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Bill Gates on America’s “crazy” lack of energy funding

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I spent two days this week at the Advanced Research Project Agency-Energy’s Energy Innovation Summit in National Harbor, Md. The conference highlights the Department of Energy unit’s funding successes in supporting clean-tech and clean-energy innovations until they can tap venture capital. On Tuesday, Energy Secretary Steven Chu and Bill Gates sat down with moderator John Podesta to discuss what we need to do for a secure, prosperous energy and climate future.

Bill Gates is not just one of the world’s richest men and Microsoft co-founder; he may also be one of the world’s few people who can engage in deep dialogue on complex energy issues with Energy Secretary and Nobel laureate Steven Chu.

The two men on Tuesday tackled an exhaustive list of topics, including the long-term outlook of global energy for the world’s poorest billion people, climate change and the financing and research challenges to solving these problems. But unlike most executives-turned-philanthropists, Gates was engaged down to the fine details on the issues. This is itself isn’t surprising. The Bill and Melinda Gates Foundation has become heavily involved in many areas, including education and global health.

On Tuesday, while clearly deferring to Chu’s impressive resume, knowledge and title, Gates spoke with an authority and clarity on issues of energy innovation, climate change, politics and public perception, geo-engineering and energy storage, among others. If his view could be boiled down to one sentence, it might be this less wonky sentiment: “It’s crazy how little we’re funding this energy stuff.”

Gates’ investment includes being chairman of nuclear startup TerraPower as well as a continuing advocate of nuclear’s worldwide promise as a ready source of baseload energy. His basic argument is compelling, and one shared by Chu and others: The U.S. (and world) need baseload power sources that are carbon-free, and nuclear is our best available scalable option. A Department of Energy tweet noted approvingly this paraphrase from Gates: “It’s not currently as cheap as coal, but there are designs on paper that can compete.” And cost isn’t locked in, he says. “There’s no inherent reason why nuclear needs to be expensive.”

It’s not just cheapness that has boosted nuclear’s profile. Gates and Chu both noted the importance of supercomputers in testing nuclear designs to a far greater extent than was possible with live simulations. However, Gates said he cannot guarantee that when the time comes, TerraPower will site a pilot plant in the U.S.

Where Gates’ long-term global planning and ARPA-E’s mission converge is on the need for short-term funding as a lifeline for the research that may yield the scalable answers we need. “The role of ARPA-E was…short-term funding. Just push it over the bump” until private funding takes over, Chu said. In their vision, a stable regulatory setting – Gates favors a long-term carbon tax – will ensure certainty for investors to take on risk, while ARPA-E and similar programs can flood the market with many companies testing many potential technological breakthroughs.

In the meantime, patience is needed. Gates discussed about how it can take decades to truly overhaul energy systems, and how public and legislative impatience and lack of understanding can hurt all funding. “I do worry that people think … that people underestimate the difficulty of getting the breakthroughs and that they underestimate how long it will take.”

The danger isn’t just in public misconception, Gates said. “If we underestimate how hard it is, that’s how we can end up underfunding the kind of innovative work that needs to go on.”