Bill GatesBill Gates goes casual at the Climate Solutions breakfast.Photo: nonfictionmediaThe Bill & Melinda Gates Foundation — the richest in the world, with an endowment of $37 billion — doesn’t have plans to focus on clean energy and climate change, Bill Gates said on Tuesday. Speaking at a fundraiser for Northwest nonprofit Climate Solutions, he argued that energy markets and investments are too large for philanthropic money to make much of a dent. But Gates is investing in energy-tech startups himself — he called out nuclear company TerraPower in particular — and he hopes those investments make money that can then be plowed into his foundation.

What the private sector doesn’t do so well is basic R&D, said Gates, so he wants the U.S. government to more than double funding for energy R&D. He would rather shift the balance of money from “present generation” industries like wind, which gets government backing via the production tax credit and rapid depreciation, to basic R&D.

Gates believes that “breakthrough” innovations in energy technology are crucial; today’s tech, like “cute” rooftop solar panels, isn’t enough. That stance that has earned him criticism from some climate activists like Joe Romm who want to focus on deploying existing clean technologies. But Gates insisted on Tuesday that to get CO2 emissions from energy production to approach zero, “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.” And he argued that the U.S. is far better positioned than China or other countries to be the source of these breakthrough innovations.

You can watch full video of Gates’ remarks and read the transcript — or get the highlights right here. 

On energy and philanthropy

Q. 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.

On China and innovation

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. … in China, the amount of total power in the next 20 years is going up by a factor of four. … The idea that the Chinese are going to come up with these innovations, unfortunately, it’s not the case. … 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. … 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. … [The Chinese] 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.

On politics and the push for energy R&D funding

Gates has tended to steer clear of politics, but that might be changing; he made reference on Tuesday to his own “political activities” around energy and climate. Last year, he gave $700,000 to help defeat Prop. 23 in California and ensure that the state’s landmark climate law wasn’t gutted. As he told the Climate Solutions crowd, he also played an active role in the American Energy Innovation Council, which brought together business leaders including GE CEO Jeff Immelt and venture capitalist John Doerr to call for $16 billion a year in federal funding for clean energy innovation.

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 [for companies] … 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. …

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. … 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’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.

For more, watch the full video or read the transcript