The future of energy: Certain uncertainties

The future of energy: Certain uncertainties


Good afternoon. Thank you for coming to this. As the video said at the end,
this is 10 years of MITEI. It’s 10 years since we
had our first meeting with our inaugural members. And we’re very excited
to be able to share with you this premier showing
of the video that highlights some of the people and
some of the work that’s been going on at MIT
over these past 10 years. One of our big
assets at MITEI has been an extraordinary
external advisory board. We have quite a few
extraordinarily capable people with amazing reach in the
energy and political world. And each year around the
external advisory board committee meeting we ask that
one of these board members share with us some of their
expertise and their insights into the energy field. Really delighted
this year to have Norm Augustine to talk with us
about some of his perspectives on energy. Norm is a graduate of
Princeton University in aerospace
aeronautical engineering. He has served in many
different capacities as first as undersecretary
to the Army, later as acting Secretary of the Army. He was chairman and CEO of
Lockheed Martin Corporation. I think he was later a
lecturer at Princeton with rank of full professor. He was the chairman
and principal officer of the American Red Cross,
chairman of the National Academy of Engineering, chairman
of the Aerospace Industries Association, and on and on. I could spend all your time
giving your accomplishments here. But we’re delighted to have
him with us this afternoon to share some of his thoughts
on the future of energy. And I think the subtitle here
is “certain uncertainties.” So with that, I’d
like to turn it over to Norm for his thoughts. [APPLAUSE] Well, thank you very much. Good afternoon. That was a very
generous introduction for an unemployed aerospace
worker such as myself. But this being a
meeting about energy, when I hear all those
kind words I can’t help but be reminded
of an introduction that a friend of mine,
David Roderick who was at the time chairman of
US Steel, he had received. Of course, they use an awful
lot of energy in his business. Dave was introduced by
a master of ceremonies who said that David was one of
America’s most gifted business persons. And to prove it, this
master of ceremonies cited just one little fact. He said David had made $10
million in California oil. And David came up the
podium and he was obviously somewhat uncomfortable. He said the introduction had
been essentially accurate, but that he said truly
it was not California, it was Pennsylvania. And actually it wasn’t
oil, it was coal. And actually it wasn’t $10
million, it was $10,000. And it wasn’t he,
it was his brother. And he didn’t make
it, he lost it. So with that, I thank
you very much for such a nice introduction. It’s indeed true that I’ve
had the privilege of serving on the MIT Energy
Initiative advisory board for a number of years. And it’s with great
pride that I’ve had the privilege of doing that. And it’s also been
a great opportunity, a period of
excitement to see some of that brilliant
work that’s going on and some of the most imaginative
work in the field of energy of which I’m aware of. And to have the opportunity
to be around people who are trying to solve one of
the most important and broadly applicable challenges
that the world faces today is indeed a rare privilege. I’m very much looking forward
to what the initiative will accomplish in the next 10
years, which we’re now underway. I should begin, of course,
by confessing that I’m not expert in energy matters. I’m an aerospace
engineer who in my career moved into systems engineering. And the provision of
energy, of course, is a huge systems challenge. So I felt that maybe I could
contribute a little bit there. And then later in my career
as my engineer friends say, I descended into management,
but we won’t talk about that. But before you dismiss
everything I have to say, let me just remind you,
I am a rocket scientist, so whatever that’s worth. Today our nation has some
very difficult and important decisions to make with regard
to the energy and climate future, not only of our country,
but of the world writ large. As we all know in past
decades, the United States became extremely dependent
upon Mid Eastern oil. To the extent we were shipping
some $6 million a week to pay our energy bill overseas. Several years ago at
a press conference that was held by an independent
organization I belong to of former government
employees who are committed to trying to from the outside
build support for energy research and development,
at that press conference one of the people
representing the media had asked if the problem was
that the United States didn’t have an energy policy. Now this was some years ago. And one of our members who was
a very well-known former US senator, he responded
by saying, oh, but we do have an energy policy. Our policy is to
support foreign cartel by importing billions
of dollars of oil and sending them billions
of dollars in return. Some of which they can
use to fund terrorists who are trying to kill us. That’s our policy. Well, that is a bit
of a harsh assessment, but it did have elements
that rang somewhat true. Now a lot’s happened
over the years due to the efforts of
an awful lot of people, some in the Department of
Energy and some in this room who I know that were there. Many of the more
difficult decisions that have to be
made in any field are decisions that involve major
capital investments in items that are long lived and
where the environment which they will function is
shrouded in uncertainty. That’s a perfect description
of many of the decisions that will have to be made in
the application of new energy techniques. It’s a great opportunity for
people who like taking risks. And I’m, of course, not speaking
of ill considered risks. I’m talking about
judgemental considered risks where the benefits justify the
risks that are being taken. The underpinning of a clean
energy world in the future, in my opinion, is research. That’s the underpinning,
necessary but not sufficient. But the federal government’s
investment in energy research has been declining largely. And so the question comes up if
not the federal government, who is going to make
up the difference? Might it be industry? Currently industry is
one of the beneficiaries of research in energy. And indeed, in the area
of development industry has been picking up much of
the slack in R&D writ large. In this regard, let me
briefly share with you the a lesson I learned
from an incident that occurred several years ago. When the firm where I was
working had a number of I thought really
promising opportunities in the research
arena, I would call it applied research probably. And we were so excited
about it we decided to increase our investment in
research substantially, still small compared with the
overall expenditures of the corporation. And we call a briefing
on Wall Street and sent the company’s
president there to tell the people on Wall
Street, the analysts, what a great, exciting
opportunity this was to impact future
profitability and growth. Well, at the end of the briefing
by the company’s president, this actually happened on Wall
Street, most of the audience got up and literally ran out
of the room and sold our stock. Our stock dropped
11% in four days. Just to calibrate that, there
were about 182,000 of us in the company that worked that
entire year to get the stock up by almost 11%. Shortly after what became
known in the research labs and into corporate offices as
the debacle on Wall Street, I asked one of the
analysts who I happened to know who had been
present at the briefing, I wasn’t there, what we
had said that was wrong. And I can almost verbatim
tell you what he said. He responded, I’m told
rather impatiently that we should
know that it takes 10 or 15 years for research to
pay off if it ever does at all. And your average shareholder
owns your stock for 18 months and they don’t care what happens
to you in 10 or 15 years, and for sure they don’t
want to pay for it. And by that time,
your investors today will probably own your
competitor’s shares anyway. And so the analysts then
administered the coup de gras. And I think this is
pretty much verbatim. He said that our
firm does not invest in corporations with such
short sighted management. That was his words. Figure that out. That’s a true story. Anyway, today about
80% of America’s chief financial
officers, CFOs, say that they would
cut R&D if it were necessary to beat the next
quarter’s profit forecast. The root of the
problem I think is at the time I first entered
the industrial world long, long ago the average
stockholder held their shares for eight years. Today, it’s four
months and declining. And in fact, day
traders prove, quote, to prove that to milliseconds
that they hold their shares. And so you have a market that
demands returns next quarter. And that’s not compatible
with performing research. And it’s not compatible
with conducting technology demonstrations at scale. But once research has been
successfully conducted, there are still
further hurdles that remain to be surmounted that
the policy world has not yet fully dealt with. The first of these
hurdles, of course, that is widely known
as the valley of death, not unique to energy. It bedevils all
innovators as they try to progress from
laboratory results and research to proven technologies at the
bench or a little larger level. Unlike most fields
though, energy R&D faces a second even
major valley of death that requires going
from that technology prototype to full
scale demonstration to show the feasibility
and economic viability of the concept. And that’s an extraordinarily
costly and extraordinarily time consuming undertaking. We do have some
reasonably good mechanisms to help get through that
first valley of death. We have very few to help get
through that second valley. And I’d like to talk a little
bit about that as I go on. The second valley, of
course for starters, is who is going to put
up the necessary capital and the innovative
drive it takes to get an idea from
the prototype phase to a full scale demonstration
of economic feasibility? The answer, it
would seem to me, is going to have to
reside in combining the strengths of our
government with the power of the free enterprise system
with the underpinning of world class academic research. Consider the impact of just
one major development that is certainly coming
down the highway, no pun intended, but that
would be electric cars. I think not much further behind
maybe self-driving vehicles and especially passenger
vehicles, not trucks. Trucks I think more likely
will depend on fuel cells. But the Chevy Volt
is now getting about 240 miles per
refueling or range is really making all
electric propulsion much more practicable. But there are still
some problems that remain that we’ll come too. I think most of us
probably in this room would view all electric
light vehicle fleet with considerable optimism. I sure do. No more carbon emitting
internal combustion engines, just clean electricity
pouring out of the wall plug into the vehicle. Before coming back
to that, let me just mention that it reminds
me some years ago I was at a used bookstore. And prowling through
it I found a book on mechanical
engineering that had been printed just right after 1900. And the opening line
in the entire book said the horse is dead. And if you were to see the
2000 version of that same book, my guess is that it would
say the internal combustion engine is dead. At least as it applies
to passenger vehicles. That’s going to
take a bit of time, but it’s not a
bad bet, probably. Well, for openers, what’s
wrong with this picture? One thing is that today about
two thirds of the nation’s electricity is
currently generated from fossil fuels,
and a share that’s relatively slow to change. Nuclear reactors, of
course, provide about 20% of the electric power. I note that six of them
are scheduled to be retired within the next decade. And those six together
provide more power than all the nation’s
solar panels combined. And I say that not to diminish
the importance of solar power, but it’s the question whether
nuclear should be a four letter word in the minds of many
of our policy makers, including those in
Europe, parts of Europe. Unfortunately, too many of
the nation’s decision makers are overlooking the
fact that there’s no magic box behind that
wall plug pouring electricity into our cars, that that
electricity is being created, and is likely to be
created for a long time, with far from clean energy. That brings us to the
Earth’s fragile environment. As everyone in this
room knows, we’ve now passed about 400
parts per million of CO2 in the atmosphere. The Earth’s average
temperature has increased around a degree
Celsius in the last century or so. And that’s a rise with
very serious implications, And especially so if that
rate were to be sustained. And I personally happen to
believe the scientific evidence relating to global warming. And yes, I do understand
the hazards of small samples and also that there’s a
difference between causality and correlation. But to me, the data is
relatively convincing. And if nothing else,
I think the idea of carrying on a giant
uncontrolled experiment that potentially profoundly and
irreversibly could impact our planet would seem
to be an experiment that deserves a great
abundancy of conservatism. Fortunately, the
United States has been given a partial reprieve,
if you might call it that, to implement longer term
solutions to the energy dilemma that we face. That reprieve is called
hydraulic fracking. And as controversial
as it might be, indeed it has
problems of its own. But whatever the case, about
a decade ago America’s energy firms were scrambling to
construct natural gas import facilities to bring gas from
abroad into the country. And now the US is passing Saudi
Arabia and Russia combined in the export of oil and gas. And the US should become a net
exporter of gas very likely next year. And this significantly
changes the equation of the economy in many respects. It certainly changes the
world’s geopolitical balance in many respects. And the day is approaching
when Mid Eastern oil instead of going west from
the Hormuz Straits may go east from
the Hormuz Straits. And that raises all kinds
of interesting geopolitical questions. Who is to defend the Hormuz
Straits, for example? The revolution in
energy was really a result, this revolution
I refer to of fracking, was a result of
probably three rather fundamental technological
breakthroughs that were supported by both
government and industry that consorted to unlock
this energy source. And the first of these was of
course advanced 3D seismics. Second was the development
of horizontal drilling that extended ranges. And the third was
hydraulic fracking itself. And secondary
recovery of oil is not a new notion in this country. It’s been underway for
well over a century, but only in much shallower
and much smaller wells at far lower pressures. And while access to
unconventional gas is an enormous boon to the
economy and national security, it’s not without its own
challenges and detractions. Shale gas itself is of
course, a finite quantity, although abundant
in the short term thinking of maybe a century. And while natural gas is clean
compared to oil and coal, it’s certainly not clean
in an absolute sense. Natural gas greenhouse emissions
in the form of carbon dioxide are about 30% lower per BTU
than those of oil and about 44% less than of coal. But a critic might state
that somewhat differently. It would say that natural gas
is 70% as polluting as oil and 56% as polluting as coal. Nonetheless, the
development of shale gas does seem to provide
an opportunity to devote attention to truly
clean sustainable energy sources. That’s particularly true
when one views the context that 82% of the United States
primary energy production is still derived
from fossil fuels. And that the general
dependency is going to be with us
for a very long time. And the equivalent figure
for the world as a whole is about 88%. And that’s a number
that’s only declined by about a percent in the
last quarter of a century. Whatever one’s perspective
is, natural gas is an enormous improvement
over the status quo. But that we are going to be
depending on fossil fuels to a considerable degree
for a very long time, making such things as
sequestration very important. In the case of a cleaner
generation of electricity, where I think some of
the biggest opportunities lie because of
what I would expect to be a widespread adoption
of electric vehicles, passenger vehicles,
substantial progress has been made in this area. The fraction of
electricity that’s produced in the US that’s
attributable to natural gas has nearly doubled in
the last few years, about a decade or more. And we now get about a third
of the electricity that’s generated from that source. Also as all electric cars
become capable of greater ranges and of more rapid recharging,
the demand for them is likely to increase. And that’s likely
to further increase the demand for clean
electricity and whatever is behind that wall plug
that could produce it. And this would be an important,
really a huge opportunity since about 94% of the fuel
is consumed in US vehicles, trains, and planes is
currently derived from crude. While clean energy
sources such as solar and voltaic, solar thermal,
wind, wave, biomass, geothermal are all extremely important
alternatives to fossil fuels, none of them would
seem at least to me at least at this point
to be approaching becoming a main line
source of power, but rather will be relegated
to important complimentary companion sources. And if old forms of renewable
energy are included, such as wood and
hydroelectric, new renewables, in spite of being
generally well subsidized, still provide less than
half the total contribution of renewables themselves. And as attractive as
these latter sources are, they too aren’t without
their disadvantages, whether it’s
intermittency or cost or unique forms of
pollution that they too are burdened with. The massive costly and long
lived energy infrastructure in this country, at
least as it exists today, is constituted around just four
primary sources, petroleum, natural gas, coal, and nuclear. And the infrastructure that
so much has been invested in represents a huge impedance
when one tries to produce change in the delivery of power,
not in the concepts and ideas of research. Of the roughly 100
quads of energy that we consume in
this country each year, petroleum provides about
a third, natural gas about 30%, coal around us 17%,
nuclear I think at 9% now. And all the other sources
are less than 10%. Professor Vaclav Smil of
the University of Manitoba made an interesting calculation. And he calculated it took
under 60 years for world wide energy usage, first
of his calculations, that historically was
based on burning wood, it took 60 years for it to
go from 5% coal to 40% coal. He went on to calculate it. It took 60 additional years
to go from 5% oil to 40% oil. But with the passage
of a similar 60 years, natural gas has
barely gotten to much over a quarter of
worldwide energy usage. And indeed once again,
the change in energy space takes a lot of time. Among the limitations
of a lot of renewable energy sources is of
course intermittency, which coupled with a growing
demand for mobility makes energy storage a
particularly critical requirement. In this regard,
advancements in batteries, in terms of energy density both
weight and volume and recharge time and cost is badly needed. I might add safety
is badly needed. Whether we’re talking about
handheld devices or we’re talking about vehicles
or perhaps the grid. Given the importance of safe,
reliable, compact, affordable, portable energy storage
devices, the advancements that have been achieved
in recent years I guess I would uncharitably
characterize as somewhat modest, at least as
compared with the needs. There have clearly been
some important achievements. Development of the lithium
ion cells, lithium oxygen sounds very promising. But nobody, I think, would
confuse the pace of advancement in energy storage battery
technology, batteries in particular,
that would compare with the rate of
advancements in semiconductor integrated circuits or
optics or space technology or genomics or other
fields like that. And furthermore, the
lithium ion batteries that we count on so much
have now been around for a quarter of a century. What would seem we need are
quantum, again no pun intended, but what are needed
is a quantum jump in energy storage
capability, particularly for mobile sources. And unfortunately,
advancements like that are not likely to be
derived from doing what we’ve been doing all
along and trying harder. It seems likely
they’re going to come from new concepts, new fields. For example, solid
state battery. And under circumstances
such as these, there’s certainly a premium
on thinking out of the box. And that has been the primary
goal of the MIT Energy Initiative. And let me share with you
one of my favorite examples of what it takes to
think out of the box and how difficult it could be. The example I want to give you
is not from the energy area, it’s from the medical area. And a while back
there were a group of engineers and
cardiologists who were meeting at a well-known
university not in this case MIT. And they were meeting to
talk about the possibility of constructing a truly
effective artificial heart. And somewhat ironically,
the two groups had never sat down to
talk about this before. One of the cardiologists
began the session, I’m told, I wasn’t there, I’m told by
listing the requirements that would be necessary for
an artificial heart to perform adequately in terms
of safety and functionability, and so on. And the cardiologist barely
got his presentation under way until he was interrupted by an
engineer who inquired, would it be all right if
instead of having your heart in your ribcage
could it be in your thigh where it would be easier to maintain? Well, there was
silence in the room. And it turned out that
nobody in the room had ever thought
about that possibility before, even though
the cardiologists had spent their entire lives
studying the human heart. Well, after a brief
interlude, the cardiologist was said to have proceeded
with his presentation and was soon
interrupted once again. This time it was
an engineer asking if instead of having
one heart could you have a network
of three or four or five hearts in your system. Might that be better? Well you get the idea. It created a whole
new form of discussion and a new relationship
between these two groups that has prospered to this day. And in this regard,
it shouldn’t go unnoticed, particularly
with the group here, the impact that engineering
is having in fields as far, seemingly as far apart
as biomedical field. I was working with NIH quite
a bit in the last few years. And they had conducted a survey
of practicing physicians. These were physicians out
dealing with patients. The question was, what
technological developments in the last decade
or so have had the greatest positive
impact on your ability to care for your patients? And it turned out, the top
five on the list, three of them were pure engineering. If I remember right it
was CAT scans, stents, and artificial joints. And once again, when dealing
with complex fields like this, I know it’s true
of the initiative here, that to have
technologists working alone without policymakers,
without economists and so on, is not likely to lead to
implementable successes. Well, when it comes to the
subject of novel energy sources, it’s not
as though we lack truly promising opportunities
in a fundamental sense. In the Pentagon
where I used to work they would have referred to it
as a target rich battlefield. We have learned to, for
example, to engineer microbes to produce energy. And the microbes, it’s pointed
out to me as a retired business person, never take vacations. They never ask for raises
and they don’t form unions. So some of the microbes
that have been engineered are viewed with some favor. But we’re finding that there
are recoverable forms of energy in almost every waste
product that one can imagine, including some that one probably
would just soon not imagine. And there are
remarkable materials that are being developed that
have energy applications. I think for example of
graphene sheets and the ability to cover huge areas with very
minor weights of sheeting. But the only long
term answer that I can think of to solve the
world’s energy problem, the basic energy source, if
you will, is nuclear fusion. When I was in
graduate school they were working on the Matterhorn
Project at Princeton. And I could recall– that was a time, incidentally,
when gasoline for your car costs $0.19 a gallon. Except when there
were price wars, then it was $0.11 a gallon. And most of us had
cars that weren’t worth the price of having a
full tank of gas in it either. But I asked one of
the scientists that was working on the Matterhorn
Project, I said, how long will it be till we have commercial
nuclear fusion generated electric power on the grid? And his answer was 30 years. Well, not too long ago
I was at the Fermilab. And I asked a
group of scientists there how long
will it be till we have fusion powered electricity
on the grid commercially. And without hesitating,
they all said 30 years. And not long ago I was amused
to see a newspaper article that was quoting an executive at
the NIF, the National Ignition Facility, that
said in 30 years we will have electricity on the
grid produced by fusion energy absolutely. That’s a quote. My conclusion is
the good news is that we haven’t lost any
ground in the last 30 years. And I just never personally
realized that like E and pi, 30 is a universal constant. Of course, not everybody
agrees with this assessment. Some are more optimistic,
some much less so. It’s as much an issue
of funding and political will, if you will, as it is
of science and engineering. Admitting that the latter is
one of the tougher problems that we’ve ever challenged. But whatever the case,
it does seem to me that fusion energy is
likely to be ultimately of utmost importance. And that today as a nation
we are significantly under invested in it. Now I haven’t thus far
mentioned the challenges of electric power distribution. And I focused on
electric power because I think that’s where many
of the opportunities are. But how do you deal with this
problem of distributing power on a grid that is quite
ancient by today’s standards? And trying to upgrade
is a little bit akin to trying to rebuild
an airplane in flight, where behind every
cloud there are hackers. That’s something we need
to think more about. Hackers not only individuals,
but nation states. And our electric grid is one of
the most complex systems that’s ever been constructed. But as I say in many ways,
it’s fairly primitive. A few years ago I was
asked to chair a committee to investigate why the power
in much of suburban Washington, including Washington
DC, seemed to cease to function, at
least as described by the citizenry, whenever a
cloud went over Washington. And to my amazement, I learned
that the way the local power company determined
which circuits were out how to troubleshot
a network after a storm was they sat by the phone and waited
for people to call and say my house is dark. And then they used that
information to plot out where the current was flowing
and where it wasn’t. And through a little logic
could deduce where they should send the maintenance crews. And I probably have
to confess to you, when our group turned
in its final report, six of the 10 of us on the
group went out and bought home generators. But I’m happy to say that
at least thus far the one we bought has never
been needed yet. The challenge of upgrading or
reducing such a vast system is complicated by
the difficulty, read impossibility
of testing a system, fully testing a system
of this complexity. The dilemma is suggested by some
work of Friedrich [? Wicorse ?] that I always found interesting,
from a German institution. He derived the equation that
describes a number of states that a system can exist in. If each element or
each node of the system can impact every
other node, but only in the simplest possible
way, namely the connection is on or it’s off, one or two. [? Wicorse ?] called his
equation the monster. And I think he did so
quite appropriately. With only two nodes, the number
of states is obviously four. But if you go up
to just six nodes, the number, according
to my slide rule, was 1,073,741,824
possible states. And with a system as widely
distributed geographically as the electric
grid, it’s unlikely, or we know that every
element can’t directly affect every other
element, which is required of [? Wicorse’s ?] theory. Nonetheless, it does seem
clear that the number of possibilities is huge. And we do know that many nodes
can affect other nodes that are very distant indirectly. For example, when a tree
brushing against a power line in Ohio shut down
the electric power for 50 million people in
Northeastern United States and parts of neighboring
Canada a few years ago. Well, that brings me to the
final portion of my remarks, which concerns
whether we’re properly organized and resourced to
meet such demanding challenges as confront us in the energy
and environmental areas closely linked. First of all, given
the importance of reducing greenhouse
gas emissions, it would seem that we’re
greatly under investing in clean energy research
and development as a whole. And I look with dismay at
the funding or non-funding of ARPA-E. When ARPA-E was first proposed
in the Gathering Storm report, it was anticipated by
now, some 12 years later, that ARPA-E’s budget would
be a billion dollars a year. Instead of that,
its very survival has recently been challenged. And that’s not withstanding
its considerable successes. ARPA-E has, in fact,
accomplished a great deal in helping move through
that first valley of death, and has helped somewhat in
the second valley of death even with the modest
budget it’s had. And the number one energy R &D
funding priority in my mind is to increase ARPA-E’s budget to
the billion dollar level within the next five years. The number two is to invest
in much more basic research, at least twice what
we’re now spending. And that next would be
to start building bridges across the second
valley of death. So with regard to that
second valley of death, I’d like to make a
proposal today, which is a companion, a
sister to ARPA-E, that would be patterned after
another highly successful organization In-Q-Tel. Perhaps some of you
may have heard of it. About 20 years ago the CIA asked
that a mechanism be established whereby industry and
academia might work together with the federal government
to bring advanced technology to some of the most
important problems facing the intelligence community. To do so in the open, but
to put it very bluntly, do it without the
stifling impact of government bureaucracy. The result was an
organization called In-Q-Tel. And one of the lessons
that we learned when we formed In-Q-Tel
is the fundamental need is to be able to
attract the most capable, imaginative, innovative
people you possibly can and to provide them an
environment in which they can be free to innovate. But there was a second need. And of course, that was
also addressed by In-Q-Tel. And that was to
encourage the investment, to draw upon this huge
innovative enterprise that exists today already
to help solve problems in the intelligence world. Which I think the
same thing could be done to a considerable
degree in the energy world if such an organization
were adequately funded, funded far more than ARPA-E is. One of the big problems
that we discovered is that entrepreneurs
don’t want to deal with the federal government. They can’t afford the delays and
the bureaucracy, if you will. I’m not ant–government. I spent 10 years proudly
with our government. But it is true that large
organizations, particularly government organizations
that don’t have competitors tend to become very
set in their way. Well, the keys to resolving the
roadblocks in In-Q-Tel’s case included they were
given the ability to attract extraordinary
people, but also to be free of government procurement
rules and hiring rules. And were able to adopt their
own investment practices. And that included the
ability to award grants, to award contracts, even
take equity positions. And to make decisions to
do so almost overnight. And when that happened,
all of a sudden people began appearing at the door
with great ideas, many of whom hadn’t talked to
each other before and each had half an
answer to a problem. In-Q-Tel since has been,
as I say, very successful. It’s an outside firm. It is not a government firm. It’s funded by the government. It works for the government,
it’s owned by the government, but it’s run by a board of
totally outside individuals. And it’s a board that I
think would be fair to say would be welcome by any Fortune
100 company in the country. The organization has
to obviously abide by all laws, all
regulations that govern broad public companies. It has to abide by the
same ethical rules. But when they have
failures, the first thing that does not happen
is a big investigation is started that
goes on for years. Being in the public domain, it
has so much greater latitude than does a like
government agency. Well anyway, that leads to the
idea of what I’ve called it In-Q-Tel-E for energy for
the lack of any other name. But I would hope that
serious consideration could be given to passing this
second valley of death with an organization
outside the government, funded by the government,
totally managed and governed by individuals
from outside the government. For companies to do this
alone is equivalent to you bet your company. Well, that’s my idea of the day. I’m often asked whether I’m an
optimist or a pessimist when I look at some of the
challenges we face. I always answer that by
saying that a pessimist is a person who wants
to be an optimist, but has a working
knowledge of the facts. Together, I’m convinced, I’ve
worked in government, industry, and academia, and I’m convinced
the three can work together to solve some truly
amazing challenges. Remember the Apollo
program is one example. We just need to be given
the chance, and especially the chance to take
considered risks over long periods of time. Celebrate the
successes, but don’t spend too much of
our time studying the entrails of the failures. With that I think we could
accomplish a great deal. Again, I congratulate the
Energy Initiative here at MIT on 10 very
successful years. I look forward not
only to 10 more years, but to many more after that
until this problem is solved. Thank you all very much. [APPLAUSE]

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