Welcome and Overview of Workshop and Energy Innovation Hubs Video (Text Version)
This is a text version of the welcome and overview of the workshop and energy innovation hubs video presented at the Critical Materials Workshop, held on April 3, 2012 in Arlington, Virginia.
Speakers
Dr. Leo Christodoulou, Program Manager, Advanced Manufacturing Office (AMO)
The Honorable Steven Chu, Secretary, U.S. DOE
DR. CHRISTODOULOU: Good morning. Good morning, everybody. My name is Leo Christodoulou. I am the Program Manager from the Advanced Manufacturing Office of the EERE Energy Efficiency and Renewable Energy element of the Department of Energy.
It is my pleasure today to welcome you all, those of you that are here and up on the web, to participate with us here.
Time is our most valuable resource, and we are very grateful we at the DOE today are very grateful that you have selected to invest some of this valuable resource with us today. We look forward to your participation, both here and on the web, and your contribution to this very important discussion that we hope to have today.
Now, critical materials represent, I believe, one of the great challenges of our time. We need to rise to this challenge with innovation, good science, good technology, and we need to pursue real solutions for the nation. I mean, this is real important.
I often talk about the tyranny of the periodic table, the finite number of elements that we have to work with. But actually we really have a lot of other tools as well. We have feature size, we have crystal orientation, texture. We have innovative design perhaps that can help us overcome some of these solutions some of these problems.
For us, this is a whole of DOE exercise, and we aim to break down barriers and work as a team to find real solutions. And to that degree, you will see my colleagues from the Office of Science. Of course, Mr. Secretary, Dr. Steven Chu, is here with us.
And with that, it is truly an honor and a privilege for me to introduce our Secretary of Energy, Dr. Steven Chu, who has been instrumental in the hub concept, has been one of his visions that he has executed, and it is so successful.
And he will share with us this morning some of his thoughts on the model and on the hub model, and I have no doubt that he will give us a great charge to go forth and do good things.
Mr. Secretary? (Applause.)
SECRETARY CHU: Thank you, Leo. So, first, it is almost a non sequitur for me to stand here and say why critical material is important, because if it wasn't important it wouldn't be called "critical." (Laughter.)
So I am going to skip that. No. So critical materials are increasingly important because, as we go forward in a lot of new technologies in LED lighting, in displays, in magnets. Remarkably, in an old application grinding materials, those are rare earths.
But there are other critical materials that would be very critical in catalysis, that we would like to rethink how we do a lot of things if we only had the right catalyst. And those would also be listed as critical materials.
As you all probably know, in some of these critical materials they have become so critical and supplies limited and somewhat controlled that sometimes prices went up by an order of magnitude or a factor of 50 in certain cases.
Usually when prices go up by a factor of 50 the market responds in some way, and there is more attention to other sources, but these require long startup periods. And with the rare earths in particular, it is you know, it is sort of an atomic physicist's dream and nightmare.
You've got all of those unfilled shelves. You've got all this complicated spectroscopy. I always wanted to work with single electron atoms, kind of like hydrogen. And it is because of all of that those wonderful unfilled shelves that you have all of those wonderful properties, but also it makes the specific extraction very difficult.
And so we are in a very unusual era where the Office of Science has for a while been investing in actinide chemistry. Eric Rohlfing was telling me that it may not be the same as lanthanite chemistry. That's true.
But there is actually, most of the bulk of the physical science is material scientists haven't really, in my opinion, been focused on mining, extraction, purification, recycling, which might seem mundane, but as we go forward in a sustainable world, it will become increasingly important. We do have finite resources, and we are going to have to deal with that. And nothing focuses a mind more than $150 a kilogram, or higher.
So this is something that is yet another hub. It is a critical hub. So let me tell you a little bit about what we think a hub is. But I think, just looking at the notes, you are going to talk about all of the possibilities of what one can do with critical materials, how do you find substitutions or use them in a very sparing way. The more sparing you use them, the harder it is going to be to recycle them, because it will require economical extraction means.
But also, in the mining, in the manufacturing and how much is left on the factory floor, and when the product the end cycle of the product is over, one is beginning to think no longer about end cycles but of, really, a continuous cycle.
So those are the scientific and engineering challenges, but let me talk about the hubs. So this started probably the second year I was a lab director at LBNL, and I remember vividly Secretary Bodman coming it was his first or second year he visited me in Berkeley Lab.
And he was in my office, and I was expounding poetically on the revolution in biology. And it may be possible using synthetic biology to really take a very fresh look at how one makes biofuels.
And he stared at me. He went like this. I don't know if you know him. He is kind of he goes like this. It's his code word for this is this guy from Mars? (Laughter.)
And then and I said and not only that, it is going to be something that would require teams of scientists, because real synthetic biology is where the whole metabolic pathway is going. So this is very rare that a single group can do this, unless you have a group of 30 or 40. But it would be better if you can get teams.
So Secretary Bodman Sam went away, talked about it. I think he certainly talked to people in the Office of Science, and after a while said, "You know, that might be possible." And that grew within the Office of Science, and the next time and talking to Ray Arbregan. The next time, this hub actually getting people under a roof to have concerted effort over an extended period of time.
So let me talk about that. It's a lot of people on the roof across a lot of disciplines over an extended period of time. The idea was five to 10 years, five years and then renewable to 10.
The shorter time period stuff the other idea, the alternate idea, which wasn't as enthusiastically bought by the Office of Science, was an ARPA-E-like concept. But it is okay, it is not in the Office of Science, and the next Secretary was very enthusiastic about that one. (Laughter.)
But ARPA-E would be a very short hit, a single idea or set of ideas, two years, two and a half years. The extended period of time is a recognition that there are going to be a lot of time scales. Some things you can hit for a year or two. Other things will need five or 10 years, and even after five or 10 years it may be a good start.
So it would be a sustained effort. It would still be looking for more than incremental improvements. So if we want just incremental improvements, industry is highly motivated to get these incremental improvements, and they probably are the best place to do it.
But if we wanted something beyond that, where the private sector is not willing to invest that five or 10 years and it gets harder and harder to do that then these hubs would be an excellent opportunity to be coupled with the private sector, find out where their head is at.
So not to be this is you know, the hub is not a funding facility. It is a research entity like a mini Los Alamos, a mini radiation lab where they developed radar in World War II, or a mini Bell Labs. I wanted to call them Bell Lablets. Wiser heads prevailed and they are called energy hubs.
But that was the model, and sadly or happily or no, sadly, I am old enough to have known people who worked at Los Alamos and the radiation laboratory and, you know, I would sit at their lap and they would tell me stories of the good old days during World War II.
And I worked at Bell Labs for nine years, and I knew what it is like there, and secondhand I knew what it was like in those places, where you really had scientists and engineers working side by side in this really interesting, super live place where you were working together and remarkably also competing with the next person because, you know, Ed Purcell was telling me, you know, Dickie, he went and got all of those theorems about three, four things, and he was feeling undone.
And so he spent nights and nights afterwards trying to think, did Dickie miss a theorem? And he tells me, "He missed one. I found one he didn't he couldn't identify and prove." And those theorems developed during the radiation lab were because they were based on electromagnetic theory and essentially modes, were exactly transportable over to fiberoptics. Every one of those theorems just went from microwaves to fiberoptics.
And one person at Bell Labs told me I look like a genius because I knew all of the things you could and couldn't do, and all I did was read the radiation series books on microwaves.
An amazing place. So this was the vision that we want for the hubs that you get that electric atmosphere and you get that sustained effort. And because you have stability in funding for at least five, probably 10, years, if you do well, then you could get people to temporarily leave what they are doing. I don't have to worry about funding anymore. I just want to solve the problem.
And so this was another view that I had that you could get people to work on something where in many cases you would want them to kind of traipse over and partially change fields. They would not be willing to do this unless they knew that there was this longer term vision that there was "sticktuitiveness," and you just wanted the right people.
So there were no experts, very few experts in radar, and there were very few experts on nuclear technology. And, well, that was for national emergency, but you still needed that in this sustained commitment. So that is what we are looking for in the hubs. Again, connections to find out what industry wants, so the partnerships would be real but not as a co-funder but as, okay, this is where you need industry to know if you are going off in a direction that the private sector wouldn't be interested in, because it goes away from manufacturability, it goes away from practical processing, it goes away from all of those other things. And so that is another thing that we want in this hub.
The biofuels centers I think, by anyone's there was another meeting in the SCIF room of the Department of Energy where the then-Secretary of Treasury, the head of the NEC, and the Secretary of Energy, were there to get briefed on ways of helping with diversifying our energy supply in transportation, or in fossil fuel in general. And in that meeting, it turned out to be a hit, and Secretary of Treasury and the head of the NEC decided that they would not just fund one bioenergy center, but they might fund more than one. And then we thought they were going to double it, but they tripled it.
So now three and a half years old, very, very successful, I think. If you look at it's not the papers, it's not the patents, it is not even the CRADAs and the organization of the companies. But if you see what might actually get out in the private sector and be deployed, there is a shot that some of this stuff will really get out there. And I am convinced that some of this stuff has been significantly accelerated, which is what it was about.
Okay. We've got, you know, bioenergy centers, over 50 industrial collaborations, a couple of spinoff companies. More excitingly, a couple of them out of the 50 are going into pilot plan production with intellectual property generating from those centers. So that was a good thing.
The next hubs a little too early to say, but early signs that they are following a similar route. So we want this hub to also follow a similar route. Okay?
And so as you talk about what the issues are, the potential topics are very vast, and you've got to figure out how to concentrate. You can't do everything.
Arun Majumdar, Bill Brinkman, and I sat down one lunch, and there was a matrix of materials for magnets. Actually, it's a funny thing. It's for permanent magnets, but the permanent magnets can actually induce the soft magnetics to get a very permanent, high quality, permanent magnet if you do it right. But you have to figure out how to manufacture materials for display lighting and materials for catalysis. And then you had all of these other things going sideways, and then all of a sudden there is this big matrix and said, "Well, you can't do everything. What do you want to concentrate on?"
And so this workshop is also to figure out, where is the value added in this research program that is going to be funded by the Federal Government, that the private sector would not take up on its own? But if you do this, and it could lead to a transformer breakthrough, that is what you want to focus on.
Things that look imminent, don't bother. If everybody is already focusing, they are going to get a solution. You know, one solution is take it up with WTO. But on the longer solution, an aside to figuring a solution, look for those areas.
So that is all I have to say. I've got 30 minutes, and so I wanted just to answer questions for the rest of the time. So the floor is now yours to ask me anything you want, preferably about hubs. (Laughter.)
Oh, come on. I can blither on, but I'm not going to blither on. I'm going to go ahead.
Let me also say while you are thinking of what to ask, we do have international arrangements. There is an agreement with the EU, Japan, and the U.S. on critical materials. Also, this started before, and then Canada and Australia were also part of this discussion for certain reasons having to do with their natural resources. And in Japan just a couple of days ago there was a meeting, a technical meeting, on that.
You know, an open question, do you want to get the hub starts stabilized before you really link with this other collaboration? But there is an appetite out there internationally to help solve this problem. Yes.
MR. WETZEL: Dr. Chu, Christian Wetzel, RPI. You mentioned the concept of under one roof in your hub. What does that mean? Would I have to think of one lab, one building? Or is that more or less a virtual aspect?
SECRETARY CHU: Ideally, under one roof. But in actual fact, if you look at some of the hubs, it's not. Let me give you one example, the sunlight to fuels hub. It is centered in two places – Berkeley-LBNL and Cal Tech.
I think they at least once a week but they have kind of group meetings, but it may be even on a daily basis they are meeting.
So one of the things the most critical thing is that, again, based on my personal experiences at Bell Labs, also what I saw in places what I knew I have a bunch of friends in the Laboratory of Microbiology, the MRC, it started a lot of the X-ray crystallography, protein structures, DNA.
There were common meeting places. They would bump into each other. Oh, by the way, what are you doing? So it wasn't a planned, scheduled thing. Many of the collaborations at Bell Labs happen this way.
If you talk enough, whether it's virtual or not, then you kind of get a sense of what everyone's view is, even though you think, "I'm not collaborating with them." Voila, a year later you say, "Hey, there is something we can work on."
So it could be a virtual under one room. "Ideally under one roof" is the wording, but we also recognize that sometimes that is not possible, and sometimes you want to bring people across the country together. But, you know, in some of the hubs we actually got people to they really wanted to do that, and they moved to other places. It was impossible for personal reasons, other things. Okay? So it is not a hard rule, but
MS. YOUNG: Thank you, Mr. Secretary, for your leadership. My name is Corinne Young, and I represent renewable chemical and biopolymer advanced material companies. Could you please expound more on a little bit of a followup question. How can industry interface or collaborate with these hubs, without impugning the Office of Science?
We found the Office of Science to be geared toward more university and academic research. And with the new nascent but fast-moving renewable chemical industry, in conversation with DOE and USDA on incentives to keep this industry here and grow out the full value chain, these hubs sound like a fabulous opportunity. And how can industry participate?
SECRETARY CHU: Okay. So let me give you a couple of examples. For the first set of our hubs, one was using high performance computing to help the nuclear industry. Because of the very high expense and long duty cycle in the NRC approval, that could you actually try to simulate things that could make a more corrosion-resistant fuel rod.
There were some issues and problems, and how do you get higher yield out of the current set of nuclear reactors by using high performance computing. Again, you still needed the experiment, the verification, because you are not going to get an NRC approval. But you can explore parameter space in a different way.
So there the first thing they were doing is they are working on software packages that you can give directly to industry, but then you have to talk to industry what level of detail they need, what sort of how user-friendly could this high performance computing software be?
So that is the set of tools. I am trying now to get them interested in something very different. How do you convert highly enriched uranium research reactors to low enriched uranium reactors and still maintain the neutron density? So it's the neutronics, plus energy density, plus bit cooling again, a high performance computing thing that this would be ideal.
Another one, the biocenter there would be a new process, a new synthetic a metabolic pathway put in. It looked okay, you get the first okay. It worked. It wasn't rejected by the organism. Immediately you know you have to get it to perhaps 80 percent of the metabolic energy of this organism has to be doing this.
And what is the extraction of this? And what is the how do you keep these very disordered bugs alive? It is you know, so that the only thing you are producing biofuels, you know, but forget about sex, everything else.
And so what happened in one that I happen to know personally it was at LBNL the process started, they rigged it on a bench the way you know, in the old chemistry style with okay. And they made a toy thing, and then they said, "Okay. LS9, get the yield up." LS9 is a company. Or Amaris. We are not going to squeeze on getting the yield up, because that is better in a company, and it was handed off very quickly to the company that would squeeze on everything. Okay?
Those were partners at the very beginning of the standing up of the hub, the energy biocenter. Others where it was the usual round, it's intellectual property, patent thrown over the transom.
But we are finding that, actually, if you got the partnership at the very beginning to know what industry would be truly thinking of investing in five or 10 years down the road, it is actually more productive. So you don't go off in left field somewhere where Energy says, "That's so unmanufacturable we're not interested." Okay?
MS. YOUNG: Okay.
SECRETARY CHU: And especially in your field, the manufacturability and the processing is key.
MS. YOUNG: Yes. And LS9 and Amaris are talking more chemicals and fuels these days.
SECRETARY CHU: Right.
MS. YOUNG: Yeah.
SECRETARY CHU: In fact, it is a very interesting thing, because it is not on biofuels, it is higher value products that get the industry started that will be crucial for the first pilots in the United States.
MS. YOUNG: Hallelujah. Thank you.
SECRETARY CHU: Okay.
MR. POWELL: Hi. Adam Powell from Metal Oxygen Separation Technologies. We are a startup company, and I am very familiar with the concept of the Valley of Death between innovation and commercialization. How can startup companies work with energy innovation hubs to help to bring that valley? Are there other resources available? How has that worked in some of the existing hubs that you've seen?
SECRETARY CHU: Very familiar with the Valley of Death. Well, there is a couple Valleys of Death. The one I think you are talking about is after you get the VC funding at the $5-, $10-, $20-, $30 million range, and then you need for the first demo pilot a couple hundred million.
MR. POWELL: Right.
SECRETARY CHU: And that is where a lot of things just get stalled, because that starts to get to the significant money where if you're in VC, you know, one in five, one in 10, $5-, $10 million, you know, it's okay.
MR. POWELL: Right.
SECRETARY CHU: $300 million, it's a totally different story.
There are a couple of things. This is a problem. I'll tell you how a couple of countries handled it. Some countries have a way of financing the investment, e.g. loan program. China is a good example lines of credit. There is about two dozen countries that do it that way.
There is a bump in the road for our loan program, so I'm not sure when we will be going forward with it. There is another way where if the finance because this goes beyond VC. This goes to bankers, the financial world. And without certainty on energy policy, it is sometimes hard for them to invest in something. Okay?
And so what you need to do is you need to at least guarantee some of a market that will actually take a lot of the pilot plant production.
Now, the way we did it before in the United States is the U.S. government was an early adopter. We were an early adopter of airplanes. It is true, we didn't the U.S. government did not fund the Wright Brothers to make the airplane. But then they bought virtually every airplane that Wright and Curtis made for the next 10 years.
In the semiconductor business, you know, Bell Labs invented a transistor. Integrated circuit came out of the private sector. But the actual reduction of that to commercially viable, hard core electronics that you could do it took 15 years, 10 years. And, again, the government was the early adopter through the military, because the military said, "Hey, we need lightweight, low cost, low energy stuff." So that was a driver.
And at some level we can be an early adopter if but, again, you know, times are a little bit different. But we could be an early
adopter for a lot of these things.Other things this is now creating market draw to get the investment. You either can provide the investment directly or you get a market down where there is enough that if you make a reasonable product you can sell it.
MR. POWELL: Sure.
SECRETARY CHU: Okay. So those are the two options, to step back and tell you, you know. And so the other one again, it is in some states but not federally, are things that create market draws like clean energy standards, renewable portfolio standards, things of that nature. Right?
MR. POWELL: Okay.
SECRETARY CHU: And if it weren't for things like that, I think we would you know, our renewable energy program would not be where it is today, and there is a great nervousness still. So it is these other things like the market draws, either as a customer or something that says, okay, there is a certain fraction that will have to come from this to help get the investment.
And then, finally, there is another way of private sector money that if the more potential investors to can get in private sector money, if you only have big companies that have a lot of gains over here, and they want to shield that from corporate tax, and they invest in something, that is a very limited set of companies, the cost of money is very high.
The more you can get a wider class of investors to finally you know, not only pension funds and endowments, but actually private investors, to invest in this, then the cost of money goes way down. And then, all of a sudden, that first pilot demo plan at $100- or $200 million might be doable, because it really depends on the cost of money.
And so that is another we are, in the Department of Energy, working very hard to figure out how to get the private sector more engaged. First, a wider class of equity investors, but beyond that, how do you actually get it into the private sector where you have a class of investors?
Right now, you and I have two options. We can put it in a treasury note or CD and get two percent, or we can put it in the stock market, which is very volatile. There are a lot of investments at the six percent level that are quite safe, you know, long-term power purchase agreements, installing renewables, things like that, where six, eight percent.
And it would make the difference between six and eight percent and 12 percent, 10 percent, is the difference between renewables are more than any other form of energy or less.
Right now, natural gas is the cheapest. But if you think about it, renewables, any sort of clean energy, any sort of stuff the rare earths, the new industry utilization, the new processing plants, it is all capital, right? And so cost of money is everything.
MR. POWELL: Right.
SECRETARY CHU: Especially in renewable energy, because, believe it or not, the fuel is free.
MR. POWELL: Well, I guess in particular you mentioned a couple of bioenergy things that have gone to pilot plants. And how that worked from the innovation hub to pilot plant? How have you seen that work?
SECRETARY CHU: Again, it depends on the business model. So the ones I know, they either go to a place it depends on the technology. If it's let's say there is two steps. It's cellulose to ethanol, it's simple sugar to drop-in biofuel, and it is, finally, cellulose to drop-in biofuel is the cat's meow.
So the first thing that comes along is either hemicellulose to ethanol, and there are some pilot plants and that is going along. The simple sugar to diesel, or something else, a drop a near drop-in substitute the first place they go is to where the feedstock is a lot less money, e.g. Brazil.
If you do it in the United States, the feedstock is a little higher. Therefore, they are looking okay, you are not only going to produce biofuel, but you produce higher value products that like surfactants for shampoos. Much more valuable than diesel fuel. You don't use as much of it on your hair as you use in your truck.
So, and that would not saturate so quickly. There is a few fragrances that you just blow away in certain production.
So that is what I see that business model then it makes sense. You can invest in it. You can get down the learning curve, drive down production costs, because you are producing higher value products as well as the biofuel, which is our eventual goal. And so then you can get private sector investment. Okay?
MR. POWELL: Thanks.
SECRETARY CHU: Very tame audience. No science questions. I'm disappointed. (Laughter.) Okay. Thank you.
DR. CHRISTODOULOU: Thank you, Mr. Secretary. It is great to have you here. (Applause.) Okay. Okay. Thank you, Mr. Secretary. As you can see, ladies and gentlemen, the Secretary is quite passionate about the subject area, and indeed the model of the hub.
As I said earlier, this is a whole of DOE effort. And I am pleased to introduce our Assistant Secretary for Policy and International Affairs, David Sandalow, who spent quite a bit of time thinking about this problem. And he is going to share with us some of his thoughts of the critical materials and the areas in the main of DOE, of the Department of Energy.
So, David, it is great to have you here. (Applause.)