The New Complexity Its Nature and Proximity Wide Thinking Required John Voeller, Black & Veatch

1. Major Changes, Key Drivers, Principal Interrupts And Enticing Opportunities For the Next Decade The New Complexity Its Nature and Proximity Wide Thinking Required John Voeller, Black & Veatch

2. Major Changes, Key Drivers, Principal Interrupts And Enticing Opportunities For the Next Decade So What Does The Future Look Like In Which We All Will Operate

3. Major Changes, Key Drivers, Principal Interrupts And Enticing Opportunities For the Next Decade The Context of Our Session The World Seems On Every Front to Be Getting More Disrupted, More Dangerous and More Complex. Is This Our Imagination Or If It Is Not and Risk of Almost Every Form Is Increasing What Are We Doing To Improve Our Data, Analysis, Simulation And Interpretation Capabilities To Understand and Anticipate Tomorrow

4. Major Changes, Key Drivers, Principal Interrupts And Enticing Opportunities For the Next Decade Our Goal To Discuss Efforts From Industry, National Labs And Overseas International Efforts That Are Examining the Nature of Risk Now And In The Futures We Can See Or Suggest Are Possible And How We Can Examine Them Fully Fundamental Concept Introduced Wide Thinking

5. Major Changes, Key Drivers, Principal Interrupts And Enticing Opportunities For the Next Decade Our Path For the Next Hour Risk – Forms, Sources and Representations Aging – Implications At A Global Level Growth – You Have a Billion New Customers…. Energy – The Reality We Ignore Water – Another Reality We Ignore Climate Change? – Blind Decision Making Minerals – Running Out Without Knowing All Resources – A New Minimum Government – Trying Hard Industry – Waiting For Answers and Making Do Narrow Thinking – An International Example Broad Thinking – A Reasonable Attempt Wide Thinking – Making Tomorrow An Opportunity

6. Risk Situational Complexity Size ~ Likelihood Darker ~ More Impact Perceived Impact – Billions of Dollars US Unlikely Likely Very Likely

7. Risk Situational Complexity Size ~ Likelihood Darker ~ More Impact Wider – Stronger Link

8. Aging Situational Complexity

9. Aging Situational Complexity

10. Growth Situational Complexity

11. Growth Situational Complexity Percentage of Population Younger Than 30 yrs Old

12. Energy Resource Complexity

13. Energy Resource Complexity Lloyds 2011 World Risk Assessment 1. Businesses Which Prepare For And Take Advantage Of The New Energy Reality Will Prosper – Failure To Do So Could Be Catastrophic 2. Market Dynamics And Environmental Factors Mean Business Can No Longer Rely On Low Cost Traditional Energy Sources 3. China And Growing Asian Economies Will Play An Increasingly Important Role In Global Energy Security 4. We Are Heading Towards A Global Oil Supply Crunch And Price Spike 5. Energy Infrastructure Will Become Increasingly Vulnerable As A Result Of Climate Change And Operations In Harsher Environments 6. Lack Of Global Regulation On Climate Change Is Creating An Environment Of Uncertainty For Business, Which Is Damaging Investment Plans 7. To Manage Increasing Energy Costs And Carbon Exposure Businesses Must Reduce Fossil Fuel Consumption 8. Business Must Address Energy-Related Risks To Supply Chains And The Increasing Vulnerability Of ‘Just-In-Time’ Models 9. Investment In Renewable Energy And ‘Intelligent’ Infrastructure Is Booming. This Revolution Presents Huge Opportunities For New Business Partnerships

14. Energy Resource Complexity

15. Energy Resource Complexity

16. Energy Resource Complexity Uncertain Political Commitment To Technology Incentives Future Demand Uncertainty Environmental Pollution Liability Policy Change Undermine Viability of Investments Price Fluctuations Hinder Decision-making Increasing Emission & Performance Stds Renewable Energy Policy Uncertainty Carbon Price Uncertainty Technology and Resource Access Risks Financial and Investment Risks Regulatory and Environmental Risks Risks for Energy Sector Reputation RIsks Physical and Operational Risks Lack of Climate Policy For Long-term Planning Operational Threats In Unstable Areas Operational Threats In Unstable Areas Regional Carbon Pricing Harsher Physical Environments Harsher Physical Environments Infrastructure Failure Via Climate Change Infrastructure Failure Via Climate Change

17. Energy Resource Complexity Uncertain Political Commitment To Technology Incentives Government Policies Carbon Price Uncertainty Policy Change Undermine Viability of Investments Higher and Volatile Energy Prices Increasing Laws and Stds on Efficiency Consumer Pressure For CO2 Emissions Labeling Fuel and Power Supply Disruptions Technology Risks Short-term Supply Chain Risks Financial and Regulatory Risks Risks for Wider Business Longer-Term Operational RIsks Reputation Management Lack of Climate Policy For Long-term Planning Scrutiny of Carbon Portfolio Regional Carbon Pricing Services Compromised By Energy Disruption

18. Energy Resource Complexity Basic Realities From the national energy front, the following is fundamental: There are 9 cars per thousand people in China today There are 300+ cars per thousand people in the USA today When China goes to 11 cars per thousand people, they will consume another 71 million gallons of gasoline per day That is 21 million more gallons than the entire US burns in a day. The math is inescapable….

19. Water Resource Complexity

20. Water Resource Complexity

21. Water Resource Complexity Basic Realities Some Simple Arithmetic Amount of water total on Earth – Fixed Amount of recoverable fresh water on earth – Fixed without desal Amount of desal-based water supportable with current technology – 11% of world requirements currently limited by energy costs Population Growth in same period – 2-3 billion

22. Water Resource Complexity

23. Climate Change? Threat Complexity

24. Climate Change? Threat Complexity

25. Climate Change? Threat Complexity

26. Climate Change? Threat Complexity

27. Climate Change? Threat Complexity

28. Climate Change? Threat Complexity None of These And Almost All Others Ignored The Emissions of 31 Chemicals With Many Times The GHG Impact of CO2 Including Methane Which Is 100 times the CO2 Impact Per Cubic Foot and Ocean Emissions of This Are Increasing At A Massive Rate Due To Ocean Warming and Current Deviations Climate Change?

29. Researchers predict that supplies of indium, used in liquid-crystal displays and of hafnium, a critical element for next-generation semiconductors such as N-Core Chips could be exhausted by 2017. and The world's zinc will be gone by 2037 Minerals Innovation Complexity

30. General Electric discovered last year that the one mineral known to prevent high temperature creep in their aircraft turbine blades was unavailable because of Chinese market control Millions were Spent on Substitute As Market Price Increased 13,000% Minerals Innovation Complexity

31. Qualcom recently examined the current cell phones and found they use 61 elements of the periodic table up from 15 in 2002 Most are no longer under Western control and there are no substitutes for the majority of them. Minerals Innovation Complexity

32. Minerals Innovation Complexity

33. Minerals Innovation Complexity China’s rare earth monopoly threatens global suppliers Following two acquisitions in the past six months, Korean, Japanese and Western players may be locked out of the sector. With over 90% of the global rare earth resource held by Chinese companies, the country’s monopoly looks unchallenged. China currently produces 95% of the worlds rare earth supply. Rare earth metals are needed for manufacturing of wind turbines, plasma televisions, mobile phones, hybrid car batteries meaning a China monopoly could shift the high-tech manufacturing bases from Japan and Korea to China. China employs a three-pronged strategy; rare earth exports are restricted, imports encouraged, and outbound rare earth acquisitions actively encouraged.

34. "China at 10% GDP growth per year, has become the largest consumer of several key metals, generating about one-quarter of the total world demand for aluminum, copper, and steel China consumes 25% of the world's aluminum, 22% of copper, 18% of nickel, 44% of iron ore and 31% of steel. India is a close second with an economy that is expanding at a clip of more than 9% annually. Economists say a growth rate of 9% to 10% is probable for China for the rest of the decade while they say 7% to 8% is sustainable in India." Minerals Innovation Complexity

35. Definition – Era of Insufficient Plenty The last century starting with the industrial revolution has been characterized by two major processes. The first is the extraction and processing of natural resources to feed the product lines at a reasonable cost. The second was the finding and buying or negotiating for a commodity, device or knowledge fragment with confidence that it was available albeit at a price. What happens when things we need for our processes become unavailable at any price and we are not ready with the tools and knowledge of alternatives with full cognizance. This situation suggests that every major engineering discipline will be challenged to find alternative materials, methods and processes. All Resources Innovation Complexity

36. Government Rule Complexity So What Is Government Doing Now To Increase Complexity

37. A new Executive Order requires agencies reduce GHG emissions 30% reduction in vehicle fleet petroleum use by 2020; 26% improvement in water efficiency by 2020; 50% recycling and waste diversion by 2015; 95% of all applicable contracts will meet sustainability requirements; Implementation of the 2030 net-zero-energy building requirement; Implementation of the stormwater provisions of the Energy Independence and Security Act of 2007, section 438; and Development of guidance for sustainable Federal building locations in alignment with the Livability Principles put forward by the Department of Housing and Urban Development, the Department of Transportation, and the Environmental Protection Agency. Government Rule Complexity

38. Aggressive moves by GSA to force strong metrics in all facilities from the CIA to the VA Dept. of Homeland Security looking at lack of pursuit of sustainability as a form of national insecurity that should be addressed in tandem with security NIST teaming with National Institute of Building Science to create very aggressive energy, materials and methods standard based on sustainability Government Rule Complexity

39. DOD has already adopted major metrics in future energy use from number of jeep trips across bases to placement of modular nuclear units as base load Dir of National Intelligence released open IDIQ with no limits on task size or number to apply sustainable solutions to all intel facilities world-wide Environmental Protection Agency is waiting to impose rules and regulations. A recent analysis, however, suggests the environmental agency may ultimately do more harm than good depending on how it acts. Government Rule Complexity

40. After a century of developing materials, standards, specs and processes, we must re-examine them in light of sustainability of all kinds This will demand intense discipline, personal and corporate to make sure this is a positive, not a negative value event We have an opportunity to return engineering to its very roots by rethinking all the assumptions on which the last century of engineering was based. Government Rule Complexity

41. Industry Business Complexity So What Is Industry Doing To Address This

42. Industry Business Complexity Plants and Facilities Future Complexity Of Plant Devices Goes Way Up Complexity Of Plant Economic Optimization Goes Up Complexity Of Plant Systems and Systems Integration Goes Up Complexity Of Plant Upgrade Path Goes Up and Cycle Accelerates Complexity Of Process Content Goes Up Complexity Of Sensory Systems And Their Interpretation Goes Up Complexity Of Design And Construction’s View To Operational And Maintenance Impacts And Consequences Goes Up And Finally Overt Demands That Certain Tools and Functions Be Artificially Applied With Limited Knowledge of Consequence

43. Industry Business Complexity

44. Industry Business Complexity

45. Industry Business Complexity

46. Industry Business Complexity

47. Industry Business Complexity Masdar

48. Industry Business Complexity

49. Industry Business Complexity

50. Industry Business Complexity