WASHINGTON – Here is what Bill Gates, (IT technology visionary, Microsoft founder, net worth about $ 80 billion), said talking to The Financial Times about policies aimed at reducing carbon emissions: “When you say what can we do about climate change, the easiest thing to say would be: ‘Hey, let’s just take today’s technology and replace transport, electricity, industrial power with carbon-free emissions.’ Unfortunately the cost of doing that with today’s technology is beyond astronomical”. [Emphasis added].
It will not work
Got that? This approach –deploying what we’ve got– will not work. Bad idea. A non starter. And this is because trying to replace all carbon energy based systems with currently available renewable technologies would entail costs that are “beyond astronomical”.
In other words, according to a recognized brilliant entrepreneur, current policies that advocate precisely that –replacing carbon based systems with imperfect, inefficient and still costly solar or wind power systems– are wrong, and they will prove to be prohibitively expensive.
This warning should invite reflection
This simple and unambiguous statement from a universally recognized smart person should be taken as a serious alarm bell. It should invite a pause and serious reflections among well-intentioned environmentalists, climate change believers and the policy-makers who follow their advice.
“While we believe in our goals aimed at reducing greenhouse gases that cause global warming, may be we are going about it the wrong way”. I suspect that Gates is right. When it comes to wind and solar, or electric vehicles, what we have developed so far is still rather primitive and inefficient.
Superior technologies do not need subsidies
Indeed, If renewable energy technologies were already cost-effective and efficient, they would have been spontaneously adopted on a massive scale. Why would you drive a car running on gasoline, if you could buy a cheap, high performance electric vehicle with batteries that can be quickly recharged at a fraction of what it costs to fill up with gasoline? Superior technologies find buyers and eventually take over simply because they are better. They do not need government mandates, subsidies, tax breaks and other artificial incentives in order to gain a modest market share.
Below the horizon
That said, what does Gates suggest? He suggests something really difficult. Our hope, he stated in the same FT interview, should be in achieving a true quantum leap when it comes to clean, affordable energy production. Therefore, we should be providing financial backing to enterprises that are pursuing real technological breakthroughs in untested sectors, with the hope of producing improvements that will not be just incremental, but truly disruptive. The steam engine was a breakthrough. The automobile was a game changer. The internet and all the software that supports it is true innovation. However, a very expensive electric vehicle (think Tesla) with limited range provided by a conventional battery, while interesting, is not a game changer.
Too risky?
The disincentive to engage in this type of investing is that most of these hoped for new technologies probably will not work. Which is to say that a lot of capital will be invested and burnt, with zero results. And very few investors are willing to take this kind of chance.
Bill Gates of course can afford to do some of this investing. And he is doing it. He has spread about $1 billion (this is his personal money) among a variety of enterprises. And he is planning to double this commitment. He is hopeful, but also realistic. He calls this “high risk” investing, and he says in the interview that there is may be a 10% chance of getting results. But he also believes that we have to push the envelope. If we want breakthroughs, we have to bankroll dreamers.
Here are some examples of where Gates is putting his money. He is working with a company called TerraPower that is planning to build mini nuclear reactors that will use nuclear waste as fuel. Another possibility for energy generation is some sort of “solar chemical” power that would reliably create a liquid hydrocarbon. And then there are “kite balloons” that would house turbines high up in the atmosphere.
More government-funded R&D
Anyway, you get the picture. All this looks intriguing, but most improbable; and therefore too risky. You cannot expect General Electric, Siemens or United Technologies to invest in any of these ventures.
And this is why Bill Gates is also advocating for more government-funded R&D in basic science, that is to say not tied to immediate commercial results. Unfortunately, the US Government does not support basic science in the same way as it used to decades ago.
The Manhattan Project was only a hope. Eventually it did produce the first atomic weapon. But there was no certainty that there would be any results when a group of scientists were tasked by Washington with what appeared an almost impossible goal. But we know that they could work on their “mission impossible” because the US government provided all the backing and all the funding. No way that these people could have organized and sustained the same multi-year effort relying on some private company or university funding.
They private sector will not do this
One cannot expect that profit oriented corporations will pour billions of dollars into ventures that may never produce any results. The risks are too high. Impossible to justify these investments to shareholders and investors who normally expect immediate rewards.
But will Washington go back to supporting open-ended innovation, with the hope that some day, someone will come up with something really transformative when it comes to affordable clean energy? Or will Washington keep subsidizing solar panels that provide an inadequate, expensive alternative to gas-fired power plants?