Energy Threats and Opportunities – An Entrepreneur’s Perspective
Delivered at CU Law School
November 12, 2015

In thinking about this lecture, and contemplating the sheer scope of what energy means to world…

...I briefly considered changing the title of this speech to “Energy: We’re Screwed.”

It’s daunting, when you look at what we’re up against:

  • Accelerating energy demand
  • Antiquated infrastructure
  • And the long periods of time it takes to scale promising – but unproven – technologies to a global market

Not to mention a little thing called climate change.

Many of today’s “thought leaders” view climate change as one of the most urgent crises facing humanity.

The Pope recently delivered an impassioned plea for “politics and economics to enter into a frank dialogue” to address it.

Bill Gates has called for a tripling of government R&D to $18 billion annually →

  • to catalyze a global energy transformation to take us beyond fossil fuels.

Amory Lovins, a visionary and prominent voice in the field of energy →

  • has spent the last 40 years advocating we pursue a cleaner, more efficient path toward new forms of power.

Whatever opinions you may have about climate change, and the need or lack thereof to address it...

...forging a cleaner, more efficient global energy system isn’t just about the environment.

It’s got serious implications across the board: economic, social, national security, and public health.

To achieve the kind of transformation Gates, Lovins and even the Pope, are talking about, we need a new energy system that:

  • is cheaper and more efficient than today’s hydrocarbon sources
  • has limited or no CO2 emissions
  • and is as reliable as today’s energy system

Sounds relatively simple, right?

Actually, it will be a miracle – a miracle that we will create.

A miracle that we have to create.

We need to scale and deliver these new systems to a world that is demanding an unprecedented amount of power.

Over the next 25 years → 3 billion people in China, India and other developing countries will rise to the ranks of the middle class.

  • And they will require a huge surge in energy supply to support their growth and new standards of living.

Global energy consumption is projected to increase by 56% by 2040.

That’s not just change, that’s tectonic change.

And, to borrow a phrase from my former Facebook relationship’s complicated.

We know we can’t change our current system overnight, but every industry has a role to play in its transformation.

The U.S. oil & gas industry is currently facing its worst downturn in six years.

But due to innovation and investment in R&D →

  • We’re getting resources out of the ground cleaner and more efficiently →
    • and changing the face of the industry
      • use of 3D seismic imaging
      • hydraulic fracturing utilized in horizontal wells up to 3 miles long
      • rigs costing a third less than they did just a year ago

Thanks to advances in technology that allow us to access resources previously thought to be unattainable →

  • The U.S. is on track to become a net exporter of natural gas →
    • which was unfathomable just ten years ago.

We have an opportunity to partner with Canada and Mexico to develop oil and gas resources →

  • and make North America a major center for oil & gas production.

From an industry perspective, that sounds really promising.

But when we think about our longterm energy goals →

  • seizing these opportunities is like playing with a Rubik’s Cube.

Every move you make to solve the puzzle → also brings a new set of complications and setbacks.

Take natural gas, for example:

A recent Yale University study found that the single largest contributor to the significant reduction of U.S. CO2 emissions, between 2008-2013→

  • was the transition from coal to natural gas for electricity generation.

Natural gas emits far less carbon than oil or coal →

  • but it still contributes to climate change
  • and many question the pitfalls of embracing it as a “bridge fuel.”

Here in Colorado, we’ve already acknowledged the importance of addressing fugitive emissions from natural gas →

  • We convened experts from the environmental community and the the oil & gas industry for over a year
    • to create the nation’s first regulations of methane emissions.

This kind of collaboration must be emulated again and again to achieve our energy miracle.

When we look to renewable energy sources like wind and solar →

  • we find they’re neither as costly as some would have us believe
  • nor as easy to adopt, on a global scale, as others claim.

In some countries, solar power is scaling faster than cell phones.

  • China is currently the largest renewables market in the world…
    • ...but they also have the worst air quality, so that’s not a huge surprise.

America’s reliance on renewable energy has reached historic levels, and is poised to grow even further.

Here in Colorado, we’ve dramatically increased our renewable generation since 2004 →

  • when voters approved the nation’s first Renewable Energy Standard.
    • In 2004 → 1% of our electricity came from renewable sources
      • By 2014 → renewables accounted for 15%
  • By 2020 → Colorado’s largest utility will draw 30% of its power from clean and renewable sources.

But the major challenges of wind and solar are intermittency and storage.

We can’t control when the wind blows or the sun shines, and storagewise →

  • we have yet to develop a costefficient battery – or other methods like compressed air and hot metals – that can provide gridscale economic storage.

Meanwhile, we derive just below 20% of America’s total electric generation from nuclear power.

While nuclear is a nonCO2 energy source → the issues of

  • cost
  • safety and security of waste disposal
  • and our zero risk tolerance...

...have made nuclear energy – with present technology – unrealistic in our drive toward a viable new energy system.

So, given this complex Rubik’s Cube of potential solutions and complications… do we piece together the right combination of moves to generate the cleaner, cheaper, more efficient energy supply we need?

  • What is that energy derived from?
  • How is it delivered?
  • And how do we facilitate these monumental changes...

...given that energy transitions don’t move nearly as quickly as the digital innovations we’ve become accustomed to?

All this brings us to the entrepreneurial perspective.

There are threats and opportunities in all of the moves we can make...

...but the common denominator in every solution we pursue is innovation and collaboration.

Every one of these challenges is an opportunity to innovate.

Deploying existing technologies more strategically →

  • such as Demand Side Management…

...and powering breakthroughs to the “next big thing” in energy development through innovation →

  • will leverage the true driving force – the Market...

...By offering solutions that aren’t just better for the environment or climate change mitigation →

but will be:

  • more affordable, more reliable, and more effective than today’s energy system.

As a businessman and a public servant →

  • I view promoting energy sector innovation and leveraging market forces →
    • as both a public and private endeavor.

Affordable, reliable energy is a public good, and it’s in our best interest to support innovation with →

  • smart regulatory infrastructure
  • and investment in R&D

That’s why Bill Gates is championing this quest to escalate energy R&D →

  • to, in his words, “drive innovation at an unnaturally high pace.”

As Gates suggests → governments can do more to stimulate innovation by dramatically increasing spending on R&D →

  • while also facilitating regulatory change to protect our environment and public health→
    • through initiatives such as:
      • the Clean Power Plan
      • Fuel efficiency standards

The private sector, in turn, must lead the creation and deployment of new technology →

  • that can be scaled throughout the U.S. and developing countries.

Ultimately, we won’t change these immense systems because “it’s the right thing to do.” →

  • That’s a highly subjective notion.

We’ll change because innovation, new technology and the market drives that change.

In the 1800s, when we innovated a way to turn crude oil into kerosene →

  • it revolutionized our energy system, which until then, had largely relied on whale oil.

As kerosene changed the face of energy, the whaling industry declined → almost overnight →

  • “not because of public awareness of the evils of whaling,
  • not because of consciousnessraising

efforts by pioneer environmentalists,

  • and not because of legislation.
  • The whales were saved because of the march of technology.”

We’re already seeing amazing progress being made in new technologies around energy development:

Pavegen (PAVEgen) flooring tiles convert high footfall areas into pseudobatteries that can be used to power city lights.

The Japanese Space Agency is working to develop technologies to transmit electricity wirelessly.

  • Their goal is to be able to transmit energy from orbiting solar panels by 2030.

Goodyear has unveiled a new concept tire that will potentially generate electricity for electric cars

  • by converting the friction heat created when the rubber meets the road.

That’s the kind of stuff our future is made of.

That’s the kind of innovation that gets my entrepreneurial pulse pounding.

We are here today because humans are the most adaptable species on the planet.

We’ve innovated our way to the moon and beyond; and I’m confident we can meet our energy challenges if →

  • we approach each threat as an opportunity
  • we encourage and support our collective ingenuity
  • and we harness the benefits that publicprivate

collaboration can bring to this process.

It’s funny, when you think about it → you can’t spell “innovate” without “no.”

“No” is the word that entrepreneurs and visionaries use for fuel to do the unprecedented, the unthinkable, the impossible.

You don’t have to be a scientist or a billionaire to solve our energy puzzle.

  • (Though it certainly doesn’t hurt to have a few on your team.)

Anyone can take an entrepreneurial approach to a challenge.

The key is → don’t back down. Lean in.

Even when you think you might be screwed. Especially when you think you might be screwed.

Because that’s when the best ideas and breakthroughs happen.

Thank you.

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