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Innovation and Human Capital: Energy Security and the Quiet Crisis

by
Shirley Ann Jackson, Ph.D.
President, Rensselaer Polytechnic Institute

American Petroleum Institute
The Westin La Cantera Resort
San Antonio, Texas

Wednesday, October 5, 2005


INTRODUCTION

As global energy demands rise, on pace with extraordinary worldwide economic growth, energy emerges as the shaper of the future.

Achieving energy security — a complex challenge in a complex world — demands of us a great variety of resources. Not least among them is our national capacity for innovation, which rests squarely on a very small contingent of our workforce — the nation's scientists and engineers. The United States is in a high-stakes race to develop human capital — but I am getting ahead of myself.

GLOBAL ENERGY OUTLOOK

In the past 35 to 40 years, worldwide energy consumption has nearly doubled, driven by population growth, rising living standards, and invention of energy-dependent technologies. Global energy consumption is projected to increase by 57 percent between 2002 and 2025, and to double by mid-century.

While consumption has grown nearly everywhere, it has soared most dramatically in Asia, and especially China, which is on its way toward surpassing the U.S. as the world's largest economy. The increase in oil consumption in China, from 2002 to 2003, accounted for more than 18 percent of global oil-demand growth — and, in the process, China surpassed Japan, becoming the second largest oil consumer, the second largest consumer of primary energy overall, and the second largest contributor to global energy-related CO2 emissions.

The extraordinary economic growth in many of the world's developing nations, is enabling these nations to provide their populations with the common necessities of life — food, shelter, clothing, transportation, education — necessities to which many never before had access.

Despite this growth, an estimated 160 million people do not have access to electricity. One sixth of the world's population lacks safe drinking water, and half lack adequate sanitation; and, half live on less than $2 per day.

A reliable energy supply — especially electricity — is a prerequisite for addressing these needs--a prerequisite for joining the game on the newly leveling playing field.

While, the availability of inexpensive energy has enabled and fostered unprecedented growth in many developing countries, it has created a heretofore unparalleled demand for energy, in all of its forms.

Eighty-five percent of the world's energy currently comes from fossil fuels — a percentage which has not changed significantly in the past decade. And, the share of nuclear power and renewable energy sources — wind, solar, and geothermal energy — is expected to remain limited, but important.

Perhaps the most glaring imbalance — which not only alters the playing field, but raises many questions about the game — is that for every two gallons of petroleum-based fuel consumed, one gallon is discovered.

Dr. Steve Koonin, Chief Scientist for BP, has stated that the world's known oil reserves will last at least 40 years, and probably 20 more beyond that.

While the planet may have energy resources to meet demand beyond 2025 or 2030, less certain is how much it will cost to extract and to deliver these fuels to users. New energy infrastructure will require vast amounts of financing. Fossil fuels are projected to account for about 85 percent of the increase in demand or consumption. Major oil and gas importers — including the United States, Western Europe, and the expanding economies of China and India — will become more dependent on supplies from Middle East members of OPEC and Russia. As international trade expands, the vulnerability to disruptions will increase, and geopolitical turmoil may exacerbate surging energy prices. Carbon dioxide emissions will continue to rise, calling into question the sustainability of current energy usage models.

We emit about two times more CO2 than the atmosphere can integrate. The U.S. is responsible for the largest percentage of carbon emissions to gross domestic product (GDP). France, which uses nuclear power to produce electricity, has the lowest emissions per GDP. By 2020, the developing world will surpass the industrialized world in CO2 emissions. There are 500 million vehicles, worldwide, which are responsible for approximately 25 percent of total carbon emissions. By some estimates, in 15 years, there will be another 700 million vehicles on the roads — many in China.

A further concern about the environmental impact of energy usage has been fueled by speculation that Hurricanes Katrina and Rita were exceptionally powerful because of warmer oceanic temperatures, and the news that the polar ice cap is the smallest in recorded history.

Whatever one believes, energy usage by developed countries, and the progress of developing nations, with the human improvement this represents, are generating energy and environmental challenges worldwide.

This means that we must address, comprehensively and holistically, the issues of global resources, and it gives us a starting point for discussion of innovation and human capital development.

It is a given that, at least in the long term, there will be no single "solution" to providing abundant, clean, and inexpensive, energy for the global community. Rather, there likely will be a "mix" of solutions. These will include innovative discovery, extractive and transportation technologies for fossil fuels; innovative conservation technologies; and innovative alternative fuel technologies.

What might step-change technological innovation for the petroleum industry look like?

INNOVATION

Nanotechnology
Nanotechnology is a wide-open field, with far-reaching potential. My own university is exploring nanoparticle gels, polymer nanocomposites, and nanostructured biomolecule composite architectures. Each research thrust is supported by multiscale theory and modeling, as well as extensive characterization efforts.

For the petroleum industry, an array of possibilities from nanotechnology research holds promise. Consider:

  • Nano-enhanced materials which provide strength and endurance to increase performance and reliability in drilling, tubular goods, and rotating parts.
  • Improved elastomers, critical to deep drilling, to improve high-temperature and high-pressure characteristics.
  • "Designer properties" to enhance hydrophobic or hydrophilic behavior, to enhance materials for waterflood applications.
  • Nanoparticulate wetting carried out using molecular dynamics, simulations which show promise in solvents for heterogeneous surfaces and porous solids.
  • Lightweight, rugged materials which reduce weight requirements on offshore platforms, and more reliable and more energy-efficient transportation vessels.
  • Nano-sensors for improved temperature and pressure ratings in deep wells and hostile environments.
  • New imaging and computational techniques to allow better discovery, sizing and characterization of reservoirs.
  • Nano-sensors deployed in the pore space via "nano dust" to provide data on reservoir characterization, fluid flow monitoring, and fluid type recognition.
  • Small drill-hole evaluation instruments to reduce drilling costs, and to provide more environmental sensitivity due to less drill waste.

Other smart materials and smart metals will provide predictable responses to known stimuli. Examples include:

  • Boreholes which respond to the presence of water through a change in diameter, imparting a "lifting response."
  • Pipelines which detect conditions under which undesirable materials might form, and respond accordingly to avert a problem (for example: non-desirable phase changes such as ice plugs).
  • Pipelines which detect leaks and perform self-healing processes.
  • Noise-sensitive materials to eliminate noise and facilitate information transmission and reliability.

Smart materials aligned with sensor technologies can facilitate intelligent responses of oilfield systems. What would be the impact if there were a wellbore system which "responded"2 to loading conditions, if we could maintain an optimized borehole configuration to maximize rate and reliability, and have pipelines made of materials which responded to internal conditions on a real-time basis?

In these arenas, the petroleum industry will want to align itself with universities, entrepreneurs, service companies, and laboratories, and with industries already utilizing nano-applications, which the oil and gas industry may leverage. The opportunities for collaboration with universities could and should go beyond collaborations with traditional petroleum engineering programs to include those with expertise in nanotechnology, advanced materials, multiscale modeling, and imaging science and technology.

Methane Hydrate
Those of you who attended the National Petrochemical and Refiners Association meeting last spring may remember Alan Greenspan's description of new energy sources and technologies, when he said: "the unconventional is increasingly becoming the conventional."

One example is methane hydrate. Methane, the chief constituent of natural gas, is locked in ice, and generally is found in hostile, remote settings, such as the Arctic or deep ocean. Once considered a nuisance because it clogs natural gas pipelines, methane hydrateís reputation has improved as scientists have discovered that it could be an astonishingly abundant new energy source. Worldwide estimates of the natural gas potential of methane hydrate approach 400 million trillion cubic feet — a staggering figure when you consider the world's currently proven gas reserves at 5,500 trillion cubic feet. In fact, the worldwide amounts of hydrocarbons bound in gas hydrates are estimated conservatively to be twice the amount found in all known fossil fuels on Earth.

As you may imagine, there is great interest in unlocking this massive potential energy source, and both oil companies and universities are involved. Numerous studies are underway to characterize and describe the hydrates, and to determine how much is available at sites here and abroad. Yet, little is known about how gas hydrates can best be extracted and transported.

Traditional proposals for recovering gas from hydrates usually involve dissociating or "melting" the substances on site. Marathon Oil Corporation — and in the interest of disclosure, I am a Member of the Board of Directors of Marathon Oil — is exploring ways to produce and to ship stable slurries of natural gas hydrate crystals.

Proposed methods for gas hydrate production have not considered some recently developed advanced oil and gas production schemes such as in-situ combustion, electromagnetic heating, or downhole electrical heating. Also, advanced drilling techniques and complex downhole completions, including horizontal wells and multiple laterals, need to be considered.

If only 1 percent of the methane hydrate resource could be made technologically and economically recoverable, in an environmentally sound manner, the United States could more than double its domestic natural gas resource base. Congress has authorized funds for methane hydrate research and development, but has appropriated only limited amounts.

As with most promising new energy sources, gas hydrate drilling comes with its share of environmental concerns, including fears that drilling could release greenhouse gases, or trigger ocean landslides.

The innovations described, and myriad others, will make a difference in utilizing the planet's fossil fuel resources. But, no matter what period of time one chooses to believe the Earth's fossil resources will sustain us, we will need to innovate to discover and to use them — with the least possible environmental impact.

At Rensselaer, a considerable portion of research is devoted, as well, to hydrogen fuel cells, light emitting diodes (LEDs), photovoltaic architecture, modeling and simulation, visualization, and other energy-related technologies. Rensselaer is forming an Institute for Energy and Environmental Sciences, Innovation, and Policy, to be a platform for extended enterprise in this arena. This will build upon expertise we have developed over the last decade in each of the areas cited, and more.

I do not have the time, comprehensively, to review all of the research being done, but suffice it to say that people are working, as well, on conservation initiatives, sonofusion, solid state lighting, "smart highways," and wave power generation.

But, I would be remiss if I did not mention nuclear power in the category of energy alternatives. Nuclear power, which provides 20 percent of electricity generated in this country, and about 16 percent worldwide, is having a resurgence. This is being achieved through safer and more economical performance of nuclear power plants, and by technological innovations in new designs — which address safety and profitability concerns, and which are targeted to deal with issues of nuclear waste.

Much of growth in nuclear power generation is in Asia, with 17 out of 25 reactors under construction being there.

Several new designs are moving toward implementation.

South Korea is making progress with its System-integrated Modular Advanced ReacTor, or "SMART" pressurized water reactor. The Korean government plans to construct a one-fifth-scale (65 megawatt) demonstration plant by 2008, but has not announced a commercialization date for the full scale (330 megawatt) plant.

Among gas-cooled reactors, the South African Pebble Bed Modular Reactor (PBMR), which features billiard-ball-sized, self-contained fuel units, is well under way. Preparation of the reactor site at Koeberg has begun, and fuel loading is anticipated for mid-2010.

Innovative designs still in development employ modular cores which need refueling only every 30 years. New fuel configurations could reduce proliferation concerns, enhance control of sensitive nuclear material, and lessen infrastructure needs.

These, and other innovations, are important because the reality is that we can no longer just drill our way to energy security. We must innovate our way to energy security — we must innovate the technologies that uncover new fossil energy sources, and improve extraction; the technologies that conserve energy, and protect the environment; and the technologies which provide sustainable, multiple energy sources.

But, the question remains — who will make these innovations?

A GROWING CONCERN

There is growing concern over maintaining our nation's capacity for innovation. The Council on Competitiveness recently released a report, deriving from its National Innovation Initiative, which declared that "innovation will be the single most important factor in determining America's success through the 21st century...", and that ..."over the next quarter century, we must optimize our entire society for innovation..." Not mincing words, the Council's "Call to Action" was subtitled "Innovate or Abdicate."

Another report, with the same clarion call, is entitled, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future, issued by a high-level committee convened by the National Academy of Sciences, National Academy of Engineering, and Institute of Medicine.

It, too, states bluntly, that "the committee is deeply concerned that the scientific and technical building blocks of our economic leadership are eroding at a time when many other nations are gathering strength." While the committee found that a "worldwide strengthening will benefit the world's economy — particularly in the creation of jobs in countries that are far less well-off than the United States...we are worried about the future prosperity of the United States. Although many people assume that the United States will always be a world leader in science and technology, this may not continue to be the case inasmuch as great minds and ideas exist throughout the world."

I served on the committees which developed both reports. Concern springs from the speed at which other nations are ratcheting up investment in higher education — especially in science and engineering — and in infrastructure. For example, China announced this month that it is opening ten innovation centers around the country. This undergirds the fact that the United States competes, and collaborates, across global economic and security arenas, where the key elements are ideas, learning, and delivery of value to the marketplace.

Warning signs include the decline of federal investment in research in the physical sciences, mathematics, and engineering as a percentage of gross domestic product (GDP). China graduates three to four times as many engineers as the United States, and offers lucrative tax breaks to attract companies to conduct research and development within their borders. Of the 1.1 million U.S. high school seniors who took a college entrance examination, less than six percent indicated plans to study engineering — nearly a 33 percent decrease in interest from the previous decade. There are other signs, but too many to list today.

Quiet Crisis
Scientists and engineers comprise a mere 5 percent of our 132 million person workforce. Yet, this small group, for decades, has driven the powerful engine of American innovation which has fueled our global leadership, our economy, our health, and our security. They have provided us the wellspring of our prosperity and well-being.

But, conditions are shifting:

  • There are impending retirements of a large portion of our skilled science and technology professionals;
  • Global economic forces, new opportunities in their home countries (and in other countries abroad) and new U.S. visa policies, have combined to make universities and jobs elsewhere attractive to the foreign-born students and scientists, who traditionally have come here to study and, then, have joined our science and engineering enterprise;
  • American students are not sufficiently engaged in science and engineering study to replace those who will retire. The decline in graduates, increasingly, is felt in industry and in government, and in the university sector, I might add. Government investment in basic research has declined by half since 1970 as a percentage of the gross domestic product (GDP).
  • U.S. demographics have altered, creating a "new majority," comprised of women and minority and ethnic groups traditionally underrepresented in science and engineering. Many of these students are the least prepared to study these subjects. But, this is the talent pool from which we must draw the next generations of scientists and engineers, while spurring the interest of all of our young people.

I have termed this overall situation "The Quiet Crisis" — a "perfect storm" of converging trends threatening the American innovation enterprise. Thanks to Tom Friedman, columnist with The New York Times, this nomenclature, and what it means, have gained a bit of notice.

The converging forces of the "Quiet Crisis", indeed, are being noticed — and drawing concern in every sector.

A powerful indicator of concern was the release, in July, of the Business Round Table report Tapping America's Potential: The Education for Innovation Initiative. Fifteen of the nation's most prominent business organizations endorsed the report to express "our deep concern about the United States' ability to sustain scientific and technological superiority through this decade and beyond. To maintain our country's competitiveness in the 21st century, we must cultivate the skilled scientists and engineers needed to create tomorrow's innovations."

The report's goal — printed on the front cover — is to "Double the number of science, technology, engineering, and mathematics graduates in the next ten years."

To meet this goal, the Initiative lays out a plan for building a national commitment to make science, technology, engineering, and mathematics improvement a national priority. It makes the case for national and state investments in research and innovation, which will strengthen U.S. competitiveness in the worldwide economy.

The Business Roundtable report extends and broadens corporate concern for an issue which was expressed in the 2003 amicus brief supporting University of Michigan admissions policies in two U. S. Supreme Court decisions — Grutter v. Bollinger and Gratz v. Bollinger. In that brief, 65 leading American corporations argued the importance of a diverse workforce — coming out of a diverse educational environment — for their "continued success in the global marketplace."

The corporate sector, clearly, understands that special emphasis on assuring that all of our young people are educated, especially in the sciences and engineering, will be the key to our global competitiveness.

Federal agencies, too, have a stake in the science, technology, engineering, and mathematics (STEM) workforce, especially the U.S. Departments of Defense, Education, Homeland Security, Commerce, Labor, and Energy.

The U.S. Department of Defense, along with the vast defense industry, must fill most vacant STEM positions with top secret "cleared" or "clearable" STEM professionals, and readily acknowledges that it is increasingly difficult to do so. The emphasis on "cleared," of course, is the stipulation that most defense industry work be done by skilled U.S. citizens.

In August, Deputy Under Secretary of Defense Michael W. Wynne, speaking to DARPA Tech, the DARPA Systems and Technology Conference, said that "there is no doubt in my mind that America has the brain power, the talent and the drive to generate the next great idea(s) . . . What we don't have is a growing pool of scientists and engineers to draw from. And, without a growing pool of talent from which competition and inspiration can be drawn, other nations are beginning to overtake us."

Under Secretary Wynn cited a National Defense Industrial Association (NIDA) and Aerospace Industries Association (AIA) study which indicated that nine percent of defense industry openings — openings already funded by the federal government — are going unfilled because of a lack of qualifiedóand cleared or clearableóSTEM professionals.

He said this was a particular concern, "because we hire almost half of all federal scientists and engineers outright, as well as being responsible for many of the private sector jobs in science and technology."

Under Secretary Wynn described meeting "very senior talent" at national laboratories, and in the defense industry, expressing his surprise at the number who had been drawn into science and engineering by the National Defense Education Act (NDEA) of 1958. He urged the reprise of the NDEA.

That may be happening in the form of the Kennedy-Collins Amendment to the proposed Defense Authorization Bill [S. 1042]. The legislation, which has passed both the House and the Senate, is currently in conference. If approved, it would increase, by $10 million, funding for the Defense Department "SMART" Scholars Program which supports undergraduates and graduates who study defense-critical science and engineering disciplines — doubling the program's funding. The amendment, also, would increase funding for basic research by $40 million — for Army, Navy, and Air Force university research initiatives, and DARPA research in computer science and cybersecurity.

Later this week, the Senate Energy and Natural Resources Committee and the full House Science Committee will hold hearings to consider policy suggestions addressing science, education, technology, and global technology competitiveness derived from "Rising Above the Gathering Storm," the National Academy Report I referenced earlier.

In December, the U.S. Department of Commerce is convening a National Summit on Competitiveness of top industry, university, and government leaders to discuss the seriousness of the global competitiveness challenge, and to promote an action agenda ensuring continued U.S. leadership in innovation. I will be among the discussants.

Along with the growing consensus that the nation must take action, there has been a noticeable up-tick in media coverage. Most major media are beginning to address the topic in new features and editorials, and columnists and opinion leaders are weighing in on the op. ed pages.

Earlier, I alluded to New York Times Foreign Affairs Columnist Thomas L. Friedman who began writing regularly, this year, on the need to educate the next generations for future science and engineering. His book, The World is Flat, published this year, contains an entire chapter devoted to the "Quiet Crisis."

Newt Gingrich's book, Winning the Future, published in January 2005, declares that "investing in science (including math and science education) is the most important strategic investment we can make in continued American leadership economically and militarily."

Nor are they alone. CEOs, university presidents, members of Congress, Cabinet secretaries, governors, Nobel Laureates, labor leaders, scientists, mathematicians, engineers, researchers, and educators on prestigious commissions and panels, — together and individually — all agree that something must be done and soon.

Consider this: the Chinese government builds about 200 new research centers a year. Since the 1980s, Chinese college enrollment has quadrupled to 20 million, graduating 200,000 engineers annually. Japan graduates 100,000. Meanwhile, the United States graduates 60,000 — fewer native-born engineers than we did 20 years ago. Europe graduates about 50 percent more advanced engineering and science students than does the United States. And by some estimates, the visa restrictions imposed since September 11, 2001, have shrunk our international graduate study applicants by 30 percent.

There is no question that the United States has vast advantages — a political system, an extensive and far superior university system, science laboratories and infrastructure, supportive government policies, financial systems and open capital markets, an entrepreneurial enterprise, and a culture of risk-taking — all of which combine to give us the finest platform for innovation and discovery.

But, we must keep it that way, and we must examine what we need to do, as a nation, to compete and continue to lead in an increasingly complex world.

When a cross section of U.S. leaders concurs, we may be reaching critical mass. But, there is much to do and the approach must be at once broad and deep, uniting around mechanisms for developing the next generation of scientists and engineers, and committing to providing the leadership needed to help the public understand the dimensions of the problem.

Nearly fifty years ago, the shock and surprise of Sputnik made it immediately apparent — to national leaders, to the American public, to the private sector, to government policy makers — that immediate action was required. It was a matter of national pride and national security not to lose the Space Race — which, in reality, was a science race. And, immediate action, in the form of programs to nurture and support an entire generation of scientists and engineers, was forthcoming — and it worked.

We are reaching a similar, though less theatrical, point today, with energy security, and we can do now what we did then. But, although equally as serious, and with equal implications for our national and global future, energy security has yet to capture the national imagination — it has not yet translated into the need for complete action — new legislation notwithstanding. This is because the essential link of energy security to innovation, and of innovation to the creation and sustenance of a talented science and engineering workforce, has not been clearly made, fully articulated, or fully appreciated. People make discoveries and people drive innovation.

I suggest that energy security is the space race of this millennium.

Within the context of the current global energy outlook, the United States must build a national strategy to assure national energy security — a strategy which moves beyond where we are today.

It will be innovation which will create the new technologies we must have for fossil fuel exploration, discovery and, extraction; and new technologies to diversify our energy mix. Innovation also will bring essential new conservation technologies.

But again, innovation requires people, and it requires adequate resources for collaborative/multi-disciplinary research... How will we all address this challenge? I look forward to hearing your thoughts.


Source citations are available from the division of Strategic Communications and External Relations, Rensselaer Polytechnic Institute. Statistical data contained herein were factually accurate at the time it was delivered. Rensselaer Polytechnic Institute assumes no duty to change it to reflect new developments.

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