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Bill Loveless: The world is undergoing remarkable changes in the way energy is supplied, delivered and used, affecting virtually every aspect of our lives. In fact, mega trends are taking shape so quickly that keeping up with them is challenging. Hello and welcome to Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. From Washington, I'm Bill Loveless. Our guest today is Barbara Hampton, the CEO for Siemens USA, where she guides the German engineering conglomerate strategy and engagement in its largest market in the world. Previously, Barbara was president and CEO of Siemens Government Technologies and before that, an executive with Booz Allen Hamilton and Lockheed Martin. I sat down with her at Siemens offices in Washington to talk about how megatrends including digitalization, automation. and electrification are driving corporate decisions, not to mention the impact of other phenomena, like climate change and urbanization. We also talked about the roles of government policy and regulation and addressing these issues, as well as options for making sure there's an adequate workforce to keep things running smoothly. Well, here's our conversation, I hope you enjoy it. Barbara Hampton, welcome to Columbia Energy Exchange
Barbara Hampton: Bill, thank you. It's a pleasure to be with you today.
Bill Loveless: You know, I always like to start by giving our listeners a sense of who our guest is, where they came from, what brought her to the position she's in today, and you graduated with a mathematics degree from Wake Forest University. I've read where you thought you would become a math teacher like your mom and dad. But here you are today CEO of a $23 billion enterprise and very much involved in the transformation taking place in the US Energy System as we know it, how did you get here?
Barbara Hampton: You know it's interesting. I really--I was on a track to be a math professor what a fantastic life the professor's get to live, but I did get a visit from IBM on the campus at Wake Forest. They came offering jobs to math majors to learn to be computer programmers. I told my parents I thought it would make me a better Professor eventually to have some experience like this and about five years later, my mom said, so when do you think going to going back to graduate school and I said, as long as I'm having fun, I'm going to keep at this and honestly, it's never--I've never stopped having fun. It's been a fantastic experience to go from IBM where I was working on large scale programs with the federal government essential to national security, to then having the opportunity to work with Siemens on things that I believe are essential for global security, you know, being able to work in the field of energy and infrastructure in healthcare, these are all topics that matter to people now.
Bill Loveless: And my goodness, how things have changed too since those days when you were starting out as an computer programming, just think how the technology has changed over that period of time and where we find ourselves today. Yeah, you look at and the position you're in today, you obviously need to keep a close eye on the bottom line. But you also look out much farther; you talk a lot about megatrends that are taking place today in our world. Talk to me a little bit about these Megatrends, the ones that you're most focused on.
Barbara Hampton: Yeah, you know, Siemens actually has built its global corporate strategy around global Megatrends. Think about these inexorable forces at work today that none of us really control, climate change, urbanization, as it's happening all around the world. It's an aging human population; I love to tell people that we think the first person who lived to be 150 has already been born. This ever increasing global supply chain and the digitalization of everything, these are all factors at work that are really leading to significant changes in the way we live, the way societies operate, and so at Siemens, what we're thinking about is how to bring or know how, in electrification, automation, and digitalization to the table. So wake up every morning thinking about how can we make energy cleaner and more resilient in response to climate change? How can we make city infrastructure more interoperable and provide services that have never been available to people before. How about the improvement in health care that's actually going to extend lives and make lives more fulfilling and livable, right? These are all the ways that we can bring value to society.
Bill Loveless: And where do you see most of the change coming right now, because you touched on a number of things, you talked about at least when it comes to energy, and of course, energy applies to all of these trends that you mentioned. But we're talking the production of energy, we're talking about the delivery of energy, the supply of energy, and it's all changed very much in the past even well, so rapidly, even as we speak, almost, but certainly, as you look back over a few decades, where do you see most of that changing occurring?
Barbara Hampton: Well, I feel I've shared with some of my colleagues here at Siemens that I feel like I've seen this movie before. When I started my career at IBM mainframe computers well that's what we had. Today, your toothbrush has more computing power than the technology that got people landed on the moon, so I feel like we're seeing exactly the same sort of transformation happening and energy. Think about the difference between mainframe computing or central power generation being transmitted and distributed out through an ecosystem. What we've come to in computing is everything's mobile, technologies embedded in everything. I believe the same thing is happening now with energy. We have sources of energy we've never been able to tap into before in a very efficient way, now we can. We've got now wind and solar operating at scale. We have rooftop solar, we've got vehicles that will soon be two way participants in the electric grid and so anything that can be empowered today can become a resident on a future two way grid. It's going to be transformative and I think it'll change the way we live, it'll change the way we work because one of my favorite questions to ask people is, if you could live anywhere, where would you choose to live? Well, it turns out that for many of us, just power and comms is really all we need to be able to choose where we're going to ply our trade, shall we say,
Bill Loveless: Yeah, I'm tempted to ask where you would choose to live?
Barbara Hampton: Oh, you know, I still have the mountains of Virginia.
Bill Loveless: But it's all very disruptive too and disruption can be good and disruption can be not so good?
Barbara Hampton: We got to embrace it. We've got to embrace disruption.
Bill Loveless: So how do you do that then when we have these big, we're still very heavily invested in utility systems, for example, electric and natural gas utility systems, at the same time, that we're seeing all these other technologies distributed energy, for example, begin to emerge and take hold. How do you assure the reliability of the system we've invested in so much over decades, at the same time that we can promote the adoption of these new technologies?
Barbara Hampton: Well, I think first of all, step one is recognizing that the change is happening. Right, we've got the ability now for people to vote with their feet and actually take themselves off the grid. So there's this fear, I think that we're going to be undermining the business models of the past and that's absolutely true, so the key question for utilities or any large scale player in the energy ecosystem needs to be, how can I embrace the change that's coming and adapt my business models to things that are going to be important to our future state? Now, Siemens has built its strategy around global Megatrends, thinking out to 2050. One of the things we did recently was an exercise with employees across the organization literally formed up cross functional teams, people from different functions, different disciplines, different areas of the business, asking questions about how the global Megatrends are going to manifest themselves in the US market. And what we built was something we called the US agenda 2030, but we think the world is going to look like even 10 years from now, here in the US. Turns out it looks quite different in the imaginations of our employees and imagine the--just take the transportation sector, right, a more electric transportation sector with more autonomous potential for travel and what does that require? Well, it requires a transformation and the electrical infrastructure of major cities. So what we've done is we sort of then thought it backwards, what do we need to be working on today so that we can be relevant and be a player in that 2030 future?
Bill Loveless: How well are our utilities adapting when you look across the landscape in the United States?
Barbara Hampton: Yeah, you know, it's a wide variety of responses. I would say that we see a couple of interesting dynamics at play, one being the entry of private equity into the overall ecosystem. We're seeing a lot of power generating assets actually being purchased by investors who say, hey, you know, I'm going to operate this separately and so then what does that do, puts the utility often in a position of managing that transmission and distribution network. Well, how is that going to look different and what other services could be offered across that same network? Some of the most advanced utilities, we see getting actively engaged in the whole question of the transformation of transportation recognizing that simple things like having an open standard for vehicle charging stations is going to be critical to really driving adoption of the technology, so utilities who step up to that plate are actually helping their communities make the transformation more rapidly.
Bill Loveless: And do you think that happens more or less than you would like to see in the country?
Barbara Hampton: Well, hey, one of the strengths of where we are, is that we've got this incredible diversity 3000 plus utilities across the US and so, you know, this is not the kind of thing you're going to regulate in, right? It's going to take local leadership and I actually--we applaud those who are working at the local level, because every community has slight nuances and differences in the challenges they're facing and actually what they're trying to accomplish.
Bill Loveless: I think that's an interesting comment you made, we don't want to regulate this in, so it raises the question of then what is the appropriate role of the regulator, be it a federal regulator or a state or local regulator in prompting this sort of change?
Barbara Hampton: At Siemens, we've been huge advocates for I would call it a lightweight regulatory framework, right? We do believe that there's real power in having stated tenants, you know, we know that we need to attend to the cyber security of our systems, right. We know that we need to attend to what I'll say the fuel mix future that we want as a society and so having some guidance that I would say helps to keep markets as open as possible so that our communities across the country can take advantage of the rapid pace of technological advancement. We really believe that businesses can and should take responsibility for meeting the broad needs of society. We don't have to be told via regulators to, for instance, protect citizen data or even protect the business data of our customers. We recognize our responsibility to do that and we've developed our own mechanisms _____ [00:12:46] into that.
Bill Loveless: So you don't think there and that's a big issue in these days right is data--protecting our data from unwanted--unwarranted intrusions by bad guys. You feel as though there's, by and large the business can determine what's necessary and act effectively to protect?
Barbara Hampton: Responsible business people will and we see this in all of our travels. In fact, I would say in this sector and the energy sector, above all, we have customers who are acutely attuned to the need for security; it is the flip side of the coin ongoing digital. They recognize the opportunity ahead with digital and they recognize the risks involved in that, and so they're being very-very selective, who they're choosing to work with. And it's one of the reasons that Siemens actually developed the charter of trust. I don't know if you've heard about it, maybe your listeners haven't, in essence, a set of tenets that we as a member of industry choose willingly to adopt on our own and we've brought others into agreement with us that they too will be leaders in this area, so think about Siemens and who we typically work with. It's IT companies like Dell and Cisco, it's customers like certain utilities, etc, who have signed on and they themselves have stated that within their business systems, they're going to be following these same tenets, we really think that it's this kind of corporate leadership that can and should be the way we move most effectively through this time of rapid transformation.
Bill Loveless: So if you could give me an illustration of something that's happening right now, amid all these Megatrends that you find most exciting and perhaps most illustrative of the change, effective change that could take place and take place rather quickly. What would be a good example?
Barbara Hampton: Oh, you know, a fun example might be what do you think the role Hydrogen will play in our energy future. What do you think that'll be? Folks at Siemens believe that Hydrogen is going to be a fantastic alternative to some of our traditional fossil fuels and so for every single one of the turbines that we're making, our objective is to have our turbines operate.
Bill Loveless: You are talking wind turbines?
Barbara Hampton: Oh no, I'm talking gas turbines.
Bill Loveless: Okay.
Barbara Hampton: Today, they go from small scale up to hundreds of megawatts. The goal is to operate any of those on 100% Hydrogen by 2030. Now, think about that. There's experimentation going on all around the world today and in fact, many of our turbines do operate either in a mix or in a few cases already working with 100% Hydrogen. Hmm, what does that do to our carbon future? I think that could be a transformational change. That is, I mean, think about it, 2030 not that far away.
Bill Loveless: Not very far away at all. And what would be something where you look with a little bit of concern right now, there may be the development of technology is happening a little slower than you would like to see.
Barbara Hampton: You know, I do think that this transformation of our transportation system needs to move faster. I mean, if you look at the transportation sector just think about it as, say, 40% of all of our carbon emissions in the US today, and you think, man, we're going to have to tackle that, we're going to have to tackle it quickly, and what I hear from a lot of people is, you know, we focus a lot on cities, think about rural America, that there are some--it's a big country out there. Yes, it is, but I do believe that there are advancements being made now and accessibility of electricity is probably the most important asset for us to be focused on to achieve what we're aiming for in that arena.
Bill Loveless: You know, one thing I find alarming right now is the--some of the environmental calamities we see happening across the country, most recent of them, of course, is the wildfires in California, and the fires, needless to say, that in and of itself is so destructive to so many people. But we're also seeing the grid responding out there, the utilities, PG&E, for example, cutting off power to millions of people to try to avert fires. This is all a new phenomenon where utilities are shutting off power to so many of their customers so quickly. What does that say about the reliability of the grid?
Barbara Hampton: Yeah, I'm really glad you brought this up. I had the privilege of being in LA just a week and a half ago, and I attended an event sponsored by the LA Chamber of Commerce and the focus of the event itself was infrastructure. So In a single room we had folks from local utilities, we had folks from the city infrastructure power and water, and the transportation sector as well, and this became central to our discussion, you know, what effect that these, you know, weather phenomena have on our built infrastructure, and a couple of things sort of surfaced in this discussion and one story I was able to share which gives me a lot of hope about our future is actually came from Northern California. Siemens several years ago had begun work for native Indian lands, Blue Lake Ranch Area, a community that was looking to establish their own micro grid. They worked with us, they have a work in micro grid now that takes advantage of solar power, but it offers them various options for solar power storage connections to the grid, and in these most recent fires this season, they were able to stay up and running throughout. They actually became a resource for their region, because they were able to Island themselves, operate independent from the grid, and then serve almost as a power hub for others who unfortunately had to be cut off, so I think these are moments when it's important for us to tell these stories, because the options are there today, the technology is with us today for us to be able to establish connected interoperable micro grids that give us the ability to isolate the impact to smaller communities then whole regions and so we've been huge advocates for building that kind of resilience into the architecture of the utilities.
Bill Loveless: Yeah, and I was just reading, another example is the airport in Pittsburgh, which is in the process of going to a micro grid that will supply all of its power. But again, what does that say of the traditional utility that we've, you know, come to rely on for a 100 years in this country?
Barbara Hampton: I think a lot of utilities actually are going to be picking up on this and as they make--I believe as they make their investments, they're going to be looking to increase resilience at the same time that they're, you know, continuing to provide power our lost _____ [00:20:29]. You know, we've been through many years here where we've seen the demand for power remaining fairly constant. We see a lot of activity on energy efficiency, reducing power demand, but at the same time, we see the expansion into new sectors and, you know, keeping things relatively flat. What I'm expecting is that utilities, the hardest part of this transformation is going to happen right now in these next few years, because as soon as we bring vehicles on, and by the way, right after land based vehicles that the electrification of aviation is going to be right behind it. We're going to see a transformation of the need for power as well, so I believe the business case is being built now, as we bring more people online and more assets online for electricity, but making the change right now in a fixed rate scenario is the real challenge for a lot of utility boards.
Bill Loveless: Right? We were talking before about some of the risks and certainly cyber-attacks or risk. Recently, Siemens and the Ponemon Institute completed a study of the utility industries vulnerability to cyber-attacks, and it found that the risk is worsening. With the potential for severe financial environmental infrastructure damage, some 54% of those surveyed in the utility industry expect an attack on critical infrastructure in the next 12 months. Were you surprised by those findings?
Barbara Hampton: Unfortunately no and one of the reasons we do studies like this and work with the Ponemon Institute as one clear example, is to find ways to help get the word out. This is a real issue we're dealing with today and it's important that owners and managers of common infrastructure that we depend on, that they understand the risk that's facing them. It's easy I fear for folks to say, well, something hasn't happened to me and therefore, I can put off worrying about this for now and so raising awareness is part of the role we're playing and then of course, bringing tools to the table to help people address those risks.
Bill Loveless: Right, you think enough is being done by industry, by government?
Barbara Hampton: Well, you've already heard my theory, which is I don't think we industry should be waiting for government to regulate. I think we have to be responsible leaders and so this is part of our, you know, sort of evidence of responsibility is stepping up, talking about it, making people aware, and as I say, working collaboratively with our customers and others and industry looking for common solutions. So, for instance, think about all the tools that exist in the IT world. Two, identify cyber risks and then once detected to mitigate those risks, sort of continuous monitoring, etc. Well, a lot of our infrastructure and energy is a lot more sparsely populated than the IT world. In other words, there are fewer cases to base your intelligence on it's, it's a different problem. So the cyber security for operational technology requires different tools and techniques and we've devoted a whole organization to working on just that and building sort of the ecosystem of collaborators who are helping to solve those problems.
Bill Loveless: You know, you talked a little bit about regulation and your view of what is an appropriate role for government regulators were, you know, the Center on Global Energy Policy off course is dedicated to studying policy, government policy and what can be effective role for the government to play? What do you think should be the role of the government overall in terms of policy in addressing some of these issues?
Barbara Hampton: Yeah, I think there are fantastic roles for government when it comes to helping to define the aspirations of our society. Let me put it that way, broadly and I'll give you a great example and the Department of Energy, the SunShot initiative, the one that really created the solar market as we know it today, that would have been difficult to do with the market based approach overall.
Bill Loveless: Explain what the SunShot initiative?
Barbara Hampton: Oh, the SunShot initiative actually created incentives programs, issued challenges, and got people focused on actually deploying more solar power, you know, setting up more solar fields, integrating solar into more of the energy mix overall, with the recognition that a market reaches a tipping point, and once you reach that tipping point, then market forces will bring prices down and the technology can then spread ubiquitously, you know, just with the kind of organic market conditions that we have. Well, they had to get to that tipping point first, so having the Department of Energy get engaged offer those kinds of support tools to industry made it possible for companies to get a start and once that start happened now you see the price of solar coming down dramatically.
Bill Loveless: Right and we've seen it with other, the Advanced Research ARPA-E Advanced Research Projects Agency _____ [00:25:52] does a lot to stimulate that high risk but potentially high potential technologies.
Barbara Hampton: Oh, that's right. ARPA-E also does something, you know, I'll take it one step further, they're actually reaching into the academic communities where so much of the basic research is going on, they're identifying those things that are ready to be brought into more practical use and then they themselves, you know, by putting their muscle into it, they highlight and elevate the capabilities of teams who might not otherwise ever have their work see the light of day. Oh, it's so exciting to see what ARPA-E has been able to introduce to the world.
Bill Loveless: But climate change, obviously, is part of these Megatrends that you watch so carefully and, you know, we're seated here in your office, which is, you know, near Capitol Hill, not so far from the White House. Big debates, very divided debates in this town over what the appropriate role is for government when it comes to climate change, what do you think it should be?
Barbara Hampton: Yeah, well, first of all I--we at Siemens have a very clear voice on this topic. We at Siemens have made our own carbon neutral commitment. Our commitment is to be carbon neutral by 2030. We made that commitment in 2015 with the audacious goal of being halfway there by 2020. Well, here we are right on the eve of 2020.
Bill Loveless: And how are you doing?
Barbara Hampton: We're going to make it. We will hit that 50% reduction goal that we had set for ourselves now, this next stage is hard. The next stage is going to require us to deal with some of the most difficult parts of our portfolio, like our fleet of 10,000 automobiles across the US and used by our various businesses and it's at a moment where it's going to be possible for us to hit our targets using offsets, you know, maybe we won't get 100% of our vehicles into, you know, electric fleet, but we believe that we'll be able to do a combination of that plus offsets and get there. Now, you know, all of this is to say that I believe that companies like ours; I believe that communities across the United States are setting objectives for, you know, what do we stand for? Where are we headed? And at Siemens, we have been very cognizant of the need for what's commonly referred to as an all of the above strategy. We recognize that the electrification of communities both in the US and around the world is a tremendous contributor to economic growth and prosperity and then that in turn, leads to global security. So you'll see us having a very loud voice when dealing with it, in particular, the US government, about the capabilities of Siemens to help solve some of these big problems. We're bringing forward, clean gas solutions to complement renewable power generation sources and what we're offering is roadmaps. In fact, roadmap for whole countries to help bring people online, did you realize there are a billion people without reliable power?
Bill Loveless: Right, it's a big issue.
Barbara Hampton: It's a huge issue, so to the extent that our US government is helping to support the aspirations of communities around the world and helping us to reach those communities with our capabilities, our technologies, this is a way we can really play a leadership role.
Bill Loveless: But do you think when it comes to government policy that there should be a strong policy adopted by government? We see very different approaches under the most recent administration's right there. Obviously, Obama administration took a very aggressive approach to this in terms of, you know, bringing the US into the Paris Climate Agreement and enacting a number of other regulations. Trump administration has gone in the opposite direction, I mean, between the two do you think--do you have any preference, do you think there should be--the government should be taken a much stronger role than the current administration is taken?
Barbara Hampton: Well, as I say, we at Siemens are absolutely dedicated to carbon neutrality and see that as critical, we actually find our government very supportive of the technologies that we're rolling out. They've taken political stances that I'm not the one making those decisions, but the great news is that we see advances in the marketplace largely driven because the technology is now there.
Bill Loveless: Right yeah, there's also a lot of talk about the price of carbon. Economists love it, politicians don't seem so comfortable with it. A lot of people don't understand it. Is that something you factored in, in your own planning and do you think by and large it would help if there was a price of carbon adopted, say economy wide?
Barbara Hampton: You know, this is an interesting topic because the fact is a lot of people are struggling with how to make the business case for making changes in the technology they're using or this versus the fuel, etc. and having a price for carbon does help make the business case. One of the questions I like to ask these days and we talked about this in LA with the Chamber of Commerce is what's the price of doing nothing? Right, so this idea of carbon pricing can be a little bit of a proxy for what is the price of doing nothing. Now, interestingly, we've had the chance to go around and see some of the Department of Energy Labs and getting the chance to go to NETL outside of Pittsburgh having
Bill Loveless: National Energy Technology Laboratory.
Barbara Hampton: Exactly, exactly yes. Having the chance to see Brian Anderson, the director there and his team, working on technologies for carbon capture and recognizing that their price for carbon is around 50 bucks, you know, the technology would say that'll get you the carbon capture, you know, per ton that would be the market price today. Now, we've seen this within all kinds of technological advancements that price will drop as demand for that capability rises. So carbon that can be used in other industries, carbon that can be used actually in the fossil fuels industry today. These are all practical applications that are actually helpful to our objectives in being carbon-neutral planet wide.
Bill Loveless: But it's important to understand the price of carbon in order to make some of those decisions and determine how much to invest and that sort of
Barbara Hampton: That's right and the fact that there are scientists, the governmental scientists are doing work on this and proving out that there is, you know, a technology that would lead to carbon capture that's costed out at about this level can lead to something tangible, I think people will understand and recognize that oh, then when we put a price on carbon, it's not an artificial construct by politicians or economists. It's actually a practical application of new technologies that are going to be useful ultimately in industry.
Bill Loveless: So it's a good idea. It's one that would be effective.
Barbara Hampton: I actually think it is effective. I think it'll help people to make the case for doing the right thing.
Bill Loveless: You know, before we go, one thing I want to touch on with you because I know it's another big important topic for you is the US workforce and how it's changing. What's necessary to revamp the workforce to meet these challenges that we've been discussing?
Barbara Hampton: One of the most important topics that we've been focused on is the idea of the way we think about the education required to help young people or even mid-career people launch into our business is a little different. In the past people thought four year degree is the ticket to the American dream and now, what we're really trying to help people understand is that there are multiple pathways to that dream that today careers are going to last much longer, technologies are changing so fast. It might not feel as relevant today that a four year experience at the beginning of one's life is all that is needed to be successful for the future. We're proponents of you may be thinking about an apprenticeship, maybe thinking about a two year degree, think about vocational career, technical education, and so people entering the workforce, getting some hands on experience, you know, really using that to launch and then deciding along the way when they want to maybe go back for additional educational experiences to complement what their lifelong plan is.
Bill Loveless: And there's been a lot of apprenticeship off course is big in Germany in Siemens home country and experience, they're going back decades.
Barbara Hampton: It is, and Siemens, by the way, has been deeply, deeply engaged with apprenticeships around the globe. When we actually needed to expand a facility in Charlotte, North Carolina about a decade ago, and we're looking for, you know, I'll say 1200 people, had 12,000 applicants, but not enough qualified people to fill the jobs. That's when we really launched our apprenticeship program here at Siemens and what we found is that it's an opportunity that's embraced by folks. We've had people come through the program, go on and get four year degrees afterwards, advance into Senior Technical roles within our Charlotte Energy Hub. It really does prove out to be a fantastic employee development avenue.
Bill Loveless: Yeah and it never stops, the need for that never stops.
Barbara Hampton: It never does.
Bill Loveless: Especially today. Barbara Hampton, thank you very much for joining us on Columbia Energy Exchange.
Barbara Hampton: Bill, it's been a pleasure, thank you.
Bill Loveless: Well, that's our conversation. I hope you enjoyed it. For more on Columbia Energy Exchange and the Center on Global Energy Policy, go to our website at energypolicy.columbia.edu. or find us on social media @columbiauenergy. And if you have a minute, give us a rating on your favorite podcast platform, it means a lot to us. For Columbia Energy Exchange, I'm Bill Loveless. We'll be back again next week with another conversation.