The Global Community for Sustainable Energy Professionals
On the energy vision of Bill Gates
In an interview appearing in MIT Technology Review by Editor-in-chief Jason Pontin last August, Bill Gates criticized the systems of feed-in tariffs and tax rebates for renewable energy. It was his opinion that taxpayer’s dollars would be better spent on research. As could be expected, the interview provoked a firestorm of controversy and many heated discussions are still ricocheting around the Internet regarding his position.
Ugo Bardi from the Oil Drum wrote a rebuttal in defence of feed-in tariffs, arguing that they are, at the very least, result driven, something which cannot be said of research grants. 'The proof of the pudding is in the eating', he wrote and he rightly cites the rapid development of renewables in recent years — both in total power installed and efficiency — as the direct result of the feed-in system.
Among the many reactions Bardi’s article received, a few readers from high-tech companies noted that we obviously need both: research grants to stimulate innovation, and some other kind of support — preferably a result-driven system like feed-in tariffs — to bridge the gap with the mass market. They criticize Gates for not realizing that 'research is a useless orphan without volume production'.
Do we need to send Bill Gates a copy of Geoffrey A. Moore’s marketing classic Crossing the Chasm?
It’s the size of the challenge
Since this type of public debate often tends to become fuzzy or drift away from what was actually said, I went back and reread what Gates was originally quoted as saying. In spite of his critic’s ripostes, what I discovered was that his main point was not to attack the principle of feed-in tariffs, but rather the sheer size of the challenge to decarbonize our energy supply:
'It is disappointing that some people have painted this problem as easy to solve. It's not easy, and it's bad for society if we think it is, because then funding for R&D doesn't happen.'
And on the limited potential of the currently available technologies:
'Even in the most optimistic case, if the U.S. is cutting its energy intensity by a factor of two, to get to European or Japanese levels, the amount of increased energy needed by poor people during that time frame will mean that there's never going to be a year where the world uses less energy. The only hope is less CO2 per unit of energy. And no: there is no existing technology that at anywhere near economic levels gives us electricity with zero CO2.'
Are renewables mature enough for the mass market?
Every product innovation requires at least two consecutive phases of investment: a first one for research and development, and a second one for 'crossing the chasm'; that is, bridging the gap between the early adopters and the mass market.
It does not make sense to throw government money into market deployment if the renewable technologies are not ready to reach the goal the government is aiming at, namely decarbonizing the entire economy. Renewable energy technologies are 'market ripe' in the sense that they can economically make up a limited share in the energy supply. But government measures are not taken to merely achieve a limited increase in diversification of the energy supply. Their objectives, of necessity, must reach much further, and this, in Gates’ opinion, is unrealistic given the current state of technology. His conclusion therefore is that we need to stimulate research first to take renewable technologies to another level of efficiency and operability, before worrying about market deployment.
This is a position you can agree with or not, but it is certainly a much more sophisticated position than the plain either/or question of which is the most effective: research grants or feed-in tariffs.
If the proof is indeed in the eating, then despite years of feed-in tariffs in many countries, most renewable energy projects can still not stand on their own feet. The chasm that needs to be crossed seems almost endlessly broad. And that raises the question: is this a sign of an immature product?
Or does it only mean that we need to abolish all kinds of hidden subsidies for fossil fuels and tax them according to their externalities, i.e. their environmental impact and other damage to society?
The context asked for quick results
Even if you accept the Gates analysis as valid, can you blame governments for their renewable energy politics, given the context in which the decisions are almost invariably taken? Climate change became a hot topic in short time, and people everywhere were demanding that something needed to be done. Many countries were required to take immediate action after the ratification of the Kyoto Protocol. While research generally works internationally and on the longer term, results were being demanded on a local level and in the short term. 'What has your government done for climate change lately?' was the question politicians were facing. Within this context, feed-in tariffs and/or green certificates proved to be successful, if somewhat pacifying, measures.
Renewables have become mainstream
And there is at least one success for which you can give the prevailing support systems credit: renewable energy has come out of its niche, creating a large community of believers. A decade ago, renewables were still called 'alternative energy', while today they have become a mainstream product that is part of everyday life — in personal as well as business life.
As long as this awakening belief is not crushed through a complete collapse of the renewable energy industry, this is an important achievement. Maintaining feed-in tariffs for a much longer span certainly appears difficult in the current financial context. But to avoid a total collapse, it may be wiser for governments to cut back on incentives gradually rather than precipitously. Accepting the validity of the Gates' analysis should not be taken as a license to abolish the feed-in tariffs from one day to the next. Over-enthusiastic cost cutting could undo everything that feed-in tariffs have already achieved and reduce the return on the investments that have already been made.
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Comments
We have to remember that Bill Gates is an aspiring monopolist who understands how to benefit by concentrating power in a centralized organization, as opposed to the founders of Google, Facebook, Twitter and others who understand how to benefit from the dispersion of power across broad networks. Bill now wants to do for the energy industry what he did for the software industry -- concentrate power in a company that he controls. R&D spending leading to patents and concentration of power in a few companies is his business model. Distributed generation from a diversity of sources is the Google model that forced Bill to give up day-to-day management of Microsoft because he does not understand how to compete in that environment.
John Howley