05/06/11 11:44am

Article By: Joseph Romm

Is there any super-rich tech geek who knows less about WTF he is talking about than Bill Gates?  Bizarrely, he keeps dissing technology deployment as a source of innovation, even though that’s how he innovated and got rich (see below).

Even more bizarrely, Gates loves nuclear power because … wait for it … there’s been no innovation.  He just said at the Wired business conference:

“The good news about nuclear is that there has hardly been any innovation. The room to do things differently is quite dramatic”

Seriously.  That must hold the record for trying to make lemonade out of lemons. It is certainly possible to believe that the lack of innovation in nuclear power is due to, oh, I don’t know, businesses simply sleeping on the job for the past 30 years.

Or perhaps there is another reason, as a 2010 paper argued (see Does nuclear power have a negative learning curve? ‘Forgetting by doing’? Real escalation in reactor investment costs):  “It may be more productive to start asking whether these trends are not intrinsic to the very nature of the technology itself: large-scale, lumpy, and requiring a formidable ability to manage complexity in both construction and operation.”

But it isn’t enough for Gates to tout his big brilliant bet on nukes — “In recent years [Gates] has invested hundreds of millions in nuclear energy start-ups” – or for him to bet big on geo-engineering.  No, he has to attack energy efficiency and solar PV:

“Can we, by increasing efficiency [technologies], deal with our climate problem?” he asked. “The answer there is basically no, because the climate problem requires more than 90 percent reduction of C02 emitted, and no amount of efficiency improvement is enough.”

Gates loves to bash efficiency (see here), but who ever said it would solve the problem by itself?  It’s sad to see him once again psuh the straw man argument that somehow because any one technology can’t solve the problem, it somehow deserves to be singled out for criticism.

There is certainly no realistic possibility that nuclear power could even be half of the answer. It would be incredible if it were ultimately, say 1/4 of the answer (about 3 out of the 12-14 wedges needed in the full global warming solution).  Even one-wedge of nuclear wouldn’t be easy (see here).

In fact, as experts like Saul Griffiths have shown, without aggressive efficiency and conservation and dematerialization, it is implausible we can solve the climate problem.  The International Energy Agency [IEA] report takes a similar view (see here).

Efficiency can play a huge role — at far lower cost than nuclear (see McKinsey must-read: U.S. can meet entire 2020 emissions target with efficiency and cogeneration while lowering the nation’s energy bill $700 billion!).

What’s doubly absurd is that Gates understands we need a 90% reduction in CO2 — although he doesn’t give the time frame and in other venues he seems to lack urgency (see Annual Letter from Bill Gates silent on climate change).

In any case, we ‘only’ need a 50% reduction globally by 2050 (and 90% by 2100) to stabilize at around 450 ppm.  We do need more like 90% by 2050 to get to 350 ppm.

But if you want to get that kind of reduction, then you must have aggressive deployment.  In releasing its 2009 Energy Outloook, the IEA’s executive director said, “The message is simple and stark: if the world continues on the basis of today’s energy and climate policies, the consequences of climate change will be severe.”  They explain, “we need to act urgently and now. Every year of delay adds an extra USD 500 billion to the investment needed between 2010 and 2030 in the energy sector”.

But in Gates-land, those costs don’t matter because in direct contradiction to every major independent analysis, Gates thinks we simply have nothing to deploy:

“The solutions that work in the rich world don’t even come close to solving the [energy] problem.  If you’re interested in cuteness, the stuff [solar panels] in the home is the place to go. If you’re interested in solving the world’s energy problems, it’s things like big [solar projects] in the desert.”

Well, I’m as big a booster of big concentrated solar thermal power in the desert as anyone, but large-scale deployment of those cute home solar panels has been bringing down the cost sharply and is likely to achieve unsubsidized grid parity in many places within the decade.  This is simply an ignorant statement by Gates.

And speaking of ignorant statements, here’s more from Gates:

Over 90 percent of subsidies are on deploying technology and not on R&D. You can buy as much old technology as you want, but you won’t get breakthroughs which only come out of basic research.

It is absurd to claim that breakthroughs come only out of basic research.  I ran (and co-ran) DOE’s billion-dollar Office of Energy Efficiency and Renewable Energy in the mid-1990s.  We didn’t do much basic research — DOE’s Office of Energy Research did — but we achieved what people would call “breakthroughs” though most of those would be far better described as major advances in innovation.  As I’ve pointed out many times, genuine game-changing breakthroughs are rare (see “The breakthrough technology illusion“).

The R&D-centric strategy raises this question:  What are the chances that multiple (4 to 8+) carbon-free technologies that do not exist today can each deliver the equivalent of 350 Gigawatts baseload power (~2.8 billion Megawatt-hours a year) and/or 160 billion gallons of gasoline cost-effectively by 2050? [Note -- that is about half of a stabilization wedge.] For the record, the U.S. consumed about 3.7 billion MW-hrs in 2005 and about 140 billion gallons of motor gasoline.

Put that way, the answer to the question is painfully obvious: “two chances — slim and none.”

IS GATES A HYPOCRITE?

After Gates put out his first piece dissing energy efficiency and action, I wrote a critical analysis.  A couple of technologists wrote to point out how hypocritical Gates was to push innovation-through-big-government-R&D, given that he has long been touting innovation-through-deployment for his own industry.

As recently as two (!) years ago in a Carnegie Mellon speech, Gates argued:

But Paul Allen and I thought, okay, we’ll do software. We’ll build a platform, and encourage other people to write software. Now, there was an assumption there that we could get millions of machines out, because, after all, if you want to make it economic to spend tens of millions developing software, and sell it for $100 or so, you’ve really got to get that base out there.

But because we made that bet, and we got that going, it became a virtuous cycle. That is, as more machines would sell, it created the market for a broader range of software, and that further drove the market for the machines, and in fact that volume allowed the price of the machine to come down. And that’s why from 1975 onward, that personal computer market actually not only became significant, it actually become the center of the entire computer industry.

The large machines we use today, and the big server farms, or corporate data servers, these are all based on the Windows PC architecture which, because of its volume, has come down in price, and improved in performance very, very dramatically. And so we have a large software industry.

Precisely.

One technologist (who wants to remain anonymous) wrote:

The man built his career on shipping “what we have now” and then improving it, using programmers paid out of the revenues gained from shipping not-quite-yet-ready product.  Not once cent of Big Government R&D Breakthrough Command Economy directly flowed to Microsoft.  To be fair, big government R&D did lead to things like the integrated circuit and the Internet, both of which had something to do with enabling Bill’s fortune.  His business strategy for his entire life was antithetical to the Lomborg nonsense “don’t do anything until the Big Research Lab In The Sky Makes It Perfect.”

We simply don’t have the time to wait for Gates’ multiple “Energy Miracles,” and Gates simply hasn’t proposed the best strategy to achieve his wish — dramatic improvement in performance and a sharp drop in price.

The time to act — to deploy — is now.

WHY DEPLOYMENT NOW COMPLETELY TRUMPS RESEARCH

How do we achieve rapid cost reduction in low-carbon technologies, as Gates suggests he wants?

A major 2000 report by the International Energy Agency, Experience Curves for Energy Technology Policy has a whole bunch of experience curves for various energy technologies. Let me quote some key passages:

Wind power is an example of a technology which relies on technical components that have reached maturity in other technological fields…. Experience curves for the total process of producing electricity from wind are considerably steeper than for wind turbines. Such experience curves reflect the learning in choosing sites for wind power, tailoring the turbines to the site, maintenance, power management, etc, which all are new activities.

Or consider PV:

The experience curve shows the investment necessary to make a technology, such as PV, competitive, but it does not forecast when the technology will break-even. The time of break-even depends on deployment rates, which the decision-maker can influence through policy. With historical annual growth rates of 15%, photovoltaic modules will reach break-even point around the year 2025. Doubling the rate of growth will move the break-even point 10 years ahead to 2015.

Investments will be needed for the ride down the experience curve, that is for the learning efforts which will bring prices to the break-even point. An indicator for the resources required for learning is the difference between actual price and break-even price, i.e., the additional costs for the technology compared with the cost of the same service from technologies which the market presently considers cost-efficient. We will refer to these additional costs as learning investments, which means that they are investments in learning to make the technology cost-efficient, after which they will be recovered as the technology continues to improve.

Here is a key conclusion:

… for major technologies such as photovoltaics, wind power, biomass, or heat pumps, resources provided through the market dominate the learning investments. Government deployment programmes may still be needed to stimulate these investments. The government expenditures for these programmes will be included in the learning investments.

Obviously government R&D, and especially first-of-a-kind demonstration programs, are critical before the technology can be introduced to the marketplace on a large scale — and I’m glad Obama had doubled spending in this area. But, we “expect learning investments to become the dominant resource for later stages in technology development, where the objectives are to overcome cost barriers and make the technology commercial.”

We are really in a race to get technologies into the learning curve phase: “The experience effect leads to a competition between technologies to take advantage of opportunities for learning provided by the market. To exploit the opportunity, the emerging and still too expensive technology also has to compete for learning investments.”

In short, you need to get from first demonstration to commercial introduction as quickly as possible to be able to then take advantage of the learning curve before your competition does. Again, that’s why if you want mass deployment of the technology by 2050, we are mostly stuck with what we have today or very soon will have. Some breakthrough TILT in the year 2025 will find it exceedingly difficult to compete with technologies like CSP or wind that have had decades of such learning.

And that is why the analogy of a massive government Apollo program or Manhattan project is so flawed. Those programs were to create unique non-commercial products for a specialized customer with an unlimited budget. Throwing money at the problem was an obvious approach. To save a livable climate we need to create mass-market commercial products for lots of different customers who have limited budgets. That requires a completely different strategy.

The vast majority — if not all — of the wedge-sized solutions for 2050 will come from technologies that are now commercial or very soon will be. And federal policy must be designed with that understanding in mind. The IEA report concluded:

A general message to policy makers comes from the basic philosophy of the experience curve. Learning requires continuous action, and future opportunities are therefore strongly coupled to present activities. If we want cost-efficient, CO2-mitigation technologies available during the first decades of the new century, these technologies must be given the opportunity to learn in the current marketplace. Deferring decisions on deployment will risk lock-out of these technologies, i.e., lack of opportunities to learn will foreclose these options making them unavailable to the energy system.…

 

Deployment, deployment, deployment, R&D, deployment, deployment, deployment.

Sadly for U.S. competitiveness, if we don’t deploy, others will, especially China, and whatever modest amount of R&D the anti-federal-investment conservatives let us do will merely result in manufacturing success down the line in countries that have a robust domestic market.

h/t Treehugger

This is a cross-post from Climate Progress.

Dr. Joseph Romm is the editor of Climate Progress and a Senior Fellow at the Center for American Progress. 

Original Post: http://climateprogress.org/2011/05/05/bill-gates-efficiency-cute-solar/