This morning, Bill Gates, Microsoft chairman and co-chair of the Bill & Melinda Gates Foundation, talked with Climate Solutions Board Co-chair Jabe Blumenthal about climate change and innovations in clean energy.
Q. How and why did you get involved in climate change and energy issues?
A. I think it’s important to think about energy and how critical it is in so many ways. If you say, why has our civilization done so well over the last 300 years, a lot of that is breakthroughs in energy, the intensification of energy use. When you think about poor people, and improving their lives — getting around, getting cheap fertilizer, getting lighting at night — so many of the things that count for them are energy. So we’re going to have to have breakthroughs in energy. As I learned about energy, understanding that we’ve got this constraint now, and that we’re going to have to [have breakthroughs] in a way that’s not emitting CO2, made it even more fascinating. I love innovation. I love meeting with scientists, understanding the problems. Even the intersection of science and public policy, the foundation has forced me to learn aid budgets and how things get decided. The more I’ve learned about this problem, the more I see it as super-critical. We need a breakthrough. We need, maybe, multiple breakthroughs, to create a portfolio of solutions that deal with the environment, that get the costs down. If we just had the environment constraint and no cost constraint, we could have a solution for rich countries. Unfortunately, in terms of overall planetary energy use, you better have something that works for everyone, because we want poor people to get those services. I’ve been drawn in. With your help, I’ve gotten to meet some great professors who work in this area, and they’ve brought a lot of people in, so I’ve enjoyed learning about it, and trying to help make people understand how important it is.
Q. You’ve got a reputation, well-deserved, for when you get interested in a topic, diving in very deeply and thoroughly. Could you talk to us a little bit about what you’ve done over the last couple years to get educated on these topics?
A. The number of great books in this area is pretty phenomenal. My favorite author in this space is Vaclav Smil, who’s done about a dozen books. Creating the 20th Century talked about how energy intensification and innovation, really starting in the 1800s, had been so central to the lifestyles that we live today. [Sustainable] Energy — Without the Hot Air, the David MacKay book, is very good.
But also, I’m very lucky that some of these top people on climate and energy are willing to come in and talk. The last session we had was one about climate and agriculture. The Gates Foundation does a lot of work in agriculture because 70 percent of poor people are people with small, small farms, and making them more productive is super-important. Weather in the short run, climate in the long run, is a key problem for them. Already it’s a problem. It’s going to get worse, with heat and extreme weather events, a lot of these crops won’t be as productive. Understanding how does that work, what can we do to mitigate, or help them adapt as well — that was a fascinating topic.
There are people who understand the political situation who came out and talked. We put a group together to make the case for more basic R&D. In my view, you need a portfolio of investments, but the thing I think that’s the most underinvested in is basic R&D. That’s something that only the government, really, is going to do. Once you get further downstream, there are a lot of opportunities, and I’ve invested in tons of companies, I spent all day yesterday with a venture capitalist, Vinod Khosla, who’s really quite incredible in terms of the energy companies he’s put together. There are about 15 that I sat and talked with yesterday about what they’re doing, went through the science. That upstream part is part of what makes me optimistic, even though we seem to have a political road-jam, at least temporarily, on some of the issues like carbon pricing. The innovation piece really is so important, and I do see good things happening, but the federal government should more than double what it’s spending on that piece. So a group of us got together to try and make that case. We didn’t actually get more money, but we’re going to keep trying.
Q. So that was the American Energy Innovation Council, you and Jeff Immelt at GE, and other business leaders. Can you talk a little bit more about some of the specific recommendations they made? Are you hopeful that there might be some movement on that? What was the reception to those recommendations?
A. It was a fun group. As you said, Jeff Immelt, who runs GE, Norman Augustine who runs Martin Marietta, John Doerr, who’s a venture capitalist, Ursula Burns from Xerox — really quite a strong group. We had a pretty clear consensus about what should be done. I think in a normal fiscal environment, we probably would have been successful. The amount that you have to tax energy in order to fund this R&D piece is pretty modest. Like, say, a half percent if you go after the entire energy economy, more like a percent if you go after just the electricity part of it. We were willing to say that they should stand alone as something to reform how energy gets built and not go after the normal treasury revenues. It came at the time when an additional tax like that or anything that was associated with climate was going to have a tough time. So we weren’t able to raise more money. President Obama did see us, he said nice things, and I think he meant them. The secretary of energy was nice as well. I still think it’s, when you care about the future, many issues come together on this one. Why do we have a security problem? What could hurt our economy in a disastrous way? Would cutting off the availability of oil would be very, very bad. The lip service that’s been paid to energy innovation over the last few decades is disappointing. A few good things have been done. This ARPA-E, it’s run by a guy named Arun Majumdar, who was at the event I did yesterday, he’s done a really good job funding some of these projects. But he deserves to have a lot more money. He almost got cut to zero. We’re going to have to keep the pressure up on this, including being creative about what the funding sources would look like. Ironically, what can happen is, if you’re not careful, you’re funding more downstream stuff by subsidizing the delivery, which is fine, that has a role, but right now, say, for wind power, not only do you have the production tax credit, you have the rapid depreciation. So you’re funding a lot of present generation stuff, and if you’re looking at how much you’re really spending on it, you would want to ship more of it to the R&D piece. I’m kind of stunned that we can’t get a bipartisan view on this R&D piece, because it’s about jobs and innovation. It’s the kind of thing the world counts on America to do well, and very key to how this country stays unique. Maybe two, three, four years before we get it done.
Q. I want to go a little bit further into the argument for energy R&D. Last year, you gave a talk at TED, and you often hear people say that in order to be able to not have climate disaster, we’ll have to decrease our total emissions by 80 percent by 2050, and you said something at the TED conference that was in many ways stronger than that. You said, if we’re really going to get down to 80 percent reduction, we’re going to have to get the emissions from energy production essentially to zero. You walked through this equation and said, the conclusion from that is we really need some energy breakthroughs, or miracles, as you called them. At the risk of people thinking that they paid a bunch of money to come and get an algebra course, could you walk us through this?
A. It might be a little early for math, but the basic idea is that all the CO2 we emit stays around for a long time. That’s a very unfortunate fact, and that leads to the warming. That’s about as clear as anything can be. You can argue over, as the temperature goes up, will it go up even more. There are certain feedback effects that are the subject of a lot of inquiry. But almost no one basically doubts the fact that you’ve got to reduce the CO2 emissions. How much CO2 emissions comes out is based on how many people you have; how many energy-using services, S, those people are using; the amount of energy each activity uses, that’s sort of an energy-efficiency question; and then, for each unit of energy, how much carbon comes out. You multiply these four things. That tells you what things look like. As you look at each of these, if you want that thing on the left to come close to zero, then you have to really do a good job on at least one of these factors. But we don’t want to have the population drop to zero. In fact, that’s going up. We don’t want poor people not to have lighting and transport. Services per person, even if the rich countries like the United States first and foremost actually moderate their products and services, which they should, smaller cars, better things, that number is still going to go up, because we’re moving so many people from a lifestyle where they have no electrical use, no transport use, to have some. P is going up, S is going up, E — there are some areas where you can get efficiency, like in lighting, and it’s amazing. That actually saves money, it’s a great thing. A number of these innovative energy companies I saw yesterday are working on things in efficiency — efficiency in air-conditioning, efficiency in cars. That’s really neat, but even if you get a factor of 2 or 3 there, which would be really amazing, because there are some things that are very hard to improve. Industrial processes like how you make steel or fertilizer, you’re not going to get much improvement, so for everything like lighting, you can get massive improvement, there are quite a few that are almost at their limit. Finally, since those three aren’t going to get some big reduction, the thing that you have to do extremely well on is C. That is, the amount of CO2 that is emitted for each unit of energy — electricity, mostly — that you are using. Now, fortunately, there are ways of doing that. That’s the thing where we have to do extremely well. The CO2 equation, I’m leaving out, there are a lot of things in forestry and agriculture, or some ways that poor countries deal with energy, that are going to be very tough to change. So for the power sector in rich countries, we had better do more than our 80 percent part. We’d better almost take that to zero. So, you’ve got to either do carbon sequestration from coal and natural gas, got to do nuclear, got to do renewable. Fortunately there are different approaches — none of which is economic, none of which is clear that it will be economic today. So you ought to pursue all of those things. Solar energy, nuclear energy, there are quite a few that deliver you a C that’s absolutely zero, so over the next couple of decades we have to invent and pilot, and then in the decades after that we have to deploy in an unbelievably quick way, these new sources. The author I mentioned, this guy Vaclav Smil, has a book called Energy Transitions that talks about how usually it takes 60 years or so between when you get new energy sources and when they’re used. So, what we’re talking about is moving faster to change than we ever have in the past. Now, we’re richer, hopefully we’re smarter, sometimes it seems that way, sometimes not, but we’re really asking for something pretty impressive to get done.
Q. So, you have been criticized, but I think it’s fair to say, for being not optimistic as you should be about current low-carbon technologies. Some people have even gone as far as to say that Bill doesn’t understand the lessons of the computer industry. The reasoning goes, we just need to get some carbon pricing in place, or some renewable electricity standards, and then private investment and competition will kick in, and there will be some Moore’s law of ever-lowering costs and ever-increasing performance of technologies and then we’re sort of off to the races. I’d be interested in your reaction to that, what you think of that analogy, what is different about the computer industry and energy, because I take it, you probably don’t agree with that assessment.
A. The difference is a couple of things. First of all, the scale of the capital investment and the amount of time that it has to be useful over is very different. When you build a coal plant, a nuclear, gas, renewable plant, you have to have a 40-year life for those things to make sense. So the decisions you’re making now are based on some prediction of government policy way out there decades in the future. Also those kinds of things are so risky in terms of will the right regulatory things happen that there is a tendency to under-invest. When it comes to software and chips, the life cycles are two or three years, you understand who wants to buy the things, and it’s not subject to all this regulatory complexity. So the energy sector is going to be under-invested. The R&D won’t be done as well unless the government comes in and encourages people, both with money and by making the policy clear that they will permit certain kinds of things, if they put economic incentives in place, that they’ll stay in place for the full time period. So this one is, it’s hard. But it’s very, very important, whether it’s the competitiveness of our economy or what life is like for poor people on the planet. Energy innovation gets right up there as one of the things that you hope that things go very, very quickly.
Q. You spent a fair amount of time in China, and China seems like they’re so far ahead of us in so many important areas on clean energy, and so much more committed to it, both in industry and at the governmental level, and it’s not just that they’re ahead on manufacturing costs, but ahead on engineering. They’re likely to complete the first pebble-bed nuclear reactor, for example. Aren’t they just going to address this problem for us, maybe a few years later than if the U.S. was really fully participating, or are there a few things that still the United States can do uniquely well in technology that we need to do?
A. Well, a lot of the figures that are thrown around about China are sort of these bogeyman, oh-we-should-feel-bad type things. China’s very important, and China can be part of the solution here. After all, if you look at how much additional energy capacity China will be putting in place in the next 30 years, they are a much bigger market for energy than the United States. The United States is going to have modest increases, so you have a lot of the activities, just replacing the plants as they reach their retirement ages or as they’re not meeting environmental standards, whereas in China, the amount of total power in the next 20 years is going up by a factor of four. So we need to be involved with China. The idea that the Chinese are going to come up with these innovations, unfortunately, it’s not the case. I wouldn’t feel that bad about it. If I have a disease, and the thing that saves my life happens to come from China, I’m not going to complain. And so environmentally, if they have some environmental breakthrough that makes things cheap, that’ll be great. Unfortunately, that’s not the situation. The great innovation, the power to innovate in the sciences, including in energy, the U.S. still has a dominant position. And so mostly, if you’ll dig into these statistics about solar companies, for example, a lot of the innovation’s being done in the United States. The manufacturing is lower because of land value and various things; a lot of manufacturing’s going on there [in China]. But the innovation, we really still have to count on wherever the top universities are for that work to go on, wherever the mechanism for doing high-risk start-ups is, that’s where it has to go on. The United States has a completely gigantic share of that. And so we need the innovators here. I know of a hundred great new energy ideas, companies being started. I’d say 70 percent of them are based here in the United States, even if they’re looking at doing some manufacture there.
China needs to be part of the solution, but we can’t sit back. They have not committed to make net CO2 reductions. They’ve talked about commitments as a percentage of their economy, their CO2 intensity will go down, and they are quite serious about that, they’re shutting down some of the bad coal plants, and the scale of the renewables stuff they’re doing is incredible. Likewise, the scale of their nuclear investment is quite phenomenal. But because their overall energy use is going up so quickly — take nuclear, where they have a commitment to go from 10 gigawatts to 80 gigawatts over a 10-year period, it’s kind of mind-blowing. It means building 70 new plants. That will only drive nuclear from 2 percent of their energy to 4 percent of their energy. So unless things get very economic, they are going to build a lot of coal plants to go with a lot of wind, and a lot of solar, and a fair bit of nuclear as well. So they need our innovation and any solution that turns the energy game into a nationalistic one-upmanship thing isn’t going to get us to where we need to go.
Q. So, you mentioned nuclear. I think everybody in the room probably knows that you’ve got an interest in nuclear technology, future technology, that you’ve made an investment in a company, and are spending a fair bit of time in TerraPower. There’s an interesting dynamic I’ve noticed in the press where people want to ask you only about nuclear and TerraPower and then report that all you talked about was nuclear and TerraPower. But you’ve been doing a lot of stuff in other areas as well, you’ve made investments in non-nuclear companies. So I’d love to hear you say whatever you’d like to say about TerraPower but also other technologies, what else seems promising to you.
A. My key interest is that we get a solution that’s cheap energy that emits no CO2. There are many paths that could go down. Anyone who thinks that any of those paths is easy is overlooking the difficulties. It’s not going to be easy to get wind up to say 30 percent and have it be economic. It’s not going to be easy to get solar thermal, solar electric; it’s not going to be easy to get biofuels up to big numbers. Every one of these things has real difficulties. Nuclear has a particular difficulty in terms of the cost of building the plants is very, very high, and both creating systems that people can see that it’s going to be incredibly safe. So not only that it’s going to be safe but that people feel good about it being safe — that’s a real challenge for nuclear. Then you have to have a waste solution. It is as daunting to say we’re going to get a huge percentage of energy from that as it is any of the other paths. Given this uncertainty, I think we have to go full speed ahead on every one of them.
There are some wonderful things about nuclear energy in terms of the size of the plant, the amount of energy you can get, and potentially, how low cost it could be. If you’re talking about something where you want to be cheaper than coal — that is such a tough challenge. Coal is very, very inexpensive, and [nuclear]‘s one of the routes that could do it. I’ve got a lot of investments. This nuclear company, TerraPower, is one of these great things that on paper what we have is so cool. The difference from going from something we have on paper to an actual plant is immensely difficult. In no area is it more difficult than nuclear. That is a very high-risk company. It’s got some brilliant people based here in Seattle working with lots of universities around the United States, and it’s got to seek a partner somewhere to actually build this plant.
But, that’s just one of maybe a thousand cool companies that we need to get behind to maximize our chance that come 15 years from now, we’ll have, ideally, multiple technologies that work and are cheap, and then we can go into the global high-speed deployment mode to get them out there.
Q. The one question I promised your staff that I wouldn’t ask, whether the Gates Foundation is going to get involved in climate change — is the Gates Foundation going to get involved in climate change?
A. Well, I’m very involved in energy and climate in terms of investments and learning sessions and reading and now even political activities. The scale of the energy market is gigantic, it’s trillions of dollars, and so when you think about hiring people who are going to invent a new nuclear reactor or cheap solar, I think the capitalistic format where they own part of the company and they’ll do well, you raise money from private investors and things, I think that’s the main area where energy innovation is going to take place. I want to facilitate that as best I can.
When you think about the needs of the poorest, the type of biofuels stuff they might be able to do uniquely on small farms in Africa or in parts of Asia — that draws in the foundation. The foundation is looking at things that are ignored, that there is no market for, and that relate to the poorest. And so some of our agricultural things touch on energy, getting energy for health-care clinics in remote parts of Africa and things like that. We need innovative solutions for those things.
But by and large, most of the money I put into energy will be done on the private side. Ideally some of those things will be successful, they will generate profits, and that will all go into the foundation so they can do even more of what they do on global health and those things.
So energy per se is not one of the foundation’s focuses simply because it’s a capitalistic game that’s going to have to bring so many elements to bear.
Q. You ended your talk last year at TED with what seemed a very, very powerful statement to me. You said if you had one wish for the next 50 years, it would be energy at half the cost of today’s energy with zero carbon. Got a big standing ovation. Do you feel as strongly about that now as you did then?
A. Well, absolutely. If you look at the history of mankind, and you say, why is it in the last 300 years that we’ve doubled lifespans, reduced childhood death by a factor of 10, raised literacy from under 1 percent to over 80 percent, what happened? It wasn’t that we just happened to pick good political leaders. For hundreds of years we’ve been picking political leaders, and nothing all that magic happened. Lifespan stayed at about 30 years. The innovation is so core to how we’ve gotten as far as we’ve come. It’s kind of exciting that there is the potential to solve these problems. The amount of sun that hits the Earth is this gigantic amount. So it is possible to use that as the source that will solve this. The amount of energy in uranium molecules is a million times per reaction as oxidizing carbon. A factor of a million, that’s pretty serious. So scientifically it is wonderful that it looks like we should be able to solve these problems. So for me, if I had this one wish, OK, what would happen in the next several decades, having breakthroughs in energy that would be very, very cheap, and zero CO2, I think that would be more valuable than being able to pick the next five presidents of the United States, or China, or United Nations, whatever group you happen to think about. This is very, very important. So we have to get organized to do the high-risk things in this area. It would be so amazing. The price of fertilizer is the price of energy, the price of building decent buildings in these areas where we’re going to have so many people. If we can get energy improved, it’s deeply empowering.
Meeting with the scientists who are working on this stuff, it’s a lot of fun. Some days, like yesterday, when I’m meeting with scientists, I get very optimistic. Then I step back and I look at the political elements that should be in place, for example, pricing carbon, funding more R&D — and not just in the United States. In the United States, we’re the richest country, we overuse energy more than anybody else, we ought to take the lead, but actually, it’s not as though Europe’s investing as much in basic R&D as much as they should, and even China is going to have to be pushed on these things. So that part of it is certainly gotten to be messy and even sort of disturbing in terms of, do facts matter, somewhat. But you’ve got to persevere. It’s the same political system that somehow got us into the wonderful situation we are in today. I mean that seriously. The United States is in, basically, a good situation. So when you despair and think, how can it move forward on this problem, you have to think, well, it did in the past. Maybe we’re not being creative enough or patient enough. So even that piece, I think, we may get what we need, but only because people like the people here are keeping that message clearly in front of all the politicians.