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Solution Series: Carl Ferenbach · Simmer Down

• 0:00
  Speaker 4: So it's my great pleasure to introduce our two speakers today.
• 0:06
  Speaker 4: Kathleen Biggins returns to Point Woods.
• 0:09
  Speaker 4: She made a presentation here about five years ago on the science of climate change.
• 0:15
  Speaker 4: And Kathleen is the president and the co-founder of Sea Change Conversations, which promotes nonpartisan conversations about the science of climate change.
• 0:28
  Speaker 4: And of course, I'm happy to welcome back also to Point Woods after 50 years, my cousin Carl Farrell.
• 0:37
  Speaker 4: Carl is a leader in business and finance and philanthropy, environmental stewardship, and education.
• 0:50
  Speaker 4: I don't want to embarrass him with his entire uh his entire uh resume, um, and which you can all Google.
• 1:00
  Speaker 4: But I will tell you one little thing that you won't find from Google, which is that um when Carl was a boy, he was quite an excellent sales eraser.
• 1:10
  Speaker 4: And if you go down to the Yacht Club and you look at the old trophies of Awesome Cup and whatnot, you will surely see his name, Carl Fairfot 3.
• 1:19
  Speaker 4: As a little boy, I asked my father, so who's this other Fairfot anyway?
• 1:24
  Speaker 4: Because infrared blocks is confusing.
• 1:26
  Speaker 4: Um, and um he said, Oh, that's your cousin Carly.
• 1:31
  Speaker 4: He's a great sailor, which is the highest praise my father can bestow on any human being.
• 1:38
  Speaker 4: And um, he's a really great guy.
• 1:41
  Speaker 4: And I have always found that to be true.
• 1:43
  Speaker 4: We welcome back to Pointy Woods.
• 1:45
  Speaker 4: I'm gonna turn it over to Kathleen.
• 1:47
  Speaker 4: For those of you who are on Zoom, um, put your put your questions into the chat and we will get to them later.
• 1:54
  Speaker 4: We're gonna spend about half our time in conversation, and then we're gonna turn it over to the room.
• 2:00
  Speaker 6: Thank you again for coming and enjoy the presentation.
• 2:09
  Kathleen Biggins: It is such an honor to be back with you five years later.
• 2:13
  Kathleen Biggins: I think we visited with some of you on Zoom in the interim on our climate and how it impacts our health and personal security.
• 2:20
  Kathleen Biggins: Um, but I do want to make a little bit more of a shout out to two people here that are on our sea change team, Carrie Dykman, who is on our executive board and's been with us for nine years, and Katherine Art Sidman, who are not from who have been in the closer six or seven years, and and um we have toured the country.
• 2:40
  Kathleen Biggins: We've been to 32 states, we've been crazy busy, and it's all been due to the incredible contributions of our team and these two women right here.
• 2:50
  Speaker 3: So who's us and do that whole paid announcement?
• 3:00
  Kathleen Biggins: Um, it is such a pleasure to see and meet you in person.
• 3:04
  Kathleen Biggins: I know we've had a few Zoom calls here for this, but um, you sit in such an interesting place, kind of in the nexus between philanthropy that is really devoted towards the environment and towards the climate issue, and the markets and the economy, which obviously you have a long tenure in.
• 3:24
  Kathleen Biggins: So let's start off by talking a little bit about your philanthropic reasoning on why you chose to concentrate in this area, which historically really gets the smallest amount of the philanthropic time.
• 3:36
  Kathleen Biggins: Why this time?
• 3:38
  Carl Ferenbach: Thank you, Kathleen.
• 3:39
  Carl Ferenbach: If I could just say thank you to Greg for uh very kind and introduce my um partner of 52 years, who uh was here the last time I was here 50 years ago.
• 3:54
  Carl Ferenbach: So anyway, so how did we uh how did we wander into um to the environment?
• 4:05
  Carl Ferenbach: The the um we had um bought land in Vermont, the farm in Vermont um in 1987 or 1988.
• 4:16
  Carl Ferenbach: And um as we were uh and we were going back and forth, we were sort of weekenders, and uh, and but as we were there, more land was becoming that was adjacent to us was becoming available.
• 4:28
  Carl Ferenbach: And Judy uh has a background in in landscape design.
• 4:32
  Carl Ferenbach: And uh so we were messing with the land a lot, and we started to ask ourselves and this was the age of um of uh the pollution coming out of the Ohio River Valley um and creating acid rain.
• 4:48
  Carl Ferenbach: So we had had a lot of acid in the soil, and we were experiencing acid rain late 80s and early 90s.
• 4:53
  Carl Ferenbach: Um, the clean air and members of the clean air act passed in 1990, but the consequences uh of working through that, which happened much faster than anybody thought they would, but but still took a number of years.
• 5:06
  Carl Ferenbach: So we were experiencing um stuff that was going on, and we didn't really understand what was going on, and we were messing with the land, and we started asking ourselves, well, so what are we doing?
• 5:17
  Carl Ferenbach: And are we doing anything?
• 5:18
  Carl Ferenbach: Are we hurting the habitat?
• 5:19
  Carl Ferenbach: Uh, do we even understand what habitat is here?
• 5:22
  Carl Ferenbach: Who do we connect with?
• 5:23
  Carl Ferenbach: How do we uh get answers to questions?
• 5:26
  Carl Ferenbach: And the just as so many things in life happened coincidentally, I think the coincidence uh was a um a friend from business uh one day rang up and said, Um uh Fred Krupp, who is the CEO of the Environmental Defense Fund, is um is here in town.
• 5:47
  Carl Ferenbach: This is 1999 now, and uh, could I just bring him by just to introduce?
• 5:52
  Carl Ferenbach: So Fred came by um with John Hill Wilson, and we had a great conversation for an hour or so.
• 5:59
  Carl Ferenbach: And the next thing uh we knew we had an invitation uh to go on the uh Colorados with the Grand Canyon uh that summer.
• 6:08
  Carl Ferenbach: And that was then EDF's sort of hook as uh uh first development activities.
• 6:13
  Carl Ferenbach: Uh, there's a suspect, let's take them on the river.
• 6:17
  Carl Ferenbach: So um, so we had never done that, and uh Judy's dad had done it with her sister years before, and so we both thought that would really be fun.
• 6:25
  Carl Ferenbach: So we went uh on the river in 1999 with Edie, and uh that was really where it began.
• 6:32
  Carl Ferenbach: Um in terms of our uh you know the hook was in, and we had to actually learn something about climate and um and the environment.
• 6:42
  Carl Ferenbach: And climate in 1999 was it wasn't really in anybody's radar screen.
• 6:49
  Kathleen Biggins: Right.
• 6:49
  Kathleen Biggins: It was still not before it was talked about in a big way.
• 6:52
  Kathleen Biggins: In some ways, it was before it was even tabooed to talk about, which came a little bit later.
• 6:56
  Kathleen Biggins: So you were an early adopter in that case.
• 6:59
  Kathleen Biggins: So let's um move for a second to a different part of your life, which is business in the private sector.
• 7:06
  Kathleen Biggins: And when let's go to that midterm, 2008, at that point when it looked like there might be some movement on climate legislation, um, businesses really did not embrace that.
• 7:18
  Kathleen Biggins: They came out against it in part because they felt it would make them less competitive on the international stage.
• 7:24
  Kathleen Biggins: But if you fast forward to today, and businesses in fact are doing the opposite.
• 7:29
  Kathleen Biggins: They're leading, they are pushing states and utilities to move more quickly than even states and utilities want to do.
• 7:36
  Kathleen Biggins: And a recent McKinsey study showed that it was number two in the top six priorities of um CEOs.
• 7:42
  Kathleen Biggins: What do you think has precipitated that change of heart, that change of view?
• 7:47
  Carl Ferenbach: Well, so many things, but um generational change was one.
• 7:51
  Carl Ferenbach: But the just the um in the 08-09 uh leading up to the final loss in Congress in 2010 in the Senate, with the Senate, the bill never got to the floor in the Senate.
• 8:02
  Carl Ferenbach: But um the um there were a number of um, I don't know how we would characterize them as um as avid supporters, but there was a uh there was a business group, Jeff Emelt of GE was the most visible, um, but there were a number of others.
• 8:20
  Carl Ferenbach: Uh the utilities um who were the particularly the coal-fired utilities were all scratching their heads about where they were going with this.
• 8:28
  Carl Ferenbach: So there was a lot of interest in business in 08, even if they weren't advocates for the legislation.
• 8:35
  Carl Ferenbach: And the legislation was uh was complicated, and that's ultimately was its demise.
• 8:40
  Carl Ferenbach: But but so what has changed since?
• 8:43
  Carl Ferenbach: Um the uh I think the for one, the environmental community um and EDF in particular discovered methane.
• 8:54
  Carl Ferenbach: Um and with that um discovered that if you could focus um the uh public and you could focus um the academic community on a single piece of the puzzle that everybody could understand that had a huge impact.
• 9:15
  Carl Ferenbach: Methane as a greenhouse gas is 80 times more powerful, roughly 80 times more powerful than CO2 carbon dioxide is.
• 9:22
  Carl Ferenbach: And methane uh comes from three main sources.
• 9:27
  Carl Ferenbach: Um, it's leaks and other uh emissions and flaring uh out of the development, exploration, and development of oil and gas.
• 9:36
  Carl Ferenbach: Uh it comes from farms, uh, animal burps basically.
• 9:40
  Carl Ferenbach: Uh, but it's animal burps are basically a third of uh of methane.
• 9:46
  Carl Ferenbach: And that comes from everything else we do, uh driving our automobiles to uh heating and cooling our homes.
• 9:54
  Carl Ferenbach: And um and it's roughly in those proportions.
• 9:58
  Carl Ferenbach: Uh so we understand those three things.
• 10:00
  Carl Ferenbach: We can address them.
• 10:02
  Carl Ferenbach: Uh, a lot of methane in the oil and gas industry is just getting a guy with a wrench um in the field doing something about leaks, uh, persuading the oil and gas companies that flaring is just sending revenue out into the air, uh, capture that natural gas, recycle it, and and use it for energy.
• 10:24
  Carl Ferenbach: And um, so a lot of effort has gone there.
• 10:28
  Carl Ferenbach: Um, and there is now a lot of effort going into the community, but but the ability to focus on something that everybody could understand uh became uh a part of the uh of the um the strategy of the advocates that became effective.
• 10:49
  Kathleen Biggins: So let's dwell down a little bit more on businesses' perspective today, um, because what we are hearing is that businesses also see climate change as a threat to their own bottom lines now versus just their profitability, just supply chain, market um security, all that kind of things that are tied in.
• 11:10
  Kathleen Biggins: But also that there is real pressure on them from their stakeholders, from their employees, from their investors, even from their customers.
• 11:19
  Kathleen Biggins: Do you find that to be true?
• 11:21
  Kathleen Biggins: And do you feel that that is a big part of the motivation for them to get in front of this issue?
• 11:27
  Carl Ferenbach: Yeah, so there are a couple of things, and I should have said this in the last answer, but um start with Walmart.
• 11:34
  Carl Ferenbach: Um and the um going back to roughly 2008, the then CEO of Walmart um just decided Walmart was then the grand pariah of everybody who could, and particularly organized labor, who could come up with a rationale for for vilifying Walmart, was.
• 11:55
  Carl Ferenbach: And uh Walmart was trying very hard to change that, um, change that that narrative and change that dynamic.
• 12:02
  Carl Ferenbach: And uh Lee Scott, who was then the chief executive, came up with the idea that they should really be take a leadership position and it's it ought to be on climate.
• 12:12
  Carl Ferenbach: He rang up several of the NGOs, including my friend Fred Krupp, uh said, I'm gonna go to the top of Mount Washington.
• 12:19
  Carl Ferenbach: Um it was in the fall.
• 12:20
  Carl Ferenbach: I want you to come with me.
• 12:22
  Carl Ferenbach: Uh, and I'm gonna make an announcement on what on the commitment that Walmart is prepared to make to um significant uh emissions reductions, and I believe it was by 2020, but I can't remember exactly.
• 12:35
  Carl Ferenbach: He did that, um, and that did have an impact.
• 12:38
  Carl Ferenbach: Walmart has followed through on that, so uh in in many, many, many different ways.
• 12:45
  Carl Ferenbach: Um, the major NGOs all have offices in Betterville, uh, deep relationships.
• 12:50
  Carl Ferenbach: So that was you know one big factor.
• 12:53
  Carl Ferenbach: But Walmart at the time, this was before Amazon really took over, um, had what it had an enormous uh influence on all forms of supply chains.
• 13:05
  Carl Ferenbach: And given that the supply chains had migrated uh to Asia and back again, um Walmart had the ability to say, this is what we want, you have to go back through the supply chain for your products.
• 13:19
  Carl Ferenbach: Um and and so that had that had a uh an enormous impact.
• 13:25
  Kathleen Biggins: Um and uh my other compelling reason, I'm drawing a blank, but uh why don't we so did Walmart get in front of the bird or she behind the bird?
• 13:35
  Carl Ferenbach: Walmart definitely uh got in front of the bird and and has remained there, um and it's had an uh enormous impact.
• 13:44
  Carl Ferenbach: So other companies have have, of course, uh who don't sell Walmart or don't sell consumer products, um, had to make, I'm sorry, the so the other big change uh is generational.
• 13:56
  Carl Ferenbach: Um and so um every the biggest every CEO's biggest job, they would probably tell you today, is talent management.
• 14:07
  Carl Ferenbach: And developing the next generation of talent is is a critical skill for all managers.
• 14:14
  Carl Ferenbach: And uh so what we've seen in the last uh through the millennial generation, basically, but now a generation Z, is um generations that are willing to, when they come to their job interview, to say, like Kathleen, your CEO here, uh, what are your values?
• 14:31
  Carl Ferenbach: Uh they ask questions that you know I would have cowered even have thought about, our generation would have.
• 14:39
  Carl Ferenbach: And um they're um and they stick with it, they mean it.
• 14:44
  Carl Ferenbach: So if you're going to hire the next generation of talent, you have to address the questions that they are finding interesting.
• 14:53
  Carl Ferenbach: And this is one of the things that's compelling to that generation.
• 14:57
  Carl Ferenbach: So you have to figure out how do you do it.
• 15:00
  Carl Ferenbach: The challenge for business leaders is how do you take something that isn't part according to your actual business product, service, uh, the things that you have been doing every day to be successful, and how do you integrate that into how you manage your organization?
• 15:22
  Kathleen Biggins: So let's build on that a bit because one of the things that we are are hearing a lot from CEOs and from um other types of business leaders is that while they have to keep their eye on the core business, there is a new recognition of both risks and opportunities that are coming from climate because climate is changing so much around us, and because of the complicated ways that societies have chosen to try to corral it and react to it.
• 15:52
  Kathleen Biggins: So no doubt CEOs have a harder job today, but isn't it true that just the fundamentals of their business are also being impacted by the global climate risk?
• 16:04
  Kathleen Biggins: Or would you agree with that?
• 16:05
  Carl Ferenbach: Well, it depends on the business, but yes, I mean, um, you know, we've seen in the last couple of years um the major integrative oil companies, Exxon uh Mobil, for instance, who uh resisted um all forms of climate intervention uh for just the reasons that you cited, Kathleen, um, has now got uh very well uh defined climate policies that it's engaging in.
• 16:33
  Carl Ferenbach: Uh went through a proxy fight a couple of years ago, uh, ended up with two or three, I can't remember, new directors uh as a result.
• 16:41
  Carl Ferenbach: And um, so we're seeing those that have been um been most directly involved because of their production of fossil fuels, uh, recognize that they have to have uh have some policies in place and some process for addressing uh the emissions, their emissions, and they have to be credible, they have to be able to be completely understood by the public.
• 17:08
  Carl Ferenbach: And um and ultimately they're gonna have to end up in the price of the money.
• 17:13
  Kathleen Biggins: Well, the the price of products in general.
• 17:16
  Carl Ferenbach: Yes, right.
• 17:17
  Kathleen Biggins: And I I guess um maybe I would add that there's also new opportunities coming.
• 17:22
  Kathleen Biggins: It's not just the risk and the downside, there's a lot of upside for these companies that can invest in new technologies.
• 17:28
  Kathleen Biggins: And I don't need to tell you about that because that's an area that you're quite versed in.
• 17:31
  Kathleen Biggins: Yeah, but there is the hope on that side as well.
• 17:34
  Kathleen Biggins: Let's drill down a little bit on the hello.
• 17:38
  Kathleen Biggins: Um, Colin question.
• 17:42
  Kathleen Biggins: So let's drill down a little bit on the changing economics.
• 17:46
  Kathleen Biggins: Because I think we all know the old story, which was that making this move towards cleaner tech would indeed be much more expensive.
• 17:54
  Kathleen Biggins: Um, and it was um making it a hardship for us to embrace it.
• 18:00
  Kathleen Biggins: And it meant a lot of job loss without a lot of job loss.
• 18:03
  Kathleen Biggins: But today, that is kind of been turned on its head.
• 18:06
  Kathleen Biggins: I mean, global energy is significantly cheaper, about 40% cheaper than fossil fuels on a global basis on a levelized apples to apples.
• 18:15
  Kathleen Biggins: Um, and we're seeing strides also in transportation and other areas.
• 18:19
  Kathleen Biggins: So, can you talk a little bit about that economic equation and what you see going forward in the transition?
• 18:28
  Carl Ferenbach: Well, um, the the um we win, of course, if if uh every day if you can win in the marketplace.
• 18:38
  Carl Ferenbach: Um and so, and I think that is having a big impact.
• 18:42
  Carl Ferenbach: Um, but it's it's a gradual process.
• 18:46
  Carl Ferenbach: The the the different the utility differential between uh solar and wind uh is is very evident in warmer climates in the southern half of the United States, for instance.
• 18:59
  Carl Ferenbach: You would think it would be less evident in uh in the colder climates, although in our uh adopted state of Vermont, we see solar everywhere and we have solar.
• 19:10
  Carl Ferenbach: Um, and so it is doable.
• 19:12
  Carl Ferenbach: Um and uh the uh rate at which we're adapting and adopting uh electric vehicles is probably surprising, at least everybody, at least for the moment, uh, whether that's sustainable uh is difficult to say.
• 19:29
  Carl Ferenbach: But the you know, it's still in terms of the totality of what we do in the in the US in our economy and what they do in Europe and what they're doing in China, um, it's still uh we are still emitting enormous amounts of greenhouse gases.
• 19:48
  Carl Ferenbach: China's uh commitment was to peak.
• 19:52
  Carl Ferenbach: I think uh Z is reappearing this, I think, and I think it's peaking in something like 2030 or 2035 and going net zero in 2060.
• 20:03
  Carl Ferenbach: But at the same time that he's saying that, they're turning on uh weekly, literally, uh new coal-fired um energy.
• 20:13
  Carl Ferenbach: Uh India has said, okay, we're going to leapfrog technologically.
• 20:19
  Carl Ferenbach: Um, so we won't be as bad as the other as the developed economies, uh, and we won't be as bad as China.
• 20:27
  Carl Ferenbach: Uh what they say by what they mean by leapfrog is instead of building a coal, turning on a new coal-fired plant every week, they're going to, or every other day, they're going to do it with renewables.
• 20:38
  Carl Ferenbach: Um they have a southern location, they have lots of sun, um, and uh and they can access wind.
• 20:46
  Carl Ferenbach: Uh so but they have to do it, they have to execute.
• 20:49
  Carl Ferenbach: So the you know, that's where we are.
• 20:52
  Carl Ferenbach: We're really we are now in the age of execution, and uh we'll will nations make that commitment.
• 21:01
  Carl Ferenbach: But this is our view, my view personally, as opposed to all these great organizations we help support, but um the uh corporations and corporate leaders are now going to have to uh actually deliver the outcomes very publicly so that everyone understands it can be done and that it will be done.
• 21:23
  Carl Ferenbach: And we aren't there yet.
• 21:26
  Kathleen Biggins: That's a big challenge, isn't it?
• 21:28
  Kathleen Biggins: I mean, it's interesting to me, um, as you mentioned, that China is indeed coming out with that coal, but they are also bringing on board four times as much renewables.
• 21:37
  Kathleen Biggins: In fact, they have about half of all the renewable activity in the world.
• 21:41
  Kathleen Biggins: They do.
• 21:42
  Kathleen Biggins: Um, which concerns me because so often our conversations in the past have been oh, we have to stay competitive because they get to use fossil fuel, right?
• 21:50
  Kathleen Biggins: We can't get off while they can use it.
• 21:52
  Kathleen Biggins: And now the issue is oh my goodness, they are beating us in the race for all the new technologies, and we are way behind.
• 21:59
  Kathleen Biggins: So It's it's kind of a cruel twist on that competitive theme from before.
• 22:04
  Kathleen Biggins: So what else can the private sector do?
• 22:08
  Kathleen Biggins: What can the people in this room as investors and as consumers do to help facilitate this transition?
• 22:16
  Carl Ferenbach: Yeah.
• 22:17
  Carl Ferenbach: So um there are two sides to the whole um climate question, the two sides being mitigation and adaptation.
• 22:27
  Carl Ferenbach: So mitigation is basically where all of us are concerned is just finding ways to use less of the stuff uh that's causing the problem.
• 22:37
  Carl Ferenbach: Uh, can we do that?
• 22:38
  Carl Ferenbach: Well, we can make our homes more efficient.
• 22:40
  Carl Ferenbach: Um, we can, however, uh we transport ourselves, we can do it more efficiently than we do if we just focus on doing that.
• 22:50
  Carl Ferenbach: Um, they're not big things.
• 22:52
  Carl Ferenbach: Um we don't have to all become vegans or pescatarians or something else, but uh we should be aware that um that farms and food are uh a major contributor to greenhouse gases.
• 23:05
  Carl Ferenbach: Um so you know what we what we buy and how we choose to buy it and from whom we buy it does can make a difference.
• 23:13
  Carl Ferenbach: Um but so we can all affect mitigation just by relatively modest behavioral changes, uh, which can have a significant outcome, uh significant benefit.
• 23:23
  Carl Ferenbach: The other part though is um we're already experiencing a lot of the consequences of what is somewhere between one degree and one and a half degrees Celsius uh of warming um in the last uh well since we started counting in the 1870s, but really most of that since in the last 50 years.
• 23:45
  Carl Ferenbach: Um and the and that curve is getting is quite steep.
• 23:50
  Carl Ferenbach: Um emissions are going to be greater.
• 23:53
  Carl Ferenbach: Um and the um uh carbon dioxide emissions, uh once they're up there, they're up there.
• 24:02
  Carl Ferenbach: They're up there for a couple of centuries, they don't just go away.
• 24:05
  Carl Ferenbach: Methane's only up there for 20 years, 80 times more powerful, but it's up there for a short period of time.
• 24:11
  Carl Ferenbach: So in effect uh or have an impact on what um organizations are doing, but just making it clear that if they will address some of the uh some of these questions in their own businesses, that that will make us a more uh welcoming customer.
• 24:32
  Carl Ferenbach: Um and uh and at the same time, uh thinking within our communities and the places where we live, uh, how do we, what should we do to adapt?
• 24:44
  Carl Ferenbach: Are there things that we can do?
• 24:45
  Carl Ferenbach: Are there things we can do living in a barrier beach um that will um will um make it a safer place to live?
• 24:56
  Carl Ferenbach: Uh Judy's family lives right on the facing the Atlantic Ocean on rocks of Cohasset, Massachusetts.
• 25:02
  Carl Ferenbach: Sea levels have risen 18 inches uh in the last 50 years.
• 25:06
  Carl Ferenbach: Um they're likely, we're told they're likely to go up another 18 inches by 2035.
• 25:12
  Carl Ferenbach: Uh that's going to mean a lot of flooded background uh backyards.
• 25:16
  Carl Ferenbach: Um, how do you prepare for that?
• 25:18
  Carl Ferenbach: How do you prepare the urban environment for that?
• 25:21
  Carl Ferenbach: And probably most importantly, how do we uh uh prepare and help uh the uh people in urban environments and low-lying environments, 35% of the global population lives on um on exposed lands on ocean fronts.
• 25:37
  Carl Ferenbach: Uh, how do we get those uh lower income populations through this really existential challenge that they're gonna face?
• 25:47
  Kathleen Biggins: So, one thing that you um perhaps could say puts a bow on all of those ailing parts from these changes are the economic losses.
• 25:58
  Kathleen Biggins: And we're beginning to see the insurance company um price in what they see as a more realistic risk.
• 26:06
  Kathleen Biggins: Um, there are there's talk about trying to put border tariffs, and in fact, York is doing that to try to integrate the real costs of climate and these disruptions into the cost of the products and services that we buy or produce.
• 26:22
  Kathleen Biggins: Will that make a difference?
• 26:24
  Kathleen Biggins: I mean, it seems to me that the insurance um change that we're reading about really was startling to a lot of people.
• 26:31
  Kathleen Biggins: Yet it the writing has been on the wall for quite a lot.
• 26:34
  Kathleen Biggins: Um, and it's just the beginning of the what they're calling the great repricing.
• 26:38
  Kathleen Biggins: How do you see that unfolding and do you see it waking people up a little bit more to the economic harms that are coming as well as the physical ones?
• 26:46
  Carl Ferenbach: Yeah, it's it's a um we should really have somebody who understands what's going on in the insurance markets better than I do.
• 26:53
  Carl Ferenbach: But the the um there's no question that uh particularly property insurance is a market-based um uh is a market-based um protection that we all buy.
• 27:08
  Carl Ferenbach: And if we can't buy it or if it's not affordable, um, then there's two big messages there.
• 27:15
  Carl Ferenbach: One is we haven't got an insurance insurable property, and the other is um it's at greater risk than we thought it was.
• 27:23
  Carl Ferenbach: And uh I think we do want the insurance companies to communicate more effectively about their own risk analysis process, how they do evaluate, uh, to just show up in a community and say, you know, you've got too much exposure, we're not going to insure you anymore, without any prior uh preparation within that community for that, or without any opportunity for the communities to come up with a plan to address the risks that the insurance companies don't want to underwrite.
• 27:53
  Carl Ferenbach: Um, that seems to me to be unprincipled.
• 27:56
  Carl Ferenbach: We don't want them to do that.
• 27:58
  Carl Ferenbach: Uh, but on the other hand, we do have to be prepared for the fact that that is going to be their reality.
• 28:03
  Carl Ferenbach: And uh so that's part of the adaptation process.
• 28:08
  Kathleen Biggins: Yeah.
• 28:09
  Kathleen Biggins: I think this great repricing will be interesting to watch over the next five and ten years, though, because there's so many areas where we haven't captured the real cost yet, and it's going to be forced upon us simply because the destruction is getting stronger.
• 28:23
  Speaker 6: Yeah.
• 28:24
  Kathleen Biggins: So one of the things that you and I talked about, Arizona, is that this is not all gloom and doom.
• 28:28
  Kathleen Biggins: There is a lot of opportunity out there for us as human beings and also as investors.
• 28:34
  Kathleen Biggins: And I know you are very much looking at some of those investments that will be some of the answers to adaptation and mitigation as we go forward.
• 28:43
  Kathleen Biggins: Um, the grid, as we know it, is going to be very different.
• 28:46
  Kathleen Biggins: The grid, as we know it, cannot continue and it's already beginning to transform on our watch.
• 28:52
  Kathleen Biggins: But could you help us understand some of the new technologies that are coming and things that are exciting you about this transition, both in the grid and broader?
• 29:01
  Carl Ferenbach: Sure.
• 29:02
  Kathleen Biggins: So what we um can you hear back that there without those mic?
• 29:07
  Carl Ferenbach: Is it like I'll remember to pick it up?
• 29:10
  Carl Ferenbach: The the uh um so like so many things, I guess we just stumbled into this, but the the um idea that uh could we have a significant impact, could we even have more impact um than we were having out of the foundation if we uh invested in the next generation of technology?
• 29:31
  Carl Ferenbach: So there's a whole, as it turns out, there's a whole uh venture world out there called clean tech.
• 29:36
  Carl Ferenbach: And um there's a lot of interesting uh capital that's uh that's backed a number of new ideas, and they're not by any stretch of the imagination, all in the Bay Area.
• 29:49
  Carl Ferenbach: Uh they're all over the country.
• 29:51
  Carl Ferenbach: And uh some pretty creative and interesting stuff.
• 29:54
  Carl Ferenbach: So one of the we tried to stick with something we thought we might know something about, uh, and only work with people we knew.
• 30:02
  Carl Ferenbach: Um, but the the uh so one area that we have invested uh behind pretty actively has been the next generation of battery technology or the whole area of storage.
• 30:14
  Carl Ferenbach: So utility scale storage is still sort of out there in the future.
• 30:20
  Carl Ferenbach: Um that's um, but it's there, it's being developed, um, but that may not be the great uh the great savior.
• 30:29
  Carl Ferenbach: But the current generation of batteries that we're using in EVs um will be significantly improved by the next generation.
• 30:39
  Carl Ferenbach: It'll also be safer.
• 30:40
  Carl Ferenbach: One of the problems lithium and lithium ion has is that lithium is an unstable element.
• 30:45
  Carl Ferenbach: And so we've had a number of fires that have resulted from lithium ion lithium ion batteries um and and uh that were insufficiently protected in the production process.
• 30:56
  Carl Ferenbach: And uh the next generation will be more solid state, may also have different chemistries, and uh and will be more stable.
• 31:04
  Carl Ferenbach: It'll also basically we should be thinking by the end of this decade that we can get double the mileage if we can get 350 miles off a battery charge today.
• 31:14
  Carl Ferenbach: Can we get 700 miles off the next generation and actually it have it be smaller, weigh less, take up less space in the vehicle, and um and cost less.
• 31:26
  Carl Ferenbach: Um, so there's enormous potential productivity gains.
• 31:31
  Carl Ferenbach: Uh China's led the trade on batteries right now.
• 31:35
  Carl Ferenbach: I think uh to some extent at least, I think that both in the US and in Western Europe, there's a tremendous amount of effort going into uh new battery, um new battery development.
• 31:49
  Carl Ferenbach: And uh a number of young companies that are now getting just getting into production.
• 31:55
  Carl Ferenbach: Uh there's a wonderful Harvard Business School case in a company called Northpole, uh, which is in northern Sweden, uh, started by a former uh by several people, but a former Tesla executive.
• 32:08
  Carl Ferenbach: Um they are in the process of uh rolling out their first big gigafactory.
• 32:15
  Carl Ferenbach: They're gonna be Europe's supplier.
• 32:17
  Carl Ferenbach: They're up close to the Arctic Circle.
• 32:20
  Carl Ferenbach: Uh, they've got people that they've been recruiting from all over the world who are going to work in that factory.
• 32:26
  Carl Ferenbach: And uh just by chance, uh 30 miles from there, apparently, they've discovered a very large lithium deposit.
• 32:35
  Carl Ferenbach: Uh, and so suddenly they're going to be self-supplying.
• 32:38
  Carl Ferenbach: Uh, and so they'll be the low-cost player, they'll be adapting the newest technology.
• 32:44
  Carl Ferenbach: That's going on all over the place.
• 32:46
  Carl Ferenbach: And and um, so that's that's exciting to see.
• 32:50
  Carl Ferenbach: The other place, which other places which are much more boring, but traditional um production processes in the manufacturing sector around the world um are adopting um new processes or new ways of uh designing and producing uh whatever their product is uh far more efficiently than they have in the past.
• 33:16
  Carl Ferenbach: So just by being better at what they do, they're uh contributing to the reduction in greenhouse gases.
• 33:23
  Carl Ferenbach: And that's you know, we should be supporting we in the investment world should be supporting those.
• 33:30
  Carl Ferenbach: Um I won't go into the whole thing around ESG, but those companies are really the ESG companies.
• 33:39
  Kathleen Biggins: Okay, well, I think that we can do better, and we should support those that are doing better, is a great place for us to wrap up our conversation and open it up to the audience.
• 33:49
  Kathleen Biggins: We're going to put out um a mic.
• 33:51
  Kathleen Biggins: I would ask you to come up or pick up the mic so it's a little easier for us to hear your questions.
• 33:56
  Kathleen Biggins: And if we don't have any from the audience, we'll just keep on going.
• 34:00
  Speaker 6: But I'm sure we have something out there.
• 34:05
  Speaker 4: Yes.
• 34:06
  Speaker 4: I'm curious as to why we don't hear much about nuclear, since technically they're smaller, uh safer nuclear uh building land and utilities going in on nuclear.
• 34:22
  Carl Ferenbach: The uh the primary impediment has been cost.
• 34:26
  Carl Ferenbach: Um and uh and it's a great question.
• 34:30
  Carl Ferenbach: Uh, and there's been a lot written about uh new generations of nuclear technology.
• 34:36
  Carl Ferenbach: Um, and that could could we can we build, we have the capability to build smaller, more efficient plants.
• 34:42
  Carl Ferenbach: Um so it's highly regulated.
• 34:45
  Carl Ferenbach: Um the cost of uh as a consequence of the of the necessity of it being highly regulated uh has been an impediment for a long time.
• 34:56
  Carl Ferenbach: And so can we drive the uh the production cost down to a place where it's competitive?
• 35:02
  Carl Ferenbach: Um and um or will um we scale up in renewables um so rapidly that it obviates the need to go through all of that.
• 35:13
  Carl Ferenbach: And um I'm sure there what people say anyway, I'm not an expert at all on nuclear, but what people say are uh is um is we'll see more of it.
• 35:23
  Carl Ferenbach: The other thing that's out there, um, and it's somewhere within the 2035.
• 35:29
  Carl Ferenbach: Well, I don't know.
• 35:30
  Carl Ferenbach: Judy and I took a tour with uh with Fred Trump and a bunch of other people of a uh fusion facility outside of Boston, um, what a month or so ago.
• 35:41
  Carl Ferenbach: And um I mean they have built the the uh base um production unit that will build the batteries, uh which are gigantic, uh, for this fusion facility.
• 35:56
  Carl Ferenbach: That that facility is finished.
• 35:58
  Carl Ferenbach: They have the bones built, the all the concrete built for the actual fusion plant.
• 36:06
  Carl Ferenbach: They expect to uh have a this is a group this started with a group from MIT, which had worked on fusion and pushed fusion for decades, literally.
• 36:17
  Carl Ferenbach: Um it's now in the hands of the engineers, uh they're very proud to say.
• 36:22
  Carl Ferenbach: Um, and they're gonna actually build a product of a real fusion unit.
• 36:26
  Carl Ferenbach: So their ambition, at least, correct me if I get the dates wrong, but it's that they uh will um their prototype will uh produce, they expect, produce uh power uh by uh where 2023, 2026, I think was their start date, that that they would go from there.
• 36:53
  Carl Ferenbach: So that's the you know, do we test out?
• 36:56
  Carl Ferenbach: They go from there to um actually turning it on uh in 2030.
• 37:04
  Carl Ferenbach: Turning it on means that a single fusion facility that that emits nothing and has no spent fuel would have the power to power the entire city of Cambridge, Massachusetts, one facility.
• 37:17
  Carl Ferenbach: Their ambition, uh, and this is a big ambition, their ambition is that by um mid-century, I guess, that worldwide we have something like 10,000 of these plants, in which case we would be getting all of our electricity for a very low cost uh and with effectively no no uh emissions.
• 37:42
  Carl Ferenbach: Is that possible?
• 37:44
  Carl Ferenbach: I have no idea, but we sat and listened to this, and they're making this presentation almost daily, which was sort of what our takeaway was from that.
• 37:56
  Carl Ferenbach: So there's that kind of thing is there.
• 37:59
  Carl Ferenbach: There's real they their uh startup capital funded by both governments and private um corporate um entities and investors was two billion.
• 38:12
  Kathleen Biggins: So I'll just build on that because you're not the only one impressed because Microsoft actually issued a PPA to buy it in 2028, which blew my mind.
• 38:21
  Kathleen Biggins: I mean, to actually buy fusion energy where we aren't quite even sure how it's going to go.
• 38:26
  Kathleen Biggins: Um, and just to build a little bit on the nuclear, because it's it's a topic that we hear a lot when we go travel around the country, and it does hold so much promise.
• 38:34
  Kathleen Biggins: Um, and they are experimenting with these kind of sexy looking um ones that can fit right into a coal plant.
• 38:41
  Kathleen Biggins: They're so small they fit on a truck.
• 38:43
  Kathleen Biggins: Um, and China is building 19 new nuclear plants, including one that they're saying they can get out in two years, which is something that we could maybe get a blueprint for in our country.
• 38:54
  Kathleen Biggins: So it kind of shows what other countries can do.
• 38:57
  Kathleen Biggins: Um, the last thought on nuclear, though, is the role it would play in the grid and whether it would just be a baseload or whether it would pick up when the wind isn't blowing and the sun isn't shining, and it's not as good on that intermittency.
• 39:12
  Speaker 6: Yeah.
• 39:12
  Kathleen Biggins: So it it it it so its role has to be well defined.
• 39:15
  Kathleen Biggins: We have to do it better.
• 39:16
  Kathleen Biggins: Um, but it's definitely something that a lot of people, including the current administration, is very excited about.
• 39:22
  Kathleen Biggins: So you know, yeah, next.
• 39:25
  Speaker 4: Well, thanks for coming.
• 39:26
  Speaker 4: My name's Peter Flower.
• 39:27
  Speaker 4: I've actually worked in the nuclear industry quite supposed for lifting up the G, etc.
• 39:32
  Speaker 4: I'm a huge fan of nuclear second-size three mile island was said to be a disaster, but it wasn't the world tried to shut down nuclear.
• 39:46
  Speaker 4: It basically did until southern companies in Georgia finally was able to build nuclear plants, two plants.
• 39:54
  Speaker 4: The cost of it was like 4x what it should have been if there weren't all this regulatory nonsense.
• 40:02
  Speaker 4: Um, we made, in my mind, buy it, we made an incredibly bad decision years ago, driven by driven by three mile islands, to kill the nuclear industry.
• 40:12
  Speaker 4: West the United States lost Westinghouse and GE's nuclear systems.
• 40:16
  Speaker 4: They're gone.
• 40:17
  Speaker 6: Yeah.
• 40:18
  Speaker 4: We made a huge to me, we made a huge mistake.
• 40:22
  Speaker 4: Fast forward.
• 40:23
  Speaker 4: I'm just full disclosure, I'm an incredible denier in the whole climate change crisis thing.
• 40:30
  Speaker 4: But I feel like we're in the mode now of uh another you know nuclear shutdown massive decision, spend 50 trillion dollars.
• 40:40
  Speaker 4: That's nonsense.
• 40:43
  Speaker 4: And so I I'd be curious, like, what's your view in you know, there's several books written by some very smart people about you know apocalypse?
• 40:53
  Speaker 4: Never.
• 40:54
  Speaker 6: Yeah.
• 40:55
  Speaker 4: You know, what's your view about the opposing view into this green energy crisis?
• 41:01
  Speaker 4: But broadly speaking, you mean things the the you know all you know, there are actually a lot of scientists out there who disagree with the and I you know just curious, what's your view as to the you know the opposite opinion that this is the crisis?
• 41:17
  Kathleen Biggins: Is it that climate change is happening or that nuclear should be part of the mix?
• 41:21
  Speaker 4: Yeah, separate the nuclear.
• 41:22
  Speaker 4: My nuclear example is just we economically we wasted so much money by killing the nuclearists.
• 41:30
  Speaker 4: So are we at risk of wasting so much money again by doing something that will turn out to be a bad decision?
• 41:37
  Speaker 6: Yeah.
• 41:39
  Carl Ferenbach: Well, um, a couple of things.
• 41:41
  Carl Ferenbach: I guess the the, I mean, first of all, the uh at least the actual numbers that we uh we think we get um out of the scientists is that 97% of scientists are solidly behind um the um the issues associated with clean with with uh with climate change.
• 42:02
  Carl Ferenbach: But you know, I think I mean there's a lot of uh variation and there's a lot of different, you know, people are confronted with this in different ways, different aspects of the life they live.
• 42:13
  Carl Ferenbach: And um, and I don't think it should be a surprise to anybody that lots of people um uh are skeptical or are concerned, or I believe in climate change, I don't think it's going to affect me, so I don't need to do anything.
• 42:26
  Carl Ferenbach: There's a whole range of of views that people have.
• 42:30
  Carl Ferenbach: Um so the you know, I think it it does uh and our thinking about this is all started with uh with a continuum.
• 42:41
  Carl Ferenbach: Um the the um do we have a problem?
• 42:46
  Carl Ferenbach: I think we have a problem.
• 42:47
  Carl Ferenbach: How do we understand the problem?
• 42:49
  Carl Ferenbach: We turn to science, we get the best science we possibly can to understand what the problem is, and uh and how we define the problem and how we look at all the uh variations of the problem.
• 43:03
  Carl Ferenbach: And from there we have to turn to policy, and policy has two elements to it.
• 43:08
  Carl Ferenbach: The it's to understand what policy options uh might be there, and that can be primarily an academic effort and is uh to a great extent.
• 43:19
  Carl Ferenbach: And then it's how do we actually select what policies we should pursue, what will the public support, what will uh be affordable, and and then go to policy.
• 43:31
  Carl Ferenbach: And then that from that point, it gets handed effectively to us as consumers, to the producers, to corporations, markets make the and in the end we'll make the decision um about policies.
• 43:45
  Carl Ferenbach: And uh and that will drive um what we actually do.
• 43:49
  Carl Ferenbach: And if you can keep the discussion in that framework so it's supported by science, there is an understanding that there Are a lot of different opinions, approaches, needs that need to be met in the course of doing something about this.
• 44:06
  Carl Ferenbach: And then you go to a place rather than having uh government or some other entities say, we have to do this, and designating the winners, um, let um let the process uh decide the winners and and let markets make the decision.
• 44:28
  Carl Ferenbach: Hopefully that answers the question of people like you who are seriously concerned about uh making bad decisions and going in the wrong direction.
• 44:37
  Carl Ferenbach: Um, and at the same time uh gets us to the places that ultimately um those of us who think that this is a problem and we need to do something about it tomorrow uh actually get an answer.
• 44:48
  Carl Ferenbach: I hope that helps.
• 44:51
  Speaker 2: Yes, um I'm trying to think of exactly how I want to frame this in my question.
• 45:00
  Speaker 2: Oh, I'm Kat Kramer.
• 45:03
  Speaker 2: I've married in 1570 years ago.
• 45:07
  Speaker 2: But I'm trying to learn as much as I can about the history and the politics of the language.
• 45:14
  Speaker 3: Anyway, my question is and I'm thrilled you're here because my husband and I, who don't have as much money, it's a lot of the fans here, but we are I would say comfortable, have come to the realization that most of our investments are with a country that does not have our values, um, our values as scientists, so don't think we should be fracking or mining diamonds in the Congo and that kind of thing.
• 45:46
  Speaker 2: So we've been trying to reduce our investments that we've had that have done very well for our college and death.
• 45:55
  Speaker 4: Okay, so we are taking some money out of that.
• 45:59
  Speaker 4: We're looking around and saying, what should we do with this money?
• 46:04
  Speaker 4: Um, and why do where do we go for advice for good advice?
• 46:13
  Speaker 2: If I mean we want some kind of mutual fund, I mean with or an algorithm, we want some part of what some several hundred thousand dollars and us put together with the rest of the boomers, we can put in a lot of investment and make big changes.
• 46:36
  Carl Ferenbach: So you don't want to take investment advice from me.
• 46:46
  Speaker 3: But how do we select what's it do?
• 46:48
  Carl Ferenbach: Yeah, well, so um go to um uh blackrock.com and literally uh or Vanguard, um, and they have um they offer funds uh and have uh for some time now that are uh focused on these areas.
• 47:08
  Carl Ferenbach: So Larry Fink of BlackRock has recently said he's not going to talk about ESG anymore, but that there are a number of funds that are um, it sounds to me anyway, like they are focused on on uh your concern about the values you're concerned about.
• 47:24
  Speaker 2: Well, just though as a comment, as scientists, we look at some of the ESG stuff and it looks like a big scam.
• 47:31
  Carl Ferenbach: Yeah, so well, and that's why it's under pressure.
• 47:35
  Carl Ferenbach: Um, but there's also a lot of, I mean, there's a lot of legitimate stuff out there, and if you go to the right uh organizations, uh you'll find you could be asking you what you know and then are we a little bit so so honestly, you're not alone.
• 47:57
  Kathleen Biggins: If you look at so the impact investing, especially for women and for the next generation, is women, and it's incredibly important for those two constituencies.
• 48:08
  Kathleen Biggins: And Morgan Stanley has funds.
• 48:10
  Kathleen Biggins: Um any investment advisor that you would be talking to anyway has these options and they aren't always labeled ESG.
• 48:18
  Kathleen Biggins: And in fact, probably many of them will be less of them will be labeled ESG.
• 48:21
  Kathleen Biggins: So it's got to be kind of a hot button thing.
• 48:24
  Kathleen Biggins: But the idea of being climate forward um in your investing has been recognized by the professionals and they do offer a lot of choices.
• 48:32
  Kathleen Biggins: So just I think it's really a question of making that first ask, and you'll find your way.
• 48:36
  Kathleen Biggins: And if you need more than that, I have a I have a good friend.
• 48:42
  Speaker 4: Great.
• 48:43
  Speaker 4: So I'd like to say something nice about Carl and Fred and the leadership in PDF and what they've accomplished, but I'd also like to get as a question.
• 48:50
  Speaker 4: Um, Carl glossed over it, but your acid brain really was a problem that everyone remembers.
• 48:56
  Speaker 4: No one talks about the reason is because fundamentally for EDF basically, accent trades, SO2, sulfur and dioxide is something that utilities resist and put in place and loads behold or down struggles and other things in a few way.
• 49:10
  Speaker 4: So when you talk about finding a market-based solution after climate example, yeah, we are energy investors by profession.
• 49:16
  Speaker 4: Um relationships with EDF, I just want to help them actually.
• 49:20
  Speaker 4: We are running our business launching the last week.
• 49:23
  Speaker 4: So thank you very much for the market based.
• 49:25
  Speaker 4: Thank you for Brian Wallace.
• 49:28
  Speaker 4: Um, my question for you is this the the cap and trade stuff uh versus SO2 in 1990 uh passed, but cap and trade for CO2 did not pass.
• 49:40
  Speaker 4: We got very close to the saying.
• 49:42
  Speaker 4: Right 2010, I think it failed.
• 49:44
  Speaker 4: Um, there's some people who say that putting a price on CO2 would just raise cost would be painful.
• 49:49
  Speaker 4: Yeah, there are other people who say putting a price on CO2 would push the decision out into the magic of the markets.
• 49:54
  Speaker 4: We've made lots of distributed decisions, which would be better than where do you come out on that?
• 49:58
  Speaker 4: How advisable is the price on CO2 now?
• 50:02
  Carl Ferenbach: How do we get how we could happen?
• 50:04
  Carl Ferenbach: Yeah, it's hard.
• 50:06
  Carl Ferenbach: Obviously, if it was as easy, it would have been done, right?
• 50:09
  Carl Ferenbach: That's you know.
• 50:10
  Carl Ferenbach: Um, and it's been uh subject of debate.
• 50:13
  Carl Ferenbach: I mean they've had a debate.
• 50:24
  Speaker 4: That's a that's a billionaire going joking, but that's okay.
• 50:35
  Carl Ferenbach: So um Europe uh the EU's had had a carbon market for some time.
• 50:42
  Carl Ferenbach: China has um gone all in on carbon markets, um, and um and it's done it with a cap and trade system um that they've been rolling out by district or by city.
• 50:56
  Carl Ferenbach: Um and um by all accounts, anyway, they remain uh committed to it.
• 51:01
  Carl Ferenbach: This has been going on for seven or eight years or more, maybe.
• 51:05
  Carl Ferenbach: And um, and so uh it's the um it's out there and it's controversial here.
• 51:13
  Carl Ferenbach: So uh the risk is if we don't do it in an effective way, we lose uh the confidence of the public, we lose the confidence of investors, and it doesn't work and it ends up with a bad name.
• 51:28
  Carl Ferenbach: So that's the the, you know, so how much regulation do you impose on uh putting a price on carbon?
• 51:36
  Carl Ferenbach: Do you put a price on carbon uh through taxes?
• 51:39
  Carl Ferenbach: Do you flow the taxes through corporate uh income statements?
• 51:44
  Carl Ferenbach: Do you there's been a you know Sheldon Whitehouse and several other members of the Senate had a uh proposal, I think that Sheldon put in a bill four or five years ago, uh, that um would uh effectively um have a price, uh have a carbon tax and recycle the funds uh so that uh we would all pay it at the pump, we would get it back or it would flow back.
• 52:11
  Carl Ferenbach: Um and that so it would be tax neutral um on the public.
• 52:17
  Carl Ferenbach: Um, but it would be it would add to the price of uh fossil fuels and and uh and therefore supposedly be a deterrent.
• 52:26
  Carl Ferenbach: Is that a workable process?
• 52:28
  Carl Ferenbach: You know, I I mean there's a lot of stuff out there, but there's nothing around which um we'd have anything approaching consensus in this country.
• 52:39
  Carl Ferenbach: And and so it's hard to see how we're gonna get there.
• 52:43
  Carl Ferenbach: And I, you know, so we keep the EDF staff keeps advocating, but cautiously and without the expectation that there'll be an outcome.
• 52:52
  Kathleen Biggins: So two follow-ups on that.
• 52:53
  Kathleen Biggins: One is what do you think about Reggie and the fact that in the Northeast they've had at least on electricity, a um patent trade that's been deemed fairly successful?
• 53:06
  Kathleen Biggins: No, yeah, it has.
• 53:07
  Speaker 6: Yeah, it has.
• 53:08
  Kathleen Biggins: And then on the West Coast, there's some.
• 53:09
  Kathleen Biggins: So we have some little baby steps going in.
• 53:11
  Kathleen Biggins: What about the the tariffs on tariffs in Europe is going to put on carbon so that countries that use carbon-intensive um manufacturing processes will be punished?
• 53:25
  Kathleen Biggins: Will that force our hand to do something similar?
• 53:29
  Carl Ferenbach: Well, that's the that's the question, and the whole border tax um debate is a hot debate.
• 53:36
  Carl Ferenbach: Um, but it uh because it seems to remain in the debate phase, um, it doesn't get into the market, so we don't really know what the impact will be.
• 53:46
  Carl Ferenbach: Um is it uh will will organizations, governments uh who uh who are on the negative side of the uh of the border tax uh find ways around it.
• 54:01
  Carl Ferenbach: Um, you know, I mean what we've seen um is that the industry is impacted by uh because they're engaged in fossil in some way, shape, or form, or very resilient.
• 54:12
  Carl Ferenbach: Um, the oil and gas industry has just had two of the best years in its history.
• 54:18
  Carl Ferenbach: Um and you know, because of the in part because of the pandemic, in part because of Ukraine, um, and uh in part because we don't have the capacity to replace uh all the demand that we um that we impose on and therefore use fossil fuels uh to supply.
• 54:36
  Carl Ferenbach: So uh and I think one of the things that everybody who's concerned about this needs to keep in mind, if if our starting point is here, 2023, how much total energy are we humans, just take the United States, going to consume uh in 2033, 2035?
• 54:57
  Carl Ferenbach: How much more energy are we going to consume?
• 54:59
  Carl Ferenbach: And so if we're trying to take fossil out, replace it with renewables, replace it with newer technologies, how quickly, you know, how much of this increase from here to here are the renewables going to take?
• 55:15
  Carl Ferenbach: How much of the fossil that we consume today are they gonna replace?
• 55:20
  Carl Ferenbach: How much realistically can happen?
• 55:23
  Carl Ferenbach: Um, and uh, if you read JP Morgan's uh stuff on this, it you know, it's very cautious about pointing that out.
• 55:32
  Carl Ferenbach: Um, that we consume, you know, we're not gonna change, we're unlikely to change how we live uh to a place where we just don't want to consume the stuff anymore.
• 55:43
  Carl Ferenbach: So that's gonna be our challenge.
• 55:45
  Kathleen Biggins: But the good news is if you flick on a light, you really don't care if it's a clean electron or a molecule.
• 55:51
  Kathleen Biggins: You really don't.
• 55:52
  Kathleen Biggins: All you care about is it's there when you need it, right?
• 55:55
  Kathleen Biggins: Um, so thank you.
• 55:58
  Kathleen Biggins: Thank you.
• 55:58
  Kathleen Biggins: So um if if we can make it seamless so that it isn't a sacrifice, yeah, then potentially some of this adoption could happen a lot easier.
• 56:08
  Speaker 4: We hope.
• 56:08
  Kathleen Biggins: We hope.
• 56:09
  Kathleen Biggins: We hope.
• 56:09
  Kathleen Biggins: I'm I'm being up to the case.
• 56:11
  Speaker 4: Carl, listen, it's great to have you back.
• 56:14
  Speaker 4: And uh you taught me sailing 57 years ago, I'm always um yeah, and you weren't involved.
• 56:24
  Speaker 4: No, Carl, when you were here 52 or plus years ago, if you were gonna go from here to the ocean, it would probably have been about 66, 67, 68.
• 56:41
  Speaker 4: It is probably 75, 76, 77 out there.
• 56:46
  Speaker 4: We had 77 and above.
• 56:48
  Speaker 4: Really?
• 56:49
  Speaker 4: But yeah, you breathe the air, you're breathing smoke.
• 56:53
  Speaker 4: Right, right.
• 56:54
  Speaker 4: It's really here.
• 56:56
  Speaker 4: The crisis is here.
• 56:57
  Speaker 4: Right.
• 56:58
  Speaker 4: I'm fishing for optimism here.
• 57:01
  Speaker 4: The context is back in the early days of the environmental movement, there was some partnership and collaboration politically, you know, with the Clean Water Act, Melbourne Nixon.
• 57:15
  Speaker 4: There were some things that happened.
• 57:17
  Speaker 2: Today we have a group of individuals who are going to plant one trillion trees to trees.
• 57:27
  Speaker 4: It's right, so I'm fishing for optimism for you because I think the elephant now no longer in the room is the political issues.
• 57:40
  Carl Ferenbach: Well, there's no we we need to have um public policy that is prepared to engage on on uh and support a solutions, and that uh it depends on where you go in the world, whether or not you find that.
• 57:55
  Carl Ferenbach: We don't find it here, uh, but we find a lot of um uh a lot here that um people will embrace and that are supporting it um either through philanthropy through philanthropy or you know, the American way is to support it through investment.
• 58:13
  Carl Ferenbach: Uh, you find much more consensus in Europe um and in the UK.
• 58:18
  Carl Ferenbach: I can separate the two.
• 58:20
  Carl Ferenbach: Um we find uh the top-down judgments that are being made uh by the Chinese.
• 58:28
  Carl Ferenbach: Um, but there there's no question that they are investing hugely in clean energy.
• 58:32
  Carl Ferenbach: They're also investing hugely in in trying to think of one over three billion people middle class.
• 58:39
  Carl Ferenbach: And um and so they're being cautious about uh jettisoning the fossil energy that's allowed them to get there.
• 58:47
  Carl Ferenbach: India still uh has a lot to go.
• 58:50
  Carl Ferenbach: Um so this is you know a lot of depends on where you are, uh a lot depends on the cultures, uh, a lot depends on how cohesive your society is.
• 59:02
  Carl Ferenbach: Uh, and right now ours is suffering from some division that keeps us from getting to any form of unanimity about what the solutions are.
• 59:13
  Kathleen Biggins: So can I just jump in on that too?
• 59:15
  Kathleen Biggins: You know, we travel the country and I get pretty depressed too.
• 59:19
  Kathleen Biggins: And then we've been into some very conservative markets that have a very different perspective on evaluating the risk of this issue.
• 59:26
  Kathleen Biggins: And to me, it comes back to economics, right?
• 59:29
  Kathleen Biggins: In in a lot of it was that for them to embrace climate change, it meant to move away from the economic drivers that were providing them economic security.
• 59:41
  Kathleen Biggins: That is changing in part because in many of these conservative areas, job growth in the renewable area and in clean tech is way outpacing those that are being lost in fossil, in part because fossil has already been um mechanical and but it's a mechanics, thank you.
• 59:58
  Kathleen Biggins: Um, to such an extent they've already shed a lot of workers, but in part because these jobs are in different attendant areas.
• 1:00:05
  Kathleen Biggins: And I think that if you start with the fact that everybody wants a healthy planet and a healthy economy and a good place for their kids to grow up, it's just they have a different perspective on how to get there.
• 1:00:19
  Kathleen Biggins: And part of what was stopping them was the sense that they would have personal economic loss.
• 1:00:24
  Kathleen Biggins: And I think that's changing.
• 1:00:26
  Kathleen Biggins: And you look at just letting the markets run.
• 1:00:29
  Kathleen Biggins: Texas is a deregulated market in energy.
• 1:00:32
  Kathleen Biggins: 40% of their electricity comes from renewables.
• 1:00:36
  Kathleen Biggins: Why?
• 1:00:37
  Kathleen Biggins: Not because governments said so, but because of the economics.
• 1:00:41
  Kathleen Biggins: And in fact, each household saved like about $500, and the economy saved $11 billion last year because of the renewable.
• 1:00:48
  Kathleen Biggins: Have we heard that story?
• 1:00:50
  Kathleen Biggins: Not so much, but it is happening, it's happening on a global basis.
• 1:00:54
  Kathleen Biggins: So I think we're at a point where that economic argument will change, and hopefully, with that, some hearts and minds.
• 1:01:01
  Carl Ferenbach: It wasn't very many years ago that the biggest investor in wind in the country was T-Boon Pickett's oil and gas fank.
• 1:01:09
  Speaker 2: Yes.
• 1:01:10
  Speaker 2: Um, I get all my information from NPR, and I heard the other day that if farming was its own country, it would be third behind the V US and China in terms of emitting greenhouse gases.
• 1:01:27
  Speaker 2: I just I think it's just fascinating, and um I want to hear if you have any comments on that.
• 1:01:36
  Carl Ferenbach: Well, uh the um that I don't know whether NPR's got its data right, but uh farming is definitely uh a major source of emissions and uh in this country and around the world.
• 1:01:50
  Carl Ferenbach: And and uh, you know, as we said earlier, the uh you know, animal husbandry, how you feed the animals, uh what you feed them um, for instance, can have a big impact in terms of their um their methane emissions um just from uh animal burning, uh, but also how we operate the farms.
• 1:02:10
  Carl Ferenbach: Um you know, we're operating it with um fossil fuel um equipment, um driven equipment.
• 1:02:18
  Carl Ferenbach: Uh can we switch farm equipment to electric?
• 1:02:21
  Carl Ferenbach: Will that be useful?
• 1:02:22
  Carl Ferenbach: Can we uh can that be accomplished?
• 1:02:25
  Carl Ferenbach: Uh how do we where do we how do we store product?
• 1:02:27
  Carl Ferenbach: How do we get product to market?
• 1:02:28
  Carl Ferenbach: I'm not sure what you know in saying what NPR said is are you counting every step in a supply chain right up to the uh to the plate and you attribute all of that to farming?
• 1:02:40
  Carl Ferenbach: Um and uh but in any case, there it's it's definitely um an uh an economic era area um where uh there's a lot of potential uh for improvement.
• 1:02:55
  Carl Ferenbach: And I think you know, we're well uh farmers tend to be conservative, they also live on the land, they they know what's going on, they're experiencing uh whatever it is, whether they advocate something for something politically or not, uh, and they're committed to making it better.
• 1:03:12
  Carl Ferenbach: So uh we'll find ways, I'm sure.
• 1:03:17
  Speaker 4: Carl, um we have sure we have some Princeton alumns in the room.
• 1:03:21
  Speaker 4: And um, I'm uh I'm really interested in some of the things you've done uh at Princeton in terms of developing human capital.
• 1:03:30
  Speaker 4: Um, and I was wondering if you could um tell us a little bit about that and what you've learned from the uh that instant just thankfully.
• 1:03:41
  Carl Ferenbach: Well, that's all that no credit to us, that's to them.
• 1:03:44
  Carl Ferenbach: Um the uh about the university and the universities generally, um whether they're um the great Ivy League universities or whether they're um the uh uh all the wonderful land grant universities around the country, that the the science uh policy and general research that's going on at universities uh is just is phenomenal and has an enormous impact on um as their student bodies are uh increasingly now in the workforce and doing more, um making more of the important decisions that we have to make around where investment is going and how it will happen.
• 1:04:27
  Carl Ferenbach: The the um what Princeton is one example uh has done, it has had, as I think everybody else said, an institute.
• 1:04:38
  Carl Ferenbach: Um and the the uh what was originally called the Princeton Environmental Institute goes back to the uh goes back now 28 years, I guess.
• 1:04:47
  Carl Ferenbach: Um and uh it as an as opposed to uh being a core um field of study, like the humanities or like engineering, um, the theory behind the institute is that it's a place where different disciplines can come to collaborate.
• 1:05:06
  Carl Ferenbach: Um and so while the core piece of the what was then PEI uh was around uh the physical sciences, the uh it incorporated the humanities uh into coursework, uh and therefore that that faculty into coursework and then the social sciences, uh, which takes you to the policy questions and uh and economics, uh, although that particular faculty in Princeton is difficult because it's so full of Nobel Prize winners that they don't let anybody, they didn't want to hire any uh environmental economists.
• 1:05:41
  Carl Ferenbach: But the uh um that that's I think a strategy that a lot of universities have pursued, and their contribution is um is in the science and policy research uh arena, and it's an educating uh Undergraduates and the next generation of faculty in those disciplines.
• 1:06:04
  Carl Ferenbach: And so that's uh that's been huge.
• 1:06:08
  Carl Ferenbach: As we've seen uh in more recent years, they've incorporated the um uh the whole agenda as as the student body has become more committed uh to this set of questions and more interest, more engaged.
• 1:06:25
  Carl Ferenbach: Uh the faculty has also become more engaged.
• 1:06:28
  Carl Ferenbach: And as a consequence, the the um the whole curriculum has come to address it.
• 1:06:36
  Carl Ferenbach: Um faculty or I'm sorry, university administrations have had to say, well, you know, if our student body is here and if our faculty is here and this is what we're teaching, are we walking the talk?
• 1:06:50
  Carl Ferenbach: Uh, because all of us who've been on university campuses know that they're pretty amazing facilities.
• 1:06:56
  Carl Ferenbach: Um, but if you're not managing them to um to the same environmental standards that you're preaching uh in the classroom, then um you may be sending the wrong message.
• 1:07:08
  Carl Ferenbach: So we've seen a lot of that kind of innovative stuff just happening on university campuses within the administrations.
• 1:07:17
  Speaker 3: Next question.
• 1:07:18
  Speaker 5: Uh girl, uh Spencer Hayes.
• 1:07:19
  Speaker 5: Um you uncle taught me Sam back in the day.
• 1:07:23
  Speaker 5: You would sit in wire throughout a three park touch truth.
• 1:07:27
  Speaker 5: Do you still sail?
• 1:07:32
  Carl Ferenbach: I married into a sailing family that uh you know was I was just totally uh bottom rung on the ladder.
• 1:07:39
  Carl Ferenbach: And and uh and uh so not much anymore.
• 1:07:45
  Speaker 5: We don't want to.
• 1:07:46
  Speaker 5: My other question is how would you rate the effectiveness of the Biden administration?
• 1:07:52
  Speaker 5: So in some sense, what's John Kerry about doing?
• 1:07:58
  Carl Ferenbach: Well, I don't know.
• 1:07:59
  Carl Ferenbach: He's been amazing in terms of um his uh his reach and his commitment to the issues John Kerry has.
• 1:08:08
  Carl Ferenbach: Whether his, you know, as a former secretary of state, is he um is he putting his diplomatic hat um on a head of his environmental hat is hard to know, but but uh in any case, it's it's gonna take both.
• 1:08:35
  Carl Ferenbach: And he's working hard.
• 1:08:37
  Carl Ferenbach: Um, this past week we've seen he's been in China.
• 1:08:40
  Carl Ferenbach: Um, so um the Biden administration, um to me, coming from my background and interests and um and commitment to markets um as solutions to lots of problems, it's the Biden administration is is very much good news, bad news.
• 1:09:01
  Carl Ferenbach: Um, the good news is that they have uh taken on these issues.
• 1:09:05
  Carl Ferenbach: Um they've uh been very open to hearing um a range of policy uh possibilities and incorporating those uh into the Biden agenda.
• 1:09:18
  Carl Ferenbach: And ultimately they found their way into two major pieces of legislation: the infrastructure bill, um, which arguably should pay for itself.
• 1:09:29
  Carl Ferenbach: And so from an economic perspective, we should celebrate it.
• 1:09:34
  Carl Ferenbach: Um and but we won't know for some time.
• 1:09:37
  Carl Ferenbach: Uh and the other is the uh infamous ARA, the ARA, the the Inflation Reduction Act, uh, which is primarily uh Climate Change Act.
• 1:09:47
  Carl Ferenbach: And um the concern that that uh so the good news is that they're uh they're coming up with policies to address the issue.
• 1:09:56
  Carl Ferenbach: The bad news from my perspective is that it's industrial policy and the government is making decisions about who does what and what so they're gonna, you know, for instance, take um the subsidies for EVs.
• 1:10:10
  Carl Ferenbach: Um, the more um EVs and the more you drive them, the more subsidy.
• 1:10:17
  Carl Ferenbach: What's the consequence of that?
• 1:10:19
  Carl Ferenbach: Well, for the first time in our history, we have uh during peacetime war levels of debt.
• 1:10:26
  Carl Ferenbach: Debt that's significantly greater than our annual gross domestic product.
• 1:10:31
  Carl Ferenbach: And uh, what does the IRA do?
• 1:10:34
  Carl Ferenbach: What do the subsidies do?
• 1:10:35
  Carl Ferenbach: They add for more, we take them up.
• 1:10:38
  Carl Ferenbach: We've created an incentive to add to the debt.
• 1:10:41
  Carl Ferenbach: So it's good news and bad news.
• 1:10:43
  Carl Ferenbach: We're driving cleaner vehicles, we're putting more debt on the government balance sheet.
• 1:10:48
  Carl Ferenbach: Will that come back to bite us?
• 1:10:51
  Carl Ferenbach: There's a lot of people who think it will.
• 1:10:53
  Carl Ferenbach: So that's the downside.
• 1:10:55
  Carl Ferenbach: Um, would we have gotten as far as we've gotten, and would we get to where we need to get to if we just did it with markets?
• 1:11:03
  Carl Ferenbach: It's a hypothetical.
• 1:11:07
  Kathleen Biggins: Can I just ask a question to build on that and we'll come right back to you?
• 1:11:10
  Kathleen Biggins: Um one of the things that is also coming more and more obvious is that the cost of climate change is hitting our government's coffers.
• 1:11:20
  Kathleen Biggins: Um, I think Mina Bri just said we had $270 billion worth of natural disaster costs, and some of that's due to climate change, some of it's not, but quite a lot is coming from it.
• 1:11:30
  Kathleen Biggins: What we saw coming into this is that again, going back to that markets question, we haven't really been capturing the costs, and we as taxpayers have already been paying for that.
• 1:11:40
  Kathleen Biggins: So the the idea of debt is a really critical one, but the the the idea that the status quo was not going to burden us financially is, I think, uh a falsehood.
• 1:11:55
  Kathleen Biggins: And I think it needs to be part of any conversation that the status quo isn't going to keep us safe, but it isn't going to keep our economy safe either.
• 1:12:02
  Kathleen Biggins: So something has to get, and I'm not saying that findings is a way to do it, but um, the other thing is that as we talk about a carbon tax, one of the things that the countries are trying to do is just stop subsidizing the use of fossil fuels.
• 1:12:16
  Kathleen Biggins: Right.
• 1:12:16
  Kathleen Biggins: And we haven't been able to do that.
• 1:12:18
  Kathleen Biggins: That's right.
• 1:12:18
  Kathleen Biggins: And that's kind of amazing.
• 1:12:20
  Kathleen Biggins: You can't even stop incentivizing the use of the thing that's causing the everybody know what Kathleen is.
• 1:12:26
  Carl Ferenbach: We subsidized our oil and gas industry.
• 1:12:28
  Carl Ferenbach: We subsidize oil and gas production at the same time we're trying to produce.
• 1:12:32
  Carl Ferenbach: Oh, we subsidize it at the same time we're trying to reduce it.
• 1:12:38
  Carl Ferenbach: Um as a matter of policy that's been in place for I don't know how long, but all of the 20th century.
• 1:12:44
  Carl Ferenbach: Uh at this one.
• 1:12:46
  Kathleen Biggins: So can I interrupted you?
• 1:12:48
  Speaker 4: So it's back to the question of hope.
• 1:12:51
  Speaker 4: So I run a life science fund that's focused on finding cures for diseases focused on human health.
• 1:12:57
  Speaker 4: Yeah, there's obviously a strongly a strong connection between human health and planetary health.
• 1:13:05
  Speaker 4: So we've launched a fund focused on creating companies.
• 1:13:08
  Speaker 4: So every day I look at innovation, new emerging technology.
• 1:13:12
  Speaker 4: Just curious, what technologies that used to be your top two or three or initiatives that we think are going to make a difference in the next five to ten years?
• 1:13:22
  Carl Ferenbach: Oh gosh.
• 1:13:22
  Carl Ferenbach: Well, so I I wish I knew more about the biosciences because I mean, look at what uh what biosciences did with COVID, uh, which is pretty phenomenal.
• 1:13:33
  Speaker 4: So one of our companies.
• 1:13:35
  Carl Ferenbach: Yeah, so I mean it's uh I mean that came from nowhere.
• 1:13:39
  Carl Ferenbach: So um I hate to predict what might make a difference.
• 1:13:44
  Carl Ferenbach: Um and uh and I come, I'm much more from the school of uh can we just do everything a little better every day?
• 1:13:52
  Carl Ferenbach: Uh that constant uh improvement, uh constant analysis of what we're doing and how we do it better is what ultimately gets us to where we need to get to.
• 1:14:03
  Carl Ferenbach: And uh so I don't even know how to think about the next great production.
• 1:14:08
  Carl Ferenbach: I mean, we have where we have put capital has been in um in the next generation of of uh batteries and and uh the uh and in and every place else we put capital has just been you know uh one at a time, somebody doing something better, uh smarter, that ultimately produces a better outcome.
• 1:14:36
  Kathleen Biggins: So I I want to just add something to the battery suggestions because I think people think, oh, batteries got it in a car or maybe on my power wall, but I don't know that they realize what it can do for the grid and the flexibility it gives, how it can turn all of us into power smoother.
• 1:14:51
  Carl Ferenbach: So, can you talk about what these innovations in batteries translate to more of the I'm not sure I can't on the but I'm uh comment on the grid because that's worth um the grid is going to be a real challenge for us.
• 1:15:05
  Carl Ferenbach: Um the grid that we have now is not uh built um and doesn't have the capacity to be an effective transmission agent for uh particularly renewables, uh, but it also has real capacity limitations, and and our demand is growing significantly, just the actual um demand each of us in uh creates in terms of what we use.
• 1:15:30
  Carl Ferenbach: And then on top of that, the fact that we're using all these new devices that are we want to have be powered by electricity.
• 1:15:37
  Carl Ferenbach: So the demand is the demand curve is steep, and the um we did not get into the IRA and into the and not a lot into the infrastructure uh legislation, uh, grid expansion and grid upgrades.
• 1:15:55
  Carl Ferenbach: Um, and that's gonna be a challenge for us uh for everybody, for everybody.
• 1:16:01
  Carl Ferenbach: So we're gonna have to um invest in the grid.
• 1:16:05
  Carl Ferenbach: Uh and if we're gonna go down this road, and if we're actually gonna have the capability to ultimately put all the uh funding to work in some way, we're gonna have to do something with the grid.
• 1:16:18
  Speaker 3: Well, this wanted to take us back a little bit to um the subsidies for public gas.
• 1:16:24
  Speaker 3: But I've spent a bunch of time learning about uh the carbon thing and dividend concept, etc.
• 1:16:30
  Speaker 3: etc.
• 1:16:30
  Speaker 3: And I'm just curious if you could expand a little bit on the oil and gas subsidies, how much they are, and what do you think of happening just and they disappear tomorrow?
• 1:16:39
  Speaker 3: How much money, where that money can go, and just what you think the interest is.
• 1:16:43
  Carl Ferenbach: Yeah, I don't know, but um and I don't know if anybody in the room has a background in oil and gas.
• 1:16:50
  Carl Ferenbach: Yeah, it does, yes, right.
• 1:16:54
  Speaker 3: Go ahead.
• 1:17:02
  Speaker 4: Uh oil and gas subsidies is sort of a hot topic.
• 1:17:05
  Speaker 4: People like to talk about it.
• 1:17:07
  Speaker 4: Um there's I was sort of divided into two categories.
• 1:17:10
  Speaker 4: There are countries out there like Saudi Arabia or Venezuela, where a big part of the citizen of those countries is building by gas link for 2,000 cents a gallon or something.
• 1:17:20
  Speaker 4: So when you see gas coming from oil and gas subsidies uh in hundreds of billions of dollars, it's that US, and I've looked at this over and over and over, might be 10 billion a year, which sounds like a lot, or $20 trillion.
• 1:17:33
  Speaker 4: So it's it's really small.
• 1:17:36
  Speaker 4: And this IRA act is hundreds of billions of dollars in renewable subsidies.
• 1:17:40
  Speaker 4: So I think if you ended the oil and gas subsidies, it would have a very small impact.
• 1:17:47
  Speaker 4: Also, I think what you have to do is you have to say, well, oil and gas is subsidized, but every time you buy a gallon of gasoline, you pay tax on it.
• 1:17:55
  Speaker 4: And the taxes are not as high here as they are in Europe.
• 1:17:58
  Speaker 4: But I think if you if you took the subsidies, but you've netted against the taxes paid.
• 1:18:04
  Speaker 4: I think oil and gas is a big tax betriver, unfortunately.
• 1:18:08
  Speaker 4: So it's nice to talk about how big changes the ass.
• 1:18:11
  Kathleen Biggins: Right.
• 1:18:11
  Kathleen Biggins: So just one question on that though, on the global, because I know the G7 has come out and said this is one of their primary strategies on climate change, it's to stop the subsidization of oil and gas.
• 1:18:22
  Kathleen Biggins: And I think it's probably more outside of our country.
• 1:18:25
  Kathleen Biggins: But do you think it's a bigger issue there?
• 1:18:28
  Kathleen Biggins: Because my sense of this is that it's a critical strategy that they have put forward.
• 1:18:34
  Speaker 4: It is, but I think the the numbers in this country, last time I did the map, it's something like oil and gas is paying in this country through these highway taxes, whatever, something on the order of 50 or 60 billion, but it's being subsidized 10 billion.
• 1:18:46
  Speaker 4: Whereas Saudi Arabia is probably getting away, I don't even know how many tens of billions of dollars of very subsidized fuel.
• 1:18:54
  Speaker 4: So I think what you're talking about is can you get the Saudi six house a week?
• 1:18:58
  Kathleen Biggins: Yeah, right on it.
• 1:18:58
  Kathleen Biggins: And the Iraqi right on it.
• 1:19:00
  Kathleen Biggins: Did you want to add something?
• 1:19:02
  Kathleen Biggins: Okay, more questions.
• 1:19:04
  Kathleen Biggins: And then we're we're almost to the end of our time.
• 1:19:06
  Speaker 2: So thank you, my student Kramer.
• 1:19:09
  Speaker 4: Um, I'm not trying, I'm always not so great at the question, so I only have to roughly plot this out.
• 1:19:22
  Speaker 4: I've heard a lot of, I really enjoyed the presentation, and and multi-dimensional stories are always great.
• 1:19:28
  Speaker 4: Um, we've talked a lot of time about like another trying to just prompt that is going to have an impact on the way the economics is done and the marketplace is going to be the same thing, but there's going to be some changes.
• 1:19:38
  Speaker 4: And I'm another scientist out of the depth, I've tried really hard to learn about economics to see how environmental policies interact with science.
• 1:19:48
  Speaker 4: The science and environmental policies interact within the realm of the marketplace.
• 1:19:52
  Speaker 4: I'm certainly I mean about that, but I have come across a number of basic assumptions that seem absolutely baked into economics, which seem to be totally flawed and unreasonable and unjustified.
• 1:20:08
  Speaker 4: And so the question is: can we really make the changes that the economic marketplace needs to make?
• 1:20:15
  Speaker 4: We don't address some of these rational flawed assumptions which economists just make.
• 1:20:22
  Speaker 4: And the two of them that's the that's the general idea of the question, and the two that bother me that I've struggled to understand how to possibly just bother are the discount rate, which says that money is worth flow now and in the future.
• 1:20:35
  Speaker 4: So if you're trying to do something on the benefit of people to the next generations, that's just not as important as what we do with our money now.
• 1:20:42
  Speaker 4: That's a really nice simple explanation.
• 1:20:44
  Speaker 4: But discounting has to do with the relative changes over time.
• 1:20:47
  Speaker 4: And the second one is externalities.
• 1:20:49
  Speaker 4: We don't charge the cause, we don't charge the people that are causing the problem for all the managements they cause.
• 1:20:56
  Speaker 4: And externalities just are a foot way to get rid of all the things that you don't want to have to be responsible for, and you have to have to get away with it.
• 1:21:03
  Speaker 4: So to me, those two alone, and I'm sure there are more models don't work.
• 1:21:08
  Speaker 4: Um can we can we possibly make the changes in the marketplace that need to be made without dealing with these fundamentally irrational ideas that were just built into economics like externalities?
• 1:21:24
  Carl Ferenbach: Yeah.
• 1:21:24
  Carl Ferenbach: Well, um, first externalities.
• 1:21:30
  Carl Ferenbach: Um, I I mean I uh I wish that we had a good answer to externalities, but I think what happens uh in so many policy areas is that in order to, and this has happened, um, and the Biden administration has has done it in different areas, and others have uh too.
• 1:21:48
  Carl Ferenbach: We want to kick start something.
• 1:21:50
  Carl Ferenbach: Um so we um subsidize it.
• 1:21:55
  Carl Ferenbach: Um so we want to uh we want to catch up with China on on batteries, we want to catch up on EVs, we can't want to catch up on you pick the technology.
• 1:22:06
  Carl Ferenbach: Um so in the industrial policy world that we're working in now, government says, great, we'll get behind that.
• 1:22:15
  Carl Ferenbach: Uh, and you find subsidies.
• 1:22:17
  Carl Ferenbach: Once you've done it, it's really hard.
• 1:22:20
  Carl Ferenbach: That's we've seen over and over, you see it in every walk of life.
• 1:22:23
  Carl Ferenbach: It's really hard to undo it.
• 1:22:25
  Carl Ferenbach: So the externality of today was the incentive of yesterday, many times.
• 1:22:32
  Carl Ferenbach: And um, so number one.
• 1:22:34
  Carl Ferenbach: Number two, don't think discount rates much.
• 1:22:37
  Carl Ferenbach: Capital, like everything else, has a cost.
• 1:22:42
  Carl Ferenbach: Capital is priced on risk, and risk is analyzable based upon what you think the future return to capital is.
• 1:22:51
  Carl Ferenbach: Uh, in some cases, it's uh the future return is uh a contract that's a debt instrument.
• 1:22:59
  Carl Ferenbach: Uh, but in other cases it's your ownership share, your share of stock, or whatever your partnership interest.
• 1:23:05
  Carl Ferenbach: And you have to analyze the business to understand what the future um cash flow from that particular investment is, and what discount rate would you apply to taking that risk?
• 1:23:22
  Carl Ferenbach: And so that's the at least that's my uh so I've always preached, if you will, that um most people and many, many, many business leaders don't understand that simple piece of reality, which is that capital has a cost.
• 1:23:39
  Carl Ferenbach: Uh that is in the cost is an understanding of risk.
• 1:23:46
  Carl Ferenbach: And the risk is based on an analysis of what that uh that in this case business is capable of doing.