Were you to make a list of the most influential people in technology, it likely would resemble the roster of the Breakthrough Energy Coalition. Jeff Bezos, Jack Ma, Reid Hoffman, Mark Zuckerberg, Meg Whitman, and Bill Gates would make for a great poker game, and they’re joining together with 24 other high-profile individuals to gamble on what many consider the world’s most prominent looming problem: climate change.
“The renewable technologies we have today, like wind and solar, have made a lot of progress and could be one path to a zero-carbon energy future. But given the scale of the challenge, we need to be exploring many different paths — and that means we also need to invent new approaches,” Gates wrote in a blog post annoucing the coalition. “Private companies will ultimately develop these energy breakthroughs, but their work will rely on the kind of basic research that only governments can fund. Both have a role to play.”
There’s considerable influence in the coalition, which Gates announced in December at the COP21 climate negotiations in Paris. The Washington Post estimated the group’s net worth at $350 billion, and they’re among the most innovative thinkers in the world. But are pioneers in personal computing and social media the right ones to tackle greenhouse gas emissions, clean tech innovation, and sustainable agriculture?
The 30 members of the coalition fall into four categories: tech luminaries, venture capitalists, philanthropists, and international industry moguls. That last category is an important one; climate change correction can’t take place without changing the way energy is produced and used in developing nations. Gates’ organization includes representatives from a South African mining company, an Indian manufacturing conglomerate, a Nigerian resources and agriculture conglomerate, and India’s second-largest company.
“The most interesting feature of this consortium is that it’s a consortium,” said Daniel Kammen, director of the University of California, Berkeley’s Renewable and Appropriate Energy Laboratory. “It’s not one individual pushing an effort. It’s a more diverse coalition where there’s, I hope, going to be a real excitement to opt in.”
Notable areas of expertise are missing, though, in Gates’ group. One is banking. The coalition is saturated with representatives from Silicon Valley’s most prominent venture capital firms, but their spending power is paltry compared with that of JPMorgan Chase or Wells Fargo, which manage trillions of dollars worth of assets.
Also missing are folks from the world’s largest energy firms. It’s clear that if the worst climate scenarios are to be avoided, fossil fuels must remain in the ground. But coal, oil, and natural gas deposits are already included on the balance sheets of Shell, BP, and EonMobil; to keep them from digging up and burning said fuels, there must be incentives to do otherwise, or penalties for maintaining the status quo.
Directly affecting the energy mix is not something Gates’ group can do. Amazon and LinkedIn aren’t getting into the energy business anytime soon (though Sir Richard Branson’s Virgin Airlines planes and Ratan Tata’s cars run on petroleum-based fuel). But the group will focus on a field venture capitalists and tech folks know well: risky investments in startups, which could then upend the established energy giants.
“The likeliest outcome is that (a carbon-free energy system) will not come from the incumbents,” Kammen said. “Microsoft was a tiny startup — two people in a garage in Albuquerque. The history of these changes has been outside the mainstream, but it sure would save us all what we don’t have a lot of — time — if the big players also saw this as an opportunity to make money in the green future.”
Gates recognizes that the private sector has limitations, especially early on, in the push for clean energy. “When it comes to preventing the worst effects of climate change, the investments I make will matter much less than the choices that governments make,” he wrote in a July blog post explaining why he plans to invest $1 billion of his own money in clean tech. Government regulations can begin the shift to clean energy, but Kammen said private money is needed long-term. The federal government spent $6.3 billion on energy research and development in 2014, a total consistent with early-1980s spending levels. If Gates’ group invests, say, $1 billion a year, it will immediately become a global driver of clean-tech innovation.
It’s not easy for clean-energy firms to get money. If a utility is going to employ an energy source, the lights must turn on when the switch is flipped, and most renewables can’t yet meet the demand for consistent, or baseload, power. But there’s not currently reliable power in many nations; an American would gripe at losing power for a few hours, while nearly 80 million Indians don’t have electricity at all, so mixed-source, small-grid systems are more welcome there.
Gates’ group can provide the capital needed to build those innovative energy solutions. A promising nuclear company — say, Gates-backed TerraPower — might now get to set up a pilot system in a rural Indian village to prove it works. By focusing on seed, angel, and Series A investments, the Breakthrough group can help a smattering of clean tech companies get their start. The question then becomes whether any of the companies will develop systems to convince banks, energy companies, and governments to adopt new methods of powering the planet.
This article has been updated to reflect the article published in the January 2016 issue of 425 Business.