Gates Leads Global Billionaires in Clean Energy Investment Pledge

In a bid to build momentum toward meaningful action on global climate change, Bill Gates announced a new coalition of global billionaires to back companies commercializing clean energy innovations. Those innovations would be achieved through government research and development funding, which 20 nations pledged to double in a related move.

The Breakthrough Energy Coalition, announced as climate talks get under way this week in Paris, includes a who’s who of tech executives and investors from around the globe. In addition to Microsoft co-founder Gates, the Coalition includes Amazon founder and CEO Jeff Bezos, Alibaba Group executive chairman Jack Ma, Facebook founder and CEO Mark Zuckerberg, and about two dozen others.

At its core, the Coalition believes that new technologies are needed to confront the challenge of powering the world in a way that doesn’t dramatically change it—which is to say with no carbon emissions. It’s a position Gates himself has articulated previously, and backed with investments in companies such as Bellevue, WA-based TerraPower, which is seeking to reinvent nuclear energy, and Sapphire Energy, a San Diego developer of algae-based biofuel technology.

The Coalition, which involves big names and presumably big dollars—though specifics are still to be determined—would complement a new commitment by 20 national governments to double research and development funding for clean energy over the next five years. Mission Innovation, as it’s called, includes the U.S., China, India, Brazil, Saudi Arabia, and 15 other countries that currently provide more than 80 percent of research and development funding for clean energy.

The U.S. government, for example, provides some $5 billion annually in clean energy R&D, according to a White House blog post on Mission Innovation. That doesn’t include state-level efforts, such as Washington state’s $40 million Clean Energy Fund II, which focuses on clean energy deployment.

While some may argue that clean energy technologies such as solar are already sufficiently developed and now need to be broadly deployed, Gates and the
Breakthrough Energy Coalition suggest otherwise.

“The urgency of climate change and the energy needs in the poorest parts of the world require an aggressive global program for zero-emission energy innovation,” the Coalition says in a statement of principles. “The new model will be a public-private partnership between governments, research institutions, and investors. Scientists, engineers, and entrepreneurs can invent and scale the innovative technologies that will limit the impact of climate change while providing affordable and reliable energy to everyone. 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. We can’t wait for the system to change through normal cycles.”

The Coalition would pick up where government research and development funding leaves off.

“The private sector knows how to build companies, evaluate the potential for success, and take the risks that lead to taking innovative ideas and bringing them to the world,” the Coalition says. “But in the current business environment, the risk-reward balance for early-stage investing in potentially transformative energy systems is unlikely to meet the market tests of traditional angel or VC investors—not until the underlying economics of the energy sector shift further towards clean energy.”

The Coalition represents “a different kind of private investor with a long term commitment to new technologies who is willing to put truly patient flexible risk capital to work. These investors will certainly be motivated partly by the possibility of making big returns over the long-term, but also by the criticality of an energy transition. Success will provide the economic proof points necessary for the mainstream market-driven clean energy economy required for our planetary future.”

Specifically, the Coalition will make “seed, angel, and Series A investments with the expectation that once these investments are de-risked, traditional commercial capital will invest in the later stages.”

It will back both core and enabling technologies (those that offer dramatic improvements in efficiency, scalability, or cost) in several sectors, including electricity generation and storage; transportation; industrial use; agriculture; and energy system efficiently.

The Coalition pledged to put more meat on the bones of its plans over the next year, so stay tuned.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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