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Thread: Bill Gates on R&D, a Carbon Tax, and China's Role

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    Havakasha is offline
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    Bill Gates on R&D, a Carbon Tax, and China's Role

    September 2, 2010, 8:15 AM
    Bill Gates on R&D, a Carbon Tax and China’s Climate Role

    Bill Gates, the software innovator and development philanthropist who has recently championed a big research push to advance non-polluting energy choices, has weighed in with some new thoughts after reading a critique of his thesis by Richard Rosen of the Tellus Institute. Rosen asserted that putting too much focus on research aimed at energy breakthroughs was “dangerous” because it might encourage people “to put off investment in the many good renewable technologies that we have today, in the hope that something dramatically better will come along in the future.”

    Gates e-mailed me some reactions and more detail on his vision of a sustainable energy quest, which you can read below. I also encourage you to watch his February Ted talk on energy and climate (which substituted fireflies for the mosquitoes he used as a propin a previous talk).

    As I did with Rosen last week, after receiving Gates’s e-mail, I followed up on a couple of points, and he’s been kind enough to address them here, as well. Here’s his initial reaction:

    Richard Rosen’s comments focus on how important I think it is to invest in energy R&D to reduce the cost of energy and reduce CO2 emissions. He implies that I think that is all we should do. On the contrary, I think more R&D investment, while critical, is only one element of an energy strategy.

    We need both a market push (R&D funding) and market pull by having a price on carbon. Pricing carbon emissions would help in many ways. It would encourage increased efficiency, increased deployment, more private R&D and provide funding for government R&D. More efficient use of energy is important. There are a lot of great efficiency approaches like building standards, and Cafe standards that can make a difference.

    Any analysis needs to consider middle-income and poor countries whose energy demands are increasing as people move out of poverty leading to increased CO2 emissions. For the poorest, more expensive energy reduces their access to energy-driven services like increased use of fertilizer, vaccine refrigeration, reasonable transportation, and many other things that can improve the conditions in which they live. Poor people need energy that is both cheap and clean – which only R&D advances can provide.

    Our renewable portfolio, as it exists now, is not good enough to get us where we need to be. Without R&D investments, we are not going to be able to address climate problems in time. For example getting renewable energy to a high share requires breakthroughs in storage technology. In looking at these issues I am -– to borrow U.K. energy scientist David MacKay’s phrase –- pro-math. We need solutions that are economic, reliable in almost all conditions and that work at scale. Vaclav Smil brilliantly describes in his latest two books – Energy Transitions and Energy Myths and Realities — how difficult it is to make a major change in energy sources and how many predictions about quick changes have proven to be overoptimistic.

    Some people take the position that we can’t focus on more than one thing at a time. I think that would be a mistake. We need to proceed on multiple fronts. I think it would be shortsighted not to include investing in breakthrough R&D particularly given the long lead times involved.
    Here are my followup comments and Gates’s replies (both edited a tiny bit to clarify some e-mail shorthand):

    In tracking the climate challenge (science and policy) since the 1980s I see scant evidence that our politics and public attitudes will make it possible to build a carbon price “pull” sufficient to shape energy investments and choices on a meaningful timescale…. I do see the prospect of using a targeted carbon cost/tax to raise a big research and demonstration war chest (as I described in “A 2-Cent Solution to Help Fuel an Energy Quest“).

    It is certainly correct that the challenge of getting a level of taxes on energy say at 1-2% would be a lot easier than getting an increase of 10% and up. As described in the AEIC report the 1-2% would be enough to fund a lot of energy research and deployment. It would not be enough to drive efficiency so you would have to use regulatory approaches to do that.

    I am not an expert on the politics –- I do think a carbon tax should be put in place. When the government raises a lot of money people get concerned about politically favored causes being what gets funded and we saw with the House energy bill that funding for specific CO2 sequestration was chosen even though that might not be the best way to spend the money.

    Since R&D is long lead time and the economy is weak if could be the ideal approach is to get a modest tax now with the expectation of a higher carbon tax in the 10-40-year timeframe which is key for people deciding what power plants to buy or cars to build.

    Do you see any path to a price on carbon (in the developed world) that realistically would lead to meaningful rates of decarbonization in developing countries (where nearly all the growth in emissions is coming)?

    I see three ways that this could happen. The first is that even without rich countries funding extra R&D and learning-curve deployment that innovation comes up with a way of generating energy (electricity, transport, heat, etc..) that is cheap enough for the developing countries to use. This doesn’t seem likely but innovation can always surprise us. This would be doing the minimum amount to try and avoid climate problems and I think it would be a huge mistake.

    The second is that the rich countries put a lot of extra money into R&D and learning-curve deployment and that this manages to get the costs of CO2-free energy low enough that at some point the developing countries change to use these approaches. The final is that the developing countries see the problems that climate change will cause and that they contribute to the R&D and learning-curve deployment and buy some energy infrastructure that costs more but emits less CO2. Since these countries face problems of childhood deaths and food shortages the idea of paying extra money for energy causes a lot of problems since it leads to a lot of things like fertilizer costing more.

    China is a special case since it isn’t really a developed or a developing country and the amount of energy infrastructure it is adding is very large. China has taken some steps to participate in new forms of energy, including some tariffs that encourage deployment. China is also a major player in helping the nuclear industry get into a new mode where a specific design is made in high volume. China is also the most likely place [where] new nuclear designs which can eliminate many of the problems of today’s nuclear plants will get tried. So it is important to keep working with China and involving them. When the U.S. energy discussion becomes nationalistic, insisting that R&D all be done here and that new solutions all be manufactured here, it isn’t optimal. Ideally R&D and deployment would be rationalized on a global basis. The middle-income countries like China should be thought of in a special way since they can participate in the R&D and deployment, unlike the poorest countries who will face most of the problems.
    I’ve initiated a fruitful e-mail exchange among a variety of people immersed in energy technology, climate policy and related fields and will post some of that string of thoughts before the week is out. Others are weighing in elsewhere on the merits of pollution taxation and how to build a new generation of energy innovators.
    Last edited by Havakasha; 09-02-2010 at 12:22 PM.

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