On Monday, just in time for the start of the Paris climate talks, Bill Gates and other wealthy entrepreneurs announced the creation of the Breakthrough Energy Coalition, a global group of private investors committed to “early-stage investing in potentially transformative energy systems” with “near zero carbon emissions.”
The coalition includes those with experience in clean energy investment, including Virgin’s Richard Branson, and venture capitalists John Doerr, and Vinod Khosla. But it also brings into the fold supporters new to the field – including Amazon’s (amzn) Jeff Bezos, LinkedIn’s (lnkd) Reid Hoffman, Facebook’s (fb) Mark Zuckerberg, as well as hedge fund titans and leading industrialists from around the world.
As investors and advisors who have been working for many years on new models to finance and scale up clean energy innovations, we’re delighted to see the formation of this Coalition and others like it. Kudos to Gates for organizing it at a scale perhaps only he could.
A few months ago, when Gates first announced his intent to invest another $1 billion on investments to fight climate change, we wrote an essay for Fortune.com expressing concern that he was focused too much on long-shot technologies and not enough on improving and deploying existing technologies.
We said: "While some investment in high-risk technology is needed, where we really need billions to be spent is on the scaling up of applications and business-model innovations that build upon currently available clean energy technologies."
Today, we applaud what appears to be an expanded focus for Gates, whose Coalition says: "We are looking for outliers both in developing novel technologies AND in innovations which enable current technologies to be dramatically more efficient, scalable, or cheaper. Whether core or enabling technology, the key differentiating factor must be a credible pathway to rapid scaling…”
Some observers think Gates still remains too focused on moonshots. Joe Romm of Climate Progress, despite being a longtime advocate for more energy R&D spending, says Gates’s effort will only have value “if it focuses more on improving existing cleantech and less on breakthrough technologies and energy miracles.” We agree, but are optimistic Gates and the Coalition are moving in the right direction and will continue to shift as they evaluate how to make the biggest impact in a timely way.
As we previously noted of Gates, but equally true of most of the entrepreneurs who have joined the Coalition – their fortunes depended upon other companies first having completed the difficult and often unrewarding task of developing the necessary computer hardware and infrastructure. This is as true of Microsoft (msft) as it is of Amazon, Facebook, LinkedIn, and Salesforce (crm) – whose founders are Coalition members. All of them built upon progress in computing hardware and Internet and communications infrastructure by creating specific software applications that revolutionized industries.
Mark Zuckerberg didn’t invent online social networking, but he uniquely leveraged improvements in computing power, networking, and interface design to create a better user experience and solution – which is why Facebook has 1.5 billion members. Entrepreneurs like Elon Musk are doing the same in clean energy and mobility and we need more investment to support these efforts.
One tech billionaire who didn’t join Gates’s group, Peter Thiel, argued recently in a New York Times op-ed that climate activists should, as Gates has in the past, embrace new nuclear technologies. Our view is that neither the building of more expensive new nuclear plants nor the cleaning up of fossil fuels and electricity generation through carbon capture or emissions controls will do in energy what new technologies did for data and communications – make it cheap, available everywhere and allow it to foster new economic growth.
Gates’s Coalition has the capacity to transform the energy industry -- assuming its commitments turn rapidly into actual investments. Already, it is planning to work with twenty countries that are part of a related new group, Mission Innovation, whose members are committing to double their R&D investments in clean energy over the next five years.
But, the Coalition’s true impact will come from the influence it can have on others by demonstrating that investments made in technology can have real and near-term impact on carbon reduction. If those investments generate positive results, they will cause corporations, pension funds, and other institutional investors to join the movement.
We hope the Coalition will focus on applications that will make clean energy technologies as affordable, easy to use, and ubiquitous as a Facebook page. Those are the real breakthroughs we need – and ones that Gates and company can uniquely help to achieve.
Stephan Dolezalek, Stefan Heck, and Andrew Shapiro, long-time clean energy investors and advisors, are the founders of Resourcient, which promotes scalable investment in resource efficient businesses.