Nick Deiuliis joins the podcast this week to discuss the delicate balance of transitioning from fossil fuels to clean energy. How far has innovation taken us? And how do we factor in national security as well as environmental concerns? We also consider how the Appalachian region has been an enormous boon for the energy space.
Nick Deiuliis is a chemical engineer, attorney, and business executive, and is the Director and the Chief Executive Officer of CNX Resources Corporation. During a career spanning 30 years, he served as the CEO or Chairman of the Board of five public energy companies. During that time, Nick has been on the front lines of the war being waged by elites against the working men and women of Appalachia, the “doers” of the American economy, and the free-thinking individual.
And welcome to She Thinks, a podcast where you’re allowed to think for yourself. I’m your host, Beverly Hallberg, and on today’s episode, we discuss the delicate balance of transitioning from fossil fuels to clean energy. How far has innovation taken us, and how do we factor in national security as well as environmental concerns? We’ll cover that as well as how the Appalachian region has been an enormous boon for the energy space.
We have a wonderful guest to talk about this all, Nick Deiuliis. Sorry about that, Nick. Nick Deiuliis is a chemical engineer, attorney, and business executive and is the Director and the Chief Executive Officer of CNX Resources Corporation. During a career spanning 30 years, he served as a CEO or Chairman of the Board of five public energy companies. During that time, Nick has been on the front lines of the war being waged by elitists against the working men and women of Appalachia, the doers of the American economy, and the free-thinking individual. He’s also the author of The Precipice: The Left’s Campaign to Destroy America. Nick, a pleasure to have you on the program today and forgive me for butchering your name.
Beverly, it’s great to be here. And you didn’t butcher it. You actually pronounced it.
Did I get it right?
It was perfect. That’s rare. So well done.
Well, thank you so much. And of course this is an important topic as we talk about energy. And since you’ve been on the board of different energy companies, I wanted to start with a common narrative that we have heard from the current administration saying that the reason why gas prices are so high is because of gas stations, gas companies. Can you first of all explain to us whether or not this is a myth or not?
Unfortunately, it’s certainly a myth. It’s an absurd myth when you think through what’s happened. What’s happening is actually quite logical, which would’ve been expected, should have been expected. Looking back not long ago when you sort of contemplate the energy/climate policies that not just the United States but EU, et cetera, large parts of the world have adopted or run toward. And what those policies are effectively doing — some of it’s through the regulatory state, some of it might be through international accords, some of it might be through sort of market subsidy or protected market shares for the favored pieces of the energy portfolio — but they’re all aiming in the end to sort of drive the same sort of symptoms. One is to create energy scarcity. So going from sort of a position of energy abundance and energy independence to one of scarcity. It’s designed to limit supply quite a bit. You see that with things like pipeline projects that are often blocked by regulatory or other type of action.
Another symptom to expect is that the cost of energy is going to increase, again by design. So it’s not just that the supply is being reduced, but also you want the cost to go up. And in the end, both of those symptoms are really designed on the back end to drive down basically demand, consumption, use of, access to energy. Now, there’s different perhaps reasons or justifications for that depending on who you talk to throughout the different stakeholder groups or entities that are pushing these.
But looking at where we’re at today with everything from grid reliability, geopolitics, there’s a big geopolitical element to this. I think Putin and Ukraine are also symptoms of what happens when you pursue these policies without thinking things through, as well as what’s going on with inflation, what’s going on with overall quality of life, standards of living. They’re pretty much unfortunately symptoms and somewhat to be expected if you think through what the ultimate goals or objectives are of the policies that we’re seeing.
And of course, so much has happened to pipelines. You mentioned that just a minute ago, and of course one of the first acts that President Biden took was closing down the Keystone Pipeline while even recently lifting some of the sanctions on companies in Venezuela so that they can import some of the oil here. This brings up the issue of energy independence. How important is it for America to be energy independent and did we achieve true independence under the presidency of Donald Trump? And where are we today? Can we get that back quickly if regulations were reduced?
Great questions. I mean this topic of energy independence that’s been bantered back and forth since the seventies, right, with the oil embargoes and back to the days of Jimmy Carter, and then every administration, sort of every cycle in business since then. And again, the reality, the fact of the matter is we secured, we achieved energy independence largely within this nation. And what did that, interestingly, it was not policy. It was not government intervention. It was basically innovation, ingenuity, the free market doing its thing through things like horizontal drilling technologies, advanced completion technologies that brought about the Shale Revolution within a natural gas space. And Appalachia was a big part of that, but other basins in the United States and globally as well.
So those innovations, those developments by the free market are the doers as you referenced at the start of this, right? It’s sort of the exact opposite outcomes and symptoms that we talked about with the energy policies and climate policies we’re seeing today. It increased the supply of energy. It reduced the costs of energy. And it basically created more affordability, better quality of life, those types of things.
So using your pipeline example today, everybody talks, rightfully so, about Keystone, as you have. The bigger example, I just read today in the paper this morning, I don’t know if you saw it or not, but the New England system operator for the grid in New England is basically warning that if winter is cold this winter, this coming winter, if it’s cold, which it typically is in New England, then there’s a significant chance that there will be rolling blackouts in New England and you get to the why’s. Why would we need to do that or see that?
Well, it’s because, again, these policies have limited pipeline infrastructure to take a methane molecule that’s basically manufactured in Pennsylvania, a couple hundred miles away from New England. Can’t build a pipeline to connect that supply source domestically to the demand in, say Boston city [inaudible 06:35]. So what happens is we assume initially that wind and solar are going to fill that gap on a large scale. They can’t because they’re by nature intermittent and now what are they doing? Boston, New England is having to import foreign liquified natural gas or LNG. And what’s happening to the global markets for LNG? Prices are going up, availability is becoming scarce because places like Europe are in desperate need of it to try to offset their lost production when they relied in hindsight, not in a good way, on Russian natural gas.
So this is all interconnected in geopolitics, energy security. A prerequisite for smooth geopolitics and a strong national security is energy security. If you don’t have that — we’ve learned that not just over the past year we’ve learned that, again, going back to the 1970s — if you don’t have energy security, you’re not going to have national security. And if you don’t have energy security, you’re not going to have a geopolitical landscape that is smooth. You’re going to have a lot of volatility, a lot of strife, and a lot of angst that’s going to create a lot of follow-on chaos as we’re learning in 2022.
So there’s the national security angle, which you just mentioned. There’s this other side that is often contrasted against this idea of using fossil fuels, and that is whether or not we’re caring about the environment, saying that there’s climate change and we must do something now. We’ve heard politicians make claims such as the world is not going to be around in X amount of years if we don’t do something today. So is a lot of what’s driving this innovation and changes in how we look at energy purely from what we would view more as the progressive green entity? Or are we seeing a lot of people in the free market also concerned about alternative energies, but trying to do it in maybe a long-term way instead of this short term, let’s do this instantly way?
So again, you’re asking awesome questions. These are huge issues. They have implications far beyond the energy industry or energy landscape. The whole issue of climate change, it’s very complicated, but it’s also very simple when it comes to physics and math, which are undefeated over the long term and in the history of humankind. So do we think, do we know that the increases in atmospheric CO2 are going up because of human activity? Absolutely. There’s no debate about that, since the start of the industrial revolution.
As to how much global temperatures or sea levels or whatever metric you want to look at will rise over a period of time, that is a highly complicated modeling endeavor, and most of the models that we’ve seen from the United Nations and everyone else in between have proven, if anything, to be very volatile and very inaccurate on look-back sort of basis. So it’s very tough to predict.
The other sort of realities that factor into things like climate change and what to do about it. One is this issue of carbon footprint. And again, this is simple carbon accounting, the physics, the chemistry of carbon accounting. And what we’ve done within our industries and across society and with policies, is that we’ve engaged and sort of embraced, sometimes discreetly, sometimes directly, a faulty set of accounting standards. What I mean by that is it doesn’t matter in the development of a kilowatt hour of energy or a BTU unit of energy where the CO2 is being emitted across whatever needed to happen to make that kilowatt hour available or that BTU available. All the CO2 ends up in the atmosphere.
So it doesn’t matter if it’s being emitted when you’re manufacturing a component used to generate electricity, or whether it’s from burning a fuel to generate electricity, or whether it’s used to transport. CO2 emitted in that process, that development chain, is CO2 that should be totaled into the carbon footprint of that form or piece of the energy portfolio.
What we’ve done across the energy space and with policy and in the economy, is that we’re ignoring sort of that full life cycle carbon accounting. So when we look at something like natural gas or fossil fuel, so to speak, we’re counting that carbon footprint of extracting a natural gas and combusting it in a power plant and the CO2 that’s emitted. But then, when we’re comparing it to something like, let’s say, wind or solar, what we’re not doing is we’re just looking at whatever the CO2 emissions would be at the turbine or at the panel when the sun is shining or when the wind is blowing. But yet to get that turbine to where it’s at, let’s say on a ridge line in Pennsylvania, or that solar panel where it’s at in a flat area of farmland in Appalachia or beyond, there’s all kinds of CO2 that’s being emitted in that endeavor.
You have to mine all those rare earth elements, all those materials and compounds, very CO2 intensive. You’ve got to do it in places like Africa, China. Then you have to process all of that to concentrate those materials and elements, very carbon intensive. You then got to manufacture turbine blades, solar panels, carbon intensive, carbon driven factories. Then you’ve got to transport them over here because all that’s going to be done typically in places like China because of where geologically a lot of this stuff is. Then you need all the backup and redundancy for when the wind’s not blowing and the sun isn’t shining. That’s carbon intensive. And then all the new transmission grid that’s also required.
So you add up the true carbon footprint of something like wind and solar, it is much, much higher than just the carbon footprint of what’s emitted when the wind turbine is spinning or when the solar panel is being utilized when the sun’s shining. And when you do it on that accurate apples-to-apples basis, what you quickly come away with, there is really no true zero-carbon energy source in the world today. Everything has a carbon and a CO2 footprint. And getting accurate on the apples-to-apples comparison then allows you right to make the informed decisions from a policy perspective, or from an energy mix perspective, if you’re interested in things like CO2 emissions and what that might mean for climate or climate change.
We’re not doing that across societies today. What we’re doing today is we’re sort of fooling ourselves. We’re saying, natural gas, as an example, we’re going to count the carbon footprint at the power plant of that. But when it comes to wind and solar, we’re not going to add up or account for all the carbon emissions and CO2 emissions that lead up to the turbine being in place or the solar panel being in place. And from an atmospheric perspective, that’s not the right way of looking at it, of course.
And what I think is interesting, there’s been this push for people to get electric vehicles and it almost makes it seem like, oh, well it uses electricity, powers this battery, but nobody talks about where the electricity comes from, that there needs to be a power source way for electricity to be made. So when we look at the carbon footprint of electric vehicles, what is that, and what are people not really considering?
Yes. This is another prime example. It’s just going from the grid side that we’ve been talking about with wind turbines and solar panels and looking at the true carbon footprint of those. Same with electric vehicles. So the simplest way to think of electric vehicles and their carbon footprint is there’s two large buckets or contributors to it. One will be all of the CO2 that needs to be emitted to basically manufacture the electric vehicle itself. This is very similar to what we described for the wind turbine or solar panel. You need to extract an awful lot of minerals and elements from the earth. That’s very carbon intensive. Also has a significant environmental footprint, let’s put it that way. You need manufacturing facilities to process those materials into concentrated components and then to manufacture batteries and then the vehicle itself. So that’s sort of the construction first bucket of CO2 intensity.
Then the second bucket is then looking at what happens once you’ve got the electric vehicle in your garage and, as you’re charging it, where, to your point, is that power coming from? It’s coming from of course the grid. Well, what’s the grid makeup going to be? Well, again, looking at places like New England or California or Europe or here in Appalachia, there’s going to be significant lifecycle carbon footprints inevitably tied to the grid, whether that grid is heavy in wind and solar or whether it’s light in wind and solar. All of those components, including wind and solar, have CO2 footprints.
So from a carbon dioxide perspective, this thought that electric vehicles are zero carbon is ridiculous. It defies the laws of physics, chemistry, math, and science. Now, does it help with things like tailpipe emissions? Certainly. So when it comes to things like smog or particulate levels and things like that in urban areas like Los Angeles and the Basin there, where it’s got some air quality issues, there’s huge positives with respect to electric vehicles. And make no mistake, I’m a proponent of EVs because, again, if it’s going to be powered now off of the grid and the grid inevitably has to be powered in large part by things like natural gas, that’s creating incremental demand for sort the widget that we manufacture. But going back to my engineering leanings, let’s do a proper accounting when it comes to CO2 about what that looks like.
And the other thing for EVs and wind and solar, we’ve got all these other sort of intangibles, and sometimes tangibles that come into play when you start thinking about where they have to be mined, extracted, processed and manufactured. So what are the human rights practices where these activities that are going and being taken on? What is the environmental impacts when you look at some of these open-cast mines and the processing facilities and the runoff, et cetera? And then what are the geopolitical implications? Is it a good geopolitical call? Is it good to have a republican democracy say, I’m going to go from a position of energy independence with things like natural gas, and I’m going to willingly give that up and trade that effectively for energy dependency on places like China? If you listen to Chairman Xi’s speech that he opened the recent Congress with, that thought and that sort of concept gives me a lot of concern.
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Well, Nick, I want to talk a little bit about just where we are in transitioning to cleaner and cleaner energy. You’re based in Pittsburgh, Pennsylvania, and as you were saying, Appalachia, the Appalachian region has seen so much change going from coal to fracking, natural gas, and that has been cleaner as time has gone on with the innovation. When you look at moving into newer energy sources, what do you think that speed should be? How do we weigh the importance of keeping costs low for Americans, making sure those in New England don’t face these rolling brownouts there, but also trying to get the cleanest energy possible?
And again, I think it’s a holistic approach. So you start thinking about the metrics that you want to weigh across different energy options and energy choices. Certainly the availability, the energy reliability itself, is crucially important. You want to know with certainty when you hit the switch, the lights come on. That when it’s winter, your home’s going to be heated, your business will be able to function, the factory will be able to function. So reliability should be, I think, at the top of the list. And we’re seeing reliability issues across grids in California, in Texas, now in New England, with the EU, the UK, all of them largely driven by these issues of energy and climate policies that are sort of designed to degrade the reliability of the grid.
Cost, of course is a big one. And why is cost important? Well, it’s not just economics and profit/loss. The cost of energy drives the cost of just about everything that you can contemplate in an industrialized society. And I would sort of suppose that if the cost of energy were going up, if you were experiencing any energy inflation, you might be experiencing wider ranging inflation across the board. And lo and behold, what have we seen across all of these economies of recently as 2022? Raging inflation, right? So the cost of energy is crucially important.
I think where and how the energy is manufactured and sort of extracted — crucially important. So what I mean by that, Appalachia is a great example of this. You mentioned I’m from the Pittsburgh area, and Pittsburgh of course existed originally because of its manufacturing prowess relative to the location of energy. The factories and the mills were built here because they were in close proximity to energy and a reliable low-cost source of energy, and that basically industrialized Pittsburgh. And that manufacturing basically built the nation and built the world.
We got away from that in the late seventies and early eighties, when I was growing up as a kid, and it devastated regional communities. Now with the free market and the innovation that brought on the Shale Revolution, these regions are being basically resurrected again, both rural and urban. And there’s a lot of career and professional opportunity tracks that don’t require college degrees to basically vault a lot of our next generation into the middle class, keep them entrenched there, and then obviously allow them to grow even beyond that. That’s crucially important to everything from GDP to balance of trade, to just overall quality of life for regions and nations of course.
And then of course the environmental impacts. Going back to recognizing every activity when you look at things like energy or manufacturing or any sort of industry of note will have an environmental impact. Let’s just do a true honest accounting of what those impacts are so we can make an apples-to-apples comparison. And I think when you do that with things like natural gas generation on the electricity grid versus wind and solar, you’re going to come to the conclusion of, boy, solar in Arizona makes a lot of sense. Wind in the windiest places within the United States makes a lot of sense across all these metrics. But natural gas basically across wide swaths of this nation’s grid, that’s the best option. You want that to be the bedrock of your portfolio.
Well, final question for you. I was hoping you could give some insight to those listening to us today on what they can expect this winter with energy costs likely to go up. We expect that to happen. What should people do to prepare and what should they expect?
Yeah, so there’s a short term/long term piece to what I tell you. In the short term, it’s going to be very volatile and it’s going to be largely dependent on weather in the short term. So if we get a cold start to winter in the United States or in Europe, I would expect very high chance for high energy prices, inflation to continue on, perhaps even grow from here, et cetera. If we have a warm start to winter, then I think things might actually moderate a bit.
So in the short term, it’ll be largely subject to, say, the next 30, 60 days of weather and how winter kicks off initially. Longer term, that’s where I’m more concerned. And maybe that’s sort of frightening because that first part of the answer wasn’t all that positive or bright. The longer term, what I’m worried about is that our adversities, namely entities like Russia and specifically China, they have definitely figured out, they are convinced, that again, energy leverage, energy security is geopolitical leverage, is geopolitical security. And they’re willing to use that, not just as a piece of their overall strategy, but maybe a key sort of pillar of the strategies. And that’s flying and converging right at the same time with a lot of entities within the Western world, the environmental movement, the left, et cetera, that are looking to basically run towards climate policies that are handing this energy independence over into energy dependence. And I think longer term when it comes to energy reliability, energy access, energy costs, that is not going to bode well at all.
So if we can get back to, again, rational thought, science, not the science, but like the science of carbon accounting, the physics of how the grid needs to work, and we start making more informed policy investment and capitalization decisions across the grid and infrastructure. Basically we get right back to where we were. The free market, if left to its own devices, would basically solve our inflation, our energy costs, our energy and security issues, and frankly, the CO2 equation as well in a very short period of time.
But as long as we still view government as having all the answers and sort of the bureaucratic state having all the answers, and it’s driven by more ideology than sort of the chemistry and the physics, I’m worried longer-term about energy costs, energy availability, and energy security.
And as you pointed out with all of this conversation, there’s so many different layers to this. Obviously, energy impacts all of us in so many ways. We’re seeing that with costs going up, not just on gas but on food prices and everything else. But as you were saying, there’s that importance of what does this mean from a security standpoint and how do we balance concerns with environmental concerns? So we appreciate your work and also coming on She Thinks today. Nick Deiuliis, there we go, Deiuliis, of CNX Resources Corporation, we appreciate it.
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