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Administrator Gina McCarthy, Remarks at L.A. Clean Tech Incubator, As Prepared

10/06/2014
Let me start by thanking Fred for inviting me. I want to also thank Tom for his years of leadership. And thank you Dr. Parker for the introduction. The Air Quality Management District has a special place in the history of American progress. So does this city. In 1946, a headline called the smog shrouding Los Angeles a “dirty gray blanket flung across the city.”

It was so bad at times, school was cancelled for “smog-days.” I’m preaching to the choir, because some people here lived through it. There’s a reason why everyone knows the smog story of Los Angeles, because it’s an incredible comeback story. Yes, L.A. is still not pollution free, but the point is: we’ve come a long way. And what sparked that comeback can be boiled down to this: smart policy driving markets and spurring innovation. That’s why you’re all here. The people in this room represent the Clean Technology business.

For years, California has been pretty comfortable being ahead of the curve on cars and clean energy. The fact that I’m here at a Clean Tech incubator, a hub for innovation and investment, is proof of that progress.

But I’m here today to talk about how EPA has caught up, and how we are also harnessing the power of smart policy, to signal markets and spur the innovation we need to fight climate change. Today, with climate change unfolding around us, the pollution and the problem are different, but the principle is the same. A few weeks ago, at the UN Climate Summit, President Obama said, quote: “We cannot condemn our children to a future beyond their capacity to repair, not when we have the means to repair it now.” He’s right. Climate change supercharges risks to our health and our economy. But we don’t have to choose between a healthy economy and a healthy environment. Those goals are not separate, they’re intertwined. A world-leading economy depends on a healthy environment and a stable climate. We don’t act despite the economy, we act because of it.

That’s why under President Obama’s direction, this summer EPA proposed a Clean Power Plan to cut the harmful carbon pollution fueling climate change from our power sector. The good news is, acting on climate isn’t a defensive play. It advances the ball. It’s an opportunity for us to capture creativity and innovation, and push progress toward a strong, stable, low-carbon economy. And make no mistake, you all are on the forefront of that charge.

You’re putting good money behind good sense. Let’s face it: this is where the world is going. We know the trajectory. But when we use smart regulation to clearly draw the goal line, we can deliver the market certainty you guys need to carry the ball forward. A couple weeks ago, I went to the UN Climate Summit with President Obama. I met with some of our biggest industry and financial sector leaders. And one thing is clear: U.S. action is changing the game.

Private sector enthusiasm is palpable. According to a new report from the Carbon Disclosure Project, major companies like Delta, Google and Disney use an internal carbon price in their business decisions. Why? Because investors and CEO’s see the benefit to their bottom line. A report from The New Climate Economy shows that not only is global climate action affordable, but it could actually speed up economic growth. That’s why banks are lining up behind clean energy financing. Heck, that's why this incubator is here. The report showed that a transition to a low-carbon electricity sector would bring in a net $1.8 trillion dollars in worldwide financial benefits between 2015 and 2035, that’s the incredible scale of the opportunity we’re dealing with.

So clearly, our energy landscape is changing, and America is increasingly bullish on clean energy. We’re in a different place than we were even a few years ago. We have better data to make informed decisions. We have cleaner energy choices that are getting cheaper by the minute. In less than 4 years, the average cost of solar panels has dropped over 60 percent. Utilities and power generators have to rethink the way they do business, because markets are shifting. Every 4 minutes, another American home or business goes solar. And jobs in the solar industry are growing faster than any other sector in the United States.

Thanks in part to President Obama’s record investment in clean energy though the Recovery Act, and other policies across the government like tax credits, we’ve laid fertile ground for clean tech startups like never before. For example, I’m sure you guys are aware of DOE’s Advanced Energy Research arm, called ARPA-E. Just 22 of their projects have attracted more than $625 million dollars in private funding after ARPA-E’s initial investment of only $95 million. I don’t have to tell you all how that works, when you guys succeed and scale up, it’s a snowball effect that brings costs down even more. Your investment and your innovation is key to catapulting these trends even further. That’s the real prize of any regulatory action. We don’t regulate to drive regulation, we regulate to drive markets.

We all know that California gets it. California's rule to tackle climate change, "AB 32" as we say in bureaucrat speak, doesn't have the same mechanisms, levers, and pulleys as EPA’s Clean Power Plan, But it does have the same underling motivation: We signal the market, and the market runs with it. The key to making EPA's national plan ambitious and achievable, is flexibility. Our plan identifies tailor-made carbon pollution reduction goals for each state. We just point to the destination. It’s up to states to choose their own low-carbon path to get there. Flexibility means more choices. More choices means more ways to invest. That’s the powerful market signal I’m talking about, that’s the kind of market certainty you guys feed off of.

I’m confident we have the tools and the smarts to build the low-carbon economy we need to fuel growth for decades to come. What gives me confidence, is the entrepreneurs, venture capitalists, and policy makers in this room. Just look at what we’ve been able to do with smart climate action, thanks in part to California’s leadership. Smart regulations can drive markets toward better public health protection and stronger economic growth. EPA’s historic fuel efficiency standards for cars and trucks are cutting carbon pollution, saving families money at the pump, and fueling a resurgent auto industry that’s added more than 250,000 jobs since 2009. Auto makers didn’t fold, they flourished. The number of cars coming off American assembly lines is the highest it’s been in 12 years. Since President Obama took office, wind energy has tripled and solar has grown ten-fold. That’s thousands of jobs that can’t be shipped overseas. A study by the group Environmental Entrepreneurs shows that in the second quarter of 2014 alone, we added 12,500 clean energy jobs.

America’s clean energy progress is bringing down energy costs, bringing in good paying jobs, and bringing back manufacturing. Our intent is to steer the ship, but there’s no doubt that you guys and gals are the wind in our sails. And when it comes to the American economy on the global stage, cutting pollution doesn’t dull our competitive edge, it sharpens it.

From catalytic converters to smoke-stack scrubbers, America has a legacy of innovating the world's leading environmental technologies, accounting for more than $44 billion dollars in exports in 2008 alone. That's more than other big sectors like plastics and rubber products. And if you want to talk return on investment, in over four decades, we’ve cut air pollution by 70 percent, while our GDP has tripled. Today we have more cars, more jobs, more businesses, and less pollution.

That’s how we define progress. So it’s worrisome to hear special-interest critics still say, quote, “…I’m not a scientist, but climate action is going to ruin the economy…” Well, as President Obama has said, those critics have one thing right: they are not scientists. The funny thing is, they’re not economists, either. But guess what, we’ve got some pretty good ones at EPA. And at NOAA. And at NASA. I’m sure I can find some folks down the street at JPL that can vouch for them. We trust our scientists to put astronauts in space, and to tell us if the air is safe for our kids to play outside. So I have little patience for those critics who lack faith in American ingenuity…and lack faith in that the businesses and ideas grown right here. Simply put: the economy isn’t a reason to fear action, it’s a reason to take it.

When we’ve faced challenges before, we have acted time and time again. Our action has made our nation stronger. When L.A. faced its dire smog situation, we knew we had the technology to fix the problem. All we needed was to nudge the market to embrace it, and to run with it. And that’s exactly what happened. We fired off a signal flare by making good policy to protect public health. That signal drove markets, drove innovation, cleaned up our cars, and served as a model for the world. And because we took action, our kids won’t grow up breathing toxic leaded gas fumes. Acting on climate change is not just a responsibility we should accept. It’s an opportunity we should seize, to retool and resurge with new technologies, new industries, and new jobs. That’s what your success will shape.

This is our new catalytic-converter-moment. Let’s remind ourselves what we’re capable of. Let’s embrace this defining moment of American leadership. Thank you.