Climate

Can Bill Gates’ ‘Breakthrough Energy Coalition’ Become Truly Useful?

CREDIT: Evan Vucci, AP

Led by Bill Gates, billionaires like Jeff Bezos and Mark Zuckerberg have announced a new multibillion-dollar “Breakthrough Energy Coalition” at the start of a Paris climate talks. In parallel, 20 countries — including China, India, U.S., Indonesia, and Brazil — are joining “Mission Innovation,” which commits them to double their clean energy research and development funding by 2020.

The question is, however, whether the Breakthrough Energy Coalition be tweaked into something truly useful, given that:

  • The world needs about 100 times as much money for deployment of carbon-free energy as it does for R&D right now;
  • Key developing countries like India are making decisions about building coal vs. carbon-free power right now that could lock in carbon pollution for decades; and
  • Genuine technology breakthroughs are exceedingly rare in the energy arena and generally take decades and vast resources to deploy once they do make it to market.

I continue to be, of course, one of the biggest advocates for clean energy research and development — and demonstration and deployment (RDD&D). In the mid-1990s, I helped run what was then the largest program in the world for low carbon RDD&D — the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy — $1 billion in funding aimed at developing and commercializing low carbon technologies like solar photovoltaics, wind power, advanced batteries, and a broad spectrum of super-efficient technologies including LED lighting. And in recent years, I’ve continued to advocate for ramping up RDD&D funding in books and on this website.

But the thing is, the clean energy R&D push succeeded beyond most people’s wildest dreams — a more than 99 percent drop in solar PV costs since 1977 and a 95 percent drop since the late 1990s!

Price-per-Watt-over-time

In the beginning, R&D played the biggest part of this because there wasn’t much of a market. But the cost drops have continued, in large part because many U.S. states — along with countries like Germany and China — put in place policies that accelerated most of those technologies into the marketplace when they hit key price points.

The accelerated deployment created economies of scale and brought technologies rapidly down the learning curve. As a result, the price drops have never stopped, as the DOE reported a couple weeks ago:

DOE-RevolutionNow

Again, this isn’t because of technology “breakthroughs.” We still are waiting for those to pan out — for next-generation nuclear power that’s too cheap to meter, for any type of practical and affordable fusion power or even for high-temperature superconducting to realize its potential decades after the first breakthroughs.

And so, we have the “Revolution Now” — driven by accelerated deployment — which is why DOE titles its update, “Revolution … Now: The Future Arrives for Five Clean Energy Technologies,” and included this figure along with the cost curves:

DOE-RevolutionNow2

The “Breakthrough Energy Coalition,” however, appears to be overly focused on breakthrough technologies and on a somewhat out-moded notion of the R&D pipeline, arguing “But in the current business environment, the risk-reward balance for early-stage investing in potentially transformative energy systems is unlikely to meet the market tests of traditional angel or VC investors –- not until the underlying economics of the energy sector shift further towards clean energy.”

Well, that obviously isn’t true in such keystone technologies as solar, wind, batteries, and LED lighting, where the underlying economics have already shifted dramatically!

I (and others) have been critical of Gates in the past for his focus on the need for new breakthrough technologies to solve the climate problem, what he calls “Energy Miracles.” Gates has generally downplayed the amazing advances we’ve had in the keystone clean technologies — and been investing in new nuclear power, geo-engineering technologies, and off-the-wall stuff.

And the Breakthrough Energy Coalition continues to tout Gates’ debunked claims about the need for “Energy Miracles,”

So while a boost in cleantech R&D funding is always welcome, what is most needed now is money for accelerated deployment and project financing of technologies that are now market-ready. Low or zero-interest loans and loan guarantees can leverage money 50-to-1 (since default rates are 2 percent or less). With $2 billion, you could create a $100 billion revolving fund for backing clean tech projects — which is getting to the scale of investment we need.

I am sure that experts in cleantech financing could come up with even a more highly leveraged way to use whatever funds the world’s billionaires put on the table.

“In terms of dollars, the real cost is deployment. Globally, deployment costs will be in the trillions of dollars, while R&D costs might be in the tens of billions,” climate expert Ken Caldeira told me back in 2011. “We are talking about the elephant and the mouse.”

The International Energy Agency warned back in 2009, “The world will have to spend an extra $500 billion to cut carbon emissions for each year it delays implementing a major assault on global warming.” In 2011, the IEA did the calculation a different way, concluding, “Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.”

That’s why the world’s top priority is to deploy the low-carbon technologies we already have commercialized as fast as possible at a trillion-dollar scale. Unsurprisingly, deployment, rather than R&D, is a major focal point for the Paris talks. “A key sticking point in the negotiations during the next two weeks will be finance — specifically, whether developing countries trying to green their economies will get enough of it to make the clean energy transition worth it when coal remains cheaper,” explained Greenwire in its piece on the Gates fund:

Pascal Canfin of the World Resources Institute, formerly France’s minister of development, said while the spending deal might not move specific parts of the negotiations, it helps the broader ‘Paris package’ for dealing with climate change.

To be clear, the new fund has value, especially if it focuses more on improving existing cleantech and less on breakthrough technologies and energy miracles. We will need a steady pipeline of next-generation carbon-free technologies that perform better and cost less — so countries can continue down the path towards zero emissions post-2030.

But such funding isn’t what is most needed now. It won’t be of much if any help to the Paris negotiators or to the folks in India who have to make a decision today between coal plants and renewables.

Let’s hope the billionaires are open to consulting with the leading experts on cleantech financing and tweaking their fund so it does the most good now.