Michael Webber: Changing the Way Business Thinks About Energy, Texas Enterprise Speaker Series,...
78
Changing The Way Business Thinks About Energy Texas Enterprise Speaker Series Michael E. Webber, Ph.D. April 16, 2013
-
Upload
utmccombs-school -
Category
Documents
-
view
292 -
download
0
description
In a lecture for the Texas Enterprise Speaker Series, Dr. Michael Webber will identify the key trends that are reshaping the energy sector, including economic and population growth, industrialization, an expanding electrical grid, smarter energy systems, and a policy push for domestic, low-carbon, and renewable fuels. Dr. Webber is the Josey Centennial Fellow in Energy Resources, Co-Director of the Clean Energy Incubator at the Austin Technology Incubator, and Associate Professor of Mechanical Engineering at The University of Texas at Austin. The discussion will focus on how a new found shift in economic philosophy is creating new business opportunities in the energy sector, allowing companies to increase profit margins while decreasing resource consumption — which will simultaneously boost the economy and protect the environment. Attendees will learn how to put their businesses in an ideal position to succeed in the rapidly changing energy industry. You Will Learn - • How your business can be in a better position to succeed in a rapidly changing energy industry and turbulent environmental and world economic environment. • How to prepare for a world with different price curves, different environmental regulations, and new sources of energy.
Transcript of Michael Webber: Changing the Way Business Thinks About Energy, Texas Enterprise Speaker Series,...
Changing The Way Business Thinks About Energy
Texas Enterprise Speaker Series
Michael E. Webber, Ph.D. April 16, 2013
Michael E. Webber, Ph.D. Changing Energy Biz 2
April 16, 2013
Americans Are Confused About What They Want from U.S. Energy Policy
• Two ideological camps for energy in the U.S. – High production and high consumption – Low production and low consumption
• US energy policy has been the worst of both worlds – Low production and high consumption
Michael E. Webber, Ph.D. Changing Energy Biz 3
April 16, 2013
American Attitudes About Energy Have Evolved Over Time from NIMBY to BANANA
Build Absolutely Nothing Anywhere Near Anyone
Not In My Back Yard
Artwork © 2007 by Julia Cook Webber
Michael E. Webber, Ph.D. Changing Energy Biz 4
April 16, 2013
American Attitudes About Energy Have Evolved Over Time from BANANA to NOPE
Not On Planet Earth
Michael E. Webber, Ph.D. Changing Energy Biz 5
April 16, 2013
Pledging to Get Off Foreign Oil Is A Decades-Long, Bipartisan Tradition
Michael E. Webber, Ph.D. Changing Energy Biz 6
April 16, 2013
Pledging to Get Off Foreign Oil Is A Decades-Long, Bipartisan Tradition
Michael E. Webber, Ph.D. Changing Energy Biz 7
April 16, 2013
Energy Is Good: It Enables Things We Like and Need
Michael E. Webber, Ph.D. Changing Energy Biz 8
April 16, 2013
Energy Is Good: It Enables Things We Like and Need
Michael E. Webber, Ph.D. Changing Energy Biz 9
April 16, 2013
Compared To Other Important Liquids, Petroleum-Based Fuels Are Affordable
• Gasoline: ~$3-4/gallon
• Cruzan Rum: ~$70-125/gallon
March 2008 Guadalupe St. Austin, TX
Michael E. Webber, Ph.D. Changing Energy Biz 10
April 16, 2013
The Energy Industry Is The Largest Market Sector In The World
• Fuels: >$4T/year – Oil: $3T – Natgas: $1T – Coal: $200B – Uranium: relatively small
• Power Sector: >$2T/year
Source: BP Statistical Review 2012 (for 2011)
Michael E. Webber, Ph.D. Changing Energy Biz 11
April 16, 2013
The Global Map of Electricity Consumption and Wealth Are Nearly Identical
Source: NASA (2012)
Michael E. Webber, Ph.D. Changing Energy Biz 12
April 16, 2013
Energy Consumption and Affluence Are Correlated
Michael E. Webber, Ph.D. Changing Energy Biz 12
April 16, 2013
Michael E. Webber, Ph.D. Changing Energy Biz 13
April 16, 2013
Those Benefits Are Not Available to Everyone
Michael E. Webber, Ph.D. Changing Energy Biz 14
April 16, 2013
Approximately 1 Billion People Suffer From Chronic Hunger
Source: UN World Food Program
Michael E. Webber, Ph.D. Changing Energy Biz 15
April 16, 2013
Approximately 1 Billion People Do Not Have Access to Clean Drinking Water
• Plus 80% of global population at high risk of threats to water security
Source: UN, Nature
Michael E. Webber, Ph.D. Changing Energy Biz 16
April 16, 2013
Approximately 2.5 Billion People Do Not Have Access to Sanitation
Source: UN
Michael E. Webber, Ph.D. Changing Energy Biz 17
April 16, 2013
Approximately 5 Billion People Do Not Have Access to Computers or the Internet
Source: Internet Worldstats
Michael E. Webber, Ph.D. Changing Energy Biz 18
April 16, 2013
At least 2 Billion People Do Not Have Access to Telephones
• There are 5 billion mobile phone accounts globally – Maybe an allegory for distributed energy
leapfrogging centralized energy?
Source: ITU
Michael E. Webber, Ph.D. Changing Energy Biz 19
April 16, 2013
There are only 600 million cars and 250 million trucks globally
Source: WorldMapper
Michael E. Webber, Ph.D. Changing Energy Biz 20
April 16, 2013
All Those People Want
• Food
• Water
• Sanitation
• Computers
• Phones
• Cars
Michael E. Webber, Ph.D. Changing Energy Biz 21
April 16, 2013
Global Consumption Patterns Suggest Growing Strains on the Energy System
Michael E. Webber, Ph.D. Changing Energy Biz 21
April 16, 2013
Michael E. Webber, Ph.D. Changing Energy Biz 22
April 16, 2013
Energy Has Drawbacks, Too
Michael E. Webber, Ph.D. Changing Energy Biz 23
April 16, 2013
The Energy Problem Is Comprised of Three Converging Crises
• Three energy crises: – Environmental Degradation – National Security & Violent Extremism – Resource Depletion
• All three are related and amplify each other
Michael E. Webber, Ph.D. Changing Energy Biz 24
April 16, 2013
The USA Must Balance Three Priorities While Addressing the Energy Problem
Economics & Supply
Most options for new fuels or technologies solve any one or two priorities, but not all three
Environment
National Security
Michael E. Webber, Ph.D. Changing Energy Biz 25
April 16, 2013
Environmental Issues Are Also Front and Center
September 2004
March 2006
April 2006
Michael E. Webber, Ph.D. Changing Energy Biz 26
April 16, 2013
The National Security Implications of Energy Are Important
Source: Economist, March 2011
Michael E. Webber, Ph.D. Changing Energy Biz 27
April 16, 2013
MiMichchaea l E.EE WWebebbeber,, Ph.D. Chan iging Energy BiBiz 2727
April 166, 20201313
Michael E. Webber, Ph.D. Changing Energy Biz 28
April 16, 2013
Michael E. Webber, Ph.D. Changing Energy Biz 29
April 16, 2013
Headlines Raise the Alarm About Resource Depletion, Costs, and Reliability
June 2004
August 2005
May 2005
October 2003
Michael E. Webber, Ph.D. Changing Energy Biz 30
April 16, 2013
Today, Headlines Declare We Have An
Abundance of Oil and Gas
March 2013
The energy situation is always evolving
so must our thinking.
Michael E. Webber, Ph.D. Changing Energy Biz 31
April 16, 2013
For the First Time In My Lifetime, The US Energy Situation Is Improving
• U.S. Energy Production is UP since 2009 – Oil, gas, solar, wind, geothermal, bioenergy,
• Consumption is down
• Imports are down
Michael E. Webber, Ph.D. Changing Energy Biz 32
April 16, 2013
Energy Evolution: Our Energy Systems Change With Time
Michael E. Webber, Ph.D. Changing Energy Biz 33
April 16, 2013
The Fuel Mix Has Changed With Time
Michael E. Webber, Ph.D. Changing Energy Biz 34
April 16, 2013
Renewables Have Grown Significantly
Michael E. Webber, Ph.D. Changing Energy Biz 35
April 16, 2013
Energy Transitions Have a Few Features
• They are more typical than we might expect
• They take a long time
• Today’s energy solution is tomorrow’s energy problem
• They tend to follow a path towards decarbonization
Michael E. Webber, Ph.D. Changing Energy Biz 36
April 16, 2013
Energy Transitions Take A Long Time
Michael E. Webber, Ph.D. Changing Energy Biz 37
April 16, 2013
Deforestation (or Peak Wood) Was a Real
Phenomenon
Michael E. Webber, Ph.D. Changing Energy Biz 38
April 16, 2013
Peak Whale Was a Real Phenomenon
Michael E. Webber, Ph.D. Changing Energy Biz 39
April 16, 2013
Mi h l E W bb Ph D
Energy Transitions Show A Trend of Decarbonization
Michael E. Webber, Ph.D. Changing Energy Biz 40
April 16, 2013
So What’s the Future of Energy?
It's tough to make predictions, especially about the future.
Yogi Berra
Michael E. Webber, Ph.D. Changing Energy Biz 41
April 16, 2013
Official Prediction: U.S. Energy Supply Expected to Change Very Little For 20 Years
Michael E. Webber, Ph.D. Changing Energy Biz 42
April 16, 2013
Projections Are Often Wrong
Michael E. Webber, Ph.D. Changing Energy Biz 43
April 16, 2013
Global Energy Trends
Michael E. Webber, Ph.D. Changing Energy Biz 44
April 16, 2013
The Energy Transition Will Be Comprised of Three Shifts
• A change in total demand for energy – Population growth pushes total demand up – Economic growth pushes per capita demand up
• A change in our end uses of energy – Electrification – Motorization – Urbanization – Industrialization
• A change in our sources of energy – Domestic sources – Low-carbon sources – Sustainable sources
Michael E. Webber, Ph.D. Changing Energy Biz 45
April 16, 2013
There Are Several Production Trends Worth Watching
• More hostile environments – Deeper (deepwater production, deeper shales) – Higher pressure – Harder (low porosity shales) – More corrosive (high TDS water)
• More Technical – Higher windspeeds, blade stresses, etc.
• Need solutions for materials and components – Temperature resistance – Strong – Light
Michael E. Webber, Ph.D. Changing Energy Biz 46
April 16, 2013
There Are Six Policy, Market, and Cultural Trends And Forcing Functions to Watch
• Pressure From Capital Markets: Energy will become smaller/modular, quicker to build, and w/higher utilization
• Pressure from Economists: Energy markets will become liberalized
• Pressure From Regulators: Energy will get cleaner
Michael E. Webber, Ph.D. Changing Energy Biz 47
April 16, 2013
There Are Six Policy, Market, and Cultural Trends And Forcing Functions to Watch
• Pressure From Popular/Cultural Forces: Energy will become more sustainable/renewable
• Pressure From Utilities: Energy will become smarter, resilient and flexible
• Pressure From Consumers: Energy will become democratized and will stay affordable
Michael E. Webber, Ph.D. Changing Energy Biz 48
April 16, 2013
Energy Will Become Smaller/Modular, Quicker to Build and More Highly Utilized • Loan sizes of $100Ms instead of $1Bs
– Large nuclear goes to modular nuclear – Large coal goes to natural gas combined cycle – Wind proceeds as before – Rooftop solar goes to utility scale solar farm
• Loans will emphasize 1-3 year build out – Nuclear and coal on hold – Natural gas, wind and solar proceed
• Capital efficiency will increase from 46% to 80-90% – Storage, load-leveling/shifting, demand response
Michael E. Webber, Ph.D. Changing Energy Biz 49
April 16, 2013
Energy Markets Will Become Liberalized
• More competition in the power markets – Entrenched interests are not excited
• More markets – Ancillary services (Storage, Firming power) – Will transmission bottlenecks remain?
• More innovation
• Market dynamics – Supply and demand will affect prices – Signals will drive consumer behaviors
Michael E. Webber, Ph.D. Changing Energy Biz 50
April 16, 2013
Energy Will Become Cleaner • Fuel switching
– Renewables & natgas will compete w/coal & oil
• Scrubbing – Growth market for NOx, SOX, Hg (and CO2?) scrubbers
• Temporal Sensitivity – Reducing emissions by time of day and time of year – Real-time pricing, environmental dispatching
• Water – Reduced water intensity of energy (for power plants
and fuels extraction)
Michael E. Webber, Ph.D. Changing Energy Biz 51
April 16, 2013
Consumers Will Demand Leaner Systems
• Accountability demands by consumers will increase – End-to-end analysis will be critical – Lifecycle footprinting for carbon, energy, water,
waste, emissions and materials – Customers will gain view into global supply chains
• Priority on reducing requirements in a verified way
• Customers gain – Insights – Reduced costs – Improved sustainability credentials
Michael E. Webber, Ph.D. Changing Energy Biz 52
April 16, 2013
Energy Will Become More Renewable and Sustainable
• Support for renewables – Regulatory-driven programs (RPS, CES) ~$100Bs – Consumer choice programs (GreenChoice) – Tax supports (PTC, ITC)
• Large-scale implications – New infrastructure for transmission – Wealth generation for rural landowners
• Impacts for fossil fuels – Push for “new” renewables (waste coal and RNG) – Additional barriers to conventional fossil fuels
Michael E. Webber, Ph.D. Changing Energy Biz 53
April 16, 2013
Energy will become smarter, resilient and flexible
• Large scale (~$100Bs) of investment in the “smart grid” – Massive roll-out of smart meters – Smarter transmission & nodal markets – IT opps: mobile apps for control & awareness
• For the Utility: – On-call demand reduction – Better response times to outages
• Consumers: – New smart appliances – Return of the ESCOs (Energy Service Companies)
Michael E. Webber, Ph.D. Changing Energy Biz 54
April 16, 2013
Energy Will Become Democratized
• Distributed Generation: – Solar PV rooftop – Natgas microturbines and fuel cells – Ground source heat pumps – New market entrants
• Distributed Electricity Storage: – EVs – Garage battery banks
• Distributed Control: – Smart appliances, meters, and mobile apps
Michael E. Webber, Ph.D. Changing Energy Biz 55
April 16, 2013
All Six Trends Point To A Handful of Winners
• Fuels: – Near: natural gas, wind, solar PV, geothermal – Far: small nuclear, small hydro, microharvesters
• Landowners
• Service companies – The industry will shift from a cost basis to a
value basis
Michael E. Webber, Ph.D. Changing Energy Biz 56
April 16, 2013
Michael E. Webber, Ph.D. Changing Energy Biz 57
April 16, 2013
Energy Systems Can Change
Michael E. Webber, Ph.D. Changing Energy Biz 58
April 16, 2013
San Antonio
Laredo
Houston
Corpus Christi
Eagle Pass
Victoria
Del Rio
The Stars at Night, Are Big and Bright .
Michael E. Webber, Ph.D. Changing Energy Biz 59
April 16, 2013
Bakken Shale
MMiMMii hhh ll EEEE WWWWWWWW bbbbbbbb PPPPPPhhh DDD
Bismarck
Minot
Miles
Michael E. Webber, Ph.D. Changing Energy Biz 60
April 16, 2013
Is This Revolution The Result of Market Triumphalism, Good Policies, Disruptive
Technologies, or Something Else?
Michael E. Webber, Ph.D. Changing Energy Biz 61
April 16, 2013
For The First Time Since The 1960s, Energy Technologies, Policies, And Markets Are
Aligned • Market triumphalism: the shale play is almost entirely
on private lands with private companies and was triggered by high prices
• Supportive government policies: – DoE R&D investments throughout the 1970s to
1990s kickstarted the whole trend – Energy Policy Act (2005) excludes hydraulic
fracturing from underground injection regulation
• Disruptive Technologies: advancing 1930s and 1950s technologies is a 2000s idea whose time has come
Michael E. Webber, Ph.D. Changing Energy Biz 62
April 16, 2013
Shale Gas Is A Global Resource Base
Michael E. Webber, Ph.D. Changing Energy Biz 63
April 16, 2013
Northern Russia 2001
MMiMiMiMMiMiMichchchchchchhchhhhhhhhhhhchhhhchc aeaeaeaeaaeaeaeaeaaaaaaaaaaaaaaaa llll E.EE.EEE. WWWChChChChhChChhCChCCCChananananananan iigigigig nnngg
Michael E. Webber, Ph.D. Changing Energy Biz 64
April 16, 2013
Northern Russia 2012
MMiMiiMichchchhhaeaeaeaeaellll EE.E.E. WWWWWWWWWeeeeeeeChChChCCChChChhhananaanananangigigigigiiggg ngngngngggg EEEEEEEnnnnnn
AAppApApApApppApAppppp
Michael E. Webber, Ph.D. Changing Energy Biz 65
April 16, 2013
Australia 2001
MMiMiMiMiMMiMiM chhaeael E. WebbbbebeChChCChCChanangingg EEnenergy
Appririll 11
Michael E. Webber, Ph.D. Changing Energy Biz 66
April 16, 2013
Australia 2012
Michael E. WebbeChanging Energ
April
Michael E. Webber, Ph.D. Changing Energy Biz 67
April 16, 2013
Prediction: Within 1 to 2 Decades, Natural Gas Will Overtake Petroleum As The
Dominant Energy Source in the USA
Michael E. Webber, Ph.D. Changing Energy Biz 67
April 16, 2013
Michael E. Webber, Ph.D. Changing Energy Biz 68
April 16, 2013
US Oil and Gas Prices Have Separated
Michael E. Webber, Ph.D. Changing Energy Biz 69
April 16, 2013
US and Global Gas Prices Have Separated
Michael E. Webber, Ph.D. Changing Energy Biz 70
April 16, 2013
Economic Thinking Might Change
Michael E. Webber, Ph.D. Changing Energy Biz 71
April 16, 2013
Current Economic Thinking Is Antiquated
• Growth is the only goal of economic theory
– personal, city, state, national – implies more resource use,
more impacts, more destruction of natural assets
• More population and more consumption is the key to economic growth
Michael E. Webber, Ph.D. Changing Energy Biz 72
April 16, 2013
Current Economic Thinking Doesn’t Work for Multi-continental Multi-Generational Problems
• Can we use today’s economics to solve the climate crisis?
– the people who are affected live across the world and haven’t been born, yet
• Long-range economic planning uses discount rates – 3-10% discount rate is typical for industry – 0% discount rate is the “ethical” rate
Michael E. Webber, Ph.D. Changing Energy Biz 73
April 16, 2013
Towards a New Economic Theory
• Old Economics: yielded the Industrial Revolution – Nature is abundant and people are scarce, so
increase labor productivity • automation, mechanization
• New Economics: for the next Industrial Revolution – People are abundant and nature is scarce, so
increase resource productivity • efficiency, resource reuse
Source: Hawken, Lovins & Lovins, Natural Capitalism
Michael E. Webber, Ph.D. Changing Energy Biz 74
April 16, 2013
Towards a New Economic Theory
• Old Economics: cost-based capitalism – Energy is sold based on how much it costs to
produce – Utility sells electricity, customer turns on lights
• New Economics: value-based capitalism – Energy services are sold based on how much
value they offer – Utility sells lighting services
Source: Joe Stanislaw, 1994
Michael E. Webber, Ph.D. Changing Energy Biz 75
April 16, 2013
Economic Vibrancy and Environmentally Conscious Policies Are Becoming Accepted
As Compatible With Each Other
• McKinsey Global Institute praised the business advantages of an energy efficient society (2007, 2009)
– “energy productivity”
• Fortune, Forbes, etc. marvel at how saving money on energy expenses is a good idea
• Cities like Seattle, Portland and Austin use green policies to attract the best and brightest
Michael E. Webber, Ph.D. Changing Energy Biz 76
April 16, 2013
Kids Intuitively Connect The Environment and The Economy
• Michael Webber: “Evelyn, I don’t know if you discuss current events in the 4th grade, but the economy is really struggling right now.”
• Evelyn Webber: “I know. It’s because we aren’t helping the earth very well.”
– March 29, 2009, 9 years old
Michael E. Webber, Ph.D. Changing Energy Biz 77
April 16, 2013
Summary
• Energy systems can change
• They usually change for the better
• Alternatives that are today’s solutions become tomorrow’s problems
• New business opportunities are emerging
• We need new thinking to match the changing energy landscape
Michael E. Webber, Ph.D. Changing Energy Biz 78
April 16, 2013
Michael E. Webber, Ph.D.
Deputy Director, Energy Institute
Associate Professor, Mechanical Engineering
Co-Director, Clean Energy Incubator
http://www.webberenergygroup.com
