Last week, I was in New York for a conversation with Warren Buffett at Columbia University.
When I first started learning about climate change 15 years ago, I came to three conclusions. First, avoiding a climate disaster would be the hardest challenge people had ever faced. Second, the only way to do it was to invest aggressively in clean-energy innovation and deployment. And third, we needed to get going.
Since then, an influx of private and public investment has accelerated innovation faster than I dared hope. This progress makes me optimistic about the future.
But I am also realistic about the present. The world still needs to reduce annual greenhouse gas emissions from 51 billion tons to zero, but global emissions continue to increase every year. If you follow the annual IPCC reports, you’ve watched as the scenarios for limiting the global temperature rise to 1.5 or even 2 degrees Celsius become increasingly remote. And some of the clean technologies we need are still very far from becoming practical, cost-effective solutions we can deploy at scale.
In the past decade, we finally got going. Over the next three, we need to go much further, much faster. I still believe we can avoid a climate disaster—if we devote the next generation to mobilizing the largest crisis response in human history.
To understand what it will take to get to zero, we need to start by asking where the 51 billion tons of emissions come from. Unfortunately, the answer is everything and everywhere.
Everything: Virtually every human activity produces greenhouse gas emissions. People automatically think of electricity, where there’s a path to zero because wind and solar are now cheaper than fossil fuels. But electricity accounts for only 26 percent of global emissions. Similarly, lithium-ion batteries have made it possible to see a net-zero future for car travel. But cars account for less than half of the transportation sector’s 16 percent of emissions. Lithium-ion batteries don’t do much about the emissions from long-distance travel in airplanes, cargo ships, and heavy-duty trucks.
Agriculture and buildings account for 21 and 7 percent of emissions, respectively. The sector with the most emissions, 30 percent of the total, is manufacturing—making the things that modern life depends on, like cement, plastic, and steel. There are currently no cement plants in the world, and exactly one steel plant, that don’t produce CO2.
So, if you are reading this over lunch on a plastic device in your climate-controlled concrete-and-steel office building that you took a bus to get to, you begin to see how more or less every aspect of our lives contributes to the problem.
Everywhere: More than 70 countries have committed to reaching net zero, including big polluters like the United States and the European Union. Even if the US and Europe get there, however, we won’t have solved the problem. Three-quarters of the global population lives in emerging economies like Brazil, China, India, and South Africa, and although historically they played a very small role in causing climate change, they are now responsible for two-thirds of total greenhouse-gas emissions. China by itself emits more than one quarter. So solutions can’t be dependent on unique conditions in a single country or region. They have to work in all countries, or the temperature will continue to rise.
Thinking globally instead of nationally reveals why we can’t solve climate change simply by using less energy. Low- and middle-income countries are building aggressively to achieve the standard of living their people aspire to—and they should be. Many countries in Europe and North America filled the atmosphere with carbon to achieve prosperity, and it is both unrealistic and unfair to expect everyone else to forgo a more comfortable life because that carbon turned out to change the climate.
The solution to the everything, everywhere challenge is three-fold. First, we have to invent clean technologies to replace every emissions-intensive process we use today: a new way to make steel, to power airplanes, to fertilize fields.
Second, we have to drive the cost of new clean technologies down so they can compete, not just in rich countries but in all countries. I call the difference in price between any current technology and the clean alternative the “Green Premium,” and it’s the key to how I see the world avoiding a climate disaster. Green Premiums need to be near, at, or below zero. As long as clean cement costs twice as much as traditionally manufactured cement, for example, the vast majority of buyers simply won’t choose it.
The third part of the solution is deploying these cost-competitive technologies, fast. We have to replace every single piece of infrastructure dedicated to doing things the old way with infrastructure dedicated to doing things in a new way—and that doesn’t happen instantly, especially considering the mind-boggling scale of the job.
For example, there are currently 2,412 coal-fired power plants in the world, and that number is still going up. Every single one of those plants will have to be replaced. Or zoom in and consider just a single oil field, Hebron-Ben Nevis off the coast of Newfoundland. It will operate continuously for 30 years, employ hundreds of people, and cost $7 billion—and all that time, labor, and money will produce enough oil to last the world just eight days.
We use so much energy, and we have invested so much in the machinery to generate it. Now, in the span of about 30 years, we have to decommission it all and start over again with clean technologies. I have more confidence in markets than many other people, but even I don’t think the market by itself can press reset on an entire economy in just a few decades. We need a plan to speed the process up.
A lot has changed since the COP 21 meeting in 2015 in Paris, where 22 governments launched an initiative called Mission Innovation. Since then, public funding for climate-related research and development (R&D) has increased by almost a third.
The private sector is investing in climate more than ever
At that same event, I was part of a group of investors that launched Breakthrough Energy Ventures, a climate-focused venture capital fund that now has more than 100 clean-energy companies in its portfolio. Meanwhile, other venture funds are making more investments in the sector. In the past two years, VCs have put approximately $70 billion into more than 1,300 clean-energy start-ups.
As a result of this activity, R&D pipelines are finally filling up. Take long-duration energy storage. Many renewable sources of energy—specifically solar and wind—are intermittent: not always on. But we still need to be able to generate power on demand, so we need to store it when the sun is shining and the wind is blowing and use it even when they aren’t.
BEV is funding multiple companies developing different approaches to long-duration energy storage, because we don’t know which one will work best. For example, Ramya Swaminathan’s start-up, Malta, converts electricity into heat, which is stored in molten salts, and cold, which is stored in an anti-freeze solution—and converts them back into electricity when needed. Form Energy, founded by Mateo Jaramillo, stores electricity in what is known as an iron-air battery that converts iron into rust and then reverses the process on demand. The pipeline in other key sectors is similarly diverse.
Established companies have also recently started shifting investment and expertise dramatically to meet net-zero commitments. In 2016, only 21 companies had issued climate targets. Now, that number is 3,671. Breakthrough Energy’s Catalyst program is partnering with airlines, carmakers, and steel companies committed to deploying clean technologies and banks and investment funds interested in financing them.
The public sector is stepping up with impactful policies
One reason for this burst of innovation is public policies that have grown more ambitious in recent years.
In the past 12 months, the U.S. Congress has passed and President Biden has signed three climate-relevant laws: the Inflation Reduction Act, the Bipartisan Infrastructure Law, and the CHIPS and Science Act. Together, they provide more than $500 billion in tax credits, loan guarantees, and other investments in the energy transition. More importantly, they will spur hundreds of new clean energy projects and mobilize trillions more in private investment, including—crucially—in what are known as demonstration projects.
Demonstration is the key to getting the Green Premiums down. The only way to optimize new technology is to take it out of the lab, build it out in the real world, and continuously improve it. This legislation not only provides funding for doing so but also creates an Office of Clean Energy Demonstrations to manage the process going forward.
For its part, the European Union enshrined net zero by 2050 into law in 2021. In the same year, it stepped up its 2030 target from a 40 percent to a 55 percent reduction (compared to the 1990 level). The specific plan to reach those targets is still making its way through the legislative process.
Unfortunately, the war in Ukraine and the energy crisis it caused are putting pressure on the growing climate consensus on the continent. Some countries have recently invested in new fossil fuel projects, which only trades one major problem for another. Ultimately, net zero and energy security are two sides of the same coin. Clean-energy innovations are the only way to achieve either one.
Humanity has never had all these raw materials in front of us before: the investment, the policy, the pipeline of innovations, the overall public awareness that climate change is a priority. In recent polling, more people around the world see climate as a major threat than any other issue. And more individuals than ever are taking productive steps to reduce their own carbon footprints, which when viewed collectively sends a powerful signal to business and government leaders that more must be done. But even with all these tools and momentum, we still have to fashion them into a comprehensive solution.
That means three things: more research, development, and demonstration; developing a fair, workable process for scaling up; and helping people adapt to the climate change that is going to happen no matter what we do now.
Research, development, and demonstration: There are still many critical clean technologies that aren’t anywhere near cheap enough to compete. We need sustainable liquid fuels for long-haul transportation; affordable ways to capture CO2 directly from the atmosphere; additional sources of renewable energy to keep up with global demand that will double or triple as we electrify more and more processes. And to fill these gaps, we need to keep doing what we’ve done well since 2015: we need to ratchet up investment in clean-energy innovation even more.
Develop a fair, workable process for scaling up: We cannot pretend an energy transition won’t be disruptive. Although new industries and jobs will appear, some old ones will disappear. New infrastructure will affect the communities where it’s built. In the past, low-income communities and communities of color have suffered disproportionately from decisions about where big infrastructure projects should go, and we cannot let that happen this time. Public policies need to ensure a just transition so that we never pit a livable planet in opposition to people’s livelihoods. Those who could experience disruption need a voice in the process.
At the same time, there must be a transition. Last year, voters in Maine blocked the construction of transmission lines needed to bring low-carbon electricity to the Northeast. Some of those transmission lines were slated to cut through farms and forests, but nevertheless we need to be able to make responsible tradeoffs in fair and transparent ways so we can go faster. The unimaginable disruptions caused by a 4-degree rise in temperature will outweigh the downsides of most clean energy solutions—and a strong community engagement process will result in better design and siting of projects.
Help people adapt: The climate has already changed dramatically, and it will continue to do so. To minimize the damage these changes cause, we also need to invest in helping people adapt to a warmer climate, rising sea levels, and less predictable weather. That means investing in crop science so that farmers can plant seeds that are more tolerant of heat, an area our foundation has been working in for years. It also means figuring out technologies like desalination to guarantee that communities will have access to clean water, and upgrading port facilities around the world to make them resilient to floods and storms. The world must use the same strategies that have incentivized innovation in mitigation technologies to start getting serious about adaptation, too. We’re expanding our approach at Breakthrough Energy to reflect this perspective.
The ultimate measure of success is global greenhouse gas emissions: we need to go from 51 billion tons a year to zero in the next three decades. But there’s also a lag when it comes to that metric. Investment in the development, demonstration, and deployment of clean technologies comes first. The drop in emissions comes second, after the Green Premium for any given clean technology gets low enough to scale up.
That is why my interim measure of success is Green Premiums. We need to get those near, at, or even below zero by 2040 for the full range of products and processes we need to replace. Progress won’t go in a straight line. There will be setbacks along the way. But if we can approach the elimination of Green Premiums, I will feel good about the long-term prognosis for the climate.
That leaves us 18 years to get from here to there. Europe and the United States, which have historically produced the vast majority of CO2 emissions, owe it to the world not only to eliminate our own emissions but to invest aggressively and get Green Premiums down. This will give other countries that didn’t have much to do with causing climate change a chance to stop emitting greenhouse gases while growing their economies and raising their standard of living.
As a father of three children, I know that 18 years is not a long time. That’s why I am asking the team at Breakthrough Energy to work with innovators and other experts in the climate community to map out rigorous 10-, 15-, and 20-year plans to drive Green Premiums down to zero. We cannot merely hope for the best. We need to design for it, together.
This is the hardest challenge people have ever faced. There has never been a mobilization of this scope, at this scale, at this speed, for this long. But humanity has also never faced an existential crisis like climate change.
I am optimistic about what people are capable of in a crisis, and in the long run, I wouldn’t bet against us. Unfortunately, we don’t have the luxury of a long run. We have already achieved many energy breakthroughs. We need to achieve more, faster, to avoid a climate disaster.