Bill Gates will lead a coalition of billionaires and institutional investors to quicken the pace of private sector investment in clean energy.
Bill Gates is initially joined by Jeff Bezos, founder of Amazon, Virgin Group founder Richard Branson, Jack Ma, executive chairman of Alibaba, Mark Zuckerberg of Facebook, Ratan Tata of Tata Sons and other billionaires from 10 countries. The University of California is the sole institutional investor.
The coalition is based on the principle that technology will solve our global energy issues. The coalition will be a public-private partnership between governments, research institutions and investors.
Earlier this year, Gates announced he would invest $1 billion of his private fortune in clean energy in the next five years. Gates has also talked about energy poverty in recent years, suggesting that some of the investment could go to distributed solutions that bring modern energy access to the more than one billion people who live without it. The time is ripe, as off-grid solar solutions have begun to proliferate and become a profitable business.
The coalition did not give a specific figure for investments to come, but rather it will work with countries that have signed on to Mission Innovation, an initiative that was also announced in Paris. Twenty countries, including the U.S., India and China, have committed to double their respective clean energy research investment in the next five years.
“The existing system of basic research, clean energy investment, regulatory frameworks, and subsidies fails to sufficiently mobilize investment in truly transformative energy solutions for the future,” the coalition wrote in its mission statement. “We can’t wait for the system to change through normal cycles.”
The group aims to invest broadly across electricity generation and storage, transportation, industrial use, agriculture and energy system efficiency. Although this is the most high-profile announcement, there have been a flurry of announcements that seek to increase the role of private investors to accelerate clean tech and move early stage companies beyond the Valley of Death, where technology fails to commercialize due to investment barriers.
Far before leaders convened in Paris this week, President Obama secured more than $4 billion from investors for clean energy this past summer. A new organization, PRIME Coalition, is trying to lower the barriers for philanthropists and institutional investors to invest billions in clean tech.
Change is already coming in many countries as the cost of solar and wind energy reaches cost parity with traditional fossil fuels. It will likely not just be wind, solar and energy storage that receive attention and dollars. Many of the investors in Breakthrough Energy Coalition have financially backed or expressed interest in next-generation nuclear energy.
“The renewable technologies we have today, like wind and solar, have made a lot of progress and could be one path to a zero-carbon energy future,” Gates wrote on his blog. “But given the scale of the challenge, we need to be exploring many different paths—and that means we also need to invent new approaches.”
Although energy is underfunded by governments compared to healthcare or defense, there is a need for a new way of doing business that goes far beyond just energy research and development, as the coalition’s mission statement alluded to by mentioning regulatory frameworks and subsidies.
The entrenched utility industry is notoriously slow to change in many regions of the world. Additionally, fossil fuels still receive the lion’s share of subsidies globally, about $550 billion in 2013, according to the International Energy Agency.
The Breakthrough Energy Coalition will have to fund not only breakthrough energy solutions, but push for breakthrough energy policies that allow for technologies to quickly be deployed as they are developed.