2007 summit review

2007 Summit Review:Security, Leadership and Transparency

Sponsored By:EnerCrest, IncBlueWater Strategies, LLCUniversity of Wyoming College of BusinessIBMIron Creek Energy Group, LLCMarathon Oil Corporation

Sinclair OilShell Oil CompanyUniversity of WY School of Energy ResourcesPillsbury Winthrop Shaw Pittman, LLPBritish Petroleum

Energy Policy Summit Review: Security, Leadership and Transparency

199 E Pearl Ave Ste 101 PO Box 1989 Jackson, WY 83001 T 307-732-8875 F 307-732-8889 www.jacksonholepolicy.org Board of Directors: Shaun Andrikopoulos, Board President Sara Flitner Brad Gammons Andrew Lundquist Henry S. Romaine, Jr. Paper Contributors: Dr. Eric Arnould Dr. Elizabeth King Suzanne Moore Howard Useem

On December 2-4, 2007, the Jackson Hole Policy Institute (JHPI) hosted the First Annual Senior Executive Energy Summit in Jackson Hole, Wyoming. The JHPI organized and led an off-the-record discussion of the impact of global energy demand on Western energy and environmental resources between Senior energy executives, Federal and state policy makers, leading academicians, and NGO leaders. This document summarizes the themes and issues that were raised by speakers and panels during the Summit. The JHPI has not attributed specific comments or opinions to individual participants in order to preserve the ’off-the-record’ format for future Jackson Hole Policy Institute events.

WESTERN U.S. ENERGY: It’s a Global Matter

The West is playing an increasingly vital role to domestic energy security. Energy ‘nationalism’ complicates our long-term energy picture. Constrained energy transportation infrastructure limits the development of Western energy

resources.

THE CALIFORNIA EFFECT: How End Markets Drive Energy Policy & Development

State and regional legislation does not always account for energy economy realties. Consumers are looking for more ‘transparency’ in their energy purchasing. State and regional RPS and CO2 mandates are ‘in front’ of much-needed Federal energy policy

leadership which could complicate matters.

THE ENVIRONMENT & ENERGY CONUNDRUM: Show Us The Power

Energy development is closely tied to environmental and societal sustainability. Limiting access to our natural resources creates tradeoffs that may not be apparent to

consumers and voters suggesting a greater need for education and transparency. Environmentally sustainable energy production will be predicated on producers taking a

‘holistic approach’.

SUMMIT TAKEAWAYS: New Insights into Energy Security

Domestic energy policy is becoming more important to our national security equation. Innovation, partnership, and leadership are necessary ingredients for success. Energy transparency is critical in the boardroom and in the living room if we are to transform

our economic reliance on energy. CO2 emission levels are an unavoidable sideboard for energy policy and security.

2007 AGENDA WESTERN US ENERGY It’s a Global Matter

Keynote: Steven Hinchman, Senior Vice President of Worldwide Production, Marathon Oil Corporation

Moderator: Andrew Lundquist, President, BlueWater Strategies

Panel: Mark Northam, Director, School of Energy Resources, University of Wyoming

Todd Graham, Chairman, Greater Yellowstone Coalition

John Grossenbacher, Director, Idaho National Laboratory

Peter Johnson, President, Sinclair Oil Corporation

THE CALIFORNIA EFFECT How End Markets Drive Energy Policy & Development

Moderator: Michael Barr, Attorney, Pillsbury Winthrop Shaw Pittman

Panel: Gerald Secundy, President & CEO, California Council for Environment and Economic Balance

Tom Ohlmacher, President and Chief Operating Officer, Black Hills Corporation

John Schiffer, Senate President, Wyoming State Legislature

Jeff Trandahl, Executive Director, National Fish & Wildlife Foundation

Lara Ryan, Executive Director, Green River Valley Land Trust

ENVIRONMENTAL POLICY UNCERTAINTY Are There Any Winners?

Keynote: C. Stephen Allred, Assistant Secretary for Land & Minerals Management, US Dept. of the Interior

OPEN MODERATED DISCUSSION

Moderator: Eric Arnould, Distinguished Professor of Sustainability, College of Business, University of Wyoming

Panel: Paul Matheny, Vice President, Rockies Region, Questar Market Resources

Roy Cohee, Speaker of the House, Wyoming State Legislature

Thomas Fitzsimmons, President, Iron Creek Energy

Sara Flitner, Environmental Quality Council, State of Wyoming

John Turner, Past President & Chief Executive Officer, The Conservation Fund

THE SUSTAINABLE ENERGY CONUNDRUM Show Us The Power

Keynote: John Hofmeister, President, Shell Oil Company

Moderator: Shaun Andrikopoulos, Chief Executive Officer, EnerCrest, Inc.

Panel: Richard Walje, Chief Executive Officer, Rocky Mountain Power

Jimmie Powell, Director of Global Energy Initiative, The Nature Conservancy

Brad Gammons, Vice President Global Energy & Utilities Industry, IBM

Kevin Collins, President and CEO, Evergreen Energy

David Lincoln, Founding Partner, Element Partners

WRAP-UP DISCUSSION AND KEY THEMES

Facilitators: Eric Arnould, Distinguished Professor of Sustainability, College of Business, University of Wyoming

Charles Mason, True Chair, Energy Economics, University of Wyoming

2007 PARTICIPANTS Shaun Andrikopoulos, EnerCrest, Inc John Andrikopoulos, EnerCrest, Inc Eric Arnould, University of Wyoming Paula Barnett, British Petroleum Michael Barr, Pillsbury Winthrop Shaw Pittman Roy Cohee, Wyoming State Legislature Charley Dean, Silverton Partners Patrick Devine, Pillsbury Winthrop Shaw Pittman Andrea Erickson, The Nature Conservancy Todd Erickson, EnerCrest, Inc. Thomas Fitzsimmons, Iron Creek Energy Sara Flitner, State of Wyoming Brad Gammons, IBM Corporation Todd Graham, Greater Yellowstone Coalition John J. Grossenbacher, Idaho National Laboratory Kevin Harvey, EnerCrest, Inc Brent Hathaway, University of Wyoming JJ Healy, EnerCrest, Inc Steven Hinchman, Marathon Oil Corporation John Hoak, Rock Well Petroleum, Inc. John Hofmeister, Shell Oil Company Diana Hulme, Ruckelshaus Institute Paul Jacobson, Evergreen Energy Krista Johnson, Shell Oil Company Peter Johnson, Sinclair Oil Cathy Kehr, Capital Group Companies Thomas Kelsch, National Fish and Wildlife Foundation Elizabeth King, EnerCrest, Inc. David Lincoln, Element Partners

Andrew Lundquist, Blue Water Strategies Timothy Male, National Fish & Wildlife Foundation Charles Mason, University of Wyoming J. Paul Matheny, Questar Market Resources Chantel McCormick, State of Montana David Nelson, Global Decisions, Inc. Jim Nielson, Nielson & Associates, Inc Kent Noble, University of Wyoming Mark Northam, University of Wyoming Tom Ohlmacher, Black Hills Energy Fred Parady, EnerCrest, Inc. Jimmie Powell, The Nature Conservancy Henry Romaine Jr., EnerCrest, Inc. Lara Ryan, Green River Valley Land Trust John Schiffer, Wyoming State Legislature Allan Schurr, IBM Corporation David Searle, Marathon Oil Corporation Gerald Secundy, California Council for Environment and Economic Balance Mark See, Rock Well Petroleum Inc. Lyn Shanaghy, US Senator Mike Enzi Paty Smith, US Senator John Barrasso Chris Spooner, University of Wyoming Foundation Doug Thierwechter, Marathon Oil Corporation Jeff Trandahl, National Fish & Wildlife Foundation John Turner, The Conservation Fund Howard Useem, BlueWater Strategies Foster Wade, US Dept of Interior Richard Walje, Rocky Mountain Power

2007 Energy Summit Review: Security, Leadership and Transparency - 4 -

WESTERN US ENERGY: It’s a Global Matter

The overarching take-away from the 2007 Summit is that the U.S. is on ‘the razor’s edge’ with respect to our current and future energy security. The U.S. consumes nearly 25% of global energy (Fig. 1 & Fig. 2) and imports nearly two-thirds of its petroleum today (Table 1). Numerically, the eradication of U.S. dependence on fossil fuels seems highly unlikely placing a greater importance on the development of all of our domestic resources, most of which reside in the Western states. The West sits at the nexus of increasing energy production, environmental concerns and growing consumption. Figure 1: 2005 World Total Primary Energy Consumption (Quadrillion Btu)

United States, 22%

Europe,19%

China, 14%

Eurasia, 10%

Other Asia & Oceania,

9%

Central & South America,

5%

Middle East,5%

Japan, 5%

Other North America, 5%

India, 4%Africa, 3%

Source: EIA Statisics

Figure 2: 2005 World Per Capita Total Primary Energy Consumption (Million Btu)

United States, 340.5

North America Total, 280.3

Japan, 177.0

Eurasia,160.4

Europe, 146.4

Middle East, 124.7

Central & South America,

52.2

China, 51.4Asia & Oceania, 41.0 Africa, 16.1 India, 14.8

Source: EIA Statistics


Table 1: Net US Hydrocarbon Imports

Fuel Consumption 2006 Net Exports (-)/Imports Net ImportedPetroleum (Thousand Barrels per Day) 20,687 12,357 60%Natural Gas (Billion Cubic Feet) 22,241 3,612 16%Coal (Million Short Tons) 1,125 -468 0%


United States Energy Profile

GAME CHANGING GLOBAL PRESSURES The demand for energy is directly linked to economic growth, as a consequence historical U.S. foreign oil supplies are under increasing competitive pressures from developing nations. Some predictions indicate a 74% growth in energy consumption in non-OECD countries (Fig. 3), most of this growth will be supplied by fossil fuels through 2030. Global energy consumption is likely to grow globally at 1.3% per year even if tempered by significant increases in efficiency. Power generation is the fastest growing sector in the energy universe, followed by transportation. Oil, gas, and coal are likely to remain the global mainstays of energy supply through 2030 (Fig. 4). These trends set the stage for less certain energy future for the U.S. and a greater dependence on all forms of domestic energy. Figure 3: Energy Use (Quadrillion Btu) in the Non-OECD Economies by Region, 1990-2030

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Figure 4: Energy Consumption (Quadrillion Btu) by Fuel 2006-2030

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Although liquefied natural gas imports will likely play an increasingly important role in meeting domestic demand, they appear to be subject to competitive pressures from other economies around the world; ‘like oil tankers, LNG ships also have rudders.’ Tar sands from Canada will also contribute to U.S. supply, but big issues remain about burning natural gas to produce tar sands. Said another way, this type of resource requires us to burn clean gas to produce a dirtier fuel. FOREIGN ENERGY ‘NATIONALISM’ BLURS THE U.S. ENERGY PICTURE More than ever our energy security is directly linked to our foreign policy and our ability to strategically compete with other major oil consuming countries. Foreign governments own and control much of the global supply of hydrocarbons and all of the incremental oil ‘surge’ supply placing increasing pressure on our need for more domestic production. Energy nationalism is leading to markets that are less efficient because of the associated price controls, capital investments, and ownership restrictions placed on foreign reserves. International energy companies appear to be at a crossroads of increasing downstream demand with less upstream supply certainty. A CALL FOR U.S. RESOURCE NATIONALISM Some Summit participants pointed out that financial and homeland security pressures today underscore the need to stimulate a U.S. resource nationalism discussion. Some industry executives blame the industry itself for the current lack of U.S. energy security and strategy. They believe that the energy industry has largely ignored the stakeholder community to its own detriment by giving rise to ‘off limits’ areas for future energy development. This view is complemented by a call for a National Energy policy that is ‘holistic’ in nature by accounting for externality costs (e.g., environment, socio economic, etc.). One view suggests that is if we were to take a Nationalistic approach to our energy reserves, environment, and economy we could significantly improve our energy security equation for the foreseeable future.


THE WEST’S ENERGY CORNUCOPIA The energy resources in the Western U.S. are not a drop in the bucket globally when we consider the oil, gas, coal, uranium, wind and solar resources that are concentrated there (Fig. 5). Many believe that the West has the opportunity to set the standard for energy development with coal being a top priority; this view of course is tempered by current state and proposed Federal carbon emission mandates. Despite the wealth of energy resources in the West, there exists a bottleneck in U.S. energy infrastructure between the major resources and the population centers on the coasts. Industry and policy maker participants agreed that our energy transportation infrastructure will not reliably meet the growing needs of our economy in the near term. Figure 5: United States Net Energy Producing States & Net Energy Consuming States (2005)

WESTERN NATURAL GAS IS INCREASINGLY STRATEGIC


Natural gas supply, a crucial component of the western U.S. input to the energy mix, is forecasted to grow approximately 2% per year (Fig. 6). This growth will be largely driven by the demand for lower emission power generation when compared to other fossils fuels. Gas will overtake oil for industrial use and in electricity generation, but will be a distant second to coal for generated power. The nexus of production for natural gas in the U.S. will change as supply declines from conventional reserves (e.g., Gulf of Mexico), but unconventional sources such as shale, tight sands and coal-bed come on-line in significant volumes. Unconventional plays, found primarily in the West, could represent as much as half of U.S. production by 2030 (See Fig. 6).


Figure 6: Western State Natural Gas Production by Volume and % of U.S. Supply (1990-2006)

6.5%7.0% 7.7% 7.2%

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THE OPPORTUNITY OF A LIFETIME…THERE IS A DOWNSIDE Energy development in the West represents an ‘economic opportunity of a lifetime’ for many small towns. Not only will traditional oil, gas, coal and uranium be the drivers of economic growth, but so will wind, solar and carbon capture and sequestration. Most of these opportunities appear to be being surfaced in rural areas across the West. However, with energy development comes considerable socioeconomic and environmental impact; the way of life for most citizens in these areas will likely change in more than one facet. Rocky Mountain States are currently struggling to balance the value of open space, neighbors, and wildlife with the need for energy production, economic prosperity, and the desire to maintain the authority over infrastructure. Some hold the view that energy development in the future must take into account the financial, environmental, and social impacts that are created in ‘energy boom’ times. NGO leaders and policy makers alike pointed out that the communities impacted by energy development should be better empowered to cope with development with a greater say in how resources will be exploited and through greater economic involvement from the producers creating the impacts. NIMBY IS PLAYING A BIGGER FACTOR IN THE WEST TODAY THAN IN PRIOR BOOMS Those adopting NIMBY (not in my backyard) ideals have expanded beyond the environmentalist community, to include the local residents, sportsmen and landowners, many of whom are the employees of energy companies. Increasingly these interests are expressing that certain areas should remain ’off limits’ to future energy development. Industry participants counter this desire by predicting that production costs are likely to increase in order to deal with extraction in a responsible way and a significant behavior shift within industry will be required. Segments of industry recognize that the days of economic exploitation for shareholder value and pure economics are waning and that corporate social responsibility must play a greater ‘on the ground’ role in future energy development.


THE CALIFORNIA EFFECT: How End Markets Drive Energy Policy & Development As the 8th largest economy in the world, California’s energy demands have disproportionate influence on how and where we develop energy resources. On one hand the state of California is an energy leader with one of the lowest carbon footprints per capita in the U.S. On the other, its voters and legislature continue to mandate stricter regulations on the state’s energy mix. For example, California’s Assembly Bill 32 (AB 32), enacted in 2007, calls for the return to 1990 levels for green house gas emissions levels and places considerable restrictions on incremental coal-fired power generation. THE AB 32 RIPPLE EFFECT The energy-rich Rocky Mountain States appear to be struggling with a multitude of issues as a result of AB32. These states desire to be good suppliers to California, but they also desire to maintain the quality of life that defines the Rocky Mountain States. Local and regional policy makers expressed that impacts to the coal and natural gas industries of Wyoming should not be overlooked by legislation proposed in other states (such as AB32) that could disrupt the long-term energy mix. There is a call to initiate a dialog between producing states and consuming states in order to maintain a balance between stakeholders. SHOULD FEDERAL POLICY MIRROR STATE POLICY, OR THE OTHER WAY AROUND? Thus far the federal government has not followed California’s lead in carbon reduction mandates, which illuminates the disparity that exists between regions of the country when it comes to energy and environmental policy. The view that AB 32, along with other state mandated renewable portfolio standards (RPS), may not fully account for the reality of ‘where the energy will come from’ was shared by a broad cross section at the Summit. There appears to be no consensus on whether Federal legislation should drive state carbon emissions policy. Nor is there consensus on how RPS requirements will impact the supply and demand equation that exists between regions. There appears to be emerging interest in coordinating a regional energy policy, both to address the region’s own development needs and to meet the demands of AB 32. Some believe that Federal solutions don’t fit precisely and that past experience indicates that the states would prefer the opportunity to work through energy development issues in their own way. While consumers [voters] are taking a more vocal role with regard to increased sustainable energy production, there is still a wide lack of awareness about the realities of energy production, supply, and demand. That lack of awareness, coupled with popular stances in favor of “greener” energy, will likely drive a wider gap between state, regional, and Federal policy. SHIFTING THE ENVIRONMENTAL AND SOCIAL BURDEN California continues to look toward other states to supply its growing energy demand. With NIMBY (Not In My Backyard) concerns driving the trend; the number of oil refineries in California has dropped to 12 from 25, no new coal or oil fired plants are being planned in the state, and existing nuclear power plants will start being phased out over the next 15 years as they reach their design life. California is mandating clean energy but doesn’t want to produce it. As a result, the impacts of energy development appear to be hidden at the point of production outside the state. One example of these hidden impacts is the change occurring in Sublette County, Wyoming where two of the largest natural gas fields in North America exist. Sublette County is the fastest growing county in Wyoming because of heavy drilling and production activity. With this boom, the community has experienced significant socioeconomic and environmental impacts. Some view these impacts as a direct externality of increasing Californian demand for natural gas.


ENVIRONMENTAL POLICY UNCERTAINTY: Are There Any Winners?

Over half of the energy production in the U.S. occurs on public lands where there are strongly competing demands for various uses such as energy development, recreation, agriculture, and tourism (Fig. 7). The increased impact on these lands will likely lead to increased regulation. Private lands are also likely to experience tighter regulations as impacts from development, like air and water quality, affect all landowners. With tighter regulation comes recognition that we may have limited access to some of our most promising energy reserves. This view was countered by the view that with greater regulation often comes greater ‘resource efficiency and innovation’ that could actually lead to lower costs long-term (e.g., mat and clustered drilling). Figure 7: Federal Drilling Permits Issued Nationally 2006

Wyoming, 54%

New Mexico,21%

Colorado, 10%

Utah, 7%

Rest of Country, 8%

Source: US Department of the Interior, Secretary Kempthorne, to the Committee on Natural Resources, US House of Representatives; Quations for the Record, Hearing Date March 1, 2007.

Responsible development requires collaboration. Industry participants at the summit expressed a call by industry for collaborative approaches as an alternative to increased regulation. Collaboration could occur in many areas: research and development, innovation, conservation, efficiency, education, science, and leadership. One environmental NGO suggested that a systems management approach to future energy development could be established now in order to protect our future. In a market economy free of regulation, how is good stewardship regulated, how is it determined who is doing a good job, and how are companies that are operating under best practices rewarded? These are issues that need to be addressed if legislatures are not going to step in to write the rules. Part of this effort may start by educating the consumer that there is a differentiated supply based on corporate environmental stewardship. SHORING UP OUR FUTURE WITH GREATER ACCESS TO U.S. RESERVES One industry view suggested that the U.S. is the only oil importing country that denies access to its own natural resources. According to one industry participant at the Summit, policy restrictions have placed as much as 40 billion barrels of technically recoverable oil off limits (i.e., Outer Continental Shelf and the Arctic National Wildlife Reserve). The legal restrictions on drilling the Gulf of Mexico are partially based on environmental concerns but also aesthetic worries about the impact on tourism. Some restrictions may be based on false perceptions all together since offshore oil platforms are arguably safer than tankers offloading imported oil in harbors. Oil and gas production, particularly of continental shelf reserves, may be a short-term necessity if consumer demand is to be met. The question remains whether some reserves should be left completely off-limits for development because of environmental concerns, or whether, if properly regulated, they can be accessed in a responsible manner.


THE SUSTAINABLE ENERGY CONUNDRUM: Show Us the Power DIFFERENT MEANINGS FOR DIFFERENT PEOPLE A concept that emerged during the Summit was that sustainable energy means different things to different people. For some, sustainable energy equates to renewable sources which excludes hydroelectric and nuclear power. For others, sustainable energy revolves around the concept that traditional energy resources can be developed ‘sustainably’. Some industry executives voiced the opinion that responsible energy development includes an attempt to maximize extraction, maximize efficiency, and minimize development footprint. Another supporting view suggested that domestic energy development in the future will look beyond financial and purely economic drivers and toward other factors, such as food production and water resource constraints. At the Summit several participants foretold of significantly higher food prices as a consequence of increasing biofuels production. As a broad consensus point, environmental NGOs, policy makers, and industry executives alike agreed that we should cautiously pursue biofuels policy, but not at the expense of our food production security. The role of biofuels, from food-based sources such as cellulosic ethanol as well as non-food sources from waste products, is likely to remain controversial. Few in the policy arena appear to recognize that the amount of energy consumed in biofuels production, the large land supply required to grow biofuels, and the loss of biologic diversity on converted lands often exceed the perceived benefits of the fuels themselves. THE RESPONSIBLE ENERGY CONUNDRUM The U.S. is caught in the conundrum of consuming more energy, expecting stable prices, and seeking greater independence while at the same time expecting large resource areas (such as the outer continental shelf and ANWR) to remain undeveloped. Energy industry leaders and policy makers appear to be standing ‘at the precipice of meeting many demands, some of which conflict.’ According to one industry study referenced at the Summit, as many as 80% of customers surveyed indicated an interest in having more renewable energy choices along with increased in energy efficiency choices. However, 45% said they didn’t want to pay more for ‘greener’ energy. 20% of another study group was willing to pay a premium for products and services with better energy efficiency. There is not currently a universal direction that the consumers are pressuring the power industry to head in. ALTERNATIVE ENERGY…WHERE WILL IT COME FROM? Demand for ‘alternative’ energy sources is outstripping supply in today’s market and are likely to only make a small overall contribution to our total energy mix in the mid to long term. It is unclear exactly which alternative fuel sources will be able to deliver at the levels our energy economy demands or in the places where it is demanded. Wind is seen as a savior but the transmission capacity from major wind producing regions is a key constraint. Silicon-based photovoltaic solar is supply constrained, continues to have cost disadvantages and faces scalability issues. One industry participant suggested that transmission of renewable energy on the grid can be accomplished if existing transmission lines and power corridors are used to establish access to renewables as a lead energy source. These sources could then be supplemented with fossil fuels that are transmitted as a tag along to compensate for the intermittent nature inherent with both wind and solar. From a public policy perspective some panelists held the view that tax and other renewable energy subsidies do as much to harm the broad adoption of renewable energy as they do to help it. With inconsistent tax treatment the renewable industry and value chain is being whipsawed between period of high demand and periods of near zero demand. All the while, local, state and regional RPS (renewable portfolio standards) continue to roll out in increasing number and degree. HIGHER OIL PRICES ARE LIKELY A GOOD THING FOR RENEWABLES There is a wave of renewable energy innovation that will grow as the cost of hydrocarbons increases. Renewables, such as solar, have become more attractive with the increase in crude oil prices and technological innovation in the


nanotechnology and material science fields. Perhaps government mandated RPS’s will improve the position of renewable energy resources if traditional energy sources remain expensive on a relative basis. CARBON EMISSIONS OPTIONS The planet is experiencing an approximate 2% increase per year in CO2 emissions with coal as the largest source followed by gas (Fig. 8). Most of the growth of carbon emissions will be in non-OECD countries. China is currently the second largest carbon emitter and will bring a new 330 MW coal fired power plant on line every 10 days this year (Fig. 9 & 10). Figure 8: World Energy-Related Carbon Dioxide Emissions by Region, 2003-2030 (Billion Metric Tons CO2)

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Figure 9: 2005 World Carbon Dioxide Emissions from the Consumption and Flaring of Fossil Fuels (Million Metric Tons CO2)

United States, 21%

China, 19%

Europe, 17%

Other Asia & Oceania, 14%

Eurasia, 9%

Middle East, 5%

India, 4%

Central & South America, 4%

Africa, 4% Other North America, 4%



Figure 10: 2005 World Per Capita Carbon Dioxide Emissions from the Consumption and Flaring of Fossil Fuels (Metric Tons CO2)

United States, 20

North America, 16

Eurasia,9

Europe,8

Middle East,8

China, 4Asia &

Oceania, 3

Central & South America, 2

Africa, 1 India, 1


The view that reducing carbon emissions is an enormous challenge was shared no matter which industry, policy or environmental NGO weighed in on the topic. According to one speaker at the summit the following reductions could be possible with a concerted effort in the U.S.: If the fuel efficiency of automobiles is doubled, a 2% impact on CO2 emissions results, replacing half of the U.S. coal combustion with nuclear or clean coal would reduce CO2 emissions by 3% and if current coal plants are retired at 40 years and replaced with nuclear, CO2 emissions would drop 10%. All of these steps would begin to cap emissions, but questions remain about the viability of these steps particularly with the rapid growth in CO2 emissions in the developing nations. CAN CARBON CAPTURE AND SEQUESTRATION SAVE THE DAY FOR COAL? Coal has a higher environmental impact than oil or gas; and all three have a higher impact than wind or solar. In order to enable coal to become cleaner we must make a concerted policy and industry investment effort toward clean-coal technologies. Although carbon capture and sequestration (CCS) appears to be a top priority for industry, there are big unanswered questions regarding what new impacts will be created with CCS (e.g., heavy water usage) and how the CO2 will be stored sub-surface. Some industry executives worry that Carbon sequestration may be changing the subsurface of the Earth and some leading CEO’s worry that industry, and the public, still lack a full understanding of the long-term consequences related to CCS. Policy matters such as who owns the sequestration geologic formations, who regulates them, who secures them, and who retains the long-term liability of the CO2 remain to be answered in most places. One outcome of the Summit was to reinforce the importance of passing in-process legislation in Wyoming to enable CCS. The legislation was passed in the 2008 session. COULD NUCLEAR BE THE NEXT ‘GREEN’ ENERGY? With the passing of nearly 40 years of technological advancement since the last commissioned nuclear power plants in the U.S. were designed, could nuclear be staged for a comeback? Today approximately 20% of our power is nuclear generated. According to the EIA, approximately 47 thousand metric tons of nuclear waste (spent uranium fuel) has been produced by the U.S. nuclear industry over the past 40 years. This is in stark contrast to the over 2 billion metric tons of CO2 produced by coal combustion in our country every year. Nonetheless, current consumer attitudes about nuclear power are expected to stymie plant development in the U.S. for the foreseeable future.


2007 SUMMIT TAKEAWAYS: Questions Emerge About Energy Security DOMESTIC ENERGY POLICY IS BECOMING MORE IMPORTANT TO OUR NATIONAL SECURITY EQUATION. It is clear that as energy ‘nationalism’ continues to drive the global energy supply picture, the demand picture is increasingly being driven by non-OECD economic growth demands. Quite possibly these trends are on a collision course which could result in less certainty for long-term U.S. national security. Should we answer the call for more energy ‘nationalism’ here at home, or continue on our current path? ARE WE LIMITING ACCESS TO OUR MOST PROMISING RESERVES AT THE EXPENSE OF OUR LONG-TERM ENERGY SUSTAINABILITY? With large portions of our domestic energy reserves being placed off limits due to environmental concerns, many of which are legitimate, are we placing our long-term energy security at risk? Is it feasible for these resources to be tapped with the proper amount of regulatory and technological advancement? What policies are in place today to enable the development of such resources and what policies should be developed to better ensure the viability of these reserves? INNOVATION, PARTNERSHIP, AND LEADERSHIP ARE NECESSARY INGREDIENTS FOR SUCCESS. Without a doubt higher energy prices globally will drive accelerated investment in R&D which in-turn will lead to solutions to many of our current supply and demand issues. However, at the same time there is a clear call for leadership amongst and between industry, environmental and political interests when it comes to defining our energy priorities for the 21st century. Can we meet our needs without compromising our most important societal values? If so, who will take the leadership to make it happen? ENERGY TRANSPARENCY IS CRITICAL IN THE BOARDROOM AND IN THE LIVING ROOM IF WE ARE TO TRANSFORM OUR ECONOMIC RELIANCE ON ENERGY. Consumers must become more educated about how and where their energy is produced if we are to significantly change our consumption patterns on a broad scale. This requires that we establish a higher standard for ‘energy transparency’. Technological advancements could lead the way for greater consumer awareness, but so too should established energy providers enable consumers to better understand the energy value chains that drive our daily lives. CO2 EMISSION LEVELS ARE AN UNAVOIDABLE SIDEBOARD FOR ENERGY POLICY AND SECURITY. Global CO2 emissions growth must be addressed to ensure that the anthropomorphic effects on global climate change are minimized. How should the U.S. take a leadership position in the reduction of CO2 emissions without compromising its economic prosperity or without inadvertently subsidizing overseas economic growth? How can CO2

emissions policy be developed in a coordinated fashion with broader energy policy mandates?

ABOUT THE JACKSON HOLE POLICY INSTITUTE The Jackson Hole Policy Institute (JHPI) is a 501(c)3 non-profit institution dedicated to improving public policy through constructive engagement between diverse stakeholders. The JHPI was created for the express purpose of convening frank and substantive discussions on important policy issues. The Senior Executive Energy Summits are designed to raise awareness and elevate the debate surrounding energy and environmental policy and are the JHPI’s current focus.


199 E Pearl Ave Ste 101 T 307-732-8875Post Office Box 1989 F 307-732-8889Jackson, WY 83001 www.jacksonholepolicy.org

2007 summit review

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energy transparency

energy nationalism

domestic energy security

senior energy executives

power energy development

sustainable energy production

longterm energy picture

environment energy conundrum