Transcript: Gigawatt Renewables
THE CNA CORPORATION
GIGAWATT RENEWABLES
SPEAKER:
JOHN MIZROCH,
PRINCIPAL DEPUTY ASSISTANT SECRETARY,
ENERGY EFFICIENCY AND RENEWABLE ENERGY,
DEPARTMENT OF ENERGY
MONDAY, MAY 12, 2008
Transcript by
Federal News Service
Washington, D.C.
MIKE AMMONY (PH): If I could have your attention, I’ll start. My name is Mike Ammony, and I work with the Department of the Air Force. And I have the pleasure to introduce my friend, John Mizroch, who is going to speak to us tonight about “Gigawatts of Renewables,” or translated, how we’re going to meet the mandates in the presidential executive orders, and associated in the case of the Department of Defense, the National Defense Authorization Act which challenges the departments and agencies of the Department of Defense to achieve a 25-percent renewable portfolio by the year 2025.
John is the principal deputy assistant secretary within the Office of Energy Efficiency and Renewable Energy, and is most appreciative of us to have you, John, in that your portfolio is, in fact, a renewable portfolio. And so I’m not going to spend anymore of my time. I’ll come back at the end. Usually, there’s an opening presentation that you would give, and then if you’ve got the time for Q&A, I’m sure there will be from this crowd some questions that hopefully you can field the answers for, or you can pass it back to the staff to respond back to.
JOHN MIZROCH: Michael, thank you very much. (Applause.) Thank you, Michael. In fact, I would like to leave a lot of time for Q&As. I don’t want this to be a lengthy lecture. But in fact, I do have some broad, important things that I would like to say, and really to posit to this group. I talked with Scott and with Mitzi and others, and this is a very knowledgeable group of people, and I expect some good questions.
But before we do that, I want to share with you my perspective of two years of being the deputy manager of this portfolio, and before I get specifically into our program, let me make some observations. My unofficial non-government, back-of-the-envelope observation is that the United States of America is now spending more money to import foreign oil than it’s spending on defense.
If you do the numbers, which were, before the latest price rise, that we were spending $1.5 billion a day to import oil, and I think that figure’s gone up since the price of oil went up. We’re now spending more than half a trillion dollars to import oil, almost $550 billion. And if that doesn’t sober you to the fact that energy is the number one issue facing America in the world today – which everybody here knows, but maybe you don’t know some of the statistics I’m about to give you – I don’t know what would sober you today.
From EERE’s perspective, energy is the number one issue, and it is defined broadly by two specific but different things: one is energy security and the other is climate change. Energy security for America is broadly the fact that there are eight countries in the world that control 80 percent of the world’s oil, that America depends – its economy depends on liquid transportation fuels for our buses, our cars, our trains, our trucks, our barges, our aircraft and other. And supply is constrained for many reasons, some of which I’m about to talk to you now and we are in an unacceptable position.
And the national security implications are similar. I don’t necessarily need to talk about it, but our national security depends on liquid transportation fuels as well.
Climate change, I’m not going to talk about in detail except that I will provide you with what I think are some of the solutions sets for climate change. We, at EERA, believe that climate change is real, believe that we have to do significant things. That’s what the gigawatt scale title is about, but I’m not going to go into the science.
So why are we in this situation? Who do we have to blame for it? I tell my children that if you want to be a really good American, you find somebody else to blame. Whose fault is this? We have to go and find somebody to blame. And the answer is that it’s nobody’s fault, and it’s everybody’s fault. The last – the two big things that happened in the last half of the 20th century were not the discovery of penicillin or the invention of the television or computer or the Internet, whatever. They, in fact, were population increase and urbanization at a scale, a size, unprecedented in human history.
In 1950, there were about 2.2 billion people in the world, and in 1990, 40 years later, there were five billion, and in 2000, there were six billion, which means that we grew a China or an India in a decade. In 1950, there were two mega-cities, cities with populations of eight million or more, just two. And most people can’t guess – most people guess New York, and they can’t guess the other one, but it was London. And there were about 190 cities that had populations of a million or more. In 1990, 40 years later, there were about 800 cities with populations of a million or more, at least 21 mega-cities, and in 2000, the mega-cities became 34, possibly 40.
Now, at this point in time, there are 43 cities in China that have populations of four million people. The same is true for vehicles. Everybody is looking at the world price of oil, and scratching their heads and crying. Our economists are all going, gee, we’ve reduced consumption in America by 1 percent or 2 percent. Why isn’t the price falling dramatically, and whatever? It’s all about cars; it’s all about trucks; it’s all about vehicles.
In 1950, there were 70 million vehicles in the world, cars, buses and trucks. And in 1990, there were 600 million vehicles. And now, or last year, we estimated that there about 900 million vehicles, give or take 50 million or so. But that is changing dramatically. China, which had no vehicle industry to speak of, and where in 1990, there was no private vehicle ownership – you couldn’t own a vehicle if you were a citizen in China. In 2006, 16 years later, it became the second largest vehicle market in the world. There were almost seven million vehicles sold in China in 2006, and almost all of them were made in China.
We commissioned a study, a report from (Argonne ?) about two years ago that was published about a year ago that tracked what the vehicle market would look like. And it said in 2000, that they thought there were about 30 million vehicles in the country. And they plotted a trajectory that said that within 10 years, China would be larger than the U.S. annual vehicle sales market – that’s about 15 to 16 million a year – and that in 20 years, China would get up to about 200 million vehicles.
So how did our report do? It turns out that our report was pretty conservative. In 2006, they sold seven million vehicles, and in 2007, the sales were up 24 percent to nine million vehicles, and almost all of them made in China. And this year, for the first quarter, sales were up 20 percent again.
So basically, what that means is that again, unofficially, not – that instead of 10 years, China will become a larger vehicle market than the U.S., annual vehicle market, in four to five years, and that they will get to 200 million vehicles or more within 10 to 15 years. And India is right behind them, so it’s not a mystery where oil is going, particularly if you’ve had people come, as I believe I’ve read your program, “Peak Oil.” I don’t know if I believe in peak oil or not. I just know that the oil production is not keeping up with vehicle production.
So one of the reasons that I was late – Scott suggested that I mention this – is that from the strategic, economic dialogue that Secretary Paulson started, it was decided to do a 10-year energy working relationship between the U.S. and China on energy and environment. And transportation will be a part of that dialogue since the U.S. and China are now the number one and number two vehicle markets in the world. It’s not just about cars, but that will be a large part of it.
And I’ll be probably headed back to China next week to begin a work plan discussion with the Chinese about what our discussions are going to look like, what the role of government is, what the role of the private sector is, how should we work together to displace petroleum, make sure that the vehicles that we’re both either building, or the vehicles that are sold in our markets, are different than the vehicles of today.
And I’ll talk about our programs. We – EERE is going to spend more than $600 million this year on various vehicle technologies, which again – which I said I’ll talk about later.
So what are we doing about it? What is America doing? And so what I’m going to do briefly – and I’m not going to spend a lot of time on each slide – is I’m going to give you a range of the 10 programs that we manage, the collaboration briefly with the private sector that we’re in, and I’m going to suggest to you that as much as I think we’re doing, it’s not nearly enough. It needs to be significantly more.
And I think that we need to have a much bigger conversation around this issue, not just editorials in the press, not just people that are well meaning, but some serious discussions about what America is going to do over the next 10 years, and particularly to 2030.
So this is – these slides I’ll make available to the audience, if you want them. This is broadly our mission. And we take this displacement of petroleum – I do – very seriously. I think that that is a critical mission, and I’m going to talk about that at the very end of my remarks.
These are broadly the programs in my portfolio, our portfolio, stationary power generation – that’s wind – solar, geothermal, fuels. Its vehicle technologies which includes battery research for hybrid and plug-in hybrid, developing lightweight materials that will be stronger than steel that replace steel, engine optimization.
The biomass, we are spending more – and I’ll talk about this – than the rest of the world combined on next-generation cellulosic ethanol development. And our hydrogen program has consistently been the largest in the world. Japan has a program that’s almost as large as ours, but our hydrogen fuel-cell program has spent more than $1.2 billion since 2003.
On the energy efficiency side – and this often gets left out of the equation – we’re doing some things that are as important as the renewable side. We have a significant industrial technology program which I’ll touch on in a minute. The building technologies program – we have two signature programs which I will, again, just touch on with a slide.
But our two signature programs are zero-energy homes and zero-energy buildings. These are homes and buildings that, over the course of a year, generate as much power as they use. The significance of that for the built environment can’t be underestimated. Buildings in America, homes and commercial space, use one-third of our energy, but they use two-thirds of our electricity.
If we start to make buildings that are super-high efficient; if we develop the technology that makes building a zero-energy home or a zero-energy building cost competitive with the current existing technology, which is what we are doing and what we will do, and we build these structures, that has a significant ramification for what the grid has to look like. I’ll get into that later as well.
So this is our budget. It’s $1.7 billion this year. Most of our investments are in partnership with the private sector, which means that in our biofuels program, we’ve committed to spend $600 million over the next three years, but the private sector is putting up at least another 600 million. That’s true in our solar America program; it’s true in our battery program; it’s true in most of the programs we have. We are applied science with a view towards developing and commercializing technology. We’re not pure science.
So I’m going to touch – I’m going to go through this very quickly. The solar program’s goal is to make solar energy cost competitive by 2015, to make photovoltaic cost competitive, to make concentrated solar cost competitive with any other form of electric power generation by 2015. In order to do that, we’ve made a number of key investments that we announced last year under the Solar America Initiative which are designed to bring the cost of manufacturing down and increase manufacturing by tenfold over the next three to five years.
Again, if we’re able to stand up a solar industry in the U.S. of barely the shape and size that they have in Germany, it will have significant ramifications, in my view, for America’s security and economic health. This is our estimate about market penetration and driving cost down. Again, I’ll make all these slides available to you later. Then there you go, and they’re going to be instantly available to you on the website.
Our biomass technology program – last year, between our program and our Office of Science, we announced that we were going to spend up to $1 billion over the next four to five years on next-generation biofuels and bioenergy. We’ve done that by making investments in 13 cellulosic bio-refineries. The cost-competitive cellulosic ethanol industry doesn’t exist yet. All this talk about food versus fuel – and if anybody wants to talk about that later, we can do it, I guess. I’m a little talked out about it, but I’m certainly happy to do it.
But this is next generation. This is going to be made from every imaginable different feed stock, from municipal green waste, from woodchips, from wheat straw, from corn stover, from switchgrass or sweet sorghum, or a million different things that are available. We did a study in 2005 that said that the U.S. had available – immediately available, without cultivating new land – 1.3 billion tons of biomass that could be, in theory, if it were collected, harvested and with a cost-competitive industry which could produce 60 billion gallons of ethanol a year.
Sixty billion gallons is a hell of a lot, and it’s six times the entire amount of fuel that the country of Brazil uses. Brazil is always held up as this great example of their – it’s self-sufficient now. But 60 billion gallons is about one-third of our annual needs. So that’s how big America is; that’s how big our problem is. And that’s why we need biofuels as one of the tools, one of the critical tools, but only one in solving our energy issues.
This is our vehicle technology program. America has almost one third of the world’s vehicles, about 30 percent actually, and we use almost one-third of the world’s oil every day. And so this is just by way of saying that we have the problem and we need to solve the problem. China is the second largest importer of oil, up from nowhere. They were a net exporter less than 10 years ago, and now they’re the second largest importer of oil. And India will not be very far behind. So in this program, one of the big things that I wanted to show you was battery technology. This is, in my opinion, one of the keys to America’s energy future.
And so we are working to reduce – we people know how to make lithium-ion batteries. The department actually was responsible for developing – one of the key developers of the nickel-metal hydride battery. The Japanese control 90 percent of the world’s production of nickel-metal hydride batteries, that every Prius that’s sold pays a small licensing fee to the Department of Energy – not enough to pay my salary or to pay for any of this research, but it’s kind of a Pyrrhic victory, but we will not let that happen with lithium ion. America needs to make sure that we not only invent this technology, even if others invent it, but that we control a certain amount of the production of batteries.
Now, the interesting thing about this battery, and the reason I wanted to focus on it was this will not necessarily be just for vehicles. There are some, in my view, credible and very exciting tests going on. Ford and Southern California Edison are one of the folks that are doing these tests, and there’s a Japanese company and a Japanese homebuilder that are doing it, which are combining battery storage in buildings. If you think about it, you can take the same battery that would work in a vehicle, once we’ve solved all the safety and technical problems, and store energy. You can store it at night; you can store it any time. And with smart metering, you could draw that energy out when you need it.
So if you have a million solar roofs which would – in Southern California which would provide you with probably a gigawatt of energy, why couldn’t you have a million batteries that could supply peak demand? This is the theory in California. This isn’t just me saying this. It’s actually being tested right now. But I think it’s an interesting creative solution for storage. And storage is going to be the key for renewable energies, as I’m sure most of you have heard talked about. But the key will be how quickly we can prove up this technology.
Our wind program has been responsible for – in the past, over the past 25 years, for developing much of the technology that has been successfully commercialized. I’m sure many of you, or most of you, know that this industry is mature. The power generation costs are competitive, and in some cases, more competitive than any form of energy. And so our role in wind now is different than it was, because General Electric and Siemens, Investus and others are spending far more money than we could doing just basic practical research and development.
Our work in this area is transmission and grid integration. And we’re building, in fact, a grid integration facility at our National Renewable Energy Laboratory. Last year, we funded the biggest increase in infrastructure at our national renewable energy laboratory since it was created in the first place, in almost 30 years. And one of those facilities will be our grid integration facility.
Today, earlier today, Andy Karsner, who some of you know, announced a report that was released today called “20 Percent Wind.” Basically, it was a collaborative report with over 50 different organizations headed by NREL, but the business community and other labs were involved, which basically validated the president’s vision that he announced in the State of the Union in 2006 saying that America could have up to 20 percent of its stationary power generation from wind energy.
So this report should be on our website. It was just announced at 2:00 p.m. today – very interesting. We’ll see what ramifications there are, but this is something that we can do. Wind is only about 1 percent of America’s stationary power generation. So I commend this new report to you. In my view, it’s very exciting, and it should be a basis for the Congress and the industry and others going forward.
As I mentioned, our building technologies – and I think I have a different slide on this – we’re inventing technology that will provide the cost-competitive basis for zero-energy homes and zero-energy buildings. That includes windows, insulation, lighting. We are managing the government’s investment in solid-state/LED lighting. That’s transformational technology, and the quicker we can perfect and adopt that, again, the more secure America will be.
I was at a meeting – we’re doing partnerships with China, and India, and Hawaii, and others. And we rode over to the district building this morning to try to have a serious meeting with the last bastion of dysfunction in America, which is the District of Columbia. And of course, the key person that we were supposed to meet with didn’t show up. She was sick. I’m sure she was sick, but on the way other there, it was interesting because my FEMP person said, can we go talk with Metro next, because they have these T-12 – they have the single-most inefficient lighting that exists remaining in the country in Metro. And they could move to TA, which would immediately save them huge sums of money, and apparently, they don’t even know that they can do that. So the last great frontier is the District of Columbia.
I’ll go into zero-energy buildings, because I have some slides for you in a minute. Our industrial technology program – industry in the United States uses 33 percent of our energy. And that is broken down largely by 4,000 industry installations using about 58 percent of that energy and hundreds of thousands using the rest, so that we kind of have a bifurcated program that tries to work with the big energy users, and a distributed program that works with the hundreds of thousands of the rest.
What we did in 2000 was we identified the thousand largest energy users in the United States, and in 2006, we invited 200 of those to come in for voluntary, abbreviated audits. Now, what that is – a normal energy audit takes weeks or months, and you look at everything. These energy audits looked at big-ticket energy users and industrial processes; 80 percent of energy typically is generated by process heat or steam or it could be compressed air; it could be a very small range of factors.
So if you send an expert in to – if you collect data ahead of time, send an expert in, do a two or three-day audit, sometimes you will surprise the company as to what you can do. These 200 companies were some of the most sophisticated companies in the world. One of them was a UOP installation. They invented their Honeywell division, but they invented the refining industry in 1914 and it’s a very sophisticated company. Another was Caterpillar, and so on and so on. And of course, these companies have the wherewithal and the intelligence to have done this themselves. I’m sure they’ve been working on energy savings.
Out of the first 200 audits, we identified $500 million worth of savings. They would displace enough natural gas to have heated – served 700,000 homes. And each company for a $10,000 audit, which is approximately what it cost us, saved about $2.5 million annually. So we have now done about 500 of these audits. We announced the 500th audit, I think, about a week ago. I think we’re up to about $1 billion in savings, and we’re going to try transition this technique to the states to take over, and this is something that we’re talking to the Chinese about.
The Chinese industry uses 70 percent of their electricity. And you’ve all heard that they’re building one gigawatt coal-fired power plant a week. That’s not really true. They’re actually building about two thousand megawatt coal-fired power plants a week. And if you’re going to slow that down, one of the big ways is to try to get their industries more efficient. And it also is a potentially big opportunity for American industry that has really good technology to help with energy efficiency.
Some of you know about our FEMP program. I see Rick Kahn, who’s now working with Mike, who ran our FEMP program for a number of years. I won’t talk about that in great detail except that we have – actually, I should mention this. I think some of you are aware that there was a federal order, a federal executive order, issued by the president which I believe was memorialized in the Energy Independence and Security Act in December who said that the federal government has got to increase its energy use efficiency by 30 percent in 10 years. The secretary of energy said he thought being the Department of Energy, we could do better than that.
And we have created a TEAM Initiative, Transformational Energy Management Initiative which has been announced, but the results haven’t been announced yet. Hopefully they will be more formally announced, where at the department, we’re going to, hopefully – and again, not to be announced; I will not scoop the secretary in doing this – but we’re going to try to cut that figure from 10 years to two years. And I will let you know this summer whether we’re successful in doing that.
But it has been an extraordinary operation at the department working with all of our different divisions and buildings and things like that. We want to take this to the rest of the federal government. We have the play book. We can give it to you. You can implement it and the federal government can do extraordinary things with this, in my opinion, with a little bit of leadership and a lot of elbow grease.
I’m just going to touch on the geothermal program just to let you know this is not the geothermal heat pump which we helped to invent, and which I’m a big fan of that technology. This is not conventional geothermal and even low temperature. This is enhanced geothermal – we commissioned a report that was done out of the Massachusetts Institute of Technology, and released last year, which said that enhanced geothermal, which is essentially drilling significantly deeper and just using the heat from the core of the earth to go down to rock, fracture rock at maybe 10,000 feet, and run a continuous loop that will use the earth’s heat to heat up the water through power generation, that the U.S. could have almost unlimited geothermal energy potential in every part of the country, not just the parts that have been mapped out now which are almost all in the southwest.
And so this year, we are, in fact, talking with the drilling industry and with the Europeans and Australians who are actually further advanced in this science than we are, and we’re going to launch some programs in this area. So this is base load power, pretty plain vanilla, pretty reliable. It’s just the drilling piece that we’ve got to get right. But interestingly enough, the drilling industry has gotten a lot of experience over the last 30 years. The bad news about that is the drilling industry is pretty busy these days drilling for oil and gas, so finding the right company is going to be an interesting challenge. We’ll be in Houston in about two weeks to talk to some of them.
Hydrogen fuel cells, I so much want to talk about, except that we’ve done extraordinary work, and as you can see, we brought the cost curves down rather dramatically.
So just a couple of things that I wanted to touch on – I’ve talked about the TEAM Initiative; I’ve talked about the Save Energy Now; I mentioned China and India.
Let’s get into the homes just for a minute. The key – I guess this is one of the last big things I want to leave you with except for two or three things. The key to building zero-energy buildings is to do this whole building design, to start at the beginning of a building, not after it’s built, and, gee, can I get some LEEDS points and things like that, and to integrate all the systems.
So the zero-energy home and the zero-energy building will have, hopefully, active photovoltaic, or in the case of buildings, thin film or nanosolar – will have a geothermal heat pump system. It might have battery storage; it will have high efficiency insulation, high efficiency appliances. But there are a number of design features that can go into homes and buildings that are extraordinary.
In fact, because I have been with our building team recently – and for me, this is some of the most exciting stuff that I’ve done in my career – we can take a conventional building now, and increase the energy efficiency in a conventional building without spending any more money, just using design techniques and cost-neutral technology, increase that building’s energy consumption by 50 to 70 percent. That’s now, without solar, without magic things and we’re designing buildings to that standard. This is a new building; that’s correct.
Retrofitting buildings actually presents challenges, but they also present opportunities. One, we can do them, and the energy services companies will tell you all day long how we can do them. If the price of energy is going to keep going up as much as I think it’s going to keep going up, it’s going to pay for themselves in a much quicker timeframe. So this is broadly what a zero-energy home looks like. And I just wanted to show you some real pictures, not just theory.
So this sounds real good, and we’re 60 to 70 percent of the way there. We have five copies of homes, and these are low-income homes in Oak Ridge, Tennessee, where we do a lot of our building work out of the Oak Ridge National Laboratories. It’s a 1,100 square foot home, three bedroom, one bathroom, active photovoltaic, solar ray, two kilowatts, geothermal heat pump, appliances, whatever. And it’s all electric, heating and cooling, winter and summer. And it operates for an annual cost of 41 cents a day. That’s what the electric bill is. So it’s not zero energy, but if anybody looked at my energy bills, I would take that.
This is a home that was built in Las Vegas. This is a big home that was built – each year, we sponsor the New American Home with the Homebuilders Association and this home is a near net zero-energy home. This home was exhibited on the mall, I think, in 2003, and it is – and then taken down and reconstructed in Virginia. And it is a net zero-energy home. Again, this is one in central Florida that generates more energy than it uses over the course of the year, and during the hottest day, when you’re in the middle of summer in Florida, it’s energy neutral, so kind of extraordinary. But we document – we monitor these things. We test them 365 days a year.
My only point in telling you this is that in the U.S. right now, there are approximately 1,000 homes that have been built, or are under construction, that are near net zero or net-zero energy homes. So it is food for thought when – and this is obviously not the greatest time to talk about homebuilding right now. I was just with a big homebuilder last night, and it’s a bad time for them. But this is something to think about for America’s future. So I will leave you with these slides.
So here are two thoughts that I want to leave you with, because I said I wanted to leave time for questions. In fact, let me give you some of the statistics for gigawatt scale that Jim Connaughton likes to use. If we’re going to solve climate change, we need to displace or get rid of 25 gigatons of CO2. I just want to give you a couple of things to put that in perspective. If we took the nuclear fleet that was in the world, which is about 400 nuclear power generation facilities, and we doubled that to 800, that would be about three gigatons. If we didn’t build or took out of commission 270,000 megawatt coal-fired power plants, that would be one gigaton.
Estimates that I’ve read recently with the utility industry bemoaning how much more energy and where in America and where is that going to come from, and by 2030, we’re going to need 150 to 180 gigawatts of new power generation. In 2006, China installed 104 gigawatts of power, and India, which I was just in about two weeks ago, is following closely behind in terms of their power demand and what they’re going to start building. So this is America’s problem. We need to solve our problems, but we need to think about the rest of the world as well.
So here are two things that I will close with: one, if we’re going to make solar cost competitive by 2015, which I think we will, if we make zero-energy homes cost competitive by 2020, and I think that will be 2015, and zero-energy buildings cost competitive by 2025, and if we make these batteries competitive by 2015, which is what we’re targeting, and wind is competitive now, why don’t we think about mapping out what America’s future is going to look like?
This is sort of the fight for 2030, whether we take all these conventional energy systems, which were mostly invented about 150 years ago, and continue to try to make them a little bit better, a little bit more efficient, or whether we get serious about deploying on a major scale technologies that are either ready, or almost ready, to be deployed on a significant scale.
The world spends trillions of dollars annually on oil and coal and natural gas. And I would suggest to you that our job over the next generation, and sooner if we can do it, is to figure out how to transition those trillions of dollars into other technologies that would include nuclear energy and would include clean (tech ?).
I know in the oil industry, seemingly the people that would – the countries that would stand to lose the most in a generation would be those eight countries that control 80 percent of the world’s oil. Four of those countries I don’t really care about so much, and I know America is going to continue to – we pump a lot of oil, and we will continue to do so. I presume we’re going to use our oil, and Canadian and Mexican oil, maybe not so much from Venezuela, but who knows?
So I would suggest to you that – and again, one of the reasons that I wanted to speak to this group was to say, you tell me how we can get really serious about this. I’ve certainly got some ideas.
And then, the other thing that I wanted to suggest, not facetiously, but in a modest proposal like Jonathan Swift might have made, is if this is a national security issue, which I certainly believe it is, and if battery storage technology is probably the critical technology to help America be more secure for our vehicles, to displace petroleum so that domestic petroleum is available for any number of reasons, then I suggest that the military establishment consider making the lithium-ion battery our next big weapon system that we ask Congress for, that the F-35 is a great system, and there are a lot of great systems, but why don’t we get Lockheed Martin or Boeing to help develop this technology, stand up in industry and do it in an expedited timeframe?
I’m just saying that to provoke discussion, because I think if somehow in 10 years, we had this battery technology that was not only available, but there was a manufacturing industry that could produce it in the scale and the numbers that we needed, that the whole political dynamic in the world might change very dramatically, and that our defense needs – we might be able to reconfigure entirely our thinking about what exactly America needed to do to defend itself.
So with that, I’m going to end. I think I went a little bit longer than I intended, but I’ll certainly be glad to take some questions. Thank you. (Applause.)
MR. : Thank you, John. And of course, questions will be queued up at the two mikes. Identify yourself. Mitzi?
Q: John, I’m Mitzi Wertheim. I’m one of the –
MR. MIZROCH: Yes, I know.
Q: – efforts, right.
MR. MIZROCH: Right.
Q: – efforts behind making this event happen, but there are many others who helped, and we couldn’t do it without them. That was a fabulous talk. I want to ask about the government working in collaborative ways, and maybe this idea is really kind of nonsense, but let me try it out as a metaphor. We have all sorts of people in Detroit who have really good manufacturing jobs – manufacturing skills who are no longer employed. It’s not a very good place to be these days.
I’m told that the manufacturing of windmills, most of it is done overseas and that there’s a four-year backlog. If my data is wrong, you can correct me. But my question would be, if we could think about how to create the appropriate governmental enticements to bring manufacturing of windmills into the Detroit area or wherever, where you have skill set, it could solve multiple problems, how would we make that happen, because so many things are done by one group on a one-off solution?
MR. MIZROCH: I’m going to answer your question, and I’m going to duck your question too, because it’s a policy question. The federal government does not control electricity in the United States. Fifty states control it and 3,000 companies provide it under a monopoly arrangement. And the monopoly arrangement is simply that they get the permission to generate, they negotiate a rate and they get a guaranteed rate of return. Twenty-six states have renewable portfolio standards. That has helped, and I believe that there needs to be a national solution of some sort. It could start with Congress passing the PTCs and investment credits on a predictable basis instead of year-to-year, which they’re doing again this year.
And as far as specific locations, we have a tremendous potential workforce. What the wind energy announcement, if you read – that report said, specifically to your point, was that if we go to the 20 percent and build the 300 gigawatts of wind energy, that we could create a domestic industry, hundreds of thousands of new workers, hundreds and hundreds of thousands come into the workforce, but that’s really part of the beginning of the national debate.
So we formed a partnership with the auto parts industry in Detroit. It was announced –U.S. Auto Parts – to do pre-competitive research for the automobile industry. And the concentrated solar, I have been working to try to create a domestic industry. The plant in Nevada that opened had to source from Germany trying to get those guys to come over here and build.
I think it’s something that we all need to work on. And I’m not saying this to pick on the Department of Defense, because I’m not picking on the Department of Defense. They’re doing extraordinary things, but the government could help with this considerably, and I think DOD could help as well. I don’t know if that answers your question.
Q: Sort of.
MR. MIZROCH: Okay. Yes, sir?
Q: Yes. Dave Sheetz (ph), Army. One of our big environmental things is sustainability. I’ve heard that it takes about five to eight – depending on a number of gallons per water to make a gallon of ethanol or biofuel. Is 60 billion gallons of ethanol biofuel sustainable?
MR. MIZROCH: Well, it’s a great question. I’m happy to answer it. And the answer is, because this is – we have created a sustainability team that actually – we, the Department of Energy, together with the Department of Agriculture, managed something called the Biomass Research and Development Board that also includes a representative from the Department of Defense, but also transportation, treasury, interior, Environmental Protection Agency, senior representatives.
We have the top scientists in our government, including the head of the National Science Foundation, the head of science and policy at EPA, our undersecretary for science, the head of research at (AG ?), office of the science advisor in the president’s office meeting now, which we have been for the last two months, to try to define what sustainability is. It is a much bigger issue than just water use. It is land use; it is fertilizer; it is carbon cycle; it is everything.
Q: But you have to admit, under the droughts that we had in 2007, and with all the – people tend to use water for things like drinking, and I was just curious –
MR. MIZROCH: Right. Corn, which is being pointed to as the culprit, is only contributing a small amount to this food price increase. You can have a separate discussion on whether we should be planning and harvesting corn at all, but you can’t blame corn for rice in Asia. Farming is energy intensive. Ten years ago, a barrel of oil cost $10. Now it’s $123.
Australia, which was a huge producer of wheat, is its third year of profound drought. And these countries that I’ve been talking about, China and India, which are becoming fabulously wealthy, not surprisingly, are wanting to eat better than they have been and they are importing tremendous amount of food stuffs. So this problem with the food has been happening now for a long time. It just has hit at this point.
Now, the specific answer to your question is in the ISA, corn is kept at 15 billion gallons. We’re already producing between seven and eight billion gallons. We’re not working on corn at all. We’re working on next generation biofuels which are biomass that has nothing to do with food, and in many cases, where land will not be cultivated, because the biomass is there already. Now, your answer about sustainability indicators is a good one, because we need to do that for the next-generation biofuels.
The corn situation, I believe we will – scientists will take a serious look at this, and hopefully later, rest some of the bad science that, in my opinion, is out there, or the non-peer reviewed science. Water use is a very important issue. Sustainability is an important issue and I’m not ducking that. But what I’m saying is that as we invent the next-generation biofuels, we need to do sustainability, and we’re actually doing it with those scientists.
Okay? That’s the best answer I can give you. I’m sorry to appear so short, but I’ve been doing interviews on biofuels now on Talk Radio around the country for the last two weeks. Anyway, next question? We have time for a couple more, maybe.
Q: This is an excellent presentation you’ve given. And I have two short questions.
MR. MIZROCH: Okay.
Q: One is basically, how do we convince India and China to go along with the technologies we are developing? Are we going to transfer these? Do we have any systematic way of getting them to go along with us from the global warming perspective? And the second question, of course, is that what additional work do you need from the Office of Science research that will enhance your portfolio?
MR. MIZROCH: Well, we have three important broad agreements with the Chinese government that I’ve been working on for about 18 months, one in industrial energy efficiency, one in biofuels which will now become transportation and include batteries and other things, and the third in green buildings. And buildings in China are important – just to throw out more statistics that might scare you.
The U.S. has about six billion square meters of commercial space which is office buildings, shopping centers, warehouses. In 2003, China built two billion square meters of commercial space, one-third of the U.S., and they’re doing that every year, if anybody is wondering why the price of cement and steel and everything is going up.
So these are small, but I think important agreements, because we’re negotiating them at the highest levels of the government: the NDRC, the National Development and Reform Committee and the Ministry of Construction and others. And I hope to grow these into much bigger partnerships. These are relationship building with leadership who I think will begin to make things happen.
We were in India two or three weeks ago visiting with the Ministry of New and Renewable Energy, Ministry of Power, Ministry of Oil and Gas trying to negotiate the same relationships. Both countries want to do this. We don’t talk about climate change. We talk about energy efficiency and savings, and in my view, they are absolutely serious about doing this. But I think the devil is in the details, so over the course of the next months, and hopefully eventually years, I think we’ll begin to negotiate this thing out.
The second part of your question is that the Office of Science probably has to do everything and more. We should talk more specifically about what the relationship could be, but I think science is going to play a critical role in this. So we can talk about it more.
Q: Yes, we will. Thank you very much.
MR. MIZROCH: Okay. Yes, sir? Maybe – well, go ahead.
Q: Yes. My name is Bruce Ainger (ph). I happen to work in a defense think-tank, but I’m here as a private citizen. You mentioned ground-source heat pump, and then you sort of went away from it. From the ignorant perspective here, it seems like a wonderful technology, but it doesn’t seem to be widely installed. Can you comment on that?
MR. MIZROCH: I’m a huge fan of ground-source heat pumps. It is growing, but not quickly enough in the United States. One of the problems is a systemic problem. I talk to companies who literally can’t get enough skilled help to do the drilling that they need to do.
Just a segue – not to jump around – the Indian government wants us to help them stand up an industry in India for ground-source heat pumps. I honestly can’t think of a better country that this technology could apply to, because they don’t have to worry about cold. It’s mainly just heat, but this could help them in my opinion significantly.
So I don’t know what we need to do to get specifically, but it is as close to a transformational technology as we have, in my opinion, for HVAC. But again, it’s new construction. It’s very hard to go on retrofit homes or buildings, if they’ve been built already. So, again, I don’t know if that answers your question, but I love ground-source heat pumps, and I wish we’d see a lot more of them. Yes, sir?
Q: Yes, sir. My name is David Comas (ph). I’m here as a private citizen. Two comments and a question. One, I think in order to go – have any chance of getting a next generation of nuclear, the government has to solve this question of what to do about storage. If not, I don’t think the people will ever come behind it, and the cost will just be prohibitive.
Second comment had to do with you were asking for what could the Department of Energy do. I think it’s more a FERC issue, but there seems to be a huge problem with getting transmission lines from the areas where renewables are, which is where the people are, and there seems to be this huge question of who pays for it? And if somehow we could solve that issue so it’s not the first person who wants it out there, pays for the entire transmission line, I think that would be a place where DOE would be able to work with FERC tremendously.
And here’s my question. How much storage is needed in order to go past the 20 percent renewables into the grid? Everybody says we can do 20 percent; we can move it around in the grid, but everything I’ve seen that says once you get past 20 percent, you need to be talking pump storage; you need to be talking the vehicle to grid and back. Is DOE making assumptions as to how this large amount of storage is needed and how do you make that determination?
MR. MIZROCH: We are doing assumptions. I mean, we are doing calculations. And let me respond to your comments first, one of which is being the renewables energy guy, I don’t have to talk about nuclear. I’m a fan of nuclear, but I won’t talk about waste storage. On transmission, we had Suedeen Kelly, who is one of the FERC commissioners there, at our announcement for “20 Percent Wind” today and we talked quite a bit about transmission. That is a huge key to getting clean electrons to population centers.
The storage issue is a little bit more complicated in the sense that you have to look at distributed energy, regional issues. The people that I talked to who are building concentrated solar in California tell me that the California utilities basically say, don’t worry about storage. We need energy for peak demand. When the sun’s shining, that’s when we need it. Don’t worry about storage. Wind is obviously a little bit more complicated. And I would go to the wind report to see what they say, but I think we’re just at the beginning of this issue of determining how we would get past the 20 percent barrier.
Q: Yes, sir, I understand the concentrating solar people are basically building plants for six hours of energy storage, but I think the problem is more than just wind. Wind seems to be the first ones to the table, but it’s going to be wind and solar without storage, and wave energy, as that starts coming too. And they all have different periodicities and it’s a much more complicated problem than just wind.
MR. MIZROCH: I think storage is the key. And I think that the experiments that have just begun on this, using battery technology, particularly if we could stand up a significant manufacturing industry, could go a long way to solving that storage without pumping water or without – I mean, we like the idea of compressed air and all of those things. Those look very interesting.
And we’re technology neutral, but we’re funding a lot of activities. And in other words, we don’t care who wins as long as somebody wins, or it’s great if everybody wins, whatever is cost competitive. So all I can tell you at this point is that storage is one of the big keys to our energy future. And we’re working on several – this is where Office of Science can come in and help us as well.
Yes, sir? Maybe one more question if that’s okay. I’ve got to go pick my daughter up. She’s at somebody’s house.
Q: I want to ask the last one.
MR. MIZROCH: Okay.
Q: No, no, no, no.
Q: My name is Brad Holloman (ph). I’m an energy consultant. I’ve been engaged at least around the peripheries of Department of Energy’s EERE programs for approximately 30 years. And so my question, based on that experience, has to do with continuity of engagement with industry. You’re talking about long-term goals which require a certain amount of consistency and continuity. And if I can go through a little bit of the history, you were talking about commercialization, which was a word invented during the 1970s when the Reagan administration tried to abolish the Department of Energy.
George Keyworth was talking about long-term high risk research that did not engage industry. I think you both worked for the first Bush administration. Mike Davis tried to reverse that, and tried to reorganize the EERE to – so that the organizational units corresponded with units of technology.
Then came the 1994 Congress, and corporate welfare became a bad word. Later on, after digging out a part of that, when the current administration came in – you’re Mr. Karsner’s predecessor – basically deconstructed the organization scheme that Mike Davis had put in place. And now it appears that you are talking about deployment and commercialization which were bad words about four years ago. And so I’m trying to start you off by making – (inaudible).
MR. MIZROCH: All right. So the – it is a good question and a fair question because our office has been sort of up and down like a roller coaster over the last 15 years in particular. And my simple, short answer to that is – because we asked our selves that. Why is this time different than any other time? People are going to get excited, and then the price of oil goes down and people back off, and whatever, and just forget about it because Lord knows that the country could have done this 20 or 30 years ago, and we would have saved ourselves a lot of grief.
I think the thing that is different now, in part, is China and India. I track this new-found zeal to roughly the fall of 2005 when, because of hurricane Katrina, the price of natural gas, which has historically been $2 to $3 an Mcf, went to $16 an Mcf, crippling industry and almost driving companies out of business or offshore. Now it’s dropped all the way back down to $10 an Mcf, right, still historically three to four times as high as it’s been.
Oil – gasp – was in the $25 to $35 band, and started to double. Now it’s what, quadrupled or quintupled? And prices are insane. Coal, our bedrock fuel, our fuel that is so cheap that we just have to keep using it, the price of coal in Asia, because of China – in 2003, the benchmark price of coal in Australia at Newcastle, which is their big export port, was $20 a metric ton. And now it’s $120 a metric ton for coal, which is why, in part, the price of coal in the United States has doubled, and one would suspect, with export opportunities, that it will continue to go up as competition.
So the only thing I can tell you is that I think this new-found zeal is because of price. It is a joke that I won’t tell you in length today, but it has to do with the farmer and the mule. And the farmer wants the mule to plow the field, and he takes the mule to the field and he says, plow it. And the mule doesn’t do anything and he pushes it and pulls at it and yells at it. The mule does nothing. And then his neighbor comes along, and says, what’s the problem? And the farmer explains it. So the neighbor goes over to a woodpile, picks up a two-by-four, walks right over to the mule and hits him right in the middle of the forehead, and says, now go plow the field, right? And later, the farmer goes to the mule and says, why didn’t you do that when I asked you? And the mule says, well, nobody explained it to me the way he explained it to me. (Laughter.)
So I just think it’s different now. And I think, for better or for worse, hopefully for better, times have changed. Obviously, had no way of knowing who will come in next, but we hopefully have institutionalized programs efficiently, and hired good managers, and refurbished programs over this tenure. And that story is yet to be told. So the country can rely on the kind of investment that I think the Congress is going to start making in this. So, I’ll keep my fingers crossed.
Mitzi?
Q: Okay, last question. First of all, I want to thank you for giving such a fabulous talk this evening. And as (Holmes ?) was leaving, she said, wasn’t it terrific? Here’s a story where the Department of Energy can brag about all the good things it’s doing. So I pass it on to you.
I had lunch last week with Jon Wellinghoff, who is one of the commissioners at FERC, and he was explaining to me about the air conditioning business. And I’m not sure I got the story fully right, but there’s some small company in Texas that is making air conditioners that are 50 percent more efficient than the ones the rest of us buy. And what I understood from him was that the whole manufacturing, selling, installing of air conditioners is sort of controlled by four different companies, sort of vertically done. And this new firm that has a much better design can’t break into that because of the way in which the system is designed. How do you get around something like that?
MR. MIZROCH: I don’t know. I could just tell you that I was at NREL two weeks ago and they’re working on technology that’s radical that could revolutionize HVAC systems. So I think there’s going to be a lot that’s going to happen in the future, but I’m not sure I can specifically answer that question, so – Mike?
MR. : Well, John, again, thank you. Mitzi already did that.
MR. MIZROCH: Yes, she did. (Applause.)
MR. : A couple of administrative announcements. Next meeting will be in June 23rd. Bob Wilkinson, senior fellow of The Rocky Mountain Institute, advisor to the California Energy Commission, a coordinator with the U.S. Climate Global Climate Impacts, et cetera, will be here. His talk is specifically going to be aimed at the global water crisis. So we invite you back on June 23rd. If you’re interested, on the website EnergyConservation.org, there’s the beginning of a calendar of energy events –
MS. : Conversation.
MR. : Yes, that too. EnergyConversation.org. There is an opportunity to look at what energy events are coming up. If you have things that you’d like posted on that, we ask you for that, and then as usual, please turn your name tags in. And with that, we’re dismissed for the evening. (Applause.)
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