Billionaire philanthropist and Microsoft Chairman Bill Gates and Nobel Prize-winning physicist and Energy Secretary Steven Chu hold similar views on the importance of finding new sources of inexpensive energy to better the plight of the world’s poor—as well as to make money. They voiced this commonality during a wide-ranging discussion at a Department of Energy conference late last month.
Although they joined in support for new energy generation technologies and backed greater spending for fundamental research to bring them about, they differed on what those energy sources should be.
During the discussion, Gates urged the U.S. to double its energy R&D spending; Chu pushed for more funding for high-risk, experimental energy technologies; and the audience cheered. The hoots and clapping were not too surprising given the audience of 2,600 technologists and investors at the third annual Advanced Research Projects Agency-Energy (ARPA-E) technology conference held near Washington, D.C.
ARPA-E funds high-risk, small-scale energy research projects with great potential. Although created by Congress before Chu took over DOE, his support has made the agency real with funds, focus, and staff. Through the American Recovery & Reinvestment Act of 2009, Chu provided the agency with its first funds, and he has watched as it has nurtured some 180 research projects over the past three years.
Gates is also a strong backer of transformational technologies such as those supported by ARPA-E. When quizzed by a conference moderator about why he was at an energy conference, Gates explained the tie between inexpensive energy and the focus of the Bill & Melinda Gates Foundation on ending world poverty.
“If you look at improvement in the human condition over the last 200 or 300 years,” Gates said, “the improvements of today really have to do with energy intensification. And if you want to improve the livelihoods of the world’s poorest 1 billion, their access to cheap energy determines if they can afford fertilizer, transport, and lighting—the things we take for granted as part of our lives and our dignity. Without advances in energy, they will remain stuck where they are.”
Those affected most, he added, are the “equatorial small-holder farmers” whose families barely get enough to eat and whose children suffer physical and mental deficiencies from malnutrition. “The imperative is to provide them with what they need to raise themselves up.” In doing so, Gates said, more demand will be created for continued innovation in energy. A benefit of this new energy will be a reduction in greenhouse gas emissions, he added.
Gates underscored that providing cheap energy is one of the top things that would really help the world’s poor.
Chu described a similar vision for global energy expansion, particularly for the world’s 2 billion people who lack basic electricity. Pointing to DOE R&D—at both ARPA-E and the Office of Science—Chu stressed the potential rapid growth of renewable energy, particularly with technological improvements in advanced batteries and solar energy systems. These technologies, he said, have the power to go “viral,” leading to global energy expansion.
He compared the coupling of inexpensive, robust batteries and photovoltaic systems to the viral expansion of the cell phone.
“In a developing country, if you have any spare cash, you get a cell phone,” Chu noted. “Cell phones have leapfrogged the normal telephone transmission network, and we see photovoltaic systems and batteries leapfrogging the electrical transmission grid.”
The result of such widely spread photovoltaic and battery technology in the developing world, Chu continued, “would be to bring this power to small villages and to places where people would be able to read at night, to run a refrigerator to keep medicines safe, and to run things that pump water for irrigation. We see this as having a great potential for human life.”
But Gates sees the technology expansion a bit differently and stressed the need for large, 24/7 baseload energy generation, particularly nuclear power plants. He pointed to his support for TerraPower, a nuclear power developer. TerraPower is exploring a nuclear fast reactor, a “traveling wave reactor,” Gates explained, that uses depleted uranium as fuel and is able to go as long as 60 years without refueling.
TerraPower has recently been in negotiations with China and other countries to build facilities there to demonstrate the technology and eventually possibly construct a plant, Gates said. This ability to develop and sell energy products to the global marketplace as well as in the U.S. is something Gates and Chu agreed is important.
Gates played down similarities between the computer revolution and the nascent energy revolution. The nimbleness of the information technology revolution, which Gates largely led, does not compare well with the “gigantic investments” required in the energy sector for equipment and the inherent risk in such large investments, Gates explained.
“For a software company or even a chip factory, the innovation cycle is two or three years,” he noted, “not the 40- or 50-year cycles needed for a new power plant.” Other hindrances, he said, include government regulations as well as state and utility commission oversight and policies that litter the energy sector.
To move this sector, Gates urged more government support as well as research to encourage companies to take risks with new technologies. He said a 90% failure rate should be expected when investing in complex, high-risk technologies. There should be “thousands of companies working to find 10 or 20 approaches to get us to a magic solution.”
Gates applauded DOE’s use of stimulus funds to kick off energy research programs such as ARPA-E. Although there is more government activity today than there was five years ago, he said, “the magnitude is not at a serious level.”
Referring to DOE’s failed loan guarantee to the solar company Solyndra, Gates said, in the future there will be many other companies in such programs that pay off dramatically. “Clearly I am a fan of risk-taking.”
To drive this sector—be it nuclear energy or renewables—Gates and Chu both said a price on carbon will be required. But perhaps as a reflection of today’s political reality, both stressed that the price need not be immediate.
“We need a price on carbon,” Gates said, “but its role is to get people who build power plants to look out at their investment returns over a 40- to 50-year period and choose between sources to support.” It is not so important that there’s a price today, he said, but it must be crystal clear that there will be a carbon tax in the future.
Chu agreed, adding that he does not use the “T word.” Instead, he offered the example of the Obama Administration’s plan to develop efficient cars that can be sold in the global market, specifically the push, announced last summer, for a 54.5-mile-per-gal vehicle by 2025.
Chu claimed that auto engineers are excited by the innovation challenge and that such fuel-efficiency advances will prove to be a big deal in international trade.
“It is very difficult for American companies to sell an automobile that gets 10 or 15 mpg to a global mass market,” Chu said. “But many people around the world will buy a 40- to 50-mpg car that performs well.”
Gates echoed that view, adding that today’s technological entrepreneurs hoping to sell their products “better have a plan of how to sell their stuff globally, especially in China and Asia, or else they better just not compete.”