Eric Schmidt at Corporate Eco Forum

Eric Schmidt at Corporate Eco Forum

M. R. RANGASWAMI: We are very
privileged to have Eric Schmidt join us tonight. He’s actually spoken at my
conferences when he was at a prior company. But I met with him about six
months ago when we were at a dinner together. And I really presented him the
Corporate Eco Forum program and asked that he
be a keynote. And he said, look, M. R., if I
have the time on my schedule, I’ll do it. And fortunately, he had
time on his calendar. So Eric is a very passionate
individual, as an individual and a person, about the
green initiatives and the green movement. And also, Google as a company
has undertaken numerous initiatives in this space, done
a lot of experimentation, and really helping make a big,
big impact on the Eco agenda. So as you know, this is a forum for Global 500 companies. And who better to have be our
keynote than a Global 500 CEO? So please help me in welcoming
Dr. Eric Schmidt. ERIC SCHMIDT: Hi, M. R.
Thank you very much. This is a fun group,
and it’s been a fun conference for the day. Shall we get the screen up? And what I thought we would
begin with his do– What’s a dinner without
a few presentations? We don’t use PowerPoint
anymore. We use some better technology. And I have with me
Michael Jones. Raise your hand, Michael. And Michael happens to be the
inventor of Google Earth and is a good personal friend. And I asked him, if he were
going to talk about the earth in the way that he loves it and
that all of us love it, how would he talk about it? And curiously, Michael, you have
us starting at our hotel. So where are we going next? MICHAEL JONES: Well, let’s
find out where we are. ERIC SCHMIDT: We’re at the
Fairmont, Michael. MICHAEL JONES: A small
piece of the earth. ERIC SCHMIDT: So one of the
first things we looked at was, what are people doing with
Google Earth with expected climate change? Are they, in fact, using this as
a tool to try to understand what happens? And there’s this interesting
group called the Hadley Met Office, which is the UK official
weather and climate information research center. And the British Antarctic
Centre created this sort of layer. And what’s interesting about
this layer is that, as the temperature goes up, it
starts off kind of– blue is the normal temperature–
and then, as the temperature goes up, you see
it changing and changing. And what’s interesting
is you take the innovation, say it’s 2020. And I’m using midpoint
projections here for climate change. North America, two
degrees Celsius. So what is that, three,
four degrees? No big deal. Warmer is better probably,
anyway, right? But in the North Pole, it’s
15 degrees Celsius. So you see the little
ice cap up there? It’s going to be really
nice to all those open shipping lanes. That’s the way I
think about it. Unfortunately, there’s a lot of
other things that happened up there, as everybody knows,
including basically all of the wildlife and all the
trees are gone. But we’re not done yet. They then basically take us
out to 2050, which is five degree Celsius, which again is
kind of toasty here in our part of the world. It’s 40 degrees in
the North Pole. So if you think there’s any
ice up there, you’re not paying attention to
freezing point. And of course, it’s all open. It’s all gone, along with
probably a sixth of the world’s plant life. Oh yeah, well, we had enough–
we have the other 5/6, right? You get the idea. This is a very, very, very
tragic scenario. Keep going, Michael. So what happens, of course, is
as it gets higher, it gets even worse. So what we thought
we’d do is– can government policies
make a difference? We thought, well, are
there some examples? Everyone’s always saying,
nobody can do anything about this. So what are some examples
of government policies? So here’s an example. Mexico and Guatemala. And show us the border,
Michael. Actually, I’m sorry,
this is over ’74 through basically today. And there’s the border, the
difference in policies of Mexico versus Guatemala. Kind of interesting. You can just see it as a
straight line, or in this case, as a corner. Go ahead. Let go to [INAUDIBLE]. Anybody been to Uruguay,
a well run country? Which side is Brazil, and
which side is Uruguay? This is a trick question. Uruguay is on the lower, and
Brazil’s on the upper. Anybody care to know what
the border looks like? There it is. Let’s zoom in. By the way, you see the
trees there on the left, on the right? Those are little trees
that they planted. Government policy does
make a difference. Another question, can any of
you make a difference? Of course we can. There’s a fellow in Texas whose
name is Luecke, who decided to make a difference. And Michael, you promise me
this is a real picture. You didn’t just add this. OK, you promise? OK, these are half mile
long letters. And by the way, that
is a power line, in case you’re wondering. Those are the tall power lines,
because you can’t plant trees next to the power lines. It gives you a sense
of the scale of– a lot of people say lucky,
but the correct pronunciation is loo-key. This is a guy who had a vision
that he could make a difference. And he did, with a little
bit of marketing. So when we do these policies, we
have to have some policies about where do we want
to spend our money. Google– and I’ll talk about this a bit
more– has invested $10 million in enhanced geothermal,
which I want to talk about a little bit. And what you do is, enhanced
geothermal– I think people here know–
is there’s a lot of heat inside the earth. Remember this as children? It’s really hot. It’s why you can’t
dig to China. That doesn’t work. There’s a reason. But basically, if you go down
a little bit, there’s heat. But the heat varies. So here’s a chart of the
suitability of states for enhanced geothermal. And what’s interesting, of
course, is the Western states have higher suitability. Again, let’s make decisions
with facts. It’s a big country. We’ve got a lot of choices. Let’s put those things where
they make a difference. Keep going. Showing the circulation
pattern. So here’s an example of the
temperature of depth. Now, we used 5.5 kilometers,
because that’s sort of a reasonable depth to use oil
drilling equipment, to get down there and start
playing with this. And again, you can see there’s
a fair amount of temperature there that’s available. And we’re talking about
temperature of 150 to 200 degrees Celsius. And by the way, the temperature
doesn’t stop. You sort of don’t
run out of it. There’s a lot underneath
there. So we calculated that if you dug
down 5.5 kilometers in a two percent [UNINTELLIGIBLE],
we’d have 15,000 megawatts of energy annually in California,
for example. Anybody here been to the San
Gorgonio Pass? it’s the pass when you’re driving from
LA to Palm Springs. Anybody ever see all
those wind– everybody sees that, right? So here we are. And Michael’s now
driving along. And the wind farms there
generate 893 gigawatt hours of electricity a year. It’s probably one of the
best places in America. And basically, the average wind
speed there is about 20 miles per hour. So again, you can
see them here. You can see them on
Google Earth. And there’s plenty of things
that you can do with this. Now, let’s take a
look at Google. And as an aside, One of the
first meetings I went to, they said, did you know– I always start those things,
did you know– that 40 percent of climate
contributions, CO2 contributions, are coming
from buildings? And I don’t really know
much about this. And they said, and it’s
a big problem. I’m going to talk about
that a little bit. And I thought, I could
actually do something about this. I actually have a lot
of buildings. Big deal, right? Google’s a big place. So I called the facilities
people. And I said, what are we doing
about energy efficiency? And they said, oh, well, we
lease the buildings, we bought these ones, the usual
sort of answers. And I said, well, anybody know
how much it would cost to make these buildings very
efficient? And here you see the
Google campus. And the initial estimate
was $5 million a year. So it’s going to be $5
million in capital. And I said, well, that’s
a lot of money. I try to look like a CEO. And everybody asked you $5
million, say it’s a lot of money, because you want
it to be cheaper. So they said $5 million. And I said, well, how
long is the payback? And they said, two
and a half years. I said, the payback on a $5
million capital investment is two and a half years, and you
haven’t done it already? And they said, no, we didn’t
have permission. I said, you don’t have
to ask permission for that kind of payback. In other words, what’s
wrong with you? But I learned something. And I learned something, that in
normal corporations– and I suspect all of you have
this problem– nobody asks the questions
in an integrated way. $5 million, immediate payback,
what’s not to like about this? Furthermore, this is when gas
was half the price and electricity was cheaper. And one of the things that
people– and again, business people will understand this– is
savings compound infinitely when prices go up. This is an easy thing to
understand, very, very easy to understand. When prices go up, you’ve
already got the savings. The savings get bigger,
not less. It’s called increasing
savings. I’ve just invented it, OK? Why this is missing
in corporate accounting is beyond me. Somehow they don’t get this. So then I said, what
else could we do? And they said, well, we actually
have some ideas about using solar. And we’ll build carports
for all the cars. And we’ll put solar on top. And in fact, here, we have a
meter, which shows you our scoreboard– we have dynamic systems
inside our campus– which shows you by building how
we’re doing against power usage– and we use lots
of electricity– and of course, the contribution
from solar. And my point here is not that
these are hard to do. These are simple to do. But somebody had to do them. So the question is, have you
done them in your company? If you haven’t, why not? It’s just a scorecard. And it’s just capital, with a
very, very quick payback. In our case, we had a lot
of fun with this. And about a year and a half ago,
when it was completed, it was the largest private
installation of solar on top of the roofs of the buildings
that we own. And by the way, the
savings continue. The payback is incredible. Payback was less
than 10 years. And that’s ignoring all the
various subsidies, which, of course, we were happy
to pocket. So eight buildings, two
carports, the total utility meter, the building 40
dashboard, which we’re showing here now. And here, again, you can show
the contribution from solar. You can show the net
contribution and the total demand. We can monitor this. We can understand it. And we can go forward. Michael, take us back to
where we started here. Here we are at Google. Come back up to San Francisco,
I think. MICHAEL JONES: Yes, sir. ERIC SCHMIDT: What’s interesting
about this kind of a tool is you didn’t realize
what life was like after you start using it. How did you operate
without it? So here we are again. But of course, we’re
really there. We’re actually up on the
top part of that building right there. And it’s not really daytime. It’s kind of dusk. And by the way, anybody look out
the window, do you see the Golden Gate Bridge? Because it’s obscured by fog. But in Google Earth, you
can see it 100 percent. So with that, thank you
very much, Michael. So I wanted to show you that,
because I think it helps when people can see it. You can see how you can make
a difference and so forth. Unfortunately, what I’ve
concluded is that people in this room get it. A lot of people I know get it. But we have a total failure of
political leadership, at least in the United States,
and perhaps in the world, on these issues. It is a fundamental failure
of leadership. And it comes from– Let’s start talking about the
things that really threaten civilization. Well, obviously, nuclear
proliferation. That’s something which many
people worked on when we were born and when we were young. And the other one is
climate change. Certainly, life as we know it
is now clearly threatened by this thing over the next
50 to 75 years. And what’s interesting to me
is that, as a political dialogue, there is a lack of
understanding of the value of global alliances. There’s a lack of understanding
of the benefits of technology and how technology
can actually change the dialogue. There’s a lack of understanding
that there’s an opportunity before us that is
a massive opportunity that solves a lot of these
problems at once. And so it seems to me
that this is time to seize the moment. And I think what I would like
to lay down tonight is it’s time for everybody to get off
their rear ends and start taking this seriously. So here’s my argument. It’s very simple. I’m not a politician. The government is about to do
a massive stimulus package. They’re going to reward all
their usual friends, depending on who their friends are. Why? Because the country is in this,
are we in a recession or are we not, kind of a state. Everybody’s talking about it
all the time in Washington. Read about it in the press. So instead of just randomly
handing out all the money to all the normal suspects, why
don’t we take an opportunity? A crisis is a terrible
thing to waste. Why don’t we take the crisis,
and use this as an opportunity to retool the energy
infrastructure of the United States? It’s very straightforward,
not a very hard idea. And I’ve got a proposal. Unfortunately, I don’t have
everyone in agreement. So help me with this. It’s very simple. What’s the number one reason
we’re spending all this money on the military? Fundamentally, because of
oil security, right? So if we could make the
price of oil be lower, that would be positive– positive for us, not
for everybody. If we can solve that problem by
reducing demand, we’ve got another problem. We have an employment problem. We have a job creation
problem. And by the way, the jobs that
are created in energy policy– solar, geothermal, wind– are, in fact, high paying blue
collar, white collar jobs. And by the way, they’re jobs
in the US, in case anybody didn’t pay attention. Furthermore, we have the best
scientists and the best technology, the best research
community in the world, people beginning to work on this. Maybe we could build export
industries and get some of the stuff out, and build some more
revenue for the country. So it seems to me that you’ve
solved– oh, and by the way, I forgot about climate change. If you actually did this, if you
actually managed to figure out a way to replace– get this– replace all of the electricity
generation in the country by renewable sources over a 20 year
period, and you got rid of half of the cars’ use of
gas on a per car basis– which, again, is achievable
based on our analysis– you would cut our climate
emissions by half. And by the way, this is a
replicable strategy for all the other countries, too. So we could show them
how to do it. So I sat down and, with
a whole team, did this calculation. And it’s actually pretty
interesting. If you can achieve 100% US
electricity generated by renewable electricity sources,
50% percent of the vehicles being plug-in hybrids– and I
want to talk about that– and assuming that per capita
energy consumption remains at the same levels as it has this
year– which is, by the way, an easy target, because they
can clearly be made lower. California’s done
this for years. We all know this– our calculation was that
the total cost of this was $2.7 trillion. How are we going to come
up with that money? That’s a lot of money,
even for the US. Well the reason you can do
it is because there’s an offsetting $2.1 trillion
in savings. And the reason the savings
occurs is because of efficiencies. Remember that whole
thing of that increasing efficiency curve? And what’s interesting is our
calculations say that it turns out to be about using
an 8% discount rate. It ends up being about $200
billion in net present value, which is roughly a fraction
of what we spend on oil in this country. So even if you disagree with
my methodology, there is a real opportunity right in front
of us to actually solve this problem if people would
stop arguing about all of the minor issues and start talking
about the fundamental opportunity, which is
to retool the energy infrastructure of the
United States. And by the way, I forgot– because we’re politicians here
in the room, right?– How many jobs does it create? 500,000 jobs in this calculation
in wind alone. And by the way, we’re not
running out of wind. There’s a lot of wind. The other things to think
about– and big country, it’s useful to have a big country
with lots of wind– the other most interesting thing
about it is that wind occurs all the time. There are no cases where the
US has been becalmed. Right? That would be historic. The wind stopped today. Sorry we don’t have any electric
power because the wind stopped. You see my point. So we focused on solar, wind,
and enhanced geothermal simply because they’re the ones
that are most likely. We explicitly ruled out nuclear
power for a number of reasons, including the fact that
it has infinitely high capital cost and has lots of
energy security issues. So if you imagine that the root
problems are: the energy mix is too carbon intensive–
which has to do with history, and so forth and so on– that the way we move the power
is inefficient, we have the wrong price signals. A regulatory system is basically
targeted to the existing incumbents. We all know this. The model that you want is a
distributed renewable power structure with cogeneration
and other sources that actually make the thing
more efficient. We know how to do
all of this now. It’s just a matter of sitting
in a room and saying, the payback is how long? Why are we not doing this now? It’s actually right
in front of us. Now, we all know the carbon
intensity issue is basically a coal issue. And these plants that are being
built are responsible for about 80% of the greenhouse
gas emissions from electricity. Electricity is a large
component of this. We all know the issues
of climate change. The aging electric power
infrastructure that exists was designed without the kind of
smart grid ideas that would be obvious to computer scientists,
obvious to people who sit in this– and there are reasons for it. They didn’t have the switching
technology. They didn’t have the signalling
technology. These things were built 20 or
30 years ago, when the only kind of computer they could
get was a mainframe. And they didn’t want to put that
next the power station. There’s a lot of leakage in this
network, and so forth. The regulatory system– with the exception of a few
states, including California– are incentivized around revenue
rather than ROI and cost savings. That’s a straightforward
regulatory change that can be made on a per PUC basis, or at a
national level if they won’t move fast enough. The cost of fossil fuels is not
internalized into these systems. So all of these externalities are not in there. So how do you do this? Well, my ideal scenario would
be to say, let’s take everybody and let them all
compete fairly without subsidies, and let’s focus on
efficiency first. The problem with that is that there are so
many subtle subsidies for the existing fossil fuels
that it’s not really a fair strategy. Though, you’d like to do that. Maybe you could wean them off. And again, you all have heard
a lot about these subsidies. But there are many, many, many
in terms of special treatment around an oil leases,
various forms of tax credits, and so forth. Why don’t we just take all those
and shift them over to this other thing to help out? But my plan doesn’t
even require that. So why don’t we figure out
a way to work on energy efficiency? We’re good at that. It requires good technology,
good invention, and so forth. And when utilities pay people
to make their buildings more efficient, they do it
at about $0.01 to $0.03 a kilowatt hour. So one way to think about that
on an economic basis is that investing in energy efficiency
is cheaper than the cost of coal, or the cost of wind or
what have you, which is $0.05 and higher per kilowatt hour. So my important point here
is that, if we change the incentives so people start
thinking about efficiency first, businesses
will do this. They will go and insulate
their plants, make their businesses more efficient,
and so forth and so on. And then, the other thing that
you have to do is, you have to look at total cost
of ownership. What happens is, the way the
accounting works and the way executives work is they always
think about a purchase rather than think of the life cycle
cost. The life cycle cost, especially with these increasing
costs, becomes prohibitive. And by the way, the savings– a typical example is, you don’t
really need to replace the insulation in your
house, but you have to replace the heater. The passive systems are much
less likely to wear out than the active systems, which have
motors and maintenance, and so forth and so on. By the way, all that labor
costs go up and so forth. So if you take capital plus
operating budgets, you discover that you need to
solve this problem. In Google’s case, the capital
and operating budgets for our data center is owned by one
person, who happens to be in this room. So he’s very, very good at
making these long term trade-offs. And of course, the other trick
is to create a real time information loop. What happens is that there’s a
lot of evidence that things which are measured, consumption
goes down. There have been a lot of
studies about this. Smart meters with homes, for
example, there’s been a 10% reduction in use just by
being aware of it. Now, 10%, you go, no big deal. 10% over the United States
in every home? Think about it. And we have the underlying
computer technology– monitoring and so forth–
to make these kinds of monitoring trivial. These are very small, simple
devices, easily applied, again, and retrofitted into
the systems. So consumers basically can understand
all of this. The same thing has to do
with PC equipment. One of the other interesting
things about office buildings is that the computers– my world– generate a lot of the
electricity use. And a lot of those computers
are not doing very much. In fact, a lot of the heat load
and a lot of the ultimate electric load is driven by the
fact that these computers are on all the time. So small changes in power
management settings of your computers and so forth can
actually make a big difference. There’s a group called Climate
Savers Computing Initiative a number of computer companies
are working on, which looks like it can, basically by
raising these efficiency standards– this is roughly
like the car companies actually welcoming raising
their own efficiency standards, which is a
separate discussion. If we could basically meet these
standards, we think we could take 11 million
cars off the road. That’s how big the electricity
use and power use of personal computers and mainframes,
and data centers and so forth, really is. Another example is
building codes. Most commercial buildings
are built to be leased. So again, the incentives
aren’t in alignment. Now, you can fix this. Other countries, Sweden being
the classic example, require when these buildings are built
to have huge amounts of insulation. Again, you get this enormous,
enormous payback. Fuel efficiency, everybody
talks about it. Why don’t we just fix that? Again, it’s a call to action,
a call to action to better power, better performance,
and of course, product efficiency standards. But the interesting thing is
if you do all of that in efficiency, you can then start
talking about winds, solar thermal, and geothermal. And what’s interesting about
it is, well, the problem is the wind doesn’t blow
all the time. Geothermal, you have
to dig really deep. Solar thermal, the sun doesn’t
shine all the time. Even in California, it
rains occasionally. This obviously doesn’t add. But if you do the math, and we
actually mathematically model the likelihoods and
probabilities of when things are on and off, they basically
balance out, so that they’re roughly a permanently
reliable sum. And by the way, the shocking
discovery is that they’re more reliable than power plants,
because power plants break. And the wind continues
to blow, the sun continues to shine– thank goodness– and of course, the earth
continues to be very hot. So in the wind case, we’re
very close on wind. I think people here know
how successful the wind programs have been. North Dakota is now known as
the Saudi Arabia of wind. That’s what they’re
claiming about. Texas is known as the
Kuwait of wind. I’m not sure why one took
one, one took the other. You can guess. The important point is that
wind is really becoming mainstream. And there are issues of getting,
of course, wind power into the grid, and so
forth and so on. But all of that is
going to happen. And it looks like it’s
happening well. Solar thermal is interesting
because you know that there’s a shortage of photovoltaic
panels, and so forth and so on. Solar thermal is different. Basically, you take the sun,
you heat up a fluid. So you’re using, essentially,
a mirror. And by the way, it looks
really, really neat. It’s like a space age, James
Bondian type device. And those things are now being
built all over the United States and all over Europe. And it’s particularly
good in deserts, for all the obvious reasons. So there are more than a dozen
of these plants being built. And with the subsidies that
are currently on the plan, they get economically roughly
close to where they need to be. And this is roughly a million
homes, so these are big, big numbers. By the way, if you took a 100
mile by 100 mile piece of the Southwest– which, by the way, there’s a lot
of 100 by 100 mile pieces of the Southwest that look
pretty empty to me– that single square could power
all of the United States if you didn’t have transmission
issues. So there’s a lot of solar, and
there’s a lot of wind. And I forgot the underground. Enhanced geothermal, if it
works, go in, fracture the rock, ship the water
down or other surfaces, cycle it through. We understand this
pretty well. Good jobs in the drilling
and oil industry. It may be a major game changer,
because, of course, it’s 24 hours a day. We at Google have decided, with
our renewable electricity less than coal initiative– and remember, that’s a formula. We like formulas. You can raise the price of coal,
or you can lower the price of renewable
electricity– we think we can do this. We ourselves are investing. We’ve invested more than $10
million dollars in wind and wind power related activities. We recently invested
$10 plus million in enhanced geothermal activity. Governments have to
have it, too. This is where this failure of
leadership and failure of understanding what the
opportunity is. Obviously, increased federal R&D
support for all of this, basically targeting renewable
portfolios by state government. Some are getting it,
some are not. Some, about half the states,
have portfolio standards around renewables, and
so forth and so on. You’ve got to solve the
transportation problem. A rough analysis for you is that
it’s cheaper to operate a car on electricity
than gasoline. If you look at the current
hybrid situation, if you simply take the battery and make
the battery bigger, and you put a normal plug-in, and
then you plug it into your wall at night– and this
is very important– you’ll get roughly double the
miles per gallon of the car. These are called plug-in
hybrids. These plug-in hybrids
look like they can make a material dent. The most extreme calculation I
found was one by Avery Lovins, which roughly goes like this:
if you move to hybrids, you get a factor of 2/fuel
use per mile– which is the metric you
want to care about. If you move to plug in hybrids,
you get another factor of 2. If you move to E85, which
everybody knows about, is 85% ethanol, you get another
factor of 4. If you drive it the way of
optimal efficiency, you get another factor of 2. And that turns out that you’ve
reduced the gas use in the automobiles from 100% to
3% of what it was. So even if he’s off by a factor
of 2 or 4, imagine what that would do to the price of
oil, given that that’s sort of the largest consumer now
of petroleum products. So we, of course, are doing a
small fleet of hybrids to prove this point. There are now initiatives among
many manufacturers that are trying to prove
this model. And it looks like it’s
going to work. If you put a price on
carbon, this would become a lot easier. Of course, there’s a big debate
as to whether you should have a carbon tax
or a cap and trade. You can imagine which one is
going to have more political momentum, the one that doesn’t
have the word tax in it. But anything that actually
causes the externality of the price of carbon to be properly
into these systems would help a lot. If we do that, and we do one
more thing, which is we’ve got to solve the grid problem. And this grid that we depend
on– and we love our grid, because without it, we wouldn’t
have any power– is creaking for all the
ways that you know. There’s about a 9% efficiency
loss in current architecture. It’s very inflexible. So it’s very difficult to
transmit things depending on where the sources are. So let’s imagine a different
structure. Let’s apply a different model. And let’s imagine, for example,
that those cars that were charged at night had
batteries in them that, when they could just– the batteries are just
sitting there, right? Let’s see if they could send
that power back into the grid during the day. And you go, that’s kind
of a cheap trick. Because there’s efficiency
loss. You lose efficiency when
you store the battery– It turns out that math is very
interesting, because most of the cost of power generation is
the peak power cost. Very, very interesting. It’s that top 10%, when it’s
really hot, and everybody’s air conditioners are on. That’s when all of the costs
are, because that’s when, on the margin, you have to
go to spot fuel and more expensive fuels. Because obviously, when there’s
low demand, you’ll use your most efficient sources. So all of a sudden, you discover
that if you can figure out a way to use
batteries in cars, other ways of shifting load off of peak,
and also, reconfiguring the grid so that people can make
money, and doing it in a material way– in off peak hours, and in peak
hours, in particular– giving power back to utilities,
all of a sudden, it works really, really well. Why does this not occur today? The grid isn’t really
owned by anybody. It isn’t really managed right. People don’t really understand
how to architect these things at the regulator level. But the technology’s
right there. So when I look at this, I look
at this sort of smart grid and what is called the
vehicle-to-grid– V2G– and I imagine the smart garage,
where I just sort of plug my car in. And the computers handle it, and
the right thing happens. And it always works, and it’s
always incredibly efficient. And by the way, I make money
by cost shifting. So I love my car. I especially love my car
parked in my garage. Sure sounds to me like a
distributed computing problem. Sure sounds to me like
the internet. And sure sounds to me like
personal computers. Now, speaking as a computer
scientist, I’m sure that there are a lot of complexities that
we’re talking about. But what I see foremost before
us is an opportunity that is the largest opportunity that
I could possibly imagine. It’s an opportunity that solves
energy security– which is a lot having to do
with war, and war is bad– energy price, an opportunity to
create jobs and investment, and an opportunity before us,
oh, and by the way, solve the biggest problem facing the
planet aside from nuclear proliferation, which
is climate change. With that, thank
you very much. M. R. RANGASWAMI: We can take
a few questions from Eric. So anybody want to
ask a question? ERIC SCHMIDT: Go ahead. M. R. RANGASWAMI: Go ahead. AUDIENCE: I’m curious, you
didn’t really talk about the transmission problem. ERIC SCHMIDT: In the first
place, there are people working on better
architectures. There is a transmission
problem. And I had fun with my 100 by
100 square mile example. But that’s not how
you’d do it. The model of power generation
is going to be distributed. You’re going to have a
combination of a relatively large number of gas turbines,
which are quite midsized in this technology, and then, a
pretty good mixture of smaller sources of generation,
of which solar thermal would be one. But I think a reasonable
assumption, since we’re not going to solve the grid problem
in the next year or two, we’re going to be forced
to having, perhaps, more of these than we would
like, that is, a less efficient structure. But there’s still lots and
lots of solar sources. By the way, it’s sunny very near
southern California, it’s sunny very near northern
California, it’s sunny very near most of the places,
certainly, in the West. The East Coast turns out to have a
lot of enhanced geothermal and a fair amount of wind. So again, depending on the
situation, one size does not fit all, and you have
to look at it. There are enough people now
doing California desert-based solar solutions that do, in
fact, pencil out, even with the existing assumptions
about the grid– which is a problem– that I think that, with a little
bit more focus on the grid, we can get that
one solved. AUDIENCE: A great friend,
senior VP of the Rocky Mountain Institute. ERIC SCHMIDT: Yes, yes. AUDIENCE: Thank you,
thank you. I’m curious, is all of this
sounds as good as we’d like to think, why isn’t it
happening more? And we talked about
politicians. But in the business community
it’s interesting. The Rocky Mountain Institute
wrote a report in 2004, which talked a lot about this. And so there been a lot of
people in my research– I’m new to this– a lot of people have
been talking about this for a long time. And I think, frankly, cheap oil
made it easy to ignore the good work and the good
work on efficiency. The question is, do you
think the era of cheap oil will come back? And I’m assuming it’s not. I think it’s a reasonable
assumption. And even if it did come
back, it would be bad for climate change. So I think it’s fundamentally
because political systems and democracies tend to
work on the urgent rather than the important. I do think that it’s a failure
of leadership. What I like about this
opportunity is, if we can tie the short-term problems we have,
which are jobs, taxes, all the usual problems, on high
current energy prices, maybe we can break
through this. Whereas having an intellectual
conversation a few years ago, you just couldn’t get
anybody’s attention. AUDIENCE: [INAUDIBLE] ERIC SCHMIDT: Well, in the
first place, on Google ourselves side, most of our
energy use is, in fact, in our data centers. And Bill Weihl talked about it
earlier today, so I did not want to cover over
his material. We have a very, very
sophisticated program about really understanding the amount
of power that we use. And the answer on our data
centers is very simple. If we can get our computers
to be more used, we have fewer computers. Therefore, we generate
less power needs. And therefore, everything
else works. So the simplest answer about
computer efficiency turns out to be keeping them at 100%
rather than 20% or 30% or 40%. One of the great tragedies about
all these computers that are sitting in you guys’ offices
running is, they’re not doing anything. What are they doing,
running Windows? It’s not that much computation
required. And there’s not much
going on, right? So they’re just sitting there. And think about it. If they were really heavily
used, how much smaller and how much less power they
could use. Now, on the measurement side,
we’ve got a number of initiatives where we’re looking
at end user ideas about measurement. But virtually all of the end
user measurement things require collaborations
with a utility. So the utilities have to decide
to expose on a per person, per household
measurable data. And then companies like Google
and people here in the room can write software that will
basically take that stuff and do lots of interesting
stuff with it. But you have to make
the data available. M. R. RANGASWAMI: Eric,
a question over here. ERIC SCHMIDT: Oh, I’m sorry. Go ahead. Yes, ma’am. Amy. AMY: You all are doing a lot
of R&D and onvestment [UNINTELLIGIBLE]. I was wondering if you could
talk about the policy he’s given for the importance of
decoupling from the other policy initiatives that
you talked about. ERIC SCHMIDT: Well, there’s
a lot going on in policy. And it’s basically a lot
of conversations with politicians, trying to get
them to understand these calculations. Everybody would like to hear
these messages, but they often don’t understand the
subtle trade-offs. The single best thing to do is
to try to come up with state or national standards around
efficiency, and then remove the barriers to renewables. And obviously, the fact that
the government cannot even extend the renewables tax credit
is another tragedy, another failure of leadership. M. R. RANGASWAMI: There’s
a question over here. AUDIENCE: [INAUDIBLE] ERIC SCHMIDT: Well, because
we care so much about it, Google’s been doing the math. We’re trying to figure out
a way to get this kind of calculation done. What bothered me is I would go
to these meetings, and I’d say, OK, I’m tired of everyone
grousing about it. Show me a plan. Even if it doesn’t foot,
show me a plan. So I’ve produced a plan. If you don’t like my plan,
produce your own plan. What’s your alternative,
death? Right? Seriously. So this plan is a Google plan
based on the data that we have. There are other people. Al Gore, for example, announced
something which was sort of a similar approach
with a different set of assumptions– shorter time frame, did not
cover cars, covered electricity– which is another example
of a plan. And there’s a few other people
working on them. AUDIENCE: Did you come out
with this publicly? ERIC SCHMIDT: I just
did today. AUDIENCE: I have a hypothetical
question. Say next week, you wake
up, and you find out– [INAUDIBLE] ERIC SCHMIDT: Well, again, it’s
a hypothetical question. It’s always a mistake to
answer hypothetical questions on stage. Well run businesses have
people who can do spreadsheets, and they can do
these calculations correctly. And I think most companies and
most CEOs that I’ve talked with are going to do these
pretty much regardless of the cost of oil. And the reason is that, under
any set of assumptions, the various passive investments–
for example, investments in reducing your use,
efficiency uses– pencil out under all
assumptions. And those are just good. And should have everybody
doing them. And that’s a big business, many,
many billions of dollars of building retrofits, business
energy process retrofits, those kinds
of things. How would consumers behave? I think we all have seen this
complex relationship between oil price– Hummers and that
sort of stuff. And that’s a case where the
government really has to decide how much regulation
they want to put. But the fact of the matter
is that there’s a good opportunity. It’s very difficult to raise
the gas tax when gas prices are high. It’s very easy to raise
the gas tax when gas prices are low. So an obvious thing to do in
that scenario would be to try to increase the gas tax, and
then as gas prices then go back up– because, of course,
they’re going back up, because we’re eventually running out,
so prices will eventually go to infinity– is you lower that tax. As to whether that’s really
going to happen in the US political system, I’ll
let you decide. AUDIENCE: So, you as a CEO,
obviously, [INAUDIBLE] ERIC SCHMIDT: Tell them it
increases their earnings and decreases their expenses. Corporate America– AUDIENCE: Do you have that
experience when you’re sitting at dinner with them? ERIC SCHMIDT: Yeah. The problem is, people want
to solve the problem. And by the way, American
corporations are accumulating cash at a huge rate. Anybody notice this? Right? The cash awards are getting
bigger, for various reasons involving accounting and the way
these companies are run, and the way that you
could do cash and acquisitions, and so forth. So companies have cash. I could understand if you said,
well, I really want to go invest in efficiency, but
I can’t get the cash. And I’m not going to go to the
debt market to borrow it, because interest rates
are too high. Most companies, in fact, have
very good capital lines. So I disagree with that
line of reasoning. And I think that opportunity’s
before– It’s just a math problem. And by the way, the
numbers are big. Because you look at it over a
one or two year period, it’s pretty interesting. You look at it over a five or
ten year period, under any set of assumptions, it’s
huge contribution. So again, CEOs are supposed to
look at the long term value of shareholders, not the short
term, long term. This is one of the best things
that you can do for the long term value of shareholders. M. R. RANGASWAMI: Eric, I had
a question, which is, you showed Google Earth and how the
borders of countries were easily identified
by policies– ERIC SCHMIDT: –Wasn’t
that fun?– M. R. RANGASWAMI: How can you
give that to the whole world, so people in different
countries– ERIC SCHMIDT: I can just imagine
you planting an M and an R in trees. You’re such an ecological
person. M. R. RANGASWAMI: So you
know what I’m saying? How can the people in Mexico
have access to that data, so they can go their government
and politicians– ERIC SCHMIDT: It’s called, and they can download it. M. R. RANGASWAMI: OK, but
I think it would be a phenomenal asset. ERIC SCHMIDT: No, again, what
we’re trying to do with Google Earth is we’re trying to use
this as a platform, obviously, to communicate. You can have fun with
it and so forth. But one of the most important
things people are doing with Google Earth is they’re
building overlays. My favorite overlay is the
overlay that shows the flooding of the US capitol
as sea levels rise. So eventually, what happens is,
the only building left is the US capitol. And all the other buildings, all
those K Street buildings, the White House, they’re
all gone. And just because the
water comes up out of the tidal basin. And if that doesn’t scare you,
you’re not paying attention. Yes, sir. AUDIENCE: I had this question. I think that– [INAUDIBLE] ERIC SCHMIDT: We have. One of
the issues is that these sort of generic calculators don’t
really get interesting until they have real data. So we need to have
data sources. And I think one of our messages
to people who have the data is, make it available
on the Web. And companies like Google and
specialized companies, and so forth, get advantage of it. Yes, go ahead. If you use the part per million
calculations, we’re at 300 and some-odd parts per
million right now. Current projections have us,
in various cases under business as usual, going
well to 450, 550. 550 was in one of the
major reports. 450 was in another. 450 corresponds to five degrees
Fahrenheit temperature rise across a lot of the
populated parts of the earth. And that does include some sea
level rise and a fair amount of ecological destruction. The problem that I have is that
the modeling makes some assumptions that I think are
unlikely unless politicians and our leadership act. And so we’re on a path
to exceeding the 550. And those are situations where
we would essentially have a repeat of the kind of global
calamities that have occurred every so many millions of
years in the world. It’s worth noting that oil and
oil shale originally came from global warming some random
number of 200 million years ago, when the oceans became
acidic, all the plants died. They eventually went to the
bottom of the ocean, and then, over the period of that many
years, turned into oil. So we’re in a situation where,
if we don’t act, we could eventually cause
that to occur. Of course, the problem is, all
the people would be dead before that cycle was over. They’d be replaced by something
else, I guess. It’s a terrible,
terrible image. So we have to take it very,
very seriously. So the climate change issue
is very, very serious. And the things that
I’m talking with are part of the solution. It will ultimately require not
just a US action, which is what I’m advocating, but also,
all of the other actions that people here know about. M. R. RANGASWAMI: One
last question. Go ahead. AUDIENCE: What are your thoughts
about using wave energy, as well as the
renewable sources? I see you had an announcement
a couple days ago about your data barges. ERIC SCHMIDT: Yeah, the data
barges is a clever idea. I’m not aware of us building
any at the moment, but at Google, you never know. And by the way, we patented the
idea of a data center on a barge in ocean, using
wave power to power the data center. You never know. So the studies on waves indicate
that there’s a lot of wave power. There’s issues of citing,
there’s issues silting, there’s issues of the depth at
which you put the paddles and other structures. There’s a couple of initiatives
where people are trying these. There have been a number of
pretty successful experiments. The reason i focused on the
three that I did is that we have proof points of them
working pretty well. So I would view the wave one
as an example of maybe a fourth or a fifth one
that may come. And I think we want to encourage
all of that. M. R. RANGASWAMI:
One last one. ERIC SCHMIDT: The lady over
there had a question. I have not publicly endorsed
any candidate. And I would love all of the
candidates to stop focusing on some of the short-term things
and take this as an opportunity to go and actually
solve all these problems in parallel, which I think
be can be done. Yes, ma’am. AUDIENCE: Mine is not
really a question. It’s more of a plea to you, as
the chairman of a very public, high-profile company, to use
your position to give your plan to the leadership, whatever
it may be, and to share it with other CEOs,
because we really need that conversation to happen
in the C-level suite. And I’m not assuming that you
are not doing this already. But I would really hope that
you don’t underestimate the opportunity that you have
to make huge steps– ERIC SCHMIDT: Well, thank you. Well, thank you very much.

29 thoughts on “Eric Schmidt at Corporate Eco Forum

  1. How can you try to contradict the CEO of one of the biggest companies when you're, for sure, far from a lot of information he has? There's no way he would say 5 years if it was 100 years.

    Anyway, I would really enjoy this video to be featured. It's great information that should be shared and put in reach to as many as possible.

    I'm rather thankful I have subscription to Google's channel.

  2. So when is Google going to release the low power thin client type low cost computer system for people to use in their homes?

    Will those computers run on ARM processors and DSP for multimedia? Can you turn off the main CPU when it is not needed? Will you run Google Android with Google Chrome on $100 Laptops and Desktops?

  3. I petty ignorance… stop watching tv and travel a bit… see the world and the effects global warming are already causing. We have to save the world and now is the time to do it. The good thing about ignorance is that it can be solved. Do something about yours.

  4. And just because you have one study as a source it's a fact? Consider the number of studies that have been done on this subject. The RISC might be a very important institute, but that doesn't make their study a fact when a lot of others do not accept it. If Google participated in this project it's because they saw profit, real one. If nobody did it, I would go with trusting RISC, but if there are companies doing it, I can't see them being stupid.

  5. I wonder how much longer this fine individual will live. The service he is doing to our country, and for that matter the world, is immeasurable. THANK GOD FOR ERIC SCHMIDT AND THANK GOD FOR GOOGLE.

    There is hope for capitalism.

    Google may single-handedly save our country from the pending financial-ecological-political collapse.


  6. The wind doesn't stop, but it fluctuates like crazy. The installed base of wind power in the USA only produces 25% of its name-plate capacity rating, meaning 4x the amount of turbines must be installed for a given amount of average desired output. At $2 million each, 1600 2MW turbines would be $3.2 Billion + extras for 800 MW of output. That's a rather poor proposal.

  7. No. There's research with scientific method that has been done on this. Lots of it (just search on Google, you get tons of results). What I mean is that just because a single study case did not agree, you cannot consider that study a fact. Even scientific method does not make things 100% certain.

  8. Funny to see people with vested interests come out of the woodwork on this talk. Most of Mr. Schmidt's other talks get hardly any response…

    If there is anything I've learned about Eric Schmidt and Google it's that they do their research. Every decision Google makes is based on huge amounts of data.

    He's a visionary CEO and a brilliant guy so I think I'll take Eric's word over some YouTube commenters!

  9. I don't have to, since there's no point on doing so. It's not the same to put a solar panel in the desert of Sahara than to put it in the north pole (obviously). So, the beginning of the discussion was Google's solar panels, which you considered would give pay back in 100 years. If I showed you a study for the hottest place on Earth, it would be meaningless, as it is the Google offices' locations what matter. Those studies are in hand of Google, not mine.

  10. Let's say you're right, can you please tell me what is your receipt for peak oil? Aren't renewable energy sources (wind, geothermic, solar -not only fv-, biomasses, natural gasses from non-food sources) the only way to save our "ACTUAL" style of life that permits 6 bilion people to live on this planet?

    If we don't invest in research and development NOW, how do you think we can survive the end of cheap oil?

    [Please respect yourself and don't say a ridiculous think as Hydrogen…]

  11. The paradox is that the docu you're referring to is a swindle itself. Remember the solar radiation vs temperature graph, it only goes as far as the 1980s. Why did they do that, the data was available at that time!
    What the data since the 80s shows is that while the sun's radiation levels out, the temperature goes up, up and up… And that would disprove the radiation theory the program tries to put forward, and only fits with manmade global warming.

  12. Oh, was meant as a reply to marjan15. Anyways, you can check the graph for yourself if you do a google image search with: max planck solar research climate.gif

  13. Your quoting a source that's funded by oil companies ( sourcewatch org/index.php ?title=Friends_of_Science ) and that is using uncorrected UAH MSU satellite data. One of the researchers of that project, Roy Spencer, was on Earth: The Climate Wars (eps 2), telling that the data was faulty. The satellites orbit was not correctly calculated, when corrected the data is the same as ground measurements. You can look up the really interesting serie at the pirate bay (search climate wars)

  14. Strange you cite UAH data, since on their website they say their satellite data confirms global warming and actions should be taken to decrease CO2 output: google uah News climatebackground

  15. "There are three kinds of lies: lies, damned lies, and statistics."
    If the graph is so clear, why aren't even the authors of the graph convinced?
    If you have any degree in science you know that figures themself mean nothing unless you know how they came about, how they fit in the rest and what they tell in the big picture. Satellites' raw data tells nothing if you didn't calculate the effects of friction on the satellite. That's what happened at UAH. Google dn11660, it is all about this graph.

  16. I love what Eric Schmidt is saying here. He did not touch on the supergrid, however, which will be essential to making a renewable based economy.

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