Thank you for the opportunity to speak to this group of business leaders in Stockholm. I'm excited about sharing my opinions on climate change but I can't help recall that before I became ambassador, no one really cared about my opinion. Not even my wife.

Shortly after arriving in Sweden 16 months ago, I decided to make cooperation between US and Sweden on alternative energy my primary focus: my One Big Thing. A few weeks later, the Al Gore movie came out, then the Stern Report, then the IPCC reports, with the result that climate change has become one of the most important issues of the day. Today, I'll tell you some of the interesting things the One Big Thing has led me to see in Sweden, explain how attitudes on climate change in the US are changing, and describe President Bush's climate change policy.

I knew when I became ambassador I wanted to concentrate on one important strategic issue. The question was: what should that issue be? The idea for the One Big Thing came from a meeting I had with Hans Olof Olsson, former CEO of the Volvo Car Company. He told me there are two Swedish inventions found today on every car made anywhere in the world: the seat belt and the catalytic converter. When I heard this it occurred to me that what I should do is look for the seat belt of alternative energy. When I reviewed this idea with President Bush, he agreed. Why look in Sweden? Because since 1990, Sweden has accomplished something amazing: 7% reduction in greenhouse gas emissions during a time when the economy grew 36%. No other country has a track record like that. So the President told me to find out how Sweden did it.

Further inspiration came from another Swedish businessman, Lars Josefsson, CEO of Vattenfall. I hope you don't mind me mentioning his name in a Fortum meeting. Over a year ago he explained to me that he had made it his personal mission to get business leaders to commit to fighting climate change. He showed me a letter he intended to ask Fortune 500 CEOs to sign, committing themselves to do everything in their power to reduce the greenhouse gas emissions that cause global warming. He called his initiative Combat Climate Change, or 3-C. This sounded like a noble cause for a busy CEO to take on, and I felt inspired by his idea. Today nearly 50 business leaders have signed Lars Josefsson's letter.

Since then I have traveled throughout Sweden looking for breakthroughs in alternative energy. I have seen many ingenious ideas and absorbed the strong sense of environmental stewardship that exists in this country. People have been eager to show me what they are working on from a wind farm in Gotland to black liquor gasification in Piteå. And they always ask me where the US stands on climate change and alternative energy.

This cartoon (pit crew chief asking NASCAR driver if this is a good time to talk about global warming) captures the image many people in Europe have of US attitudes toward climate change. But there is another image I want to share with you. This is a solar array in Arizona that produces 3.5 megawatts of electricity. And this is a wind farm in Sweetwater, Texas that produces 37.5 megawatts.

The cartoon gets a laugh because it reminds people that President Bush did not sign the Kyoto Protocol in 2001 and from that many conclude he doesn't get it regarding global warming. But President Bush is concerned about global warming, has said so repeatedly, and has put in place policies to address the problem. The most significant of these he announced in his State of the Union Address last January when he called for a mandatory 20% reduction in gasoline consumption in the US in ten years: 20-in-10. This means 35 billion gallons of CO2 producing gasoline must be replaced in ten years as a result of using ethanol and other alternative fuels and making car engines more efficient.

More recently I had an experience that told me how dramatically global warming concerns in the US have grown. I spent my summer vacation back home and was struck by the fact that I couldn't turn on the TV or pick up a newspaper without seeing evidence of this concern. For example, the automobile industry announced that it expects to sell 750,000 environmental cars in the US in 2008. This is up from 5000 just a few years ago. And Walmart has set a goal of selling 100,000,000 compact fluorescent light bulbs by 2008. These new bulbs cost more than ordinary incandescent bulbs, but last ten times longer, use one-fourth the energy, and produce 90% less heat. Walmart estimates these new bulbs will save enough energy to eliminate the need for a power plant big enough to produce electricity for 450,000 homes. Last week, on October 2, 2007, Walmart announced they have achieved the 100,000,000 goal several months early. As you can see from these examples, US companies today are in a bidding war to see who can fight climate change the most. This was not the case 18 months ago.

Another change: today 80% of all electricity generated in the US comes from states with a renewable portfolio standard, state laws that require 10-20% of electricity to come from renewable fuels like wind or solar. Two more states announced renewable portfolio standards during my vacation. Many other states, most prominently California, have set goals for reducing greenhouse gas emissions and are exploring cap and trade systems.

Now I am back in Sweden where I continue to look for ways the US and Sweden can cooperate on alternative energy. One obvious thing our countries have in common is large forest lands and I've had good success connecting researchers and investors in the US with businesses in Sweden converting forest waste to alternative fuels. For example I've seen a facility in Örnsköldsvik where they make cellulosic ethanol out of waste from the forest and another in Piteå where they've converted the black liquor waste by-product from a pulp mill into biogas. Both these technologies can produce alternative fuel for cars that will help the US achieve President Bush's 20-in-10 goal.

Because of the One Big Thing, I am often drawn into discussions about climate change. To understand climate change one must know where the greenhouse gases that cause it originate. Roughly speaking, greenhouse gases come from four sources, each with more or less equal slices of the pie. The four are transportation, factories, homes and buildings, and electricity generation. To have a serious plan for combating climate change, one must have a plan for reducing emissions from each of these four sources.

This chart (showing cost to produce a kilowatt hour from various energy sources) is the most important in my presentation. You see that the cost to produce electricity from nuclear or coal is 3 cents per kilowatt hour, compared to 6 cents per kilowatt hour for wind and 12 cents for the latest kind of solar energy. For power generation to move away from dirty coal, technology breakthroughs must bring down the cost of the alternatives. And the next chart makes us feel confident in the future because history shows technology investments do drive down the costs of new technologies. So, what policies does the Bush Administration support to encourage such investments and address climate change?

On May 15, Prime Minister Reinfeldt met with President Bush. I was lucky enough to be in the Oval Office that day and heard the President ask the Prime Minister what he wanted to talk about. The importance of reaching a post-2012 global agreement on climate change, Reinfeldt responded. And that is what they talked about, for the better part of an hour, including discussion of a bilateral agreement on alternative energy cooperation. A month later, on June 28, Sweden and the US signed that agreement which calls for joint research on bio-fuels, engine technology, and other kinds of renewable energy. This agreement is now the centerpiece of the One Big Thing. In the White House that day Prime Minister Reinfeldt also declared Sweden's goal of tabling a post-2012 climate change agreement during its EU presidency the second half of 2009. This goal opens the door to additional cooperation between US and Sweden.

The last week of September was climate change week in the US as the UN, the Clinton Initiative, and the Bush Administration all held conferences. But to understand the context of what happened during climate change week, let's first go back to the G-8 meeting in Heilingendamm, Germany, June 8. Just prior to this meeting President Bush made an important announcement in which he proposed to 1) limit US greenhouse gas emissions, 2) participate in a post-2012 climate change agreement, and 3) exert US leadership to encourage India, China, and all the other major emitting economies to also participate in the post-2012 agreement. At Heilingendamm the G-8 leaders endorsed President Bush's proposal. Two months later at the APEC Meeting in Australia, leaders of the US and major Asian economies issued the Sydney Declaration which called for a 25% reduction in greenhouse gas intensity by 2030. Significantly, China signed this climate change agreement, along with the US and other Asian nations.

This activity led up to the UN and Bush Administration conferences at the end of September. The UN meeting was historic because heads of state from 80 countries pledged to act against climate change. Afterwards, UN Secretary-General Ban Ki-moon said: "I sensed something remarkable happening, something transformative - a sea-change, whereby leaders showed themselves willing to put aside blame for the past and pose to themselves more forward-looking questions." At the end of the week, the meeting Bush suggested in Heilingendamm, called Major Economies Meeting (MEM), took place. The purpose was to find common ground for a post-2012 agreement that would be acceptable to the EU, the US, and developing nations, most significantly, China.

The significance of getting China involved cannot be overstated. China is now the largest emitter of greenhouse gases in the world, having passed the US this year. As this chart shows, the US and China each contribute just over 20% of greenhouse gas emissions, while Europe produces about 15%. Together, the 15 largest emitting countries produce 82% of the greenhouse gases that cause global warming. Thus the significance of President Bush's meeting. To have a serious chance of reducing the greenhouse gases that cause climate change, a global agreement must be acceptable to the 15 major emitters who produce 82% of the problem. The Kyoto Protocol, adopted and well known in Europe, only includes countries producing 15%. President Bush wants to take the next step. But China and India have said they should not be bound by the mandatory cap and trade system Kyoto calls for. So now what do we do? Some in Europe say that if the US would only commit to Kyoto, China and India would follow. But what if they don't?

This is what climate change policy negotiations, begun at MEM, are now about. What is the post-2012 agreement that will be acceptable to the EU, the US, China, India, and all the major emitting nations? The meeting produced candid exchanges among high level officials, confirming there are huge differences. President Bush proposed a new fund to promote international investment in clean energy technologies. Secretary of Treasury Hank Paulson will be the point person for the US. Some ministers pushed for the US to put on the table its own proposal for a long term emissions reduction goal, something the US confirmed is under consideration. One European minister faulted the US for declining to adopt economy-wide caps of carbon emissions. But China and India maintained their position of rejecting mandatory caps as they struggle to alleviate poverty. Discussion confirmed that Japan, Russia, and several other countries were not ready to join the EU in committing to an international legally binding post-Kyoto regime. Japan asserted that it has achieved substantial cuts in emissions without the use of a cap and trade system, as has the US. While no conclusions were reached at the MEM meeting, the parties agreed it was constructive and that they should meet again, probably in France after the December UN meeting in Bali.

This might be a good point to take a look at US emissions. Here is a chart showing US emissions since 1990. I think the US was asleep on this issue for awhile. But we are awake now. The chart shows that while emissions grew nine out of ten years in the 90's, US performance since 2000 has been much better, on a par with performance in Europe and most other parts of the world. In two of the past six years, US emissions have actually gone down, including during 2006. But we can do better, and we must. The question is how?

Policy negotiations like those at the Washington MEM meeting can be hard to follow because they are so complicated. Have you ever tried to figure out what's really happening in the Doha Round of trade talks? But what's important is that nations are talking to each other. And it is also important not to lose sight of what must happen to achieve a serious reduction in greenhouse gases so that global warming can be contained. There are many mitigation scenarios but a particularly good one has been produced by Vattenfall in conjunction with McKinsey, shown on this chart. To keep temperature increases at less than 2 degrees centigrade, which is the advice of the IPCC, 27 gigatons of greenhouse gases must be eliminated by 2030 vs. a business-as-usual scenario. The chart shows how increased use of nuclear power, alternative fuel for cars, wind and solar power, carbon sequestration, and many other technology developments can contribute to this goal. Interestingly, 25% of the mitigation needed comes from actions that cost nothing and require no technology breakthrough, but do require people to change their behavior.

Remember those new light bulbs we talked about earlier? This next chart shows those same mitigation ideas organized by region of the world and by sector of the economy. See that China must produce the same results as the US and Canada, for example, reminding us of the importance of keeping them at the table. See also the key role of the four pieces of the pie we discussed earlier: transportation, factories, homes and buildings, and electricity generation. Most of the opportunities for mitigation come from those four sectors.

Finally, let me return to the One Big Thing: After sixteen months I have indeed found many good ideas in Sweden: widely available E85 instead of gasoline, the use of geothermal heating instead of oil heat, and technologies for converting waste to fuel. The US and Sweden are cooperating now on these subjects as we work to find policy and technology breakthroughs that will solve the problem of global warming.

Thank you for your time.