Invoice Gates And Power — Redefining Power Podcast Transcript

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Breakthrough Power Enterprise’s odd investments, a mix of smart, venture-capital aligned begin ups centered on local weather motion with the next proportion that make no sense, have come beneath my scrutiny for years. Equally, attempting to determine why the climate-aware billionaire oligarchs who based it, together with Invoice Gates, Jeff Bezos, Richard Branson and others had managed to get the unsuitable finish of the stick has been a spotlight. I’ve printed on it repeatedly. In consequence, Laurent Segalen and Gerard Reid over at Redefining Power requested me to hitch them to debate it. In a theme I’ve been pursuing, right here’s a frivolously edited transcript, together with podcast itself.

 

Intro: You’re listening to Redefining Power. Your co-hosts from Berlin, Gerard Reed and from London, Laurent Segalen.

Laurent Segalen (LS): At this time on Redefining vitality, we’re gonna have a little bit of enjoyable. That is summertime, so we’re gonna make some buddies. At the least one buddy. We’re going to speak about Invoice Gates and his strategy to vitality.

Gerard Reid (GR): The rationale we’re speaking about this matter is due to Michael Barnard. And he wrote fairly an fascinating article on Breakthrough Power Ventures and unhealthy funding thesis. Subsequently unhealthy investments. And I believed, that’s good. I like this. I stated, let’s convey Michael on to speak slightly bit about, I suppose, about that matter. But in addition, extra importantly, why does Invoice Gates assume like this? I believe that’s, for me, an important query.

LS: So, Michael, welcome to your present.

Michael Barnard (MB): Thanks guys for having me. It’s been enjoyable being on a sibling channel, Redefining Power – Tech, the place I get to have actually superb, nerdy conversations. However typically I discuss stuff you guys care about too. Like cash.

LS: Yeah.

GR: It’s simply. Excuse the truth that each myself and Laurent have ADHS, you understand. So we simply we are able to’t cling on for that lengthy, you understand? No, it’s nice to have you ever.

LS: However let’s be clear. We aren’t going to speak about Breakthrough Power Enterprise this time. Though I’ve had quite a lot of issues to say. As a result of there’s the great, there’s the unhealthy, and there’s quite a lot of ugly stuff at Breakthrough Power. Gerard, what’s thesis, please?

GR: What I needed to speak to Michael about was, and I’ve been it for a few years, is the philosophy behind what Invoice Gates is doing. And that comes right down to a Czech professor residing in Canada referred to as Vaclav Smil. I even have all his books right here in my workplace. I actually have loved them. And for many who don’t know them, what this good professor does. He’s actually written concerning the historical past of vitality. And his complete thesis is that large revolutions internationally come about when you’ve gotten a brand new type of vitality and associated to that’s a giant change in transport. That’s it. And I believe that I go together with that is nice, however there’s loads that I don’t go together with. And I believe that’s what I’d love to speak about. I’d love to listen to your ideas on Smil and all that sort of stuff. So, positive.

MB: I get along with my buddies like Paul Martin and others on this area and get grumbling about our fellow Canadian Vaclav Smil and his outsized affect. We have now a few issues to say. One is deep respect for the stuff he will get proper. His analysis and depth and breadth is nice. He’s lined an incredible breadth of stuff. And I say that as somebody who’s lined an incredible breadth of stuff. He’s broader than me. He’s broader and deeper than me, apart from vitality. He wasn’t deep sufficient. He wasn’t shut sufficient. He didn’t do the evaluation of particular varieties of issues. He didn’t perceive a number of the fundamentals of the completely different types of vitality. He didn’t perceive a number of the thermodynamics, as a result of that’s not his place.

As such, he made some fundamental errors, and it took him a very long time to even admit that the first vitality fallacy existed, and he nonetheless by no means admitted that it’s an issue for his complete thesis about vitality. It’s fascinating to me, and he’s now considerably of a recluse. Final time I heard his title was when Goldman Sachs launched its annual report. That they had a ahead by him. He submitted a really prolonged essay, which they condensed down. I used to be cited in some chapter or different of it as effectively, and I used to be simply chatting with the individuals over there about it. Yeah, he was unsuitable about vitality. And because of this, Invoice Gates’ biases had been confirmed. There’s an entire bunch of fascinating cognitive biases happening on this bubble of billionaires.

GR: So, Michael, possibly we are able to soar into them. I imply, for me, what I believe the most important one factor is unsuitable — and that is me coming with my economics mind, so that you come along with your scientific mind after this — for me, is his view is that vitality transitions, by their nature, are very sluggish, and so they can take as much as 100 years. There’s little doubt while you look again in historical past, they did take 100 years. Whether or not it’s a coal revolution, it’s the start of the oil revolution, similar factor. They took 100 years. I’m now wanting and I’m going, he doesn’t perceive expertise as a result of there’s huge expertise change. And if I simply take the case of photo voltaic, we’ve by no means seen an vitality expertise come to market as fast as this expertise. And there’s different ones, and that’s, for me, the massive one.

I’d like to listen to what you assume, if you happen to assume I’m misreading this, otherwise you assume there’s one even larger than that.

MB: So there are three main issues in my evaluation, and I printed on this a number of years in the past, which, in fact, Vaclav Smil undoubtedly by no means learn and Invoice Gates by no means learn. The primary one is the first vitality fallacy. He simply didn’t notice that we didn’t want to interchange the entire warmth vitality in coal, oil and fuel. We would have liked to interchange the helpful work we bought out of the warmth vitality, and that’s a couple of third on common. Then with efficiencies Saul Griffiths did the calculation and got here up with 42% was the full vitality required in the US when he did work with the DOE final decade, mainly saying that 100 quads of vitality, they solely want 42 quads in the event that they’re going from renewables to electrical vitality companies. So Smil missed that fully, as many do. That’s only a full fail of research.

That’s a giant one. He’s off by loads by way of vitality necessities when he reductions electrification. The second, to your level, he doesn’t perceive economies or manufacturing scale and modularity. He’s nonetheless pondering large. Gigawatts scale coal and nuclear crops, versus manufactured elements, put into an optimized international provide chain and constructed in parallel over an prolonged time frame. We’re now on the level the place we are able to put a gigawatt offshore wind in ten months of development. We’re placing in gigawatts of photo voltaic daily now, merely due to that manufacturability and that international provide chain, the standardization after which the parallelization of development. It’s simply a lot quicker. The third factor is, he overstated our transition to a pure fuel financial system.

He’s asserting that we’re 40 years right into a pure fuel financial system and solely 5 or 6 years right into a wind and photo voltaic financial system. However the wind and photo voltaic financial system began within the seventies, so he’s misstating when the wind and photo voltaic financial system began and overstating the pure fuel financial system. As I look around the globe, I don’t see his thesis being borne out by way of precise stuff. Simply take a look at Europe’s vitality disaster. Pure fuel demand has plummeted as a result of wind and photo voltaic are match for function, and there’s an entire bunch of different stuff that may be completed round that. So he’s bought a number of issues which can be unsuitable, and sadly he by no means corrected any of that stuff. And it confirms Invoice Gates’ biases for nuclear.

I believe there’s a very good factor to speak about on this, the place we are saying, when had been the biases shaped and why did they persist? That’s a basic a part of my evaluation of the billionaires. What’s your take? Gerard? Laurent?

LS: I don’t understand how that ideas had been put collectively, however what I can inform you is that there’s lots of people who’re profiting from, particularly the first vitality fallacy, to simply repeat advert nauseum, we’re not there. It barely scratched the floor and so forth. And right here we’re speaking about certainly one of my heroes, however now the man wants a retirement. It’s Daniel Yergin. I used to be an absolute fan when he wrote The Prize, however when was that? 35 years in the past. And now it’s throughout. I imply, he’s going to that Ceraweek the place all of the oil government oil themselves is like, every thing’s going to be okay. Nothing’s going to vary. Due to course, they’re the producers. They need individuals to proceed to purchase their oil. The fossil gasoline trade and people guys, they’ve fossilized of their head.

And worse, they are saying, oh, look, Invoice Gates is saying the identical factor as we do, we’d like oil and nuclear. After which quite a lot of minions, I don’t wish to title names, however I’m repeatedly in fights with these guys on LinkedIn, individuals who I’m speaking about.

GR: Michael, thanks very a lot for summarizing that. I imply, I couldn’t have completed higher. It was nice. I believe you ended up speaking about nuclear, and I’m not going in charge Smil for nuclear and Invoice Gates. I’m truly going in charge Dave Mackay, who was a UK physicist who handed away a number of years in the past, and he wrote a e-book referred to as Sustainable Power With out the Scorching Air. I actually loved that e-book as effectively. There have been positively errors in it. However the main conclusion he had is, we are able to’t construct an electrical energy system in and round renewable vitality. That was actually what he was saying, and there was no approach round this. So because of this, what we have to do is concentrate on vitality effectivity and nuclear. So I blame him moderately than Smil.

And proper me if I’m unsuitable, I believe what I conclude out of Smil is the conclusion that Gates bought from Smil was that the applied sciences should not there for this transition. As a result of truly, in all probability even when Gates began this, possibly a decade in the past, yeah, photo voltaic wasn’t what it’s as we speak. Batteries wasn’t what it’s. He has missed them, and he’s gone and centered on applied sciences which you’ll be able to argue should not scalable. That’s, I believe, the error that he’s made, and I discover that’s fascinating that Gates has made that mistake, on condition that he’s a technologist. Proper?

I imply, no matter, he’s a technologist.

LS: At the least he put cash the place his mouth was. So he has sunk an unbelievable quantity searching for fusion or SMRs. However in all probability you’re extra attuned on these topics than me. Michael, we have now to return additional.

MB: The story for nuclear is much like the story for hydrogen, for vitality within the late nineties, early two 1000’s. For people who find themselves local weather conscious and environmentally conscious, they had been searching for applied sciences which might remedy the issue. And the choices had been pretty restricted on the time for highway transportation. Batteries clearly weren’t match for function on the time. It was an actual leap of religion to say, we’re going to have an electrical highway, even automobiles, nevermind vehicles. In 2000, equally for nuclear, France and the US had come out of fairly profitable rollouts of nuclear packages. You squint, they don’t look too costly. And they also wanted one thing that would scale and so they wanted one thing that would work. Each of these issues had been met by nuclear and hydrogen. And so a bunch of individuals determined that was the reply.

This wind and photo voltaic stuff that had been round for the reason that seventies and eighties clearly was simply not critical stuff. It was straightforward to make these choices round 2000 to 2005. And Gates based Terrapower, his touring wave nuclear reactor firm, in 2006, across the similar time that Musk put his cash into Tesla. Simply to check and distinction. In case you put all of your cash into these issues, and also you determined that these are the solutions, then as time goes by, say, 2015, when breakthrough Power Ventures was based, by 2015, the reply was clearly that the info had modified. And if we return to Keynes, effectively, the info has modified. I’ll change my thoughts. What do you do, sir? However sadly, individuals like Gates dwell on this digital actuality that appears loads like our Earth, however excludes stuff which doesn’t verify their biases.

They have a tendency to have individuals and filters round them which give them extra of what they wish to know than what they don’t wish to know. McKay and Smil had been chatting with Invoice Gates’s cognitive biases round vitality, and he wasn’t receiving stable stuff that challenged his biases from the individuals round him. They weren’t saying, Invoice, you had been proper 15 years in the past, however it’s time to vary your thoughts. It’s onerous. I’ve spoken to people who find themselves bounced off the bubble round Gates, and it truly is. There’s slightly courtroom there. Persons are very jealous of their place in that courtroom. They’re very effectively funded to do stuff that they get pleasure from, and it’s onerous to get previous that. I really feel some remorse for a number of the individuals in that courtroom, as a result of they might have been doing higher work.

However that is form of the issue as we take a look at that. Breakthrough Power Ventures was based by six or seven billionaires, together with Branson and folks like that. They usually had been all professional nuclear individuals. All of them needed to resolve the local weather disaster. All of them reached their place and opinion on applied sciences a decade, 20 years earlier and weren’t being challenged on these biases, as a result of that’s not the way in which their lives are arrange. The stuff that enabled them to be extraordinary earlier of their careers by wanting deeply into the enterprise fashions, wanting deeply for disruptive applied sciences, understanding the stuff, taking large bets on nascent applied sciences, after which being ruthless enterprise individuals to create their billions and making errors, however fixing them over time. They’re not doing that anymore.

In case you take a look at Musk for example, it’s one other instance of a poor local weather conscious billionaire oligarch. The Boring Firm and Hyperloop had been actually silly concepts. However he was put up early Musk. In early Musk’s days, he simply realized every thing. If he would get into disrupting city transit, he would learn 400 web page books and speak to international specialists and type his opinion and have difficult conversations. He now not does that. Now he has a whim. After which they purchase tunnel boring machines and he begins an organization. It’s a divorce from actuality. They usually now not have individuals round them sturdy sufficient to problem and proper them once they get unsuitable. So it’s fascinating to observe. And it’s deeply unlucky as a result of we have now this hagiography of billionaires, of the profitable multi billionaires who’re so influential. They go to Davos and hobnob with world leaders, and folks take note of them when their opinions are ten and 20 years outdated.

LS: To Gates’ credit score, he was very instrumental in pushing for the IRA within the US, though it’s a bit self-serving as a result of quite a lot of his firm bought quite a lot of subsidies alongside the way in which. That’s a paradox. Are they a power for good or not? Actually affect. They’re enormous by way of cash. Even with all the cash on this planet, I can inform you, Invoice Gates, if you happen to pay attention, the nuclear trade can bankrupt you. They will outspend every thing you’ve gotten. So don’t go into nuclear. If you wish to give one thing to your youngsters.

GR: Let’s change the theme barely, guys. Let’s assume Invoice Gates manages to take heed to this podcast. So what can we inform them? I’ll offer you my one level. I’ll simply say one level. The way forward for this vitality transition is all about standardization and scaling. I don’t care what it’s. If I take a look at transformers internationally, they’re all custom-made. That is ridiculous. They should be standardized. All the things’s standardized. And if you happen to take a look at three applied sciences which have scaled most in our vitality area, they’re wind generators, they’re photo voltaic panels, they’re batteries. And they’re all standardized and scaled. In order that’s for me. The message to him is concentrate on stuff you could standardize and scale rapidly if you wish to make a distinction. So to climb it and to maneuver this vitality transition, that’s my one. What’s yours, Michael?

MB: I’d lean into that and perceive manufacturing bodily issues. Gates is good, however his large successes had been software program issues, which is an trade I’m intimately conversant in. It’s very completely different than manufacturing {hardware} issues. He wasn’t an individual who constructed laptops and cell telephones. He was an individual who constructed software program. So perceive the variations, as a result of that’s basic to understanding wind and photo voltaic’s dominance and batteries’ dominance. The second factor I’d say is, take a second, ask your self why it’s you’ve gotten this affirmation bias which is stopping you from leaning closely into wind, photo voltaic, and batteries once they’re so clearly successful. Ask your self why the system you’ve arrange round you over the previous 20 to 25 years isn’t enabling you to have the success you had in software program and illness prevention.

And to be clear, I overlap with Gates and illness prevention. I helped construct the world’s most refined communicable illness administration resolution right here in Canada after SARS, one which was used right here and within the Center east throughout COVID. I get how transformative the Invoice and Melissa Gates Basis’s efforts and international illness eradication are. That’s as a result of they began, in each circumstances with actuality, not bias. And so, Invoice, return to fundamentals. Work out why you’re shedding on this area, as a result of you’ll be able to win.

GR: Wonderful.

LS: Okay, so large guys wish to learn, so I recommend you learn Professor Bent Flyvbjerg, How Huge Issues Get Accomplished. I recommend you comply with good younger individuals like Nat Bullard, like Dave Jones. There are like tons of them with contemporary concepts, contemporary knowledge, and we’ll do the episode on Breakthrough. And I can inform you they’ve completed 100 offers in ten years, which is loads for a VC fund. It’s loads. I do know. It’s like one a month, and I don’t know if it’s the Mass impact. They’re actually nice stuff in his portfolio. There’s quite a lot of crap as effectively, however that’s in all probability for one more episode. Gents.

GR: Wonderful, my buddies. This was good.

MB: Okay. Gerard has had his fulfilling second. He needed to say this for some time. I can inform.

LS: No, no, we’re out of the system. We gained’t be invited at Ceraweek, that’s for positive.

GR: I’m wanting ahead to the opposite one, as a result of that quote, to be clear, Gates continues to be extremely immune to that is nice. We’ll begin the following one with this. That is nice, guys. This can be a good introduction. Excellent.

MB: I’m simply going to say there are indicators of life. Liebreich retains getting invited to main hydrogen insider occasions to keynote, and he’s positively not singing from their music sheet. So I believe a few of these bubbles of affirmation bias and tribalism are breaking down. They’re searching for solutions to why they’re not successful, and so the solutions are on the market.

LS: Okay, guys, nice speaking to you. Undecided we’re going to be invited on the subsequent Ceraweek, though you by no means know.

GR: Course we’re going to be invited. Nicely, I’ll anyway.

MB: I believe if Liebreich will get invited to hydrogen insider conferences, we must be invited to nuclear and massive oil conferences. Yippee.

Outro: Thanks for listening to Redefining Power. Don’t neglect to fee the present and subscribe on Apple Podcast, Spotify, or the platform of your selection.