Sunny Day Fund: Why We Need to Invest In Our Shared Energy Future Now

Climate change is a global issue that threatens to impact the environmental and economic well-being of people around the planet. To mitigate its long-term impact, we need new, transformative sources of clean, affordable, carbon-free energy production that we can produce at lower costs than today’s dominant energy sources. The innovation required to fuel this transition will only occur through a joint, networked effort between all sectors of society. Governments, academic research institutions, and private investors and entrepreneurs must all play crucial and complementary roles.

That’s why I’m participating in the Breakthrough Energy Coalition alongside Bill Gates, Mark Zuckerberg, Richard Branson, Marc Benioff, John DoerrVinod Khosla, Jeff Bezos, Jack Ma, Meg Whitman, Masayoshi Son, George Soros and many other global business leaders. I applaud both Bill’s substantial capital commitment, and the leadership he’s shown in creating a network behind the Breakthrough Energy Coalition.

Our collective commitment: To work with governments around the world to accelerate research and investment in potentially transformative clean-energy technologies. As entrepreneurs and investors, we bring important skills to direct human and financial capital to maximize the chances of breakthrough success.

As history has shown many times over, aggressive and broad-based government-funded technology research can catalyze new and transformative industries, including, of course, the Internet. But as Bill notes in his recent essay on energy innovation, the U.S. government currently devotes less than 1 percent of the total it spends annually on energy to R & D – just $5.3 billion. "In the United States," Bill writes, "consumers spend more on gasoline in a week than the government spends on clean-energy research in a year."

Jason Bordoff, who heads Columbia University’s Center on Global Energy Policy at Columbia University (where I serve on the Advisory Board), emphasizes this point as well. " U.S. government investment in energy innovation has declined for decades, with energy research funding smaller than in other sectors like biotech or than in other industrialized nations," he notes in a recent CNBC commentary.

We believe governments should at least double their current levels of clean energy R & D over the next five years – and so far 20 of them have signed on to this goal.

But governments alone cannot accelerate innovation as fast as we need to accelerate it. At this week’s U.N. summit on climate change in Paris, long-term goals revolve around limiting overall global warming to 2 degrees Celsius by 2050. To even accomplish that goal – what Bill calls our "least bad option" in regard to mitigating the negative effects of climate change – the world’s most prolific carbon emitters will need to reduce their emissions by 80 percent from current levels.

While governments must increase their funding commitments for basic and applied research, we also need private investors who are ready to make bold but patient investments in early-stage companies that are taking the most promising technologies out of research labs and onto a path toward eventual commercialization.

Historically, energy innovation has been an extremely lengthy process. Hydraulic fracturing was invented in the 1940s, for example, but didn’t emerge as a major commercial source of energy production until the mid-2000s. Solar and wind have had similarly slow development trajectories. As a result of these lengthy development and implementation horizons, a "capital gap" exists in the energy industry.

Promising technologies that are ready for real-world testing and iteration but are not yet mature or risk-free enough to attract traditional investors cannot find the funding they need to survive this key stage of their development.

This is where the Breakthrough Energy Coalition will play a strategic role. Working primarily with the countries that have committed to increasing their funding of the basic research pipeline, we will be investing in selected technologies that are ready for early-stage private investment but not yet proven enough to attract investment from traditional private sources. Our plan is to invest in a wide range of novel approaches that have demonstrated a credible pathway to eventual rapid scaling.

While substantive government funding will provide the foundation for accelerating innovation, private-sector participation is equally necessary. Technologies are pioneered in lab settings, but tested, improved, and mainstreamed in commercial markets. The capital the Breakthrough Energy Coalition provides will be important. But the other resources we can draw upon – networks of talent and expertise we can tap into, experience in blitzscaling organizations from start-ups to global entities in accelerated fashion – will be just as critical.

In the Networked Age, as billions of people use digital platforms and marketplaces to connect with each other, we’re on the verge of a global entrepreneurial renaissance. But entrepreneurial energy requires actual energy. As I’ve said before, the Networked Age runs on power strips, cargo ships, and Uber trips. As developing nations continue to industrialize and grow their economies, global energy consumption will rise significantly. That will broaden prosperity and have massively positive benefits for everyone.

To ensure the best possible outcomes for all, we need to develop clean energy technologies that can help us rapidly decarbonize our economies. It’s a substantial challenge, but so too are the resources we can collectively draw upon to address it. In the Networked Age, we have new capacities to pool resources and share knowledge and expertise. We can test and iterate with tremendous speed. And once we identify technologies, products, and solutions with real-world viability, we can accelerate global adoption much more rapidly than we were able to do so in a less connected world. 

But our quest for large-scale, reliable, affordable, and carbon-free energy will only succeed if governments and the private sector work together in distributed but collaborative fashion. For that reason, I encourage more countries to embrace the goals outlined at Mission Innovation, and more business leaders to support our efforts at the Breakthrough Energy Coalition. The Networked Age creates part of the problem, as globalization brings prosperity and economic activity to the entire world. Working together, the Networked Age can also bring the solution through collaboration on new technologies and commercial initiatives. The investments we make in this realm now can power the way toward a prosperous, secure, and sustainable future for future generations across the planet.

This article was originally published here on December 8, 2015

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