Jul 11, 2019

Ep 175: Joseph Hezir - Managing Principal, Energy Futures Initiative

Managing Principal
Energy Futures Initiative
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Show notes

1) Timestamp 0-10
Bret Kugelmass: Where did your interest in energy begin?

Joseph Hezir: Joe studied Chemical Engineering and became interested in the policies involved with technology which is how he was introduced to energy. He was doing environmental engineering (working on research behind pollution control technology) and he took an open position at the Office of Management and Budget. He was on the staff at Carnegie Mellon University, trying to develop new APC technologies for the steel industry (from blast furnace operations).

How do we characterize these waste issues?

All processes have residuals discharged through the air, water, or solid waste. Theres increased recognition of these discharges and from a technical standpoint, now the engineering field needs to find ways to either reduce or clean up these emissions.

How do we keep track of the waste through regulations?
There are requirements for companies to monitor, report and control these discharges.

So what did you do at the OMB?
2 years after the federal water control act amendments of 1972 and they werent really being implemented yet. There were new federal programs implemented by the act and the EPA was in charge of these. He prepared and revealed the budgets for these programs and the regulations that were being issued by the EPA under these programs. The EPA has a gov wide regulatory oversight role charged througha seires of exectuvie orders 9and now bya statute) to ensure that the costs imposed on society are justified by the benefits and that theyre taking the most cost effective streamlined approach to regulating.

Does the different administrations change the regulations much?
Over time there’s been a gradual trend to have increased independent scrutiny irrespective of presidential administration, This is because the scope of federal regulatories has been increased to make sure the costs to society are justified.

Do we look at the net effect of these regulations on industrial processes?
Not on a regular basis, but there are periodic and systematic reviews, for example, of the clean air act. Its expensive and an extensive process to do so.

Who does this review? What happens if the review comes back negative?
In the environmental statues congress grants a lot of authority to the executive branch, primarily the EPA. There are stutatry touch points they have to meet but utlimately the EPA has a lot of discretion over the regualtions. Technical, scientific and economic aspects come into play in setting these regualtions

Bret Kugelmass: what jumped out a t you during your time here?

Joseph Hezir: OMB plays an important role beind the scenes because therea re issues at an interagency level and at OMB this is wehere these issues are illsutrated.

Whats a specific example?
Regulation of wetlands. The authority 2 issues permits for activities that affect wetlands was up to army corps of engineers but EPA had guidelines that the army corpa had to follow and they had different ideas of the extene tof those guidelines. Teh2 sets of regulatons ebing developed in parrallel led to daily meeitings with both parties in the room to come up with a common set of understanding. Rgulation of farming practices and wetlands was particulary difficult because wetlands tend to be near ag areas and so there had to be guidelines on what type of farming practices could be used near these ares. The department opf agriculture was also involved in theses discussion.

2) Timestamp 13
Bret Kugelmass: What looped you into the energy scene, through an MIT report?

Joseph Hezir: Still at OMB and after the iranian oil disruption in 1979. There was an opportunity to move frmo environemntal area to the energy area and he was interested in energy policy issues with respect to the oil markets. Dep of energy strategic oil researve program was set up to repsond to global disruption in energy market.

Why cant we have a giant energy reserve and keep the price levelized over decades?

Both in rep and dem administrations theres a reluctance to have the gocv interfer in global oil markrts and the market is global so even if we oculd regulate the US, we cant exercise control on a gloval scale. It would take an enxttemly large capacitor to buffer a global oil market. The policy ahs always been to ahve the reserve as a backstop to deal with severe supply interruptions of the embargo scale impacts on the makrer.

Now we have so much domestic oil we dont have to worry aout that?
Yes the markets ahve changed substantially. the pattern of petroleum supplies around the world shows the concentration in the middle east isnt as hgih as it once was and our domestic production is higer. In the 1980s (discovery of oils, oil thrust belt) and early 2000s ( unconventional oil and gas) lead us to now have an abundance and weve changed policy so that now werea ent oil exporter

Why should we export oil?
Because its a global market and theres a limit to what you can control within borders. By having an open market, efficiency is better and prices for consumers are lower. Longer term that market is efficient int erms of pricing an dencouraging new investment. You should continue to encourage investment and new development.

3) Timestamp 18 :30
Bret Kugelmass: tell me about the MIT energy initiatives

Joseph Hezir: began in the early 2000s by proff ernie moniz who served in clinton admin under sec of energy, was formally a professor at mit. Went back to mit to form this initiative. Its purpose was to elevate the focus across campus on energy issues. It did so in 2 main ways: it raised additional funding to bring in additional soiurces of funding frmo private sector and philanthropies for energy research on campus, it also was a center for doing energy policy studies. In 2007-2008 joe was doing consulting work for a large electric utility that had issues carbon capture from existing coal fired pp and they had technical, economic and policy conerns. Joe thought the inititative would be a good place to go to get some answers so they camr up with a joint prohext . director moniz then said to joe to come do consulting work for the mit project and he got involved frmo there. He wotked on the future of natural has study which was conducted in late 02000s because the unconverntial natural gas industry was about to take off and they wanted to know how that would change end use markets. He looked at natural gas use in industry and what the demand might be now that they had a much alrger domestic reseource. So far the demand has exceeded what they prediceted/

what s the source of the unconventionsl natural gas?
Some say its methane associated with the formation of the earth.on saturns moons there are oceans of methanethat arent frmo decayed plant matter. They knew there was gas trapped inshale rock and conventional drilling coulddnt cover that ina n economic wya. It was funded by doe in the 1970s to after the first oil embargo wehere doe embarked on it sfirst effort to assess all the domestic energy resources that we have. In the early 2000s the new horizontal drilling and fracking technologies, which were develped by the oil and gas industry, allowed us to recover enough resources economically.

Do tey extract more than they can use?
In some plaes theres no pipelne infrastructure, in others there have been wells drilled that got taken out of production because of the supply and demand.

4) Timestamp 24
Bret Kugelmass: what are the mandates for those plants to capture their carbon waste

Joseph Hezir: its in research, congress has jsut apprproutated some funding for this. Capturing co2 from NG plants is different than capturing CO2 from coal fired because the concentration is lower so it takes more effort to capture that carbon. The same tech can be used, it just needs to be modified. At EFI, this is something we work on.

What is the origin of EFI?

Joe was on the staff at the MIT program. Melanie keladine served as exec director and wehn ernie was asked to be sec of energy, he asked Joe and Melanie to go back to gov with him, because of them had prior governemnt experience. During moniz’s tenure at doe, melanie became director of energy policy and systems analysis and JOE became CFO. Afte the 2016 election, they decieded to forma n organiztion to continue the plicy work they were doing at DOE and this led to the formation of EFI as a nonprofit organzition, policy think tank focused on finding innovative policy solutions to move to a low carbon society. It was built on the foundation laid by the obama administration on the apris agreement. The 2 key focuese are decarbonization through innovatoion an strategies where technology innovations can lead to new soltuions to decarbonize the economy.

Do you advise on policy or do you do advocacy?
We dont do advocacy but we do research and advise on policies. They ahve 2 ground rules: they have complete control of what they work on (irregardless of what their funders want) and they make al of their findings public. They promote their work their website, presentations, webinars, seminar, speeches, congressional testimony, ect.

What technologies have you done research on?
For about a year they (with IHS market) studied, funded by Gates Ventures, the energy innovation landscape. They looked at current policies, current large players, resource capabilities, the infrastructure for innovation across the country and areas for breakthrough potential opportunities. It cameout this january and put together a framework to show how the gov and private sector should be identifying and prioritizing the technologies. There were about 20 tech areas that couldhave siginifcant impact in the market plce.

What were your top 3?
Advanced nuclear reactor technologies because its a large source of carbonf ree technolgoy. Carbon capture and sequestration, of twhich there are major demonstrations of rihgt now although the cost and texhnology need to be imprioved. They need to look at how much carbon we can safely sequester geologically. We also need to look at electrucuty storage. 4-6-8 horus of battery storage exists now but we need to eb able tos torage electricyty for days, weeks, months or even seasons (but it doesnt exist today).

5) Timestamp 34
Bret Kugelmass:
Wouldn't we increase the net global carbon footprint by requiring use of renewables?

Joseph Hezir: You ahve to look at the whole carbon lifecycle. In the case of battery technology, the big challenge long term is, if we expand the current use if battery technology we run into the risk of running out of materails such as cobalt and lithium. We need to look at less carbon dependent and more earth abundant battery materials.

Is anyone running calcualtions on the global scale of the material consumption needed if renewables were to take off on a global scale?

Most look at t a10-20 year projection int he US, western europe or china and not so much looking at whats happening in the rest of the qorld. Its very hard to look out 40-50 years ona global basis because there is a huge amount of uncertainy. One of our important themes is optionality, we may not follow the same path in the next 30 years which is why nwe need a robust innovation program to assess what will be improtant in the future for globaly energy developemt.

Is it possible that were too focused on innovation? Couldnt odler technolgies be cheaper?
Two other aspects to advanced nuc tech are 1) safety features, all new ones emboy forms of safety features. Even though the old plants are safe enough, active safety to passive safety may not actually add cost and its important to consider public perception. If were going to have a new generation of nuclear deployement we want to be able to say that its better. We also want to have a reused fuel system or a system where used fuel can be stored long term on site, older plants are built so that fuel is quickly moved off site and stored in long term storage.

Is there a big difference in cost in the advanced and old reactors?
Joe doesn’t think so. There’s an aspect of desiging to scale that makes a difference. Older reactors are larger and built customly on site. With advanced reactors, they can eb built on a smaller scale with many of their components being built in a factory. Just like in the technology field, we will hopefully be able to realize those economics of producing these technologies.

But what about the carbon cost of waiting 10 years to bring a carbon free technology to market?
The real trade off in the electricity markets is whether ur building new nuclear or anything other than nuclear. Without a carbon rpice, NG generation is very attractive because theres such a large domestic supply. Wind and solar benefit from a combination of state level mandates and the afct that they receive large federal tax incentives. Whether its a1970s LWR or an advanced reactor, theyre going to have trouble competing in the US.

6) Timestamp 45
Bret Kugelmass: why shouldnt we go to a different country to deploy nucelar where we dont face this proble,?

Joseph Hezir: theres interest in building an export market. Joe worked with the Atlantic COuncil ona report in whcih they showed there are countries that have the potential to do this but they arents as interested in byulding a 1000 MW plant than they do building a 2-3 MW plant. We need to get one step ahead of the game and thats where the advanced reactor game is important.

Isnt the big problem to remove the CO2 weve already emitted?

Even if you were to get to a net zeo carbon emissions in the next few decades, there would still be a certain amount of warming and climate imapcts that takes place. CO2 removal, via the air or oceans, is a new area that they are doing a major project study on to see what would be a R&D portfolio to advance CO2 removal. WIth carbon capture, ona small scale, this is being done although its not economic and needs innovation. Its important to be able to cature and isolate carbon in the oceans and finding ways to improve or capture the natural processes that soils and plants use to capture carbon. The next major report is on carbon dioxide removal because they see the need for a new fed gov initivate for R&D in this spce to provide more options on the table for politicians to deal with the climat echange issue.

Shouldnt this be the only thing that matters then?
Its not an either or propostition. We need to wrk on both mitigationa nd co2 removal. Implicit in your question is the problem that if u focus on co2 removal, then it doesnt matter what we admit in the atm and policymakers/the public wouldbt find that acceptable. They have to be complimentary solutions.

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