Berkeley Haas - Dean's Speaker Series | Mary Nichols, Vice Chair, California-China Climate Institute

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(people chattering)

  • Okay.

So, good afternoon everyone,

and welcome to today’s Dean Speaker Series.

I am really absolutely delighted to welcome today’s speaker,

Mary Nichols.

Very exciting.

Mary has been described

as the most influential environmental regulator in history,

and she’s known as California’s #CleanAir guru.

She pushed forward clean air and decarbonization programs

under four California governors.

And as we know, where California goes,

there goes the United States.

Mary is perhaps most famous

for her long tenure

as the chair of the California Air Resources Board,

which runs California’s renowned Cap-and-Trade Program,

which we will talk about more shortly.

Today, Mary serves with Ford CEO Jim Foley

as the co-chair of the Coalition for Reimagined Mobility,

and as vice chair

of the California-China Climate Institute,

with former governor Jerry Brown

of California. - Right.

  • During her leadership

at the California Air Resources Board,

California became a national and global leader,

developing clean energy and clean transportation solutions

that many other states and nations

have consequently adopted.

Mary has a deep understanding

of what businesses will need to do

to lead and support the many transformations

of our economy,

that will be necessary to avert the looming climate crisis.

Here at Haas,

we’re talking about sustainability and climate change a lot,

in particular, how businesses and industry

can take a leading role

in developing a sustainable climate-resilient economy.

We know that every aspect of business,

whether it’s agriculture, real estate,

energy, finance, corporations,

will need to be reimagined,

and will need to be redesigned,

to address the current environmental, social,

and economic crisis.

In today’s conversation,

we’ll be exploring that question,

and in particular, how government policy

can work with industry,

and the critical role that policy will play

along with business in this transition.

Thank you so much, Mary,

for taking the time to be with us here today.

  • Thank you. - We are absolutely thrilled.

  • Thanks for inviting me.

(audience applauding)

  • So, Mary, let’s start a little bit with your background.

You studied law at Yale,

the greatest law school in the country.

Your first job after law school in 1971

was at the Center for Law in the Public Interest

in Los Angeles,

working as the air lawyer.

Now, what drew you to environmental issues,

rather than some other area of the law,

when there was not even such a thing

as an environmental lawyer?

  • Well, first of all,

I think it’s important to recognize,

for many people, including me,

when you actually look back on your career,

you realize that a lot of it was based on avoidance,

as opposed to attraction.

(audience laughing) That is,

I did not want to go work for a corporate law firm,

which is what most people did

when you graduate from a school like Yale Law School,

especially if you have loans.

But even if you didn’t have big loans to pay off,

the feeling when I graduated in 1971,

was we were gonna be making policy for the country.

Because this was a time, you know,

right at the sort of peak, in many ways,

of the civil rights movement,

when people thought that law could be a force for good,

for social change.

Not just not bad, but actually,

the way that you could go about making change happen

was as a lawyer,

you could think of a good theory and go to court.

You could have clients

that had not previously had access to the law,

and make law for them using existing statutes.

So, it was a time when going to law school

was considered a progressive thing to do.

And I certainly didn’t go

thinking that I was going to make a lot of money.

I came from, this is, you know,

probably more than you need to know,

but my parents were first-generation college graduates,

so my grandparents were the immigrants,

and they were the blue-collar union people.

My parents both went to college,

actually got advanced degrees and became teachers.

And so I’m kind of the next wave.

My brother is a doctor and I’m a lawyer.

It’s the perfect, (laughs) the perfect storm, right?

The perfect scenario for Jewish parents.

They got one of each. (audience laughing)

So, bottom line is when I went to law school,

I had had experience working in the civil rights movement,

and working in a foundation

that was involved in criminal justice reform.

And I was very interested in both of those things.

But as it happened,

I was also moving to Los Angeles,

‘cause I’d gotten married to somebody

who wanted to move to LA,

and I was very happy about that anyway,

from a pure, you know, physical comfort.

I was very happy to get away from the winters

on the East Coast.

And so I went looking for a job.

And what was happening at that time,

what was going on,

was the beginnings of the environmental movement.

So, I found a way through air pollution, I think,

to link social action and environmental protection.

So, I wasn’t, in those days, you know,

a conservation lawyer.

I wasn’t so interested as some of my colleagues were

in preserving things, you know?

I wanted to be involved in, before it even had a name,

really, in promoting community justice

through the environment.

  • Thank you for that.

And we’re all so fortunate that you made that decision.

California has really benefited.

So, along those same lines,

what do you see

as some of the most important sustainability challenges

that our students here,

in this business school,

are likely to encounter

as they become business leaders?

And in particular,

what role do you see for private companies

to actually lead the transition to clean energy,

in a low carbon economy?

  • I was at a dinner not too long ago,

with a man who’s made a fortune as an investor,

and is one of a number of people like that

who are giving money towards environmental protection

and towards climate change in particular.

And he expressed the opinion

that capitalism was incapable

of dealing with climate change.

And he wasn’t actually being facetious.

He was, he has come to the point in his own evaluation

of the world,

that he really didn’t think that there was a way

that you could harness capitalist impulses,

or to the system,

and address what needs to be done

in order to deal with the ongoing crisis

of climate change. - But do you feel

that way too?

  • Well, I’m close to it. (laughs)

I don’t think it’s impossible,

but that’s because I have a career and a history

as a regulator,

and I do believe regulation

can contain the worst of capitalism,

and still allow for the best of it.

So, in other words,

I haven’t seen anything

that made me think that China or Russia,

when Russia was still a place that you could talk about,

is gonna do better than we are

at dealing with climate change at all.

But I do think that the current political climate,

which is one where governments are incapable

of mustering the political will

to act in a way that puts a check on capitalism,

and are relying completely on voluntary actions,

will not succeed.

It hasn’t succeeded yet,

and I don’t think it, I don’t think it will.

  • So, the government isn’t succeeding,

and you’re worried

about the private sector’s ability to succeed.

But what about something like electric vehicles?

I mean, what role did the public and the private sectors

play there?

  • I think that’s a terrific example

of how government and businesses can work together,

if there’s a general acceptance that each has a role to play

and there’s something that everybody agrees has to be done.

I mean, we’ve been trying,

we now meaning California,

you know, for decades,

to deal with the problem of vehicle pollution.

And we worked on the fuels,

we worked on the engines,

we were, and we adopted regulations

that systematically ratcheted down

on the allowable emissions.

So, before we really got seriously into zero emission

vehicle requirements,

an internal combustion engine

that you could buy in a car in California,

emitted about one 100th of the pollutants

that it would’ve admitted

if you had bought that same model from Ford, or GM,

or whoever, you know, in 1970.

So, incredible progress.

Technology rising to meet the demand,

California making the demand,

knowing what technology was capable of doing,

and coming together with a strong regulatory program.

We also, of course, as California,

were a big enough market

so that companies design cars to, you know,

to meet our needs.

Global warming takes you to a whole new level.

I mean, we needed, we in California

need zero emission vehicles for urban air pollution reasons,

and so do places like Shanghai, or Beijing,

or Delhi, or Indonesia, et cetera.

But the, most of the world doesn’t really.

It’s, you know, it’s urban needs

that are sort of driving it.

But the world needs vehicles.

If you’re gonna have personal transportation,

or you’re gonna move, and any kind of a global economy,

you’re gonna move goods around,

you’ve gotta have emission-free transportation essentially.

So, we started to make that leap in California.

And fortunately,

enough of the companies

could see the handwriting on the wall,

especially with Europe jumping in,

in a very aggressive way,

that they rose to meet the challenge.

And so we went from hearing that electric vehicles

were always gonna be a niche market,

and would never be able to be sold at prices that, you know,

real people would possibly be willing to pay,

to a point now where every auto company

is seriously making zero-emission vehicles,

and they’re marketing them.

And they’re still not the majority of what they sell,

but they’re gonna be there pretty soon.

  • So, let me paraphrase that.

It’s a interesting world,

where if you have a big market like California,

a strong forward-looking regulatory framework

combined with an innovating, exciting,

visionary private sector,

can together, working together, solve this problem.

So, let me ask along those lines,

tell us about your experience in particular

with Volkswagen and Dieselgate as it’s called,

and then Volkswagen’s switch

to supporting California’s strict environmental standards.

This was a interesting example

where there wasn’t participation,

but a company saw the light.

What lessons would you offer our students

about business and government working together

in both designing, but even more importantly,

implementing environmental regulations?

  • Yeah, well, so this is sort of a good and a bad example,

but the lesson that you draw from it to begin with

is that regulations are only as good

as your ability to enforce them.

And in this case, Volkswagen, for a number of years,

and they were not the only company that was doing this,

they just did it in a bigger and more egregious way,

they came up with a way

of evading our emissions requirements for nitrogen oxides,

which are directly related to combustion,

to how much, how much fuel is being combusted,

by finding a way to basically turn off the monitoring system

in the vehicle itself,

under certain driving conditions.

So, it would meet the emissions requirements

when it was on the dynamometer being tested,

to be allowed to be sold,

but wouldn’t meet it in the real world.

And we become aware of that. (laughs)

  • [Interviewer] How did you figure it out

that there was cheating going on?

  • Well, actually, the Europeans,

who were very big on diesels,

were the ones who first started to complain

about how they weren’t seeing in the real world,

when they went out and measured air quality,

the benefits that they should have seen

from these new clean vehicles

that were out there on the road.

California started testing,

and we did roadside testing also,

and then we actually went and bought cars,

and put them on dynamometers with equipment,

and saw how they were operating during the test,

and figured out what was, what was going on.

This was helped a lot also,

by the fact that a sort of middle-level engineer

who had been working,

he was part of the government affairs team at Volkswagen,

confessed to one of my staff people

what was going on.

Because he saw that we were getting close

to figuring it out,

but he also was so, himself, so ashamed,

of what was happening,

so upset about what was happening,

that he felt like he had to tell somebody what was going on.

  • That’s an incredible story. - So, that’s how we found out.

Then of course, this exposed into a huge enforcement action.

We brought it to the federal government.

It wasn’t because the federal government didn’t care,

but we sort of had a agreement with them

based on how we could allocate our resources,

that we’d start certain areas of enforcement,

and they’d do others,

and we would just share the burden of enforcement

on motor vehicles.

So, this one was ours to begin with,

but then they took it up,

and together we pursued the court actions,

which eventually resulted in a settlement,

which was the largest consent decree ever

for anything related to automotive pollution.

And while that was all going on,

the German government got involved,

the European Union got involved,

there was horrible publicity,

and the company was under investigation

by their own parliament.

You know, Volkswagen,

and in general, the EU regulations

were not as strict as California’s,

and they didn’t enforce them as much as the US did.

But in this instance,

they felt like they were being embarrassed.

And the German government,

which has a particularly close relationship,

because of its history with Volkswagen,

couldn’t just turn the other way.

And so they were threatening all kinds of reforms.

Volkswagen ended up throwing out its board of directors,

firing the CEO.

You know, they found that the knowledge of what was going on

went all the way up to the top.

And then at the end of it all,

not only did they pay their fines

and come into compliance,

but they decided to use this

as a way to actually reinvent the company

in a very major way.

And their decision was to, not just to satisfy

California’s demand

that they produce electric vehicles,

but to actually commit

to making all of their products electric

before anybody else was doing that,

and to spin off a company,

and this was part of the settlement with us,

a company that would build electric charging stations.

Because obviously, one of the things

that has slowed down the transformation of this industry,

is that you can’t just work on the vehicle,

you have to be looking at the fuel at the same time.

And there was a real question

about whether there was gonna be enough charging

for these new vehicles, so.

  • That’s an incredible story.

I mean, to think that you turned around this company,

from your office where you were,

that that led to this incredible transformation,

is just such an amazing story.

  • I think it’s a great story for Volkswagen.

And, I mean, the fact that in the end,

in the end, they chose to use this as a positive push

to do something that maybe some people of the company

had been thinking about for a while,

but they would never have been able to do it without that.

It is a good example, I think,

of how you can actually use enforcement

as a way to benefit the private sector as well.

  • So, as an environmental regulator,

you’ve often faced extreme lobbying

against environmental regulations by industry and business,

but we know that at other times

some parts of industry have supported,

or even encouraged government efforts to regulate pollution

or emissions of greenhouses gases.

So, when do you see the interaction

between business and regulators

at their most effective and productive?

And do you think that businesses are more receptive now

to policymaking,

than they were when you started your career?

  • Well, over the years,

I think both sides have evolved.

And certainly, I spent a lot more time

in my last few years at the Air Resources Board

meeting with business representatives,

than I ever did in the early years.

And we were holding the kinds,

I mean we always had informal workshops

where businesses could come in and talk to the regulators,

but they weren’t, they were talking mostly

at the technical level.

As time went on,

and you know, and you could see this

as maybe government and business getting too cozy,

and people could be suspicious of it.

But I think both sides came to believe

that we had to understand each other’s motives,

and we have to also be able to make suggestions

about ways things could be done better,

which are very hard to really surface effectively,

if you are doing it at a public hearing

where you’re up on a dais,

and somebody is coming before you

and reading a statement.

You’re just not gonna be able to engage

in some of the best kind of thinking and policy making.

So, I have thought for a long time,

that, you know, the California’s success in the early days,

especially in our air quality programs,

is really largely dependent on voluntary goodwill

by companies in California,

which didn’t mean that they always agreed with us,

or always liked what we were doing.

But especially in the case of larger companies,

they tend to have,

Volkswagen being an example of why this isn’t always true,

but they tend to actually have a strong commitment

to following the law,

once it is the law.

And, so we got a lot more compliance

than we could have gotten

if we actually had tried to, you know,

be out there policing every car

that rolled off the assembly lines.

But with global warming,

I think we’re in a different world,

because the problem is so complex,

and we’re back at the stage where every sector

wants to claim that it’s somebody else’s fault,

or somebody else should be doing more.

And so coming up with a common vision

of what the program should be,

has proven to be pretty elusive.

I mean, over the last decade or more,

there have been groups, coalitions of different companies

that have come together around the idea

that there needs to be some form of a price on carbon,

which absolutely, by the way, has to happen.

I mean, whether it’s through a cap-and-trade program,

which is actually more difficult,

or through some sort of tax,

which you can then work through

how you deal with borders and boundaries and all of that.

But if there isn’t a way to spread knowledge and acceptance

of the fact that carbon is causing problems

throughout the economy,

we will not make it to anything like the goals that we have,

which may be too hard anyway right now.

But let’s just say, you know,

even if we decide it’s gonna be two degrees of warming,

or more than two degrees of warming,

and it’s not gonna be 2050, it’s gonna be 2060,

whatever it is, we won’t get there,

if we can’t figure out a way to put a price on carbon.

And industry has actually been, not always,

and not in every sector,

more forthright about saying that

than you, than many in the political world,

or in the, you know, in other forms of advocacy groups.

  • I mean, the, putting a price on carbon

has been the goal for, I guess, for decades.

Do you have any idea how to do it,

since nobody’s been able to figure it out yet?

  • Well, I mean the California Program of Cap and Trade

is a way of putting a price on carbon.

It just gives certainty to the allowable amount,

and then companies can trade underneath the cap,

versus the tax where the certainty is around

what the price is,

and people can make their own decisions

based on the price that’s allocated.

It’s two sides of the same coin really.

And actually, although it’s been very slow, you know,

other, there are other jurisdictions

that have actually implemented cap-and-trade programs

since we did.

Of course, we started with Quebec as our partner,

the province in Canada,

which you know, looks very different from California

in some ways,

but has a very similar kind of environmental ethic.

They’ve been joined by other Canadian provinces,

once Canada decided that all of their states,

all of their provinces,

would have to put some kind of a price on carbon.

So, they actually did that at the national level.

  • So, let’s get back to the California cap-and-trade model,

which as you point out,

is a way of putting a price on carbon.

How in that case

were you able to get business in agreement with you,

to make that model work?

And even though we’re just a state

we’re the equivalent

of one of the largest countries in the world?

  • Well, first of all, you know,

the program has been criticized,

because in the beginning,

we didn’t auction off the allowances,

we actually allocated them freely

to most of the businesses that were subject to the program.

So, within California,

we started with only the 700 largest emitters.

We added fuels after that.

So, natural gas, and gasoline, and diesel fuel,

came under the Cap-and-Trade Program,

in kind of the second wave.

The first wave was just the companies.

And we came up with a system

in which we allocated allowances by sector,

based on a sort of a average of efficiency

within that sector.

So, the most efficient company,

let’s say among oil refineries,

might get actually all the allowances that they could use,

and the least efficient would not get as many.

  • So, the least efficient was forced to work,

to move harder. - Correct, right.

  • Right.

  • And within each of those sectors, let’s say oil and gas,

ultimately there was enough agreement

on the part of the companies

that thought they were gonna come out ahead,

so that they actually embraced the cap versus fighting it.

And they were also afraid,

that being California, if we didn’t,

if they didn’t come along and help design a program

that they could live with,

it would, it could be worse, you know?

We might have banned all oil drilling.

And there’s still people who are, you know,

mad at Jerry Brown,

‘cause he didn’t ban all oil and gas drilling in California,

which he could have done legally.

I mean, he made a decision politically,

that, and it was sort of a moral decision too,

that as long as people in California were using the product,

we shouldn’t just pretend

that we weren’t gonna produce any of it in California.

  • Ah, interesting.

So, let me ask you another question about cap and trade.

So, I guess the idea behind cap and trade

is where the scope for improving efficiency,

and reducing pollution,

is the greatest,

is where you would do that.

But at the same time,

some groups don’t like cap and trade,

because companies can buy cheaper emission reductions

outside their own factory gates,

so they can find a way of not actually reducing pollution

in their own premises.

What’s your response to that critique of cap and trade?

  • Well, from the very beginning,

it seemed to be that it was,

there was some confusion

about what we were trying to accomplish;

that if your goal is to reduce greenhouse gas emissions,

companies that are subject to the program,

are not going to choose

to keep their oldest, least efficient plants going,

they’re going to pump up production from their newest,

most efficient plants.

And so the idea that they would be deliberately continuing

to pollute in the low income, most impacted communities

because of this program,

just didn’t make logical sense.

But if you think about this

from the perspective of a community group,

who’s really not primarily concerned about global warming,

their real concern is the emissions from the diesel trucks

that are pulling up to the factory gate,

or the other toxic contaminants

that the factory is emitting,

you can see why they would not want to buy into a program

where those emissions at that site

were not being specifically addressed.

And so this has been a tension from the very beginning.

And one of the things I think it’s brought to the fore,

especially with the increasing organizational power

of, you know, environmental justice communities,

is a stronger emphasis on localized pollution controls

at those facilities,

and making sure that the program doesn’t do anything

that actually incentivizes

continued operation of the plants

that are the most irritating. - But of course it is,

it is less efficient than-

  • Yeah, that’s right. - Yes.

  • So, now the Cap-and-Trade Program is not pure anymore.

It’s less efficient. - Yeah.

Ah, interesting.

So, for everyone here,

if you would give one message

to all our students in our community here,

what would be the one thing that you would tell them to do,

to try to address climate change right now?

  • You know, I don’t think there is one thing

you can tell people to do.

I think the message is you gotta act with urgency,

wherever you see the opportunity,

but at the same time recognize

that this is a fight

that we’re gonna be in for the rest of our lives;

the rest of my life and the rest of your lives as well.

And so you need to figure out

how to, to incorporate that kind of thinking and policy,

and recognize that you’re gonna have to be a part of it,

no matter what. (laughs)

Nobody gets to escape being part of fighting climate change,

and no one entity can be the ones that solve it all either.

I mean, you could say energy as a thing is like 70%,

emissions from energy as a whole.

But if you try to break that down

into the various components,

it becomes pretty clear that, you know,

just building solar,

if you’re not retiring other things,

just switching to electric cars,

just doing a better job with waste,

or you know, stopping meat production,

you, no one of those things in and of itself

is gonna do it.

It’s gonna require we all do what we can,

and also that we be more holistic in our thinking, I think.

  • So, that leads me to my next question.

California’s approach is perhaps less holistic

in the sense that the climate strategy

is to try to electrify as much as possible

from cars to buses to buildings.

On the other hand, our electricity grid in California

is increasingly subject to a lot of stresses,

wildfires, blackouts.

How do we reconcile this push

towards electrifying everything

with the increasing lack of stability

of our electrical grid?

  • We’ve known for a long time

that we were gonna need to build more generation

in California,

and also that we could do much better

at deploying electricity,

if we had a regional grid with other states,

that was more closely tied

to each state’s abilities and needs

to consume and generate at different times of the day.

So, we now, in California,

generate more solar electricity in the middle of the day

than we can use.

We literally dump electricity that could be put to work

because we don’t have enough demand for it.

We have more demand at the end of the day,

late in the day, and early evening hours,

and into the evening,

then we can satisfy with solar.

We have some wind,

and we have some other resources,

but basically, we need to be importing from Wyoming,

and other places in the evening hours.

There’s no reason why we shouldn’t be able to share,

if we could work out the politics

of making a more efficient and equitable system overall.

There’s also a lot of room for micro-grid technologies,

where you bring it down to the local level,

and work your timing of things.

We know we can do a lot more with storage,

so that when there is excess electricity,

you can save it in batteries or other ways.

And there’s also the possibility,

increasingly now being looked at and used,

where an electric car can be its own storage system,

and be part of a little electric system in its neighborhood

and within its house,

so that when there is access electricity on the grid,

you could be charging your car,

and when there isn’t,

your charge has a, your car has a bidirectional plug,

and you could actually be giving electricity

back to the house.

That’s a very simplistic explanation,

but that, but that actually can happen,

and now does happen.

You know, if you, a Ford 150 truck

comes with electric outlets on it.

So, a lot of people who could care less

about being in a zero-emission vehicle,

love the idea that they could be off road in their truck,

and be plugging in all sorts of other cool appliances

out wherever it is they are.

So, you know, this is, this is a way more interesting

and diverse system,

than certainly seemed to be when, you know,

a few years ago

people were just thinking about one power plant

with lines radiating out,

and that was the, what the whole system was.

Still, we’re gonna need more.

I mean, there’s no way around that.

And we all want more things that are electric.

We do consider, by the way, not just battery electrics,

but fuel-cell vehicles are electric-drive vehicles.

And so there’s, there is a place in the economy for us,

and for many parts of the world,

for hydrogen running a fuel cell,

to be a big part of this electric future

that we’re talking about.

But there’s nothing in the fact that, you know,

on a very, very hot day this year,

we were worried

about whether there were gonna have to be some blackouts.

That tells you nothing about where we’re gonna be

in a few years,

because we’re just, we’re moving ahead

on all these other fronts.

  • Thank you for that.

I mean, one of the things we really emphasize here at Haas

is the power of innovation,

and also we’re focusing on sustainability.

And so the intersectionality

of innovating and sustainability

is just so incredibly important.

As a trade economist,

I also like what you’re saying

about the opportunity to trade energy

across time zones and locations.

I think there’s tremendous potential there.

So, now we’re gonna change,

we’re gonna change the focus a little bit,

and talk about China.

So, China’s the largest emitter of greenhouse gas emissions

in the world.

But the China, the California,

further climate action between California and China.

So, that area,

climate change has long been one of the few reliable areas

of productive collaboration between the US and China.

Can you tell us more about the work of that institute?

And how does this current tension that we’re seeing

between the US and China

affect the work of that institute?

  • Well, it has been affected

to the extent that exchanges of the kind

that we were hoping would occur,

where scholars from one country

would go and spend time in the other,

have been pretty dramatically affected.

But it is interesting that at a time when, you know,

between the US and China at the national level,

there’s probably more tension,

and general lack of sense of collaboration

than there has been for many, many years right now.

But the work of the institute

has continued both in China and in California.

We have people working together,

and they can share documents,

and, you know, work together over the internet.

And they are publishing a group of papers,

a set of papers,

that are gonna be coming out quite soon,

they’re in circulating and draft form right now,

where they’ll have on 10 sort of big topic areas;

papers that talk about what both China and California,

or really China and the US can do

to meet our goals under the Paris Accord.

And that is an effort which has been,

I wouldn’t say sponsored,

but it was, actually, it has been sponsored in a formal way

by the state department,

which had, at Glasgow,

they began a process of revitalizing a China,

I keep saying China California.

The institute is China and California,

but the agreement is between China and the US

to collaborate on developing China solutions.

That really goes back to Obama,

when he had invited the premier of China to come over,

and they spent time together,

and announced a series of things

that they wanted to work on on climate.

The Chinese are very serious about this stuff.

I mean, they’re having political problems of their own

internally as well.

And you know, the effects of COVID have been disastrous

as far as their economy is concerned.

But they continue to just produce renewable energy

at a record rate,

and they have implemented a cap-and-trade program

for electric generation in China.

  • Yeah, no, I’m aware of that

having done a lot of research on China.

And if you just, if you look at aerial photographs

of Beijing over decades,

before you couldn’t see Beijing at all,

and the progress that has been made is really remarkable.

I have one final question before I open it up to the floor.

After I ask my question,

and you’ll give us your thoughts on that,

if you want to ask a question,

you can then go to the mic,

and you can identify yourself,

and ask your question.

So, my last question here is what would you recommend

for Haas students,

or for non-Haas students for that matter,

who wanna lead businesses,

and also contribute to sustainability and climate solutions?

So, where should they be looking to make the biggest impact?

  • I really wish that I had a good, simple answer

to give to that question.

But one of the things that I think we need to recognize,

is that given the vast amount of change

that has to happen throughout society,

maybe the goal of being a leader,

even though we do need leaders,

isn’t necessarily the most important thing.

I mean, if you’re gonna be the leader in something,

you should be a leader

that makes climate a big part of your portfolio,

of what you’re gonna be working on.

But you don’t have to be,

your goal doesn’t have to be the leader,

if you are serving the purpose

of building a community of people,

or groups that are addressing this issue collectively,

because this is about doing things for the public good

as opposed to only for the good of your own company.

So, in, you know, it’s a little bit antithetical

in some ways,

to the desire

which I’m sure all kinds of people

who come and get degrees here, you know,

have that leadership gene in them,

and they all have the potential to be leaders

wherever they are.

But I’m personally at a point now

where I’m beginning to think that maybe we need more people

who are doers, (laughs)

wherever they happen to be,

working together to solve problems.

Because we’re seeing the levels of resistance and backlash

to anything that involves asking people to share

in the common good.

So, if you can’t do it by mandating people

to do whatever it is you want them to do,

you really have to have people agreeing voluntarily,

that this is what they wanna do.

And it may mean that being a leader means, you know,

being a leader of your PTA, you know,

just to pick an example.

I don’t mean to put down on PTAs.

I think they’re actually very powerful.

It’s a, but we have to agree with each other

that this is something that we, you know,

that we all can agree that we want to do.

And that means talking to other people,

engaging with other people,

which is kind of the opposite of what you think of,

as the, you know, the hard driving CEO personality.

  • It’s interesting because leadership these days

is a lot about influence.

And so we had, in a former Dean Speaker Series,

we had general McChrystal

who led the armed forces,

and he talked about how in the military,

even though the military,

we think of it as a hierarchical organization,

it’s all about leadership through influencing people,

inspiring people, educating people.

So, on that note, I would love to hear the first question.

  • Thanks for speaking with us today.

I’m Will.

I’m a MBA student here at Berkeley Haas.

My question is, looking forward,

what regulation do you see as being essential,

that isn’t out there today?

  • Can you translate the question?

  • [Will] Like-

  • What’s the critical new regulation

that needs to be passed?

  • Ah.

  • [Will] Yes, thank you.

  • Thank you, I’m sorry.

I have a little feedback in my hearing, I think,

but also it is hard for a person

who has to stoop down to speak into the microphone.

So, I appreciate your patience.

So, I think the most critical new regulation

that we need at the national level,

probably builds on what’s already

in the Inflation Recovery Act that was out there.

So, you know, we were able to get money,

very large amounts of money passed,

but very little in the way of mandates

as to how it’s to be spent.

Probably the most important thing though,

if you sort of took a step back,

would be to what we could get rid of

by way of subsidies for the oil and gas industry.

There’s still way too much in the current system

that is keeping us from making the changes

that we need to make.

So, in addition to my carbon tax idea,

which is not my idea,

but some form of a carbon tax,

I think we probably need to close loopholes,

or close very longstanding special benefits

that are enjoyed.

Because there’s no,

there’s really just no hope to make it to our climate goals

if we can’t hasten the departure

of our current system.

  • Cool.

I’ll buck the trend of needing to lean down.

I have to go up to the mic. (Mary laughs)

And I’m Chris, and I’m a first year MBA student

here as well.

I just recently was working

on the Clean Energy Transportation Group

over at PG&E,

so we dealt a fair amount with Californian regulators.

So, my question to you

is how do you see the sort of like, need for regulation,

and in, with sort of private companies,

versus the like, stifling nature

that sometimes that can have for innovation?

So, for instance, our group,

we wanted to go out and like, install more chargers,

but we were actually limited by our regulators to do that.

And so how do you see

like, the balance of like, checks and balances

put in place for safety and other requirements,

versus like allowing pure innovation to take over?

  • Well, I have been a fan of the kind of regulations

that we did,

going back into the 1970s,

that forced big improvements

in the internal combustion engine,

where we didn’t specify what technologies

the companies had to use,

we specified an emissions level,

and let them decide what was gonna be the way

to get there.

And I still think that performance-based regulation

is preferable to technology-based regulation,

and that there’s plenty of spaces

where that can still be applied.

I do think that there need to be more incentives

for breakthroughs in technology

than there are today.

And we also have to look

at the ways in which systems work together.

So, if we can’t ultimately find ways

to reduce the need for people to drive,

it’ll take a whole lot longer

to get to where we need to go

in terms of emissions from that sector.

So, certainly, in this country,

the thing that’s been the hardest to tackle

is how to, how to create the ability

to build new housing,

and at the same time, you know,

build it in ways and in places

where people can bike, walk, and otherwise, you know,

lead healthier lives

than if they have to be providing time and space

for their vehicles.

So, it’s a, it’s more of a holistic pattern.

And I think the failures of the regulatory system

tend to be more where one set of regulators

isn’t looking at what other regulators are doing,

and figuring out how to get them to work together.

One of the things that I thought President Biden did

sort of early on,

which I don’t think got a lot of attention,

but was actually one of the hardest things

ever to do in government,

is that he took two cabinet agencies,

the Department of Energy,

and the Department of Transportation,

and he made them start a new program jointly together

around electrification of the transportation system.

So, you know, each one has its own pride,

it has its own ideas about how things should be done,

but when it comes to deployment of electric charging,

they are absolutely joined at the hip,

and one can’t move without the other.

That is really policy making at its hardest.

  • Great.

My name is Meredith Fowlie.

I’m a professor of economics from RCNR.

We’re the College of National Resources.

Thanks so much for being here.

Quick question about cap and trade.

So, I share your view

that it’s really an important part

of sort of the large policy landscape.

And California had been leading,

but as you see Canada, and Washington,

and Europe push forward,

it’s playing a diminished role in the scoping plan.

It has no official future past 2030,

which I’m concerned about.

So, I guess, given that you are such an instrumental part

of the launch of the Cap-and-Trade Program,

I’m wondering if you can comment on the future trajectory,

given sort of where things seem to be going,

and then where they could be going

with some sort of policy leadership.

Thank you.

  • Well, you know, the, you reach a point

where you have to sort of decide

if the price of the allowances has gotten to a point

where that in and of itself

is gonna cause a political backlash.

And because there’s such a narrow set of people

who actually are subject to the requirements,

we’re not there yet.

But you could easily foresee that after 2030,

you could be at that point

in which case you’d be looking for a better way

to spread the costs,

than just through the carbon allowances.

I mean, California’s program, I think, is unique

in the way that it blends direct regulation

with a cap and trade program.

And the cap is the key thing,

not not the price on carbon.

But when you start to really lower the cap dramatically,

then the price of carbon obviously does have to go up,

‘cause there just aren’t enough allowances around

for the people who need them.

Then you have to decide whether there’s some other technique

that’s gonna come along,

that’s going to be more effective

at allowing for things like cement

to continue to be produced,

or you have to decide

you’re not gonna produce cement anymore.

And so I think they’re looking in a pretty scalpel-like way

at where you can do more with regulation,

and where you can do more with the cap and trade system,

and not ready to really come down one way or the other.

Meantime, if I’m right

that the United States, at some point,

is gonna have to kind of find a way

to work its way towards a carbon tax,

then you’re gonna have to figure out how to layer that

on top of the existing Cap-and-Trade Program.

So, I mean, I believed at the time we started the program

that there was going to be a federal program,

and that we would eventually have to negotiate

where our system could be folded into a federal system.

I still think that that’s the most desirable goal.

I don’t think we should be aiming towards a system

where every state has its own.

You know, if Oregon and Washington

are able to develop their programs

in a way that allows for meaningful linkage, real linkage,

between the three,

then it might become more possible.

But, you know, we’re not the, even as the Pacific West,

it’s still not a big enough market

to really, I think, keep things moving

as far as we need for them to go.

  • I think we have time for one last question.

  • Hi, my name is Arno;

a first-year MBA student.

So, up to now,

much of the focus has been on carbon dioxide,

very little on methane,

although it’s a much more powerful greenhouse gas.

What regulations and policies

do you think states and countries should take

to cut these methane emissions?

  • What policies should-

  • What to do about regulating methane?

  • Yeah, no, I, okay.

Well, (laughs)

another big question.

I have been involved and still am involved

with a public private partnership,

which is looking at ways

to improve our methane monitoring using satellites.

So, I think that we need to do a better job

of pinpointing where the largest targets of opportunity are,

not just to, not just to enforce existing regulations,

but to develop better new regulations as well.

The focus has mostly been on oil and gas,

where certainly, you know,

there’s a number of hot spots

where you should just focus in

on what’s leaking in those places,

and probably through a combination

just of information,

as well as developing some form of regulatory system,

target those.

But the other big sources are the landfills,

which are also very large sources,

and need a different type of regulation,

which hasn’t been really worked on for a long time.

And then agricultural production,

especially animal, animal raising.

And there are separate strategies

that are sort of being looked at for each of them.

But again, I feel like it’s important

that we try to pick out where the places are

that are the biggest sources,

and work directly on those,

because we don’t have time to develop a set of regulations

that are gonna work for everybody.

So, if we can come up with better technologies

in some cases, alternatives to the product completely,

and then, and then work on the regulatory side,

I think that’s where we have our greatest opportunities.

  • So, I want everyone to help me

in acknowledging and thanking Mary Nichols;

a pioneer in the clearing air movement,

continuing to make a huge difference every day.

Thank you so much

for joining us today. - Thank you.

(audience applauding) Thank you.

Everybody is gonna be a clean air warrior here.

(interviewer laughs)

This entire group.

  • [Interviewer] I think we have a lot of warriors.