Author(s)
This introduction is also featured in Energy Insights, which reflects a sample of ongoing research across the Center for Energy Studies’ diverse programmatic areas, all addressing the ever-evolving energy challenges across Texas, the U.S., and the globe. Read more from the inaugural edition.
From the Past Into the Future
A Brief History of CES: Establishing a Structure for Data-Driven Research
The history of energy research at Rice University’s Baker Institute dates to its founding in 1993. The principle of comparative advantage was a basis for the establishment of core pillars around which to build the institute’s research programs. Given the Baker Institute’s location in the energy capital of the world — Houston, Texas — energy was identified as foundational. From that vision, the Energy Forum was formed to bring together thought leaders in the energy world to discuss some of the most important challenges facing industry, government, and society.
In 2012, after an almost two-decade track record of success in engaging leaders around the world, the energy research program was reimagined. Under new leadership, the Center for Energy Studies (CES) was established to formalize an expansion of energy research at the Baker Institute into new and evolving dimensions. The Energy Forum was maintained within the CES as a vehicle for engagement with donors — through conferences, workshops, and roundtable events — on energy markets and policy, geopolitics, energy education, and important energy-related environmental issues. In forming the CES, a new program structure was created to diversify the research portfolio to address an expanding set of issues facing stakeholders in energy, as well as deepen interactions across the Rice University research ecosystem.
Since 2012, the CES has expanded upon its historically leading research efforts in geopolitics — with a focus on Eurasia, Latin America, and the Middle East — and global oil and natural gas. It has also built significant new programmatic strengths in sustainability and resilience, minerals and materials, transportation, electricity, and new energy technologies. Today, the CES is home to over 50 affiliated fellows, scholars, staff, graduate students, and postdoctoral researchers who provide critical insights on the world’s complex and evolving energy landscape. By conducting data-centric research and nonpartisan analysis rooted in fundamental principles, the CES provides a trusted voice that investigates the drivers of energy market evolution, including but not limited to market design, policy and regulation, technology adoption, climate change, sustainability objectives, and geopolitics.
Table 1 — CES Research Foci
Cross-Cutting Initiatives
In 2023, CES began the process of launching five cross-cutting initiatives to address materials transitions, regional perspectives on transitions, sustainability, the future of fuels, and the future of oil and gas (Table 1). Already, these initiatives have led to new institutional relationships that will enhance the depth of research and breadth of connectivity with stakeholders across industry and government.
Materials Transitions: A variety of material inputs are essential for legacy and new energy technologies. As a result, supply chain challenges associated with energy transitions are present in multiple dimensions. Understanding the depth of these challenges, and the opportunities they present, is at the core of materials transitions and requires research that spans the periodic table, covering the elements, minerals, and materials key to modern economies. This initiative is focused on understanding where binding constraints will manifest and how new material innovations could alleviate them. In some cases, this includes innovations that are critical for circularity along supply chains; in others, it involves materials innovations, such as advanced carbon materials, that introduce entirely new supply chain elements. A primary goal of this initiative is to elevate discourse on the deep linkages among energy, materials, and sustainable growth.
Sustainability: In the broadest sense, a sustainable outcome is one that can be maintained without disruption. Thus, sustainability is multifaceted and rooted in resilience. This connects the entirety of research at CES. This initiative aims to highlight why we must always consider higher order impacts of specific actions to understand implications for sustainability. Understanding first order impacts is never enough because the law of unintended consequences is ever-present, and often predictable. Sustainability requires a balance of environmental, socioeconomic, and financial/commercial dimensions — three legs on a stool that support a sustainable development platform. Ultimately, there are trade-offs that must be considered, and an adequate cost-benefit analysis requires a systems-level approach. Importantly, innovation, market design, and policy are the reinforcing crossbars that stabilize the entire system. Failure to think in this way is akin to neglecting the importance of all parts of the system, yet everything must work in harmony to generate sustainable outcomes.
Regional Perspectives on Transitions: To date, discussions about energy transitions have been largely dominated by developed nations’ perspectives. However, the global energy future is a developing nation story. Energy demand is rising fastest in the developing world, and it is largely driven by hydrocarbon fuels. To begin, the shares of global energy use are disproportionate to the distribution of the global population and more in line with levels of economic development. As of 2023, the world’s most economically advanced nations, the countries of the Organization of Economic Cooperation and Development (OECD), accounted for 37.1% of global energy use and 17.1% of global population, while the rest of the world, the non-OECD, accounted for 62.9% of global energy use and 82.9% of global population, many of whom are severely underserved.[1] Altogether, this reflects a significant unrealized potential for future demand growth, as well as different perspectives on energy. The future, like the past, will look different everywhere, and it will hinge on resource endowments — nature, minerals, energy, human capital, capital availability, etc. — as well as various political, institutional, or aboveground features that will either hinder or promote economic advancement. Thus, it is important to understand how the principle of comparative advantage will manifest when considering future energy market outcomes.
The Future of Fuels for Mobility: Transportation constitutes roughly a third of total energy use and about a quarter of global emissions, and leverages an existing infrastructure base that is heavily interconnected through deep, well-developed global supply chains worth trillions of dollars. Policies and regulations targeting transportation technologies and fuels have profound impacts on global supply chains that underpin global commerce. Hence, suboptimal decisions risk significant economic dislocation, raising several important questions that demand an answer:
- What is the best pathway for avoiding emissions across each mode of transportation?
- What are the costs and benefits of displacing legacy fuels and internal combustion engine designs?
- What are the key factors, including supply chains and logistics, influencing the economic attractiveness of each fuel/energy option with attendant risks and uncertainties?
Our scope includes all modes for moving passengers and freight, as well as heavy-duty vehicles for utilities, mining, construction, and other uses. This will enable the identification of trade-offs along supply chains for fuel/energy choices across modes of transportation, and provide a data-driven, analytical basis for positive — rather than normative — assessment of different options.
The Future of Oil and Gas: Crude oil and natural gas are widely used raw material inputs for a variety of energy services — transportation, power generation, industrial process heat, space heating, etc. — and other basic commodities and intermediate goods — petrochemicals, plastics, lubricants, asphalt, solvents, adhesives, medical devices, electronics, etc. Crude oil and natural gas are distinctly different commodities with different end uses and marketed applications; however, they are:
- Depletable resources.
- Products of similar extraction processes.
- Ubiquitous materials across the global economy.
Thus, they present an interesting opportunity to understand the challenges and opportunities that new technologies face in energy transitions. Given the prevalence of predictions that a peak in demand for hydrocarbon fuels is eminent, it is critical to understand the factors that will influence the production, distribution, and use of both crude oil and natural gas, and any residual impacts of such changes to the global energy system.
Advancing Data-Driven Research
The journey of energy research at the Baker Institute is far from complete, and its successes are a testament to the fellows, scholars, graduate students, postdoctoral researchers, and staff who have contributed time and energy to maintaining the highest of standards to deliver data-driven research while striving to elevate, not advocate, research findings. CES is widely recognized for its depth and insight, having been ranked at the top of the energy field by the University of Pennsylvania’s Think Tanks and Civil Societies Program for three consecutive years before being named a “Center of Excellence.” CES is also a past recipient of the United States Association for Energy Economics’ (USAEE) prestigious Adelman-Frankel Award for “unique and innovative contributions to the field of energy.”[2] CES fellows and scholars have also been individually recognized domestically and internationally, and their experience and expertise span a wide range of backgrounds — from strategic and analytical roles in industry, to regulatory roles in government, to practicing energy and environmental law, to fieldwork in journalism, to various roles in academia, to appointments and affiliations at research institutions around the world — providing a unique, multidisciplinary, and global perspective on energy-related issues.
Some of the most challenging questions faced by society today require a holistic approach to achieve environmentally, socially, and economically sustainable answers. By working across programmatic strengths in an interdisciplinary manner, CES fellows and scholars aim to elevate discourse and achieve workable, scalable solutions. The interdisciplinary team of CES fellows and scholars is frequently called to provide briefings to U.S. government officials, world leaders, and top industry professionals on a variety of issues. In the last decade, CES experts have delivered 20 congressional testimonies and worked with members of the U.S. House of Representatives and Senate and various federal agencies, including the Department of Energy, Department of State, Department of Defense, and Department of Commerce. They have also conducted an average of 23 ministerial-level briefings per year spanning 43 countries.
The collective research of CES fellows and scholars reveals several core principles that underscore CES’ work and highlights risks and opportunities in an evolving global energy ecosystem.
Past Findings Driving Critical Insights for Future Research
Since its establishment, research conducted by experts at CES has led to a tremendous library spanning all CES programmatic disciplines. This has provided a foundation of critical insights that are guiding lights for future research, enabling us to identify challenges and opportunities for all stakeholders across the energy domain — from policymakers to commercial actors to the general public. It is precisely these types of insights that have focused CES research on the following core principles across a breadth of research focused on energy transitions.
Energy transitions are complex. Developments across the energy landscape in the last two decades highlight the fact that understanding the global interconnectedness of energy markets — and the factors that shape them — is growing ever more important. Technological change, economic growth, environmental preference, geopolitics, energy trade, energy poverty, and energy security concerns are all interwoven with national welfare and domestic economic priorities. The future of energy involves trade-offs, and successful transition pathways will fully consider environmental, social, and financial sustainability.
Energy transitions will look different everywhere. Globally, hydrocarbons account for over 80% of all energy, and demand continues to grow.[3] Developing economies have accounted for all incremental demand since the turn of the century. The energy mix from region to region varies widely, with economic and population growth, national security priorities, innovations in the production and use of all energy sources, and native natural, physical, and human capital resource endowments all playing formative roles in defining regional risks and opportunities. These factors also foretell a future of energy that will continue to be different everywhere.
Economics matter. Assessments of the long-term market implications of new energy technologies must incorporate full system costs of adoption and operation. Failing to account for the fixed cost of deployment, operating costs, costs associated with maintaining system reliability, and costs of any nonpecuniary externalities can result in unintended consequences ranging from environmental damage and social inequity to financial insolvency. New technologies must avoid burdensome fixed costs of adoption if they are to integrate into supply chains successfully, or they risk falling into the valley of death. Coproducts can provide additional value for new technologies, which raises the possibility for things such as carbon-to-value innovations to accelerate a portfolio of scalable low-carbon energy options.
Supply chains matter. Supply chains connect raw materials to manufacturing to delivery of final products through end-of-use. Efficient supply chain function is heavily dependent on transportation infrastructure. Actors along any supply chain must coordinate to ensure resilience and reliability, and commercial returns must be positive to support long-term viability. Otherwise, the supply chain breaks down, and economic health is compromised. Transitioning to lower-carbon supply chains will require new infrastructures as well as optimization of various transportation modes and their respective fuel requirements to ensure long-term resiliency and economic health.
Energy transitions require material transitions. Hydrocarbons are critical to supply chains for advanced materials for wind, solar, electric vehicles, batteries, and countless other technologies. Sustaining a modern way of life requires plastics, advanced composites, resins, lubricants, and more. Even the most conservative energy transition scenarios represent a call on minerals and materials. Existing supply chains will be pressed to meet these demands. Improvements in the material intensity of current activities and the development of new, advanced materials will be critical for any energy future.
Infrastructure is central to any energy future. The legacy of existing infrastructures and energy delivery systems is the foundation for change in the capital-intensive energy market. Energy systems are large and must scale to accommodate growth and expanded access. Energy infrastructure is long-lived, turning over on a multidecadal time frame. Emerging technologies can drive cost improvements and signal how energy sources will compete. But investment in new (greenfield) and existing (brownfield) infrastructure is the vehicle for the deployment of new technologies. So, infrastructure investment will dictate the pace of innovation and change across the energy landscape.
Sustainability is multifaceted. Sustainability is deeply integrated with supply chains, weaving through raw materials production, manufacturing and production of final goods, and distribution of intermediate goods throughout production process and final goods into market centers, use of final products, and end-of-life into waste or re-“X” streams.[4] New innovations, regulatory interventions, and policy prescriptions may promise more environmentally sustainable systems. But social acceptance, including affordability, is a prerequisite for any new product development, and positive returns on invested capital will drive growth and investor focus. Hence, environmental, social, and financial sustainability will be a hallmark of successful transition pathways.
Innovation and growth will shape the future of energy. The two largest drivers of transitions in energy markets since 2000 are the shale revolution in the U.S. and the steep rise in demand in developing Asia. The U.S. shale revolution is a story of technical and process innovation, and demand growth in Asia was due to tremendous economic growth. Innovation and growth have always been the core drivers of transition in energy systems. Nations that embrace innovation and growth see the welfare of their citizens improve and their industries thrive.
Looking Ahead and a Message From the Director
Welcome to the first annual Energy Insights from the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. The articles herein reflect a sample of the ongoing research at CES, each rooted in a programmatic research area. To be clear, these are not outlooks. Outlooks are a bit of a challenge to produce, and rarely are they actually predictive. Hence, we chose to refer to these articles as insights that can be used to better understand what may come to pass. While no one can predict exactly what comes next, if we are paying attention, the road we travel provides plenty of signposts that can be used to understand the challenges and opportunities ahead.
CES has an active year of research and programming ahead, with several conferences, roundtables, and workshops already planned that are in-line with the advancement of our initiatives and research programs as well as in coordination with other Rice University divisions, such as the Carbon Hub and the Rice Sustainability Institute.[5] These include our sustainability roundtables with a focus on plastics, Latin American energy roundtables, Middle East energy roundtables, roundtables focused on the future of oil in energy transitions and on the evolution of liquified natural gas (LNG) markets, and roundtables exploring the future of fuels in mobility.[6] For 2024, we are also planning our annual Energy Summit on Oct. 1–2, and a conference focused on the intersection of markets, policy, and technology on Aug. 29.[7] Additionally, we will be preparing a series of postelection briefs discussing the outcomes of the U.S. elections and the opportunities presented.
We will also be releasing several programmatically focused research publications, including analysis of U.S. LNG export policy, electricity reliability, hydrogen market developments, the potential of nature-based carbon sequestration, microplastics and per- and polyfluoroalkyl substances (PFAS), energy transition commitments, mining in Latin America, methane emissions abatement, and much more. Suffice it to say, the next 12 months will be busy, and the conversations will be dynamic.
In the meantime, I hope you find this content useful, and that it will motivate you to stay involved in the conversation. If you have any questions, please do not hesitate to reach out. I look forward to seeing you soon at the Baker Institute.
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Notes
[1] Energy Institute (EI), Statistical Review of World Energy, 2024, https://www.energyinst.org/statistical-review.
[2] United States Association for Energy Economics (USAEE), “Awards,” https://www.usaee.org/aws/USAEE/pt/sp/awards.
[3] EI.
[4] Re-“X” innovations (recycle, refurbish, repurpose, reuse, etc.) are critical for circularity along supply chains, which can ease stress on supply chains.
[5] Carbon Hub, Rice University, https://carbonhub.rice.edu/; Rice Sustainability Institute, Rice University, https://si.rice.edu/.
[6] The Middle East Energy Roundtable is a joint endeavor with the Baker Institute Edward P. Djerejian Center for the Middle East (https://www.bakerinstitute.org/middle-east-energy-roundtable).
[7] The annual Energy Summit is co-hosted with Baker Botts (https://www.bakerbotts.com/); 2024 will be the eighth in the series. The conference focused on markets, policy, and technology is co-hosted with the Energy Institute at the University of Oklahoma (https://www.ou.edu/price/energyinstitute).
This material may be quoted or reproduced without prior permission, provided appropriate credit is given to the author and Rice University’s Baker Institute for Public Policy. The views expressed herein are those of the individual author(s), and do not necessarily represent the views of Rice University’s Baker Institute for Public Policy.
