Good morning everyone. Pleasure to be with you this morning. But, I'm going to start on a very somber note. I hope it'll end up being somewhat of a liberating reflection, but you'll have to judge afterwards.

GDP is slowing all over the world, everywhere. The reason? Productivity has been declining for 20 years, all over the world. The result? Unemployment is very high. And especially for the millennials trying to find their place in a 21st century workforce.

Our economists are projecting 20 more years of low productivity, slow growth. And let me do the math for you. After two industrial revolutions in the 19th and 20th century, here's where things square off.

Arguably, half the human race were far better off today than our ancestors were before we began this industrial era. Granted. Also arguably, 40% of the human race, making $2 a day or less, are not appreciably better off than they were before we began this new era.

And while half the human race has done far better, the other half of the human race has not caught up. The very well off have done quite well. The eight richest people in the world today, we could put them in this role, the eight richest individuals on this planet today's combined wealth,

now equals the accumulated wealth of one half the human population living on earth, three and a half billion people. There's something wrong, very dysfunctional about the way we're organizing the economic family. There's nothing like this in history.

And now this economic crisis, which is structural, has given rise to a much more profound crisis, an environmental crisis. We've had two industrial revolutions, all based on digging up the burial grounds of the Carboniferous Era and turning it into this civilization.

And we have spewed massive amounts of CO2, methane and nitrous oxide into the atmosphere of this little planet. We're now in real time climate change. This is not a theory, it's not imminent, it's not on the horizon. This is in the house. What's terrifying about climate change, and what I'm about to tell you is never explained.

If it were explained, every parent, every grandparent in this world would be motivated, driven with one purpose in mind, one agenda to save our species in the next seven decades. Climate change changes the water cycles of the earth.

It's never explained. That's what this is all about. We are the watery planet. Our ecosystems have developed over millions of years based on the water cycles, the clouds that converse our ecosystems. Here's the rub. For every one degree that the temperature of this planet goes up because of emission of global warming gases,

for every one degree the temperature goes up, the atmosphere is actually sucking up 7% more precipitation from the ground. The heat is forcing that precipitation into the clouds quicker, so we're getting concentrated precipitation, more violent water events, but not predictable.

More violent winter snows, eight feet in Boston that last season. That's the new normal. More dramatic spring floods. We had a flood in the U.S. and the Carolinas last year. They said, well, this happens once every thousand years. We've had six in the last two and a half years. More dramatic and prolonged summer droughts and wildfires.

Every summer from British Columbia through California across our country, we've got wildfires from drought. We've got Category 3, 4, and 5 hurricanes. The one that hit the Philippines last year, most powerful ever recorded. This is the new normal.

And now our new scientific studies show that we are, because of the fresh water melts, are moving so quickly in the Arctic, the Antarctic, and Greenland shelf, the water currents of our great oceans now are on an exponential runaway curve. We are looking for storms over the next six decades, unprecedented, never experienced by human beings on this planet.

Infrastructure destroyed, human lives already lost. And this is what I want you to take home with you. Our scientists now tell us we are in the sixth extinction event of life on planet Earth. It doesn't even make the headlines.

We've had five mass extinction events on Earth in the last 450 million years, well before humans were here. And when they came, they came quick. There is always this tipping point in the chemistry of the planet and that massive die-out. On the average, 10 million years to get life back on Earth after the die-outs.

Our scientists tell us we are in the sixth extinction event. We're chronicling it. It's not a model. And we're being told that we're going to lose upwards of 50 percent of all the life forms on Earth likely in the next eight decades. The last time this happened was 65 million years ago.

But then it took thousands of years. This is eight decades. This is a wipeout. As my wife says, we're just not taking a look at the enormity of this. We're greenwashing. We're going on as business as usual. It's one of 20 issues.

No, this is about extinction. This is about survival. 99.5 percent of all the species of life that have ever been on this little planet have come and gone. Actuarial, that's not a very good odds, is it? We're the youngest species, anatomically modern humans. Here we are. We've been here 200,000 years.

We're the babies. There's no guarantee we're going to make it. So what do we do? We need a new economic vision for the world. It needs to be compelling. We need a game plan to deploy that vision. It needs to be quick.

It has to move as quickly in the developing world as the industrial world. We have to be off a carbon-based civilization, off, off in less than four decades. If we have any chance of at least avoiding the abyss, because we are in climate change. It isn't going away. It's now about adaptation and resiliency and, hopefully, later on, replenishment.

We need to step back in the banking and financial community, because it's going to be on your watch where we're going to make these decisions. We've got to ask this question. How do the great economic paradigm shifts in history occur? If we know how they occur, we're going to get a road map and a compass in this room

on how the financial community can help us navigate a new journey, hopefully, to save this earth. There have been at least seven major paradigm shifts, economic shifts in history, and they're very interesting anthropologically. They share a common denominator.

At a moment in time, three technologies emerge and converge to create what we call in engineering a general purpose technology platform. That's a fancy way of saying a new infrastructure, think infrastructure, that fundamentally changes the way we manage, power, and move economic life.

What are those three defining technologies? Number one, new communication technologies to more efficiently manage the economic activity. That's obvious. Number two, new sources of energy to more efficiently power the economic activity. That would be also obvious. And number three, new modes of mobility to more efficiently move the economic activity.

So when communication revolutions converge with new energy regimes and new modes of transportation logistics, it does change the way the human family manages, powers, moves economic life. All obvious, not in a single economic textbook, but that's the anthropology of the paradigm shifts.

Let me give you two examples. Can we cut the video here? I'd rather people be with me rather than watching TV. 19th century, first industrial revolution, Britain. 20th century, second industrial revolution, United States. First industrial revolution, Britain. The Brits take us from manual printing, a German invention,

to steam power printing, a British invention, and this is a big leap forward in communication, cheap, quick, efficient print for communication. Then in the last half of the 19th century, the Brits lay out a telegraph system across the British Isles, and those communication revolutions, steam power printing in the telegraph,

they converge with a new energy source in England and Britain, cheap coal from the hinterlands. Then the Brits invented the steam engine to harness the coal. And then, this is ingenious, I don't know who figured this out, they said, well, why don't we put the steam engine on rails, locomotives, national transportation, the rest is history, communication, energy transport, managed power life,

it changed our habitats, it changed the way we organize economic life, it changed governance, it changed the spatial temporal orientation, it changed everything. 20th century, second industrial revolution in the United States, centralized electricity, especially the telephone. I know we think that Internet's a big deal, but the telephone was a really big deal.

Instant communication at the speed of light, very cheap around the world. Later, radio and television. These communication technologies in the U.S. converged with a new source of energy, cheap Texas oil. Then, Henry Ford put everyone on the road, cars, buses and trucks.

That second industrial revolution took the entire world through the 20th century, and it peaked in July 2008. And that's the month when Brent Crudall, if you remember, hit $147 a barrel on world markets. The entire global economy shut down that month.

That was the economic earthquake. The collapse of the financial market 60 days later was the aftershock, because the real economy shut down. You couldn't keep the debt and credit economy moving. Why is this the earthquake? This entire civilization relies on fossil fuels.

Our fertilizers, our pesticides, our construction materials, most of our pharmaceutical products, our synthetic fiber, our power, our transport, our heat and lights all made out of and moved by fossil fuels, the whole civilization. So when oil starts to go over 90 a barrel, all the other prices edge up.

When oil hits about 115 a barrel in that zone, prices become too high, purchasing power starts to slow. At 147 it all shuts down. So in 2009, you recall, oil went down to 50 a barrel because the economy had gone to a halt. We start to regrow the inventories in 2010, oil prices started to go up,

all the other prices went up after 90 a barrel, and at 114 a barrel, prices too high, purchasing power slowed again. And the only reason oil went down to 50 a barrel in the last two years is now the fossil fuel industry is fighting among themselves in the sunset of this era. So OPEC said let's keep that oil spigot wide open

and we're going to flood the world with oil and we're going to knock out our new, more exotic competitors, shale gas and tar sands, because they're not competitive under 50 a barrel. They were wiped out in 18 months. It's gone. Thousands of people unemployed, the industry's in bankruptcy, and while there may be some people in the United States talking about the comeback of shale gas and tar sand,

if it does, they'll just open up the oil again. But right now oil prices are going up because their competitors are out of the market. This is a sunset. Convulsion, growth shut down, growth shut down. And now where there is oil, we've got failed states. Everywhere there's oil almost, failed states.

This is an unpredictable, dangerous world. So an economic crisis, now real-time climate change. Where do we go from here? Let me share an anecdote. When Angela Merkel became chancellor here in Germany, she asked me to come to Berlin in the first couple of weeks

of her new government to help her address the question of how to grow the German economy and create jobs on her watch. When I got to Berlin, the first question I asked the new chancellor, I said, Madame Chancellor, how do you grow the German economy when your businesses are plugged in to a second industrial revolution infrastructure of centralized communication, fossil fuel nuclear energy,

internal combustion, road, rail, water and air transport and that infrastructure to manage power and move Germany peaked in its productivity a decade ago. This is the rub.

Economists are lamenting, why is productivity declining when we've got all these new killer products coming out of Silicon Valley and everywhere else? What's going on here? There's a deep misunderstanding among economists and that's why they've failed to see the picture, I think. We normally think that there are two factors in productivity. More capital for better machines and better performing workers, correct?

But when Robert Solow won the Nobel Prize on economic growth theory in the mid-'80s, he let out a little secret that all of us are a little bit embarrassed about and don't want to talk about, he said, when we track every single year of the industrial revolution and we track in better machines and better workers,

these factors only account for 14% of productivity. So Solow said, where's the other 86% of productivity? Don't know. It's called the Solow residual. Now, if you're not an economist, you'd be shocked because you would think this is something economists ought to know. There is another factor in productivity. It's an economic term, but it's ignored by economists,

but well-known by chemists and engineers and biologists and architects because they have to study the laws of thermodynamics. That's the language of their discipline. Whereas economists, our economic theories are based on Newtonian physics and Newtonian metaphors, which have nothing to do with economics.

So what is this third factor in productivity? It's called aggregate efficiency. Thermodynamically, that's the ratio of potential work to the actual useful work that you get embedded into every good and service across the value chain. So here's what economics is from a thermodynamic point of view,

the laws of energy. We take raw energy out of nature. It can be a rare earth, material form of energy for your smartphone. It can be a metallic ore for your automobile. It can be a fossil fuel. All of that material and energy is really energy. It's available to do work. Then we take those resources out of nature and we ship them, we store them, we produce goods and services out of them,

we consume them, then we recycle them back to nature. In that entire value chain from nature to society and nature, at every step of conversion of a good or service, we have to embed some form of materials or energy into the good or service

to get it to the next stage of what it becomes. But in the process of the conversion, we lose some of that material and energy. That's the ratio of the potential work you've got and the useful work that gets into the good and service. You with me? Let me tell you it works the same way in nature. In nature, if a lion chases down an antelope and kills it and devours it,

you know only about 10 to 20% of the total energy in that antelope gets embedded into the lion. The rest is heat loss. Thermodynamically, it's the conversion factor. So what does this have to do with my conversation with the chancellor of Germany?

She's a physicist, you know. Here's the situation and why we have a problem with productivity and we're not moving. The United States started the second industrial revolution in 1903 at 3% aggregate efficiency. We lost 97% of the material and energy in every single conversion. By the late 1990s, the U.S. got up to about 14% aggregate efficiency.

That was our ceiling. Nothing's changed. Germany got up 10 years later to about 18.5% aggregate efficiency. That was its ceiling. Nothing's changed. Japan led the world in the 1990s at 20% aggregate efficiency. Nothing's changed.

Why is this important? A new generation of economists trained in physics and thermodynamics rather than Newtonian metaphors, they went back and they looked and tracked every single year of the industrial revolution and put in three factors, better machines, better workers, aggregate efficiency, and aggregate efficiency amounts to most of the rest of productivity.

Henry Ford could have told you that. Any engineer could have told you that. I teach at the Wharton School, the oldest business school in the world. I taught the advanced management CEO program for 15 years. None of our professors teach the laws of thermodynamics. No wonder they're lost. So what I said to the chancellor that first day, you can have market reforms in Germany

and you can have labor reforms. You can have fiscal reforms. You can incentivize a million Steve Jobs and it won't make a damn bit of difference. As long as your businesses are plugged in to a second industrial revolution infrastructure of centralized telecommunication, fossil fuel nuclear power, internal combustion, road wear, water, and air transport because the productivity on that platform

thermodynamically can't get above 20%. That's all we can get. That's why we have all these killer new products, but they're being plugged into the old infrastructure and it's not creating the new business opportunities. So you have no idea where to invest.

On that first day with the chancellor, we talked about a third industrial revolution, a new convergence, communication, energy, and transport to manage power and move Germany. At the end of the day, the chancellor said, We will have this third industrial revolution for Germany. And by the way, there is no fourth industrial revolution. I know there's some hype in the business community, the World Economic Forum.

The idea that the third industrial revolution, which I'm about to talk with you about, is moving so quickly that it's on an exponential curve, so we have to call it the fourth. No. The first industrial revolution was steam power and coal. The second industrial revolution was centralized electricity and oil.

The third industrial revolution is digital technology, infrastructure across the world, renewable energies, and combined transport. So here's what's happening. We are seeing a new convergence in communication, energy, and transport to manage power and move the economies. The communication Internet has now matured.

It's been 25 years since the World Wide Web. Everyone here, how many people have the smartphone on them as I speak? Literally on you. Can't go without it. Now this communication Internet, which is now moving to 5G, is just beginning to converge with a digitalized renewable energy Internet,

which in turn is just beginning to converge with a digitalized automated GPS and soon driverless road, rail, water, and air Internet to create three digital Internets. Communication Internet, already here. Renewable energy Internet, already emerging in Germany and Europe.

Automated GPS, driverless transport Internet, already starting. These three Internets to manage power and move the economy ride on top of a platform called the Internet of Things. We are embedding sensors in all of our devices so they can relay real-time economic data, talk to each other, and talk to us.

We have billions of sensors already in the agricultural fields, factories, smart homes, smart vehicles, smart warehouses, smart roads. They're beginning to send data, but they're not sending the data to this mysterious thing called the cloud. They're sending the data to the emerging communication energy and mobility Internets to manage power and move economic activity

across all the value chains of the business community. By 2030, we will have ubiquitous interconnectivity, everything connected to everything to everyone. This is a global brain. That's exactly what this is. It's an external prosthesis, a global brain, a nervous system that connects both economy, society, and nature in one global embrace.

On the upside, a great leap forward potentially for humanity because now billions and billions of people connected to the Internet and pretty soon the whole human race. Let me say that China has just come up with a smartphone for $25.

It has more computing power than send our astronauts to the moon. Everyone's going to be connected in the next 15 years. So what we have now is we have billions of people out there who are beginning to be connected and they can begin to engage each other with cheap mobile technology, just keep your service provider and your power up

and engage each other directly in economic life. They're going to eliminate a lot of the middlemen, a lot of the vertically integrated organizations that kept the 1% to the 99%. This is happening. While this is a great leap forward for humanity, particularly the social entrepreneurialism,

this is a vast expansion in the entrepreneurial spirit. Everyone can be an entrepreneur on one level or another. However, as potentially exciting as this interplanetary connection is, there's a dark side. The minute we talk about interconnectivity, we're excited and then we're scared.

How do we deal with network neutrality when everyone's connected? How do we ensure open access to everyone on the planet to this Internet of Things third industrial revolution? How do we protect privacy when everyone's connected? How do we ensure our data when everyone's connected? How do we prevent governments from monopolizing this Internet

for their own political purposes? That's already happening. How do we prevent Internet companies and other companies, telecom, from monopolizing this Internet for commercial purposes for third parties at the expense of our data? How do we prevent cyber crime and cyber terrorism which could take down the whole system at a moment in time?

This is the dark net. And what I'm saying to you this morning is the dark net is as impressive as the bright net. And the politics of the next three generations is to spend as much resources and political muscle across the world in ensuring against the breakdown of the system with resilience and adaptation, or we won't get to the promised land.

But for this morning, let's assume we can address the dark net. I think it's a big struggle, and it's an open question mark. Here's the advantage of the Internet of Things platform, the communication energy, and transport Internet. It's already emerging, and this means if everybody here has a value chain,

whether you're a small business, a bank, a government agency, a nonprofit, where every day you are managing and powering and moving some form of activity. It means you can go up on this Internet of Things Third Industrial Revolution platform already, it's emerging, and have a transparent picture of all the economic data flowing through the world if it stays open.

Even big companies didn't have that data before. This evens the playing field. Everyone now can be an entrepreneur with cheap technology. You have very easy entry fee. And that means if you're a small or medium-sized enterprise here in Germany, you can go up on this Internet of Things platform, it's now emerging, and you can cut your data,

your big data, out from the rest, the big data you care about on your value chain, cut it out from the rest of the noise. Then you can mine your own big data with your own analytics, create your own algorithms, create your own apps, so that you can dramatically increase your aggregate efficiency at every step of conversion on your value chains to manage, power, and move your business.

And by dramatically increasing your aggregate efficiency, you're dramatically increasing your productivity because aggregate efficiency is most of productivity. And you can dramatically reduce your ecological footprint because you're getting more out of less of the earth in each conversion and wasting less. And it dramatically plunges marginal cost.

The digital revolution dramatically plunges marginal cost. And that's the title of my book, The Zero Marginal Cost Society. This is important for the banking community to understand. The marginal cost of a digital revolution, a communication energy transfer, is going to get so low

that it's going to force the capitalist market to readjust, and they're going to have to move from ownership to access and markets to networks, and they're going to have to make money by helping manage these networks where there's lots of traffic, and you make it on the commissions rather than individual transactions because at low marginal cost, it's sharing the webs and all the traffic,

and then you collaborate to share those commissions, it's ownership to access, it's markets to networks. Transactions? No. Some of the marginal costs are plunging to zero already, and that's giving rise to the sharing economy. Now, what is this little sharing economy? This little... capitalism gave birth to this sharing economy.

We didn't see it coming. Late birth. And this little sharing economy is brought on by the digitalization of communication, the first Internet that's come in. And I want to be clear. While the sharing economy is a little muddy, like any parent-child relationship, it's cloudy. The capitalist parent wants the little baby to be absorbed into the capitalist den.

The little baby, some of them want to do that. Give me my $4 billion cap. I'll sell out to you tomorrow morning. But there are a lot of these young startups that actually see this as a new model for society. Let me be clear here. As cloudy as this little baby's destiny is,

this is the first new economic system to enter onto the world stage since capitalism and socialism in the 19th century. It's really a remarkable event. We are already in the hybrid economy. Part of the day, our young millennials are in the marketplace as sellers and buyers and owners and workers,

and they're making transactions for profit. There's enough margins, and the market is not going to disappear. But part of the day, our young millennials are in the sharing economy, and they're producing and sharing all sorts of virtual goods with each other at zero marginal cost, not on the market, beyond profit, not on the GDP. So let's take a look at how the sharing economy has affected

the first of the three Internets, the communication, and then we'll see what's going to happen to energy, transport, and all the businesses that come with it. We now have 3.5 billion people soon, everybody in the human race, who are prosumers. That is, at any given time, they're producing and sharing all sorts of virtual goods with each other for free.

Young people are producing their own music. What does it take to have a little video quality little machine? You put your music there. That Korean performance artist two years ago, a billion people came to his web in three months. It didn't cost him a damn thing. He just had to have a service provider. We have young people producing their own YouTube videos.

Millions of young people are now producing and sharing their own film with each other, open source, no intellectual property, zero marginal cost. Young people are producing their own news media, their own social blogs, near zero marginal cost. Young people contributing to Wikipedia, we've democratized the knowledge of the world. The accuracy is, and it's all for free,

and it's a nonprofit website, $50 million a year to keep it, and we're constructing the knowledge of the world, the human race. And we've got millions and millions of students today who are taking massive open online college courses taught by the best professors and the best universities. They're getting college credits, zero marginal cost. Whole industries have been disrupted.

Music industry, television, newspapers, magazines, book publishing, and this is only 17 years since that little Napster file sharing service. That is massive disruption. But whole new businesses have emerged, not just Google, Facebook, and Twitter. There are thousands of startups, profit and nonprofit. They're creating the connections.

They're putting together the platforms. They're doing the apps. They're looking at the big data. They're doing the analytics. They're creating the programs. It's a revolution. We thought there'd be a firewall that, while we could understand how the digital revolution would affect communication, we didn't think it would move from the virtual world to the physical world.

What I'm saying now is the Internet of Things, their industrial revolution has just broken through the firewall in the last 36, last 24 months. We now have millions of people, especially here in Germany, but around the world who are producing their own solar and wind right now, this morning, near zero marginal cost. And we now have millions of young millennials

who are moving from ownership of vehicles and markets to car sharing and networks. And within a few years, those vehicles are going to be electric. They're going to be fuel cell. They're going to be 3D printed with recycled material. They're going to be driverless within four years. The marginal costs are plunging in transport too. Let's go back to Germany. What's happened since that first conversation with the chancellor?

I've had the pleasure over the years to work with the vice chancellor, Sigmar Gabriel, and my friend Frank Steinmeier, the Greens. Everybody came on board. What's happened? We are at 33% of all the electricity powering this country today, 10 years later, is now solar and wind. We'll be at 40% before 2020.

We'll be 100% renewable energy in this country way before 2040. Why? The fixed costs are plummeting. The fixed costs of solar and wind are an exponential curve now for 20 years, just like computers, and it's just not widely known. I'm the oldest person in this room today.

When I was a little boy in the 1940s and 50s, we had a few computers, and my university invented the first computer, the University of Pennsylvania, UNIVAP. And they cost millions of dollars, and some of you remember the chairman of IBM in history books says, We think we'll need five computers for the world. That was an optimistic forecast, maybe three, four.

The millennials laugh. They're on the floor when I tell them this. We didn't anticipate the Intel chip, Moore's law, where the engineers started to double the capacity on that little chip and half the cost every two years. Now smartphone China, $25. We've got a similar curve in solar and wind. A solar watt in 1979 cost $78.

That's the fixed cost of generating one solar watt, $79. Do you know what it is this morning? 53 cents. And 18 months from now, 35 cents. That's the fixed cost. We now have power and utility companies in my global consortium

who are buying 20-year contracts right now for solar and wind at four cents a kilowatt hour right now. And here's the story that nobody wants to talk about, and this is a story that you and the banking industry are going to have to deal with. It's called stranded assets.

I sit down with the CEOs of the power and utility companies all over the world every month, and they're frightened to death. Citigroup, as you know, put out a study last year saying we have $100 trillion in stranded assets in the fossil fuel industry. It's over. There's not going to be a way for them to compete with the plunging fixed cost of solar and wind.

They can't do it. What do we do with this? This is the biggest bubble in history, and this carbon bubble will make the little subprime look like a tiny parlor game. It's right now. That disruption's in the next 10 years, between now and 2025.

We'll come back to how we deal with this in the power industry in a few minutes. What's interesting in Germany and elsewhere is once you pay the fixed cost and they're plummeting, everyone's going to be having a little solar and wind, every little village in the world. We're now putting solar in glass, in paint, in facades. It's going to be everywhere.

It's going to be cheap. But what's interesting in Germany and across Europe is once you pay the fixed cost, the marginal cost of this energy in Germany right now, it's zero, near zero. The sun hasn't invoiced us. The wind hasn't sent a bill. What happens when German businesses plug in to a third industrial revolution infrastructure

of digitalized 5G communication, converging so our electricity grid becomes digitalized and millions of players are producing their own renewable energy and they're taking it off grid or sharing it across continents at near zero marginal cost, when German businesses can plug in to an energy grid of 100% renewables at zero marginal cost

and every single conversion on their value chain, the energy they're using is zero marginal cost. Imagine the aggregate efficiency and productivity. How does a second industrial revolution country, without naming names here, countries that want to stay in the second industrial revolution, how are they going to compete with that?

Smart. Germany, EU. Who's producing all this new energy in this digital revolution? There are four major power companies in Germany. EMBW, I used to work with Utz Clausen when he was there. RWE, EON, Vattenfall. We actually thought these companies were invincible 10 years ago.

Giant vertically integrated organizations and what's happened to them in 10 years is what happened to the music industry and newspapers and book publishing and magazines. All over Germany, Denmark, around Europe, and especially these countries, everyone created electricity cooperatives. Farmers, urban dwellers, small businesses. They all went to the banks. You all gave them loans.

It wasn't the government because you knew they'd pay back by the energy they were producing. No one defaulted. Didn't need a lot of government money. They're producing all the new energy. The big four power companies are producing less than 7%. They can't scale it. To their credit, the centralized energies required massive capital and vertical integration. There was no other way to do it, and they did a damn good job.

But the new energies, you have to collect the sun everywhere and the wind everywhere. That requires lots of small players coming together in cooperatives. Does this mean the end of the power companies? Not necessarily, but they have to change their business model quickly. So about five years ago,

EON asked if I would debate Mr. Tyson, who's still there, their chairman, in a neutral country. We did it in the Netherlands. There's a two-and-a-half hour debate. And I said to Mr. Tyson, you're not leaving the Second Industrial Revolution tomorrow morning, but you better be in a Third Industrial Revolution portfolio business at the same time so with those stranded assets, you can ease the transition over two generations.

And so your legacy business can be eased out with the least amount of loss on amortizing your assets, and you can move into the new profitability of the new business model. And I said the new business model is totally different. In the new business, EON, you make more money by selling less and less electricity. He said, let me hear that again.

You set up partnerships with rate payers, businesses, thousands of them, and you help manage the energy flow through their value chains on the energy Internet. You help them mine their big data. You help them with their analytics. You help them with their algorithms and apps so all those thousands of businesses

can dramatically increase their aggregate efficiency at every step of conversion on their value chains to manage power and move their business. And you know what? They'll share those productivity gains back with the power companies. It's called performance contracts. That's where we're heading. At the time, Tyson just went, he did it this last year. The legacy company's been put up on the market,

I believe. They're now moving to energy services. RWE has followed suit. They have a legacy company, and now they're moving to energy services. They're moving quickly with the disruption. Companies that don't, they're not going to be here. It's not just Europe. Now China. This caught me off guard,

and it was just totally serendipitous. When President Xi and Premier Li came into office, Premier Li put out his official biography. I had never met either of them and never been to China, and I was surprised. He said up front that he had read the book The Third Industrial Revolution that I wrote a few years ago, and he instructed the central government of China to begin moving on this narrative quickly.

They're mindful in China. They lost on the first industrial revolution. They were occupied. They lost almost the second industrial revolution that came in the last tail end ten years. They don't want to lose the third. They want to be among the players. To show you how fast they move, I've been shuttling back and forth, working with the leadership for the last three years, and after the first visit,

11 weeks later, the chairman of the state electricity grid, the national grid, the largest in the world, announced $82 billion over four years starting with the five-year plan this year to completely digitalize the electricity grid of China so that millions of Chinese people with their own solar and wind technology,

they're the largest producers, can produce energy locally, go off-grid, go on-grid, sell it back to the grid. Watch Europe, watch China. The coming together of the digitalized communication Internet with a digitalized renewable energy Internet makes possible the digitalized automated GPS driverless mobility Internet.

We built the whole second industrial revolution economy on the automobile, correct? Making them, selling them, then the suburbs, the shopping centers, the travel and tourism, et cetera. Here's the problem. Millennials don't want to own automobiles anymore. That's grandma and grandpa, two automobiles sitting in the driveway, waxing it once a month, don't drive it occasionally.

The millennials want access to mobility and car-sharing networks, not ownership in vehicles and markets. Do we have any millennials here? Where are you? Anybody? Do I have this right? I have this right? So we got a problem here. For every car shared, 15 cars are being eliminated from production. This is the disruption.

It's the digital revolution. You go up on the communication Internet, you go to a website for car sharing, it immediately moves you to the transportation Internet, GPS. GPS locates the driver 90 seconds away. PayPal pays. Why would they ever want to buy a car again? Some of you remember Larry Burns, former Vice President of General Motors, till five years ago.

Well, Larry's just done a study. He's a professor at the University of Michigan. He said Ann Arbor, Michigan, they did a study. In the future, they said they can eliminate 80% of the vehicles in that city pretty quickly with better mobility and cheaper. Now, extrapolate this study. We got a billion cars, buses, and trucks in the world today choking us in traffic.

They're the number three cause of global warming emissions, transport. Number one is buildings. But here in Germany and across Europe, we're retrofitting millions of buildings and we're transforming into micro power plants for clean energy. They are the power plants. By the way, anybody know what the number two cause of global warming emissions is by industrial activity? One is buildings. We spend a lot of time on it.

Three is transport. We spend a lot of time on it. And then there's this silent one in the middle. The cows. The cows. I wrote a book on this in 1990, Beyond Beef, and I was pillory. They said, you're out of your mind. Well, now the science is in. We've got over a million cows around the world that take up 23% of the land mass.

I love cows. But the methane is 23 times more potent than CO2 and all of the feces, the nitrous oxide, is 288 times more powerful per molecule than CO2. And no one wants to talk about it. We don't want anyone to have to change their diet and maybe move down the food chain for their own health

and the health of the planet. If we can't even talk about this, we're in trouble. But number three is transport. So if Larry Burns is right, over the next two generations, we're going to eliminate 80% of the vehicles. The remaining vehicles will be electric and fuel cell. They'll be 3D printed. The first car is already out.

It's the Stratus. It's a beautiful Italian car. They always know how to design those cars. They'll be recycled material, driverless. Within four years, driverless. So does this mean this is the end of the transport industry? No, but like the energy industry, they have to change their business model or they will be gone. So last spring, this is very cool actually,

Wolfgang Bernhard gave me a call. He's the chairman of Daimler Trucks, one of the eight board of directors of Daimler. I always will look to Daimler. You know, they gave us the second industrial revolution. And I remember a number of years ago, I joined with their chairman when he introduced the hydrogen vehicle. So I always looked to Daimler. So Wolfgang called. He said, can you join us in Germany?

We want to bring journalists in and we want to introduce a new business. So I came to Germany, we laid out this narrative, and then Wolfgang got up and he said, we're in the new business, mobility. And quietly, no one knew this, quietly, Daimler had outfitted 300,000 trucks in the last few years with sensors.

They're on the roads now. I think it's almost 400,000. And those sensors make these trucks mobile data centers. They're picking up weather conditions and traffic conditions and warehouse availability and all the data you would need to move your packaging from A to B on any logistics chain of any business.

Now, they went up to a feed, a helicopter feed. This was very interesting. And they dimmed the lights and there are these three massive trucks, Daimler trucks on the German expressways. And the drivers are waving to everybody in the room, all the journalists. And Wolfgang said, would you please take your hands off the wheel and your foot off the pedal? Well, the drivers became software analysts, whipped out the computers,

they're software analysts now, not drivers. The trucks platooned together like an automated train, all automated going down the German expressway, smart. Daimler's still going to sell millions of trucks and cars and buses, all right? But they understand that they have to be in two businesses, the mobility business, where they help businesses with their big data, their analytics,

so that they can increase their agri-deficiency and their productivity, reduce their ecological footprint and marginal cost when they're transporting goods and services. It's good business. You have to be in both the second Industrial Revolution and the third simultaneously to make a shift over two generations. This is what we did in the last century.

The first Industrial Revolution was full steam ahead, as we said, and the second Industrial Revolution is centralized electricity, oil, telecommunication. It came in at the same time and they lived together for 40 years, and then the second overcame the first after World War II. Some businesses made the shift. A good example is Siemens. They were in both. Some didn't. They're history. The coming together of these three Internets,

communication, energy, transport, to manage power and move economic life, this is the Digital Revolution. This is what it really is. It isn't just about 5G and free Wi-Fi. This is about digitalization. Now, when President Juncker came in, I wrote a long memo to him, president of the commission,

and I said, we need to move on this overall plan now, where everything is piecemeal. He got back and he said, this is the plan. We're thinking along the same lines. Next week, after these few years, we will announce, in Europe, the European Commission, together with the Committee of Regions, the launch of Smart Europe next week.

That's why I'm here in Europe. And Vice President Maris Sefcovich is in charge of Smart Europe. He's in charge of the Energy Union with eight other vice presidents and ministers, and we're going to have a joint meeting with the 350 regions of the Committee of the Regions to begin to launch this infrastructure across all the regions and cities of Europe beginning next week.

So the question came up. Now we come to you. Where's the money? Where's the money? And what I said is we have the money. The problem is not the money. It's either where it's going to or why it isn't being used. For example, I'll give you an example. Back in 2012, which was a lousy recession year,

nonetheless, we spent 741 billion equivalent US dollars in the EU, public and private infrastructure, just in a lousy recession year. The problem's not the money. It's what we're spending it on. We're spending it on a second Industrial Revolution fading infrastructure of centralized telecommunication, fossil fuel, nuclear power,

internal combustion, road wear, water and air transport, the productivity, the aggregate efficiency. It peaked all over the industrial world in the last two decades. There's nothing more we can get out of it. It's not a good investment. So I said we need to reprioritize. Certainly we don't want to collapse that second Industrial Revolution infrastructure. We need to patch it up, but we need to reprioritize

and put a lot of our funds in allowing every region of Europe to create roadmaps to move us to a third Industrial Revolution digital infrastructure, communication, energy transport, Internet of Things platform, manage power and move Europe. A year and a half ago, we had a meeting here in Berlin hosted by Chancellor Merkel and President Juncker

and President Heuer. I laid out this narrative, and then President Heuer at the EIB said, we're reprioritizing the funds. So if you're a region, you're looking for funds from the EIB, here are the priorities now. Digitalized communication, digitalized energy, digitalized mobility and transport, digital education for the workforce,

and healthcare digitalized for quality of life. So how do we finance it and what's the role of the banking and financial community here in this room today? Every industry is going to be involved in the build-out of this 40-year infrastructure.

It's on the same scale as the first Industrial Revolution in the 19th century and the second Industrial Revolution in the 20th century, and it's going to be two generations, same amount of time for 40 years. Cable, telecom, ICT, consumer electronics, transportation, logistics, advanced fabrication manufacturing,

3D printing, construction and real estate. Every industry is involved in the build-out, and this means millions and millions of jobs over 40 years. We have to take the entire energy infrastructure of Europe and hopefully the rest of the world, and we have to transform that infrastructure

from fossil fuel nuclear power, which are sunsetting in stranded assets over 40 years, we've got to transform that into renewable energies, which are distributed and have to be laid out across all the building infrastructure across every country. That means we have to retrofit every building. You can't actually turn them into micro power plants unless they're efficient.

We've retrofitted, what, two million buildings already here in Germany. Robots aren't going to put in the insulation and the new windows and the doors. AI's not going to come in and magically do that. That's millions of unskilled, skilled and professional labor to retrofit every building. And you pay back by the energy savings performance contracting.

You don't need the government. You just need public funds, and I'm going to explain that in a minute. Then we have to take and install all the renewable energies. Have you ever seen the installation of those technologies? Human beings have to put those wind turbines up and the solar panels on the roofs. Robots don't do that. A lot of skilled labor and unskilled labor.

We have to take the entire electricity grid of every country in Europe and transform it from dumb servomechanical to smart intelligent. Who's going to lay down all the underground cable? Robots aren't going to do that. Who's going to put in all the advanced meters and manufacture them and put them in place? Robots aren't going to put them in place and manage and service it. We have to then put in smart technology

across all the infrastructure. Human beings have to do that. Then we have to take the transport infrastructure and we've got to move it from dumb to smart road, rail, water and air. Who's going to put in millions of charging stations? Who's going to put in all the smart sensors to connect the road, rail, water and air in a seamless mobility internet?

That requires millions of workers. So this is the plan. And what's the role of the banking community in this room? We have now done three test regions in Europe. And I would like you to come and visit these regions because talk is cheap. You need to see if this actually works. We deployed our first region four years ago,

Haute-de-France. It used to be Nord-Pasquale in Picardy. They're absorbed. It's one single region. It's the third largest region in France. It's the old Rust Belt. I hope they're listening in America. It's the old Rust Belt, the coal mining region. We started four years ago. My global team, TIR Consulting, we have some of the best engineering scientific firms, including the Fraunhofer and a lot of the Fraunhofer groups

in Germany and others. We came in not to give them a plan, but to work with them so they could create their own plan. This is a subsidiary principle at work. And this is the only way this will move quickly. We're transforming the way we lay out infrastructure. Instead of government doing it and then giving it to us, it moves quicker if we bring in the whole region.

So in Nord-Pasquale, now Haute-de-France, all the political parties joined. They joined with the Chamber of Commerce, all the universities and high schools, all the civil society. And for one year, we worked with committees of hundreds and hundreds and hundreds of people with our global team, and they created the plan.

They created the plan. We're now, in our last three years, in deployment. And if you come visit there, you're going to see a metamorphosis. We have thousands of coal miners who have been retrained. They're retrofitting, building, and putting solar collectors on. They're making a living. We've got high-tech parks in the rural areas that used to be Picardy, and they're doing biological substitutes for chemical products.

We've got all of this moving, and we just say, come and visit. Come and actually see that, what people did on the ground in less than four years. We've just finished two other plans. We just finished the first member state, Luxembourg, for Vice President Schneider. Again, hundreds and hundreds of people involved across the entire country.

The plan was announced last month, the first member state. And this Friday, I'll be in the Netherlands. We just finished 23 municipalities from Rotterdam to The Hague. Again, hundreds and hundreds of people involved, thousands actually peripherally creating these plans. It's just a matter of doing it.

This can be done. If this can be done in these three regions, all very different. But this can be done anywhere in the world. This is from talk to walk. Why do we need the banking and financial community? Here's what we need you to do. We need to issue public bonds.

You're all looking to infrastructure. Well, go to the new infrastructure so we can create the new productivity and the new businesses for the millennial generation. The millennials are the digital revolution. This is the digital revolution. We need public bonds issued in every region. So as these regions begin to build out this master plan, this roadmap, and then begin to connect, they need public bonds.

Those public bonds that are issued will allow private equity, pension funds, and banks to invest long-term in infrastructure. And what's the guarantee of your return? Performance contracting. There will be no defaults. Because what will happen is you bring together energy service companies across industries in collaboration, housing, construction, real estate, ICT, logistics.

They have to come together to create these energy service companies. Then they get those public bonds that are issued for private equity and banks to take. And with those public bonds, those energy service companies retrofit scaled-up buildings. Because once a whole region comes to doing this, you don't have to get one apartment building at a time.

You can go big scale. Because an entire community will say, scale up our commercial district with the retrofitting. Scale up our old social housing across this entire region. Then you're on scale. You're not in small little pilots. The energy service companies across the industries get the public bonds, then they retrofit the buildings, pay back by the performance contract and the energy savings.

You can audit in advance and know exactly how long it will take to pay it back. This isn't rocket science. Then the energy service companies come in, again, across all the industries, all scaled, and they put in the renewable technologies on or around the site with cooperatives, paid back by the energy being produced, performance contracting. Then the energy service companies come in,

and they help digitalize that electricity grid locally, paid back by the performance contracting, and then they put in the charging stations, paid back by the performance contracting. This can be done tomorrow morning. I know that in the banking community, they're all saying, we need long-term, we need investment, we need infrastructure. For God's sake, why would we invest in a second Industrial Revolution infrastructure

that's sunsetting with stranded assets? That's absolutely foolish. Absolutely doesn't make any sense. On the other hand, let me be clear, we need to make sure those old industries are eased out over 40 years, and we want to make sure that we can retire these assets with the minimum disruption,

and that will be brought about by the new productivity gains of the new businesses they emerge with. You follow me? You've got to do them simultaneously. Let me say at the final few minutes here, this isn't just about technology. This isn't rocket science. Our global businesses, when we come in and talk to heads of state

and global CEOs, we say to them, this is the only way we know to address climate change in time and still move the economy, create the jobs, because if 7 billion people armed with little, teeny technology, mobile technology, and every single day, they can find ways to, with their analytics and big data,

to increase their aggregate efficiency of whatever they're doing on their value chain and managing, empowering, moving their lives. That means they can dramatically increase their aggregate efficiency. Everybody can be a player, dramatically increase their productivity, dramatically reduce their ecological footprint because each of us is getting more out of less of the earth in each of our conversion.

We're not wasting any. It's the circular economy. Then if what we do produce is shared, share the cars, share the homes, share the children's toys, then we're distributing what we do produce over and over again and in a circular economy, nothing has to go to the landfill. And we say to businesses and governments, if you have another plan, step forward.

We always get silence every single time. The only other plan is to hold on to legacy industries because they're frightened to death to move us to the next stage of the human journey. That's not good enough, and it's certainly not good enough for the banking community because you're looking for the new investment opportunities of the 21st century. But let me say in closing,

this is not just about technology. I'm not a technological utopian. I'm not a Silicon Valley, you know, wow wow. I just think technology is an enabler, but whether or not we move on this journey will depend on human beings and the shift in consciousness.

We have to have an exponential transformation in consciousness to accompany the possibility of the technologies to get there in time. I'm only guardedly hopeful about what I'm saying here today. I don't know if we'll make it all. Many of you will be here long enough to know whether we made it or not. I'm only guardedly hopeful, but the reason I'm guardedly hopeful

is I'm beginning to sense a dramatic consciousness shift among millennials under the age of 38. That gives me some hope. We have millennials who are beginning to transform three basic notions of their identity, how they view freedom, how they view power, and how they view location and identity, freedom.

I grew up to believe that freedom in a post-Enlightenment view is very simple. Everyone's an autonomous agent. We each seek to be self-sustaining, not beholden others, independent, and we want the government to allow us to be able to have the rights to be autonomous. So we see freedom as exclusivity.

Everyone's an autonomous agent. For the millennials, this is weird. This is like the kiss of death. Take away the smartphone and they are gone. They're withdrawn. For them, freedom is not exclusivity. It's inclusivity. It's not ownership. It's access. For them, freedom is the ability to flourish, and they flourish by being a network after network after network where they can openly share their talents,

open source. It benefits the networks. It benefits their social capital. Completely different idea about freedom. We'd have to change all the constitutions. Freedom is inclusivity and access, not exclusivity and ownership. They're changing their view of power. I grew up in a post-Westphalian world. Power is a pyramid from the one to the many.

That's just the way it is through history. But the kids that grow up on the Internet, for them, power is not vertical. It's lateral. The more networks they're in, the more they share that lateral power. And finally, this is probably the most interesting to me. They're changing their notion of identity, and a lot of this has to do with the backlash and the political extreme movements

that are now scared to death of this. Because what I'm outlining to you this morning is the antidote. The reason there's a populist backlash and there's these political extreme movements is because there's great fear of planetary interconnectivity. But the bottom line is, the millennials all over the world, they're gaming together in games.

They're Skyping on global classrooms. A billion and a half of them are on Facebook. It's the largest fictional family in history. These young people are planetary. And they're beginning to shift consciousness. I grew up in a geopolitical world where each individual is a sovereign, and we compete with other individual sovereigns for scarce resources in the marketplace,

zero-sum game, correct? Our governments are sovereign. They represent our interests with other governments, and they compete with them in the marketplace and the battlefield for scarce resources, zero-sum game. Can anyone here tell me how we're going to address climate change, heal the planet, come together as a human family,

steward our fellow creatures with that worldview? The young people are coming home, not with geopolitical consciousness, but biosphere consciousness, and see if this rings true in your family. The biosphere is a little sheath. It's only 19 kilometers from the stratosphere to the water where all the chemicals

and biology to plan to interact to maintain this living organism called the biosphere. 19 kilometers. We got young people coming home and they're saying to their dad, why are you using so much water while you're shaving? You're not even in the room wasting the water. Why is the television not in that room? We haven't been in there in three weeks. Wasting electricity is just a comfort factor for the noise.

Why is there two cars in the driveway? We haven't used that other car in six months. Why not car share one? And the one I'm particularly fond of, this brings a smile to my wife and I. We got young people coming home and they're asking, where did the hamburger come from on the plate? Strike. Did that hamburger come from a rain forest?

Did they have to destroy those trees for six inches of topsoil to graze one cow for one hamburger? And the kids connect the dots. You know if those trees are destroyed for grazing that cow, there's rare species of animals that only live in that tropical forest. They're gone forever extinct. And they know if the trees aren't there anymore to graze the cow for the burger,

there's no trees to absorb CO2 from industrial emissions. That means the temperature of the planet goes up. That means a subsistence farmer 10,000 miles away from that hamburger, he and she can't feed their children because they're getting spring floods and they're getting summer droughts and wildfires because of the hamburger. The kids are learning ecological footprints.

It's not academic. They're actually measuring it. They're doing it in classes. They're learning that everything we do all day long, even when we're sleeping, intimately affects some other human, some other species, the ecosystems in which we live. This is biosphere consciousness. And so we're at a turning point here where this move to a biosphere conscious,

planetary interconnectivity, this new narrative comes hand in hand with the digitalization of communication, energy, and transport so all of us can engage each other in managing, empowering, moving our economic, social, and political life so we can have a hybrid system, part capitalist market, part sharing economy. This is real. We have a backlash. Those who are being left out, some of it's urban rural,

some of it's generational between the baby boomers and the millennials. What we have to do is we have to talk to the parents and grandparents about the opportunities for the young people coming up, and we also have to ease their way into retirement, and we do that by providing them with reskilling,

providing them with the ability to move in the legacy industries as we ease them out. Everyone's got to be involved in this debate. But without this counter narrative, more fear, more populism, more extreme politics, we have seen this very carefully, closely in the last week. This is very, very dangerous territory.

So what I would say to you, when you leave this conference, go back to the bank, go back to your lending institution, go back to your pension fund, and tomorrow morning get involved. We're going to roll this out around Europe. We're going to want your help. We want Europe to be a flagship for the rest of the world, and this can be done tomorrow morning, but not without you.

So the real legacy for this generation, the financial community, you have to do the bottom line, I understand it, but the real bottom line is when your grandchildren look back, they'll say you did the right thing. You didn't just sit on the fence and take a look at the actuarials and the probabilities. This is a plan that allows you to move forward with the bottom line

and actually hopefully save our species and save our planet and provide hope for the next generation. Without you, this is not going to be done. With you, we'll make this happen.

Thank you, Jeremy. This was very interesting. I think we all have a lot to think about after this, and the world ahead of us is certainly not going to be the same as today. There will be a lot of challenges ahead,

and everyone is here to be able to embrace them. Thank you very much. This has been very interesting for everyone. Thank you.