Thank you all who come in for work will be written off the grid will be coming of age fifty a great pleasure to have Dr joins us from Berkeley very precious we reached the top of that what is the basis for the green growth and the basis of discussion of your game console console informal economy and still competitors this question under the direction of a Belgian presidency will you all stop here we all carry on about the soldiers we treat your about and in this country spending unbelievable amount of money on a nice green can mean green growth. John is also a very good friend and a unique personality. He's working for over six years now and you still will talk with me on joining is a professor of all for those signs of Merkel also a bit co-founder and co-director of a very few wrong people on the International on the international economy green. We've got I think many of you know and the faculty member of the Center for Information knowledge the research in the interest of science which is one of what I think a very good reason you is most interesting initiatives and research. There are seeds here for those of you are afraid. John will not kill you only ninety ensure it be paid for and all for many many. And that the rules of the game and I understand right around one one point and I will start exercising mine. I don't know if you. Thank you very much. Danny I promise you I won't speak that long. I will have plenty of time to talk. I thought it was appropriate that we do this next a football field. I grew up in Nebraska and for those of you who know what that means I actually know a lot about the problem. We actually had for the some of your football kind of stores and the running back on my high school football team was a little known not very good running back by them. Gale Sayers So some of you know football history. You know I don't quite know and a proponent of that. So we actually had a pretty good team in any case I'm really delighted to be here. It's always fun to come to Georgia Tech. It's always fun to do things with and with Danny and cheery what I'm going to try and do is lay out this talk which was originally a policy audience as you could tell and try and which I tried to fill in some pieces to open out an academic not just a policy discussion. So why don't we get started. The notion of green growth emerges from a discussion that starts with the idea but there's a climate crisis but that's only half of the story. So I just want to be clear about what my own view on that part of the story is so that we can set it behind us the climate debate personally sitting at Berkeley with people like Steve true and Lawrence Berkeley labs. It's pretty clear to me but there's a serious problem and in fact in some ways where the Pascal's wager you know there are. Better is there God or isn't there. God if you bet against it near wrong you're in real trouble. Well that's sort of the same story here. I think the evidence is overwhelming. There are some ambiguities in it if you want to make the bet against a climate crisis. Good luck if you're wrong. OK Now if you believe that there is a climate crisis that's actually a story about emissions but emissions. You know with all of the Kyoto discussions and the Copenhagen meetings which are all about regulating emissions. Well the problem is you can say let's reduce emissions but if you don't tell people how to do it. You don't get very far and emissions or alternately really the derivative of an outcome of the energy system so if you want to have different kinds of emissions or levels a mission trip to change the energy system so that's really the core of where this conversation started which is addressing the climate problem means an energy systems transformation but then the quality is most if you probably know is that most of low carbon energy is pretty expensive and consequently part of the debate emerge around whether or not there would be some way of getting growth out of going green and that's really where this conversation really got started. But whether you believe in the climate Bako or not there are other reasons for trying to change the character of the energy system which I want to mention and we can talk about if you like one is there are not unlimited supplies of oil in some ways the Gulf oil crisis that we saw was really an expression of the fact is we're going to harder and harder locations to get oil and there is a considerable sense not that will run out but that in fact that the real plateaus in oil production and other production that are likely to be reached that may be we're certainly not going to like not likely to see rapid expansions in oil production and the implication of that is serious because the demands on. Energy are going to grow steadily globally growth of China of India mean if nothing else substantial increases in the levels of demand that of course is in her world and with the story of dependence on foreign oil and the first part means if there's a plateau we may see the increases in energy prices whether we like it or not and consequently might as well get it get in the happen as it were and get factors that brought that dependence on foreign oil. Of course those point many people pointed out the answer for others it is well just turn to coal and just turn to bio fuels my own concern about that is for places like Korea where I spent time in France and then Mark that is not a satisfactory answer they are going to make a bet on moving to non carbon sources and China as well as it builds out its energy system and consequently I that we make that move toward the industrial leadership in these new in the areas of energy production and technology are going to come from outside the United States and will substitute one form of energy dependence for another. So unless we have but that's a personal view. Unless we take the lead the last comment I'd make is how do you reconcile broader international objectives and very simply. If you think about what the debate in Copenhagen was about it was oversimplified a set of countries that were saying you're rich you got rich by polluting it's our turn. You're rich now you solve the problem. OK now let's put it in that kind of way. If you want to reconcile the desire of a whole array of countries and of billions of people to be better off. It's going to mean more energy and is no possible way of doing that with in a carbon system purely and simply so that quite apart from the climate crisis there are a whole array of other reasons for the United States in my view to take more Europe where I've been speaking. To take the lead in trying to make this transformation. So in other words there are really these two debates there's a debate about avoiding the extra analogies of the high carbon system climate and global security and then the thing on which we're going to partly focus today which is can we create positive gains out of a transformation that we probably need to make in any case is there green growth to be had growth out of moving to green sources. Is there industrial leadership to be had out of that. So let's sort of pose the problem around green growth this way but there are three sort of three propositions or three issues here. Can an energy system transformation drive green growth in business opportunities. What if we are going to talk about this with the proper role for markets for prices and for governments in trying to make this transition and what are the essential and can we really identify some essential policy interventions that said the green growth task is in some ways. Abstractly very simple and in practical terms very hard in in abstract terms we need to move from an old system which is an inefficient high carbon system to a new system which is inefficient low carb system and for those of you as a bet have a bent towards history. This is not the first time we've made a great historical energy transformation. You know we went from coal from charcoal to coal. We went from coal to oil we moved into an electricity system the only difficulty with each of those stories was that they took a long time to ship from charcoal to coal took a couple of centuries. OK And in fact each of those had critical elements that were involved in making that transition. If you're interested then you can make available. Markku Berti is one of my graduate students wrote an absolutely wonderful piece called The next last energy transition which is available on the brain website and that and some other things he's been doing the wonderful thing about good graduate students is then you learn from them and then you sort of you know it's much easier and much better but the coal story required two things One is that required transport because the real advantage of charcoal was charcoals wood wood was all over England so that basically you didn't have to get it anywhere. The problem was you were running out so that you know various points of the British crown actually declared that the making of glass had to be done with coal and not with tar call because it was afraid that the trees would all get chopped down and there wouldn't be any would propose which were minor issue of national security in those states right. So the question is how it until you actually had the interplay between the new uses of coal the prices for charcoal the development of a transport system to get coal from where it was dug out to where it would be used. You really couldn't get to this new system in the same way with the shift from coal to oil. You know you had to build an oil pipeline system and in a real sense that's where the Rockefeller's made all their money right is they both created and capture and control of that system and more broadly in electricity Edison conceived and it's part of his genius conceived not just the light bulb. But concede the entire electrical system as a whole as a whole unit and set about trying to persuade governments to allow him to implemented. So the energy systems transformation this time around has to be done if everything we hear is true in a hurry. Which means can we just leave it to the market is one of the questions to have in the back of your mind the market signals indicate the transition clearly enough but we're moving from an old inefficient system to an efficient low carbon system and the issue here is and there's a risk this policy and various choices people may. Optimize the existing system or do they in fact help create a new system optimizing the existing system higher gas mileage and cars. Absolutely. Good idea but in fact is that a long run solution is that part of a trajectory that gets you to an new energy system longer lasting light bulbs. Absolutely. Walmart in fact is promoting that some of you may know is used for purchasing leverage not only for its customers but for its own stores as a device for trying to push toward a different kind of light bulb and that's a great idea. It's a very good use. It has commercial value but it doesn't necessarily mean that one has a completely different energy system or you create a new system smart efficient buildings and you're at Georgia Tech. So you all of heard some of the technology stories Berkeley is and ourselves one of our real nodes of technology expertise is putting runs into smart buildings and energy efficient buildings the energy efficient buildings and renewables would be required to establish a new trajectory. OK it needs to be a different system composed of different elements not just different in pieces but here is where. Part of the problem really comes which is creating a new system doesn't just mean bits and pieces separate and that means the development of suites a complimentary technology and those suites of technology really have to move together we all know this but sometimes the implications are completely drawn out renewable energy sources are intermittent That means they require a smart grid and they require storage. Because if we're going we could be dependent on electricity so we're not going to suddenly move to a system that guarantees fluctuating availability of electricity. So if you're going to move to a real renewable system. You know since the sun doesn't always shine. Was it doesn't always blown. Back to nuclear in a bit. You need a smart grid and storage so how do you get that my own view is there are some levers you can call that if you in fact made sure that you put a smart grid in storage systems and the architecture of a smart grid in place you actually could then let market draw and pull a variety of other sets of activities one just an aside because it's not built into the sides. I have absolutely no real idea what a smart grid is OK You know nor did most people what is a smart grid it means that there's intelligence somewhere in the electrical system either in the way in which to pursue forces are connected to the distribution system or the way in which the utilities are connected to the customers and the way the pieces interlink when people use the term they tend to use it in a whole variety of different kinds of ways. If you talk to General it depends on who their customers are and what their purposes are so that means putting intelligence into the grid in some form or another. The second piece that's less than obvious is exactly what the architecture. I mean if you're starting to talk about intelligent system you all have had lots more some computer science than I have and you know. In fact you know the architecture of the system is crucial. So when you say smart grid. We're basically waving a flag right. And without spelling out necessarily exactly what is going to go into smart grid but nonetheless it's pretty clear something some version of what a smart grid actually is and I would emphasize that the way in which P.J. any out where we are use the term in the way the dangers the term are for different purposes. So it's intelligence in the system. Similarly electric cars require It's quite obvious enormously more electricity and they require electric fueling stations you know you can't drive across country right now. No electric vehicle because there are a bunch of filling stations along the way and that much. More electricity requires a smart grid. OK When we ran we did Berkeley the citrus organization that Danny mentioned we ran the first one of the meetings with the Copenhagen Climate Council in the lead in to COP fifteen a couple of years ago and from the Berkeley side a few people Steve too came. I remember Jim Dar who some of you know is now running our pay he would just need dance Research Projects Agency for energy. It was a pretty good group and the Danes brought in the current look but their political level and Jim Rogers from Duke Energy used to care supply around here now from Duke Energy which is in North Carolina came along and Jim is some of you know is a big advocate of green whatever he means by that. And in fact you know when the whole issue of electric cars came up I said Jim can you do that and he said with permission to put in a smart grid. OK You know we hate if we can do that if we don't we can't the old electric system can't handle the kind of electric demand and variation in electric demand that would come with electric cars. So my own view and this is not a necessarily of this is my pop science and you because I'm always looking for props and we did a lot of work over the years and I think in digital technology issues and the problem was always to cut through the technology stories to what was actually the core of what was going on. This is my take on what actually really is involved here and I'm open to its being wrong. I need but I need some simplification which is that the pathway to a transformation is first electricity electrify everything cars. Whatever it is and then deep carbonized the sources of electricity. Secondly it's an efficiency story to reduce the total demand for energy per unit of economic output whatever left over as you need to de carbonized forms of liquid fuel which is actually in parts of the world extremely important and in fact in some ways substituting for example liquid natural gas product. For coal and charcoal products and parts of the Third World is actually both crucial to their development and to this broader problem. And lastly of course tree. Keeping them but the eco system operating. But what does it mean. Having said that's the case. What is this story. It's not the Manhattan Project in other words this is not a story about a single technical fix. We're not putting the man on the moon. We're not trying to build the atomic bomb which are single specific dedicated technical outputs some of you do you know the semiconductor industry roadmap roadmap and if any of you know that some of you do the semiconductor industry has a roadmap to try and keep building out new and better products which requires an ever increasing density of transistors on a chip and to be able to do that they have built a technical roadmap that isn't a lot live I think it's a conversation that's ongoing but the real objective is they have a single technical objective here. There is and I read a technical outcomes there are a whole array of choices to invest in better fuel efficiency in cars to do best in trying to move toward electric vehicles. You know there are different kinds of incentives you may want to put in place to try and get those transmission. So this is a diverse set of things. So it's not a target that you can really aim at the consequence of that is the top down economic planning in and of itself won't work. Why because the choices are too diverse. You may need government and I think you do but in fact you're going to need price signals because the range of choices that people are going to make are so diverse that you're going to have to have have price ignorance to drive it and in fact you need to shape that transformation so that you don't just get any old new transformation but one that's a low carbon story. So that's my take on what the what the transit of why we need to make a transformation if you will to a low carbon system and what sketchy terms that would actually look like. Which brings us to what I promised in the first place which is can you get green growth out of this story. OK So can you get green growth that will start where does growth come from if you make this transition and this transformation. Well one piece of the growth is that you build out the new pieces of the system you build windmills you manufacture solar panels albeit they may all get manufactured in China which means the question of whose growth we're actually driving is left open and a subject of conversation. You may in fact build out the building the droll systems which in fact is not only hardware but software and secondly you may try and generate competitive advantage by selling the pieces above into global markets and I promise you that the Koreans the Chinese the Japanese are in fact viewing green growth in the drive to love energy carbon systems as a mechanism for developing the industrial expertise for selling into other markets. OK. It is I mean absolutely straightforward and clear it's not is it's not ambiguous in any way they think that's where the game is going to go. I think they need to make the transition so let's make it now but get industrial leadership and in areas in place like Japan that becomes a principal objective of the old ministry of international trade and industry now the Ministry of international economic abyss that the other thing but they seized on to this is the new basis of the Duster policy the Koreans have done the same with the tripartite set of policies around green growth and carbon izing energy around high speed rail roads to integrate the country and around smart work and putting telecommunications high speed telepresence kinds of Cisco telepresence systems throughout the country. To reduce the need for commuting it commuting and they see that is the basis of it and the next wave of Korean leadership and industrial export and the Chinese are making it all anyway. So that's another question the real broad growth doesn't come from either of those those are both narrow and located the question is are there will green growth be a transformative disruptive technology that changes choices throughout the economy. So when you introduced railroads when they came through Omaha Nebraska. You basically created a national marketplace to change the way in which the economy worked. It wasn't just that it was faster it just changed all of the choices in the economy electricity meant that you could reorganize how factories operate and they didn't have to necessarily be near water mill so they didn't have to be near steam sources you could in fact put motors all throughout a system and you could flatten that you could do the factories very differently. And of course but the emergence of semiconductors and the digital revolution that we all are living through. In fact the use of information throughout the economy throughout products and services was radically altered because it could be produced organized distributed not only in new ways but it is a trillion. The cost of what it was before the and I don't think I'm exaggerating that number of the cost beforehand so will green tech knowledge base be transformative and disruptively productive that in the long run is really going to be the question and I'm going to say right away. We don't know. And if I were running a policy that's where we need to in a certain sense start to try and put a considerable emphasis is what can you do with new low carbon technologies that you can't do otherwise because until you get an answer to that you end up with the fact that most of those technologies are just a little more expensive than the existing ways of doing things whereas my as my. As Mark bear to whom I mentioned before would remark substituting green electrons for Brown electrons isn't sufficient. What can you do with green electrons that's different. Since the green electrons the fundamental difference between green electrons and brown lifetime is as you well know they're more expensive. OK so why do you want green electrons you need to have some reason other than just avoiding the externalities if you're going to drive it on it in an autonomous kind of way. So are there distinct advantage to strip green electrons apart from saying I don't think the answer is there yet and I don't think we know then will the until we have that we won't know whether a green at energy system can create new opportunities throughout the system as a whole but not knowing doesn't mean that it's not the case some of you who know the history of the digital revolution may recall that the then C.E.O. of I.B.M. in the one nine hundred fifty S. when the first of the mainframe computers came out I basically took the position that there was a limited market for them three or four right. So that in fact people didn't really couldn't imagine what was being done with it and now we can easily say Well that was a transformation that meant to create the digitization of information and a whole array of things that could happen as a result but standing at the time people didn't see it or very few people saw it by the one thousand late sixty's early seventy's. They were starting to be folks who were building toward the future who did start to see over the horizon. You know people at Sun Microsystems Steve Jobs and not really. Bill Gates who was sort of looking still inside of a particular world but people like Joy. Bill Joy wrote Who was the architect of the Sun systems also wrote Unix four point two which was the key operating system comes out of Berkeley of course put but had a big. In the world as it now is he had thirty years ago. You can sort of see where it was going but until you got to that point people most I mean very few people of any actually saw where this was going microprocessor who understood it at the beginning. One of my friends a member of Bill Bill David who runs now venture a company called More David out which is one of the premier venture firms in Silicon Valley Bill had a job when he was at Intel in the early years and his job he was marketing manager. OK Now what did he have to have as a background in the marketing manager he was a prize winning graduate student in Ph D. student electrical engineering at Stanford. OK. Why do you need someone like that as your marketing manager because no one had a clue what a microprocessor was or what you could do it. So his fundament of a very fine book which is called high tech marketing he's written the story of how he had to go out and basically explain to engineers and companies what you could do with a microprocessor and why it could change the design process and products in a fundamental kind of way. So again we don't really know what will come. We've seen a sequence of platforms for computation and connectivity and my guess is if we start down the road of a smart grid and other things. We'll see some of that in the same way and I'm going to jump ahead here and remark that one of the real problems in the energy system in innovation in the energy system is that there's a big difference between these I.C.T. years and information manipulation technology years and the green tech years and that's called the utilities. OK that is in the old days when we were doing the I.C. teeth and stuff. You could change a computer and you know basically you know change one product at the end of a process you change the utilities you know the utilities are investing for forty years. You're not going to be real happy if. The electricity goes out you know you're not going to be real happy if the price of the electricity is double So the in a sense the the utilities of the commotion in the story but there's a curmudgeon prepare Lee good reason and real solutions that solve their problems have to be found if we're going to try and really drive any kind of innovation. So the question is how would you get to a green growth trajectory and my memory was that I had reached the right point to tell the story and I started doing this so I C T was different because it was a system change without even trying. That is in both the case of microelectronics in the Internet the system change the flex point was already in place when the venture capital guys sort of stepped into the game. Some of you may know that eighteen T. which is where a lot of the semiconductor technology came from was for bitten by law from entering the semiconductor business. OK because it couldn't cross subsidize from one from its from its regulated monopoly position to a competitive position elsewhere. So there was a space. I.B.M. which would have been a potential supplier or I.C.T. technology just took a look at what had happened to eighteen T. and decided it didn't want to get broken up either. And as a result they didn't enter the merchant something and aftermarket which weft space in the game for a few companies A.M.D. National Semiconductor and of course Intel for those of you don't know the sociology of my part of the world rounders of A.M.D. Intel and National Semiconductor were all together at Fairchild Semiconductor and they went off in different directions. So they're sort of what is called in various books the fair children you know because they sort of send their kids in some cases become entrepreneurs and so forth so that in the case of the Internet. It is DARPA the Defense Advanced Research Projects Agency. Of course not. I'll go. But it is a government action but in four puts out a new paradigm of how to in fact organize the architecture of digital ten tenth's Knology equally important as I said the dominant players were limited from entry and a new model of the venture capital model had emerged and they were real a media did vantages for Information and Communications Technology and price performance and production and none of that's really true. Right now so green electrons now cost but just for those some of you can't see silly in the back so green technology will be different. Green transformation is more difficult because green electrons cost more for now than brown electrons and one of the crucial questions of course is under what circumstances and what sets of innovations would in fact renewable non carbon sources of electricity in fact be competitive with the costs of coal and the like and in some areas that's happening. Secondly it's a retrofit problem in the West we already have an energy system retrofitting it is harder than building it a new which is another reason why the leadership is going to come from China and India and Korea and we're going to be left out if we don't pay attention to the large investments for the long term. So it's harder to innovate operational continuity in energy is essential. As I've been emphasizing there stablished large players and production and distribution and as I said their price disadvantages. Over the long run. So that leads us to the question and hopefully I'll get through this quickly and we can have a chat about what role for governments and markets the price of carbon the first question and most of the debate has been about should you have carbon taxes so that you have cap and trade which amount to the fact should do we need to have a higher price for carbon in order to make this transition than the question. So how do you get it. My own view is since I think we need to make the transformation my own view is you probably need to have that it's not very likely we're going to get it. OK and that the distinction between Cap and Trade and carbon you know since the cap and trade you realize that cap and trade was a Republican idea in the first place and in fact it was a public idea of the and they were right it is in fact a different form of tax or transferring or chipping the price. There are a variety of ways of structuring this so that it is in some ways income neutral in other words you could have a carbon tax. I was for that one a model which goes to have a carbon tax and then a rebate on income tax based on income that basically meant because what you want to do is not take money out of people's pockets. You basically want to raise the price of energy. You don't necessarily need to transfer it to government in order to accomplish that. But you probably need to raise the price of energy but it in fact is not sufficient because the real risk with just raising the price of energy is in fact that you're likely to optimize in the old system that is you rate until you get a flex point you get the pieces and elements of the new system in place but the easy things to do are all inside the old system. My own view is regulation of energy needs to focus on creating the news energy system which means that one the one hand dealing with the low hanging fruit it's often referred to in the story which is energy efficiency and in fact trying to create the stands and regulate standards for the new the new system and finally of course you need broad technology investments. You may need focused large scale projects some of the projects some of the changes that need to take place such as the hope that it might perhaps maybe be possible to in fact have a low carbon coal or a low. Emissions coal clean coal. But that's going to take a heavy investment in experimentation that is probably well beyond the willingness of private investors to undertake so the question is how do you finance that. How do you finance the diffused research investment required throughout this entire system and how do you facilitate the move of clean tech into the marketplace. All of those are areas where government actions of one kind or another are probably important. Again they come because by Def we've defined it as a market failure we need to make that set of transitions. So how do we accomplish that particular purpose. So as I say we need to my own view is that the core levers to pull are grid and storage that is if you know I'm not as I'm by no means an expert on the energy system but what I really see is that those are the two pieces that if one in fact change one and might well be able to let the market drive other parts of it. So where we are is the worse. I'm suggesting prices aren't sufficient in that. Well good long term green growth can only come from redefining the energy system and that will require developing the systems of a green electron system and prices aren't sufficient proper regulation is necessary technology investment is necessary and investment in infrastructure is going to be crucial. Now before I stop since we're really in a political economy globalization setting the question is how do we get there and what's the political economy story. If you will that's behind that part of the question is what is the capacity for concerted action and what are the obstacles to the various steps that might need to be taken the structure of the existing energy system in governance in places like France and Korea really make it possible to take more assertive action than is the case. And the United States and the structure of the political system makes that the United States is with our decentralized energy system with lots of utilities spread out all over the country but a fragmented distribution system which has worked perfectly well over a long time is in fact ill suited to make a radical shift in how that system is organized the print the French from the top down dictate that you know the electricity defrost and the core system there including how you're going to do metering and how you're going to use the architecture now. My guess is that more interesting architecture of a smart grid will come out in the United States. Remember the French some of you may know did Minitel which is really a the first of the electrons of the digital information systems which is best known for being in a museum these days. So you know at the end the United States a little bit slower and a little differently implemented the Internet and then you know. So the fact that the French can move quickly doesn't necessarily mean it will be necessarily the most impact of a right answer the Koreans are going to make a similar set of Africans. So the obstacles are coordination that political and other multiple obligations with a view of utilities to in fact have to maintain prices keep prices low keep the electricity flowing and the light and for those of you like villains the only people who can't win out of this in the long run. Are those who produce oil that's going to be you know you can do carbon ice coal but if you saw in California we had a ballot our governor whatever else one can say about him actually did push through some green legislation to actually force the D. carbon ization of parts of California and a set of Texas oil companies came in and put a referendum on the ballot this year to try and reverse that happily and. They were the only ones. So essentially I mean because across the board all the rest of there are a range of winners who can come out of the system but the oil companies would be the clear losers. So I would just let me skip over that and simply say what drives the politics and what will be a winning coalition and that transformation is not clear the last political economy comment or global comment that I want to make is that in some ways the failure of COP fifteen of that negotiations over climate is not the failure of a government. It's not the failure necessarily of a particular country. It is the fact that we're seeing a fundamental shift in my view in the way in which deals will get done and what the deals need to be in the global system. What we've seen really since the World War two until now was a system in which the core institutions of the global economy were organized put in place and governed by the wealthy by the wealthy and powerful than the trading system like with the gap becomes the W T O that some of you certainly know when they when the rich countries got tired of the gap because too many exceptions had to be made. They basically said OK let's have a new system altogether and we'll call it the W T O and everyone can join or not join if they don't join with our new rules they just can't be left out which is why we went from the get to the W T O the I.M.F. and the sundry international financial institutions there's no central core or single institution. Well dominated by the rich countries. Until now. Now that may well change I think over time but what the Copenhagen story really was was a case in which we kept our just what was the real problem. We could all agree on what we wanted to do and the weaker countries the politically and economically weaker countries could say well what you don't want is for us to pollute. Which means you don't want us to build out dirty energy centers. Fix it for us. So the real threat becomes the real power is suddenly hands of the weak who in fact just by taking actions that would ordinarily be normal in fact can force the hands of the powerful in ways that when the case before the international monetary system. You know first Britain and the US had money when we had control of the rules. Everybody wanted access to our markets. So they basically had power in the international trading system. This game stands the whole story on its head. So let me just end where I began. I think there is a climate problem and I do think we need to for those reasons alone to make this transformation. I do think there are sort of reasons. Well beyond the climate debate that if you're sort of making a case in Georgia or you're making the case in the basket where I'm from or in Texas where I have family you know I try and try to not build the case simply on the climate story where in fact there has been some doubt I simply want to add a lot of the I don't know who that Georgia Tech has been involved with the I.P.C.C. I'm sure some folks have been but the folks at Berkeley have been involved Steve Chu is now secretary of energy as you well know who is sort of the third great scientists of the Nobel Prize in physics. So I mean you know he used to be taken somewhat seriously. Steve is things that the I.P.C.C. radically understated. The problem to try and mollify the politics. OK so that the people who are involved in the conversation actually look at the skepticism of the other way around and say we haven't had any idea what we really want to say which is much stronger but there are different reasons beyond the climate reasons for making this transformation and then there are two big debates how much is it worth to avoid the extra nowadays and can you create positive gains out of that story but that let me stop and let's. Let's just have a chapter of it. John thank you again for what I hope was provoked you talk about just share one story with you on different country that has no clue at all that he or she happened. So it wasn't just the C.E.O. of I.B.M. The Israeli government decided that one Philco computer is enough for the whole country and then the ministry of defense said yes but we might have problems with might as well by two if one of them brings in the only changes when the Minister of Finance discovered that it will help the tax goes away which might teach us something about green energy and growth and why growth is so important. If you want to have this transformation. We have about twenty five minutes for Q. and A And we'll have to close this part take control you look at me I'm happy to be with us. You can do whatever you like. There have before I take questions. There were two there were one thing. Two things that I need to the Forgot to say one is you don't get this transition. Unless people believe there's growth and they're not going to pay for it. So the politics are the green growth argument matters and the second is there are a bunch of political contradictions in the whole climate that environment story because what is the what why is it the French are able to meet Kioto and cope and then they have nuclear sources for electricity eighty percent of French electricity is nuclear So you know you're left one is left with a tension between some environmental objectives and other environmental objectives. At least for now you can't have it all ways around this one of my friends who ran one of the big foundations really and spent the last part of his preferred. Early part of his retirement having spent the his career making a lot of money basically said you know those who oppose nuclear energy support warming the earth now and in fact that may or may not be the case but the problem and the dilemma actually does have to be faced. Sorry I don't want to raise that place left right on governmental that it was possible way too long and warm brown energy goes would not go a long way towards or there is an extra Alys meter which shows the way this energy and create markets for the kind of innovation that you're looking for we're looking to work around it. If you get worse and people consume less of it. It's value and green becomes market competitive with the One World One market mechanisms to drive growth. Although it seems certainly United States getting a conference of national policy. He isn't going to happen for a while so we look to other private sector with more on maybe leadership. But I think that is likely to be in the American case what happens that is prices of you know carbon based energy are likely to go up and if they go up fast. We'll be lucky and the reason I say will be lucky is because that in fact will start making the adaptations that are going to come in anyway. And we won't necessarily be an industrial follower. There is a big debate and one of the legitimate their various legitimate debates in the same place I don't particularly consider legitimate but is one non-legitimate debate for me here is whether there's really a climate crisis there's a climate crisis. So I don't think one of the debates is how do you get to twenty fifty you know some people argue that many of the solutions available today only get you to twenty thirty and then get to it then. And so there's a very big set of them. It's over what the best routes are but my own concern is is that if we go too slowly. If we go too slowly. In fact other countries will seize the industrial leadership that will be behind the technologies from them. I watch a lot of that sitting in Silicon Valley where a lot of the developing ideas are emerging and a lot of the development is now being done outside the United States for a market reason I'm going to take this gentleman and then this young lady. Yes but you're going to have to speak a bit louder to go. That would be wonderful. Thank you. When there's a debate obviously some people trying to push that I do think it's a national security issue myself. The problem with that really is that the easy answer to dependence on the easy answer to the dependence on oil is moved to coal. OK so that in fact that is a solution to secure the narrow security problem. It's an answer that in climate terms isn't so effective which is why many people are hesitant at this point to use that national security answer but the question is can we. That's why I've tried broaden this out in terms of in other terms the Koreans import ninety percent one percent of the energy they turn into into electricity. They're not going to start importing call you know that they don't care so that other countries are not going to go the coal route. So if we're left there we're going to be co-leaders and we won't have any followers. So I think the problem is real how to make it politically salient you know it just isn't fair. The crucial is the crucial question which will turn the brightness of your time I'll call them up a little energy in the street that your love crisis was not a crisis on the ground and you go down real now as if you're wrong and the system so that regular will fall will not be the real plan that will work for you. There is a day that will not bend it out and eat and eat and this is the mandate that I don't know. And right now there is no national policy. There are a mandate to go with any defense here. Yet your and George are not around or through my hundred years. We're not letting the national guard down. He said he told me they're going to see them try to pull out now hold and local levels are probably both locally and nationally like your own you're the reason all the time passed the regional councils the right. Brand were humans. You can be there but look at yes but I mean where there's a lot of pieces built into your comeback. So the first issue. To is yes probably. We have to mandate the use of renewables the mechanisms for mandating them are obviously delicate you can do that in ways that end up with foolishness. The German some of those if you're all engineers right. OK or in some sense I'm teasing. But I mean most you know that basically that the location to really have a fish and solar energy is not Northern Germany. OK but the German mandate system basically requires the promotes the use of solar energy that's really not the smartest solution that one can have. So the question is accepting the idea of mandates how do you then run a sensible mandate system that actually operates attractively the article New York Times yesterday as he was actually quite interesting and it really says that the whole story becomes partly is one of how do you structure regulation because in fact the regulatory bodies were not being obstinate they are obligated in this particular case of the story under law to in fact not burden the rate payer with that with expensive sources of energy. So unless you change the regulatory environment in which the regulators are operating they have to do that you know it is a real problem for the utilities so hopefully innovations will come out of places like California California is big enough that in fact what we choose to do can and can drive investment but the real risk and that's what I mean by the retrofit problem if you're Korean you're going to continue growing you're going to build out energy systems in new ways and you're going to use you can use low carbon systems because parts of it can be done efficiently in that kind of way. If you're China you're going to use a mix of coal and and energy efficient kinds of things and you're going to have industrial leadership and then when we actually get around to it. We may have problems my own hope is that in the smart grid architecture which is a which is something I barely really grasp. It's pretty clear there are really innovative ideas in this country about how to do that and hopefully they can contract get implemented. Yes this gentleman then Michael then yes it will be here to greet you back big with you there in the green room. Yes we were in with one of the reasons for their troubles realize we are partly not here just because the state is it is a strong story but it's penetrated within the bureaucracy by just so it's very hard for them to move away from reliance on nuclear either carbons to that to me they're going towards me so I'm wondering about what that space bring back is the advantage to us. Not the other one and I was wondering just thinking about the scale of one of the work for mentally against oil existing there is less time now where we invest those who are very skilled the still get it right and say really. Are we wrong with building the stuff. So that they could then get much more of that existing infrastructure that by that time we'll still be sure those are very useful and important questions let me try and have an answer. You took them to turn if I don't get the sun going right for a minute because I want to respond to the first is the real problem of the strong state I did with some of you may know I started my adult life in France and I started it by dealing with a strong state there I really vantages and real disadvantage and so you know I mean you. Go down that you start down the wrong road and you're going to go there. So part of the question of who are the obstacles are the entrenched players inside of a bureaucracy it's a very good point. The question is are the disadvantages one could have a discussion as I would want to about the balance between capacities and tasks and what the disadvantages of certain kinds of ballots and these are and the question clearly is are the disadvantages of going down a nuclear road going to get a piece of beat that. In fact it blocks innovation and the other knowable. Demands my own and I don't know Korea very well I've spent a little bit of time looking at it because I got invited over and I've spent so it is a good thing you know that and that there is it as you say tension in the bureaucracy but I think this presidential commission on green growth that they've appointed is in fact precisely because the president. I for those who don't know the present. It's an ex industrial executive who actually knows his way around the stuff doesn't want to be trapped. So I think it's a very interesting case to watch the French it's your absolute right eye but I think there is inside Europe and there are going to be that nuclear play inside of Europe of course the Danes are the most interesting of the Nordic countries because you know they've made a whole array of moves in this area and have now committed to being completely fossil free and I think thirty years I mean they're but they're but they do it with their own kind of trickery which is called You know I don't know we just hydro power because the offset you have are Noble says you know there are the big stories that are intermittent so you basically have to have something else you can turn on when they're not there or where you can store it if they are there and you know that that's really what the deal is to ship it to Germany want it so that we're very sunny and you take it from the Norwegians when it's not right. I mean you know when you know so that in fact there are tricks in all of this to the second point you made was about. Yeah. The problem. Actually yes that's the real issue is should we be investing to absolutely the real problem is where it is where is the intellectual property you know how and OK it's a big question and I think it's one of the central questions out there. My own and what my own view is we're trying to run a project in Berkeley trying to team up with a series of countries and someone from here would be delighted you know can we define what the what the legal frameworks or the business model framework should be appropriate competitive or pre-commercial or basically choose your term dependent means different things. Research so that in fact when it's calles in China it in fact doesn't simply slip completely out of the grip of the Western company the Western sources of technology and that perhaps I'm sure it's true. I don't know Georgia Tech very well but it Berkeley now we're doing new projects with Singapore with China with over a very a variety of places. So if we spend all of the money developing this technology are we in essence becoming the tech but keep in technology source for another country's move in that direction. So I agree with your question is how do we benefit. How do we share in that scale and what are the models that we can define to do that and I think it's concrete. It's a matter of when we sign the next deal what should it. Say you know so I agree with your concern and your objective and I don't have a I don't know how to do it at this point. Yes sorry you had a question back there than that louder though that you're getting right. We are living on you know what I've read that you know you're lying right here but I don't know. I literally don't know how to answer that question let me tell you why I don't know that is let's start with the last piece of solar panels with which technology. OK today solar panels we're going to buy from China are tomorrow solar panels going to be a linear extension of the silicon based story that we're currently saying maybe maybe not. Are there going to be breaks in that kind of way. There is a risk that what you're saying is that we end up buying the technology elsewhere. I think there's enough sources of innovation in the course of a particularly of grid and the like but in fact it may not be deadly. But I think it'll take some time. OK So I think it's a it's a question. It's not for which I don't have made answer I'm going to take this young lady than Michael then you. OK And then I'm like well I don't think I mean I'm not sure that there will be a reaction to the I mean the another way of putting it is that going to be an American to listen cleantech if you will places like Korea and Denmark aren't big enough to play the game so they're going to have to export one way or another and they want open markets. There's going to be a competitive rivalry in these technologies. OK so I'm not sure. It's how will the global sources react I mean the question is how will G.E. compete with them and so forth you know. So there will be a global competition in this area that will be backed by governments in some cases domestic markets will be used under W T O rules legally and illegally to time promote those interests and work it's going to be a source of I will be a source of conflict contention if anybody starts making money. It'll be a big deal. You know Michel and then this gentleman right here. So to put it bluntly the United States we have a bit of a policy problem with trying to set up the types of systems that you're talking about trying to get the right regulations in place to enable market forces to take further more we have less crises we're all behind in spending right now. So a lot of money that level to fund sort of a shift from brown to green is limited so in your opinion what is the best. Where should the focus be because right now political forces on the right and left are all over the place on this issue trying to do everything in their homes. You know is there a better target even though you may have an edge smart grid is it better to concentrate on the state respective on investment in R. and D. is it just your state or vice investment let the market. Let's market and navigate decide what to invest in what should the state really try to make a concentrated push towards accomplishing some sort of regulation to raise the price of running or you know where where should be of this is if everything's we have to do something you know I think part of it is with the election. Whatever you think of it. It's going to come and with the failure of COP fifteen. Everybody is taking a deep breath and trying to decide what they think the appropriate approach to those kinds of questions actually will be and I think opiate of my own view is in some ways we need to start over. But is there was a remarkable moment when in fact people started to understand that there was a real climate problem when people started to see that that was the case and that's been missed. So in some ways the education process. In some very basic way start over across both of them cross the whole set of banks then the fights are at the at the local and state levels in many cases can we create models can California continue to grow in which the real cost to a company of energy is low right now the energy cost California has been remarkable in that its its economic growth has been on a per capita basis a steady use of energy. We don't we. We have not used. We have not expanded the use of energy the cost the companies because the energy cost total energy use this down. Is often low even if the actual unit energy is higher. So I think we're going to see a fragmented set of approaches for the next few years certainly in this political environment that's the best we can hope for this gentleman had a question about there there is absolutely there are two different there are multiple conversations that have to happen simultaneously. OK one set of conversations is obviously how do you move a broad populace toward accepting the idea that they may have to in the short run paid a premium for energy in order to avoid longer term problems. My own view of that is you start by trying to make the case that there is a climate crisis for example the green growth story. The question about the threats. If you are speaking to Paul. Makers in various countries that is a big deal for them because they can look ahead and see that that person who didn't care whether or not they bought their solar panel will from China or from locally in fact does care about where the jobs are and when it comes to voting if they can in fact support that and sell the notion of jobs they can probably push through policies they couldn't push through otherwise. So that in fact I would separate out I don't think that some of the arguments time I was making would sell and would sell on a mass television network they do sell and policy circles. You know and they do sell you know if I mean if I mean my own view is when I have family in Texas and I sort of meet old military senior guys down there you know the story I say is OK so you folks really are committed to making the US a second rate power. You know so that I mean you take. I mean depends on the audience right. I do think that's a consequence of not acting on that's OK is that the US becomes a sort of that's what they care about. I want to the conversation in terms of something they care about this gentleman here how many more sorry when he yes I'll take this gentleman and then I'll take the young lady simply because we're going on gender discrimination way in the back. He's been waiting. Thank you Will remind you that Bryan won the world. The regulation of this one will be all. Here's what I'm going to do I may take all three questions and I'll try and answer them. Thank you. That's a great that runs knowing my interest for a long time and he knows that he's trying to get me to talk about those things at which I will. Yes I'm going to go deep under the rubric markers used to be the best new technology. There's just no money you do all we use basically almost all winter when you know the world and yet it's been negative some gave them where all you see growth you know with all of your state where goods that you're really you know ROOM. Yeah you know whether I'll come back to that second perfect book about so long here and actually our I don't see how us not from here. I mean if you are looking for a home to your home which is all. Well you know happy but he'll be like you know hold off on all of that me while he is the one that was necessary because we don't hold any green or I mean we survive here. We asked him to let me take the two last questions as a set and then respond to them with what Brian had asked the first as the reason the Danes went to a low carbon strategy was not to promote wind technology they went to a low carbon strategy because in the seventy's when the price of oil went up they decided it was just they had to reduce their dependence on. Imported oil because they couldn't afford it. The second is as you may as you certainly know the Danes employment problems do not they do not have an employment problem in the private sector to the extent they have a productivity problem at all. It's in the public sector where they are now addressing it by introducing new information computer technologies the the windmill technology is an export item for them and overall helps them address that that issue which is they need to not be importing oil and they need to not be importing energy. So their problem is very different. They don't have the coal one way or another. So I mean from their standpoint that makes sense exact balance of the outcome is what it is OK. The issue on coal. You know the problem is you can't convert coal and coal doesn't. Coal is a source for electricity generation it isn't a source for cars and other kinds of things. If you move cars from oil to electricity you in fact improve the improve the situation if in fact we in any way want to in fact limit the levels of emissions coming out of the rest of the world if we moved to the use of coal. We don't control our own emissions we'll never get a deal of any sort whatsoever. The other thing is over a twenty twenty five year period the ability over time and I I do take this to be the case someone suggested that there was a suggestion that ten for ten years that we're going to start seeing solar power in particular to become competitive with coal that is increasingly the belief. That's what I'm starting to hear. I actually was. And when I was in Brussels one of the solar producers actually said to the big A S F which is one of the big chemical companies. I said to one of the senior people there will sign contracts today we can deliver we can deliver solar called price. It's sort of based on. Electricity a cold prize a guy of course says you know I have a lawyer in the next room you want to sign a contract and they were postponed I think they can get there. I think the real issue is is that I think people will get there. I think there will be advantages in those kinds of technologies and I think there will be exploited and I think that the U.S. will not be a player in those what become the emerging new technologies over the next years. That's the real risk the other part is I don't think that you know dirty coal is sustainable question is is some form of clean coal possible. There are a whole array of projects in China with Duke Energy here and Lawrence Livermore the bomb lab in California and they're heavily invested in those areas. So the question becomes what can you do do industrial policy. I mean the old industrial policy tools in a funny kind of way we're seeing in Korea. You know which is we're going to define a direction to go. We're going to try and use financing to get there. We're going to try and use domestic demand to get there and we're going to try and find export markets that allow us to recuperate some of the kinds of cost. I don't think that very many people can play that game. I think you know I don't know what the Japanese are playing that they don't appear to be in that way but you'll tell me more about about that. I think that really is a question is a lot of the old what Brian really would suggest is that a lot of the old tools that were available in the sixty's and seventy's and eighty's which one watched control of the financial system of where flows of money went in the economy aren't available anymore. So there are alternative ways of trying to promote this transformation. So maybe we end with the question. Thank you very much.