Climate One

Energy Innovation: Overhaul or Tweak? Severin Borenstein, Co-director, Energy Institute, Haas School of Business, UC Berkeley Richard Lester, Director, MIT Industrial Performance Center Dan Reicher, Executive Director, Steyer-Taylor Center for Energy Policy and Finance, Stanford America’s innovation engine is the envy of the world, yet it struggles to deploy new technology at the scale commensurate with its economic might. This panel of experts from three of the nation’s leading universities says that the U.S. risks falling behind if it refuses to address the technical, financial, and political barriers slowing energy innovation. Richard Lester, Director, MIT Industrial Performance Center, lays out what he calls the three waves of energy innovation: energy efficiency in this decade; the scaling of low- or de-carbonized energy supply technologies beginning in 2020 and running through about 2050; and breakthroughs we don’t even know about today, or may know about but are in the lab stage, but that can take decades to mature. Dan Reicher, Executive Director, Steyer-Taylor Center for Energy Policy and Finance, Stanford University, is especially bullish on the promise of Lester’s first wave, energy efficiency. “It is the low-hanging fruit, and it’s also the low-hanging fruit that grows back. We don’t use it up,” he says. Reicher says that energy efficiency and other low-carbon technologies are needlessly held back because we ignore one or more critical criteria: technology, policy, and finance. And even when easy efficiency gains are there to be had, such as in new cars, says Severin Borenstein, Co-Director, Energy Institute, Haas School of Business, UC Berkeley, we are slow to act. “The technologies are getting better, but gasoline, for the most part, remains cheap. When you ask people how much they need to save to drive a smaller car, it’s a lot more than most people are willing to give up,” he says. These difficulties and more – think our broken political system – have convinced Richard Lester that a new approach, one not dependent upon raising the price of energy, is necessary. “It may be time for a shift in the policy debate to focus less on what is certainly the key requirement of increasing the price of energy to reflect these costs and focusing more on the other half of the equation, which is figuring out how to reduce the cost of the things that we actually want, which are low-carbon energy technologies and efficiency,” he says. Dan Reicher shares Lester’s concern about our broken politics, particularly as it is manifested in the GOP focus on the bankruptcy of Solyndra. “We may be demanding that anything that we put money into has got to show very reliable, very quick success. And not allow for what innovation requires, which is placing bets,” he says. Severin Borenstein urges policymakers to ramp up funding for basic science research, in part because he is pessimistic that existing renewable energy technologies will be sufficient. “The technologies that are going to solve this problem don’t exist yet,” he says, adding that “most of the technologies that exist don’t have the potential to be cost-effective with fossil fuels.” “We can’t take our eye off the price on carbon,” he says. This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on November 3, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

Executive Chairman, Ford Motor Co. It might sound strange coming from the scion of a family whose name is synonymous with cars, but Bill Ford is worried about a world with too many automobiles. “Even if we clean up our cars, 4 billion clean cars is still 4 billion cars,” he tells this Climate One audience. “Most everybody has been focused on CO2 and fossil fuels and the effect that has on us politically and environmentally. That’s absolutely an appropriate focus,” says William Clay Ford, Jr., Executive Chairman, Ford Motor Co. “But I have started to realize that there is this other looming issue lurking out there that nobody was focused on, and that’s what I started calling ‘global gridlock.’” In a world of 4 billion cars, “How are they going to move? How are we as mobility providers going to provide solutions, and not be part of the problem?,” he asks. His answer, to a large degree, is technology. Ford gives an example. His company is testing a fleet of demonstration vehicles outfitted with vehicle-to-vehicle information technology. Say you are about to enter an onramp for the freeway. Five miles ahead of you, another car rolls to a halt in stop-and-go traffic. You would receive an alert about the traffic jam and be given an alternate route to save time and prevent a larger back-up. Climate One’s Greg Dalton asks if Ford and other automakers feel threatened by the increasingly popular trend of urban car-sharing such as Zipcar. Without hesitating, Ford says: “I think it’s a great opportunity. People don’t have to own cars; they want to have access to cars.” Beyond giving customers access to mobility, Ford stresses his company’s commitment to changing the way cars are fueled. It is investing in R&D in compressed natural gas, hydrogen, fuel cells, and biofuels. But “we are making big bets on electric,” he says, with an all-electric Focus coming later this year and a plug-in model next year. Ford says that his company is also committed to improving the fuel economy of every model it makes. Four years ago, the company set a goal of being the fuel economy leader in every model category. Ford is investing in a suite of technologies, Bill Ford says, because “we really don’t know how the world is going to break out.” He adds: “Until this nation has an energy policy, which we desperately need, all of this is going to be sub-optimized.” This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 27, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

US Senator Jeff Merkley (D-OR) America should wean itself from foreign oil and invest in clean energy technologies and infrastructure. Join us for a broad conversation about what Congress could do to promote electric cars, create jobs and spur development of biofuels from forests and agricultural lands. This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 26, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

Beyond Petroleum: Lessons from the Gulf of Mexico Bill Reilly, Co-Chair, National Oil Spill Commission Bob Graham, Co-Chair, National Oil Spill Commission More than a year after oil stopped gushing into the Gulf, the co-chairs of the commission tasked with investigating the Deepwater Horizon oil spill appear together in this Climate One panel to assess the nation’s response to the disaster. Bill Reilly and Bob Graham commend the Obama administration for overhauling regulation of the offshore oil industry, and praise the oil industry for initiating internal reforms, but they blast Congress for doing next to nothing to respond to the spill. Former EPA Administrator Bill Reilly says that the administration and the oil industry have heeded the call for reform. “The systemic reforms that we recommended are underway, certainly in the Interior Department under the direction of Michael Bromwich at BOEMRE and Secretary Salazar. They’ve issued any number of new rules on safety and environmental management that are long overdue, I think, and very defensible, very professional, and very appropriate.” Less expected has been the aggressive push by the oil industry to take control of its own conduct. “Very promising, and to some extent surprising, has been the response of industry,” says Reilly. “Frankly, industry has done more than Congress to respond to our report,” he says. Asked by Climate One’s Greg Dalton to grade the government and industry implementation of commission’s report, former U.S. Senator Bob Graham says: “Probably, in both places, it would be ‘incomplete.’ The actions that have been taken at the executive level in the federal government are very encouraging.” As for Congress, Graham is less than impressed. “The Congress would not get a very good grade because they have essentially done nothing, and in some instances have gone backward.” Reilly and Graham express frustration that the five Gulf states have been unable to reach agreement to settle monetary damages and fund restoration. “We’re still waiting to see what the final settlement looks like, where the money goes,” says Reilly, but “one hopes it goes to restoration when it’s finally allocated.” Graham and Reilly also want money dedicated to monitoring potential health impacts of the spill for residents and those who consume Gulf seafood. “To fully assess the health implications of this event, and the environmental implications, we’re going to require an extended period of time and a substantial investment in research,” Graham says. Graham and Reilly also agreed that we need to reduce the demand for oil – and hence the need for more drilling – altogether. “I don’t see the United States engaged in any serious thinking about what its economy is going to be in the post-oil era,” Graham says.This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 21, 2011 This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 21, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

Beyond Petroleum: Navy Seals Leading the Charge Jackalyne Pfannenstiel, Assistant Secretary of the Navy, Energy & Installations Jeremy Carl, Research Fellow, Hoover Institution, Stanford University The U.S. military has ambitious plans to reduce its dangerous dependence on oil and other fossil fuels. Can the buying power of the Pentagon drive innovation in new energy technologies and create markets? This conversation explores how the U.S. Navy and other military branches can align their intellectual and financial capital to accelerate and broaden the transition to cleaner sources of electricity and transportation fuels for American forces and the American economy. This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 21, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

Saltworks and Beyond Peter Calthorpe, Principal Architect, Peter Calthorpe Associates David Lewis, Executive Director, Save the Bay Jack Matthews, Mayor, San Mateo The debate over Saltworks, a proposal to build 12,000 homes on former salt ponds in Redwood City, is a harbinger of coming development fights in the age of climate change. In this October 18 Climate One debate, architect Peter Calthorpe argues that the need for housing in the San Francisco Bay Area is so great that infill development alone can’t meet demand; conservationist David Lewis counters that developing one of the region’s last unprotected wetlands is not worth the cost. “This is not a site for housing,” says Lewis, Executive Director, Save the Bay. “This one area in Redwood City was held onto by the Cargill Salt Company because they wanted to develop it,” he says. “They have no entitlement to develop it. The city’s general plan says it should remain as open space. It’s a priority area for acquisition by the federal wildlife refuge.” “I do have some concerns about it,” says Jack Matthews, He concedes that the development, as planned, seems isolated. Peter Calthorpe, Principal Architect, Calthorpe Associates, argues that Saltworks needs to be assessed not as a stand-alone development project but as a response to regional pressures. “The larger context is that for a very long time we’ve been building more jobs than housing—particularly in the west side of the Bay, in Silicon Valley and the Peninsula. The jobs housing balance has been so askew that we have people commuting from outside the nine-county Bay Area. We’ve been pushing housing way to the periphery.” Citing the Association of Bay Area Governments, Calthorpe says the region will need 72,000 new housing units to keep up with expected demand. There is no way to satisfy demand by only building transit-oriented development along El Camino Real, the region’s main north-south artery, he says. Calthorpe challenges David Lewis to answer how the region can reach a jobs-housing balance without employees moving to sprawling developments in Tracy or Livermore or Gilroy, if projects such as Saltworks aren’t built. “When you push housing farther and farther to the periphery because you don’t want to face up to the challenge in these jobs-rich areas, the environmental footprint, carbon emissions, VMT [vehicle miles traveled], energy consumption, and land consumption—because we all know it’s lower density once it gets out there – all of that, in many cases, is on pristine habitat or farmland.”We do it by building on already developed land and re-configuring our cities, Lewis answers. Saltworks “should have been dead on arrival in the beginning because it’s not the right place,” he says. This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 18, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

On Energy, Security and the Remaking of the Modern World Daniel Yergin, Executive Vice President and Chairman, IHS Cambridge Energy Research Associates; CNBC Global Energy Expert; Author, The Quest: Energy, Security, and the Remaking of the Modern World Bullish on technology’s ability to tap previously unreachable oil and gas, energy analyst Daniel Yergin tells this Climate One audience to expect the age of fossil fuels to continue well into this century. Yergin is author of The Quest: Energy, Security, and the Remaking of the Modern World, sequel to the Pulitzer Prize-winning history of the oil age The Prize. A pivotal year for Yergin is 2004 when, he says, the world woke up to the surge in energy demand in emerging markets, notably China. After Yergin’s opening remarks, Climate One’s Greg Dalton reads a 2010 statement from International Energy Agency Chief Economist Fatih Birol expressing concern over rising global oil demand and urging a transition from oil. Yes, the statement was reasonable, Yergin says, we will run out of oil someday. But “we’ve run out of oil – and I don’t say this facetiously – five times.” Referring to the oil shocks of the 1970s, Yergin says, “There are people in this room who know very well that we were going to fall off the oil mountain – and production is now up 30%. We haven’t used up half the world’s oil; we’ve maybe used up 20% of the world’s oil.” Keeping up with demand isn’t just about making new discoveries, Yergin says. Also important are extensions and additions to existing oil fields, prolonging the life of oil plays thought to be exhausted. “It’s technology,” he says. “There’s a tendency to think that technology stagnates, that where you are is where you are going to be. But, in fact, the industry is basically run by scientists and engineers who are trying to push the technology along.” During the audience Q&A, Yergin is asked if he agrees fossil fuel subsidies needed to be reduced to level the playing field for renewables entering the market. “The subsidies question is very complex, and it really depends upon definition,” he says. Jobs are being created in the renewable industry, he says, “but I think the thing we’ll probably see in the next month or so is the fact that in the last three or four years – and this seems counterintuitive – a lot more jobs have actually been created in the conventional energy industry than in the green industry. That doesn’t mean that’s going to be the case five years or 10 years from now when those industries are much more mature.” This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 13, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

Red Alert: China Time, China Scale Peter Greenwood, Executive Director of Strategy, China Light and Power Group Stephen Leeb, Co-author, Red Alert Alex Wang, Visiting Professor, UC Berkeley School of Law Julian Wong, Attorney, Wilson Sonsini Goodrich & Rosati; Former Advisor, U.S. Department of Energy The four China watchers assembled for this Climate One panel debate the motives for, and the implications of, China’s domestic climate action, particularly its abundant clean energy investments. Stephen Leeb, co-author, Red Alert, is the panel’s contrarian. “I don’t think China does anything with the world’s interest at hand; I think they do everything with China’s interest at hand. Climate change is very much a mixed bag for them. Much more important to them is the issue of resource scarcity.” Leeb was suspicious of the intent of China’s renewable energy investments. China, he says, aims to control the solar market to the detriment of foreign players, including the United States. Julian Wong, an attorney with Wilson Sonsini Goodrich & Rosati, agrees with Leeb, up to a point. Yes, energy is a pivotal issue in China’s economic growth, he says, and scarcity issues are “high in the minds of China’s leaders.” He also cites the increasing importance of environmental protection in preventing unrest. “Ultimately, this Communist Party is in power as long as the people allow it to be. If you are getting protests by citizens, by residents, on very fundamental needs, that’s going to get the attention of leaders.” Alex Wang, a visiting professor at the UC Berkeley School of Law, emphasizes the importance of the environmental protest movement, citing events this summer at a chemical plant in the city of Dalian and at facilities operated by Jinko Solar. “People are getting more wealthy. They are getting better educated about environmental issues, and they realize that is impacting their health, their children’s health,” he says. Counter to Stephen Leeb, Peter Greenwood, Executive Director of Strategy, China Light and Power Group, says we should vaunt not vilify China’s investments in wind and solar. “It’s not actually, necessarily, a bad story for the rest of the world. Wind turbine prices have fallen in the last couple of years by about 20%. A lot of that is due to the efficiency and scale of Chinese manufacturing,” he says. “What does that do? It means that wind projects that were previously uneconomical become economical. Sites that were previously not feasible become feasible. Subsidies that might otherwise have to be paid by Western and other governments can perhaps operate at lower levels. That’s a beneficial story.” This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 12, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

Drop In, Scale Up? Ed Dineen, CEO, LS9 Alan Shaw, CEO, Codexis Jonathan Wolfson, CEO, Solazyme Next-generation biofuels are on the verge of a breakthrough but aren’t ready to displace conventional fuels, three Bay Area biofuel company CEOs say in this Climate One talk. The CEOs insist that their fuels must compete on price with conventional gasoline or diesel, with or without government support, or a price on carbon, which means they have to scale up, fast. For biofuels to scale, all agree, they must be drop-in fuels. Meaning, says Jonathan Wolfson, CEO, Solazyme, “a fuel that fits directly into the existing infrastructure without modification.” “You’ll not replace mass transportation, internal combustion engines, in our lifetime – not at mass scale,” says Alan Shaw, CEO, Codexis. “What drives it is a liquid transportation fuel. We need an alternative to that. We’re still in the very early days. And that’s because the technology is not ready to be deployed at scale.” Ed Dineen, CEO, LS9, says “for the type of technologies we’re practicing” – second-generation biofuels – “I think three years you’ll start to see plants be established. And once the initial plants get established, and we learn the technology, the acceleration will pick up,” he says. “The bigger issue is the capital intensity of these plants,” he adds. “If we see a world of $150 [per barrel] crude, I think that’s going to accelerate the pace of this technology,” he says. Agreeing with Jonathan Wolfson, Shaw says that “the key driver of economics here is feedstock costs” – in this case, sugars. Promisingly, he says, the second-generation cellulosic sugars that he and fellow panelists’ are developing run about a tenth the cost of their first-generation predecessors. The larger price competition, biofuels pitted against conventional crude, would be a fairer one, Wolfson says, if the two sides were evenly matched. “There is one thing people forget, which is that the big integrated oil companies have had 100 years to bury subsidies in all kinds of places. People are talking about Industry should stand up, and We should all be dependent on alternative and renewable fuels meeting parity with petroleum. But the truth is parity isn’t parity because of all these hidden subsidies.” This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 6, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices

Truckin' John Boesel, CEO, CALSTART Mike Tunnell, Director, Environmental Affairs, American Trucking Associations Alan Niedzwiecki, CEO, Quantum Technologies In August, the Obama administration announced the first-ever fuel efficiency standards for heavy-duty trucks and buses. The three experts convened at this Climate One panel say that the trucking industry is ready to meet the new rules, which require semi-trucks to reduce fuel consumption and greenhouse gas emissions by 20% by 2018. “What’s exciting now is that we have some decent public policy in place,” says John Boesel, CEO, CALSTART. “The engineering talent that was dedicated to cleaning up the criteria emissions is going to be applied to helping reduce our dependence on oil and cut greenhouse gas emissions. I think we’re going to see a lot of innovation in this space.” The new rules “will encourage fleets over this short term to develop best-available technology that is there today. It won’t really be technology forcing,” he says. At the same time, he adds, fleets will be looking at alternative fuels, especially natural gas, when they make economic sense. Mike Tunnell, Director of Environmental Affairs, American Trucking Associations, agrees, pointing out that with diesel prices hovering in $3 to $4 gallon range, “fleets are beginning to look more, in America, at alternative fuels and natural gas in an effort to cut some of the fuel costs.” But, he cautions, there is a flip side: the upfront costs for equipment are higher, and fuel availability becomes a concern. Climate One’s Greg Dalton picks up on the supply worries later, asking if fleet operators are concerned energy firms might not meet California’s Low-Carbon Fuel Standard, which aims to reduce the carbon intensity of California’s transportation fuels by 10% by 2020. “There will be some concerns,” says John Boesel, “but this is a regulation that will encourage them to be more innovative and more creative than they have been in the past.” David Mazaika, Chief Operating Officer, Quantum Technologies, says that plenty of examples, including hybrid buses now in service, prove that the fuel standards can be met. “It certainly can be done; the industry just needs to focus on that. Now, with the new legislation, there are some targets out there that the industry can focus on and really strive to meet.” “The technology is out there to be able to support these types of levels,” he says. “It will be a wide spectrum – everything from aerodynamic improvements to hybrid-drive systems and different fuels.” This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 5, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices