archival government and educational films from the 1930s through the '70s. created by the cable tv industry and funded by your local cable or satellite provider. watch us in hd, like us on facebook, and follow us on twitter. live now to the center for strategic and international studies here in washington, d.c., for a conference today examining coal as an energy strategy, including its economic competitiveness and viability as an energy resource, the current state of clean coal technology development and how it factors into the climate change debate. representatives from u.s. and international energy companies will offer their views and we'll hear from the deputy assistant energy secretary for clean coal. the event should be getting under way in just a few moments. live coverage here on c-span3.

i think it's completely crazy we're doing substantive work on the 17th of december. i can't imagine we're holding real conferences here right the week before christmas, but we are, but that's because there's so much to talk about, and i'm so glad to have you all come. thank you, thank you all for being here. my name is john hamre, i'm the president at csis. i wanted to say special thanks to julio friedmann who is a friend. we have known each other for many years. he's fortunately in town serving in government more directly. he's a government guy, he's out at lawrence livermore labs but we're so pleased he can be here leading at a crucial time when we need to be thinking through a lot of important issues. for a very strange reason, recently i have been doing some personal reading on the history of philosophy, and i was

recently reading about thomas robert maltous, a british cleric who in the early 18th century who was a very provocative philosopher because he had very dark views about the future of humanity. you now know him as an adjective. people talk about a mall thusian problem. this is robert malthus. he had this very dark view that the population was growing much faster than the capacity of the world to feed the population and people were doomed to die of starvation. he took it over the edge by saying, therefore, we shouldn't help poor people because they're going to die anyway, and so let's not give them anything to help them through this. you know, pretty bleak and dire

sort of a philosophy, which is why he's now known by the adjective, not known himself. and i thought about it, that it's -- you know, it was relevant for our conversation today. he was wrong because he didn't understand one crucial thing, and that is that where the supply and demand curve interse intersect, it's not static, and a supply curve changes with technology. so back in his day when he was writing in 1820s, '30s, you know, there were 2.5 billion people in the world. today we have 7 billion people in the world. we have three times as many people, same size globe, probably a lot less space devoted to agricultural and we still have hungry people. i'm not minimizing that, but technology has allowed us to address a mall thusian problem and to find a solution.

and i thought, you know, it's a little bit a good context for today. you know, we are -- you know, we've got a lot of people in the world that are talking about a very, very dark future because of climate change, and that may be true. i'm not commenting one way or the other on climate change, but what i'm saying is we have to understand that technology is giving us new alternatives, new solutions all the time, and so we are going to spend some time together today to really explore that. what is technology giving us in terms of clean coal? now, in one sense, you know, you can't get around the central dynamic that in coal there's four carbon atoms for every one hydrogen atom. in natural gas you have only two carbon atoms for one hydrogen atom. there is an irreducible quality to coal as producing more

hydrocarbons and putting them in the atmosphere or carbon atoms and putting them in the atmosphere. but there is an enormous possibility for greater efficiency, and i think that's part of the landscape of what we're going to be talking about today and we're going to be spending a little bit of time digging into that. now, i'm absolutely at the extreme edge of my knowledge and now i have to stop because i don't know anything and it's time for us to turn to julio so we can really get this conference going for real, but i'd ask people to start with this frame of reference, that the world is constantly evolving and giving us new options and new choices, and instead of locking ourselves into just a rigid position that something is possible and something is not possible, let's spend the afternoon thinking together. sarah, are you going to kick this off for real? why don't you and julio come on up, and thank you all for coming today. [ applause ]

>> well, thank you very much, and dr. hamre, you sort of have outdone yourself. on the one hand you tease us for doing something substantive. on the second hand you start off with an introduction that has a mall thusian dilemma and a carbon change. that seems pretty subsan tiff to me. thanks for the good introduction. i'm sarah ladislaw, the director of the energy program here. thank you for coming today. we're really excited to have this conference today for many of the reasons that dr. hamre highlighted, but because, you know, we've been doing so much work on different fuel sources around the world, natural gas and oil in particular because of the sort of renaissance in unconventional oil and gas production, what that's meant for the economies around the world, and, you know, sometimes i think it's actually a good friend of ours charlie ebinger as well as the head of the world energy outlook at the iea,

reminded us that sometimes we forget about coal and yet most of the world has not forgotten about coal. there is a significant sort of coal market dynamics, drivers both for the production and consumption of coal, and also a significant focus on how to make it cleaner and more efficient so it's compatible with sort of our climate change goals and needs. we were very, very pleased when our sponsors for the event today mitsubishi heavy industries, provided us with the opportunity to put together a longer than our normal session focus today on some of these dynamics and what it means both from a global and a u.s. perspective. so we're very pleased you're going to spend the afternoon with us here today. before we get started and before i want to be very conscious of julio's time, just two quick reminders. one quick reminder. we will have a reception following this so we do hope that you'll be able to stay and

participate in the discussion that will be part of that reception. now, to kick off today's event, what we wanted to do was invite julio freiedmann here today the deputy assistant secretary for clean coal at the u.s. department of energy and runs the r & d program in advanced fossil energy systems. large demonstration projects, carbon capture utilization and storage and clean coal deployment. just that, yeah. we're very pleased to have julio here to talk about the role of coal in the administration's all of the above energy strategy. i believe you have a presentation and we can go ahead and do that and we'll take some questions. >> sure. >> thanks very much. >> thank you, sarah, thank you dr. hamre. i'm delighted to be here. for those of you who don't know me. i'm julio friedmann. i am confident i am the only one you will ever meet. there's one other who lies in

chile. he worked at alstom, go figure. i feel compelled to mention not only philosophically but scientifically how often people are wrong. a very storied figure, lord calvin, was also wildly wrong. lord calvin who is by any measure a good physicist calculated the age of the earth based on the heat flux from the crust definitively laid out that the earth could not be older than 10,000 years. based on the heat flux. there were things he didn't quite know at the time, and as we learn things, things change, and in that context we enter this space with a certain amount of humility, with a certain amount of objectivity as we get into this. we like to lead from a basis of facts and that's what i'm going to try to talk to you about today in the context of where coal is at and based on where coal is at what we see and imagine not only as a global

role but the u.s. role continuing into the future. one of the things that most people sort of instinctively understand but don't explicitly understand or state is that we are in an era of fossil energy abundance right now. that was not obvious ten years ago at all. ten years ago there was a lot of discussion around peak oil. ten years ago we had imagined a nation and a world in steep natural gas decline. a ki kind of not that way anymore. the united states is having record oil and gas productions for both. in fact, natural gas is now i think about 60% unconventional production, something like that. well above 50%. we're now the number two oil producer in the world. we're going to eclipse saudi arabia sometime next year. that's a little different. from many perspectives, this is very welcome news. there's a lot of good news in this. not so much in terms of the atmosphere, not so much in terms of the global climate system.

i'll be spending more time talking about that but from a number of perspectives, from economics, geopolitical stability. this era of fossil energy abundance is not only important to recognize but to sort of internalize as we go thinking about our business. thankfully we're not the only people who do this. i never thought we'd see coal on the cover of "wired" magazine, but it is. and it gives a sense of the fact that this is starting to enter into the zeitgeist a bit, that the presence and abundance of coal, the role it plays, its persistence is one of those things that has to be sort of recognized and in some context managed. because, in fact, the future of u.s. fossil energy, global demand, sees an awful lot of fossil use and coal use specifically. under most scenarios certainly within the eia, 75% of global primary energy by 2035 is still fossil. ma squort of that is coal. coal is about to surpass oil as

the number one energy fuel worldwide. even with robust natural gas growth, coal remains a major fuel in the u.s., everywhere. in the context of the united states, even given sort of robust scenarios of low priced natural gas and high abundance, we're still looking at 25% coal use for the indefinite future. that's a lot of coal. and it's a lot of emissions with that. fossil energy remains the dominant power supply. it's always a mix of coal and gas up to about 70% in the united states. again, that is expected to be that way for a very long time. with that continued use, we will continue to see greenhouse gas emissions grow as well, and that is, in fact, the hard part. coal has come a very long way. the first use of the phrase clean coal was somewhere in the 1830s. people were talking about the fact that clean coal was about getting your linens dirty.

because coal was dumped into people's houses, clean coal meant it wouldn't get all over your apron and i think the industry has moved quite a bit since then. we've had in the past couple of decades something on the order of 90% reduction in socks and knocks. we've been able to figure out a basket of technologies to manage mercury emissions. carbon is the hard one and it's the central issue in terms of what will the role of coal be in the united states, how do we think about that carbon profile and how do we manage it. for the rest of the world, coal use is still there. it continues to grow in china, in europe, in japan. europe i think may have been a surprise for some. it is, in fact, the fastest growing coal market in part because germany is shutting down nuclear power plants, and gas wasn't what it used to be in europe these days for a number of reasons. so they find themselves using more coal. same thing in japan with the closure of the nuclear power plants, japan is building gas plants and coal plants and

expects to be using them for a while. there is increased trade in export in coal, and there are new energy security concerns. this is a central issue in the way that china thinks about its work. for them domestic energy security is a big issue and coal is a big part of how they see their robust energy infrastructure. same thing in eastern europe. it's not just poland. poland, romania, ukraine, hungary, a number of eastern european countries and adjacent countries really rely heavily on coal for their energy supplies, and, of course, with all that dramatic increase in carbon dioxide emissions. in that context, if we are in an era of fossil energy abundance, carbon capture and storage or carbon capture utilization and storage, ccus, this is the key technolo technology. if you actually want to deeply reduce emissions, if you want to stabilize atmospheric

concentrations, it's one of these things you need to do. this has been recognized formally in the president's climate action plan. in fact, it is central to the -- literally central, if you open the middle of the document that's where the ccs piece is. there's a number of things that have flowed from that. there's a certain amount of controversy around the epa draft regulations for 111b and 111 d, 9ñ ccs is listed as compliance option for both of those. and people are busily going about trying to figure out whether or not that makes sense for their state or for their region. in addition to that, there's some important technical findings. the most important finding is the climate change is real. the intergovernmental panel has dibble b doubled down on that and says yes, we you understand that and it's very dire. in addition to that there are new challenges associated with things like resilience. some of it is resilience in the

face of weather threats or climate threats of various kinds but some of it is resilience issues having to do with renewable loading. that's a good challenge to have. we've been adding renewables to the grid, and we've learned a series of things from that. in doing so though how you actually maintain resilience as part of the mix is a new and important question. the department of energy has not been idle about this. my program has put $6 billion into this effort since president obama took office. it is a massive investment in trying to keep coal part of a clean energy future, and central to that, again, is carbon capture and storage. for those who aren't familiar with it, it's not that hard. there's two parts. carbon capture is basically you take carbon dioxide from dilute streams, 12%, 14% from a coal plant maybe, 3% to 7% from a natural gas plant, and you have to concentrate it up to 95%, and the reason why is for the second part, for storage. you inject carbon dioxide deep

underground. it has to be high lie concentrated for that to work properly. once it goes down, it stays down. the earth's crust is well configured to store carbon dioxide. we have a huge body of knowledge to dem trait it. it's not rocket science, it's rock science. there's a lot we know about that. to a first cut the united states is not just the saudi arabia of coal, it's kind of the saudi arabia of everything these days, for oil, for gas, but also it turns out for co2 storage volume. we have somewhere between i think 1600 and 3200 billion tons of storage. we have a huge natural resource for storing carbon dioxide in the united states and that's lovely, that's really great news because it means we have an option that we will want to consider as part of what we do under an all of the above scenario, and i can't state this enough. i'm not here to be a tub thumper for coal. i think coal has an awful lot of benefits to it and those are manifest in terms of low cost,

diverse supply, ease of transport, domestic production and a number of things, but if you're really going to be serious about climate change, you do need to do all of the above, all of the above includes coal but it's not just coal. very robust finding from these kind of general equilibrium models. this is the eia's but it could be the iea's or stanford's or any other group. if you look at 13 different vintages and bases for these kind of equilibrium models around the world you get a similar result. you do efficiency, you do renewables, you always do nuclear and always do carbon capture and storage and always do fuel switching. you always have all those things and the numbers are surprisingly robust. this analysis at ccs at 14% but that's a robust result. one of the things the iea, the international energy agency, made a point of in their 2014 outlook was to say we've come a

long way on a whole bunch of other things. we could go even farther in the ccs space and, in fact, there's grounds for it. one of their ways of thinking about it is this. if you look at all those different equilibrium models and you say what does it take to hit a 450 target, if you take ccs offer the table, half the models don't converge. they actually don't solve the problem at all. a typical estimate from this kind of thing is if you take ccs often the table, the cost of hitting that target goes up about 150%. so more than doubles. and the international panel on climate change has actually put more emphasis in this, and this is from david victor at uc-san diego. if you're trying to hit a 550 target gand you take ccs off th table it goes up 50%. it goes up 30% to 80%. if you want to hit a 450 target, the cost triples.

goes up between 200% and 400%. that's a lot of money, and it's just because in some markets coal with ccs is the cheap option. not everywhere, maybe not in california, maybe not in arizona, but in a whole bunch of markets, in a whole bunch of places in the country and around the world, ccs with coal is the cheapest option for deep abatement, and if you get rid of that cheapest option, you have to replace it with something more costly or less efficient. the good news is we've made a lot of progress on this. this slide is actually a little old, but basically the lower two bars are stuff that's built and operating or will be operating soon because it's being built. so right now we're here at 2015, we're putting about 50 million tons of carbon dioxide a year under ground. that has a decent volume. that's real abatement. that was co2 going into the atmosphere and is not anymore. by the end of the decade we should be roughly twice that. right now we have 20 large projects worldwide.

we're on track to have another 20 or so by the end of this decade. that's awesome. we want that knowledge, we want that demonstration, we want the technical findings that come from that kind of an undertaking. it advises decisionmakers very, very well. this is an important one. this was the birth of a new species and i was happy enough to witness this october 1st a boundary dam in canada became the first place where someone's retrofit a coal plant to capture the emissions using basically off the shelf technology. this is canadian technology, but it's very similar to mitsubishi's technology, similar to the norwegian technologies. basically the steam coming out the top means it's operating. that was venting 1.1 million tons a year. it's not anymore. that's all going underground now and they really like the idea of doing another one of these or another two of these.

they've already learned enough from the first project to cut the cost by 30% on the second. that is a very important finding and it's something we find is robust across the portfolio. as people deploy these things they say we know how to cut the cost on the first project a lot. we'll just do the second project instead because the second project is always cheaper than the first by a lot. 20% to 30% is a very typical kind of number. i want to dwell on this for a moment because it helps make the point that i made earlier. an environmental group approached sas power and said you're going to spend $1.4 billion on this project, that's a lot of money. how about you put a bunch of solar panels, put in a bunch of wind farms, you do a bunch of efficiency model and it will be better for your customers. reasoned, impassioned pitch. the president said you know we're in canada, right? it's dark here half the year, and when it's dark is when we

need the energy. so solar isn't a really great solution for us. also we can't put up wind farms because we have chinooks that run 90, 100 miles an hour and they rip apart wind farms so we'd lose our capital and canada has already put through a lot of efficiency measures. for our customers this is the right solution. and i want to underscore that line. for our customers, this is the right solution. not for everybody, not everywhere, but for some part of the world this is what clean coal looks like. virtually no socks, virt tilely no knocks, no particulates, no mercury and a 90% reduction in carbon dioxide emissions. we have not been idle about this in the united states. canada got there first, but it's been a good run and we've got a number of projects coming online which we've put a lot of money into. the total investment from the u.s. side on this so far is a commitment of about $4.5

billion. a substantial commitment to see these things up and running and the reason why is because it all comes down to projects. projects are the source of innovation, not just in technology, not just in engineering design, but in business, in policy, financial models, financing, all these things, it all comes into projects because when you put that kind of money on the table it focuses the mind and people get serious about trying to figure out how to make the thing work. let me give you a couple examples. this is one of our favorite projects, the kemper project. this is a success in many ways. part of that is we're scaling up a useful technology. it took us 25 years to develop that. we're testing it now at scale. this is a 582 megawatt power plant, a big plant, and the thing i want to draw your attention to is really two things. one is that little black pile in the corner. they're mining local lig night and coal. they're mining that at $10 a

ton. they've got an 80-year supply. it is an incredibly cheap source of fuel for this plant. and in this part of the country where they need to maintain resilience due to weather disruptions and all these other sorts of things, a southern company thought this was an important component of their portfolio. this is a net water positive power plant. this water plant produces water. part of the reason is they have to dry the coal to make it work. when they do they recover the water and return it to the environment. we don't often think of fossil energy plant as sources of water but, in fact, they put water into the environment. that's one of those things we could consider and the d.o.e. is thinking about it in terms of its r & d portfolio. you may be familiar with the petro nova project. it's a huge power plant. it's like 4400 megawatts. they went and we gave them some

money to do a 60 megawatt retrofit and they crunched the numbers and said 60 megawatts isn't going to cut it. let's make it four times as big. they did a 240 megawatt retrofit with no additional investment of government money but they innovated their business model. this is first vertically integrated power plant, merchant power plant. so these guys own the power plant. they also are owning the capture facility, that's all those blue things. those are being built right now. we broke ground in september and we're off to the races. they poured the concrete for the cooling tower but they also own the co2 pipeline and a quarter of the oil field it's being injected to. they are able to make the finances for this project work by trying a new business model. it's important to note that this is also a model of what the future looks like in terms of international partnerships. this project is 50% financed by japanese banks and, in fact, has

japanese technology at its core. this is mitsubishi's technology for post combustion retro fits. we think there will be other projects like this with international financing and other projects of ours in which other governments are looking to play a role as well. this is a utilization project. it's one i'm kind of fond of. it's small by our standards, 750,000 tons a year, but i love this project. they are making baking soda. there's not a huge market for baking soda, but they're capturing the co2. their feed stock is salt which is very cheap and they're selling the baking soda and hydrochloric acid. they're actually turning a profit on this and they're looking forward to their second and their third and fourth plant. important to understand, once they saturate the baking soda market which they will basically do on their next plant, they're going to sell road aggregate. basically at 11 bucks a ton. it's a cheap product but it's thermodynamically favored and

there's a market for it. they're being very straightforward and cagey about what they're going to do. it's another stimulus project. this is just outside of san antonio. so when it comes to what the department of energy and particularly my program is doing, our top, top priority are projects like this. it's just getting these commercial demonstrations into operation. one of them is already working from an industrial source in texas, a refinery. it's the air products project. we've put 1.6 million tons of co2 underground on that project, operating very, very well. part of what we have to do is deliver a deep rich set of public learnings from all these projects because this is what they're for. they're actually to advise the public. among our projects we have precombustion, post-combustion. we're injecting into say line formations. doing new builds and retrofits.

car bot gnbon gnats and plastic. we're trying to deliver the richest set of public learnings back to the nation. we take that mission very, very seriously. second priority, we have to reimagine our r and d portfolio. if you want the nine-hour version of that talk, let me know. i'm happy to give it. but really our program was conceived in 1997. the world has changed a bit since then so we're busily going about trying to think what is actually important, how do we make the ccs and the clean coal r and d portfolio what it needs to be. our research program was conceived in 1997 in which a unilateral united states seemed obvious to all. not so obvious these days. there are many international players in this space. there are many partners. the world has become more integrated, more complicated, more multinational in its

actions, and we feel like that's an important part of making this situation work. i do want to take a moment and talk about the financing of these plants, and the primary reason why is because this is where if the focus is projects, then the issue with projects is financing. a lot of people come to me and say the issue with carbon capture and storage is about cost. my rejoinder is the issue with carbon capture and storage is about financing. i will unpack that in the next couple slides. it's i think fair to say that the cost of a plant with ccs is more expensive than a cost of a plant without it, but we're not really talking about that. we're talking about something different. what clean energy alternatives are out there, how do we spend that emissions curve in an important way. it's also not just about the technology. a lot of people say to me that this is an unproven or untested basket of technology. it's hogwash. we have been capturing carbon

dioxide since 1938. we have been storing it underground since 1972. there's maybe a dozen vendors worldwide who will sell you a capture technology heavy equipment at a price with a performance guarantee. so the potential to improve is also very, very large. i'll just speak briefly to that. we'll talk about it more. right now we do these gas separations at about 15% over the thorough dynamic efficiency. there's a lot of room to improve from an eng nooering basis, from an ind gration basis, from a material science basis, from a thermodynamics basis. and it means there's a lot of room to ratchet down the cost. with respect to finance, that's really the issue. how do you finance these things? many options which are open to other clean energy technologies are not open to carbon capture and storage today. these include things like investment tax credits and

production tax credits, renewable portfolio standards which allow you rate recovery, tax exempt debt financing, utilities that will provide that service, and i absolutely want to be clear on this, i do not have a dog in that hunt. i do not make or recommend policy, period. not what i do. but if you want to get the financing done, it's worth asking what kind of policy choices are available to us, and that's a conversation which we are very happy to have and eager to discuss. the punch -- and other countries, they're actually pursuing that as well. in the united kingdom they have a different of contracts which they're exploring. white rose is the first off the block. and the european union, they have feed in tariffs. feed in tariffs have not been applied to carbon capture and storage yet.

just the question is how do you get these things built? one of the ways we're trying to do it is through the loan program office. in addition to the $6 billion we spent on my program, we have approved $8 billion of loan authorities strictly for fossil energy projects. clean coal is very much at the top of those lists. and peter davidson, who is the new executive director of the loan program office is keen to get these proposals and is starting to get them now. now that that program is proving profitable, we are keen to see how it can be -- how the success of this program can be leveraged into clean fossil energy projects. i think the majority of which will ultimately have ccs. to talk specifically about the cost issue, i wanted to show you this analysis. this is a levelized cost of electricity analysis. let me start by saying the obvious. these are thorny, divisive estimates. i don't want you to draw too much from the specific numbers here, but this is an analysis done by world resource institute

and published in their seeing is believing dom, back in october. this shows very nicely what all of the above actually looks like. if you look at the cost of this, there's coal without ccs and coal with ccs. natural gas without ccs and with ccs and a change of cost estimates for nuclear, geothermal, solar, photovoltaic, solar, thermal, all of these technologies. to a first cut in some markets, some of these are the cheapest. in other markets they're not. you can see that here. one of the other things i want to draw your attention to is we don't have a lot of data points yet for ccs. one of the things we need to do is figure out the range around that, where will it be higher, where will it be lower as we start thinking about this going to different markets, what do the costs really look like? at this point basically you're talking about something that's a few cents per kilowatt additive maybe. there's a lot of assumptions that go into that, how much

capture are you going to do? is it 50%, 90%? there's a lot of questions in terms of what technology to use. but when you look at the range of these costs, one story emerges which is it's all of the above. there isn't a silver bullet that you can point at and say this will always be that thing for the market. and you'll do efficiency to some extent and then you do all these things. and one of the things that comes out of these kinds of analysis is the recognition that as a policy option, as an engineering option, as a deployment option, coal with carbon capture and storage is a very important one and a real one. one of the things that makes it work in the united states may be harder in other parts of the world is enhanced oil recovery. i can't overstate this enough. the low end estimates are many tens of billions of barrels of production that could come from co2 injection underground. that would provide tremendous

revenues. if you look at the difference in cost associated with some of these projects, the tax revenues that come from eor basically are break even on the order of seven or eight years which means they're net revenue positive to the government after that. you don't always think about it that way, but it's an important finding done by northbridge engineering. in terms of storage potential, when you do enhanced oil recovery, you store carbon dioxide. we're looking at something on the order of more than 25 billion tons of storage in conventional eor. that's a very large volume of carbon dioxide. that would be half the u.s. coal fleet for 20 years. it's a lot of carbon dioxide, and, in fact, we are short about 100 million tons a year right now in terms of what the market would buy if you could supply it. so there's grounds to think that this would be helpful and it helps with the financing. again, if the financing is the issue, getting some of the financing done through co2 eor is a good thing to do. in that context, this is something that's being considered in the context of the epa's draft regulations.

what's interesting about this, and i don't want to dwell on this, is that ccs and ccus with eor is a compliance option. especially under 111b, that's pretty straightforward and explicit, but also how this is treated is flexible. so the way that this is accounted for i think is something that's still being sorted. we're talking with thee pa and trying to figure out how to make the best recommendations we can to what it is they do. they're a regulatory body, they take their jobs seriously, and we provide input to that. we hope it's received, but we think having these successes with eor getting these projects built is important in thinking about nunopportunities in the pr sector. something usually not spoken about is residual oil zones. for those of you who are oil and gas economists, you probably don't think about these because they're not resources and they're not reserves. if you inject water into a residual oil zone to produce it,

you get nothing. so it actually only works when you inject carbon dioxide. something you might not know is people have been busily doing this around the country for about six years now. there's eight fields in the united states that are producing from their residual oil zones. a recent study done by advanced resources international looked at just four counties in texas. that's the yellow box. the blown up box is one county in texas. that's the red box. their conservative estimate for how much oil could be produced from that is 109 billion barrels in those four counties. one of the things that i'm glad to say is actually we've negotiated a way for them to continue and expand their studies to develop a methodology that could be applied to other parts of the country. one of the things that i care about in this is that those residual oil would store carbon dioxide, an enormous opportunity. also important in this is, in fact, that that would be net

carbon negative oil. let me say that again, net carbon negative oil production. today when you do enhanced oil recovery, if you inject between 6,000 and 7,000 standard cubic feet of co2 that's close to break even at about 7,500, 8,000 scuffs per barrel on a molecular basis on an energetic basis, that's decarbonized if you're using anthropogenic co2. however, if you're using more than 8,000 scuffs per barrel, it's net carbon negative. i had the great pleasure of meeting with an oil company the other day which only using anthropogenic co2 for their enhanced oil recovery and injected between 10,000 and 15,000 standard cubic feet per oil. they're producing negative oil today. the oil they produce has a lower carbon volume than what they inject. it's an important finding, one

of the things the department of energy wants to be more clear about and more demonstrable about in the coming years. but in thinking about these residual oil zones they're almost always going to be net carbon negative. i want to close with a short discussion about international partnerships. this is where a lot of the action is. these are required. the global environment is shared and one of the things that came out of lima is every country has a job. so we're trying to figure out what this looks like. in my program we have things like the carbon sequestration leadership forum actively supporting not just information sharing but the development of new policies and the development of new projects. we've been very excited by the leadership the secretary has shown with this group and the leadership that other administers have shown in response. the next ministerial will actually be in the kingdom of saudi arabia next november. watch this space. there's going to be interesting things to come. international partnerships are also required for the commerce.

at the end of the day, what will help the climate negotiations is good trade. and so if we can figure out ways to support commercial engagements through ccs projects and reductions, that will help everybody. things likes showcase projects for example in this country or in others. also international partnerships can accelerate the learning, sharing. can accelerate deployment. we don't have to build five kinds of plants in five different countries if we can just build one plant in one country and share the results, it saves money and saves time in a very useful way. the international landscape is also changing dramatically. i'm sure many of you here watched the u.s./china accord that was announced in november. we were all very, very pleased with this. it includes, among other things, a large ccs project in china and a science project that is a joint international project shared by the united states, china, and other nations. we're thrilled with this outcome. there's also a new kind of project that the chinese are going to pilot, an enhanced

water recovery project. like enhanced oil recovery except pulling out oil you pull out brines and you use the pressure you're using in injection to drive a reverse osmosis process at the surface. we're ready to pilot. china is going to do a pilot and we're seeking a pilot in the united states. i'm happy to say many other countries have come to us and said, hey, that sounds like fun. we'd like to do a pilot, too. there is this new european accord. i don't know if you had clocked that one. october 23rd, the european union inked a deal. it was a very ambitious climate target, 40% reduction but one of the things that was interesting is they called for policy parity with ccs and with nuclear and they said these are also clean energy options and should be considered in the context of what we do. about the same time the united nations economic council -- was it economic council of advisers, un ece, amended its statutes to include carbon capture and

storage and ccs with eor as part of clean energy technology under the u.n. framework convention. so these policy shifts actually are materially important. in addition to that, they put forward an innovation fund. how that works, nobody quite knows yet but so far so good. it looks like that fund can be used to not only support the development of technology but hopefully to support projects as well and we're busy discussing with our european counterparts to find out what it all means and what's useful and how we can help. there are new actors on the scene. the uk is putting forward this white rose project. we're very excited about that. two groups in the middle east, the kige dom of saudi arabia and the united arab emirates are in the process of building large projects. saudi arabia's will be online next year. they're capturing from refine refineries and steel plants.

they're going to use the co2 for enhanced oil recovery. saudi arabia is building two 500 megawatt iggc plants. they are also looking at coal as part of their future which is a very interesting development i think. finally, with the energy reforms in mexico, we're seeing some interest from them also on ccs and eor that is also welcome. we just hosted the trilateral with canada and mexico and this was one of the things discussed. we're eager to continue to work with all countries to try to figure out how we can further this kind of deployment. in many ways though china is the main event. china is the number one global emitter, uses half the world's coal, and they have to every once in a while shut down the freeway because people can't see the cars in front of them. so they are very serious about trying to figure out how to manage pollution in general but ccs is part of the conversation now. a lot of that is going forward under the climate change working

group. i'm delighted to be part of that discussion and to help support that with state department and treasury as they move forward. and we are seeing them continue to invest and increase their investments in carbon capture and storage and enhanced oil recovery. they are really very serious about this, but they see coal even with a coal cap, even with diminished coal use, it's going to be a big part of their future. they are currently using 4 billion tons a year of coal. that's just a lot of coal, and they're going to be doing that for a long time. so they acknowledge that this is part of the thing they have to do at some point and we're pleased they're really interested in doing this sooner rather than later. we continue to meet with them and talk with them. i'lli i'll be going to china next month in part to identify opportunities and discuss what can be done together. one example of this is the fact that we signed what we call a counter facing projects. we identified a series of projects, some in the united states and some in china, which would serve as an opportunity to

accelerate learning and share deployments and this is what success to a lot of people looks like. you ever john pa des that and the climate enjoy, vice chairman of rdnc and in front of them there's a commercial deal being inked by administrator zack. it's a commercial deal witnessed by governments and supported by governments. that's a lovely outcome and one we're trying to get more of. the last thing i want to say and trust me, again, i can do this all day but i'd rather have your questions, is part of the reason we are so committed to the technology angle of this, the research, dochingevelopment, an demonstration piece, is that technology offer presages and does, in fact, inform policy decisions. just as an example, in 2010 thee pa put forward their first class six regulatory framework. as we build these projects, as we develop technologies and

demonstrate their efficiency, as we ratchet down the cost through things like advanced manufacturing technologies or development of new materials or using supercomputers, these things are all going to result in technical findings which decisionmakers can look at and think about. ultimately we have to build and deploy the large projects. that's the work. that's what's required. and there are real learning opportunities from doing that. opportunities to share that information, to build engineering prototypes of models which can be picked up by industry for industry to lead the development of these projects and to tackle financing through the many potential paths that are out there to get these things across the finish line. there's a lot of second and third generation technologies we're enthusiastic about. i'm happy to talk about those. we realize we have to partner in many in the united states at state level, at local level, with industry, and, of course, internationally. coal will be used.

the girs part of my talk was that. coal will be used. it will continue to be used and co2 must be controlled. we have to take the climate issues very seriously while we acknowledge that first part. as a consequence now is the time to build. now is the time to get on with the work which we know we have to do. with that i thank you for the opportunity to talk and look forward to some questions. [ applause ] >> that was a really fantastic and wonderful conversation not only about the work that you're doing but, you know, over the course of the conversation -- or your presentation i recall being in the power offices many years ago where they put forward their idea for this plant that was right for their customers. it was really an important part of their message and there was a lot of criticism of whether it was possible or whether it was the right choice, and, again, they said if we weren't the ones to do it, we won't see the cost reduction and so it's nice to

hear about the outcome of some of that. we've got about ten minutes for questions, so if you do have some questions, please raise your hand. we have a couple ground rules. we have a number of cameras in the room so there are people watching on the web. we appreciate if you wait for the microphone so they can hear >> that was a really fantastic end to a wonderful conversation, not only about the work that you're doing, but i -- over the course of the conversation -- your presentation, i recall being in the offices many years ago where they put forward their idea for, you know this plant that was right for their customers, it was a really importantple of ground rules. we have a number of cameras in the room, there are people watching on the web. we appreciate if you wait for the microphone so they can hear your question, state your name

and affiliation and your question in the form of a question and we will do our best to get as many in as we can before dr. friedman needs leave. cc for any decarbonization path way, from co 2 to place it is can ultimate lib captured, i know what a lot of your program does is folk learnings that can be had to inform policies around those i shall use i wonder do you speak a little bit that transportation issue. >> thank you. this is actually one of my favorite topics from am technology standpoint, there's almost nothing to talk about, got 3,000 miles of co 2 pipe lines in this country already. the department of transportation has beenáãmanaging them for 30 years much the issue is about the infrastructure itself. if want to take co 2 from where the's admitted to where you with toish store it pipe lines are part of what you're goongd almost always a large part of what you're going to do even in cases where there's opportunities to finance a project, try to get those pipelines built is kind of a different issue.

and one of the questions i think we are asking ourselves at the department of energy and elsewhere is since we know develop those things what are the option we was to get those up? what is the aprop prey'all role for states? what is the appropriate role for banks? it is not actually obvious. the issue with splips on a per toncheap. maybe one, maybe two bucks a ton but all capital up front, somebody has to buildle thing, day one, before you inject the co 2. so the up front costs are high and people are reluctant to carry those costs. so i think we as a nation need to think harder about that. i'm delighted that the department of energy not only is this a topic the secretary is interested in, melanie is passionately interested in and we are talking to her about this event along with other topics associated with national infrastructure and the national energy structure. >> [ inaudible ] you probably get this question every day, but right now, on average, a coal plant is being decommissioned in the united states every two weeks. and suspect there a risk that -- just kill the interest in coal

investment, except for [ inaudible ] by the deo. and so how can you make sure investment in clean coal in a country with unlimited supply cheap gas, what is the plan for that? >> right. so you're correct. this is something -- this is a constant and frequent topic of conversation in our office. we do see the emergence of low-cost abundant natural gas. it is not just a real market phenomenon but the science shows thanks we are likely to have a lot of it for a long time. broadly speaking, i think that served the nation well. we have through that reduced some emission. we have also through that, kept production prices low. doesn't actually solve the climate problem. actually still need to do ccs on gas plants eventually as well, underscored eventually there. we haven't sort of figured out exactly when that is. but even with the closure of some coal plants, even with aup about dant low-cost natural gas,

our analyses reveal there remains a large fraction of coal in the infrastructure and our analysis suggests any number of potential scenarios would you still deploy ccs on some of those plant. we have looked at the plants from a heat rate perspective, from a permit perspective, from a space available perspective, from an engineering design, from a vintage perspective and you do actually end up retrofitting some of those plants. i think we also learn from the polar vortex last year that gas prices can spike and do, even in an era of abundance a lot of our utility partners in building more gas but still worried about those price shocks and they see keeping coal in the mix is one of the ways that they can avoid those kinds of shocks as part of what they do. last thing i will say, of course is that's the united states' story. in other countries, coal is much more prevalent and the

availability of gas much more limited. so, from a global perspective, we certainly see coal as an important player, not just in the united states or not just in north america but many parts of the world. >> hi, charleseten jer from brookings. julio, it seems to an outsider that the administration a bit schizophrenic on ccs and coal, in general, because the one hand, we have the excellent would, that you have highlighted the doe is doing, the other hand, we look at the organizations like opec, xn bank, so forth, as well as our positions in financial institutions, we seem to take a very negative attitude toward financing coal in other locates. could you make a comment on whether you think there's any chance the administration might follow your lead and pursue these opportunities to help other countries advanced coal? >> um, let me start by saying

from inside, it doesn't seem schizophrenic. and i would sort of reject that characterization outright. i think the administration, even in casting its policies around the xm bank said they are flood finding clean coal project, one that have a certain emission thresholds and would include ccs that seems actually to be a very consistent position. i would also say that on that topic, obviously, the landscape is changing in realtime, we are talking to the administration, we know what the policy position is now, which is we don't want to finance plans that will lead to locked in large emission. and we are trying -- 'cause that's serious concern. beyond that, we are trying to figure out what other things we can do, what is rational. and i would watch this space. it's an interesting time. >> gina, csi initiative program. thank you so much, julio, for

coming in, doing a great keynote. my question concerns, i guess -- i can see how the ccs with er feature is economically viable for some of the economies with hydrocarbon resources, for example, including china. when we look at the less developed countries though, how -- you know, what are some of the ways that the ccs could be a little more viable and then also, i wanted to see if you could please elaborate on the potential role that in-house water recovery sort of benefit may have. i'm not sure if it's -- i haven't really thought about the different structures and you say africa or say south asia, but how that may be potential game changer to go with the ccs implement. >> sure. let me start with that second part first.

secretary moniz has repeatedly and vol ubably underscored his commitment to energy water progress and he sees that as a very important undertaking, the announcements that came out of the china agreement actually was that the u.s./china clean energy research sweater on add aing were on energy water and that that's very welcomed much we look at then hansed water recovery technology, we are mindful of the fact that oil is between, say, 1,000 to $2,000 a ton, in terms of its value and water is on the order of half a dollar a ton. you can't actually really finance these things but we do think about this as a good news story because in part about the social right license to operate and water-scarce areas, the value of the water can be very real. it wouldn't surprise you to know that some countries that are very water scarce are very interested in this technology. our estimate, part of the reason

we need to pile it and demonstrate, our estimate is that the cost about half the cost of convention desal lip nation f that proves true that can become a very interesting option in terms of thinking about pairing carbon management with water treatment. with respect ton#z developing countries, first of all, i'm simply not the state department, i'm not the person who talks about develop emission and their roles in this. what i would say is took sort of our school in thinking this through, if you're a developing country without enhanced recovery opportunities, ccs may not be the best option for your country. we are not technology shoving. we are not trying to make everybody do everything all the time. if you're in a country like south africa, it might bork, but it might not. and those countries have to determine on their own what makes sense for their nations in terms of both its missions

reductions strategy and its national needs. i thank you good role for developed countries, in particular, industrialized countries like the united states and japan, like china and members of the eu is how can we ratchet down those costs through demonstration to create a wider optionality for more countries? 'cause if we can get the cost down a place where more countries want to adopt it that gives them an option that they can consider that's rational for their lands. the last one? >> we have got time for one last question and i promise we will get you out of here. >> as well as ccs is concerned, you need to have specific ground properties to be able to push that so there are restrictions on where it could be applied it cannot be applied every placesome that a correct assumption? >> so, that is 100% correct. i didn't naught in this talk but

i put in very many talks and it's something that a lot of people don't really internalize in their thinking. if do you not have a storage site, do you not have a sequestration project, period. if there's no police to put the co 2, your options are limited. in some countries, let say south korea, they don't have a lot of storage options. even though they could develop and sell really excellent carbon capture technology they can't deploy themselves because they don't have those storage options. north america's blessed with opportunity in this way but not every country is. initial assessments of china is it's pretty good. in india, i think the assessments need more work. i don't think we really know what the viability deployment in south asia is. in parts of africa looks promising, other parts, not so much. it is just like gold. if you have it on your property, you have a natural resources and if you don't, you don't. it is a natural resource and it really is a natural resource and it's one that if you have, you

consider an exploit. in thinking about the deployment of ccs in the united states, states that have this option have an option that other states don't and they will put that into their calculus and figure out how to make it work and if that option is viable for them. but the gulf coast and the illinois basin are world class co 2 storage options. those states, i'm sure are more glad that they have that option than not. with that, i really appreciate the opportunity to talk with you today. thank you very, very much. thanks very much, julio. [ applause [ applause ] okay, at this time, welcome up char labor day the first panel, please. thank you.

>> good afternoon, ladies and gentlemen, i'm charlieten jer from brookings institution where i'm a senior fellow in the energy security initiative. it's always nice to come took csis, since i was the first director of the energy program here from '79 to '87. it's always kind of like returning home to good, close friends and former colleagues. so i thank csis very much for inviting me here to moderate this very exciting panel.

ebinger. we have a stellar lineup today. we are going to hear from lass low var row, who heads the office of gas, coal and electricity and the markets, the vision of the iea, clearly one of the most influential forecasters of technologies, such as coal. we have a dear old friend and also a former brookings colleague, soichi ito from ieej, who has had a distinguished career, both as an independent researcher and as an official on the japanese government and we have mr. sam mule tam me wa, who is the deputy representative and the north american representative of the asian development bank, also perhaps one of the most critical agencies exact the coal market since i think most forecasts predict as we look out the next 25 to 30 years that asia will probably be if not the leading growth mark forth use of coal, certainly one of the most

important. the format today as we are trying to get each speaker to try to limit their remarks to roughly 20 minutes so that we have a good hunk of time at the end for questions. i won't say more now. but we will try to format the discussion before turning over the floor when they have finished but i would hope that we get into some critical questions among which, just to name a few, might be do we look we look 10, 15, 20 years out, how do we see coal, particularly in the asian power market competing against also a resource of great importance and interest these day mainly liquefied natural gas. do we think coal will -- the market for coal will perhaps once again have to be competitive with nuclear energy or is nuclear going to be one of those resources that we allow to witter on the vine with perhaps tragic consequences for our

ability to meet our climate change goals? i think would be useful if we can get some insights into really how far along the path toward commercialization around the world, not just in the united states, but we heard an excellent presentation from julio but how far away is ccs technology and some other markets and if ccs is far away, are there opportunities for using conventional advance coal, such as super critical and ultrasuper critical technology to replace the older generation of technologies that most of us are using? so, without further ado let us turn to our speaker and we will start with lass low with some opening remarks. >> thank you very much, mr. chairman. ladies and gentlemen, which launch the new coal market look of the agency of monday afternoon and tuesday morning, the first thing i did, i jumped on a men to fly here and share with you.

so, i'm very glad for the perfect timing on this compromise. i should emphasize that we do a lot of policy -- but this outlook that we look at is not what should have happen but what we like to happen. we look at what is happening with a real life as industry outlook. in fact, the numbers i'm going to show you are unfortunately mathematically -- with the first -- beginning of -- describing. so this is clearly -- and that shows that the -- that the current -- insufficient for a meaningful -- stagization and we have to move beyond those. school is not out of the game. i have to say our headline number, 2.4% average growth state for global consumption, this is actually the lowest numbers which we ever came up with ever since we have been in

the business of projecting coal. coal had 15 years of very, very low growth. the past 15 year, almost half of the -- of the growth of global primary consumption. so there is a slow down but not out of the game at all it is very driven by a very robust growth of coal fair powered generation. so, "uss cole" a very -- measure of fuel. power generation is the most important use by far but very robust investment. [ unintelligible ] we also think that coal will continue to be -- china, we see a much bigger growth in china than any other region of asia. but here we see a decline in

both europe and the united states, but that is lost by -- now in the past couple of months, the climate5áb and the chinese economy, there have been a lot of discussion about the possibility of peak coal in china. so we looked at very, very carefully. certainly, the notion that china is soup posed to ignore the climate problem is completely out of touch. china is doing very, very large investment into low carbon sources. the ongoing chinese investments into hydro power are equivalent to roughly 150 million tons of coal not being burned in coal-fired power plant by the end of the decade. most of this projects avoided the attention of the western media but china is bringing online on average -- every year. so still a lot of -- in china to

be done. another big investment made in china, china is the largest investor by far. that is another 150 million tons of coal being burped in coal-fired power plant. and i should mention 27 nuclear power plants that are under construction in china and plants another 150 million tons of coal. [ inaudible ] hydro beams and nuclear are individually bigger -- have a big impact on global coal consumption than global climate -- in the united states. so the notion that china is [ inaudible ] baseline and doesn't do anything is completely false. and also, the china is building new high-efficiency coal-fired power plants [ inaudible ]. he have year, they close down roughly [ inaudible ] coal-fired power plants and new high-efficient coal-fired power

plants and the gross of the average efficiency of the chinese fleet looks -- 17 million tons of coal compared to -- they didn't do that. [ inaudible ] the investments into more efficient -- sufficient to cover the chinese -- if the first 3.1% growth of china -- consumption by low carbon sources -- only by 3.1 -- [ unintelligible ] actual production is 5.5%. -- than the united states but a completely different structure. u.s. household electric consumption is twice as high than the electric con suching of the chinese household despite the four times higher population

but the chinese manufacturing sector is five times more than the american industry. so the big question is the demand for china manufacturing products. [ unintelligible ] [ unintelligible ]

[ unintelligible ] [ very heavy, unintelligible

accent ]

[ very heavy, unintelligible accent ]

[ very heavy, unintelligible accent ]

[ very heavy, unintelligible accent ]

[ very heavy, unintelligible accent ]

[ very heavy, unintelligible accent ]

the new regulation catching one other region. you take the main sources the regulations are in line with europe and also the new chinese. the new chinese environmental regulations are quite tough. there have been environmental regulations in china required more by the industry, but in our view, the new environmental regulations in china will be enforced in a very -- very, very thorough american some, in fact, could you regard the new regulation as something which is part of a basic package for society.

[ very heavy, unintelligible accent ] [ very heavy, unintelligible accent ] indeed there were new investments, new plants are coming online in germany, but this is not a reaction to the german nuclear phaseout, large coal-fired power plants have an investment leadtime of five to

seven years. this is the schedule of the coal-fired power plants coming online in germany and this is the final investment decision. the final investment decisions for those plants to place between 2005 and 2007, by the time the nuclear moratorium came, those plants were irreversible and under construction. what is the big difference between today and the time these plants were decided is that 2007 is the start of the -- [ inaudible ] from the point of view of the financing from the energy industry, anything before the eurozone crisis is like ancient egypt. a different time which is unrelated to reality. completely devastated by the euro zone crisis and also if i compare room temperature with 2007 from to the latest room temperature -- [ inaudible ]

[ very heavy, unintelligible accent ] this is the last of a dying breed. for the first time ever, they actually can make meeting market projection [ inaudible ] so far done only, you know [ inaudible ] molding and so on, but [ inaudible ] coming back from the grave and real action is taking place. in the next five years this is going to be 0.2% of correlated emission. a long way to go but the journey already started. with that time, happy pause the floor. thank you very much, laszlo, for a very interesting and somewhat soccer projection, particularly anybody who's looking for more coal use in europe.

soichi, we will go to you next. thank you. i'm very honored to be invited to this convenient and so happy always to be back in -- in hometown washington, d.c. and -- [ mumbling ] brookings. [ very heavy, unintelligible accent ]

people tend to have very negative image of coal overall, just because we are talking about what to do against climate change. we have to maximize our efforts to protect for the future generations. many people's image of coal tend to be [ inaudible ] can you believe this is a picture of coal-fired plants near tokyo. such a clean qualifier plant.

something black. [ very heavy, unintelligible accent ] future with such different die verging image of coal. well, let me ask how it's -- for

so some. [ inaudible ] there is nothing either good or bad but thinking makes it so. thank you. well r well, what are the bigger roles of coal? let me answer three central questions i would like to discuss. [ very heavy, unintelligible

accent ] increases our core consumption in the global scale. second, well, however, we have to be careful how to use coal because we are also concerned about what to do with the future volume of shared emissions. at the same time, each country has different economic background. the way you consume coal must be economically sustainable. then what if we cannot use coal in the most effective way? kind of political, political impact we may encounter? well r well, two other kind of hydro

car bops, they are also predicted to enfuse -- especially in able as the gravity of -- has already shift toward the asia pacific, especially asia in it. and china and india -- asia and beyond. [ very heavy, unintelligible accent ]

the increasing trend of coal consumption is not just -- india. asean economies projected to rapidly increase coal consumption. in indonesia, indonesia is one of the main oil and gas-producing countries in asia. but the economy is growing so fa fast, they need to use oil and gas for the domestic consumptions. at the same time, they are

trying to use coal for domestic economy by introducing the advanced screening coal technologies. and malaysia as well. actually, japan is importing monster scale and malaysia. but domestic gas consumption is increasing. they are trying to make the best of their coal increasing imports of gas. well, we have to bear in mind that how they use coal in asia especially changes the future scale of sufficiency of energy in the region.

unless they use coal effectively, their external dependence for their hydrocarbon consumption about to increase, we have to be careful what it would cost for this point of consumer competition over oil and gas in the region. once again, we have to look at the best tract of how coal has been usualed in asia. china is such a big giant of consuming huge scale coal. others, in time, the pace of improving thermal efficiency for

domestic fire power is going to peak. at the same time, china is very proactively trying to export their clean coal technologies to other developing countries. this just today's picture of global trade flows. and here i have two different pictur pictures. [ very heavy, unintelligible accent ] the rate of coal consumption

could be curved technology relations including ccs, you know, effective use of -- nuclear, et cetera, et cetera, et cetera. even with that kind of -- domestic picture, we still need huge, sizeable scale of coal to be traded on the robust scale. i already showed the slides, asian nation, especially china, india, to be held by asean countries, we need to consume the scale of natural gas,

especially due to environmental consideration, et cetera, et cetera, et cetera. without effective use of coal, the -- the demand for natural gas is bound to increase. it will cause, it may cause some political impact up within the region and beyond. [ very heavy, unintelligible accent ] china especially, that part of the world and chinese are trading asian demand for everything, oil and gas, to be followed by india and in case

they don't use coal effectively, they are actually a big -- two of the big coal producers, they have lots of coal domestically. and still, they are importing coal, unless they use coal nations, especially in asia, don't use coal effectively, it's -- could impact on future hydrocarbon trades, especially at oil and gas could be something we need to be concerned about i believe. well, let me go to europe. we haven'tca+)uu found -- solve the question, the european

crisis, which is actually escalating. encountering such a rare critical -- the world history and the european nations trying to figure out how the use dependence upon gas forms in the country. but we have could calm down. how many option does they have? yes, the united states has much scale natural gas. japan, as a nation, expecting massive arrival of input for the state, but you cannot expect land locked countries to -- [ inaudible ] including ukraine.

[ very heavy, unintelligible accent ] they need to make a changing power mix. [ inaudible ] but it takes time and up front cost for building nuke cheer power priority is just huge.

[ very heavy, unintelligible accent ]

speeding up of deploying nuclear reactors. develop countries in asia and africa, not portable to pay for higher prices for oil and gas, they may think it's more attractive to introduce a nuclear power plant if someone could provide up front costs. china trying to hurry up domesticization of nuclear policies. set one pakistan, south africa, et cetera, well, we also have to be careful about future possible

division of [ inaudible ] use of nuclear technologies and when we are wondering what's going to happen to the future of nuclear generation as a result of shale gas revolution, here in america, cheap gas prices are pushing out coal and nuclear, but if you just keep your eyes open globally, we should have a different set of pictures and cheap gas prices in the state that do not stop considerable division of nuclear technologies on a global scale. that will wrap up my presentation. purists, well, we have to keep

our eyes open wide globally. what may happen here in the end is china, japan, not tell you every single piece of global reali reality. second, thank you. use of coal, we will -- may increase -- uncertainties in view of considerable competition over other kind of [ inaudible ] and lastly, no perfect energy or no -- the question of energy security and we have to be -- about the costs of environmental

and mitt cal and economic questions. thank you very much for your -- >> thank you, soichi. [ applause ] as usual, by the time you got to the end of one of your presentations, there's always a very provocative thought to think about. thank you. samue samuel? >> good afternoon. thank you very much, chaij for -- and csis for the opportunity to participate in this panel. i'm always a bit intimidated when i speak with such people because they are energy experts. i'm the deputy representative of the asian development so my job is good government relationships with treasury and state department and with department of foreign affairs, trade and development of canada, so, that's my job, but when i first started my career at the asian development bank, i started an

investment officer for south asia and coordinating efforts to increase lending and renewable energy and energy efficiency. so, every time i get an opportunity to speak about energy issues, i do the background research and i keep my technical -- technical bits going so always interesting to do this. but today, i thought that we had some incredible presentations, incredible data, perhaps today i thought i would talk about energy security, the -- in asia. the energy security challenge in asia. and i'm going to come -- take it from a become that adb has just publish and shortly zribs beauting called "asia's energy challenge, key issues and policy options." and i'm not sure -- there we go. that's capital -- that is title of the book and look out for it. it has an e tend of the g, i misspelled that, i'm sorry, it talks about a lot of sort of the

human dimensions of what we have been talking about today. we have a lot of data, but there's a lot of human dimensions that go into energy, the political and policy decision, the human behaviors that need to take place for asia, in this case, to talk about -- to meet its energy challenge. this is the premise which the asian development start a lot of its work and it is that we did a stud day faw years ago that says if asia continues to grow at its current rate of economic growth by 2050, asia's gdp will be more than half of the global gdp. and in fact, per capita income in asia would be about $40,800 per person, which is what the per capita income of europe and north america is. so, this is a premise of where we start a lot of our economic work and a premise by which we start a lot of the policy dialogue that we hold with our developing member countries. and there's a lot of assumptions and a lot of premise on this and a lot of the assumptions and the

assumptions are based on whether asia will meet those six points that are on the right side of the slide there, whether we can address any quality in the region individual inequate, whether asia can overcome the middle income trap. asia a region in the world with the least natural resources of the five regions in the world that has the least amount of airable land for growing. it has the least amount of fresh water of all the five regions in the world. and how asia addresses these things and has probably the least amount of natural resources of energy. okay. um and so we will have -- and these are the assumption, we are not going to get into that because we are not going to be actually talking about the economic today. we are going to talk about energy security. but these are the assumptions that are being made.

we look at the -- our flagship study called the asian development outlook over the last few years shows that, in fact it is pretty correct, that in the last few years, the average 6% growth in the region and forecasted growth for the rest of 2014 and 2015 going into 6.2624% for asia and going forward with a lot of assumption, i think shows that asia economic growth will condition at its current rate and in fact, some of the issues this we talked about in energy security will come true. this is, at the same time, what the rest of the world is doing in its economic growth and i want to point out 3% for the u.s. we forecasted for 2015 is going to be excellent growth for the u.s. and will actually underpin a lot of the growth coming from asia is the strength in the u.s. economy coming out, forecasted for next year. aggregated a lot of the data we have been talking about a lot today. if asia was going to meet its

economic goals of, you know, becoming 50% of the global economy by 2015, this is the energy needs for us to continue to go, to continue to meet our economic growth rates. currently, we use 34% of the global energy and if we are going to continue by 2035, we will be needing about 56%. these are on a business as usual scenarios. also, if we look at the self-sufficiency index, i know it is going to be hard to read, but see only three countries that are going to be self-sufficient in asia in countries, kazakhstan, azerbaijan and brunei. everybody else will be energy importers. india, china, before the middle there, bangladesh is way down on the bottom, these are the big kwupts a lot of population and so, this is where the energy demand is going to come. again, we talked about the derth of energy resources in the -- in the region.

we look at the reserves in coal. we look at the reserves in conventional gas and technical recovered oil and natural gas and see that asia doesn't have a lot of this. so, how is asia going to address these shortages to ensure energy security for continued economic growth. i think this is a slide similar to yours on the energy demand for asia in asia, that most of it is going to continue to come from coal moving forward. an interesting number there, i'm not sure why, why renewables. it's not more of a percentage. again, i'm thinking that it's because it's going to come fr from -- this is based on the business as usual scenario. so perhaps future policies and regulations and incentives will have greater impact on renewables. also, on oil imports. the oil imports for the region are expected to triple by 2035. and, again, how is asia going to manage this?

i'm flying through these slides because a lot of this has been done, and i want to spend a lot more time on the policy options we're talking about. fossil fuels, demand, still, this is for the electricity where electricity in asia comes from. we see that a lot of it still comes from coal. in fact, it's going to continue to grow and coal will continue to be a large part of the feed stock for energy in asia. along with the points i made earlier. and i'm switching here to infrastructure. because the investment needs in the region are big. not only do we need energy, but asia needs a lot of infrastructure. yesterday, there was an interesting session on asia's infrastructure needs. and i did a report, just released this month ago on asia's infrastructure needs. we did our own studies in 2009 to look at asia's infrastructure needs. we can see that oecd infrastructures, scoring, 5.4

out of 6 and where the rest of asia fits in. a lot of investments need to be made in asia and its infrastructure. the reason i bring this is up is because this is an opportunity for asia. for the policy makers, for the people of asia. the investments we make now will have, they will be in place for the next 40, 50 years. and with the energy side, that's very, very important. i'll bring that up a little bit later. because of this infrastructure gap, we look at the shortages. talked a little bit about asia and southeast asia. 1.3 billion use traditional forms of energy for cooking. although, i'm told that cooking with firewood tastes better than cooking with gas. i question that number on internet access. i don't know, i think it's perhaps less than that. those are the numbers i've

gathered from various reports. there's a lot of financing requirements, in the road sector and transport. and i bring this up because we're a bank and we do a lot of financing. and because we do a lot of financing. we, the world bank, we have an interesting place at the table to effect some of the investment decisions they're going to be made. now i'd like to spend a bit more time on the three pillars on we think how asia can get to energy security. and the first part is talking about energy pricing. the subsidies need to be -- what's the word i'm looking for? need to be -- rationalized, okay. you can subsidize, but we must

understand what we are subsidizing whether you can afford to provide those subsidies. indonesia is a good example. i'm from indonesia. the previous president cut the subsidies through the energy sector by 50%. the current president has cut 30% of the remainder and says he'll continue to do that. other things. and these are the same conversations we're having in india, laos, vietnam. across the board in asia. and this is an important part. because until we get to real pricing of energy, right, and we put the price signals out there, we will not get to energy efficiency. because energy efficiency as we can see from the numbers that were given by -- should i talk to this one? okay. and as the numbers are given, you know, earlier i really liked

the number, 42% of energy growth can come from energy efficiency savings. that was from, and so, yes, to get to energy efficiency savings, we need to get the price correct. we had a large energy efficiency program in the asian development bank. we targeted seven countries, india, china, indonesia, vietnam. bangladesh. but it's very hard for us to help and to get investments in energy efficiency. it makes a lot of financial sense with utilities, with industry, but because of price distortions and electricity sectors, it's very hard to get there. number one on our list is really to work on subsidies and address those and get that. the second part is emissions, co-2 taxation. either a cap and trade system or

taxation of co-2. again, it's about getting the prices correct on this, i believe perhaps taxation is much better than the cap and trade system. the cap and trade system tried in europe, tried with cdm. i think taxation, perhaps, is another way of doing it that will send better signals to the market on the -- on what can be done with energy. and then, we talk about sort of the second part is sort of more that we're having with the countries. we're talking about kind of smart cities. and talking about urban growth, and as you know, the urban, the rate of urbanization in asia has been phenomenal. it's taken asia less than 100 years, around 100 years to get, to be more than 50% urbanized. it took north america about 150 years. it took europe about 200 years to become urbanized. so the problem of urbanization and the problem of meeting the

challenges of urbanization is not that the asians aren't trying to do something about it, it's just happening so fast they're not able to cope. but if we can do this better, if asia can urbanize a lot better and we can plan this better, i think a lot of the energy use -- savings for energies can come from better planning and urbanization. also, on the transport sector, right? we talked about economic growth, we talk about the economic growth of asia and growth in per capita income. if today vehicle ownership in asia is about 300 vehicles per 1,000 people. in north america, vehicle ownership in north america and europe, vehicle ownership is about 700, 800 vehicles for 1,000 people. and if asia goes to a higher per capita income, there's going to be huge growth in vehicles. how are we going to meet that? the energy needs for vehicle use? we're talking, the asia development bank with governments and other

institutions about a model, avoid, shift, improve. avoid the need to travel in the first place. smarter cities, better urban planning. shift from private transportation to public transportation. and that's a very difficult thing in asia. because, again, we're talking about behavior. and the first thing you do when you make money is you buy a motorcycle. and when you get a bit more money, you buy a car. and my staff take my bicycles and they take the bus, but i take my car. but then when we start talking about mass transit and special bus lanes for -- the reason to do that is to get people out of cars, into buses. and to do that, you need comfortable buses that are air conditioned. you need hub and spokes systems to get these people to move. and people who are already taking public transportation, that's not your target audience. your target audience are these people who you want to move away from the cars into the buses. well, that doesn't jive well

with politicians. we're talking about inequality here. the comfortable buses are going to be much more expensive than the regular buses. the poor people are going to feel like you're not taking care of them. it's a behavioral change and it's a long-term behavioral change. and it's something that we're working on with developing member countries. another thought is to switch. because of abundant and efficient gas, i liked when the secretary said, he said abundant and clean gas. with abundant and clean gas, perhaps in asia we can re-think it and not just use gas to create steam, to create generation. it is then transmitted, and used to cook water on the stove. the infrastructure in the u.s. is such that you would do. perhaps the infrastructure is not so developed that you can't

encourage better gas distribution and use gas as a primary fuel for cooking, for -- and, perhaps, even for appliances. that's a thought that we're exploring and looking at investing a lot more in gas distribution. the second part of the three-legged stool is environmental sustainability, right? i like also -- secretaries topic. he called the presentation today, the role of coal in all the above strategy. i think with asia, it really has to be all of the above. there is no panacea for this energy security. it has to be all of the above. and investments in renewables, wind, solar, geothermal. it's an important resource, has been overlooked at indonesia. very underdeveloped. and something that really could be done. and there's a lot of that. and there's wind in the