Interview with Jonathan Schechter

August 21, 2017

 Jonathan Schechter, shared views with JHCGA on the current state of energy in Wyoming and beyond. 

 

Tell us about and your background vis a vis Energy in Wyoming.

 

I’m an interested citizen who’s educated myself by looking through the data every so often to get a better sense of the context in which to put it, but I don’t consider myself an expert in any sense, and I don’t think anybody else would either. 

 

Section 1 - Expert Index Questions

 

Wyoming’s Economy


The Wyoming coal industry will rebound.


Disagree—rebound is so relative.  Does rebound mean up to what levels?  What is that based on?  Price?  Will coal prices return to the levels of 3, 4 years ago? No way.  Then there’s quantity pulled out of the ground, and that’s a function of demand.  I would structure the question as “will it rebound to where it was five years ago? ~$100/ton and ~100m tons/yr?  Maybe ask, “Where do you think coal prices will end up?”

 

Wind power will be a large part of Wyoming’s economic future?

 

Yes—why: because it’s becoming increasingly competitive.  I think the real key there is the aging out of America’s coal plants.  The average age is in the high 30s and the average lifespan is 40 years, and a significant chunk is going to age out, and when it does, what’s going to replace it?  Not new coal plants.

 

Carbon capture and storage (CCS) technologies will be a large part of Wyoming’s economic future.

​Nope, no way.  There’s no technology there; no money to develop it.  Why did GE pull out?  There’s no market.  You have a decreasing amount of coal burning, so there will be a decreasing amount of supply to capture and store, so unless you get in to some sort of heavily subsidized deal that’s basically throwing a life preserver to Wyoming and West Virginia, I don’t see how that’s ever going to happen in these anti-government times.

 

Wyoming will be able to diversify beyond energy and tourism in the years to come?

 

In concept, yes. Does it have the political desire to? No. If you really want to diversify you have to have a legislature or leadership that’s willing to lead that actively for a long time.The leadership and the legislature are going to be in denial about coal’s decline for a number of years, and any little uptick in price or stabilization of how much coal is being pulled out is going to be used as an excuse to delay because the next boom is going to be around the corner.I can’t see where the leadership is going to come from that’s going to move the state beyond that, because coal is what we know, and when you have a Tea Party kind of mentality clinging on to a past that’s no longer here…I think it’s possible but unlikely.|
 

If I were the czar, I’d take a lot of that money that we have stashed away, and I would turn the University of Wyoming into this hotbed of excellence by bringing in academic hotshots, I’d have a super-competitive mini-college within the university to attract the best students from around the country for all sorts of disciplines.Have this gem of a college that becomes super desirable, and let that infect the rest of the university.Use the coal money to buy the best possible university system you can, and then hang on for twenty years and let that propagate out.But that takes an economic commitment: a lot of money over a lot of years. I don’t see where the political will is to get from here to there.

 

The Nation’s Energy Landscape

 

Within 5-10 years in the U.S., CCS technologies will start coming on-line through demonstration projects, bringing the costs of these technologies down, and proving the technology.

 

I would try to see if anyone has done a fundamental study about how much carbon is being put into the environment by plants.  You could do a projection of what the energy mix is going to be ten years from now? If the feedstock isn’t there, how is anything else going to work?  You’re looking at a technology that’s going to be expensive, and it’s going to be years before you get any sort of payback.  You’ve got the development cost, you have the installation time and cost, and to the best of my knowledge it’s nowhere near primetime yet.  If that’s the case ten years might be generous, and if ten years from now the renewable energy portfolio has gone from 15% maybe today up to 40%? If you see that supply line going down why would there be any incentive for CCS?

 

Within 5-10 years, California will be using Wyoming generated wind-power.

 

There again it’s a question of political will.  Are we willing?  Right now the state is spending a lot of money trying to get a port built in Washington or Oregon to ship Wyoming coal to China.  Would they have the same willingness to do that for transmission lines for wind?  My guess is that large, centralized distribution networks are going to become smaller and more regional when you have wind and solar and other types of smaller-scale distributed generation.  Does it make sense to ship electricity 1000 miles over a wire?  There’s a technology question here and a political will question and they are two very distinct questions.

 

The national regulations set forth by the Clean Power Plan will be repealed and this will slow investments in carbon capture, renewable energy, and other alternative energy resources.

 

Maybe there will be enough feedstock of coal in China and India for CCS to be worthwhile there, but if you look at the advances in Rawlins and in Carbon County, not only are they going to put in that new giant wind farm, but they’re retrofitting some of the turbines down there with bigger, more efficient blades.  The technology for improving renewables is really escalating rapidly; that isn’t happening with hydrocarbons.  I think there’s going to be continued efficiency improvements in renewables that’s going to go on regardless of what the feds are doing.
 

Other coal producing regions of the U.S. will rebound and successfully diversify their economies beyond coal dependence.

 

Again, rebound is relative.  Where are the other regions? Appalachia and here only.  Do they have the political will to diversify in West Virginia?  I think they’re going to have a similar mindset to the West Virginian legislature, so I don’t know where that political will is going to come from.

 

The Global Energy Landscape
 

Within 5-10 years, CCS technologies will start coming on-line globally through demonstration projects, bringing the costs of these technologies down and proving the technology.

 

Who’s doing it if not the Chinese?

 

Within 5-10 years, renewable energy will reach price parity with fossil fuel energy, driving global renewable energy growth.

 

Absolutely—strongly agree.  As I understand it the latest wind technology already has price parity, and the big difference is the potential for efficiency improvements.  You can’t make coal-fired production or gas-fired production too much more efficient: it’s already at 80% or 90% of the energy capacity of each unit of fuel.  But you have great potential to increase the efficiency in wind and solar and the like, and as you do that the cost keeps dropping while hydrocarbon efficiencies stay stagnant.

 

Without U.S. government support and/or international private sector financial participation, CCS will never get off the ground.

 

Agree.  I would modify the question to include non-US government support.  I wouldn’t limit the government support to just the US.

 

Part 2 - Short Answer Questions:
 

Coal Communities and Economic Diversification
 

Looking ahead, what economic sectors beyond energy and tourism could Wyoming and other coal communities try to develop to achieve economic diversification?

 

Silicon Couloir is looking at what it takes for your community to create and foster a successful entrepreneurship ecosystem.  There’s a belief that there are 10 basic criteria, and of those 10 criteria we have all of them going, to some extent, here in Jackson.  Some of them are further advanced, some are less advanced—other mountain and resort communities have the same thing going.  The idea is to try to identify what these basic principles and basic components are, and create a recipe for creating an entrepreneurship ecosystem in your community.  That to me is the answer: it’s coming up with a set of basic principles, and it must emerge organically—obviously Jackson is a different place than Rock Springs.  The economic sectors beyond energy must be something that is authentic for the place that it’s coming up, but you can create a set of criteria to say, “Hey, you want to do an angel investor network for start-up ideas in Rock Springs.  We can help you create that locally, and if you don’t have the money locally we can create that sort of thing on a statewide basis.”  That’s how I would go about doing this:  create the recipe and then let it roll out from there.

 

What steps do you think Wyoming and other coal communities should implement to offset current and anticipated layoffs in the coal industry?
 

Education and retraining.  People who have hitched their stars to coal are screwed, and they can sit there and rail against the man and the war on coal, but those jobs are gone and are going to stay gone, and the only thing you can do is retrain those people.

 

Should states like Wyoming work to restore jobs in the coal sector for displaced coal workers or work to create new jobs for them in other sectors?

 

The fantasy of a coal CEO is to have a mine with no employees.  With every leap of technological improvement you’re getting closer to that fantasy.  I can’t remember if they’re producing twice as much coal with one-third the level of employment, but it’s something like that, and if you’re having those kinds of productivity increases, how do you combat that?  You can’t.

 

Which other energy source poses the greater threat to coal: Wind or Natural Gas? Why?

 

Natural gas in the short-run; wind and solar in the long-run, because both of them are having incredible efficiency gains.  As fuel consumption becomes increasingly efficient, demand for fuel falls.  Rapid increases in efficiency leads to decreased demand, and decreased demand is going to work against the highest cost types of fuels, and that’s where coal and, later, natural gas are going to find themselves.

 

What would a “level playing field” among energy sources in Wyoming like look and is it desirable?

 

The tax incentives for oil and gas, depletion allowances, etc., are already so stacked in favor of hydrocarbons.  The names of subsidies and allowances change between hydrocarbons while wind and solar are a little bit more transparent, but if you really wanted to make a level playing field you’d have to go in and fundamentally rewrite the tax code around oil and gas.  Who wouldn’t be in favor of a level playing field? But the incentives for pulling out gas and oil and coal, particularly gas and oil, go back 100 years, and they’re so imbedded and if you disrupted those it would be a nightmare from a contracts perspective and a tax perspective. 

 

Is there a state that has successfully implemented state legislative policies to benefit economic diversification that Wyoming could replicate?

 

There are few states as economically concentrated as Wyoming, so any state that’s more economically diversified could potentially be a model for us.

 

What are currently Wyoming’s most important clean energy R&D priorities?  Coal conversion?  Carbon capture, utilization, and storage?  Hydrogen production and utilization?  Energy storage?  Wind Supplementation?  How should this research be financed?

 

Energy storage has to be the priority.  The more efficiently wind or solar can be stored, the better off Wyoming is going to be.  My concern about all these things that are listed is that you’re pouring money into a dying industry that just isn’t going to be there.  Why not put all this funding into an incentive program for a new economy?  A way to think about it is cell phone introduction in Africa, where they didn’t really have landlines to speak of.  Cell phones rolled out in Africa much more rapidly and with more advanced technology.  Coverage is better in Africa because there were no landline companies in Africa to combat and constrict the rollout of advanced cell phone technology.  You could say that hydrocarbons are to economic diversification as landlines are to telecommunications in the United State.  You can sit there and be super protective of a dying entity, or you can take that same amount of money and pour it into something that’s really going to be the future.  We are no doubt going to do the former, but the model is there for the latter.
 

How much of a global market do you think there is for coal-based industrial chemicals and other end-products of coal conversion?
 

My understanding of coal conversion is that it’s so highly inefficient that it makes absolutely no sense.  It’s trying to prop up something that doesn’t work well, when what you really want to be doing is pouring money elsewhere.

 

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