Ep17: Prof. Ernest J. Moniz 'Innovation and Power'

Transcript

Michel Liebreich

Hello, my name is Michael Liebreich, and this is 'Cleaning Up'. My guest in this episode is Professor Ernie Moniz. He was Secretary of Energy during the second term of President Obama. He accelerated many of the policies and innovations which have led to the recent rapid decarbonisation of the US economy, in particular, its power sector. He also played a vital role supporting Secretary Kerry in the negotiation of the Paris Agreement. And he was lead negotiator on the JCPOA. That's the agreement with Iran over its nuclear programme, which President Trump famously called 'the worst agreement ever negotiated'. Please welcome Professor Ernie Moniz.

Mr. Secretary, Ernie, thank you very much for joining us here, on 'Cleaning Up'.

Ernest Moniz

Good to see you, Michael. It's been a while.

It has been a little while, I'm trying to remember... I don't think that we have met in person since the end of your term in office, things have been moving pretty fast, haven't they?

They certainly have. It's been an interesting four years.

Well, we are, it should be pointed out at a very interesting moment in time as we record this, where they're still counting votes. And just before I came, I sat in front of the screen to film here. I actually checked the betting exchanges and where we are as apparently we have an 85% chance of a Biden presidency coming up, and a 15% chance of a Trump second term. So we need to bear that in mind as we talk through the energy transition and what might happen next. Do you have a different view on the odds there, maybe?

Well, I'm not going to get into numerics. But I do think right now, it looks more probable that Vice President Biden will become the president. However, it also looks probable that the Senate will remain Republican. And that's also not resolved. But I would say the odds are certainly leaning that way. And then it becomes a very different issue in terms of implementing the climate agenda.

Indeed, indeed, and it's gonna have... it's gonna be reminiscent of your own time in administration, at least parts of it, where, again, you had a split, did you not?

Well, we had a bigger split, in the sense that both chambers of the Congress were in Republican majorities. So it was an interesting challenge. But, frankly, to be honest, I think the Department of Energy got as much or more done than any other department in that split government.

So I want to come back to all of this, but I do want to sort of rewind the clock back. And to put this in context, the 'Cleaning Up' audience is very broad, we have everything, from students who may be just embarking on that, you know, sort of first forays into climate energy policy, we've got some real experts as well. But not everybody has the context of the sort of the journey, your own great background, and so on. So, if I could, let's sort of backfill that. The great thing about these conversations is we do have a bit of time to do that. So, when you and I first met, would have been around 2008, and I was starting to invite people to the New Energy Finance summits. And you were director of the MIT Energy Initiative, which you had been running, I'm not sure for how many years, but that was definitely your thing when we first met. And then a few years later, suddenly, you had been nominated as Secretary for Energy. I just, I just read to you, I found the email that I wrote, because we had interacted when you were running the MIT Energy Initiative quite a lot. And then I suddenly my buddy, Ernie, was suddenly being nominated for Secretary of Energy. And I wrote to you. If it were anyone else, I would say I'm not sure if it's a privilege or a burden to be Energy Secretary at the present time. However, I know you are relishing the challenge. Was I right?

Yes. In fact, first let me say that the MIT Energy Initiative I've started in 2008... 2006, excuse me. However, when we got together in 2008, and then subsequently during the first term of President Obama, I was on his Advisory Council for Science and Technology. So I was quite engaged with the administration, even though technically not part of it in the first term. Then getting to the question of becoming the Secretary. I did relish it. And in particular, I have to say, I think it played out extremely well. And in particular, I say that, because when you have a cabinet position like that, and two of the President's highest priorities are in your bailiwick - it's pretty exciting. One was, of course, the clean energy and climate initiative, that the President really focused on strongly in the second term. Of course, the whole Paris meetings, etc. But in addition, becoming a kind of co-negotiator in the Iran situation was also quite a ride, also in 2015, and 2016. So again, you know, when the President is really engaged in those issues and

you have a chance to advance it, it's a very, very exciting place to be, and it was really a great, a great opportunity, in my view, to help move the ball forward in both cases.

And a lot of people that I interact with, sort of they haven't been... they didn't track the Iran negotiations nearly as closely as they will have tracked the energy transition and the climate situation. But you really were kind of the perfect person for that, because of your previous experience during the Clinton years. And you've been in administration before, correct?

Correct. I was in administration in the second... well, in the first and second Clinton terms in two different jobs, including Undersecretary, but... Let me just say, Michael, when I went to... When I was in the Obama administration for the second term, I was engaged in the Iran issue from the very beginning, because the Department of Energy is the receptacle of nuclear expertise, if you like. And in addition, being a nuclear physicist myself, I had also direct engagement. But what really changed and was very unusual, was then the call in February of 2015, to not simply be the steward of the nuclear advisory structures for the negotiators, but to literally jump in and become a parallel negotiator with Secretary Kerry. And the reason for that was that, fundamentally on the Iranian side there had to be a giving up of considerable nuclear activity. And that activity was under the guidance of Dr. Ali Salehi himself is a very influential figure, he had been the Foreign Minister, preceding Foreign Minister Zarif. And now, went back to the nuclear, he was a nuclear PhD from MIT. And, and the feeling was, frankly, that this negotiation simply wasn't going to converge, unless, fundamentally, the two chief nuclear officers of the United States and Iran, were actually doing the negotiation on the nuclear side.

So that's when we joined in and... And for five months it was quite a, quite a juggling act to try to run a department, be active in the run up to the Paris meeting, later that year, while still being a full time negotiator with Iran. Very exciting time.

You know, I'm, of course, humbled because my nuclear engineering experience was an undergraduate at Cambridge where it was one, it was about a quarter of what I did, but that must have been some quite... that must have been some quite heavy technical discussions, that you got into there. And since we have this opportunity, perhaps you can, you can address the right now part of the discussions around President Trump and his time in office was that he, of course, stepped out of that agreement and has been consistently rubbishing it as a poor agreement, a terrible agreement, and so on. Do you want to set that record straight for the nth time?

Well, yeah, President Trump was calling it the worst agreement ever, before he became president. In fact, I'll just mention as an anecdote that in September of 2015, so after the agreement was signed, which was July of 2015. And the success of the Obama administration in maintaining the agreement through the congressional period, which was very hot in September of 2016, I appeared on Colbert to discuss the Iran agreement. And the guest immediately preceding me, was the gentleman named Donald Trump, then a candidate for President. Although I think at that time, no one expected him to actually become the president. Whatever the case Colbert pulled out, while Trump was on stage, a dog eared copy of 'Art of the Deal', and, and asked Donald Trump, if he would endorse it to his next guest, me. And, so I have a copy of 'The Art of the Deal' signed personally by Donald Trump to me, saying 'Ernest, better luck next time'. Now I'm sure this will be a big eBay hit at some point.

I'm already what I want to put it in. I want to be the first reader

But then, in a serious vein, of course, I think that is completely incorrect. And his withdrawal from the deal has been an unfortunate, major negative. I will note that many influential Republicans, from the Chair of the Foreign Relations Committee, to the Secretary of Defence, Jim Mattis, General Mattis, they were opposed to going into the agreement, because they wanted an agreement that was much broader, and which could never have been achieved, frankly. But nevertheless, I understand the position, at least intellectually, I don't agree with it, but I understand it. On the other hand, when President Trump was threatening to take the action that he eventually did, in May of 2018, to withdraw, those people were all opposed to withdrawing. A very, very different decision from going into the agreement in the first place. And frankly, many, many Israeli, military and intelligence figures were saying the same thing: look, we didn't want the agreement, but we're in it, it's working, we should stay in it. But the President went out of it, I would find it very difficult to argue that we are in a better place today than we were then, clearly the Iranian economy is in a worse place. That has not stopped them from engaging in regional activities that we don't like. I mean, to be blunt about it, we're on the verge of being run out of Iraq. The Secretary of State talking about closing down the American Embassy in Iraq. Frankly, I believe our reputation has been harmed by having the so called maximum pressure during a time when the Iranian people needed humanitarian support, during the COVID crisis. I could go on and on. And I think that the opportunity, that the JCPOA, the Iran agreement <inaudbile>, could have been could have been taken. People like Jim Mattis would have been very hard nosed on Iran within the agreement. That was always the intent.

People forget, that... I think most people think that with the agreement President Obama and the other negotiators, the Europeans, Russia and China, that somehow all the sanctions on Iran

were lifted. That's incorrect. It was only the sanctions associated with their nuclear weapons activity. Many other sanctions were in place, which was complicating their hope for economic development. And also, what is forgotten, and is now, I think, is the balance, is that the agreement is usually focused on, you know, how many centrifuges were taken out of operation. How many tonnes of enriched uranium were shipped out of the country to Moscow. And those were very important. But they are not the most important part of the agreement. The most important part of the agreement is an unprecedented verification regime. Iran is subject to intrusive inspections like no other country is. And that is the foundation of international confidence that they are not in fact resuming a nuclear weapons programme. And it's very interesting, as we speak today, and as you say, and we are speaking while votes are still being counted in the American presidential election. But as we speak today, the verification regime remains in place. I think the outcome of the election will determine whether that remains true.

I was gonna say, you and I know that, had that agreement been negotiated under President Trump, he'd be hailing it as one of the major foreign policy successes of his time in office. But such is life. Do you have a sense, by the way, of what might happen? If the betting, the betting exchanges are correct, and we do get that Biden presidency, have you already had preliminary discussions about getting on a jet back to Teheran?

First of all, I think you should ask your betters in the UK to also bet on the Iran agreement future. We will see. But first, and also I must correct, it would not be back to Teheran. I have never been in Teheran. We don't have diplomatic relations. And so, our discussions were in Europe, in Oman, and in other third countries.

I had this impression of you arriving there and negotiating on their territory, and them on yours. But that's not the way it was, apparently, okay.

No, no, it was mainly around Lake Geneva and Vienna. And there are some funny stories there. But we could go into those later. As far as the future goes, I cannot speak, of course, for the Vice President Biden or his campaign on that. But given what he said, and what I think should happen if he is the President, would be something like a temporary reestablishment of the agreement, as it was. It would be... That would be the analogue of the interim agreement that was reached for the final Iran agreement, where for an interim period you have certain conditions, and you also have a negotiating menu of what needs to be accomplished by a time definite. And in 2015, that day was July 1, it ended up being July 14, which is, you know, pretty

good for government work. And I think that there would be a similar thing here, frankly, you can't just say four years of water over the dam, somehow is ignored. We cannot go back to a status quo ante in a permanent sense, but I think we should, personally, we should go back to that, again, with a defined negotiating agenda. Now that is broader, and has a time definite to be accomplished.

Okay, very good. Thank you very much. And, and I seem to recall that some of this happened in Lozanne, at the Grand Hotel in Lozanne. So you mentioned that it was near to Lake Geneva.

Correct.

That's right, so, so you then...

And one of the funny stories there. I won't go into detail, but involves the fact that the Grand Hotel in Lozanne is the hotel where the Ottoman Empire was dissolved. And you can extrapolate from that to...

Right. But the reason I suddenly remembered that, is this a part of the world that I know. I know well, I spend quite a bit of time down there. But you then went off, perhaps in a direct straight line, but perhaps via Washington, but you ended up in Paris helping to negotiate or leading the negotiation for the US on the Paris Agreement. And that was December 2015, when that was closed?

Correct. As I referred to earlier, there was still a very busy activity with the Iran agreement, getting it through Congress and getting it implemented. However, during the entire time, there were these two threads going on. With Paris and, in particular, I certainly did not lead the negotiation for the Paris Agreement. Secretary Kerry did that. I was, of course, part of the... I was part of the kitchen cabinet, which I might add was almost entirely a Boston cabinet, John Kerry, myself, John Holdren, Brian Deese, Gina McCarthy, all of all from Boston.

I have to ask you to stop because every time you mention a name, I'm thinking 'gosh, I need to get these people on to "Cleaning Up" because they have extraordinary stories to tell.

<laugh> Where I did have the lead, was on generating, creating what became known as Mission Innovation in Paris. In fact, as you said, you have a wide audience. And I'll just note that the Paris meeting, like well, first of all, all the COP meetings basically run for two weeks. By definition in Paris, the last day of the meeting is when the Paris Agreement was signed, was reached and signed. However, the French did something very clever. Basically, because of what had happened in Copenhagen, they decided that they did not want the national leaders present at the last day, as the would only complicate the issue of reaching an agreement, and that the leaders would be present on the first day of COP21, which was actually the last day of November in 2015. That was the day, and President Obama was there among many, many other leaders. That was the day that 20 of them went on stage to announce Mission Innovation. Now, that is something that I had been, while as you know, at Department of Energy, a Secretary, the clean energy innovation was a major focus for me, and I had always placed innovation at the centre of climate solutions. And so I became kind of determined to do that in Paris as well, because, frankly, technology innovation had not played a particularly prominent role in the previous COPs.

To summarise for the audience, Mission Innovation was a doubling by those 20 countries later, I think joined by others, a doubling of the spending on energy, clean energy R&D, correct?

Yes, over five years. So the idea was a five year ramp to a doubling. And I'll come back to another thread of that as well. So already back earlier in the year, you know, we were working on building this up. And in fact, another anecdote which brings together the two threads of 2015 in my life, Iran and Paris. Actually, in May of 2015, John Kerry, Secretary Kerry and I were in Paris to meet with the Gulf countries' foreign ministers as preparation for a meeting the following week at Camp David, with those Gulf countries leaders and President Obama to discuss the Iran, the developing Iran agreement. I mentioned that because since I was in Paris, it's interesting how life works out. I thought, well, what if I call my friend, Laurent Fabius?

Fabius was the French Foreign Minister who I had come to know very well in the Iran negotiations. But Laurent was also the president of COP21 in his role as Foreign Minister of the host country. So I went over to see Laurent in his office during a break and he had others, Laurence Tubiana for example, a well known person in the French climate leadership. And, and fundamentally, all was said and done. I was talking to Laurent Fabius, I was talking to Bill Gates, which I'll come back to, Bill Gates was talking to Laurent Fabius, it was a triangle. And finally, so when the proposal was made to Laurent: why don't we have innovation as the focal point of

one of the days of COP21 - done deal. And it was the first time that had happened. Then in June, we'll...

Just that you'll like to know, that at the time I was actually talking to Laurence Tubiana about similar ...

Okay.

...similar in... well, the importance of, and the cost reductions that we had seen in clean energy technologies, which was transformative to the mood of Paris versus Copenhagen. I think you'll agree.

Yeah. Yes. And certainly that discussion in May, I mean, I said 'done deal' is this was not exactly pushing on a tightly closed door, it was a very open door. But it was terrific to get that enthusiasm. And then with Bill Gates in June was the key, the key discussion that we had, where, where I felt that we could push and actually get five or six countries signed up for Mission Innovation, by Paris. If he would push to get a few deep pocketed individuals to have a parallel initiative called the Breakthrough Coalition, in order to bring significant capital to bear for high risk investment and the product of that opened up innovation pipeline. And five or six countries became 20 by Paris, quite surprising. In fact, a real... Frankly, a bandwagon began rolling to the point where we've never discussed this before... But the press releases on Sunday, for the Monday event with the national leaders, were already printed up with 19 countries.

Until late at night, Italy came and said: hey, wait a minute, you got to count us in! All right, we redid the press releases to make it 20. And now it's about 23 or 24. So, anyway, so that was a major parallel push. And I'm pleased to say that although the Trump administration has been not, you know, not fully aggressive, shall we say. But Mission Innovation goes on. Some very interesting international collaborations have, in fact, resulted.

Indeed, those commitments maybe have not been met to the letter of doubling, but it's been pretty close. But I want to get your thoughts on that kind of private sector. I mean, not just the breakthrough energy ventures, but more broadly, there's sort of support from the private sector for that. I need to ask this sort of diplomatically, but it's not been overwhelming, you know, there haven't been the great, you know, the great sums of money, you know, it's kind of a billion here, a billion there. It sounds a lot until you look at the kind of scale of investment and

venturing that's going to be needed to get the next generation of technologies beyond, the kind of wind, solar, batteries and horizontal drilling, and a few others that have been, you know, that have really scaled. But have we seen the private venturing community really step up as you would have liked?

I think it was slow getting going. But is in fact, getting going. Now, frankly, Bill Gates himself will be, he'll be very straightforward. And say that it really took, that it really took him two to three years to really get going. But they are going, that's the... specifically, the Breakthrough Energy Coalition has now made quite a few investments. And when the first billion is gone, I think there'll be another billion behind it, etc., etc. So that's one thing. Secondly, one is seeing increasingly traditional energy investment funds, turning away from that towards clean energy investing. I'm an advisor, for example, this is public, to the Lime Rock New Energy. Here's a 20 year, you know, investment fund that did very well in traditional energy. And now they see that, we got to now do our fund in new energy, going forward. A lot of the ESG activity, I think, is also pushing various companies towards clean energy deployment, as well as R&D. So , that's all I think, going forward. And finally, there are some significant pockets of major private capital going into new technologies completely without government funding. The example, okay, I'll give one example. Again, I'm engaged in it. So, you know, I may have some prejudice that this is particularly interesting. But there has never been so much innovation in the nuclear sphere, both nuclear fission and nuclear fusion. And this has been driven especially in fusion. It's essentially 100% private capital. So I'm not talking about either, you know, the large fusion, multinational fusion development, which is being built in France. I'm talking...

Cadarache in southern France.

In Cadarache in France, but is an international project. And, you know, it's got a long way to go. I'm talking about, if I just think here in North America, several novel technology concepts that are looking very interesting and funded collectively by the order of a billion dollars of private capital, on a very high, obviously, a high risk area, like fusion. So I think it's not quite as bad as you indicated, Michael. And I think it's the... and I'm seeing the slope as being quite, quite positive.

Now, let me know. While we're sort of segueing into it, and you've, you've done it quite elegantly into nuclear. There are those who would say that there's too much of an emphasis during your time at DoE and in, you know, in much of the kind of energy policy in the UK as

well. Way too much emphasis on these kind of large scale, centralised nuclear CCS. Maybe you could add, you know, sort of hydrogen because it's going to be so, you know, it's so kind of centralised and state driven. And the distributed solutions just always get shortchanged. You know, the, the solar, the wind, the EV, the batteries. That's what's moving at just these extraordinary speeds. And yet, it's not... it didn't have the same emphasis during your years, and may still not have sufficient emphasis now. What do you say to them?

Well, first of all, I don't agree with that, to be honest. For example, on batteries, take batteries. We had significant support for battery development, through ARPA-E. programme, through the energy programmes, and through special initiatives, for example, creating the hub, so called Innovation Hub, called Cesar, which is led by Oregon and Berkeley. In that case, looking at novel battery chemistries. So, you know, I think that there's a piece of it, and by the way, and also, I should have added the loan programmes, which is about getting battery factories built.

Huge, a couple of huge loans, including to Nissan, for example, to build a battery factory in Tennessee. The cost reduction, a lot of that cost reduction, as you well know, actually comes in the manufacturing phase, and working down the costs. For the government we did some of that, as I said, through the loan guarantee programme as one example. There were also, by the way, tax incentives, we shouldn't forget the thousands of dollars of tax incentive for electric vehicle, for example. But our job was also more the earlier stage R&D. Like for example, can one invent new battery chemistries that may have advantages, they may have some safety advantages, because lithium-ion batteries have had some problems there, for example. But to me, and by the way, ok on distributed solar, a different issue, obviously, batteries, batteries matter as well for solar. But I'll give you another example of something which is moving forward, I think in a very interesting way. And again, it's mainly in the private sector. On the one hand, you have the distributed, you know, the rooftop solar, and you have the utility scale solar, you know, the hundred megawatts and plus solar farms. But what I find now interesting is the development of community solar. And so it's a semi-distributed, it's still, it's on the distribution system, but maybe it's five megawatt, ten megawatts.

It's interesting, because I was so expecting you to say, what I find interesting is 'giga solar', really big sort of you know, Australia, you know, Morocco, Chile, where it's really getting into gigawatts. But you went for the community?

I mean, the gigawatts. I mean, look, the thing is I never put an 'or' in. I always put in 'and'. Because my view is that, first of all, the targets that we are increasingly focusing on, like net zero targets, I mean, this is really, really hard. And when you understand that the very low

carbon solutions are going to look very different in different places, for good reasons, be they technical reasons, weather reasons, social acceptance reasons, they're going to look different. Therefore, we need every possible arrow in the quiver. They won't all be useful in all places, but all of them, and I was focusing on is one area that because I went to it precisely because people don't usually talk about it. But this kind of community scale. You know, many people, and I'm thinking also in the social justice context, a lot of poor people, you know, they don't own their roofs. There's a lot of vertical building in cities, they may get, they may get served by a giant farm, they may be able to have community solar, which is growing, I think, in a quite interesting way. Anyway, that's another point. But going back to nuclear and you mentioned CCS and hydrogen. Another thing that we are emphasising very strongly, and every, every serious modelling attempt, reinforces the fact, we are not going to have a reliable system on wind, solar and batteries. It just isn't going to happen. It needs to have some significant component, a firm, clean electricity. Could be small modular nuclear. It could be CCS on a natural gas or coal, or coal plant for that matter. But you're going to need firm energy. And secondly, let me say, Michael, that: the issue of storage, I think, we're finally getting recognition of the fact that as wind and solar rightfully become major parts of the supply system, having storage for a few hours is not adequate.

Right. I want to push on that if I might. You know, because you have been a professor on energy. So I know I can really push you on this question. Because the problem is once you've got a lot of wind and solar, and it's very, very cheap when it's there. When you say firm, you need firm resources. What you actually need is flexible resources for the times when there's no wind and solar. And so, I'm constantly kind of struck by this tension between saying: well, let's, you know, let's deal with the intermittency, with technologies like nuclear or CCS, or to be honest, you know, geothermal, or pretty much anything else, which actually like to run 24/7, 365 days. So how are they the solution, if they're constantly going to be pushed off the grid, every time it is windy or sunny, which means that they are only going to run for 1000 hours, 500 hours, whatever it is. And their economics are going to be absolutely horrible, are they not? What I mean, what are we missing here?

No, no. So first of all, let me say, okay, firm is a term of art. What it means is that the resource is available at any time when you want it. Right. It's not a high capacity,

Flexible firm has connotations of flat...

It's the term of art, that is we generally use, firm is meaning it's available anytime. That so, that's just...That's a definitional question.

You're absolutely right - when you have a very high capital, capital intensive resource, you'd like to use it a high capital, low fuel cost. You want to use it all the time. That would be ideal thing. I might add that solar and wind are not inexpensive, on a capital basis, when you include the capacity factor. If a solar, you know, solar, let's say is 25%, let's say, capacity factor, if you compare that to a nuclear plant with a 93% capacity factor, how you evaluate the capital costs is quite different. Because in the solar case...

Solar with what they called for hour battery, basically, it can, you know, it is effectively dispatchable, except for those few weeks a year when it might be raining in California

No, that's actually not really correct. For example, another issue is in designing the system. Even if I forget your cloud cover, etc. There is something called latitude. You know, it's a very, very technical physics term, you know that. So in California, for example, to take a, you know, a major sun, the biggest state for sun deployment in the United States, obviously, mid-latitude.

And the solar insolation in the summer is double that of the winter. That's just a fact.

I have solar on the roof, where I sit where I am right now, I have solar on the roof. And it's fantastic during the summer. Yeah, during the winter, it produces 10% of what it produces during the summer.

That's what I'm saying. So now it's solar, which I'm very bullish at, as you know, I've always been very bullish on solar. But when you put solar into the system, at very, very large scale, now you've got a seasonal storage question to deal with, unless you want to just completely over build everything at enormous capital cost. So, to me, it's all about system design. So let's start with California, again, where we have the biggest solar penetration. I have this habit, it annoys people, look at the data. And so if you look at the data, right now, in California, with solar, both utility and rooftop together, probably providing 16 - 17% of the kilowatt hours. If you look at the natural gas combined cycle plants in California, which remain the workhorse, today, the average time that an NGCC plant is, on just six, seven years ago, was 12 hours. Now

it's the median, the median, now it's four hours, because that big solar peak comes into the afternoon, shuts down everything else. And, and so a much more intelligent system design is going to have to be done. Where, again, I think wind and solar can be major workhorses in the system. But it can't be the entire system now. Especially also with wind, by the way, and again, these are data, you have much more fluctuations. For example, we've looked hour by hour at wind and solar dispatch, and say California and Texas. Texas is, of course, the number one wind producer, California is the number one solar, number one wind in Texas, in both California and Texas, there were approximately 90 days, a quarter of the year, where there was essentially no wind in the state. And in both cases, the biggest fluctuation if you like, it was I think nine days in Texas and 10 days in California with no wind. You're not going to do that with batteries.

Right. We've talked a little bit about nuclear. I agree with that entirely. I think that's exactly right. Clearly, batteries is for minutes and hours, maybe through the one day, but not nine. We talked a bit about nuclear and I think you initiated or you led the process of changing the regulatory environment to speed up the innovation. You also... Mission Innovation, put more money into it or caused more money to be put into it. But that will come through later in the decade, in the form of new designs. So if you agree with that, then I would move on to just, if we can briefly talk about CCS, which is really not got anything like the pathway to large scale, or to any sort of, you know... There isn't, there just isn't the project pipeline that you would need for it to play the role that you'd have wanted it to, right?

Okay, I'm gonna make just one comment on the nuclear. Just to say that, you're right that we may be seeing the deployment of the first kind of like small modular generation four plants later in the decade. But, as I mentioned earlier, most of those companies have been financed through private funding. And getting over that, that last Valley of Death to the billions required is not a solved problem, in my view. So we still need a lot more kind of private-public partnerships to be designed to actually... Basically, to resolve what are the technoeconomic realities of this new generation of power plants. And I'll also say, I mentioned earlier fusion. And I think that there are several promising fusion companies. And I will say is, I'm not going to make crazy predictions other than to say, I think we will have a good idea whether these new technologies will work n this decade. It will still take time to commercialise, etc. But it's a very interesting development. CCS... First of all, there are probably... in there quite a few projects actually. But certainly in North America almost all of them are for using the carbon dioxide for enhanced oil recovery. And in my view, that is not the future of CCS, if it is to become a major scaled technology. That future...

Is that not a self licking ice cream cone? Because you're using the CO2 to extract a little bit more than you otherwise would obviously...

I mean, we can argue in, I mean, the... It depends, of course, if it's displacing other oil that would have been produced. And also, by the way, there is so... I'm not, you know, again, I want to go to the deep aquifers. But the last thing I would say is that... so far the enhanced oil recovery approach is about minimising the CO2 required and maximising the oil produced, you could imagine in a world where carbon has a high price for emissions, for example, you could maximise the CO2 and minimise the oil. So there are other things that can be done. But having said that, I still argue,

But if you look at the scale of what is in the models for, you know, look at the IPCC models of what we need to do to get to two degrees, to get to one and a half degrees. I mean, the IEA models. More to the point. You know, that wedge really opens up, we need a lot of CCS or we need to stop doing some things that where currently don't look like stopping. So the scale is so huge, that a few projects here and they're just not going to cut it.

Again, Michael, I never used the word 'or' in this context, we should be using the word 'and'. But clearly, actually, look since we've identified this time period as when votes are still being counted in the United States, then I can use that as a reference point and say that: two weeks ago my nonprofit Energy Futures Initiative, released a report on kickstarting CCS, specifically in California, we do a lot of our work focusing on California as our model. And what you find there is with deep aquifer disposal, there's thousands of years of capacity. So geological capacity is not the issue. And that's the case in many, many parts of the world. However, the issue... CCS project, from a regulatory permitting point of view, not technical, but permitting point of view can be extremely complex. Think about it. Suppose you retrofit a power plant, or an industrial plant, the capture facility is a big kind of chemical factory. Right? Then comes: oh, why don't we build a pipe for CO2 to take it to the disposal location? Pipes are very simple to permit. That's, of course not the case at all. Then you go to the disposal in the United States, the EPA, that would be called a Class VI well. So you can see, you may have to have federal, state and local permitting processes, they're not coordinated. So there are many obstacles for this type as well. However, what we emphasised is, and you refer to the IEA scenarios that say: boy, we're going to need some CCS to do this, etc. That's true. And in particular, what is true is today we do not have a great toolkit for decarbonizing major parts of industry. Everybody likes to talk about electricity, where we have many options, including renewables, including nuclear, and including

CCS. And, yeah, renewables includes geothermal and hydro and the like. But what about a cement plant? For example. Or refinery? Right now CCS would have to be the technology of choice. But we don't have... we have a lot of pushback on it in many places, no question about it. And we don't have consistency. I'll give you an example in California, again, where we did this deep dive. California. If you do CCS at a refinery producing a fuel, then you are eligible for a very significant low carbon fuel standard incentive. A tax incentive. Large. Right now it's $200 per tonne of CO2. Okay. But if you go in the same state... and so CCS is specifically a protocol in the low carbon fuel standard programme. If you go to SB 100, the major law in California for getting to deep decarbonisation, CCS is explicitly not allowed as a way of reaching low carbon. So what's a cement plant to do? They don't produce fuel, they can't get the LCFS. And they can't get credit if they were to capture the carbon and sequester it. So there's so much to work out our, policies here for CCS, but it's urgent. And I would add another thing which we can discuss or not, as you choose in depth. But again, we've made a major push in this, and frankly, we are certainly getting a lot of traction. And I believe, we'll have legislation next year, no matter who's in the White House and the Senate. And that is on carbon dioxide removal from the atmosphere, and from the upper oceans. And I want to emphasise with CDR, carbon dioxide removal, I do not simply mean air capture. But the multiplicity of ways including terrestrial and biological, for getting CO2 out of the atmosphere. I think that's another thing like CCS that we are desperately going to need. In fact, if we look at net zero and then net negative, then it's a tautology that we have to have negative carbon technologies. And that's what CDR is.

Yes. And that feels certainly when you talk about, you know, reforestation, or biological capture, that feels a lot more politically feasible than some of the alternatives.

Yeah, but I'm talking about obviously. There are what the morphology that we use are natural approaches like planting trees. Technological approaches like direct air capture. And technologically enhanced natural processes.

And enhanced weathering.

So enhanced weathering in basalt... Designing plants with extremely deep root systems and high lignin content to fix more CO2, you know, etc. So now, we had 27 elements in our CDR portfolio.

Now, I don't want to short-change that discussion, but what I'm going to try and do, maybe is find somebody who can come on to 'Cleaning Up' and talk about that in more detail. Because I want to use the remaining time perhaps to move to the question of: how do you get? How do you get federal policy done in...? And you know, we're gonna have to sort of choose which scenarios of President we talk about. But when we spoke, when we did our one-on-one in 2014, at the Bloomberg New Energy Finance Summit, my first question to you was: how do you do this? Because you had talked about your plans at the time, climate action, all of the above innovation, and so on. And I said: how do you do this, without having, without running up against the problem of federal policy? And the Senate is most likely going to be a block, even if there is a Biden presidency. So what could Biden, what could President Biden achieve? Or what is needed at the federal level? And how would you navigate that?

Well, first of all, there's a lot, of course, that the President can do through executive action. That does not require congressional action. And clearly, if the President is Biden, and we know he's going to have a strong commitment to clean energy and climate, then we'll see a lot of those executive actions. I'll give you two examples. One is, we have seen the rollback of a lot of EPA regulations, methane, fugitive methane emissions, for example. I believe it's 100% certain that we will see the rollback of those rollbacks and things like methane emissions will be addressed. A second different kind of example, one that I was directly involved in when I was Secretary, is we had a kind of a supercharged pace of getting out energy efficiency rules and regulations to very material impact. The modelling suggested that the rules that we put out, would cumulatively by 2030, reduce almost three gigatons of CO2 and save over half a trillion dollars, in terms of consumer bills. So there was a whole bunch of things that can be done executively. Secondly, he can go to Congress.

Yeah. I'm sorry. Keep going.

Well, I would just say to Congress now, the one area that I would expect continued bipartisan focus. And I think with a... If Biden is the president, it would maybe change the game quantitatively, is the innovation agenda. The innovation agenda, you know, has been treated quite well. In these last few years, the administration always proposed a giant cut 40%. And the Congress ignored it. And I think over these four years, we will probably see a 30% to 40% increase in those budgets. I think if it's Biden, in split Congress that might even pick up the pace a little bit. So the innovation budget will be there. Then, of course, the big issue is the policy, the policy world, which is much more, much more difficult. However, there. We mentioned...

Okay, we just got through mentioning nuclear, CCS, now, CDR. Those are pretty popular areas in a bipartisan way, for things like tax incentives. So I think we can see progress there as well. Then there will be more difficult areas. And of course, the big one is the whole idea of pricing carbon emissions. They're... even there, I'm not entirely pessimistic. I'm not pollyannish. But the Republican, you know, George Shultz, Jim Baker, proposal for pricing emissions is getting some traction. And, you know, it won't happen on day one, that's for sure. But I hold out hope.

Right. But the context for this is that, you know, he's running on a ticket of, you know, decarbonizing the power supply by 2035. I would assume that President Biden would sign up to Paris, and he's going to have to make a commitment for, you know, net zero by 2050. Because the EU has done that, the UK has done that. Japan has done that, South Korea has done that.

China, of course, 2060. I don't see how President Biden wouldn't do that. I mean, but the depth of change that's required to credibly talk about 2035 decarbonisation of power and 2050 net zero. That scale surely can't be done without major legislative initiatives and major new legislation, new bills, transport bills, power, electric, energy bills, and so on.

I agree to get to those goals will require legislation, there's no question about it. But I would also add, you know, as a physicist, I'm an inveterate optimist. I would also add, that the motion, for example, in the utility industry without federal legislation is amazing. In the United States, the electricity sector, the entire sector is already down 32%-33%. And I might just note, that the no longer operative Clean Power Plan aimed for exactly that number in 2030. And we've already reached it, without it. Secondly, I just add one more thing. The investor-owned utilities are at 44% reduction, already. And the major utilities across the entire country have almost all done some version of net zero carbon neutrality by mid-century. So you know, I think there's a lot of motion...

There is a huge amount of motion and momentum that can be accelerated. But, heating, transportation, glass, you mentioned cement, steel manufacturing - these things are going to need...fertiliser. And then of course, international action on things like shipping and aviation, these things need $50, $100, $200 carbon prices or some equivalent policy to happen.

Progress will accelerate, that's clear, but it won't be anywhere near surely on track for net zero.

Net zero by 2050 is clearly a tough goal. I think it's the right goal. And, and again, I'll just say what I am pretty much said before, that I also think one is going to need every tool including carbon dioxide removal to, you know, to get there. And we clearly don't have a lot of time to

waste, put it mildly. Look, you know, what you say is obviously correct. It's obviously the case that, first of all, the outcome of the presidency will have two starkly different programmes on climate. I think that, if it ends up with Vice President Biden as president, and a Republican Senate, my view is, you know... I can maybe I should go back a step and say that... What I always emphasise is some characteristics that I believe one needs to have any chance of success at an aggressive climate action plan. And number one on that list is coalitions. You cannot effect a change of the scale that we are talking about, I mean in a permanent sense, without having it changed by every succeeding administration if there is not a coalition, which includes bipartisanship, but also includes business and labour, and we could go on. And, you know, if there's a vice... If there's a President Biden and a Republican Senate, Democratic House presumably, all that means is: you better start working on those coalitions, that's hard work. But I would say on a positive vein, I think that has been a characteristic of Biden's career. That's what he's always done. Formed coalitions, reached across the aisle, etc. That will not satisfy every, every group. That's clear. But the reality is, that's the only choice that there will be. And so if you want to get something done or you don't, I believe, if he's president, he would certainly want to get stuff done. And he would work hard on that coalition building and finding the places that we can move forward, and not lose a lot of time on those kinds of mid-century goals. That's the way I would look at it.

And, you know, given a second... President Trump term has not been ruled out yet by the vote counters.

Right.

What does... What would that look like? And maybe this will be a hypothetical by the time, this episode of 'Cleaning Up' is aired on Friday, but what would you see happening under a second Trump term?

Well, I mean, first of all, they're mean, you know.. One can never rule out epiphany. But in the absence of that, I do think that one will still see the, again, the innovation agenda. If it has to be driven by Congress, it will be driven by Congress. But clearly, we will not see the administrative agenda, that I like, that I refered to, in terms of the regulatory structures, the rules, efficiency rules. I mean, frankly, the efficiency rules, practically grinded to a halt after the Obama administration. So you know, a huge burst in those years, and then practically nothing, to be honest, and some walking back, like on automotive CAFE standards and the like. So you know,

that's just... That look... that's the reality. And I think, I think in that reality here in the United States, the issue will be to continue to work hard on the innovation agenda, and to work hard on the state agenda, the states. And to work hard on the business agenda, because another factor again, on the business side, you know, a lot, I mean, those net zero commitments, where we're, you know, have not been taken recently, because companies expected Biden to become the president. I mean, this happened before. And the companies, and I see it myself, the companies are coming under tremendous ESG pressure. Again, in the United States, I would note that many states have also taken the net zero commitment. But in almost every state, the largest cities have taken net zero commitments, even if the state has not. Now, 'how you do that' is a little bit mysterious. But it's still, it shows the direction that's going. On the ESG side, I would note, I was involved in two meetings in the Vatican in 2018, and 2019, in which the principle groups were CEOs of oil and gas companies, and leaders of financial, major financial institutions. If I just look at the United States, obviously, it was mainly... It was more European than the United States, but in the United States, in oil that included Exxon Mobil, Chevron, ConocoPhillips, Occidental, on the financial side, it included BlackRock and Vanguard, State Street Bank, and CalSTRS and CalPERS... I mean, these are big, big institutions. What came out, were publicly signed statements, one on pricing, calling for a price on carbon emissions, and the other calling for corporate disclosure and transparency on carbon performance, part of the ESG agenda. Even since 2019, June of 2019, that ESG... The velocity of the ESG pressure on companies is increasing dramatically. So even with a second Trump administration, there will going to be a lot of pressures to keep that momentum going, to build the momentum further.

And eventually, we'll have to catch up with the executive action and legislation.

Very good. Very good. Now, the clock is running down. You said something very interesting, though. You said: I'm a physicist, and therefore I'm optimistic. Now, I wasn't aware that optimism was a condition for physics experimentation or for physical... physics results to be replicable. But, nevertheless, that may be true. And certainly on these shows, what's been really interesting is that we've talked to Christiana Figueres, we've talked to Ramez Naam, who's the sort of futurist out of California. I've talked to Bertrand Piccard, who flew around the world in an electric aeroplane. And maybe it's sort of self-selection, the people who are optimists, I like to talk to, and they like to talk to me. So there's definitely a thread there on these conversations. So you remain optimistic. And it's been, you know, it's a great pleasure, just talking about these issues with you. If you have any final thoughts, perhaps, for the incoming Secretary of Energy, you know, your counterpart twice removed in the new administration.

What would they be?

First of all, let me come in on the optimism. Certainly, as long as the innovation agenda is recognised as central to this, I'll remain optimistic. Eventually the other stuff will all catch up to it. In terms of an Energy Secretary? Well, first of all, I hope that Secretary will be in a position to do things like really crank up the energy efficiency side of the story, where DoE does have lots of prerogatives in terms of advancing that, and doing it in a way that kind of leads the development of technology. Secondly, clearly focusing on the innovation agenda, not surprisingly, and that includes using... What is, in some sense, the special, unique capacity of the 17 National Laboratories that the Department owns. And they are tremendously effective. And they're, I would just... I'm sorry to introduce a new idea here at the end of this, but we've been focusing a lot on the specific energy technologies. And the labs certainly are fully engaged in that as well. But in addition, what's very important in the energy business, is more complete kind of integration, utilisation of what we call 'platform technologies'. Very large scale computation, machine learning, 3d printing, etc. And we often forget that those platforms get integrated into technologies across the board. And certainly in the energy space, I think we have a lot more that we can do. Certainly, in things like the grid, we've barely scratched the surface of using all of the IT and big data, and machine learning opportunities there are. The laboratories are really, really special for advancing those kinds of platform technologies. So that's another big, I would say, big advice for an Energy Secretary.

Okay, so energy efficiency and the innovation agenda, and the labs. And a third piece of advice. Or are you done?

I thought that was three. <laugh> Because all I'm saying is the innovation agenda. And the... Especially the labs and the platform.

Okay. And the and the scaling. Okay, I'll let you have that as three

I mean, you know, because DoE is the leader and always has been up in terms of pushing the edges of computation, for example. But of course, if you say Department of Energy, you know, we're focusing here on the energy agenda, but of course, the Department of Energy also has a major nuclear security issues, and the Secretary of Energy must play a very important role, particularly in the nuclear non proliferation agenda.

I think that's probably what I would take as the third piece is the resilience and nuclear non proliferation, and so on, and so on. Thank you so, so much. Your team is indicating that we have to bring this to a close, I would just like to thank you very much for spending this time with me here today. I'm sure that you will join me in checking your phone and seeing whether there's been any more progress on the vote counting.

Well, there should have been because Nevada was supposed to say something 35 minutes ago.

Okay. So I will again, thank you for joining me and, and good luck with the Energy Futures Initiative. Hopefully, in the next time we have a chat like this, it would be over a single malt whiskey, as we used to, in the old days, in person, rather than via Zoom.

Also, by the by the way, Michael, going back to your earlier comment. My partner, I have two partners, Melanie Kenderdine who you know, and Joe Hezir who I think you probably don't know. But he's another long standing partner. In case it's useful. He was and is the lead on the carbon dioxide removal. And, and we will be publishing three more reports, actually at once, in December on CDR.

Very interesting. I've been doing a lot of work on the financial markets for offsets. And that will also be published some of that with the former Head of Carbon, New Energy Finance Guy Turner, who's undertaking some of that work looking at the supply and demand balances. Let's plug those people together.

Well, yeah, actually, that will be a very active discussion, because Joe, actually, he was a legend years ago in the Bush senior administration. He was the senior career person at OMB and at DOE, I had him as CFO.

We'll be able, I suspect that we'll be able to converse and move forward to a number of these agendas in the coming months and years. It's a pleasure to reconnect with you.

Okay, good.

Enjoy the rest of your day.

I forgot, I've lost track now. You have, what? Seven children?

Yeah, just the three. You're approximately, right, because we do also have two cats. One new boxer dog and a blue goldfish, if you can explain that one.

Well, there you go - seven. Okay, that's perfect.

Comes to seven. <laugh>

Yeah. Thanks very much.

Okay, Cheers.

Bye, bye.

If you've enjoyed this episode of 'Cleaning Up', please make sure that on Apple Podcasts you give us a five star rating, on YouTube you give us a thumbs up. It really helps get the word out. My guest next week on 'Cleaning Up' is Nancy Pfund. She's one of the preeminent venture capitalists of our times. She's also the most prominent woman, venture capitalist. She's an early investor in Tesla. She sat on the board for three years, and she has some fascinating stories to tell. Next week please join us for a conversation with Nancy Pfund.

Ep17: Prof. Ernest J. Moniz 'Innovation and Power'

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