Climate One: Hank Paulson – Dealing with China

This program was recorded live at The Commonwealth Club in San Francisco on April 28, 2015.


2015-05-17 Hank Paulson: Dealing with China

Hank Paulson believes that climate change is the biggest risk we face, and not just because of the environment. “It’s the biggest economic risk we face,” says the former treasury secretary and co-chair of the Risky Business Project.

But unlike the financial crisis of 2008, he warns, the government won’t be able to bail us out of global warming at the last minute. “We tend to deal with issues nationally when there’s an immediate crisis, rather than a longer-term issue,” Paulson points out. “And the terrible thing about climate change risk is that carbon emissions, essentially for all practical purposes stay up there forever, so it’s accumulative. The longer you wait here, the more costly and the more difficult it’s going to be to avoid the worst outcomes.”

Climate change was just one of the topics Paulson touched on while visiting The Commonwealth Club to talk about his new book, “Dealing with China.” The title is apt — as chairman and CEO of Goldman Sachs, Paulson spent much of the 1990’s doing just that. It was a time of great economic and political reform for the country, and Paulson was allowed rare access on his many visits. He brought the Climate One audience up to date on a wide range of issues, from China’s economy and government leadership to its evolving stances on human rights, the environment and US-China relations.

“I believe that this is the most important bilateral relationship we have in the world,” says Paulson. Despite – or perhaps, because of – the fact that China is becoming our biggest competitor, Paulson believes that working together is the only way to solve the world’s problems.

“So we’re partnering with them in some things and competing in others,” he continues. One issue both countries have publicly agreed on is the need to address climate change. “There, it’s impossible to avoid the worst outcomes if major developing countries, and particularly China, the largest emitters of greenhouse gases, aren’t taking the necessary actions. And they, more than any other of the developing nations, understand the problem and are committed.”

China’s leaders, says Paulson, are focused on air pollution big time. But can China hope to reduce its carbon footprint while struggling to lift the majority of its citizens out of poverty? In other words, is it possible to balance economic growth with environmental responsibility?

“I have always believed that the two go together,” Paulson asserts. “No growth is going to be sustainable, no prosperity is going to be sustainable, if we don’t have a clean, healthy environment. And unless you have a certain amount of economic success, it’s going to be hard to have the ability to do the things you need to do.

“So these are the opposite sides of the same coin, rather than being in conflict.”

Paulson predicts that urban growth, and its attendant environmental hazards, will be a major issue for China, as millions of rural poor flock to its cities. “This country produces and consumes half of the cement, half of the steel, half of the coal — half of all new buildings on earth go up in China. And the urbanization model they have right now doesn’t work, they know it. They built cities for cars, not people.”

The Beijing arm of the Paulson Institute is helping to address some of those issues, by partnering with China’s cities to introduce more sustainable and energy efficient building practices.

But it’s not just a one-way street – there’s plenty that we can learn from the Chinese as well, Paulson notes. “I would cite one in particular: these leaders are very, very pragmatic. They look everywhere in the world for the best practices and then they look to implement them. And…they’re very candid about their problems.

He recalls a conversation in which one Chinese mayor cited his admiration for Reagonomics, to Paulson’s surprise. “I thought, I can’t imagine a US mayor being aware of what the Chinese problems were — and having some views on how to fix them. That’s to me the biggest positive – a practical, pragmatic leadership that recognizes that they’ve got problems, and is going to look everywhere and move to solve them.”

Recognizing their country’s challenges and addressing them head-on has led to visible improvement in the lives of China’s citizens, says Paulson. He has even seen progress in the politically charged area of human rights.

“I view economic issues, I view environmental issues, there’s a whole set of issues that are human rights issues,” he told the audience. “And you have to acknowledge that in the time I’ve been going to China, the living conditions, the lifestyles, the basic rights that the Chinese have, in terms of traveling internally, externally, have just improved dramatically.”

There was one aspect of ‘dealing with China’ that teetotaler Paulson never embraced – the drinking of maotai, a notoriously potent Chinese liquor. How did he sidestep the social pressure to imbibe with his hosts?

“I had a ‘designated drinker,’” he laughs. “I’ve never tasted maotai, and I’m glad I haven’t!”

Host: Greg Dalton

Guest: Henry Paulson, Former United States Secretary of the Treasury and author of “Dealing with China: An Insider Unmasks the New Economic Superpower” (Twelve, 2015)

Related Links:

The Paulson Institute

Risky Business: The Economic Risks of Climate Change

NY Times: The Coming Climate Crash

Dealing with China: An Insider Unmasks the New Economic Superpower

Climate One: The Future of Coal and Powering the Economy

This program was recorded live at The Commonwealth Club in San Francisco on April 22, 2015.


Since the late 18th century, when it emerged as a source of heating and, later, steam power, coal has brought untold benefits to mankind. Even today, coal generates almost 45 percent of the world’s power. But now, the coal industry is at a crossroads, faced with pressure from environmental groups, public health and safety concerns and dwindling support from congress. Churches, universities and other large institutions have publicly divested from coal company stocks, threatening their toehold on Wall Street. With coal painted as the black-hatted villain of carbon emissions, it’s easy to forget how essential it was to fueling prosperity during America’s industrial age.

“Cheap energy certainly is one of the ways that we lift people out of poverty,” says Frank Wolak, a Stanford economist. Wolak points out that between 1870 and 1915, the increased consumption of coal in the United States directly correlates with an increase in GDP. “If you fast-forward to 100 years later, you look at China, you see exactly the same pattern, which is a rapid increase in coal consumption and a rapid increase in GDP in China,” he adds. “It does deliver essentially rapid economic growth, simply because it’s a very cheap source of energy.”

But as we’ve seen over the past 100 years, coal production also delivers greenhouse gases, lung disease and environmental devastation. It’s clear that it’s time to wean ourselves, and our planet, off of coal.

Bruce Nilles heads the Sierra Club’s “Beyond Coal” campaign to stop coal production and exportation. “We have 13,000 people a year dying prematurely from relying on an old, dirty, inefficient fuel source,” he told the Climate One audience. “Today, the choice is between clean, affordable electricity, like wind and solar, which is actually developing and providing more jobs today than in the coal mining sector. So our job ahead of us is overcoming the political barriers that the coal industry has put on our political process to make this transition as fast as possible, so that we don’t have to trade-off providing electricity and people’s health.”

But even as Americans are pushing for cleaner energy, demand for coal has been growing in other parts of the world, particularly China and India. One survival strategy for the industry could be for coal producers to cut their losses here, and focus on shipping their product overseas to power growing nations. But that solution will come back to haunt us, warns Nilles.

“We sit on top of 25% of all the coal in the world,” he says. “We know that if we burn that, our planet is toast. So we have a simple responsibility. Do we allow that to get mined at enormous cost to us? Shipped through our communities with a lot of coal dust along the way, and then ship it overseas so that we have the situation today where coal being burned in China is polluting us here in California?…it makes absolutely no sense for us to be thinking about shipping coal overseas and hurting ourselves, hurting the planet, and obviously contributing to air pollution in China as well.”

Frank Wolak vehemently disagrees, warning that if we ban exports, China will just get its coal from somewhere else. Instead, he believes, what the U.S. should do is put a price on carbon. “If you price carbon, you will certainly reduce greenhouse gas emissions. If you prevent coal exports, you’ll do nothing to stop greenhouse gas emissions globally.

“I mean, simply jawboning and saying, ‘you can’t export’ is not going to change the fact that all the coal is going to get consumed. And there’s many other countries in the world willing to sell China the coal.”

The good news is that China may already be curtailing its coal dependence, as author Richard Martin points out. “In fact, China’s coal consumption was flat last year, after growing at a high percentage rate for decades,” he says. “And there’s a report [that came out] last year called Peak Coal in China, saying that actually the use of coal in China could peak by 2020 or so.”

Martin is the author of “Coal Wars: The Future of Energy and the Fate of the Planet.” Martin traveled from the Appalachias to rural China to interview those involved in the coal industry, from workers to coal barons, and those affected by its production. Martin reports seeing a shift in attitude, away from coal and towards renewables — even in coal-dependent communities such as Craig, Colorado. That town recently built a solar garden, he says, “that is literally in the smokestack of the big 20-mile coal plant, right there in the middle of Craig.”

Any discussion of the demise of coal leads, inevitably, to the issue of jobs. In researching his book, Martin talked with families of miners who go back generations. “Certainly, the miners are angry, the miners are defensive. They see this livelihood that has supported them for generations evaporating, and they don’t know what they’re going to do.”

To make matters worse, the industry itself is abandoning its workers. Mechanization has resulted in layoffs. And as the market for coal is shrinking, the coal mining industry has eviscerated the unions, leaving workers nowhere to turn for support. “These workers are being laid off with no pensions and no rights, and a lot of healthcare costs,” says Nilles. “We, as a country, owe it — just as we did to the loggers in the Pacific Northwest, the tobacco farmers in the south. We need, as a country, to come together and help Appalachia and the workers make this transition with healthcare and pensions and say, “Coal may have served us well over the last hundred years, but it is time, it is long due and over time, to move on as fast as we possibly can.”

What’s next for the coal industry, and the thousands of workers it employs? Having burned bright for nearly 150 years, is it time to close up the mines, shut down the plants and let renewables fuel the planet’s future?

Host: Greg Dalton

Guests: Richard Martin, Author, Coal Wars: The Future of Energy and the Fate of the Planet (Palgrave Macmillan Trade, 2015);
Bruce Nilles, Senior Director, Beyond Coal Campaign, Sierra Club;
Frank Wolak, Director, Program on Energy and Sustainable Development, Stanford University;
Brian Yu, Senior Analyst, Citi Research

Related Links:

Sierra Club: Beyond Coal

Peak Coal in China

Universities Price Carbon

Coal Wars: The Future of Energy and the Fate of the Planet

Climate One: Net Zero: Homes and Waste

This program was recorded live at The Commonwealth Club in San Francisco on April 22, 2015.


Conservation begins at home – literally. And the ultimate in energy conservation, of course, is a home that produces as much energy as it uses. Net Zero homes are designed from the ground up to do just that, from insulation material (New Zealand sheep’s wool is optional!) to light fixtures to rooftop solar panels. But is there a tradeoff to energy efficient home ownership?

For Sven Thesen, Net Zero living doesn’t mean giving up the comforts of home. He recalled his family’s decision to make their dream house a Net Zero house: “My wife’s requirement was it had to be beautiful,” he told the audience at a recent Commonwealth Club gathering, “and so it was beautiful. And then, it has to be functional and comfortable. And let’s see how energy-efficient we can make it.”

Powered by a 5.9 kilowatt photovoltaic system, the Thesen’s house uses roughly a quarter of the energy of the average Palo Alto home – as well as powering a curbside EV charger, available free of charge to anyone who wants to pull up and plug in.

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Climate One: New Food Revolution

This program was recorded live at The Commonwealth Club in San Francisco on November 5, 2014.


One more hungry mouth to feed? Try 9.6 billion — that’s the earth’s projected population by 2050, according to a United Nations report.

Dinner was on the table, figuratively speaking, at a recent Climate One event at The Commonwealth Club. It’s estimated the amount of food needed to feed the planet will double by mid-century, so how will we manage the world’s food supply? Is the solution to simply produce more food?

“In a word, no,” says Jonathan Foley, author of National Geographic’s recent cover story A Five-Step Plan to Feed the World. While food production has reached the equivalent of “drill, baby, drill – let’s just get more stuff,” he continues, “we’re now exhausting the ability of our agricultural system to simply produce more and more and more. We’re going to have to be more thoughtful about the food we actually grow today, and the nutrition and opportunity delivers for people around the world.”

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Climate One: Power Ball: T. Boone Pickens

This program was recorded live at The Commonwealth Club in San Francisco on March 24, 2015.


You might not expect a billionaire to pick up hitchhikers on his plane, but T. Boone Pickens is no ordinary billionaire. The CEO of BP Capital, who made his first billion in the oil business, recently visited the Commonwealth Club for a discussion on the future of the oil industry.

But first, he had a story to share, one that belies his humble Oklahoma roots. The last time he visited the Commonwealth Club, he remembered, he issued a blanket invitation for anyone in the audience to join him on his plane. Ordinarily his offer has no takers. “You aren’t going to find one or two people to go to Amarillo, Texas,” he laughed, “But then this guy raised his hand.” Turns out, it was the son of an acquaintance of Pickens’ whose mother in Amarillo was ill. “I said, “Yeah, come on. Jump in.”

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Climate One: Climate Denial, Education and Politics

This program was recorded live at The Commonwealth Club in San Francisco on December 16th, 2014.


Do you believe in climate denial? To hear climate scientists tell it, there is a war being waged on science by government opponents and special interests, designed to fuel skepticism and discredit their work in the eyes of the public. Two of them told their stories recently at The Commonwealth Club.

Ben Santer of the Lawrence Livermore Laboratory says that being a climate scientist today feels “a little scary.” He’s been targeted by congress and threatened with referral to the Justice Department; threatening emails from strangers have filled his inbox. Michael Mann, a professor of Meteorology at Penn State who has written on the climate wars, tells of having his emails hacked and used out of context to malign him, his colleagues and climate research. “I see that as a direct assault,” he told the audience.
“Not just on us, but our children and grandchildren, who stand the most to lose if we fail to act in time.”

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Climate One: The Carbon Bubble

This program was recorded live at The Commonwealth Club in San Francisco on March 12, 2015.


If you’ve got fossil fuel stocks in your retirement account – and most of us do, whether we know it or not – you could be in for a bumpy ride. England’s Central Bank has said that coal, oil and natural gas reserves that determine the future earnings of those companies, and therefore their stock prices, may be overvalued. And as supply grows and global demand decreases, oil prices are dropping by the barrelful.

So how do financial managers and investors plan to ride this one out? Several of them joined host Greg Dalton for a Climate One discussion of what the carbon bubble means to our financial futures.

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Climate One: Clean Cloud

This program was recorded live at The Commonwealth Club in San Francisco on March 3, 2015.


As the web moves to the cloud, more and more of us are asking what powers the data centers that fuel our browsing. How much carbon is being consumed when you stream from Netflix, surf Youtube or weigh in on “what color is this dress?” And is there a way to take some of the pressure off of the grid – and off of the climate?

Those are questions Greenpeace began asking several years ago, says senior policy analyst Gary Cook. “The IT sector has a huge energy footprint,” says Cook, “and it was growing very rapidly. If you aggregate all the demand of electricity from the cloud, for the data centers and the networks, ranking among countries, we would rank in about 5th or 6th in the world. So it’s quite significant.”

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Climate One: Weather Whiplash

This program was recorded live at The Commonwealth Club in San Francisco.



Deputy Director, California Governor’s Office of Planning and Research

Director of Strategic Communications, Climate Nexus

Administrator, National Oceanic and Atmospheric Administration

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Climate One: Cheap Gasoline

This program was recorded live at The Commonwealth Club in San Francisco on February 27, 2015.


For the past few years, skyrocketing oil prices have had Americans on a gasoline diet. We’re walking more, using public transportation, opting for weekend “stay-cations,” even trading in our gas-guzzlers for hybrids. Ten years ago, the consensus was that oil demand would go up as supply went down, and prices would follow. But as it turns out, the opposite was true. So, what happened? That was the first question host Greg Dalton put to his guests at a recent Climate One forum.

The last five years have seen a significant – and unprecedented — shift in American’s driving habits, says Bill Reilly, a former head of the EPA. “We leveled off in terms of vehicle miles traveled,” he says, “Now, there are more of us, there are more cars that are being sold and manufactured every day, but at the same time we’re driving less.”

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