Presentation to EESI Review Committee

1

• Presentation to EESI Review Committee
• Professor Andrew N. Kleit
• Departments of Meteorology and Energy and Mineral
  Engineering
• May 7, 2008

2

• Theme Earth Science is an important part of
  Society
• The goal of CEER is to help integrate the study
  of risk, and the consequences of risk, into each
  of the EMS disciplines. Some examples
• Geography Spacial implications of the
  Environment
• Geosciences Policy Implications for Water,
  Climate Change, etc.
• Energy and Mineral Engineering Policy and
  Business aspects of Energy
• Material Science The Role of Nanotechnology in
  Soceity
• Meteorology Weather Risk Management

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• Example of risk analysis Climate Change
• Now we are agreed that climate change is going
  to happen. But
• How much will happen, and when?
• And what should be do about it?
• Should we do something now, or wait until we know
  more or have improved technology?
• One of the problems is that earth science models
  do not generally have statistical properties.

4

• 1st CEER Event Daniel Osgood (Columbia) and
  Joanna Syroka (World Bank), Weather Risk
  Management in Developing Countries, February
  2008
• Discussed how WxRM can be used to improve incomes
  and living standards in poorer countries.
• Cosponsored with ENRI and ASEEDA
• Strong individual meetings across 3
  constituencies.
• Good source of funds
• Weak attendance on public events.

5

• 2nd CEER Event
• Ken Richards (Indiana) Preparing for Carbon
  Capture and Storage Policy and Legal
  Considerations, March 2008.
• For carbon sequestration underground to work, a
  variety of legal issues must be addressed first.
• Cosponsored with Geosciences
• Strong individual meetings
• Strong attendance at colloquium

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• The Evolved Model for Speakers
• Cosponsor with Departments
• Hold as part of department colloquium
• Helps on the finances
• Helps on the contacts
• Brings students and faculty to the talk.

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• Further Speakers
• Alan Krupnick (RFF) with Geography, valuation of
  health and ecological improvements
• Faculty from the Engineering and Public Policy
  Program at Carnegie Mellon with Energy and
  Mineral Engineering. Help us design the Energy
  Management and Policy graduate option.
• Material Sciences working with Gary Messing.

8

• Weather Risk Management Conference (Projected
  date April 2008)
• Obtain financial support from PSU Conference Fund
  and the Meteorology Department
• Obtain financial support from private firms such
  as Storm Exchange, Exelon, Mars, etc.
• Look for contacts from the Weather Risk
  Management Association
• 3 panels in the conference
• 1) Academic Scholars
• 2) WxRM in Developing Countries (Osgood and
  Syroka can be used for contacts)
• 2) Business uses of WxRM (Meteorological
  Department contacts, firms that hire, alumni)
• The goal is to make this Conference become a
  major event on the calendar for the entire
  community of professionals working on the
  frontiers of energy and environmental risk. Such
  a conference does not yet exist, but a critical
  mass of researchers is developing across the
  country to make such an annual event feasible.

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• Energy Risk Issues for CEER to look at
• Because of the special nature of energy sources
  the price volatility of energy has been much
  higher than other commodities markets.
  Volatilities in energy market also have broad and
  compound impacton social welfare. This is an
  opportunity for us to develop strength and become
  a leader in this area. In particular, the utility
  industry is traditionally risk-averse and has
  great demand for risk management.
• (2) A similar question is "What is the option
  value of carbon capture-readiness. Should we
  prepare carbon sequestration technology, not know
  if and when we would want to us it? This would
  require a great deal of statistical modeling, the
  capability for we are building slowly in EMS.

10

• A pre-CEER funded project
• Decision Markets and Uncertainty in Weather
  Forecasting, National Science Foundation,
  Program in Decision Making, Risk, and
  Uncertainty,, PI Bolton, Co-PIs Kleit,
  Kwasnica, Roulston (475,692).
• Two aspects to this project 1) we use weather
  decision markets to create standard deviations
  for weather forecasts 2) we use economic
  laboratory experiments to observe how subjects
  respond to uncertainty information in weather
  forecasts.
• Again, the problem addressed is the lack of
  standard deviation information in weather
  forecasts.

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• Funded Projects
• We have already received one grant, What is a
  'Better' Prediction System? Combining Statistical
  and Economic Metrics of Prediction Quality,
  National Science Foundation, Program in Decision
  Making, Risk, and Uncertainty, September 2007 to
  August 2010, PI Small, Co-PIs Evans, Keller,
  Kleit, A. Thompson (749,992).
• Meteorology firms compete to have better
  forecasts. But what does better mean? It
  turns out to depend on the user. For example,
  electric utility are interested in forecasts when
  it is very hot or very cold. Accuracy is
  important then. But for when the temperature is
  between 45 and 75 degrees Fahrenheit, it does not
  matter much.

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• Other Roles for CEER
• Support Policy Initiatives in EESI, e.g. Water
  Topics Seminar Series
• Support undergraduate programs Energy Business
  and Finance, WxRM option in Meteo, projected
  Earth Science Policy Option in Geosciences
• Support graduate option in Energy Management and
  Policy in EME
• Support EMS Initiative - Graduate Institute in
  Earth and Energy Policy

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• CEER Associates
• Jamison Colburn (Dickinson School of Law)
• Keith Crocker (Risk and Insurance Department,
  Smeal College of Business)
• Jenni Evans (Meteorology)
• Klaus Keller (Geosciences)
• Kamini Singha (Geosciences)
• Arthur Small (Meteorology)
• Rudi Slingerland (Geosciences)
• Brent Yarnell (Geography)
• George Young (Meteorology)

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• Budget (per year)

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• Conclusion
• The EMS College is moving towards a series of
  program that are focused on the impact of the
  earth sciences in society. This is happening in
  all the EMS disciplines.
• The envisioned role of CEER is to support the
  research and educational mission in the college,
  with a special emphasis on issues pertaining to
  risk.