Energy Transitions Panel Discussion

Researchers from the John and Willie Leone Family Department of Energy and Mineral Engineering are at the forefront of research into the energy transition spanning economics, law, policy, science, and engineering. An interdisciplinary group of leading energy scholars from EME shared their thoughts on what it takes to make global energy systems more sustainable while powering a world with billions of energy-hungry people.

Meet the presenters

Chiara Lo Prete: Associate Professor of Energy Economics and Associate Head for Diversity, Equity and Inclusion
Expertise: applied econometrics, electricity market design, energy economics and policy, and modeling of electricity and natural gas systems.

Title of talk: The Geopolitics of the Energy Transition
Abstract: Geopolitics focuses on the shifting balance and rising tensions among nations. Fossil fuels have been the foundation of the global energy system, shaping the geopolitical map over the last two centuries. The growing deployment of low-carbon energy technologies involves a deep transformation of the global energy landscape that will have profound geopolitical implications, altering relations between states, affecting the global distribution of power, and creating new vulnerabilities. Chiara will discuss these far-reaching effects on energy markets, with a focus on electricity grids.

Seth Blumsack: Professor of Energy Policy and Economics and International Affairs and Director of Center for Energy Law and Policy
Expertise: electric power and natural gas industries, reliability and resilience in network infrastructure, organizational decision-making for infrastructure management, and regulation and deregulation in electric power.

Title of talk: Legal and Regulatory Innovation
Abstract: Even when economics and technology are perfectly aligned, poorly designed legal and regulatory frameworks can thwart the deployment of innovative energy strategies by raising barriers or increasing uncertainty. Penn State’s Center for Energy Law and Policy uses an interdisciplinary, science-based approach to identify legal and regulatory solutions that can lay the groundwork for energy innovation and more sustainable energy systems. Seth will highlight the Center’s efforts in multiple areas including methane emissions regulation, geologic carbon sequestration and home energy efficiency to illustrate its unique approach to interdisciplinary policy analysis and stakeholder engagement.

Mort Webster: Professor of Energy Engineering and Associate Department Head for Graduate Education
Expertise: stochastic multi-stage optimization algorithms, electric power systems planning and operations, coupled energy-water-land modeling for resiliency studies.

Title of talk: Managing Uncertainty in the Energy Transition
Abstract: The need for a low carbon and resilient energy system that is also low cost and reliable calls for new technologies and new market structures. There remains considerable uncertainty in which technologies will be best, in what the future costs will be, and the best transition path to get there. Finally, future energy systems that rely more on renewables will need to manage variability and uncertainty on daily and hourly time scales. Mort will overview some of the research at Penn State into alternative technology pathways and new energy market designs to better manage the short-term and long-term uncertainty.

Additional Q&A

QUESTION: Looking at how energy systems have changed over your careers, what has surprised you the most?

Chiara Lo Prete: Personally, the biggest stunner has been shale gas, and the major impact that the unconventional revolution has had on natural gas markets over the past 15 years. When I moved to the U.S. to do my Ph.D. in 2007, total U.S. annual LNG imports reached about 770.812 billion cubic feet (bcf) and LNG exports were about 48.485 bcf. In 2021, U.S. LNG exports were about 3.5 trillion cubic feet, while LNG imports were 21.587 bcf.

Seth Blumsack: Agreed – when I started my career as a researcher the entire nation was preparing for a future where the US would be a major gas importer – round 2 of “energy dependence.” I would also say that I have been pleasantly surprised at how easily many power grid operators have absorbed incredible amounts of wind and solar energy. The small power producers (SPP) grid routinely sees around 70% or more of its power coming from wind at any given moment. A lot of this has been helped by cheap natural gas as a backup power source, but a lot of credit also goes to how quickly grid operators have been able to integrate weather analytics and other adjustments.

Mort Webster: This is my pet peeve, but I would generalize from my colleagues’ comments and say that I am surprised at how projections and predictions about energy technologies and fuels are consistently wrong and yet we never learn. Solar penetration, wind, electric vehicles, natural gas prices, oil prices, etc.

QUESTION: What are some of the most difficult problems around energy transitions that you expect to encounter in your research and teaching in the coming years?

Chiara Lo Prete: What changes should be made to the design of wholesale electricity markets to enable the clean energy transition? Should we introduce gradual reforms, or are more structural changes needed? The energy transition poses challenging electricity market design problems that were unknown in the early electricity industry restructuring efforts. For instance, there is now a concern that future wholesale electricity prices will be too low and uncertain to justify the needed investment in further renewables and more flexible resources.

Seth Blumsack: I think the problem goes deeper than market design although that’s important. The U.S. has very foundational legal frameworks for the electricity industry (primarily the Federal Power Act) that were built around a kind of grid that just doesn’t exist any longer. That kind of foundational re-thinking is a major challenge and one that will upend many vested interests. On a different note, in multiple areas I think we have started to see the long-term aspirations of decarbonization collide head-first into the short-term realities of oil and gas markets. Both Europe and the U.S. have sent very strong signals to oil producers (and to varying extents gas producers) that their product is undesirable. These signals may be well intentioned but have contributed to volatility in these markets that winds up hurting some of the more vulnerable (or at least less politically influential) portions of society. Skyrocketing heating bills or gasoline costs will turn people and governments against decarbonization (reversing the transition) instead of thinking about how to smooth the transition. I also suspect that developed countries will wind up with a kind of stranded-cost problem for fossil energy facilities (pipelines, refineries etc) that are not economic as we go through the energy transition, but that society judges are needed for some other reason. The electricity industry has been wrangling with similar questions for many years and it has always been controversial.

Mort Webster: One major challenge with the transition is the rush to eliminate particular fuels or technologies and/or to mandate other fuels or technologies, based on assumptions about the future. Premature, irreversible decisions in the near term could make it more difficult to achieve decarbonization, or to maintain reliability, or to avoid excess costs. As we move toward multiple renewable energy sources, such as off-shore and on-shore wind wave, solar, and geothermal, how is the “grid” going to manage the electricity from these sources? Additionally, improving the grid requires state and local approvals. How can this process be sped up?

Chiara Lo Prete: Increasing variability in electricity supply and demand means that the requirement for flexibility quadruples by 2050, according to estimates by the International Energy Agency. At the moment, dispatchable thermal power plants and hydropower perform most of the adjustments to match energy demand and supply. The importance of gas-fired power for electricity security will likely increase to maintain reliability in times of stress for the system. In the long term, the IEA predicts that battery storage and demand-side response become increasingly important, each providing a quarter of the flexibility needs in 2050. Some states like New Mexico and Colorado are doing innovative work to speed up the process. See: https://denvergazette.com/news/business/new-regulatory-agency-over-electric-grid-expansion-begins-early-phase-of-work/article_d06ffc98-80ec-11ed-aec8-df72a963504e.html

Mort Webster: Professor Lo Prete said it well above. I would add that current electricity markets and operations are not well-designed to maintain reliability after a large increase in variable generation. Market design changes are needed to be able to meet demand and to ensure that the incentives for investment in the needed flexible resources is there. We at Penn State EMS are working closely with many industry partners on what the next generation of market designs should be.

QUESTION: How big of a role will nuclear energy play in the future? Will diesel engines still be necessary for certain applications?

Chiara Lo Prete: The IEA expects the share of nuclear in the generation mix to remain broadly where it is today (around 10%) in all its scenarios. It is hard to imagine a scenario under which the world reaches its net zero goals without a substantial component of the global energy mix being from nuclear power. The EIA AEO predicts rising diesel consumption as a result of medium- and heavy-duty freight truck travel, which accounts for about 77% of consumption of diesel in the transportation sector throughout the projection period.

Seth Blumsack: The economic environment for conventional nuclear energy in many countries is terrible. And yet as the question suggests, losing these facilities is also terrible if we really care about meaningful decarbonization. I think within the next several years we will see if the next generation of small modular reactors can really achieve the kinds of economies that its proponents claim.

Mort Webster: I agree that whether we keep existing nuclear operating and/or invest in new nuclear is one of the “wild-cards” that makes it hard to predict what the future mix of energy sources will or should be. Some sources, such as solar, have characteristics that complement nuclear effectively, while others, such as wind, do not complement nuclear. Although diesel generators are relatively inefficient and have higher emissions, their contribution to national-scale annual emissions is negligible. These are used in specific situations in which no other energy source is available, for example starting up other generators after a large scale power outage. Otherwise, their cost is so much higher than alternatives, they are aways the last resort in extreme emergencies, which are rare. It would be surprising if diesel does not stick around for these specialized uses. Perhaps someday a mature fuel cell or battery industry could replace these, but this is unlikely in the near-term. Concerning power generation, I believe many RTO/ISOs are still fact finding on 'lessons-learned' from the Christmas 2022 weekend event. Given there were load forecast errors coupled with load peaks predominantly during early morning periods, what changes should both federal and state regulators consider to avoid similar power disruptions as utilities hasten "dispatchable" generation retirements in favor of "non-dispatchable" (renewable) energy sources? For example, should RTO least-cost economic dispatch models be reviewed to ensure adequate price signals are given in advance, such that sufficient fuel is procured for the event? To that end, should the renewable energy moniker "free-energy" be reconsidered due to the variation it places on the nation's electric grid - causing fuel-based generation to incur incremental costs? Also, should state, zero-carbon legislation be revisited to ensure the retirement/replacement of "dispatchable" energy sources (e.g., fossil fuel) are not arbitrarily mandated (e.g., based on some goal from the Paris Climate Accord) or mandated too quickly.

Chiara Lo Prete: I agree that removing existing sources of flexibility (thermal power plants) before others are scaled up represents a major risk to electricity security. One change that regulators should consider is developing and expanding other sources of flexibility, such as stronger interconnections with neighboring grids that can help even out fluctuations in the supply of weather-dependent variable renewables, within and between countries and regions. Establishing formal minimum requirements for transfer capability has been discussed at more than one FERC technical conference and such a requirement is included in HR 8303, the Reinforcing the Grid Against Extreme Weather Act, introduced by Representative Sean Casten this past summer, and the CHARGE Act (S. 3879) sponsored by Senator Ed Markey. On the issue of price signals given in advance, a few years ago ISO-NE proposed a multi-day ahead market on a rolling horizon as part of its Energy Security Improvements plan. The proposal was terminated by FERC, making its implementation uncertain.

Mort Webster: We are currently collaborating with one ISO to reconstruct the event you refer to and several other major events of the past few years, and then test what changes to markets/operations would have performed better. It appears that there was sufficient flexible generation but it was offline at the time. ISO operations need to have more lookahead and also need to explicitly account for uncertainty.Problems like these often stem from the processes that determine which generators startup and when so that there is sufficient capacity online. Forecast error will also there, so we need better ways of building in the ability to adapt when conditions change rapidly.

QUESTION: What are the most important investments and technologies that need to be deployed to be able to convert to a sustainable energy environment (>50% non-carbon based energy sources) in the USA?

Seth Blumsack: To encourage “non-carbon based energy sources” I would say long-duration energy storage and alternative fuels such as hydrogen that can facilitate the decarbonization of difficult sectors like heavy industry (steel, chemicals, some pharma, etc). I am very curious about the potential to scale production of natural hydrogen sources in place of existing technologies that work, but stress the environment in other ways (GHG’s, water use, etc). I also believe that some of the ways in which we depend on supply-side technologies like batteries could be replaced to some extent with demand-side flexibility for electricity combined with clever algorithms for controlling those flexible end-uses. To get to a “50% carbon-free energy system,” or even further, which is a distinct goal from the one in the question but one that I think is really the end goal, I think that we need to take carbon management (capture, sequestration, non-emitting re-uses) very seriously. Even if we totally decarbonized the current electric grid, that would represent only about a third of all energy sources.

Mort Webster: I fully agree with Prof. Blumsack above. I would stress that while batteries, hydrogen, etc, all sound great, they are still some ways from being economic on a scale that is useful. Given the uncertainty and poor record of predictions about energy technologies over the past 70 years, we should keep multiple options in development, including natural gas with carbon capture and nuclear.We should continue to invest in all of these technologies.

QUESTION: Is the primary transition in our transportation systems i.e. fuels or with electricity generation?

Chiara Lo Prete: Transportation has been the highest-emitting sector in the U.S. since surpassing power sector emissions in 2016. However, most emission reductions are expected to come from the electric power sector. For example, the Rhodium Group recently provided a comprehensive assessment of the emissions and energy system impacts of the IRA. They estimate that the biggest emission reductions occur in the electric power sector, and are equal to a reduction in 495 million metric tons of CO2e in 2030 beyond what’s projected without the IRA. This corresponds to a 70% reduction relative to today’s net emissions (1551 million metric tons of CO2e). The reduction in the electric power sector is followed by carbon removal (-84 million metric tons of CO2e), industry (-63 million metric tons of CO2e), and transport (-20 million metric tons of CO2e).

Seth Blumsack: Beyond the IRA (which is very focused on electricity) I think the answer depends on how serious we are about decarbonization. If we focus solely on decarbonizing the grid, that’s great – but we also miss the chance to think beyond the grid to how clean electricity can substitute for transportation and some industrial fuels. This will mean not only decarbonizing the existing grid but figuring out how to scale clean electricity up, possibly by a factor of two to four.

Mort Webster: It is difficult to give a definitive answer to this because most modes of transportation, except for air travel, could be electrified, in which case decarbonization depends on who electricity is produced.Or transportation and other energy demands could use alternative fuels.

QUESTION: What is your expectation for the future of energy from waves using the new technology introduced by ATARGIS.COM, which has demonstrated a 95% energy harvest in wave tank tests?

Mort Webster: I do not have any direct expertise in wave energy, so it is difficult to comment.

QUESTION: What is the total cost only in the upstream segments (mines, solar films, wind turbines, batteries) in the next 10 years to get us on path to net-zero? How does it compare with oil and gas investments in the past 10 years?

Chiara Lo Prete: I don’t have the exact answer to this question, but the recent IEA WEO predicts that investment in electricity generation from renewables rises from $390 billion today (2017-2021 average) to around $1,300 billion by 2030. This level of spending in 2030 is equal to the highest level ever spent on fossil fuel supply ($1.3 trillion spent on fossil fuels in 2014).

Mort Webster: I do not have any estimate either of the specific costs you refer to. I would add that in addition to the costs of scaling up those technologies, there is also investment cost required to develop and maintain flexible energy sources that are needed to complement the new technologies and ensure reliable uninterrupted energy supply. The cost of not investing up front in these courses will be much higher.

QUESTION: Did the recent extreme weather identify any “Achilles Heels” in energy transition planning or EV effectiveness in extreme cold conditions over an extended period of time?

Mort Webster: As mentioned above in regard to previous questions: Yes: several recent events have identified two major issues that energy transition planning must consider to avoid worse problems in the future: 1) reliance on any one fuel or technology type for a large share of our energy supply creates vulnerabilities; and 2) energy planning and operations should explicitly consider uncertainty and plan in advance for a wide range of scenarios on several time scales.

QUESTION: Do you believe that the time for hydrogen has finally come? For instance, do you believe more people will ultimately become a hydrogen producer via conversion from natural gas to hydrogen?

Chiara Lo Prete: If blue hydrogen (produced from fossil fuels with CCS) meets strict emissions criteria, it could play an important role in scaling up hydrogen volumes in the short to medium term, and drive the development of related infrastructure and technologies along the value chain. In the long run, green hydrogen, which relies on water electrolysis powered by renewable electricity, should be the end game.

Mort Webster: I believe that all energy sources should be fully explored and considered to have as many options as possible.I do not think we can conclude today that any technology or subset of technologies are definitively the only ones to use from this point forward.

QUESTION: Do you foresee hydrogen then being the silver bullet for the Baltic States? (along with traditional renewables?) Sameer Safaya

Chiara Lo Prete: I can’t comment on the hydrogen potential for the Baltic states – my interest lies in the threat posed by Russia due to the planned desynchronization from IPS/UPS. Once synchronization with the European network is complete, electricity trade with Russia will stop altogether, so that should not pose further threats.

QUESTION: In light of climate reports and studies showing we're well behind the eight ball on limiting the impacts of climate change (i.e. 1.5c warming threshold), how do we manage the pressing need for the transition with investors/shareholders/policy makers demanding economically attractive projects? -Tramond Baisden

Seth Blumsack: Last April, EMS and the Center for Energy Law and Policy hosted a roundtable discussion with a number of leaders in the energy sector and in government (celp.psu.edu/energyroundtable.pdf). This topic came up several times. Many clean energy projects are attractive in their own right, but are hampered by outdated regulatory systems and public opposition. In the absence of a holistic climate policy (like a carbon tax) that gets the basic economics right, moving forward with more rapid decarbonization is going to require some leadership on the part of industry, government and investors. For all the attention that ESG and similar investors get, we heard from our roundtable participants that they are not actually demanding very much change at the present time. The IRA is one step, but it is not really a substitute for a credible climate policy.

QUESTION: Today's solid oxide fuel cells (SOFCs) can run on both traditional fossil fuels like natural gas and tomorrow's fuels like hydrogen. How does the panel view this technology specifically and its role toward an energy transition? -Dave O.

Mort Webster: I do not have direct expertise in solid oxide fuel cells. As mentioned above, I believe all technology options should be developed to provide options, and eventually, markets will drive the adoption of some technologies over others.

Seth Blumsack: I can’t comment directly but I would think someone would put something in here about the Center for Critical Minerals, and also the circular-economy work that people like Ezgi Toraman are pursuing.

Mort Webster: I agree with some parts of your comments. The energy transition will require serious effort in several aspects: to develop viable alternative technologies for supplying energy with greenhouse gas emissions, to develop conditions under which the best of these are adopted and scaled up by private investors, and in maintaining reliable energy supply in both the near-term and in the long-term. I cannot speak for all my colleagues, but I do believe that we are striving in our research and in our evolving curriculum to provide leadership for how to think about the energy transition and to train the future leaders in the energy field who will continue implanting the transition.In that I do have pride, and suspect my EMS colleagues do as well.

QUESTION: Energy and Mineral disciplines are more related than ever. In many ways: “metals are the new oil.” The need to “green metals” will be seminal to the requisite transformation. What is PSU doing to enhance professionals to help produce new steels, copper, nickel, lithium, cobalt. - - - and recycle these metals when energy storage limits are reached? -Ed Dowling

COMMENT: I’d like to make a comment which i would like to share in the forum. It's disappointing to hear the last thing Dean Kump said, we are still beating the drum of the fossil fuel industry. We have a responsibility to enable the energy transition yesterday - not in 2050. Its a transition, which requires serious effort. Its imperative that Penn State graduates walk with a sense of pride in the world and are empowered to support the sustainable future that our world demands. Its obvious the petroleum engineer needs to learn new skills and the entire program needs a revamp so that the world of today's graduates are well armed to support the energy transition - I would seriously ask Penn State to be brave enough and take a leadership position rather than following the industry. We have till 2030 to get our collective act together or else you can kiss goodbye the Paris agreement or any other target, even 2 degrees C. for the rest, thanks for organising – Sameer Safaya

Mort Webster: I agree with some parts of your comments. The energy transition will require serious effort in several aspects: to develop viable alternative technologies for supplying energy with greenhouse gas emissions, to develop conditions under which the best of these are adopted and scaled up by private investors, and in maintaining reliable energy supply in both the near-term and in the long-term.I cannot speak for all my colleagues, but I do believe that we are striving in our research and in our evolving curriculum to provide leadership for how to think about the energy transition and to train the future leaders in the energy field who will continue implanting the transition. In that I do have pride, and suspect my EMS colleagues do as well.

Watch recording of the panel discussion

The panel discussion on Energy Transitions was held on Feb. 1, 2023, in Houston at the Houstonian Hotel, Club & Spa. Watch recording of the panel discussion.

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