Expanding Dr. Chu's Comments

After posting the P41 Pick Points, it was not until this morning, over a quiet cup of tea, that I could sit down and actually listen to what Dr Chu had said during his visit to Platts on Thursday. There were sufficient additional pieces of information (and the comment on OPEC was right at the end and of less significance than has been made) that I thought I would expand a little on what you can hear on the podcast. The prepared remarks, as I mentioned earlier, deal with the loan guarantee program, but the answers to questions were the more informative.

On being asked how the nation could double renewable output in 2 years, he said that wind is most mature technology and thus the most likely, solar thermal would be the next to see growth while photo-voltaics (PV) may also contribute. Numerous wind projects can be expected to go forward . He cited Bonneville Power as one who is capable of putting in lines to connect to turbines, with the system being installed within 2 years. There is Wind available in the Dakotas; and there are power plants capable of using solar thermal in the range of 100’s of Megawatts but those are the areas that he expects to get immediate funding and to meet the targets.


He does not claim that the government has all the answers, but anticipates going out into the market to find what the industry wants to bring forward, transmission isn’t there yet (maybe not until 2014).

He hasn’t reviewed the existing CCS projects yet, nor made any decisions; yes, there is FutureGen, but it needs a technical review before a decision can be made to see if it can progress. He feels that there are gains to be made in pre-combustion separation as well as post combustion separation of pollution. Oxyburn is also to be looked at. It is not a slam dunk which technology is going to prove to be the best, so he wants to carry out a suite of tests on potential solutions. 6 geological sites are going to be tested for CCS, and he wants also to look at EOR but all this has to be tested. The big money will be in capture and in sequestration, though it will be so expensive that the current investment will not go that far.

He sees power transmission as a national issue, combining renewable energy and being able to port it around the country. We have gone from local generation and use to a need to look nationally. Solar, for example, is concentrated in the Southwest. And wind also is focused. We need a national transmission system overlay. We need a discussion over the realization that this is a national issue. Yet while this is a national imperative that we go forward, we need to study this as these are complicated issues.

In regard to feeding the Strategic Petroleum Reserve (SPR) he said that the last thing we want to do is to is to have the 13 million barrels of the current commitment going into the SPR, when there is a tightening of supplies and OPEC cuts, but he is not sure if this is not already a done deal, and since there are complications to the issue – he will have to look into this. Having been dumped deep into the pool, and while he knows the technical issues, he will need to look at other aspects while he gets up to speed, and he was told this was a done deal.

What is the likelihood that the world will get the tipping point when tundra starts emitting carbon dioxide? He said that we don’t know when the tipping point when the tundra thaws, don’t know at what temperature and carbon dioxide concentration this will occur. It would, however, be prudent to stay away from that happening.

His goal is to focus DOE research and make it more results driven. It is the biggest supporter of physical sciences in the US. Many Nobel laureates have been supported by DOE. It is a primary contributor to our current prosperity, and so we cannot not do that, but must fund basic research. But at the same time there is a lot of government research that should be used and passed to the private sector. DOE is not as good at taking great research and transfer into things industry picks up. So he will be spending time trying to find out how to port discoveries over. Wealth creation was effective when Bell Lab results were transferred into industrial products, and our economic future was driven by electronics companies that believed and invested in research. Don’t have this philosophy yet in Energy, and so DOE has to fill the vacuum, National Laboratories and Research Universities will be the key. First priority is the economic recovery and the second is a green industry where US can lead.

If anyone thinks they can predict oil prices, they should be rich. For a long time he was a member of the America’s Energy Future study by the National Academy (the report should be out soon). He can’t predict oil prices, but sees higher demand and hopes they can decrease the rate of demand increase, though it will still go up, the peak of major oil companies, conventional oil production (not tar sands or deep water) is going to be soon. They will have to move to more expensive oil recovery this drives price up, cheap oil production will not increase. Price will go up in the long term, and so we must decrease consumption and use other means. Conventional oil has been increasing but it is now flat, and will have to go to more expensive sources. If we get smarter ways to get oil out it will extend oilfield life. But at some point you reach a limit.
The price of wind energy has gone down by a factor of ten and will go down further, PV is on the learning curve, and hopefully can get down a factor of 5 further, to make it practical. New technologies will come down in price = faster than more mature technologies. It is different because oil has only a finite supply. But with EOR oil may be not last 15-20 years but 50 years.

Asked about an increase in the blending cap for ethanol – he answered that the only issue is the auto industry opinion on harming engine at higher mix. You need to accept that you can’t deteriorate the engines of the present fleet, but we need to increase fraction of E85 vehicles, which means changing the fuel lines, seals etc. We can’t get to target on cellulosic – but this is a challenge, some smart work now being done, looking at bio-producing heavier fuels than ethanol. 3 bioenergy institutes have been started started, and in first 6 months altered yeast and bacteria have been sued to feed and sugars and make gasoline and diesel like fuels. These self-separate from water. These are better than ethanol therefore. Given the caliber of the scientists working on this – some of the best – suddenly the level of activity causes technology to lurch forward. He expects the work to be populated by really top people and students who no longer aspire to a life in finance but want to do science. Don’t need an ethanol pipeline.

On India he was asked how to do tech transfer of nuclear technology to India; reply - there is an understanding and that will go forward.

On how the US and China can they work together in climate change issues, he said that the key was that they do work together and mitigate carbon dioxide, increase the efficiency of their growth and the best choice of new sources of power. There are many opportunities. Building technologies, for example, provide a lot to be gained, since buildings can use 70-80% less energy thann conventional construction affords. We can now build 60% more efficient buildings and we think we can build 70-80% efficiency in ten years. China will build many new buildings so a lot of things can be done, and there are lots of chances for collaboration.

OPEC and his role and his message to them. Stable prices are very important to every country and he will do what he can to encourage stability. Major mission of DOE is to look to ourselves and what we have control over. We are the science house and he is aimed at promoting efficiency, and decreasing our use of oil. If oil is used more efficiently, particularly in personal use by a factor of two, this can have a great effect. He would argue for price stability – do we want OPEC to cut production. He needs to look into it more. No specific plan for doubling renewable power in 3 years, but there are mature renewable technologies, and he cannot divide how to get to the target but has to look at the technologies and how they can be best encouraged to develop the answer. He, personally, is big on energy efficiency in the home , and had a house in California where he paid very little for heating and nothing for air conditioning – through the efficient use of blinds.