Eric Schmidt at the WSJ ECO:nomics conference


Uploaded by Google on 11.03.2009

Transcript:
[applause]
>>ANNOUNCER: Eric Schmidt.
[applause]
>>ALLEN: Eric was back stage so he didn't see the Jeff Immelt video and what he has
to live up to tonight. Google has an energy plan.
A national--the nation may not have a national energy plan, but Google has a national energy
plan. I have seen you in the last 4 months on Meet
the Press, Larry King, The Neal Cavuto Show, The Rachel Maddow Show.
I mean, the only person I've seen on the tube more than you in the last 4 months is Boone
Pickens. Why are you doing it?
>>SCHMIDT: Because energy matters. If you go back to the survey that you showed
at the beginning--people say the environment doesn't matter.
But the energy matters a lot to them. And the way you solve the environment problem
is you solve the energy problem. From a Google perspective it's the right thing
to do for the world. It's also good for our business because we're
in the information business. And a lot of the energy solutions involve
a lot of information.
>>ALLEN: But that would have to be a pretty small part of your overall business--energy
information.
>>SCHMIDT: But we're happy to make money everywhere.
[laughter]
>>ALLEN: You know, I always thought the way Google worked was that Larry and Sergei were
out doing no evil, and you were back home running the company.
>>SCHMIDT: Yes, that's all true.
[laughter]
>>ALLEN: Has that started to change?
>>SCHMIDT: Are you implying that they're beginning to do evil? No.
>>ALLEN: No.
[laughter]
>>ALLEN: No, I'm implying that you're out in--I'm going to talk about the details.
I'm going to talk about the details of your energy plan, but I think it's interesting
to have you--
>>SCHMIDT: It seems to me that we are in a situation where people--and there are many
people in this room. You've got to get out and take a stand.
So we talked about it. And Larry and Sergei talk about it a lot.
And Larry and Sergei have been interested in this for a very long time.
We need to take a stand. We'll put up a proposal, and you can shoot
at us. But at least we put up a proposal, and at
least you can judge on us based on what we said.
>>ALLEN: Yeah.
>>SCHMIDT: And I think the more of that, the better.
You've got a number of authors of such proposals here at the conference, and I think that's
great.
>>ALLEN: So you gave one of--one of the early speeches you gave on this was in September.
I pulled something up off the web where people were commenting on it.
A shareholder says, "I don't want Eric Schmidt out there talking about green energy investments."
"I understand they consume a lot of energy, but that doesn't address the top line."
"It has a marginal effect on earnings. Don't do it."
I mean, what do you say to shareholders who say this isn't the way you should be spending
your time?
>>SCHMIDT: The shareholder value in a company is created at the end of everything you do.
You create shareholder value by serving your customers, building a great business, and
if you do a great job, your stock will go up.
So they're not first in the discussion point. What's really first at Google is about changing
the world in a positive way. Can we make a difference?
In our case, we're huge energy users. So a relatively straightforward solution to
our energy costs goes right to the bottom line.
Sorry.
>>ALLEN: Right.
>>SCHMIDT: Okay? Is that a crisp enough answer or shall I make
a stronger answer?
>>ALLEN: That was crisp. No, that was good. That was good.
>>SCHMIDT: Lower costs cause more earnings for shareholders.
>>ALLEN: If you had seen the Jeff Immelt video, you
would have--
>>SCHMIDT: Green energy--
>>ALLEN: --thrown in a few expletives, but that would have--
>>SCHMIDT: Green energy done right is more profitable than the old kind of energy, okay?
[applause]
>>SCHMIDT: It's real easy to understand.
>>ALLEN: So let's talk about the--
>>SCHMIDT: This is a good business to be in which is why we're all here.
>>ALLEN: It's important for Google, right?
>>SCHMIDT: It's called economics.
>>ALLEN: That's right. So let's talk about the specifics of the plan.
You set a target date of 2030--
>>SCHMIDT: That's correct.
>>ALLEN: --to get utilities totally off of carbon fuels.
>>SCHMIDT: Let me--it's easier if I sort of make the argument this way.
You've got to solve a whole bunch of problems. And in the environmental movement you'll get
people who are ideologues on 1 issue in favor or against.
Our view is that all of the aspects are going to be brought in in some way.
You've got to solve the energy generation problem, and you've got to solve the transportation
problem. So, surprisingly, when you add it all up if
you make--in our view--the right assumptions and you invest in the right ways, you end
up saving money. And that's the thing that I think was most
surprising to me. So the rough numbers are we need about 3-1/2
trillion dollars of investment over 22 years as opposed to over 3 months which is a separate
discussion.
[laughter]
>>SCHMIDT: So over 22 years, and we generate on a cost basis a savings of 4.4 trillion.
So this is a net investment value, if you will, by rebuilding the energy infrastructure
of about 800 billion dollars--which in present value terms is about 200 billion.
And we'd certainly need the money. So the fact of the matter is that if you invest
in the right way you can make money by doing this.
And the way you do it is you've got to figure out a way to install the renewable energy
and the distribution network to get it to consumers.
And you've got to address the energy efficiency issues with respect to cars.
>>ALLEN: Okay, so let's start with the renewable energy--the utility piece of it.
Your 2030 plan takes renewable to like a third of our--
>>SCHMIDT: That's correct.
>>ALLEN: --up from--I don't know--what is net 1%, 2%?
>>SCHMIDT: What we did is we kept the current sources of power roughly constant because
you figure they're not going to be turned off.
In particular, we kept nuclear at its current absolute number.
>>ALLEN: You don't want more nuclear in your plan.
>>SCHMIDT: Our plan does not require more nuclear, and it also does not require to turn
it off which is important. And, again, we'll talk about nuclear in a
sec, but the important thing is if you build those plants, the incremental cost is high
because you have to build all these plants. But, also you don't have to build other plants.
So part of the calculation is what do you not have to build?
And the assumption we made is that you would enact essentially a renewable portfolio standard
and constant energy efficiency on a per capita basis
which has been achieved in California since 1973.
If you look at per capita use of energy in the United States, it has gone up over 30
years largely due to regulatory issues in our view.
And if you decouple the management of electric utilities--literally, if you compensate the
electric utilities for efficiency as opposed to absolute profits--
>>ALLEN: Which is done in California.
>>SCHMIDT: --which is done in California, and now done in 8 to 10 other states depending
on how you define it-- and I think will become a national trend because
it's obviously a more efficient model-- you end up with a significant savings there.
>>ALLEN: That's the energy efficiency--
>>SCHMIDT: That's the energy one.
>>ALLEN: So you get a big piece from energy efficiency, but--
>>SCHMIDT: And then on the car side there are many, many--and Amory has talked about
this in much of his writings--
>>ALLEN: But wait. Stay with utilities just for a second.
>>SCHMIDT: Same thing. Sure.
>>ALLEN: I don't want to leave utilities yet because it's really the notion that we can
between now and 2030 go from--again, I don't know the exact numbers--but it's like
well under 1% wind power to--wind power is a huge percentage of--
>>SCHMIDT: It's about 10%.
>>ALLEN: Ten percent of your plan. And solar--again from very small percentages,
so--
>>SCHMIDT: I should say--by the way--that wind is on a kilowatt per hour basis roughly
similar to the cost of coal after the subsidies it gets today.
And without the subsidies it's a couple cents higher per kilowatt.
So that's pretty good. It's the one that's closest now to being a
free substitute for--
>>ALLEN: Right.
>>SCHMIDT: --for coal which is the most common power source that we all have.
The issue, of course, is that wind doesn't blow in the places where the people are.
So, in order to make these systems really work, you also have to have the grid technology.
And the problem with the grid is it takes 2 years to get the line built and 8 years
to get the permits. I'm not making that up, by the way.
So you fundamentally have to establish either federal rights of way for these things or
other incentives that cause the utilities and so forth to actually be able to build
these power ________?? 7:35
>>ALLEN: So the Federal government has to say, "We can site these transmission lines
where we need to." Is that--
>>SCHMIDT: That has been discussed. The Obama administration has already indicated
very strong support for a Federal renewable portfolio standard.
An alternative if that does not get through--and I suspect it will get through--is that you
can imagine incentives at the state level where if 2 states have RPs--
they can basically build these lines quicker with federal help.
So the arguments that we make do not work unless you solve the problem that the wind
blows in the middle part of the country from the north to south.
And, by the way, there's a tremendous amount of wind.
And the sun shines primarily in the deserts and heats up the ground for enhanced geothermal.
>>ALLEN: That's critical. You have to do that.
>>SCHMIDT: Absolutely critical. If you look at the rate of improvement of
solar photovoltaic and also solar thermal, they are behind wind, but they're going to
get there. It's remarkable how quickly they're moving.
>>ALLEN: And do you see a distributed plan? Are you talking about me putting solar panels
on my house or are you talking about centralized power generating facilities?
>>SCHMIDT: All solutions ultimately are distributed. One of the errors that we have is we have
a patchwork of economics and incentives that distort what is an obviously correct model
which is distributed power. And you want it to be able--that people on
a fair basis to be able to generate and send power back into the grid--and on an economically
equivalent basis. Many of the utilities are now being regulated
so that they have tariffs in. And, in fact, it's becoming possible to have
a real business of generating power and sending it in to the utilities.
>>ALLEN: And why not clean coal? Why not carbon capture?
Why not take advantage of the technologies that can make coal plants--
>>SCHMIDT: In the first place, there's a lot of great progress in carbon capturing sequestration.
I don't use the term clean coal because I think it's misused.
I think it's used to infer--
>>ALLEN: Because you don't think coal is clean.
[applause]
>>SCHMIDT: Well, it--if we're going to talk about coal, I'd like to talk about it in the
context of its CO2 load as opposed to the other particulates that clean coal typically
represents. So the fundamental problem is coal which is
the most prevalent source of energy in the United States and China.
It generates too much CO2. It really does contribute to global warming.
Now, 1 answer to that is that you have a carbon tax or a cap and trade system.
I am skeptical as to whether those are going to happen simply because they have the wrong
words in them--which have the words taxes and prices and so forth.
There are many, many people who believe that they're the right answer.
But I think just politically we have to act as though those will occur but not anytime
soon. So what that tells you is we--in our case,
we assume carbon capture and sequestration will work,
but we assume that it will take a fairly long time for the systems to become prevalent enough.
I should say that we're having a U.S. based conversation here, but we can solve all the
problems in the United States and get them right,
and we can still die as a society basically because of the issues in China and India.
And so in the car conversation that was fascinating earlier, one of the things to emphasis is
we have to solve the efficient car problem in the United States,
but it's even more important to establish it at lower price points in developing countries
which is where most of the cars are going to get sold.
Maybe you start it in the U.S., and you learn from that, and you scale from there.
These need to be global solutions.
>>ALLEN: And then why do you choose the Google plan to be a national plan?
>>SCHMIDT: Because we could get accurate numbers. One of the other problems about energy is
that there is not an agreed upon set of facts. It's too new. There are too many conflicts,
maybe too many political operatives or too many business interests.
But there's not a common spreadsheet on what are costs--how do the economics work--and
maybe there won't be. But it's not a perfectly free market in the
sense that you don't really understand what the costs are.
And my guess is that without some form of cap and trade or carbon tax we will never
really understand what the costs of these plants should be.
>>ALLEN: I've seen you say in other venues that you stepped into this gap because you
felt there was an enormous lack of leadership in the United States on the energy issues.
Do you still feel that?
>>SCHMIDT: Well, obviously the administration makes a huge difference.
And President Obama--then candidate Obama--had indicated a very strong support for renewable
energy. And I think with politicians you want to sort
of judge them based on what they do, not what they say.
The stimulus bill that was passed had 50 billion dollars of renewal investment, renewable credit.
>>ALLEN: Is it in the right places as far as you're concerned?
>>SCHMIDT: It's good enough given that the government is 2 months old--
>>ALLEN: It's a start.
>>SCHMIDT: --they did a job of getting it--
>>ALLEN: It doesn't address this transmission problem we talked about.
>>SCHMIDT: There's about 6 billion dollars of actually smart grid and smart grid investment,
and that's probably sufficient. There are probably more policy issues that
will come when people start to actually try to build these grids, and they discover various
other--either federal issues or state issues.
>>ALLEN: But I--I mean smart grid seems to mean different things to different people,
but what I've heard when I've inquired about what that money is for
I hear more talk about devices in the home to monitor energy usage as opposed to cracking
that big problem you said of getting the power from where it can be generated to where it
is consumed.
>>SCHMIDT: Certainly the policy intent was to do both.
It's worth noting, by the way, that we take for granted the structure of the internet
and how powerful it is in distributed notion and
anyone can connect to anything and you can monitor everything on the internet.
None of that is true of the energy grid to first order.
So the most obvious thing that you want is you want to be able to have a computer that
somehow talks to your dryer and calculates the optimal time to turn on the dryer.
And that optimal time will depend on an awful lot of dynamics.
Today's price for energy; today's consumption; is the grid full?
Those sorts of things. If you look at energy costs--
>>ALLEN: Right.
>>SCHMIDT: --literally the cost that the utilities face which is horrendous in these situations,
it's not the base load that costs the all the money, it's the peak power.
It has to do with human use and human cycles of the day.
So the power they have to turn on at 2 to 4 on a summer afternoon is immensely more
marginally expensive than the power that they have every day.
So anything you can do that can shift even 5 or 10% off of that has huge systemic benefits
for savings in efficiency and, obviously, climate change and so forth.
>>ALLEN: Do you think your experience in the computer business then helps you see issues
in the energy business that perhaps people who are actually in that business don't see?
>>SCHMIDT: Well, it certainly makes us a better irritant of them.
[applause]
>>SCHMIDT: Basically, we look at the structure, and we think--and I mean this with respect
because these are people who have worked hard to build a great system--it's not very flexible.
So we like to think of applying computers to a mature system to make it that much more
efficient. Again, even 5 or 10% improvements because
of marginal costs have these enormous amounts of savings for them.
So there's every reason to think this will happen quite quickly.
>>ALLEN: So you talk about people with a lot of experience in the business.
Since we have Michael Morris here who runs one of the largest utilities--largely coal
fired utilities--in the country, I wonder if--
Can we get a microphone up here, please, and I wonder if we could hear your reaction to
the Google plan? It's coming.
>>MORRIS: Allen, thank you. And, Eric, thanks for all the kind words you
said. We obviously agree with much of what you've
had to say and take challenge with some of the timelines and some of the dates.
I feel like we're going to get there, but the internal combustion engine which we call
a base load power plant is going to be with us a long time.
>>SCHMIDT: Yeah. Sure.
>>MORRIS: But we will transition to these things over time.
Clearly, I agree with your point that we'll get to distributed generation.
It would be foolhardy for us to sit back as Telco's did some years ago and say, "Oh, yeah,
sure. People are going to walk around with telephones in their pocket."
Because they do. And eventually you and I may have a power
plant in our home--a small power plant driven by some other fuel source.
It may be the sun. It may be the wind. It may be any of those combinations, but it
will take all of those things. I admire your comment about the transmission
grid. You know, one of the things that my long term
colleague Boone Pickens has done for all of America is to raise the awareness of the need
for the grid to be built. The end game for Boone--and it was pretty
clear when he was asking Allen--is to put compressed natural gas to better work than
the generation of power. And what we see about the grid is get that
federal authority to get it built like we do natural gas pipelines, oil pipelines and
those kinds of things. Like Ford, why try to tell the government
we don't need your money, nor do we want your money because it typically comes slowly
and comes with all kinds of strings attached as some of our colleagues are finding out.
What we need is that federal authority to get a single site and then a cross allocation
model. Because sitting around and trying to battle
whether the state of X ought to pay this or the state of Y ought to pay that is just confusing.
We've looked at your 30% and the timeline you spoke to.
Don't know how that can happen. We're 40,000 megawatts--
>>ALLEN: Thirty percent--how do you get 30% a year energy from renewable sources?
>>SCHMIDT: By 2030.
>>MORRIS: I don't know how we could.
>>ALLEN: You don't think it's possible.
>>SCHMIDT: >>MORRIS: We're 40,000 megawatt generator.
That's 12,000 megawatts of wind and sun. You can't do any water anywhere in the United
States. So I don't know how we get there.
But we're a thousand plus megawatts of wind today.
We're 66% coal today. Two short years ago we were 73% coal.
So maybe you can get there. I just don't know--
>>SCHMIDT: Yeah.
>>MORRIS: --how the supply chain helps us get there.
We're pushing solar thermal. We don't know that it applies in our marketplace.
And I'm on that slide you were on earlier, Allen, which you all showed.
You know, my average customer pays about $78 a month.
Now, we don't serve California where you pay $780 a month or something like that.
[laughter]
>>MORRIS: No, kidding. I'm sorry Peter. I know we'll be on a panel
tomorrow together. I'm sure you'll beat me up for that.
But, so be it. But the fact of the matter is for an investment
of 7 or 8 or 9 thousand dollars for a rooftop solar to take their cost from $70 dollars
to $62 a month-- I don't know who they're ever going to get
there.
>>SCHMIDT: Again, we think the number is foot. I think the important point here is that we
can't--America is a great country because of our ability to solve problems in clever
new ways. Really build enormous new businesses that
change the world. If you take a look at any of the things where
industry is represented here in the room, we can do this, and we can do it at scale--especially
if we put our heads to it. Much of the energy industry has largely languished
in the last 30 years. The universities have not spent that much
money on it. As you pointed out, the government regulation
has been a disaster for all the reasons that you said.
And I think there's an opportunity before us.
The other comment that I want to make is that we have not tonight spoken about efficiency.
And by efficiency I mean the efficiency of building insulation--those sorts of things.
The quickest way to actually solve all these problems is to have better passive insulation
in your home--you know, those sorts of things. Because saving so-called megawatts--saving
the use of energy is the cheapest form of generating it.
And there are a tremendous number of ideas in there.
And with the right financial incentives we can make that happen even quicker.
>>ALLEN: I'm going to open it up here, but would you comment on that, as well, about
the California style incentive system so that you are not incentivized to increase
energy usage, basically.
>>MORRIS: This may take longer than you want, but at any rate--
>>ALLEN: You've got 20 seconds.
>>MORRIS: There you go. Can't be done. Anything else?
The energy efficiency--there's no question about that.
But when you speak to that issue--again, think of the Appalachian region of West Virginia,
Virginia that we serve. There's no one who's going to go out and spend
$1,800 to put in new insulation in their home for the purpose of saving $2 a month on the
cost of electricity. There's not an equation that make sense to
retrofit--and I did the business roundtable study with a lot of my colleagues.
Many of your people were on the same work with us.
There is savings on the 30% range in the commercial marketplace, but that's retrofitting buildings
that were built in the 20s and 30s and 40s. It's not going to happen.
You're not going to re-window them, HVAC them, insulate them.
I don't see that process. Anything new ought to be built that way.
You look at the state of Florida. To build a new house, it has to be hurricane
proof.
>>SCHMIDT: On this--
>>MORRIS: So, going to those standards, I think we can get there.
>>SCHMIDT: On this, we actually disagree. The President's bill actually has about 6
billion in low income re-insulation program.
>>MORRIS: And an excellent way to get that put to work would be to give it to the state
utility regulator.
>>SCHMIDT: Agreed.
>>MORRIS: Through us, put it to work.
>>SCHMIDT: I agree with that.
>>MORRIS: About 13 million dollars dedicated to northeast Ohio 7 years ago in a different
administration--imagine that--for insulation for homes.
Not 1 home has been insulated. The 13 million dollars is spent.
You've got to get a better way to do this.
>>SCHMIDT: Where did the money go? And, by the way, an even better way is to
have the utilities be able to capitalize those improvements in their rate base.
>>MORRIS: Yeah, that's the point. So--and that takes me--
>>SCHMIDT: The point is that smart regulation here can actually cause this to occur very
quickly.
>>MORRIS: Sure.
>>SCHMIDT: And things like energy efficiency really do compound over time in terms of the
savings.
>>MORRIS: No argument with that.
>>SCHMIDT: Because energy prices are not going down over the next 20 years.
>>MORRIS: To your question, I'm not a de-coupler. I'll make my money by the capital investments.
And if my gigawatt hours shrink, they shrink.
>>ALLEN: Okay. Thank you.
Let's open it up. Somebody else.
[applause]
>>ALLEN: Oh, Peter. Yes, can we get a microphone back there?
>>PETER: So, for those of you who don't know me, I'm Mike's counterpart.
I'm at PG&E.
>>ALLEN: Not a lot of coal.
>>PETER: Not a lot of coal. Zero in our operation. Let me comment on a couple of points that
have been raised. In total agreement that de-coupling is the
way to go. I've been arguing it now for 4 years in front
of the Edison Electric Institute. And what I will comment on is during the last
year our stocks lost about 10%. And most of the utilities out there have lost
about 50%. And we actually have been a beneficiary of
de-coupling which normalizes our revenue and brings us back to a revenue target.
The important point to be made there is not only is it good in a down turn but that it
has put in place the right incentives. Mike has an incentive to sell more kilowatt
hours every year, every day, every week. And we have been incentivized.
The important thing is California is--call it the 6th largest economy, 7th largest economy
in the world. We've had de-coupling in place for 30 years.
During that period of time, per capita energy use in California has remained flat.
Across the rest of the United States it's gone up 50%.
So in a huge laboratory over 30 years if you have the right incentives in place energy
efficiency will do a tremendous amount.
>>ALLEN: And, Peter, what about renewables? What do you think about Eric's goal of 30%
renewable by 2030.
>>PETER: The first thing I'd say is I come from outside the electric utility industry.
I was previously at Goldman Sachs. I've been in high tech.
Whenever you put an objective out there at first it seems un-accomplishable.
And we felt that way about the 20% goal--20% by 2010 renewables in California.
Well, during the bankruptcy process and energy crisis and all of that we didn't make much
progress. So we came from behind.
And we've gotten from the point in 3 or 4 years where we contracted for 24% of our power
to come from renewable by 2014. Now, of course, we recently in the last 8
months or so had a meltdown in the capital markets.
So what has happened is we're afraid our counterparties aren't going to deliver.
So we announced that first of all we would do a rooftop photovoltaic program.
We had an announcement on that 2 weeks ago. And the next thing we're doing is we're looking
to see how we can come into the market and provide financing to distressed counterparties
and, in effect, be a venture capitalist or a distress fund lender.
So we're really trying to be creative in getting there.
While we may have gotten a setback in getting to 20% by 2010, I believe we will get there
by no later than, let's say, 2012--2014. And then what the government of California
has said is now we need to do 33%. One would say that is really far more than
we could possibly do. Well, we went to work on it and said how could
we build a business? Not have a mentality of compliance, but how
can we build a business and grow our business? And so we have contemplated vision and are
working on a long distance transmission line to British Columbia where they will export
wind power as well has hydro to us. Clean energy in California.
And with that and other programs we think we can get to 33%.
So it really takes the right incentives and it takes really stretch thinking and visioning
to move ahead. And let's face it, the utility industry has
not been known for that historically. And we need to change because people like
Google are out there, and they are a catalyst for change as well as government.
>>ALLEN: Do you want to comment on that?
[applause]
>>SCHMIDT: Thank you. I think it's easy--thank you for that.
People talk about the utilities all the time. Utilities have a number of very important
assets including the ability to raise capital. And they do it often, and they understand
it very well. And I think using that capital to achieve
these goals against measureable goals is going to be part of the secret.
>>ALLEN: Question right here. Please identify yourself.
>>POPE: Carl Pope from the Sierra Club. A comment and a question to you--not to you.
>>ALLEN: Me?
>>POPE: At the beginning--yeah, you.
>>ALLEN: No, I ask the questions. I don't answer them.
>>POPE: At the beginning of this evening-- No, no. I'm going to ask you a question.
At the beginning of the evening, we talked about how much things have changed in the
last year. And I think in kitchen table America a lot
has changed. And I think the conversations that are taking
place in kitchen table America are a good deal more visionary.
And I watched tonight some very, very smart people play "gotcha" and "no, you didn't get
me". And I want to say that I think that if this
1943 we wouldn't be having these kinds of conversations.
I think that there is at least a possibility that this is 1943.
And we really need to be saying not, "Well, you really can't do that. You really can't
get it done," which is actually the framing of this evening
to the business folks upon the table is you can't really do this.
It's too ambitious. The media is setting a table about low expectations.
And I don't think America wants that. I want to ask you, Mr. Murray, how would you
be conducting this evening if this was 1943?
>>ALLEN: How would I what?
>>POPE: How would you be conducting this evening differently if it was 1943, and if America
really was--as I think a great many Americans think it is--right up against the wall?
>>ALLEN: Well, we're up against--well, it seems to me we're up against 2 wall.
And that's what we're talking about here tonight. We're up against an economic wall.
Households' budgets are stretched. People are not going to be willing to pay
higher prices on their utility bill or pay $5,000 for a hybrid car.
And, at the same time, we are up against the energy issues that all of you are talking
about. So I think what we're trying to do here is
to look at some of the tradeoffs that are a necessary part of this game.
>>SCHMIDT: Let me give you sort of a political answer in context.
Change does not occur when things are going well.
Change occurs when people are scared. This is the time--and I'm not suggesting my
recommendation is correct or the other discussions are.
This is the time to have this conversation, set up bold agendas--which I think is what
you were trying to get at--and go for it. It's the history of our country that we can
do this. How would we think--are we not capable of
doing this? Look at the things that our predecessors were
able to do. And we're just as smart if not smarter.
We have the world at our feet in terms of information.
Let's do it. We've got the underlying technology.
We've got the smartest people in the world. We've got this enormous university system
which in my view has been underutilized and is now getting the right kind of support and
funding. Every day I come across some new and interesting
idea that's sort of clever. This is the dawn of this sort of new age of
ideas. So I would reject the old orthodoxies, and
I would suggest that if you get the right people in the room, and you drive it really
hard, you can beat my plan. You can get it done quicker than 2030 if you
all work very hard on it.
[applause]
>>ALLEN: Other questions. Right here. Let's let this gentleman.
>>MAN: I've got the microphone.
>>ALLEN: We're going to hear from you. I don't know who did that.
The first rule of moderating is hang on to that microphone.
>>MAN: Do I have to give it up?
>>ALLEN: You've got a whole hour tomorrow.
>>ALLEN: Go ahead. Ask your question.
>>MAN: Let me--just quickly on a question to Eric.
Eric, you're a smart guy and love to listen to you talk.
But all the things you've said made sense. And everything--the questions have been good.
But please tell me how we are going to reduce the dependency on foreign oil.
Because that is a security issue for this country that I don't think that we can continue
like we're going.
>>ALLEN: And we probably didn't do the transportation issue.
>>SCHMIDT: Yeah, we didn't talk about transportation. More efficient cars.
And the way you get to more efficient cars is you make them stronger, lighter, better
physics. You use better instrumentation in the cars
to make them more efficient. All the things that Allen and others are working
on And there's a lot of new stuff coming in that
area--more efficient batteries, more efficient power trains, more efficient use of charging,
night charging, all of that. The sum of all of that can produce very significant
efficiencies. In fact, in our model--and you can see this
in our plan--we actually assume that the economics are such that people will actually want to
trade their cars in to get that benefit.
>>ALLEN: Last question right here.
>>MAN2: I'm very inspired by you--Mr. Pope, is it?
And, you, Eric. And I admire both of you.
And you're both exactly right. And we can do this, and we can do this now.
And there's the talent in this room to put together a plan that can be implemented.
And there's very simple things. One is weatherization.
Mackenzie 2008--I beg to differ. But Eric knows and a lot of people in this
room know that weatherization is the low hanging fruit like PG&E has discovered.
And using tax districting which has been put in AB111 in California--we're trying to get
this legislation across the country. It will fund the average homeowner to weatherize
their home by putting a tax assessment voluntarily on their home.
What does that give us? No. 1, let's say 5-10-15% energy efficient
savings. No. 2, demand side management.
Part of any weatherizing system is demand side management.
Another 5 or 10% conservatively, as Eric points out, in reducing reserve requirement for the
grid. Now we have 20-30% excess capacity for the
grid. With the cooperation of utility companies
or a little bit of leaning by our president, we get this efficiency which can then be used
for plugging Hybrids, electric cars. And, in fact, under the laws that we're putting
in, you can--the electric car now has 2 purposes because it can additionally--we're designing
a home in a demand side management system, so the car plugs into the home
and as Eric pointed out, it additionally reduces the peak demand.
So when we combine these things together, they can be implemented now.
California Berkeley October, 2008 their discussion--and just in California by just weatherizing, it's
an 86 billion dollar increase in GDP-- a 49 billion dollar savings to the homeowner
in California and a 400,000 job creation. So we're solving the economic issue.
And we're solving the environmental issue and the energy independence issue.
No new technologies. And we can do it now by cooperation between
the auto industry, the Googles, the Sierra Clubs, and utility companies--and really the
media. Because the media can be part of the solution.
Get this word out. What Eric has been trying to do over and over
is say we can innovate. Really the same message.
>>ALLEN: Okay. What we will do now is move upstairs where drinks will be served.
I'm sure that will make solving all these problems much easier.
And we'll continue the discussion.
>>SCHMIDT: Thank you all.
>>ALLEN: Tomorrow morning breakfast starts at 7 o'clock.
Program starts at 8:15. Thank you.
>>SCHMIDT: Thank you all.
[applause]