 You're going to get a lot of information this week and if you're anything like me, you're going to forget most of it. But what I hope you take away from this, at least, are the people, who we are, what we're doing, and where to go to find what you need as you get into your graduate experience at Stanford. So what we're going to spend the next 45 minutes talking about is, well, I hope you will have answered by the end of the next 45 minutes, what is clean energy finance? Who does it on campus? And where can I find out more? So think of me kind of as the orchestra leader. I'm the managing director of the new Stanford Sustainable Finance Initiative. I'm also managing director of the Steyer-Taylor Center for Energy Policy and Finance. I also teach a course at the law school, which I'll make a plug for at the end. The Soyoung in and Marshall Burke, who you're going to hear from next, they're really, they're deep into the research. So they're doing the kinds of things that I'm talking about at a 30,000 foot level in the slides to come. So the way I like to introduce the concept of clean energy finance is actually a quote that Christiana Fageris made at just following the Paris Agreement. So this was January 2016. And she said, how capital gets deployed over the next five years will determine the fate of humanity. So this is important stuff. And that was two and a half years ago. So we got to get to it. One way to think about that is a measuring stick that an organization called Ceres has has been marketing and I think to good effect to help people wrap their minds around the scale. What we're talking about here is to achieve the goals of the Paris Agreement. That is no more than two degrees Celsius warming. We need to reach a trillion dollars of investment in clean energy globally per year over the next 15 years. There's another mile marker out there you might see of 2.3 trillion. It's effectively double that accounts for low carbon sources of energy, energy efficiency, and transmission, etc. So there are other sources that come there are other inputs that go into that number. It starts on a higher base. At the end of the day, we're still talking about three times more investment than current spend in deploying proven technologies of today, developing innovative technologies and business models of the future, and scaling economically or politically challenged technologies. So at the sustainable finance initiative, our approach is to actually reframe climate in order to move capital at that requisite speed and scale. And I sort of borrowed a little bit from Dr. Seuss and the in out list. So bear with me if this is too cute for you, but we're moving from price to risk. So out pricing carbon in pricing risk from micro to macro out cool demonstration projects in changing production systems from there to here out global solutions in local solutions. And here's the Dr. Seuss part climate solutions are everywhere out Asia as a finance and technology taker in state driven finance. So particularly at SFI we're thinking about both Western and state driven financial systems. A little detour here on what centers are you're going to hear from faculty members you're going to hear from center directors and and I think about centers at their best as a bridge between academics and markets. So we take the resources and assets of the university, the faculty, the fellows, the graduate students, the undergraduate students, alumni, our networks and we build bridges to the real world and get things done. A little detour on the Starter Taylor Center because it's confusing and you'll see it on your map. Starter Taylor Center is a joint initiative at the business school in the law school. I am also the managing director there. The mission of the Starter Taylor Center is to increase the cost effective deployment of clean energy in the U.S. and globally by developing and disseminating supportive policies and financial instruments training the next generation of leaders and convening academic business and policy leaders. We're pretty much the same people as SFI so you'll see most of these names and faces again. Paul Brest former dean of the law school is the acting executive director Thomas Heller who is my the faculty director of SFI is also the interim faculty director of the Starter Taylor Center. I serve the same role in both places and here are some of our fellows. There are more coming back to the Stanford sustainable finance initiative. Our mission is if you look at the Venn diagram effectively encompasses Starter Taylor but is broader in a sense that it's looking to develop system transforming policy business and finance solutions across energy agriculture and mobility so we're really looking at the decarbonization and climate resilience more broadly. A little bit of who we are again Tom Heller managing excuse me faculty director I'm the managing director we've got an advisory board of which Sally Benson is the chair we've brought in the first four folks this will expand Richard Kaufman the New York state energy czar Joaquin Levy who's managing director at the World Bank Jeffrey Greener who's the chief risk officer of Bank of America Bank of America is the benefactor of the sustainable finance initiative and then we the the initial team of researchers includes Grish Ramali Udevar Darjean so young in who you'll hear from Stephen Camelot I would love to add Marshall Burke to this list at some point this was the assumptive close by bringing him in today and just a brief detour into our focus areas so within that broad mission of of transforming systems we're approaching it across business and financial innovation so these are the new business models financial vehicles blended capital strategies green bonds all of which you know have the pursuit of catalyzing private investment at scale second focus areas around risk metrics and management so this again is this idea from moving from pricing carbon to pricing risk and because we're here at Stanford no initiative can can exist without including the application of big data analytics but in this sense it is it is truly exciting to think about combining climate models with the capabilities of big data analytics to yield investment ready analysis to help asset owners redeploy assets based on appropriately pricing the climate risk managing stranded assets so designing innovative vehicles and financial mechanisms to compensate for just transitions and then transforming and integrating legacy systems so new political and economic mechanisms for integrating resource efficient technologies into an infrastructure across energy agriculture mobility those legacy systems a little bit of a diagram here to show you the model of how sfi is going to work so not only do we have an ambitious mission but we have an ambitious vision for how we're going to execute that through this what we call an engine so at the core sfi is its directors its advisors its fellows student engagement and key collaborators that will in turn determine a suite of projects chosen based on their criteria whereby Stanford analysis would be valuable in the consideration of the solution set where there are we've got clients here but you can think of them as partners where they're situated in specific geographies with specific problems where there's an implementation pathway and together we can kind of crank that engine of sfi into the site specific projects out the output of which will be research and analysis meetings and workshops internships and fellowships for folks like you new vehicles and alliances and executive education a little plug for the class before we get to so young marshal so i'm teaching a course this winter it's listed at the law school it counts for the csi at the gsb the center for social innovation credit or certificate it's called climate politics finance and infrastructure i taught it last winter with tom heller i'm teaching it this winter with a woman named kate gordon who was the lead author on the risky business report which you may be familiar with which was a risk analysis of the u.s economy and then went into different regional risk analyses of the u.s economy so the themes will be exploring there are the economics and psychology of climate kind of take you through the history of climate negotiations past looking taking deep dives into risk management and disclosure looking at growth and innovative investment models these are some of the speakers we hope to have in the in the next quarter although again now kate who was a speaker last year will now be a co-teacher this year so i hope to see some of you there and just finally now you know who i am and where i sit on campus and what i do i'm a connector i like to put good people and good ideas together to make things happen so if you remember nothing else from this just know when you have questions around where's climate sustainable finance on campus come find me and with that we'll get into the deeper dives on some research thank you nice to be here i think i spoke at this event last year and maybe there was half as many folks so it's the the growth is uh exponential i guess which is exciting um so i'm marshal Burke uh i think as you've probably learned so far anyone in stanford is obligated to have like six affiliations a lot of things to keep track of so my departmental home is in a department called earth system science which is an interdisciplinary department most of us sit uh just across the breezeway there and y2 e2 and it's a mix of social and natural scientists sort of heavy on the natural science i'm one of the few social scientists there but a lot of folks thinking about problems like this from the research side really trying to understand um questions of climate both from the the physical perspective as well as from the socioeconomic perspective and so that's where my research is um a lot of it tries to think about what are really the benefits of climate mitigation either locally or globally and and trying to think about the benefits across a suite of outcomes that we care about everything from human health to aggregate economic output and i'll show you a little bit of a a taste of of the sort of things we work on um okay so here's sort of the biggest picture economic framing so my phds and economics few social scientists uh raise your hands uh when alicia asked earlier so that's too bad um but i got my phd and economics and so i think at this i come at this uh from an economic lens but again in this sort of interdisciplinary environment so i i try to i try to talk to talk um so as an economist should we imagine a government considering a specific mitigation policy uh you know many examples out there you've probably already talked about a lot just in any policy um the economic reasoning behind this policy uh or or the economic reasoning behind the government's decision to adopt the policy often boils down to something that is looks something like this the only equation i'll show you uh but something about the difference between the cost and the benefits right so imagine a policy that's going to cost a lot now but generate some future stream of benefits uh as a policymaker you might be interested in adopting that policy so here we're ignoring the any sort of political constraints here but from an economic perspective you might be interested in adopting that policy if the long run discounted benefits of of adoption and implementation uh outweigh the cost right so if the left hand side of that equation is larger than the right hand side of the equation right so a lot of important things here right number one is the discount rate that's the sort of delta term how much are you going to discount a future cost or future benefit right um and then what are these benefits and what are the costs so a lot of my research focuses on what's the left hand side of that of that equation this benefit stream so if we adopt some of these policies that reduce future warming for instance what are going to be the benefits again either locally or globally on all sorts of outcomes uh that we like to think about okay so my research really tries to answer that question which is fundamentally a forward-looking question right what's going to happen in the future if we uh reduce the amount of warming that we're likely to see so that's a forward looking question um to understand that my research really tries to look backwards actually and use history as a laboratory to try to understand okay over the past few decades past century how have outcomes that we're interested in responded to past changes in climate past changes in warming or precipitation patterns right the idea here being that you know history can provide hopefully some guidance as to what future impacts might look like as we run these currently fairly uncontrolled experiments with the global climate system uh cranking up the temperature many degrees over the next few decades so again uh it's a fundamentally forward-looking question but we use historical evidence and i'll show you pieces of this from around the world to try to get a handle on on these climate impacts questions okay so let me give you three examples um the first one is a really broad question so let's say and and one of the key statistics we think about a lot when we're thinking about climate impacts and if you read the IPCC reports is are these aggregate economic statistics so what's going to happen to global uh GDP gross domestic product right the value of all the things we uh we produce in a given year um so turns out until recently we didn't have great evidence that directly looked at the impact of warming on that aggregate output instead what we had was a lot of micro level studies that didn't look at a big picture but they looked at lots of parts of the smaller picture right we looked at fundamental building blocks uh of the economy and we tried to add up the effects across all these building blocks to get a broader scale estimate so here are two examples from that this is not my own work there's other folks and again they're they're now literally hundreds of of studies of this flavor so here's one that looks at labor supply so this is literally how much people work so i'm going to show you a bunch of plots pretty much every plot is going to have temperature on the x-axis some some manipulation of temperature on the x-axis and on the y-axis is going to be some outcome that we hopefully care about the outcomes here number one is labor supply is this just how much do you work during a given day um the second one is test scores so this is uh i think from sat tests um and both of these analyses again are looking at how these outcomes respond to changes in temperature so lo and behold uh in certain jobs this is not for all jobs this is for i forget the specific classification but for people who tend to work outside more often um lo and behold when it's really hot out people kick off from work early and go home and drink beer and sit by the pool right so on the hottest days people work on average an hour less okay that's that was the sort of headline finding from this study so labor supply goes down at least in some industries when it's hot maybe no big surprise here a lot of new studies and and apologies if you can't quite see the confidence interval in these there are standard errors on these estimates um but this study came out a few years ago there've been a bunch of actual great studies in the last six months that have come out on this that actually shows that our cognitive function declined when it's hot so you can see this mainly in test scores so you can look at the the temperature on the day of the test when kids are taking these sat scores and it has remarkably large effects on how the kid performed on that test and it's not only the temperature on the day of the test you can look at the accumulated temperature over the past year before the test and that has a pretty large effect on again how you perform on the day of the test so repeated exposure to hot temperatures reduces our cognitive function and reduces how much we learn and and how much how well we're able to do at the test so if you were unlucky enough to take the sat on a pretty hot day so this is Celsius so if you're used to thinking Fahrenheit 30 Celsius is like 85 Fahrenheit um you were on average 3 percentiles lower your mass score right which is like the difference between getting into Stanford and not getting into Stanford for undergraduates right so that's a big number there's a big effect right and magnified across pretty much every individual who is exposed to these sorts of temperatures okay so we have a lot of micro level evidence again often what policymakers are after are not the micro level estimates they want a macro level estimate what's going to be the effect on GDP right this is the only thing economists care about what's the effect on GDP so how do we understand that okay how did these studies work they they compared individuals exposed to hot temperatures on the day of a test to comparable individuals who are exposed to cooler temperatures on the day of the test that's the sort of thought experiment you should have in mind and the best studies took the same individual who happened to take the same test so take the sat twice I'm sure you guys didn't retake the sat but I did so if you take it twice I'm exposed likely to two different temperatures on different days right but it's Marshall in both settings and the only thing that's changed likely is temperature right so I can compare how Marshall does on a hot day versus how Marshall does on a cool day and those studies find something very similar right they find that Marshall does much better on a cooler than average day than a hotter than average day so that's the thought experiment you should have in mind think of it as a sort of natural experiment that exploits variation in temperature random day to day or year to year variation in temperature we're going to take that same experiment and we're going to apply it to GDP data from countries around the world so most countries have collected GDP data for the last half century the system of national accounts set up after world war two so we have pretty good data going back in time what we can do is do a similar experiment so I'm going to look at the US and I'm going to compare output in the US in a cooler than average year to output in a warmer than average year so I'm not going to compare the US to Norway or the US to Nigeria I'm just going to compare it to itself in a warmer than average to a cooler than average year and ask okay is output higher or lower as you move around the temperature right and we're going to do that for every single country around the world okay when you do that you get a response function that looks like this so again on the x-axis is annual average temperature and on the y-axis is changing the growth rate of gross domestic product GDP right this is again like one of the key statistics as economists that we are on and on about and then there are even a tweet storm if you saw it this morning about disagreements about today's GDP rate growth rate so what do we find we find a non-linear response function that before I showed you this if I just had you draw what this looks like you probably would have drawn something similar right if it's really really really cold imagine at the limit right zero Kelvin or whatever it's going to be hard to produce anything right similarly if it's really really really hot right in middle of the Sahara it's going to be hard to produce anything right so if you're really cold and you warm up the temperature you're probably a little bit better off up and to some point where that thing turns over and then warming gets worse and worse as you approach the Sahara right so go from Antarctica to the Sahara that thing has to peak somewhere right turns out that's exactly what you see in the data and where it peaks is coincidence or not hard to know exactly 13 degrees Celsius so what that would suggest is the global optimum temperature for producing things over the last 50 years is 13 degrees Celsius about 55 degrees Fahrenheit so that's an annual average temperature one guess as to what's the annual average temperature of Palo Alto California coincidence or not 13 degrees Celsius right Palo Alto is literally at the global optimum for economic output so you made a good choice made a good choice in grad school but it turns out this is also one of the wealthiest places in the world so coincidence or not right this is a very comfortable place for sort of human production and the data bear that out you can drop the us from this regression and you see exactly the same thing okay so this is again backward looking now we're going to run the world forward and take each of these vertical slices which which correspond to the average temperature in different countries so the EU is a little bit left of the optimum it turns out the US Japan China are sort of right at the global optimum right now so the largest economies in the world right now are right at the global optimum again unlikely to be a coincidence and then most of the tropics are parked out here at the at the declining part of the response function if you don't believe the national accounts data we've done this in household level data we've done it in subnational data we get the same response so this is a very robust response so imagine taking everyone now and cranking up the temperature slowly one degree two degrees all the way up to four or five degrees with our current unmitigated climate change what happens the point I submitted is now this black line so compare two worlds a world in which we warm four and a half degrees by 2100 to a world in which temperatures are fixed today the counterfactual world is a no warming world the difference between those two worlds is about 20% of global GDP with large uncertainty right so there's the sort of uncertainty bands you can see there it turns out there's enough uncertainty in the historical relationship that we can't reject much smaller estimates but uh the sort of meat of the estimates here and our point estimates suggest about 20% losses in global aggregate economic output right is the global number that we care about 20% relative to a non-warming world right so this is about so we published this in nature a couple years ago uh this is about 10 times larger than the existing estimates on global economic output right and all we did was take history seriously right we said let's look backwards and then let's use that relationship to go forward okay and this is pretty heroic right we're projecting out to 2100 so a lot of things might change about the world right but as sort of an initial back of the envelope it gives us pretty big numbers so a couple more minutes um I spent more time on that one example but I like this example um let me give you one more so that's a that's a macro level example again we're doing a lot of these micro level studies and what they're useful at is so we we can I can give you an aggregate picture but it's not going to tell us what's going on right so how if we want to shape that response if we want to reduce the response given the warming we might see in the future where would we try to do that where we try to protect people from these exposures what parts of the economy are most affected um so again there's a lot of work going on on campus on this happy to chat more about it if it's of interest something we think about a lot particularly in the health domain which is an economically important sector but also affects sort of each one of us every day um so here's a quick pop quiz and I'll go through this in my last couple minutes um um anyone want to take a stab here so of the top 10 uh causes of mortality in the us what is and I hear I have single it's actually there's two uh where are the causes or the single cause now you're gonna have to guess which one I'm going to talk about but there are two causes uh of the top 10 where mortality rates are actually not declining so for most things people are living longer um we're becoming healthier on average over time but it for a couple specific outcomes that's not the case so which are those yeah so drug overdose is one yeah so that's gone up dramatically in the last couple years other one yeah uh it's not heat induced stroke so those have gone up but thank you um cardiovascular disease on on average uh it has gone down over time or people are living living longer um suicide so it's actually suicide so this is something that I think has touched I'm sure a lot of people in the room um definitely you know I've had friends uh who have taken their own life so this is a it's a really serious topic and unfortunately suicide rates have gone up 25 in the US over the last 15 years this is something that's still not that well understood social scientists had noticed for over a century that suicide rates actually also peak in warmer than average months so a lot of you might and I had this intuition going in so it's the darker months of winter where suicide rates are higher that's actually not true it's late spring and early summer right but it was unknown whether that was actually caused by temperature or caused by something else that varies seasonally so we took the same experiment and applied it to the US and Mexico so we have tons of data in the US going back almost half a century again county level data or city level data same thing in Mexico uh and again we're able to relate so we're in Santa Clara County we asked our our suicide rates in Santa Clara County higher in months that are warmer on average um and we can do that for every county in the US and every municipality in Mexico um and again and the different lines here are different statistical models happy to bore you with the details but it does not matter how you run this analysis you get the same response you see this very strong upward sloping relationship between warmer than average temperatures and increases uh in suicide rates this is really important and actually this paper just came out uh about six weeks ago and of all the papers I've ever written this paper got more coverage in what's called the red state press right I had way more folks from middle America interested in this paper because this touches I think a lot of folks in the way that the maybe the aggregate statistics or the sort of poor country studies do right this is it has a really visceral effect on a lot of people so let me in there um a lot of really critical things to still learn about the impacts of changing climate on these outcomes we care about I think we've learned a lot but a lot we still need to know findings like this I think are pretty brand new and and I think of course I'm biased but but uh important in sort of our understanding of the the broader pattern of impacts that changes in climate might have so I'll stop there thanks