by Bill Gates
The policy worked. Ethanol production quickly exceeded the targets that Congress had set; today a gallon of gas sold in the United States might contain up to 10 percent ethanol.
Then, in 2007, Congress set out to use biofuels to solve a different problem. Now the concern wasn’t just rising oil prices; it was climate change too. The government raised the biofuels targets and in addition required that about 60 percent of all the biofuels sold in the United States be made not from corn but from other starches. (Biofuels made in this way reduce emissions three times more than conventional biofuels.) Refiners quickly met the target for conventional corn-based biofuels, but the advanced alternatives have lagged far behind their target.
Why? Partly because the science of advanced biofuels is just plain hard. And oil prices have stayed relatively low, making it difficult to justify major investments in an alternative that will be more expensive. But a big reason is that the companies that might produce these biofuels, and the investors who might back them, haven’t had any certainty about the market.
The executive branch has expected shortfalls in the supply of advanced biofuels, so it keeps lowering the targets. In 2017, the target was dropped from 5.5 billion gallons to 311 million gallons. And sometimes the new targets are announced so late in the year that producers don’t know how much they can count on selling. It’s a vicious cycle: The government lowers the quota because it expects a shortfall, and the shortfalls keep happening because the government keeps lowering the quota.
The lesson here is that policy makers need to be clear about the goal they’re trying to achieve and aware of the technologies they’re trying to promote. Setting a biofuels target was a fine way to reduce the amount of oil the United States needed to import, because there was already an existing technology—corn ethanol—that could meet the target. The policy sparked innovation, developed the market, and got it to scale up. But setting a biofuels target wasn’t a particularly effective way to lower emissions, because policy makers haven’t accounted for the fact that the suitable technology—advanced biofuels—is still in the early stages and they haven’t created the certainty that the market needs to get it out of the early stages.
Now let’s look at a success story where policy, technology, and markets worked together much better. As early as the 1970s, Japan, the United States, and the European Union began funding early research into various ways of generating electricity from sunlight. By the early 1990s, solar technology had improved enough that more companies started making panels, but solar still wasn’t being widely adopted.
Germany gave the market a boost by offering low-interest loans to install panels and paying a feed-in tariff—a fixed government payment per unit of electricity generated by renewables—to anyone who generated excess solar power. Then, in 2011, the United States used loan guarantees to finance the five biggest solar arrays in the country. China has been a major player in finding ingenious ways to make solar panels cheaper. Thanks to all this innovation, the price of solar-generated electricity has dropped 90 percent since 2009.
Wind power is another good example. Over the past decade, installed wind capacity has grown by an average of 20 percent a year, and wind turbines now provide about 5 percent of the world’s electricity. Wind is growing for one simple reason: It’s getting cheaper. China, which accounts for a large and growing share of the world’s wind-generated power, has said it will soon stop subsidizing onshore wind projects because the electricity they produce will be just as cheap as the power from conventional sources.
To understand how we got to this point, look at Denmark. Amid the oil shocks of the 1970s, the Danish government enacted a number of policies with an eye toward promoting wind energy and importing less oil. Among other things, the government put a lot of money into renewable-energy R&D. They weren’t the only ones who did this (around this time, the United States started working on utility-scale wind turbines in Ohio), but the Danes did something unusual. They paired their R&D support with a feed-in tariff and, later, a carbon tax.
Denmark helped lead the way on making wind power more affordable. These turbines are on the island of Samsø.
As countries like Spain followed suit, the wind industry started moving down the learning curve. Companies now had the incentive to develop larger rotors and higher-capacity machines so each turbine could produce more power, and they started selling more units. Over time, the cost of a wind turbine dropped dramatically. So did the cost of the electricity generated by wind: In Denmark, it fell by half between 1987 and 2001. Today, the country gets about half its electricity from onshore and offshore wind, and it’s the largest exporter of wind turbines in the world.
To be clear: The point of these stories is not that solar and wind are the answer to all our electricity needs. (They are two of the answers to some of our electricity needs. See chapter 4.) The point is that when we focus on all three things at once—technology, policies, and markets—we can encourage innovation, spark new companies, and get new products into the market fast.
Any plan for climate change needs to understand how all three work together. In the next chapter, I’ll propose one that does just that.
Skip Notes
* Wildfires, such as the ones that swept across the western United States in 2020, are a separate but related issue. Smoke from the 2020 wildfires made it unsafe for millions of people to go outside.
CHAPTER 11
A PLAN FOR GETTING TO ZERO
When I was in Paris in 2015 for the climate conference, I couldn’t help wondering: Can we really do this?
It was inspiring to see leaders from around the world come together to embrace climate goals as nearly every nation committed to cut its emissions. But with one poll after another showing that climate change was still a marginal political issue (at best), I worried that we’d never have the will to do this hard job.
I’m glad to say that the public’s interest in climate change has grown much more than I thought it would. Over the past few years, the global conversation about climate change has taken a remarkable turn for the better. Political will is growing at every level as voters around the world demand action and cities and states commit to making dramatic reductions that support (or, as in the United States, fill in for) their national goals.
Now we need to pair these goals with specific plans for achieving them—just as, in the early days of Microsoft, Paul Allen and I had a goal (“a computer on every desk and in every home,” as we put it) and spent the next decade building and executing a plan to reach it. People thought we were crazy to dream so big, but that challenge was nothing compared with what it’ll take to deal with climate change, a massive undertaking that will involve people and institutions around the world.
Chapter 10 was all about the role governments need to play in achieving that goal. In this chapter, I’ll propose a plan for how we can avoid a climate disaster, focusing on the specific steps government leaders and policy makers can take. (You can find more detail on each element below at breakthroughenergy.org.) In the next chapter, I’ll lay out what each of us can do as individuals to support this plan.
How quickly do we need to get to zero? Science tells us that in order to avoid a climate catastrophe, rich countries should reach net-zero emissions by 2050. You’ve probably heard people say we can decarbonize deeply even sooner—by 2030.
Unfortunately, for all the reasons I’ve laid out in this book, 2030 is not realistic. Considering how fundamental fossil fuels are in our lives, there’s simply no way we’ll stop using them widely within a decade.
What we can do—and need to do—in the next 10 years is adopt the policies that will put us on a path to deep decarbonization by 2050.
This is a crucial distinction, though it’s not one that’s immediately obvious. In fact, it might seem like “reduce by 2030” and “get to zero by 2050” are complementary. Isn’t 2030 a stop on the way to 2050?
Not necessarily. Making reductions
by 2030 the wrong way might actually prevent us from ever getting to zero.
Why? Because the things we’d do to get small reductions by 2030 are radically different from the things we’d do to get to zero by 2050. They’re really two different pathways, with different measures of success, and we have to choose between them. It’s great to have goals for 2030, as long as they’re milestones on the way to zero by 2050.
Here’s why. If we set out to reduce emissions only somewhat by 2030, we’ll focus on the efforts that will get us to that goal—even if those efforts make it harder, or impossible, to reach the ultimate goal of getting to zero.
For example, if “reduce by 2030” is the only measure of success, then it would be tempting to replace coal-fired power plants with gas-fired ones; after all, that would reduce our emissions of carbon dioxide. But any gas plants built between now and 2030 will still be in operation come 2050—they have to run for decades in order to recoup the cost of building them—and natural gas plants still produce greenhouse gases. We would meet our “reduce by 2030” goal but have little hope of ever getting to zero.
On the other hand, if our “reduce by 2030” goal is a milestone toward “zero by 2050,” then it makes little sense to spend a lot of time or money switching from coal to gas. Instead, we’re better off pursuing two strategies at the same time: First, going all out to deliver zero-carbon electricity cheaply and reliably; and second, electrifying as widely as possible—everything from vehicles to industrial processes and heat pumps, even in places that currently rely on fossil fuels for their electricity.
If we think the only thing that matters is reducing emissions by 2030, then this approach would be a failure, since it might deliver only marginal reductions within a decade. But we’d be setting ourselves up for long-term success. With every breakthrough in generating, storing, and delivering clean electricity, we would march closer and closer to zero.
So if you want a measuring stick for which countries are making progress on climate change and which ones aren’t, don’t simply look for the ones that are reducing their emissions. Look for the ones that are setting themselves up to get to zero. Their emissions might not be changing much now, but they deserve credit for getting on the right path.
I agree with the 2030 advocates on one thing: This is urgent work. We are at the same point today with climate change as we were several years ago with pandemics. Health experts were telling us that a massive outbreak was virtually inevitable. Despite their warnings, the world didn’t do enough to prepare—and then suddenly had to scramble to make up for lost time. We should not make the same mistake with climate change. Given that we’ll need these breakthroughs before 2050, and given what we know about how long it takes to develop and roll out new energy sources, we need to start now. If we do start now, tapping into the power of science and innovation and ensuring that solutions work for the poorest, we can avoid repeating the mistakes of pandemic preparation with climate change. This plan sets us on that path.
Innovation and the Law of Supply and Demand
As I argued at the outset—and as I hope has become clear in the intervening chapters—any comprehensive climate plan has to tap into many different disciplines. Climate science tells us why we need to deal with this problem but not how to deal with it. For that, we’ll need biology, chemistry, physics, political science, economics, engineering, and other sciences. Not that everyone needs to understand every subject, any more than Paul and I were experts at marketing, partnering with businesses, or working with governments when we started out. What Microsoft needed—and what we need now to deal with climate change—is an approach that allows many different disciplines to put us on the right path.
In energy, software, and just about every other pursuit, it’s a mistake to think of innovation only in the strict, technological sense. Innovation is not just a matter of inventing a new machine or some new process; it’s also coming up with new approaches to business models, supply chains, markets, and policies that will help new inventions come to life and reach a global scale. Innovation is both new devices and new ways of doing things.
With those provisos in mind, I’ve divided the different elements of my plan into two categories. These categories will sound familiar if you’ve taken Economics 101: One involves expanding the supply of innovations—the number of new ideas that get tested—and the other involves accelerating the demand for innovations. The two work hand in hand, in a push-and-pull fashion. Without demand for innovation, inventors and policy makers won’t have any incentive to push out new ideas; without a steady supply of innovations, buyers won’t have the green products the world needs to get to zero.
I realize this may sound like business-school theory, but it’s actually quite practical. The Gates Foundation’s whole approach to saving lives is based on the idea that we need to be pushing innovation for the poor while also increasing demand for it. And at Microsoft, we created a large group that did nothing but research, something I’m proud of to this day. Essentially, their job is to increase the supply of innovations. We also spent a great deal of time listening to customers, who told us what they wanted our software to do; that’s the innovation demand side, and it gave us crucial information that shaped our research efforts.
Expanding the Supply of Innovation
The work in this first phase is classic research and development, where great scientists and engineers dream up the technologies we need. Although we have a number of cost-competitive low-carbon solutions today, we still don’t have all the technologies we need to get to zero emissions globally. I mentioned the most important ones we still need in chapters 4 through 9; here’s the list again for quick reference (you can put the words “cheap enough for middle-income countries to buy” in every item on the list):
Technologies needed
Hydrogen produced without emitting carbon
Grid-scale electricity storage that can last a full season
Electrofuels
Advanced biofuels
Zero-carbon cement
Zero-carbon steel
Plant- and cell-based meat and dairy
Zero-carbon fertilizer
Next-generation nuclear fission
Nuclear fusion
Carbon capture (both direct air capture and point capture)
Underground electricity transmission
Zero-carbon plastics
Geothermal plastics
Pumped hydro
Thermal storage
Drought- and flood-tolerant food crops
Zero-carbon alternatives to palm oil
Coolants that don’t contain F-gases
To get these technologies ready soon enough to make a difference, governments need to do the following:
Quintuple clean energy and climate-related R&D over the next decade. Direct public investment in research and development is one of the most important things we can do to fight climate change, but governments aren’t doing nearly enough of it. In total, government funding for clean energy R&D amounts to about $22 billion per year, only around 0.02 percent of the global economy. Americans spend more than that on gasoline in a single month. The United States, which is by far the largest investor in clean energy research, spends only about $7 billion per year.
How much should we spend? I think the National Institutes of Health (NIH) is a good comparison. The NIH, with a budget of about $37 billion a year, has developed lifesaving drugs and treatments that Americans—and people around the world—rely on every day. It’s a great model, and an example of the ambition we need for climate change. And although quintupling an R&D budget sounds like a lot of money, it pales in comparison to the size o
f the challenge—and it’s a powerful indicator of just how seriously a government takes the problem.
Make bigger bets on high-risk, high-reward R&D projects. It’s not just a question of how much governments spend. What they spend it on matters too.
Governments have been burned by investing in clean energy before (look up “Solyndra scandal” if you need a reminder), and policy makers understandably don’t want to look as if they are wasting taxpayers’ money. But this fear of failure makes R&D portfolios shortsighted. They tend to skew toward safer investments that could and should be funded by the private sector. The real value of government leadership in R&D is that it can take chances on bold ideas that might fail or might not pay off right away. This is especially true of scientific enterprises that remain too risky for the private sector to pursue for the reasons I touched on in chapter 10.
To see what happens when governments make a big bet the right way, consider the Human Genome Project (HGP). Designed to map the complete set of human genes and make the results available to the public, it was a landmark research project led by the U.S. Department of Energy and the National Institutes of Health, with partners in the U.K., France, Germany, Japan, and China. The project took 13 years and billions of dollars, but it has pointed the way to new tests or treatments for dozens of genetic conditions, including inherited colon cancer, Alzheimer’s disease, and familial breast cancer. An independent study of the HGP found that every $1 invested by the federal government in the project generated $141 in returns to the U.S. economy.
