Twenty-First-Century Environmentalism: How Protecting our Environment will Create Economic Growth

Council on Foreign Relations, New York, New York

Thursday, April 12, 2007

WILLIAM F. WELD:  Good afternoon, everyone, and welcome to today's Council on Foreign Relations meeting.  My name is Bill Weld.  I'm a member of the council.  As an introductory matter, please remember to turn off all your cell phones, Blackberrys, and all wireless devices.

I would like to remind everybody that this meeting is on the record.  The meeting is being webcast and teleconferenced live to council members across the nation and around the world.

It's a great honor for me to introduce a hero and a visionary in the environmental area, Governor Arnold Schwarzenegger of California.  The governor's environmental credentials are beyond impeccable.  They include, without limitation, his creation of the California Hydrogen Highways network in 2004; the Sierra Nevada Conservancy, which is going to provide support for economic sustainability across about 25 million acres within the governor's suzerainty; his Ocean Action Plan, which is going to increase the abundance and the diversity of California's oceans, bays, estuaries and coastal wetlands; probably the best-known example of the governor's enactment of the landmark legislation to reduce greenhouse gas emissions in September of 2006 -- of which more later -- and in 2007, the governor signing an executive order to establish the world's first low-carbon standard for transportation fuels.

Those of you who attended or are familiar with the governor's landmark meeting with British Prime Minister Tony Blair in California know that this is a man who can literally see the future in the area of both economic development and energy and environmental advances as well.

Governor Arnold Schwarzenegger.  (Applause.)

GOVERNOR ARNOLD SCHWARZENEGGER:  Thank you very much, Governor Weld, for the wonderful introduction.  It's exactly the way I wrote it.  (Laughter.)  Thank you.  And it's wonderful to be here today at the Council on Foreign Relations.

And I want to thank, first of all, Jean Kennedy Smith for being here today.  That's the aunt of my wife, Maria Shriver.  So give her a big hand, because she has been a big supporter.  (Applause.)

I'm going to keep my speech brief, only to 15 minutes, because we all have to contribute to fighting global warming.  (Laughter.)  Someone told me that you guys have no sense of humor, but I think that's good.  I'm very happy about that.

But anyway, so I'm talking here today about the environment, as you have heard from Governor Weld.  And what is amazing about this is because three-and-a-half years ago, when I ran for governor, I was followed around by environmental protesters with signs.  You know, they didn't like my Hummers.  They didn't like my SUVs or anything.  As a matter of fact, they didn't even believe when I talked about that I would protect the environment when I become governor.  And now here we are, three-and-a-half years later.  I'm on the cover of Newsweek as one of the big environmentalists.  So I say, "Only in America."  (Laughter.)

Now, I know this is a speech about the environment, but let me first talk about bodybuilding, which is another passion of mine -- (laughter) -- because bodybuilding used to have a very sketchy image, as you know.  And as a matter of fact, there were a lot of people that were working out in the old days; they never admitted that they were working out because they didn't want to be associated with that sport.  As a matter of fact, a lot of the big Hollywood celebrities -- Clint Eastwood, Charles Bronson, Kirk Douglas -- they all were working out with weights, but they never would publicly acknowledge it because they didn't want to be associated with the gymnasiums that were like dungeons for weirdos and for fanatics and so on.

So we knew that we had to change the image, and we did.  We consciously changed the image.  The book came out, "Pumping Iron," and the movie, the documentary of "Pumping Iron" came out.  And I started writing books on bodybuilding for men and for women and for children and all this and started promoting and promoting.

Eventually the image of bodybuilding changed, that now you literally can go anywhere in the world and you will find a gymnasium.  As a matter of fact, you can go to any gymnasium and you will find ordinary people talking about their lats and their biceps and their abs and their body fat and all those kind of things.

And so the reason why I'm mentioning it is because, like bodybuilders, environmentalists were also thought of as being kind of weird and strange and fanatics and the kind of serious tree-huggers, as you know.  Environmentalists were no fun.

(Sound of phone ringing.)  Who has a cell phone on?  (Laughter.)  Governor.  (Laughter.)  I like that.  (Laughs.)  I like that.  If someone asks for me, I'm not here, okay?  (Laughter.)

But anyway, so it had that kind of the same image.  As a matter of fact, a lot of times you would think of these environmentalists like prohibitionists at a fraternity party.  (Laughter.)  But, you know, someone showed me the other day a cartoon, a very funny one, that shows a salesman in a showroom talking to this couple.  And he's pointing at the car and he says, "It runs on conventional gasoline-powered engine.  And then when it senses a little guilt, it switches over to battery power."  (Laughter.)

And it's very funny, but the strange thing about it is there's a lot of truth to that, because for too long the environmental movement has been powered by guilt.  But I believe that this is about to switch over.  It's about to switch because it's going to be powered not by guilt but by something much more positive, by something much more dynamic, by something much more capable of bringing about real big change.

You know the kind of guilt that I am talking about -- the smokestacks belching pollution that are powering our big-screen TVs or powering our Jacuzzis or, in my case, flying me around in private jets.  But it is too bad that we can't all live as simple a life as monks in Tibet.  But you know something?  It's not going to happen.

So ladies and gentlemen, I don't think that any movement has ever made it or has ever made much progress based on guilt, because guilt is passive, guilt is inhibiting, and guilt is defensive.  You remember the commercial a number of years ago of the Native American that has seen what we have done to the environment, and all of a sudden a tear runs down his cheek.  Well, you know something?  That approach did not work.  It was disastrous.

The successful movements are all built on passion, not on guilt.  They're built on passion, they're built on confidence, and they're built on critical mass.  And often they're built on an element of alarm that galvanizes action.

The environmental movement is, to use a popular term, at a tipping point right now.  I believe that the tipping point will occur when the environmental movement is no longer seen as a nag or a scold, but it is seen as a positive force in people's lives.

And I don't know when the tipping point occurs, but I know where, and that is in California.  We are doing everything that we can in order to tip the balance on the environment.  First, let me start with government policy.  Now, I don't want to go through all of the things, all of the policies and initiatives that we have accomplished, because you've heard that already very eloquently from Governor Weld.

But there's two things that have gotten us the most attention of anything:  One, we passed a law to cut greenhouse gas emissions by 25 percent by the year 2020, meaning that we're going to roll back our greenhouse gas emissions to the 1990 level.  And then we're going to go and cut 80 percent below the 1990 level by the year 2050.  And two, I ordered a 10 percent cut on the carbon content of transportation fuel.

Now, do I believe that what California does and the standards that we set will really solve global warming?  Of course not.  What we are doing is applying leverage that at some point the whole environmental thing will tip.  It's like a see-saw.  You walk up to it and eventually it will tip down to the other side.

California is so big, California is so powerful, that what we do has consequences.  Now, even though, when you look at the globe, California is just a little spot, but the kind of power of influence that we have on the rest of the world makes us look like a huge continent.

And what we are saying is we are sending the world a simple message.  What we are saying is that we are going to change the dynamic on greenhouse gas and on carbon emissions.  We are taking actions ourselves.  We are not waiting for the federal government.  We're not waiting for Washington.

As a matter of fact, we are creating our own partnerships; partnerships, for instance, with Great Britain, with provinces in Canada and with states in the West and in the Northeast.  And every year we are gaining and we're creating more partners and our partnership is getting bigger and bigger.

What we are doing is increasing the momentum for change.  Now, there's a billboard that is out in Michigan that accuses me of costing the car industry $85 billion because of our carbon emission standards that we have set in California.  The billboard says, "Arnold to Michigan, drop dead."  But that's not what I'm saying.  What I'm saying is, "Arnold to Michigan, get off your butt.  Join us."  (Laughter.)  In fact, California may be doing more to save the U.S. automakers than anyone else because what we are doing is pushing Detroit to make the changes so they can sell their cars in the Golden State.  And we all know that if they don't make the changes, someone else will.  The Japanese will, the Chinese will, the South Koreans will, the Germans will, and the list goes on an on.  I believe in American technology.  I believe that it is the American technology that will ultimately save Detroit.  

Now, California is a perfect example.  We have a car company that is called Tesla Motors.  I don't know if you all have heard of Tesla Motors.  It's a really sexy car.  It's called the Tesla Roadster.  It's 100 percent electric.  Now, I said to myself, "Why is it that a car company that has built the first car and is new is already building a car that has zero emissions and Detroit cannot do it so they're falling behind?"  But that car, I test drove it.  It goes from zero to 60 in four seconds, it drives 130 miles an hour, and it goes 250 miles on a charge, and then it only takes three-and-a-half hours to recharge the car.  It costs $100,000 this car, and it's so powerful it sold out immediately, and now the second version they're building, the cost dropped down to $50,000.  So it's a huge, huge success story, and the economics can tell us where this is heading. 

It's the same thing as with the cell phones.  I remember 20 years ago I bought a cell phone when it was kind of a radio phone really.  It cost me $1,600.  Then a few years later it was $1,200.  Then it was $700.  I just bought my daughter a cell phone just recently.  That cell phone cost less than $90.  So the costs have come down -- have dropped down so much that now almost everyone owns a cell phone.  And the same thing will happen with the environmental technologies on cars.  Government can give a push by setting standards, so California is giving the nation and the world a push.  

Now, beyond government policy, a second tipping factor is economic.  California is the leading edge of what I call the environmental economy.  The aerospace industry built the modern economy of Southern California.  The computer industry and the Internet built the economy of Silicon Valley.  And now the green-clean technology, along with biotech, is going to be the next wave of California's economy.  Right now, California's university labs, corporate research parks, even plain-looking offices in strip malls -- something very, very exciting is happening.

The nation's brightest scientists and the smartest venture capitalists are all racing to find the new technologies for alternative energy.  They're all racing and this race is fueled by billions and billions of dollars.  Capitalism, interesting enough, long the alleged enemy of the environment, is today giving new life to the environmental movement.  Daniel Yergin, the famous oil analyst, says that "if this all-out activity continues, expect dramatic results."  And the head of PG&E, California's largest utility, says that "the energy industry is on the brink of a revolution."  You know something is up when General Electric says it's selling its (gas ?) business because there is less of a potential there than in environmental goods and services, so there is huge changes going on.

In an environmental economy, we can protect both.  We can protect the environment and the economy.  And that's something that I've been saying now for years.  People don't believe that a lot of times.  They believe that you have to choose between the economy and the environment, but we have proven in California that we can do both -- protect the environment and the economy.

Now, the third tipping point that I want to mention is the attitude of the people.  I believe the environmental movement is in the midst of redefining itself as something more modern, more confident and more positive.  As governor, I talk to scientists in our universities.  I talk to CEOs who run major corporations.  And these are not wacky people.  But I can tell you mainstream scientists are convinced, mainstream CEOs are convinced, and if you look at the surveys, mainstream Americans are convinced that global warming and climate change is real and that we have to do something about it.

But who are the fanatics now?  They are actually the ones that live in denial -- in economic denial, political denial and environmental denial.  Who are the fanatics when DuPont has hired the former head of Greenpeace International?  Who are the fanatics now when major companies are demanding -- demanding that the federal government passes laws that finally set standards for greenhouse gas emissions?  Major companies like DuPont, GE, Wal-Mart, BP, PG&E -- and the list goes on and on -- believe that climate change is real.  That is the mainstream speaking.  That is the establishment speaking.  

Some of you have may have seen the cable TV show "Pimp My Ride".  Now maybe not.  But, I mean, it's a  -- (laughter) -- but it's a -- it's a real cool show.  (Laughter.)  What it does is on this show it takes old junk cars that you're supposed to junk and destroy -- get off the road -- and make them into low-riders and into muscle cars.  Now, my teenage son loves watching this show -- he loves watching it every time.  I watch it with him sometimes.  As a matter of fact, I recently did a segment of the show that will air on Earth Day.  The reason why it will air on Earth Day is because we took this very cutting edge show that everyone loves -- the young people love -- and added something very environmentally hip to it. 

What we did was we took a 1965 Impala and we made it into a low-rider.  But not an ordinary low-rider; we dropped in a 800-horsepower engine that goes from zero to 60 in three seconds.  I mean, really very powerful.  But what is unique is that that engine is powered by biofuel.  That means it emits 50 percent less greenhouse gases and it goes twice as far.  That is what you have to do.  You have to make things cool, to make things sexy and cutting edge.  And so we don't have to take away the cars from the people -- the SUVs, the Hummers and the muscle cars -- no.  That formula is a formula for failure.  Instead what we have to do is make those muscle cars and those SUVs and those Hummers more environmentally muscular.  That is what we have to do.  Now, this is why now one of my Hummers is -- runs on biofuel and the other one of my Hummers runs on hydrogen fuel -- zero emissions on hydrogen fuel.  And GM built that car for me -- it's as a matter of fact traveling around the world right now.  It's a huge hit, and that's where the future is.

Now, the new environmental movement is not about guilt -- it's not about fringe -- it's not about being overwhelmed by the enormity of the problem.  It is about mainstream momentum.  Like I said in bodybuilding, you have to change the image so it's mainstream so everyone wants to get involved in that movement. 

Now finally, let me say something about politics -- what politics plays -- now what big part it plays in the tipping point.  If you are against taking actions on greenhouse gases and carbon emissions, your political base will melt away as surely as the polar ice caps.  I can guarantee you that.  You will become a political penguin on a smaller and smaller ice flow, drifting out to sea.  Goodbye, my little friend.  (Laughter.)  The environment is a public value, and the politicians who ignore it do so at their own peril.

Now, of course, privately, many of those politicians come up to me and say, "How can we do what you're doing in California?  How can we work around our Republican colleagues in all those kind of things?"  I always tell them -- I said, "First of all, there's two things I have to say -- mandates and markets.  But beyond that it takes political courage."  I said -- and I always say that political courage is not political suicide. 

What good does it do if you take -- many of my friends say -- Republican friends say, "What good does it do?  If we take actions now and the developing world, where emissions are growing fastest and fastest, don't do anything about it?"  Well, I believe in free trade and I believe that it lifts everyone's standard of living.  But eventually we will look at those countries that produce goods without regard to the environment the same way as we look at countries that produce goods without regard to human rights so -- such as those who allow sweatshops.  My guess is that within the next decade or so, if an economy ignores the damages that it's doing to the environment, the civilized world will impose environmental tariffs, duties and other trade restrictions on those countries.

This is a matter of fair trade.  Nations cannot dump their products, and one day in the near future, they will not be able to be allowed to dump their carbon or their greenhouse gases either.  It gives them an unfair trade advantage.

Now, ladies and gentlemen, in closing, let me just say this:  I know there's a lot of people that are still pessimistic about how we're going to deal with our environmental problems, but I am very optimistic, because you can feel things tipping.  You can feel things happening.  I say, "Do not be downhearted about the environment because things are about to tip our way."  

I'm telling you, what I've seen this last month is extraordinary -- to see a documentary on greenhouse gasses and global warming to win the Oscar.  I mean, that says a lot.  If Al Gore wins the Oscar, I think that says a lot.  When you go today to a magazine store, which I did the other day, I picked up nine covers.  These are nine magazines that have cover stories on the environment and global warming and how we all can participate in this fight against global warming. 

Think about all the things that are happening.  You cannot turn on a television show or radio where they don't talk about global warming and any of those kind of things.  So I'm very optimistic things are about to tip our way. 

Thank you very much for listening.  Thank you.  (Applause.) 

WELD:  Is he a champion or what?  Are you sure you weren't born in this country, Governor?  (Laughter.)

SCHWARZENEGGER:  Thank you.

WELD:  I would now like to invite members of the council to join our conversation with their questions.  Please wait for the microphone to get to you and speak directly into it.  Please keep your questions on the general topic of climate change or the governor's remarks, including, I suppose, economic development consistent with the environmental issues.

Please stand, state your name and affiliation and limit yourself to one question and try and keep it concise to allow as many members as possible to have a chance to speak.  The microphone should be moving among you. Yes?

QUESTIONER:  Nick Platt, Asia Society.

Governor, where does nuclear power fit into your calculations?

SCHWARZENEGGER:  I think that unless we see that it doesn't create another pollution by, you know, protecting global warming, I think it doesn't fit anywhere.  I think the important thing is, I think, with nuclear power we have seen there is nuclear waste and that creates another pollution.  So if we can eliminate that problem, then I think this is the way to go.  But as long as we can't eliminate it, it's not about to happen, I think.

WELD:  Yes, in back.  Yes, ma'am.

QUESTIONER:  Thank you, Mr. Governor.

I'm a Chinese reporter.  Many years -- several years ago, the U.S. government refused to sign the Kyoto Protocol.  So do you think that this country has missed a very good opportunity to embark on a greener field and has left behind other countries?  Thank you.

SCHWARZENEGGER:  So what's your question?

QUESTIONER:  Since the government refused to sign the Kyoto Protocol --

SCHWARZENEGGER:  Yeah, I know.  There were several countries like China and the United States and Mexico and Brazil and India --

QUESTIONER:  Yeah, it's about --

SCHWARZENEGGER:  -- the list goes on and on that did not sign it.  And I think that, you know, Tony Blair -- the prime minister of Great Britain -- has a great idea by bringing those countries back together again.  I had a long conversation with him about that.  He wants to bring everyone together again and really bring this one -- this time everyone on board and make everyone participate, because I think that the problem is getting so serious now that those countries have to participate.  Everyone has to participate, including China, including India, the United States and so on.

And I think that the federal government is falling behind with the action here.  I mean, I believe very strongly that if the federal government does what California does, which is to make a commitment to roll back the greenhouse gasses, or to come up with a carbon fuel standards the way we have done, and to protect the oceans, and to do the kind of things that really think far in the future, I think a lot of things can happen and we could be a great inspiration to the rest of the world.

WELD:  Thank you, Governor.

Yes?

QUESTIONER:  Thank you for speaking to us, Governor.  I'm David Malpass with Bear Stearns.

Could you address one of the criticisms or the question marks over global warming in that the world's had previous periods of global warming.  So in the 1000 to 1300 A.D. the world warmed a lot and it wasn't carbon emissions from people that were doing it then.  So how do you respond to that question?

SCHWARZENEGGER:  Well, as I said, I believe the scientists.  It is like when my child is sick and has a huge fever and I go to 100 doctors and 98 doctors say, "This child needs immediate medical care," and two say, "No, forget it.  Go home and just relax," I go with the 98.  (Laughter.)  You know, I mean, it's as simple as that.  (Applause.) 

And so I think that, you know, when you have -- you know, just recently like almost 4,000 scientists from all over the world -- I mean, the huge majority of scientists saying that this is actually much worse than what we thought and it's faster and you will feel it very soon in your own state and in your own country.  And we are feeling it already.  We have the earliest wildfires in California that we have ever had.  We have, you know, fast runoff and floods in the winter and less drinking water in the summer.  I mean there's things that we see.  The rising sea level.  We are seeing that we have now a major problem with our delta that we have to rebuild and do something about our delta, because it's pushing the saltwater in which would wipe out all the farms in California. 

So we are seeing right now tremendous threat that we have to act as Californians, and I think as Americans, very quickly.  So this is why I think that that debate is over for me.  And I think it should be for everyone else.  I think that we should take this seriously and I think that we should fight global warming and do everything that we can.  And we should not forget that we can protect both.  We can protect the economy and the environment, because with the new, green, clean technology that's coming out, that will make businesses boom once again.  Like I said, in California we are seeing it happening already.

QUESTIONER:  Thank you.  Alice Tepper Marlin from Social Accountability International.  Wonderful presentation!  Thank you.

When you are incentivizing, encouraging and requiring cars with more environmental muscle and one of the ways of doing that is electric power, how do you assure that the power is generated in a way that doesn't have just as bad an affect on the environment displaced at the point of generation as opposed to the point of running -- when the car is run?

SCHWARZENEGGER:  That's a very good question, because science tells us there is a small fraction of what kind of pollution and greenhouse gas emissions that you create by driving with fossil fuel.  So I think that's where the big, big break is with battery cars or electric cars.  Hydrogen fuel is, of course, one of the top of the list.  And that's why we in California are building a hydrogen highway so that we have on our freeways and highways we have every 20 miles a hydrogen fueling station.  We have just signed an agreement with Canada with one of the provinces where we take the hydrogen highway all the way up to where they have, you know, the Winter Olympics and then continue up to Alaska. 

So I think that's where the real deal is, that the future is.  We've got to get off fossil fuel and this is why I signed an executive order this year for the new carbon fuel standards to get us -- that will reduce our usage of fossil fuel by 10 percent and then we'll go for another 10 percent.  We've got to become more independent of that and come up with alternative answers to those.  And battery, hydrogen, biofuels, ethanol, all of those things are answers to this problem.

QUESTIONER:  Hi.  My name is Louis Gerstner.  I'm from the Gerstner Foundation.

My question, actually, relates to what you just said.  In order to try to sell cars as we've been talking about -- ethanol, electric -- most people, at least that I've come across, don't know what all of these things are.  And it's not a very sexy product to sell.  You said you have your Hummer going around, that is.  But how do you -- how do you educate people as to, you know, what is ethanol?  Is it more efficient?  How is electricity better?

SCHWARZENEGGER:  Well, I think that's a very good point, and I think the most important thing is that we have to make it attractive.  You know, whenever something new comes out, it's normally when you look at the first cars and the models, they look terrible.  And you know, someone like myself didn't want to be seen with a car like that.  So now all of a sudden they change it, like, say, the Tesla is a perfect example.  That car looks like a Ferrari and it is -- you know, I got into the car, I turned on the engine, and I kept, you know, turning on the engine.  And I said to the guy that was with me, the race car driver, expert in that particular car -- I said, "Well, how do you turn on the engine?"  He says, "It's on."  (Laughter.)  There was no sound.

Now think about how cool that is.  No sound at all.  (Laughter.)  And then I stepped on the gas pedal and it jerked my head back.  (Laughter.)  That's how fast the car is and how powerful the car is.  So you would never relate a car that is not fossil fuel car that they will be that powerful and such a muscle car.  But that car was. 

And so that's what we have to do.  This is why the car -- even though it was $100,000, it sold out immediately because that's what people want, the same as they want to drive the Hummer.  They want to drive the SUV.  But let's change the technology.  Let's not get rid of the Hummer and the SUV; let's change the technology and make those engines powerful but with biofuel or electric. 

So this is what we have to do.  That's how you get the people involved.  And this is why I say the movement didn't work as well in the past, even though they did a great job and there were a lot of great environmentalists that have done an extraordinary job to get us to the place where we are today, but I think we've got to get rid of more of the -- get rid of the guilt and to really make it kind of attractive, the whole thing, and mainstream so people do want to become part of the whole thing.

So I think that what the media is doing right now, the amount of coverage that it's giving global warming and how we all can participate, I think is extraordinary.  And I think that's what will really make, you know, the thing tip.

WELD:  Thank you.

Question down front, here?

QUESTIONER:  Thank you, Governor.

Thank you, Governor, for wonderful remarks.  I'm Paula DiPerna from the Chicago Climate Exchange.  I wonder if you could speak to the jobs creation potential inherent in these efforts, especially with respect to investment and the potential to create jobs for low-income as well as high-income professionals.

SCHWARZENEGGER:  Well, I think that, as I said earlier, that you've already seen because of the green clean technology that we see in California exploding.  And this race, you know, of being part of the investment -- we see that left and right in the economy that it has a tremendous impact.  People were so worried that when we set certain standards in California that that would mean people would lose jobs and companies would move out of the state and -- because they would not be able to sell their products.  But quite the opposite has happened. 

What has happened is that we have created more jobs than ever.  We have now, in the last three years since we've started changing and coming in with passing environmental laws, we've created 850,000 more jobs since then.  So as you can see, you can do both.  You can protect the economy, we can build the economy, create the jobs, and at the same time go and set really tough standards on environment and fight global warming.  So those two go totally sync in sync.

WELD:  Mr. Peterson

QUESTIONER:  Governor, most of the political talk we hear is what you might call on the "supply side" -- namely alternative fuels and so forth.  But most of the experts tell me it will be some years before that has a significant effect.  Most of the experts also tell me we ought to be doing it on the demand side, and their favorite proposal is some kind of major energy tax.  So my question to you, sir, is, can you imagine a political scenario whereby this country could be made to accept a tax, for example by rebating the tax on the payroll tax?  But I wonder, could you comment on the tax approach to working on the demand side rather than just the supply side?

SCHWARZENEGGER:  Well, I think that the Bush administration -- and I think the president has proposed a tax -- reformed tax so that there are tax breaks and incentives in order to do that. 

But I think that -- I think that the thing what we have to do is, even though like you say that it is so far out until we can really see results -- I think we are seeing results already.  And I think that every marathon starts with the first step.  So I don't think we should be discouraged when someone says the technology is going -- to really perfect it would take 10 years.  I think that if we start now rather than drag our feet, we can get there and we really can fight global warming. 

We've seen already the kind of things that are being done in California.  I mean, the fuel cell -- I went to a plant that produced fuel cells.  That little fuel cell is going to light up an entire neighborhood without any pollution whatsoever.  This little fuel cell like this is going to power a car, and it's going to do the opposite of what we have seen in the past, which is the car is going to drive in in the evening into the garage and instead of you taking the house plug and plugging it into the car to charge it up, you will be taking the plug from the car and plug it into the house and charge up the house.  (Laughter.)  This is the kind of power this has.  It will literally light up this -- your house and five other houses in the neighborhood -- just a little fuel cell like this. 

So the technology that we see that is being developed is spectacular.  Yes, it's going to take some of this stuff a few years, but I think that's where the action is.  Just get the action, go in there and do it rather than think about, you know, the supply and demand and the market. 

And this market approach is a very important approach.  We love the market approach.  This is why we think that what Bush is doing by saying that we are pushing ethanol is, I think, the wrong way because I think we should not tell the people what to push.  I think we should let the market take care of itself.  But the people will pick.  What is it?  Battery, hydrogen, fuel cell, you know, biofuel -- any of those things -- they will pick it themselves.  

WELD:  Be still my heart.  (Laughter.)

Time for a couple more questions.  Right there.

QUESTIONER:  Zachary Karabell of Fred Alger Management. 

Thank you for those wonderful remarks, and thank you also, I think, for being the first person in the history of the council to issue the words "pimp my ride".  (Laughter.)

A question about activist government, because it does lead to that -- I mean, this is a strong act of government.  Would you advocate this strong act of an activist government as a Republican in other areas that you felt were vital to the public good, or do you limit this to right now the issue of global warming?

SCHWARZENEGGER:  Like what -- what --

QUESTIONER:  Health care, for instance.

SCHWARZENEGGER:  Well, we are pushing health care.  But you know, we go out -- right now I'm going out and talking mainly about the environment.  And the next time I -- you know, in California of course, I talk a lot about health care because this is the year where we are reforming our health care system because we have a broken health care system.  I think it's inexcusable that we're the sixth largest economy in the world and that we have 6.5 million people uninsured.  I think it is very important that we provide insurance for everyone, that we have mandatory insurance, and that we make the health carriers -- the health insurance cover everyone so that no one has to live in fear that because of some health condition their insurance policy gets cancelled or someone that has maybe a terrible history of -- or some odd history -- medical history, that they can't get insurance because of it. 

So all of those problems have to be solved, so this year we're going to solve health care.  And then of course I will promote it all over the country.

WELD:  And we have another speaker who will address that question next month.  (Laughter.)

Here?

QUESTIONER:  Andy Nagorski, Newsweek.  I'm glad you like our cover this week.  (Laughter.)

SCHWARZENEGGER:  Loved it.  I have to say one thing -- that this was the most difficult thing that I've ever done -- (laughter) -- balance the globe on my finger.  But here's the odd thing, again:  I mean, before I could balance an Oscar on my finger, I'm getting to balance the whole globe on my finger.  (Laughter.)  So this was a -- it was a great thing to do.

QUESTIONER:  Okay.  (Laughs.)  You mentioned, Governor, your Hummer image and how you dealt with that.  But is there in any sense a legitimate question to political leaders about their private usage of energy?  It's come up with Al Gore, John Edwards -- the size of their houses, the private jets, Hollywood celebrities.  And what would your advice be on how to respond to that?

SCHWARZENEGGER:  I think that it is fair because anything is fair when it comes to public people.  You know, if you are in entertainment, if you're in politics and anything like that, I think that the people have a right to know what do you do?  You know, you may be out there -- I mean, there's entertainers out there that talk a big game about the environment.  So, people should know -- well, you know the interesting thing is that person flies also with private jets.  So if they -- (inaudible) -- a big car, an SUV, and gets driven around by an SUV -- so it's just another spin. 

That doesn't mean that we should discredit that person -- not by any means -- because no matter what Al Gore does, and no matter how many big cars he has -- let's assume he has some -- I don't know what vehicles he drives or if he ever flies a private jet -- but let's assume he does and he has a whole bunch of big cars and the engines -- it makes no difference to me because the fact of the matter is he has created so much inspiration and he has done so much in order to move the environmental movement forward that it is okay in the end.  I still appreciate what he has accomplished. 

And so as far as that goes with Edwards or anyone else that is talking about the environment -- so one can mention it, but it should not really be kind of like you're turning against them.

WELD:  Thank you, Governor.  You're an inspiration.  (Applause.)

SCHWARZENEGGER:  Sure.  Absolutely.  Thank you very much.  (Applause.)  Thank you.  I appreciate it. 

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Council on Foreign Relations, New York, New York

Thursday, April 12, 2007

WILLIAM F. WELD:  Good afternoon, everyone, and welcome to today's Council on Foreign Relations meeting.  My name is Bill Weld.  I'm a member of the council.  As an introductory matter, please remember to turn off all your cell phones, Blackberrys, and all wireless devices.

I would like to remind everybody that this meeting is on the record.  The meeting is being webcast and teleconferenced live to council members across the nation and around the world.

It's a great honor for me to introduce a hero and a visionary in the environmental area, Governor Arnold Schwarzenegger of California.  The governor's environmental credentials are beyond impeccable.  They include, without limitation, his creation of the California Hydrogen Highways network in 2004; the Sierra Nevada Conservancy, which is going to provide support for economic sustainability across about 25 million acres within the governor's suzerainty; his Ocean Action Plan, which is going to increase the abundance and the diversity of California's oceans, bays, estuaries and coastal wetlands; probably the best-known example of the governor's enactment of the landmark legislation to reduce greenhouse gas emissions in September of 2006 -- of which more later -- and in 2007, the governor signing an executive order to establish the world's first low-carbon standard for transportation fuels.

Those of you who attended or are familiar with the governor's landmark meeting with British Prime Minister Tony Blair in California know that this is a man who can literally see the future in the area of both economic development and energy and environmental advances as well.

Governor Arnold Schwarzenegger.  (Applause.)

GOVERNOR ARNOLD SCHWARZENEGGER:  Thank you very much, Governor Weld, for the wonderful introduction.  It's exactly the way I wrote it.  (Laughter.)  Thank you.  And it's wonderful to be here today at the Council on Foreign Relations.

And I want to thank, first of all, Jean Kennedy Smith for being here today.  That's the aunt of my wife, Maria Shriver.  So give her a big hand, because she has been a big supporter.  (Applause.)

I'm going to keep my speech brief, only to 15 minutes, because we all have to contribute to fighting global warming.  (Laughter.)  Someone told me that you guys have no sense of humor, but I think that's good.  I'm very happy about that.

But anyway, so I'm talking here today about the environment, as you have heard from Governor Weld.  And what is amazing about this is because three-and-a-half years ago, when I ran for governor, I was followed around by environmental protesters with signs.  You know, they didn't like my Hummers.  They didn't like my SUVs or anything.  As a matter of fact, they didn't even believe when I talked about that I would protect the environment when I become governor.  And now here we are, three-and-a-half years later.  I'm on the cover of Newsweek as one of the big environmentalists.  So I say, "Only in America."  (Laughter.)

Now, I know this is a speech about the environment, but let me first talk about bodybuilding, which is another passion of mine -- (laughter) -- because bodybuilding used to have a very sketchy image, as you know.  And as a matter of fact, there were a lot of people that were working out in the old days; they never admitted that they were working out because they didn't want to be associated with that sport.  As a matter of fact, a lot of the big Hollywood celebrities -- Clint Eastwood, Charles Bronson, Kirk Douglas -- they all were working out with weights, but they never would publicly acknowledge it because they didn't want to be associated with the gymnasiums that were like dungeons for weirdos and for fanatics and so on.

So we knew that we had to change the image, and we did.  We consciously changed the image.  The book came out, "Pumping Iron," and the movie, the documentary of "Pumping Iron" came out.  And I started writing books on bodybuilding for men and for women and for children and all this and started promoting and promoting.

Eventually the image of bodybuilding changed, that now you literally can go anywhere in the world and you will find a gymnasium.  As a matter of fact, you can go to any gymnasium and you will find ordinary people talking about their lats and their biceps and their abs and their body fat and all those kind of things.

And so the reason why I'm mentioning it is because, like bodybuilders, environmentalists were also thought of as being kind of weird and strange and fanatics and the kind of serious tree-huggers, as you know.  Environmentalists were no fun.

(Sound of phone ringing.)  Who has a cell phone on?  (Laughter.)  Governor.  (Laughter.)  I like that.  (Laughs.)  I like that.  If someone asks for me, I'm not here, okay?  (Laughter.)

But anyway, so it had that kind of the same image.  As a matter of fact, a lot of times you would think of these environmentalists like prohibitionists at a fraternity party.  (Laughter.)  But, you know, someone showed me the other day a cartoon, a very funny one, that shows a salesman in a showroom talking to this couple.  And he's pointing at the car and he says, "It runs on conventional gasoline-powered engine.  And then when it senses a little guilt, it switches over to battery power."  (Laughter.)

And it's very funny, but the strange thing about it is there's a lot of truth to that, because for too long the environmental movement has been powered by guilt.  But I believe that this is about to switch over.  It's about to switch because it's going to be powered not by guilt but by something much more positive, by something much more dynamic, by something much more capable of bringing about real big change.

You know the kind of guilt that I am talking about -- the smokestacks belching pollution that are powering our big-screen TVs or powering our Jacuzzis or, in my case, flying me around in private jets.  But it is too bad that we can't all live as simple a life as monks in Tibet.  But you know something?  It's not going to happen.

So ladies and gentlemen, I don't think that any movement has ever made it or has ever made much progress based on guilt, because guilt is passive, guilt is inhibiting, and guilt is defensive.  You remember the commercial a number of years ago of the Native American that has seen what we have done to the environment, and all of a sudden a tear runs down his cheek.  Well, you know something?  That approach did not work.  It was disastrous.

The successful movements are all built on passion, not on guilt.  They're built on passion, they're built on confidence, and they're built on critical mass.  And often they're built on an element of alarm that galvanizes action.

The environmental movement is, to use a popular term, at a tipping point right now.  I believe that the tipping point will occur when the environmental movement is no longer seen as a nag or a scold, but it is seen as a positive force in people's lives.

And I don't know when the tipping point occurs, but I know where, and that is in California.  We are doing everything that we can in order to tip the balance on the environment.  First, let me start with government policy.  Now, I don't want to go through all of the things, all of the policies and initiatives that we have accomplished, because you've heard that already very eloquently from Governor Weld.

But there's two things that have gotten us the most attention of anything:  One, we passed a law to cut greenhouse gas emissions by 25 percent by the year 2020, meaning that we're going to roll back our greenhouse gas emissions to the 1990 level.  And then we're going to go and cut 80 percent below the 1990 level by the year 2050.  And two, I ordered a 10 percent cut on the carbon content of transportation fuel.

Now, do I believe that what California does and the standards that we set will really solve global warming?  Of course not.  What we are doing is applying leverage that at some point the whole environmental thing will tip.  It's like a see-saw.  You walk up to it and eventually it will tip down to the other side.

California is so big, California is so powerful, that what we do has consequences.  Now, even though, when you look at the globe, California is just a little spot, but the kind of power of influence that we have on the rest of the world makes us look like a huge continent.

And what we are saying is we are sending the world a simple message.  What we are saying is that we are going to change the dynamic on greenhouse gas and on carbon emissions.  We are taking actions ourselves.  We are not waiting for the federal government.  We're not waiting for Washington.

As a matter of fact, we are creating our own partnerships; partnerships, for instance, with Great Britain, with provinces in Canada and with states in the West and in the Northeast.  And every year we are gaining and we're creating more partners and our partnership is getting bigger and bigger.

What we are doing is increasing the momentum for change.  Now, there's a billboard that is out in Michigan that accuses me of costing the car industry $85 billion because of our carbon emission standards that we have set in California.  The billboard says, "Arnold to Michigan, drop dead."  But that's not what I'm saying.  What I'm saying is, "Arnold to Michigan, get off your butt.  Join us."  (Laughter.)  In fact, California may be doing more to save the U.S. automakers than anyone else because what we are doing is pushing Detroit to make the changes so they can sell their cars in the Golden State.  And we all know that if they don't make the changes, someone else will.  The Japanese will, the Chinese will, the South Koreans will, the Germans will, and the list goes on an on.  I believe in American technology.  I believe that it is the American technology that will ultimately save Detroit.  

Now, California is a perfect example.  We have a car company that is called Tesla Motors.  I don't know if you all have heard of Tesla Motors.  It's a really sexy car.  It's called the Tesla Roadster.  It's 100 percent electric.  Now, I said to myself, "Why is it that a car company that has built the first car and is new is already building a car that has zero emissions and Detroit cannot do it so they're falling behind?"  But that car, I test drove it.  It goes from zero to 60 in four seconds, it drives 130 miles an hour, and it goes 250 miles on a charge, and then it only takes three-and-a-half hours to recharge the car.  It costs $100,000 this car, and it's so powerful it sold out immediately, and now the second version they're building, the cost dropped down to $50,000.  So it's a huge, huge success story, and the economics can tell us where this is heading. 

It's the same thing as with the cell phones.  I remember 20 years ago I bought a cell phone when it was kind of a radio phone really.  It cost me $1,600.  Then a few years later it was $1,200.  Then it was $700.  I just bought my daughter a cell phone just recently.  That cell phone cost less than $90.  So the costs have come down -- have dropped down so much that now almost everyone owns a cell phone.  And the same thing will happen with the environmental technologies on cars.  Government can give a push by setting standards, so California is giving the nation and the world a push.  

Now, beyond government policy, a second tipping factor is economic.  California is the leading edge of what I call the environmental economy.  The aerospace industry built the modern economy of Southern California.  The computer industry and the Internet built the economy of Silicon Valley.  And now the green-clean technology, along with biotech, is going to be the next wave of California's economy.  Right now, California's university labs, corporate research parks, even plain-looking offices in strip malls -- something very, very exciting is happening.

The nation's brightest scientists and the smartest venture capitalists are all racing to find the new technologies for alternative energy.  They're all racing and this race is fueled by billions and billions of dollars.  Capitalism, interesting enough, long the alleged enemy of the environment, is today giving new life to the environmental movement.  Daniel Yergin, the famous oil analyst, says that "if this all-out activity continues, expect dramatic results."  And the head of PG&E, California's largest utility, says that "the energy industry is on the brink of a revolution."  You know something is up when General Electric says it's selling its (gas ?) business because there is less of a potential there than in environmental goods and services, so there is huge changes going on.

In an environmental economy, we can protect both.  We can protect the environment and the economy.  And that's something that I've been saying now for years.  People don't believe that a lot of times.  They believe that you have to choose between the economy and the environment, but we have proven in California that we can do both -- protect the environment and the economy.

Now, the third tipping point that I want to mention is the attitude of the people.  I believe the environmental movement is in the midst of redefining itself as something more modern, more confident and more positive.  As governor, I talk to scientists in our universities.  I talk to CEOs who run major corporations.  And these are not wacky people.  But I can tell you mainstream scientists are convinced, mainstream CEOs are convinced, and if you look at the surveys, mainstream Americans are convinced that global warming and climate change is real and that we have to do something about it.

But who are the fanatics now?  They are actually the ones that live in denial -- in economic denial, political denial and environmental denial.  Who are the fanatics when DuPont has hired the former head of Greenpeace International?  Who are the fanatics now when major companies are demanding -- demanding that the federal government passes laws that finally set standards for greenhouse gas emissions?  Major companies like DuPont, GE, Wal-Mart, BP, PG&E -- and the list goes on and on -- believe that climate change is real.  That is the mainstream speaking.  That is the establishment speaking.  

Some of you have may have seen the cable TV show "Pimp My Ride".  Now maybe not.  But, I mean, it's a  -- (laughter) -- but it's a -- it's a real cool show.  (Laughter.)  What it does is on this show it takes old junk cars that you're supposed to junk and destroy -- get off the road -- and make them into low-riders and into muscle cars.  Now, my teenage son loves watching this show -- he loves watching it every time.  I watch it with him sometimes.  As a matter of fact, I recently did a segment of the show that will air on Earth Day.  The reason why it will air on Earth Day is because we took this very cutting edge show that everyone loves -- the young people love -- and added something very environmentally hip to it. 

What we did was we took a 1965 Impala and we made it into a low-rider.  But not an ordinary low-rider; we dropped in a 800-horsepower engine that goes from zero to 60 in three seconds.  I mean, really very powerful.  But what is unique is that that engine is powered by biofuel.  That means it emits 50 percent less greenhouse gases and it goes twice as far.  That is what you have to do.  You have to make things cool, to make things sexy and cutting edge.  And so we don't have to take away the cars from the people -- the SUVs, the Hummers and the muscle cars -- no.  That formula is a formula for failure.  Instead what we have to do is make those muscle cars and those SUVs and those Hummers more environmentally muscular.  That is what we have to do.  Now, this is why now one of my Hummers is -- runs on biofuel and the other one of my Hummers runs on hydrogen fuel -- zero emissions on hydrogen fuel.  And GM built that car for me -- it's as a matter of fact traveling around the world right now.  It's a huge hit, and that's where the future is.

Now, the new environmental movement is not about guilt -- it's not about fringe -- it's not about being overwhelmed by the enormity of the problem.  It is about mainstream momentum.  Like I said in bodybuilding, you have to change the image so it's mainstream so everyone wants to get involved in that movement. 

Now finally, let me say something about politics -- what politics plays -- now what big part it plays in the tipping point.  If you are against taking actions on greenhouse gases and carbon emissions, your political base will melt away as surely as the polar ice caps.  I can guarantee you that.  You will become a political penguin on a smaller and smaller ice flow, drifting out to sea.  Goodbye, my little friend.  (Laughter.)  The environment is a public value, and the politicians who ignore it do so at their own peril.

Now, of course, privately, many of those politicians come up to me and say, "How can we do what you're doing in California?  How can we work around our Republican colleagues in all those kind of things?"  I always tell them -- I said, "First of all, there's two things I have to say -- mandates and markets.  But beyond that it takes political courage."  I said -- and I always say that political courage is not political suicide. 

What good does it do if you take -- many of my friends say -- Republican friends say, "What good does it do?  If we take actions now and the developing world, where emissions are growing fastest and fastest, don't do anything about it?"  Well, I believe in free trade and I believe that it lifts everyone's standard of living.  But eventually we will look at those countries that produce goods without regard to the environment the same way as we look at countries that produce goods without regard to human rights so -- such as those who allow sweatshops.  My guess is that within the next decade or so, if an economy ignores the damages that it's doing to the environment, the civilized world will impose environmental tariffs, duties and other trade restrictions on those countries.

This is a matter of fair trade.  Nations cannot dump their products, and one day in the near future, they will not be able to be allowed to dump their carbon or their greenhouse gases either.  It gives them an unfair trade advantage.

Now, ladies and gentlemen, in closing, let me just say this:  I know there's a lot of people that are still pessimistic about how we're going to deal with our environmental problems, but I am very optimistic, because you can feel things tipping.  You can feel things happening.  I say, "Do not be downhearted about the environment because things are about to tip our way."  

I'm telling you, what I've seen this last month is extraordinary -- to see a documentary on greenhouse gasses and global warming to win the Oscar.  I mean, that says a lot.  If Al Gore wins the Oscar, I think that says a lot.  When you go today to a magazine store, which I did the other day, I picked up nine covers.  These are nine magazines that have cover stories on the environment and global warming and how we all can participate in this fight against global warming. 

Think about all the things that are happening.  You cannot turn on a television show or radio where they don't talk about global warming and any of those kind of things.  So I'm very optimistic things are about to tip our way. 

Thank you very much for listening.  Thank you.  (Applause.) 

WELD:  Is he a champion or what?  Are you sure you weren't born in this country, Governor?  (Laughter.)

SCHWARZENEGGER:  Thank you.

WELD:  I would now like to invite members of the council to join our conversation with their questions.  Please wait for the microphone to get to you and speak directly into it.  Please keep your questions on the general topic of climate change or the governor's remarks, including, I suppose, economic development consistent with the environmental issues.

Please stand, state your name and affiliation and limit yourself to one question and try and keep it concise to allow as many members as possible to have a chance to speak.  The microphone should be moving among you. Yes?

QUESTIONER:  Nick Platt, Asia Society.

Governor, where does nuclear power fit into your calculations?

SCHWARZENEGGER:  I think that unless we see that it doesn't create another pollution by, you know, protecting global warming, I think it doesn't fit anywhere.  I think the important thing is, I think, with nuclear power we have seen there is nuclear waste and that creates another pollution.  So if we can eliminate that problem, then I think this is the way to go.  But as long as we can't eliminate it, it's not about to happen, I think.

WELD:  Yes, in back.  Yes, ma'am.

QUESTIONER:  Thank you, Mr. Governor.

I'm a Chinese reporter.  Many years -- several years ago, the U.S. government refused to sign the Kyoto Protocol.  So do you think that this country has missed a very good opportunity to embark on a greener field and has left behind other countries?  Thank you.

SCHWARZENEGGER:  So what's your question?

QUESTIONER:  Since the government refused to sign the Kyoto Protocol --

SCHWARZENEGGER:  Yeah, I know.  There were several countries like China and the United States and Mexico and Brazil and India --

QUESTIONER:  Yeah, it's about --

SCHWARZENEGGER:  -- the list goes on and on that did not sign it.  And I think that, you know, Tony Blair -- the prime minister of Great Britain -- has a great idea by bringing those countries back together again.  I had a long conversation with him about that.  He wants to bring everyone together again and really bring this one -- this time everyone on board and make everyone participate, because I think that the problem is getting so serious now that those countries have to participate.  Everyone has to participate, including China, including India, the United States and so on.

And I think that the federal government is falling behind with the action here.  I mean, I believe very strongly that if the federal government does what California does, which is to make a commitment to roll back the greenhouse gasses, or to come up with a carbon fuel standards the way we have done, and to protect the oceans, and to do the kind of things that really think far in the future, I think a lot of things can happen and we could be a great inspiration to the rest of the world.

WELD:  Thank you, Governor.

Yes?

QUESTIONER:  Thank you for speaking to us, Governor.  I'm David Malpass with Bear Stearns.

Could you address one of the criticisms or the question marks over global warming in that the world's had previous periods of global warming.  So in the 1000 to 1300 A.D. the world warmed a lot and it wasn't carbon emissions from people that were doing it then.  So how do you respond to that question?

SCHWARZENEGGER:  Well, as I said, I believe the scientists.  It is like when my child is sick and has a huge fever and I go to 100 doctors and 98 doctors say, "This child needs immediate medical care," and two say, "No, forget it.  Go home and just relax," I go with the 98.  (Laughter.)  You know, I mean, it's as simple as that.  (Applause.) 

And so I think that, you know, when you have -- you know, just recently like almost 4,000 scientists from all over the world -- I mean, the huge majority of scientists saying that this is actually much worse than what we thought and it's faster and you will feel it very soon in your own state and in your own country.  And we are feeling it already.  We have the earliest wildfires in California that we have ever had.  We have, you know, fast runoff and floods in the winter and less drinking water in the summer.  I mean there's things that we see.  The rising sea level.  We are seeing that we have now a major problem with our delta that we have to rebuild and do something about our delta, because it's pushing the saltwater in which would wipe out all the farms in California. 

So we are seeing right now tremendous threat that we have to act as Californians, and I think as Americans, very quickly.  So this is why I think that that debate is over for me.  And I think it should be for everyone else.  I think that we should take this seriously and I think that we should fight global warming and do everything that we can.  And we should not forget that we can protect both.  We can protect the economy and the environment, because with the new, green, clean technology that's coming out, that will make businesses boom once again.  Like I said, in California we are seeing it happening already.

QUESTIONER:  Thank you.  Alice Tepper Marlin from Social Accountability International.  Wonderful presentation!  Thank you.

When you are incentivizing, encouraging and requiring cars with more environmental muscle and one of the ways of doing that is electric power, how do you assure that the power is generated in a way that doesn't have just as bad an affect on the environment displaced at the point of generation as opposed to the point of running -- when the car is run?

SCHWARZENEGGER:  That's a very good question, because science tells us there is a small fraction of what kind of pollution and greenhouse gas emissions that you create by driving with fossil fuel.  So I think that's where the big, big break is with battery cars or electric cars.  Hydrogen fuel is, of course, one of the top of the list.  And that's why we in California are building a hydrogen highway so that we have on our freeways and highways we have every 20 miles a hydrogen fueling station.  We have just signed an agreement with Canada with one of the provinces where we take the hydrogen highway all the way up to where they have, you know, the Winter Olympics and then continue up to Alaska. 

So I think that's where the real deal is, that the future is.  We've got to get off fossil fuel and this is why I signed an executive order this year for the new carbon fuel standards to get us -- that will reduce our usage of fossil fuel by 10 percent and then we'll go for another 10 percent.  We've got to become more independent of that and come up with alternative answers to those.  And battery, hydrogen, biofuels, ethanol, all of those things are answers to this problem.

QUESTIONER:  Hi.  My name is Louis Gerstner.  I'm from the Gerstner Foundation.

My question, actually, relates to what you just said.  In order to try to sell cars as we've been talking about -- ethanol, electric -- most people, at least that I've come across, don't know what all of these things are.  And it's not a very sexy product to sell.  You said you have your Hummer going around, that is.  But how do you -- how do you educate people as to, you know, what is ethanol?  Is it more efficient?  How is electricity better?

SCHWARZENEGGER:  Well, I think that's a very good point, and I think the most important thing is that we have to make it attractive.  You know, whenever something new comes out, it's normally when you look at the first cars and the models, they look terrible.  And you know, someone like myself didn't want to be seen with a car like that.  So now all of a sudden they change it, like, say, the Tesla is a perfect example.  That car looks like a Ferrari and it is -- you know, I got into the car, I turned on the engine, and I kept, you know, turning on the engine.  And I said to the guy that was with me, the race car driver, expert in that particular car -- I said, "Well, how do you turn on the engine?"  He says, "It's on."  (Laughter.)  There was no sound.

Now think about how cool that is.  No sound at all.  (Laughter.)  And then I stepped on the gas pedal and it jerked my head back.  (Laughter.)  That's how fast the car is and how powerful the car is.  So you would never relate a car that is not fossil fuel car that they will be that powerful and such a muscle car.  But that car was. 

And so that's what we have to do.  This is why the car -- even though it was $100,000, it sold out immediately because that's what people want, the same as they want to drive the Hummer.  They want to drive the SUV.  But let's change the technology.  Let's not get rid of the Hummer and the SUV; let's change the technology and make those engines powerful but with biofuel or electric. 

So this is what we have to do.  That's how you get the people involved.  And this is why I say the movement didn't work as well in the past, even though they did a great job and there were a lot of great environmentalists that have done an extraordinary job to get us to the place where we are today, but I think we've got to get rid of more of the -- get rid of the guilt and to really make it kind of attractive, the whole thing, and mainstream so people do want to become part of the whole thing.

So I think that what the media is doing right now, the amount of coverage that it's giving global warming and how we all can participate, I think is extraordinary.  And I think that's what will really make, you know, the thing tip.

WELD:  Thank you.

Question down front, here?

QUESTIONER:  Thank you, Governor.

Thank you, Governor, for wonderful remarks.  I'm Paula DiPerna from the Chicago Climate Exchange.  I wonder if you could speak to the jobs creation potential inherent in these efforts, especially with respect to investment and the potential to create jobs for low-income as well as high-income professionals.

SCHWARZENEGGER:  Well, I think that, as I said earlier, that you've already seen because of the green clean technology that we see in California exploding.  And this race, you know, of being part of the investment -- we see that left and right in the economy that it has a tremendous impact.  People were so worried that when we set certain standards in California that that would mean people would lose jobs and companies would move out of the state and -- because they would not be able to sell their products.  But quite the opposite has happened. 

What has happened is that we have created more jobs than ever.  We have now, in the last three years since we've started changing and coming in with passing environmental laws, we've created 850,000 more jobs since then.  So as you can see, you can do both.  You can protect the economy, we can build the economy, create the jobs, and at the same time go and set really tough standards on environment and fight global warming.  So those two go totally sync in sync.

WELD:  Mr. Peterson

QUESTIONER:  Governor, most of the political talk we hear is what you might call on the "supply side" -- namely alternative fuels and so forth.  But most of the experts tell me it will be some years before that has a significant effect.  Most of the experts also tell me we ought to be doing it on the demand side, and their favorite proposal is some kind of major energy tax.  So my question to you, sir, is, can you imagine a political scenario whereby this country could be made to accept a tax, for example by rebating the tax on the payroll tax?  But I wonder, could you comment on the tax approach to working on the demand side rather than just the supply side?

SCHWARZENEGGER:  Well, I think that the Bush administration -- and I think the president has proposed a tax -- reformed tax so that there are tax breaks and incentives in order to do that. 

But I think that -- I think that the thing what we have to do is, even though like you say that it is so far out until we can really see results -- I think we are seeing results already.  And I think that every marathon starts with the first step.  So I don't think we should be discouraged when someone says the technology is going -- to really perfect it would take 10 years.  I think that if we start now rather than drag our feet, we can get there and we really can fight global warming. 

We've seen already the kind of things that are being done in California.  I mean, the fuel cell -- I went to a plant that produced fuel cells.  That little fuel cell is going to light up an entire neighborhood without any pollution whatsoever.  This little fuel cell like this is going to power a car, and it's going to do the opposite of what we have seen in the past, which is the car is going to drive in in the evening into the garage and instead of you taking the house plug and plugging it into the car to charge it up, you will be taking the plug from the car and plug it into the house and charge up the house.  (Laughter.)  This is the kind of power this has.  It will literally light up this -- your house and five other houses in the neighborhood -- just a little fuel cell like this. 

So the technology that we see that is being developed is spectacular.  Yes, it's going to take some of this stuff a few years, but I think that's where the action is.  Just get the action, go in there and do it rather than think about, you know, the supply and demand and the market. 

And this market approach is a very important approach.  We love the market approach.  This is why we think that what Bush is doing by saying that we are pushing ethanol is, I think, the wrong way because I think we should not tell the people what to push.  I think we should let the market take care of itself.  But the people will pick.  What is it?  Battery, hydrogen, fuel cell, you know, biofuel -- any of those things -- they will pick it themselves.  

WELD:  Be still my heart.  (Laughter.)

Time for a couple more questions.  Right there.

QUESTIONER:  Zachary Karabell of Fred Alger Management. 

Thank you for those wonderful remarks, and thank you also, I think, for being the first person in the history of the council to issue the words "pimp my ride".  (Laughter.)

A question about activist government, because it does lead to that -- I mean, this is a strong act of government.  Would you advocate this strong act of an activist government as a Republican in other areas that you felt were vital to the public good, or do you limit this to right now the issue of global warming?

SCHWARZENEGGER:  Like what -- what --

QUESTIONER:  Health care, for instance.

SCHWARZENEGGER:  Well, we are pushing health care.  But you know, we go out -- right now I'm going out and talking mainly about the environment.  And the next time I -- you know, in California of course, I talk a lot about health care because this is the year where we are reforming our health care system because we have a broken health care system.  I think it's inexcusable that we're the sixth largest economy in the world and that we have 6.5 million people uninsured.  I think it is very important that we provide insurance for everyone, that we have mandatory insurance, and that we make the health carriers -- the health insurance cover everyone so that no one has to live in fear that because of some health condition their insurance policy gets cancelled or someone that has maybe a terrible history of -- or some odd history -- medical history, that they can't get insurance because of it. 

So all of those problems have to be solved, so this year we're going to solve health care.  And then of course I will promote it all over the country.

WELD:  And we have another speaker who will address that question next month.  (Laughter.)

Here?

QUESTIONER:  Andy Nagorski, Newsweek.  I'm glad you like our cover this week.  (Laughter.)

SCHWARZENEGGER:  Loved it.  I have to say one thing -- that this was the most difficult thing that I've ever done -- (laughter) -- balance the globe on my finger.  But here's the odd thing, again:  I mean, before I could balance an Oscar on my finger, I'm getting to balance the whole globe on my finger.  (Laughter.)  So this was a -- it was a great thing to do.

QUESTIONER:  Okay.  (Laughs.)  You mentioned, Governor, your Hummer image and how you dealt with that.  But is there in any sense a legitimate question to political leaders about their private usage of energy?  It's come up with Al Gore, John Edwards -- the size of their houses, the private jets, Hollywood celebrities.  And what would your advice be on how to respond to that?

SCHWARZENEGGER:  I think that it is fair because anything is fair when it comes to public people.  You know, if you are in entertainment, if you're in politics and anything like that, I think that the people have a right to know what do you do?  You know, you may be out there -- I mean, there's entertainers out there that talk a big game about the environment.  So, people should know -- well, you know the interesting thing is that person flies also with private jets.  So if they -- (inaudible) -- a big car, an SUV, and gets driven around by an SUV -- so it's just another spin. 

That doesn't mean that we should discredit that person -- not by any means -- because no matter what Al Gore does, and no matter how many big cars he has -- let's assume he has some -- I don't know what vehicles he drives or if he ever flies a private jet -- but let's assume he does and he has a whole bunch of big cars and the engines -- it makes no difference to me because the fact of the matter is he has created so much inspiration and he has done so much in order to move the environmental movement forward that it is okay in the end.  I still appreciate what he has accomplished. 

And so as far as that goes with Edwards or anyone else that is talking about the environment -- so one can mention it, but it should not really be kind of like you're turning against them.

WELD:  Thank you, Governor.  You're an inspiration.  (Applause.)

SCHWARZENEGGER:  Sure.  Absolutely.  Thank you very much.  (Applause.)  Thank you.  I appreciate it. 

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