Eric Schmidt on Strategies and Solutions for Energy Security

>>PRESENTER: I want to great everyone
here tonight. I’m Frances Beinecke. I’m the president of NRDC, the National Resources
Defense Council. We have a lot of friends here from NRDC, and
I want to welcome you and also welcome, or at least join, all of
the people who are here from Google. This is a great evening for NRDC. We’re at
a real moment of change in this country, and the key issue that we’ve
been working long and hard on which is curbing global warming and the intersection
with global warming and a new clean energy future, and how that
gets addressed in the current economy is absolutely top of
mind for us. We’re very fortunate tonight to have
Eric Schmidt from Google address that issue. He has been a great leader, and as I think
you all know, is involved with the President elect’s transition economic advisor teams,
so I think this will be a wonderful opportunity for us to hear directly from him how he envisions
a clean energy future and how that merges with
how we can move the economy forward. We have many great friends here tonight, and
I just want to recognize a few. Our chairman Dan Tishman who is – where
is Dan? There is Dan. Welcome Dan. Of course, our founding director John Adams,
who needs no introduction, but is one of the great leaders in the environment
movement for many, many, many decades.
What we’re going to do is Eric is going to begin and tell us a little bit about his views,
and then I want to introduce two other very important people.
Dan Reicher is the director – I have to get this right – of climate and
energy initiatives at He’s also a former NRDC staffer, of which
we’re very proud. He’s currently on the Obama Energy Environment
Transition team too, as well as being a former assistant secretary
for efficiency and renewables in the Department of Energy, so he is a true
expert. Joined by our own co-director of our energy
program, Ralph Cavanaugh, who for 30 years, has really been leading
the charge on how we promote energy efficiency and develop a new energy
future for the United States as well. This is an amazing team, and Eric’s going
to start off and give us his views and strategies of how to move forward, and
then we’ll have some questions and conversation among us, and then
questions from you.>>ERIC: Well, thank you. I’ve had the privilege
of working with NRDC, and with Frances, in particular, for some
years here. This organization is the organization that
gets stuff done. There are a lot of organizations that sort
of talk a lot, and something about the construction – and I think we have a few people
who know how this was done, and I am certainly in awe of what you did
– you managed to figure out both the policy and the enforcement side of
what you’re really trying to do. If there’s anything that I can say about the
NRDC, this is an organization that’s worth supporting, following, and participating in,
partly because of Frances’ leadership, of course,
but also because it’s a systemic solution to a big problem.
It’s been around for a long time, and it’s got a pretty impressive track record.
My story – it’s easier if I tell this as a story – is I went to an NRDC event,
and someone said 40 percent of the energy and emissions comes from buildings.
I thought, “Wow, that’s a big number,” and they had one of these terrible slides, we’re
all going to die and so forth and so on. [laughing] I thought that’s one thing that I can –
we have a lot of buildings. I called the Google folks in, and I said,
“Hmm-m, what are we doing about the 40 percent?” They go, “Oh, well we have this idea, that
idea, this idea, that idea,” and I said – I put on my sort of republican
CEO tough guy tone – “What’s the payback?” and they said, “18 months,”
and I said, “What?” I said, “I don’t have to pay for this?” They
said, “No,” so I said, “Why don’t you do it?”
“No one asked.” This is a real conversation. [laughing] All of a sudden I realized all I had had to
do was to ask. These people had been coming up with ideas.
They had done the math. It is relatively straightforward. These are
positive NPV investments. I said, “Good. Do it. Come back when you need
more money,” so they did it. Of course, we have millions of dollars of
savings at Google, which goes, by the way, right to our shareholders, so
good republican behavior, and by the way, it’s the right thing, so I
learned a lesson. You have to ask. Those of you that are in charge of things
or participating in this, it’s time to act.
You can sit there and you can say, “Oh, woe is me. This is a problem,”
and so forth. Take action yourself. After replacing all the light bulbs, by CFLs
and so forth and so on, it actually begins to compound.
Then they show up again, and say we have a new idea, “Let’s have the world’s largest,
private solar generating system here on campus.” Okay, and one of the side benefits is that
you have carport which has solar panels on it, which shades the cars, plus you can have
a little plug. With the electric cars, you can plug them
in right to the solar panels. Perfect. “How much does it cost?” “Oh, I don’t know,
not that much.” “What’s the payback?” “Less than ten years,
and we have these great tax credits which are about to expire.”
“Even better. Do it.” All of a sudden and for awhile until about
six months ago, we had the largest, 1.6 Megawatts in fact, which covers roughly 20 percent
of our electric needs in our campus. Again, what’s the compound of that, as our
electricity rates rise over 10 years? These are very conservative assumptions.
It’s a no-brainer from a shareholder perspective. My point in those two stories is that you
start, when you actually do the math, you discover doing the right thing is also the
right thing for business. If there’s any message that you should take
out of NRDC’s involvement in this, and certainly my involvement, is that you
don’t have to choose a good or a bad outcome.
Meanwhile, Dan Reicher shows up. We have a philanthropic on him.
We give it a couple million dollars grant for energy efficiency to NRDC.
We meet all these interesting people. He comes in and he says, “We can do better.”
We start looking at energy efficiency. We start looking at renewables.
We start looking at technology. Google’s an information company, not so much
an energy company, so we start building things that involve smart grids and so forth,
and I’ll talk a little bit about that, but of course, he’s the expert.
This proceeds, we make investments in solar, in histiothermal, and wind.
We have a detailed strategy, tens of millions of dollars in investments
in companies trying to get it kick-started, because I’m going to run out of normal conventional,
oh yes, perfectly reasonable NPV decisions as a company,
unless these new technologies become available. We’re a significant user of power, so I’ve
got a good business reason to do it, plus I have a good social influence, also a good
reason to do it. We’re having this conversation, is there a
way – question – is there a way to solve every known problem at once?
I’m tired of everyone complaining, right, I’ve learned something here,
which is that you do the right thing, you can solve multiple problems.
Let’s go through the list, energy prices are too high, energy security –
how many wars are being fought over oil now and in the future?
What about job creation, especially in the rural areas?
What about building businesses that are exportable outside of the United States
to create wealth for Americans, always a good thing in my judgment.
Oh, and by the way, why don’t we solve the climate change problem too, at the same time?
Wouldn’t that be great? Yeah, sure, right, absolutely, so we had this
debate. The first calculation was it would cost a
trillion dollars, and I said, “Yeah, it’s easy to get a trillion
dollars, just put to the head of the congress.” [laughing] Oh sorry, wrong discussion. Sorry, that was
a different conversation. It’s only a trillion dollars. You can get
it in a week, okay. By the way, that’s over 22 years. MTV is 200
billion. U.S. energy business is about 1.5 trillion
a year. Two hundred billion in present value of investments
over 22 years is not that big of a number.
We published that model in September, and I’ll take you through it,
because it’s open, people actually criticized it.
As a result, we discovered some errors in our calculation, and guess what?
We started to make money. At $4.00 a gallon, we actually make about
$1.8 trillion, as opposed to losing a trillion, so now it’s
hard to argue with me. At $3.00 a gallon, we’d make a trillion dollars.
It is pretty neat. It doesn’t get better than this, guys.
Here I am with my businessman hat on making a trillion dollars,
which everyone could use, plus we’re going to solve every known problem at once.
How do we do this? This is pretty good. The first thing we do is we separate out energy,
essentially generation, from transportation. Remember, energy generation is primarily coal
and natural gas, mostly coal, in the United States with some nuclear and so forth.
Is there a way to take all the fossil fuels that are currently being used, roughly 70
percent of most of the electric power used in the United States,
and replace it, because you remember, these plants die.
They have to be replaced and so forth. There’s new demand.
With some assumption, including holding energy efficiency per citizen,
that is energy consumption per citizen, constant –
which has been true in California since 1973, not true in many other states – we’re
able to take the money that’s saved from that single idea,
and plow that into the construction of solar, wind, enhanced geothermal,
as long as there’s the proper grid to get the stuff around.
I’ll come back to that. The math works You say where do we get the trillion dollars?
It’s turns out that’s roughly cost even in the current calculations.
You can read all of this, using your favorite search engine,
just type “Google 2030 energy plan.” The second thing that we do is take a look
at transportation. Most of the issues around oil are really related
to cars and trucks. Trucks will be solved largely by LNG fleets
and other kinds of things like that, but cars are this huge opportunity.
It turns out that in the middle of all of this, Google and a number of other companies,
but in particular, Google – and I think under Dan’s leadership,
so I’ll give you a little bit more credit here too –
came up with this notion of plug-in hybrids and getting people using them.
As you know, what a hybrid is, is it’s got a mixture of a battery and –
essentially think of it as an electric engine and a gasoline engine.
The electric engine uses the battery, and so forth.
Plug-in hybrids essentially have a bigger battery,
and they use the battery more, is the easiest way to understand it.
The latest technology uses the battery to power the electric motor,
and that when the battery runs down, the gasoline engine turns on, charges the battery, battery
powers the electric motor, car goes off. What kind of efficiency can you get with such
a device? About 100 miles per gallon.
If you assume fleet wide increases in roughly doubling from 37 to 70 miles per gallon, all
of a sudden you save a trillion dollars, right, because gas prices held constant over the
number of miles, and so forth. Now you’ve got to get those cars in people’s
hands. You actually have to build them, so in our
plan – and you’ll see this – we actually accelerate the buy back of polluting
cars, also known as our current cars, and so forth.
We presented this, and people said, “Way not aggressive enough.”
I said, “Not aggressive enough? We’re already making a trillion dollars solving all known
problems? Like, what’s your complaint?” “Well, the first thing is you haven’t accounted
for basically carbon sequestration for coal?” “Yeah, but that’s positive to our model.”
“You haven’t accounted for the possibility that nuclear can be made safe.”
This is like skeptical, right? I said, “That’s positive to our model. You
can prove that, we’ll add that too.” Then somebody says, “Did it ever occur to
you that if you made cars twice as light, not twice as heavy, so half the weight, using
carbon fiber and other technologies, and maintaining their
current strength and survivability, you’ll get 200 miles per gallon?”
Positive to the model, better design, so forth and so on.
You can get the gasoline part of transportation down to 5 percent or 10 percent of what it’s
used today, and wouldn’t it be nice to cause the demand for petroleum to drop dramatically,
after everything that’s happened to us and been done to us?
Let’s get back at this. I remember. My point here is you’ve got a plan that spans
both, so how do we put up this plan?
Well, in the first place, we need some cash. Thank goodness, there’s a whole bunch of cash
about to happen, and I’m not talking about the bank bailout.
I’m talking about the stimulus package, and President-elect Obama, thank goodness, has
talked about that if you’re going to have a stimulus package,
you might as well invest in roads, bridges, schools, broadband,
and energy efficiency, and these kinds of things.
Perfect, how much money do we need? “Oh, a few billion dollars.”
These stimulus packages will be big enough in our little corner,
the one we’re working on, is relatively a rounding error,
compared to the scale of the numbers that they’re talking about,
so this is achievable, so that’s where the money comes from.
There’s another thing that we need – and this is what I’m going to end on –
we need intelligent regulation, and intelligent regulation recognizes a couple
of things. It recognizes first and foremost that most
of the money is not with the government, it’s in the private sector.
It recognizes that incentives need to be designed so that private money comes in.
Here’s an example. What’s the best stimulus that you can do?
Give money to the energy efficiency programs that are already in place at the state level
run by the utilities. In our plan, we have $10 billion for that.
It immediately goes to work. What’s the best insulation program you can
do? There’s already a low income weatherization
program that’s unfunded, authorized, and in place.
How much money do you need for advanced R&D? You can’t soak up more than $2 to $3 billion
in investments, and that money would go to take over plants in places like Michigan,
where their people don’t have any work, where there are sophisticated
and high-tech workers who could actually build the battery
and the battery trains that we need for this kind of architecture.
Without going through it number by number, believe me,
we’re got the numbers that add up. The second thing that has to happen –
and I want to emphasize this – is that there is this infrastructure problem.
Now, I’m a computer scientist. I think about the Internet,
and I look at the electric grid and I say, “Why is the electric grid the same as it was
in the 1960s?” Because nobody cared. Nobody tried to build
a grid that was flexible, scalable, decentralized, and had decentralized control and the ability
to get on and off. In the vision, which we’ll talk a lot about,
of a smart grid – here’s an example – you guys have all the batteries sitting
in your cars? What are they doing in your garage?
Why can they not add to peak load, when peak load is needed?
The utilities say that the highest cost of being a utility is not average load, but peak
load, which is in the afternoons. Right, plug your car in, draw the battery
down, charge it up at night, straightforward. Seems obviously, right? You can’t do it.
Because the computerization of the Internet and so forth,
it seems obvious, right? The grid is not organized that way. That’s
part of it. The other part has to do with transmission
lines and sort of a lack thereof. Here we are, private sector, billions of dollars,
solar, wind, so forth and so on, plus the stimulus package
to get it going, all those unemployed workers, all the suppliers
just ready to go. All of these people buying up desert in New
Mexico for cheap, thinking that they’re going to put their solar panel
there, and then they discover they can’t connect to anything to get it out,
and so the land is worthless. There are proposals now for very, very sophisticated
transmission systems throughout the west which are needed for this,
which are currently on a fast track to occur in ten years.
We don’t have ten years, guys. Look at the map of climate change.
You want to be in a hurry, look at the compounding, look at the math.
We don’t have time, so there’s a series of things that the federal government, in particular,
can do around renewable improved quality of standards and interconnect agreements to accelerate
that. The money is there. The utilities are willing
to do it. The private sector is behind it. I would argue
that the compelling need is there, and I will finish by telling you, I cannot imagine a
better use of everybody’s time than getting the energy infrastructure of America rebuilt.
It solves every interesting problem, all of the things we care about,
all the things you care about, and it is achievable, and it’s the perfect American challenge.
Thank you very much. [clapping]>>RALPH: I’m Ralph Canvanaugh, the energy
program co-director for NRDC, and the plan for the rest of the evening is for me to comment
very briefly on Eric’s remarks, and then initiate a conversation which will
quickly draw as many of you in as we can, so be thinking about your questions.
Now, what I wanted to say about the Google 2030 clean energy plan,
is that what you’ve just heard is a quite wonderful rebuttal for the most common mistake
that has characterized American energy policy for 30 years,
dominated the congress that entire time. It was referred to during the recent presidential
campaign as the “all of the above” strategy.
Its fundamental insight is that to meet America’s climate and energy challenges, you got to
do everything as rapidly as possible, all the coal,
all the nuclear, all the gas, all the renewables, all the energy efficiency.
The Congress of the United States never met a resource that it didn’t like,
and if you’ve got an articulate lobbyist or an attractive scale model –
and sometimes you only need one – you can be reasonably assured
of being included in the next federal energy bill.
The problem is, we don’t have unlimited resources, and Eric has laid out
the time constraints that we face, and all of the above just doesn’t work.
What he has given you instead, is a system where, after letting winners and losers emerge
on their merits, you have a future you can believe in,
driven by and dominated by energy efficiency and renewable energy.
To tease out just a couple of pieces of it, and give you a sense of what we’re trying
to do to realize that vision, notice the importance first of two things
that he talked about a lot that most people never talk about in this context.
One was the importance of energy efficiency as a resource.
When I subject Dan Reicher and Eric Schmidt to merciless cross examination,
I’m going to ask them a question about energy efficiency that all of you want me to ask,
in terms of why groups like NRDC have not been able to make it sexy.>>ERIC: Why have you not been able to make
it sexy?>>RALPH: I’m going to answer that question.
I’m going to answer that question by turning to my friend Dan Reicher and telling –>>ERIC: He doesn’t work there either.>>RALPH: He doesn’t work there either, but
Eric, he did at one time.>>ERIC: You work there.>>RALPH: He’s a credible guy, and he’s going
to give you the first insight into how we’re going to make it work.
The good news is even without making it sexy, we have succeeded,
Eric, to reassure you just a little bit –>>ERIC: Okay.>>RALPH: – in actually making it a
very high priority resource, an investment candidate
for a sector you also talked about that most people don’t,
which is America is more boring, down home, hometown utilities.
The electric and gas utilities that connect through their wires and pipes to more than
half the global warming pollution in the U.S. economy.
A critical challenge – if you want to think about the investment Eric was talking
about, about what we need to do to realize that efficiency and renewables vision –
the utilities are incredible. They manage those ancient grids he talked
about. They make the investments in the renewable
energy resources. They’re in a position to push energy efficiency
as an alternative to power plants if you give them an incentive to do it.
For most of the utilities in the United States, for most of its history,
they had perfectly perverse incentives. If their customers used less energy, they
automatically lost money. If they bought renewable energy from an independent
supplier – and more and more of them want to sell – at best, they could
past the cost through. They had no earnings opportunity, comparable
to what they could get if they built one of those coal or nuclear
power plants. What did you get for most of the history of
the utilities with those sorts of incentives?
Unsurprising and wholly uninspiring results, and that’s changing.
What I want you to know is just this past Tuesday, NRDC and the nation’s utilities,
the Edison Electric Institute, which represents them,
which I expected to spend my career suing, went before the national association of regulatory
utility commissioners and essentially embraced Eric Schmidt’s vision.
What we said was, “We are prepared to go before all of you state regulators to change the
rules, so that energy efficiency and renewables are profitable
for utilities, if done well, and so that utilities as a collective whole,
those entities that account for half of the global warming pollution,
can together work with us, with all of you, to get there.
The goal is easy, simple, maybe not sexy, but rather compelling.
It’s all cost effective energy efficiency, all the energy efficiency we can find at lower
cost than power generation it replaces, and the Google energy 2030 plan
gives you some sense of how big a deal that can make.
Two other very quick points – one of the most powerful engines for making energy
efficiency happen at the scale we need it, as quickly as we need it,
is to lock in the gains we get through the incentive programs
in efficiency standards. There’s a lot more we can do there.
The nations utilities pledged on Tuesday to join us in advocating
more aggressive efficiency standards in every category of energy use.
To give you an early example of the success of that partnership, most of you probably
didn’t even realize that just within the last year,
we managed to get an efficiency standard passed by the federal government,
drafted in at NRDC, with Google’s support, that will affect every one
of America’s four billion sockets that light bulbs screw into.
I bet you didn’t know we had four billion sockets.
A large fraction of them represented in the homes in this room. [laughing]
Every one of those four billion sockets, every one of them, will dramatically improve its
energy efficiency by 2012, and even more dramatically by 2020.
By 2020, the average light bulb will use less than a third
as much electricity as it does now. The notion is performance-based standards,
guys. You don’t dictate the technology. You set
the standard. You let entrepreneurs figure out how to meet
it. I think what I want to do now is begin a conversation
about the last, and maybe most important part of this discussion, how
are we going to get congress. The one thing we clearly need congress to
do is to act on climate, set mandatory limits on global warming pollution.
This is a group that will have a lot of say about
how that happens and how quickly. As a way of initiating that conversation,
I want to ask my friend, Dan Reicher, former assistant secretary for energy efficiency
and renewable energy, the question that I was asked at the most
recent NRDC staff meeting, and Eric, it was not quite the one I just
framed. It was even more embarrassing, from my perspective.
It was how can we make energy efficiency as cool as Google?
Dan, I know that you have thought deeply about that from both institutions,
and I know that you have at least an initial illustration to provide
as to how this might be done.>>DAN: Well, thank you, Ralph, and Eric, Frances,
John Adams, great to see you all, great to be here.
I’m really thrilled to be able to participate, and this is the question
that we’ve been struggling with for decades, which is the low hanging fruit,
as we call it, the low hanging fruit that in fact grows back.
You go from incandescent bulbs to compact fluorescent bulbs.
You go from there to LEDs. Energy efficiency is what we’ve really got
to move into this system, and we have not succeeded very well in doing
that, despite lots of good work. I think we’re on the verge of this turning
around, thanks to work by organizations like NRDC
and people like Ralph. I was talking to Ralph earlier, and my greatest
moment during my eight years in the Clinton administration, my most fun
moment, involved energy efficiency standards, not one of the most exciting achievements
of the Clinton administration, but we were, in fact, after lots and lots of work,
hundreds of pages of regulations that we set, we were issuing a new standard for the efficiency
of refrigerators, and NRDC had pushed on this very hard, as
did other groups. Secretary of Energy said to me, “So, Dan,
I’m getting up to make this announcement about the efficiency of refrigerators and standards.”
– to him not the most exciting thing in the
world – and he said, “So, what should I say?”
I said, and I thought to myself – you know – a week ago, Mr. Secretary,
the President of the United States gave his second inaugural address
and he talked about building a bridge to the 21st century, and I said,
“Why don’t you get up and announce we’re building a frig to the 21st century?” [laughing] It was the quote of the week in Newsweek,
front page in The New York Times. I said, “That’s it. I’ve done it.”
Two weeks later, we were announcing an agreement with the mining industry
about how to improve their energy use, cut pollution,
and he said, “So, Reicher, what am I going to say now?”
I said, “Well, Mr. Secretary, why don’t get up and announce that,
“After all, a mine is a terrible thing to waste.” [laughing] He said, “No, you do that one.” [laughing] In any event, the first step is humor.
We’ve got to put something around this, but more seriously,
I do think that energy efficiency is really the opportunity
that we really have to exploit. It achieves everything we need to achieve
from an economic, environmental, and security perspective.
I will leave you with one, what I think, is a big thought
on how to make this happen, and that is, the power of information.
I think if you sit back and realize what you get once a month in the mail,
which is this paper bill from your utility, and realize how little you understand from
that other than how much you owe and where to send
the check. That’s all you basically get.
Imagine if you actually had real time information about your own energy use?
That’s something we’re very interested in at Google, bringing this to people,
and we’ve begun to experiment with it, and five days ago,
I had a little unit installed in my house, and I now can go on my laptop, and at any
given moment, get real time information about the electricity
I’m using.>>FRANCES: Or that your household is using?>>RALPH: That my household is using, so I
called up my wife last night. I had been away for a couple of nights, and
I said, “You know those two lights in the front hall?
I think you left them on.” She hated me for this, but in any event, information
– I think – is going to be very empowering for people,
in terms of energy use. Added to that – I think –>>ERIC: Dan, you should use a different story.
We have another engineer that has reduced his consumption by some huge number?>>DAN: Yes, so we have an engineer at Google
who did the same–>>RALPH: With no assistance from his wife.>>DAN: No assistance from his wife.
He started monitoring his own house, and he realized that he had not one,
but two refrigerators, and he looked into how old they were.>>ERIC: This is typical of engineers, not
knowing exactly where they live, and those kind of things. [laughing] He looked into them, and he realized that
they each were over 20 years old. Trying to figure out why he was using so much
electricity, he went online and, in fact, discovered that these were among the biggest
energy users of all refrigerators ever built, and he replaced
both of them. His electricity use dropped by 50 percent,
so he got some information. It didn’t take much time to do something with
it. He made a change in his house, and will receive
the benefit.>>RALPH: If he’s a Californian, his utility
paid to cart that refrigerator away, and captured the chloro-fluoro carbons from
the insulation.>>DAN: He got not one, but two, incentives.>>FRANCES: If he lived in New York, that probably
didn’t happen.>>RALPH: What I want to do is ask Eric and
Dan the two skeptical questions that many of you want me to ask them, and
then we’re going to open it up to all of you, and Frances is going to manage the conversation.
The first skeptical question is, okay, guys, that was all very well as of mid 2008, but
now there’s a looming recession, fossil fuel prices are going in the opposite direction
very rapidly. Why won’t we simply slip into apathy and paralysis
once again, and indefinitely defer the future you just
described to us?”>>ERIC: You want to go first, Dan?
In the first place, I’m not sure that all fossil fuels are falling indefinitely.
People are aware that gasoline prices have come down.
All of the arguments are still true, even at the current prices.
I suppose if gasoline went down to 10 cents a gallon, we’d have a different situation,
but gasoline is still higher than it has been for many, many years.
There is every reason to believe that the same incentives are there.
In addition to that, the government has wisely increased the standards
to 35 miles per gallon, although it’s been delayed.
Let me point out that China has implemented one to the same number right now.
Once again, there are many reasons to go forward, and from my perspective,
the arguments that we’re making are really independent of the current prices
because a long-term trend over a long enough period of time – we’re running
out of these things, guys, and when you run out of things, prices go up,
it’s harder to find them, people fight wars over them, and so forth and so on.>>DAN: I’d simply add that – I think
– in this crisis that we’re facing is this great opportunity to make the kind
of investments that we’ve long needed, and we finally have the justifications.
We’ve had the environmental justifications. We’ve had the security justifications. Now
we have an economic justification. The electricity grid desperately needs to
be rebuilt. We need to build 20,000 miles of transmission
lines, if we’re going to move wind from the Dakotas to Chicago, or from the desert to
Los Angeles and Las Vegas. We need to put a smart meter in every home
in the United States, so that all of us can, in fact,
take advantage of real time information and real time prices.
We’re tens of billions, hundreds of billions of dollars should be spent,
can be spent, with huge economic returns and huge benefits
from an environmental.>>ERIC: The other thing to note is that there
is a series of cap in trade bills in the congress which are clearly going to
get debated in 2009. In my conversations with senators and congressmen,
they believe that these systems, in one form or another, will be implemented during this
coming session, which is a 2-year session.
Even if you assume, collapse the previous prices, and so forth, with cap in trade in
place, the incentives around efficiency become so much clearer.>>DAN: What also comes from that are the revenues
that are derived from, essentially, auctioning the permits for greenhouse gas emissions,
and those revenues are very significant, so instead of having to,
in a sense, use taxpayer dollars, as we will in this initial stimulus, we will
have a new source of large amounts of fund that can be invested in these changes that
we desperately need to make.>>FRANCES: I was just going to say to Eric,
you’ve been talking to members of congress about cap in trade program, but you’re also
in conversations with other CEOs, leaders in the business community.
Do you see them joining you in this view that this legislation has to pass?
Where do you see the business community, your peers, are they in these same conversations
that you’re in, or what do you think is going to bring them along?>>ERIC: You have some sympathy for the utility
executives, because they have a lot of stuff coming at
them. They’re regulated. They have all these people
yelling at them all the time. They don’t necessarily have a technological
leverage point that a lot of other businesses do.
The CEOs that I’ve spoken with all express a concern that cap and trade
be done in such a way – you have a problem with cap and trade of what’s
your starting point. Once the starting point is established, it
looks like the market worked pretty well, but the primary concern is actually a tactical
one. If you’ve already made tremendous efficiency
gains, you’d like as part of starting in the cap and trade system, to not be penalized
for that good work. You don’t want the worse polluter to get the
largest gain, so there are many people working on making
sure that the starting conditions for cap and trade
is such a thing. That’s, in fact, what I hear.
Most of the people that I’ve talked with either accept, or grudgingly accept, that there will
be a cap in trade, because they all have families and children,
and they all understand that eventually, you’re going to have to put
a price on carbon. There are some people – and I was in
a meeting on Tuesday where we had this, sort of, I thought, relatively bizarre argument
among the utility companies of whether it was better to have a carbon
tax or a cap in trade system. There are complex arguments in favor of the
two, but I observed that one has the word tax in it, and the other one does not,
therefore the other one will win. [laughing]>>FRANCES: I want to ask you all to join me
in thanking Eric for his time. [clapping]>>FRANCES: Thank you, Ralph. Thank you, Dan. [clapping] Thanking our host at Google.
It’s been a great evening, and you will all see how this unfolds over the next many months
and many years. We have a lot to do, and we’ve had a great
conversation about what the path is that we need to take, so thank you very much
again. [clapping]

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17 thoughts on “Eric Schmidt on Strategies and Solutions for Energy Security

  1. Nice speech.
    We all know that energy is the issue.
    Public Transportation and Energy are connected.
    We all hate modern air travel
    We all dream of cheap fast simple hassel free travel.
    The solution is Cool Public transportation-High Speed Linear Motor Train Lines.
    3 points.
    1. China has had this train for 5 years.
    2. American Industry can tool up
    3. trains are great to use google on your android


  2. This is the track we need to be on but how do we deal with the energy companies raising the price of their services for buying in to this.

  3. I lik Google too. But they're not completely good, there's some issues, but overall and apprntly it's a gr8t comp. alot better than many others…

  4. "doing the right thing is also the right thing for business"- Likewise, when it's NOT cost effective for certain technologies- wait until the technology is available.

  5. "…, what about building businesses that are exportable outside the United states to create wealth fot americans…".

    Not a good movement. I would like to reply with a quote: "When the power of love overcomes the love of power, world will finally know peace." Google the author if you want.

  6. Glad to see a few years have gone by since this speech, and we've made very little progress in terms of reducing consumption of coal and oil. Wish he would give a new speech and describe what the hold up has been. Not blaming Schmidt at all, just feel a little let down that the country hasn't done more.

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