Bill Gates on COP28, the Green Premium, and Trump’s Threat to Climate Tech
A conversation with the billionaire climate investor in Dubai.
Eight years ago, at the Paris climate convention, Bill Gates committed $2 billion to fighting climate change.
You have to admire his ROI. Since then, Breakthrough Energy, the set of Gates-linked climate groups, has become ubiquitous on the topic. It invested in dozens of climate-tech startups, and Gates personally lobbied for the passage of the Inflation Reduction Act.
Gates has also come to formulate a big idea: the “green premium,” the gap between the cost of a fossil-fueled technology and the cost of a climate-friendly one. Right now, electricity generation has almost no green premium, for instance — solar power is dirt cheap — but steelmaking’s green premium is very high. Only when the world gets green premiums down to zero for every economic activity, Gates argues, will it be able to seriously solve climate change.
I had a few minutes to chat with Gates on the sidelines of COP28, the United Nations climate conference in Dubai, about green premiums and what we were doing in Dubai in the first place. Our conversation has been edited for length and clarity.
On the point of COP, the massive United Nations climate conference:
Well, there’s a lot of good things that happen at COP. Remember that there are many sectors that make up the solution. Small, innovative companies — and Breakthrough Energy has 30 [startups] here, I bet you there’s 70 others — they need big companies, they need government policies, and they have booths here. And they give people a sense: Oh, there is a new way to make steel. Well, how quickly can that be adopted? How quickly do you get the green premium down to zero? Are my steel companies and my company engaged in this? What do they think? It keeps the pressure on.
Obviously, there is no coercive mechanism here. So solving global problems — given that you don’t have world government — maybe you need meetings of 70,000 people to try and say, “Hey, come on, everybody, let's do this together.” You know, anti-climate people say, “Hey, why should the U.S. make sacrifices? Because if the U.S. alone does this, or even U.S. and Europe, the [effect on global average temperature] is very, very small and it’s not worth doing.”
Climate is so complicated. To really understand climate, you’d have to be a physicist, a biologist, an atmospheric scientist. People who are polymathic love the subject, because it allows you to say, “Oh, I’m reading a book that’s going to help you understand climate” — and almost any science book you can justify.
So getting people to understand a little bit more about climate … this is an atmosphere that the bias is toward exaggerating the impact of climate, but oh well. Maybe the signal gets muted when it gets out to the other 7 billion, and so we have to kind of, you know, overdo it here so at least it gets some resonance.
On carbon taxes and who should pay for climate mitigation:
The political situation is that about 40% of voters are like, “Wow, I didn’t know my lifestyle was going to be reduced because of this. Isn’t there some rich guy or some other country or someone else who should be paying for this electric heat pump, or paying more money for their gasoline because of your carbon tax?”
Washington State has a carbon tax, which is kind of unusual in that it’s been focused on gasoline, so it’s actually raised the gasoline price. We have a referendum [to overturn the law in the works] — it’ll be interesting to watch.
On the perils of climate change as an elite-driven political issue:
Even in Europe, who you’d have to say is the most climate-committed region of the world, they have very few political parties — although maybe the one just won the Netherlands elections is one of them — who are like, “Hey, screw all this, let’s do nothing.” But even there they have to be careful because the elites‘ commitment to climate greatly exceeds the general voter’s. So when Macron puts on his diesel tax, that lasted about three months, because the rural people who are less well-off than the urban people said, “Oh, this tax is targeted at us. You’ve lost touch.” And then a whole movement gets created around that, and he pulled the diesel tax really quickly. And compared to the carbon tax that you should have on diesel, [Macron’s diesel tax] was like a tenth of the increase.
So, you know, the 70,000 here aren’t — it’s like the Republican primary, it’s not a representative set of people. For me, you know, I only have one hammer, which is innovation, whether it’s software, global health, or climate. I’ve never seen a problem that innovation can’t solve, which is a caricature, but that’s where I add value. It’s organizing the capital and the teams and the goals. It’s fantastic how much progress we’ve made in eight years.
On how the IRA implementation is going:
It’s going super well. They’ve got [former White House chief of staff] John Podesta [leading the effort], who’s here helping to try and make sure it goes faster than normal. We fund groups that are helping with IRA implementation. There’s various philanthropic things we’ve done in support of getting the IRA to move quickly — so that, like Obamacare, maybe it’s more popular four years after it passes in red states than it was the day that it went through on a purely partisan vote.
On whether he believes in Goldman Sachs’ estimate that the government will provide a staggering $1.2 trillion of incentives under the Inflation Reduction Act:
Some people have estimated the cost of these tax credits at way beyond what they were scored. I think they’re wrong, because their EV number was insane — that Goldman Sachs, $1.2 trillion thing. But the Congress is there if a tax credit over-succeeds. They can — at year four, five, six — cut it back or eliminate it.
On why electing Donald Trump to the White House (again) could set back climate action for decades:
Right now, companies are responding to the IRA incentives. But you know, if you get Trump elected, and he really gets rid of it, there’s a lot of business plans that will [make people] feel foolish. And then for the future, it’s going to be very tough. Because even if the Democrats come in and put something new in, people say, “Well, you’re asking me to make a 30-year investment. And half the time, I’m stupid.” So that could be quite damaging that it’s so unpredictable.
On why green premiums are so important:
I’ve said very clearly that, unless you get green premiums to zero, you’ll never get adoption in the middle-income countries. The low-income countries are small numbers, and you can subsidize them — maybe, in some cases, you should. But [you can’t] in the middle-income countries — that’s India, China, Brazil, Vietnam. You know, humanity lives in middle-income countries, and thank God, it’s the opposite of what it was in the 1960s, when there were almost no middle-income countries and there was this rich, Europe-U.S. piece.
So yes, we have to make solar, fission, fusion, storage, cement, steel, beef — we’ve got to make them at, ideally, negative green premiums, but at least at zero green premiums. Otherwise, you never get adoption.
Now, technology can go through a period where it has a green premium. And then you’re asking rich countries, rich companies, rich people to create the demand signal to get on the learning curve, like was done with solar. Breakthrough [Energy] only works on technologies that, once they’re down the learning curve, have zero or negative green premiums. At the Paris talks, there was almost no focus on the hard to abate areas. Even though it won’t achieve 1.5 [degrees Celsius of warming] and probably won’t achieve 2 [degrees Celsius], the fact that we kicked that off, and there are more companies than I would have expected with cool ideas — many of which will fail, you know — that’s more than I thought we’d have eight years ago.
On whether global carbon emissions will start rising again in 2060 due to massive economic growth in Asia and Africa, as a recent study from an energy research firm, the Rhodium Group, projected:
Rhodium is not assuming there’s a cheap fission reactor. Once you get to 2060, predicting the costs of things… I mean, even fusion. We will probably have extremely economic fusion by then.
Editor’s note: This article was updated after publication.