December 17, 2012 | 2
Welcome to the live coverage of the Comparative Energy Policies and Technologies in France and USA Conference from Austin, TX. I’ll be updating this post throughout the day with recaps of panels and other bits of info. Check back here regularly and over on Twitter to stay up to date: @davidwogan #USFranceEnergy.
The United States and France are interesting to discuss, especially Texas and France. Both are roughly the same size, have a long diplomatic relationship (starting when Texas was its own country for 9 years), and are important illustrations of energy policies. France is also home to some very large, very influential players in the international energy arena: AREVA, Total Petrochemicals, EDF, and more.
The French General Consul is providing opening remarks now, noting how the United States and France have similar goals when it comes to energy: both want safe, clean, and reliable energy. But geography and history have shaped how both countries approach energy policies. The United States has the luxury of space and domestic fossil fuel reserves, allowing it to develop these resources for its own use, and also for export. France, on the other hand, has all but depleted its fossil resources.
Here’s the schedule for today:
Panel I: Shale Gas Production and its Global Impacts
Natural gas is an important fuel for both the United States and France. Due to the explosion of U.S. natural gas production (largely due to shale gas and hydraulic fracturing), the electricity generation mix in the United States has already shifted. Just this year, coal production went from 50 percent of the generation mix down to one-third, while natural gas expanded from one-fifth of the market to one-third. The U.S. power generation sector has decarbonized somewhat in the last year – without carbon policy.
In the words of MIT Professor Ernie Moniz: “There is no politician… who is going to walk away from [natural gas].” Environmental concerns need to be addressed, he continues, but are not a deal killer.
Natural gas liquids are feeding the petrochemical industry. According to Michael Goins of Total Petrochemicals, USA, natural gas-dependent industries have expanded 7% (paper, glass, chemicals, metal production) – due to the natural gas liquids that are produced in conjunction with the gas portion of natural gas. The refining industry is also responding to excess gas, and is building out refining and fractioning infrastructure.
We have also seen the U.S. natural gas boom affect coal exports, which I wrote about briefly here. Our excess coal is making its way to Europe, and not just for power production – a lot of coal is being used for manufacturing processes.
The two things that combine to make shale gas possible in the U.S. are horizontal drilling and fracturing (cracking rocks with water to release gas). According to Rod Nelson of Schlumberger, horizontal drilling is outpacing vertical drilling, and industry is fracturing much more rock than ever – even though fracturing as a technology has been around for decades. Industry views these technologies as processes that can become more efficient as drilling becomes smarter by pinpointing wellheads, instead of oversaturating drilling sites. By being smarter, Nelson says, industry can reduce the resources that go into extracting natural gas.
There is no separating water and energy, and natural gas is no exception. Water is used as the primary fracking fluid (mainly because it is cheap) and is augmented with secret recipes of chemicals and sand and other ingredients that break rocks. The shale gas boom taking place in Texas is also resulting in stress on already stressed water systems in Texas, especially in west Texas. According to Professor JP Nicot, UT Austin’s Bureau of Economic Geology, water recycling and flowback is common, but only about 20 percent of water can be reused – meaning the other 80 percent has to come from somewhere else.
Texas has historically benefited from oil and natural gas production. According to Texas State Representative Mark Strama, the energy sector contributes 15 percent of Texas’ GDP – most of that is oil and gas. Texas benefited from high gas prices, especially when oil was at $146/bbl several years ago. But with climate concerns, hurricanes, wars, and security concerns, Texas is vulnerable to a shift away from traditional energy sources like oil and gas. While Strama would like to have seen renewables take off more than they have in Texas (Texas is already a leader in wind), it’s natural gas that ended up being a disruptive technology. Texas is fortunate to be able to take advantage of this disruptive technology, and not being disrupted out of the market. On the losing end, as Strama sees it, is solar and wind. Natural gas in the electricity market is making it harder for solar and wind to reach grid parity.
But it’s not over for renewables. Strama sees natural gas a bridge fuel that buy us time as we invest in R&D for renewables. The same strategic investment (not just market forces) that have led to the boom in natural gas can be replicated with renewables. Seems to be a recurring theme this morning.
Rep. Strama just brought up an interesting point about natural gas in light of the upcoming U.S. fiscal cliff. He suggests that the gap in the federal budget could be closed by taxing carbon emissions. As a State Representative from Texas, he realizes this could be political suicide because Texas would likely be the largest taxpayer under this scheme, due to carbon emissions from Texas industries. But Strama also sees industries moving away from more carbon-intensive operations in other states and moving to Texas, which might ease the tax burden.
Panel II: The Power Sector: Nuclear, Smart Grid, Renewables and Efficiency
Now the discussion is moving beyond shale gas to the energy sector in general: nuclear energy, smart grid, energy efficiency, and renewables. France is the poster child for nuclear generation, with its 58 pressurized water reactors (good for around three quarters of France’s generation). For comparison, the United States has 104 commercial reactors in operation. The question in France is how to incorporate nuclear energy in the future. Cyril Pinel, Counselor for Nuclear Energy at the Embassy of France, sees nuclear energy as a competitive advantage for France, as electricity from nuclear energy has been cheaper than other sources in other parts of Europe. Cyril Pinel is also excited about the AP1000 (Advanced Pressureized Water Reactors) that are building out in Georgia and South Carolina, as the world watches on to see how the projects are completed.
Energy efficiency has been missing for the most part this morning, but Dr. James Sweeney from Stanford University’s Precourt Energy Efficiency Center is bringing it into the discussion now. The technologies we’ve been talking about this morning (nuclear, shale gas, etc) are mostly supply-side issues. The other side of that is energy efficiency, and therefore very much dependent on human behavior and pricing schemes. But for most utilities, decisions are made to sell more electricity, rather than less, so there’s not much incentive to reduce customer use. And for consumers, information about true costs for electricity (especially time of use info) is hard to come by, and generally hard to put in context. Dr. Sweeney is estimating that household electricity costs make up about 2 percent of an individuals budget.
Keynote: Professor Scott Tinker (Creator of the acclaimed movie SWITCH, Director, Bureau of Economic Geology, UT Austin) with introduction by Dean Fenves, Cockrell School of Engineering, UT Austin
Professor Scott Tinker is now talking about energy transitions. The thing to remember, he reminds us, is that energy transitions take time. In the next half century, it is possible, in his view, that with the right mix of policies and economics that the foundational energy technologies of today (fossil fuels) will give way to foundational technologies of tomorrow (nuclear, renewables, etc).
Personal observation: I would like to see more emphasis on reducing demand through energy efficiency. We covered the topic a little bit earlier in the conference, but most of the focus is on new technologies, or switching things up between existing technologies.
Panel III: Energy Policy
The meat of this panel is asking: what are the right policy frameworks that are needed to balance the needs of a world whose population is growing, demand for higher standards of living, including access to electricity and transportation are increasing, and new and old environmental challenges are presenting themselves. We’ve seen examples where ‘new’ technologies like shale gas can thrive even with a lack of climate policies, and from Texas State Rep. Mark Strama about how new energy policies are needed to transition to the new energy economy Dr. Tinker talked about.
Francois Moisan is now speaking about France’s energy policy. France has a similar menu of initiatives in its energy policy platform. On the demand side, the French have identified addressing consumption from buildings, transportation, and industry. The building sector in particular, according to Moisan, is an important focus. The building stock contains a lot of potential efficiency gains, and tries to incentivize upgrading the existing building stock through tax credits for upgrade measures (adding insulation, replacing inefficient equipment), and through stricter building codes (zero energy buildings by 2020). We are seeing a similar focus on the American side with President Obama’s Better Buildings initiative. And while this is a federal program, it is implemented at the state and local level by governments, utilities, and non-profits.
Roger Duncan, from UT Austin’s Center for International Energy and Environmental Policy, is up now to talk about state and local policies in the United States. Mr. Duncan served as General Manager for Austin’s municipal electric utility for many years and has seen Austin increase its renewable energy portfolio to 30 percent (mostly through wind power from West Texas). According to Duncan, cities and local governments are extremely critical because the world’s urban population is going to increase, and policies are more attainable at the local level as opposed to the national level.
Roger Duncan is reminding us that there is a lot of complexity moving towards advanced technologies. Integrating smart meters, distributed solar panels to homeowners, etc. is difficult because policies haven’t developed at the same pace as the technology, or there are complexities we haven’t solved yet with technologies. Duncan uses the transition from landlines to cell phones as an example, saying that we invented the term dropped call for a reason. Technology moves faster than the policy in most cases.
I think we can make an important observation about energy policy in France and the United States here: as the French representatives noted throughout the conference, France has developed stable, long-term energy policies that provide certainty to industry (and others). In other words, a top down approach. The United States tends to take a bottom up approach, letting states and local governments develop policies, which eventually form federal policies. Several examples of this off the top of my head are vehicle emission standards from California and residential energy efficiency standards from Austin, TX (the home of Home Performance with ENERGY STAR(R)).
Panel IV: Energy Coverage in the Media
Evan Smith, of Texas Tribune fame, is moderating this panel.
Russell Gold (Wall Street Journal) is telling us about why he thinks fracking has taken off in the United States. Private mineral rights have played a role, he says, but geography has played an important role, and one that is hard to replicate (unless you have millions of years). Marine deposits created what we now have as shale in parts of the country that were in shallow seas millions of years ago.
What has the media gotten right about shale gas? In Russell Gold’s view, the media was on it over a decade ago with fracking in and around Fort Worth, TX with the Barnett Shale. What can the media do a better job of? Connecting everything with climate change (!!).
Krauss recalled visiting an LNG plant in 2006 that was being prepared to import LNG. Fast forward six years, and that same terminal is being prepared to export American natural gas to markets around the world. In his words, “In six years of research, and six years of conference, I can tell you that things will be different in six years.”
The discussion has now turned to how the changing media landscape is affecting media coverage. Some traditional newspapers and magazines (who have ventured into online reporting in recent years) have cut staff, while some have disappeared all together. Non-traditional news outlets (for lack of a better phrase), can fill in the gaps that the big organizations cannot, or choose not, to cover. An organization like David Sassoon’s InsideClimate News can fill in gaps and pursue stories that might not pass muster of an editorial board at a large media outlet.
Quick observation: it’s interesting to see that the media industry is undergoing a transition or shift at around the same time the energy industry is. How will this play out in the next few years?
And we’re done here in Austin, TX. Thanks for reading!