Hello from the Breakthrough Energy Summit (BES) in Seattle!
The event is organized by Breakthrough Energy CompaniesBill Gates’ venture capital (VC) organization that works to fund startups that can fill critical gaps in the decarbonization ecosystem.
But having technologies alone is not enough. They need to be affordable so they can be deployed fairly, and not just by the wealthy.
Understanding the Green Premium
We simply cannot expect mass adoption of climate mitigation technologies if they are prohibitively expensive. The extra cost of choosing a clean technology over one that emits more greenhouse gases is sometimes called the “green premium”.
Breakthrough Energy Ventures uses the measure of “green bounty” as a guiding principle for areas that need innovation the most. The higher the premium, the more innovation is needed to reduce the cost.
While it may be tempting for organizations to invest in competitive technologies that lead to rapid emissions reductions – such as wind, solar and electric vehicles – ignoring hard-to-reduce sectors would leave no path to achieving the climate goals.
“You don’t just work on, oh, transportation and electricity,” Bill Gates said from the BES stage. “If anything, you should work hard [technologies] first, and put more capital in those because you have this 2050 deadline.”
Gates’ North Star is to make technologies cheap enough that middle-income countries can afford to adopt them. These countries, like China and India, account for about 70% of the world’s population and two-thirds of global emissions. They simply cannot pay their way to net zero emissions.
Gates’ perspective is simple: rich countries must close the gap.
“[It’s incumbent upon] rich countries that hold most of the power of innovation, the science of high-risk capital, that they not only reduce their emissions to zero, for example, but use it to create technologies that, as as they evolve, provide that green zero premium,” Gates says.
The Critical Role of Business: Buying Clean
Moneybags Gates uses its power and influence to do what it does best: drive innovation and business.
The next step requires companies to do their part to scale clean technologies in a meaningful time frame for climate change mitigation. This means making commitments early (to signal market demand) and working hard to integrate cleaner materials and processes throughout the value chain. Even if it’s hard to do. Even if it costs more.
Companies have taken the first step. The Firstcomers Coalition, for example, includes more than 60 companies that have made a series of commitments to purchase cleaner materials in their operations. Commitments range from Volvo and GM setting a purchase target of at least 10% clean steel by 2030 at Maersk pledging that at least 5% of its deep-sea shipping operations will be powered by zero-emission fuels by 2030.
But talking costs nothing and these commitments are not binding. The President’s special climate envoy John Kerry, who launched the coalition at COP26 last year, acknowledged the need for additional support and accountability as businesses strive to incorporate cleaner materials.
“We welcome your review,” Kerry told a panel discussion. “We want it to be responsible.”
The good news is that companies don’t need to bear the risk of new materials and strategies alone. The Department of Energy’s Office of Lending Programs just received a $300 billion injection to de-risk the business strategy of promising technologies in partnership with companies, according to Energy Secretary Jennifer Granholm.
“It’s the bridge to bankability, as they say,” Granholm said on the BES Stage. “This is a huge amount, to be able to get across to the private sector, hey, if you’re partnering with a company that you think really has an opportunity to grow, we want to be your partner.”
With great wealth comes great responsibility
Bill Gates says he pays $9 million a year to offset his carbon footprint. He pays Carbfix in Iceland to inject carbon dioxide into rock formations. It buys clean aviation fuels. He pays for heat pumps in HLMs.
It’s neato, and not scalable at all. If Gates were to stop there, it could be seen as a microcosm of what companies with net zero goals aim to do: take care of their own carbon impact and call the work done.
“It doesn’t matter if some rich companies, some rich countries, and some rich individuals can get out of trouble,” Gates said. “That’s the problem. And unless you say, this is numerically how, across all sectors, emissions from middle-income countries will reach zero, then you’re just playing a game of ‘OK, I don’t care.’ I don’t want it. It’s got to be someone else who’s in charge and should come forward to fix the problem.'”
This paradigm makes sense to me. I applaud companies that set ambitious decarbonization goals. But if that’s not working to bridge the gap between sectors and countries, you’re not really part of the solution.