U.S. Energy Secretary Moniz’s speech at Nazarbayev University

Dr. Ernest Moniz
U.S. Secretary of Energy

April 7, 2016

Secretary Moniz: Thank you, President Katsu and my new best friend, Mr. Bosumbayev. He’s been in office two weeks, and we met last week in Washington, we meet this week in Astana. By simple extrapolation I will have the rest of my term filled in collaboration with Kazakhstan.

This is my first time in Kazakhstan, my first time in Central Asia, and I have to say it’s been a wonderful trip and very productive, but I also want to say that I think looking at this university, it’s a wonderful example of a commitment to education, to a new kind of education that I think will be extremely productive for this society, but will have implications well beyond it as well.

So I would like to say a little bit before getting into some of the remarks around climate change and the responses, the clean energy responses that we need, just say a few words more broadly about our collaboration with Kazakhstan. It really is involved with two of the major challenges really facing humanity. One is nuclear security, particularly nuclear non-proliferation, keeping nuclear materials out of the hands of terrorists and the like, and this is something where we have collaborated for many years since the independence of Kazakhstan and I’m always happy to add the United States was the first to have diplomatic relations with Kazakhstan so it’s a very important friendship. President Nazarbayev and Kazakhstan have shown a tremendous commitment to nonproliferation.

We’ve been able to talk about and advance several specifics, but I don’t want to spend a lot of time on this. I’ll just mention one thing, and President Katsu mentioned the Iran negotiations. I just wanted to say that Kazakhstan played a very important role in allowing us to go from the agreement that was reached last fall to the implementation January 16th by stepping in and helping us resolve an issue in terms of getting some enriched uranium out of Iran. So again, I want to just say that all of you should be I think very proud of the role that Kazakhstan has played and will continue to play, and we will collaborate on this as we move forward in the, I feel pretty optimistic, the very successful implementation of that Iran agreement.

Now that’s one of the areas that is again one of the major challenges facing all of us, an area of deep and ongoing collaboration.

The other is energy and in particular clean energy as essentially the solution to the climate challenge.

I’m not going to, for this audience, go into global warming, however, emissions from the energy sector are the dominant and in fact the most persistent challenge, carbon dioxide in particular.

So when all is said and done, the solution is to have, for these next decades, a very very strong decarbonization [program that utilizes recent advances technological, advances especially where there are significant cost reductions in renewable technology].

[Facing this future of distributed power generation, laws and policies must progress as technology progresses. For example, when planning a solar energy project in the U.S.A, it is] local barriers to actually building solar farms or rooftop solar that become a dominant part of the costs.

So I think in this audience there’s probably a lot of technologists but don’t forget, we also need to innovate in the kinds of policies we have and in how business models are structured for industry to work in a world of new technologies.

So I mentioned wind, I mentioned photovoltaics. Let me also mention batteries. Batteries for grid integration of renewables, batteries for transportation, electric cars. Once again we have seen probably a 60 percent reduction in battery costs over the last six years.

You all, no doubt, will be rushing out to buy the new Tesla model that was just announced last week. But if you think of the progress that’s been made from the base Tesla vehicle of only a few years ago of $120,000 for a two-seat vehicle, a very nice vehicle but expensive; to last week’s announcement of a base price of $35,000 for a five-seat vehicle in only a period of six years, is completely remarkable.

Now we still need more progress. We need another reduction by maybe a factor of two before we can begin to penetrate in the large commodity markets and vehicles, but we are making tremendous progress and this is the kind of progress we need to sustain, as I said earlier, to underpin increased ambition by all countries in the next 10 or 15 years.

Finally, in terms of this cost reduction trajectory, let me also mention what is actually the most remarkable reduction in that time period — a 90 percent reduction in the cost of LED lighting.

Let’s say for home use a typical LED light right now to replace a 60-watt traditional incandescent bulb uses only about one-sixth of the electricity requirements, and has a pay-back period now getting into the months.

So this is again, efficient, now this is for supporting efficiency as a clean energy technology, and this is a revolution that is happening in front of our eyes. In the United States we’ve gone from virtually no deployment to about 80 million deployed just in something like two years. It’s happening around the world. It’s happening in India, et cetera.

And these are technology-driven revolutions, really, that we need to capture the benefits of but also need to keep working at and extending so that we can have the kind of new energy economy that we will need, a very very different energy economy that we will need by mid-century.

Finally, in terms of being in a place like Nazarbayev University, and I did have the pleasure of having, unfortunately a curtailed tour, but still a very interesting one and seeing what this university is doing to build up, I went through the robotics laboratory, both the undergraduate teaching laboratory to see these facilities at work, and I’m talking about the students in particular, to work on the tremendous variety of enablers that will allow the energy system to operate.

For example, integration of renewables with grids, an area where we are, we have been working actively with Kazakhstan. Just last week the ISTC, now located here in Astana, sponsored a delegation from Kazakhstan to the United States looking at those issues, an area where we will collaborate more.

But it’s also areas such as inventing the advanced manufacturing techniques of the future. We’re going to need those techniques, let me give you an example, to build the kinds of components we will need for the super-efficient vehicles of the future. So at the Department of Energy we have a strong program that we’ve been building out over the last few years of advanced manufacturing, whether it’s for the [power] electronics that we will need for everything from solar to managing large grid power conversions. Composite materials. Smart manufacturing techniques. The whole integration of information technology with the energy system is really in its infancy.

So these are tremendous opportunities but also tremendous needs that we’re going to have to have the enormous energy system of the world have a transformation of the type that we are talking about on a period of decades if not centuries. So these kinds of activities are just absolutely central.

I’m going to end with just one more example. We still don’t know where we’re going, but we’ve had very interesting discussions here in Kazakhstan the last two days around driverless vehicles.

Two years ago I wouldn’t be surprised if there was no one in this room, because I certainly include myself in that group, that could foresee the incredible rate at which driverless vehicle technology has evolved. It’s gone from “you’ve got to be kidding” to have these vehicles on the roads.

Now the technology has actually outpaced the policies and the regulations. Who’s liable for an accident, for example. But this is an example of a new technology that can fundamentally, it builds on electricity-enabled technology. It obviously builds upon information technology and sensors and [static on recording] and all the things that many of you are studying and do in the laboratory. But this is an example of going beyond the traditional paradigm where innovation and energy technology typically has not provided any new services to customers, that is a photovoltaic electron looks the same when you flip your switch as a coal electron. It’s cleaner, it’s a better technology, hopefully it will be cheaper, but it does not provide anything new to the consumer. Something like driverless vehicles, that’s brand new. It’s like cell phones. Just giving completely new possibilities.

What I want to do is to encourage you, if you think about breakthroughs like that, you shouldn’t just stop at the vehicle because those vehicles deployed massively in urban environments should challenge the whole way you think about the urban environment. It’s quiet. There’s no pollution. We get from A to B while you’re doing something else. Those who maybe don’t have the capability of driving become much more active and functioning in society. So these are tremendous possibilities.

I think we are going to be seeing, again we are seeing, we need to see to address this, in this challenge of climate change, we will need to see a tremendous technological pace of change, and I think it’s very important that all of you think about how you will play in that. Whether it’s in technology innovation or policy innovation or business model innovation, all of these are going to have to come together.

We will continue to build our partnerships with Kazakhstan as one part of that collaboration, and indeed, it’s been really interesting and I would say [straightforward], earlier, just before coming here we had a meeting with the President and his enthusiasm and his deep thirst for learning more about this clean energy and these possibilities was really very very reassuring that I think all of us will be working together on this kind of technology advance to solve our big problems, climate and again, as I said earlier, nuclear security as well in which we will remain very very strong partners with Kazakhstan.

So thank you very much. I really admire what’s happening here at Nazarbayev University, and we were talking with President Katsu in fact about some opportunities that we might even be able to pursue over the next years.

Thank you.

Voice: Thank you very much Secretary Moniz, and thank you very much Minister Bosumbayev. We have a few minutes, so let’s start with the Q&A session. Who wants to be first?

Audience: Hello, everyone. I am thankful for your presentation and speeches. My name is [Manja Arif]. I am a graduate student at Nazarbayev University’s Graduate School of Public Policy. And as Minister Moniz mentioned today, we are going to challenge both political people in policy formulation as well as the technology guys in the laboratories to come up with more cheap and more advanced technologies in the future so that society will benefit from it.

And my question is, how international relations will they address this issue, raised, as you mentioned to the technologists. Because currently technological regulations are independently regulated in the international level from the policy and public, from public perspective is differently regulated. How do you see in the future how this integration is going to join together and to make it easier for society to understand the rules of the game?

Secretary Moniz: A difficult question.

The large-scale kind of climate policies, then I personally believe that we will need to evolve and many of our countries including my own, are not yet ready to evolve to a simple, relatively simple system that is economy-wide. And the one example of how one would do that is the simple idea of a price on carbon emissions. There’s a lot of support for that. You saw that in Paris. But it’s also the case that I think many countries are not quite ready to go to that economy-wide approach.

So in the meantime, let me talk about the United States as an example. There are, President Obama put forward a very strong program that will, with hard work, meet our targets in the 2025 and 2030 time frame and 2020 time frame as well, for carbon reductions. It is based upon looking at different sectors. So there are policies for transportation, like requiring highly efficient vehicles or requiring some biofuels. There are policies for power plants, like meeting the emissions to start with, let’s say more typical of natural gas plants rather than coal plants without some carbon capture or in higher efficiency. There are other policies for the efficiency requirements of appliances and other equipment.

So we do all of that, and I think many countries have approaches that look at different sectors in different ways, and this is important. Eventually, as I say, I think one will need to bring that together into a simpler economy-wide approach.

I’ll just end, not going into a lot of detail that those broad climate policies are very important, but it’s then also going to be important as you go to countries and in some cases, including ours, to states and localities, to have regulations that do not provide artificial barriers to the deployment of certain technologies.

Again, I’ll use the example of a roof top solar system. So it’s distributed generation, et cetera, et cetera. We are at the point where the costs can be dominated by getting local permits. For example, do you have to have the highest grade electrician come by to do something or can you, or will you be allowed to just plug it in? That’s a big difference in cost, for example. That’s just one example.

Right now in the United States we have a huge battle going on between established utilities and rooftop solar owners over the way in which the rooftop owner is compensated for sending electricity back to the grid. So those are examples that it’s fine, once you work out the high level policy you still have to work out these local issues.

My last observation, I’ve gone on too long, is to say this last example I gave of the utility versus the distributed generation owner is a good example of business model innovation that is needed. The traditional utility model will not work very well at least in a world of new technology and things like distributed generation.

So there’s a lot of things to do even as we in the laboratories keep inventing the new technologies.

Audience: My name is [Alashir] and I’ve got some questions.

The first is how does the USA plan to cut the usage of the nuclear energy?

The second is what are the plans to reduce the amount of carbon dioxide in industrial regions of China and India?

And the third is how the experience, how do you assess the experience of Germany in green technology?

Secretary Moniz: I can’t remember your first question anymore. [Laughter]. No, the first question was on nuclear, right?

Sorry? Oh, how to get rid of nuclear. Is that what you said?

Audience: — On USA side, reducing nuclear kind of energy.

Secretary Moniz: Okay, so we do not have plans to reduce reliance on nuclear power. First of all, let me emphasize that the government in the United States does not determine the market share of any technologies. There are rules, for example, obviously, I said earlier I would look forward to something that has an economy-wide approach to limiting carbon emissions. When you do that through any mechanism you will favor low or zero carbon technologies. But what exactly the marketplace decides to choose is up to the marketplace.

The Department of Energy, what we do is we support the research and development and demonstration of all technologies that can contribute in a low carbon world to make them available to the marketplace.

Now nuclear specifically, we think is going to be part of a low carbon future. It will be different in different countries and it will be different in different parts of our own country. So right now we are building some new nuclear power plants in the southeast of our country and not elsewhere. We are also developing new innovative technologies for much smaller power plants, so-called small modular reactors, which may be very attractive if they’re built in, particularly if they can be built in factories with all the quality assurance that comes with a factory environment.

So we believe nuclear is going to be part of the future low carbon solution.

Could you repeat, what about China and India? What’s the specific issue you’d like to —

Audience: I’d like to know how are the international plans to reduce the amount of carbon dioxide in industrial regions in China because they are the most countries that produce this carbon dioxide.

Secretary Moniz: Right. First of all, let me talk about China first. China has been very forward-leaning in discussing the climate challenge. In fact, frankly, it was the joint announcement by President Obama and President Xi in Beijing in November of 2014 that really changed the whole debate about climate change leading to Paris and I think was largely responsible for reaching I think a stronger outcome than many had thought. Weaker outcome than many had wanted, but stronger than many had thought.

So the Chinese are moving forward. We don’t know yet for sure, but the fact is the last two years their coal use has gone down and so we can speculate whether coal has peaked or not already, but whatever the case, they are working on that. Of course they are doing so not just for carbon emissions, but for pollution which remains a tremendous problem in China’s cities.

The Chinese have put in place aggressive standards for efficient vehicles. They intend to adopt a cap and trade system. So you know, I think they have put forward a goal of 20 percent non-fossil energy by 2030, which if you think about what that means in a country of that scale it’s rather amazing, and they are working it.

So I think that China is committed to doing this. It’s a challenge for all of us. Certainly it’s a big challenge for them.

India is in a less-developed situation and I will just say there, and leave it at this, that when we spoke with the Indian government and Prime Minister Modi about Paris and innovation, he said look, if innovation continues to drive the cost down we will get more and more ambitious in our goals as time goes on. So that goes back I think to reinforcing this innovation theme to bring along the less-developed economies.

Isn’t there a limit on questions per student? [Laughter].

Look, briefly, Germany is committed to the nuclear phase-out which I have every reason to believe will occur in Germany. They moved very early on with a very aggressive program for introducing wind and solar with subsidies that were probably, were just hard to sustain, particularly as deployment increases. So they had some roll-back. Other countries as well. Spain, Italy, et cetera there.

But I think look, I’m still optimistic because first of all Germany has gone a long way towards managing the integration of wind and solar into the grid. They’re maybe not making as much progress on coal as we and they would hope at the moment, but fundamentally it’s going to come as these costs come down and Germany’s [energy vende] I think will be sustained as a policy there. But again, I want to stress, different countries are going to find different portfolios for meeting their low carbon requirements.

Audience: My name is [Benyazak Saliva] and I’ve just finished my thesis report for my final [undergraduate] here and my thesis report was about the integration of renewable energy sources, storage demand and weak grids. Basically I took the village that is situated in Kazakhstan, it’s a real isolated village that has no power supply, basically remote village let’s say. And during my studies and all the research I’ve been doing, I was kind of interested, right now in Kazakhstan per capita carbon emission is not as high as let’s say in China or any other countries, but nevertheless the government is forcing to develop all these renewable energy sources development, technologies, et cetera.

So the question is, what is your recommendation? Should we build like localized renewable energy sources? Or should it be like I don’t know, the whole system for the whole country? But at the same time, the country is huge. It cannot transport the energy through the transmission lines because we have all the losses that are occurring, and that means that the cost is getting higher and higher which makes the renewable not feasible comparing to the traditional ones.

So what’s your suggestions? What’s your ideas how to implement the renewable energy sources in Kazakhstan in terms of this huge territory?

Secretary Moniz: I think the, I’m going to ask Minister Bosumbayev to comment on that in Kazakhstan. [Laughter]. Would you like to do that now or should I say a few words? Okay. I’ll say a few words and then hand it over to you.

Let me talk more generically and then my good friend can talk about Kazakhstan, about the issue of addressing the energy needs of isolated communities. They may be in Kazakhstan. I can tell you in the United States they are in Alaska, in Africa, India, it’s a common issue, how to supply energy to isolated communities for which building large expansive infrastructure over enormous distances is just not going to make sense.

So obviously we’re talking about I think distributed generation and probably micro-grids at the community, or sometimes interlocked communities level.

In terms of the energy sources, we have to remember what we are comparing against. Typically the energy services that are available in those places are very expensive. Either directly, for example, the cost of bringing diesel fuel to a remote village is very expensive typically. There are other kinds of expenses like environmental impacts through some of the traditional sources.

But I think the renewables clearly in most places I think have to be an important solution. But typically in a hybrid system, integrated ideally for example if it’s available but often is not, something like natural gas systems. But I think renewables and storage, energy storage makes huge sense.

But a lot of times it’s very specific to the conditions. For example, I’ll go to Alaska. We did a project there which is going very well in terms of putting a what’s-called hyperkinetic, a turbine in a river the village is near to. And that is providing may megawatts of power. It’s looking to be reliable and not killing fish, which is important.

So again, I think one has to look at the local opportunities, the local resources. That’s an example of a renewable hydrokinetic resource that makes sense there.

But that’s the spectrum of things that we are looking at. Again, we have our own issues with Alaska to deal with.

Minister?

Minister Bosumbayev: Yes

Audience: Hello, my name is [inaudible] and I’m a biology student.

I have a question about [carbon] policy. So there are a number of ways of assessing our success in finding [inaudible], but the one that we are using is a two degrees’ policy. So do you personally believe the two degrees’ policy is efficient way to show our success? Or [promote] climate change?

Secretary Moniz: Well, the two-degree policy I think is very helpful in putting out in a simple way the kind of challenge we need to meet. Especially when two degrees is often then translated into something like 450 parts per mission concentration, recognizing that that’s not a direct correlation because any particular concentration has a probabilistic distribution in terms of temperature. But nevertheless the two degrees I think captures the kind of ambition as I said we’re going to need over time to get there.

The caution that I’ve always had with it, with any choice of, I don’t care whether it’s 2 or 1.8 or 2.2, choosing one number. The only caution is that it not discourage the kind of push we need.

Again, I am all for trying to get to these low emissions and low concentrations. I think it’s very important. And in fact I’ve talked a little bit about mitigation, reducing emissions, but if we don’t succeed — the more we don’t succeed, the more we’re going to have to pay also for adaptation which we are already seeing the need for.

So it’s very important.

But on the other hand, one should not underestimate the importance of making substantial progress towards the kind of goal we talked about, say 450 parts per million. I don’t want this misconstrued, even if we didn’t get there because I want to get there. But making substantial progress, relative to the business as usual approach, largely eliminates truly catastrophic outcomes.

If we don’t do anything, you know, we’re probably talking six, seven degrees Centigrade which I think, which every expectation is would not be very pretty at all. But when you think about, I’m sorry for getting — this is a technical university. So when you think about the probability distribution of temperatures that would arise from certain, from any concentration level, what’s very important is once you start getting down to reasonable levels, let’s say 550 parts per million rather than 450, you essentially eliminate the probability of having a very high temperature rise. Maybe it would be 2.5 degrees or 3 degrees versus 2 degrees. That’s not good but it’s a hell of a lot better than 6 or 7 degrees.

So I think it’s always a difficult argument. On the one hand, the argument is look, we’ve got to do as well as we can. On the other hand, we better do very well. And the two degrees captures, I think and makes a nice reference frame in the public debate for the kind of ambition we need.

Audience: My name is [inaudible], I’m a PhD student here at Nazarbayev University and I have a question for you sir, — QUESTION IN RUSSIAN

Minister Bosumbayev: ANSWER IN RUSSIAN

[Applause].

Voice: Thank you, Mr. Minister. We have time just for one last question.

Audience: —

I want to ask a question, here. What is the role of [policy] in global climate change policy making? Some countries are more [comprehensive in] local policies, and others which we have [observed] are less so. This is a challenge by itself because local [interests] do not have a strong voice when they are opposed by projects which are favored by [government/powerful] interests and are harmful. And how can we interact with these kind of problems considering [the strong forces that promote these projects]. Thank you.

Secretary Moniz: Is that a question for me? [Laughter].

Audience: Yes.

Secretary Moniz: So I understood the question to be basically how do we advance the climate challenge in different political systems. Correct?

Audience: Yes.

Secretary Moniz: I would say in different ways. [Laughter].

I mean in Paris, again, the commitments made the INDC’s national commitments, you know, were different not only in numbers but in nature. Again, some countries like the United States were proposed specific targets, numerical targets for carbon emissions. Sometimes there were statements about carbon intensities. So carbon emissions per unit of economic activity. Sometimes like with China I mentioned earlier, it was stated in terms of when would be the last date by which carbon dioxide emissions would peak, and a specific amount of alternative energy. So all different kinds of commitments.

I haven’t thought about this systematically, but my assertion, my guess is that the variation probably has less to do directly with political systems than it does with stage of development. Economic development.

Now that in turn may have some correlation with the political system, but I would think it’s more a question of that stage of development.

Again, India again was very different commitments given its stage of development, and of course we can go to the least developed countries in Sub-Saharan Africa or whatever. I think it’s development, personally, although that would be a good thesis to do because I, I certainly haven’t studied it directly.

Our own political system is one where it’s had a very strong influence because as you undoubtedly know, there is not a chorus all singing from the same book in terms of policy prescriptions. That’s why we have right now a strong policy but one that is based upon administrative, that is executive action that is already authorized in law as opposed to a legislative solution that would do what I said earlier I think needs to happen eventually, which is a simple economy-wide approach.

So I think there’s internal politics, there’s the macro politics and forms of government. But I think the stages of development are probably a bigger indicator.

President Katsu: Thank you very much.

I want to thank Secretary Moniz and Minister Bosumbayev. Thank you very much for your visit. Thank you for trying to really respond to the questions of our audience. And hopefully hearing how well you regard your friendship with Mr. Minister. Perhaps you will be coming to Kazakhstan quite often. And we love it. [Laughter].

In 2017 there will be an Expo in Kazakhstan, and we certainly look forward to [having you return].

Secretary Moniz: In my driverless car.

Voice: Thank you very much.

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