The Future of U.S. Energy Security: A Conversation With Elizabeth Sherwood-Randall

The Future of U.S. Energy Security: A Conversation With Elizabeth Sherwood-Randall

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United States Deputy Secretary of Energy Elizabeth Sherwood-Randall joins Chairman of Corporate Eco Forum P. J. Simmons to discuss the evolving energy landscape in the United States, the changing definition of energy security, and the role of innovation in ensuring America’s energy future.

SIMMONS: Good evening, everyone. My name is P.J. Simmons, and I’m delighted to welcome you all to tonight’s discussion with Elizabeth Sherwood-Randall on the future of U.S. energy security.

As a reminder, again, this meeting is on the record. It’ll be live-streamed and on CFR.org. And do please take a moment to silent your cell phones and electronic devices if you haven’t done so already.

It’s my great pleasure to introduce Elizabeth Sherwood-Randall this evening. She is celebrating her two-year anniversary as the deputy secretary of energy. She was appointed in October 14th in that position and has spent most of her career in public service. She joined the Obama administration in January of 2009 and served throughout the president’s first term as a special assistant to the president and senior director for European affairs on the National Security Council.

In 2013 she was appointed as the White House coordinator for defense policy, countering weapons of mass destruction, and arms control. And in that position she also served as the president’s sherpa for the 2014 National Security Summit in The Hague.

Before joining President Obama’s team, Dr. Sherwood-Randall worked at Stanford University, Harvard University, and here at the Council on Foreign Relations. In the Clinton administration she served as the deputy assistant secretary of defense for Russia, Ukraine, and Eurasia. And during that period she led the effort to denuclearize the former—three former Soviet states. And for that service she was awarded the Department of Defense medal for distinguished public service.

Earlier in her career she served as Senator Joe Biden’s chief adviser on foreign policy and defense. She also received her—attended college at Harvard University, received her doctorate in international relations as a Rhodes scholar at Oxford University. And I can tell you, based on conversations with many people that have worked with her, she has earned a reputation for being as wonderful of a colleague as she has earned a reputation for being an accomplished thinker and a doer.

So it’s a great pleasure to welcome Liz Sherwood-Randall to the stage. (Applause.)

SHERWOOD-RANDALL: Thank you very much, P.J. That’s extraordinarily generous.

I am so honored to be back at the Council. There are beloved friends in this audience. I have to say, for the people at the table here, Leonard Lauder, Judy Glickman Lauder, and the Schlossers, I am humbled to be in your presence. You’ve been inspirations to me for my whole life. You’ve known me since I was a child. So thank you for being here today.

This is actually a home for me. I came to the Council on Foreign Relations as a dreamy-eyed student at Harvard in the summer between my junior and senior year. And I came—I had the privilege of working for Bill Bundy, who was then the legendary editor of Foreign Affairs. And I hoped I would make a career in service of our country in some way. I didn’t know what path that would take me on. But it was a very important formative experience for me.

And I then had the privilege of coming back here from 2004 to 2008 to work as an adjunct senior fellow and led a number of projects here. I worked with Enzo Viscusi, who’s sitting in the audience, and others looking at—in particular at the question of the future of American alliances. And I took that work into the Obama administration with me on the first day of the first term in 2009. As you noted, I was asked to serve on the NSC staff with responsibility for Europe. So I credit the Council with playing a hugely important role in the development of my thinking about the issues with which our nation has to wrestle as we continue to seek to lead the world in the 21st century.

And that leads to the topic for tonight, which is our nation’s energy security. Energy is a significant source of America’s strength. And through our energy policies and actions, we are positioned to lead the world. And that’s a very important reframing of the notion of energy security from the way that it was approached when I first began my work in this field.

I’ll also—I’ll take some time to talk with you about how we’ve addressed these issues over the past eight years in the Obama administration through policy development, innovative science, and global partnerships. And I want to try to make this vivid to you, because my sense is, many times when we talk about what government does, it seems very bureaucratic and abstract. I’ll talk to you about the work we’re doing to modernize the U.S. electric grid.

And finally, because this is a time when we have to think about the handoff to the next team—it’s coming at us very quickly—I’ll talk a little bit about our thoughts, how we’re going to hand over our thoughts to those who will fill our shoes shortly in the next administration.

When I was here at CFR in that summer of 1980, we were still reeling from the oil shocks of the 1970s. And I took a look at the articles that were in Foreign Affairs at the time when I was working here—titles like “The Arab Oil Weapon” was a piece in Foreign Affairs in 1978—demonstrates how we were completely focused on oil when we thought about our energy security. Other titles also showed that some things changed but some things remain the same. For example, there was an article in Foreign Affairs at the time, “Russia in Eastern Europe: Hegemony Without Security.”

Those issues that were raised in Foreign Affairs actually informed my choice of a doctoral thesis, because there was a huge debate at the time in the late `70s and early `80s about how the United States would work with its NATO allies to guarantee access to oil supplies in the Persian Gulf, because the Strait of Hormuz was seen as a chokehold. And if we didn’t get the oil out to Western markets, it could have an extraordinarily damaging effect on our economies. And that was really a jugular vein for us.

We are still, of course, dependent on oil, and we’re still a major importer of crude oil. But what has changed very dramatically in the intervening decades, and most important actually in the last eight years, is that we are now the number one producer of liquid fuels in the world. And we are diversifying our suppliers and have begun exporting crude oil and natural gas.

So by many traditional standards, we could consider ourselves to be more energy-secure than we have ever been before.

In addition, because of decades of investments that we have made in research and development, much conducted in the 17 national labs that the Department of Energy is responsible for, we’re experiencing remarkable changes in the energy sector that are transforming our notions of what energy security means.

So, for example, the current shale-gas revolution is due in part to research that we undertook in our national labs several decades ago. And similar investments that we are making now in renewables, such that we have made in the past in studying renewables, are now paying off with the deployment of wind and solar as we’ve brought costs down and can deploy much more widely, indeed, on a utility scale, when we look at solar deployment in this country today.

Between 1975 and 2014, DOE invested $6 ½ billion in wind and solar photovoltaic technology research and development. So that gives you a sense of the scale of investment which led to the improvements that we’re now seeing in the technology that is dramatically bringing down costs and making it possible to think about the deployment of wind and solar in a cost-competitive way with more traditional sources of energy.

So, since 2008, the cost of wind has dropped by 41 percent. Distributed PV has dropped by 54 percent. And utility-scale PV is down by 64 percent. Another way of putting that is we put money into the first five utility-scale solar PV projects in this country early in this administration, and there are now more than 45 utility-scale projects that have been entirely funded by the private sector.

So now large-scale solar facilities are comparable in cost, and sometimes even cheaper than electricity generated using natural gas, even without subsidies. The Solar Industries Association is estimating that by the end of the second quarter of this year we will have enough solar power of all types to power more than 6.2 million American homes. And after a record-breaking year last year, the American Wind Energy Association estimates that we’ll have enough installed wind capacity to power about 20 million homes.

These technologies have actually come so far that we’re now considering them to be part of our national-security strategy. And that’s a big shift. Our military in the United States, of course, requires a lot of energy to keep it going, and the Department of Defense is the largest consumer of energy in the federal government. And that actually represents a vulnerability. So bases around the country, and indeed around the world, are investing in renewables, working in a collaborative partnership with DOE to supply some or all of the power that they need to operate.

Among the most recent are the 210-megawatt Mesquite Solar 3 facility, which is expected to come fully on line by the end of this year. It’s going to provide one third of the power that is needed for 14 Navy and Marine Corps installations in California. And Hawaiian Electric Company and the Navy are planning to build a solar facility at Joint Base Pearl Harbor-Hickam. The Army—and I could go on and on.

These technological advances, however, also come with challenges. And we know that we’re going to have to find a way to meet those challenges if we’re going to be truly energy-independent and truly energy-secure. As our energy system evolves, the interconnections between different sectors, like electricity and natural gas, electricity and telecommunications, and water and energy, have become more pronounced and stronger than ever.

Our aging electricity infrastructure is ill-equipped to handle the variable loads that come with the integration of renewables onto our grid. And the complexity and frequency of cyberattacks against the grid is escalating. In fact, in the last fiscal year, in 2015, the energy sector reported the second-most incidents of any sector of our economy out of those to which the Industrial Control Systems Cyber Emergency Response Team at the Department of Homeland Security responded.

So today we’re seeing that some of our strengths, from greatly improved technology to the utilization of our abundant natural resources, also have down sides. So better, more-connected systems increase our vulnerability to cyberattack. Increased use of fossil fuels leads to stronger impacts on our climate. And increased climate effects increase the threat to the infrastructure that enables our energy security. And this means that the ways in which we’ve defined and achieved energy security in the past no longer reflect our current reality.

The evolving energy landscape is demanding a transformation in how we think—we as American policymakers think—about energy security. So we began making this transformation early in this administration. President Obama has given two key speeches that identified the requirements to meet our energy-security goals by investing in innovation, infrastructure, and international partnerships.

In 2011 he laid out his vision for American energy security and American energy independence. He outlined a long-term plan that would set the United States on a path to secure, affordable, and a low-carbon future, one that we have come to call our all-of-the-above energy strategy.

In addition to decreasing our dependence on imported oil, diversifying our suppliers and producing more oil at home, we would also invest in new sources of energy and use more renewables. That emphasis on innovation is also present in the president’s 2013 Climate Action Plan, which he announced in the second speech that year.

The plan requires mobilizing the unparalleled capacity that we as Americans have for innovation in order to reduce greenhouse gas emissions while enhancing growth across our economy. It also called on our capacity for leadership, requiring us to spearhead international efforts to combat global climate change.

So I won’t spend too much time on that last point about spearheading international efforts, but I would be glad in the Q&A, P.J., to talk about that if people are interested.

The bottom line is we have driven a global consensus on the need to get serious about climate change. And our agreements with major emitters like China gave real momentum to our climate efforts in the past year. So we’re working to ensure that policy is designed to handle our current realities and prepare us for the future.

But we can’t achieve our goals through policy alone. In order to succeed in meeting our goals, we have to make a concentrated investment in scientific and technological innovation. The good news is that there’s a lot of low-hanging fruit to be harvested through enhanced efficiency in our energy system by the deployment of new technologies. So energy efficiency is actually a lower-cost resource for us across the board.

We’ve used our technological prowess to strengthen our appliance and efficiency standards, working with industry to make our factories more efficient and improving the gas mileage of cars and trucks. And we’re seeing real results in that space. We’ve achieved efficiency improvements across our economy that have cut growth in energy consumption to almost zero. And energy efficiency, while important to us, is only one piece of the puzzle. So this is something I want to emphasize. There is no one solution to the challenges we face. It’s going to be a puzzle with many pieces, and we have to get all of the pieces in place.

We also need to make significant ongoing investments in new clean-energy technologies. And here I want to pause just to emphasize that we really mean all of the above when we talk about clean-energy technologies. People often think that we’re talking only about wind, solar, and hydropower. But that’s not the case. When we talk about all of the above, we mean clean energy to include decreasing the amount of water we use, deploying new nuclear technologies, better transmission infrastructure, advanced manufacturing, and, importantly, carbon capture and storage for fossil fuels.

This last part is crucial, because many countries around the world will need to use an energy mix that includes fossil fuels for decades to come. So our climate and energy policies have to move us toward significant reductions in carbon emissions associated with using fossil fuels so that we can keep them as part of our low-carbon energy mix.

At the same time, we need to increase our deployment of no- and low-carbon energy resources. And so, in addition to developing new technologies as rapidly as possible, we need to push those technologies out to the marketplace as soon as we see that they have potential to deliver results for people.

That’s why, on the first day of the climate talks last year, we announced with 19 other countries a new initiative called Mission Innovation. With 21 partners now, because the EU joined us as well, we’ve committed to doubling government investment in clean-energy research and development over the coming five years. And that is a very significant commitment, because the partners in Mission Innovation are the countries that already account for more than 80 percent of global government support for clean-energy research and development. So there’s a high baseline to begin with. And we’re working to double our collective total to about $30 billion of investment in 2021.

As part of our commitment to Mission Innovation, DOE has requested $110 million in funding for up to 10 regional clean-energy partnerships. And I want to pause on that, because it’s also important to note in the United States we recognize we have a very diverse energy landscape. And different regions have different resources, and they need to bring together regional players to develop customized energy and issue portfolios based on their needs.

So the planning and priority-setting and research development in the regional partners would be regionally led so that clean-energy programs could be closely associated with the state and local economic development programs and based on regional strengths, including universities, laboratories, and the private sector.

While some challenges, such as cyber and physical attacks, and the integration of renewables, are more or less universal, others are not. Many of our grids on the East Coast—you know this well—need to be able to withstand hurricanes and heavy snow. Grids in other parts of the country need to be able to withstand droughts and wildfires or earthquakes.

And so what I want to do is give you a sense of the range of initiatives that we’re now pursuing to work across the innovation chain and what that means for our approach to energy security nationally and regionally.

Today we’re asking our grids to do things they were never designed to do and handle threats that were unimaginable at the time that they were constructed. To make matters more complicated for the federal government, more than 90 percent of our nation’s power infrastructure is in private hands. So modernizing our grid and making it more resilient in the face of climate and cyber and other threats, and ensuring that it can handle the variable loads that we’re asking it to handle because of the increasing integration of renewables, is a pressing challenge.

In fact, I’ve made it one of my highest priorities as deputy secretary, and it’s one of those areas where every part of the Department of Energy’s vast enterprise has a part to play, from the basic research that we do, the basic scientific research, to the technological development and deployment to policy formulation and public-private cooperation.

We’ve been aided in these efforts by funding from the American Recovery and Reinvestment Act. And while ARRA’s primary purpose has been to improve the economy and get the American people back to work, it also laid the foundation for our economic future and for the transition to a sustainable 21st century energy economy.

DOE was able to invest $4 ½ billion as a result of ARRA funding, matched by the private sector in grid modernization. And our grid modernization initiative is helping to shape the future of our nation’s grid across six lines of effort. These include research into developing tools and technologies that will help us to observe the entire system so we can see where the problems are and distribute loads more evenly. The technology could potentially prevent power outages and, by pinpointing the exact location of a problem, save crews time in making repairs.

We are also working on self-healing grids that isolate problems and route power around them so fewer customers are impacted. We saw the outcomes of this most recently in what happened in Florida in the aftermath of hurricane Matthew.

We're developing an improved grid architecture that can withstand severe weather, handle the integration of renewables, and enable us to transmit power more efficiently and over long distances.

Research in our labs has also led to the development of products that detect tampering with field devices that are used by utilities, a web tool that provides real-time information about the state of the grid, and technologies that make mapping networks much more difficult, which can help us to thwart attacks.

And we are seeking better utility scale energy storage capabilities, which will be a critical component for managing the increase in renewable energy resources on the grid. Developing cheaper and more energy dense batteries, along with other forms of storage will enable us to use solar energy when the sun is down and when the wind is not blowing.

Perhaps equally important, new energy storage capabilities at both the grid and residential scale will help ensure system resilience and provide what we need during emergencies.

I saw examples of this work in September when I visited the National Renewable Energy Lab's energy systems integration facility in Colorado. It allows utilities to come to our labs and test new electricity sources at full power before they are connected to the grid, so that they can be integrated seamlessly when they are ready to deploy them.

It also provides metrics and analysis to inform the design of smart infrastructure and to develop better regulatory models. All this is absolutely essential for grid modernization. And it is also helping us to increase the use of renewables by demonstrating to our industry partners that it can be done affordably and with low risk to consumers.

We are also working hard to get those technologies out into the marketplace, as I noted, to benefit the American people as quickly as possible.

Last month I took the Electricity Sector Coordinating Council leadership to Sandia National Lab in New Mexico, to discuss how we can more closely align our priorities for research and development.

In addition, we discussed options for better and more rapid commercialization of the technologies that are being developed by DOE's labs. And earlier today I had the opportunity to tour Con Ed's facilities here in New York with the CEO John McAvoy. I saw their emergency operations control center just across the park, and their impressive substation in the South Bronx.

This is an example of the kind of work that we are doing with our partners in the electricity sector to ensure that we build the most resilient grid possible for the American people. These investments strengthen infrastructure that New Yorkers depend on to power their lives, and we are finding ways to create closer and more meaningful partnerships.

And here I would underscore people don't believe this is possible because of what seems like a great divide between government and industry, but we have found a way to partner with the private sector on this critically important work of securing the grid for the future, especially as all other sectors of our economy depend on the delivery of power to power what they do.

And we are seeing the results of our modernization efforts. I noted that investments by Florida Power—I said Florida—Florida Power and Light in particular, with an assist from DOE, has made an advanced metering infrastructure and distribution automation technology, helped to prevent some outages during Hurricane Matthew, and helped to restore power much more quickly after the storm.

Innovation is critical to the future, but it won't be enough to get the job done. And so we are also developing strategic policy recommendations to hand off to the next team. In 2014, President Obama directed DOE and 21 other executive agencies and departments to prepare a report that was focused on our nation's energy transmission, storage, and distribution infrastructure.

This was called the Quadrennial Energy Review and it developed a concrete and analytically based plan to transmit our policy goals into action. It contained a number of recommendations for executive and legislative action, and a number of the recommendations have already been implemented, used to inform federal laws and push for improvements.

We are now working, as the clock ticks for the end of this administration, to complete a second installment of the QER, and this QER is an integrated study of electricity systems, from generation to end use, including transmission, distribution, markets, and grid operations.

And we intend to release this this fall to provide the analysis and policy recommendations that will guide further modernization of our vitally important electric system.

So obviously we won't be able to be here to carry out those recommendations, but they will provide a worthwhile platform, a starting point for the next team in its consideration of the energy security policies that are necessary to secure our nation and our friends and allies around the world.

I'll note that the president has said in the run-up to the Paris climate talks that we have made modest progress, but we are nowhere near what we need to do. So the new administration will inherit a redefined global energy security landscape, newfound domestic strengths and sources, and an economy that is driven by our energy abundance.

It will also inherit the opportunity to guide the world toward a more secure and prosperous future that allows us to advance our climate goals and our commitment to economic growth at home. In all of this, innovation and action will be key.

Populations around the world are burdened by the effects of climate change, from shrinking territory and scarce water to high costs for food and fuel. Our next era of energy abundance can be de-carbonized to fulfill the prospect of a clean energy future that we have set ourselves on the path toward.

And in working toward realizing this dream, we cannot only advance the energy security of the United States, but create the opportunity around the world for development in countries that still face a very steep development trajectory, to power their people with energy solutions that save our planet.

Thank you for being with me here this evening, and I look forward to a conversation. (Applause.)

SIMMONS: Well, thank you very much for that tremendous, rich overview. That's terrific. I know you've cut your teeth on the national security realm, and that's where you've spent most of your career. And I wanted to ask you, picking up on that idea of going back —I'm going to get those old Foreign Affairs articles back in the '70s —if you could sort of think back to the way you used to view energy security issues.

You've had the benefit of looking at a lot of these issues through a wider aperture than most of us have an opportunity to, so if you could maybe reflect a little bit about how your own views have changed, assumptions you might have had in the past have changed, might be more priorities or top of the line for you now.

And if you could kind of go back in time and brief your younger self looking at these issues through a more traditional lens, what would you tell that person?

SHERWOOD-RANDALL: Well, first of all, that younger person should be thankful for having gotten a start here because I learned so much at the Council.

I would say that because energy security has evolved in its definition, as I set forth, we have to be open to the redefinition that is much broader than the traditional national security explanation of things. And so for example, we have to think about the extent to which our grid is an enabler of our capabilities as a nation and also a vulnerability for us.

In the traditional thinking about the grid, our nation's nuclear deterrent protected the homeland from attack. And frankly, we didn't really have to worry too much about the security of the grid unless we were in an all-out nuclear war, in which case we had lots of things that we would be doing, and that would be not our first order of priority. It would be to defend the nation against that attack.

Now we face the very real prospect of adversaries seeking to impact the grid, for example through the use of cyberattacks, knowing that that's a softer underbelly for us. And so it's a whole new dimension of national security and energy security that we need to consider, and for which we certainly have the capability to develop and engineer in solutions.

And that's the kind of thing, through the work of our national labs, that we are putting our minds to. How do we invest in that infrastructure that we need to modernize, and in that modernization, build in the cyber security solutions that will protect our infrastructure and enable us to deploy all those renewables onto the grid and at the same time protect against some of the vulnerabilities associated with an interconnected grid.

So I would say it's really about opening our minds to the new technologies that have become available to us in the last couple of decades. The strengths that that brings, the enabling power those technologies, and at the same time to become aware of the new vulnerabilities that creates for us and for our allies around the world and our partners around the world, and work, as we always have, to develop solutions to protect ourselves from those threats.

SIMMONS: Picking up on the idea of spearheading international efforts that you talked about a bit, I thought of a couple of areas. One, after the climate negotiations, when all of these countries around the world set specific national goals, many of them had to do with setting renewable energy deployment goals, which are really challenging.

So I'm wondering, on the one hand, how the department is sort of engaged in helping on that front, beside some of the things you already mentioned. And also about China. You know, it's really a big part of the puzzle, but it's been amazing how well that's gone, that relationship with climate and energy, and in the face of such a challenging relationship overall. So I'm wondering if you could talk a bit about.

SHERWOOD-RANDALL: I would love to do that. So we have major international partnerships through which we are seeking to cooperate with other countries to develop and deploy the technologies that will meet our clean energy goals. And China is an excellent case in point.

These new technologies are major sources of economic strength for the United States, and our businesses want to take our technologies around the world for development and deployment because it creates opportunities for them.

So what we're doing is looking at —we've got a company here, there's a representative of IBM —Brad is somewhere here in the audience. I was with him in China recently. We took 24 clean energy companies to China on a presidential trade delegation which I co-led with the secretary of commerce, and the purpose of that trip was to showcase to the Chinese American innovation and how it can help them to meet the goals that they have now set for decreasing emissions because for them the fierce urgency of now is addressing the pollution in their cities. And they know they've got to find solutions to reduce their CO2 emissions.

And so what we're saying is that this is a win-win solution, opportunities for our private sector to partner with countries around the world in deploying these new technologies.

I went recently to India with a similar purpose. We need to work with our Indian partners, recognizing that they have a great challenge to electrify at least 300 million people's lives, and that unless we help them to identify the possibility of doing so in a way that reduces emissions, this is going to be so damaging to our climate efforts that we will not achieve our goals, because they are heavily dependent on coal.

So we are working to innovate on carbon capture utilization and storage, as I said, and also to help them with identifying opportunities to deploy cleaner energy solutions to the benefit of their people.

That work we do in partnership is essential to meeting our goals. We are so interdependent on this front that we have to pursue this with other countries. We can't just solve our own challenges. We have to assist others as well. And I could describe many other countries with which we work.

I'll also note that many of our partners have huge research capabilities of their own, and there we do extensive work with them on searching for these clean energy solutions, so our labs have many partnerships with foreign partners around the world because science is global, and the pursuit of solutions inspires so many of them to work collaboratively.

SIMMONS: At this point I'd like to invite other members of the Council to join in on the conversation. Before I do, I just want to remind everyone this meeting is on the record. Please wait for the microphone to come to you and speak directly into it, and note your name and affiliation, and please limit yourself to one question and be brief. Otherwise I'll cut you off.

Q: I'm Jason Forrester, a Council member, a former Obama appointee.

Regarding U.S. liquefied natural gas exports to Eastern Europe, do you think if we were to increase those exports, that could reduce Russia's ability to meddle in the region? Thanks.

SHERWOOD-RANDALL: We have been working with our European allies and partners to develop greater energy security that allows them to diversify their sources, their fuel pipes, and the routes through which they get their energy, for which they currently, as you know, are heavily dependent on the Russians.

And that's an ongoing project developed both with the E.U. in our partnership, our bilateral relationship with the Europeans and the G-7 energy process and the G-20 process. So many, many initiatives.

With respect to our exports of LNG, you know, the market sets the destination. So we can approve exports, but the question is where is the best deal available for those who export it. And fortunately, we are putting LNG onto the world market, and that assists with creating a more ample supply that the Europeans can acquire if the bids are right for that resource.

So we believe that what we are doing on the LNG front definitely contributes to global energy security, and we will also continue to work closely with our European allies and partners to help them to create more energy security across a broad range of initiatives that they need to pursue on that front.

SIMMONS: Yes.

Q: Thank you. I'm Gordon Bell. I, too, was a term number, then full member. I grew up here. Welcome, back, Deputy Secretary Elizabeth.

SHERWOOD-RANDALL: Hi, Gordon.

Q: My question is about what we do with cities and what we do with poverty, and I guess many world cities look like some of our poorer cities. Is this going to be an advancement driven by market, participating with all the right dynamic players like the IBM folks and all the great innovators? Or will it also be focused on delivering city, poverty city, anti-gentrification issues?

One specific. When folks who are in, say, Bed-Stuy Brooklyn, where I help work in a charity called Bed-Stuy Restoration, started by Bobby Kennedy, commercial, the bottom line is folks leave when they can't afford it and gentrifiers come in.

But those folks now go to suburbs, or more suburban environments, where the cost of educating and helping them is even higher. The energy is not really working for them. I don't know what we're going to do with the cities, but we've got a couple of buildings with Goldman Sachs that are cogen-driven, so natural gas making heating, electricity, air conditioning.

But that's still last generation innovation. So, Deputy Secretary, what are we going to do with our cities, and how will that get modeled and rolled out across the world?

SHERWOOD-RANDALL: We have a number of initiatives with cities, and you've raised a multitude of issues and I won't get the chance to address them all here. But I'll say that we have many initiatives with cities. Cities are the ground troops for energy innovation. It's where lots of innovation is happening.

We see the power of distributed generation, the power of what we call prosumer citizens who want to own their own generation and are developing the capacity to take on some of the ways in which energy has been priced that are disadvantageous to consumers.

So we are working to support the necessity of figuring out how to make the new economics of energy generation possible in a way that is fair and equitable, and also allows for the investment we need to make in the next generation of infrastructure that I talked about. So it's quite complex, but the cities are in the forefront of this work.

And I'll also add that internationally we have a major initiative on smart cities which focuses on energy innovation at the city level. And so we're doing that with China, with a number of other countries where we see cities as real drivers of innovation in the energy space.

I'll also add, because I think it's important, it's another responsibility we have at DOE. We feel the necessity to encourage young people, especially in under-served communities, to pursue STEM careers because we know that there is such a great need for STEM capacity in our economy in the future.

So, for example, the president's Science and Technology Advisory Council came back to him and said we are going to be 1 million people short of the people we need in 10 years’ time in STEM careers. So we need to stimulate that pipeline. And we know we will not be successful in meeting the challenges we face unless we have an inclusive economy that brings into the pipeline of talent those who have previously not had those opportunities.

So DOE has launched a number of initiatives on STEM education and connecting young people to opportunities in our labs. For example, minority-serving institutions having opportunities to work on cyber security in some of our nuclear weapons labs for summer jobs.

And that's really—it's a very labor-intensive effort. We all have to be part of it in our own way, but we see that as a crucial contribution that we can make to powering the economy of the future.

Q: Can we find it online?

SHERWOOD-RANDALL: Pardon me?

Q: Can we find it online?

SHERWOOD-RANDALL: Absolutely. Yes.

SIMMONS: Yes?

SHERWOOD-RANDALL: Hello, Judy Miller.

Q: Hello, Liz, welcome back.

SHERWOOD-RANDALL: Thank you.

Q: I have a quick question for you. I noticed in your excellent overview you had essentially one line on new nuclear technology. Is nuclear over, or is there anything that gives you hope that there could be any kind of nuclear renewal in terms of alternative for carbon?

SHERWOOD-RANDALL: We don't believe nuclear is over at DOE. Nuclear does face challenges. We've invested in the first new nuclear power built in this country in 30 years, and they are coming online, and that's very exciting.

We're also investing a great deal in research on the next generation of nuclear power, small modular reactors in particular, where we see the possibility of meeting some of the challenges that have prevented nuclear power from being deployed, siting issues and safety issues that we want to prove out, to demonstrate to people that this is really a very important non-carbon-emitting power source for the future.

And certainly, Judy, we know that around the world nuclear power, if informed by the kind of technology that American industry brings to the build, is safe and secure and a major baseload power source for people in countries that desperately need it.

So we are advocates for nuclear power. We continue to work toward its deployment in every way that we can.

SIMMONS: Yes?

Q: Tara Hariharan, NWI Management.

Given the current range of oil prices, it would seem that the reality of the shale revolution is very much here to stay, and that shale production will continue to rise from here. Given this, how are we to reconcile the future of energy as being low-carbon, alternative-energy-based, versus this reality that is economics-based? Thank you.

SHERWOOD-RANDALL: Thank you for asking. That’s a great question, and we’re asked that a lot, especially because of low oil prices right now.

And I’ll quote one of my partners in the private sector—Tom Fanning, who heads the Southern Company—who said, “You can’t keep the waves off the beach.” The most innovative energy companies are investing in the all-of-the-above strategy. That is, they’re looking at the necessity to develop and deploy a multitude of sources. So they continue to have traditional sources, and they also have major investments in wind and solar and other forms of renewables.

And what we see is that the future will include opportunity across this space, the all-of-the-above strategy that will, as I noted at the outset, clearly continue to include fossil resources. But increasingly the deployment of renewables, which would create for us both a path to the clean future we need, but also allow us to ensure that we have those resources far out into the future.

And I’ll add an interesting example. If you look at the Persian Gulf countries, where there are huge oil resources, those countries—the Saudis, the Emiratis, and others—are investing heavily now in renewables, because they also know that eventually their resources will not be what they are today, and they need alternatives both to power their economy and also to generate opportunities for export. And I just did a bilateral energy dialogue with the Emiratis, and we are very focused on the full scope of innovation that I described earlier. They’ve just opened the first steel plant utilizing carbon capture and utilization. They also are investing in renewable sources like solar because they see that their future lies in a future that is not exclusively dependent on fossil fuels.

SIMMONS: Yes?

Q: My name is Hari Hariharan. I’m from NWI Management.

I want to ask you a question about how you think about energy security, given the paradigm shift—that, once upon a time, as a big importer, the SPR was a key component of strategy. You wanted to have a lot of oil in case. But today, that’s not a problem. If anything, the problem appears to be how do you insulate the economy from price shocks—you know, for example, if prices were to go dramatically higher or lower, it has important capital—(inaudible). And more importantly, that the geographical distribution of energy in the—in the country is still, you know, not optimal. So how are you—what is your concept of energy security now? Is it a quantity availability, which appears to be no longer the issue because we’re producing a lot? Or has it more to do with price and availability of the stuff where it is needed?

SHERWOOD-RANDALL: It’s optionality, actually. It’s to have multiple sources of supply and an infrastructure that we’ve invested in so that we’re not dependent on, for example, one pipeline that moves from the Gulf up to the East Coast. You know the colony pipeline—Colonial Pipeline has experienced overnight an explosion, and that is a very significant pipeline for us. Surprisingly, we are—we do not have multiple pipelines that come from the Gulf up to the East Coast. And that’s the kind of thing that we need to invest in so that we have options, that we can have more renewables on the grid, we develop nuclear power, we have our fossil resources that we use in an environmentally friendly way, and that we have choices so that you are insulated against those shocks you’re describing.

The shocks are multiple potential shocks. They’re price shocks, as you said, that we may not have—it may not be because of our doing. There may be exogenous factors. There can be shocks because of extreme energy—extreme weather events. There can be shocks because of a malicious attack. And so what we want to ensure is that we have the optionality to generate the power where we need it, when we need it; and surge it, if we need it, to a different part of the country. Right now we don’t have that capacity, which is why in that QER the first installment we made the case for heavy investment in the energy infrastructure, which is not only aging but insufficient to the needs of the country today.

SIMMONS: Yes?

Q: Hi. I’m Joe Oliver, Oliver Global.

I wonder if you can comment on the ITER, the fusion project in France, the thermonuclear. Is it a pipe dream; potential panacea 20, 30 years down the road; or something in between? Thank you.

SHERWOOD-RANDALL: This is a fusion project that multiple countries have committed to. It’s very advanced and ambitious science. It has faced significant management challenges. And we have worked to assist the new leadership at ITER with a plan of action that would lead them to the achievement they have—the goals that they have set for fusion. We can’t say that we know they will get to where they need to be, but we are committed to the project and have continued to support it through the international agreement that we reached on the undertaking at Cadarache in France.

SIMMONS: Yes?

SHERWOOD-RANDALL: Hello, Nina.

Q: Hi. Hi. Nina Gardner. It’s been about 30 years since I’ve seen Elizabeth, so—(laughter).

I’m a sustainability advisor, and I just wanted to ask you, when you’re talking to the fossil fuel companies, mostly oil and gas, but it’s oil companies, what does sustainability and leadership look like to them in 50 years’ time? Because they are thinking that far ahead. And as we transition out of a fossil fuel economy, are you getting any kind of movement on this? Because if we’re going toward an all-of-the-above strategy, for them, they’re sort of entrenched in the sort of fossil fuels and maybe a little bit of natural gas, but they’re not moving ahead. And they have the money to do some serious investment in renewables. So I was wondering whether you’ve ever had any sort of closed conversations with them to nudge them in the right direction.

SHERWOOD-RANDALL: I have, Nina. And I think the—you know, I can’t speak for—first of all, I can’t speak for them. Second, there’s a wide range.

Importantly, because of the likelihood that fossil fuels will be used far out into the future globally—including by the United States, but also by others—what we talk about principally with those companies is how are we going to get to a place where these fuels can be used in a responsible way. And that is to continue to work to develop the technologies that will enable us to capture carbon and use it in a way that makes it environmentally—economically plausible. So that’s really the key piece, is that utilization piece, because the business case has to be made for doing it.

Now, again, some companies—diversified energy companies are looking at the development of multiple sources, and the companies that are most heavily invested in fossil are looking at a horizon which continues to allow them to develop new sources of supply. And I think from an American energy security perspective, we also need to develop those new sources, coupled with the new technologies that enable those sources to be used in a way that allows us to meet our climate goals.

SIMMONS: Yes?

Q: Laurie Garrett from the Council.

SHERWOOD-RANDALL: Hi, Laurie.

Q: Welcome back.

In seven days and 12 minutes—(laughter)—the polls will be closing on this side of the country. And in eight days, hopefully without any insanity, we will have a final result. The changes made in the Obama administration to the whole structure of energy and energy security in the United States have been really profound. Are they writ in stone? How flexible are they? And could either candidate fundamentally alter the course that you have set?

SHERWOOD-RANDALL: That was very diplomatically put, because you know I can’t comment on the election. (Laughs.)

Laurie, I think so much has taken place that has demonstrated to the American people that a clean energy economy is good for the American workforce and creates jobs and opportunities for them that much of the work we have invested in will be sustained, because the private sector is now taking it forward. So if you look at hundreds of thousands of jobs in the solar sector, the job generation in energy efficiency opportunities, work in the construction world, we see—we see so much happening for the American workforce that it cannot be rolled back.

Now, there’s no question that an administration that fundamentally disagrees with the effort to develop and deploy clean energy solutions as we have believed they need to be developed and deployed could slow things down. And leadership matters, so we can’t—we can’t dismiss that as a possibility. But I believe that we have achieved a demonstration of the benefits to the American people, that we have bipartisan support in Congress for a number of the initiatives that we have undertaken—a commitment, for example, on grid modernization that has received significant support across the aisle—and that we will be able to continue forward, perhaps not at the same pace depending on the outcome, but I think ultimately we will move toward this destination because it’s inevitable for us.

SIMMONS: Yes, sir?

Q: Rick Petree from Global Power Partners.

You touched very briefly on storage—

SHERWOOD-RANDALL: Yes.

Q: —mentioning batteries and other technologies. Would you comment on which technologies you see leading the way, what the roadmap is for wide-scale deployment, and what the timing might be?

SHERWOOD-RANDALL: Well, I can’t pick technologies. I would say that really the holy grail now is large-scale storage, and that is work that will create a huge market if we can achieve the outcomes we need to achieve. And that’s one of the areas in which our labs are investing most heavily, investing their brainpower most heavily. We’re investing the money; they’re the brains.

I’ll give you an example of something I witnessed recently. We invested in a thermal solar facility called Crescent Dunes in Tonopah, Nevada. And it actually is the first of its kind. I went to a technology, basically, christening a couple of weeks ago there. And it stores 10 hours of solar-generated power, and then that power is available at night or when the sun is not shining. It’s the first time we’ve seen this actually work in the United States, and it’s a very significant development, because if we can begin to store on a large scale—this plant can power 75,000 homes. So we’ll begin to be able to see the wider deployment of the renewables that we know we need to deploy more broadly. But this is also true for automobiles and all sorts of other reasons we need more advanced battery technologies.

So I would say—I mean, if I’m challenged to ask where’s—if I were a young scientist looking for something meaningful to do on the climate front, I would be very interested in working on storage. Or I’d work on CCUS. Those are the two things that would capture my interest.

SIMMONS: Any others?

You know, I know one of the things that you’ve been very passionate about is the need to build a better innovation ecosystem and a sort of expanded pipeline for all the requirements of innovators and workers that we’re going to need. Can you talk a little bit about that area of interest of yours and some of the things you think we ought to prioritize?

SHERWOOD-RANDALL: So I had really not thought a lot about this till I got to DOE, and I didn’t understand how essential each element of the chain would be. The basic research we do in a number of our labs is the fundamental science that has to be done—so, for an example, materials science that is revolutionizing a lot of our energy technologies. Then we move that to the applied science people who work on how do we use these discoveries to meet our clean energy goals. Then we have to think about deployment.

That’s where we get to the need to reach outside DOE and look for private-sector partners. That’s a very risky time on the innovation chain. We have the Advanced Research Projects Agency-Energy, called ARPA-E, which we modeled on DARPA, the famous Defense Advanced Research Projects Agency. And that—the goal of ARPA-E is to put money into early-stage deployment of technologies that the private sector sees as too risky and to prove them out. And if they’re proven, as we’ve seen with a number of the technologies we’ve invested in at DOE in the last eight years, then the private sector will take them to scale. And so we have the APRA-E initiative to get through that first valley of death.

There is another valley of death after that. We then see the challenge of getting them out to broader-scale deployment. And as I noted to you earlier, for example, on utility-scale solar deployment, we saw that we needed to give an additional push. So we had ARRA funding and some additional money we were able to put into the deployment of utility-scale solar, and then it took hold. And the private sector has deployed these additional—now it’s 40 on top of the five that we put initial funding into, without any federal subsidy.

So what we see is all along the innovation chain we have a role to play. This effort to partner with the private sector has been an absolutely essential piece of the equation for us, because we can’t get the technologies out to market at the cost that is required to see them widely deployed unless we have private-sector partners. And so we have a number of additional initiatives we’ve developed for bringing our lab experts out into the private sector and bringing the private sector into our labs, so that we can see early, promising technologies—the applied technologies—and think together about how to bring them to the market.

And for any of you interested in that, again our website has really extraordinary information. This is www.energy.gov. And it’s a fascinating place to spend some time if you haven’t been there before.

SIMMONS: Speaking of the private sector, we’ve seen in recent years a really dramatic uptick in the amount of the ambition and the leadership of corporate efforts around efforts to procure and deploy clean energy.

SHERWOOD-RANDALL: Yes.

SIMMONS: And I’m wondering, from your perspective, from your perch, how significant that is. And if you could kind of encourage the private sector to do more of anything, whether it’s—(inaudible)—or others, with regard to this whole suite of issues, what would it be?

SHERWOOD-RANDALL: Well, we are—we have sought to build a partnership with a number of patient investors, people who take a longer-term time horizon on reward and who perhaps have a higher tolerance for risk, because we really do see a number of opportunities for investment in some of these earlier technologies that need to be brought out to the market. And in addition to Mission Innovation in Paris last winter, there were a number of private-sector and philanthropic leaders who stood together with Bill Gates and announced something called the Breakthrough Energy Coalition, which was specifically created to work with the countries that had committed to Mission Innovation to help bring those new technologies out to market. And so there I would say, if you’re an investor interested in doing good in addition to doing well, working to identify those opportunities to bring the new technologies out to market more quickly would be a very significant contribution to our clean energy ecosystem.

SIMMONS: Well, Deputy Secretary, you’ve served this country in such an amazing way for so many years. We’re so grateful for your service.

SHERWOOD-RANDALL: Thank you.

SIMMONS: We’re grateful for the thoughtfulness that you bring to all these issues, and we are grateful for the rich discussion you’ve helped to provide tonight.

SHERWOOD-RANDALL: Thank you.

SIMMONS: Please join me in thanking the deputy.

SHERWOOD-RANDALL: Thank you so much. (Applause.)

(END)

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