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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.
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.
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.
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.
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.
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.
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.
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.
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.
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Did a battery plant disaster in California spark a PR crisis on the East Coast?
Battery fire fears are fomenting a storage backlash in New York City – and it risks turning into fresh PR hell for the industry.
Aggrieved neighbors, anti-BESS activists, and Republican politicians are galvanizing more opposition to battery storage in pockets of the five boroughs where development is actually happening, capturing rapt attention from other residents as well as members of the media. In Staten Island, a petition against a NineDot Energy battery project has received more than 1,300 signatures in a little over two months. Two weeks ago, advocates – backed by representatives of local politicians including Rep. Nicole Mallitokis – swarmed a public meeting on the project, getting a local community board to vote unanimously against the project.
According to Heatmap Pro’s proprietary modeling of local opinion around battery storage, there are likely twice as many strong opponents than strong supporters in the area:
Heatmap Pro
Yesterday, leaders in the Queens community of Hempstead enacted a year-long ban on BESS for at least a year after GOP Rep. Anthony D’Esposito, other local politicians, and a slew of aggrieved residents testified in favor of a moratorium. The day before, officials in the Long Island town of Southampton said at a public meeting they were ready to extend their battery storage ban until they enshrined a more restrictive development code – even as many energy companies testified against doing so, including NineDot and solar plus storage developer Key Capture Energy. Yonkers also recently extended its own battery moratorium.
This flurry of activity follows the Moss Landing battery plant fire in California, a rather exceptional event caused by tech that was extremely old and a battery chemistry that is no longer popular in the sector. But opponents of battery storage don’t care – they’re telling their friends to stop the community from becoming the next Moss Landing. The longer this goes on without a fulsome, strident response from the industry, the more communities may rally against them. Making matters even worse, as I explained in The Fight earlier this year, we’re seeing battery fire concerns impact solar projects too.
“This is a huge problem for solar. If [fires] start regularly happening, communities are going to say hey, you can’t put that there,” Derek Chase, CEO of battery fire smoke detection tech company OnSight Technologies, told me at Intersolar this week. “It’s going to be really detrimental.”
I’ve long worried New York City in particular may be a powder keg for the battery storage sector given its omnipresence as a popular media environment. If it happens in New York, the rest of the world learns about it.
I feel like the power of the New York media environment is not lost on Staten Island borough president Vito Fossella, a de facto leader of the anti-BESS movement in the boroughs. Last fall I interviewed Fossella, whose rhetorical strategy often leans on painting Staten Island as an overburdened community. (At least 13 battery storage projects have been in the works in Staten Island according to recent reporting. Fossella claims that is far more than any amount proposed elsewhere in the city.) He often points to battery blazes that happen elsewhere in the country, as well as fears about lithium-ion scooters that have caught fire. His goal is to enact very large setback distance requirements for battery storage, at a minimum.
“You can still put them throughout the city but you can’t put them next to people’s homes – what happens if one of these goes on fire next to a gas station,” he told me at the time, chalking the wider city government’s reluctance to capitulate on batteries to a “political problem.”
Well, I’m going to hold my breath for the real political problem in waiting – the inevitable backlash that happens when Mallitokis, D’Esposito, and others take this fight to Congress and the national stage. I bet that’s probably why American Clean Power just sent me a notice for a press briefing on battery safety next week …
And more of the week’s top conflicts around renewable energy.
1. Queen Anne’s County, Maryland – They really don’t want you to sign a solar lease out in the rural parts of this otherwise very pro-renewables state.
2. Logan County, Ohio – Staff for the Ohio Power Siting Board have recommended it reject Open Road Renewables’ Grange Solar agrivoltaics project.
3. Bandera County, Texas – On a slightly brighter note for solar, it appears that Pine Gate Renewables’ Rio Lago solar project might just be safe from county restrictions.
Here’s what else we’re watching…
In Illinois, Armoracia Solar is struggling to get necessary permits from Madison County.
In Kentucky, the mayor of Lexington is getting into a public spat with East Kentucky Power Cooperative over solar.
In Michigan, Livingston County is now backing the legal challenge to Michigan’s state permitting primacy law.
On the week’s top news around renewable energy policy.
1. IRA funding freeze update – Money is starting to get out the door, finally: the EPA unfroze most of its climate grant funding it had paused after Trump entered office.
2. Scalpel vs. sledgehammer – House Speaker Mike Johnson signaled Republicans in Congress may take a broader approach to repealing the Inflation Reduction Act than previously expected in tax talks.
3. Endangerment in danger – The EPA is reportedly urging the White House to back reversing its 2009 “endangerment” finding on air pollutants and climate change, a linchpin in the agency’s overall CO2 and climate regulatory scheme.