From climate policy to geopolitical tensions and sanctions to technological innovation, the energy world is facing enormous change, complexity and uncertainty. To discuss some of today’s most timely issues across the energy landscape, Jason Bordoff recently sat down with Dr. Ernest Moniz, the former U.S. Secretary of Energy.
As Secretary, Dr. Moniz worked across a range of issues from nuclear security and strategic stability to technological innovation and renewable energy to energy efficiency and climate policy. He also served in government as the Energy Department's Under Secretary from 1997-2001 and is the Founding Director of the MIT Energy Initiative and Director of the Laboratory for Energy and the Environment. Dr. Moniz is currently CEO of the Nuclear Threat Initiative, a Distinguished Fellow at the Emerson Collective, and CEO of the Energy Futures Initiative.
On this episode of Columbia Energy Exchange, Dr. Moniz and Jason discussed the status of the global transition to a lower carbon future and what will be needed to not simply meet, but exceed, the goals of the Paris Agreement. Dr. Moniz spoke about the intersections between technological progress, policy frameworks, and business model innovation to drive decarbonization. Dr. Moniz discussed the state of nuclear power technology and the potential for escalating proliferation risks in light of current US-Russia tensions. Dr. Moniz and Jason also discussed the outlook for the Iran nuclear agreement, and what the implications may be for energy markets, following the Trump Administration’s decision to withdraw from the deal.
View the transcript
Jason Bordoff: Hello and welcome to Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I am Jason Bordoff, there is so much going on in the energy world today from climate and environmental policy, to geo politics, economic activity in different parts of the world, with President Trump’s withdrawal from the Iran nuclear deal and the ongoing situation with North Korea, the breakdown in the U.S. Russia relationship.
Nuclear power is a hot topic also because of the challenges nuclear power phases existing plan is closing and it seems nearly impossible to think about building new plans right now. And at the same time, new developments on climate change, impacts and policy the Trump administration’s energy policy, oil and gas market developments around the world and much more.
And so I had the pleasure recently to sit down and talk about a broad landscape of issues not nearly enough time of course with someone who can speak knowledgeably about all of these things the former U.S. energy Secretary Erne Moniz. We sat down and had a conversation about these and more topics on the side lines of the recent Aspen Energy Week conference in Aspen, Colorado.
Secretary Moniz is well known to all the listeners of this podcast of course as the nation’s 13th Secretary of energy. He is currently the CEO of the Nuclear Threat Initiative. He is also a distinguished fellow of the Emerson Collective and the CEO of the Energy Futures Initiative. As Secretary, Erne worked across a range of issues on energy technology, nuclear security, strategic stability, clean energy, climate policy and more.
He also served in government as the Department of Energy’s under secretary from 1997 to 2001 and he was the Founding Director of the MIT Energy Initiative and Director of the Laboratory for Energy and the Environment always a pleasure to be able to have a conversation with Erne. He is a no stranger to the Columbia Energy Exchange having previously sat down with my colleague Bill Loveless. It’s great to have Erne back and here is the conversation I had with him. Secretary Erne Moniz thanks so much for joining us on Columbia Energy Exchange.
Ernest Moniz: My pleasure so far.
Jason Bordoff: Hopefully, it’ll still be when we’re done because there are so many things and current events I want to talk to you about. I know our listeners will be interested in hearing about, but first we’re at the Aspen Institute you’re chairing the Aspen Energy Week this year. And just there is a lot of issues on the table to address with regard to the energy transition and I am just curious what’s top of mind for you what are the biggest changes you see taking place in the energy sector when it comes to the clean energy transition where policy makers and companies you think should be focusing right now?
Ernest Moniz: Well, of course the number one issue for the energy transition from -- from 40000 feet is the -- certainly in my view absolutely inevitable continued drive towards low carbon. You know we can talk about President Trump’s announcement of last year etc., but the reality is if you look at the ground truth of what Mayors and Governors are doing of what business leaders are doing, what other countries are doing, what it means for developing a clean energy market place globally I think there is no question that we’re heading there now. If that’s the case, then there are all kinds of other transition issues to be --
Jason Bordoff: That’s fine. On that point, how much you -- you think that narrative is correct that all of those other entities, states, cities, companies can sort of pick up the slack when the Federal Government steps back as this administration seems to be doing how damaging is that?
Ernest Moniz: Well, first of all you have to remember that the progress that we have made in the United States in carbon reductions and it’s been considerable. It has basically been entirely a combination of basically states and markets. Now I don’t want to be Pollyannaish there clearly are issue the things that the Federal Government does is that are -- that are very important, but even there I want to remind you that for example the Trump administration has proposed consistently in their budgets to hammer the innovation budgets.
The Congress has chosen to not follow that the congress is clearly bought in to the clean energy innovation agenda from the R&D to even things like passing expand the tax incentives for carbon capture and sequestration for which it is very hard to argue there is any redeeming virtue other than keeping Co2 out of the atmosphere. We could go on. So again I mean I can also give current examples, but -- but the reality there is a lot of momentum in this direction I believe ultimately this is more bumping the road than any fundamental deviation from the destination.
I think one area where the president’s announcement would doesn’t hurt the overall progress it is that clearly American leadership is not going to be there globally for advancing -- to advancing in climate risk -- risk mitigation. But frankly that absence of leadership is got nothing to do with the announcement. It was -- you know it is not going to there in any case, so in the end --
Jason Bordoff: When you see this administration seeming -- seemingly attempting to dismantle much of the work you did over four years at DOE and across the administration Paris Agreement as you said R&D even the Congress went in another direction fuel economy, the clean power plant there is a long list. What’s most concerning to you when you look at that landscape?
Ernest Moniz: Well, the biggest concern again is not to do with at least up to now the administration’s action. So again I am not -- I am not endorsing them obviously I don’t like a lot of them, but the reality is the biggest issue is even with the Paris Agreement which I’ve always characterized as a very important first step and the first is an important word just like important is an important word because those targets in and of themselves kind of get us going in the right direction. It is I think universal accepted that they in and of themselves take us nowhere close to where we want to end up.
And so I think the biggest issue is going to be how do we convince United States of America, how do we convince other countries to keep _____ [00:06:50] up the -- the ambition and the acceleration of the low carbon transition. There I think that it is the interplay the synergistic interplay of technology, policy, and business model innovation that is the only way to reach success. One important part of that and probably not surprising given my physicist background that I would emphasize is in fact the technology innovation agenda. I don’t believe we can reach the ambitious goals that we think are necessary without success in the technology innovation agenda.
Jason Bordoff: Existing technologies so when that’s not sufficient --
Ernest Moniz: I look at in three -- I’ll give you two different cuts that come together on this. One is that let’s first look at the different sectors of the economy across all sectors energy efficiency is absolutely essential, so I have to pocket that we make tremendous progress on the demand side. Having said that, we have line of sight to essentially decarbonizes electricity sector and that’s very important. And then we electrify as much of the rest as we can building on the low carbon electricity, but while I -- while it is not violate the laws of physics to say that you can electrify everything. In my view, you can’t electrify everything.
Jason Bordoff: Heavy industry and steel --
Ernest Moniz: So a heavy industry -- industry that needs really high temperature process heat for example elements of the transportation sector the most obvious of which is airline --
Jason Bordoff: Air travel.
Ernest Moniz: travel even buildings where buildings it’s easy to have the line of sight to how let’s say buildings are all electrified, but we have to take into account the realities especially in the industrialized countries like the United States. The housing stock and even the commercial building stock not quite as -- not quite as extreme, but those are _____ [00:09:13] long lived assets and we are talking about significant retrofits to accomplish that. So I think there is a big -- big operational barrier to reaching there.
So when I look at that and I do my physicist back of the envelop calculation about where I think we can actually go with success in deploying currently technologies. I will argue we don’t get there that we still have some critical areas where we need not even just simply technology development if you like, but we need to overcome some fundamental scientific barriers. And I would say that one area that brings all that together that it is necessary to reach the ambitious goal and in many examples requires major scientific breakthroughs would be what I call large scale carbon management. One way or another it’s various aspects of carbon -- carbon capture utilization and sequestration, but carbon capture I would emphasize is not only from concentrated sources it’s also from diffused sources --
Jason Bordoff: Air capture --
Ernest Moniz: like the atmosphere.
Jason Bordoff: Right.
Ernest Moniz: air capture -- utilization. We have some of that now in enhanced oil recovery, but what about converting Co2 into products at a scale that matters. We really aren’t there.
Jason Bordoff: Can I ask you said we had line outside to the electricity sector decarbonizat6ion what role do you think advanced nuclear technology should well play and should play?
Ernest Moniz: Let me come back to that after I just finish this --
Jason Bordoff: Oh, I am sorry.
Ernest Moniz: my – no, no.
Jason Bordoff: Okay.
Ernest Moniz: That’s the CC and the U and now comes the S and the S again I would -- I would characterize as two major areas geological sequestration and biological sequestration. So it’s like 2/2/2 set of options and if you look at various pathways through that 2/2/2 you see some pretty hard problems direct air capture being another. It dramatically enhanced biological sequestration many, many challenges there. I just -- I didn’t want to add because I said there were two cuts and then I’ll come to the nuclear question.
The other cut which is -- which is kind of additional to the last one on sectors is timeframes that clearly for the next let’s say decade we have no choice other to make progress other than deploying the technologies we have in hand and of course keep working at their cost reduction. As we have done it so successfully we collectively with solar, with wind, with LEDs and then like batteries have come -- have come way down. Then I think -- so if I think of DOE as examples, I think let’s say that’s like the loan program helping technologies that are just about there in the commercial --
Jason Bordoff: Helping them commercialize.
Ernest Moniz: market get them initially commercialized so that the private sector can then decide what they’re going to do in the future large scale solar farm is a good -- is a good example of that. Then there is the intermediate timeframe where we still need more technology development demonstration and development breakthroughs at the EOE and the DOE context. I say okay think ought the E right lots and lots of companies form still mostly in the early stage a few of them hopefully jump over the valley of death and -- and become deployable in the 10 to 20 year timeframe.
And then we have long timeframe beyond say 2040 where things like these large scale carbon management, negative carbon emission, in these next couple of decades that’s when we had to do the science and the technology to have that become an economically viable approach. So that’s what do I see sectorly and as it roles out in timeframe. At DOE, again as I said for loan programs and RPE I’d say the basic energy sciences programs like energy frontier research centers looking at solving the fundamental science challenges is an example there.
All of that has to go on now in order to be able to have success in those different timeframes. Now one of the technologies of interest that you raise is nuclear. The reality is frankly in terms of conventional nuclear power plants. I really see no future in the United States at least for decades because we just haven’t had the cost schedule performance that will --
Jason Bordoff: For new nuclear built you mean?
Ernest Moniz: For new for new nuclear built yes preserving current nuclear plants is very important for the for the carbon budget but that’s -- that’s quite challenge, but if I think longer term. The reality is if you assume that today’s nuclear power plants will run for 60 years so they’re initially 40 year license and 120 year extension then staring in the 2030s you have the big waive every time. So if you want to have nuclear as a real contributor say in 2050 you better start now in terms of thinking about getting substantial deployments because we still have the order of a 100 gigawatts of deployed nuclear capacity.
Now I think that if nuclear has a future in the United States, it will come from innovation and in particular I think that innovation aimed at various kinds of small modular reactors. The reality is we have never seen so much innovation in the nuclear field in the United States as we see today and so also in Canada and -- and some other countries. In the United States, we have over 40 companies that you might call start-up companies, novel concepts in both fision and fusion that are out there I think quite impressive.
Some of those modular reactors are technologies that are very analogist today’s technologies like water reactor technology, but they are configured in a very, very different way, but there are really much more novel concepts molten salt reactors for example and here we have an issue. I think the technology looks terrific frankly they have excellent safety characteristics in general. By being small by small, I am talking between say 50 and 200 megawatts compared with a 1000 or a 1000 plus megawatts that offers a very different financial engineering package to get out there which is very important for nuclear. But right now I think the big problem is -- so I’ll say just generically while these companies seem to be able to attract let’s say the 10s of millions of dollars to develop let’s say up to the first engineering stage. And if they could demonstrate at reasonable scale and actual working reactor which let’s call that in the 100s of millions to billion dollar scale they probably could attract the billions of dollars to actually deploy in a -- in a full sense.
I think it’s that middle part where do you get let’s call at the billion dollar scale I don’t think we solved that problem in terms of how the capital is addressed. And I think it will require some new form of public private partnership to be able to get through that period to deployment of one or two or three of these -- of these new technologies. So I think nuclear could have a future, but it’ll be based on this innovation pathway and not on building more of these gigawatt plus light water reactors.
Jason Bordoff: I want to make sure we touch on a couple of important current foreign policy issues but just quickly you mentioned technology and policy and you mentioned the business community many of which the oil and gas industry investors like black Krug and yourself were invited to the Vatican recently to meet with the Pope. And I thought our listeners might be interested in your reflections on that meeting how the Pope’s message was received, what the outcomes from that were and -- and how effective that was trying to bring the business community together to think about a low carbon future and where we want to deploy our capital?
Ernest Moniz: Well by the rules of engagement I am little bit limited in what I can say, but -- but it is certainly first of all certainly it’s correct that what I would say is the -- the audience for this I guess audience goes with Pope, but the group in the discussion it was roughly 20 what I would call principles and the order of 40% oil and gas CEOs, international oil and gas CEOs roughly 40% from various parts of the financial world including some interesting pension fund heads from three countries and roughly 20% undefined people like myself.
We were hosted by -- by the Cardinal who head the Dicastery of Human Development and -- and had a substantial interaction with the Pope. So I would say that the meeting was first of all extremely interesting in a certain sense just in the fact that it happened in -- in this way. Now the Pope gave a very forward leaning message and not surprising as with Laudato si’ his encyclical of course he talked about caring for the Earth, but also a very important theme about addressing the undeserved in the world so social justice issues, equity issues and the like.
And of course based upon eluded conclusion that it is in fact many of the world’s poor who would be the first major victims of the continuing change of climate and we’re already seeing big dislocations. Now going to the nature of the discussion without getting into lot of detail what encouraged me was that there was certainly universal buy-in in this group in terms of the need to address carbon and climate, in terms of the willingness to look at effective mechanism for moving the needle.
It was -- it was noted without discussing again conclusions, but the press release from -- from the Vatican did note that there were lots and lots discussion around the issues of carbon pricing for example. So I -- I think that this group hopefully is representative of a larger group in the industry and in the financial world and someone in the policy world that can come together around policies to accelerate the low carbon transition.
Jason Bordoff: So this is very much switching gears, but I want to make sure we touch on it you were key architect of the Iran Nuclear Agreement which administration has cancelled. I want to ask you about what you think happens now sort of in two respects one obviously lot of people listening to this podcast are interested in the energy markets and the oil markets if you could sort of reports recently that the administration wanted to no exemptions for countries, zero out Iranian oil sales by November. What do you expect in terms of the impact on the oil market and what we’ll actually see how effective the reimposed sanctions will be on curbing Iranian oil sales and then secondly is there any prospect for restarting talks or what would happen if -- if we don’t do that and Iran might choose to restart its nuclear program. What -- what are the sort of different scenarios you see playing out in terms of trying to come back to some sort of agreement?
Ernest Moniz: Well first of all in your last question implicitly reinforces the point that we should emphasize that Trump -- President Trump did not cancel the deal he certainly cancelled U.S. participation in the -- in the agreement. And now it remains as we speak in the middle of July it remains to be seen whether that in fact blows up the entire agreement or whether the Europeans and Russia and China and Iran go forward. If they go forward, I believe that has implications for your first question about oil because the reality is that the major income stream that Iran has realized since the agreement was implemented in January 2016 we’re not two and half years into it, but I might noted as we speak today is the third anniversary of the signing of the agreement July 14th.
The -- the issue of whether or not the sanctions that the United States imposes which are still not really announced in the sense that exactly how treasure he will implement this remains unknown in some sense potentially for as long as November, but we will see how that develops. Whether or not that does in fact reduce Iranian cash flow on oil, I think we’ll have a major -- major implication for whether or not there is a possibility of keeping Iran and everyone else complying with the agreement.
What do I think it’s a hard call to make, but I do note that the sanctions that we had place before the agreement were clearly very effective and I think there is no doubt by the major role of bringing Iran to -- to the table. They were effective because the world was united and the idea that Iran had to verifiably have no nuclear weapons program and they were not trusting that given the history where there is no doubt that they had a structured program.
Jason Bordoff: United as supposed to we’re going along because there is this threat of a hammer of a stick that the U.S. coming down and sanctions in our financial --
Ernest Moniz: Correct. Exactly. And I remind you the agreement was signed in July 2015 which was over a year after Russia’s Ukraine invasion the Crimea Annexation etc. So we had terrible relationships with Russia generally as did the Europeans and yet we were all together on this negotiation. Now going forward we don’t have that situation --
Jason Bordoff: We’re not all together?
Ernest Moniz: Absolutely not and in fact --
Jason Bordoff: Countries would be reluctantly going along.
Ernest Moniz: every, every other country is saying correctly it’s the United States that’s not in compliance with deal Iran has comply. And I think they’ve made it clear that they in effect do not want to certainly at the at the governmental level in anyway endorse the reimposition of the nuclear sanctions doesn’t change the fact that the large multinational companies in their countries will probably had no choice because of their exposure to the U.S. market and the U.S. banking system. So I think --
Jason Bordoff: So the question then is how much – the threat of U.S. --
Ernest Moniz: Exactly.
Jason Bordoff: sanctions on a financial system has a making countries do something they want to do.
Ernest Moniz: Correct. So that’s why it’s a very different situation and that’s why --
Jason Bordoff: And what’s the answer to that do you think like -- you know countries like China will they just mop up at some discount whatever Iranian --
Ernest Moniz: Oh, I think that’s certainly a possibility but I think it’s hard to speculate. China is the biggest customer for Iranian oil and Japan for example depends upon Iranian oil not to the same extent volume metrically, but they their refineries are geared to having that mix of Iranian oil. So I think whether it’s China or an ally like Japan there is going to be hard questions and it’s going to be very, very tough and certainly if the United States tries to go to the maximum it is going to cause big problems especially when compounded with the trade tariff situation that we are now walking into.
Jason Bordoff: And finally on the topic of nuclear security, you and Sam now recently wrote or rather alarming OPED in the hill warning about how the breakdown in the U.S. Russian relations might terribly raise the risk of some sort of nuclear computation or action or something talk a little bit about what you’re worried about there and what do you think needs to be done?
Ernest Moniz: You know well -- well first of all historically we know on both sides U.S. and then the Soviet Union we have had very, very close calls due to misinformation going to and both U.S. president and -- and the and the head of the Soviet Union at the time and miraculously we avoided horrible nuclear exchanges. That was a period in which we nevertheless despite all of our problems had structured dialogues at all levels of government plus scientist to scientist collaboration in the nuclear realm. Those are at a very, very low level now.
Even as our militaries are operating in close quarters over the Baltic Sea in Syria etc., so what Sam and I said is that we are enhancing possibility of a blunder into a very, very bad outcome potentially the exchange of nuclear weapons. And we’re saying is look we understand for example last week’s Brussels meeting a NATO meeting was not one to enhance American cohesion with our allies for example to strengthen our position in an important discussion.
And nevertheless we say for the existential issue of nuclear weapon’s risk we still advocate getting that dialogue going starting with the summit and then hopefully coming out of the summit a charge to the diplomats, to the military, to the science and technology establishments to resume dialogue and to come back in fact to the Presidents with some specifics about what needs to be discussed what needs to be cooperated on.
We have to restore strategic stability. The goal is we must not see a nuclear weapon used again hopefully on the way to eventually eliminating them. But step by step we have to keep from using a nuclear weapon and the current situation, the lack of dialogue, the lack of cooperation essentially at an historic low over the last several decades should not persist.
Jason Bordoff: Of course we barely had time to scratch the surface of the number of topics we love to talk to you about but as always it’s privilege to spend time with you and to learn from you. Mr. Secretary thanks for spending with us on Columbia Energy Exchange.
Ernest Moniz: Thank you Jason and I’ll be looking forward to collaborating.
Jason Bordoff: For more information about Columbia Energy Exchange and the center on global energy policy visit us online at energypolicy.columbia.edu or follow us at columbiauenergy on social media. We’ll see you next week.