Will It Cost the Earth to Save the Planet?

Good evening. I'm Doyne Farmer. I'm a resident faculty member, a professor at the Santa Fe Institute and it's my honor tonight to be able to welcome you all here. I first want to begin by thanking everybody for coming, because the mere fact that you've got out here on this hot day with so many other events going on illustrates that - what is going here, excuse me. I'm sorry. I had my notebook on the laptop and I was advancing. We got - I was about to get part of this lecture at high speed. I just want to thank everybody for being here because the mere fact that you're here illustrates that you're willing exert effort to inform yourselves about what's perhaps the most pressing issue facing the world right now. Certainly, that's my opinion. The Santa Fe Institute has a long history of involvement in this area although I would say we've kind of wanted to get involve for a long but never until recently found the right way to do it. Almost 20 years ago, there was something called the 2050 project that Murray Gell-Mann pushed and there was an effort to get SFI involved in thinking about sustainability issues and the future. For various reasons that didn't quite go but that didn't mean that people weren't still interested in it and a couple of years ago, the National Renewable Energy Laboratory called up and particularly the director Dan Arvizu called Geoff West, our president. They had some conversations and they asked SFI to help them think out of the box, think about the issues and renewable energy and sustainability that they might be missing and that lead to a couple of different workshops that have happened in the meantime. But then we got the idea of holding a summer school and so, this summer school that we're having involves 30 utterly remarkable students from the natural sciences, social sciences, biology, and physical sciences and it's a 2-week event with 30 students, 10 experts from around the world and so far I can say it's prove to be an incredibly exciting event. The organizers of that event have been Jessika Trancik, Postdoc at SFI, Doug Arent of National Renewable Energy Laboratory, myself and John Shellnhuber who is going to serve as the moderator for tonight's discussion. So tonight, we are going to have a discussion between two people. I mean let John introduce them but let me to say a little bit about John so you know who he is. He is first of all was originally trained as a physicist. He is the founding director of the Potsdam Institute for Climate Impact Research. He has got many honors, a long list that I'm not going to bore you with then including being a member of both the German and the U.S. Physical Society - I'm sorry, the Academy of Science - the National Academy of Science. He is also a founding member of the IPCC, a long term member of the IPCC, that's the Intergovernmental Panel on Climate Change that if you're reading the paper and you see the estimates about the impact of global warming, they are the ones who produced that. They got the Nobel Peace Prize in 2007, so it's my pleasure to introduce John Shellnhuber who then will – oh you're going to - oh that will go. You can go that way. I forgot there was stairs there, anyway. And so it was already a really complex problem to be solved but do you see I did, I did it. Anyway so guys, ladies and gentlemen, it's a real pleasure to be here. In general, the moderators are very useless person actually but today we are doing an experiment of some sort. I mean first of all, it's a real pleasure to have two world leading intellectuals here who are coming from very different angles actually and the overall issue is clearly the world is in crisis not the automobile industry, it's the planetary as a whole, our planet as a whole, the planetary system as a whole. So it's climate change but very often issues as well its soil erosion, water resources and species depletion and so on. And the question really is I mean when I entered this field, I was trained as a physicist then mathematician as well and I enter the field I thought, well this is very interesting intellectual challenge. I have to think about climate change and the planetary system but the more you learn about it, the more you get worried. I already give a lecture on that on Saturday and the latest numbers and the latest analysis simply show that if we are able at all to solve the problem, that means if we are able to deliver a world which is worthwhile to live in to our grandchildren and something very dramatic needs to happen, very dramatic needs to happen. I give you just one number, the United States would have to completely decarbonizes their industry by 2050, no emissions at all, probably going into negative emissions, that means extracting carbon from the atmosphere through growing forest and probably even by 2030, there would have to be an emission reduction of around 80%. So these are just numbers but it would mean an industrial revolution and the question is of course can we afford to save the planet. That's what economist asked you. We may lose shops in saving the planet so how should we do it? Should we do it at all? So that is the title of this talk or of this event tonight, Will It Cost the Earth to Save the Planet and then of course, this is being discussed in different ways. The economists really talk about timing. Timing is very important so we assume we are getting smarter and developing a lot of inventions and innovations so if we wait a little bit, it might be better to end climate change. So this is in the end, the discussion about this country, it’s an intergenerational acuity and so on and Partha Dasgupta will certainly tackle the event a while for people who are more coming bottom up engineering type, very creative, very pragmatic like Amory Lovins to say, oh we have a wealth of solutions. We just have to employ and apply them and while waiting for anything, we can do it right now. So I'm over simplifying clearly and the two gentlemen will make their points but they're coming from very different philosophies I guess and now the experiment today is do these philosophies match can wait, make it for a conversation for your questions, can we make these philosophies match in order to have a crurde look at the whole as Murray Gell-Mann would say, the claw approach for which the Santa Fe Institute is so famous and we'll do this experiment today. Let me first or let me say a few words, just a few words about the two gentlemen I will ask Partha Dasgupta to first take the floor. So Partha - oh actually all of the three people on the panel including myself started as physicist so we are somehow the jobless samurai of the intellectual world and with all looking for new battlefields. So Partha started out that he is major in Physics in Delhi I think and from Mathematics lapsed into Economics and - but I mean he is based in Cambridge now, St. John's College and many people say very appropriate for Cambridge. He is termed the Newton of environmental economics and I think there is some truth in it. So Amory Lovins started out as an experimental physicist then he is now I think the lead engineer of energy efficiency. You may call him the Einstein of energy efficiency. So we have two very famous people here tonight and let's see how the evening goes whether it falls flat or we will really have good look at the whole. So Partha, may I invite you to come to the floor now. Thank you very much. It's almost like being like Buridan's ass sitting in the middle wondering which of the routes to take but I think I solved it by flipping a coin mentally and turning left rather than right. Well it's a great pleasure to be here Will It Cost the Earth to Save the World and I'm an economist. I will be taking the separation between the natural scientist and social scientist on this particular problem is one where we trust one another to do well by our own disciplines and I'm going to be using very, very crude estimates that are thrown at us from the natural sciences and feel them somewhat to fashion the questions that we as citizens by ask when we deliberate over breakfast, lunch, dinner and at parties, not political events, is to what we should do about saving the world. So I won't - it's not my place to talk about the urgency of the matter. It's the urgency I take from the natural scientist and then I'm going to try and convert into something like the perspective of how to think about cause and benefits. We realize what the trade offs are, I don't want to insult by stating obvious. We are thinking about intergenerational or way into temporal swaps by doing something for the future will cost us some. What is that some is something we want to talk about and if we don't do it, there'll be some damages in the future. The Economics of Climate Change inevitably leads us to think about the long term in a way that most economists aren't use to. The natural horizon here is 50, 60, 100, 200, 300 years. In a way and typically if you read newspaper e.g. the - I won't even mention the Wall Street Journal but something like the New York Times, you're really looking at typically the next year, 3 years down the road, 5 years but the moment you say 5 years, you start thinking about 5 year plan so the Soviet period and you stop and shrink back to it the next year so to speak. So we're talking about the long term in some sense and the other thing, the second point I want to made before I proceed is that, there is a sense when you read the literature of people, economist or philosophers writing on it, somehow there is a feeling that the future, the future generations are aliens. What are we to do about them when they arrive? As a father of 3 children, I feel that's a misleading way. I think we do ourselves injustice or insult ourselves by not acknowledging but in fact we do think about the future people all the time because every future person will be somebody's child and that somebody will have been somebody else's child and we can track it back to ourselves. So we spend enormous amounts of money rightly and with great pleasure in educating our children which is an investment into the future and we did want - we take them into account and when we take them into account, we take our grandchildren to account because we recognize that they in turn will be interested in their children. So by recursion, future people are very much in our minds. The question is that as on a day-to-day basis when we go about our daily lives are the signals that we receive from the external world but of course, being an economist, the signals I have in mind are prices. Are those signals giving us the right directions within which to take our future people into account in an appropriate way and there's an enormous literature which I will not go into now. We suggest that we would be dead wrong and thinking that market – the prices – face in the market reflect the scarcities of good and services. Of course, that's why we are here today. We're talking about global climate change and enormous amount of unanticipated effect of our actions are being felt gradually now but into the distant future cumulatively in a way which makes things very worrying. Okay, now let's get down to business. What am I to do now? Here we go, crude estimates of annual expenditures require to limit a mean global temperatures increase that is to 2 degrees centigrade - this is a background. Roughly speaking when you're very uncertain about the future, standard technique, a very reasonable technique is to say let us create some kind of quota beyond which the threshold beyond which we don't wish to enter. Currently amongst the economist those who work on global climate change did that quota is something like let's say 2 degrees centigrade increase in mean temperature from what it is today. And crude estimates, yes, if you want to limit that, then the estimates are that something like 2 and an outline of the figures that I've seen, they are maybe other figures but from our purposes, I want to give you ballpark figures, 2% to an outside 10% of the aggregate GDP of rich countries over the next 20 years, 25 years and so forth. Now, when you're a reading newspapers, the figures like say 10% of GDP especially if you're reading it in America, you'd be talking trillions and I asked somebody a very famous U.S. senator once said a billion here and a billion there and pretty soon you're talking about big numbers or real money. But here we're talking about trillions because this is a trillion dollar economy. Once you're given this figure in a trillion, in terms of trillion dollars, you start worrying. I want to argue that that worry is a misplaced and here is why. Is it – is 10% an outlier figure, is that a large figure? Well to – get a fill for an answer, note that over the past 30 years or so, the GDP of OECD countries which - these are - if you like the club of rich countries in the world, has been growing at an annual rate of approximately 3% a year. Now - so only 3 to 4 years ago, GDP was 10% lower than what it is today. It has been going 3% per year. So even if you're just leave aside 10% of your GDP for the "future" and regard the usable GDP your personal if you like to 90% then that 90% GDP is what we are experiencing. It would be say 4, maybe 5 years ago. Now you have to ask yourself where we, we should asked ourselves were we that badly of 5 years ago. Is it the case that we were starving and so forth and so on? Life was probably pretty the same then as it is now. So we're really not talking about big numbers when you turn the problem into one of what it felt like in living memory and here of course, it's not living memory, it's just the other day, okay? Now, so that's one point. The next point is however, if it's, you've got a pool of cash, we need to worry about how to spread over the future to save the earth and here, those people who have worked on the Economics of Climate Change and I'm going to be talking about two main protagonist. Both of them are very influential have come to very different conclusions and I want to spend the rest of its talk giving you a flavor of the source of that difference. Both the parties and question and I'll mention their names and the figures they use, take climate change very seriously but one, William Nordhaus, a colleague and friend of mine at the Yale University who has been studying the Economics of Climate Change for the past 30 years, has come to the conclusion and that conclusion hasn't change over the last 30 years by the way. The models have been changing. The models he has been using have been changing but his conclusion hasn't really very changed very much, is that we should be following a gradualist policy. Don't spend too much now but allow economist to grow and become richer and then 20, 25, 30 years down the road, shift investment towards climate change. Mitigation and various forms of activity that could reduce to limit the temperature let's say within 2 degrees. That's the broad picture and that's the picture which has been followed by - which has been accepted by a number of people. In contrast, Nicholas Stern, Lord Stern currently at the London School of Economics who had a very famous review at the end of 2006 which was commissioned by the U.K. government. The Prime Minister back at - the then Prime Minister and the finance minister and now Prime Minister Gordon Brown backed it - took a view that the matter is much more urgent. The specific policy that was suggested were something like 2% of the GDP of rich countries should be invested even as we speak and as a recurrent expenditure. So when I began the previous slide by saying that the estimates are vary between 2% to 10% the lower end is the one which is the more aggressive expenditure that is suggested by economist but I've included up to 10% for the simple reason I take natural scientist a lot more seriously than more social scientist do and I've heard much higher figures and I want to work with them to see what that might involve. Okay, so the question is why is there a difference of opinion between the two? And the answer is as it's been suggested already, it depends on the way you discount future costs and benefits relative to today. Tomorrow, the dollar is not the same. Tomorrow's real dollar is not the same as today’s real dollar because with today's real dollar you could do things which might make the asset grow, okay? Now, the question is as citizens, what discount rate should we use? Nordhaus and large group of economists have taken the market rates of return on investment as the benchmark for doing that calculation. I will wish to argue that it's deeply flawed for a very simple reason, that if you are studying a problem which involves huge market failure, an institutional failure, generally, government failure, household failure, market failure because the signals are wrong. Then to use those same market signals to solve their problem that involves market failure seems the methodological weakness to me. Question is, is it likely to be very large? I mean, you can always make an error, make it logical flaw in your analysis but nevertheless, it could be that you still arrive at approximately reasonable answer. The answer in this case happens to be, no. The figures that were used by William Nordhaus and Nicholas Stern are as follows. Nordhaus in a particular scenario which the Stern review follows takes a value of 4.3% per year discount in future costs and benefits to convert them into present values. Stern takes 1.4% per year of the discount rate, which in some sense explains in great deal. It provides a great deal of explanation for their different recommendations. Now, you might think that approximately 3% discount rate difference is not really very much, but in fact it is, 4.3% a year may not seem very different from 1.4% a year, but it's in fact a lot higher when it is put to work on the economics of global climate change. So to give you an example, consider we're given loss in consumption 100 years from now, say, 100 dollar in real terms 100 years from now. If the figure is discounted at 4.3% a year, the present value of that loss is nearly 20 times lower than the present value of that same loss, if it were discounted at 1.4% a year, which gives you the intuitive sense of what discount rates are doing for you. The damage 100 years from now will look much smaller when discounted at 4.3% than if it will be discounted at 1.4%, and that's what's giving the difference. Now, what I want to do in the next five minutes that I have with my disposal is to lend an explanation for their difference. So why they arrived at these two very different discount rates, which are doing so much of the work in explaining the difference between their recommendations. In fact, of course, many people would regard the Stern recommendation as being very overly conservative and that's why it was taking outer figures like 10% of GDP. The reason is, I think a very interesting reason, intellectually is very interesting, as concerned citizens like yourself will find very worthy of consideration. To put it slightly crude but not too crude, I'm an academic, I don't want to be that crude but it's approximately correct but it requires certain amount of delicate maneuvering. Nordhaus is, the approach that he takes, is on the whole rather democratic. It says let me try and figure out from the day-to-day behavior of people, how they view the future. So the kind of data he studied in order to infer what discount rate ought to be used for the global climate change problem, are behavior. The presumption is the people are concerned people, intelligent people, concerned about themselves and others and let's try tease out elicit from their behavior what their values are, okay? So that's if you like - a particular philosophy of doing well for economics are more of philosophy by saying, their actions speak very loud. Let's infer the values. Those values which will be consistent with the actions, okay? Stern on the other hand takes the attitude of a Mandarin, which is very reasonable because he was a Mandarin at the time he wrote the - - which is a government official. There the idea is that really we can, through speculation by reading the classics like Aristotle, John Stuart Mill and so forth try and see what the right thing to do this and we will use that way of thinking to arrive at the kind of parameters on the basis of which we choose a discount rate. So there you have it. You have on the one hand, if you like, a contemplative method of arriving at a discount rate versus a cold-faced kind of way of doing it which is to study a lot of consumer data about expenditure savings and so forth, risk taking and then trying to infer the differences. Question, what should we -- which route should we follow? Being an incurable ditherer, I find a bit of good in both, and a bit of bad in both. I don't like to be told by Mandarins what I should think, because that smacks so of authoritarianism, no matter how well meaning the Mandarin are, God knows how much of harm good people have done in the past. So I worry about that. On the other hand, trying to elicit values that we as citizens hope from our daily behavior in the market place, in a world in which the market signals are all wrong, hugely wrong, particularly the contexts of global climate change are diversity loss and so forth. It seems to me to be wrong also because we, on our daily basis, are not behaving as concerned citizens. What we do is we behave as concerned citizens when we gather on occasions by people, various people and then of course agitates their congressman in this country, provided by people, various people and then of course agitates their congressman in this country, parliamentarians in the UK, and so forth. It seems to me that that's where the action is going to lie, and I’m much more -- my gut feeling is that as I rely on that that middle ground where we -- the political dialogue which is which to really effect at the end of the day the deliberations that will take place in Copenhagen at the end of this calendar year. That will happen not by people choosing discount rates but in some sense pushing towards policies which are going to commit funds for this monumental -- gigantic undertaking that humanity has to undertake, there's no ifs and buts about that but the underlying economic arguments that I've been suggesting, of course, are there to sharpen that intuitive notion, but at the end of the day it seems to me that that's where the right wait lies and so I think these debates, these discussions are the right way forward. Thank you very much. So, I guess I've seen Amory Lovins entering this room, you must be somewhere. Okay, Amory, the floor is yours. Well, as you might expect, I have a different perspectives about what questions to ask which is even more interesting than the answers. We are often offered in the media a multiple choice test which if clearly expressed would read something like, Do you prefer to die of climate change or oil wars or perhaps nuclear holocaust because those are the broad consequences of the energy choices on offer. Of course, there's another answer we're seldom offered which is none of the above and that's what happens I think if we use use energy in a way that saves money because then problems like climate change and oil dependence and nuclear proliferation go away, not at a cost but at a profit. So this is the fundamental divergence I think from the lovely tutorial we've just had on how to value money over time when we compare cost now with benefits later. I don't that's the comparison we're actually making in the climate case. Do any of you happen to know how climate protection is like the Hubble space telescope? No? Well, they were both spoiled by a sign error, a confusion between a plus and a minus sign which cause the mirror of the telescope to be grounded in the wrong curve. Similarly, the whole climate conversation is about cost burden and sacrifice, what will it cost to protect the climate, who should pay, who should decide? Actually, the theorists who came up with that notion got the sign wrong because climate protection is not costly, it's profitable and the reason it's profitable is that it's cheaper to save fuel than to buy fuel. Efficiency is cheaper than fuel. Once more politicians appreciate this remaining resistance to climate protection, well I think melts faster than the glaciers, and the main obstacle to climate protection is the assumption that it's going to be costly but that's contrary to every shred of empirical evidence we have. I'm going to come back to that point at the end because I think there is a very interesting difference between, for example, physicist and economist as to what is evidence, what is empirical. There are sort of paralleled universe that's operating here. And we can get some notion of empiricism by looking at what companies do, I worked mainly with the private sectors, so I may give you a few numbers. Two of our biggest chip makers, IBM and STMicroelectronics have been cutting the energy they use per dollar of revenue. By over 6% a year, with two or three year paybacks on their investments such as a lot better than one can do in other kinds of investments, just because they want to make money whether they care about climate or not. BP met its climate goals for initial operation carbon reduction 8 years early, they made $2 billion on the deal. Dupont raised some eyebrows by saying that by 2010, they would have cut their Greenhouse gas emissions by 65% below 1990 level. How are they doing? That sounds pretty ambitious. Well, by 2006 they were 80% below the 1990 level than they made $3 billion on the deal and so a lot more than that. Now, Dow has invested $1 billion in saving energy and they've made $9 billion so far return on that investment. United Technologies has cut its energy intensity 45% in five years. General Electric is in the midst of improving its energy productivity 30% to build shareholder value. I think the record-holder so far is the carpet company interface, which while growing the business and making money has cut its absolute Greenhouse gas emissions by about 72%. So what's wrong with this picture? Nothing. Their shareholders are laughing all the way to the bank, so whilst the politicians continued to debate theoretical costs and who should pay them. Smart companies are raising to pocket the actual profits before their competitors do. The size of those profits is rather large. McKenzie put out a supply curve showing how much money you would save or pay as you increase the savings or abatements of Greenhouse gas and they figured that you could actually by 2030 abate, eliminate about 70% of the normally projected emissions of Greenhouse gas in the world and an average cost of just €4 per ton of CO2, that's down in the noise and distinguishable from zero. And the reason is that the left side of their curve, there are a lot of negative cost opportunities for mainly energy efficiency that's cheaper than the fuel it saves, that is its profitable and the area under that part of the curve is almost equal to the area under the -- or costly bet at the right where you actually have to make an extra expenditure to abate the emissions. Now, the left hand part of the curve, the energy efficiency part as McKenzie would agree, it does not include a lot of newer technologies nor any of the integrative design that we've been advancing at Rocky Mountain Institute, that's the way to get expanding not diminishing returns to investments in energy efficiency. That is its way to make very large even tenfold of our energy savings cost less than small or no savings. And economist don't like to think about that because it makes their economic models explode versus inconvenient and inelegant, but it is what we observed empirically that if you optimize a whole building or factory or vehicle for many benefits rather than just a piece of it for one benefit, you get very large energy savings that are cheaper than small or no savings. And I'll give a couple of lectures to the course tomorrow, showing some of the examples of this, but you'll find many of them at rmi.org/stanford, Standard engineering school lectures which show how to tunnel through the cost barrier to get expanding returns to efficiency investments in buildings, industry and transport. You know, with our design over thousand buildings this way and $30 billion worth of factories and 29 sectors, various land and sea vehicles, it's quite consistent. In the factories, for example, we're saving 30% to 60% of the energy retro-fitting existing plants in two or three year paybacks. In new factories, we're getting 40% to 90% savings and the capital cost goes down for the efficient plant, not up. This leads of course to curious conversations with people who have been conditioned by presumably the brain disease they caught in business school to think that efficiency must cost more, so I tell them, yeah, we'll save, you know 80% or 90% of the energy in your new office building and it will cost about 3% to 5% less to build. They say, yeah, what's the payback? I'd say, no, it will cost less to construct. They say, yeah, but what's the payback? I'd say, what part of cost less to build don't you get? And this is, of course, well we're up against in the climate discussion, the assumption that protecting the climate must cost more than we pay. So for -- or we would have done it already in the implicit assumption as that markets are essentially perfect. So if we haven't already bought all the energy efficiency that's worth buying, it must because the price wasn't high enough because if you're an economist, you tend to interpret the world through the lens of price. Price is merely a form of information. It's one way to get people's attention to signal how much something is worth. There are other ways to do that too, but I don't happen to see the world just through the lens of price, interpret behavior just through price or think that behavior can be influenced only through price. I think higher primates are a lot more complicated than that and, you know, good economist do too and we have a superb economist here who I don't think would not subscribe to the caricature of you. I just gave you of the way economics is often done but it is quite widespread. And I don't even think there's a vaccine against it yet, but the corollary of course, is if you believe the reason we haven't bought energy efficiency as the prices to be at high enough, then you will ask how high would we need to raise the price. In order to get people to buy that much efficiency, you infer from other people that responded to price changes in the past, these are called historic price elasticity of demand and then you turn the crank on the model and say, how much would it harm the economies they reduced GDP if we had that increase in energy price and then kept the money and didn't give it back to people. And you can get answers like to 2% to 10% of GDP. On the other hand many of the mainstream models will also show negative numbers. It just depends on what assumptions you make and the outputs are hardwired to the input. You don't actually need the model to reach this conclusion. To give you a few numbers on how much efficiency is available and worth buying, in this country, we can save over half the oil and gas at the fifth price of buying more or three- quarters of the electricity at an eighth price of buying more, and we are actually buying quite a lot of efficiency, for example, in 2006, a rather healthy year for the economy at that time. The US use of energy and coal and oil all went down because energy intensity, energy use per dollar of GDP actually went down more than the economy grew. That was with 26 years of stagnant life vehicle efficiency. It was with rewards in 48 states for selling you more energy, rewards to the utilities for selling more energy and penalizing utilities for cutting your bill, which is just as stupid as it sounds, rewarding the opposite of what we want. Imagine what would happen if we paid attention? Maybe we're starting to pay attention whether for reasons of climate or security or prosperity. And how fast would we have to pay attention? Well, if energy intensity in the world continues to drift down as it has done historically by just 1% a year, then normal projections, carbon emissions would triple by 2100 and we'd all be toast. Of course the objective here is to make toast and not be toast, so if we were to cut energy intensity worldwide 2% a year instead of 1%, then carbon emissions would stabilize, and if we could cut energy intensity 3% or 4% a year then we could actually stabilize climate to the extent that irreversible changes are not already underway. Can we imagine reducing energy intensity 3% or 4% a year? Well, actually the U.S. has done that for many, many years, at time of both high and low price, and without paying attention. California has been about 1 percentage point faster than that, China 1 percentage point faster than that, they cut energy intensity over 5% a year for a quarter century through 2001 and now they are back on track and accelerating even beyond that. I've named some of the large companies that are cutting their energy intensity 6% to 16% a year, so why should 3% or 4% a year be so hard especially because most of the projected growth is in countries like China and India that are building their infrastructure the first time and it's a lot easier to build it right than to fix it later as we have to do. And since everybody I can think of the last 40 years or so who has done energy efficiency has made money at it, why should this be a costly activity? So you see how fundamental the differences are in the assumptions and actually, at Rocky Mountain Institute, our focus is re-inventing fire that is road mapping and driving the profitable transition from oil and coal to efficiency renewables. We already did the oil part 5 years ago. You'll find it at oilendgame.com; it's a study for the Pentagon winning the oil endgame which shows in considerable detail how to get the U.S. completely off oil by the 2040s led by business for profit because the average cost of doing this is just $15 a barrel in year 2000 dollars. And we're now about half way through doing the similar electricity story looking at an all distributed, all renewable very efficient electric system that looks like it's probably going to work better and cost less than present arrangements and be a lot more resilient. So more about that in my topical lectures to the class tomorrow. But I want to just end with a little comment about what's behind the -- I think important differences of perspectives that we've just heard sketched and we'll get into next in a conversation. At my organization, we are practitioners and not theorists. We do solutions and not problems. We do transformation and not incrementalism. And I'm not all that interested in tools for allocating scarce resources because our work is around creating abundance by design. And of course if you turn scarcity into abundance through radical resource productivity, a lot of tensions and problems in the world go away including climate, oil proliferation and a lot of the development problem. But I think there's also an underlying difference between disciplines as nearly as I can tell and I try to study economies and I do speak it with kind of a physics accent but as far I can tell, for an economist, what is normally considered empirical evidence is aggregated price elasticities of demand that is numbers summarizing how large number of people behave in the past under conditions that no longer exist in which it's probably your goal to change as much as possible. Now, I don't want to be too cynical about it because this is a very useful thing to understand and it reflects all the hassles of you know, people who have other things on their minds, who have lack of information, who have conflicting advice and conflicting priorities and really don't want to devote their lives saving energy, there are a lot more important things to do. On the other hand, while it's important to understand the 60 or 80 market failures in buying energy efficiency, for me as a former bench scientist, empirical evidence has to do with numbers I can measure based on physical observation, becomes in physical units. So, if I can look how much energy it takes to provide a certain level of measurable comfort in a certain floor space, under certain climate conditions or to turn alumina into aluminum or pulp into paper or dough into bread or whatever my need is for service like mobility, information or illumination or whatever. That seems to me -- you know what I would call empirical and of course, the rap that one will often hear from economist with some justification is that those who just concentrate on the engineering details of making the equipment more efficient technically, will miss the important points about human behavior like, how do we actually bust barriers and turn those 60 or 80 market failures into business opportunities so people can respond to the price signals they see. And again, price is important. getting price right is important, but I think there's more to it than that and as a practitioner of course, I bump my head against those market failures everyday, they are very real for me, because I see buildings and factories mis-designed all the time and try to fix them. Why were they mis-designed? You have to wonder this after awhile. Well, if you pay architects for what they spend and not what they save, you can expect to spend a lot and not save very much, so economics does work. And if you start paying them for what they save and not what they spend, it has a very salutary effect on design. If you reward utilities for cutting your bill and not selling you more energy, it's amazing how much energy they'll help you save. About half of the states are now considering doing that. So, I think there is indeed a valuable fusion of these two perspectives, I'm not saying either one is right or wrong, and perhaps that is where we'll get to in this next stage of our conversation, thank you.