Climate change is a top priority for the new Biden administration, starting with a slew of early executive orders signed during President Biden’s first week in office. In this “whole-of-government” approach to climate change, the Department of Energy is a key player not only in policy, but also basic research, commercialization, and deployment of new clean energy technologies which will be critical to get on a pathway to deep decarbonization.
In this edition of Columbia Energy Exchange, host Jason Bordoff is joined by Dr. Arun Majumdar to discuss the outlook for energy technology and climate policy under the Biden administration.
Dr. Arun Majumdar is a Professor at Stanford University, a faculty member of the Departments of Mechanical Engineering and Materials Science and Engineering and former Director and Senior Fellow of the Precourt Institute for Energy at Stanford University. He served as the Founding Director of the Advanced Research Projects Agency - Energy (ARPA-E), and also served for a year as the Acting Under Secretary of Energy under President Obama. After leaving Washington, Arun was the Vice President for Energy at Google. He also led the energy agency review team for the Biden-Harris Presidential Transition, which covered the Department of Energy, Federal Energy Regulatory Commission and the Nuclear Regulatory Commission. Arun received his Ph.D. from the University of California, Berkeley.
Jason Bordoff: Hello, and welcome to Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University, I'm Jason Bordoff. Climate change as a top priority for the new Biden administration as we saw with a slew of early Executive Orders in his first week in office, and in this whole of government approach to climate change, the Department of Energy of course, is a key player, not only in policy, but also basic research and commercialization and deployment of new clean energy technologies, which will be critical to get on a pathway to deep decarbonization. To discuss the outlook for energy technology and climate policy under the Biden administration, I reached out to Dr. Arun Majumdar this week.
Arun is a professor at Stanford University, a faculty member at the Departments of Mechanical Engineering and Material Science and Engineering, a former Director and Senior Fellow of the Precourt Institute for Energy at Stanford. He also served as the Founding Director of the ARPA-E, the Advanced Research Projects Agency for Energy, and served for a year as the Acting Under Secretary of Energy under President Obama, after leaving Washington Arun was Vice President for Energy at Google and very relevant for this conversation with him, he led the Energy Agency review team for the Biden-Harris presidential transition, which covered the Department of Energy, the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission. Arun received his PhD from the University of California, Berkeley. Arun, thank you so much for joining us on Columbia Energy Exchange today.
Arun Majumdar: Thank you for having me here.
Jason Bordoff: So you've held senior roles in the Department of Energy. You led the transition team for the Biden administration, the Department of Energy. Can you just start by talking for our listeners a little bit about I think sometimes people are a little surprised to find what the Department of Energy actually does also, but it doesn't do and what the role of DOE is in combating climate change in particular?
Arun Majumdar: Yeah, so I joined DOE in 2009 as the first Director of ARPA-E, which is the Advanced Research Projects Agency for Energy, and it got launched with a budget during the Recovery Act and, so I was there for about roughly three years, and for the last 14 months, I was also asked to be the Under Secretary of Energy which I did, and so that's -- that was my, those are the titles, but in ARPA-E I was responsible for not only recruiting people technical people from the research community, but create programs and actually fund research on some breakthrough ideas, and the idea was to look at DARPA and what it did in starting in 1960s and DARPA as many of you know created the internet, created the stealth technology and no pressure on us. We were supposed to do the same thing for breakthroughs in energy technologies, with an idea of greenhouse gas emissions, reducing greenhouse gas emissions, reducing imports of energy, increasing energy efficiency, et cetera.
So that was, it's really about funding research, but imagining new programs of R&D. In the applied as my role in the Under Secretary, I was responsible for the office of energy efficiency, renewable energy, office of fossil energy, office of electricity as well as nuclear energy and it's a combination of both again R&D funding with much later stage R&D funding, as well as policy, and there's a lot of discussion that goes on from that office, with the White House on one hand, and with Congress on the other on policy related things. So I was involved with that as well.
Jason Bordoff: And when you say the, just for our listeners, I want to go too in the weeds and the org chart of DOE, but when somebody hears you say, I was the under secretary of energy, they might say, well, what else is there? It's the Department of Energy of course you were the Under Secretary of Energy. So just talk about the other big pieces of what DOE does and then within, when you say Under Secretary of Energy, the scope of what that covers you call them the applied offices in particular areas, and then also the national lab system, which just is a pretty extraordinary resource for this country. Talk a little bit about that too.
Arun Majumdar: So the Department of Energy is an enterprise with almost a 100,000 people. It has it has a Secretary of Energy who is a cabinet level position. It has a Deputy Secretary, and it has, at our time, there were four Under Secretary or three Under Secretaries. Sometimes it changes between three and four and they, at least in my time there was the Under Secretary of Science who was responsible for the scientific mission. There's the Under Secretary for Energy, which is what I was asked to do, and there were a few others before me, and there's also the Nuclear Security Administration, NNSA, National Nuclear Security Administration, which also the administrator for that is an Undersecretary level position reporting to the secretary. The Department of Energy has four mission areas. It is the largest funding agency for research in science and engineering, which permeates all throughout the United States. It is also responsible for clean energy innovation, including deployment, of financing some of the deployment and R&D. It is -- it has the responsibility for, as a civilian organization for Nuclear Security, which is stewardship of the nuclear stockpile, non-proliferation, our nuclear Navy, and a few other things.
Jason Bordoff: And that's really a major part, so half of what-
Arun Majumdar: That's a major part, exactly-
Jason Bordoff: The energy department does. Yeah.
Arun Majumdar: I mean, that is, and then we have, there's the legacy waste, nuclear waste clean-up from all the plutonium and the high radioactive material that was spread around during the war effort in world war II that is still in the ground and that's the clean-up. So if you combine the budgets for the nuclear security side and legacy waste clean-up side, that is roughly about 60% of the DOE budget, and the rest of it is split between office of science, which is science funding, which goes into basic material science, basic energy sciences environmental science, high energy physics, nuclear physics, all of that, and then the other half goes into applied energy programs which is nuclear, yeah go head.
Jason Bordoff: Yeah, I'm sorry to interrupt. I want to go deeper into your role as you said, not just leading ARPA-E that an entity that's really gained widespread support from policymakers attention from other governments around the globe as a possible model, but you created it. So talk about what worked in the case of ARPA-E? What was the secret to what success there was? What are its limitations and what lessons should we take from that relative to how a government might move forward? There's now President Biden has talked about ARPA-C we need something focused on climate change. Let's talk about what it looks like to go big on clean energy innovation and what the role of something like ARPA-E is?
Arun Majumdar: Let me make a small correction. I did not create ARPA-E, I was its first director. I called myself the first babysitter. I changed a lot of diapers.
Jason Bordoff: Fair enough, good correction.
Arun Majumdar: But it was created by Congress. It was authorized. The recommendation for that came out of a National Academy's Report called Rising Above the Gathering Storm and that was in 2006, by 2007, there was legislation to authorize ARPA-E and it got authorized in the COMPETES Act, and that was around 2008, President Bush signed it in 2007, 2008, but then the financial crisis hit and nothing happened. One of the members of the Rising Above the Gathering Strong Committee was Steven Chu and he was a big fan of it. So when he became the Secretary of Energy he wanted to finance, we're going to start the launch thing. He recruited me to be its first Director, and the first budget came out of the Recovery Act budget, which are the stimulus budget of $400 million for two years, and the first appropriation budget came out in 2010. So that's kind of the history of ARPA-E.
Jason Bordoff: So, I'm curious kind of, as you think about what worked to make it successful in what government should be doing now with a platform like ARPA-E, what should we be doing given the challenges we face climate change key among them?
Arun Majumdar: There is the mission that is stated in the statute. It's a very clear mission. The mission is to reduce greenhouse gas emissions. It is to increase energy efficiency across the whole sector, economy. It is to reduce energy imports, and the most important thing is to provide a technological lead for the United States for breakthrough technologies. At the end of the day and I say this all the time, and I've said that in my public statements and in hearings, et cetera, it's all about the people at the end of the day and it requires, it is a research R&D Funding Agency. It is not a commercialization agency, has a lot of people mistake it to be. It is the pre, I would say pre venture capital R&D that needs to be done so that the private sector it's too risky for the private sector to take on, but if it, should it show some signs of success when creating the foundational entirely new industries of course, the private sector would be interested in that.
So few examples, batteries which are beyond lithium ion, I would rather have the United States take a shot at that than some other country and take the technological lead. That was the purpose for that. Grid Management Technology, we ha we talk about routers for information routers, right? We all use that in our homes these information route, we don't have any routers for the grid. Electricity flows down as if it flows down the hill, like water down the hill, we have no control over it. So ARPA-E created the first router for electricity that is cost effective, right. So those are the kinds of breakthrough technologies that ARPA-E funds the research for.
And there's a whole portfolio of them not all the idea. In fact, if all the ideas were successful, we are not trying hard enough, and some of them would likely fail, but you don't know a priori, whether they’re going to fail or not, and this is that high risk, high reward research that needs to be done, which is funded by the government. No one else is going to fund it and those great ideas that our innovators have, we just die out because there was no money to actually try it out. So that was the real purpose of ARPA-E.
Jason Bordoff: And it sounds like you see part of its mission and there's more talk today than people may be in some policy circles felt comfortable in the past talking openly about things like industrial policy, the role of government, and picking certain industries to try to compete in and lead in clean energy. You see that as a specific part of what the U.S Government should be doing and what ARPA-E should be doing.
Arun Majumdar: Actually, there was a lot of question, though I was asked that, are you picking winners and losers? I can say it from a scientific basis. I certainly don't want to pick the losers of things that violate the laws of science, right? I mean, we-- I'm a scientist I know what the laws of nature are, laws of physics, et cetera. I certainly don't want to violence so if any project, in fact that our proposal, which violated the laws of physics, we know immediately that these this is going to be loser because you're not going to get away with it. So you can triage those, but the things that were funded were not winners or losers or anything, it was a portfolio of different approaches to address a problem and out of a portfolio, some of them are going to win. Some of them are not going to make it, but you don't know a priori, which ones are going to make it or not, because not all the details are worked out in the science and so the triage part is to make sure that it doesn't violate the laws of science, but beyond that, you've got to pick the best ideas and try them out and then figure out which ones are going to win or not.
Jason Bordoff: And what's the other role for government when you think beyond the basic research, the commercialization, the deployment, one of the activities you oversaw, I think as Under Secretary was SunShot maybe you can say a word about what that was, but is it a model that should be replicated for other technologies? What lessons can be learned from that?
Arun Majumdar: First of all, the reason SunShot was created for couple of reasons and this is something that Steve Chu, when he was a Secretary and I, we used to meet every week and discuss various issues and this came up and we realized at that time, that China was basically taking over the whole solar PV manufacturing market for a variety of things that they did. I mean, they were competing and we were losing that, and that's a big deal for the United States. I mean, we invented the solar panel, solar PV, photovoltaics, and we were losing at that thing and so we said, we gotta do something about it because there are a lot of jobs involved, and we said that let's try to put a SunShot Program and it was a program to make the solar, the cheapest way to produce electricity in the next decade.
So just like, President Kennedy had the Moonshot to reach the moon and return safely in a decade. We said, let's try to figure out how to make solar the cheapest way to produce electricity within a decade, and guess what? In seven years it reached the target of 5 cents a kilowatt hour, the first one and of course now it's continues to go down. So that was the idea and we said that it, some of it may be science-based, some of it may be science and engineering based. The other parts are like, how can we get the permitting done correctly or shorten the time? He said, we'll do whatever it takes to make sure that solar becomes the cheapest way to produce electricity in United States, and that was the program. Now, could you -- would you say was it industrial policy?
Well, I mean, if you're going to address climate change we know that solar, if we don't do it, someone else is going to do it and that's was really what we were going after, and again, it's part of a larger portfolio. The portfolio includes nuclear, includes carbon capture, includes everything else, but we got to take I mean, the idea was we've got to take the lead in some of these things and push the boundaries and thereby enable our industry to pick up the things that actually work out and thereby lead to economic recovery at that time, which was the 2009 downturn.
Jason Bordoff: I want to ask you about what some of those other technologies are because there are some who kind of say, we have the tools we need, we have solar panels, 90% cheaper, batteries, something like 90% cheaper, we have wind and we just need to scale and deploy versus the view you kind of see this now in the new Bill Gates Book, for example, but we need a lot more innovation. Talk about what your view is in terms of what's needed, where it is.
Arun Majumdar: Yes. Here's the book. I actually interviewed Bill Gates a couple of days back actually last week and really to go into details about his book and I had like 80 post-it pads on it. So yes, I mean you definitely, the good news is that we have solar and wind, which is the cheapest or at least some of the cheapest way to produce electricity and we need to scale. That's great. So the first thing is to decarbonize the electricity grid in some way, that's and but you need storage as well, and lithium-ion batteries are not going to get us to long duration storage. We know that, but at least we have storage for short term and that storage solution also enables electrifying transportation, right. These are all good news stories and I think we need to scale all those, but to re-
Jason Bordoff: Do you think, sorry to interrupt. Do you think it allows for electrifying cars or transportation because that-
Arun Majumdar: I think it allows transportation, certainly electrifying light duty vehicles, maybe small delivery trucks, local buses, et cetera, for long haul trucking I think we need to look at other options. I don't think batteries are may not be always the optimal option. People are talking about hydrogen, hydrogen trucks and all of that, and I think those at this point, if it's, if you really want to address, if you see this about climate change all hands on deck at this point, and we should be looking at other options, but you, the other way globally, 28% of the emissions come from food and agriculture, and that's not going to be solved by wind and solar, right. I mean, that needs other approaches to look at. Our industrial process and I know that Columbia wrote a report on industrial heat, which is terrific and steel and cement are roughly about you put it all together with 10 or 15% of the other the emissions global emissions, and a lot of that happens elsewhere, not in the United States and we need to decarbonize that.
So there is research that needs to be done in figuring out how to decarbonize it and also policy measures. So that those the products or the R&D, the technologies can actually come to market because you need policy out there. So the combination of alignment and reinforcing the policy versus R&D and technology development, that's critical right now, but I think it's great news we should absolutely in a clap when you see solar wind and batteries and transportation, but that's not going to be enough to get to net zero economy and if you are trying to keep and meet the goals of the Paris Agreement, you got to have net zero. Otherwise, we're not going to make it, you're going to have negative emissions, and we need to figure that out as well.
Jason Bordoff: Yeah. I thought Bill Gates’s book did a good job, sort of demonstrating the scale and magnitude of that challenge, a framework to sort of focus on where the tons are, and I think the biggest category wasn't even electricity. It was making things like steel and cement and plastics and things that some of which not all of which will be maybe pretty hard to electrify. So we may need other solutions focusing on where the biggest cost premiums, what he calls the green premiums were, and then taking account of the fact, the way he got into this work in the first place was this strong connection between GDP growth and energy use, and the denominator is going to keep getting bigger. The world is going to continue to demand more energy, and that's the framework within which we need to think about decarbonizing all of it, which is pretty staggering in terms of the challenge.
Arun Majumdar: It is something that the world has never done. People use World War II analogy I think it's bigger than that because it is going to affect everyone's lives, and it's a bigger world today, bigger population, and the population is growing. It's almost like redesigning and building the plane as we're flying it, and you don't want to end, you cannot crash. So that's really, and I don't think analogies are the right thing because we have never done this before. This is big.
Jason Bordoff: Well, let's talk about what some of those technologies might be that will get at some of these harder to electrify and harder to abate sectors, huge amount of focus now on hydrogen. You gave a fantastic Ted Talk a few years ago, where you said the most significant invention of the 20th century it was not the polio vaccine or the internet, but something many people probably haven't heard of, the Haber-Bosch Process which makes ammonia and ammonia is becoming an essential fuel in the net zero economy. I'm kind of wondering whether you think it might be the most important invention of the 21st as well, but talk about the role of these electro fuels and they can be made in other ways too, but talk about what you think they'll do?
Arun Majumdar: Sure. I think in addition to decarbonizing the grid, you need a carbon-free fuel and a lot of people are betting on hydrogen and the industry, many parts of the industry are betting on hydrogen and I think there's good reason to believe hydrogen is a good way to address it, but I think we have to figure out where does the hydrogen come from and what are the carbon emissions associated with that? 95% of the hydrogen today comes from natural gas or some kind of fossil sources, and they're carbon, and most of the carbon emissions happen at that time when you produce the hydrogen. So you gotta be able to decarbonize that and that's comes back to carbon capture, moving the carbon dioxide somewhere, and the sequestering it at someplace. So this is going to be so CO2 capture and moving it and sequestering, it is a bottom line across the board technology that is absolutely needed to produce the hydrogen that is greenhouse gas free at a cost-effective way.
There's also the electricity way of producing hydrogen, that which is using electrolysers, et cetera, with electricity, has to be decarbonized then and the scale of electricity that is needed to create a fuel that that matters is unbelievable. We haven't quite fathomed, we talk about solar and wind penetrating about 10% or whatever the percentage may be, but that 10% denominator is today's grid capacity. If you add fuel to it, it's a much larger capacity and we haven't even made a dent to it. So I think while everyone's excited about what it's called green hydrogen electrolysers, got to be careful that the grid capacity that is needed is humongous. So I think keeping the options open on decarbonizing hydrogen from natural gas is a very important point and the question, so that's on the production side, then the question about movement of hydrogen, you need an infrastructure.
And lot of people think that, hey, let's just put a hydrogen pipeline and with steel and pressurize the hydrogen move it, people don't realize that we don't quite understand the signs of hydrogen embrittlement of steel. We're not going to have pipelines that will remain for a long time or the lifetimes and how you're going to get the permitting for that to happen. We do have some pipelines, but you're not going to have en masse. So the best way to move hydrogen from one point to the other is either you move natural gas, capture the CO2 and move the CO2 and CO2 pipelines are much easier to have or you move the electricity and really cut down the cost on the electrolyser the Capex and reduce the cost of hydrogen production and so I think we need to look at hydrogen as certainly a way, as a fuel to decarbonize industrial heat, et cetera but then you got to think about infrastructure also, and the different ways of production and the carbon emissions associated.
Jason Bordoff: Very interesting. So the because there is this kind of, you see it in the European Union, but some environmental groups sort of green hydrogen okay, blue hydrogen so it’ll use the fossil fuel or not. Your view is we're going to need all of these things and we need to be pretty open-minded.
Arun Majumdar: Yeah, I mean, green hydrogen today is four times the cost of gray and potentially blue hydrogen, right. I mean, I'm not sure. I like the colors at the end of the day, it's greenhouse gas emissions, and you've got to eliminate all of that. Yeah. The colors kind of make it easy to label them, but we cannot have any CO2 emissions from hydrogen. That's the bottom line and the cheapest way to, yeah go ahead.
Jason Bordoff: And you put ammonia into that same category of carbon neutral fuels?
Arun Majumdar: Absolutely. Once, I mean, ammonia is made by taking nitrogen from the atmosphere, taking hydrogen from methane, natural gas or coal or some fossil sources and reacting them to form ammonia. Ammonia is one atom of nitrogen and three atoms of hydrogen. Hydrogen is where production is where the CO2 emissions are. So if you can decarbonize hydrogen, it not only decarbonizes the industrial heat sector, decarbonizes ammonia synthesis, which is where our food is. That's what our fertilizers come from. So that's going to be very important.
Jason Bordoff: And possibly fuels and things like shipping and I know people.
Arun Majumdar: Exactly, yeah exactly. Ammonia is I mean again, to increase the energy density, liquefaction of hydrogen is extremely energy intense. So ammonia could be a great way to do this.
Jason Bordoff: Now, when you talk about how to use natural gas to create carbon neutral hydrogen, it requires carbon capture and I want you to maybe talk a little bit about where that technology stands. There were some in the environmental community who called technologies like that false solutions, things that the fossil fuel industry promises will come along one day to allow business as usual to continue. Just explain to people where you see carbon capture storage and technology today, how far along it is and how big a role you think it can play in a decarbonized future?
Arun Majumdar: Yeah. First of all, I'll make a broad statement, the scale and urgency of a problem is such that we cannot have either or solutions. We fall in the tyranny of or, and we need the harmony of and, we need and, and it's not just in a hydrogen it's carbon capture. It's all because it is a multidimensional problem, which is why we have never done anything like this before we're trying to shift the whole global economy. So carbon capture extremely important technology and this has different flavours that are point sources like if you make you go to a brewery, the CO2 produced and that's fairly pure CO2 that you can capture. If you go to cement manufacturing you will have at least one pure source of CO2 and a mixed source of CO2. If you go to natural gas in a combined cycle turbine, you'll have a dilute source of CO2, more dilute than coal fired power plant. Coal fired power plant is 15% roughly of the gas that is coming out of the exhaust is CO2, in natural gas it's about 8% and in the atmosphere, it's 0.04% is 400 parts per million. As you make things more and more dilute, it takes more energy to separate them out and capture it. It's just the laws of physics, laws of thermodynamics and so, and more of the energy is needed the more it costs. So for coal fired powerplants today it's about $50, $60 a ton. You go to natural gas turbines, and that cost is about $80, $90 a ton and today, if you go to air captured it costs about $400, $500 a ton today.
Jason Bordoff: Air capture just from the ambient air, you mean-
Arun Majumdar: From the atmosphere, right. So the question is not where it is today, but where could it go without violating the laws of physics. People in colloquial terms call it the giggle test. Well, giggle test is even before the laws of physics, you cannot violate the laws of physics, right. So I would say if direct air capture, directly from the atmosphere and CO2, if you could separate out CO2 at less than a $100 a ton, you are in terrific shape, because if you could do that, you could take the CO2 that is coming out of a natural gas turbine and get it down to maybe $10 or $20 a ton and that is below the policy. The policy is at whatever $50 or $30, that's 45Q and today, the cost of capture was higher than that. So there is no business, but if you can take R&D and reduce the cost down to $20, $30, you're making margin, because you're getting paid at 45 Q rates and I think that's where the combination of policy market creating policy and the R&D if they can be aligned and we could really make progress. I mean, this would be terrific.
Jason Bordoff: Yeah. 45Q just for listeners being the government subsidy for carbon capture and utilization and the how bigger role do you think what's called direct air capture will play and obviously there's technological ways to do that. There's also land-based ways with, so we can come to those next with afforestation, reforestation, avoided deforestation, but in terms of technology use, as you said, four or five, $600 a ton, that's pretty expensive. Is this going to play an important role in deep decarbonization?
Arun Majumdar: Well, every scenario that we have seen now in terms of analysis has shown that if you are to keep our temperature global average temperature rise below two degrees, you need some level of negative emissions, which at scale by the middle of the century should be on the order of 20 gigatons per year. Okay. 20 gigatons is a big, big number. The United States emits as a whole five gigatons per year, roughly. So we are talking about four times, five times or four times the U.S level. Now, this is going to be less than mitigation. Mitigation is about 40, 50 gigatons in the future, and so you need the combination. That's why I say we cannot, we need and, not or, we need both, right. So if you really are -- if you get the technology down to a $100 or lower, that is going to be a very important way to as a option to use, if you have the right price of CO2 for the negative emissions, we do need negative emissions, that I think is clear.
The question is, can you -- do you use natural climate solutions like plants, photosynthetic, like afforestation crops, re-carbonizing the soil that's one approach and the other approach is engineered systems like chemical means of removing CO2 from the atmosphere. I think you need both, you can't rely on one or the other. You absolutely need both and that, and land use brings in food productivity and all of those kinds of things, and I think from a purely agriculture, in fact, that's where I spend most of my time with Bill in the interview last week is because it really resonated with me because we have had a green revolution and I'm a product of Norman Borlaug Green Revolution. I wouldn't be alive, and none of us would be alive if it was not for Haber-Bosch that creating fertilizer. So we need another green revolution, not only for food, but to also time climate solutions at the same time, that's what we really need and then compliment that with the engineered solutions, and I think we have a chance of keeping things below two degrees.
Jason Bordoff: Tell us what that conversation, what insights came out of it. I mean, do you think that's going to be the meat substitutes that he's been funding or what do you think those solutions will look like?
Arun Majumdar: I think certainly meat substitute is a start, there's a lot more. He didn't talk, I don't think he talked about as much about dairy. Dairy is again I think he did talk about dairy that as a matter of fact, there is a big, big source because it's the animals with cows, right and they produce methane and that's a big, big source, and so I think the whole agricultural sector, if you look at what could be the lowest hanging fruit for natural climate solutions, it is number one increasing food productivity, because if you increase food productivity, you do not need to deforest, right. So deforestation sort of is mitigated. Then you have to switch from animal-based, especially beef and cow and lamb, which is the highest footprint for CO2 per kilogram to in a plant based and that is going to be I think it could be a major, major impact.
The third is to develop crops that can not only increase the food productivity, but have a deeper roots to put carbon in the soil where it belonged, where it came out from. A lot of it came out from because of tilling and so having those technologies in place, and what is technology, as we have learned from COVID is not enough to have a quantum leap in technology, which is the vaccines that we have. It is an entirely different challenge to get people vaccinated. So the delivery of the solutions at scale is going to be absolutely critical.
Jason Bordoff: And let me ask you about one or two other specific technologies. I think in the U.S now the focus of policy on nuclear is probably preventing the early retirement of some of the zero carbon power. I don't think there's a view we're going to be building a lot of nuclear plants, at least not with existing technology. Talk about where you see advanced nuclear technology going and on a global scale, how important do you think nuclear will be to decarbonizing the electricity and therefore the energy mix?
Arun Majumdar: Of course, nuclear makes a lot of sense. It is the largest carbon free power in the United States and certainly France and other places. The challenge with nuclear is the cost of construction and if you really want to have new nuclear in the United States, you got to stop the bleeding of current nuclear. That's on the first priority and we have 90 yard power plants and 94 power plants that are running today, and they're in jeopardy because the price, the wholesale price of electricity has come down because of natural gas and a little bit of wind and solar, which has gets adopted in the market, and so the margins for the nuclear plants have gone down and they cannot pay off the loan. So recommissioning, relicensing, these plans and making sure that they don't go under, which is a policy measure is going to be critical, that's number one.
It is also clear that if you don't build nuclear plants, we'll never learn how to build them cheaper, right. So that's the second thing, and it is unlikely for scale and financing reason, it is unlikely that we're going to get a gigawatt scale nuclear plant again, in the United States. It's probably going to be a few hundred megawatts, few tens of megawatts these are what are called Small Modular Nuclear Reactors. Now, we need a market for those and we're hoping that at some point the government like it, many times it has, has always often the first adopter for new technologies, and so we are hoping that that could create a market that could bring down the cost and modularize it. So that also bring down the cost and thereby make it competitive in the marketplace and it may need some help from the policy side to be able to do that. Not only just the market side, but the government policy side to be able to make it competitive, but nuclear, it's maybe we can get through this without nuclear, but it will make it so much easier if you have nuclear on board.
Jason Bordoff: And just so people understand why, I mean, because as you said, it's quite expensive. I mean, there are issues with the land that's required to build renewable energy, the siting and permitting of transmission lines. There are some beyond the technology, there were some barriers that may exist to just how far you can scale up. Some of these technologies, obviously nuclear is more dense in terms of the energy generated in a certain footprint. Is that what, why you think it's important?
Arun Majumdar: I think so. I mean, you're exactly right, and frankly I know that there are a lot of coal fired power plants going out of business and this is for economic reasons and frankly, if they could be, and the grid is all connectivity is already there. If those could be the sites for new nuclear or storage frankly, it is local jobs and nuclear supports a lot of people. It's very supportive of labour, and I think so creating that nuclear sort of foundation of nuclear power has a lot of other benefits for communities that have suffered in the past or a suffering now.
Jason Bordoff: That you're near Silicon Valley and when I talked to folks there the continued excitement about fusion, which is kind of always the big breakthrough a few decades down the road and continues to be, it doesn't seem like the breakthrough has gotten much closer. Do you think that is going to -- are you optimistic about that?
Arun Majumdar: Well, I would say it is right now, it's not quite a technology with a learning curve, right. I mean, it is still in the phase of understanding the details of the signs, which are very important. Otherwise, you'll never have technology, that's actually producing net power, and you can't today we can't even associate a cost associated with it, with fusion. So I think it has, it's absolutely important that we pursue that as a research program to iron out all the details and any kind of and figure out how to turn that science into a technology through engineering and that is yet to be done because we don't completely understand the details of the science in terms of and I won't go into the detailed instability of the plasma and all of those things are absolutely critical, and only when we understand we will be able to crack it, but it is a hard problem. I don't think we should sugar-coat this at all, but we should try, we should try to understand the science like we have done for many other areas.
Jason Bordoff: What breakthroughs are you optimistic about in battery technology? Is it improvements in existing electrochemistry or they’re going to be whole new technologies we're not really thinking about today for longer duration, longer life of a battery and also things that lasts more than a few hours, but days are longer?
Arun Majumdar: Well, today, first of all I mean, let me say a little bit about lithium-ion battery. There is plenty of room at the bottom. There is new materials, there are new solid state lithium ion batteries, pure lithium metal, anodes, and all of that, this is ongoing and the good news is that they're going into production as the innovations are coming out. So there's a nice feedback loop between R&D, manufacturing, products, and then bring it back to see what the problems are and sort of that chain is on and frankly, I would love to see a battery manufacturing and supply chain in the United States, so that it -- a lot of the innovations can actually go out here and lead to value. That's the lithium-ion battery, but you pointed out long duration storage when we are talking about like, 100 hours of storage, and especially when you reach about 80% penetration of solar and wind you'll need periods of time where you have a 100 hours, 50 to 100 hours of storage, and you may use it about 10 times a year.
The cost of that battery is 10 times lower. Needs to be 10 times lower than lithium ion batteries and lithium ion will never get there because the bill of materials will never get there. So we need to, and this poses a bigger scientific challenge to the scientist is that you cannot use lithium, you gotta use iron and you gotta use sulphur, figure it out or figure out a new way to do it. Maybe use heat to store electricity and convert it back to electricity. Once you store it as heat and that may actually turn out to be cheaper. So there's a whole and the, you know, today the lithium-ion batteries about roughly a $100 a kilowatt hour Capex. It needs for long duration store. You need $10 a kilowatt hour, and we really don't have any solution yet except for pumped hydro. And so there's a whole program in ARPA-E called the DAYS program that is focused on $10 or lower per kilowatt hour of storage, and that is where it's very exciting to see that we need many more such programs for the R&D to happen and then of course, after the, if you see something interesting, the scaling, the pilot scale, commercial scale, the supply chain developing. So if we can get to that by the end of this decade, we are I mean, that would be terrific.
Jason Bordoff: We obviously saw a catastrophic and life-threatening example of failure of the energy system in Texas last week and what I hear you saying is going forward there, technology may be a part, not the only way, but a part of how you could address that with longer duration storage, demand response. I'm curious what you think the role of technology could be in a more resilient grid but at a higher level, what lessons do you think we should take away? And again, we probably need a full post-mortem to understand all the failures there, but what do you think the lessons at this point are?
Arun Majumdar: Well, there are multiple lessons. One is that I think the prediction of what the weather extremes are going to be in the future cannot be derived from what has happened in the past and I think that's number one, because no one had predicted such a long duration and such low temperatures and that's really what it's called the jet stream was wobbling, right and that's what happened, and these are climate induced. So I think we are, we need to add some few factors in there in predicting what could happen, that's number one. Number two, as we all now are watching this unfold unfortunately, if the capacity for tie lines, if there was more capacity I mean, ERCOT decided I mean, Texas decided to have an isolated grid. It had a few titled to 800 megawatts tie line in the North and a few 100 megawatts in about 400 megawatts from Mexico right. Now, if that's not enough for the shortfall that it had, which had about 10 gigawatts of shortfall.
So having a connected grid, even if you don't often use it, that's okay, but having the option of capacity to come in, if you don't have that capacity coming in from elsewhere, you better have the capacity internally in Texas or whatever the state may be, right, that's the second one. The interplay between gas and electricity is critical and right I mean, we saw this unfold, not just because of the gas wells and all freezing out, and in fact, even a nuclear power plant froze out or went offline, but the fact that others are using the gas because the coal we have is not limited, you don't have enough supply, and if your electricity is pinned to gas, those prices go up in a spot market, right? So you got like, I don’t know quadruple whammy out here. So I think we need to rethink and just like California faced the challenge before and everyone had to rethink their grid and the utility system, the same thing lessons learned from Texas is not just limited to Texas. Others need to look at that and say, are we resilient or not? Are our communities resilient?
Jason Bordoff: Yeah. Which is what and do you think are there promising technologies you think can play a role in boosting that resilience or is this just we could weatherize things in Texas to prepare for extreme events in ways that maybe we didn't think we had to in the past, but now we do because extreme events are gonna happen more often. Do you see technologies that are more interconnected grid and digital technologies that might deliver some of that resilience?
Arun Majumdar: I think we need to take a lesson, we need to take a few lessons. We need to take a lesson from the ‘70s when we created the strategic petroleum reserves. We need some strategic reserves for these really snowy or rainy it used to be rainy days, but now snowy days and other heat waves, et cetera. Heat waves are going to happen. This is, we are seeing that we can't predict them and in fact, as I was saying earlier, I have an Op-Ed coming out, I think on Wednesday, in New York Times, so that we need an early warning system for extreme climate events and we can only predict about 10 days ahead of time. Can we predict them a month or two months ahead of time? Why can't we do that? And that requires technology to be, and if you can't predict then of course you can prepare for it, but there are some, we need reserves.
We need reserves for electricity. We need reserves for gas, and so that if there's a bad few days we can overcome then. We need connectivity. The isolation is not a solution to be able to share resources when you really need it and so and even if you're on a normal time, your markets, you want to keep it isolated, fine do that, but when it's emergency time you need information exchange. You need a feed stock exchange, you need electricity, gas, all of that to happen, right. So I think that's where -- that's some of the lessons learned looking in the future that these climate extremes are going to be more and more happening, larger intensity and but it's unpredictable.
Jason Bordoff: As I want to turn to policy just in closing, but because as I said you led the transition team at the Department of Energy for President Biden, the Vice President Harris. We had two of my colleagues at Columbia who were on that team. I know how hard they worked, I can only imagine what you're a few months were like. So I know that work was undertaken in confidence, but just explain to people what a presidential transition entails. Why do we have transition teams? Why do we need them? What do they do? What did your team do?
Arun Majumdar: Well, first of all, this was a transition like none other because of a variety of reasons. Number one there was COVID constraints. We could not travel and otherwise normally a transition, first of all, a transition team is needed to prepare the incoming team to understand what the state of the agency and state of affairs is and so that they can execute on policy that a President has because they need to understand where things are today. So that's sort of in a very high-level nutshell, that's what it is. This one was different of course, because of a variety of reasons one, as I said was COVID we could not travel. So everything was most 99% was on video, which frankly was an opportunity to meet quickly people in various geographically distributed, but otherwise you have war room inside the Department of Energy we all come together and meet every day, in a person-to-person meeting face-to-face and things get done.
And this one was not like that. You also realized that maybe you don't need that much of that face-to-face also, and there are advantages of doing it by video. The second thing was boy, there was a lot of uncertainty and we were not sure if you recall an ascertainment was a big word that time and people may have forgotten, but we were not sure when we could go in and once as a-
Jason Bordoff: Going to the agency and talk to the people in those roles-
Arun Majumdar: Going to the agency, talk to the people in the agency, right, and when ascertainment happened by GSA the Government Service Administration, my first phone call was with a point of contact or then with the current sec -- at that time the then Secretary of Energy Dan Brouillette and he was so gracious. He said, we are going to make it work. We're going to, if anyone's blocking and tackling, I will unblock it for you, and you should be able to talk to anyone in the agency, including career staff, without political staff and that was a partnership that started in a mid-November or so, and right till January 20th there was the partnership continued and I must say, thank you to Dan Brouillette and Mark Menzies and Paul Debar and the whole crowd, the whole team, the political team. We have very, very gracious and cooperative. So that happened. So that was the other uncertainty, and then I wouldn't go into the details of January 6th and all of that, but there was uncertainty out there. So all of that put together when things happen in January 20th, we were just relieved that we have a new team coming in, but it was not just the review of the agency, and I think we found later on realized that it is more than a review because the Biden goals are so ambitious, in terms of clean energy, a 100% power by 2035, net zero economy by 2050, environmental justice which is the first time I've seen this elevated and jobs and labour that we said that we're not just going to review the Department of Energy, but we need to reimagine the Department of Energy and create a preview, what it ought to be to meet those goals and deliver on the President's promise. And so there was kind of, I wouldn't say double the effort, but a renewed effort, and which was very exciting for the team. So let's re-imagine, many of us had been in the Department of Energy in the past, and so and that was a collective team effort to re-imagine what the department should be or could be and that is now of course, passed on to the current administration, current team that is going in.
Jason Bordoff: What condition is, did you find the department in I know there were reports about some other places like EPA, Bill Burns wrote about State sort of being hollowed out. How was the Energy Department doing it as the Biden team takes over?
Arun Majumdar: Overall the Energy Department actually has done quite well compared to many other agencies that we hear about. There were short I mean, we found out that the staffing had to be done with new people that needed to be recruited, but overall the department has done a reasonably well, and it's not I mean, it's public knowledge that for example, the loan guarantee program has a lot of money sitting out there. It hadn't been deployed or hadn't been used. So there's an opportunity out there, which is really important. I think NNSA there needs to be some really good leadership out there, and the partnership between the Department of Energy and Department of Defense is going to be absolutely key in that. So there are some pockets where you improve, but overall, I would say it was a pretty good shape that national lab budgets have gone up over the last four years, thanks to Congress. The budgets have gone up and they're doing well. The partnership between the national labs is in very good shape and especially in COVID, they created a virtual national lab to address COVID and I think that's a model for success for other things in the future as well in partnerships across the national labs. Now, management of the national lab from the Department of Energy, that needs some work, and there are, so there are some pockets where there's a lot of improvement needed, but overall, I would say it's in pretty good shape.
Jason Bordoff: Well, thanks for your time and focus on that and service on the transition. We just, our last minute, I just want to lightning round final question, which is, I asked you earlier about some specific technologies. I'm curious if you're optimistic about any technology I didn't ask you about. What do you sort of see on the horizon, I kind of talked to you about the when everyone's talking about hydrogen and carbon capture, advanced nuclear, but is there something we should be talking about that we're not?
Arun Majumdar: I think we are talking a lot about mitigation technologies. I don't think we are talking enough about adaptation and resilience and Texas is a good example that it is in this case, electricity and power and gas infrastructure we are going to face heat waves. Everywhere there’s a heat wave and that's what this whole Op-Ed is about everywhere there’s heat wave. A, we need to figure out how to create a food and supply chain on food that is climate resilient. We need housing that is climate resilient and by the way, these are environmental justice issues, and we need to be able to prepare for our communities for drought and how do you deal with droughts? We're going to have droughts, maybe not in the United States, but certainly in the rest of the world. So adaptation and resilience, which was I was asked to think about ARPA-C.
And I said, if you want to compliment ARPA-E, this would be a great way to compliment, is adaptation and resilience based technologies, as well as a satellite monitoring system that is monitoring the earth. I mean, I was shocked to find the Amazon we think is normally is always a sink for CO2. That's what I thought. A lot of people think of that. It's actually starting out to be a source of CO2 because of the warming and the deforestation that has happened. I did not know that and if you look at the Sub-Saharan Africa, all the forests in Congo, they becoming a source as big as China. Okay. So the forest subject, so now we could be hitting some tipping points. So the monitoring system, the modelling system to have, give enough warning and predictability on climate events and extreme events, which are going to happen and then having the infrastructure in place to be able to be resilient. That is something we need to put on the table on the same footing as mitigation technologies.
Jason Bordoff: Arun, thanks so much you've been really generous with your time. Thanks for your service in government. Thanks for the work you're doing at Stanford on breakthrough technologies and teaching tomorrow's leaders and thanks for making time to be with us today. It's always fascinating to have the chance to talk with you. I really appreciate it.
Arun Majumdar: Thank you, Jason, and to you and to your whole team, this was a fabulous discussion, really enjoyed.
Jason Bordoff: Arun, thank you again for making time to be with us. Thanks to all of you, our listeners who are joining us on this episode of Columbia Energy Exchange. For more information about the podcast or the Center on Global Energy Policy, visit us online at energypolicy.columbia.edu or follow us on social media @ColumbiaUEnergy. I'm Jason Bordoff. Thanks for listening. We'll see you next week.