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CERAWeek by IHS Markit kicked off on 1 March with a discussion
between IHS Markit Vice Chairman and Pulitzer Prize-winning author
Daniel Yergin and Bill Gates, founder of Microsoft, global
philanthropist, and author of a new book about the climate change
challenge, How to Avoid a Climate Disaster.
In a wide-ranging discussion, Yergin and Gates looked at the
urgency of addressing carbon emissions globally, the impact of
emission-reductions measures so far, promising technologies, and
Gates' efforts to translate the ideas of climate experts to
messages that will inspire the general public to demand action.
For more than a decade, Gates has been sounding the alarm about
climate change, most famously in a TED Talk in 2010.
In his new book and the discussion at CERAWeek, Gates said
transformative solutions must be implemented on a huge scale, and
promptly. Gates expressed some optimism, noting, "… only in the
last few years, with the adoption of 2050 net-zero goals and
involvement by activists, we [may get] governments to execute on a
plan."
Today, however, Gates said that the relatively easy reductions
have been launched or achieved, at least in wealthier nations, such
as reducing emissions from power generation and the introduction of
a mass market for electric vehicles. But the scale of the needed
solutions seems not to have penetrated the public consciousness
yet.
"This will be harder than any other domain I've ever worked in,"
he said, referring to his tech industry work and more than 20 years
of the Gates Foundation funding solutions to combatting the world's
infectious diseases.
Part of the solution is getting the message out clearly. "Being
succinct on this topic is very hard. The article writers in a
magazine will put in a sentence that this [emissions source] is
equivalent to 10,000 cars on the road. But they never give you
enough information on what percentage of the problem it is," he
said. "And they tend to romanticize that solar panels are cheap and
that will solve the problem. Or if we just travel less miles or eat
less meat, or we make green investment — as if any one of these
will solve this problem."
Instead, Gates said, a combination of innovations,
breakthroughs, and changes in activity will have to be in place,
and they will have to be sustained. "In the history of the
industrial economy, things have never changed as we're asking them
to change. It is so radical," he said. "Only if an entire
generation is committed to making it a political priority - at
least all the rich countries for the next 30 years - do we have a
chance."
Green premium
In his book, Gates references what he calls the "green premium,"
which he defined as: "the additional cost of choosing a clean
technology over one that emits a greater amount of greenhouse
gases."
The green premium varies hugely. For electric cars, Gates
estimates that a Chevrolet Bolt costs about $0.10/mile more than
driving a Chevy Malibu, including purchase price, fuel, repairs;
that's a premium of less than 10%. "We can see over the next 10-15
years that this green premium will probably get to zero. That means
the government can say no more gasoline cars, and people won't
complain," he said, adding that it Is why General Motors CEO Mary
Barra was confident in saying earlier this year that GM will stop
making gasoline and diesel cars by 2035.
The situation is entirely different in cement production, where
Gates said that reaching net-zero approximately doubles the cost.
That's where the problem lies, as it would be hard to convince many
cement buyers, particularly those in poorer countries, to pay that
green premium.
Innovators around the world first have to step up and reduce the
cost of carbon reduction, carbon storage, and carbon removal. Then,
political leaders in wealthy countries must commit to filling the
gap for paying the rest of the premium, he said.
Currently, the total, global green premium is so high that it's
simply not politically tenable to advocate for closing it, Gates
admitted. Gates himself purchases offsets for the carbon he
generates at $600/metric ton (mt) from a company that stores the
carbon deep underground. The world emits about 51 billion metric
tons/annum of carbon, so that's about $30 trillion per year for the
green premium.
In his book, he presumes that the green premium will reach
$100/mt within about a decade. That brings the annual cost to about
$5 trillion per year, which he said is still impossible to imagine
wealthy countries transferring to poor countries. But if on top of
pricing for carbon removal, technology is developed to reduce and
capture 95% of the carbon, then the remaining volume would cost
about $250 billion per year, which he said is a "manageable"
figure.
"Unless you can order this [cost] and look at those magnitudes,
in a sense you are not being guided by what the priorities are," he
added.
Solutions
In terms of solutions - whether incentivized by the green
premium, or not - Gates and Yergin agreed that increased
electrification of economic activity is at the top of the list.
With that, Gates observed, the transmission grid in a mature
economy such as the US probably has to triple in size. "It has to
stay reliable, and people don't want the price to go up. So … what
we have done so far is only a small subset of what we are asking …
to do in this 30-year period," Gates said. (Notably, the interview
was taped before the power outages in Texas brought reliability
closer to the forefront of US consciousness.)
Again, he cited innovation as the key — a not surprising
conclusion from a person who helped to change the world with
software to run on personal computers. "The innovation pipeline
starts with basic R&D, then you want entrepreneurs to develop
their ideas, and then you need venture money … and then you need
somebody to buy these green products even if they cost a little
more," he said.
Gates has his fingers in each of those pies, including about $2
billion in investments in companies with promising technologies.
His most high-profile recent development has been with TerraPower,
which is developing a nuclear power reactor that Gates said would
provide carbon-free power without the safety concerns that arise
with traditional plants. In October, the US Department of Energy
awarded a contract for up to $4 billion to TerraPower and a second
company to each build next-generation nuclear plants within the
next seven years, and Gates said he has personally committed $2
billion to the venture.
Carbon capture is another technology in which Gates has
invested. He's backing work on direct air capture, which seeks to
pull carbon out of ambient air, rather than from a source of high
carbon, such as a power plant or steel plant. While describing some
of the proposed technologies as "wild ideas," Gates said they are
necessary, as reducing carbon from existing processes is
insufficient to solve the global problem.
In the aviation space, Gates noted that he is the largest buyer
of aviation biofuels in the US, about 7 million gallons per year.
"Assuming hydrogen doesn't work in a plane, it will be electrified
fuels or biofuels," he said. "Right now, I'm buying [that it will
be] biofuels."
The question, as it is in so many other areas, is cost. Right
now, aviation biofuels are two-three times as costly as fossil
fuel-based aviation fuels.
Gates also has investments in battery storage companies through
the Breakthrough Energies Fund, including Quidnet Energy, which is
working on using excess renewable energy to pump water down into
the earth, where it becomes pressurized, and then releasing it when
needed. "It's like hydro-storage, but it works in many locations,
not just where you need a reservoir," Gates said. "They're out
there drilling holes and seeing if that can work."
Taking the big-picture perspective, Gates said: "If you look at
all the sources [of carbon], you need something like a dozen
breakthroughs. It's not one magic tool that does the job. If you
can get super-cheap green hydrogen, and that is used for a lot of
industrial processes, fertilizer, and steel, that is a huge deal….
[but to reach] breakeven for steelmaking, green hydrogen would have
to be mind-blowingly cheap. It's exciting, but it might not
emerge."
Per his investment in TerraPower, Gates believes that nuclear
energy is a major part of the equation, saying that up to 25% of
the world's clean power in the future could be nuclear. But he
acknowledged the public's fears about nuclear power have slowed its
development, chiefly by resulting in regulators insisting on more
and more protection from potential accidents. This has raised the
cost of new facilities, in the US at least, to punitive levels.
TerraPower believes that its design will solve the problem, and
Gates said that a site will be selected this year.
Lessons learned
To conclude the discussion, Yergin asked Gates about lessons
learned from both his work on climate change and his efforts to
eradicate diseases through vaccinations. Gates gave a TED talk in
2015 about the world's lack of preparedness for a pandemic similar
to the Spanish Flu.
First, Gates said that he learned that warnings are not heeded
and that the severity of a problem tends to be unappreciated. As an
example, he said, "people oversimplify … maintaining the
reliability of electricity" when they talk about the merits of
electrification to reduce emissions from transportation, heating,
and manufacturing. "You can have a cold front over the Midwest and
shut down wind and solar. Electricity is only really valuable when
it's totally reliable," he said.
Second, Gates is concerned about political and public willpower
to make the necessary investments and sacrifices. "I'm definitely
afraid that the large capital investment and plans required
constantly through the 30 years" won't exist, he said. "Unless we
get this to a bipartisan issue …"
Reaching bipartisanship starts by getting people to at least
discuss from the same framework. Gates cited his Breakthrough
Energy Science initiative, which has published an open source
climate emissions model, as an effort to cut through the posturing
of people with different agendas. Anyone can use the model to look
at the factors involved in carbon emissions and test their ideas on
matters such as transmission, energy storage, or the use of nuclear
power. "We have to draw in lots of people using the same models so
that they cannot exaggerate the benefits of using one thing or
other," he said.
Finally, Gates said that huge opportunities exist in solving the
climate challenge. In particular, he cited the power industry as an
example. "They should be very excited…. power demand could be three
times bigger," he said.
For the oil and gas industry, while fossil fuels may be on the
way out, Gates said that the needs created by carbon capture and
removal "are skill sets that those oil and gas companies can bring.
Can they help us with biofuels? Can they help with electric
fuels?"
And he ended with a warning, relating climate change back to the
COVID-19 pandemic. Minimization of and preparation for climate
change are essential. "[It] will kill five times as many people per
year" as COVID-19, he said. "But sadly, it creeps up on you….
Hopefully, [we] get more people to join in — fewer deniers,
fewer people who think it's easy to solve…. A lot of it is in the
political realm, which is unpredictable. But the science is
amazing. I love talking to the innovators."
Posted 01 March 2021 by Kevin Adler, Editor, Climate & Sustainability Group, IHS Markit