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Breaking Through with Bill Gates

Bill Gates needs no introduction, but his book deserves further inspection.

At the beginning of his book, Bill Gates makes one point perfectly clear: The energy industry is massive and incredibly important.

The energy industry not only supports our entire economy, it is also worth roughly $5 trillion a year. Of course, this staggering figure is rooted in reality---energy is essential: "It’s impossible to build an economy where everyone has job opportunities if you don’t have massive amounts of reliable, affordable electricity for offices, factories, and call centers."

Gates readily admits he is not necessarily the ideal messenger on climate, but to his credit he's done the reading, "including several eye-opening books by the scientist and historian Vaclav Smil, who helped [him] understand just how critical energy is to modern civilization... (The best books [Gates has] read on this topic are Vaclav Smil’s Energy Transitions and Energy Myths and Realities.)"

When it comes to energy and environmental matters, many have taken a restrictionist approach---but Gates does not. He's much more realistic about what can be accomplished. For instance, he says "there are no realistic paths to zero that involve abandoning [fossil] fuels completely or stopping all the other activities that also produce greenhouse gases (like making cement, using fertilizer, or letting methane leak out of natural gas power plants)." Moreover, he reminds us that energy itself is not the problem, and that "there is nothing wrong with using more energy as long as it’s carbon-free."

Gates also tempers his realism with healthy doses of optimism: "this is a huge economic opportunity: The countries that build great zero-carbon companies and industries will be the ones that lead the global economy in the coming decades." He also has a keen eye for energy transitions, noting, for example, that natural gas took seventy years (1900 to 1970) to reach 20 percent of the world's energy, from a starting point of 1 percent.

The energy industry is not only enormous, it is also complex and resistant to change for a number of reasons, namely cost, risk, and reliability:

  • Cost: "First, you have huge capital costs that never go away."

  • Risk: "Society also tolerates very little risk in the energy business, understandably so."

  • Reliability: "We demand reliable electricity; the lights had better come on every time a customer flips a switch."

In an eloquent single sentence summation, Gates says, "We need the energy system to stop doing all the things we don’t like and keep doing all the things we do like—in other words, to change completely and also stay the same."

Bill Gates' Top 10 Energy Insights

1. Electricity's Importance: "We’re in love with electricity, but most of us don’t know it. Electricity is consistently there for us...But, as sometimes happens in life, we don’t realize how much it means to us until it’s gone...I wasn’t always aware of how much we rely on electricity, but over the years I’ve gradually come to see how essential it is. "

2. Energy Storage: "A crucial point: It’s extremely difficult and expensive to store electricity on a large scale, but that’s one of the things we’ll need to do if we’re going to rely on intermittent sources to provide a significant percentage of clean electricity in the coming years."

3. Increased Demand: "And we’re going to need much more clean electricity in the coming years. Most experts agree that as we electrify other carbon-intensive processes like making steel and running cars, the world’s electricity supply will need to double or even triple by 2050. And that doesn’t even account for population growth, or the fact that people will get richer and use more electricity. So the world will need much more than three times the electricity we generate now."

4. Transmission: "It’s natural to think of America’s electric grid as one single connected network, but in reality it’s nothing of the sort. There isn’t one power grid; there are many, and they’re a patchwork mess that makes it essentially impossible to send electricity beyond the region where it’s made...What I can say for certain is that we need a concrete plan to develop new power grids that provide affordable zero-carbon electricity reliably, whenever we need it."

5. Transportation: "It’s rare that you can boil the solution for such a complex subject down into a single sentence. But with transportation, the zero-carbon future is basically this: Use electricity to run all the vehicles we can, and get cheap alternative fuels for the rest."

6. Nuclear: "Here’s the one-sentence case for nuclear power: It’s the only carbon-free energy source that can reliably deliver power day and night, through every season, almost anywhere on earth, that has been proven to work on a large scale."

7. Offshore Wind: "For the offshore wind industry, there’s nowhere to go but theory, we could generate 2,000 gigawatts from it—more than enough to meet our current needs. But if we’re going to take advantage of this potential, we’ll have to make it easier to put up turbines. Today, getting a permit requires you to run a bureaucratic gauntlet: You buy one of a limited number of federal leases, then go through a multiyear process to generate an environmental impact statement, then get additional state and local permits. And at each step of the way, you may be opposed (rightly or not) by beachfront property owners, the tourism industry, fishermen, and environmental groups. Offshore wind holds a lot of promise: It’s getting cheaper and can play a key role in helping many countries decarbonize."

8. Hydrogen: "I hope we get some big breakthroughs in storage. But it’s also possible that some innovation will come along and make all these ideas obsolete, the way the personal computer came along and more or less made the typewriter unnecessary. Cheap hydrogen could do that for storing electricity...We could use electricity from a solar or wind farm to create hydrogen, store the hydrogen as compressed gas or in another form, and then put it in a fuel cell to generate electricity on demand. In effect, we’d be using clean electricity to create a carbon-free fuel that could be stored for years and turned back into electricity at a moment’s notice."

9. Plant Retirements: "Governments will need to retire inefficient, fossil-fueled equipment—whether power plants or automobiles—faster than they might otherwise. It costs a lot to build power plants, and the energy they produce is only cheap if you can spread the cost of construction over their useful life span. As a result, utility companies and their regulatory agencies are loath to shut down a perfectly good operating plant that may have decades of useful life ahead of it. Policy-based incentives, through either the tax code or utility regulation, can accelerate this process."

10. Policy Innovation: "I admit that 'policy' is a vague, dull-sounding word. In this book, I’ve been emphasizing the inventions we need to get to zero—new ways of storing electricity, making steel, and so on—but innovation is not just a matter of developing new devices. It’s also a matter of developing new policies so we can demonstrate and deploy those inventions in the market as fast as possible. Luckily, in developing these policies, we’re not starting with a blank slate. We’ve got a lot of experience regulating energy. In fact, it’s one of the most heavily regulated sectors of the economy, in the United States and around the’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."

Bottom Line: "Keep in mind that although we need to pursue all these ideas, we probably don’t need all of them to pan out in order to decarbonize our power grid. Some of the ideas overlap each other. If we get a breakthrough in cheap hydrogen, for example, we might not need to worry as much about getting a magic battery...If a genie offered me one wish, a single breakthrough in just one activity that drives climate change, I’d pick making electricity: It’s going to play a big role in decarbonizing other parts of the physical economy."

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