do really hard things in a sector, if you think transportation's hard, that's actually the easy part of the problem. The really hard part of the problem, the problem also where this community can really contribute is in figuring out how to cost effectively provide process heat to industrial applications. The only way we have for generating heat inputs to industrial processes now basically involves burning fossil fuels. Now, either we need to capture the carbon when we do that, which I'll just tell you is currently really hard and really expensive, and there are a few pilot projects that haven't gone so great. Look up something called Kemper County and Southern Company and you'll see what I mean. But huge challenge, huge challenge, particularly in California, another alternative would be like a small modular nuclear reactor. That's illegal in California until we have a long-term solution to the nuclear waste storage problem, I should say. So this is a huge challenge. It's one that we all need to be thinking about, the engineers, the lawyers, the economists, trying to figure out how we achieve this or even something close to this over the next decade. And I should say this is the science-based target, right? 40% below 1990 emissions levels is what the science tells us we need to be doing. If you can't do that in California, a rich progressive state, you're not gonna be doing it anywhere else, right? So this is, California is the place where we demonstrate proof of concept, and it's incredibly important that we get this right here. So another challenge that I mentioned is just this problem of integrating renewables. As renewables become really important to the energy, the electric energy supply in the mix that we use in the grid. This is a famous figure that keeps getting recapitulated. It's called the duck curve. I think it sort of looks like one of those swans you get at a restaurant when they wrap up like fancy restaurant, foil swan, you ever seen that? But I don't see it as a duck, but whatever. And it basically just shows what people who run grids call net load. So this is the shape of the demand for electric power after you correct for the non-dispatchable resources, solar and wind over time. And what you can see is that it's been going down and down and there's this shape to it that's really challenging, very low load here, and then this really fast ramp in the afternoon. How we manage that problem is super complicated, and it takes up the time of engineers and lawyers and regulators and economists who think about electricity at this point. One of the ways we're talking about managing it is basically increasing the size of our grid. This is a map, this yellow thing here is basically the grid in California. It's the balancing authority for California that balances load with supply of energy and operates a wholesale energy market to kind of make that work and provides ancillary services. All these other things in different colors here are different other balancing authorities in the Western United States that are starting to hitch up with California to run something called an energy imbalance market. And this is kind of just dipping a toe in the water of growing the grid in the West. And that's really important for California. Right now, when net load gets really low, we're starting to have to tell solar plants to turn off, to curtail their generation, especially in the springtime because there's just too much solar energy and we don't have anywhere to put it. We can't store it, we don't have batteries. And so the question of how to do this right, how to do this right and recognize we're getting married to Pacific Corps, Idaho Power, these entities that are in states where the issue is not subsidizing renewables, it's how do we subsidize our coal-fired power plants and keep our coal miners employed. We got to do this right or we risk undermining some of our other energy policy goals. This is a really interesting problem that I hope folks around here in this room will be interested in working on while you're at Stanford and it's something that we're engaged in as well. Lastly, I'm talking about managing the risks. This is a picture of something that probably none of you looking around, maybe there's some older students here have heard about or heard of. Conrail was an entity that was created basically when the railroad industry went bankrupt. And it was created, it was this entity that was a nationalized all the assets of these large railroads in the Eastern United States that had gone bankrupt because they'd been run into the ground by the combination of regulation by something called the Interstate Commerce Commission which doesn't exist anymore, but it did. Back in the, you just take my word for it. Economic regulation that didn't take account of emerging forces of competition, right? What do railroads compete against? They compete against trucks. They compete against barges. They compete against all air freight, right? And for a long time the regulators just couldn't deal with that. It was a very difficult challenge and it got so bad that the railroads all went bankrupt. They had to be nationalized. Penn Central was at the time that Penn Central bankruptcy was the largest bankruptcy ever in US history. And it was enormously disruptive particularly for an industry that's critical. If you wanna keep the electric power plants on in most United States, you gotta have rail because you gotta deliver coal, right? And certainly at this time that was true. Less true now. And the key issues here are how to understand, how to reinvent the utility business model so we don't repeat this mistake in electric power. And that's a topic that I work on that a number of other researchers at Stanford work on from different disciplines but it's a place where this is this is this being in California in particular where we have more distributed energy almost at anywhere else in the country on a percentage basis maybe other than Hawaii is a particularly good place to be asking these questions, right? We need to avoid a second PG&E bankruptcy. That may make you all, you sort of may go, huh, that makes me feel twice old in this conversation. But these are the kinds of challenges, the regulatory challenges that integrate with economics and with engineering solutions that facilitate utility participation in solving this problem, right? That we have an old system, an old regulatory system. This is the formula, the revenue requirement for the utility is equal to the rate base of the utility times its rate of return plus its operating expenses. How do we manage this very old system, 19th century system as we move into a 21st century electricity world environment and avoid this, right? Where the taxpayers pick up the tab for the financial disaster. So those are the kinds of things that I'm interested in working on and that we're working with policy makers on right now in California, in Oregon, in Washington, in Virginia and I'll just say that the engine that makes that work happen is students. And so, come talk to me. If you're interested in these questions, if you wanna engage really directly in trying to solve these kinds of problems, there are a number of other people, I see one of them sitting in the back of the room there, Diane Grunick who's a former PUC commissioner and is very much involved in this conversation at Stanford and in California and with regulators across the country as well. There are a number of us that wanna engage and I would just encourage you to reach out, to think about these big problems when you're at Stanford and to think about how you can craft your work to be relevant because the challenges are now. They're not, this is not a long term thing. We have to make choices now that are gonna drive whether we navigate this kind of tricky rapid that we're headed into in the power sector in particular or whether we end up on the rocks. So, I'm happy to take a few minutes of questions if people have them. It's going to be cold, oil, energy, and sources of energy for employment intensive. I'm not sure how employment intensive renewable energy will be. So, how do you think the transition will be with respect to managing jobs, with the jobs that are important to us? Yeah, that's a great question. So, one thing to say is that renewable energy is actually adding skilled blue collar jobs at a much faster rate than the oil and gas industry is losing jobs, is shedding jobs. Oil, gas, and coal, fossil is shedding jobs. Coal mining is used to be a labor intensive activity. We have that image of it. But the reality today is, well my son, my five year old son has this truck that's like a Tonka version of a coal mining truck that you'd see in the Powder River Basin in Wyoming. But his version is yay and the real one is six stories tall. And one person drives it and it takes coal from a thing that can fill 10 of these an hour or probably more that is operated by one person, one other person. And a lot of these industries are squeezing the labor out. The nice thing about distributed energy is that you need, until Amazon, there was a great April Fools thing about a while back from an energy blog about Amazon inventing robot aerial deployment of distributed solar energy. Until that happens, the drones come to distributed energy. Yes, you need a lot of people. And so the facts on the ground demonstrate that. Solar in particular is adding jobs much faster than, and these are the kinds of jobs that are needed. Now I don't want to minimize the challenge. The real challenge is, what do you do in Wyoming? A place where coal mining has been kind of the heart of the economy for multiple generations and where America as a nation asked Wyoming to make that commitment. Carter said, we're gonna burn coal. It's a domestic energy resource. We don't depend on Middle Eastern countries that are subject to lots of geopolitical risk to get coal. So Wyoming, go dig up your coal and we're gonna facilitate that happening. Miners go to work, if you get sick, we're sorry. But this is a national commitment. And how do we help those communities transition? That's a much harder problem. And I don't want to minimize it. But I think in the net, at the national scale, the picture's pretty good. Now, the hypothetical world where the federal EPA is no longer the highest level of study policy, what are some of the values, the rest? The hypothetical. The hypothetical. What are some of the values and risks you see of states now being the highest level of governance and policy? Yeah. The frameworks that are developing that are patchwork or is there more innovation coming from states working individually? I think there's a lot of innovation that reflects the different circumstances that states face because of their legacy investments, because of their resources that they have to bring to bear on the problem. The risks I foresee, and I think the challenge is gonna be the development of a patchwork. And the reality in energy is we already have a patchwork. We've always had a patchwork. The state's playing an incredibly important role in developing energy resources, and they always have. And that's kind of the federalist system we live in. We don't have a national energy policy, and we probably never will. We might have a national climate policy at some point in the future. Or I guess we do now, we don't care. The challenge is gonna be that at the point where we get to another conversation at the federal level, the states that wanna do things will have done them, and gone further down a track that's very different from the states that don't wanna do things. Countering that, at least in the power sector, is the fact that the economics are really shifting, where now, even in Georgia, in Georgia powers, recent integrated resource planning efforts, they have said explicitly, solar is the least cost resource for them. And Georgia power doesn't come to that out of a bleeding heart concern about climate change. They're looking at hard numbers and making an objective determination about what's best for ratepayers. And so I think that to some degree counters it in the power sector, but the power sector, as I said, is not enough, and it's not where emissions are growing, and it's not where we need them to fall most urgently. And in the transport sector, it's where the biggest challenges lie ahead because oil is not gonna get expensive again, right? People already in the Permian are locking in three-year hedges at less than 50 bucks a barrel, right? So they're saying, I can profitably sell oil at less than $50 a barrel. And so that tells you that oil is just not going up. I mean, absent some massive disruption in the shale industry, it's not happening. And so that transportation is gonna be the big challenge, I think. And there we're gonna see real divergence and getting everyone back on the same page is tougher once that happens, right? The Clean Air Act was passed kind of where in this context where California had taken some bold steps, had a huge air pollution problem, and before everyone went down the California road, the Fed stepped in and said, hold on, we need a national program to regulate vehicles because vehicles are a national product. And the challenge is gonna be that we may get to that fragmented situation before we have supportive federal policy. And my question is, so why did the leader talk to you about the greenhouse gas emissions and how this was going to affect it? What guys were going to add? Now my question was, I mean, the recent growth of the Paris agreement by the federal government, does that pose any addition to the fiscal record? No, that's the short answer. The Paris agreement, well, first of all, we haven't withdrawn. We have announced our intent to withdraw and intentions can change. You never know, particularly with the person who sits in the White House right now and particularly with whoever might replace him. So it's an intent, but in addition, the Clean Air regulations in the United States have long held, have long said that states can do more. If a state wants to have cleaner air than is required by the federal Clean Air Act, they are at liberty to create that outcome. They can't do less, right? The Clean Air Act is a floor. How bad can things get? No worse than the Clean Air Act requires, and even sometimes it is worse, but implementation is imperfect, but states can certainly aim higher. And so California is on pretty clear legal ground to aim higher. And that's even true, it's actually more true, the more the federal government steps away from doing something about greenhouse gases. Where things can get tricky is if the federal government is doing a lot and maybe there are aspects of that where there might be some preemption, but the less the federal government does, the more a state like California can do. Thanks, thanks for your time. Thank you.