[ MUSIC ] Greetings all and it's an honor to follow Tanaka son who is a global strategist without peer. I have studied the accumulation of carbon in the atmosphere for far too long and one of the things that teaches you very quickly Is that we have to do all the right things and we have to do them promptly. There's no more room for error we have as a world squander the possibility. So what I want to talk to you today about is what I call the four zeros. How do we get to a zero carbon grid, zero emissions vehicles, zero net energy buildings? And zero waste manufacturing. Before I do that I need to mention just a couple words about US, China relations as part of this. This a picture that I like a lot, it's our Governor of California, Jerry Brown together with the leader of China, Xi Jinping. This is important because when China and the US work together we get a whole lot done. One of the reasons Paris was successful was because prior to Paris, China and the United States sat down and hammered out an agreement that other countries could live with. And they made enormous commitments themselves. I've had the fortune I think I've made 70 trips to China. Over 20 years working with Chinese experts, when our countries work together on the global commons, we solve things. I know that US, China relations are fraught right now. That's all the more reason in this realm to join arms and stay together. So I don't wanna forget that Why do we have to stay together because there's no way that one of our countries can solve this problem without the other the two giants in the energy world or China and the United States. And it's impossible to keep New York from flooding unless China does this part on climate change and it's impossible to keep the greater Bay Area And Shanghai from flooding, unless the United States does its part. There's no way to separate the solution here. This is common sense, perhaps. Not practiced as well as it should be. First, some slides you'll be very familiar with. The key to magic in climate change solutions are the learning curves. When we drive down the price of zero carbon technology during incredibly low levels, a whole vast array of solutions becomes possible. And it no longer becomes an economic choice to do the right, a political choice to do the right thing, but also an economic choice. This is solar TV prices dropping down over time, and the volume rising. I sometimes say there was an unwritten agreement between Germany and China. Germany agreed to overpay and China agreed to over produce, and together they achieved a relative miracle. The same thing happened with wind offshore wind, watch this space. Offshore wind prices have dropped by half in the last four years. And they make an incredible contribution to a clean energy system. Batteries powering electric vehicles, staggering price drops, and where by no means done, and they're many more. And these have come again because of subsidized demand in the early days over production and the China price helps us all. So how do we get to the four zeros? Start with the electrical grid. This is the easiest and the fastest sector to decarbonize and it also enables all the other three to decarbonize. So this is a crucial step we have to make. I show that electricity from wind and solar is incredibly cheap already but what are the policies that we are required to get us as far as we need to go? The first policy is a mandate to drive to 100 % carbon- free electricity on the grid. Soft targets won't do it. Long- term signals are required. It's now cheaper to move to solar and wind than to continue. We analyze every single coal plant in America and discover that 75 % of them cuts more just to operate Then if we replace them with brand new solar and wind farms. But that doesn't make it happen automatically because incumbent industries fight back and they fight back hard and this is why we need good policy . So the first one is 100 % clean energy standard phased in over time over the next 10 2030 years depending on the state of the economy. Second, we have to align power markets with the carbon market. China is developing a carbon ETS, emissions trading system. It needs to help accelerate the transformation of the grid. I should have put a third one on. We need better strategies to balance the grid. Intermittent sources of energy are not that difficult to manage. You have a good strategy that includes demand response and more transmission and heterogeneous electricity sources hooked together and occasional use of speakers. I spoke last week to the man Steve Barbara who runs the California grid. And he told me he can get to 80 % decarbonised electricity without worrying. 80 % in the fifth largest economy on the planet that's impressive how do we get to zero emission vehicles go to shenzhen they have 18, 000 electric buses all the taxis are soon to be electric DD will be electric the price drop is making this feasible. If you have a solar system driving your energy grid and an electric vehicle, you've accomplished two things with one. You also as an incredible bonus, cut out noise and air quality problems. What are the requirements ever stricter efficiency and pollution standards for internal combustion engines combined with a steadily increasing mandate? For electric vehicles. You'll note that I have very few bullets on what we need to do with policies. And the reason I've reduced this so much, is it turns out with energy policy, there's a small number of things that make a huge difference. And most energy policies are not that important. We have to focus our energy on a small number. That really drive change. We don't have time to waste. We cannot do the wrong things, and this is the list for cars. It's not the entire list but it's the core elements. If we do these two things we come out okay. Buildings. My first job was Construction, building buildings. And then I started a Construction company with my brother. Back in the 1980s. And we designed and built solar homes, and it was not difficult. You put in insulation, you put in great windows, you put in super efficient appliances and air handling system. You put overhangs over the windows and voila, your energy goes down by 80 %. A well- insulated, well- designed building is a 100 year assets. Because operating costs are so low. A poorly designed or poorly insulated building is a 100 year liability because you're condemned for the entire life of that building to pay utility prices and to emit carbon emissions you don't need. What makes for good buildings? Only two policies deliver great buildings. A very strong building code that's well enforced Really important and appliance that equipment standards so that we do not put bad air conditioners into good buildings. So those are the two that drive the zero net energy building. The last and the most difficult is industry, industry because it's complicated. It has huge capital investments. And because steel is different from cement is different from chemicals. But Tanaka- san mentioned the hydrogen economy. We need to reinvent chemistry so it's not powered by hydrocarbons but by hydrogen, which is entirely feasible. There's a company in New Jersey That makes cement, it's called Solidia, that's 60 % less carbon than the best conventional cement power plants. We need concentrated, extensive research on each of the principal energy- consuming sectors of industry. And when we have that, we will come up with these solutions. Also, We can electrify much of industry. And again, if you have a low carbon or zero carbon grid, then electrification of industry is pretty dramatic. So those are the four zeros. Zero carbon grid, zero emission vehicles, zero net energy buildings. Zero Waste manufacturing, every one of them is possible. Every one of them can become cost effective if we take advantage of the learning curves that I mentioned. Learning curves don't just happen. They require much more vigorous r & d than we have in either China or the United States. They require early support when technologies are out of Out of the price range, but still promising. And then they require commercialization. The strategies I pointed out here will induce so much demand, they will create a vast amount of innovation. And that's what will really deliver the goods, it's when saving the earth is cheaper than ruining the earth. Not just cheaper counting [ UNKNOWN ] but cheaper in the narrowest possible sense, it's already happening with the grit. So we're on our way there. But the only way to get there is to build those policies, that list of policies that I mentioned, quickly and make sure they're strong and make sure they're well- enforced. I wanted to end this on, with this slide about diplomacy. I know this is an international conference, much more than just the United States and China. But with the friction we have, right now, caused by my government, which I'm not happy about, it's important to remember how much good is going on. In the United States States set energy policy, not the federal government. There's nobody in Washington who has energy policy in their title. I started with a picture of Jerry Brown. California has the fifth largest economy on the planet. And we're going to, we are on target to zero carbon emissions by 2050. And we're the most prosperous state in America to anyone who tells you you can have To choose between a strong economy and a strong environment is not doing their homework. The only way you can have a strong economy is if you keep your environment clean. And the only way you can have a clean environment is if you take care of your economy, they go together. And that's requires us to work together. So thank you very much. [ APPLAUSE ] I guess we stay up here. You're in the middle .>> I guess .>> Please. Wow. So we're really getting into it now. Those are two fantastic presentations. One of the things that I was really struck by listening to both of you is that despite your different backgrounds. The way you think about problems with energy and climate are in some ways, very similar and I covered the trade ministry for many years in Japan. And there modus operandi was that they would always say, okay, what are the things that we can do that will have the most impact? Let's focus biggest bang for the buck And you're all about that. I love how that you've kind of identified this kind of, what, is it 20 / 4 / 10 formula? Maybe can you explain a little bit about that about? You know what I'm talking about here, so 20 countries. Yes. 4 sectors, 10 things. So because we have so little time to solve the climate, the carbon accumulation problem, the climate problem. Yeah. We have to Focus on the small number of things that make the biggest difference. 20 countries are responsible for 75 % of carbon emissions. If we win in most of those countries, we're gonna be fine. If we fail in those countries, we're not gonna be so fine. There are four sectors that matter in the energy space, which I mentioned already, the grid, vehicles, or transportation I should say more broadly, Buildings and industry. And for every one of those, there's between two and four policies to make a difference. So if we focus on getting those policies established in the biggest countries, we actually land on a reasonable corporate climate future. And every one of those policies has been tested and proven somewhere. Nowhere except the Nordic countries have they all been tested and proven. And what's great about this, I think is that it kind of hurdles the perception that a lot of people have, that this is a complex technology issue, that we're waiting for some sort of, you know, dramatic breakthrough to be able to tackle. I mean your whole message, no, no, we've got stuff that's on the shelf. Just start doing it. Yep. So how much time do we have if we start doing it? [ LAUGH ] Minus ten years. [ LAUGH ] No. [ LAUGH ] [ UNKNOWN ] I cannot agree more. The earlier the better. We should have started much earlier. We have graduates moving, but still we are discussing about the global carbon prices, so how to reduce as a whole tax. So you stop talking about that but just doing what we What is necessary to do. That is probably just as how said it is the way to proceed, and One of the things that really struck me in your presentation in [ UNKNOWN ] was this focus on how China is implementing renewable technology faster than you expected and than anybody else expected and that's That's a surprising driver that that is fascinating to hear you talk about this that so you're saying that that may help us on the climate side, much faster than we thought. But it may have all kinds of other destabilizing complicated geostrategic implications we haven't really thought through .>> This is really interesting because this morning we had discussion about with China stands about. Co2 emission reduction now peak. When the emission peak happens, yes, China committed in Paris to, before 2030 but some experts it may be 2022. Three years from now, the China may peak the co2 emission and capping on coal already happened. And cup of oil. The peak demand of oil may happen 2025. I thought it before 2030 and Saudi Arabia is very much growing. So China's speed of changing transformation is much much faster than nobody ever thought of. And your message here was that not only does that have a payoff for China in terms of sustainability and protecting the environment, it has a big payoff in terms of energy security: It's almost like it's a security policy as much as an environment policy. Yes, exactly. I don't think China is trying to contribute to global world by reducing Mission. It's perfectly. It's hope, its own sake. I had a chance to talk with Mr. Fujita, the former president in Hokkaido. And he said, we do energy efficiency. We use lots of renewables, but it's not for somebody else. It's for us by enhancing energy security and economic growth. This is clear message. Really interesting. Hal, what do you think? There's an old term called the Resource Curse. Yeah, yeah. Most countries that are dependent on selling one natural resource Right. Gold, oil, whatever. End up with terrible problems. They end up with corruption because there is easy ways to make money and they fail to develop other aspects of their economy and they fail in their education system. So you can look at one country that has escaped the resource curse, which is Norway, and you can look at a hundred well probably 40 or 50 countries that have succumb to the resource curse. I think your slides about China not having these oil reserves means that China becomes a much bigger innovator in all these oil realms. Right exactly. It's a kind of gift if you take it as such, but let me mention one other thing on this front There's something at work called a virtuous cycle here. The resistance to clean energy is no longer economic, but it is incumbency. Yeah. It's the existing businesses who fight change. Yeah. And they exist everywhere, including in China. Right? Yeah. Now when you get momentum going when you're starting to put in 100 gigawatts of solar in a year, you're creating new incumbents. Right have a political force that can equal the old one but it takes a while for that to snowball you we have to get past the boutique stage into the mainstream. So a couple of things are we this point about the resource curse is a Profound one, I think that's just a tremendous insight because in a way in the United States is this sort of dismissive thing, we used to say about Saudi Arabia. Great, they have oil, but that's why they don't have any economic infrastructure to speak up. And having spent a long time in Japan, that was always the amazing thing about Japan, you showed to knock us on how Japan and South Korea are way up in that far corner of that grid of oil dependency. And poor Japan, poor Korea. But in fact, that was the thing that forced innovation and improvisation and thanks partly to MITI to figure out another way to grow the economy and make use of the one thing that Japan did have Which was labor. I'm afraid that United States is energy dominant now. And dominant energy policy means that resource cost may happen to the United States. Mr. Trump's United States, may suffer in a matter of decades may not necessarily be when he is the president right. But after that, United States may have a problem. If You should not moving towards more renewables, more electric vehicle more, all the things. So how the people in Washington get this, do they think this way, and is there anything that suddenly, this sort of windfall benefit of oil shale has fallen on us, is there anything that that the United States can do to resist the temptation to just fall back on that? Well, there are learning curves in solar and wind and they're learning curves in fracking. Yeah. And so forth as well. So it's a race. But again, look to the states. The states are putting in regulations restricting fracking, restricting methane leaks, promoting clean energy. The states decide how the greatest power, the states increasingly set fuel efficiency standards It's more awkward but that's where the action is. 55 % of Americans now live in states that have pledged to follow the California path, right? So Washington is the minority actor here, you can be happy about that. Absolutely. We have time for a question or two from the audience. It's not I've got one nuclear, we haven't talked about nuclear. But Japan obviously this is a big transformation for Japan. Obby is committed to getting these reactors started again, governors are resisting him. What's the future of nuclear in Japan and then after that, China because that's the other. Very interesting question. Because Quishima public reaction to the nuclears still very negative. Right. So, to builbind the new big water reactor is prohibitively costly because of the regulation of safety etcetera etcetera so probably only nuclear we have now only nine reactors are running. After shutdown all of them may continue to restarting but probably half of the whole. Nuclear fleet. So prolonging the life is one way. But meanwhile taking that and tried to move toward the fourth generation reactor is the future that is a small modular type reactor and fast reactor may be the future of the. Nuclear industry. Japanese company statute invested in UK but withdraw because of the lack of potential benefits of the subsidy or support. So nuclear future is very tricky. But now Japan and US made a coalition. A luxury of the fast reactor which was developed. In the United States called integral fast reactor could be give us the chance for the future promising technology. So China just fade away quickly. We've only got a few seconds but what do you think. Excuse me. China is has a huge level of building the nuclear power right. But the cost of renewables is getting so cheap. Can they continue to build the bigger lightwater reactor is? i? I have a question about it because the location is limited on the seashore. But there are many people who wants to have a nice buildings. Beer as in the coast and not in my backyard please. So people's reaction negative reaction on the nucleus still is happening in China. So nuclear is not necessarily promising even in China. Wow, fascinating. The surprising triumph of renewables. Gentleman, you've given us lots to think about. Thank you both very much. Thank you. [ APPLAUSE ]

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