As the nation anticipates a “climate friendly” State of the Union speech from President Obama Tuesday, let’s take a look at what one of Silicon Valley’s most successful innovators and job creators has to say about the government’s role in climate change and innovation.
Last month, I interviewed Tesla Motors and SpaceX CEO, Elon Musk at the Computer History Museum in Silicon Valley and asked him what specifically President Obama can do to stimulate the economy. He acknowledges that presidents can only do so much, saying,”You’re actually like the captain of a very huge ship and have a small rudder.”
Musk argues that too much government regulation can stand in the way of innovation, especially in the auto industry; and is generally in favor of minimal government intervention in the economy. On climate change, however, he was forceful and described our oil based, carbon intensive economy as creating a “crazy chemical experiment on the atmosphere” with likely catastrophic consequences. He concludes that taxing carbon is vital.
Elon Musk: Well sometimes…I don’t think the government tends to stand in the way of innovation but it can over-regulate industries to the point where innovation becomes very difficult. The auto industry used to be a great hotbed of innovation at the beginning of the 20th Century. But now there are so many regulations that are intended to protect consumers…I mean the body of regulation for cars could fill this room. It’s just crazy how much regulation there is. Down to what the headlamps are supposed to be like. They even specify some of the elements of the user interface on the dashboard…some of these are completely anachronistic because they’re related back to the days when you had a little light that would illuminate an image. So we had to reserve space on the instrument panel of the Model S for where all of the indicators…that a car would have…you know you’ve got these little lights…
Alison van Diggelen: Check engine or whatever…
Elon Musk: Yeah…all these little things. There is a whole bunch of them. ‘We can’t have anything else in that space. ‘ But how about we have one space and render a different graphic? ‘Oh no, because people are expecting to see them in this space.’ Nobody is expecting to see them in that space.
Alison van Diggelen: So you can’t argue with these regulations?
Elon Musk: Well you can argue with them, but not with much success. (laughter). You can actually get these things changed, but it takes ages. Like one of the things we’re trying to get is: why should you have side mirrors if you could have say, tiny video cameras and have them display the image inside the car? But there are all these regulations saying you have to have side mirrors. I went and met with the Secretary of Transport and like, can you change this regulation…? Still nothing has happened and that was two years ago.
Alison van Diggelen: So you’re banging your head against the wall…
Elon Musk: We need to get these regulations changed.
Alison van Diggelen: So talking of government, President Obama is obviously trying to do what he can…if you had five minutes with President Obama, what would you advise him for one: stimulating the economy and entrepreneurship and (two) creating jobs. Is there one thing if he could successfully get through that would be a big stimulus?
Elon Musk: I think actually…the reality of being president is that you’re actually like the captain of a very huge ship and have a small rudder (laughter). If there was a button that a president could push that said ‘economic prosperity,’ they’d be hitting that button real fast…
Alison van Diggelen: Full steam ahead.
Elon Musk: You can imagine…the speed of light, how fast they’d be pressing that button. That’s called the re-election button. I’m not sure how much the president can really do. I’m generally a fan of minimal government interference in the economy. The government should be the referee but not the player. And there shouldn’t be too many referees. But there is an exception, which is when there’s an un-priced externality, such as the CO2 capacity of the oceans and atmosphere. So, when you have an un-priced externality, then the normal market mechanisms don’t work and then it’s the government’s role to intervene in a way that’s sensible. The best way to intervene is to assign a proper price to the common good that is being consumed.
Alison van Diggelen: So you’re saying there should be a tax on gas?
Elon Musk: There should be a tax on carbon. If the bad thing is carbon accumulation in the atmosphere, then there needs to be a tax on that. And then you can get rid of all subsidies and all, everything else. It seems logical that there should be a tax on things that are most likely to be bad. That’s why we tax cigarettes and alcohol. These are probably bad for you, certainly cigarettes are (laughter). So you want to err on the side of taxing things that are probably bad. And not tax things that are good. Given that there is a need to gather tax to pay for federal government…We should shift the tax burden to bad things and then adjust the tax on bad things according to whatever’s going to result in behavior that we think is beneficial for the future.
I think currently that what we’re doing right now, which is mining and burning trillions of tons of hydrocarbons that used to be buried very deep underground, and now we’re sticking them in the atmosphere and running this crazy chemical experiment on the atmosphere. And then we’ve got the oil and gas companies that have ungodly amounts of money. You can’t expect them to roll over and die. They don’t do that. What they much prefer to do is spend enormous amounts of money lobbying and running bogus ad campaigns to preserve their situation.
It’s a lot like tobacco companies in the old days. They used to run these ad campaigns with doctors, guys pretending they were doctors, essentially implying that smoking is good for you, and having pregnant mothers on ads, smoking.
Alison van Diggelen: Do you have a message for the climate change skeptics and the big oil people?
Elon Musk: Well, as far as climate change skeptics…I believe in the scientific method and one should have a healthy skepticism of things in general…if you pursue things from a scientific standpoint, you always look at things probabilistically and not definitively…so a lot of times if someone is a skeptic in the science community, what they’re saying is that they’re they’re not sure that it’s 100% certain that this is the case. But that’s not the point. The point is, to look at it from the other side. To say: What’s the percentage chance that this could be catastrophic for some meaningful percentage of earth’s population? Is it greater than 1%? Is it even 1%? If it is even 1%, why are we running this experiment?
Alison van Diggelen: You’ve called it Russian roulette. We’re playing Russian roulette with the atmosphere…
Elon Musk: We’re playing Russian roulette and as each year goes by we’re loading more rounds in the chamber. It’s not wise. And what makes it super insane is that we’re going to run out of oil anyway. It’s not like there’s some infinite oil supply. We are going to run out of it. We know we have to get to a sustainable means of transportation, no matter what. So why even run the experiment? It’s the world’s dumbest experiment (applause).
Read more Transcript Excerpts from our 2013 interview:
“The ad that it was responding to was an ad sponsored by a SuperPAC…sponsored by the Koch brothers… two oil billionaires … and it was an attack particularly on the Solyndra issue but it was really an attack on the whole green energy initiative of the president’s. We’re proud of that initiative…we’re proud that we’re on par to double renewable energy during the course of his first term. He believes very strongly that we need to command the clean energy technology of the future and that as a country we need to be encouraging the development of clean energy technology or we’re going to see that go to other parts of the world.”
Solyndra appears to have become a thorn in the side of Obama. How does he intend to remove the thorn?
“All you can do is be open and candid about it. We knew when made investments in clean energy technology that some would do well and others would not. That’s the nature of this…these are speculative investments. And that’s the reason why they needed some nudging from the government in order to blossom…We’ve seen real growth in solar and wind energy and so these are investments that are paying off for the country. I’m very certain that we’re going to look back at the seeds that were planted during this period and we will say that it has made a big difference for the country in a positive way.”
What percentage of the program’s investment went to Solyndra?
“There were forty under this specific program, so it was a small percentage of the entire program. It was a program… that was begun under the Bush Administration and we accelerated that program because we do believe that we are in a real competition for the clean energy technology of the future and we as a country have a great interest in developing alternative energy and home grown domestic energy and renewable energy. These were investments that made sense. Some will pay great dividends, others unfortunately will not.”
Note: in a recent report at ClimateProgress, Stephen Lacey confirmed that Solyndra’s loan guarantee amounted to 1.3% of the DoE’s total loan portfolio.
On the importance of clean energy technology
“We have our eye on the future and really encourage and develop renewable sources of energy. It’s good for the planet, it’s good for the economy, it’ll create great jobs…high end manufacturing jobs.”
On the future
“This is going to continue being a thrust for us. We’re not going to back off.”
The interview took place backstage at Foothill College’s Celebrity Forum on January 27, 2012. Check back soon for more with David Axelrod:
On Michelle Obama’s influence on green policy
On The First Lady’s organic garden at the White House
Read transcripts, see photos and check out our ARCHIVES featuring exclusive interviews with Tom Friedman, Paul Krugman, Vinod Khosla and many more green experts and visionaries…
“This is our generation’s Sputnik Moment,” said President Obama in his State of the Union Speech last night. He’s referring of course to the space race with the Soviet Union, which spurred massive investment in research and development… and massive job creation. Today, he challenges the nation to invest massively in the future again, especially clean energy and green tech. It’s the only way we can catch up with (or surpass) China in the clean energy race.
Is China the invincible leader of clean energy and clean tech? It certainly looks that way. In a Fresh Dialogues interview, New York Times columnist, Tom Friedman explained his China envy… and emphasized that government has a huge role in jumpstarting the green economy. Would he like to be Obama’s Green Czar? Not a chance. He explains why in the video below.
What can we learn from China’s remarkable lead in clean energy? I talked with China expert, Isabel Hilton, founder and editor of China Dialogue who has earned a OBE for her groundbreaking work in this field. Her team’s mission: to give the reader an inside look at China’s environmental policy and encourage dialogue between China and the rest of the world. (Check out the site…it’s in Chinese and English)
“If you think you can ignore China, you don’t know what’s coming down the road,” warns Hilton. She describes the strategic economic shift in China over the last four years, from dirty unsustainable development to a new cleaner, greener outlook. In 2011, a new five year plan will be released to position China for the future. Hilton is impressed by the focus and conviction of China’s new policies which invest heavily in research and development; and support for new cleantech industries; strategies Obama says are necessary here in the US.
Hilton cautions that public opinion is a stumbling block to progress in the West and that the “Merchants of Doubt”community is undermining policy change by generating and sustaining doubt on established scientific issues. She challenges Obama to act decisively. So far, she says, “Obama has failed to live up to his convictions.” Time will tell if Obama’s forceful State of the Union speech last night – with its “The Future is ours to win” optimism – and the bipartisan mood of Congress will create real change.
Last night, President Obama addressed the nation for the first time from the Oval office. His subject: the BP oil spill disaster. Although some say he was “vapid”, Obama seized the opportunity to call for a clean energy future and end our addiction to fossil fuels. He underlined China’s massive investment in clean energy jobs and industries (subtext: just like the Space Race in the 50’s & 60’s, the race for Clean Energy has begun, and the U.S. is falling behind); and reminded us that we send almost ONE BILLION DOLLARS EACH DAY to foreign countries for their oil.
“The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now. Now is the moment for this generation to embark on a national mission to unleash America’s innovation and seize control of our own destiny.” President Obama.
In this week’s Fresh Dialogues, we look at the advice gleaned recently from a panel of clean tech experts in Silicon Valley. If the Obama administration is serious about unleashing America’s innovation and creating a clean energy future, it would do well to take note.
From the Fresh Dialogues archives: The Obama administration ought to have sent an envoy to the FountainBlueState of Clean Green Conference this year. A panel of Silicon Valley clean tech experts had much to share on this question: how can Obama better jumpstart the clean tech economy?
Tim Woodward, Managing Director, Nth Power said the government needs to create market demand, and recommends that every government building should have solar power and be retrofitted for energy efficiency; but he warned,
“There’s a little too much of a ‘large check mandate’ in the Federal Government that picks technologies and stifles innovation at lower levels: figure out how to get smaller dollars into the innovation engine of smaller companies.”
“I look at the pricing and incentivizing through market pricing. We’re still subsidizing imported oil without putting the investment into alternative energies…I think we should put a tax on imported oil and use it to help pay off some of the defense spending we’re using to protect the transmission of that oil. We need to forge ahead with cap and trade legislation… until we have a price on carbon it’s hard for the markets to plan and have any certainty.”
Elise Zoli, Partner and Chair, Energy Practice, Goodwin Procter said that the Department of Energy needs to improve the low commercialization rate of national labs and is excited about a new national initiative to create virtual access to all the labs’ technology… “so you can see the technology, acquire it and begin to commercialize it.”
“The DoE has a fantastic lab structure, producing some really innovative technologies… (we need to ) leave them there and help them – through public/private partnerships – and take that technology out of the labs…”
“There are things they (the DoE) do terribly and being a bank is one of them.”
And Elise has one last piece of advice if you have a green energy technology you think the Feds can use, contact Richard Kidd at the Federal Energy Management Program: ”Richard Kidd will not know you exist unless you call him…send an email to Richard’s team and use my name!”
Other panelists included Dan Adler, President, California Clean Energy Fund, and Matt Maloney, Head of Relationship Management, Silicon Valley Bank. The interview was recorded at Fountain Blue’s Conference on January 29, 2010.
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ALISON VAN DIGGELEN:Hello and welcome. Today on Fresh Dialogues: Jeffrey Toobin.
Jeffrey – thank you so much for joining me on Fresh Dialogues. Let’s go on to your specialty: The Supreme Court. In 2009, they decided against environmentalists in a lot of cases…
JEFFREY TOOBIN: Six out of six.
ALISON VAN DIGGELEN: Yes. What are your thoughts on that, moving forward? Is this going to continue…this anti-environmental stance of the Supreme Court?
JEFFREY TOOBIN: I think that the court as currently constituted will likely continue in that direction. I don’t think it’s a particular hostility to the environment per se. I think it is a general sympathy for corporate defendants in all cases, environmental cases being one category of cases where the corporations are the defendants. They are also generally – the conservative majority – fairly hostile to government regulatory efforts…and the environment is one area, not the only area. So if the court stays as it currently is, I think you’ll see a lot more cases like that.
ALISON VAN DIGGELEN: So would you say, it’s moving more pro-business?
JEFFREY TOOBIN: Clearly
ALISON VAN DIGGELEN: And the environment losing out as a result?
JEFFREY TOOBIN: That’s certainly how the environmentalists see it.
ALISON VAN DIGGELEN: And how do you see it?
JEFFREY TOOBIN: Again, not a field of great expertise of mine, but I see who wins the cases and who loses them. And it’s the polluters who keep winning.
JEFFREY TOOBIN: He hasn’t said so officially but I think he will retire this Spring.
ALISON VAN DIGGELEN: So how is that going to change things? What are your predictions?
JEFFREY TOOBIN: I think he is a key member of the liberal four on the court, he will likely be replaced by another liberal. So in terms of the outcome of cases in the next few years, probably not a huge impact, but I often like to quote Byron Whitethe late Justice,who said if you change one Justice, you don’t just change one Justice, you change the whole court. If you start to have an energized liberal group of young – by Supreme Court standards -Justices like Sonia Sotomayor, like the next Obama appointee, the wind could start to be at their back. And if Obama gets re-elected, you could see more appointments…so it’s a big deal.
ALISON VAN DIGGELEN: And who is your No. 1 candidate for that appointment?
JEFFREY TOOBIN: Elena Kagan, the Solicitor General, former Dean of Harvard Law School. Very much an Obama type person – moderate Democrat, a consensus builder…
ALISON VAN DIGGELEN: Do you know if she’s an environmentalist?
JEFFREY TOOBIN: I don’t… I just don’t know. My sense is, it’s just not an issue that has come across her plate a lot…she is someone who has written on administration law, which tends to mean she’s a believer in the power of the Federal Government to regulate. But I wouldn’t…
A – I don’t know what she thinks…and B – I don’t…
A is enough. I don’t know what she thinks about these issues…(laughter)
ALISON VAN DIGGELEN: (laughter) OK. Jeffrey Toobin I really appreciate your taking the time for Fresh Dialogues.
JEFFREY TOOBIN: My pleasure. Nice to see you.
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