Inside the ambitious venture Bill Gates built to beat climate change

For humankind to make real progress on climate change, we face the daunting task of overcoming our own past ingenuity.

“The things that are responsible for our modern lifestyle are actually incredibly good at what they do,” says Jonah Goldman, managing director at Breakthrough Energy (BE). “When they’re doing their job the best, we never think about them. We never think about steel, we never think about cement. We never think about the fact that gasoline is like a miracle substance. It’s incredibly powerful. It’s hugely transportable. It’s dirt cheap.”

And this turns out to be a heck of a problem.

That’s because these quotidian miracles quite often have an Achilles’ heel: Either the process of producing them or the act of using them releases one or more greenhouse gases. Such gases—which are typically measured in what are called carbon dioxide equivalents (a term often shortened to “carbon”)—are steadily heating up the planet. And to do anything about it, we can’t just limit some of the world’s 51 billion tons of yearly carbon emissions. We have to eliminate all of them.

That will take a combination of intense innovation, public policy incentives, education and advocacy, strategic investment, global cooperation, and the creation of new markets that can push the development of zero-carbon products and technologies through sustainable demand. And that’s why Bill Gates says he created Breakthrough Energy—a multiarmed organization that the philanthropist and investor hopes can do all of the above. “It’s a network of programs, funds, and advocacy efforts, all designed to get clean-energy technologies into the market faster,” he says. “And then deployed at scale.”

It’s that last part that’s the rub. Things like alternative jet fuel and grid-scale storage of electricity are very hard to commercialize. At the least, they need to demonstrate that they can compete with their fossil fuel–based counterparts. So one component of BE, called Catalyst, will fund large-scale pilots designed to help lower the costs of these technologies, shepherding them from imagination into practice.

Creating those new markets at scale is a daunting task. “When you’re talking about creating a market for something that is undifferentiated, more expensive, and often less efficient than the thing it’s trying to replace, well, there’s no natural market structure that’ll do that, at least not in a time frame that makes sense from a climate perspective,” says Goldman. So BE hopes to either directly commercialize some of its carbon-zero products or, if not, provide a road map for creating some type of “artificial market structure,” he says—with, perhaps, a public-private mechanism to spur demand.

For an example of the latter, Goldman points to CarbonCure, a Canadian company in which Breakthrough Energy Ventures, the VC fund embedded in Breakthrough Energy, has made a significant investment. What CarbonCure does, in essence, is take some of the carbon that’s emitted from the cement-making process and then reinject it back into concrete—in the process, both strengthening the material and lowering total carbon emissions by between 10% and 30%.

But while the tech is encouraging, it falls well short of the goal of reducing carbon 100%. One way to build on CarbonCure’s progress is to combine existing carbon-reducing technologies, layering one on top of the other. But it will ultimately require some kind of market force—buyers demanding carbon-free cement either because they’re getting incentives to do so (or penalties for not doing so)—to bring other innovators in and, in time, bring down the cost curve. Part of Breakthrough Energy’s remit is, somehow, to do just that.

The still-evolving network has a newish Fellows program, too. “The idea with that program is that it’s agnostic to pathway,” says Goldman, who in addition to his role at Breakthrough Energy, is also a managing director at Gates’s private office, Gates Ventures, which sits across all of the billionaire’s business and philanthropic endeavors. “The Fellows program lets us say to brilliant minds in the academic environment, in the lab environment, in some of the corporate research environments, ‘Let’s work together to figure out what the most effective commercial pathway for your technology is.’”

Right now, a lot of that academic brainpower is being harnessed for submitting research papers and getting tenure. Goldman is hoping to build an ecosystem that draws some of those scholars—particularly in the fields of chemistry and other climate-related sciences—out of that pedagogical environment and get them to think about the potential real-world applications of their research.

Here, as with everything BE, ideas have to meet a key threshold of viability: Once they’re deployed, the invention or approach has to “have the potential to reduce greenhouse gas emissions by half a gigaton, which is big stuff,” says Goldman. “That’s only big stuff. That’s what we’re most interested in.”

“With the Fellows program, we’re not actually taking any ownership interest,” says Goldman. “We don’t have any connection to the IP. We’re working directly with the individuals, and we’re sponsoring research.” But once these inventors decide to become entrepreneurs—or there’s interest from a corporate or industrial partner to acquire some intellectual property or move the tech forward in some way, another component of BE—Breakthrough Energy Ventures—might get involved.

The BE team hopes to coax a bunch of brilliant minds and ideas into venture-backed companies. But many of the ideas, in the end, won’t be appropriate for venture financing. “They get dinged on all three of the things that venture tends to hate,” Goldman says. “They’re incredibly long term, they’re incredibly high capital costs, and they’re incredibly technically risky.”

Which brings up another tentacle in the BE climate cephalopod: advocacy. Much of the time, climate-related R&D is an accidental thing. It emerges from “blue sky” thinking about how to keep our blue skies cool. But as Gates makes abundantly clear in his new book, How to Avoid a Climate Disaster (see our related interview in this package of stories), we don’t have the time to wait for random sparks of innovation to ignite. There are very specific things—steel, cement, plastic, among them—that we need to replace. “So we need to make sure that government-sponsored R&D is significantly increased, tied directly to specific technical targets, and that it’s also easily put on a commercial path,” says Goldman. “We don’t have any of those things right now in the current R&D infrastructure.”

Says Gates: “We’re advocating for ambitious public and private sector policies that will spur innovation and the rapid transformation of the economy.”

It’s hard to disagree with that.

Explore Fortune’s Blueprint for a climate breakthrough package:

• Why it matters that the U.S. rejoined the Paris climate agreement
• Bill Gates on why the ‘miracles’ of solar and wind energy won’t save us from climate change—and the breakthroughs that just might
• This ancient Roman material could unlock the secret to building greener and longer-lasting buildings
• What the future of clean energy may depend on
• These are the biggest trends in clean tech in 2021, investors say
• Dartmouth’s engineering dean on why buildings are the frontier for tackling climate change
• The electrification of the auto industry is speeding up—and shaking up the energy economy
• 8 photos show the ‘human footprint on the land’
• From concrete to steel, how construction makes up the ‘last mile’ of decarbonization
• Inside the ambitious venture Bill Gates built to beat climate change
• Business leaders hope they can satisfy Biden’s big climate goals with their own promises—not regulation
• Meet the next generation of global climate activists
• Review: In an important new book, Bill Gates offers a real-world plan for avoiding a ‘climate disaster’
• Why we asked Bill Gates to be Fortune’s guest editor today