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Knitting Business Idea

ã¯â»â¿[applause] >>announcer: eric schmidt. [applause] >>allen: eric was back stage so he didn'tsee 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 nationalenergy 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 tubemore 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 environmentdoesn'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 prettysmall part of your overall business--energy

information. >>schmidt: but we're happy to make money everywhere. [laughter] >>allen: you know, i always thought the waygoogle worked was that larry and sergei were out doing no evil, and you were back homerunning the company. >>schmidt: yes, that's all true. >>allen: has that started to change? >>schmidt: are you implying that they're beginningto do evil? no. >>allen: no.

>>allen: no, i'm implying that you're outin--i'm going to talk about the details. i'm going to talk about the details of yourenergy plan, but i think it's interesting to have you-- >>schmidt: it seems to me that we are in asituation 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 interestedin 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 wesaid. >>allen: yeah. >>schmidt:and i think the more of that, the better. you've got a number of authors of such proposalshere at the conference, and i think that's great. >>allen: so you gave one of--one of the earlyspeeches you gave on this was in september. i pulled something up off the web where peoplewere commenting on it. a shareholder says, "i don't want eric schmidtout 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'tdo it." i mean, what do you say to shareholders whosay this isn't the way you should be spending your time? >>schmidt: the shareholder value in a companyis created at the end of everything you do. you create shareholder value by serving yourcustomers, building a great business, and if you do a great job, your stock will goup. 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 bottomline. 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 earningsfor shareholders. >>allen:if you had seen the jeff immelt video, you would have--

>>schmidt: green energy-- >>allen: --thrown in a few expletives, butthat would have-- >>schmidt: green energy done right is moreprofitable than the old kind of energy, okay? >>schmidt: it's real easy to understand. >>allen: so let's talk about the-- >>schmidt: this is a good business to be inwhich 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 aboutthe 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 ofmake 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 favoror against. our view is that all of the aspects are goingto be brought in in some way. you've got to solve the energy generationproblem, 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 assumptionsand 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 yearsas opposed to over 3 months which is a separate discussion. >>schmidt: so over 22 years, and we generateon a cost basis a savings of 4.4 trillion. so this is a net investment value, if youwill, by rebuilding the energy infrastructure of about 800 billion dollars--which in presentvalue 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 doingthis. and the way you do it is you've got to figureout a way to install the renewable energy and the distribution network to get it toconsumers. and you've got to address the energy efficiencyissues with respect to cars. >>allen: okay, so let's start with the renewableenergy--the utility piece of it. your 2030 plan takes renewable to like a thirdof our-- >>allen: --up from--i don't know--what isnet 1%, 2%? >>schmidt: what we did is we kept the currentsources of power roughly constant because you figure they're not going to be turnedoff.

in particular, we kept nuclear at its currentabsolute number. >>allen: you don't want more nuclear in yourplan. >>schmidt: our plan does not require morenuclear, 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 buildthose 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 younot have to build? and the assumption we made is that you wouldenact essentially a renewable portfolio standard and constant energy efficiency on a per capitabasis

which has been achieved in california since1973. if you look at per capita use of energy inthe united states, it has gone up over 30 years largely due to regulatory issues inour view. and if you decouple the management of electricutilities--literally, if you compensate the electric utilities for efficiency as opposedto 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 energyefficiency, but-- >>schmidt: and then on the car side thereare many, many--and amory has talked about this in much of his writings-- >>allen: but wait. stay with utilities justfor a second. >>schmidt: same thing. sure. >>allen: i don't want to leave utilities yetbecause it's really the notion that we can between now and 2030 go from--again, i don'tknow the exact numbers--but it's like

well under 1% wind power to--wind power isa 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--thatwind is on a kilowatt per hour basis roughly similar to the cost of coal after the subsidiesit gets today. and without the subsidies it's a couple centshigher per kilowatt. so that's pretty good.it's the one that's closest now to being a free substitute for--

>>schmidt: --for coal which is the most commonpower source that we all have. the issue, of course, is that wind doesn'tblow in the places where the people are. so, in order to make these systems reallywork, you also have to have the grid technology. and the problem with the grid is it takes2 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 eitherfederal rights of way for these things or other incentives that cause the utilitiesand so forth to actually be able to build these power ________?? 7:35 >>allen: so the federal government has tosay, "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 renewableportfolio standard. an alternative if that does not get through--andi suspect it will get through--is that you can imagine incentives at the state levelwhere if 2 states have rps-- they can basically build these lines quickerwith federal help. so the arguments that we make do not workunless you solve the problem that the wind blows in the middle part of the country fromthe north to south. and, by the way, there's a tremendous amountof wind.

and the sun shines primarily in the desertsand 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 centralizedpower generating facilities? >>schmidt: all solutions ultimately are distributed.one of the errors that we have is we have a patchwork of economics and incentives thatdistort 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 sendpower 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 sendingit in to the utilities. >>allen: and why not clean coal? why not carboncapture? why not take advantage of the technologiesthat can make coal plants-- >>schmidt: in the first place, there's a lotof great progress in carbon capturing sequestration. i don't use the term clean coal because ithink it's misused.

i think it's used to infer-- >>allen: because you don't think coal is clean. >>schmidt: well, it--if we're going to talkabout coal, i'd like to talk about it in the context of its co2 load as opposed to theother particulates that clean coal typically represents.so the fundamental problem is coal which is the most prevalent source of energy in theunited 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 carbontax or a cap and trade system. i am skeptical as to whether those are goingto happen simply because they have the wrong

words in them--which have the words taxesand prices and so forth. there are many, many people who believe thatthey're the right answer. but i think just politically we have to actas though those will occur but not anytime soon.so what that tells you is we--in our case, we assume carbon capture and sequestrationwill work, but we assume that it will take a fairly longtime for the systems to become prevalent enough. i should say that we're having a u.s. basedconversation here, but we can solve all the problems in the united states and get themright, and we can still die as a society basicallybecause of the issues in china and india.

and so in the car conversation that was fascinatingearlier, one of the things to emphasis is we have to solve the efficient car problemin the united states, but it's even more important to establishit at lower price points in developing countries which is where most of the cars are goingto get sold. maybe you start it in the u.s., and you learnfrom that, and you scale from there. these need to be global solutions. >>allen: and then why do you choose the googleplan 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 toomany business interests. but there's not a common spreadsheet on whatare 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 whatthe costs are. and my guess is that without some form ofcap and trade or carbon tax we will never really understand what the costs of theseplants should be. >>allen: i've seen you say in other venuesthat you stepped into this gap because you felt there was an enormous lack of leadershipin the united states on the energy issues. do you still feel that?

>>schmidt: well, obviously the administrationmakes a huge difference. and president obama--then candidate obama--hadindicated 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 whatthey say. the stimulus bill that was passed had 50 billiondollars of renewal investment, renewable credit. >>allen: is it in the right places as faras you're concerned? >>schmidt: it's good enough given that thegovernment is 2 months old-- >>allen: it's a start. >>schmidt: --they did a job of getting it--

>>allen: it doesn't address this transmissionproblem we talked about. >>schmidt: there's about 6 billion dollarsof 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 tryto build these grids, and they discover various other--either federal issues or state issues. >>allen: but i--i mean smart grid seems tomean different things to different people, but what i've heard when i've inquired aboutwhat that money is for i hear more talk about devices in the hometo monitor energy usage as opposed to cracking that big problem you said of getting the powerfrom where it can be generated to where it

is consumed. >>schmidt: certainly the policy intent wasto do both. it's worth noting, by the way, that we takefor granted the structure of the internet and how powerful it is in distributed notionand anyone can connect to anything and you canmonitor everything on the internet. none of that is true of the energy grid tofirst order. so the most obvious thing that you want isyou want to be able to have a computer that somehow talks to your dryer and calculatesthe optimal time to turn on the dryer. and that optimal time will depend on an awfullot of dynamics.

today's price for energy; today's consumption;is the grid full? those sorts of things.if you look at energy costs-- >>schmidt: --literally the cost that the utilitiesface which is horrendous in these situations, it's not the base load that costs the allthe money, it's the peak power. it has to do with human use and human cyclesof the day. so the power they have to turn on at 2 to4 on a summer afternoon is immensely more marginally expensive than the power that theyhave every day. so anything you can do that can shift even5 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 thecomputer business then helps you see issues in the energy business that perhaps peoplewho are actually in that business don't see? >>schmidt: well, it certainly makes us a betterirritant of them. >>schmidt: basically, we look at the structure,and we think--and i mean this with respect because these are people who have worked hardto build a great system--it's not very flexible. so we like to think of applying computersto a mature system to make it that much more efficient.again, even 5 or 10% improvements because of marginal costs have these enormous amountsof savings for them. so there's every reason to think this willhappen quite quickly.

>>allen: so you talk about people with a lotof experience in the business. since we have michael morris here who runsone of the largest utilities--largely coal fired utilities--in the country, i wonderif-- can we get a microphone up here, please, andi 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 ofthe timelines and some of the dates. i feel like we're going to get there, butthe internal combustion engine which we call

a base load power plant is going to be withus a long time. >>schmidt: yeah. sure. >>morris: but we will transition to thesethings over time. clearly, i agree with your point that we'llget to distributed generation. it would be foolhardy for us to sit back astelco's did some years ago and say, "oh, yeah, sure. people are going to walk around withtelephones in their pocket." because they do.and eventually you and i may have a power plant in our home--a small power plant drivenby 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 ofamerica 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 putcompressed 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 wedo 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 yourmoney because it typically comes slowly

and comes with all kinds of strings attachedas some of our colleagues are finding out. what we need is that federal authority toget 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 orthe state of y ought to pay that is just confusing. we've looked at your 30% and the timelineyou 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 megawattgenerator. 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 windtoday. 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 usget 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 $78a month. now, we don't serve california where you pay$780 a month or something like that. >>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 rooftopsolar 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 becauseof 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 thatyou said. and i think there's an opportunity beforeus. the other comment that i want to make is thatwe have not tonight spoken about efficiency. and by efficiency i mean the efficiency ofbuilding insulation--those sorts of things. the quickest way to actually solve all theseproblems 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 ofgenerating it. and there are a tremendous number of ideasin there. and with the right financial incentives wecan make that happen even quicker.

>>allen: i'm going to open it up here, butwould you comment on that, as well, about the california style incentive systemso 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. anythingelse? the energy efficiency--there's no questionabout that. but when you speak to that issue--again, thinkof 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 homefor 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 roundtablestudy with a lot of my colleagues. many of your people were on the same workwith us. there is savings on the 30% range in the commercialmarketplace, 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, ithink 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 thatput 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 dedicatedto northeast ohio 7 years ago in a different administration--imagine that--for insulationfor 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 thoseimprovements in their rate base. >>morris: yeah, that's the point.so--and that takes me-- >>schmidt: the point is that smart regulationhere can actually cause this to occur very

quickly. >>morris: sure. >>schmidt: and things like energy efficiencyreally do compound over time in terms of the savings. >>morris: no argument with that. >>schmidt: because energy prices are not goingdown 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. >>allen: oh, peter. yes, can we get a microphoneback there? >>peter: so, for those of you who don't knowme, 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 andbrings us back to a revenue target. the important point to be made there is notonly 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--callit 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 energyuse in california has remained flat.

across the rest of the united states it'sgone up 50%. so in a huge laboratory over 30 years if youhave 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 comefrom outside the electric utility industry. i was previously at goldman sachs.i've been in high tech. whenever you put an objective out there atfirst 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 energycrisis 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 4years 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 capitalmarkets. so what has happened is we're afraid our counterpartiesaren't going to deliver. so we announced that first of all we woulddo 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 andprovide financing to distressed counterparties

and, in effect, be a venture capitalist ora distress fund lender. so we're really trying to be creative in gettingthere. while we may have gotten a setback in gettingto 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 lineto 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 thinkwe can get to 33%. so it really takes the right incentives andit 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 catalystfor change as well as government. >>allen: do you want to comment on that? >>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 goingto be part of the secret. >>allen: question right here. please identifyyourself. >>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'tanswer 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 talkedabout 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 gooddeal more visionary. and i watched tonight some very, very smartpeople 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 ofconversations. i think that there is at least a possibilitythat 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 youcan'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 eveningdifferently if it was 1943, and if america really was--as i think a great many americansthink it is--right up against the wall? >>allen: well, we're up against--well, itseems 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 theenergy 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 area necessary part of this game. >>schmidt: let me give you sort of a politicalanswer in context. change does not occur when things are goingwell. change occurs when people are scared.this is the time--and i'm not suggesting my

recommendation is correct or the other discussionsare. 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 ofinformation. 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 andis 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 rightpeople 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. >>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 tothat 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 questionto eric. eric, you're a smart guy and love to listento 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 reducethe dependency on foreign oil.

because that is a security issue for thiscountry that i don't think that we can continue like we're going. >>allen: and we probably didn't do the transportationissue. >>schmidt: yeah, we didn't talk about transportation.more efficient cars. and the way you get to more efficient carsis 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 onand there's a lot of new stuff coming in that area--more efficient batteries, more efficientpower 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 economicsare 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 puttogether 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 hangingfruit like pg&e has discovered. and using tax districting which has been putin 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 voluntarilyon 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 demandside management.

another 5 or 10% conservatively, as eric pointsout, 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 purposesbecause 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 reducesthe peak demand. so when we combine these things together,they can be implemented now.

california berkeley october, 2008 their discussion--andjust 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 issueand the energy independence issue. no new technologies.and we can do it now by cooperation between the auto industry, the googles, the sierraclubs, 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 moveupstairs where drinks will be served. i'm sure that will make solving all theseproblems much easier. and we'll continue the discussion. >>schmidt: thank you all. >>allen: tomorrow morning breakfast startsat 7 o'clock. program starts at 8:15.thank you.

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