05/10/2010 05:12 am ET Updated May 25, 2011

ECO:nomics -- Creating Environmental Capital

Santa Barbara, Calif -- Talk about brains, power and money in one room. This was the ECO:nomics Conference, put on by The Wall Street Journal at the lush Bacara Resort. Legendary investor T. Boone Pickens; top venture capitalists John Doerr and Vinod Khosla; CEOs of Royal Dutch Shell, Rio Tinto and American Electric Power; Energy Secretary Steven Chu; the list goes on. This was almost enough business horsepower to warrant autograph seeking.

If there is one clear message coming out of this gathering, it's that we need to assign a price or cost to carbon emissions, and soon. Almost all the speakers agreed that be it through a direct tax on carbon -- which would affect the average consumer at the pump and on their energy bills -- or the cap and trade model, which auctions off "permits to pollute" to all businesses that emit carbon, we need to enact some serious legislation on this immediately.

Other provocative subjects discussed included wind energy, natural gas, nuclear energy, other types of alternative power, synthetic genomics (I will admit I had a hard time following J. Craig Venter's rocket science, but it involves using genomic research to discover new ways to produce energy) and not incidentally, water.

In fact, one of the best speakers was Patricia Mulroy, General Manager of Southern Nevada Water Authority. She explained that even with the winter rainfall we have been enjoying, Lake Mead (which supplies water for most of Southern Nevada) will be at dangerously low levels by 2016 and Hoover Dam may stop producing electric power. Scary stuff indeed. Mulroy added that water conservation efforts have been quite successful so far, including incentivizing citizens and developers to remove grass and replace it with low-water landscaping. Southern Nevada's water requirements have been reduced by almost a third since 2002, quite an amazing statistic. My comment is this: for those who think climate change is a myth, what do you propose we do about a situation like this? Even with strong conservation measures in place, we are running out of water...

I am one of many who were wondering whatever happened to T. Boone Pickens' wind energy initiative? Well, the answer is oil prices that were $125 a barrel ended up around $80 and thus the math no longer works. Pickens had 648 wind turbines on order from GE, he was able to negotiate that down to 324 and those will indeed be arriving on his doorstep. He will deploy them but the problem with wind energy remains transmission. Of course, Pickens has now moved on to natural gas as our savior. This concept had a number of supporters in the room but was far from unanimous.

Tom Albanese, CEO of Australia-based Rio Tinto, one of the world's largest mining companies, believes in clean coal and thinks it can be part of the energy solution. (As Director of Sustainability for Sierra Club Green, I must add that I strongly disagree.) Gregory Boyce, CEO of Peabody Energy which is one of the largest coal companies in the world, gave statistics showing just how married to coal American, Japanese, India and Chinese industrial companies are. Albanese made a very strong point that businesses and investors have been preparing for a cost on carbon for quite awhile now, and not having legislation in place leaves a giant question mark going forward for everyone. This point was echoed by top V.C. John Doerr, who ought to know since he has deployed hundreds of millions of dollars into Cleantech over the past nine years.

One of Doerr's early investments was Bloom Energy, which makes a fuel cell technology called the Bloom Box. This self-contained power unit runs off natural gas and provides enough energy, off the electric power grid, to run a large industrial facility and eventually, a smaller unit will power homes. Bloom has used up over $400 million of investor capital already and the audience was mixed on whether the Bloom Box will ultimately be commercially viable. Stay tuned on this one.

The final speaker was Energy Secretary Steven Chu. I was hoping he would address the important question raised by Rio Tinto's Albanese: now that the world's leading companies have braced themselves for assigning a cost to carbon emissions, when will that be, what will that entail, and how will it be administered? His answer: I am optimistic that energy legislation addressing this issue will be passed this year. And that America still can win the worldwide race to lead the green economy. "The Clean Energy movement is ours to lose. China is moving quickly; they see this industry as a huge export opportunity," he added. "This is an incredible economic opportunity for the United States. We have to rebuild our energy infrastructure to make us energy independent."