As I mentioned in the above article, I am encouraged by the recognition of climate change and the need for governments to take action to address it through the Paris Climate Accord reached at the end of 2015. Government actions, such as establishing energy efficiency standards or related mandates, and providing temporary incentives and funding of research and development (R&D), are essential to bringing new, low-carbon technologies to scale.
Renewable energy and efficient technologies often require upfront capital investments such as equipment or R&D, and may be too expensive to compete with existing forms of energy until they reach a scale that optimizes cost efficiencies. This state is often referred to as the “valley of death.” Well-designed incentives or regulations have helped these industries overcome this valley of death and achieve price parity (or better in some cases) with conventional, carbon-intensive sources of energy such as coal and fossil fuels.
With scale and technology advances, solar prices have dropped by more than 80 percent, wind turbines by 20–40 percent, and LED bulbs (that are 80–85 percent more energy efficient than traditional incandescent bulbs) by 85 percent since 2008. These drops have been made possible by targeted, short-term incentives. For example, a U.S. federal tax credit of 30 percent that’s available for residential solar systems and businesses until it expires on December 31, 2016 has contributed to the recent growth in solar energy by making production costs more affordable.
Unfortunately, these advances, and the limited government incentives available thus far, have not been enough to accelerate the transition to a low-carbon economy at the pace we require. We are at a point where we need new technologies that can be brought to scale in a relatively short time period.
To address the immediate need for new technologies, 20 countries representing 80 percent of global clean energy R&D budgets have committed to doubling their R&D investments over the next five years through Mission Innovation, a global initiative that was launched in Paris last month.
The independent Breakthrough Energy Coalition (the Coalition) is even more innovative and tremendously helpful. The Coalition is a group of 28 influential investors (including Bill Gates, George Soros, Sir Richard Branson, and Ratan Tata) who are committed to providing early stage capital for promising energy solutions to enable them to reach a sustainable scale.
The Coalition will help innovators working on new technologies in the countries that sign up for Mission Innovation to overcome the valley of death. The success of these investments should be high, given the Coalition’s expertise in long-term investments and innovation. The priorities set by the Coalition for their investment strategies look promising:
Renewable energy and efficient technologies often require upfront capital investments such as equipment or R&D, and may be too expensive to compete with existing forms of energy until they reach a scale that optimizes cost efficiencies. This state is often referred to as the “valley of death.” Well-designed incentives or regulations have helped these industries overcome this valley of death and achieve price parity (or better in some cases) with conventional, carbon-intensive sources of energy such as coal and fossil fuels.
With scale and technology advances, solar prices have dropped by more than 80 percent, wind turbines by 20–40 percent, and LED bulbs (that are 80–85 percent more energy efficient than traditional incandescent bulbs) by 85 percent since 2008. These drops have been made possible by targeted, short-term incentives. For example, a U.S. federal tax credit of 30 percent that’s available for residential solar systems and businesses until it expires on December 31, 2016 has contributed to the recent growth in solar energy by making production costs more affordable.
Unfortunately, these advances, and the limited government incentives available thus far, have not been enough to accelerate the transition to a low-carbon economy at the pace we require. We are at a point where we need new technologies that can be brought to scale in a relatively short time period.
To address the immediate need for new technologies, 20 countries representing 80 percent of global clean energy R&D budgets have committed to doubling their R&D investments over the next five years through Mission Innovation, a global initiative that was launched in Paris last month.
The independent Breakthrough Energy Coalition (the Coalition) is even more innovative and tremendously helpful. The Coalition is a group of 28 influential investors (including Bill Gates, George Soros, Sir Richard Branson, and Ratan Tata) who are committed to providing early stage capital for promising energy solutions to enable them to reach a sustainable scale.
The Coalition will help innovators working on new technologies in the countries that sign up for Mission Innovation to overcome the valley of death. The success of these investments should be high, given the Coalition’s expertise in long-term investments and innovation. The priorities set by the Coalition for their investment strategies look promising:
- Invest early when risks and returns prevent traditional commercial capital investments
- Invest broadly across the following five sectors:
- Electricity generation and storage
- Transportation
- Industrial use
- Agriculture
- Energy system efficiency
- Electricity generation and storage
- Invest boldly in outliers both in developing new technologies and enabling current technologies to be significantly more efficient, scalable, or cheaper
- Invest wisely with input from experts from leading public and private institutions
- Invest together with countries that have committed to increased R&D investments through Mission Innovation
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