unable either because of our market issues or our government policy-making issues to take advantage of our own innovative capability and other places on the planet because of the way decisions are made might have the ability to take greater advantage of the innovations that we're actually producing. so let's just come back to that when we can. jim, you run one of the country's largest utilities and one of the most innovative producers of -- and distributors of energy. let's hear from you. >> first of all, lisa, my great grandfather lived to be 104. my best years are in front of me. ok? so let's get over this young thing. [laughter] >> we're a unique position -- >> jim rogers. >> yeah, jim rogers with an old grandfather and i hope i have his d.n.a. we're in a unique position in the power industry to deploy

the solutions to raise the capital, not raise the national debt, to do it at scale and to do it in china time. and let me put this in context. go back to 1910. i can barely remember it. but in 1910, we started down the road to provide universal access to electricity in america. and we did it. and the price of our electricity has been flat in real terms for 50 years. that scale. particularly in a world where 1.6 billion people have no access to electricity today and we did it for the prices are lower than other developed countries around the world. and it's allowed huge gains in the development of our country. when we started down that road in 1910, we couldn't envision

what we would enable. for a hospital, x-rays, m.r.i.'s, laser surgery, just the ability to do things in the medical world. we couldn't envision that as a result of providing electricity to every home and business, it would lead to productivity gains of how we develop steel in this country with electrotechnology, which means our steel industry has the lowest carbon footprint of any steel industry in the world. we couldn't envision computers, the internet. it all came as a consequence of providing universal access. and we did it with 50 state commissions. and we did it across this country. it transformed our country. and one of the reasons we are where we are today is because we were a high-tech business in 1910. and we enabled things that no one could envision then. my challenge to you and my

challenge as a c.e.o., this is back solution capital scale china time, i sit here today in the 21st century and said universal access, enabling all the things we take for granted today was yesterday. but i believe we can have a twofold mission in the 21st century that will achieve all the things we're talking about here. and we have the capability to do it. first of all, we can modernize and decarbonize our entire fleet by 2050. whether it's carbon legislation or not, we've got to do it. and that's why i've been an advocate for carbon regulation because i want a roadmap so we can get it done. if we do that and we have to do it, that's going to stimulate the economy and create jobs. and it's going to create jobs that will rebuild the middle class and it's going to be a

huge scaling. so modernization, decarbonization, mandate by 2050. we will raise the capital. we don't need the government to raise the capital. secondly with respect to our second mission, i believe we're in a unique position to make the communities that we serve the most energy efficient in the world and do it at scale. as we convert our distribution grid into a two-way communication grid, we then have the capability to put the apps on the other side of the meter that will allow people to reduce their energy use and have huge productivity gains and we can do this at scale. in a sense, we're a distributor for all the creative, innovations that come from arpa-e, that come from silicon valley because we can deploy and make it happen and we can have the capability to raise

the capital to make it a reality. and so my point to you is, my job has always been affordable, reliable, clean electricity 24/7, 365. i know that our industry produces 40% of the carbon footprint in america. but i also know that if i can achieve my first objective, i can reduce dramatically the carbon footprint. i also know i'm going to enable -- i can only envision two things now, there's probably a zillion things that will actually happen. i can envision the ability to use renewables and make them a better contributor, but equally important, i know that i will enable electric vehicles and plug-in hybrids and the transport sector represent 30's% of the emissions. if i carry out these two missions, i raise the capital,

i come up with a solution, and i do it in china time, the reality is we can reduce our emissions close to 70% and stimulate our economy, create jobs, create energy independence and have much cleaner air at the end of the day. so i know what the challenge is. and we're in a unique position to go to work. what we need is policymakers in washington is to develop a roadmap so we can get it done. >> so what i hear you saying, jim, is in a sense, you know, we've lived in cities and villages for 8,000 years or so and those are primarily not electric. the last 100 years which is really nothing in terms of time, we built this platform which is amazingly efficient but it's not particularly modern in the way that you're using it. it's not sustainable, it doesn't have the kinds of things you're talking about, you say just let the market

work, let us move it real time and we can take that same platform to higher and higher levels of broader performance, that is performance to not only deliver that what you call universal access to electricity but also to deliver it in ways in which it is more sustainable, more environmental, and all of the other things you put on the list. so it's a maturation process that in real -- which you call china time we can get to work. the other thing we've lost is we've sort of lost track how long it takes to do things. we've had the electricity the last 100 years and now take the next few years and make it into the system it needs to be. >> said another way, think about it, in 40 years, i've got to replace every plant and do in 40 years what has taken me 100 years to do. i'm prepared to do that. >> right. >> and the other point, and i think this is the point that's really so important from skip, is that we have the ability to provide universal access to energy efficiency and

productivity gains in the use of electricity. no one else has the ability to optimize the use within a home. and in a home, in a neighborhood, and a residential customer class against industrial, against our grid. our ability to optimize is terrific. and i have a prediction, i know i'll be around long enough, i hope. but i bet in 10 years that what we think of as energy efficiency today will be very primitive compared to what we'll be doing then. if we can get on the road and get the work done. >> so i hear a lot of positive and upbeat thoughts. let's hear a little bit about what it is that holds us back. is it -- there's been studies that every time someone tries to advance new innovations into this massively efficient system, gary, that you

described or jim or skip, the system that we have that they just break down. so sunil, you're investing in companies and you've got other people's money and moving things forward, arun, you've got hundreds of millions of dollars down on the betting table relative to projects you've invested in around the smartest groups around the country. so we get all this going, what holds us back? >> i might throw in the first two observations and picking up on what jim said, and i think we're pretty much in sync together with this. the first is i commented on previously, images of the future. we need better images that we are a can-do, that the technologies, that the behavior changes are available to us if we choose to develop them. so really helping the u.s., helping the global economy understand the huge opportunity before us if we make those choices and allow that capital to be deployed. that's part one. part two, the roadmap. we absolutely do need a roadmap. we need a clear, persistent,

increasing signal of what needs to be done to transform -- >> so the lack of a roadmap holds us back and the utterance of the word "roadmap" ee vocs from some -- evokes from some the notion of soviet state central planning. so how do we get past that? >> if i may, michael, i think i'd like to pick up on a point lisa made at the beginning and that is when we talk about "we" here i think we're substantially talking about the united states and not the world. because there are big chunks of the world that get it, and they're actively on their way. germany has done an enormous amount. the chinese are on to this in a very big way because they see the economic potential that a number of the panelists mentioned. britain is into this, south korea as lisa has mentioned has made it a national imperative to innovate in this area. so substantially the we in this i think in terms of the big

economies are us. the united states. for us, i agree, it is substantially this idea of the roadmap. and i think part of what gets in our way, and is both a great strength and in this case a potential weakness is we have a very deep reliance on market mechanisms and market mechanisms cannot see the risks that we face because of the way they're presented to us and they don't yet see, although they're beginning to, the opportunity whereas some of these other economies don't have those same challenges. the chinese in particular do not have that same challenge. they can just go for it. >> let me say when i say "roadmap" i say put a price on the cap of emissions and let companies find the cheapest way to achieve those objectives going forward. i don't mean an industrial policy where you lay it out. i mean the russians proved

five-year plans don't work too well. >> yep. >> we've got to harness the power of the market but the government has got to pour money into the r&d. we've got to commercialize these things. but it's a partnership between government and the private sector and i don't -- it's not either/or. and i think we need to be sophisticated enough to be able to do that in a way to harness market forces, we have clear guidance from the government of where we need to go, we will find the solutions in the way, we just need to know directionally what we have to achieve. >> sunil, you were going to jump in? >> yeah, the idea that government planning is the way to the future is something i simply can't abide. now, i mean, i'm a venture capitalist and i absolutely

believe in venture and believe american innovation can absolutely get us out of this problem of these sort of man fold problems of innovation -- sorry, of security, climate, and economic development. and i absolutely believe markets can get there. but markets only work when the price is set and reflects what the real scarcity is. right now we have a scarcity of energy security. we have a scarcity of a stable climate. neither of those things are incorporated into the price of energy today. incorporate those prices and the market will work. it is the best known mechanism we've got for allocating resources and works far better than a chinese system or any other system out there. it's not perfect but it does work. those $13 trillion that has to be invested worldwide between now and 2020, the sort of $26 trillion by 2030, the vast majority of that needs to come

from private capital sources. the government cannot, not just here but around the world, cannot be -- we cannot look to government to be the banker for development of that energy infrastructure. we need to look to the government to be the referee and rule setter, rule setter for the markets, rule setter for infrastructure and building out that sort of natural monopoly infrastructure that can't be done through competition. and we need government to set the rules for regulation of how profits are made, for example, by jim's company and other utilities, things like something called decoupling. so that energy efficiency incentives rather than simply building more power plants. there is a role for government and a simple and important role but needs to be a stable and thoughtful role and not sort of command and control role. >> actually, secretary schlesinger, the first secretary of d.o.e. had a wonderful insight in terms of

the roadmap our government has set for us. >> that was way back in the 1970's. >> no -- but many years later he looked back and said our energy policy in this country swings between complacency and panic. it's never been consistent and we've never looked at energy and environmental policy as inextricably linked. we've actually in the house and in the senate, it's worked in different committees, it needs to come together and we need a comprehensive energy and environmental roadmap or rules or whoever -- or however you want to describe it because we're going to continue to do this when the price of oil is $140 we'll do one thing and when the price of oil is $40 we'll swing back to complacency. >> i'd like to add to what jim just said, this thought, an an economist i would be remiss when i said prices don't matter

but they do. and we need a persistent signal and grow steadily over time and what we want the price to help provide the signal and motivate in the direction we're discussing, we can enable the economy to respond and enable the markets to respond if we also invest in our education and in our laboratories and the technologies and the invention and patent process, what have you to bring that about. if it we don't, whatever the price may be, we may not be able to respond as quickly as we might otherwise and we need both, the roadmap with a price signal that's clear, persistent, steady but has to be matched by investments in the human resource in our institutions to make that response effective and possible. >> so lisa, why is this so hard from a policy perfective p in particular? >> i think a couple of things, one is that in addition to needing a long-term roadmap we really need it to be bipartisan. this needs to be something that everyone actually agrees on. and it can't be just one party,

and it can't be that one party is saying my way or the highway, that sort of thing. it actually has to be a joint decision and everyone has to get behind it. i think the other thing is we have to recognize that this is going to cost us some money and we need to recognize that it's worth it. our petroleum infrastructure was basically built by my great grandparents, some of whom couldn't read and came over here from starving villages in europe, that those people have the generosity to pay out of their paychecks and out of their lives to build us this giant petroleum and electricity delivery infrastructure is extremely moving and the fact we're not interested in investing in that to that similar degree is really kind of depressing. so we need to start -- policymakers need to start talking about the vision thing and we need to see this as sort of a responsibility as something that we can leave to our great grandkids. i think another thing that we haven't talked about here,

we've talked a lot about technological innovations. we also are going to need innovations in finance and in business models. and one of t iues- we ha thi enormous opportunity in people's homes to reduce the amount of electricity that we use and even to generate electricity and throw it back on the grid and once we start using plug-in hybrid cars we'll be in a whole other world in this sort of -- in these terms but what right now, it's very easy to finance a new power plant and rather difficult if you don't have a pretty healthy income to start weatherizing your home. you either need to get in on a government program which means you're in the lowest 20% of income or you're kind of in the upper part where you can throw some solar panels on the roof and get a tax break. but we actually need to make it easy for everybody and we need to start, as a society, investing in private homes because they're using a lot of the power and we also need to be investing in individual's

cars or individual's commute options, maybe not cars specifically but we need to start investing in that, because right now what we have is we have a private credit system for individuals and then we have a big sort of bond based system for financing power plants and other big initiatives. >> let me just add a point first, jim, to deal with this roadmap thing. there are some scholars out there that said what we've lacked is the ability to get bipartisan consensus because we've avoided those things where we actually can agree and there are places we can agree. there are outcomes and views of what america can be that people can agree to and one of those would be, for instance, a capitalism driven high-speed ecosystem that produces universal access to clean and efficient energy. i would guess you could get people around that sort of outcome oriented view and this motion of -- notion of the road happen is the outcome and once you're driven by the outcome things start to fall in place. one of the things the policy process has avoided is coming

together and agreeing on outcomes and we've sort of forgotten that to some extent. jim? >> i was going to make a point every piece of environmental legislation that's been passed by congress has been overwhelmingly bipartisan. it's also true with respect to energy legislation in this country. so we have to find a way -- we have to be more centrist in our approach because that's how real progress is made in a democracy. i mean, there's many great books and the greatest leaders in our country have been centrists who have found a way in the center to make progress. but i want to kind of comment on one thing that lisa said, and this gets to the scaling idea, we did a project in north carolina where we asked permission to put solar on the rooftop. we went out and we invested $50 million to put solar on the rooftop and at the end of the day we were able to do it cheaper because our cost to

capital was much lower than our customer's. and during the middle of the worst capital meltdown in the history since the depression, we raised over $7 billion at about 5%. we then used the money to put solar on the rooftop. we didn't force families to make a tough choice. when you have $20,000 to send a kid to college or do you do solar on the rooftop? we invested -- we looked at the rooftop as if it was a power plant site. we paid them, we install it, we operate it, we dispatch it as a consequence of that, we have the equivalent of 1,300 homes that are powered by solar. and this is an example, and i can give you examples on the energy efficiency side where we become a distributor of these technologies that are developed, whether it's a silver spring technology or grid point technology, and we can take our low-cost capital

and deploy it so families don't have to make the tough choice between sending a child to college or insulating their home or sending a child to college or putting solar on the rooftop. and it's using the same principles that we used when we brought universal access. and the last point, we used the phrase decoupling and i'm afraid we use it a lot of different ways. but decoupling for utilities just makes us indifferent. and my thought is, can anybody in the room think of anything that's ever been done as a result of indifference? i don't think so. >> bad things. >> bad things. >> anarchist club. >> but there is a step beyond decoupling. i think decoupling is fine. but the step beyond is to give companies like us the incentive, the same incentive

we have to put a $10 billion into a nuclear plant, we should have the equal incentive to put $10 billion in energy efficiency. if you get those rules right, at the end of the day on a risk adjusted basis, i'd much rather spend $10 billion on energy efficiency than on one plant. so i think it's not just decoupling, it's getting the incentives right and letting us bring capital in the scale we have to the job. >> like the whole ecosystem services logic that has been derived in economics, is a new way of looking at things. we've done that at the university. we put in five mega watts of our first 20 watts of solar, paid for none of the capital, get a guaranteed price for electricity that fits what we need and we don't have to do anything and others took the chance. arun? >> i think since there were comments made about the role of government since i'm the only government person here i thought i'd make a few comments

on that. you know, if you look at the innovation that has happened over the last, you know, 30 years, 40 years and the biggest player in the game is internet. if you ask the question, where did internet start? it started in 1968 because of special funding to create an option which no one -- and no one even imagined what the world could be with internet, even the people who developed it. so if you look ahead now at what the government can do, i think jim pointed out, is to invest in the r and d infrastructure to create technological options. we need multiple options. let me just give you one example. my daughter is applying for college. you think she's going to apply to one college? she's going to apply to 10 hoping to get one. that's the kind of options that we need in this country. and let the businesses with the right policy, with the right

sort of signals, whether it's price or regulatory signals, pull -- take those which makes best business sense. so i think the government can be the front end and the r&d that needs to be done, and tweaking it in the right way so that business that train moves as fast as possible. so that i think is what we really need to do. >> talking about fast as possible, how do we -- let's turn to this clock speed question so we have this way in which markets can move very quickly and capital can move quickly, consensus in a 310 million person democracy is perhaps sometimes less swift. let's talk about clock speed. how do we speed up innovation and change in technology, in government policy, and whatever the area happens to be. what do we need to speed up the clock speed? >> one thing i would say is every p.h.d. that graduates

from a university in this country is from another country or have a visa stapled to their p.h.d. ok. >> there's a lot of people that don't agree with that. >> that's number one. because 50% of the patents last year were really won by foreign-born creators. >> inventors. >> i think that is one thing. the other thing, and i think this is something the chinese do really well, and i've been to chin yi university several times and what they do is they take the r and the d and put it right next to commercial. and so what's happening is rather than having hundreds of science projects, one at berkeley, a science project at m.i.t., a science project at the university of texas -- >> a.s.u. >> well, i think a.s.u. would be a wonderful place to do it. but -- but i think that it

needs to be coordinated, i think it needs to be -- if you're giving money to a.s.u. and m.i.t. and you're going to give it to wherever, it ought to be a systematic plan where they're all working together. >> instead of thousands of independents. >> and the labs -- we have an incredible resource in our labs. but we need to tie the work of the labs more to the universities and then to the commercial deployment -- >> one way to speed up is to enhance the network, unify the networks, tie the networks together. what are some other ideas. >> i'd like to add to that a little bit, michael. i think this whole thread of the conversation we've been having underpins an idea i think is going to be very important for this energy system. we cannot step change the energy system. it is too big and it is too resistant to change. but if we think about it as an energy ecosystem of supply and

consumption and we think about it end to end, technology, finance, policy, radical innovation coming from entrepreneurial community, we can radically evolve it. and it isn't resistant to that. it will take that onboard if we have the right roadmap and we have an end-to-end view of what we have to line up. i think jim's example of putting solar on a rooftop is brilliant. it's not about -- simply about technological evolution. it would be great to have a better solar panel but you get the right finance and get a company with this kind of very forward-looking attitude towards finance, and you can make an important change. so the first thing i would say is that we have to see this as an ecosystem that we have to have an end-to-end view of and we have to radically evolve it. the second thing -- the point i would make is about looking for

ways we can cooperate in other parts of the world to build on strengths that we have that we can share with others. jim has raised china a number of different times. and i had a great time over the 14 years that i was there, b.p. spent $5 billion putting steel on the ground and it was great fun. there are some real strengths that china has. i wouldn't advocate that we take their system, but they have some real strengths. and one of them is china time and the other is china cost. there's an enormous opportunity for us to cooperate with them. there is a place in the north central part of china called ordos. and the future of the world's energy system is playing out there right now. and the reason i say it's playing out there right now is partly for the reasons jim has mentioned. the chinese are able to connect r&d with commercialization and they're really good at doing