Okay we are going live. Hey, welcome everybody to office hours for the ninth week of our energy future course. And today we have David Victor, and I'm going to to let David introduce himself so I don't you know, mangle his CB for him. So David if you could tell everybody, they've seen your video but if you could just give a little background that would be great. >> Sure. Thank you very much. I'm David Victor, I'm a professor of international relations here at UC San Diego. And I've worked on the climate issue for a long time. When I was a graduate student at MIT as part of my research went down to the first preliminary negotiations that lead to the framework commission on climate change. That was in the UN in New York in the late 1980s. Right. >> And now your interests are broadly, tell us. >> I remain very interested in the climate problem because I think it's one of the grand challenges for humanity. My training is in political science and I study international law and regulations. So I study why some international agreements work, others don't. What explains that and, and that's how I come to the climate issues, trying to understand where and how international diplomacy treaties, other kinds of international agreements, how they can actually help countries deal with its problem. >> Excellent. Okay, so students will log on and pitch up questions for us and then we'll pick them. And you know, kind of go through them and, and kind of carry on the conversation. And then David, just so you know, these things are recorded. They're going out on YouTube and then the students can look at these any time they want. so. I'm going to click a question here because this is a really interesting one. And David, I, I want you to answer it, but then I'm going to tell a little story about it after that. And the question is this. Climate change results in both winners and losers. In Ohio, we don't have nice sunny beaches that will soon be underwater. I think he's implying that we in San Diego do. Things might get better for us. Are there international countries that would benefit, and therefore, oppose global climate action? David, you start with that one, and then I'm going to tell a little story about Canada. >> Okay. yeah. I think there actually are, at least for modest levels of climate change, some countries that could be big beneficiaries. Russia and Ukraine for example. Both called countries. The modeling results show that both the production of wood and forests, and the production of crops, which really dominate a lot of these economic analyses because crops are one of those products that's very sensitive to the weather. That crop production could go up under climate change, that's because CO2 levels will be higher, and because you have a longer growing season. We can actually already measure the longer growing season. Canada actually could benefit. So there are countries that could benefit. And also, also, of course, there are countries that vary in their costs. Some countries could pay enormously from efforts to control green house gas emissions, the big hydro-carbon exporters. Indonesia, Malaysia, Saudi Arabia, and these countries, Saudi in particular, the OPEC countries have been skittish about climate change policies because they are worried about the costs. And others have been skittish like Russia because they think we aren't too worried about it, at least right now. Yeah so, so bringing up Canada so two years ago, I sit on the border of Genomes Canada. And which is the, sort of group that funds genetics. And I happen to be up in a meeting in Ottawa and had dinner one night with one of the business attachĂŠs from the Canadian government. And the, the meeting was not about climate change. It was about genetics, and, you know, genetically modified organisms, and how that's impacting medicine and et cetera. But I had given a talk, and talked about the importance of energy and food together, and how climate change was going to impact these things dramatically. And so the, so the discussion that, there came up about climate change. And and I had pointed out that the tar sands in Canada were one of the, you know, are now one of the major sources of CO2. they, they're an enormous amount. I mean, their fossil fuels, when you burn them up you see CO2 comes out, but just the processing of those actually puts out a fair amount of CO2 itself. and so I said sort of in to him I said, yeah you know, I'm curious how Canada always had such a good name you know, worldwide environmentally when you guys are you know, half the Tarzans. And I was putting him on the spot, a little bit. And unabashed he looked right back and said, you know, climate change isn't bad for everyone. So this was two summers ago. He said, boats can now pass through the Northern Passage. So, you know, in the summertime the ice caps melt enough now that you can actually have boats, transit you know, above Canada to get from the Atlantic to the Pacific now. And the growing days as David said are much longer in Canada. Canada now grows corn where just 10 years ago it did not. So in this case, enormous economic benefit you know, for Canada in, in a couple of things. So, absolutely true that it's going to be uneven. You know, likely the poor countries that can't, that don't have the resources to adapt will, will the ones that will suffer the most. But just in pure economic terms, Canada will be an enormous beneficiary of that. 'Kay, here David, here is a question specifically for you, and it said David radical technical change needed and nothing new meets requirements to replace fossil fuels. Based on high coast and very low effectiveness of current alternatives, and commanding control efforts. I don't know what that means, but. Should we put more money into adaptation instead? And I will let you have a go at that one. >> I think the, the question's right. It's right in the sense that the alternatives to conventional fossil fuels right now are with some exceptions more expensive. And, and they're also perceived to be very difficult to put in to place. And that's, explains why we haven't done much about the problem. If you compare the climate problem with other international environmental problems, like the ozone layer problem. One of the reasons we could move very quickly to address the ozone layer problem is we discovered new substitutes for the old nox-, more noxious chemicals. And the substitutes weren't very expensive, so we, we address the problem fairly quickly. I think that's changing now. I think that there's a lot of promise. Your own work on, on biofuels. Work on advanced methods for generating electricity from renewables. Carbon capture and storage, still pretty expensive, but that will allow you to continue to burn fossil fuels in power plants. So kind of a list of things that are promising and interesting. Nuclear power lots of difficulties but also a promise there. So I think, one way to think about what's going on is we're just kind of, bumping along down the road waiting for better technologies, radically new technologies to appear. Because we've been bumping along for a couple decades, it also means we've built up a lot of carbon dioxide and other greenhouse gases in the atmosphere. And that means adaptation is going to be inevitable, and the best strategy is going to be a combination of adaptation and then ultimately controlling the emissions. But there's no question as the questioner implies that we need to invest more in adaptation. And I, I think actually we're seeing a lot of jurisdictions do that now, because they recognize that they're on the hook for these climate impacts. And they just sit around and pretend that's nothing happening, but that's the worst case outcome. >> Yeah, I just want to make a comment on the other side of this, which is the production side of things. So, I, I think it's a little bit unfair to say that no renewable fuels are cost competitive. You know, there's a couple of things about that, that we've taught in this class. One is the externalities, the cost associated with fossil fuels which are not actually placed on them. We've talked about this you know, over the last several weeks. Look a third of our military budget goes to keep the fossil fuel supply lines open that's $225 billion a year that doesn't get billed to it. But I think now with wind and solar they're getting very cost competitive. You know, wind depending upon the time of day and you know, the facilities that have been built. Good economic return on that and, and absolutely working. Here in San Diego, this has been an enormous benefit to us because when the San Onofre nuclear power plant was closed down last summer, that would have had severe economic impact in the San Diego and southern California area. Because that was about 25% of our electrical power, got you know, taken off grid. But because we had solar, and because we had wind up we managed not to have very many brown outs last summer. So that, that's an enormous economic benefit, so I think you know, renewable energy's getting closer. And the, here's the thing that I'm amazed about. World wide, we are going to invest $1.2 trillion this year, looking for new sources of fossil fuel. All right? 1.8 trillion by 2020. If we put a fraction of that into renewables, right, we would make them cost competitive much, much sooner. So you know right now, bio-fuels are not economically viable, but they are not that far off. And I think we are going to get, I think with a bit of an investment, the technology will catch up pretty soon. Okay. All right, David here's just a shout out for you. From Munchie she says, David, great and brilliant presentation. Just so you know, our students do, do appreciate your lectures. All right, here's another one which I, I think is a little bit open ended and, and then David I'll let you take a shot at this one. He said, do you really think that global cooperation is likely to stop fossil fuel combustion without a magic bullet of radical new and cost competitive technology. Right. We'll leave it at that, and I'll, and I'll let you answer that one. And then there's another part to the question. >> Yeah, so I think it's an important question. I think we shouldn't view these as either or. When we look at other areas of successful international cooperation, what we see is that the underlying, the fundamental technological, and market conditions determine what countries are willing and able to do. And right now, because mitigation of emissions is perceived as costly. And I think what you just said about biofuels and so on, points to and, and wind and solar, points to the fact that, that might be changing. Although changes, change in the energy systems low. So, without tech, radical technological change, countries, for the most part have been skittish about doing much. So they've done kind of a little bit around the margins here and there. Emissions from the advanced industrialized countries are roughly overall flat and now has started to come down a little bit. The missions from China and are starting to slow down. At least the growth has started to slow down. And serious people are talking about the peaking in the next decade or two. And then maybe they'll come down slightly. But those are small changes around the margins compared to what you really need to stop global warming, which is like a 50% cut in emissions globally. So I think the technology's crucial. But even when the technology is improved and people are willing to do something about the problem, you still need international cooperation. In part, because the new technologies aren't going to be free. And so they're going to cost something. And we're going to need to coordinate intellectual property and a variety of other things. And if countries don't see that coordination internationally, then they're going to sit back and do the calculation from their own individual perspective. And from the perspective of any individual country, even a big country, if you don't think other countries are cooperating with you at all. It still doesn't make sense to spend much money on controlling emissions unless you see other countries doing something comparable. So that's the role of international cooperation. And when we look at areas such as international trade cooperation, where there are built in strong incentives for countries to cooperate and, you know, open their borders to international trade and so on. You nonetheless see lots of countries not doing what would be optimal. Because they need those international agreements, and enforcement mechanisms to kind of help them do the right thing to help prevent backsliding. So, if a country for, you know, whatever reason wants to set off tariff walls or other things that would be contrary to the goals of international cooperation as a mechanism for finding that out and punishing them and bringing them back into the fold, and that's the real role of international cooperation. It's to kind of help steer people along once they're willing to actually do something. And, and right now, I think one of the reasons we have, we haven't had much successful interaction cooperation in this area. In part because the costs are seen as high and some countries actually don't care much about the climate problem. And in part because we haven't built international institutions or policies that are comp, that, that would help do this steering with countries and so forth. And so it's mostly just kind of a talk fest with these international negotiations rather than a kind of serious effort to collaboration. >> So, David, let me, let me put a follow up to you on that one, which is. One of the things you brought up is that, you know, there's always a cost associated with mitigating some environmental consequence, right? But there's quite often economic benefit from doing those as well. It's one of the comments you made which you know, we have to bring them back into the fold, find a way that, you know, that they're not behaving well and bring them back in. Obviously I, I know your political science and, and economics and economists always, you know, want to think of things as pure economics. Like we will simply solve the equation that says even though it costs, you know, $100 to do something, we get $120 back. But, but that's not the case in international things that you know, we see it here in this country, right? Which is politics and emotion, and a lot of things get layered on top of that. And in international ones in, in international negotiation, it seems those things have become almost impossible to get around. But how from a, from an economics perspective you know, do you sort of reward and punish people. Is it, is it a tax, is it a, you know, how, how does, how does that come about? >> Well I think the reality is that every country's going to need to adopt their own approach. Because some countries have the administrative capabilities, including the capabilities to put taxes into place. Or cap and trade systems where you buy and sell the right to dilute. Other countries can't do that, for political reasons often and so they do, they, they control emissions with regulatory instruments or becomes a direct administration. And you were seeing that in the United States for all the talk that, that we in the policy analysts' community have had about the, the role of market based instruments like cap and trade and access. And if you look at what the country actually does, we mostly regulate directly, and that's the EPA is now developing a new set of regulations. That's kind of how we do things. Europe does thing differently, China does things differently still. You know, and so you need some flexibility for countries to do their own thing. That said, there needs to be some kind of a common international agreement about the overall level of effort that each country is going to make. And some mechanism for assessing whether countries are actually living up to their obligations, and if they're not, then calling them out on that and eventually maybe penalizing countries that don't. The record from the most successful area of international cooperation to date which is international trade negotiations is that, the first few decades of cooperation are about building trust, and experience, and so on. And the way that you succeed in cooperation in that environment is you get countries to do things that are more or less in their interest, and then kind of glue them together a little bit. And you can't really get to strict penalties and enforcement mechanisms until after those institutions are built up and people really understand the value of that. We're still in the early days of doing this with climate change. So I don't expect any kind of strict enforcer mechanism to come anytime soon. One, one just last footnote on this which is one of the things that will help a lot is if countries are allowed to adjust their border tariffs for the amount of carbon coming in, in the products that are, that they're importing. So, for example, when you, when you, use a ton of steel here in the United States and you import it from China, the emissions associated with that steel production are charged to China right now under the emissions statistics. So it creates a disincentive for countries to start getting serious about controlling emissions because they can basically offshore a lot of their a lot of their emissions. And some of the big reductions in emissions that we've seen in the European countries have come, not just because of policy, but because of this offshoring effect. And so, if you can adjust border tariffs to reflect this, then you can start to get the incentives right a little bit here and there. And, and, and dampen the incentive for countries to offshore, to free ride, we call it free ride. Okay, great. and that kind of segues into this next question. And let, let me just put it out there, David, and see, and see if you can comment on it or not. So obviously under the Obama administration we're now going to address at least a significant, at least part of our, our carbon pollution by an EPA regulation. So, not a law passed, but a, but a regulation from the Environmental Protection Agency. So the question is, would the recent EPA carbon pollution limits on power plants, in the context of the US taking the unilateral step toward action on climate, do you think this will lead other countries such as China to also take action? And, and before you go there, you know, what's your sense of what, you know, these EPA regulations, you know, are, are we even going to accept these in the United States? Right now, they're just open for discussion and we have a year before they fall into place. So, do you have sort of a feel on how the politics of that's going to go between now and when they put those in? >> Yeah. So, the, the EPA regulations are a big deal because they signal greater credibility of the United States. The United States under Obama has said that this is a major deal. But then we haven't actually done very much about the problem. It's our problem. [LAUGH] And this is part, this is not the only. But this is, this is one of the most important parts of it. It's a, it's an expensive way to control emissions. It's kind of, state by state. Basically, direct. It's not a direct regulation, but setting state by state standards then allowing the states to develop their own strategies for meeting those standards. Maybe there's going to be some emissions trading around the edges here and there. Nobody really knows what it's going to cost. So there's a lot of unknowns right now, but I think from a political point of view, the big message here is one about credibility. I don't think that action by itself needs other countries to go off and do something identical. But what it does do is it give United States a little more credibility when it asks other countries to then put something serious on the table and, and the key country to watch here is China. We're putting a lot of pressure on the Chinese to do something. Chinese were already doing a lot not because they're worried about global warming but because they're worried about local air pollution concerns. And, and that will over time more or less reduce their, their global warming footprint. But the credibility accounts for a lot in international negotiations, because you don't have strong in force of mechanisms. And so you don't have a strong way of signaling to other countries that you're, that you're word is something. And this, in one way you do it by actually implementing things at home. >> Yeah. So that brings up sort of the second part of this question. Which is, you know, right now in the United States I would say very little is being done other than the EPA rules. So, it's certainly, it seems to me now almost impossible for Congress to actually enact any legislation on, on climate change. In fact, I'm, I'm sure David you know, that there, there's even been some rumbling in Congress that they won't even fund research on climate change. It's still allowed now, but, but that has come up. So, I, I wonder if you can point out, is you know, is the rest of the world, is sort of politically divided as the United States on this? I mean is there, are there similar sort of bickering going on, on the rest of the planet about whether climate change is even real or not, and whether we should even be allowed to research it? >> There is a lot of variation in bickering. And, and we're humans, we're good at bickering. So, so that's a lot of bickering in the world. >> Yeah. >> The amount of polarization on this issue in the United States is not unique, but it's, there aren't many countries with that level of polarization. There's some degree in Britain. It's a lot in Australia, it's interesting the anglophone countries in particular seem to disagree a lot. Partly that's because the information with which people disagree is more widely available in English than in other languages. Maybe for some other reasons as well. that's, this is the, the gridlock in Congress, which really has to do with a lot of deep seated fundamental factors in the United States society, including income inequality, kind of creates incentives for people to move out to the margins rather than find the center. But that, that has really nothing to do with the climate change, but it unfortunately has had the side effect of, in the climate change and everything else in American politics has made it hard for congress to act. That's why EPA is, is pursuing this effort to control emissions from power plants in the second best, third best, you know, nth best strategy of direct regulation, because it's the only way that they can, using existing law, the clean air act, can actually do something about power plants. Almost every other rational strategy would require new law. And we can't pass a new law and practically anything in Congress these days. And so you know, we're kind of stuck. And, and that's where we are. We're not unique in that respect though I think we're going to see a lot of news out of Europe in the coming year, so we've got a new Parliament, a more Euro-Skeptical Parliament. Europe has traditionally been a big leader on climate change issues. They're now retrenching a little bit because of the huge costs of the renewal energy program in Europe and continued economic sluggishness and difficulties and so on. So, I think we're actually going to see a lot of kind of bickering about our economic priorities and also a lot of gridlock in the international system. The last thing I'll say about this, which is, part of what we're seeing right now in the world is that power is decentralizing. the, there has been, for the last couple decades, you know, one major power in the world, the United States, and that has allowed the United States when it wants to lead, to kind of help set the, the tune in organizing international institutions. And now we've got the rise of China, to some degree, India, other countries. And questions about credibility in the United States. And whenever power diffuses in a system, the system in general becomes less well organized riskier, more prone to gridlock. And that kind of, that's where we are kind of in the national system. Not just on the environment, but on trade policy, on finance, on security, kind of the list goes on. >> Yeah. So I, I, I just want to add one comment to that, which is, one of the things that, that makes, I at least have some optimism that we're going to do something in the future is actually a quote that came from all people, one of the vise-presidents of Exxon, when he was out here talking a few years ago. And I was asking, you know, was he concerned about climate change. And one of the things he said was, yeah, our biggest worry is that people operate under two modes. They do nothing, and then they overreact. And he said, right now, we're in the do nothing' mode on climate change, but we believe that it's real, we can see that it's having impacts in the planet. And that means at some point, people are going to respond to it, and generally when they do, they overreact. And so then he said, so my biggest concern is that when they overreact, they're going to take it out on Exxon. And and I think he's, he's right about that. You know, we, we have many, many expressions, you know, the straw that broke the camel's back, you name it, where people will tolerate something for a, you know, a period of time. But then at some point it gets bad enough that they actually take action. So, I, I'm at least, you know, mildly smally optimistic that at some point we will overreact and actually do something on climate change. So David, here's question and I have absolutely no idea what this means, and if you don't, that's okay, we'll go on it quick. But maybe you do, and this comes from and he says much is written but actually little is officially being published on the trans-Atlantic trade and investment partnership. What are your thoughts about potential impacts of the TTIP on energy markets on both sides of the Atlantic? >> So this question really relates to a series of inish, initiatives. Not quite bilateral initiatives between the United States and Europe. And it's part of, this bigger trend that's happening in the international system, which is because of gridlock in the global multilateral institutions like the World Trade Organization. We've now seen lots of international co-operations happening in smaller groups. Clubs if you like. US China, US India, the bricks country of the emerging economies, G20 instead of the full membership of the WTO, and, and this is one of a whole ecosystem of these smaller efforts. My own writing has been very heavily in this direction, which is to say that we're, we're not going to go out progress with big global multilateral forums, but we will make more progress in smaller forums like this. Including our topic in climate change where is just so complex and difficult that you don't know how to organize an agreement to get started. so, I've been, I've been cautiously very optimistic about these, these smaller smaller efforts. It's not clear whether the, the transatlantic stuff by itself will do much directly on climate change. Partly because the both the United States and Europe are very keen to do something about climate change to begin with. And partly because some of the big barriers to action aren't right now investment barriers but they're just sheer cost. So ,both, both sides benefit enormously from viable carbon capture and storage technologies. We're testing a few. So far they have been fantastically expensive. Europe would benefit enormously from Shell gas and improve Shell gas because if you burn gas instead of coal your emissions are much lower. There are a lot of barriers on the ground in Europe to doing that. And so they're stuck with kind of a more, much more expensive Russian gas. But frankly what I would watch more closely are the US-China partnerships which have now really started to get some traction and kind of practical things are being done, especially in the energy space. And that will help on climate questions, especially will help the Chinese feel a little more comfortable doing something about a climate change for climate's sake, as opposed to just as a byproduct of their own domestic policy. >> Yeah. And you had brought up earlier about, the, the air pollution in China, and how just reducing that will have a really sort of positive impact on you know, sort of, the, the carbon footprint worldwide. Although my understanding is that there's still at least, as of today, increasing the number of coal fired power plants that are going in over there, still building one every other week or so was the latest statistic I saw. So, a few notes. >> Yeah, just let me jump quickly on that. We've got to remember that, that's a really rapidly growing economy, and we're a slowly growing economy. And Europe is a stagnating economy. Japan has a stagnating economy. And so our fundamentals are always going to be different, so they're going to be growing and face all kinds of needs to meet growing demand. But we are already seeing in China, decoupling between economic growth and, and demand for electricity. And the coal fire power plants that are going in are much more efficient than the old ones. In fact, some of the world's most efficient coal fire power plants are being built in China today, and the Chinese are in the middle of an aggressive, very active program to diversify their energy supply. So that they're less dependent on coal. They use a little more hydro, a lot more natural gas, a lot more nuclear. All of that is great news for climate change. >> Yeah. And then, the, so, so this brings up a specific question which comes from Clay, and he says, I am looking at the EIA's energy related CO2 emissions from 1990 to 2012 chart. The US has decreased its emissions from 6,000 million metric tons of CO2 in 2007 to 5,290,000 metric tons in 2012. And he says, this is due to the economics or to the economy? David, I'll let you answer that and then I'll pitch in my $0.02, too. >> It's a little bit about the economy. The economy slowed down in that period and contracted for a little bit, and then it's kind of slowly been bumping along since then. A lot of it is natural gas. [COUGH] we've seen gas rise from about 15, 20% of the US power supply to more than 30 I think now. I forget the exact number, so please don't quote me on those. We now, some months we've seen gas and coal be almost equal. So this is a big deal. And this is because of cheap natural gas from fracking. So it's, it's helped lower emissions all in by, a couple hundred million tons per year equivalent because of natural gas, instead of the basic sum call. And the new EPA rules will accelerate that process most likely, continuing supply of fracking and horizontal drilling based gas will remain inexpensive in the United States. And, and, but I do think it's important to keep a perspective here. And US emissions are rough flat, declining a little bit. They're still, that's nothing like what you need to really stop warming. So that's just the beginning. >> Yeah, that's right. I was just going to comment that we, we were very lucky in the States, in that fracking for natural gas dramatically reduce the price. So I think when I looked today we were at $3.04 a million BTU. So that's about one seventh the cost on, on a BTU basis of liquid petroleum. So fracking in the case of petroleum didn't reduce the cost. It's in fact, sort of set a about $100 a barrel, but it increased our productivity. So we, we've got a, many of you will know. Almost three million barrels a day. That's still only eight and a half million barrels a day. We burn 19 and a half. So please do not think that we are going to get energy independence. But fracking in the oil sense increased production, but actually increased price a little bit. But the opposite happened in natural gas, where we got a big bolus of natural gas that's come out over the last few years from this. And so that actually dramatically decreased the price that made natural gas cost competitive, or at least getting closer to cost competitive with coal. And it's half the CO2 when you burn it, that, that, that you get out of coal, so an enormous benefit. Okay let's take a look down here and see what some of the other things are. well, here, here's kind of one that we've covered a little bit, but may, maybe we'll talk about it a bit more, and it says. What do you think the federal research investment or why do you think the, the federal research investment in climate change is so low in the US? And how can a normal, a regular citizen do something to change that? So that, that's a good, that's a all politics question, David. I'm throwing that one to you. Well, so I, let me just distinguish two kinds of research. One is research related to climate change itself. Understanding the problem and impacts it's on. The other is research on energy to allow us to cut emissions and decarbonize the economy. In terms of actual climate change research, we could do more. And particularly, the remote sensing part of this is, it's problematic. But we're actually investing a hot, huge amount in climate change research and, and continue to do that. Some people are happy about this, and so on. But that, that process continues, continues on. And that's basic research. Most of it doesn't lead to any kind of possible commercial output, it helps us understand the world. And as humans, we should understand the world. Research on energy is a different picture where we've seen a little bit of an up tick. We had a huge increase in 2009, 2010, 2011 because of the stimulus, economic stimulus program. And the United States was spending so much money on everything that it couldn't help, but to accidentally spend some money also on energy. But as the stimulus program was wound down energy R and D at the Federal level has come back down more or less to previous to, to, to previous levels. I think the reason we underspend in this area is partly because don't see tangible benefits, and so we in the community need to help them see those benefits, partly because it's a public good. It's, it's fundamental knowledge that then helps eventually companies and people deal with problems. And and as a general rule societies underspend on public goods. And one of the reasons we have institutions like government, is to help, you know, tame our, our incentive to underspend on public goods like security and knowledge and so on. And, and we as a general rule, have flagged on that. And that's one of the many bad byproducts of gridlock in Washington has been that what used to be a very central consensus around R and D spending across the board on biomedical research, on energy. You know, the list goes on and on and on. That consensus is kind of frayed as has the consensus on other things that we used to think of as centrist. And and, very popular in the United States. >> You know, I think that's actually, you know, I, I can speak you know, from, from being on the research side. So, so David's exactly right. There are sort of two components to that question. So on, on the climate change side, I think one of the interesting you know, problems that I see associated with that is, we can get much more precise at measuring climate change. But it, it's almost like, you know, it, it, it doesn't really matter how much more research we do on that, because the arguments against it are not based on science. So, having more scientific data or more precise scientific data isn't going to convince those people who don't want to believe climate change is real because their arguments are not science based. Their arguments are based on some belief that it can't possibly be true because it, it's not going to happen in their lifetime. So, but the other half of the question which is, can we actually come up with renewable, low carbon energies that will replace the fossil fuels we have now. We did have a big amount of money that was spent on those you know, both from the Federal side, but also a huge amount of investment that was put in on the private side. So in 2007 and 2008, there was an enormous investment from the venture community into all kinds of companies that worked on renewable energy. Then a very interesting hap, thing happened over the last few years, and that is, as fracking technologies, so fracking technology is not new technology, right? What happened is we got to $100 a barrel oil and that allowed fracking to be deployed. And when we deployed it at a very large scale, right, 175 billion invested last year in the United States, that allowed an increase in oil. There is now a general belief in the United States and probably worldwide that fracking was new technology that has allowed us to discover new sources of oil. And therefore, there is this renaissance of oil that's going to come back, and the price is going to decrease. So I have actually talked to hedge fund and venture managers that will tell me, oh, but we think there's no risk, that the price of oil will be back to $40 a barrel in the next couple of years. And you can read headlines in the newspaper that say that. So, even though as an, as an person who works on energy, and even if you ask the department of energy or the international energy administration. They would tell you, absolutely no chance that the price of oil is going to decrease dramatically in the next few year. There's still this general idea out in the investment community, and they are risk averse. So they are not going to put money into renewable technologies if they have this fear that it sort of requires a $100 a barrel oil for renewals to be competitive, and the price of regular fossil fuels going to drop to 40. So, it's not a reality of science, but it's a, it's a perception. And that has dramatically decreased the investment that came from the private sector. And I also think that, that spills over a bit into the public sector. That there are lots of people in Congress you know, both the Senate and the House, who believe that tracking technology is going to allow us to become energy independent in the next few years. Therefore the urgency on renewable energy is not what it was a few years ago. I personally think that, that pendulum is going to swing back in the next couple of years. All technologies, you know, having watched these things in the biomedical side for 25 years, all technologies get about four or five years in the spotlight. And so right now, fracking is front and center, everybody loves it, it's a great investment, and it's changing, you know, our energy landscape here. We're in about year three of this. Two more years, and when the amount of liquid fuel, you know, petroleum is not increasing, then I think that pendulum may swing back. And you know, it's sort of like the tides. High tide and low tide on investment right now, it's low tide for energy investment. But in a couple years, I, I suspect that will swing back. That, that is sort of independent though of the problem of CO2 emissions. Those things are very closely tied together on, you know, cause and effect. But a bit separated in people's minds on, on investment. Okay, let's let's grab another one here. okay, well, well, here's one. And David, I'll, I'll let you comment on that because it is specific comment, not really question and it says, China's emissions are increasing are mainly due to US outsourcing of manufacturing to China. So, I, I want you to comment on that, and then I also want you, because you started to bring this topic up of how you actually apply you know, the Carbon burden to the people who actually use it. You mentioned steel, but this is true for everything that's manufactured in China. So if you could maybe comment on those two things. Yeah, so Chinese emissions are a little bit higher than they would be otherwise because of outsourcing, and China's the largest exporter of what we call embide emissions. And these are emissions used to make a product and then the product is sent to another country, so the emissions should be charged to the other country. They're the largest exporter. But in terms of the overall numbers the dominant factor in driving Chines emissions is Chinese economic growth. And that's no longer just an export driven story. So, this is a big part of the story, but this is not actually the dominant the, the, the dominant reason. You need to get this right though both because the producers of these emissions, like the Chinese. Right now we're very worried about the impact on their economic competitiveness of climate change policies and when in fact some of those emissions will be charged to other countries. And the consumers are living in a fantasy about their actual level of emissions. The United States is, big importing countries like Britain are in a major way. In fact, Europe is actually a larger, I believe, larger net importer now of emissions embodied emissions than the United States. Because they import so much gas and electricity from Russia. So, there's a huge problem. The way you do it is you start with the products that are the most energy and emissions intensive. So, I used the example of steel because steel is very emissions intensive. There's a handful of other commodities like this and you start there, and you calculate the average or typical emissions associated with producing that might allow for some adjustments for different kinds of production methods. None of that's rocket science. We do that all the time. For example, when we calculate renewable fuel standards or emissions or. Are what are called life cycle emissions. So a lot of methods for doing this. And then you allow for a border to offer adjustments. So you would, so you adjust the, the, the cost to those products at the border as they come inside the country. You can only do that if you are also in the importing country doing something about controlling emissions. So, if we in the United States are doing the equivalent of $10 or $50 a ton worth of effort. We're not right now. We are in California probably doing the equivalent of $20 or $30 a ton of effort, maybe a little more because we have a cap and trade program which is roughly $10 a ton of effort plus lots of other policies in place in California. If you're doing something at home, then you can justify doing this. This raises a lot of interesting legal questions about how you justify this under international trade law. And the lawyers that looked at this, as long as you apply this in a non-discriminatory, transparent, fact-based way, you should be okay on the trade law side. >> Okay, so we're, we're just about, out of time for the day because I promised David that I would let him off here at a quarter to two so he, he can run out to another meeting. So I, I just want to end by saying you know, David thanks very much for being on today. thanks, thanks for thinking about these things and you know, trying to push the discussion forward. I'm sure you're probably more frustrated than even, you know, I, I'm on the energy production side of thing that's frustrating for me. I can only imagine what the policy side of things must be like. But I'll, but I'll give you the last couple minutes if you have any kind of closing comments that you'd like to say to the students. >> Okay, well thank you very much. And thanks to you for organizing this whole series of talks. It's a terrific series of talks. A lot of different points of view. This is a hard problem, and we need different points of view. This is, it's frustrating, it's difficult. It's also tremendously challenging and interesting because it brings together almost everything about how different countries get together when they cooperate, how they cooperate. And so for somebody who studies international cooperation and international law as, as I do. The intersection between that and technology. There, there's just no issue that's more important than this [INAUDIBLE] more difficult. And also, frankly, I, they can, an issue where we're starting to make some progress because in improvements in technology, because of what we learned about how to design better agreements. How to do border tariff adjustments, all that kind of stuff. There's a huge role for the research community. It's great to be part of that community, so thanks so much for organizing this. >> Thanks very much and for all the students, you guys keep up the good work. We're down to our last week, so stay in there and finish it out. And I will talk to you all next week. Thanks David.
