Hello from the Breakthrough Energy Summit (BES) in Seattle!
The event is put together by Breakthrough Energy Ventures, Bill Gates’ venture capital (VC) organization that works to fund startups that can fill critical gaps in the decarbonization ecosystem.
But having technologies alone isn’t enough. They need to be affordable so that they can be deployed equitably — not just by the rich.
Understanding the Green Premium
We simply can’t expect mass adoption of climate mitigating technology if it’s prohibitively expensive. The additional cost of choosing a clean technology over another that emits more greenhouse gasses is sometimes called the “green premium.”
Breakthrough Energy Ventures uses the “green premium” metric as a guiding principle for areas in most need of innovation. The higher the premium, the more innovation is needed to lower the cost.
While it may be tempting for organizations to invest in the cost competitive technologies that lead to fast emission reductions — such as wind, solar and electric vehicles — ignoring the hard-to-abate sectors would leave no path to meeting climate goals.
“You don’t get just to work on, oh, transport and electricity,” Bill Gates said from the BES stage. “If anything, you should work on the hard [technologies] first, and put more capital into those because you have this deadline of 2050.”
Gates’ North Star is to make technologies cheap enough that middle income countries can afford the uptake. These countries, such as China and India, comprise about 70 percent of the global population and two-thirds of global emissions. They simply cannot pay their way to net zero emissions.
Gates’ perspective is simple: Rich countries must bridge the gap.
“[It’s incumbent upon] the rich countries who have most of the power of innovation, high risk capital science, that not only do they reduce their emissions to zero as an example, but they use that to create technologies that as they scale, provides this zero green premium,” Gates said.
The critical role of companies: Buy clean
Moneybags Gates is using his power and influence to do what he does best: spurring forward innovation and businesses.
The next step requires corporations to do their part to scale clean technologies on a time frame meaningful for climate mitigation. That means making commitments early (to signal market demand) and doggedly working to incorporate 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 First Movers Coalition, for example, includes more than 60 corporations that have made a series of commitments to procure cleaner materials in their operations. Commitments range from Volvo and GM setting a target to procure at least 10 percent clean steel by 2030 to Maersk pledging that at least 5 percent of its deep-sea shipping operations will be powered by zero-emission fuels by 2030.
But talk is cheap, and these commitments are non-binding. Special Presidential Envoy for Climate John Kerry, who launched the coalition at COP26 last year, acknowledged the need for additional support and accountability as companies work to incorporate cleaner materials.
“We welcome your scrutiny,” Kerry said in a roundtable conversation. “We want this to be accountable.”
The good news is companies don’t need to shoulder the risk of new materials and strategies alone. The Department of Energy’s Loan Programs Office just got a $300 billion infusion to de-risk the operational strategy of promising technologies in partnership with companies, according to Secretary of Energy Jennifer Granholm.
“It’s the bridge to bankability, as we say,” Granholm said on the BES stage. “That amount is massive, to be able to get the private sector to realize, hey, if you’re partnering with a company that you think really has an opportunity to scale, 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. He buys clean aviation fuels. He pays for heat pumps in low income housing.
That’s neato, and not at all scalable. If Gates stopped there, this could be seen as a microcosm of what companies with net zero goals are aiming to do: Take care of their own carbon impact and call the job done.
“It doesn’t matter if some rich companies, rich countries and rich individuals can buy their way out of the problem,” said Gates. “The problem is there. And unless you say, this is numerically how, across all sectors, middle-income countries emissions will go to zero, then you’re just playing a game of, ‘OK, I don’t blame me. It must be somebody else who is responsible and should step forward to actually solve the problem.’”
This paradigm makes sense to me. I applaud the companies setting ambitious decarbonization goals. But if it’s not working to bridge the gap across sectors and countries, you’re not truly part of the solution.
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