>> SCHMIDT: So, how do we make it happen at scale?
Well, in fact, utilities, especially in the two-thirds of the states that have decoupled
regulation so that the utilities are managed to efficiency goals rather than revenue goals--
in those cases, they already have energy efficiency programs.
But often, they don't quite have it right, so an idea that I thought was particularly
compelling that came out of the group was to allow utilities to think of the efficiency
that they cause in their customers, to treat it in the same way as the capitalization that
they do of a new plant. So, from their perspective, it's a good choice-it's
cheaper, it's more effective, they get a better rate of return, and it makes their internal
business logic make a lot of sense. So, in a situation where utilities and capitalizing...
they can capitalize their investments, they'll do it more quickly.
It's also stimulative-going back to the stimulus question-- because it's something that's done
by all those out-of-work construction people and so forth who are not building houses right
now. So all of a sudden, you can... whether it's
federal buildings, state buildings, city buildings or homes, you've got this huge, huge market.
Along the way, you also need to do things like raising consumer incentives for pursuing
energy-efficient technology, a federal building code, and federal standards around energy
efficiency. And the reason you want this form of regulation
is that the consumer often... the consumer and the manufacturer and that whole transaction
cycle don't bear the full costs of it. So, the sum of that is-energy efficiency is
clearly the first place you put your money. It's relatively straightforward, but with
some clever regulation, we can build something that will sustain independent of the panic.
There are many, many interesting technology projects just waiting for infrastructure that's
hung up in local and state governments. As we all know, the states have no money for
the next year or two, and may not for a long time.
The only place where both the authority and the financing will be possible will be at
the federal level, and it needs to happen quickly.
The reason it has to happen quickly is that it's a compounding effect-if you don't get
started now, you'll lose those years forever. What's interesting is the utilities are actually
ready and prepared to build this infrastructure, but they can't do it in a timely fashion.
They either can't get the financing or, more importantly, they can't get the legal facility.
Without it, the whole model doesn't work; we don't fundamentally break out.
>> Are you talking transmission lines... ?
>> SCHMIDT: Transmission lines is the easiest one, because it's the way you move all the
power around, and if you can't move the power around, you can't fundamentally substitute
one for another. To deal with the externalities of CO2 production,
especially in the coal industry but also elsewhere, you need some form of capturing the cost of
that, so whether it's a carbon tax, as with one set of proposals, or cap and trade is
another set of proposals. The concern that I've expressed, and I think
others share, is that this is not the year to be doing a tax increase on things.
So, the first question is political reality-is it likely to be possible to get cap and trade--and
the senator would be the best authority on this-- in a context of difficult economics.
And then the second one is, will such a system actually be workable, given the armies of
lobbyists, and structures, and the uncertainty of how to get it started-literally, how do
you create the asset market that creates the market to start with?
What rights do you start with? Paul, for example, argued, if you've already
done a great job, why would you be penalized in the provisioning to get into the market
against someone who's done a terrible job? You should have an advantage, not a disadvantage.
>> So, what do you think... what do you think we should be doing with this?
>> SCHMIDT: Well, my personal opinion is that we should have a cap and trade system that
works, and I think we should also anticipate that it will take a long time to get one enacted.
Why don't we... why don't we try a couple of things that are a little more challenging?
Rebuild America's energy infrastructure for the 21st century; invest in energy efficiency
technology to create export oriented jobs; create high-paying jobs throughout the country
in an important part of our national infrastructure; do so in such a way that we solve global warming
at the same time.
>> So, this happens all the time...