Michael Webber: Changing the Way Business Thinks About Energy, Texas Enterprise Speaker Series, April 16, 2013
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Michael Webber: Changing the Way Business Thinks About Energy, Texas Enterprise Speaker Series, April 16, 2013

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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, ...

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.

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    Michael Webber: Changing the Way Business Thinks About Energy, Texas Enterprise Speaker Series, April 16, 2013 Michael Webber: Changing the Way Business Thinks About Energy, Texas Enterprise Speaker Series, April 16, 2013 Presentation Transcript

    • Changing The Way Business ThinksAbout EnergyTexas Enterprise Speaker SeriesMichael E. Webber, Ph.D.April 16, 2013
    • Michael E. Webber, Ph.D.Changing Energy Biz 2April 16, 2013Americans Are Confused About What TheyWant 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 3April 16, 2013American Attitudes About Energy HaveEvolved Over Time from NIMBY to BANANABuild Absolutely NothingAnywhere Near AnyoneNot In My Back YardArtwork © 2007 by Julia Cook Webber
    • Michael E. Webber, Ph.D.Changing Energy Biz 4April 16, 2013American Attitudes About Energy HaveEvolved Over Time from BANANA to NOPENot On Planet Earth
    • Michael E. Webber, Ph.D.Changing Energy Biz 5April 16, 2013Pledging to Get Off Foreign Oil Is A Decades-Long, Bipartisan Tradition
    • Michael E. Webber, Ph.D.Changing Energy Biz 6April 16, 2013Pledging to Get Off Foreign Oil Is A Decades-Long, Bipartisan Tradition
    • Michael E. Webber, Ph.D.Changing Energy Biz 7April 16, 2013Energy Is Good: It Enables ThingsWe Like and Need
    • Michael E. Webber, Ph.D.Changing Energy Biz 8April 16, 2013Energy Is Good: It Enables ThingsWe Like and Need
    • Michael E. Webber, Ph.D.Changing Energy Biz 9April 16, 2013Compared To Other Important Liquids,Petroleum-Based Fuels Are Affordable•  Gasoline: ~$3-4/gallon•  Cruzan Rum: ~$70-125/gallonMarch 2008Guadalupe St.Austin, TX
    • Michael E. Webber, Ph.D.Changing Energy Biz 10April 16, 2013The Energy Industry Is The Largest MarketSector In The World•  Fuels: >$4T/year–  Oil: $3T–  Natgas: $1T–  Coal: $200B–  Uranium: relatively small•  Power Sector: >$2T/yearSource: BP Statistical Review 2012 (for 2011)
    • Michael E. Webber, Ph.D.Changing Energy Biz 11April 16, 2013The Global Map of Electricity Consumptionand Wealth Are Nearly IdenticalSource: NASA (2012)
    • Michael E. Webber, Ph.D.Changing Energy Biz 12April 16, 2013Energy Consumption and Affluence AreCorrelatedMichael E. Webber, Ph.D.Changing Energy Biz 12April 16, 2013
    • Michael E. Webber, Ph.D.Changing Energy Biz 13April 16, 2013Those Benefits Are Not Available toEveryone
    • Michael E. Webber, Ph.D.Changing Energy Biz 14April 16, 2013Approximately 1 Billion People Suffer FromChronic HungerSource: UN World Food Program
    • Michael E. Webber, Ph.D.Changing Energy Biz 15April 16, 2013Approximately 1 Billion People Do Not HaveAccess to Clean Drinking Water•  Plus 80% of global population at high risk of threatsto water securitySource: UN, Nature
    • Michael E. Webber, Ph.D.Changing Energy Biz 16April 16, 2013Approximately 2.5 Billion People Do Not HaveAccess to SanitationSource: UN
    • Michael E. Webber, Ph.D.Changing Energy Biz 17April 16, 2013Approximately 5 Billion People Do Not HaveAccess to Computers or the InternetSource: Internet Worldstats
    • Michael E. Webber, Ph.D.Changing Energy Biz 18April 16, 2013At least 2 Billion People Do Not Have Accessto Telephones•  There are 5 billion mobile phone accounts globally–  Maybe an allegory for distributed energyleapfrogging centralized energy?Source: ITU
    • Michael E. Webber, Ph.D.Changing Energy Biz 19April 16, 2013There are only 600 million cars and 250 milliontrucks globallySource: WorldMapper
    • Michael E. Webber, Ph.D.Changing Energy Biz 20April 16, 2013All Those People Want• Food• Water• Sanitation• Computers• Phones• Cars
    • Michael E. Webber, Ph.D.Changing Energy Biz 21April 16, 2013Global Consumption Patterns SuggestGrowing Strains on the Energy SystemMichael E. Webber, Ph.D.Changing Energy Biz 21April 16, 2013
    • Michael E. Webber, Ph.D.Changing Energy Biz 22April 16, 2013Energy Has Drawbacks, Too
    • Michael E. Webber, Ph.D.Changing Energy Biz 23April 16, 2013The Energy Problem Is Comprised of ThreeConverging 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 24April 16, 2013The USA Must Balance Three Priorities WhileAddressing the Energy ProblemEconomics &SupplyMost options for new fuels or technologies solveany one or two priorities, but not all threeEnvironmentNationalSecurity
    • Michael E. Webber, Ph.D.Changing Energy Biz 25April 16, 2013Environmental Issues Are Also Front andCenterSeptember 2004March 2006April 2006
    • Michael E. Webber, Ph.D.Changing Energy Biz 26April 16, 2013The National Security Implications of EnergyAre ImportantSource: Economist, March 2011
    • Michael E. Webber, Ph.D.Changing Energy Biz 27April 16, 2013MiMichchaea l E.EE WWebebbeber,, Ph.D.Chan iging Energy BiBiz 2727April 166, 20201313
    • Michael E. Webber, Ph.D.Changing Energy Biz 28April 16, 2013
    • Michael E. Webber, Ph.D.Changing Energy Biz 29April 16, 2013Headlines Raise the Alarm About ResourceDepletion, Costs, and ReliabilityJune 2004August 2005May 2005October 2003
    • Michael E. Webber, Ph.D.Changing Energy Biz 30April 16, 2013Today, HeadlinesDeclare We Have AnAbundance of Oiland GasMarch 2013The energy situation isalways evolvingso must our thinking.
    • Michael E. Webber, Ph.D.Changing Energy Biz 31April 16, 2013For the First Time In My Lifetime, The USEnergy 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 32April 16, 2013Energy Evolution: Our Energy SystemsChange With Time
    • Michael E. Webber, Ph.D.Changing Energy Biz 33April 16, 2013The Fuel Mix Has Changed With Time
    • Michael E. Webber, Ph.D.Changing Energy Biz 34April 16, 2013Renewables Have Grown Significantly
    • Michael E. Webber, Ph.D.Changing Energy Biz 35April 16, 2013Energy 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 energyproblem•  They tend to follow a path towards decarbonization
    • Michael E. Webber, Ph.D.Changing Energy Biz 36April 16, 2013Energy Transitions Take A Long Time
    • Michael E. Webber, Ph.D.Changing Energy Biz 37April 16, 2013Deforestation (or PeakWood) Was a RealPhenomenon
    • Michael E. Webber, Ph.D.Changing Energy Biz 38April 16, 2013Peak Whale Was a Real Phenomenon
    • Michael E. Webber, Ph.D.Changing Energy Biz 39April 16, 2013Mi h l E W bb Ph DEnergy Transitions Show A Trend ofDecarbonization
    • Michael E. Webber, Ph.D.Changing Energy Biz 40April 16, 2013So What’s the Future of Energy?Its tough to make predictions,especially about the future.Yogi Berra
    • Michael E. Webber, Ph.D.Changing Energy Biz 41April 16, 2013Official Prediction: U.S. Energy SupplyExpected to Change Very Little For 20 Years
    • Michael E. Webber, Ph.D.Changing Energy Biz 42April 16, 2013Projections Are Often Wrong
    • Michael E. Webber, Ph.D.Changing Energy Biz 43April 16, 2013Global Energy Trends
    • Michael E. Webber, Ph.D.Changing Energy Biz 44April 16, 2013The Energy Transition Will Be Comprised ofThree 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 45April 16, 2013There Are Several Production Trends WorthWatching•  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 46April 16, 2013There Are Six Policy, Market, and CulturalTrends And Forcing Functions to Watch•  Pressure From Capital Markets: Energy will becomesmaller/modular, quicker to build, and w/higher utilization•  Pressure from Economists: Energy markets will becomeliberalized•  Pressure From Regulators: Energy will get cleaner
    • Michael E. Webber, Ph.D.Changing Energy Biz 47April 16, 2013There Are Six Policy, Market, and CulturalTrends And Forcing Functions to Watch•  Pressure From Popular/Cultural Forces: Energy willbecome more sustainable/renewable•  Pressure From Utilities: Energy will become smarter,resilient and flexible•  Pressure From Consumers: Energy will becomedemocratized and will stay affordable
    • Michael E. Webber, Ph.D.Changing Energy Biz 48April 16, 2013Energy 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 49April 16, 2013Energy 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 50April 16, 2013Energy 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 plantsand fuels extraction)
    • Michael E. Webber, Ph.D.Changing Energy Biz 51April 16, 2013Consumers 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 52April 16, 2013Energy Will Become More Renewable andSustainable•  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 53April 16, 2013Energy will become smarter, resilient andflexible•  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 54April 16, 2013Energy 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 55April 16, 2013All 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 avalue basis
    • Michael E. Webber, Ph.D.Changing Energy Biz 56April 16, 2013
    • Michael E. Webber, Ph.D.Changing Energy Biz 57April 16, 2013Energy Systems Can Change
    • Michael E. Webber, Ph.D.Changing Energy Biz 58April 16, 2013San AntonioLaredoHoustonCorpusChristiEaglePassVictoriaDel RioThe Stars at Night, Are Big and Bright .
    • Michael E. Webber, Ph.D.Changing Energy Biz 59April 16, 2013Bakken ShaleMMiMMii hhh ll EEEE WWWWWWWW bbbbbbbb PPPPPPhhh DDDBismarckMinotMiles
    • Michael E. Webber, Ph.D.Changing Energy Biz 60April 16, 2013Is This Revolution The Result of MarketTriumphalism, Good Policies, DisruptiveTechnologies, or Something Else?
    • Michael E. Webber, Ph.D.Changing Energy Biz 61April 16, 2013For The First Time Since The 1960s, EnergyTechnologies, Policies, And Markets AreAligned•  Market triumphalism: the shale play is almost entirelyon private lands with private companies and wastriggered by high prices•  Supportive government policies:–  DoE R&D investments throughout the 1970s to1990s kickstarted the whole trend–  Energy Policy Act (2005) excludes hydraulicfracturing from underground injection regulation•  Disruptive Technologies: advancing 1930s and 1950stechnologies is a 2000s idea whose time has come
    • Michael E. Webber, Ph.D.Changing Energy Biz 62April 16, 2013Shale Gas Is A Global Resource Base
    • Michael E. Webber, Ph.D.Changing Energy Biz 63April 16, 2013Northern Russia 2001MMiMiMiMMiMiMichchchchchchhchhhhhhhhhhhchhhhchc aeaeaeaeaaeaeaeaeaaaaaaaaaaaaaaaa llll E.EE.EEE. WWWChChChChhChChhCChCCCChananananananan iigigigig nnngg
    • Michael E. Webber, Ph.D.Changing Energy Biz 64April 16, 2013Northern Russia 2012MMiMiiMichchchhhaeaeaeaeaellll EE.E.E. WWWWWWWWWeeeeeeeChChChCCChChChhhananaanananangigigigigiiggg ngngngngggg EEEEEEEnnnnnnAAppApApApApppApAppppp
    • Michael E. Webber, Ph.D.Changing Energy Biz 65April 16, 2013Australia 2001MMiMiMiMiMMiMiM chhaeael E. WebbbbebeChChCChCChanangingg EEnenergyAppririll 11
    • Michael E. Webber, Ph.D.Changing Energy Biz 66April 16, 2013Australia 2012Michael E. WebbeChanging EnergApril
    • Michael E. Webber, Ph.D.Changing Energy Biz 67April 16, 2013Prediction: Within 1 to 2 Decades,Natural Gas Will Overtake Petroleum As TheDominant Energy Source in the USAMichael E. Webber, Ph.D.Changing Energy Biz 67April 16, 2013
    • Michael E. Webber, Ph.D.Changing Energy Biz 68April 16, 2013US Oil and Gas Prices Have Separated
    • Michael E. Webber, Ph.D.Changing Energy Biz 69April 16, 2013US and Global Gas Prices Have Separated
    • Michael E. Webber, Ph.D.Changing Energy Biz 70April 16, 2013Economic Thinking Might Change
    • Michael E. Webber, Ph.D.Changing Energy Biz 71April 16, 2013Current Economic Thinking Is Antiquated•  Growth is the only goal ofeconomic theory–  personal, city, state, national–  implies more resource use,more impacts, more destructionof natural assets•  More population and moreconsumption is the key toeconomic growth
    • Michael E. Webber, Ph.D.Changing Energy Biz 72April 16, 2013Current Economic Thinking Doesn’t Work forMulti-continental Multi-Generational Problems•  Can we use today’s economics to solve the climatecrisis?–  the people who are affected live across the world andhaven’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 73April 16, 2013Towards a New Economic Theory•  Old Economics: yielded the Industrial Revolution–  Nature is abundant and people are scarce, soincrease labor productivity•  automation, mechanization•  New Economics: for the next Industrial Revolution–  People are abundant and nature is scarce, soincrease resource productivity•  efficiency, resource reuseSource: Hawken, Lovins & Lovins, Natural Capitalism
    • Michael E. Webber, Ph.D.Changing Energy Biz 74April 16, 2013Towards a New Economic Theory•  Old Economics: cost-based capitalism–  Energy is sold based on how much it costs toproduce–  Utility sells electricity, customer turns on lights•  New Economics: value-based capitalism–  Energy services are sold based on how muchvalue they offer–  Utility sells lighting servicesSource: Joe Stanislaw, 1994
    • Michael E. Webber, Ph.D.Changing Energy Biz 75April 16, 2013Economic Vibrancy and EnvironmentallyConscious Policies Are Becoming AcceptedAs Compatible With Each Other•  McKinsey Global Institute praised the businessadvantages of an energy efficient society (2007, 2009)–  “energy productivity”•  Fortune, Forbes, etc. marvel at how saving money onenergy expenses is a good idea•  Cities like Seattle, Portland and Austin use greenpolicies to attract the best and brightest
    • Michael E. Webber, Ph.D.Changing Energy Biz 76April 16, 2013Kids Intuitively Connect The Environment andThe Economy•  Michael Webber: “Evelyn, I don’t know if youdiscuss current events in the 4th grade, but theeconomy is really struggling right now.”•  Evelyn Webber: “I know. It’s because we aren’thelping the earth very well.”–  March 29, 2009, 9 years old
    • Michael E. Webber, Ph.D.Changing Energy Biz 77April 16, 2013Summary•  Energy systems can change•  They usually change for the better•  Alternatives that are today’s solutions becometomorrow’s problems•  New business opportunities are emerging•  We need new thinking to match the changingenergy landscape
    • Michael E. Webber, Ph.D.Changing Energy Biz 78April 16, 2013Michael E. Webber, Ph.D.Deputy Director, Energy InstituteAssociate Professor, Mechanical EngineeringCo-Director, Clean Energy Incubatorwebber@mail.utexas.eduhttp://www.webberenergygroup.com