A Nationa nal l Energy gy Progra gram m Treating Energy as a Matter of National Security to Avoid Chaos Overview of NEP white paper http://www.ourenergypolicy.org/a-national-energy-program-the-apollo-program-of-our-time/ Presentation at: The UN Foundation August 12, 2015 Presented by: Lawrence Klaus
Presentation Outline – What, When Why and How? • What Is The Goal • When Will We Achieve it? • Why Should We Achieve the Goal? Matter of National Security • How Will We Achieve the Goal? Use proven methods • How Do We Start? NEP Planning Project • How Will We Educate Leaders of the Future? Planning and Operations Studies Presentation Approach • What, When and Why – National security matter, goal and timeline to address it Q&A • How – Structured time sensitive approach used for national security Q&A Refreshments and informal discussion 2 2
“What” Is The Goal: “When” Will We Achieve it? Goal defined over time in discussions with many interests developing white paper • To eliminate the gap between U.S. oil consumption and production and reduce green house gas emissions in a decade as a milestone on the road to a sustainable energy future. – Six million barrels of oil a day - High end of EIA, IEA forecasts for 2025 • Natural gas plentiful. Eliminating the “oil gap” = energy independence – 1,300 million metric tons of CO 2 equivalent by 2025 • Goal and timeline set by Barak Obama and Xi Jinping at APEC summit – Oil, emissions timelines made coterminous to facilitate joint planning • It’s not just about us! – Our security and stability is becoming inextricably linked to security and stability elsewhere in the world - DOD 2013 National Security Strategy – America must lead by example to Induce other nations to become less dependent on unfriendly and unstable nations • Use methods proven “at scale” – “Apollo like” long term program planning and management to achieve goal – Supply chains built during program position U.S. for sustainable future – Planning project to prepare a NEP plan in time to impact new administration coming into office • White paper provides a basis “for discussion purposes” to begin the project 3
The Goal is a “Milestone” on the Road to a Sustainable Future Unlike Apollo NEP isn’t a “one shot deal” Oil gap and Energy Products, Emissions Efficiency and Reduction Supply Chains 0 >= 6 MBD >= 1300 MMT Oil Gap and Emissions 0 Years 20 Years 10 Years Time NEP isn’t a “Zero Sum” game Fossil fuel and green energy interests make tradeoffs during 4 planning process to resolve differences and secure buy in.
Projected Oil Gap 4-7 MBD in 2025 – IEA, EIA Business as usual forecasts oblivious of world events • Velocity in instability is ever increasing around the world - Army Chief of Staff, General Raymond Odierno, Army Times • Risk of supply disruptions, energy crises, conflicts not considered – Set oil gap objective at higher end (at least 6 MBD) to cover “downside risk” – Oil, emissions objectives and timelines set as floor not a ceiling – Frontload NEP activity to avoid being blindsided by events again U.S dependence on imported liquids depends on both supply and demand 5 Source: EIA annual energy outlook 2013
Short Term Energy Euphoria Ignores Long Term Reality US and World experiencing weak demand, artificial oversupply and low prices in globally unstable conditions marked by rout in commodities Euphoria More oil produced at home than we buy from the rest of the world – the first time that’s happened in nearly 20 years … The all -of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades - President Barak Obama, 2014 State of the Union Address Reality IEA, EIA forecast U.S. oil production will peak in 2020 then decline without achieving energy independence. IEA Forecast of US Oil Production, 2012 EIA Annual Energy Outlook, 2015 6 6
Long Term Reality: Global Production Won’t Eliminate the Oil Gap Global energy demand projected to increase one third from 2011- 2035 - IEA WEO 2013 World’s major oil companies all suffer from some version of the same problem: spending more money to produce less oil. The world’s cheap, easy-to-find reserves are basically gone; the low-hanging fruit was picked decades ago. The new stuff is harder to find, the older stuff is running out faster and faster. - Bloomberg Businessweek, “Big Oil Has Big Problems” Costly Quest Exxon, Shell and Chevron have been spending at record levels as they seek to boost their oil and gas output. It has yet to pay off. Below, change in production since 2009 Source: the companies, reflects company 2013 estimates. - WSJ 7 If Global economy doesn’t return from the great recession, oil will be the least of our problems.
US and World Have a Long Term Oil Problem, Plenty of Gas • America needs an open fuel standard to convert gas to liquids for transportation – GTL could compete in liquids market if Congress enacted an open fuel standard requiring new cars to run on all-alcohol fuels, including methanol - US Senate Hearing • If America won’t use its natural gas to produce methanol others should and will – Chinese company considering two Gulf Coast locations for a $4.5 billion, 7.2 million ton methanol manufacturing and exporting plant [800 TBD in Btu equivalent] - Chinese group plans $4.5-billion methanol complex at Texas City, IHS Chemical Week – Chinese firms pour money into US R&D in shift to innovation US Natural Gas Production 1990-2040 Source: DOE AEO2014 early Release Review 8 8
Why Should America Achieve the Goal? Must treat energy as a matter of national security to avoid chaos • “Arc of instability” from North Africa to Southeast Asia [the region] could become an “arc of chaos” involving forces of many nations - DOD 2010 Joint Operating Environment Report – Seven of top ten nations with largest oil and gas reserves in the region - EIA – We have a losing record in the region since WWII – Implications for future combat are ominous, should nations see the need to militarily secure energy resources - JOE 2010 • As our armed forces grow smaller, withdraw to the periphery and “pivot to Asia”, our ability to defend the oil supply diminishes accordingly – Countries [state actors] with high performance weapons develop capabilities to deny our forces access into their countries and theater energy supplies [A2/AD] - JOE 2010 – While the armed forces will grow smaller, it is less likely their operational tempo will decrease - Capstone Concept for Joint Operations: Joint Force 2020, Joint Chiefs of Staff • Shrunken fleet stays deployed longer and gets repaired less - The Seas Are Great but the Navy Is Small, John Lehman, former Secretary of the Navy, WSJ • U.S. Army to shrink to pre-World War II level - WSJ • Our leaders focus on pump price disconnected from national security enabling “addicts” to live in denial of the threat – We have been on the “imported oil roller coaster” too long to have learned nothing from experience Decline of Empire is losing control and living in denial of it 9
As Empire Declines Barbarians Gather at the Gates Precision air strikes remain and option… unduly reducing American ground forces risks creating a vacuum - Colonel Michael Eastman, WSJ • Terrorists and organized crime [non-state actors] intermingling in “shadow markets” enabling them to coordinate activities at global scale – An informal series of overlapping pipelines [supply chains] moves products, money, weapons, personnel and goods • As these markets grow, adversaries will be able to generate attacks at higher level of rapidity and sophistication - Terrorist-Criminal Pipelines and Criminalized States: Emerging Alliances, NDU • $2-3 trillion growing faster than legal and commercial trade - JOE 2010 • We will bleed America to bankruptcy [Thanks Big Banks and US government] - Osama bin-Laden • Relationships between non-state and state actors provide numerous benefits to both - Terrorist-Criminal Pipelines – Wahhabi - Saud alliance older than U.S. • Islamic fundamentalism would be a trace element in Islam without Saudi support • “Addict - Pusher” relationship induces our leaders to ignore blood in the oil • Drones kill fighters, not financiers – Eliminate oil addiction to drain money from states and non-state actors they support and threats they pose will diminish accordingly • It’s not just about us! Lead world to eliminate addiction Armies were like plants, immobile, firm-rooted, nourished through long stems to the head. We might be a vapor, blowing where we listed…extending our front to the maximum, since that was materially there most costly form of war. - T.E. Lawrence, “Seven Pillars of Wisdom 10
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