(00:00:00) My charge tonight is to address the twin (00:00:03) issues of environment and economic development only a short while ago those are two words environment and development when linked together might have been considered an oxymoron. Now those who believe that there is (00:00:17) an inherent contradiction between preserving the natural (00:00:20) environment and achieving a high standard of living (00:00:24) could point to the way our modern economies operate as a justification for that belief because indeed we've built industrial economies that have been characterized by two Central features (00:00:36) wastefulness and fragmentation. (00:00:40) Our societies may be economically efficient. (00:00:43) They certainly are resource inefficient. (00:00:46) For example, our power plants which consume almost 40% of our primary fuels are about 30% efficient. That means over two-thirds of the energy that we burn in the central (00:00:57) plant goes off as waste heat. It is not converted into (00:01:01) electricity and then when the electricity arrives at the home and is used to drive an incandescent electric light bulb only 10% (00:01:11) of the electricity is converted into light. The rest of it is also given off as waste heat combine the (00:01:19) efficiency of the power plant and the efficiency of the light bulb and you get an overall system efficiency of about 3% (00:01:27) Our transportation system isn't much better on average. We travel one to a car (00:01:32) and only about 20 percent of the fuel burned in the engine is converted into forward or (00:01:38) backward motion of the vehicle (00:01:41) in agriculture as much as 75% of the nitrogen fertilizer that we apply in our Farms is not taken up (00:01:47) apply to our plants is not taken up by the plant as (00:01:51) much as 90% of the (00:01:52) pesticide is wasted in (00:01:54) forestry when we cut down a tree a little (00:01:58) less than half of that becomes useful in product either as Lumber or as paper (00:02:04) and after we manufacture these products and they end up in the final consumers hands, we throw away (00:02:11) 80% of them after a single use (00:02:15) Now this profligacy in the way that we (00:02:17) use materials results from and contributes (00:02:21) to the second (00:02:22) key characteristic the second key feature of modern society, which is fragmentation and separation. (00:02:31) We've separated the producer from the (00:02:32) consumer in all sectors the farmer from the kitchen the power plant from the appliance the management from the worker the worker from the workplace the (00:02:41) bank from the borrower and the depositor and (00:02:44) ultimately the government from the people the average commuter commutes about 20 miles (00:02:49) to work the average kilowatt hour of electricity travels about (00:02:53) 200 miles from the power plant to the Appliance (00:02:56) the average food molecule travels about a thousand miles (00:03:00) between the farm and the mouth. I hadn't realized just how far we had gone in that direction until a few years ago when I wandered into a Saint Paul restaurant and after lunch as my want. I picked up a toothpick. And I noticed that the toothpick I guess all toothpicks have to be wrapped in in plastic these days anyway at the bottom of the toothpick it said Japan (00:03:26) and I thought to myself Japan has (00:03:28) no wood or very little wood and has no oil (00:03:32) and yet it was considered economically efficient (00:03:36) to send our little pieces of wood to Japan wrap them up in little pieces of oil and (00:03:42) send them back to st. Paul so I could (00:03:44) get the food out of my teeth. Well, you remember a few years ago that our former Governor from Minnesota decided to get back at your pan for this dastardly deed and decided that we would manufacture (00:03:58) disposable (00:04:00) Chopsticks. That would be exported from Minnesota to Japan and the plant did set up and did (00:04:08) operate and I had a picture in my mind's eye of these two (00:04:11) ships passing each other in the night in the Northern Pacific (00:04:15) one loaded with little pieces of wood (00:04:18) on the way from Japan to Minnesota and the other loaded with little pieces of wood on the way from Minnesota to Japan now, I'm sure an economist in the audience can explain to me why that's economically efficient but from an environmental perspective. It's nuts (00:04:34) a separation not only Fosters (00:04:36) environmental pollution. It also breeds managerial and political in efficiencies (00:04:42) by separating those who make (00:04:43) decisions from those who feel the impact of those decisions (00:04:47) by separating communities who benefit (00:04:49) from those Community from those decisions from communities who are hurt we encourage poor decision-making by separating government from the people and the corporate owners from their communities (00:04:59) and their workers. We weaken the (00:05:00) Democratic Spirit and the Civic Spirit by separating the producer from the consumer. We undermine the ability of the manufacturer to know what the customer wants and what the customer needs (00:05:13) and when we separate Producer from the consumer we also are forced to rely on ever longer (00:05:19) Distribution Systems, which (00:05:21) themselves are not only expensive and environmentally (00:05:24) damaging but which invite the use of government Force to build and defend those Distribution Systems transportation systems are physically invasive, you know, it's interesting in some ways that the (00:05:37) one use of government Authority (00:05:39) that liberals and conservatives both agree on is the ceasing of private property for the purpose of building Transportation Systems about 15 years ago or so. I woke up I lived on a farm (00:05:53) which I owned in North Western Maryland (00:05:55) the panhandle of Maryland near the West Virginia border (00:05:58) and I woke up to find some people banging in (00:06:00) stakes in the front of my porch with a little red flags on them. And I said what is going on they said well where the survey team because we're going to be building a freeway through the middle of your living room. It looks like (00:06:13) Well, they were building a freeway through the middle of my living room. So they could save 12 (00:06:17) minutes according to their own figures 12 minutes on the way from the Port of Baltimore into Ohio by truck. It took 10 years a 400% increase of the price of oil and a Federal Regulation that there would be a speed limit on federal interstate highways of 55 miles per hour before we managed to stop that freeway from going through but many people haven't stopped those freeways (00:06:44) here in Minnesota people might remember in the night late 1970s the war between the farmers and the high voltage (00:06:51) transmission lines where police helicopters flew shotgun to protect the transmission lines, which are protect the people that the transmission lines as they went up during that time (00:07:05) when people won't sell their land for transportation systems, (00:07:08) we seize it (00:07:10) when foreign governments whom sell their (00:07:11) land for transportation, We seized them those of you who know the history of the Panama Canal know that before the Panama Canal it wasn't a Panama. There was a Columbia at Columbia had a section of Columbia little Province called Panama, but there wasn't a country of Panama. And so Teddy Roosevelt sent down the ships and created the government the country of Panama and within a few days signed a treaty in English for Perpetual control of a third of the Panamanian territory. In order that we would have transportation routes from the eastern part of the United States to the Asian markets and to the West Coast. (00:07:53) Well, that's a snapshot (00:07:55) of industrial economies. That's a snapshot (00:07:58) of the situation at is as it has been but not as it will be because about 20 years ago the Dynamics of (00:08:04) History began to change (00:08:06) and they began to change in large part because of the environmental movement the environmental movement convinced us (00:08:13) to change the rules (00:08:15) and it did so in large part by teaching us the distinction (00:08:19) between price and cost. (00:08:22) Now price is what we or (00:08:25) what I as an individual pay for a product or a service cost is what we as a community pay. (00:08:34) Unfortunately what we pay at the store or the gas pump often has little relationship to the full cost of extracting the raw material processing it into a final product delivering that final product to us and disposing of it afterwards a Marketplace works best (00:08:51) when it relies on accurate price signals. Well, let me give you an example of what I mean by the difference between price and cost an example from a product (00:09:01) that That is near and (00:09:03) dear. I think to minnesotans hearts and (00:09:06) rock salt now rock salt is almost literally Dirt Cheap. It costs about a penny or two (00:09:13) a pound about $20 a ton. And it's a very effective D. Aye sir on road waves, (00:09:20) but it also has a cost and the cost is to the corrosion of our cars the cost is to the (00:09:27) corrosion of our bridges a (00:09:30) parking (00:09:30) ramp in Minneapolis collapsed. I believe three or four years ago (00:09:35) because the rock salt had eaten away the reinforced (00:09:38) steel the steel rods within the concrete itself (00:09:43) rock salt gets into groundwater and pollutes it with (00:09:45) sodium which is bad for people with high blood pressure. And it also destroys roadside vegetation. (00:09:53) Some people got together a few years ago both federal government and the New York state government and estimated what the actual (00:10:00) cost of rock salt. (00:10:02) Was and they came up with a cost of between 40 cents and 80 cents a pound (00:10:09) between 16 (00:10:11) between $800 (00:10:13) and $1,600 ton. (00:10:17) Now what that means is that when the highway department this year buys a (00:10:21) ton of rock salt and they will be buying actually tens of thousands of tons of rock salt. They (00:10:27) will be paying twenty to forty dollars a ton. But we all will be paying eventually from the damage of that (00:10:33) rocks oil salt as much as sixteen hundred dollars a ton. (00:10:38) Now when alternative to rock salt exists, there are other ways to D ice (00:10:43) the ice on the roadways an (00:10:46) alternative product is called calcium magnesium acetate. (00:10:52) It is made right now from natural gas, but it can also be made from wood wastes. (00:10:59) But if it is made from wood wastes its price would be about 16 (00:11:04) to 18 cents a pound versus a penny or two (00:11:08) for rock salt but it's cost (00:11:11) would be 16 to 18 cents a pound (00:11:15) because it is not (00:11:17) corrosive. It is not polluting. It is not harmful if it moves into the groundwater Supply (00:11:23) but how do we get the highway departments (00:11:26) to pay a lower cost but a higher price that's been the challenge of the environmental movement over the last 20 years. (00:11:35) We've begun to internalize the environmental (00:11:38) costs of our wastefulness into a growing number of products (00:11:43) and in so doing we have begun to change the comparative economics of wastefulness and the competitiveness of renewable (00:11:51) resources and I would (00:11:52) submit to you that in doing so we are beginning to change the underlying the underpinning (00:11:57) foundations of Joe Society take garbage much beloved subject. We (00:12:03) found out in the late 1970s that landfills were leaking and we said no more to the land disposal of unprocessed wastes. We didn't run out of space my goodness. You have enough space probably within 20 miles here to bury the next 200 years worth of garbage that generated by all of (00:12:20) Minnesota. We didn't run out of space. We (00:12:22) made a political decision based on our new awareness of the distinction (00:12:27) between price and cost and that decision (00:12:31) in turn drove the price of disposal skywards. That is we weren't building anymore landfills. We couldn't dump on the land therefore the price of (00:12:40) disposal skyrocketed in (00:12:42) Minneapolis, the cost of disposing of a ton of garbage went from $10 a ton of 1982 almost (00:12:49) $100 a ton in 1990 and that is what is driving the recycling movement (00:12:57) because the value of a ton of scrap. Who's print in 1980 which was about $25 a ton was about $25 a ton in 1990 the value of the scrap material didn't increase but the avoided cost of not dumping that ton into the local landfill the avoided cost of not dumping that ton increased from $10 to (00:13:21) $100 or ninety dollars a ton. (00:13:24) It is the internalization of the true cost of disposal that has making the recovery of scrap (00:13:29) material economically economical when we talk about waste we must go beyond a definition that only includes municipal waste (00:13:37) because there's more (00:13:39) agricultural waste out there than there is municipal waste (00:13:43) there's some 350 million (00:13:46) tons of agricultural and Forestry waste generated each year. Now. This (00:13:51) isn't the waste that's left in the forest or on the fields. This is the waste after you've taken the plant matter from the In from the fields into the processing plants into the lumber Mills into the paper (00:14:04) mills into the corn Mills in the food processing plants. That's where 350 million dollars of waste exists. (00:14:12) And as we raise the cost of disposal of that type of waste (00:14:16) they also become valuable materials. (00:14:20) Take the product (00:14:21) called way now. I'm not a farm boy. So when I grew up I grew up with with Little Miss Muffet story Little Miss Muffet sat on a tuffet eating her curds. And whey and since I wasn't a farm boy, I have no idea what curds and whey were and I was too embarrassed to ask and it took several more decades before I discovered what curds and whey are you take 10 pounds of milk and you'll get 1 pound of cheese and nine pounds of way, which is about ninety one percent water and about nine percent (00:14:56) solids way is not hazardous. But if you dump it into the sewage system, it has a very high (00:15:02) oxygen demand and a very high oxygen demand (00:15:06) means that it can suffocate plant (00:15:08) matter and suffocate fish. That is it robbed the oxygen in the water (00:15:11) and so sewage treatment plants began to charge a higher price for treating way or to require the (00:15:17) pre-treating of way from (00:15:20) Plans and in doing that they raise the cost of disposal so that today the cost of disposing of way or pre-treating way can be as much as seven cents a pound that is seven cents of the (00:15:30) pound of cheese that you buy in the store might be the cost of disposing of the way (00:15:35) and when that happened entrepreneurs began to convert waste into wealth, they extracted the protein from the way and that has become a very valuable food additive and they extracted the lactose or the milk sugar and converted that into ethanol (00:15:53) which you can put into your fuel tanks. In (00:15:56) fact the Kraft cheese factory and Melrose Minnesota is the third (00:16:00) largest ethanol producer in the state of Minnesota (00:16:04) down south sawdust has become (00:16:06) a disposal problem (00:16:09) Lumber Mills generate a great deal of sawdust often more sawdust than they (00:16:12) can burn for their own energy needs (00:16:15) also sawdust is a hazard in the sense that it will ignite with Sparks it (00:16:20) Difficult to burn (00:16:21) and if they want if they dumped it on a landfill the landfill has problems because it tends to blow around and so often landfills in the South have begun to say we don't accept sawdust. And once again as we raise the cost of disposal entrepreneurs came in and said, we've got a better way of doing things a plant opened up just last (00:16:41) summer in Missouri, (00:16:43) which takes sawdust and converts it into (00:16:47) number six fuel oil and activated carbon (00:16:51) now activated carbon is right right now made from (00:16:54) coal and natural gas activated carbon is used in wastewater treatment plants and it's also used in toner in you're copying machines. (00:17:04) So we're taking sawdust and we're converting it into a fuel and an (00:17:08) industrial material that are competing with fossil fuel based materials right now, and we're doing it because we raised the cost of disposal all we internalize the Environmental costs into the price of the product (00:17:24) a new comprehensive accounting (00:17:26) system would substantially raise the costs of fossil fuels when the gulf work. I (00:17:32) calculated that when the Gulf War occurred at the cost of the Gulf War (00:17:38) should at the pump have shown up as a 25 cent a gallon increase in the price of gasoline (00:17:44) other people have estimated that the ongoing cost of protecting our supply lines to the Middle East (00:17:49) should raise the cost of gasoline by 40 to 50 cents a gallon (00:17:53) and the American Lung Association puts the medical costs not the foreign security costs, but the medical (00:17:59) costs of gasoline at another 40 cents per (00:18:03) gallon in other words. If we paid the real price (00:18:07) of gasoline at the gas pump we might find that gasoline was priced out of the market. Fossil (00:18:14) fuels are not only used for making energy, but they're also (00:18:17) used for making hundreds of industrial materials and here (00:18:20) also, we're raising (00:18:22) the price by internalizing the true costs. (00:18:25) For example, this decade were going to phase out the use of chlorofluorocarbons, which are petrochemical based (00:18:31) compounds that destroy the ozone layer (00:18:35) Los Angeles and the federal government soon are imposing very strict environmental regulations on what's called volatile organic compounds that light fraction of hydrocarbons that are emitted into the air by Backyard barbecue lighter fluids or by (00:18:51) pain sore by lacquers, very strict regulations, (00:18:54) and the result has been to encourage the production of new industrial materials as well as fuels not from (00:19:03) petroleum, but from plant matter not from hydrocarbons, but from carbohydrates, (00:19:12) Anything that you can make out of a (00:19:13) hydrocarbon you can make out of a carbohydrate anything you could make out of fossilized plant matter because that's what a fossil fuel is. You can make from living plant matter (00:19:24) and although some of you might not know this once upon a (00:19:27) time we did the (00:19:29) first plastic was invented (00:19:31) in the United States in the 1870s and it was made from cotton (00:19:38) and the second plastic which was a plastic that was used to build car radios after World War one (00:19:45) was made from wood pulp (00:19:47) and the first film plastic is still around. It's called cellophane. Cellophane from cellulose (00:19:55) cellulose, which is a basic wood material (00:19:58) and in the late 1920s and I want your entrepreneurial employee of the Minnesota Mining and Manufacturing company, which is now called 3M experimented cellulose put a little adhesive on the back of it. (00:20:11) And we invented Scotch tape (00:20:15) the first synthetic fiber we still with us as well. It's rayon and it's made from cotton (00:20:22) and it's also made from wood from cellulose from would (00:20:27) we make industrial chemicals? We make Pharmaceuticals. We make paints we make dies from a king's we made all of those things initially from plant matter and then after World War II not that long ago. If the World War II the price of oil dropped through the floor. We had large export markets from our farm (00:20:44) products. And so we didn't need those industrial markets any longer or not as (00:20:48) much and petrochemicals took (00:20:51) over now. The pendulum is swinging back and it's (00:20:54) swinging back because we are internalizing the environmental costs of petrochemicals right now. One third of all, the colored inks that are used in newspapers are based on (00:21:08) soil not petroleum not crude oil and that's only occurred in the last five years because they're (00:21:15) safer. A Florida company has displaced the chlorofluorocarbons that are used in cleaning semiconductor circuit boards by inventing a product made from Orange (00:21:29) rinds from Citrix citric Peels and it works according to AT&T which is in a joint venture with that company just as well and it's less expensive (00:21:41) and two companies have now made a plastic out of 100 (00:21:45) percent starch or sugar. (00:21:49) Now, these aren't the kind of degradable plastic bags that you read about that are sort of six percent starch. These are (00:21:54) 100 percent starch or sugar based Plastics (00:22:00) in Germany. The Wella Wella company is now on the market with a shampoo bottle made out of (00:22:06) 100% biodegradable Plastics generated from bacteria that are fed by sugars. (00:22:15) So as we raise the cost of disposal We are encouraging not only new products, but we are encouraging a new organization (00:22:23) of an industrial (00:22:24) economy. We're doing that because we're forcing the construction of to Waste Systems to replace the traditional One Way systems. That is we are forcing manufacturer and processor to begin to gather up the products and the materials that they use and bring them back into their processing and Manufacturing facility. And therefore we're beginning to encourage them to (00:22:45) move back toward their customers. We're beginning to regionalize our (00:22:50) economies as we do that our urban areas, which were one simply disposal sites begin to be redefined as mines redefined as forests redefined as sources of minerals that as we begin to mine our Urban (00:23:05) ores which are used materials, (00:23:09) but the biggest waste of all is not Solid Waste (00:23:12) but waste heat as I mentioned (00:23:14) before two-thirds of all the energy that we (00:23:16) burn, Power plants goes off as waste heat. Well nobody is going to build a conventional big Power Plant anymore. (00:23:23) They're going to capture that waste heat and use it for useful work. It's called cogeneration in cogeneration. You actually take that waste heat off the power plant and you will heat your hot water or you can cool your buildings or you can heat the inside of the buildings. But if you're going to do that, you're going to build your power plant near where your waste heat is needed It's relatively cheap to export to transport electricity over long distances, but it's quite expensive to transport heat (00:23:51) over long distances. (00:23:52) So we're not going to have a large power plant 200 miles away from their customers that's going to pipe in the waste heat to your houses or to your office (00:24:00) buildings. We're going to build small scale cogeneration plants. (00:24:05) Already several state regulatory commissions have begun to internalize the environmental costs of electric power emissions for coal-fired power plants the estimates range from 3/4 of a penny in Iowa to Nevada's three cents a kilowatt hour. (00:24:21) You pay about 6 cents a kilowatt hour on the residential level. If you're a commercial, if you're a business, you might pay four to five cents a kilowatt hour. So these are pretty (00:24:29) substantial environmental costs and they do not yet include the cost of global warming and 50% of the contribution to global (00:24:38) warming is carbon dioxide (00:24:40) and the single worst fuel that you can (00:24:42) use in terms of its contribution to carbon dioxide is coal, which is about 90 92 percent carbon, but Cole is 50 percent of the fuel that we consume in the United States to generate electricity and Minnesota. It represents 60% (00:25:01) So here we have a situation where we maybe just about to price coal out of the fuel Market at the same time as our electric power supply is at least 50% and in (00:25:14) some cases 60 percent dependent on coal. What will we replace coal and other Also fuels with well, we can improve our efficiency dramatically, (00:25:25) but we can also replace it by harnessing (00:25:28) resources that right now are not being used (00:25:31) and I submit to you that we are beginning to move into an era where we're defining waste in a broader way. We're defining we're not only minimizing the waste in the resources that we do use but we're also beginning to extract value from the (00:25:46) resources that we do not use for (00:25:49) example, an (00:25:50) unused resource and Minnesota is wind and those of you who have gone out in the winter uncovered understand how powerful that resource can (00:26:00) be one percent of the land area in Minnesota near Buffalo Ridge in Southwestern Minnesota could generate (00:26:09) at current Technologies 60% of the electrical needs of the state. (00:26:15) In fact, according to the federal government South Dakota The Dakotas and in fact the four states in the Midwest are called by the department of (00:26:23) energy the OPEC of wind. (00:26:27) South Dakota alone could generate more (00:26:30) electricity than the United States about than half of the total electricity that the United States needs or we can use direct sunlight. (00:26:40) Direct sunlight remember I talked to you about the overall system efficiency of generating electricity in a power plant and then moving it into your building and then having an incandescent light bulb all which is about 3 percent efficient and using that for lighting purposes. Well, we've discovered a dramatically new way to light the inside of (00:26:59) buildings. We cut a hole in the roof. (00:27:04) Well, we build bigger windows (00:27:07) on the southern side of the building. It's called daylighting in the architectural profession. I think we just call it lighting for those of us who are growing up without electricity in some parts of the country. (00:27:23) Basically, it works and it works extremely. Well. It's a (00:27:27) soft light It's a Wonderful (00:27:29) light in Germany. They've gone one step further they conduct they concentrate the sunlight on the roof into what they call light tubes tubes in which Guide the light down into chandeliers and major shopping malls are lit by direct sunlight internal (00:27:50) in the bowels. If you will of the building itself now, they're (00:27:53) not lit at night at night. They use (00:27:55) traditional forms of electricity for the lighting (00:27:58) but it reduces their air conditioning needs because light as I said gives off 90 percent of the (00:28:04) energy as heat, therefore you have to air condition it in the summer and it saves energy overall and it pays for itself. (00:28:11) Well, we can also use another part of sunlight, you know sunlight has a lot of different spectrums you go out on the beach and a part of the sunlight makes you warm and a part of the sunlight makes you black and they're very different parts sunburn comes from high frequency (00:28:27) parts of sun light or ultraviolet rays (00:28:30) of sunlight and they're extremely powerful and we can harness them and convert them (00:28:35) into electricity (00:28:37) and we can do that by using a device called. A solar cell now a solar cell for those who have never seen them is a semiconductor device. They usually made (00:28:47) in in in (00:28:49) oval cells that are maybe four inches in diameter. They're very thin. In fact one manufacturer makes them so so thin that they you can blow them away like a leaf they're thinner than a piece of paper and when sunlight hits them it pushes an electron across a boundary and then if you tie out wire to make a complete circuit, it generates just a trickle of electricity, but you tied together many of (00:29:14) these cells and it creates a large amount of electricity (00:29:19) as much solar energy falls on a roof (00:29:22) of a house as is used by that house year-round at current conversion efficiencies of solar cells. Now, we only get about half as much sunlight year round here in (00:29:32) Minnesota as Arizona does but it's still instructive. I think to tell you about a pilot (00:29:37) project done in Phoenix a few years ago. (00:29:40) In Phoenix homes were sold with solar cells on the roof. Now the solar cells were not economically competitive at that time, but the federal government supplied a subsidy to see what would happen and so much electricity was generated from the roof that when you bought one of their homes, you also got thrown (00:29:59) into the deal an electric car (00:30:03) and the roof generated so much electricity that it not only supplied all the internal needs of the house but enough (00:30:10) left over to drive the electric car year-round. (00:30:14) So when the rooftop becomes a power (00:30:17) plant your car becomes a household appliance, (00:30:23) in fact, you begin to develop a symbiotic relationship between car and the roof because the roof Powers the car, but in periods of extended cloudiness the car would have a storage system and it might Supply the (00:30:39) house and Cases of emergency (00:30:42) so as we begin to think about where this is going we need to think about (00:30:46) Technologies like solar cells now, I'm sure some people now are saying this is a little futuristic, isn't it? Well consider this Los Angeles (00:30:55) today and Southern California today have decided that electric cars are their future not gasoline cars. It's a way to (00:31:03) resolve the pollution problem (00:31:05) Los Angeles today has ordered 10,000 (00:31:08) electric cars deliverable by 1995 and the (00:31:12) Southern California Air Quality Management District. Today is building canopies over its parking lots, which are powered by solar (00:31:22) cells which will draw which will power which will charge the batteries of the electric cars which we are employees drive to work the new environmental regulations have changed the rules of the industrial game (00:31:36) and in doing so they are guiding technological development. Entrepreneurial energies Finance (00:31:42) Capital into environmentally sound Technologies the difference in just the last 10 years has been dramatic (00:31:50) in the late 1970s. If we were to discuss an energy efficient or solar energy economy. It would have been considered utopian in 1975 Chase Manhattan Bank in a famous study analyzed the potential for Energy Efficiency in the country and it concluded that maximum energy conservation efforts (00:32:09) could have no effect on future energy needs. (00:32:13) well in the last 10 years improvements in Energy Efficiency have generated (00:32:19) 100 times more energy than has been generated by all new power plants (00:32:24) that is 100 times more energy has been saved in (00:32:27) the last 10 years than has been generated by all new power plants (00:32:31) and the economics of solar energy itself has changed dramatically in 1980 if you put up a windmill It tended to fall down or the blades tended to spin off the cost of electricity was about 25 cents a kilowatt hour which was about six times the going rate of electricity at that time and the wind generators themselves might be (00:32:55) down if you will or out of operation, maybe half of the time (00:32:59) today wind generators are available that is in operation and available for generating electricity 95% of the time and they are generating (00:33:07) electricity of between five and seven cents a kilowatt hour according (00:33:11) to a report last year by the California energy commission wind energy is the cheapest form of (00:33:17) electricity for a new power plant (00:33:21) or take ethanol a liquid fuel that can either blend with gasoline or (00:33:26) can even displace gasoline in (00:33:29) 1980. If you distill a gallon of ethanol, by the way, ethanol in the industry is (00:33:36) called beer because it is it's alcohol. Only (00:33:39) reason you can't drink your gas tank if it's made up of ethanol is because they denature it at the (00:33:44) final process and they put three to five cents three or five percent of gasoline or other Commodities in there. It makes it poison and because it's poison apparently it's there for okay for us to put it in our cars that's another story (00:33:59) but in 1980, we if you were generating a gallon of ethanol it took you twice as much energy to grow the corn if you were using corn for that process as the basis for their process to cook you twice as much energy to grow the corn and make the ethanol as was contained in the gallon of ethanol in 1991 for every one unit of energy that you put into growing the corn and making the ethanol you got three units of (00:34:24) energy out on the other end. It is a net energy yield ER (00:34:31) The prices are coming down but there are many who argue that we needn't wait (00:34:36) until they're directly competitive with their fossil fuel door virgin material based counterparts before buying renewable resources or scrap based products (00:34:45) because of the remarkable economic benefits of doing so because scrap based Industries efficiency based Industries renewable based Industries can form the backbone of a massive community and Regional (00:34:56) Economic Development effort consider the evidence, (00:35:00) six times more jobs are generated per ton (00:35:03) for recycling than for landfilling five times more jobs are generated when wind power generates electricity per kilowatt hour. Then when coal or nuclear are used to generate that same kilowatt hour (00:35:18) and these do not include the (00:35:20) multiplier effects. If you will (00:35:22) that is Minnesota now Imports about 90 to 95 (00:35:27) percent of our (00:35:28) fuels or another way of looking. Garrett is we spend seven billion dollars for energy each year and a substantial amount of (00:35:37) that is used to pay for imported fuels if (00:35:41) we used wind power if we used biomass if we use direct (00:35:46) sunlight, we will be using homegrown fuels and therefore would be creating homegrown jobs. (00:35:54) Now environmental regulations you all know or viewed by the White House as a (00:35:57) handicap in the race for victory in the global economy, but fewer and fewer world (00:36:03) leaders outside this country still believe that indeed for a growing number of the most stringent environmental regulation at home is viewed as a benefit in global competition Michael Porter a professor at the Harvard Business School wrote a book called The competitive advantage of Nations and he found that the nations with the most stringent pollution standards Pollution Control standards at home were also the world leader in (00:36:26) exports of pollution control Technologies and The (00:36:29) Economist magazine. In Britain Conservative Business magazine recently noted and I quote most companies will be only (00:36:36) as green as governments make them the (00:36:38) greenest companies will therefore try to ensure that government policies set environmental standards at levels that they can (00:36:45) match but their competitors cannot (00:36:48) the greenest governments will see such companies as potential allies and in the future green governments in clean countries (00:36:55) will come under pressure from regulated companies to apply green tariffs. And that is what is occurring in the world today countries like Germany, which are now at the Forefront of environmental control Technologies are becoming major spokespeople for green tariffs and stringent environmental standards throughout the world. (00:37:16) So what does this all mean? What would an environmentally sound Economic Development policy look like well I submit to you that it would rely on two (00:37:24) principles (00:37:25) the first prevention. Arne Schumacher, the author of small was beautiful once said the smart person solves a problem (00:37:33) The Genius of voids it (00:37:35) and I think that if we're going to develop a policy it should (00:37:39) have its first principle (00:37:41) prevention. It costs less to prevent the use of materials and packaging for example than to dispose of the packaging or even then to recycle it. It costs less to reduce our need for electricity (00:37:52) and to build a new power plant. It costs less to reduce our need for transportation then to build more highways or even mass transit systems (00:38:01) an emphasis on prevention would minimize the materials that we need (00:38:05) and that leads us to the second principle, (00:38:08) which is to maximize the value we get (00:38:10) from the materials that we do use (00:38:14) An interesting Dynamic of an environmentally sound economy of extracting the maximum amount of (00:38:20) useful work or values from the materials around us is that it tends to be more humanely scaled (00:38:26) scrap based (00:38:27) manufacturers tend to be (00:38:29) smaller in scale and therefore they can produce for a more Regional (00:38:34) or local market than do virgin raw material based manufacturing (00:38:39) for example many mills, which is what they're called in the (00:38:42) industry in the steel industry (00:38:44) were created if you will in the early 1970s, they operate on 100 percent scrap. Why were they created in the early 1970s? Well in part because Lady Bird Johnson decided to beautify America by getting rid of a roadside junkyards in part because junkyards develop Technologies, whereby they could track the material that they had but by the early 1970s the steel industry could get a (00:39:08) reliable supply of scrap steel and the mini Mill was invented it uses. Percent (00:39:14) scrap initially it made pails and buckets and low quality materials and products and then it made higher quality products and then higher product quality products and last year it began to make thin sheet steel, which is the kind of Steel that you use to make (00:39:30) appliances and cars (00:39:32) the mini Mill Market has taken over 30% of the national steel market and the distinction is that the vertically integrated virgin iron ore based steel mill produces about 2 to 4 million tons a year (00:39:46) of product and a mini Mill produces between 200 and 500 thousand tons that is between 10 and 20% of the scale. And therefore it can get its crap locally if it needed to and I could Supply local or Regional markets (00:40:03) boat a no chemical complexes if I can coin a word will be smaller than (00:40:08) petrochemical complexes (00:40:10) ethanol refineries for example are 10% And in some cases even one percent the size of (00:40:18) petrochemical refineries (00:40:20) compare. For example, the economic development Dynamics with respect to the future of Minnesota Transportation fuels between the coke Refinery, which is located in Hastings. Just south of st. Paul and the Minnesota corn processes Refinery and ethanol refinery in Marshall. Now, the coke Refinery is owned by an out-of-state Corporation. It Imports (00:40:46) 100% of raw. It's raw materials petroleum from ever further away (00:40:51) and it's very big. It's supplies 40% of the entire States (00:40:57) gasoline Supply and I might mention it doesn't appear to be a good neighbor in the sense that it's been sued several times by both the state and its neighbors terms of environmental problems. (00:41:09) The refinery in Marshall Minnesota is owned by thousands of local corn Farmers as a Cooperative it gets all of its raw material locally. It sells almost all of its final products locally and it generates about 20 million gallons of ethanol (00:41:23) year about one percent of the state's Transportation fuel needs. (00:41:29) So what do we want in the future to cope refineries or fifty to a hundred ethanol refineries (00:41:37) located in every county in the state? That's the (00:41:40) difference between an environmentally based environmentally sensible (00:41:44) Economic Development future and the past projected into the future. (00:41:49) Well this emphasis on local and Regional production and on the harmfulness of long distribution lines may lead some in this audience to think that my future would actually be an age of isolationism (00:42:00) of autarky that it would be a throwback to earlier medieval societies, (00:42:05) but I think that ignores another (00:42:06) key facet of an environmentally sound future. (00:42:09) And that is the substitution of information for materials. The technological advances in the information field have been truly astonishing everybody agrees that increasing portions of our economies are now (00:42:23) based on information (00:42:24) and information is a sector in which we are learning to do more and (00:42:29) more with fewer and fewer materials. The computer of course is the archetypical example (00:42:36) 30 years ago a computer might have used a ton of metal (00:42:43) and an equal amount of sand (00:42:45) and now you can get a computer with (00:42:47) much greater capacity which uses about 5 pounds of sand and maybe a half a pound of metal in it (00:42:56) and the information economy itself runs. That is the computer economy runs on software. And how is software developed? Well, it's not developed by big blast furnaces and it's not developed by large construction. Material its development its developed by brain power and brain power (00:43:16) runs on food, which is a renewable resource. (00:43:21) And so the highest value part of the most dynamic part of the economy, which is the (00:43:27) information economy is actually run on renewable energy resources (00:43:32) information (00:43:33) Transportation Systems also rely on a renewable resource, the electromagnetic spectrum. It is non-invasive. We don't have to see someone else's property to transport ideas. (00:43:46) Many of the products and services that are now physically transported will soon be (00:43:50) transported through these so-called digital highways software entertainment correspondents and so forth. (00:43:59) The need to transport people as well as products can (00:44:02) also be reduced considerably eight years ago. If (00:44:07) you want to have a video conference in this room in a video conference in California, it would have cost each site a quarter of a million to a half a million dollars for the equipment and several thousand (00:44:17) dollars per hour for the transmission time (00:44:20) today. It costs about (00:44:22) thirty to forty thousand dollars in equipment on each side and it's 30 dollars in transmission time (00:44:30) so that we can conceive of a near-term future where we lay in our fiber optic cables that (00:44:38) allow massive exchanges of communication (00:44:41) where we can communicate visually rather than getting on a (00:44:46) plane or even getting in a car and communicate physically (00:44:51) last year one pharmaceutical firm in the Bay Area decided to install video conferencing equipment at its Quarters and it's laboratory at it now holds meetings through video conferencing. Now, what makes this interesting is that the laboratory is 40 miles away (00:45:10) from the headquarters, but the (00:45:13) firm found that it was economical to install the equipment (00:45:18) at the current (00:45:18) cost rather than habits engineer spend an hour (00:45:21) each way commuting to meetings. (00:45:26) It's truly an irony (00:45:27) that in Minnesota were going through a debate of yesteryear when the technology is moving to tomorrow. We are planning to build another airport when two years ago, the economic lines crossed between the communication of visual images with fax machines and the like and the transportation of people. (00:45:54) So what would a future look like in terms of information? A lot of information you'll just basically if you want to buy a software product in a couple of years, it'll just be sent directly to (00:46:04) your home. You want to dial up a video you won't go to a video store will be sent directly to your home, (00:46:08) but then they'll be some things that you might want to go out and buy but the buying process in the manufacturing process might (00:46:14) be very different. For example, consider what a future book store might look like (00:46:20) well you all know about desktop publishing about 10 years ago. Apple computer came out with a laser printer which allowed you to have not quite typeset quality print, but pretty good and the price of those has gone down the quality of those has gone up. So the today for about fifteen thousand dollars, you can get yourself a laser printer that prints between 20 and 25 Pages a minute of truly typeset quality and we've also had significant advances in Bindery (00:46:52) technology. Now what happens now when we publish a (00:46:56) book I write a book I The manuscript to an editor and editor then edits it send it to a typesetter a typesetter sets. It send it to a printer a printer prints. It sends it to a binder a binder binds. It sends it to a to a to a warehouse a warehouse stores. It sends it to by truck to a retail (00:47:14) store. I go and I buy a book what will happen in the future the future I'll go to the bookstore (00:47:20) and the bookstore will have one (00:47:22) copy of a lot of books (00:47:25) and I'll browse and when I'm finished and I decide to buy one, you'll print it out in the (00:47:30) back. (00:47:31) And if I can't see all that. Well, (00:47:33) I can choose the font size. I'll just have a big fun size (00:47:38) and I'll take maybe eight or nine minutes to print it out in the back. I'll get a cup of coffee or I'll make some conversation and then I'll take it away. Well, what does that what does that do? Well, it gives the author a lot more Revenue it eliminates all of the intermediaries. It makes the bookstore not only a retail outfit but a manufacturing outfit and it's incredibly efficient (00:48:02) because you never publish a book unless somebody wants (00:48:06) it. Right now massive numbers of books are thrown away. They call it remain during which means they're very cheap and then they're thrown away. But in the future, you won't publish a book that is you won't make it into a physical (00:48:21) product until somebody wants it (00:48:23) from an environmental (00:48:25) perspective. That's a very efficient future. (00:48:31) Now I started this talk by talking about the possible (00:48:35) contradictions between environmentalism and economic development. And I end this talk by saying that there is no contradiction (00:48:43) that in fact the environmental movement of the 1990s is the most pro-development movement in world history because it's a movement that says we've got to change everything we've got to invest trillions of dollars in reconstructing virtually all parts of our economies from manufacturing to agriculture from (00:49:01) transportation to the design of our homes. I'm reminded of a observation by Paul Valery that French writer and philosopher and (00:49:11) he once said the central problem with our times (00:49:14) is that the future isn't what it used to be. And John Nesbitt the author of megatrends once said that we are living through a parenthesis of History an in-between (00:49:23) times where we realized that the old ways of doing things have failed but we've yet to devise the (00:49:29) structures and the rules and the customs of the new age. It's an exciting. It's a challenging time to be alive the future shows great promise. I think (00:49:40) especially for those communities and states and regions who understand the new Dynamics and are willing to change their own rules to guide their internal capital and Human Resources into developing new (00:49:53) technologies that will allow them to take advantage of that historic opportunity because it is a historic opportunity environmentally sound Economic Development. It's not an oxymoron, it's Common Sense. Thank you very much.