Bill Gates’ ambitions to decrease the green premium are showing off. He raised more than $1 billion in corporate funding for Breakthrough Energy Catalyst to accelerate the commercial deployment of key clean energy solutions.
Among the investors is BlackRock with a five-year, $100 million grant from its charitable foundation, Microsoft, General Motors Co., Bank of America Corp., American Airlines Group Inc., Boston Consulting Group and ArcelorMittal SA.
ArcelorMittal and American Airlines are also contributing $100 million each, and the other partners did not provide details. However, they are all committing with a mix of equity capital and purchase agreements to the projects.
Gates also shared he had some “very serious conversations” persuading fellow CEOs to back Catalyst as investors are usually cautious with ambitious green energy projects. Even Gates himself admitted publicly that he “lost a lot of money” on battery development.
However, since speed is critical for the world to reach climate neutrality, clean energy investments have also increased along with investors’ commitments and risk exposure appetite to address the threat of climate change.
“We’re not doing this to make money…We’re doing this to seed these ideas, to rapidly accelerate ideas,” said Larry Fink, BlackRock’s CEO.
Breakthrough Energy Catalyst
Breakthrough Energy Catalyst was established by Gates in 2015 with the goal to accelerate the commercial viability of four key clean energy solutions to climate change – green hydrogen, long-duration battery storage, sustainable jet fuel, and carbon capture from the air.
Catalyst aims to provide the cash for capital-intensive projects to get off the ground, before debt financing and government funds can be raised to cover the remaining 90% of the cost. Ideally, the projects should prove their viability that the technology can be cost-competitive and remove the green premium by operating at scale.
As of today, those four solutions are not cheap enough to induce wide adoption. For example, green hydrogen cost comes at about $6 per kilogram and is the most expensive form of hydrogen to produce, while the average price for natural gas in 2020 was $1.9988/MMBtu.
Also, jet fuel coming from more sustainable sources like industrial waste or alcohol is around five times more expensive than kerosene. However, future volatility of fossil fuels might make some difference and weigh the scales towards clear energy solutions.
“The pathway for solar and wind, that was a 30-year pathway to make it competitive with hydrocarbons…We don’t have 30 years. We don’t have 10 years,” said Fink.
Timeline For Adoption Of Clean Energy Solutions
However, Gates has committed investors and timelines to get costs down for some clean energy technologies. Bill Gates’s climate change plan is for Catalyst to start funding projects in each area in 2022, covering early-stage costs to add up to “maybe 10%” of the total cost. 20 companies will be recruited as anchor partners to raise the pool of private capital to $3 billion.
According to Gates, green hydrogen and sustainable jet fuel are advanced enough to “get to a low price” in three to four years.
“I’d be very disappointed if we don’t see a dramatic reduction in the green premium, even in less than five years…Because that should let us do two rounds of projects, the first projects and then take the learning from those first two and a half years and do a second round that will bring the costs down even further,” said Gates.
Venture capitalists are a major catalyst for clean energy technologies to get off the ground and take off, helping the world reach its Paris Agreement targets and beyond. As a simple carbon capture pilot project could cost millions of dollars, an enormous amount of capital needs to be involved to clean the mess caused by fossil-fuel addiction.