Last month, during a trip to Europe, I mentioned that I plan
to invest $1 billion in clean energy technology over the next five years. This
will be a fairly big increase over the investments I am already making, and I
am doing it because I believe that the next half-decade will bring many
breakthroughs that will help solve climate change. As I argued in this 2010 TED
talk, we need to be able to power all sectors of the economy with sources that
do not emit any carbon dioxide. But when it comes to preventing the worst
effects of climate change, the investments I make will matter much less than
the choices that governments make. In Europe I got to talk about these choices
with several political leaders, and in this post I want to share the steps that
I encouraged them to take. I think this issue is especially important because,
of all the people who will be affected by climate change, those in poor
countries will suffer the most.
Higher temperatures and less-predictable
weather would hurt poor farmers, most of whom live on the edge and can be
devastated by a single bad crop. Food supplies could decline. Hunger and
malnutrition could rise. It would be a terrible injustice to let climate change
undo any of the past half-century’s progress against poverty and disease—and
doubly unfair because the people who will be hurt the most are the ones doing
the least to cause the problem.
In addition to mitigating climate change,
affordable clean energy will help fight poverty.
Although the Gates Foundation
does not fund energy research (my investments are separate), we see through our
work with the poorest how the high price of energy affects them by adding to
the cost of transportation, electricity, fertilizer, and many other things they
need. I do see some encouraging progress on climate and energy. Environmental
advocates deserve credit for getting climate change so high on the world’s
agenda. Many countries are committing to put policies in place that reflect the
impact of greenhouse gases. The cost of solar photovoltaic cells has dropped by
nearly a factor of ten over the past decade, and batteries that store energy
created by intermittent sources like solar and wind are getting more powerful
and less expensive.
Since 2007 the United States has reduced its greenhouse gas
emissions nearly 10 percent. Since 1990 Germany has reduced its energy-sector
emissions by more than 20 percent. World leaders will take another critical
step this December at a major meeting in Paris called COP21, where they will
discuss plans to reduce global CO2 emissions significantly. COP21 can build a
strong foundation for solving the climate crisis—but we will need to go even
further. Scientists generally agree that preventing the worst effects of
climate change requires limiting the temperature increase to 2 degrees Celsius,
and that doing so requires the biggest emitters to cut emissions 80 percent by
2050 and all countries to essentially eliminate them by the end of the century.
Unfortunately, while we can make progress with today’s tools, they cannot get
us to an 80 percent reduction, much less 100 percent. To work at scale, current
wind and solar technologies need backup energy sources—which means fossil
fuels—for windless days, long periods of cloudy weather, and nighttime. They
also require much more space; for example, to provide as much power as a
coal-fired plant, a wind farm needs more than 10 times as much land. These are
solvable problems. If we create the right environment for innovation, we can
accelerate the pace of progress, develop and deploy new solutions, and
eventually provide everyone with reliable, affordable energy that is carbon
free.
We can avoid the worst climate-change scenarios while also lifting people
out of poverty, growing food more efficiently, and saving lives by reducing
pollution. To create this future we need to take several steps: Create
Incentives for Innovation One step is to lay the foundation for innovation by
drastically increasing government funding for research on clean energy
solutions. Right now, the world spends only a few billion dollars a year on
researching early-stage ideas for zero-carbon energy. It should be investing
two or three times that much. Why should governments fund basic research? For
the same reason that companies tend not to: because it is a public good. The
benefits to society are far greater than the amount that the inventor can
capture. One of the best examples of this is the creation of the Internet. It
has led to innovations that continue to change our lives, but none of the
companies who deliver those innovations would ever have built it. Similarly,
the government’s research into hydraulic fracturing helped create today’s
natural gas boom. Expanding the government’s support for energy research will
lead to another important step: attracting more private investment to the
field. As early-stage ideas progress, private capital will pour in to build the
companies that will deliver those ideas to market.
We need hundreds of
companies working on thousands of ideas, including crazy-sounding ones that
don’t get enough funding, such as high-altitude wind and solar chemical (using
the energy of the sun to make hydrocarbons). No one knows which of these
technologies will prove powerful enough and easy to scale, so we should be
exploring all of them. My own personal investments include companies working on
new batteries and other storage methods and advances in solar technology. The
nuclear design I am investing in would be safer than previous designs and would
go a long way toward solving the nuclear waste problem. I spend a lot of time
with the CEOs and scientists at all these companies discussing how to build a
business around an innovative idea and take a product to market. If government
research budgets open up the pipeline of innovation, not only will I expand my
investments, but I believe other investors would join me in taking these risks.
Governments need to act quickly, because energy transitions take time. Today,
renewables account for less than 5 percent of the world’s energy mix. It took four
decades for oil to go from 5 percent of the world’s energy supply to 25
percent. Natural gas took even longer. I believe we can make this transition
faster—both because the pace of innovation is accelerating, and because we have
never had such an urgent reason to move from one source of energy to another.
The sooner we start, the more suffering we can prevent. Develop Markets That
Help Get to Zero Another important step will be to ensure that the energy
market accurately reflects the full impact of emitting carbon. Today the market
is not factoring in what economists call the negative externalities—the health
costs, environmental damage, and so on. If the market takes these into account,
renewable energy will be more competitive with fossil fuels, which will attract
more innovators to the field.
Many countries and states are experimenting with
different ways to price carbon. Whatever approach we take, it should create
incentives to develop new energy solutions while also giving energy companies
enough certainty to plan and execute the transition to zero-carbon sources.
We can also be smarter about how we use subsidies. The IMF
estimates that direct subsidies for fossil fuels amount to nearly $500 billion
a year worldwide, shielding consumers from their true costs. Some subsidies for
deploying renewable energy are also very inefficient, creating big incentives
to install solar panels where it’s often not sunny or wind turbines where it’s
not windy. We should be looking for ways to reduce these subsidies and invest
the savings in the basic R&D that will help solve the problem. Treat Poor
Countries Fairly Unfortunately, even if we could roll out the ideal zero-carbon
solution tomorrow, some climate change is inevitable, and it will hit the
world’s poor the hardest. The countries that have done the most to cause this
problem have a responsibility to not only invest in mitigation, but also help
poor countries adapt to a changing climate. For our part, the Gates Foundation
is concentrating on one key aspect of adaptation: helping small farmers—who
make up the majority of the world’s poor—adjust to hotter, more unpredictable
weather by raising agricultural productivity. I will be writing more about this
work later this year. As for next steps, I’m optimistic that the spotlight of
the COP meeting in Paris will help motivate governments to step up their
research budgets. In my view, innovation is essential to human progress. Some
people would say that it is the lens I use to look at every problem, and I have
to admit that there is some truth to that. But I believe it is justified by
history. In my lifetime innovation has helped eradicate one deadly disease
(smallpox) and put us on the brink of a second (polio). We have cut the
fraction of children who die every year by a factor of four. Digital technology
has revolutionized the way people live. We can create a zero-carbon future too,
if we commit to it.
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