"World of DaaS"
Jason Bordoff - Shale, Solar, and Global Energy Futures
Jason Bordoff is an expert on geopolitics, energy security and the clean energy transition. He is the Founding Director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, and he also held senior roles in the Obama administration, including on the National Economic Council, and the National Security Council.
In this episode of World of DaaS, Auren and Jason discuss:
- The future of solar
- How shale oil transformed US energy
- Critical minerals and energy security
- Realities of the clean energy transition
Looking for more tech, data and venture capital intel? Head to worldofdaas.com for our podcast, newsletter and events, and follow us on X @worldofdaas.
You can find Auren Hoffman on X at @auren and Jason on X at @JasonBordoff.
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
Jason Bordoff is an expert on geopolitics, energy security and the clean energy transition. He is the Founding Director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, and he also held senior roles in the Obama administration, including on the National Economic Council, and the National Security Council.
In this episode of World of DaaS, Auren and Jason discuss:
- The future of solar
- How shale oil transformed US energy
- Critical minerals and energy security
- Realities of the clean energy transition
Looking for more tech, data and venture capital intel? Head to worldofdaas.com for our podcast, newsletter and events, and follow us on X @worldofdaas.
You can find Auren Hoffman on X at @auren and Jason on X at @JasonBordoff.
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
Hello data nerds. Welcome to World of Das. I'm your host, oren Hoffman, ceo of Safegraph and GP of Flex Capital. I discover more episodes. Get weekly data as a service news at worldofdascom that's spelled worldofdascom. Hello fellow data nerds. My guest today is Jason Bordoff. Jason is the founding director at the Center on Global Energy Policy at Columbia University School of International and Public Affairs, where he's a professor of professional practice. He's also on the faculty of the Columbia Climate School, where he was the co-founding Dean Emeritus. Jason, welcome to World of DAS.
Speaker 2:Great to be on. I love listening to it and it's a pleasure to be here. Jason, welcome to World of Deaths.
Speaker 1:Great to be on. I love listening to it and it's a pleasure to be here. Thanks, oren, I'm really excited. Solar energy is growing like crazy. It's much faster than even the most rosy projections, like 20 years ago. What's driving that trend?
Speaker 2:Well, we've had a lot of concern for climate change, a lot of support for clean energy, particularly in the US and Europe. But a big factor driving that is China and how significant the role of investment in China has been to build supply chains at scale, just massive industrial complexes, to drive the cost down. So in the last decade we've seen the cost of solar depending on which piece, residential commercial utility scale you're talking about falling 70, 80% just in the last year, something like a 30 or 40% decline.
Speaker 1:When you install like a solar, whether it's on the roof of someone's house or a big solar power plant in the Midwest or something like that how much of the cost is the actual panels versus all the other maintenance of putting it together and maintaining it and all the other stuff?
Speaker 2:Well, it's changing because the cost of the modules and the panels has come down so significantly.
Speaker 2:So the soft costs now the labor interconnection with the grid overhead often dominate the current system costs, and improvements in one area can affect improvements in other areas, like high efficiency modules, reducing labor and material costs by requiring fewer products to be installed, so that ratio changes as the cost of the technology comes down.
Speaker 2:We should remember, when we talk about the cost of solar though and not all metrics for capturing and comparing the cost of electricity, not all electricity is the same. So today, the baseload electricity cost from coal is roughly $100 a megawatt hour. Let's say it's obviously different in different places. Cost for solar can be as low as one-tenth that amount. Solar is very good at producing very cheap electricity that is not available all the time, and that's an important caveat, because we do need electricity to be available all the time. We need the grid to be perfectly balanced. So when you think about the cost of solar, it is important to think about the cost of the additional pieces of the grid that need to be built, whether it's storage or other forms of generation, to try to make sure that you're taking all of that solar and making sure that you have reliable, what's called dispatchable electricity that can be available whenever you need it.
Speaker 1:Because the costs of the panels are going down so much more and more of the main cost is the labor and connecting to the grid and all those other things. Even if the costs of the panels end up at zero, there's only so much more it could fall at this point. Or is there still a lot more that the costs can fall?
Speaker 2:I think there's still more that prices will continue to fall. Estimates I've seen could fall as much as another 30, 40, 50% in the next five years or so, from something like $250,000 per megawatt to around $150,000. So we definitely have the ability to continue to drive the cost of solar down. The technology is improving. Different forms of solar technology perovskite and others are coming forward.
Speaker 1:It can capture it better. It can capture the sun, those types of things as well.
Speaker 2:There's both improvements in technology, the actual way you're doing it. We're going to see windows that just look like regular windows but are actually capturing solar energy and turning into electricity and things like that. That's so cool. But then just the efficiency, the scale, and again, that is why it's important to remember that China has been instrumental in bringing down the cost of solar worldwide. That is now a complicated factor because we see in the US and Europe growing concern with the dominant role that China has, not just in solar, PV, photovoltaic, but electric vehicles, batteries. We can come to that whole conversation, but that's a big part of the conversation.
Speaker 1:Now, if we start to see solar grow another 10x and it becomes a big, big portion, what are the kind of like big implications besides for maybe like the cost of energy going down?
Speaker 2:Well, first, it would be a great thing to see solar grow 10x, because that's the kind of growth we need to get to our climate goals. And we can come to that and talk about where we are in this energy transition. But the emissions are still going up. They're not even falling yet for all the growth we've seen in clean energy oil use, gas use, coal use are still going up. When you look at scenarios like net zero emissions by 2050, which is roughly when people talk about limiting temperature rise to 1.5 degrees Celsius, you can model. There's different assumptions you need to make, but broadly speaking, we would need, in a scenario like that where we meet those climate goals everyone talks about, for solar electricity to increase roughly 5x by 2030, maybe 20x by 2050. So we need that order of magnitude growth and it would mean we're getting on track at least with that particular technology.
Speaker 2:There's a lot of other tools in the toolkit for trying to bring emissions sharply down, but I do want to come back to the point I made before, because it is also important to consider the other implications of this growth. Solar takes up a lot of land. I mean I had to make sure that people are comfortable with that Just give you an example, both wind and solar. If you look at a case where the United States gets to a goal like net zero by 2050, modeling from Princeton shows that the US would need wind farms that cover an area equal to Illinois, indiana, ohio, kentucky and Tennessee put together. The solar farms would cover an area equal to Illinois, indiana, ohio, kentucky and.
Speaker 1:Tennessee put together. Oh my gosh.
Speaker 2:The solar farms would cover an area the size of Connecticut, rhode Island and Massachusetts put together. And that's if we make the most cost-efficient decisions for where to put all of that and obviously not in my backyard means we might not do that I mentioned before. Solar is a great way to make electricity that's not always available so-called intermittent energy Not necessarily a great way to make electricity that's not always available. So-called intermittent energy not necessarily a great way to make cheap electricity that is available all the time. So to get 10x increase in solar to your question and make sure electricity is available whenever we need it, we need to overbuild renewables and build a lot of transmission, way more than what is needed, because sometimes it'll be available in one place when it's not in another.
Speaker 2:Or we need to build batteries or other ways to store energy, and the scale and magnitude of what's required there, I think is hard to grasp your head around. Today you can do that for hours. It's harder for days, weeks or months, and this is a big issue. I think the amount of solar energy in Europe in the summer is more than twice what it is in the winter. So you really need to overbuild or the amount of storage, you would need the Tesla Gigafactory, a $5 billion battery plant. It's the largest battery factory on earth in Texas. Its annual output stores three minutes of US energy. So it just gives you a sense of how much we need in terms of existing technology, and the technology will get better and it doesn't have to be batteries or other ways to store electricity to get something like 10x growth. But that's what we need to do, along with lots of other technologies. We're not going to get to our climate goals with solar and wind alone.
Speaker 1:When I lived in California in the summertime, say midday, 1pm or so energy prices often went negative. I always set my Tesla to charge when they went negative and stuff like that. You could see a scenario where things from a technology standpoint maybe training models and stuff like that maybe they're not cost-efficient to do at night, but maybe at peak solar time they become very cost efficient to do and we could start to rewire society to do things at certain times, assuming that there's no storage capacity. How do you see the landscape changing?
Speaker 2:Well, I think there's huge potential for that. So there's a lot of demand that can be shifted in time of day when you charge your car, when you run your dishwasher or, as you said, in bigger scale, when you think about big tech and data centers and how dramatic the growth in electricity need is for that, not all applications and you and many of your listeners would know this as well as anyone but some of that doesn't need to run 24-7. And actually, excess cheap solar can be a pretty good way to do that. Not all models need to be trained at a chosen time depending on the application in which the model's being used. That requires technology. That requires a system, frankly, that is a little more sophisticated than the one we have today.
Speaker 2:It's difficult for most people today, just in their daily lives, to shift electricity. You can get, maybe, a smart meter like a Nest thermostat or something like that, but we need a much better way to have connectivity with the grid, where the car that is in your driveway is drawing electricity. Sometimes it's providing electricity to the grid. These are big batteries that are sitting there and there's a whole set of things for demand response. I think demand response can be a really powerful way to help balance the grid in a world where we have much more intermittent electricity. We just need the systems and we need the pricing and we need the incentives. We need people to think about it. Today, most people barely think about the cost of electricity. So to be conscious of that in ways that give the consumer some control over that. I think there's a lot of opportunity there.
Speaker 1:There's been a lot of talk about the problems with the US grid and that it's antiquated. How real are those discussions and how much do we need to invest there?
Speaker 2:We need to invest a lot, especially to see that kind of growth in renewables. We're just taking, you know, an energy system that developed over 100, 150 years. Wires and pipelines and everything about our energy system and energy transitions in history have been slow. You read the literature from energy historian like Bakalov, shmil or something. 60, 70, 80 years is the typical timeframe it takes.
Speaker 1:It was still dominant for a while.
Speaker 2:From coal and the industrial revolution and the steam engine to oil and et cetera. Now we're trying to do this in the span of maybe 20 or 30 years if we want to take these climate goals seriously that are so important. So it's just happening so much more rapidly than one can imagine and we have a grid today that really hasn't changed a huge amount from when it started to be built after Thomas Edison 100 plus years ago. So there's new technology that needs to be built and just so much infrastructure. I think that it's hard sometimes to wrap your head around the scale and magnitude of the infrastructure that has to be built. Doing this energy transition means so much steel in the ground and it's challenging. It takes an average of 10, 15 years to get a new transmission project across the finish line, if you can. There's an interconnection queue the pipeline of projects almost all renewables that are waiting to be connected to the grid today. If you add up what's in the queue waiting, it's twice the amount of electricity we generate in the United States today, and we just got to figure out how to get that online faster.
Speaker 2:It's really hard to build things. Different states fight with one another. People don't like transmission lines crossing their land, their states, their backyard, the government environmental permitting process and it is important to have a good environmental review process but it is very slow, it's very cumbersome, it can be subject to abuse by people who want to stop projects. So there's a whole discussion in Washington now about so-called permitting reform and we just need to get a lot better at building infrastructure and putting steel on the ground much faster, because that's so important to this energy transition and so much of the conservation movement.
Speaker 2:I'm a trustee at the Nature Conservancy in New York, which I'm proud of. It's a phenomenal organization and it's spent decades and decades and decades often trying to stop projects from happening because of the environmental consequences on ecosystems, on wildlife, and that is an important goal. We can't sacrifice that. But we also have to recognize that this energy transition means we have to build at scale in a way just we have not before and we kind of lost muscle memory, whether it's roads and bridges and the big projects like the Brooklyn Bridge, where I am, or something. We just don't do that anymore as a country and that's what we have to do for this energy transition.
Speaker 1:Is part of the reason that solar has grown so fast because people are worried about the climate, or is it just because it's a very effective, cheap way of getting energy? Whether you care about climate or not, it seems like a lot of people who don't care about climate are investing in solar too.
Speaker 2:Yeah, I think increasingly that's the case. So I think this gets a push early on from government investment and R&D in the early days. But I think increasingly people are making choices and I don't want to overstate this. As I said, coal use is still growing globally, gas and oil use are still growing globally, so we can come back to what the whole state of the transition is.
Speaker 2:But often, if you're looking right now at what's the most economic way to add new generation capacity to the grid around the world on cost even often accounting for that intermittency and certainly with some government support in different parts of the world, renewables just win. They're the cheapest form of electricity. In a sense that's what we need to get to in this clean energy transition we're seeing around the world. Look at the European elections. We'll see what happens here in this country in November. But voters are pointing in polls to the cost of energy, the perceived cost of this transition, as one of the factors. That's kind of encouraging support for right-wing parties or populist parties.
Speaker 2:I can fill up rooms and rooms with papers from economists arguing that the most efficient way to deal with climate change is a carbon tax and our politics has told us that's going to be very difficult to do, not just in this country, but think about the billions of people that use very little energy at all and make their energy more expensive. So, if we're going to make this transition work not in every case some things like flying an airplane with zero carbon emissions is going to be probably more expensive, but in a lot of cases whether it's vehicles, transportation, electricity we want to get to a point where the green premium, as Bill Gates has called it, the amount you're paying to make it green is as low as possible or even negative.
Speaker 1:The real estate assets in the US that are rising the fastest in price are the beachfront properties on the East Coast of the US Florida, martha's Vineyard, long Island, new Jersey, maryland and those seem like the ones that would be most negatively affected by climate change. Why is this disconnect happening? Do people just not believe in the climate change? Do they this disconnect happening? Do people just not believe in the climate change? Do they think we're going to solve it in a few years and so you're not going to have as many hurricanes? What's the reasoning why the price has gone up so much?
Speaker 2:I think it is not top of mind for a lot of people. There is still uncertainty, maybe skepticism, about the connection between extreme weather events and the sea level rise that some of the worst predictions of climate change bring about.
Speaker 1:A lot of those people are the biggest donors to climate change things. The people who have that property. You mean? Yeah, yeah, exactly, People who buy properties in the Hamptons are probably the ones most likely to be the climate change advocates. It's very trendy among that crowd.
Speaker 2:I mean, these are attractive places to live. Michelle, my wife, who you know we have a small, modest place for the weekend down at the Jersey Shore, just south of New York, and I remember when we were purchasing the land and built a small house there. It's maybe a 15, 20 minute walk from the beach, so it's not right on the beach there. It's maybe a 15, 20 minute walk from the beach, so it's not right on the beach. Trying to find information about how vulnerable is this? What is coming? It was very difficult to get information about that. Then I talked to the builder about trying to elevate things. The guy looked at me like I had three heads. He's like what are you talking about? So I think there's just not real awareness of this.
Speaker 2:You look at literally yesterday and today, with Hurricane Beryl barreling down on Texas, the earliest ever recorded Category 5 hurricane. But hurricanes have happened for a long time, so are they being made worse and more severe gradually over time by the impacts of climate change? Yes, but I think there's no one hurricane that happens just because of climate change. So it's hard for people to kind of understand the connections. But they are there and you know, the last time, the surface of the ocean was as warm as it is today was 120,000 years ago. At that time the surface of the ocean was 25 feet higher than it is today. That's 19 feet higher than the mean elevation of Miami, and so there's uncertainty about all of these predictions. We can't tell you Miami is going to be 20 feet underwater at any given time, but it's clear that the direction is putting these properties more at risk.
Speaker 2:And then I should say, because I run a center with the word policy and its name policy often provides perverse incentives we try to provide. The government steps in to help people with flood insurance because the market is increasingly making it harder and harder to afford. A good friend of mine who's out in Santa Fe and said you know, they couldn't get wildfire insurance for their home, they had to self-insure. And then, often because of that, government steps in to fill the gap. But actually that creates a perverse incentive for people to keep building in areas that maybe we want to gradually pull back from or build in a more resilient way.
Speaker 1:Now the US is now often the largest producer of oil and gas. I think even 20 years ago I don't really think anyone would have predicted that. What is happening here, what's going on with this shale revolution and how does that trend going forward?
Speaker 2:The word revolution is warranted. I mean, it's a really remarkable thing that happened in the United States over the last 15, 20 years. So, as you said, not many would have predicted it. When I arrived in Washington to serve in the Obama White House 2009, I think Washington was just starting to realize something was happening with natural gas production. You should remember, if you go back a few years before that 2004, 5, 6, there were 10, 20, 30 projects being permitted for people who wanted to spend billions of dollars building projects to import liquefied natural gas from the rest of the world countries like Qatar.
Speaker 1:And there was all these people talking about peak oil. Back then too, that was very common.
Speaker 2:Since oil was discovered in 1859, on my birthday, in Titusville, pennsylvania, roughly every 30 years the world has worried that it's running out of oil. And then some new innovation, some new technology comes along where we're able to extract it from places we didn't think possible or ways we didn't think possible. We've known that there's oil trapped in shale rock for a long time. The question was could it be extracted economically? And a few people saw that possibility. So you said, not many saw that 20 years ago.
Speaker 2:Well, there was a man named George Mitchell, who's the father, so known as the father, of fracking, and he spent the 1980s and 1990s experimenting and perfecting the technique ridiculed by many of his peers. Right, it's notable, it was not the Exxon and the Chevron and companies like that, it was the small innovators like him who figured out how to do this, sold his company in, I think, around 2000 or so, for a few billion dollars to Devon Energy, which realized he had figured out how to do something. It started with natural gas, which is more permeable, and we suddenly had a huge amount of natural gas in this country, more than we could imagine. And then that technology was applied to oil production as well, and the numbers are really striking. As you said, if you go back US oil import in around 2005, 6, 7, the US imported around 60% of its oil use. Today the US is a net exporter. So this is sort of a stunning turnaround and the US is now the largest oil producer in the world, larger than Russia, larger than Saudi Arabia.
Speaker 1:Why is shale exploration not really a big deal in most other countries? Why is the US such a special place?
Speaker 2:There's a couple of reasons for it. I mean, we know that the resource of shale oil exists in other places.
Speaker 1:Yeah, apparently it's very plentiful in.
Speaker 2:Europe right. There's some parts of Europe I think the biggest places would probably be Argentina, some parts of Latin America. There's a shale formation there known as the dead cow, vaca Muerta that has been talked about for a long time. Russia, china there are parts of Europe that have shale like gas in the Netherlands and they were trying to produce some of that. The UK has some, but there's a lot of resistance for environmental and other reasons community opposition to developing it there. One thing that's important to note about the United States is the incentive to make this work, because the landowner owns the resource in the United States. In most other parts of the world, the government owns the resource.
Speaker 1:The government owns what's underneath the land in most countries.
Speaker 2:Yeah, so the incentive in the US to lease mineral rights is something that you don't always find in other countries.
Speaker 1:You could imagine in China they could change that tomorrow to incent people to drill to explore shale. And for China, you can imagine, they're a massive net importer today. It would be in their best interest to make shale happen.
Speaker 2:For sure, and they face other challenges. As you said, if China makes a top-down decision in the government, they can make things happen pretty quickly, as we've seen with solar, electric cars, other forms of technology. They have some of the largest shale gas reserves. Actually, they lack the infrastructure to deliver that to market, so that requires a huge build out and pipelines and everything else. Water is a really key component for shale extraction. A lot of the shale resources abroad are populated in places where water is at premium and that can be an issue in China. Expertise, I mean, we did make this work in the US because of experimentation and a lot of small companies competing with one another and a lot failed, but some made it. You don't have that in parts of the world where there's one big state-owned company that often isn't necessarily as entrepreneurial as risk-taking, where the downside of failing is potentially high, and so that is part of the reason why the kind of entrepreneurial private sector spirit in the US, I think, made this happen.
Speaker 2:We talk all the time about the oil companies, so the oil industry, especially in the climate world too. We should remember the companies that come to people's mind Exxon, chevron, bp, the so-called super majors. There are, I think, seven of them, or what was known as the seven sisters. They're 15% of the world's oil and gas supply. More than half the world's oil and gas supply are nationally owned companies, companies owned by the state, like Saudi Aramco and others. Some of those are very good and very technically sophisticated, but many are not, and so it can be harder, because to make shale work in many parts of the world that we're talking about, you would need to work in partnership, I think, with some of the big global majors that really have great expertise in technology, and the service companies as well.
Speaker 1:For some reason, I still don't get it. It's now been almost 20 years since people started to really understand the Xiao revolution. Most countries, especially countries like China, are very good at taking a technology that may have been developed in the US and scaling it up. They've done that so many times in the past. This is so core to so many countries Security needs. It's core to their industrial needs, it's core to their economic needs. It's core even to their national pride needs. Why aren't more people investing in this around the world?
Speaker 2:Well, you also need the economics to work. In Saudi Arabia you can, in many parts of the country, extract oil for five, six, seven dollars.
Speaker 1:Yeah of course I understand why it's not happening in Saudi Arabia.
Speaker 2:Well, no, I'm just saying we're in an oil market now that is relatively well supplied, and so I think people look at the outlook and at some point these things go in cycles. So we just had a massive discovery in Guyana. Guyana is going to become one of the largest oil producers in the world, and that was 10 years in the making, and now it'll have oil production for probably decades to come. I think when you look forward Unless.
Speaker 1:Venezuela messes it up or something. Well, that's right.
Speaker 2:So there's geopolitics in all of these things. There's more uncertainty today about the outlook for oil. I think that is one thing genuinely different If you go back decades in the past, commodity traders obviously made money because there's unknown fluctuations in price. But if you said to someone in the long run, where's oil demand going?
Speaker 1:Everyone knew it was going up, not down. Today that's actually in question. Oh, got it so like because 10 years from now there may be less oil demand than there is today. That actually could be a likely thing that could happen.
Speaker 2:Certainly possible. There's a lot of talk about peak demand. Some people think it'll happen in the next couple of years. Some people think it'll be in 2035 or something. There's uncertainty about exactly when, but the probability that oil demand is just going to march up at 1% to 2% a year, year after year after year that I think there's much more skepticism about.
Speaker 1:Okay, especially if this is like at least a decade project to invest in to start getting returns coming out of.
Speaker 2:Yeah, although it's interesting in the US and part of the reason I think you saw Exxon buy Pioneer for $60 billion, a big shale producer. Shale is so-called short cycle and that means US went from producing 5 million barrels a day to 13 million barrels a day. To do that, you need to continually frack new wells, because the decline rate is very fast. You frack a new well. You need to continually frack new wells because the decline rate is very fast. You frack a new well. You get a certain amount of oil from it, but the extent to which the oil coming out of that well diminishes is much faster for shale than it is for something like a conventional project or an offshore project.
Speaker 2:There's something desirable about that. If you're uncertain about future oil demand, you might not want to invest tens of billions of dollars in a new offshore project that's going to take 20 years to pay back. You want to invest in things where you can shut it down or ramp it up quickly, because we're in a world of new uncertainty. So I just think when people look at where the market is.
Speaker 1:In some ways also like that would stabilize prices, so prices would never get too low, never get too high. If you could like, ratchet up and down Shell that was the idea shale first started.
Speaker 2:I remember an op-ed by Alan Greenspan in the Financial Times arguing that, and I think that's become a bit less true over time as there's been more consolidation. When you take these massive global companies like Exxon, with large balance sheets, they have a certain production plan. They're going to probably stick with it through cycles, but we did see that in the pandemic, for example, the US production went from 5 to 13 million barrels a day and then it collapsed from 13 to 10, because for a short period of time the world just didn't want oil, because we shut down the global economy to deal with the pandemic. And you saw very quickly in the United States in particular, companies, idle workers, idle rigs just say we're going to stop and then production actually fell really fast in a way that would not be the case in many other parts of the world.
Speaker 1:Germany moved very quickly to transition its energy system after Russia stopped selling gas to it in 2022. What allowed Germany to move so fast in response to Russia?
Speaker 2:It's not unrelated to the conversation we were just having, which is the role that shale gas in the United States played in the global system. So, as I mentioned, the United States in the mid 2000s was going to become a huge importer of liquefied natural gas. So you can move natural gas by pipeline. That's kind of the easier way to do it. But when you move it by pipeline it's point A and point B. They're connected. You can't shift it to some other place. You can take that natural gas and super cool it and put it on a tanker and then you can send it anywhere that has the ability to regasify it, to heat it back up, and that infrastructure is getting built out more and more. So you saw, and the US help move this along. We can argue about whether it was good or bad. There's a pause, pause the administration under Biden has put on it like people concerned about the climate impacts of it. But what we saw is that-?
Speaker 1:Why are people so concerned about the climate impacts of natural gas? It seems like natural gas is you know, of all the fossil fuels is the best for climate.
Speaker 2:Well, I think of the fossil fuels that's probably the case. There's uncertainty and people kind of argue about how much methane leaks when you're using natural gas in a leaky system that may have pipelines 100 years old or something. Methane, which is natural gas, if it is combusted, it is lower carbon than oil or coal. It is also cleaner from the standpoint of local air pollution. You go to India or Beijing. It's definitely better in that regard If you just emit it into the air. It's a very powerful and potent greenhouse gas. So we really have to get methane leaks down. That's one concern. And then the other concern is even if it's better than oil or gas, people argue that or sorry, oil or coal, people argue it's still not zero, it's still a fossil fuel, and we're kind of running out of time to get to net zero.
Speaker 2:So we can have a debate about whether you let the perfect be the enemy of the good. There's still a lot of coal. Coal is doing great. I mean, this is one story that kind of gets missed these days. We talked about how solar is doing well. Coal is doing really well too. If people wanted to invest in that and make a ton of money right now, the outlook for coal is frighteningly good. I say frighteningly for people who care about making progress on our climate goals. So it's just a question of timeframe. You say, like, can we diminish that timeframe, the role of coal in the next, say, decade or whatever, with natural gas? I think the answer is still yes. And then people worry that, okay, that's fine, that's the next 10, 15 years, but we're building infrastructure that's going to be there for 40 years or 50 years. And what do we do with that? If we have to get to zero, let's just move to zero carbon energy instead.
Speaker 1:That would be the argument that people would make, and I do think that there's a sorry go ahead. So the US really was able to supplement the decrease in Russian supplies to kind of on a one for one basis, or were there other things that Europe was able to do to survive the last couple of years?
Speaker 2:Yeah, so it wasn't just the US, because it's a global market, right, it's kind of like oil it's all a fungible global market. It's all a fungible global market. But because the US became such a large, we went from zero exports to roughly 14 billion cubic feet a day. The US consumes or produces about 100. So, just to give you a sense of scale and we're going to double that number in just the next couple of years that helped to contribute to a more flexible, more fungible, more liquid global LNG market in the past. Okay, it kept global LNG market In the past Okay, it kept the price down, kept the price down. And it also allowed market forces to work in a way that they didn't always in the past. Big, big producers historically, like Qatar. They had so-called destination restrictions. They had contracts that did not allow the buyer to resell it to other places. The US LNG export structure changed that and so it allowed market forces to work so that when Russia cut off gas supplies by pipeline to Europe, europe saw shortages. They saw the price of energy skyrocket to unprecedented levels, and then kind of markets work the way you would expect them to work. A tanker that was headed to China pivoted and some trader like Trafagora or someone else Vitol said we can make more money if we divert that into Europe. Europe had spent the 10 years prior actually undertaking a series of gas market reforms to build more LNG import infrastructure, to build reverse flow capabilities in its pipelines so that it had the ability to import more from the global market. That, of course, caused prices to go up for everyone all around the world, and the United States made up quite a significant part of the gap, because it wasn't a US government deciding to send energy to Europe, but it was just. That's how markets work. So, in response to the price signal, us natural gas went to Europe instead of Asia or somewhere else.
Speaker 2:That wasn't the only factor, to your point, demand also fell. Some of that was voluntary conservation, like people adjusting their thermostats. But we just put a paper out a month or two ago about the reduction in industrial gas demand in Europe. Heavy industry would get fertilizer, aluminum, glass paper. That really didn't paint a pretty picture for Europe and a lot of it was so-called involuntary demand reduction, meaning just high prices destroying industrial activity in Europe, and it's not clear that a lot of that industrial activity is going to come back or is coming back. Even though natural gas prices have fallen a lot, they're still expensive relative to pre-invasion, but obviously much, much cheaper than was the case in the past. So high prices do what high prices do and incentivize people to use less, destroy economic activity and force a manufacturing plant to idle or move somewhere else and pull in more supplies from the global market. And then we saw alternatives. We saw a little bit of coal being ramped up because it was an emergency. We also saw a huge growth in renewables being deployed.
Speaker 1:Now, speaking of Europe. In the last parliamentary elections in June, we saw the rise of anti-green politicians and a decline in pro-green politicians. What is your kind of takeaway from that?
Speaker 2:Well, I mentioned this earlier. I mean, I think it is a reminder that if energy affordability, reliability, suffers from how we go about this transition either in reality or just perception the first thing that's going to go is going to be broad public support for stronger climate action, and that's, I think, especially true in parts of the emerging and developing worlds that did not create the climate problem historically and use barely any energy at all. So people are angry about what they see as very high energy bills, and you see that in polling, you see that anecdotally when you talk to people, and I think they're pushing back on what they perceive as an agenda to transition to clean energy that's moved faster than it should because they're feeling it in their pocketbooks. I understand that. I think that's why we need to make sure that we're designing policies in ways that minimize those impacts. That was kind of the idea, I think, behind the Inflation Reduction Act, which was not raising prices or using a carbon tax, but just trying to make everything cheaper by throwing government incentives roughly a trillion dollars at these problems but obviously not every country can do that to try to make sure that we can make this as affordable for people as possible, because it's going to be very hard to accelerate.
Speaker 2:I do think it's important to remember that in the long run, I do believe a lower carbon energy system is one that increases, not decreases, energy security. We don't need a better reminder of that than Russia cutting off gas supplies to Europe or the volatility we see in oil prices still, or the importance of Saudi Arabia and OPEC in managing oil prices. So once we get that technology deployed and we start to see a rise in electric vehicles or heat pumps that use electricity, people can see more stability in their energy bills. These things can pay back over time increasingly quickly higher cost to not doing anything and the cost we're going to see from climate change, as we talked about before, with beach level, property and sea level rise and much more. But it's not free to have an energy transition either. There is a cost and we need to make sure that we're minimizing those costs and thinking carefully about both the politics and the equity and fairness of who bears those costs.
Speaker 1:There seems to be a reaction against these pro-green protesters where they'll go to a museum and throw paint on a venerable painting that's been around for hundreds of years or do these crazy antics. It does seem like they lose the public every time they do that. The public almost moves anti-green when they see those types of things. If I was anti-green I would actually fund these protesters. Everything they're doing an entire disservice. Do you agree with me or do you think they actually have some sort of strategy into what they're doing?
Speaker 2:I think there's a strategy. I mean, the question is whether it's a sensible one. And I agree with that. I would not destroy important historical artifacts, and I can't tell whether you raise support for your cause if you cause people to sit in traffic for hours, crazy gluing yourself to a highway. I do think, leaving aside specific instances of destroying historic works of art, which we should all condemn, we do need more social mobilization and we need more people taking to the streets to call for faster action on climate change. And this is like what the history of the environmental movement tells us the great book I read when I had COVID actually sitting there in isolation a year or so ago, by the historian Douglas Brinkley about the history of the American environmental movement through the 40s, 50s, 60s.
Speaker 2:The famous book by Rachel Carson about DDT, the smog in Los Angeles. We had several decades where we polluted the Hudson River, we despoiled the air and water and then there started to be more and more attention paid to that, but pretty gradual. And then, almost like all of a sudden, in the late 1960s, all of that angst came together. The first Earth Day in 1970, one out of every 10 Americans came out into the streets across urban and suburban, republican and Democrat, and kind of just said can't live like this anymore. We can't have air, we can't breathe, and water we can't drink and lakes, our kids can't swim and you have to do something about this. People in Washington, that's what led Richard Nixon not necessarily the greatest environmentalist, but it made sense politically to to create the Environmental Protection Agency, the Clean Air Act, the Clean Water Act, the landmark pieces of environmental legislation that we still rely on today.
Speaker 2:And the point of that, I think, is it does take social mobilization to call for change and raise the level of urgency about an issue. And I also think it's important because it's easy today, I think, to look at. We see this every day with large financial institutions, with companies. Many are pulling back on their clean energy goals because they're not being rewarded in the market, because voters are not happy about this, and I understand that. But I also think it's important to remember that environmental progress and social mobilization doesn't move in a linear straight line. It has tipping points. It faces disruption itself. I think that is coming. I don't know exactly when or where or how. It's going to be different, obviously, in lower income countries than higher income ones. The famous American economist Herbert Stein, stein's law so-called if something cannot go on forever, it will stop.
Speaker 2:And that's sort of how I feel about climate change. I thought recently about the famous quote in the Sun Also Rises by Ernest Hemingway, where that character named Mike is asked how he went bankrupt and he says two ways gradually, and then all of a sudden, and when we think about social mobilization to do something about climate change that policymakers and investors and corporate leaders have to respond to, it's going to happen gradually and then all of a sudden. I do actually believe that.
Speaker 1:You've also done a lot of work in critical minerals. What is the market dynamic there? How do you expect that to play out over the next 10 years?
Speaker 2:Well, we need a huge amount of so-called critical minerals, metals, for this clean energy transition. Some of it are rare earths and rare metals and minerals. Many are not. The amount of copper you need to build an electrified economy is staggering. An electric vehicle uses, I think, five times more copper than an internal combustion engine. Car can't build huge transmission lines and electrify everything without it. We're going to roughly double copper use by 2030. Today the current trajectory and we're nowhere close to being on track for our climate goals. The current trajectory and we're nowhere close to being on track for our climate goals. Nevertheless, what would happen if we were Now? Many of these are not rare.
Speaker 2:There's a lot of critical minerals in lots of parts of the world. We just got to get to work extracting them, but that's not easy. It takes, on average, 15 years or so to develop a new mine. There are huge challenges in a country like the US, which wants to become less import dependent, particularly on China. But mining is a nasty business in many respects and it's not clear to me that lots of people want mines all around their neighborhoods and backyards, and so doing it in an environmentally sensitive way, doing it in a way that respects native and indigenous communities. A lot of these resources in the US are located very close to Native American populations is really challenging.
Speaker 1:It's not just a mine, because then I assume you have to like post-process a lot of these things afterwards, so there's a lot of chemicals that have to happen as well.
Speaker 2:A hundred percent, and actually that is where China's dominance comes from. So people talk about China being dominant in critical minerals. They are in a few of them, like I think they mine 70% of the world's graphite. Most of the critical minerals are produced in Chile and Australia, cobalt in the Democratic Republic of Congo, but almost all of that 70 to 90% of the world's lithium, graphite, cobalt is refined and processed in China.
Speaker 1:Right. It gets sent all the way to China, sometimes thousands and thousands of miles away, to get processed, and then it gets sent back where it has to go.
Speaker 2:Yeah. So there's a lot of growing concern about what that means for China's role in these supply chains, whether that could be weaponized the way we were worried about after the Arab oil embargo. There are important differences between critical minerals and, say, oil. People often say I remember Joe Manchin during some of these debates on policy saying we don't want to go from dependence on oil in the Middle East to dependence on China for critical minerals, and there's truth to that. But these are pretty different things too. We depend on the daily flow of oil to keep the economy humming and cars and trucks moving and factories operating. Critical minerals are an input to a finished good. If there was a disruption in critical mineral supply, your lights wouldn't go out. Your heat wouldn't go out the way heat did in.
Speaker 2:Europe as much of like a variable cost on a day-to-day it would mean that new solar panels, new batteries, new electric cars would face backlogs, would face cost increases. There is an important difference there, but there's much more concentration with critical minerals. We mentioned before the largest oil producers the US, saudi and Russia. Each of those, depending on what you're measuring, is between 10% and 20% of world supply, the largest producer of certain critical minerals. Each country that is the largest producer in many cases produces more than half the world's supply.
Speaker 1:This is a tech podcast, and Mark Zuckerberg made some headlines earlier this year about how the amount of energy needed to train AI models in the future could be just massive. For one kind of training it could be a whole nuclear power plant. Do you see more investment going into private energy generation?
Speaker 2:Yeah, it's really interesting I mean absolutely and I think when you look at what the future of the electricity sector will look like the utility sector, these major tech companies are hugely focused now on making sure that they have access to affordable, reliable electricity and they don't want to depend on the grid for that. So so-called behind-the-meter investments building their own power generation capacity, perhaps building their own nuclear plants, depending on how that technology evolves I think is the direction that we're going to see. Utilities may become less important and private companies generating electricity even more important. We've got to think about what the broad, systematic impacts of that are, what that means for the overall grid. The numbers, frankly, are all over the place right now, and you can go back. I mean, I'm curious what you think too, because you're a student of this history. You look at the late 1990s. There were a million estimates for how the internet revolution was going to cause electricity demand to go through the roof, and that never happened because the technology got more and more energy efficient. So what do we expect to happen to the next generations of NVIDIA chips and others? They continue to use energy more efficiently At the same time.
Speaker 2:So the question is is there something different about AI? Many people think and I probably agree the answer is yes, just because we barely have scratched the surface for what the use cases and application for this technology is going to be be. How much electricity will be needed for running and training these models? Estimates today are three, four. 6% annual increase in electricity use. Could be more than that as we start to see AI being deployed in ways that are hard to even imagine today. But I will say on the flip side, it's also the case that AI is probably to our earlier conversation about demand response and people using energy more efficiently in their homes or businesses that you could see a very significant reduction in electricity use, maybe a reduction in emissions, by deploying AI data to use energy more efficiently. Because we don't take efficiency as seriously as we should. It's always kind of the forgotten fuel that we can do a lot more with how efficiently we use energy, and I think AI can help with that too. That's the flip side of the coin.
Speaker 1:One of the things with data centers back in the day, even up to currently, is they often have to be at least connected to some place that has super fast internet. If you're building a data center just to train AI models, you could be offline, you don't even have to be connected to the internet, and so the places where you could put it grow dramatically. You have more spots where you can put it around the US, and so if you can find a place where you can put a power plant or your own little nuclear reactor or whatever you could build like a little data center right next to it and that could be just the core customer of that power.
Speaker 2:And we see that. We see Amazon and Google and Meta and others building a huge amount of renewable capacity. Amazon just bought a nuclear power plant, taking it off the grid, so we got to be careful about that too. But trying to make sure that they had access directly to the amount of electricity they need for Amazon Web Services and whatever is going to come next with AI, it is really hard. As this comes back to the permitting reform conversation, we talked about how long it takes to build things in this country. Can you build the transmission lines you need? Can you get permits for these projects? And these companies are and need to move pretty fast to do this.
Speaker 2:I think one of the things I see is a lot of other countries in the world with very cheap low carbon electricity. You can think about countries in the world with very cheap low carbon electricity. You can think about countries in the Gulf like Saudi Arabia or the UAE. They're trying to lure these companies there too. And kind of what I spend a lot of time thinking about with my background at the National Security Council how do we think about the geopolitical or national security implications of a significant amount of the data center technology that is necessary for the AI revolution. What if that sits in other countries? Is that something that we should be concerned about as a country? What kind of agreements do we have for them? As Microsoft just had with the UAE, what role does the US government play in saying, well, we have some rules around this and maybe you can't be using technology from China in the system?
Speaker 1:One of the biggest stories in the last five years in the tech world has been NVIDIA and just the rise of NVIDIA. Now is there some sort of trade like if you're long NVIDIA, do you have to be long energy generation. How do you trade that side? On the energy side?
Speaker 2:As we've been talking about, there's a strong case to be made that increasing use of AI and data centers is going to lead to an increase in electricity for sure. So I do think that significant growth in demand for what NVIDIA produces suggests that we're going to see a lot of very significant increase in electricity. So you would be long electricity generation to your point. I do come back and I just don't know the answer. It's not my area of expertise, but I am very interested in trying to understand the order of magnitude, how significant the potential is for NVID. In what I have seen and read, the efficiency of NVIDIA's technology has just improved enormously and the ability to generate the same computing power from less electricity has increased enormously. So I think that's the offsetting factor and there are a lot of ways in which AI can actually help accelerate that, I think.
Speaker 1:Now a few personal questions. You and I we've been friends for over 20 years, I think. During that time, I don't think I've ever seen you unhappy. You always have a smile on your face. You're always positive. Why do you think you're that way?
Speaker 2:Well, I'm not sure that's true.
Speaker 2:first of all, but maybe it's because when I see I'm so happy to see you. No, but look, often when we see each other every year, it's in a gathering of lots of friends and interesting people, and I think it's underappreciated, when we talk about the things that bring us joy and the things that bring us happiness, how much personal relationships and friendships are an important part of that. So it's probably not I mean, I'm saying it facetiously but it's probably true that when I see you, it's because you do a wonderful job of bringing people together dinners, whatever it is to spend time together and those are some of the experiences that I enjoy the most are spending time with friends. I'll just video myself when I'm alone and then you'll see I'm not always happy.
Speaker 2:But when I get to spend time with really interesting people and, frankly, like people I may not always agree with we don't do that. Enough either, I think is spend time with people who have different points of view than ours. It's really exciting and enriching, rewarding, and I really enjoy that. Appreciate your creating settings for us to engage that way.
Speaker 1:Oh, thank you All right? Two more questions ask all of our guests what is a conspiracy theory that you believe? I thought about this question. You don't strike me as a conspiracy theorist person, yeah.
Speaker 2:I have found it interesting. So I'm not a conspiracy theorist person, you're right. I tend to have faith in institutions and trust in our big institutions like government. Maybe that's misplaced. I do find it interesting that people I know well, like John Podesta, for example, the climate advisor in the White House, have taken the idea of extraterrestrial activity and UFOs as seriously as they have, and whether there have been instances of that that maybe people know about but haven't told us about, at least seems possible to me. So I don't know. Maybe that's a conspiracy theory. That wouldn't be totally surprised if it turned out that was true.
Speaker 1:Yeah, there seems to be a lot of movement on that the last couple of years. For sure. This is great. Last question we ask all of our guests what conventional wisdom or advice do you think is generally bad advice?
Speaker 2:A few things come to mind. You often hear people say if you want something done right, do it yourself. I don't think that's true. I think most people are better at lots of things than I am, and I've really enjoyed building the Center on Global Energy Policy. That's now one of the largest energy think tanks over the last 10 years, and if I've learned anything, it's just build a really good team who are better at lots of things than you are and empower them and give them authority to go to work and get that done. What's most important is the team around you, not your ability to do it all yourself.
Speaker 2:I guess another conventional wisdom saying is you can't teach an old dog new tricks, and that seems wrong to me too. The thing that's so interesting about life is constantly taking on new challenges, new hobbies, learning new things, deciding. As you get older, it's harder because you're going to be really bad at something. It feels to be bad as we build expertise and we're supposed to be really good at stuff. I think that's important as we get older to take on new challenges, whether it's an instrument or anything else, and be bad at it and be comfortable being bad at it, but try to learn new skills and learn new things over time, which again is why I really enjoy spending time with you and all the people you help us bring together, because I learned so much that I had not been exposed to and hadn't thought about.
Speaker 1:I love that. I love the. I can't teach old dog new tricks, because that is common conventional wisdom. That is probably quite wrong. Yeah, people do change quite a lot.
Speaker 2:Or maybe it should change more than they do. Yeah.
Speaker 1:Yeah, absolutely. Maybe people don't change because people don't expect them to change. No, All right, this has been awesome. Thank you, Jason Bordoff, for joining us on World of Das. I follow you at Jason Bordoff on X. I definitely encourage our listeners to engage with you there. Also, you always write great things on foreign policy and other types of places, so encourage our listeners to read your writings as well. This has been incredible. Thank you again for joining us. Thanks so much for having me on. It was great, Oren. Appreciate it. Consider reading this podcast and leaving a review. For more. World of DAS and DAS is D-A-A-S. You can subscribe on Spotify or Apple Podcasts or anywhere you get your podcasts and also check out YouTube for videos. You can find me at Twitter at at Oren. That's A-U-R-E-N, Oren, and we'd love to hear from you. World of DAS is brought to you by Safegraph. Safegraph is geospatial data for physical places. Check it out at safegraphcom. And by Flex Capital. Flex Capital invests in data companies like those we talk about at World of DAS. Check it out at flexcapitalcom.