 David, I know it's hard to sort of come in and give all those numbers in a speech, and we're going to try and make those remarks available for everybody after the fact, as long as we can get them and post them online, as well as some of the presentations you're going to see in this next panel. Good morning. I'm Sarah Ladislaw. I work in the Energy and National Security Program here at CSIS, and I'm really excited about today's event, which is the second in a series that we're running this year called the Opportunity Tipping Point, and you can learn more about it on our website if you'd like. The first event had Jonathan Pershing talking about post-Copenhagen, and today's event is not only to look at the one-year anniversary of the DOE stimulus, U.S. stimulus program, but also to take a broader look at global stimulus efforts, global green stimulus efforts and also see what's going on around the world, but also ask some critical questions about, as Frank had said, how do you sustain this stimulus effort after the fact? What have been the impacts? How are people spending this money differently? Has it been a success? How do you determine whether it's a success? And I'm really excited about the panel we've been able to put together. Someone came up to me, and I didn't pay them, or they don't work at CSIS and said, you really have a star-studded panel today, and I completely agree, as an early researcher, these are the kind of people that I want to hear from, and they've done some of the best, most comprehensive, most analytical work looking at questions of global green stimulus, how stimulus is being spent in different parts of the world, and how we all should view, engage sort of the success of these programs. So, without further ado, I'm going to get the panel started because we're a little bit, running a little bit behind time. What we're going to do today is everyone's going to present, and then we're going to ask questions afterwards. So if you could hold your questions till the end, that would be appreciated. We're going to try and leave as much time for discussion, as I know there's a lot of knowledgeable folks out there who have some really good questions. So, today, on today's panel, we have the great pleasure of having Nick Robbins, who's the head of the Climate Change Center at HSBC, who's done some of the most comprehensive work that I've seen to date on global green stimulus spending. We also have Ethan Zindler, who's the head of North American Research at Bloomberg New Energy Finance, who's going to talk a little bit more about the impact of stimulus spending on private sector activity, talk about some of the market dynamics in particular and what needs to happen post-stimulus. We've got Julian Wong, who's a senior policy analyst from the Energy and Climate Change program at the Center for American Progress, who's going to talk to us a little bit more about what we can and don't know about how China is implementing their stimulus program. And then finally, Kevin Book, who's the managing director for Research at Clearview Energy Partners, LLC, who's going to ask some of these really sort of analytical deep dive questions about how this stimulus money is being spent and places for improvement and things like that. So without further ado, Nick? Thanks, Sarah. Thanks for inviting me. It's great to be here. What I want to do is really highlight why a international bank and investment research company is interested in the green stimulus. For us last year, we all knew the Copenhagen was happening. I think one of the surprises was the green stimulus phenomenon. We expected a nice big international organization like the OECD to be doing international analysis of the stimulus phenomenon. We found it wasn't, so that's why we tried to do it ourselves. So I just really wanted to talk about five points and raise questions for discussion. I think the first and obvious point is normally environmental agendas, environmental spending agendas get put on the back burner that doesn't seem to have been to happen this time. Our estimates that about $513 billion around the world has been allocated to global green stimulus. I'll talk a bit about the definitions we use. This is about 15% we think of the fiscal stimulus. Importantly, I think this is also aligned with some strategic thinking, particularly coming out of East Asia, where we think about two-thirds of the green stimulus is allocated. This has had real impacts on actual investments. We've heard from David Sandelow and also investor confidence and also some lessons about how to leverage private capital, which is a very burning question in the wake of the Copenhagen summit last year. On that, as David Sandelow highlighted, the international dimension has been a missing link. For obvious political reasons, stimulus packages have been internally and domestically focused. But one of the issues that we do need to think about is actually how we can also spend public money very effectively internationally to actually leverage private capital. And then for us as analysts looking ahead, obviously we have the stimulus phenomenon. But also, is this going to be followed by a repeat of the sort of boom and bust period we've had in previous policy rounds? Are we going to enter a realm of green austerity as governments try to cut back spending, particularly in the industrialized world? So just to remind us about why I think this is important as an issue, the point of stimulus is to be temporary, is to be targeted, and also to be timely. The question we've been asking is, can this also be transformative? And why are the reasons whereby governments have been thinking about linking the climate change environment to clean energy and stimulus agenda? One, I think, is around the risk issue. I think we should not forget the issues of systemic risk. And people, I think, have been aware of those issues. Obviously, energy security, energy independence, the job agendas that we heard, driving the next round of productivity, and also kickstarting the transition to a lower carbon economy. Just to underline, of course, that this is no substitute for long-term climate and clean energy strategy. This is supposed to be a temporary measure. So how do we do our estimates? We use the investment themes designed by the HSBC Climate Change Index. This index has 18 investment themes, looks around the world at the 65,000 stocks that are listed on the world's stock markets, and identifies those that actually do derive revenues from climate change solutions in these four areas, low carbon energy production, so renewables and nuclear in particular, energy efficiency, energy management in buildings, transport and industry. This would include grids, water waste and pollution control, fairly safe havens, and then carbon finance, by far the smallest. Just to underline our results, our estimates, and one of the big issues, I think, for analysts is the lack of transparency in many country programs. Just to link this with some public opinion research that we've been doing, we've been doing this for three years now, polling 12,000 people, 1,000 in 12 countries in developed and developing world. Just to get their views on the issues of climate change, one question we posed last year in the fall of last year was how the world's public views public spending and views public spending on climate change. So about two thirds in all viewed tackling climate change as about the same or higher priority as a number of very core political issues, which I think was an interesting conclusion from the fall of last year. So the results, I hope you can see those. As I said, about 513 billion allocated to the largest amount in China. That was the first package that really got off the ground. And I hope we'll hear more about that. Also, I'd take note of Korea and obviously here in the US. One point to underline, the European Union's package at member state level, and it's a union level, has generally been smaller. This is because obviously the European Union has a more automatic welfare system and many of the renewable and clean energy packages are much well better established there. So maybe the need for a stimulus, particularly on the green side, is less pronounced. These are our estimates in terms of the percentage of green stimulus using our definitions as part of the total fiscal plan. As you can see, Korea comes out at almost 80%. Their whole package has been designed as the global green new deal launched last January and the country is passing legislation which will come into force this April allocating 2% of GMP on their green growth strategy. So a very clear commitment there. China coming in at about a third and the US at about 12%. Interesting to see the South Africa rules has also been allocating money in their budget and stimulus package. In terms of where is the money going, the big area is this big area of energy efficiency in terms of buildings, in terms of rail, and in terms of grid spending. Renewables, I think we were surprised when we did the figures in terms of when you think of green stimulus, you think of lots of many renewables really coming largely out of the US, but then other low carbon areas and water infrastructure. So mostly an environmental infrastructure phenomenon. Again, one of the things that I think people we've heard today in discussions about the US but also as a more general phenomenon is the question of political commitments being made but actually are these being delivered? And this chart shows our varying estimates through the year starting in May last year, then August, then our latest assessment back in November about the amount of stimulus that has been spent globally. And as you can see, our estimates for 2009 came down from about 135 billion to about 94, which bumped up the stimulus spending for this year, which is obviously going to be the big year of delivery and then slightly bumped up that for 2011. Obviously, there are very different rules around the world in terms of the allocations and the solidity of allocations but obviously as spending gets delayed, the risks particularly in the time of austerity as this spending maybe gets caught in the retrenchment process. So just to wrap up some of the lessons so far. Firstly, public finance can crowd in private capital. I think it's interesting to see the role of the multilateral development banks in Europe. We've seen the role of the European Investment Bank coming into play and I think the role of public finance institutions in terms of crowding in private capital is important. And I think that has helped to underpin some of the clean energy investment last year. It has been a national phenomenon. One of the few positive developments I think that came out of Copenhagen was the commitment to 30 billion in terms of fast start funding. How can we see that as essentially as a stimulus package for clean energy and low carbon technologies around the world and use that to leverage two, three, four times in terms of private capital? Importantly for us as analysts, but I think also for public accountability as well, is transparency, particularly around regular reporting. The US has a very good system, Australia, France, and Canada as well, but many other countries, we don't see the sort of real time data on dispersants that many analysts include, many business people will need. We've heard about the issue of operational efficiency, getting the procedures in place to just disperse quickly, and I think therefore we have a fear of delay leading to retrenchment. And finally, this question again, which I'd like to hear your thoughts on as well, is how can we make this smooth transition from stimulus to recovery? Just one example there, the major economies forum, its technology action plan report, which was launched at the time of Copenhagen, was talking about the need to increase public investment around the world in the major economies forum three to six times to get us onto a low carbon track. How are we going to be able to do that in a time when public budgets, particularly in the industrialized world, are under severe downward pressure? Many thanks. Great, thanks, Nick. And I think we're going to go with Ethan next, because you've got a presentation as well. One of the critical questions here we'll ask Ethan to address is how exactly stimulus spending impacts sort of the private sector and leverages private sector funding. So he's going to talk a little bit about that. Hi, Ann, thanks very much. What I'm going to talk a little bit about today is the important role that the private sector is playing in interacting with the stimulus and also how critical the success of the stimulus is on what private market conditions are right now. Just very quickly, for those of you who don't know us, Bloomberg New Energy Finance is a global research firm covering clean energy investment worldwide. These are where our offices are. The firm has been around for five years. We were acquired by Bloomberg a couple months ago. And really what we do is track the flow of financing in this sector. Our primary clients are investment banks, venture capital funds, manufacturers in the clean energy sector, a number of government agencies, including the Department of Energy. And really our one and only focus is on clean energy and low carbon energy technologies. So five years of gathering data and studying this sector, I will try and sum up in basically one slide about what's happening in the clean energy sector at this very moment. In a very rapid period of time, we went from a moment of extraordinary investment in capital availability in this sector to one where suddenly capital has become more constrained. We've not gone all the way back to where we were in 2004, but we're not where we were in 2008 either. We've gone from a period where there was a very low supply of equipment, and that equipment was fairly high priced to one which suddenly we've got a very high amount of equipment available and falling prices, particularly in the solar sector. Inevitably that meant that manufacturers had a lot of power to dictate prices. Now buyers, which in this case means consumers and developers of projects, are in the driver's seat. And we've really gone from a period of sporadic government support via various kinds of subsidies to a much more concentrated and focused effort on this sector. So right now we really are in an ongoing recovery and readjustment to new difficult and changed conditions. And into this comes the stimulus package, which we'll talk about in just a moment. But in terms of, again, the sector tracking the money, this is one of the things that we do sort of our bread and butter is, as you can see, you've seen this spectacular run up from back in 2004 from about $36 billion all the way up to $155 billion in 2008 and then a bit of a drop off in 2009. This year we actually do expect the money to come back in, hit about 180 to $200 billion on the year. That is with the very large caveat that we continue to have economic recovery and growth. We're not macroeconomic forecasters. So to some degree that goes out the window if we do a double dip recession here. But assuming we continue to come back we think we'll see growth this year. Now, one of the things that I think is an important point to be made about the stimulus and I'm gonna talk about it a lot here is that it's probably the most important supply side policy ever aimed at growing clean energy capacity in the United States. It is incredibly generous in the amount of money that it's going into the sector. But it has arrived at a moment of sudden oversupply in the marketplace. If right here, this is very recently some research that we put out in which you can see that suddenly in the US after years of being undersupplied with wind turbines is about to enter into a period of significant oversupply. The bars demonstrate the amount of supplied, thousands of megawatts of supplied turbines. The lines indicate the demand that we project out. We have both a bull and a bear scenario over the next couple of years. But you'll notice that even in our bullish scenario the amount of turbines that are gonna be built in the United States is more than are gonna be needed here in the US. So those things have to find a home someplace. And turbine makers are gonna either try and send them to South America where there's growing interest or other markets. Or they're gonna hope that here in the US we start to have more demand. And at the same time that's been coupled with a capital undersupply suddenly. One of the things that we noted as we broke the numbers down this year was that for the first, we grouped the world into three segments. There's Europe, Middle East and Africa, EMEA. There's the Americas, and there's the Asian, Oceana region. And as you can see, this was really the first year that the Asia region jumped ahead of the Americas region in terms of investment and clean energy. So we've seen a drop off in available capital in the US and this covers South America as well. But most of this money has been up here that took place last year. So suddenly we have oversupply of equipment and an undersupply of capital and incomes of stimulus. In terms of where renewables, and this is one last piece of the puzzle here, in terms of where renewables fit within compared to conventional power, I think it's important to remember that they are still much more expensive on an unsubsidized basis than coal and natural gas. We are analysts of the industry. We're not promoters of the industry. So I think it's important to take stock of this. One thing we do every quarter is we look at the so-called levelized cost of energy which is how much a typical contract that a developer has to sign with a utility to make a 10% return on investment on a project. And one of the things that we've noted is as you look through the list here, you'll see coal and natural gas down near the bottom of the list. You can see the various clean energy technology stacked up all the way up. One thing that we've noticed is that while equipment prices have been coming down very nicely, the cost of capital has not been coming down or it's been going up in a number of cases. And so these two things offset each other and you've not seen a dramatic decrease in the levelized cost of energy for developers. So again, about the ARRA, as I said, most important federal clean energy legislation in history. By our calculation, $66, $67 billion for DOE, DOD, GSA treasury money. We only are counting clean energy. We're not counting rail. We're not counting water, just clean energy. And I think it's important though to note that many of these components of the money getting actually out the door are contingent on the private sector. So you have grants that are contingent on parties raising some independent money for their project. You've got loan guarantees where a bank has to come in and provide some of the debt as well. You've got tax credits where sometimes third party tax equity investors are needed. And so thus the success is contingent on private fundraising conditions. And in this case for tech firms, it's venture capital availability for companies that do manufacturing. It's typically public market funds such as stock exchange raises via IPOs and other things like that. And for projects, it's debt capital. And I would say there's been some successes to date, but there's still plenty left to be proven here. Our calculations on how much money's gone out the door. David mentioned $31 billion is what we say has been allocated leaving about another $35 billion left to go in terms of allocation. But our view is that our clients wanna know how much money literally has hit the street. It's nice that you could talk about how it's been allocated and how maybe you've assigned it to go to this state or that state, but how much money has actually gone into the marketplace. Our estimate is somewhere in the range of no more than $5 to $10 billion has actually gone into the marketplace at this point. Now that's not a criticism. I think in many sense the DOE has moved at sort of light speed by government standards to get this money out the door. But the reality of it is in terms of how much money is in the market and circulating somewhere in the neighborhood of five to 10. But the impact that the stimulus has had has been very dramatic and very positive. I don't mean to underplay that, but in terms of actual dollars it's not as big as some of the numbers we may have heard so far. Quickly a couple of sort of success stories in terms of the way I think that this was all supposed to work. Cylindra is a company based in California. They make long cylindrical PV modules. They raised $600 million in 2008. And then in 2009 they were offered the DOE's first loan guarantee. And then having finalized that about six months later they raised about $200 million more in private equity which was based on the fact that they've been able to get this loan guarantee. And then now they're shooting for an IPO I believe on NASDAQ for $300 million. So this is a case where they've leveraged that government support. They got some private capital and now they're gonna go for some public capital. And this is sort of the virtuous circle as I think is supposed to be working. Similar story that David told about A123 systems. I won't go through it since he talked about it in great detail, but I mean basically that's another very good example of where this has played very well. And again I guess I would call this sort of the virtuous Ferris wheel or circle or lollipop of DOE involvement in the electric vehicle sector. And I only put this up to sort of highlight the fact that we focus very much on the money going out the door from DOE. But money goes out the door from DOE and then one company makes an investment in another company or one company starts and signs a supply contract with another company. So what you can see here at these various dotted lines to the center of the pinwheel is money either dispersed or promised to one of these various companies in the electric vehicle sector. And then on the outside you see Treasury and its support for GM. But you also see a $370 million IPO for A123 systems. You see $92 million that Fisker Automotive and electric vehicle maker raised. And then you see a number of these sort of white arrows which are the supply agreements and investments that have taken place between these various companies. So there's an ecosystem of electric vehicle companies out there's battery makers, control systems and others and the DOE is playing a critical role in supporting them although not always directly in the way that gets documented through a stimulus grants. And finally just to reiterate some of the points I think I've sort of made along the way in the most basic sense renewables are not competitive yet with fossil fuels. Solar is moving very quickly in that direction and we predict maybe as soon as a year from now it will be there in some markets. It's really contingent on electricity prices and a number of other factors but they're not there yet. And so far as they're not there yet you have to find a way to sort of bridge the gap if that is your long-term goal. The ARRA was entirely focused on the supply of clean energy goods and projects. This is not a criticism it's just the political realities was that this is where money was intended to come in but it is now arriving and being dispersed in an oversupplied marketplace in which supply side policies really are only going to be so useful. And so what could the ARRA's impact be? Well obviously if the economy suddenly comes roaring back to life and a lot more capital is available then these companies that need to take advantage of their grants by raising money from venture capital are going to have more capital available. Some of the bigger guys who need to raise money to build their manufacturing plants are going to be able to IPO all kinds of good things are going to happen if the economy keeps rebounding. If that doesn't happen, which is a distinct possibility or even if it does happen the other thing that the government could do and probably should do in our view if they really want to sort of set this market on fire is to create a demand side policy that supports the clean energy sector. And there's some talk of carbon cap and trade. Obviously that would be helpful to the sector but our view is much more helpful would be a national renewable electricity standard which Congress is again contemplating at this moment and we can certainly talk more about. But if you coupled the very strong supply side policies that you've had with a significant demand side policy again I think you would see very, very strong growth in the US and you would make major strides towards that clean energy economy that the administration talks so much about. But until those two things happen you're going to have some problems along the way. Anyway, thank you very much. Thanks Ethan. Next we've asked Julian to come in and answer sort of the real easy question which is what's going on in China? China has a really very large stimulus program and everyone up here has sort of been able to write about it at some point talking about what they do know and don't know. We asked Julian to really kind of dig in and figure out what we are able to know and not able to know about how China is spending their green stimulus, how they define it, what their priorities are, things like that. And having done some research in the area this is not an easy question to answer so we're really looking forward to what you have to say Julian. Thanks a lot Sarah for hosting this event inviting me to share these remarks and thanks to CSIS as well. So I think what I'm going to do today is talk about first lay out what we do know about China's stimulus package and what we do know about the green components of it. And then sort of try to, I will sort of present the argument that, you know, it's really hard to, I guess the first caveat is that there isn't a recovery.gov.cn website that really tracks in a transparent manner what's going on. I wish there were. So that's the biggest challenge. It's trying to figure out, as Ethan said, what money is hitting the street in China both in terms of the broader stimulus package and also in terms of the green components. I will argue that the stimulus package is not as green as many press reports have covered it but on the one hand, but on the other hand there's a lot of things going on outside the November 08 fiscal stimulus package. There's a lot of things going on in monetary stimulus that are green. So on one hand it's not as green as it looks but on the other hand if you look at a bigger picture it is greener. So, and then just sort of like bring it back to the home, bring it back to the U.S. and sort of like draw a few lessons that we can learn and take back. But I think the foremost important thing to realize is that make no mistake about it, China is going into clean energy in a major way. It's just that it's doing it in a variety of mechanisms that are difficult to track. So what do we know about the stimulus package in China? The fiscal stimulus package was announced in November of 08. It was 586 billion U.S. dollars. But the thing to note is that the central government only committed to fund about 27% of the 586 billion. The assumption was that the remainder would be funded by subnational governments, provincial governments, municipal governments along with the private sector. So really the commitment from the central government is a lot smaller than the large headline number would suggest. And the OECD suggests that actually the private sector component of it is especially large, as large as probably two thirds of it. And what's interesting about that is these companies are not investing in contributing to stimulus through retained earnings but rather it's through bank lending. So loans they take out from banks. So this is where the monetary policy is important. So I'll talk a little bit more about that in just a bit. Another interesting development over the course of the year is the change in allocations. So initially, there are three potential components that are potentially green. And the first is sustainable development. There was a part called sustainable development where initially the initial allocation was 9% of this 586 billion. In March of 2009, that got reduced to 5%. And then there's this infrastructure part which is probably the biggest component of the whole Chinese stimulus package. And the initial allocation was 45% and that got reduced slightly to 38% in March of 2009. And then there's a third component which is a little more cryptic. It's called technology advances in industry restructuring. So to the extent that there's innovation in clean energy technologies, energy efficiency, to the extent that these stimulus money affects a structural industry restructuring from heavy industry to light industry, one could consider that green stimulus. But it's really hard to unpack and know where the money is going. But the initial allocation for that in November of 2008 was 4% and that got increased more than doubled to 9% in March of 2009. So, and a third thing to mention about what we know about the stimulus package is that there's been some debate about how much of this 586 billion truly represents new stimulus programs versus programs that exist that were just packaged by the central government to provide a market signal that the government was taking the recession seriously. Because I think the broader point is that if you wanna think about it, really if you think about China's trajectory and its economic growth, isn't it, wouldn't we say that it's done a 30 year stimulus plan since 1979 since it's decided to open up its economy? And so, and I think what we're seeing clean energy to is it's not a result of just the stimulus package alone. It is a result of a long-term investment plan. You know, they have a medium to long-term plan that stretches to 2020 and from what I understand that the newly formed National Energy Commission is in the process of rethinking and extending that long-term goal to 2030. So let's dig a little deeper into these few components that I talked about. Infrastructure is the biggest portion and when we talk about infrastructure, what this includes is everything from highway construction to grid construction, grid build-outs, which is essential if you're talking about delivering clean energy electrons from remote sources to the cities. And China happens to lead the world in terms of ultra-high voltage technology. And so that's something to note. It also includes things like rail, which you could subdivide in terms of freight rail or high-speed rail. And it's such an amazing story in terms of rail in China. China is about to spend about a project of $300 billion till 2020 to really build out one, essentially the world's largest network of high-speed rail. And already several phases of these high-speed rail infrastructure have opened. And if anyone has had the opportunity to take them, they're truly state-of-the-art. But at the same time, it also includes freight rail. So, you know, and that a lot of that is really dedicated to transporting coal from place to place. So, you know, squaring the high-speed rail, which is mass transit, which one can certainly think of as green versus freight rail that transports coal, you know, how do you square that? And no one really has the numbers to how that is divvied up. And then, money is also spent in the sustainable development part to things like energy conservation, which is important because energy efficiency is a major push of the government in terms of its energy policy, has also spent on waste disposal, waste management, and also spent on water efficiency, water saving conservation. And finally, ecological restoration, things like soil rehabilitation, reforestry programs and such. The notable thing is that no money has been allocated to renewable energy or renewable energy projects, at least in the fiscal stimulus. And I think the answer to that is that a lot of the funding for renewable energy projects is really coming from the banks. And this is where I talked about earlier that, you know, apart from this fiscal stimulus, this is a whole other world of monetary stimulus, bank lending stimulus. And the size of that is actually quite large indeed. By some estimates, in 2009, new loans totaled to 1.5 trillion US dollars, which is truly remarkable, considering that the GDP of China was about 4.5 trillion, so one-third. And that really has been quite a present topic in Chinese economic policy as of late. There's been a lot of concerns that we are entering a potentially dangerous inflationary period, and that has prompted the central bank to increase reserve ratios to tighten up monetary policies a bit. And it'll be interesting to see how that plays out in terms of clean energy financing, and especially in terms of those large-scale wind projects and solar projects. And I think, you know, so I sort of entered a section where, you know, I sort of titled here all the glitters is not green. And so I alluded to some of this earlier, just in terms of how do you square, you know, how do you really break down the real investments, like what's green and what's not? And certainly one can think of green investments, like I said, as an essential part of a clean energy economy, but, you know, whether it's grid, whether it's rail, they all take enormous amounts of cement and steel. And if you really want to do a true lifecycle accounting of the kind of fixed-acid investments that has been put into place, and they're really accounting for the embedded carbon, I think you get a slightly different picture. So what, I guess, essentially what I'm suggesting is that to take into account the investments that are overtly labeled as green versus those that are not. And make no mistake about it, this has been a lot of investments, you know, recall the earthquakes in Sichuan two years ago, like one quarter of the $586 billion was allocated to rebuilding Sichuan. And so that's a lot of building reconstruction. And the fact of the matter is that I would be surprised if any significant proportion of those projects would survive the sort of rigorous environmental impact assessments that the government has promised it would undertake. In fact, this has been a tussle. In fact, Ministry of Environmental Protection came out early in the stimulus process saying that we won't approve projects that are high in pollution and high in energy consumption. But, you know, when the numbers shake down, they're essentially only turning down one-tenth of large-scale infrastructure projects. And the fact of the matter is, heavy industry, particularly steel and cement industries, benefited a lot from the stimulus package in a way that suggests that really the environmental ministry's power to enforce its environmental impact assessments was limited, or at least, or maybe a decision was made internally to sort of turn that process down a little bit. So, you know, and like I said, the investments in the highways, though, you know, the other story is that China is now the largest auto market in the world. And it's really only getting started, which is the scary thing. And, you know, for all we talk about the ability of developing countries to leapfrog the West and developing a new carbon future, I think what we're seeing in China is suggest that there's a lot more work to be done, because at least, I mean, it comes to transportation. It is repeating the mistakes of the West. And that is something that, quite frankly, planners will continue, have grappled with and continue to grapple with in terms of their energy policy. And then I wanna talk a little bit about the bank financing. And really, this is one of the distinguishing features of China's stimulus compared to US. Whereas in the US, what happened in the wake of the crisis that no banks were willing to lend because of the unique political structure of China and because all the major banks are owned by the government when the government decided to intervene in economy, it really opened the spigots for financing. And so, it became basically a more important element of China's stimulus than was the announced fiscal stimulus. But, you know, I don't wanna sound to be too down on China's sort of like green agenda because in actual fact, they are undertaking a very profound and committed undertaking to develop a clean energy industry. It is, you know, it's gonna be a pillar industry, name it as a pillar industry for the next five year plan. I see it as a strategic industry, not just in terms of economic growth and technology development, but certainly for national security and energy security reasons. You know, there's been a lot written about the really lofty renewable energy and energy efficiency targets in China. I won't talk about that, but surely all that is driving, sending the right market signals to industry and to investors, and that is driving a lot of growth in the sector. And most recently, of course, as a result of the Copenhagen process, China committed to a 40 to 45% reduction in carbon emissions as a per unit of economic output. An analysis by Renming University, which is one of the more prominent universities in China, suggested that to meet that goal, China would have to invest $30 billion per year for the next 10 years. And, you know, China is really investing across the whole value chain of the energy industry. So it's not just, whereas we tend to think that China's pro-es in the clean energy space is as a result of the manufacturing, you know, the ability to manufacture at such a rapid rate and productive rate. While that is true, China realizes that that alone won't get fully developed the clean energy industry. So as a result, they're investing a lot in deployment, setting the standards that would send the right signals to the market, and also increasingly, they're investing in the innovation aspect of it. Something that is not a traditional strength of the history of science and technology more than China, at least. And so they have national programs called the 863 program, the 973 program, where the energy sector, particularly new and renewable energy, is a target industry for development. And there was a new scientist article a few weeks ago that sort of highlighted China's new role and new emphasis in science and technology, talking about how now that Chinese basically leave the world in terms of number of scientific journal articles published. And increasingly as well, the number of patents being filed is on the rise as well. So another aspect of, you know, a couple of final points, you know, it's been clear through, as particularly through the lending activities from the banks, a majority of this lending just goes to state-owned enterprises, and they are another major vehicle of China's clean energy story. And it's something that is unique to China and a lot of East Asian economies. One notable entity with pointing out is called the China Energy Conservation Investment Corporation, or CESIC. This is a company, a state-owned company, that has about 180 subsidiaries and more than 11,000 employees, and they invest across the full range of cleaning energy technologies and the energy efficiency technologies. And more recently, they're going really big on solar, they're partnering with SunTech, which is by now the world's largest solar manufacturer, it's Chinese company, to build projects across China and also now they're venturing to seek projects in Europe. So they're going global in a big way. Looking forward to the 12-5 year plan and beyond, there's talk of a new package, particularly for renewable energy. Meteor reports last year suggested a 10-year plan of investments of $440 billion to $660 billion. Now, that hasn't quite transpired for reasons that no one is quite sure. I suspect that a lot of this, the shakeout of the recession and the implementation of the stimulus process probably painted or provided some reason for caution in terms of announcing a package of that nature. But I expect that somewhere in the next year, we would expect renewable energy targets and a major strategy going forward for the next two decades, really, on how China will charge its cost in clean energy. To summarize, I think, and to conclude, I think what we know about China's fiscal stimulus package is that it is helpful in providing a jumpstart to certain sustainable development sectors, but because they're competing priorities, the fiscal stimulus package by itself may have limited effect. I think what's more interesting in China's case is its long-term sustained policy, both in terms of its monetary policy, but also in terms of its strategic long-term development plans. And I think the lesson in this case for the US is pretty clear, as the Assistant Secretary stated earlier. ARRA provides a good jumpstart in green development in the United States, but it doesn't take us to the promised lander. I think we've seen that born out in China as well. What we need in the US is a more comprehensive approach rather than just two-year temporary measures and to get the cost of production correct. And in this case, it means, among other things, putting a price in carbon in the United States. So with that, I thank you for your time and I look forward to your questions later on. Thanks, Julian. Our final speaker is Kevin Book, and Kevin's got the fun job of coming up. We asked him to talk a little bit about, so when you think about the stimulus and how it's been laid out as part of this grand strategy for starting a sort of green new deal, green energy revolution, how do we gauge success for a lot of these disparate policies and are there sort of inherent contradictions within not only the strategies themselves, but the implementation and some of the programs that we've seen thus far. So, Kevin. Thank you, Sarah. Thank you, CSIS, for having me. I guess as batting cleanup, part of the job is to ask questions about the first four presenters, and I want to defer to, I think, an extraordinary breadth of material. I'm gonna focus essentially on three challenges. Trade implications associated with a deleveraging world. I'm going to talk about efficiency as the enemy of that which is clean and green, and a little bit about maybe a spoiler for clean and green investment known as nuclear power. Clearview Energy Partners is a research and consulting firm. We don't look at everything. There are firms that do that very well, several of them represented here on this panel. We look at the things that tend to be game changers, and so the nature of this presentation will follow from that. The OECD stimulus programs basically break down to spending tomorrow's money on yesterday's factories for today's workers. And so this brings us to something of a protectionist problem. Generally speaking, though, stimulus programs are effective. I'm sure I surprise no one when I say that there's a very strong positive correlation between jobs and GDP. Yes, that's right. Especially here in the U.S., it's almost perfect. And so if you look at what the jobs numbers implied about GDP in third quarter, they implied a 0.4% gain. It was 2.2%. In fourth quarter, a negative 0.2% loss, and it was 5.7% positive. Stimulus works. Clearly, it may not stimulate jobs, and there's an implication. The real question is whether or not these sorts of protectionist outgrowths of spending on your own economy block trade that might long term be a road to faster recovery. And we're not there yet, so this is sort of a look ahead. Certainly not a prediction so much as a what if. In the post-Kopenhagen carbon compliance world, there is a question. If global federalism didn't deliver us into a post-Kyoto single treaty world, is trade and tariff-based compliance where we're gonna go? Are we gonna tax other countries stuff? Or are we gonna penalize other countries for the way they behave by taxing non-energy stuff? Big question. The lack of access to credit has affected the energy end user in a way that I think isn't well appreciated yet. The demand recovery here in the U.S., if you look at this recovery, and we're looking at jobs now relative to energy, is about 15% flatter. So the number of BTUs consumed on average per new job recovered in the economy, 15% flatter than the last recovery. Why? Our hypothesis is that the end user of energy in this country, and the OCD in general, is having a harder time borrowing. It's making it harder to use more energy discretionarily. So what you have in this protectionist question is, nations are now competing for a smaller global market, at least temporarily, and a less fulfilling pie. The curve grows. So what can we see? This M theory. The ITCs in this country are for an origin agnostic solar product. The PTCs are for origin agnostic wind products. But you heard today, David Sandelow, talk about extending the manufacturing credit for stuff that's made here. Is this a bellwether of perhaps policy changes to come? $2 billion of conventional renewable spending, which was origin agnostic, was devoted to U.S. automakers in the clunkers program. Again, it's not yet clear whether we are decisively changing anything, whether it's a blip or a trend, but it could be an early sign. The next spoiler I promised was efficiency of the enemy. And I don't want to be cavalier about this because there are some well-demonstrated efficiency gains in global performance that we will never get to here in the United States. Germany's reduced the electricity demand in buildings from 150 kilowatt hours per square meter per year to 30. It's not likely that Americans in our building stock, our lifestyles will ever get there. On the other hand, when you look at what the market size looks like, power demand is likely to recover and grow if you have more slowly. Fuels are likely in the OACD to flatten, and here in the U.S. cafe standards could make them decline. So this is where you get into some of the conflicts of your efficiency gains and your new green technologies. And I think Ethan put it very well. There's a significant oversupply because the government bought a lot of stuff that the private market wasn't. And it's now out there. That capacity exists. So what does it look like if demand is weaker than expected? Natural gas is the first thing I think that provides some context. Fracking here and in Europe could potentially bring not only an abundance of local gas but also extra LNG. And gas prices could stay low for a long time. Obviously that will have impacts potentially on the profitability on the demand side of these green investments without a carbon price. Power demand fell 3.76% in 2008. It's estimated about one and a quarter percent last year. Electric power margins are not a driver necessarily for some of these higher priced green investments. So again, the environment into which, and then I think Ethan said it very aptly, into which the supply has been brought as one of weaker demand naturally. And here's the bomb waiting to go off. And it's actually I think one of the greatest success stories of the stimulus package. There is a genuine market failure in low income homes. They don't need motion sensing lights. They don't need programmable thermostats. They know where the light switch and they is and they know where the thermostat is. They've been off all year. What they need is insulation in the walls. Well what happens if you insulate buildings that never would have been insulated as a function of economic demand response? You shift the curve down a little bit. And so it might not be a lot but if we get 650,000 homes which is more than our estimate, you could destroy as much as 1% of electric power demand permanently here in the US. Again, it's a good thing but it makes it harder to be green. The Homestar program that's been discussed, six billion in spend this year might move a lot faster than the energy offices at the state level, which are still choking on a massive influx of new dollars. We think that money gets out eventually. Homestar could ride on top of that another 1%, one and a half percent. Let's talk about cafe standards. Another success not necessarily explicitly linked to the stimulus package but certainly supported it in the long term by electric vehicles investments. It's just that if you have a 40 mile per gallon car, the cost case for an electric vehicle at today's technology levels, today's subsidy levels isn't there. You come up $3,000 short over a seven year vehicle life at $80 oil. On the other hand, if you have a 20 mile per gallon car, a battery powered electric vehicle with a $7,500 subsidy, you're too grand ahead at the end of the whole thing. This is one of the challenges. As we make the fleet more efficient, we're raising the bar for competition from some of these portfolio shifting electric vehicles. Renewable fuel standards, again not explicitly stimulus but something to think about. New ethanol replaces eight and a half percent of gasoline demand in 2020 by our numbers. If all the advanced biofuels come from biodiesel, it's about another 9% of diesel demand in 2020. And taking a very small Pickens plan projection. So wake up America, we're not going all the way to every truck, it's not gonna happen. If it were just half of 18 wheelers that move point to point and have relatively defined refueling locations, we're talking about about 20% of distillate demand. Okay, so first of all, it's bad to be a refiner but that's not what we're here to talk about. The question is what does it mean for the green stimulus in this context where you have now got a manufacturing problem? Three parts gasoline, two parts middle distillates and one part products come out of your refinery and you've just cut the three part by about 10% and the two part by about 30%. You're already awash in distillate fuels. Now you have even more. Globally, not just here in the US as they proliferate through the world, do they undermine some of the cost case for electric vehicles? Last one, renewable portfolio standards. Keep coal constant, which is what the Waxman-Markey bill effectively said to do over the 10 years and you allow renewables to cut into the generation mix when it's not growing, you're displacing something. On a one-to-one displacement for gas, you could change the peak gas demand. It was about seven TCF in 2007 to as little as five and a half TCF in 2020. If you got everything that the Waxman-Markey went for and you replaced all gas with renewables, which isn't real, about 6.5 TCF in the Senate bill. This is a decline and the question is, is this the greenest outcome you might get? And again, when we go back to the broader question of carbon pricing and demand drivers, which I think is still very much the elephant in the room, here's the deal. If green replaces gas one-to-one and coal stays burning, then emissions are up by our models about 2.3% in 2020 versus 2012 and about 13% in 2030 versus 2012. Again, theoretical extreme. If gas comes in with green and displaces everything else, so RPS has come true on a state level or a national level, they're almost the same number. And gas fills up the incremental power demand or flat versus 2012 in about, in 2020 and we're up about 6% in 2030 on emissions. So interesting question with gas. Last thing, and this is very short. Yesterday, the President announced $8 billion in nuclear power loan guarantees and I think everyone should be asking the question, is this where clean goes? Yesterday, Australian Prime Minister, Kevin Rudd, said no, not here. In Germany, they are mothballing 30% of their generating fleet, which is clean and nuclear powered, 17 reactors. If that changes, and German sentiment changes, perhaps it changes everywhere. The question is, if you have an abundance of available nuclear power, micro generation, small reactors, whatever it might be, does it displace the economic case even with demand supports for renewable power? Will the story change? We are seeing already equity subsidy fatigue in countries like Germany and Spain who have paid out an awful lot. We have now just, the numbers we got this morning in our stimulus and implied 2.3 billion spent in grants, tax credits as grants so far. That's a lot of money. It's not Germany or Spain a lot, but it's a lot. Are we moving towards a world where we look at debt subsidies, loan guarantees as a way to sort of insulate the, first of all, the politicians who are making the choice, but also the governments themselves from the perception that they are merely spending on something rather than investing in something. And so to close, green stimulus, however you quantify it, and I learned a lot today. I mean, these numbers are spectacular no matter how you slice them, no matter how precisely you slice them and trying to divine what the China's natural resources department decides to tell you and figure out what it really means is in almost impossible task, Julian, you have my utmost respect. Globally trying to figure out all these stimulus programs, Nick has done a tremendous job and Ethan has quantified, I think beyond the can of any of his competitors, exactly what we're talking about here in total spend. The question is, does any of this work if you have demand conditions that because of either efficiency and abundance of natural gas, policy choice to back nuclear power, undermine this wonderful new supply that's been created? I don't know the answer, but I look forward to comments that might produce it. Thanks. Great, well, see I told you that was the fun job. We have got about a half hour left for.