State of Green Business Forum
Gavin Newsom, Lieutenant Governor of California in conversation with
Joel Makower, Chairman & Executive Editor, GreenBiz Group.
Joel Makower: About a third, 40 percent of the people in this room are not from California and even the 50 or 60 percent that are from California, i'm not sure know the answer to this question.
Gavin Newsom: How about the guy who has to be the lieutenant governor is not necessarily sure?
Makower: What exactly does the lieutenant governor do?
Newsom: Thank you. Yes. Oh well, I can do it with a deep voice to try to impress you, but that won't work. Um, actually it's interesting. I mean, all that, lieutenant governor, all that you do is pick up the paper and see how the governor's feeling. That's sort of the old pejorative joke. But, at the end of the day, there's two roles. One is moral authority, presumably, you try to exercise it. Then you have the formal authority that is prescribed in the constitution of the state and that's substantively the role that intersects with the conversation today. I'm the Chair of the State Lands Commission and anyone that's ever done business in the state of California, it's one of those boxes you need to check off and they usually get in your way, and if they get in the way, it delays you and it costs you an enormous amount of money, so anything you want to do that connects to state property, which is vast in the state of California, you need to go through that commission. There's three members in that commission so it's an inherently influential commission…so chair of that. I'm on the Ocean Protection Council, which is incredibly important, to preserve and protect our natural resource off the coast of California and the opportunities, the business opportunities, and green tech investment in terms of wave energy, ocean power, tidal, I think are extraordinary and I'd love to talk about that in a moment; things that I was doing as mayor that now, in that formal role, I can exercise. Third, I'm Chair of the Economic Development Commission, so presumably none of you have ever heard of that. For one good reason, that it's really not mattered. It's supposed to be putting together the strategic planning document for the economy, and the world's eighth largest economy, you'd think it'd be a central agency in terms of the implementation of our collective wisdom, not just in this room but across the state. It's frankly been an embarrassment, so that role needs to be exercised differently but substantively. I chair that. And finally and I think profoundly, in this room, I will meet every few months formally as a member of the UC Board of Regents and on the California State University System as well, so when it comes to
Makower: Well, you've also talked about it in your very brief inauguration speech, was one of the few public statements you made about what you want to do, that you talked about renewable energy and green jobs and the economy and Governor Brown, in his State of the State Address the other day, two days ago, said that, "my intention is to make California a leader in renewable energy and state-of-art efficiency," and so those are obviously, and he did that quite a bit when he was my mayor in Oakland. What do you want to do number one and what are you able to do given the current budget?
Newsom: I mean, the budget's an excuse, you know. I mean, look, I was the mayor up until a few weeks ago and we always said 'oh we can't do this, can't do that because we don't have the money.' There's a gentleman in the back, I won't give his name, who just came up to me and said 'Thank you for the healthcare.' Someone who's working here can't afford healthcare that got healthcare because of our healthcare initiative in San Francisco. I say that not to impress but to impress upon you this point. We didn't have the money for that. No other city in America had ever done that, We have universal healthcare; we're not debating it. It's health care not health insurance. That's why we can afford it, different way of solving problems. You don't like the answer, ask a better question. And so, money's inherently the excuse, from my humble perspective, and that's an audacious thing for me to say, but I heard the word audacious come out of your lips and I like it. The fact is you got to think differently and act differently and that's the opportunity of this quote unquote fiscal crisis and the "fiscal crisis" in this state is so self-evident to everybody because we have a "fiscal crisis"; it seems like the governor's announced a "fiscal crisis" seven, eight years in a row and no one really believes it; no one fully appreciates or understands it 'cos, you know, at the end of the day, they seem to somehow to get out of it, you know, even it impacts us. So, my point of saying all of this long-windingly is we need to get through the crisis that is at hand, which is a budgetary crisis, but we need in parallel to be making investments in our economic fate and future. You talked about a dashboard. What's the dashboard of California's economy? What's our proximity in the context of our greatest strength, which is our regional strength as it relates, notably, to the gateway status we have to Asia, particularly China and India, and elsewhere, and what are we doing to build those attributes? Are we aligning a workforce to this new economic development paradigm and strategy and where's green tech play a role in that? And obvious to everyone is you got a governor, as you said, that in the '70s really set forth proudly the energy efficiency standards that have allowed us to lead the nation and as you would know in the last 30 years, our per capita energy consumption hasn't gone up, where the rest of the country's has gone up over 50 percent and people put that in dollar terms, anywhere from 55 to 56 billion dollars, you can imagine the economic consequences had we gone the rest of the way of the nation as opposed to our own way. And so, we've led and we continue to lead with the advent of AB32. We were able to keep Tesoro and Valero, the big Texas oil companies, at bay. 60 percent of the voters said we wanted to move down that path of getting to 1990 levels by 2020, not 25 percent below 1990 levels. It's not the highest bar, which is an amazing thing you know, everyone's sitting there, 'my gosh, what's California going to do? AB32's going to put our economy at a halt.' It reminds me of what Michaelangelo said, 'the biggest risk is not that we aim too high and that we miss it. It's that we aim too low and reach it.' I say, big deal, getting to 1990 levels by 2020, but boy, you talk to folks up in Sacramento and everyone's
Makower: But you said before, that one of the things you were able to do with healthcare is to ask the right question, change the way you're thinking, the worldview of that. What's the right questions we should be asking around sustainable economy, green jobs, clean technology, that we're not asking now?
Newsom: Well, I think we are asking a lot of the right questions and that's what's exciting about California right now and you're seeing that manifest in very tangible ways. You're seeing that in terms of the job creation and I know your numbers. I've seen other people's numbers, but in '08, '09, we saw the green tech sector grow three times faster than the rest of the California economy and you go back in the extent of 2005, you see those numbers increase, go back to '95, they get even more impressive. The problem is they're still a very small percentage of the overall economy so you're dealing with a very low baseline and the opportunity is the endless opportunity to incorporate these strategies into everything we do so that green is not some separate department like San Francisco's Department of Environment. My job as mayor was to integrate that consciousness into everything we're doing from the Department of Public Works to how the library system works to our police and fire departments in terms of adopting and adapting a sustainable framework. Interestingly, and I'm very intense about this for two reasons, one I believe in it. Second, I think San Francisco has developed a framework, where we've established some evidence. You're in the greenest big city, arguably, in the United States of America, and that's important to note. We were able to achieve some extraordinary things easily. It wasn't that difficult. There's nothing particularly complex about this. We have the highest green building standards in the city than any city in America. We have the highest recycling rates of any city in America. You thought gay marriage was controversial? Try requiring composting in your city. That's real controversy. We have a requirement for composting. No other city in America does. We have now 77 percent diversion rates and by the way, those are old numbers. That's the new number that was just announced that is a trailing number. I imagine we are over 80 percent today.
Makower: And that's total waste, not just composting, that's total waste diversion, right?
Newsom: Total waste diversion. That's why we got into things like plastic bag bans, which offended a lot of the big mucky-muck lobbyists that get paid by those big companies and some, i guess, of their shareholders, though I don't think their shareholders were well-represented by that industry. We got aggressive on plastic water bottles. You know a billion plastic water bottles a year, I appreciate my friends at Coke and Pepsi, they're the biggest. You know that's New York tap water, Dasani and Aquafina. It's an amazing thing when you guys go buy Aquafina, Dasani, you're buying tap water from New York state. What you're really actually buying is a plastic water bottle that you're going to get rid of, 'cos the water you get out here is purer and cleaner, and the municipal tap waters are purer and cleaner. I'm not here to offend Coke and Pepsi. I'm sure there's some folks here from Coke and Pepsi, but it's one of the greatest businesses of all time. Congratulations. I am just stunned by your success. But a billion of those bottles, even if they're bioplastic, end up in our waste stream and end up in that gyre and that's significant. But you see it's the sum total, I guess in the long-winded point, of a lot of small decisions, you know, we want to be the electric vehicle capital of the world out here in the Bay Area and we're working with Tesla. We're working with
Makower: So California is not San Francisco. You loved, as mayor, to go around saying that you were mayor of a city that was basically 49 square miles surrounded by reality.
Makower: Alright, good line.
Newsom: It was a good line.
Makower: Always still gets a bit of a chuckle and it's probably true.
Newsom: In some ways.
Makower: But California is, suffice to say, a very, very different state, in terms of everything, the politics, the geography, the resource availability. It's much more dispersed than, obviously the very concentrated, a 49 square mile geography. How, what's going to be different now that you're trying to push this at a much larger scale?
Newsom: I guess what's different is I don't. I completely understand what you're saying, I don't buy it. I go up to Fresno town, I don't, I can't tell the damn difference between someone sending their kid to school in Fresno and my neighbor sending their kid down the block in Noe Valley. They care about the quality of their public schools. They care about being safe when they walk out and get the paper in the morning. They care about being able to breathe clean air as much or more than anybody else. So I don't necessarily buy it. I think they'd love the opportunity to try out a new electric vehicle. They're just worried about range anxiety. You know, 1800s, we would have been worried about range anxiety because there weren't gas stations. So you got to
Makower: Well, I think that's an important role and one of my contentions about why we haven't moved as quickly, as fast, and as far as we could is that leaders, political leaders in particular, but also business leaders and civic leaders with a very few exceptions, Van Jones being one of them, have not really gone out there and helped us create a vision of what happens if we get things right.
Newsom: That's right.
Makower: And, it seems to me that that's an opportunity for you with this great passion, this incredible knowledge base, and this track record in San Francisco, is that even a role that you can play because that's important?
Newsom: Yeah, you just. Again, people need to see evidence in life. I mean, it's still an abstract question and we're now moving away. Global warming, you can't, politicians can't even bring it up. Two things you can't even bring up now are healthcare, which is pretty damn remarkable, since no one got that new health insurance that's been promoted and promised and I don't know if you saw the numbers today, how many kids in California don't have health insurance today, one of the worst states in America. You can't talk about that 'cos it's politically unpopular and you can't talk about global warming any either. You saw that big wind
Makower: I want to get to questions in a minute, but, from the audience, but I think, a lot of people have asked me to ask you. What are you specifically going to do around this?
Newsom: Well, I'm a fanatic. Look I want to -- for four years, I've been trying to get this damn wave or ocean project off the coast. Now I get to be State Lands Chair and on the Ocean Protection Council, so we're gonna do that. We're going to have the first commercial ocean probably and you know, everyone's going to do a little Google, if you have a little thing, you'll see someone who's been more maligned about that than anything I've ever done. You know this fanciful wave energy thing, they think I'm a nut, it's too expensive, all the experts say, same thing they said about solar, same thing they said about wind.
Makower: But the amount of power coming through the Golden Gate. You know the statistics better than I do. It's a tremendous amount.
Newsom: I don't and tidal, you see, is where it all started. I love failure. It's the secret of success as you all know. I think Winston Churchill said it best, 'The secret of success is moving from failure to failure with enthusiasm.' Well we did a tidal, I came up with this crazy tidal idea about the Golden Gate, so that it would flush in and out of the bay. We'd basically take a wind farm, put it underwater, harness that dense energy coming out. Turned out it was very expensive, but what it did is the study actually opened up the new idea, which was ocean power about four and a half miles off our coast, which turns out to be a lot less expensive and more exciting in terms of its prospects. We're four years now into those new studies and next year, we hope, I was hoping late this year, it's possible, but early next year, we'll put the first pilot out there for the first commercial project. Oregon is ahead of us on this. Washington is slightly ahead. Oregon's way ahead. California should lead the nation in terms of these energy projects and again this is stuff that is happening, it's not science fiction, in Scotland. It's happening in the UK. It's happened dominantly in Europe and new technologies are coming up, some of you may share them every day. So that's one thing. Second, as Chair of the State, I'm just going to start by putting electric charging stations up and down the spine of the state. You got all those rest stops. You own them. What do we do? Why not just, in every rest stop, you got a couple little charging spaces and you get all those big automobile companies that are rolling out all those electric cars, they pay for them. So I'm gonna do that next week and I've already called the companies. They all said they'll do it. So we'll just have a spine for electric vehicle chargers standardized up and down the state with everybody's version of their next new latest technology. That's number two, just to keep people thinking. We came up with local solar incentive programs that have been a godsend and with the PACE opportunities, once we beat up Fannie and Freddie and we can get the PACE program back, there's the greatest opportunity of financing on people's property taxes and that's really got to be the dominant focus, I think, so that we can really jumpstart the investment. Quick fact and stat. And you guys know this came out in, it's '09 numbers, you know everyone's got their own set of numbers so but it was an interesting study. You put a billion dollars. This is just again
Makower: So tidal power, electric vehicle backbone, and building retrofit.
Makower: I can't wait 'til month two.
Newsom: Well, that's just, yeah it's a short list, but no, I'm a fanatic. I would love adopt recycling, construction debris ordinances in every county in the state. The final point, I know we're out of time, and I have maybe one question. Cities are where it's at. Forget, you know, and that's sort of the strange thing, you kind of invited me three weeks late, big deal, some guy from the state. It's nice what states are doing. States are laboratories of democracy, but cities are laboratories of innovation. You know, for the first time in human history, I think it was 2005, people quibbled about this: more people on the planet are living in urban centers than rural and suburban areas. You have this mass urbanization thing happening; million, million and a half people moving into cities. You're going to have five billion people by 2030 living in cities. As our population grows by 2050 to about 9.2 billion from its 6.7 billion where we are today. You had 111 cities in 1960 with a million people or more. Today, there's over 300 cities with a million people or more, but the advent of mega-cities is really the biggest story in the world and that's the cities with 10 plus million people. There'll be 26 of them, we're almost there, in the next few years. There's not enough water and there's not enough energy capacity to service those cities. Cities are consuming today 75 percent of the earth's natural resources already. So, if you're going to get serious about the issue of innovation and entrepreneurism and the green tech sector, serious about global climate change, which I think is getting reinforced as significant every week when a new study comes out even though again it's not politically popular, you've got to focus on what city managers are doing, what city administrators are doing, city council members are doing, mayors, and boards of supervisors. I'm so, I'm just stunned by the lack of the investment in that focus as it relates to this debate. So, as lieutenant governor, my job is to be a convener for the counties because none of this will happen unless Mayor Reed says in San Jose, 'I agree with you on a standardized plug for electric vehicles,' or the mayor of Oakland or the mayor of Larkspur, California. That's how we're going to change this paradigm and when I talk to mayors, they get this, Republican mayors and Democratic mayors, and therein lies the great opportunity to organize. You know, you can do, and I'll close with this, one of the obvious things you can do. We spend billions of dollars a year to buy things. Why don't we buy good things and look at the lifestyle costs of those good things? We did it with plug---We already have half of our vehicle fleet in San Francisco on alternative fuels. By the way, our public transit fleet is 100 percent alternative fuels. We get fats, oil, and grease, call it a FOG program, from our restaurants. I'm a former restauranteur. We pick it up. We convert it to biodiesel, B20, that's why you see frying pans on the side of a lot of buses 'cos it's a grease cycle program to convert our old diesel fleet into biodiesel. And we now run a hundred percent on alternative fuels. Doesn't cost us much at all to do that. We have the ability, in relationship though to other cities, to begin to bulk purchase, to bring down costs, to use our scale to do open orders. Plug-in Partners started with mayor of Austin. We come and go mayors, the old mayor of Austin. We went out and we got 24, this is a true story, there's 26 big cities, we got 24 cities to do an open order to GM to buy certain alternative fuels for cars and we got close to a thousand vehicles we committed to, I think it was '09 calendar year. Imagine if the states came together and did the same thing. Billions of dollars a year we spend in the state on stuff. Why don't we buy better stuff? That then will drive a market and your business. These are basic things to send real signals that are pragmatic and real and don't require a lot of legislative push or heft, require a pen and a piece of paper because, as governor, as mayor, these are executive orders, you can simply do these things. Through the usual competitive bidding process, you can change that paradigm and so that's what I'll be pushing as Lieutenant Governor and I'm going to be hopeful in my expectation that Governor Brown, gets this as well as anyone, is going to push this even further.
Makower: Question right over there. (pans briefly to the person asking the question) I'm Keith Schwartz, an investor and an entrepreneur in the green tech/clean tech space. You know that this is the development of these businesses in this industry is a worldwide playing field and you talk about some of the things we can do to try to accelerate this in California, in the U.S. A lot of these industries that were started and innovated here, we're being passed in the fast lane by China, Germany, countries in other places and what can realistically be done now to help level that playing field and help us accelerate these businesses here before where we come second place?
Newsom: Well, you're specifically right. Germany and China, what, i think it was last year?, China put 11.7 billion dollars in loan guarantees into solar and they're just now clobbering everybody in solar manufacturing, but it is interesting. You know, all the ingenuity, you guys, all these startups, all these little ideas that are being created here in California. You know, it's 26 percent, the last numbers I saw, and I'm gonna follow up with you (refers to Joel Makower) after all of this, after you're done with this, to see if this is true, but 26 percent of these green jobs we're creating in California are in the manufacturing space. We have about 11, California has about 11 percent, of our job base in manufacturing. It's going like this (signals by pointing down) just in the last 30 years in the United States, but in the green tech sector, it's growing, not just in solar. There's certain things you have to accept, those cold realities about being competitive 'cos you don't want to race to the bottom. We want to race to the top. That's ingenuity, entrepreneurialism, it's leading, in terms of our investment in people and creativity. And that's where we need to focus, but at the same time, as you brought up Van, as he says all the time, 'You can't install solar by shipping someone's home over to China and having it shipped back. You need someone locally to do that installation.' So, you focus on those areas where you have a competitive strength, a self-evident one, in terms of the installation and maybe just picking parts together as opposed to manufacturing those parts and installing them and so those are the areas that I'm looking at in my role, as economic development director, to put together regional plans for California. There's no economic plan for California. There shouldn't be. There should be regional plans, sum total that makes up California's economic plan and really focus on those regions, in terms of their existing strengths. Right here, it would be biotech, life science, nanotechnology, green tech, digital media, digital arts. I would say that would be our, the Bay Area's, economy, not excluding others, but Fresno's economy is very different, etc., and how we can organize a workforce development strategy around these things and strengthen those attributes and build those attributes. Obviously, our corporate tax rates are too high. Obviously, we have big problems as it relates to our tax structure generally in this state, which is going to have to be addressed and I say that as a loving Democrat. And we're going to have be more competitive against Rick Perry, who seems everyday to be calling a company in California, and Hailey Barber.
Makower: It's the governor of Texas?
Newsom: The governor of Texas. I mean, these guys are aggressive and we're going to have build an aggressive framework to
Makower: Well, I think it strikes me that the competitive advantage that California has is having you in the leadership now.
Newsom: I don't know about that, but that's sweet.
Makower: And I think that we're really excited in a state that lacks positive news, lacks something to look forward to and look ahead at, it's a tremendous opportunity to have you there and so I want to thank you for being here and thank you for all that you're doing. And please join me in thanking Lieutenant Governor. (Applause)
Newsom: Thank you. Send me ideas.