Five Things Bill Gates Gets Right On Energy by Scott Nyquist, McKinsey & Co.

And one I’m not so sure about.

There’s a saying that where you stand depends on where you sit. When it comes to energy, that holds true. For example, while I am an energy guy in general, I have spent much of my time in oil and gas. That colors how I see the future (and the present, for that matter). People who are deep into solar almost certainly have a different perspective. A mother in Africa cooking over a wood-burning stove might have a third. And a coal miner in West Virginia yet another.

Finding a consensus about what to do next and how, then, becomes difficult. And that is one reason why I find Bill Gates an interesting voice on energy issues. Having spent his life in IT and philanthropy, his views do not fit into a single box—and are all the more refreshing for that. He does have skin in the game. In 2015, he founded a $1 billion clean-energy fund, the Breakthrough Energy Coalition, which is devoted to research and development on clean energy. He also has been active on issues related to climate change and nuclear power.

Five Things Bill Gates Gets Right On Energy

If I were to sit down with Gates over a latte in Redmond, we probably wouldn’t agree on everything. But I think he asks the right questions, in the right way. Here are a few comments Gates has made over the years on energy that I found particularly interesting, and my responses to them.

1. ‘Some people argue that deploying today’s technology and developing new ideas are competitors in a zero-sum game—that doing one means you can’t do the other. I disagree.’

So do I. In a sense, it’s not even a choice. The world has a huge investment in the current energy infrastructure, and it is simply not going to write it off. The idea that there could be a “moon shot” to go all renewable in ten years is not going to happen. I also agree with Gates that today’s technology needs to include nuclear. It is the only low-emissions, 24/7 technology now available, and its safety record is astonishingly good compared with conventional fuels (even without including pollution-related premature deaths). And yes, that includes Fukushima, which was poorly designed and sited. New nuclear plants are much better; Gates himself is an investor in a new nuclear technology.

2. ‘If you wanted to use [a lithium ion battery] to store enough electricity to run everything in your house for a week, you would need a huge battery—and it would triple your electric bill.’

No question: energy storage is fascinating and important. Reliable and efficient storage is the missing link for renewables, such as wind and solar, that can only supply power intermittently. But that has not happened and does not appear imminent. My McKinsey colleagues, for example, have been tracking storage for years, and the McKinsey Global Institute sees a promising future. But that future is not nigh. In 2015, a record 221 megawatts of storage capacity was installed in the United States, more than three times as much as in 2014 (65 megawatts), which was itself a big jump over the previous years. But more than 160 megawatts of the 2015 total was deployed by a single regional transmission organization, the PJM Interconnection market. And 221 megawatts is not much in the context of the total US generation capacity of more than a million megawatts. That battery Gates mentioned would weigh more than a ton. So think evolution, not revolution—and remember that we need to keep the lights on in the meantime.

3. ‘The one thing you can never say about CCS is that it will make energy cheaper than it is today.’

Right now, coal is the single largest source of global power and accounts for a third of US generation. The advantage of coal is that it is cheap and reliable. The downside is that it is dirty, generating more greenhouse-gas emissions than any other fossil fuel and contributing to smog and air pollution. The hope is that carbon capture and storage (CCS) could clean up coal, capturing up to 90 percent of emissions, while still allowing it to be used. The problem, though, is that doing so has proved very expensive, and the process just hasn’t worked as well as hoped, despite billions of dollars in investment. There are CCS plants in operation, and more are in different stages of development. At some point, CCS could well play an important role. But not anytime soon, and the costs could be high—in a world in desperate need of affordable energy.

4. ‘When you say to India, “Hey, don’t use your coal, use something that is substantially more expensive,” you’re asking them to make a trade-off against uplifting those lives to have the things that we take for granted. If they develop with coal, they still will have emitted less per person by a factor of four than we have over the last 100 years.’

Energy policy is not just about jobs, or pollution, or gas prices, or climate change. It affects all these things, of course, but fundamentally the use of energy is about improving the quality of daily life. Consider: the World Health Organization estimates that three billion people cook and heat their homes using wood or dung. This is not just inconvenient; it’s deadly, accounting for more than four million premature deaths a year. Compared to that, in many places, more coal would quite literally be a lifesaver. That is part of the reason India’s prime minister, Narendra Modi, plans to triple coal production to 1.5 billion tons a year. India also has ambitious renewable plans, but Modi has explicitly stated that his country (and others) needs “room to grow.” It’s a conundrum, and an important one. India is already the world’s third-largest nation in terms of greenhouse-gas emissions (although per capita emissions are low), and it is home to four of the ten most polluted cities. Plus, conditions in its coal industry can be dire (see some images here). But India is also home to 595 million people who lack any toilet facilities and many more who still cook using wood or dung. The country does indeed need room to grow; low-cost energy is essential. Figuring out the right pathway, and the mix of new and conventional fuels to use, will be an enormous challenge. The solutions, as Gates suggests, are not obvious.

5. ‘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.’

Whatever the question, when it comes to energy, innovation is the answer. Instead, as Gates has also pointed out in other contexts, the bulk of spending comes in one way or another in the form of subsidies, both to

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