Stanford Energy is brought to you by the Precourt Institute for Energy
By Mark Golden
Declining prices for devices to generate and store renewable energy are great, but not nearly enough to save the world from climate change, according to Bill Gates, chairman of the Breakthrough Energy Coalition and co-chair of the Bill & Melinda Gates Foundation.
Gates pulled few punches earlier this month at Stanford University’s Global Energy Forum when he talked about overly optimistic thinking, natural gas, a carbon tax and the responsibilities of developing economies vs. developed economies. He was hopeful, however, that the power of research and innovation could meet rising energy demand globally while addressing climate change and other environmental challenges. The interview by Arun Majumdar, co-director of Stanford Energy’s Precourt Institute for Energy, which organized the conference, can be watched here.
(Image credit for all photos: Dawn Harmer)
“Electricity is just 25 percent of greenhouse gas emissions,” said Gates. “There is no substitute for how the industrial economy runs today.”
When financial analysts proposed rating companies on their CO2 output to drive down emissions, Gates was appalled by the idea that the climate and energy problem would be easy to solve. He asked them: “Do you guys on Wall Street have something in your desks that makes steel? Where is fertilizer, cement, plastic going to come from? Do planes fly through the sky because of some number you put in a spreadsheet?”
“The idea that we have the current tools and it’s just because these utility people are evil people and if we could just beat on them and put (solar panels) on our rooftop—that is more of a block than climate denial,” Gates said. “The ‘climate is easy to solve’ group is our biggest problem.”
Similarly, he knocked down the idea that natural gas replacing coal for generating electricity is helping solve the energy and climate problem.
“The goal is not to take a bow because you use natural gas,” which emits half the carbon dioxide of coal, Gates said. “That contributes zero! In fact, because the forcing function is sooner on natural gas, converting coal to natural gas for the next 50 years and then shutting it down, that’s a net addition” to emissions.
Majumdar, a Stanford professor of mechanical engineering and an advisor to Breakthrough Energy Ventures, asked Gates if he thought a global tax on carbon was possible.
“The globe is a big place. You’re not going to get every country in this thing. I’m hopeful you can get the rich countries,” he answered. “But in India, are you really taxing those poor people who are just getting air conditioning for the first time? Wow! I want to meet that politician.”
And sub-Saharan Africa “should not be constrained. They should do whatever it takes to reduce malnutrition and starvation,” Gates said to applause.
People in rich countries paying a carbon premium on the relatively small amount of their income they spend on energy is not Gates’ chief concern. Instead, he is focused on finding the non-carbon technologies that can supply energy around the clock, which is the kind of supply needed to create jobs in developing countries like China and India, and eventually in sub-Saharan Africa.
Greater energy use has been and will continue to be an essential building block of economies rising from subsistence-level existence and escaping poverty, Gates said, and developmental goals can only be achieved by building energy systems and other infrastructure.
The responsibility of the West—in addition to cutting its own emissions—is to invent clean energy technologies that cost less than fossil fuel-based energy. This is where Gates is hopeful.
Majumdar asked what technologies have excited Gates since he put together Breakthrough Energy’s first venture fund at the end of 2016.
“I’m more excited than I expected to be,” he said. “When I was calling up people, saying ‘Let’s put $1 billion together,’ they were like, ‘Is there good stuff out there?”
“I said, ‘Oh, sure, absolutely,’” Gates chuckled.
Breakthrough Energy considers investing only in technologies that have the potential to reduce global emissions by at least 0.5 percent. Despite this high hurdle, Gates said the coalition of long-term investors is finding many great potential targets for investment, though it ultimately can pick only a few.
“If you set aside money for later stages of these companies, it will only take us two to three years for all that initial money to be committed with some follow-on investments,” he said. “And then we’ll need more.”
Gates has long thought that nuclear power will be part of the climate solution and the fund has invested in TerraPower, which is advancing two new kinds of reactors. It has also invested in Commonwealth Fusion Systems, which aims to build a compact fusion power plant.
“The problem with fusion isn’t just making it work—and nobody’s ever even gotten energy breakeven—it’s making it economical,” Gates said. “But for every crazy thing we need to solve, we’re finding at least three or four people—most of whom will end up being wrong—who are willing to say, ‘Hey, write us a check and we’ll go work on that.’”
Beyond the venture fund, the coalition’s network of high net worth individuals and large corporations are working to increase public funding for energy research. Around the time of the Paris Agreement in 2015, Gates visited 30 countries asking that their governments double spending on energy R&D budgets. Most of the countries that committed to this Mission Innovation, he said at the forum, have followed through, and the United States is just a little below doubling its energy research spending since then.
“In total, an extra $3 billion has gone into R&D,” he said. “This does tip the odds slightly in favor of the breakthroughs that we need.”
“We never could have gotten that Mission Innovation R&D increase,” said Gates, “if we hadn’t said that there will be a venture fund to take the best work and carry it forward ideally all the way into being a product.”
The inaugural 2018 Stanford Global Energy Forum gathered global thought leaders and decision makers from the private sector, government, academia, non-profits and media to engage in strategic and balanced dialogue about the future of energy. The meeting, held Nov. 1-2, was convened by Stanford Energy’s Precourt Institute and hosted by four former U.S. cabinet members.