 Okay, good morning. How's everyone doing? Good. We find Tuesday mornings are very similar to Monday mornings around here. It takes everyone a little bit of a couple of minutes to get set up. My name is Sarah Ladislaw at the... Oh, close the laptop. Excuse me. Hi, my name is Sarah Ladislaw. I'm a senior fellow here in the Energy and National Security Program and apparently I'm a little short. I wanted to welcome all of you here today for this really exciting event called High Impact Energy Efficiency. For us, it's a big deal because it's the first in a series that we're starting this year on the geopolitics of clean energy. In cooperation with CSIS, we're working with the Joint Institute for Strategic Energy Analysis and our good friend who is the director of that program, Doug Aaron, will be moderating the panel this afternoon. We chose to focus on the geopolitics of clean energy because given the really important and growing role that clean energy sources are having in the global energy mix, we thought it was interesting to look at what the geopolitical dynamics were of those changes in different parts of the world, looking at issues like competition and trade, things like technology barriers and some of the policies and even some of the definitions for what different countries think about clean energy. And so to start off, we started with what is probably the toughest, the... I guess the easiest tough choice when it comes to clean energy, which is energy efficiency. It's easy because everyone agrees that energy efficiency is a good answer for our economic or security or environmental concerns. It's tough because it's really hard to sort of catalyze energy efficiency gains in all the segments of the economy and all the sectors of the world that are interested in realizing those gains. So what we wanted to do was take this opportunity today at the confluence of a few major events that are coming up in the next couple of weeks. They're going to focus on new ways to really catalyze differences and changes in energy efficiency gains. And so what we're going to do this morning is we're going to focus on one particular event, the Clean Energy Ministerial that the Department of Energy is hosting with a series of other countries that's coming up in the next couple of weeks. And we're going to focus on any global event that's going to be happening the week after. And so today to sort of talk about what's going on both in terms of energy efficiency for the Clean Energy Ministerial but then also some of the other events we've got Rick Duke, who is the Deputy Assistant Secretary for Climate Change Policy from the U.S. Department of Energy and then Kateri Callahan to talk about energy efficiency from a global perspective what's going on in different parts of the world to sort of bring us a little bit closer to the energy efficiency issue. Kateri is the President of the Alliance to Save Energy which is certainly one of the leading groups on energy efficiency in this country and increasingly around the world. And so we're going to have these two distinguished speakers sort of set the scene for a panel discussion that we'll have on some of the specific initiatives and things going on around the world in terms of really kind of trying to reach those high impact energy efficiency gains. I would like to start by inviting Rick Duke to talk about the Clean Energy Ministerial. Thank you Sarah and let me start by thanking the CSIS for organizing this event and the whole series that you have in front of you very much appreciate the opportunity to speak with you all the day. I'll start with a bit of context on the Clean Energy Ministerial to give you a sense of how it fits in to the last couple of years of climate and clean energy history and how it fits in with the some of the other fora that you're familiar with. And I think the first point to make is that this is something which leaders both President Obama and his counterparts in other major economies have called for. They've called for their energy ministers to work together on what is a core agenda for all of these governments which is finding a way to drive energy efficiency and clean energy progress both through ambitious domestic action that is informed by international experience as well as through international cooperation where there are opportunities to move faster through international cooperation and coordination. And this dates back to July of 2009 in the LaLocula declaration where leaders called for a global partnership to address these challenges and out of that came a set of technology action plans that included a series of recommendations that we're now working to carry forward with the Clean Energy Ministerial Dialogue and I'll tell you a bit about that as I go forward. Later, Graham Pugh from our team will give you more detail when he's on the panel on some of the initiatives in particular in the efficiency area. And I'll just mention that the G20 has reaffirmed this leader level interest in the Clean Energy Ministerial Dialogue as recently as last November. In terms of other processes of course the Framework Convention is continuing to move ahead with its efforts through the Copenhagen Accord and then on into the Cancun outcome. And I think that the key point here is that the major economies represented in the Clean Energy Ministerial Dialogue represent a big share of the opportunity for deploying efficiency and clean energy so as such they have a central role in trying to address this problem globally. Other than that there is no direct relationship between the Clean Energy Ministerial Dialogue and the UNFCCC negotiations and I think in many respects that gives us far more flexibility and a smaller and more dynamic negotiating or it's really not a negotiating context a discussion context an opportunity to focus on actions among governments that want to move forward on clean energy and efficiency and we hope that all that is supportive of the broader aims represented in the Framework Convention negotiations. With respect to the institutions listed here the International Energy Agency the International Partnership for Energy Efficiency Cooperation and the International Renewable Energy Association these are examples of the kinds of existing technical institutions that the Clean Energy Ministerial aims to bolster through a political level dialogue and the idea is simply that by having energy ministers meet and take a close look at what can be done to drive faster progress on efficiency and broader clean energy topics we can create political momentum for these that empowers these existing institutions takes advantage of the technical work that they're doing and also quite frankly gives some impetus to the staffs and the respective bureaucracies that are driving ahead on nitty-gritty technical challenges like minimum standards for appliances or establishing the right kind of rules to integrate renewables into the grid and what have you. So the key point on this slide is quite clear you've got the major economies all represented in this dialogue a few other leading governments that have strong equities in clean energy and have shown leadership through this dialogue and more broadly and that means that with a small group of some 24 governments you're able to have a discussion that represents the lion's share of the market and try to move things through that dialogue. This kicked off last July here in Washington and Secretary Chu convened 24 governments and had what was in many respects we think an extraordinary start to this discussion. There was a public forum that was very well attended here in D.C. and then most importantly for us an extremely dynamic and positive dialogue among the ministers themselves and a series of initiatives were launched that I'll go into in some depth here in a moment and again Graham will echo that and go deeper in the panel discussion. The next such meeting is happening in a couple of weeks in UAE and the agenda for this meeting will include a clear focus on what national policies can do to drive energy efficiency and clean energy and it will also look at what we can do to better allocate increasingly scarce public dollars to drive the same kinds of clean energy success and we expect to kick off a series of engagements with the private sector and the non-profit sector and the regional round tables that we think will begin an extended conversation about these same topics with those key stakeholders. So let me tell you a little bit about the kind of underpinnings of the overall dialogue and I did not realize this was animated but we'll get there. So on the these are the core principles that Secretary Chu has laid out for this overall discussion and I think that they are important because they help to distinguish this from other existing fora and I think that what we hope will be a secret to success over time in this effort and I think the first is that we're really focused on results here and Secretary himself has said from the beginning that he only wants to make time for this if there's a clear line from the discussion to some kind of concrete impact in areas that would be smart grid technologies and the like and again I think we are getting down that path and I'll talk about some specifics in a moment. To get there this requires that all the governments involved be actively engaged and what we've been calling a distributed leadership model which means that it's not an American initiative per se it's a major economies initiative it's an opportunity for all the participating governments to work together in flexible coalitions on topics where they have particular equities and opportunities to lead and this also means that there's no particular need to negotiate any text or have any kind of a formal communicate from the meetings and this is in our minds an advantage because it means that we don't have to have a sort of least common denominator outcome but rather we can look for opportunities to move ahead ambitiously among the subsets of participating governments that want to do so and so the last bullet is speaks for itself I think in terms of accomplishments to date lots of great animation there we've got a set of initiatives that were launched last July and I think importantly with those initiatives came some concrete targets that were now actively moving ahead to try to realize I think the most ambitious of the targets is to be able to avoid 500 mid-sized power plants over the next 20 years with the efforts of the ministerial on that note we've already started to track the kind of impact that participating governments are having through mechanisms like appliance efficiency and I'm pleased to say that even since this effort began there have been dozens of power plants avoided through minimum standards work and other kinds of appliance efficiency policies initiated by the participating governments this will take time for these of course these benefits to be realized in the marketplace but the rules have been put in place the progress is being made and we want to encourage and empower participating governments to do much more of those kinds of transformative energy efficiency and clean energy policies there's a second sub-dash there in the area of energy access and I'll talk a little bit about an initiative that specifically addresses an opportunity for what is really high efficiency and clean off-grid lighting appliances and then we've been focusing on some of the clean supply challenges and an initiative to help encourage leadership by women in the clean energy field and I think the key point that's really perhaps best represented on this slide is that and you can't really see it but this matrix here shows the set of 11 initiatives against the 24 governments and the dots representing participation I think the key point is that there are a lot of dots but of course it's not a complete chess board and that's entirely appropriate in our view it fits with the distributed leadership model that we're trying to encourage and we don't expect or require in any sense that all governments participate in all these initiatives rather we want active participation in those initiatives that governments choose to involve themselves in and broadly we've grouped these initiatives into a set of energy efficiency efforts some clean supply efforts and then some cross cutting initiatives as well I'll talk about one and to some extent three in my remarks this morning starting with a core initiative and a probably familiar chart this is certainly something that Secretary Chu likes to show frequently and it's because it's a compelling story which is basically that when you look at the history of refrigerators in the U.S. context you see a dramatic improvement in the cost per refrigeration service unit in effect starting when appliance standards became active in the refrigerator area and then importantly that progress has continued to this day and we see prospects for it to continue well into the future in this one important product category so even as the size of the units has gone up the costs have come down and the energy efficiency has improved and minimum standards have been a huge part of driving that success in our estimation the super efficient equipment and appliances deployment initiative aims to encourage much more of this kind of outcome more globally and I mentioned globally because in many cases appliances are really global commodities you look at something like televisions and they're basically identical in all markets and so there are major opportunities for governments to borrow from the same technical analysis when setting their own minimum standards or to borrow from the same playbook when looking at incentives for very high efficiency televisions and to work together on other joint challenges that involve raising the ceiling and looking for the very best televisions or refrigerators or other appliances to enter the marketplace more quickly and then clipping off the worst performers by setting minimum standards and driving the kind of progress that you see here in the case of the refrigerator market in the US. Again dozens of power plants already avoided by rules that have been initiated or completed in the last year by participating governments that will take decades to have that impact realized but the rules have been achieved and then much more to come and seed this initiative for the ministerial is already starting to have impact one of the participating governments has already used some of the related technical analysis to inform its LED standard and there's much more of that kind of momentum building in a series of active working groups in this initiative. Briefly on a second efficiency related initiative this is the global superior energy performance partnership key on the right hand side of this page is the 11 marquee companies that have agreed to pilot the approach and the basic idea is that in large industrial factories as well as in large commercial facilities there are opportunities for those managing those facilities to do a better job on driving efficiency gains over time if they measure more effectively how they're doing and if they benchmark and so this is a certification program or really a network of national certification programs that are unfolding building on the ISO 5001 standard and we are excited to work with these companies including a couple in India that you'll see on helping to make this change happen you'll also note that there's a set sector specific working groups represented here and these are going to be carrying forward some of the excellent work initiated under the Asia Pacific partnership and now with a broader scope that includes the full range of major economies represented in this dialogue and I'll move on to talk a bit about electric vehicles in the electric vehicles initiative this is importantly something that was actually brought forward as an idea by China and we have worked with them on bolstering the initiative and implementing it and set a robust goal to encourage all the participating governments to hit their own self-announced and really pre-announced goals for electric vehicle deployment in such a way that by 2020 we would see 20 million electric vehicles on the road among the participating governments and there's a whole range of ways that we can work together on this including looking for key gaps in public R&D investment in technologies like batteries and sharing experience with what it takes to create the infrastructure for deploying electric vehicles at scale just touch briefly on another initiative with even better animation the smart grid action network is a actually a new technical institution like the International Partnership for Energy Efficiency Cooperation or IRENA that I mentioned earlier in this case it will be launched in just a couple of weeks in Abu Dhabi as an implementing agreement within the International Energy Agency structure institutionally and it will be carrying forward one of those technology action plans that I mentioned earlier a central recommendation for the smart grid technology action plan was to create an opportunity for governments to work together on this suite of emerging technologies that are so critical for both efficiency and clean energy integration and so we've worked with partner governments in particular Korea and Italy but also now with broad participation I think at last count we were something like 19 governments that are participating in this initiative and we've gotten to the point now where we can launch and get to work on an agenda that includes a whole range of important topics where some joint work on simple questions like understanding what's happening among participating governments in this space so that you have transparency about who's doing what and then also creating some tools which will be of common interest across the different governments and even sub-national governments a key point being all looking at similar questions around deployment of advanced meters or advanced transmission technologies and so on and so the International Smart Grid Action Network will look for common tools that can be applied by all of those that are evaluating multi-billion dollar investments and trying to encourage faster and better analysis of what makes sense given respective conditions just say briefly a few words about the energy access initiative that I mentioned before and I mentioned it here in part because in many ways it is ultimately an energy efficiency initiative this is an effort that builds on a successful program from the International Finance Corporation it is 3 to 1 financed by Italy and the US government with 30 million from Italy and 10 million from the US over a a year period and we think that it will get to millions of households reached with high efficiency off-grid appliances that replace far less efficient and more costly fuel-based lighting and really when you compare a kerosene wick lantern with a high efficiency LED lantern in many cases powered by solar you are looking at something like a factor improvement in the cost effectiveness per lux hour produced the key challenge in this marketplace is that there are major quality assurance issues and there are also some challenges to scaling up the supply chains and this initiative will take a successful model in the East Africa context and help to bring it to a global scale including in places like India and Indonesia for example of an area where a global approach and cooperation among these participating governments can help us to address a key efficiency opportunity just wrap up here with a final initiative which is really a cross cutting initiative the clean energy solution center and this is a new portal which is aimed at policy makers first and foremost it will be launched in a couple of weeks and we are in Abu Dhabi for the second clean energy ministerial and the purpose of this is to create a single portal that draws on all the existing portals and creates a synthesized set of facts for the staffs of ministers participating in this dialogue including well into the bureaucracy those that are trying to implement rules on appliances or other kinds of efficiency and energy and we want to in effect create more transparency more clarity and a better sense of what are the policies that are put in place and what are the deployment outcomes that are realized by these participating governments over time so this is a place to look at how we are doing relative to the 20 million electric vehicles goal by 2020 this is a place where we can also try to track how we are doing in terms of implementing those minimum standards on appliances and what kinds of savings we are realizing collectively and we also expect that there will be some useful tools for policy makers that are struggling with some of the harder challenges of implementing these complex at times policies and I just want to pause on that point and note that one of the things that this dialogue has already in eight brief months really underscored for me to which participating governments face a capacity challenge. There are just not that many skilled professionals that know how to do successful rulemaking on minimum standards or these other kinds of tools and so everything we can do to empower them to move more quickly and to borrow from tools that can be used collectively for example common technical analysis of appliance efficiency potential and costs and common approaches to looking at what constitutes super efficiency if you're looking at government procurement of the very best equipment or appliances these kinds of things when shared give a chance for really scarce personnel in respect of governments to do more more quickly. The dialogue itself we also hope put some attention on their efforts and gives them a chance to appropriately staff up and move ahead with support from the highest levels in their energy ministries. So I'll just close with a note that this is not the last that you'll be hearing from us. In addition to the Abu Dhabi meeting in a couple of weeks there is a third clean energy ministerial already programmed for London in early 2012 the date is still to be determined and we have a fourth government very exciting location that is going to be announced in Abu Dhabi. I can't announce the location just yet but we've secured the fourth host and in fact there's another government I think ready to go for the fifth ministerial. And that I think just a close is essential because it has only been eight months since we began this effort when you're trying to work through national policy implementation and international coordination in a domain as complicated as energy efficiency. It takes time to get to impact. We do feel that we're off to an excellent start and we're excited about moving ahead on this and the continuity that's provided by these annual meetings is essential to driving that forward. So thank you. Thanks Rick for that great overview. It certainly sounds like you've got a lot to be focusing on in the next two weeks and we'll be looking forward to hearing more about how the ministerial goes. What I'd like to do now is welcome a long time friend and good friend of the CSIS Energy Program, Kateri Callaghan, to do an outlook on energy efficiency gains globally. Thank you. Thanks. I'd like to start by thanking Sarah and Frank and the whole team here at CSIS for having me over this morning. It's a real delight. I also owe them a debt of gratitude. They actually took on my daughter a couple of years ago as an intern over here and started her well in her professional career, so thank you for that. I just want to do a couple of things with my brief time with you this morning. First I'll spend just a moment or two introducing you to my organization, the Alliance to Save Energy and then spend another moment or two to look back at what we've been able to accomplish with energy efficiency and I'm going to use the United States primarily as the platform for talking about what's going on globally because we're here today but I will keep threading in and weaving in I hope throughout the presentation efforts that are ongoing in the world and I think I would agree wholeheartedly with what Rick has said and with what the Clean Energy Ministerial is doing and that is the sharing of best practices and solutions as a way to move forward and what you'll see in the presentation that I'm going to give today is that there's a lot of work in the same areas and on the same types of issues whether that's appliance standards or building energy codes or looking for incentives and investment. We'll spend a couple of minutes because they asked me to talking about what's going on today and what we can expect in 2011 and then take just a brief look at what I hope we will see in the 21st century which is really deployment of energy efficiency as our first and our largest resource for meeting our energy requirements. So who's the alliance to save energy? We've been around for three decades we are a non-profit group comprised of an alliance of policy makers, business leaders, environmental groups, academia, consumer interest groups, just a wide array of all of the stakeholders who are interested in and impacted by energy use and how it affects our environment and our energy security and importantly our economy. We have over 80 individuals now we've grown that large over the course of time we're headquartered in Washington DC but we have initiatives and operations all over the world. We have offices actually in the Ukraine, South Africa Mexico and India. The alliance is really very unique in the NGO world because we have active leadership by sitting members of the U.S. Congress and you can see pictures of those folks here. We are a non-partisan group we bring together Republicans and Democrats, we bring together members from both the House and the Senate to work with us to advance energy efficiency particularly their interest in through public policy. They are joined on our board by about 30 other leaders from business, from academia from environmental groups. We have been very blessed with this leadership and I think it's been one of the secrets of our success is working, having the business community having the researchers working directly with members of Congress who by their positions can put forward and see energy efficiency legislation enacted into law. Another thing that makes us very unique for an NGO is the active participation of the business community. We now have over 170 businesses and organizations who are helping us with our work. They are not controlling our agenda, that's controlled by our board of directors. They are however lending their voices in the policy circles. They are providing resources into the programmatic work that we're doing around the world to build capacity to improve water, energy transportation related issues. So we've been very good at engaging a strong leadership group of businesses from around the world in our activities. So I said we take a look backwards for a moment. I love this slide. This is information that our folks have put together that shows that through a combination of technology improvements through public policy we are now offsetting the need for 50 quads of energy in the United States. What that means is if we hadn't made the improvements, if we hadn't put the public policies in place improved the technologies improved our productivity we'd need 50 percent more energy to power our economy today than we are currently using. Can you imagine what the price is that the pump would be and what you'd be paying on your utility bills were that to be the case. It's also important we claim energy efficiency is the largest resource and I think this shows it very clearly is providing more to powering our economy right now than any other resources including King Cole. One of the things that's driving energy efficiency and we're seeing this around the world is public policy and when we look at what that public policy needs to be different countries, different economies are going to approach it and have different schemes but typically you will find that all of the activities are centered in these four buckets investment and research development and deployment keeping money flowing into developing new technologies so that we can keep bringing that technology forward and driving it into our economy for efficiency gains providing incentives so that once you have new technology developed you can help it gain a foothold in the marketplace against those technologies that are entrenched in widespread use. Once you gain that foothold then you have to go out and educate consumers doing outreach and educating them about the benefits of that new energy efficient technology. We're right on the cusp of this with the new lighting changes that we're going to have in the United States and also in other places around the world we're going to need to educate people about what those new lamps can do for them, how to pick the best light technology for the application. There's going to be a very very significant education and outreach component there. Finally once the products have made it and integrated into the marketplace in a real way that's when you step in and you put the standards and the codes in place that require manufacturers that require building owners and building builders, that sounds a little awkward, building builders to meet minimum efficiency standards and to take those products off the market that are no longer efficient and can deliver what the other products that have been brought forward can and that cycle can replay and has replayed over and over and over again. And where you see it in the United States starting in 1975 when we put the first appliance standards in place and through a series of other legislation we have again at the federal level been driving energy efficiency. You can see we've been driving it in all sectors of the economy. There was a lot of activity as one might expect in the 70s when we underwent our first energy crisis. That activity cooled as energy prices fell in the United States and we went into a period of relative unconcern if you will and disinterest in energy at a time when we really should have been ramping up. The policy at the federal level picked back up in 2005 and 2007 again it tracks when we saw very, very significant rises in energy prices particularly in oil and gasoline. In 2009 with the fall in the economy we put an economic stimulus package into place and I'll mention that in a minute that had all of the various policy tools the drivers embedded in it. As I said, this is a chart putting together some information from EIA historic data. The pink line is what EIA projected would happen in terms of growth in energy demand in the United States over the course of time and what you can see is the actual energy use in the blue line has been significantly reduced from that. Now that's not all public policy but public policy has played a role and what I want to show you there in particular on that is that annual energy outlook in 2005 before an enactment of EPAC 2005 and the 2007 act was significantly higher than what has proven to be the actual case and a lot of that reduction in the demand has come through the public policy. The bad news, good news story is that energy demand worldwide continues to grow. You can see that top dotted line though it actually has come down a bit from the projections that were made just three years ago. A lot of that has to do with the economy but some of that has to do with worldwide public policies that are being put in place to cut demand. In the United States what we've done as well is to up production. A lot of the increase in production is coming from biofuels but also from the increase in gasoline prices which drives domestic production. But consumptions come down a bit and again this is a result in part from the economic downturn but also importantly in part because of the recent public policies that we have put in place. We still have a long way to go to close that gap. I'm going to skip over those. The only other thing I want to mention about our energy use because this plays very significantly in terms of driving public policy and gaining attention of policymakers and that is the impact of our petroleum use on our trade deficit. Right now petroleum as you can see in this chart represents about $265 billion of our overall trade deficit. That's $850 per man, woman and child in the U.S. It's very significant and it was even higher. It was about $1200 per man, woman and child when the price of oil went to its peak in August of 2008. There are significant opportunities. This is why folks are focused on energy efficiency to take down that growing demand to address national energy security concerns that I just mentioned and to improve our environment. This is work done by the McKenzie Global Institute that shows, the top bar shows demand growing between now and 2020 and each of the blue chunks underneath it shows where there are cost effective opportunities for energy efficiency. These are investments in energy efficiency that have an internal rate of return of 10% or greater. McKenzie has looked at this and said we as a world invest $170 billion a year in energy efficiency. We can realize a net savings of $900 billion a year. So these are investments that pay very significantly back into the economy and you can see that every sector of the economy has significant room for energy efficiency gains. We in the United States as well as countries around the world, when we put in place our economic stimulus bills, we looked at investment in clean energy solutions. And in the U.S., we put $65 billion made that available out of a total budget of about $90 billion for clean energy investments. So about 72, 73% went to energy efficiency and this shows you through a wide array of different programs from weatherization to smart grid to investment in government buildings. This is an example of what we've done in the U.S. and globally if you take a look at the investment in energy efficiency and in clean energy as broader writ about half of the investments being made by the world's governments in the clean energy and climate sector are going to energy efficiency. So this is something again I'm using the U.S. as an example but this is happening worldwide and those monies are going into our economy even as we speak. So it's time I say to seize the day and look at 2011 and where we may go from here. One of the things that is going on currently and there were just hearings in the Senate last week is that we are trying in the United States to put forward and enact consensus appliance standards. These are standards that the manufacturers of the products and there are a number of products. I have some of them. There are dozens of products in this bill but I've listed some of them out for you here. These manufacturers have agreed to these energy efficiency standards. The advocates, the environmentalist involved in it have agreed policy makers from both sides of the aisle represented here by the two leaders of the Senate Energy Committee, Senators Bingham and Murkowski have agreed that this is a step forward. This follows what countries around the world have been doing in putting forward consensus or putting forward appliance standards setting efficiency levels for products and equipment. It follows a rich tradition and Rick mentioned the power generator but we have been setting standards on all types of appliances since the 1970s. You can see here that the savings are significant whether you talk about energy saved it's the equivalent of 4.6 million homes a year by 2030 or in dollars, $43 billion in net economic savings to the country by putting these in place. That's a path we can take. Another path we could take is rolling back consensus standards which is also something that the U.S. Congress is trying to do today both on the House and the Senate side. I mentioned light bulbs earlier. We put in place as part of the 2007 act a technology neutral efficiency standard that affects all of the general purpose lamps in the United States. Those standards go into effect in 2011. Stores like IKEA have already taken all of the products off their shelves that don't meet these standards. Manufacturers are producing lights that meet the standards and these are still incandescent bulbs and regardless of what you may have heard about this halogen incandescent lighting can meet this standard. These are technology neutral so you will still have incandescent technology, you will still have CFLs in the marketplace and you'll have light emitting diodes so lots of choice in the marketplace. If we were to roll back these standards which again the manufacturers have agreed to and are working toward the cost of the economy would be about $15.8 billion $200 a family because of the loss in the energy savings that we would otherwise realize through these standards. In the investment the president has proposed a huge step forward even at such a time of federal deficits because there's a belief within the administration and I think Rick pointed to this clearly that we can't afford not to invest in clean energy and energy efficiency. And even while he's paired back very significantly other parts of the budget he's proposing a doubling in the investment in energy efficiency. I've put down some of the new initiatives the better buildings initiative in particular as part of his proposed budget for fiscal year 2012. However others of the federal policy makers are looking at cutting very significantly investments in energy efficiency. You have HR1 the continuing resolution by the House proposed to cut about 35% of the EERE energy efficiency renewable energy budget for 2011 for this current fiscal year. They would stop all funding to the weatherization program which has provided weatherization to 6.4 million Americans which is saving those families about $450 a year on their energy bills. They were not successful in getting HR1 through but the two continuing resolutions that we've seen while they work through the differences between the House and Senate between the Republicans and the Democrats are continuing to slash and they're slashing at a rate that gets them to the levels that I'm showing you here in HR1 so we're calling this death by a thousand cuts or more more precisely death by however many weeks are left in the fiscal year budget 43 or 44. Again looking at what's going on here and you're seeing this in the United in other countries as well and it was mentioned by Rick governments are leading by cleaning up and getting their own houses in order. Here we have the executive order on federal leadership it's called the green gov order lovingly by those that are working under it but the federal government has for many years for about 20 years now been working on improving energy use within its own systems the federal government's the largest energy user single energy user in the United States so what they do matters and they are bringing to bear the federal purse and the power of that federal purse to begin to transition and change not only their own energy use but those of others in the United States and around the world so let me get off the US for a minute and look at what's going on in Europe there are several different European efforts underway the Europeans have put in place a goal now it's not a mandatory target but a goal of reducing their energy use 20% by 2020 by their own admission if they continue with the programs that I'm about to show you and at the pace they're going they are likely to make only half of that to make only 10% by 2020 so they are hard at work in putting in play in watching what's going on and looking at additional programs that they may need to put in place so I'm going to talk first just real quickly about the eco design this again looks at appliance standards just as we're doing in the United States there is an initiative underway now on standby power for 9 different products that when it is put in place is projected to save about 12% of the electricity consumed in the European Union so very significant what they are doing on appliance standards they're working on buildings in the United States we just got in got the international codes committee to put in place a new 2012 code that will improve the energy efficiency of buildings by 30% in the European Union they are working on something called the efficiency program for building directives and there you can see they're looking at a methodology for calculating integrated building energy performance just like we are in the United States minimum standards for new construction and then energy certification for both the new and existing buildings and regular inspections so again very much a framework like you see in the United States again they just put out a new report that showed that they are off the target of making their goal of 20% reduction so they are going to look again in 2013 at the outcome of the various programs that they have in place and new ones that they are putting in place currently and if they do not meet their goals or don't project that they are going to meet their goals in 2013 they will look at making that target mandatory and binding on the member states one of the things that we've been doing in Europe to try to make similar I've got the same same problem you have with your with your animation we have created a sister organization called the alliance to save energy it's populated and led by leaders from the government and from business in Europe and they are going to be working very very hard to make sure that the EU meets its policy directive goals and that the policy makers continue to work with the member states on implementation which is a very very significant issue when you look ahead at what we're going to do in the United States and I hope will happen in this congress if not in this year certainly we have work as I mentioned on appliance standards that's already teed up and ready to go we have building energy code legislation that was part of both the climate bill that passed the house and the energy bill that came out of the senate energy committee in the last congress ready to go we have legislation that will correct the problems that we have in the mortgage underwriting and appraisal process that is impeding energy efficiency in the residential and the commercial building markets tax incentives, rebate programs for residential for deep residential retrofits, energy efficiency retrofits and building retrofits and then potentially an energy efficiency resource standard or a clean energy standard that would allow energy efficiency to demonstrate 100% compliance. We also will be working on appropriations keeping those at or above the investment levels proposed by the president and looking at the regulatory arena with the work that's being done by the environmental protection agency to make sure that energy efficiency is advantage as those rules are put forward and put into place. So we've got a lot to do and we've got a long way to go if we're going to be energy efficient in the world and in the United States and I put up two bars here I like to use Japan as a reference case because they are an industrialized nation one of the power houses in the world and if you look at their total primary energy consumption per capita they are very very significantly below where we are here in the United States. So I put this up as a challenge to us all that we can do better and how can we do better we can learn from one another. Sarah set me up for this as did Rick and so I don't feel so bad about the blatant advertising I'm doing here but we are going to have a meeting in Brussels Belgium in 2011 that will bring together the leaders from around the world to look at what the best practices are to look at what the common challenges the common barriers to driving energy efficiency into the market are and to come up with solutions that can be custom tailored to these various economies and to these various circumstances whether it's in the industrial arena whether it's transportation or whether it's in the built environment I hope all of you will plan to join us we already have people registered from 42 countries I'm told and we have some of the leading participants of state as you can see the EU president will be on hand to speak along with a cast of others so with that I thank you for your time and I look forward to the session this afternoon great that's wonderful see I said early April is all about energy efficiency so should you want to go to the UAE and then Brussels you can just make a trip out of it we were a little bit behind time but it would be an awful awful shame to have Rick and Terry here without taking a few questions those of you who are regulars you know our ground rules but I'll certainly repeat them please wait for a microphone please state your name and affiliation and if you can make your question concise and actually in the form of a question that would be much appreciated what I'm going to do is I'll take a few questions just so we can get a couple on the table and then Rick and Terry can answer them okay I have the two in the back there and then one on the way back good morning Frank Stewart with the American Association of Blacks and Energy first of all let me again thank you for your presentation and also acknowledge the enormous work that the Alliance has done over these many years one of the things I wanted to mention today and ask your opinion on was some recent analysis that suggests that if you look at the entire system in terms of appliance performance to include the utilization of particularly new technologies that the sum the net sum does not reflect the projection that the actual utilization of newer technologies that are more efficient creates greater usage not unlike the VMT issues we used to face in the past have you looked at those pieces and are you including within your analysis an understanding of the impact of the user and his adaptation to the new technologies okay great we'll take the question right next to you yes I'm Phillip Hughes with the White House Writers Group and wanted to pose a question particularly to Rick Duke your hopeful remarks about the development of electric vehicles and the targets for electric vehicle deployment that you mentioned I'm just wondering how the achievement of those targets and the ambitions we have for electric vehicles are swearing up with generating capacity to power them especially in light of the nuclear accident ongoing in Japan which is going to surely make a dent in the what seemed to be an emerging renaissance of interest in nuclear power the reputation of coal the difficulties of expanding much our hydropower capacity where's this electricity going to come from okay and then Rachel hi thank you both I'm Rachel Posner I'm with the energy program at CSIS sort of on detail right now in the Department of Defense my question is very similar to the question that was just asked looking at targets and the countries that you talked about that are setting these energy efficiency targets I'm sure it's different in each one but is there a general process that's followed or a specific group of people that are responsible for deciding what an energy efficiency target is what year is it going to be and how is it realistic is it 20% is it 25% why isn't it 30% how does that process come about and how maybe is it different in different countries that's interesting we'll take those three questions and either one of you can start to address any component piece I'm sorry the difficulty as you might imagine is that there's a wide variety of both ability to get things done and the rate of speed at which things can be done in various countries so it is a country by country and as I mentioned in my remarks one of the concerns that people that are operating in that environment and who want to drive energy efficiency is that you can have these great directives set at the EU level but it's all about implementation and I would give you the example here in the United States on building codes they're set by a national code setting body they're confirmed by the Department of Energy certified and then the states have to adopt them then the municipalities have to enforce them so we have a real patchwork in the United States going from that 30% what I'll call the holy grail of the national code that was just adopted down to what's actually happening on the ground level and I think that that flows very much the same in Europe the second on the impact of the user analysis there is work that's being done on that and I will see what I can find I don't know whether there is anything that comes out of it I mean certainly this is something that people have looked at very significantly and very closely I guess my comment to that would be where we're growing the plug loads in the homes are in consumer electronics that's where you're seeing the most significant growth and in vampire use of vampire power so those pieces of equipment like your TV that use power even in the off mode so that's where I think we need to spend a lot of our time and because that's where we're seeing the growth I'll leave electric vehicles to Rick. So I'll start with electric vehicles I think that the question is an interesting one when you look at the electric vehicle targets that are in place though it's a question in some ways for a decade from now or two decades from now because where we are today is such a nascent market for electric vehicles it's an exciting market there's a huge amount happening there's real momentum but we need to work quite hard to get to something like this 20 million by 2020 goal and if we get there then by 2030 you could start to see a very meaningful impact on power consumption from electric vehicles and we hope to be in that place in order to have the associated national security benefits and economic benefits and clean clean energy benefits that would come from that kind of full scale national and ultimately global deployment of electric vehicles but it is starting from a very small base so the implications for electricity consumption for the next decade are really quite modest and in many ways the challenge is to make sure that they become more significant than the current prospects it's just going to take quite a bit of time to start from essentially scratch on electric vehicles and get them to the point where they are substantially affecting our power requirements just add something very quickly to it it also I think has a lot to do with when you are going to charge those vehicles and if we can get the charging off peak then we have I think much more ability to take larger and larger numbers so there's going to be a lot of work that's going to be needed to be done to make sure that people are charging the vehicles at time when energy when the demand on the electric grid is lower not when it's at its peak that's absolutely correct and of course in certain geographic areas individual states and so on you may see meaningful impact on load sooner and having these kinds of time of use charging strategies and other approaches to optimize the way that electric vehicles are integrated into the charging system will be helpful I think that's an example the kind of thing that can be learned from sharing experiences in the cities that are participating in the electric vehicle initiative through the ministerial and I think it's also the kind of challenge that we'll see a whole range of governments facing once electric vehicles begin to get to scale interestingly government of India that has been a very active participant in the clean energy ministerial recently announced their efforts to scale up electric vehicles which is striking given that they of course face significant power capacity shortages and I think that's part of the long term vision for the government of India to move towards a clean and secure energy economy and I think perhaps part of that I don't know the exact details of the motivation but I think part of their rationale may be that this really is a long term question it will be some time before electric vehicle uptake in India begins to have a meaningful impact on their power demand requirements they begin the process now of rolling things out rationally it can become a part of their overall energy system in a way that will ultimately be helpful to them I think I'll just make a brief plug pun intended for the clean energy standard as well when it comes to the question of making sure that electric vehicles are definitively clean of course making sure that they're charged with clean electricity is an important part of that and I think that you reference the crisis in Japan and some of the other challenges to clean supply scale up and I just want to underscore that the vision laid out by the president and the state of the union around the clean energy standard is a fundamentally technology neutral approach among clean energy options and as such is a very resilient strategy to drive progress on clean energy and one benefit of that is that as electric vehicles get to scale in the context of a clean energy standard you would ensure that they are charged with increasingly clean electricity over time very briefly on the question of targets the third question raised I would just suggest that at least in the context of the work we're doing through the clean energy ministerial efficiency targets are ultimately up to the respective governments participating in these dialogues but there is some real value of the underlying technical analysis that motivates those targets and in the case of appliances for example that applies both to what's the appropriate minimum standard for my government well it's helpful if I can draw on an analysis of televisions or whatever it is that has been created through this super efficient equipment and appliances deployment program which by the way I should mention has over 15 million in funding over a five year period for just this kind of technical work that we will be useful to the European commission and to ourselves and India and other governments actively participating similarly on the high end there are opportunities to look at common development of performance based standards for procuring the very best equipment and there's a really compelling group of companies that includes Walmart and Target and many others that the department of energy has worked with on setting performance based procurement standards for high efficiency air conditioners through this dialogue we're looking at internationalizing that kind of an approach on the high end as well but at the end of the day these are questions that individual governments need to separate themselves that's excellent you know in the interest of saving some time for our panel discussion just following this I think we're going to end the first part of our program you know in addition to thanking Rick and Kateri for their excellent presentations I also want to congratulate them on what is a an enormous and impressive amount of work that we're doing on the energy efficiency and clean energy front at a time where we've got so much going on around the world you know with the sort of heart wrenching disaster that's going on in Japan but also the furious activity historic activity that's going on in the Middle East and the impact on oil prices it's good to know that folks are working equally as hard on the clean energy and energy efficiency front so you should be congratulated for that so please help me thank Kateri and Rick I don't know it just went quiet I'd like to invite Doug Errant who is the director of the joint institute for strategic energy analysis and our next panel up for our discussion of some of these clean energy efficient activities somehow it was unplugged and the battery died but we're good now yes this is what we're looking for we need when you all have a chance to refresh your refreshments in the back we'll go ahead and try to get started here in another short few seconds if we can we want to be respectful of your time and also the time of our experts here so my pleasure to co-host this event along with my colleagues at CSIS always a pleasure to be here and to engage in I think a very mindful dialogue about energy issues in relation to global issues as well as national security and geopolitics and in particular I'm pleased to moderate the following panel which really furthers the dialogue around energy efficiency in a number of different aspects and I think that you'll find the flow of the content very nicely following on from the overviews of Rick and Kateri what we're going to do is ask Graham Pugh to begin with detailing out a bit more about the energy efficiency actions underneath the Clean Energy Ministerial and then we'll follow on and look at some corporate perspectives as well as some global perspectives on the energy efficiency potential and then Russell is going to be the cleanup batter at the end to really focus on the finance years perspective and I think what this brings to bear really is the combination of understanding of how policy interacts with technology and industry and finance and that we really need all pieces of the puzzle to be effective in order to bring solutions to bear so with that kind of overview and introduction please join me in welcoming Graham Pugh who's going to talk more about the energy efficiency actions underneath the Clean Energy Ministerial thanks Doug and thanks very much to CSIS for arranging this event and it's a pleasure to be here and among friends and on such a good panel I want to extend some of the remarks that Rick made about the Clean Energy Ministerial to focus on just two initiatives and give a little bit more detail on those mainly the super efficient equipment and appliance deployment initiative and the global superior energy performance initiative so now for the wonky part of our program you know I think the key notion here in particularly in the appliance initiative is one of global market transformation it's clear that it's incredibly important to shape markets to accomplish the objectives that you want to achieve but there are a number of tools at our disposal that we've learned about over the years that we can apply so we tend to think when we're talking about equipment and appliances that standards are the only solution but we know in fact that there are a number of different tools that can help us achieve this objective so keeping in mind the three fundamental principles of this initiative which is number one raise the ceiling by pulling more efficient equipment and appliances into the marketplace number two raise the floor which is the minimum standards approach and then number three do the supporting technical analysis that's necessary to identify the greatest opportunities in markets around the world and so that's what we're trying to do in this initiative and there are actually five different working groups in different approaches for this so one of them is the standards work that Rick spoke to and I'll tell you a little bit more about but another exciting program that we're set to launch in the upcoming ministerial is an awards program for the most efficient product category that I'll tell you more about further there's the role of incentives which is how more efficient equipment and appliances can be pulled into the marketplace and their roles for energy providers as well as governments in this utilities are often have the most direct connection to electricity consumers and so they provide a very direct means for delivering incentives to change consumer behavior and then I'll talk about procurement and the role that procurement can play both procurement in terms of sometimes seeding the market making the initial investments that required to really scale up particular categories of efficient equipment and appliances and also the role that key private sector players can play in procurement and finally just a note about the cutting aspect of doing the analysis necessary to identify the high value opportunities so you know just a bit on the standards front if you take the graph that Rick showed about which is one of the secretary choose favorites about the historical rate of improvement of efficiency in refrigerators and you extend that as Kateri indicated across a number of appliance categories where minimum standards have been applied or alternatively you look at the impact of labeling programs for example in the EU that really accomplished very similar gains through different policy mechanism what you realize is that there are definite ways that we can improve the rate of improvement of efficiency in these product categories over time but that what we've accomplished to date has largely been a series of independent national actions now we recognize that those actions will always be taken at the national level nobody is at this time anyway advocating for an international standard that would apply to all governments but at the same time if we're doing technical analysis to understand what the potential is in a product category in the United States why not share that with the EU when we're sourcing for many of the same manufacturers so harmonization of the test procedure sharing of the analytical basis for making progress on these standards or labeling type of activities is very important and so that's what we intend to do and so it's you know if you imagine that you have these types of activities you can if you're going about the process of implementing these more efficiently you can apply them more broadly to other product categories you can perhaps synchronize the timing of the implementation of these so the global market gets a clear signal about what the next ratcheting level is the next opportunity for their manufacturing is going to be so that's the key notion around what we want to do with harmonization of the standards I mentioned the award for the work on the high end in terms of creating a global award and also some associated regional awards for the most efficient example of a particular product category and we'll be announcing that at the Clean Energy Ministerial it will take some time before the award is actually given but that's what we think if you backtrack from what you want to do which is send a signal to the manufacturers that they have an opportunity to sell into the marketplace a product that could potentially be the recipient of an award that they can then put on their boxes for the selling season and say this is whatever the label is going to be the most efficient product recognized globally then the manufacturers advance notice they get this into their sales cycle and so we're going to be announcing that the award is being launched we'll be sharing the criteria with the manufacturers and it's going to be exciting to see this move forward we've picked one category of appliances that are globally traded and we expect to move on to others in the future let me talk a little bit about about incentives and I mentioned that in this country we have a lot of experience with utility demand side management programs I think many of you are probably familiar with incentives either offered through the utility your utility or through the state or recently even federal incentives for purchasing of energy efficient equipment appliances or home improvements we're working to share practices across these types of demand side management programs around the world and implement them more broadly so I think we know that there are smart ways and not so smart ways to roll out these types of things you have to set the incentive at the right level to motivate consumer behavior you set it too generous you bankrupt the program very quickly without getting much improvement in the marketplace and so there's an art I think and some smart analysis around this that we're seeking to share globally and then what I'd like to do is just talk a little bit about the procurement example highlighting something Rick actually mentioned in the Q&A but this is some recent work that was done through the Department of Energy Building Energy Alliance and here's an example of procurement done by private sector players who have a real interest in ensuring that they have a choice of efficient products because in their case in this particular case rooftop air conditioning for big box retailers it's a substantial portion of their costs and so what happened is because the Department of Energy in the Appliance Standards Program has great familiarity with what is technically possible for air conditioning they were able to sort of work with some major retailers and also with air conditioning manufacturers to in fact identify an opportunity for those manufacturers to produce rooftop air conditioners at a higher performance level than are currently available in the marketplace and to have a commitment from these retailers assuming the price point is right to make major volume purchases of these so when I first heard about this I thought well what role does the Department of Energy have in managing the supply chain for a major retailer but in fact there are times when for a retailer their core business is not focusing necessarily on what their air conditioner is on their rooftop their core business is getting products to consumers but it turns out we can use some of the knowledge that we have to create these opportunities and we want to extend this type of example in the global context and see if there might be other opportunities in different product categories so finally all of this information and the cross cutting analysis that supports it is going to be available on another website called superefficient.org and superefficient.org will be available at the launch of the Clean Energy Ministerial if you are an equipment and appliance efficiency wonk this will be the site for you we will certainly link to this site from cm.org and the solution center that Rick alluded to but this is going to be the more in depth technical resource for people around the world who really want to draw on the rich amount of information that is available to really use best practices in formulating policies so let me just touch briefly on the other initiative which is the global superior energy performance initiative just a couple words on that I think Rick highlighted the certification part of this which builds on the superior energy performance program that DOE has been engaged in focused initially on industrial facilities but now expanding to commercial buildings to broaden that now to the international context and the notion is as follows it's easy for private sector partners to set an energy efficient improvement goal but unless that can be verified in terms of actual performance it's not a bankable transaction and a bankable transaction something that's third party verified interest to energy providers so you can imagine that if a utility has an industrial customer who says I'm going to reduce by 2% next year if the utility can count on that being achieved then that has tremendous value to the utility because they can better project their capacity needs and so those linkages have not all been established but the notion is that setting goals measuring those goals accurately having the third party verification is a key way of ensuring that we get the real gains that we can get in those facilities I think just to mention of two more things on GSEP and then I'll stop one is that we have another working group that we're excited about that has just started under GSEP which is a combined heat and power group and also incorporates efficient district heating and cooling Finland is leading this initiative but some of you who are familiar with what's been going on and DOE know that has been work for many years in this area EPA has also been involved looking forward to rolling out that group and we have some interesting linkages also to for those of you who sort of follow climate issues more closely to black carbon reduction in the Arctic there are some very inefficient facilities particularly in Russia that if you could improve the efficiency with combined heat and power applications you could get black carbon reductions and the associated climate benefits so that's an important focus area and then the last piece is just to emphasize that again for those of you who have followed international technical cooperation in the energy sector the Asia-Pacific partnership is now phasing out that was a partnership that started with six and then seven governments and I think had a track record of success using a public-private partnership model in key areas such as power sector, steel aluminum, cement those projects are going to be transitioning to the G-SET model under the Clean Energy Ministerial the notion is that this provides us the opportunity one to take stock of which parts of those activities have been successful and are worth continuing and maybe which aren't and then also expanding beyond the original six or seven partner countries and seeing what we can do more broadly but the key there is a public-private partnership model the involvement of trade associations and trying to improve the general level of performance in targeted sectors so I think I'll stop there but that's just an example of when you drill down into these initiatives that we're that we talk about in the ministerial there's actually a rich level of detail huge amount of effort and resources within the department and within the labs and the contractors that we're using that are focused on real technical cooperation and that's something that is very satisfying because the Clean Energy Ministerial as you can see involves this peer-to-peer dialogue at a very high level with ministers and it also involves working level innumerable international phone calls at odd hours of the day and night dealing with your counterparts in other countries to really make progress on substantive issues. Wonderful, thank you Graham for that more which detailed the description of the activities under the CEM I think in light of the time what I'm going to do is invite Jennifer Leakey who is the director of the Johnson Controls Institute for Building Efficiency to come up and give us a presentation it's a pleasure to have you here and that will be a very nice transition from some of the policy activities at the CEM to really what the perspectives are on energy and opportunity if you just hit the button. Good morning and thank you for having me join you today this has been an interesting conversation and I'm looking forward to walk quickly through my presentation because I'm looking forward to a discussion at the conclusion we've been talking a lot about the vision for global market transformation and I'm going to share with you today a little bit more about some of what we're seeing in that market some of the barriers and the opportunities and challenges that I've been tracking through the last few years. Let me move on to give you the slide that overviews what Johnson Controls is for those of you who don't know about Johnson Controls it's a global diversified company we work in 150 countries around the world and we have three major businesses energy efficiency in buildings power solutions which is automobile and vehicle batteries lithium ion as well as traditional batteries and the automotive experience business automobile interiors and dashboards I want to also note that this month we were pleased and honored to be named the number one corporate citizen in social responsibility by CRO magazine the Institute for Building Efficiency is a global initiative of the building efficiency business at Johnson Controls we launched in April a year just about a year ago in the United States and are working actively in China India and in Europe as well as here it's a global initiative to provide information and analysis on the technologies policies and practices to improve the performance of buildings and to implement smart energy systems around the world we do this from a practitioner's perspective so my goal is to engage with stakeholders outside of Johnson Controls as well as those inside Johnson Controls to talk about what we're seeing in the markets and one of our signature initiatives was the energy efficiency indicator study which I'm going to share a few of the results about with you today the study is a look at decision makers priorities practices and approaches so what we do is interview individuals who have two criteria the first criteria is that they must have capital in either the operations budget or financial authority to make decisions around the energy measures in their buildings and operations the second is that they must also be monitoring their energy use and they're the decision makers for any improvements in their facilities this is a global survey we focused on 10 countries last year and we are in the process of conducting the survey again which will close on April 8th and we'll be announcing global results in June energy management is an incredibly important topic to those individuals and those decision makers who we surveyed last year if you'll note the slide that I put up right now you'll see that there is in all regions over 50% of the respondents indicate that energy management is either important is very important or extremely important in their priorities what you'll also note is that India and China actually reported over 80% in either very important or extremely important so energy management is uniquely global in its priority and in fact even more important to decision makers outside of the developed countries in the US and Europe we saw that the drivers for energy management energy efficiency in fact were unique and very common so the very common everybody wants to save money the number one driver globally for energy management energy efficiency is cost savings however you'll note a couple of differences that I think are worth taking note of the second most important global reason for reducing for taking on energy efficiency was greenhouse gas reductions however in the US that was actually a much lower priority and in the United States you saw an interesting perspective around the government and utility incentives and rebates as a driver for taking actions so in fact the role of policy and the role of the private decision maker does vary on the context and how individuals view their incentives this is important because I'm going to come back to this policy framework and the policy activities that have been outlined earlier the other thing I'll note is that both India and China had a top as a top driver a number of traction and retention which did not show up as one of the top four in the United States or in Europe so when asked what was their priority for reducing emissions and you saw that up there the decision makers indicated the greenhouse gas emissions reductions was one of the drivers for them taking on energy efficiency one asked what implementing approach they would take for reducing emissions energy in buildings was by far the largest winner I will note however that 28% of those decision makers had not yet prioritized or did not know what their top or leading initiatives would be to reduce carbon emissions which gives us lots of room to continue to educate and to continue to engage with these decision makers on what types of approaches and technologies they could use another important area of the survey and I'm walking through just a couple of the key pieces all of this can be found at our website which is institutebe.com another one of the important aspects of the survey looked at what investments were being planned for 2010 and in summary this slide paints a picture of an industry and decision makers who are relying on their own capital to impact to create opportunities and make investments I'll go back to this but I want to note that that's important because for companies like Johnson Controls who are in these markets and for financial institutions who can provide capital into these markets most of these decision makers are assuming they have to have the money in hand and that that is their clear priority for how to make energy efficiency happen in their organizations for ESCO businesses and for others that has real implications but I want to note here that there is again a global difference in countries like India and China that money needs to they feel right now is coming from inside in countries like US and Canada you see that there is actually a little more differentiation between whether that money has to be something that is in their own capital or operating budget we were pleased to see in last year that in fact when we asked what impact has the recession has on your levels of investment in the past 12 months that in fact there was 56% of the respondents said that it has had no real impact or they've invested the same or more in the past 12 months in India and China this was not the recession felt as acutely as it was in the US and in Europe but one of the important things that we saw was that there was indeed this bifurcation the response to the recession and the economic conditions did not diminish energy efficiency interest globally but it did create a bifurcated response the most interesting slide to me in all of these is the slide that looks at what the barriers are where are the barriers to investing in energy efficiency and they came out to be four main things lack of capital budget which we already talked about for those individuals and associations that were looking at making investments from their own by self-financing that there was indeed this problem with finance in the US and Europe lack of capital was also a very important part of the overall view of what was holding them back from their energy efficiency commitments in China the number one barrier was an uncertainty around the savings or the return on that investment not in terms of the financial investment but in terms of whether and if the investments that were made would could be benchmarked in terms of what they would perform how they would perform what the individual was going to see out of it there's a lack of certainty in the market which really lends itself to a much greater look at energy management technologies with measurement and verification doing base lining, looking at change over time and then being able to follow through on the to prove that the measures were in fact saving energy in India the biggest barrier was a lack of technical expertise decision makers felt that they did not have the ability to do an integrated review of the technology options that were available and all those technology options could be implemented effectively so I think there in this slide we see that in fact there are a number of different areas where global institutions and global cooperation can work together to overcome market challenges that are being faced by decision makers around the world and those are both in the capacity building context as well as in the financing context this is a little slide that we use just to say what if you're thinking about the capacity building challenge what are the pieces in it and you'll see that for us we believe that there's a real need for clarity around the product distribution product channels need for standards and codes that allow for clarity in the market being doing labeling and allowing for better transparency on the performance of technology and options and the ability to measure report and verify in whatever framework is appropriate in those local circumstances but it certainly is an important aspect in order to move these markets forward to give confidence to the market but there are in fact ways to look at how these measures perform I'm going to very quickly share with you our favorite example of how you go in and think beyond a single measure approach and this is the other thing that I'd like to leave you with which is it's very important to do standards and codes on individual appliances it's very important to look at specific lighting technologies but we are missing the forest for the trees if we don't look at the overall integration of these technologies inside a building. Buildings are living systems and they require a constant review of the building level performance. This is one of the things that I think is important about GSEP it's certainly one of the things that I think that decision makers around the world have not yet figured out and we as building owners and managers in these decision makers still are grappling with all of the integration of these pieces so in the Empire State Building which was an ESCO project that we worked on sorry, we worked first to reduce loads across the entirety of the building second we upgraded the systems so the first thing to do was get energy out of that, energy demand out of the building the second was to upgrade the equipment and the third was to install monitoring and controls so that you could constantly be watching what was happening in that building and we worked very hard to make sure that the return on the investment met the owner's key requirements in terms of payback period and in terms of the type of overall outcome he wanted for this building in this case he was looking for a payback under three years and he had a renovation process that was going on so there was some capital available already for the project and he wanted to be able to upgrade the space at the Empire State Building in order to make sure that he was able to attract and retain the types of tenants he was looking for for the building the goal was to make both all of that happen and we achieved 38% energy savings for $4.4 million annually in savings thank you thank you Jennifer very much in transition as I invite Russell to come and talk from his perspective I have the opportunity to actually work in one of the world's most energy efficient office buildings which is called the Research Support Facility at the National Renewable Energy Laboratory which is a green field example of what Jennifer just talked about in terms of a retrofit where that building actually is lead platinum and will be zero net energy including all of the computers lighting there actually is no HVAC system in it because of adequate design etc and all built at the exact same cost or nominal differences relative to a class A office building in the Denver location itself so I encourage each of you to look that up on the website if you're not familiar with it there are also a couple of articles in the Wall Street Journal New York Times as well that have highlighted that recently but it is an example of the systems approach and the benefits that come forward and a real opportunity to change the dialogue I think going forward but the financial aspect of that I think leads well into what Russell's going to talk about as well and I think we'll just turn the mic over to you, thanks. Thank you, so it's a pleasure to be here. Last night when I was putting together a presentation that I hoped would be interesting I didn't display a lot of discipline in my slides so my slides are going to be used in a very impressionistic manner. Please bear with me, I think we'll have some fun with this. I've been in this business of energy efficiency for 30 years and have done it from the perspective of someone that ran an energy services company, someone that ran an NGO and then I moved into IFC the International Finance Corporation about 10 years ago because I viewed it as a platform not just to convene an interface with the big companies of the world that have the means of moving things in the right place to make things happen and so I'm going to reflect a bit on that but I reflect start with this which is anyone that's looked at the complexity of carbon capture and storage will appreciate the elegance of this solution and from this perspective I really want to compliment and appreciate the clean energy ministerial for bringing to the forefront the most logical appropriate first investment one makes that's sized that's looked at the economics of solar wind any advanced technologies at all understands that you start by cleaning things up, plugging holes otherwise the other stuff just isn't cost effective or feasible so just who is IFC we are the private sector investment arm of the World Bank Group we're the folks that don't deal with governments we deal with the private sector coordinating poverty that the World Bank Group has but we go about this through sustainable private sector economic development we do this with three different businesses we invest money directly we have an asset management company which is a way that we leverage additional investment and then the advisory services business which has grown to over half of the people in IFC right now and that's where I live I lead the climate change business and that's where I live IFC last year placed about $18 billion of investment for our own account and in 103 countries and our advisory services business was about a quarter of a billion dollars across all sectors but I point out this big right chunk because this has become such a substantial part of our business it's the business of investing in financial intermediaries whether we're investing equity in banks and providing credit lines to provide long-term capital and markets for liquidities only available for very short periods or a variety of different guarantees and instruments that push commercial financing into areas where it's not presently our essential objective there is to deepen financial markets that allow markets to function more efficiently and for capital to flow where it's appropriate so our perspective here is climate change and this has become a core pillar of what IFC is about when I joined IFC I was the kind of weirdo in the corner that was doing these energy efficiency things that weren't quite relevant to IFC's business and every year in the annual report we'd have sort of a poster child project which was a windmill which we shouldn't have been doing because it was so small that it was an inappropriate fit to what we do well now climate change is a core pillar of our business we're the major driver of our business and what I do is try to keep track of it all because everyone's doing this stuff now in the corporation and the reason is we've got about $9 billion of various funding sources public money to address climate change if you sort of aggregate all the various stuff of the clean energy ministerial and all their cousins and we got to get up there to about $175 billion so how do you do that? you've got to mobilize the private sector because people make money doing it otherwise it just ain't going to happen except in our dreams and it's not going to happen at a scale that really has any impact and we might as well say game over so what's IFC trying to do? well by 2013, 20% of our commitments that is our investment commitments will be for climate adaptation or mitigation projects and a significant part of the great blue piece up here and the green and the top half really is all about mobilization it's IFC positioning itself to bring in co-funders co-investors in projects that's our mobilization where we're syndicating investments and we're the lead investor others are putting their money behind us or also as a vehicle for bilateral funding that's seeking to move a market so increasingly IFC planning of bilaterals agencies that are looking for a way to not just provide a subsidy for something but to put public money in a place that allows the market to go places where it hasn't been before because of the leverage and because of this previous slide right there how do you get there and you've got to figure out levers and vehicles that get other people to invest their money because they're going to make money so our story is pretty impressive in the last four or five years where we've gone this is our portfolio in renewable energy it's gone from about 80 million dollars to last year over 800 million but more importantly there's a lot more projects over 70% of our power business now is renewable energy in terms of number of projects and the project sizes are smaller so the amount of capital into those projects is at about 30% and the transactions we did last year were renewable energy energy efficiency why do we do this a million dollars invested in new capacity will get you about a megawatt with conventional thermal power if you invest that in energy efficiency you'll get 3 to 5 megawatts equivalent so if you're going to meet the yawning gaps of energy supply demand and if you're going to address climate change there's a billion sustainable economies based on lower carbon input this is where you got to go so a lot of my challenge has been figuring out how IFC which does really big transactions really well gets capital into transactions which may be $500,000 $10,000 why is that a relevant business for IFC and so that has been where I put a lot of my energy and have been able to build a business in IFC so the two feet you see at the top are these two economists having this conversation one of them saying to the other gee George, why aren't you reaching down getting all those dollar bills on the ground and George says well if there were dollar bills on the ground someone would have picked them up so they're obviously not there we must be hallucinating this is the proverbial issue with energy efficiency right it's about behavior it's about dysfunction in institutions and international human beings and human behavior right why would a human being keep money in the bank and get what 1% interest on your savings account when you can get a one or two year simple payback return by replacing the incandescent light bulbs in your house and the market failure leads to the kind of regulations and that we're seeing in the market right because of the greater social good so how do you awaken the sleeping giant in a market place such that you get rational investment having well it's not as easy as saying I'm IFC I put money I will go do money if my tool is a hammer my tool is money I can't get it done unless I'm looking at what is actually going on in that market what are the barriers to it so what are the tools that I wield most effectively but this is also who comes from different institutions here you got to think not just about what needs to be done but what you are positioned to do well so this has been part of the discipline in IFC it's not just understanding markets barriers but staying away from things we don't do well which is that one little wind plant which is one million dollars because our lawyers are going to swamp the sponsor we got to figure out a way to structure these things that play to our comparative advantage and use our convening power we're needed so this is how we look at it basic S-curve where what you're trying to do is have penetration of an advanced technology a compact fluorescent light, LED lighting off-grid lighting co-generation and early stages where you're not proving out the technology it implies certain types of interventions needed very often regulatory reform that creates that knock down barriers as the technology matures you start to get some volumes going you need standards otherwise you're going to have markets spoiling Rick talked about the Lighting Africa program and off-grid lighting where the issue right now is that these products are finding themselves everywhere and you're getting a lot of products that last about ten minutes in the marketplace once people plug them in or try to use them because the batteries in them and their control systems are crap and what you're going to have is the same kind of pushback situation you had with compact fluorescent lights in this country where somebody finally got up the the bravery to go and buy one of these things for $15 and plug it in and it blew and suddenly it wasn't what is this product who made it it's those things don't work and it became kind of conventional wisdom and I think it set back the uptake of the technology it's critical at that moment that you start to have industry standards a way that customers, clients, users can start to reference what is good differentiate technology and create competition around quality and price at the same time by giving people the intelligence they need market intelligence how are these companies that currently are focused on LEDs for this little thing going to say there's a market out there people that are using kerosene and I have a technology that beats it but I don't know anything about the market I don't know what people desire what they're able to pay for okay and then at the upper end where markets are starting to move how do you get capital to these people and so this is the kind of construct that we think about industry standards the efficient lighting initiative we put the label on the box in this project in seven countries ten years ago the results have been immense in terms of scale up of compact fluorescent lights this was in South Africa the line at the top interestingly that the market grew but it's showing that there was replacement of incandescence because that was the incandescent bar at the top so financial market development remember when I talked about how there's IFC is a misfit for doing these smaller transactions and the question is what is the problem there when you look at why local banks were not lending for energy efficiency it was a number of different things first of all the deal sizes fit very nicely these banks they're not very good for us so I start to think hmm how can I get these banks to see this as a market they don't have experience so they're saying we don't understand this asset class we don't understand how to price loans to them are people going to pay us back so we started supporting them by selling them risk sharing tools because we were comfortable with the assets limited knowledge of the sector we started working with them technical assistants to identify the segments of the market which fit their strategies if they wanted to go down market into SMEs efficiency to SMEs a ways to get to their strategy and then the vendors and developers good engineers not so good at structuring transactions that a bank wants to finance so working with them what came out of this was a substantial IFC business half a billion dollars last year providing credit lines risk sharing tools to local banks to finance energy efficiency one of these in China has the chewy program this immense impact for energy efficiency in the last three years GHG emissions associated just with the loans that we provided guarantees for 15 million there's a hundred countries on the earth that emit more every year than 15 million tons and this project has reduced avoided the emissions of that the reality though is that there's still 1.6 billion people that live in the dark and I'd just like to point out one thing if you look at Africa the west coast right there what light is gas flaring in Nigeria there's a problem another conversation so when you start looking at who these people are and you're looking at the income pyramid let's just look at the global market about a billion people make about 26 million dollars a year their total income is 25 trillion dollars but the low income the lower two brackets 5 billion people representing 4.5 trillion dollars of capital so I start to think these are the people that live like this is that not a market in fact they spend 38 billion dollars a year on kerosene which is 17% of the global lighting market so you've got 38 billion dollars for people that are getting 0.1% of actually the lighting service so you've got an ethical issue here you've got a market waiting to happen and you've got superior technologies happening out there this is the breakdown of that segment in Ghana and Kenya where it's 1.5 billion dollar market so we asked is this a market if so are there global and private local companies that have solutions to this and are there commercial solutions so I don't want to go out there and give 5 million dollars and give people lamps and then that I've chosen what I want is for a lot of people to make money providing a technology which saves people money and gives them better service and that was the genesis of lighting after there was an emergence of technology the LED's which allows you to package systems at less than a watt you have business models such as Unilever starting to figure out how to sell to this market things like shampoo where instead of selling them a 5 dollar bottle you sell them a 1 rupee sachet things at a price point that's affordable the lessons of this market and went and talked to the LED industry and these guys were selling scoreboards to stadiums they were looking at putting more LED's in a Cadillac and they were looking at blackberries and we said is this interesting to you? and they said yes we said what do you need to start making products to go after this part of the market they said we need intelligence about the market we need to understand what people will buy how much they'll pay because we need the junk out of there we need people to understand the difference between quality and not quality and we need to figure out how people buy things what is my distribution channel to someone that's currently buying kerosene off off off the grid and so the lighting Africa program addressed these things regulatory reform industry standards market intelligence and then the financial market development how do you get the capital of these guys to scale up their businesses this is essentially what we're trying to do market penetration and trying to gain a lot of economic capital and rent and global benefits from the environment and quality of life improvements quickly by addressing those things and scaling it up and you start to get all sorts of interesting and I'm almost at the end all sorts of interesting partnerships come out of this the telephone off grid telephone market I'm not going to tell the story you probably have heard it but it's astounding it's the most impactful change I've ever seen in the developing world is the penetration of mobile phones not just because of what it does about communications because it's what it's doing about everything including banking where 30% of the GDP of Kenya now flows through mobile banking one company and PESA right all these innovations flowing out of this thing and there's opportunities because they got the same problem that the lighting has which is how you charge phones and so we're starting to see products which address both telephones and this is the driver and by the way people are getting lighting at the same time and you it's incredible the energy the entrepreneurial genius that you're seeing emerge in these markets now but it's driven by this technology so it leads me to my provocative question I for a long time have keep hearing about programs to do technology transfer and I don't understand it I just don't understand if the construct is you got technology in the United States and we have to put it in Nigeria how does that work exactly and and I guess my lessons of learning is that's an academic abstract that doesn't fit how the world works the world works through market development and you start to see the kind of market in growth for mobile telephones their annual growth of 60% in Africa and you start to see the infrastructure and the genius of what comes out of this and this is in PESA this is how people do business it's through their telephones in Kenya you buy something by zapping somebody the money from telephone to telephone and that's how the economy works now so as this happens did Nokia take their technology and say here Kenya we're Finns and we like to give you our technology no but what's emerged is an indigenous industry built around the technology that the Finns still own but there's a lot of corollary and adaptive technologies that have emerged including in PESA which is 30% of the GDP flows through in Kenya so that's my provocative observation from my conservative world view which is basically let's let markets work if we want a sustained impact and I'll leave you this one last image which is we're out here ice fishing right and under the surface there's something brewing this guy's got something on his hook not sure what it is it's the market thank you thank you with that if you can indulge us with a bit more time why don't we go to some questions let me if I could just repeat the ground rules if you could please state your name your affiliation and pose a question as a question for a particular panelist feel free to target it in that direction William Murray with Energy Intelligence Group Efficiency has kind of been in the news lately or talked about lately with a couple articles talking about the rebound effect and also both in the New York Times and late last year in the New Yorker talking about the Javons paradox which is that the more efficient economies get the more disposable income that then becomes energy so that in the long term absent carbon taxes there's actually no way to keep emissions from growing beyond what they were to start with how real is that problem and have you come up with solutions to that obviously carbon taxes are a real solution to that but in the 1980s here in the United States we saw that rebound effect and it's quite possible in the developing world that we may see that coming shortly this is a beautiful red herring I think here's the question what is the question innovation improved technology it's going to keep happening and so that's a separate issue from do we need to do everything we can to make them more efficient the analysis that was in New Yorker that was referencing this that I think kicked off a lot of the local innovation it was as if all development in the history of mankind was a result of energy efficiency not that there were parallel innovations I'm not sure what the question is I mean is it saying that we shouldn't concentrate on energy efficiency and therefore technological advancement will disappear I don't get it I think the issue they're trying to make is that the moral arguments of climate change being solved is that climate change efficiency aren't possible that there's a mutual exclusivity and that undermines it's not an economic argument they're making a the climate change argument that you won't actually see a decrease in efficiency so when you bring up issues of how good it is both for economic development and climate change in the absence of carbon taxes keeping controlling in the absence of carbon taxes I completely agree I think we need carbon taxes in the developing world of a climate regime that would allow that in the next 20 years is you're asking if there's governance that would allow that to happen why don't we let the other two panelists respond and then we'll get a bit more my understanding is and this is a statistic that I believe was from an analysis that Trevor Hauser did up in New York and I can get it for you was that his estimate was that there wasn't a one for one correlation in terms of the emissions savings for energy savings that there was something around somewhere around 20% of a bump up in overall economic activity as a result of the freed up capital that was going into energy and is now being used to fuel additional economic activity and energy consumption through that economic activity and that's my understanding of the issue you can tell me if I've got it wrong I believe that's where he ended up the one thing that I'll say is that what we do through Johnson Control's businesses is guarantee energy savings kilowatt hours used we're on the hook for those kilowatt hours used in a building so if there was a rebound effect in that building we would know about it so whether that's displacing capital that goes into other macroeconomic tendencies that have an implication for emissions that is a bigger issue however I would posit that that's not entirely negative and that there are ways of mediating and mitigating that through some pricing mechanisms but I do think that there's some interesting questions associated with what's the question you're asking can we track the reduction in energy consumption and demand when we put measures into place to reduce that energy yes and we can guarantee it for me that's really the most important starting point for this argument just a quick comment on that particular article there was a fundamental flaw in the article which assumed that all of the money that was saved 100% went into increased use of energy so I'll pose a question to you if you implement some savings process setting your thermostat to automatically go down at night for example or while you're out of the house and it saves you $100 going to all go into increased demand for energy no it's going to go to your entertainment budget it's going to go to whatever it is you do in your lifestyle some of it might go into well I'm saving more money here so maybe I'm going to make it a degree cooler in the summer degree warmer in the winter so some of it some fraction which is estimated that a few percent will go to increased energy service demands but broadly it's going to go to everything else that you do it's part of your economic activity it's not going to go into one great I'll just add one quick comment before we go to the next question which is if you look at the international data that Kateri for example put an example of between the US and Japan and you look at the overall energy intensity per GDP if you ask the income of the income effect and the rebound effect among different economies you can see pretty clearly that you know while the US has a very strong average annual GDP our energy consumption tends to be 30 40 50 percent higher than the average European who has a comparable annual GDP of income and more than twice the average Japanese and so there's some interesting international comparisons there as well is there another question we'd like to turn to Lawrence Jones with Austin Green to have a question for panel in general especially Mr. Sturm you talked about when you start your presentation you made mention about behavior change and it seemed to me I haven't spent quite a bit of time in Europe and looking at this sort of appetite for efficiency from the standpoint of the customer in the US what what do you think is the reason that energy efficiency as it's being presented today is a very very good thing and it should be no brainer for everybody but apparently it isn't so what behavioral change mechanism do we need in the US this is supposed to be the most sophisticated country in the world in terms of educational standards more or less and so what's happening why is all this good stuff that's been done here not having any sort of major impact in terms of how consumers are viewing energy efficiency and if you just look at the price of gas I think people get efficient here only when the prices go up and that's when everyone starts to scale back and as soon as the prices drop then people start to consume in excess so what do we need to do to change what's happening in terms of the behavior in the US regards to energy efficiency thanks I think you answered the question I mean we saw when gas was four dollars a gallon the metro was full over full it's we subsidize energy in this country and the difference between Japan and Europe versus the US you've seen the average size of a house of a well off person in Europe versus a house in this country and where those houses are located we've built an entire economy based on subsidized gasoline subsidized I mean the external costs are not embedded in the internal price because we don't tax it that's personal view I'll just add another question or another comment to that the other thing that I think happens for many companies at a corporate level on the energy efficiency investments that they're going to make and in particular this goes back to where their many companies are seeking to finance this out of their own budgets and when you look at that the choice then that any decision maker is making at a corporate level is do I invest in something that reduces cost or do I invest in something that might be and the difference is a bottom line versus top line prioritization so if you're looking at all of the choices for investments you're willing to take potentially a higher risk lower guaranteed result in a top line example then you might knowing that you're going to get a 9% savings on that investment 10% 15% savings on that investment in a bottom line improvement to your business so we do see that they're sort of an asymmetry and decision making associated with how you will place your investments if you're thinking about a bottom versus top line opportunity thank you do we have a final question from the audience as long as you briefly stated question we are running quite late so thank you so what needs to happen then I heard what you said but what do we need to do to change because based on what you've presented here I would argue that maybe the developing world is where we have the best potential for real gaining in energy efficiency globally speaking than we have in the US for example so what has to happen what's the solution well I think let me say one example that I think is extremely compelling right now is around a whole movement to take energy efficiency financing and provide support through non-traditional financing mechanisms in the US to call this something called PACE the property assessed clean energy in Melbourne they're calling it an environmental upgrade assessment they're allowing efficiency investments and improvements in buildings to be financed on a bill that allows for you to make that investment and pay it back incrementally over time without having to either put it on your balance sheet or by creating a disincentive because you may only own that building or hold that building for five years so therefore you're not interested in making long term investments in it so I think that that kind of a mechanism looking at the structures that would free up decision makers to do the things that they're interested in doing you saw the data 85% of these managers are interested in energy and energy management because they believe that there are a lot of upside potentials for them however they don't have mechanisms right now that allow them to move that capital into those investments that's why some of the programs that can allow for credit guarantees that can allow for different mechanisms for them to access financing really can change the way that the market will emerge I think with that you've all been very generous with your time and the panel has as well I'd like to ask you to join me in thanking the panel and thank you all for your participation