 Arun is a J prequel professor at Stanford. He's also professor of mechanical engineering at Stanford and offered on science at Slack. Arun in previous years, he served as the founding director of ARPA-E, the advanced research projects agency under the Obama administration and he has extensive experience and very passionate about energy, of course. So Arun, it's over to you. Thank you for speaking to us today and we look forward to your session. Very good. Welcome to everyone. Good morning, good afternoon, good evening, as may be the case. I'm going to upload my slide, share my slide and then following Sally's wonderful talk, I have some quizzes for you. After all, you're at Stanford, so you'll have some quizzes to start with. So the first thing I'm going to do is to, Kate, if you have the polling questions, maybe you could introduce the first poll, okay. So since we are all under lockdown, the question here is, with the word under lockdown, COVID-19 related lockdown, what is the expected reduction in global primary energy demand in 2020? Is it 3%, 6%, 11%, 20%? You got 10 seconds to answer this question. Okay, let's put the polls up. So 40% got 6%, which is the right answer. So here's the some data according to the International Energy Agency, the 6% reduction in global global primary energy demand is the combined energy demand of France, Germany, Italy and the UK, which is seven times worse than the global than that of the global financial crisis in 2008-2009. Oil demand is down by 9%, coal down by 8%, gas down by 5%, nuclear down by 2% and renewables up by 1%. Okay, so that's poll number one. Poll number two, let's go with that. With the word under lockdown, what is the expected reduction in energy-related CO2 emissions in 2020? 5%, 6%, 8%, 10%. You got 10 seconds. Okay, let's see the response. 50% got 8%, which is the right answer. Again, according to the IEA, of the 2.6 gigatons of CO2 reduction, reduced coal use would contribute 1.1 gigatons of CO2, followed by oil at 1 gigaton, gas at 0.4 gigaton. The United States would undergo the largest CO2 emissions reduction of 0.6 gigatons. Great, so this is just to get you warmed up. I think there was a question on what is 1% or 2% reduction in CO2 emissions sounds like. Well, we are at 6% or 8% reduction. It's not quite COVID-19, but it's a pretty big stretch to reduce the CO2 emissions. Okay, so let me go back to my presentation. You'll see a little bit of repetition of what Sally said, but perhaps from a different perspective. So this is the history of world population. And you can see for the last 10,000 years, almost all of it, the world population was less than half a billion people. And you can see a few dips due to pandemics in the past. The impact was much more than what we're seeing now, almost wiped out, it wiped out about 200, the Black death wiped out 200 million people in the 14th century. And the big increase in population to around 7.7 billion people today happened only really in the last 100 years. Okay, so this is remarkable in terms of population. And so we tend to put ourselves in today, of course, but you've got to look at the history of where it has come from and where it is going. Where it's going is that the United Nations expects the world population by the end of the century to kind of saturate at about 11 billion people. So three more billion people, which is roughly the combined population of China and India, again, three more billion people to be added in this world, mostly in Asia and Africa, mostly actually in Africa. So that's what the world we are getting into for the next eight years or so. What is remarkable about the last 100, 150 years is that in addition to the world population going up, the global per capita GDP, not the global total GDP per capita GDP has gone up exponentially as well, which has led to an enormous change in the quality of life that we lead from what was there for the last 10,000 years. And this has only happened in the last 100 years. So what was life for the last 10,000 years? This is what was life like. It was an agricultural society where people used to live in villages. There were cities, of course, but mostly it was agricultural. Most of the people lived in a greater in society and people used to move around by animal power. And in the last 100, 150 years or so, this is a remarkable change happened. We have electrically lit and air conditioned homes. We can sit in our homes and watch Usain Bolt run the 200 meters. We have amazing healthcare. The life expectancy has gone up from about 40, 35 to 40 years to 70 to 80 years. We have the world's information on our fingertips and we travel around to get our groceries with 100 horses in the size of an engine of a car or we travel around the world in a few in about half a day with 100,000 horses in the jet engines of planes, which would have otherwise taken months. So this industrial revolution is an amazing set of innovations and this is really we call it the horse power to horse power. In fact, we still use the same units, but that has been the dramatic change all due to innovations in energy and energy related. And based on the energy infrastructure, which is almost the mother of all infrastructures, a lot of others things have happened. So if you look at the energy infrastructure, the distribution and delivery, these are the arteries and veins of every modern economy, you have the Tesla Edison electricity grid, which we are relying even more right now. And you know, this is the architecture is still the same as what Tesla and Edison had designed. But the, of course, the devices have changed, but architecture has remained the same. And in addition to that, we have the oil infrastructure, oil and gas infrastructure, which started off at Standard Oil. And of course, many of the, you know, the companies that have come out of that are still around. And this is the massive infrastructure that we have to move energy across the oceans in all parts of the world, with its pipelines or ships. So this is the, the arteries and veins of any modern economy. And this has only happened in the last 100 to 120 years or so. So, so 80% as Sally pointed out, 80% of the primary energy consumption comes from fossil fuel. And of course, that has consequences in terms of climate change. So following Sally, let me give you another, the third quiz. So I'm going to give you some numbers. And I like you to think about what they mean and what the units are. There's no grading for this, by the way, these are the easy ones that you're going to face at Stanford. So the first number is one. Think about it. I'm going to give you the answer. This is one degree Celsius. It's roughly round number. It's about 1.1 degree temperature rise that we have from the pre-industrial level. And this is, as you know, the pre-industrial level was an agrarian society, or the last 100, 150 years or so, the temperature has gone up by 1.1 degree. The second number is two. This is the two degree Celsius that we, that the Paris agreement was. And the idea was that if one degree has created such weather extremes and all kinds of issues that we are seeing now, the melting of the Arctic and Antarctic land and sea ice and sea level rise, et cetera, imagine what the two degree, the weather extremes of that would create. So that's what's the Paris agreement. The next number is 1,000. This is not 1,000 degree Celsius. And this is the budget of 1,000 gigatons of CO2. I think Sally mentioned 1,100. These are all probabilities. If you want to have 2% or 66% probability, I think it's about 1,100. If you want to have even higher probability of keeping it below two degrees, the number of gigatons goes down. Round number about 1,000 gigatons of CO2. Here's a quiz that I don't have it on paper out here. But what is, if you sum up the weight of all the human beings, the 7.7 billion people, if you add the weight of all the human beings, what is the total weight? Can someone guess? So quick numbers. It's less than 1 gigaton. The sum of the weight of all human beings on this earth is less than 1 gigaton. We have a budget of about 1,000 gigatons. And the next number is 40. This is roughly the 40 gigatons of CO2 per year that we are emitting and which is increasing at about 1.1% or so. And the last number is 25, which is really the 25 years. So essentially, we have about 20 to 25 years to innovate our way out of this. And if you look at where the emissions comes from, we're looking at electricity production, agriculture forestry is 24%, transportation is 14%, industry, cement, steel, petrochemicals, et cetera, is 21%. And that's the distribution of the global greenhouse gas emission. So as you can see, this is not just one sector, but many, many sectors. And we have to innovate in each one of them. And we've got about 25 years left. So that's the challenge folks that we are facing. So just to give you an idea, what are the game changes? Just to emphasize some of the things that Sally said, they had some good news. Let me offer the good news first. The good news is that over the last 25 or 30 years, the innovations in extracting hydrocarbons from shale formation, very tightly bound states and very small pores in the rocks, that has really created this unconventional oil and gas revolution. And to understand the implications on the technology, on the geopolitics, on trade, economics, and business, we have at Stanford called the natural gas initiative, which looks at all of it holistically. And this is a major game changer, because in the United States and many other parts of the world, this is displacing coal and reducing the emissions, as long as the methane emissions are minimal. In fact, on the order of 1% or 2% or so, anything below that is fine. Anything above 304%, the impact of methane emissions can be larger than just the coal burning itself. So there are lots of issues about methane emissions that the NGI, the natural gas initiative, is looking at and all the other aspects. This has been a major energy game changer in the world. The second energy game changer is renewables. And on the y-axis of here in this graph, you have the PPA, the power purchase agreement price of in 2018 dollars and dollars per megawatt hour. The yellow, the circles are that for solar and it has come down to the point that today, in many parts of the world, it is cheaper than the dashed line, which is the electricity production from natural gas. So today in many parts of the world, solar is actually cheaper. The big, the blue circles are that from wind. And what you're finding for the first time in the history of humankind, renewable energy at scale is cheaper than any fossil energy. That's amazing news. And these are growing in China and India and many other parts of the world at about 20% annual growth rate or more, 25% annual growth rate or higher. So this is the change that is happening right now. And we are right in the early days of this renewables revolution that is happening. The third game changer is that of electrification of transportation. And you find on the y-axis out here the cost of the battery pack in dollars per kilowatt hour, it has come down even faster than that of solar and wind. And today it's about $120, $125 a kilowatt hour. In the next couple of years, it is expected that the battery pack will reach $100 a kilowatt hour, which is the horizontal red line. Why is that important? Because at $100 a kilowatt hour, the cost and the range of an electric vehicle is competitive with that of gasoline cars without any subsidies. And that's a remarkable milestone because you have to give another 20, 25 years and you will see a major turnaround in the fleet of vehicles that we have on the roads. And most of the adoption is going on in China. In fact, the adoption of electric vehicles in China is Europe and United States combined. It's roughly around that. So this is a major transmit in a tectonic shift in the automobile industry. And that of course is now shifting the supply chain from oil and gas to electricity. Now you have to remember the automobile companies never had to talk to the electricity sector and vice versa. Electricity guys never had to talk to the automobile. These guys have to talk. And so what we are finding that this is a unique moment in history that industries supply chains are changing. Now I talked about the natural gas initiative to look at the integration of renewables, which the Tesla Edison grid was never designed for renewable fluctuating over time. We have an initiative at Stanford called bits and watts. And this is the digital world enabling the electricity world to be able to coordinate all the fluctuation both on the supply side of electricity like solar and wind and the demand side of electricity like electric vehicles and other network devices. So that's the bits and watts initiative. We can talk more about it later on. And to look at the storage side, not just for transportation, but for the grid, we have just launched last year the storage X initiative. And these are again, each of these initiatives have about 15 or 20 corporations that we work with to understand what the issues are with the midterm long-term challenges that they face and to use that and translate that into research agenda at Stanford as well as the educational programs here. So this is just to give you an idea of the game changes, how at Stanford we are looking at that and enabling the industry to move forward. But as Sally said, this is just the start. And if you think that this will address the climate change and the gigaton scale CO2, you're mistaken because we need much, much more. So what else do we need? So we need, as was pointed out, multi-day grid scale storage at one-tenth the cost of lithium-ion batteries. Lithium-ion batteries are not going to get there because if you want to do a few days of storage, you're going to use less of it over the years. And so the capital cost has to be less because it's not going to pay off too many times per year. Secondly, nuclear reactor, small modular, today in the United States about $8 a watt or $10 a watt, we have to cut down the cost by a factor of two. And most of the cost is really in the construction. Refrigerants. We use refrigerants, refrigerators, and air conditioners. And this, the adoption is increasing because many of the tropical emerging economies are growing fast. And people who are at 90 degrees Fahrenheit and 90 percent humidity, or in many other parts of the 40 degrees Celsius and 90 percent humidity, if you have a little bit of money, you want an air conditioner. And that uses going up in the leakage of these refrigerants is deadly because these refrigerants have a global warming potential anywhere from 2000 to 4000 times that of CO2. And so this is predicted to have a huge impact. So trying to look at cooling with zero global warming potential refrigerants is a big challenge. We talked about buildings, energy efficiency. There's a lot of push towards zero net energy buildings. But trying to do zero net energy at zero net cost is non-trivial. And because that's the, but that's the only way it'll scale if you reduce the cost of doing so. Industrial decarbonization, probably one of the most difficult ones. Reimagining steel, concrete, petrochemicals, the use of hydrogen is going to be huge in this. And I'll come back to that later on. And finally, we talked about agricultural decarbonizing food and agriculture, including waste of food, which is roughly 30 to 40 percent around the world. And this is a major, major issue. And looking at food and agriculture, 24 percent of the mission, very important. And as Sally pointed out, global carbon management at the gigaton scale, whether it's capture of CO2, whether it's harnessing the biological cycle, storing the CO2 underground, or converting the CO2 into fuels and chemicals, all of this has to happen. And at Stanford, we are looking at innovations of all of these. So if you think about it, this is the defining issue of the 21st century. And this is not just solar wind in automobiles. This is a remake of a large fraction, more than 10 percent of the global economy, which is trillions of dollars per year. And that's what it's at stake out here. That's the opportunity as well as the challenge. So what do we need? What do we mean by innovation? So this is, you know, as I said, we are inheriting in the third decade of the 20th century, we're inheriting an energy infrastructure that was created in the 20th century, and we need to innovate our way out of it. Looking backwards in time is not a recipe for success in the future, because we never faced it in the past. The fundamentals of this industry are changing. So have we faced this in the past? And I'm going to invoke a very famous and illustrious, you know, former CEO of Intel who recently passed away, Andy Grove. And if you have not read his book called Only the Paranoid Survive, I would strongly urge you to read the book because only the paranoid will survive out here. And in that book, he used to teach a GSB out here, and in that book he defined a term called a strategic inflection point, when the strategy has to go through an inflection point, and he defined as the following. The point in the life of a business or an industry, when its fundamentals are about to change. The change can mean an opportunity to rise to new heights, but it may just as likely signal the beginning of the end. What does that mean? So this is where we are right now. This is the strategic inflection point, and this has been created by some of the game changes as well as climate change. All of it combined has created, has changed the fundamentals of the energy industry, and you can either grow or you could go along the same pathway and actually go down. So the question is, can you pivot? And that is where the innovation has to take place, and there is no, there's no data. You know, people say you got to make a decision, you got to look at data. What data are we going to look? And from the past, that will help us change. And this is exactly what he faced at Intel, when they had to switch from being a memory company to a processor, CPU company. They didn't have data to look back in the past. So how do you actually innovate? So this is where you have to, you have to take a few chances. You have to experiment with new ideas. You have to look for new solutions. You have to look at new or intermediate markets or first adopters, and you go to leverage new technology and bring it into energy and climate issues. So this is the time to try out these things. And this, and while doing so, you'll have to take some calculated risks. You have to learn from failures. You got to fail quickly. You have to, you have to look at what others have mistakes that others have made and not repeat them. So you got to keep in touch with what's going on in this ecosystem. And you got to look at competition. You know, previous competitors could become your partners now. And current partners could become your competitors in the future. So you got to be flexible and agile in this world. And in addition to that, you got to execute. You got to meet people talk about startup startups are important, even more important are scaleups. And the scaleup of that is extremely important. You got to have a vision of what the world ought to be in the future and drive towards that and be flexible and agile in the process. And you got to need talent and capital to be able to do that. And this, my friends, is what we call the innovation ecosystem. And you are in the world's best energy ecosystem out here, right in Silicon Valley. And while it is known as Silicon Valley, it is really turning it into an energy and climate valley, sustainable valley as well. So what does this mean? And how should we think about it? As Peter said, fortunately, I was asked to lead RPE right from the beginning. And we defined RPE, which is the federal agency that looks at innovation in a strategic way. So any technology, if you look at the learning curve, you know, is caused to a performance of the y-axis scale, you have an existing technology in this case of horse carriages. Now, you could go down this learning curve and make better and better wheels, maybe better horses, and you can go down this learning curve. Or, and so this is the sustainable innovation you got to do in existing technology. Or you could look at transformational solutions like an automobile. And initially, when they tried out transformational, they were more expensive. Some of them failed steep-art vehicles, versus those motor wagons from Benz, you know. Initially they failed, but eventually the model T worked out and it became cheaper, faster, cleaner, and better than the horse carriage. And at some point it became destructive because it was cheaper and the performance was better. You could go faster. This is now the question is, do we go down the existing technology, like a gasoline vehicle? Or should we create an electric vehicle which would be destructive and cheaper? This is what we're seeing where the batteries have enabled an electric vehicle. So how do we create this transformational and potentially disruptive solution? Gotta take some chances. Some of them may not work out, but that's why we are the university. That's where people come out here to try out these new ideas. So I'm going to give you an example of a current project that is funded by RPE that's going on in my lab. Some of the people in this, in this audience are involved in this. So that is to look at methane. We have a lot of methane and do methane pyrolysis to crack methane to produce hydrogen and produce solid carbon in the form of graphitic carbon fiber. We are trying to understand, this is funded by RPE, we're trying to understand the science of this and also see what creates the, how can we increase the performance, increase the conversion efficiency and all of that. That requires fundamental understanding of chemistry and chemical engineering. And so this is going on in collaboration with Mateo Carnelo. And we are in the early days of this because if we could do this, you could then use the current infrastructure of natural gas pipelines and LNG transport across the oceans to move hydrogen and then create solid carbon. And solid carbon fibers are going to be used in a lot of things, including automobiles and planes, et cetera. And that is at about today, about $20, $15 a kilogram of carbon fiber. And hydrogen, if you can get it down to carbon free hydrogen, get it down to $1 a kilogram, this is transformative. So we are doing the research, the question is where will it go after we, if you are successful. So I just want to give you an idea. And so this is, by the way, if you can produce, you know, the carbon nanotubes at about $4 a kilogram or $5 a kilogram. And at a 25% efficiency, the hydrogen will essentially be free. So what is it that we could do? And where are we in this innovation journey that this technology may go if it is successful? Again, the cost of a performance of the Y-axis scale on the X-axis, but the Y-axis is also risk. And so initially it's high risk. It's very hard for corporations and businesses to invest in this because it's too risky. We don't know whether it's going to succeed or not. And there's a current technology, and we are trying to create a new technology to beat that, be disruptive. So initially, these are, these are occurring at universities and national lab, where in the universities, we try out proof of concepts, and not the full proof of system yet, but first the proof of concepts. And some of them, as I said, will fail. I never call them failures. These are in opportunities to learn and go back to the drawing board. These are typically funded by the federal government and some corporations, typically around $1, $2, $5 million a year, a couple of years. And after you show the proof of concept, you got to build a proof of system. Once we, it is demonstrated as a system and it is looking good, it's promising in terms of potential economics, then you got to go to the pilot scale. And these are typically, we don't do that at the university, you got to create a large, a small company or work with large corporation, and we need investors from the private sector to create this pilot operation, cost you anywhere from $10 million to $100 million, depending on what the technology is. Beyond that, you, if once you demonstrate a pilot and it's look really promising, you may have some partnership of private corporations coming, creating a joint venture to then develop the supply chain, making sure that it's under regulatory compliance and really paying attention to cost. And this can take anywhere from three to five to seven years, and it can cost you anywhere from $100 million to a billion dollars. Finally, if you go down, then you'll talk about products and services and market adoption. You need private capital, you need public capital markets, these are typically large corporations, and of course these are, there are government policies like federal and state tax policies or regulations that are very important. And of course markets are often created by consumers or also created by carbon prices and government and state policy. So this is the ecosystem that this any technology has to go through. And if you look at electric vehicles today, the battery development started in the 1980s and has gone through, first lithium-ion battery product was in the early 90s and it has gone through this development and now is at the stage that these are products and services going out in the market. To explain all of this at Stanford, we have several opportunities. We have a Stanford Energy Ventures class by Dave Danielson, who was with me at ARPA-E and then became the Assistant Secretary of one of the offices in the Department of Energy. He is now at Breakthrough Energy Ventures and he teaches this class on Stanford Energy Ventures. Along with Joel Moxley, both were PhD students at MIT. Joel is an entrepreneur himself. He has created companies and now he's kind of stepping back and teaching this class at Stanford. In addition to that, we have the Tomcat Center at Stanford which has a wonderful program called Innovation Transfer Program that Brian Bartholomew runs. And this is, if you have an idea that you've created in the Stanford Energy Ventures and you need a little bit of money to kind of, to figure out what to do, this is the program to get to and you'll create, you'll be part of the ecosystem and network of entrepreneurs out here at Stanford. And if you really want to take it out and nurture and look at the business opportunity, there's, right in the Bay Area, we have something called Cyclotron Road, which is, and this is Kendra Kuhl who is a Stanford PhD and she started a company looking at CO2 conversion electrochemically. And the Cyclotron Road is right across the Bay, Lawrence Berkeley Labs, and you can have the world's first entrepreneur. This is a research fellowship that you'll get to create and nurture the company and to really understand, so this is the early days of how you go down the innovation journey. But to really understand what is scaling all about and what is the world in a house that's shaping out and changing, we have a global energy dialogue that we started during COVID-19 lockdown. And in fact, tomorrow morning from 7.30 to 9, we have a wonderful panelist from China and India, Sumant Sina, who's CEO of Renew Energy, the largest renewable power company in India. And Lei Zhang, who is the founder and CEO of Envision Group that has not only wind, but also digital energy as well as they just acquired the battery arm of Nissan and so then the automotive space as well. That's tomorrow and we have a series of previous lectures that you can watch the video. This is just to give you an idea of how this world, the innovation ecosystem is changing and how you could contribute to that. So again, let me stop here. Welcome to Stanford. Happy to answer some questions. Thank you so much, Arun. It's truly inspiring and wonderful talk. I think we have time just for a question or two before we go into a quick break. So if anybody wants to raise their hands. Hi there, Arun. It's Mayank. I'm an incoming Sloan fellow at the GSB. My question is just around your innovation ecosystem and the timeline that you presented specifically for the energy sector. If I add up the various different areas, the timelines to get to market, it comes up to about 15 to 20 years. You mentioned that battery research started in the 80s to get to EV vehicle kind of take up in the 2020s. How can we think about compressing that just going forward and just, you know, given the 25-26 year timeline you gave and as Europe said, the carbonation rate in terms of tackling the two-degree problem. Is there a way we can accelerate, think about even just the ecosystem within energy changing to enable that? That's a great question and frankly we are all, I would say, trying to figure this out, trying to struggle with this because we have to accelerate and shorten the time scale. And what we have to do is to make sure, number one, that the innovations in technology, innovations in finance, innovation in business model are not orthogonal or fighting against each other. That's number one, so that they all align and reinforcing each other and that requires very enlightened policies to align all of those. And if you have the wrong policy looking backwards in time in the real-view mirror, you have a problem on your hands. So policy matters sometimes and so it's very important that we have that as number one. Once we have that, it's very important to have feedback loops. So often people think of this as one-way traffic. It is not. What happens in the market, the people in the early stage research need to know. They need to know what is the techno economics of a process, which is why I was briefly showed that in our research in a lab, in addition to doing the chemistry and the chemical engineering, we are also looking at the economics of this so that we know that we're not going to be at a stage that it'll never going to fly. And if you if it's never going to fly, you might as well know that early so that you don't go down that path into a blind alley. So the feedback loop is very, very important at all of these stages and getting the people at the end of the day, technology transfer like this is a contact sport. So getting the people to understand this process all down the whole value chain. It's extremely important for them to understand and to thereby align the financing and getting more people on. So the feedback loop is again very, very important and for people to be able to understand this process early enough so that they can adapt. Finally, partnerships. This is not going to be solved by a single corporation, a single university or a single lab. So forming the right coalition, getting the right partners to form joint ventures perhaps of some other entities that along a supply chain, so the supply chain is developed along the way, is critical. So thinking that early enough could potentially shorten. So it's not one thing, but it's multiple things. And finally, I would add that in the past, the energy infrastructure was built by large things. You build a nuclear plant of a gigawatt scale nuclear plant, which will cost you about $8 billion. When you have that kind of investment, it is very hard to take any risks. It's very hard to change anything. So it's completely risk averse. The good thing about the new kind of world we are entering is that things are modular. Your solar panel is a module. So you can, you know, one solar panel doesn't work, it's okay. You can, the other one will work and the same thing with wind turbines, et cetera. So trying to go and battery packs, you see the same thing happening. So trying to go modular, there's some benefit out there because if you try to go too large to get the economy on scale, you have other risks that come in. And so trying to go modular, I think it's going to be a way to accelerate that. I hope I answered your question. Thank you very much. That was, as you were speaking, it drew parallels to the COVID pandemic in terms of how a lot of innovation has been accelerated there. So more food for thought. But yeah, that's a great answer. Thank you.