Ernest Moniz served as the 13th US secretary of energy from 2013 to 2017. Prior to that he spent 40 years as a professor at the Massachusetts Institute of Technology (MIT), where he also served as head of the physics department and as founding director of the MIT Energy Initiative. He served as under secretary of energy under President Clinton.
Since leaving government, he has continued to combine his expertise across energy and policy as founder and CEO of the EFI Foundation, an independent, nonpartisan organization tackling global energy challenges, and he currently serves as an emeritus professor and special adviser to the MIT president and as a McKinsey senior adviser. Moniz recently spoke with McKinsey Senior Partner Adam Barth in Washington, DC, about the geopolitical forces reshaping energy markets, the role of the private sector in driving the clean energy transition, and the importance of building relationships. This interview has been edited for length and clarity.
An electron race
Adam Barth: Let’s start with where we are right now: US power demand is growing rapidly for the first time in decades. How do you view this moment, both in terms of the opportunities for the US and the challenges in meeting this demand?
Ernest Moniz: I think the issues of electricity load require a more coherent response than we’ve been seeing. There are numbers all over the place for how many gigawatts any particular utility is going to require in the coming years. We know there’s a lot of double and maybe triple counting of data center projects but, regardless, we are seeing a hockey stick change in electricity requirements, largely because of the AI race—which is perhaps misnamed. It may actually be an electron race—speed to power. It is going to require major moves in supply, delivery, and new business models, because the grid, especially in the United States, has suffered from decades of underinvestment.
How can we satisfy the need for gas plus renewables in the near term while we build some of the low-carbon options, like nuclear power? We are hearing a lot about hyperscalers going behind the meter, for example. But that doesn’t mean they don’t want a grid connection. So the real question becomes: How do we recognize these needs but integrate them with the opportunity to improve our grid? The policy world has to work with the hyperscalers, who have very deep pockets—and the cost of electricity is not necessarily going to be the determining factor for them, in terms of competing to be AI leaders.
Adam Barth: How do you think about some of these cross-cutting constraints on energy supply such as critical minerals and rare earths, supply chain buildout, and so on? What role can the private sector and policymakers play to alleviate some of these bottlenecks?
Ernest Moniz: More people now recognize that supply chain fragility is a very, very important question and needs to be addressed—that there are many externalities that have to be folded into the true economics of various choices. In the United States, we are talking about a transition from a largely fossil-fuel-based economy to one that is much more technology based—effectively trading oil dependence for a critical mineral dependence.
China’s share of the supply chains for critical metals and minerals, in most cases, does not rest upon all of those metals and minerals being underneath China. They’ve made choices. They have chosen to invest in the processing and refining of those metals and minerals.
The United States has chosen to have a minimal refining and reprocessing industry. And that makes us very, very vulnerable, because even if we diversify mining and supplies, we have limited capacity to process domestically.
There are also environmental issues to consider—not just in the mining but in the chemical processing of these metals and minerals. How are we going to do a better job, in the environmental aspect, of committing ourselves and our partners to building up the refining and processing industry to diversify supply chains?
Leadership in an uncertain world
Adam Barth: In complex and fragmented policy environments, amid geopolitical uncertainty, what distinguishes effective leadership?
Ernest Moniz: Today, among global leaders, we see a lot more conventional thinking than we do creative upside. I think an effective leader articulates to their constituents that energy security, climate, low carbon, and equity are all critical issues and looks after the welfare of their citizens on all accounts. Energy security, equity, climate, and clean energy have to be addressed together if you want to achieve maximal success. To ignore any of them just creates headwinds that slow progress across the board.
Security has risen to the top of the priority list. Affordability is probably second and sustainability or the clean energy transition may be the caboose. But they have to be addressed together, because if the clean energy transition, for example, is not being addressed at the global level, people are going to suffer. They are already suffering. With things like extreme weather—heat, drought, floods, wildfires, intense storms—one way or another, people are paying today.
I think we are seeing that, whether it’s in migration patterns in developing countries, or, for example, in the extraordinary difficulties of getting insurance for homes in some areas of the United States. I think the effective leader cannot ignore that, but neither can that leader ignore the need for reliable, affordable energy. It’s all one conversation.
Adam Barth: Every year, we ask CEOs what issues are top of mind for them. Not surprisingly, geopolitical uncertainty and high energy prices have been climbing the list. What advice do you have for private-sector CEOs today?
Ernest Moniz: CEOs are absolutely critical to the energy transition that we are talking about. A major reason for progress on decarbonization over the past decade, I believe, was the actions of private-sector CEOs. But their big challenge right now is uncertainty.
We’ve seen a bit of a roller coaster in terms of policy, tax incentives, and other instruments, and that creates uncertainty. CEOs have to provide shareholder returns. They need to look at clean energy investments through a lens of providing competitive returns; otherwise, the capital will go elsewhere. We see a lot of capital looking for good projects in the clean energy space, but the uncertainty is a big problem. So I think that CEOs have to consistently argue for the importance of steady policy. And that’s where public-private partnership is quite critical.
A second area where I think CEOs are taking the lead right now is in carbon performance. Companies with global footprints are saying, “We need tools that will allow us to differentiate our product based on carbon intensity.” That’s not simple. It involves an entire supply chain; measuring CO2 emissions is tricky. But just before the COP30 climate meeting in Brazil, we saw companies come together and say, “We need new tools of carbon accounting.”
The European Union is in the early stages of implementing carbon border adjustments—tariffs essentially based on carbon content. Well, many companies are not interested in being labeled with their sectoral carbon intensity; they want their own products to be differentiated. So that’s another example of the kind of leadership that CEOs can provide and are providing.
Energy innovation
Adam Barth: A lot of your academic background has been in nuclear energy. And nuclear energy is back in the spotlight with technologies like AP1000s scaling and small modular reactors emerging, as well as with companies restarting facilities driven by data center demand. How bullish are you on the trajectory for nuclear power?
Ernest Moniz: There’s never been so much innovation in the nuclear sector as we have seen in the last 20 years, which has brought us to the threshold of the much-promised renaissance of nuclear energy in the United States and elsewhere.
Of course, we’d all love to have crystal balls and predict the oil price and the trajectory of nuclear power. In the United States, I can’t say I’ve seen a lot of final investment decisions, but, boy, we are getting very close in many cases.
We’re also seeing some very interesting business models emerging with data centers driving them. For example, we have just recently seen an announcement where companies will have speed to power—let’s say through natural gas—but then be able to convert that into a nuclear plant plus a gas plant down the road.
Is there going to be nuclear power built in the United States? I think the answer is yes. We know for certain that at least three plants that were closed are going to be restarted to serve load. The real issue is going to be new plants, whether they are gigawatt scale or 100-megawatt small modular reactors, or microreactors at the 10- or 20-megawatt scale.
The United States’ nuclear supply chain has withered, so we have to rebuild a supply chain. And we have to have the learning from repeatedly building the same technology, ideally with at least a largely overlapping workforce.
In the United Arab Emirates, they built four reactors over a period of roughly a decade. They state that the fourth one cost half of the first one. These learning experiences are critical. I don’t see how we get there without order books, and without a workforce that is developed, and can be used at least to a significant extent to bring the learnings from one, to the next, to the next, to the next, to drive the cost down.
If we go especially to the small modular reactor, the question will be, in addition to everything else, to what extent can we manufacture all or at least most of the nuclear part of the plant in a factory environment? Maybe we’re getting there—particularly in the small modular reactor world with some foreign investors, sovereign wealth funds that appear to be willing to make sound investments in this kind of buildout.
Adam Barth: What are some of the breakthroughs in technology that could fundamentally change your view of energy evolution, let’s say in 2050 and beyond?
Ernest Moniz: I think that in 2050, when we look back at 2030, we’ll be surprised by some of the technologies that we see.
Nuclear fusion is looking very, very interesting. In the United States, we’ve had more than $8 billion of private funds go into fusion companies with a whole variety of technologies. That means somebody is willing to make the big bet that this is going to have a huge return.
If fusion works it’s a complete game changer. It has all the positives of nuclear fission—very high energy density, so a small footprint; zero carbon; totally dispatchable—but without the drawbacks. It has no significant long-term radiation to deal with and no public safety issues, which means you can site the plant almost anywhere.
Another game changer, not quite on the same scale, would be engineered geothermal, which gets away from hot water coming out of the ground to use just hot rock deep in the earth.
We’ve made a lot more progress in the clean power sector than we have in the clean fuel sector. We have made some progress in clean fuel: For example, the much-maligned corn ethanol in the United States is actually 42 percent less carbon intense today than a petroleum-based fuel. That’s not zero. There’s still 58 percent to go. But a study that we did showed that one could actually decarbonize that fuel at relatively low cost. The problem is, it is not going to scale to replace all the fuel that we need.
Another area where we still have a long way to go is hydrogen. It could provide fuel services and very high-temperature industrial heat, for example. In terms of splitting water through electrolysis to make hydrogen, we’re pretty far away from the necessary price point. But we also said that about batteries and solar panels and wind turbines decades ago.
Another real breakthrough would be geological hydrogen. It certainly has not been proved at anything like a meaningful scale. Sure, we have a village in Mali that’s been operating a 30-kilowatt internal combustion engine on geological hydrogen for a while. But is geological hydrogen ubiquitous? Is it producible at $1 a kilogram, maybe even less?
Hydrogen is, in my view, the lead horse right now if I had to think about how we are going to produce fuel services at scale down the road.
Physics to policy
Adam Barth: You’ve worn many hats over your career. How have those roles shaped the way you think about today’s energy challenges and what’s needed to solve them?
Ernest Moniz: While my many roles seem quite different from each other, they’ve all contributed to how I think we should approach any issue related to the energy transition. My academic background was good for encouraging rigorous thinking. Physicists have a special ability to frame problems in a way that makes them addressable: How do you extract the essentials of an issue and then attack them? That’s been very, very useful. Then when I started in the policy world, that put a new premium on how one deals with people. In those roles, we accomplished much more when we had established relationships of trust and confidence, because the last thing you want to do is to go to somebody for the first time when you have a problem. I also found that, both in government and in the NGO world, bringing technically grounded facts to the table is very well appreciated and gives us entrée to a much broader audience than if one were simply trying to promote some favored position.
Adam Barth: Are there any moments of challenge or doubt that either redirected your path to some degree or changed how you thought about approaching problems and driving change?
Ernest Moniz: I never really started by thinking about something as not doable or a challenge. It was always about “hmm, how do we get this done?” If it’s a good idea, how do we get it done? I think my colleagues enjoyed the fact that they could come with an idea and not have the first word be “no.” That was true in academia and with Congress, whether it was a Democrat or a Republican. Thinking “yes” and developing personal relationships—those, to me, have been the keys to success.
