THE BILL GATES INTERVIEW: An energy miracle is coming, and it's going to change the world

The most remarkable thing about meeting Bill Gates in person is beholding his mental map of the world — how advances in technology, the well-being of humanity, and the fate of our world are all intertwined.

Tech Insider met with Gates on Monday to talk about his , in which he discusses the balance of bringing electricity to the billion people who don't have it and finding power sources that don't kill the earth.

"Within the next 15 years—and especially if young people get involved—I expect the world will discover a clean energy breakthrough that will save our planet and power our world," Gates says in the letter.

The head of the Bill & Melinda Gates Foundation spoke about how to make an energy miracle happen, the stakes of climate change, and what the role of the world's billionaires is in all of this.

Interview edited for clarity and length.

Drake Baer: What are the most exciting things happening right now in clean energy?

Bill Gates: A lot of it is pretty early stage. The most straightforward path would be if we could bring the cost of solar electric and wind down by another factor of say, three, and then have some miraculous storage solution, so that not only over the 24-hour day but over long periods of time where the wind doesn't blow, you have reliable energy. That's a path. But energy storage is hard. That's not a guaranteed path.

In fact, batteries haven't improved over the last 100 years as much as they would need to in order to make that happen. So I'm invested in a lot of battery companies — and there's a lot that exists I'm not in. They're all having a tough time achieving it. We need to look at less obvious paths, things like the wind in the jet stream, which is very high up. The material science of what type of kite string you would need to connect up to that. That's still at the basic research level.

That's the part where the governments have a unique role, and then when it progresses well enough, then existing companies or new startup companies should take it. In the $3 trillion a year energy market, the rewards will be quite fantastic.

At some point, that risk-taking private capital can take over, and have patents and trade secrets and things that let them lead the way, which happened with the steam engine and some other things, although with energy, the time of adoption is a lot longer than it is with, say, IT products or even medical advances, like drugs and vaccines.

Other paths would include making nuclear fission cheap enough and safe enough that people broadly embrace it, so that could be scaled up. Or, if you really could take the CO2, when you burn hydrocarbons — coal, for example — if you could really capture the carbon and sequester it — they call it CCS — if the extra capital cost, energy cost, and storage costs over time didn't make it super expensive, then that's another path that you could go down.

I could name about a dozen paths, and you'd like to have a whole bunch of research on all those paths, and then, eventually, at least four to five companies with really significant financing try and get to big scale, going down and really trying to prove it out.

It's the same way that when the car got going, people thought it would be an electric car, people thought it would be a steam car. Actually, the dark horse in that race was internal combustion, but because of the energy density of gasoline and discovery of oil in large amounts at that point in first Pennsylvania and then Texas, it won out over those other two, to the point that those other two are actually viewed as obscure footnotes in history.

Baer: Was there a moment for you when the light bulb went off, and you realized how important energy was to the world?

Gates: When I was trying to figure out why lives have improved so much in the last 300 years, where we've gone from a third of kids dying before 5 to — by 1990 it was down to 10% — now it's down to 5%. And saying why, over all history, there were smart people, but that number didn't change. Average life span didn't change. What's magical about what's been deemed the Industrial Revolution? It's really energy intensity.

When I was high school I had a vague sense of it. When I was in college I had a vague sense of it. I'd say that I didn't really start to understand it fully until I started reading Vaclav S., who has written a lot about this. David Christian, writes about this. It's energy intensification, where we essentially have, through our light bulbs and cars, the manpower of [hundreds of] people working on our behalf, helping our food being created, helping our materials like steel and plastic and wood and paper be created. Our lifestyles are incredibly energy intense.

Recently I've been studying how quickly we can get energy out to the poor countries — a lot of which are in Africa — and how little progress we've made there. There's no more electricity today in sub-Saharan Africa per person than there was 20 years ago.

The world is very disparate, in terms of the US using the most energy per person, and then the other rich countries — Europe, Japan, New Zealand — using about half of what we do, and then the world average being about a fifth of what we use, with China just now surpassing the world average.

My broad sense of this is that authors like Smil really paint the clear picture, and once you see that, it's kind of Oh, of course. That's such a primal thing to all these physical services that we take for granted.

Baer: In your letter you say you expect an energy miracle in the next 15 years. When I read that, I was like, Wow, that's bold. What are you expecting?

Gates: When I say "miracle" I mean a kind of thing like a computer on a chip, or the internet, or the cellphone, that are really quite miraculous. Most people would not have predicted them, and their effect has been very, very dramatic. In medicine, we've had a lot of miracles, and I think all of us expect and count on more.

In the next 30 years, I really do think cancer will largely be a solved problem. I think most of the infectious diseases like malaria — our foundation is very involved — once we're finishing polio eradication, then starting up this malaria eradication, and getting that done as fast as we can.

So on the demand side [for energy], there have been a variety of policies that globally have been way over $50 billion a year of tax credits, raising the price of electricity through things like renewable portfolio standards, so the total amount of money that's gone into sending a price signal to push up demand versus what would happen without it has been gigantic.

On the supply side, for innovation, you'd say, go look at those R&D budgets, and they haven't moved in the last 20 years. In the case of the US — which is the majority of R&D funding across every category you can name: health, energy, whatever — it's been about $5 billion a year from the Department of Energy.

.

Finally, assuming that many of those are fulfilled, which won't be easy in tight budget times, we're taking the supply side at the basic research level, because that's where government is absolutely fundamental.

How much further beyond basic research the role of the government should be, you could have a really good debate about it. Almost nobody would say it's zero. But that's where at least we need the private sector to play a big role. That's why we paired this announcement of the R&D [commitment] with the so-called Breakthrough Energy Coalition, which is 27 [major investors] saying, "Hey, we'll put significant money into [energy innovations] when they're ready to spin out probably into startup companies."

When I say "an energy miracle," I mean that there will be some form of energy whose 24 hour cost really is competitive with hydrocarbons given, say, 20 years of learning curve. You invent it, then you look at how much its costs go down over the next 20 years, that it really beats hydrocarbons. You might say, well, aren't people saying that about wind and solar today? Not really. Only in the super-narrow sense that the capital costs per output, when the wind is blowing, is slightly lower.

But the reason it still needs subsidies, and it can't go above a certain percentage, is this intermittency [in availability for wind and solar] — it changes the economics, particularly this requirement that the power company at all times be able to require power. That's large. At the end of the day, natural-gas peakers sit back there and get financed so that the Midwest corridor can have a huge [period] of four to five days of no wind. The peakers are running big time to make that up, because that is the swing piece that can always be turned on. (Editor's note: Natural gas peakers are power plants that run when there's a big, or "peak," demand for energy.)

Baer: You've said it will be the world's poorest who are most affected by climate change. Can you paint a picture of what that will be like?

Gates: We need to get a broader awareness. People say climate change is really bad, but painting that picture of what you're putting at risk.

First of all, there are ecosystems like coral reefs [at risk] through ocean acidification. Those are valuable things that we should protect. But humans — the first big effects will be farmers that live on the edge. Today's weather, they barely get by. Their kids, a high percentage are malnourished, and so if you impose more variable weather and more heat, you're getting more floods, more droughts, and during the germination time, the high heat, most crops...do poorly when there's more heat.

Maize, rice, wheat — all have heat sensitivity. Sorghum is kind of unusual. It can go to very high heats, but it's not as productive in most environments as maize is. So we need to help those poor farmers out.

Over 80% of the poor are people who have small plots of land and grow their own food and they don't grow enough to sell much into the marketplace. So they will be hit hard by the worst in climate. They really get hit hard starting in the 20-year time frame and thereafter.

Then, depending on how quickly you get ocean rise, you have people who live in river deltas [at risk]. Bangladesh is largely a river delta, and the rising sea level means that when storms come in, the human sanitation is backing up, the ability to farm, it's destructive-type situations like you saw in New Orleans with Katrina. You're increasing the frequency of that stuff in low-lying areas fairly dramatically.

Now, if you're rich, you can spend a lot of money, Netherlands-style, and reduce that. But Bangladesh or parts of India, like Calcutta, they just simply won't be able to afford that kind of protection.

Baer: Can billionaires save us in this situation?

Gates: Billionaires should never be responsible for solving problems, because they're not the government.

The government is there day in and day out, if you want all kids to have education, if you want to run courts, if you want to have an army, if you want to have roads, you've got to have the taxation system that funds everything that you expect.

The only role other than paying their taxes, whatever those are, the only role for philanthropy broadly — of which the rich should give disproportionately — the more, the better — and I think there is a positive trend in that direction — there are certain risk-taking things, like trying out a new type of charter school or funding a new kind of medicine. The government's ability to select scientists and pick things that are fairly strange, because politicians don't like failures. They're only in office a short term, and many of these things take a long time.

For philanthropy, although it's tiny compared to the government, it's 2% of the US economy, which is the largest percentage, other than the Middle East. There are economies like China's economy where it's less than a tenth [of a percent] today, although it is growing, is quite small, because of the notion that the government takes care of everything, and Europe and China, philanthropy has not been nearly of the same scale.

But if you think of global public goods like polio eradication, that kind of risk-taking new approach, philanthropy really does have a role to play there, because government doesn't do R&D about new things naturally as much as it probably should, and so philanthropy's there. That doesn't mean with the day in, day out things that you want to make sure get delivered to everyone that you should create a dependency. It's not big enough and it's not reliable enough.

Baer: To bring it back to the US, does the US have the right political priorities to deal with energy?

Gates: The US spends more on energy R&D than all other countries put together, and I personally consider it quite inadequate. In fact, I would have said we should more than double it, if I thought the absorptive capacity could scale up and if it was actually possible to get to that level. I think given all the different imperatives — getting energy to Africa, security of energy, climate change, that we should be spending half as much as we spend on health, which will get you all the way up to $15 billion — the health people don't like it when things get compared to their number.

The US in some ways has been the best. Who figured out shale gas? Although that wasn't a good thing [for CO2 levels], it was very innovative. It's led to low-cost energy. Who figured out nuclear power? Largely the United States. Once you get past the steam engine, which is mostly British, then the US has been at the center of most of the energy things that have happened.

You say, what are the top 20 universities in the world that do good materials research that might create carbon fibers to do jet stream kites or new magnets that will allow [energy] generation to be done up there and you just bring the electricity down. You either have to bring down rotational energy, which is hard, or you have to have the generator up there and bring down the electricity. Well, putting the generator up there is hard to do because it's too heavy.

Anyway, the US, as in most issues, is the best, has the best capability to lead, and really needs to lead. It doesn't [mean] that other countries won't pick different tacks and emphasize different things. In aggregate, they're almost half of the energy R&D. Europe, China, Japan — it's very important that they come along and contribute to these things.

The US really has to get out in front. We are the biggest per person, by a substantial amount, greenhouse emitters, and we give the most foreign aid, not per person but in absolute. This is another issue where hopefully we will take a long-term approach which, even though we sometimes have a hard time doing that, it's easier for us, as a rich country with this kind of scientific depth, than it is for the poor countries who will suffer the problems.