Bill Gates: Innovation is the only answer to the threat of climate change
Microsoft founder and global philanthropist says managing climate change won’t be easy but green innovation is the future.
Having built up a net worth of well over $US100bn, Bill Gates has committed his energy and dollars to trying to solve some of the most vexing problems of our time: HIV/AIDs, tuberculosis and malaria, COVID-19. He is also focused on climate change and has just published a new book, How to Avoid a Climate Disaster. In it he argues persuasively that the world needs to get to zero carbon emissions by 2050. He wants readers to know that achieving that goal won’t be easy but it can be done, particularly if we find ways to spur green innovation. Gates recently spoke with Harvard Business Review’s editor in chief, Adi Ignatius, from his office in Seattle. Here’s an edited version of the conversation.
HBR: There are already a lot of books about the urgency of the climate challenge. Why are you taking on the topic now?
Gates: Millennials have made sure that even in the face of the COVID-19 pandemic, we’re paying attention to climate change. In the recent US election, many candidates made the issue a priority. So we have a commitment. But do we really have a plan to get to zero carbon emissions? I want to contribute my thinking to show what’s required to develop the breakthroughs we need to get there.
Q: The book seems to pit the dire threat of climate change against your own propensity for optimism. What’s the main idea that you’d like people to take away?
A: It’s that getting to zero carbon emissions is harder than people might assume. The world releases about 51 billion tonnes of carbon a year. When people think about reducing that they tend to focus on the easy things: using renewable sources for electricity generation, or electrifying passenger cars. But we need to make progress in other big areas, like low-emissions concrete and cement. And we need to make sure that government policies, corporate behaviour, and personal consumption habits are all contributing to the solutions.
Q: To what extent are we now on the path to get to zero by 2050?
A: If you ignore the temporary reduction effects of the pandemic and the economic crisis, we’re not at all on track. Emissions keep going up. To get to zero by 2050, we’ll need dramatic declines across every category, year in and year out.
Q: You write that even if we can cut carbon emissions in half, that would only postpone — not prevent — a climate catastrophe. Is there any precedent for a transition of this magnitude?
A: This scale of change hasn’t happened before. It will need to be the most amazing thing humankind has ever done. Making a vaccine for the coronavirus went quickly, but that was far easier. It was built on top of investments that the Gates Foundation and other organisations made over the past decade in the mRNA approach. For climate, it’s important that we not spend money on just reducing, say, electricity use by 15 per cent. We need to invest in the innovations that will really make a difference.
Q: If we can’t get to zero, what happens?
A: Well, the temperature will keep going up. Natural ecosystems like coral reefs and the Arctic will disappear. If you own farmland in Canada, you’re actually going to get more crops because it will be warmer. But if you own farmland in Texas or Mexico, things will be bad. Crops like corn simply aren’t going to grow there anymore. And for subsistence farmers near the equator — in parts of Africa, for example — it will be disastrous. They won’t have enough food to survive.
Q: You write that by the middle of the century, climate change could cause five times as many deaths as COVID-19, with a far more devastating economic effect. COVID has been a real-time disaster. Yet even though the deaths and devastation have been in our face, you could say we failed in our response. So how are we going to respond to the more abstract, slow-moving effects of climate change?
A: In the case of the pandemic, if the US had taken the measures that I and others suggested when we warned about the danger, we would have ended up like Australia or Japan, with a very modest number of deaths. Responding to climate change is harder because the amount of innovation needed is much greater and, as you say, the negative effects are way out there in the future. With the pandemic, it was uncertain which year it would come. I could have gone my whole life without seeing one. With climate change we can guarantee the ill effects. There are still questions: For example, will it be four degrees hotter or five? But disaster is guaranteed unless we reduce emissions very, very dramatically.
Q: There’s also the problem of climate-change denial. I spoke to a gathering of investors recently and invited them to submit questions, which went up on a screen so that the crowd could vote for the one they cared most about. The most popular question was: “Is climate change real?” These are successful, well-educated people, with access to all the knowledge that you have access to, and yet they’re not buying climate change. What’s going on here?
A: Fortunately, denial is declining. You no longer have companies that, in a self-interested way, are trying to amplify the uncertainty. But we have two problems. First, there are still deniers, and we have to bring them along — in part by minimising the cost of what we do to avoid climate change. Second, we have to show the believers just how difficult the challenge really is. It’s not just about stubborn oil and utility executives. And we can’t make meaningful progress simply by divesting stock here and there and maybe using a little less of this or that.
Q: Who is the main audience for your book? People who believe that climate change is genuine but don’t understand what it will take to really make a difference?
A: Yes, it’s for people who think this will be easy. Or who think we just need to identify the bogeyman behind the problem. What we really need is a lot of science. We need to increase R&D budgets, to draw on the talent we have in universities and labs. And we need to re-energise financing for all of this. The venture capital community so far has had a bad experience with green investing. We need to tap high-risk capital that’s structured for the super-long-term nature of the products we need.
Q: Climate denial may be decreasing, but the efforts you’re talking about will require a consensus that doesn’t exist at present. As you know well, there’s a strong anti-science, anti-expert strain in society that has to be factored in.
A: I think more people will come around as they see the forest fires and the hurricanes that result in part from climate change. I think younger people already are more open-minded about the long-term investments we need because they’re thinking about what type of world they’ll live in. But we also need to avoid saying that this effort will take money away from other important things the government funds.
Q: You coined the term “green premium” to identify the extra amount that we need to pay for zero-carbon substitutes for existing products. If the green premium is low, we should be adopting the substitute. If it’s high, that’s where we need to direct R&D and investment.
A: The key metric as we try to get to zero emissions is how much we’re bringing these premiums down to an acceptable level. If we track the innovations that are bringing them down, that will give us a sense as to whether or not we’re going to get to zero. If it’s not happening, we’ll need to increase R&D budgets even more to create new products. And once the markets for those products get to a certain scale, that will help drive things to the next level.
Q: What about the political element? In the US you have one president who issues orders to protect the environment followed by another who issues orders undoing the protections. If you don’t have unity of purpose, how will we get there?
A: The more you look at politics, the more you see that the brute-force approach of just continuing to pay these green premiums is not tenable. Innovation is the only way to square this. Yes, we need good policies. We need a larger R&D budget. And we need a carbon tax and other measures to reduce energy demand. There were big tax benefits for investing in solar panels — a policy that survived Democratic and Republican administrations. Those incentives helped lower the learning curve to the point where the need for the subsidy is almost gone. That money can now be put into the next areas, like battery storage, aviation fuel, steel, and cement. Policy will be important, but the trillions of dollars of investment that candidates proposed before the US election in 2020 aren’t likely to emerge. It’s too big a sacrifice to spend that kind of money. We need a plan that costs tens of billions, not trillions, and fosters innovation.
Q: So ultimately it’s all about innovation?
A: Without innovation, I don’t think we can avoid climate disaster. If you tell me that science is frozen and you just have to politically decide to make the right trade-offs, it won’t work. You can’t get India, for example, to stop its emissions when other countries aren’t going along. We can’t solve this without innovation. Spending tens of billions on innovation is a modest enough percentage of the budget that I believe we can get a bipartisan consensus on advancing this work no matter which party is in power.
Q: How do you increase the supply of innovation?
A: We have some models. In the medical realm, the US spends about $40bn a year on the National Institutes of Health. That’s led to huge advances in cancer treatment and other areas, and a lot of US-based companies make the products that have come out of the research. I think there’s now some chance of bipartisan support in Congress for more climate-related research. The next piece is to get risk capital to come in. I helped create Breakthrough Energy Ventures, an investor-led fund that’s looking to universities and national labs to find out what projects are ready for development. It’s longer term and more patient than typical venture stuff, which will help accelerate the journey from the lab to the market.
Q: You’ve talked over the years about how nuclear energy is critical to creating a non-carbon future. Your book makes that argument somewhat sparingly. Is that because you doubt the will, particularly in the US, to seriously pursue nuclear power?
A: Electricity generation is hard because of the intermittent nature of clean sources like wind and solar. One way to deal with that would be to achieve a miracle of storage, with batteries that are 20 times better than what we have today. Unfortunately, there’s a good chance we just can’t achieve that. Alternatively, we can rely on nuclear fusion, though that has a huge societal acceptance problem in terms of safety, and the reactors that have been built have been way overpriced and not economical. But the energy’s got to come from somewhere. And yes, I didn’t want the book to come across as a promotion of TerraPower [a nuclear-reactor design company that Gates co-founded and chairs]. Of course, any money I make from that will go to the Gates Foundation; it’s not like I’m short on money. In the book I wanted to be neutral about the different paths to cleaner energy.
Q: Is there a point of no return for climate change?
A: There isn’t a moment when all of a sudden the world catches on fire and is gone. It’s just a matter of how many people will die and how many ecosystems will disappear. At some point the Amazon will dry up and become a savanna. Eventually, you’re not going to have Arctic ice or polar bears or coral reefs. You’re not going to be growing crops. People who talk about climate change often say there’s some magic breaking point, but we don’t know that. We just know that if you ignore climate change, these environmental and human tragedies eventually will happen. One sad fact is that there are lags in this system such that even once you get emissions to zero, temperatures won’t get cooler for about two decades. So I’m not likely to be alive in a year that’s cooler than the previous one.
Q: How do you ensure that this is a truly global effort?
A: The hard part is that even if rich-country governments go along, we need to make it attractive for less-wealthy countries to do so as well. People in developing countries deserve to have more shelter and more electricity and the ability to move around. Places like India still need more of those emission-intensive services to create a decent lifestyle for their populations. So it’s up to the rich countries — particularly the US, which has so much innovation power — to invest and come up with approaches to get us to zero.
Q: What is it that individual companies can do to move the needle?
A: Employers have a lot of purchasing power. They can buy clean aviation fuel for their private air fleets. They can invest capital in high-risk, breakthrough companies. And they can make sure that they’re not holding back progress.
Q: What about big institutional investors? If they pull out of carbon, won’t that help?
A: Not at all. Moving capital out of fossil fuels may be a good thing to talk about at the cocktail parties you go to. But are people going to stop using cement because some Wall Street guy is divesting? What’s the theory there? There’s no connection. Now if the big firms invest rather than divest — if they fund high-risk innovations related to the green premiums — then they’re part of the gain.
Q: And what do you hope to see from government?
A: In democracies we need citizens to care about and promote green ideas so politicians feel they have a mandate to work in these areas. Without government creating demand for new products — by allowing steel to be certified in a new way that uses less carbon, for example — we’re not going to get to zero emissions in 30 years.
Q: What is it that individuals can do to make a difference?
A: They can buy clean products like the Impossible Burger or electric cars. They can try to use fewer materials. They can change their consumption so that clean products can achieve scale and their costs go down. And they can use their voices to elect politicians who are willing to create the policies and fund the R&D that we need. If I had one wish for the US, it would be that spending the tens of billions needed for innovation would be a priority across party lines. We need people to speak out for this.
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Adi Ignatius is the editor-in-chief of Harvard Business Review.
Copyright 2021 Harvard Business Review/ Distributed by NYTimes Syndicate