 Welcome back to Think Tech. I'm Jay Fidel. This is Energy in America on a given Wednesday at 3 p.m. with Lou Putirisi, who joins us from Washington. He's the CEO of EPRINC Energy Policy Research. And we are going to talk today about Joe Biden's energy policy, which is really very important. He's rolling out all his people and his ideas, and we see already some issues among the members of the Democratic Party who are interested in such things. And it's going to have to settle down. So let's take a look with Lou Putirisi about what it looks like right now. But I'm sure there's plenty of material to come in the weeks and months to follow, Lou. Am I right? Absolutely. We're going to be very busy. We're going to be very busy next year. There's a lot going on, and some of it is very interesting, and some of it is probably of only of interest inside the Beltway. But we should do it. Okay. Let's see what we can cover today. I thought what I'd like to do today is talk a lot about new administration and the transition to the fuels of the future. What does that mean? How is the degree of difficulty? What is the difference between the aspirational goals and the real world or the realities of the world? And I think at the same time, I think the appointments in the whole national security area where energy environment will be a key feature is a very positive thing. The appointment of, let me see, Blinken, who was, I think, deputy secretary of state. And we can talk a little bit about John Kerry. I think that raises a lot of interest. But Anthony Blinken is the new secretary of state. He's very much in the tradition of the bipartisan view of American foreign policy in the post-World War II era. We're a very big country. We are the premier world power, but we have two big oceans on each side of us. And you cannot operate as a superpower, world power without allies. It's just not possible. And whatever problems our allies give us from time to time, that alliance network and relationship is key to so many things in American security and prosperity for the years to come. And while you could argue some aspects of the Trump administration were not really misplaced in terms of the policy, the execution of it, and I think the style was very counterproductive. I think there's no doubt about that. And so I think Biden sees his role as repairing that front and center for him. He's got a lot of other things going on. We can talk about it as we proceed. Have you seen the rollout of his potential appointments, including Anthony? Yeah, Blake, I think, Jake Sullivan as National Security Advisor. In many ways, although these guys do have experience in the Obama administration, I actually don't think this is a repeat of Obama. I think this is the stamp Biden is putting on that reflects his long, long experience in foreign policy and in Washington. And I have certain concerns about energy policy and what's realistic or not, but this aspect of the administration is, in my view, extremely positive. Well, the comments they made only yesterday, all of them really were so touching. I tell you, it really brought tears to my eyes about the openness and the caring about the country and the willing, as you said, to do multilateral engagement with our allies. It was really fabulous. And there was some stories, one Lincoln story about his grandfather and the American tank in the woods and how he had run away from a death camp in the Holocaust and found this American tank with a star on the side, a white star. And an African-American guy stood up from the hatch in the tank and he looked at him. The two were looking at each other. This little boy, his grandfather, looked at him and gave him the only three words that he knew in English, which were, God bless America. Actually, I believe in these values in the American tradition and the poll. I mean, I get frustrated a lot of times with the millennials. I think they have a very lack of understanding of the post-World War II consensus and what that's about. But that's for another day. I think one of the things, though, is that at some point people are going to get smacked in the head with the reality of the world and how they adjust to that is going to be very interesting. I can tell you, I have a lot of discussions in Japan every week. I think the Japanese are at one level a little apprehensive. But on the other hand, I think they understand that Japan is going to remain sort of the lodestar of US policy in the Asia-Pacific region, which is absolutely essential for you. Well, you kind of alluded to it a minute ago. And I think it's worth mentioning that Trump's departure actually is a time for reflection on policy. It's a time to evaluate and reevaluate and find new directions, especially on energy policy and environment policy. So we're in a very important time right now. Yeah. So what I'd like to do is talk a little bit about how we look for how we think about the transition to the fuels of the future, how American policy and foreign policy is going to play in that. And what is the reality versus the aspiration and how should we navigate this path forward? I think that's really going to be because, you know, yesterday night, I think yesterday night, Greenpeace projected, I'll send you a picture of it, projected on the Department of Energy building, a huge picture of Ernie Monique, the Secretary of Energy during the second Obama administration. Without a doubt, one of the most, you know, intellectual, hard-headed thinking guys on energy policy. And he published something called the Green Real Deal instead of the Green New Deal. I mean, the Green New Deal is, by any objective characteristic, a fantasy, you know, a fantasy of sort of unthinking. And Ernie Monique is very instrumental in negotiating all of the technical aspects of the original deal with Iran, fashioning U.S. energy policy, looking at research and development for transition technologies. He's being called out by the Democratic left as being someone who took money from fossil fuel companies. It's almost as if you're a politician from Texas and someone's criticizing you from taking money from an oil company. Well, I'm sorry. Ernie Monique is not from Texas, but if you're from Texas, you know, the U.S. is the world's largest oil producer, largest gas producer. Fossil fuels are very important to American security and how we deal with them in this going forward requires a lot of careful thinking and not. Yeah, and you'll agree with me that it also is going to involve some friction. There's going to be different viewpoints. It's already starting. It's already starting. But I would say there is nothing. I don't see anything in Biden's appointment so far that he's caving to the more fringe elements of the Democratic Party. I don't see that at all. I think he's right down the middle so far. Let's see what happens. Got to give him credit for that. Yeah, I think he's I think he knows what he's doing. And one good thing about being an old guy is that you don't really worry too much about your future career. Yeah, well, you're making you and me both feel better about that. Exactly. Exactly. So one of the things is I thought we'd chat about today within this political context is what does it how does he, you know, what are the data show us about the task ahead? Right. And then what might it say, particularly in era where we have divided government, by the way, I'm one of these proponents who don't believe it's bad for Biden to have a Republican controlled Senate and a somewhat more moderate house. You look at the recent election. I think the pollsters really missed the mark. There's no doubt about it. They need to sort of own up that these models are not that good. Instead of gaining 12 or 18 18 seats in the house, the Democrats lost something like 8 to 12. I don't know what the final number is yet. Right now we're going into the Georgia runoff elections. If those two seats, if one of those seats goes to Republican, they will have a majority in the Republican Republican. Well, under under Mitch McConnell, they'll just stop everything that Biden wants to do. This is not a good result. Well, it depends on how you think about the more, you know, Biden has got a lot of experience in the Senate and there's going to be whatever you will say about the election, 70 people didn't 70 million people did not vote for Biden. Who has to be. And I think one thing about Biden is he's very likely haven't spent all those years in the Senate, have an understanding that ultimately you have to have a coalition or let's say you have to have compromises to have the government go forward. I don't believe Mitch McConnell will do nothing. I think he will not be amenable to very radical proposals that will disrupt his base or or the national economy. So actually I'm not that. I think there's a lot of cooperative things that can be done. I'm basically an optimist fight. I hope you're right about that. But I really am very worried about it because he has not been demonstrated vision on any initiative so far. It's only been obstructionism. And that's where we are. And I don't know how you settle that out when one side really doesn't want to settle. Let me just say let me just say. Let's take LNG US is now a third world's third largest LNG export in the world. I think you would be quite shocked if I told you most of the permits for where we are in the LNG world today were issued during the Obama administration. And so I think, you know, this view that there is no room for compromise on the relation, you know, on how we transition the fuels of the future, how we deal with climate is just I disagree. There's things that can be done. There's going to be disagreements, major disagreements. If the Democrats try to roll up extremely radical. And in my view, counterproductive strategy. Well, yes, I wear on different sides on that. But let me say that, you know, the whole thing about this is a preface to your slides and the substance of your discussion. But, you know, the whole thing is we had an emergent situation. We have an existential threat from climate change getting worse all the time. I know you and I don't agree about that. But let me say that's got to be factored in not only because it's politically, you know, popular among a lot of people, but because it is an existential threat. Well, but I think we need to remember it's not a US problem. It's not a European problem. It's a global issue. Oh, you bet. And if you don't, if you don't understand the motivations and the pressures, particularly in Asia, when you get through that right now. So maybe what we should talk about is what is the reality what do the models tell us? And, you know, we see lots of models about how easy it is or what we could do to transition to the fuels of the future that we have these transformation technologies, either to remove carbon from fossil fuels or transition to these alternative fuels, which are let's say less damaging to the natural environment or to at least into the emissions of carbon into the atmosphere. So that's why don't we just start there. So as I said, we have a very big project underway. Part of this is with some folks in the federal government to try to evaluate not what is the best policy, but what is the most likely outcome? If you're a planner looking at certain strategic issues and long term force projection, all these things that you might be interested, that think about the security of the United States at a more basic level. One thing you might want to do is, okay, if I step back from the aspirational models and I just look what's happening in the world, what can I know about what the world might look like in 20 years, 20 or 30 years, particularly if you're. So one of the things I'd like to start with, why don't we start with our first slide here by George G.P. Box, a very well-famous British statistician. And you know, in my business, people say, well, did you look at the model? The model shows we can do X or Y. And he had a very interesting comment. He made this comment during the 30. All models are wrong, but some are useful. And I thought we'd go through the, I thought we'd go through some of what the model show. And more importantly, what the nature of the challenge is and why the challenge is so difficult and why alternative strategies are likely going to have to emerge over time. This is my theme tonight. And this is part of the challenge for President-elect Biden. And if you like the secretary of the planet, John Kerry or something. I love that secretary of the planet. Who could be more important, you know? Yeah, yeah, I'm sure you. Okay. So here, I think this is really important. We may have talked about this in the past, but it's very important to understand. We have spent 20 years in the West, gobs of money on transitioning to the fuels of the future. We talk every day about how efficient solar is, how fantastic, you know, wind, you know, how things are just, we're just, we're making the transition remarkably. So this is the end of, this is the end of the beginning of 2019. And if you look at this chart, this is what we call global primary energy consumption. And this is Vakalak Smeel, who I know quite well. And he tried to get all the energy down to a common base number. And just take a look at this chart for a minute. This is what the world consumes. And it consumes, and the first thing I want all the, you know, the listeners and participants tonight to look at is that there's not really a case in the modern history of the world from 1800, where we transitioned out of an old fuel. We just added new fuels. That's what the history shows. You might not like the history, but that's what it shows. And that fossil fuels, oil, coal and gas, while we've had shifts within fossil fuels towards gas and away from coal and parts of Europe and around the world, these are the dominant fuels for a reason. They have energy density. They're easily moved around. The liquid fuels can be put into pumps, and they're just outstanding for transportation. Yes, and we have these other things. We have batteries and all these things. And notice even what we call traditional biomass, which in parts of the world is called firewood or peat or whatever we do in parts of Africa. And keep in mind, this is a global problem. So this is the problem you have to deal with. It's very nice to talk what you're doing in California or in Germany, but that's not the problem. The problem is the global challenge. One thing that seems clear is that this is driven by convenience. It's driven by the way we've always done it, and it's driven certainly by economics. Absolutely. And it's not driven by climate change. It's not driven by, you know, concern about the future of the planet is not driven by that. And I think it's because a good part of the planet, maybe most of the planet of humanity really doesn't buy in. They don't understand that. I don't think that I think they know it's a problem. But if you don't, if you have a large amount of your population with low income, you need to have strategies. If you want to stay in office, if you want to keep a political consensus together in your country, you can't price 80% of the population out of the energy market. They're just not going to go for that. You're really going to... So let's go... The whole thing about dealing with climate change requires sacrifice. It requires sacrifice by the whole world. And we're not getting that for the very reason you articulated. And that is people are concerned with things that are closer to them. Where the next meal is coming from, what have you? So let's go to the next picture. So this is the other question I think is very... So actually this shows that in the U.S., people talk a lot about the massive improvements we've made in renewables, and we have. But if you look at the primary consumption by energy source in the U.S., less than 4% is wind and solar. Yes, we have other renewables. We have biomass, which has been around a while. We have ethanol, we have biofuels, we have even wood. But I just don't want everyone to think that somehow there's a reason these massive investments have not really moved the needle as far as you would believe reading the front page of your newspaper every day. Or talking about Tesla or Leone and Musk as one of the richest people in the world now. All these things are true, but you have to step back and look at the big picture. Then let's look at the next one on, I think, emissions. Yes. So here's the real story. If you don't have a transformation program for Asia, and this is all about the Asia pivot, you can forget about making a massive debt in climate. The whole game is about Asia. Asia is where the growth is. Asia is where the growth of emissions are. Europe and the U.S., where our growth is, if you look at that, we're important. And if you go to the next picture, I think we can see something. Yes. This shows you what the most advanced, most optimistic models are showing. And you see even in these models, we still rely by 2040 or 2050 on fossil fuels. Now maybe we can capture the carbon from a lot of those fossil fuels. And that's why I want to look at one more, which is the emissions in Asia. If you look at the future emissions, and if you took the OECD country, the Western OECD country, plus Japan, and you reduced their carbon emissions to zero, we would only get down to about 1995 emissions. The future of climate control to the extent it's related to carbon emissions lies in Asia. Without a plan for Asia, what we're doing in the West is only going to have a minimal impact. And when we talk about Asia, we've talked about this before. Really, the wild card is China. And then India and the rest of the South Asian countries. And so any program going forward is going to have to engage the Asians in the strategies which are cost-effective, and frankly, attractive enough that they're willing to make the commitments long-term. And I think without that, we're in a lot of trouble. And then finally, let's take a look at how varied and how much uncertainty we have. This is, I think, fascinating. These are all the major economic energy models that have been run in recent years. And I want you to see here that the uncertainty on the future of coal is just massive. We don't really have a consensus yet on what's going to happen to coal demand. And really, that's where the biggest opportunity is to reduce carbon emissions. Well, aren't those lines indicating that there's going to be a reduced demand for coal? Yes, but look at the difference. I would say the difference in the models, though, are really stunning. And if you look at the IEEJ, which is the Institute of Energy Economics Japan, who is one of the few groups there that has detailed knowledge of Asia, they see coal continue in Asia. Now, what's interesting about the Energy Information Agency, their increase in coal from 2040 to 50 might not make sense, but embedded in their model is some breakthrough technology to capture the carbon and coal. These are all analyses, expectations, predictions, based on certain assumptions, of course, and that's what modeling is all about. And that's why that first quote that you raised about all models are wrong, but some are useful for advocacy, I think. But the problem is it doesn't fold in the possibility that AOC or others in a new green deal, they may not have what they want, but they might have some success. And Biden, he'll be in the middle of the road, but he'll be looking for a greener future to satisfy his own sensibilities, but also the political progressive crowd that wants him to turn to green. And so that's not really in these charts. And the question is, and this is the title question of the show, what is he going to do? What should he do? How is he going to affect these charts? So I'm going to start off a little story. Shortly after I became a parent that former Vice President Biden would become the new president, he got a call from Prime Minister of Canada, Fudo, congratulating him. And then Fudo raised the issue of the Keystone XL pipeline, which is still going through regulatory struggles and stuff. And which I believe Biden wrote on, wrote Biden announced or at least on the public, I mean the Democratic platform that they were opposed to the Keystone pipeline. The Keystone pipeline brings crude oil from the heavy oil fields out of Alberta into the United States. It's part of the North American production and distribution platform for crude oil. It's very important to Canada. Canada, in fact, you could argue shut down all their coal facilities to make room for that in some kind of climate view of the future. I was told by a very high place Canadian that Vice President, President-elect Biden said, look, I will look at, I will look at. And so here is an administration coming out. The first thing they're worried about is alliance cohesion. One of our most important allies calls up and said, you know, let's not forget about that Keystone problem. So this whole administration is going to have to balance a lot of very tough competing interests. And energy security is least in the next 20 years. The ability of us to export and to be a net exporter petroleum products is going to be a key feature. How he resolves that with a more, let's say, radical or aggressive elements of the Democratic Party is going to be the key to his future in my mind. And I think there is a pathway in what you put so we put a lot more money into research and development. We spend a lot more effort in trying to find a path forward. On the other hand, we don't blow up what we have. So keep in mind that our allies also have mixed obligation and mixed goals. Security of the existing energy mix at the same time they want to begin to transition to the fuels. Well, he said he was going to rejoin the Paris Accords on day one. This is not as easy as it sounds, because you have to demonstrate commitment to reduce greenhouse gases. You have to go below a certain percentage and you have to put institutional structures in place to do that, which we do not have in place. And so he's going to be stuck with the problem. It's very nice to have aspirations, but you have to follow through. It's very nice to please your allies, but you have to follow through. We have to put his money where his mouth is. Keep in mind, keep in mind that the US never signed the Kyoto protocol. But of all the perspective and members, the Kyoto protocol, the US exceeded all the targets by a wide margin. And we did that because we had a massive surplus of natural gas, and we were able to back out coal with cheap natural gas. So this is a very complex problem. And how we transition and how we deal with it is going to be critical going forward. You know, for all the complexity though, he's still got to keep his eye on the ball, whatever the ball is. He's still got to keep his eye on the horizon in terms of aspiration to get there and not be stuck in the details, not be stuck in the complexities you talk about. So that's why I want to ask you one question finally here in this discussion. Let's make you a member of his cabinet for a minute. Let's make you the energy man. What is your recommendation for how he can handle this? What is the goal? What is that undying vision out there that he should be looking to? And how should he deal with all of these issues that come and hang on him, which we expect on energy as he goes forward. So, you know, if you were a member of the cabinet, you also would be a political person. And so you would think about, you know, you've got elections. We had that. We had that being political people. I think, you know, we've had a hint now that maybe they won't. Maybe they'll be, you know, altruistic. Maybe they'll be thinking of the country in general rather than politics. My fingers crossed on that. I maybe lived in Washington too long. So the point is, is that the strategy if I first, I don't think anyone's going to be asking me for my opinion, but I would just say the strategy would be. You have this great endowment of natural gas in the US, don't do anything. It's a great transformational fuel, possibly a bridge fuel. And the first thing you want to know it's very important for politics and Pennsylvania and Texas places where you want to keep a coalition together. You've got midterm elections coming in 2022. So you want to make progress on climate, but you don't want it to be counterproductive. So in the early years, focus on technology development on research on engaging your allies on getting on the gradient. But say away from mandates, strategies which really destroy a lot of existing industries before their era of decline is fully in place. And, you know, try to build on that going forward. You talked about, you know, the economics of it and the politics of it, but what about the, you know, aspirational goals for, you know, for the humanity for the planet? What vision should he have there? Well, I think the, you know, there is a technocratic solution to that way to think about that and that's some combination adaptation and getting on the, you know, trying to find trying to open up the system so that there can be exploration of the fuels of the locus into one strategy, right? We need policies which are robust against uncertainty. And there's a lot of uncertainty, including a certainty on the damage function for climate. And if you have a commitment to say we know the answer and we're going to go all in for when and we're going to forget about that's a huge mistake. Because we have a whole history, I should say, a whole history. You know, the U.S. spent one and a half billion dollars on a hydrogen car in the Bush administration. We spent a fortune on the Clint River reactor when we thought a nuclear power would be too cheap to meter. So we have a lot of experience out there. And one of the things we really need to understand is it's not the government mandated programs don't always work that way. Oh, true. But part of it is follow through and I wanted to ask you one last thing. Don't you think that in energy and other issues as well, but in energy, it's a matter of advocating. That's a matter of educating. And more than anything, it's a matter of leadership. It's a matter of saying I have considered this and I've talked to the best and the brightest. This is the way we're going to go. This is my judgment on it. You elected me to lead you and I'm going to lead you down this direction. And sure, I'll, you know, I'll deal with issues and I'll try to satisfy all the people I can satisfy. But at the end of the day, this is the direction that's leadership. The buck stops here, you know, but now I think we have to factor that in, don't you. Sure, that's very reasonable. But once again, we have a lot of history of government failure as well as some success. And so any strategy should, as I said, should directly address the uncertainty. He should provide that leadership, but he should have a sense that the strategies undertaking has some sustainability over time. Yeah, that's the magic word. There's so much more to talk about Lou. I mean, we, you know, you touched it for a moment there on nuclear energy. I don't think that's over. That may be an important piece going forward. And this is like a, it's a whole reevaluation, a moment of reevaluation. I really look forward to our discussions going forward because all these issues, you know, all these possibilities are worth discussing. So let's, can we do this again in a couple of weeks then Lou? Absolutely. I'm not going anywhere. Please don't. Please stay at home as much as you can, even including on Thanksgiving. I have a happy Thanksgiving to you and everyone at Think Tech and all my friends in Hawaii. Thank you, Lou. It's so nice to talk to you. Take care of you well.