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Breakthrough Power Enterprise’s odd investments, a combination of smart, venture-capital aligned begin ups centered on local weather motion with a better share that make no sense, have come below my scrutiny for years. Equally, making an attempt 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 recurrently. 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 calmly 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 the moment on Redefining vitality, we’re gonna have a little bit of enjoyable. That is summertime, so we’re gonna make some buddies. At the very 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 attention-grabbing article on Breakthrough Power Ventures and dangerous funding thesis. Subsequently dangerous investments. And I assumed, that’s good. I like this. I stated, let’s deliver Michael on to speak just a little bit about, I suppose, about that matter. But in addition, extra importantly, why does Invoice Gates suppose like this? I believe that’s, for me, crucial 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 speak about 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 already know. So we simply we will’t cling on for that lengthy, you already know? No, it’s nice to have you ever.
LS: However let’s be clear. We’re not going to speak about Breakthrough Power Enterprise this time. Though I’ve had numerous issues to say. As a result of there’s the nice, there’s the dangerous, and there’s numerous 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 dwelling 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 sensible professor does. He’s actually written concerning the historical past of vitality. And his complete thesis is that huge revolutions internationally come about when you might have a brand new type of vitality and associated to that’s a giant change in transport. That’s it. And I believe that I associate with that is nice, however there’s loads that I don’t associate 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, certain.
MB: I get along with my buddies like Paul Martin and others on this house and get grumbling about our fellow Canadian Vaclav Smil and his outsized affect. We now have 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, aside 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 among the fundamentals of the completely different types of vitality. He didn’t perceive among 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 total 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. They’d 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 nicely, and I used to be simply chatting with the folks over there about it. Yeah, he was unsuitable about vitality. And because of this, Invoice Gates’ biases have been confirmed. There’s an entire bunch of attention-grabbing cognitive biases happening on this bubble of billionaires.
GR: So, Michael, possibly we will soar into them. I imply, for me, what I believe the foremost 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, they usually can take as much as 100 years. There’s little doubt if 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 trying and I’m going, he doesn’t perceive know-how as a result of there may be huge know-how change. And if I simply take the case of photo voltaic, we’ve by no means seen an vitality know-how come to market as fast as this know-how. And there’s different ones, and that’s, for me, the large one.
I’d like to listen to what you suppose, if you happen to suppose I’m misreading this, otherwise you suppose 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, after all, 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 exchange all the warmth vitality in coal, oil and fuel. We would have liked to exchange the helpful work we obtained 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 USA 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 providers. So Smil missed that completely, as many do. That’s only a full fail of study.
That’s a giant one. He’s off by loads when it comes to 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 huge. Gigawatts scale coal and nuclear crops, versus manufactured parts, 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 will put a gigawatt offshore wind in ten months of building. We’re placing in gigawatts of photo voltaic on daily basis now, merely due to that manufacturability and that international provide chain, the standardization after which the parallelization of building. It’s simply a lot sooner. 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 world wide, I don’t see his thesis being borne out when it comes to precise stuff. Simply have 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 executed round that. So he’s obtained a number of issues which are 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 have been the biases fashioned 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 have 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 only repeat advert nauseum, we’re not there. It barely scratched the floor and so forth. And right here we’re speaking about one in every 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 govt oil themselves is like, the whole lot’s going to be okay. Nothing’s going to vary. Due to course, they’re the producers. They need folks to proceed to purchase their oil. The fossil gas 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 numerous minions, I don’t wish to title names, however I’m recurrently 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 executed higher. It was nice. I believe you ended up speaking about nuclear, and I’m not going responsible Smil for nuclear and Invoice Gates. I’m truly going responsible 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 Sizzling Air. I actually loved that e-book as nicely. There have been undoubtedly errors in it. However the main conclusion he had is, we will’t construct an electrical energy system in and round renewable vitality. That was actually what he was saying, and there was no manner round this. So because of this, what we have to do is deal with vitality effectivity and nuclear. So I blame him somewhat than Smil.
And proper me if I’m unsuitable, I believe what I conclude out of Smil is the conclusion that Gates obtained from Smil was that the applied sciences will not be 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 immediately. Batteries wasn’t what it’s. He has missed them, and he’s gone and centered on applied sciences which you’ll argue will not be scalable. That’s, I believe, the error that he’s made, and I discover that’s attention-grabbing that Gates has made that mistake, provided that he’s a technologist. Proper?
I imply, no matter, he’s a technologist.
LS: At the very least he put cash the place his mouth was. So he has sunk an unbelievable quantity in search of fusion or SMRs. However in all probability you’re extra attuned on these topics than me. Michael, we now have to return additional.
MB: The story for nuclear is just 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 have been in search of applied sciences which might clear up the issue. And the choices have been pretty restricted on the time for street 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 street, even automobiles, nevermind vans. In 2000, equally for nuclear, France and the USA had come out of fairly profitable rollouts of nuclear applications. You squint, they don’t look too costly. And they also wanted one thing that would scale they usually wanted one thing that would work. Each of these issues have 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 because the seventies and eighties clearly was simply not critical stuff. It was simple to make these selections 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 match and distinction. Should 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 information had modified. And if we return to Keynes, nicely, the information has modified. I’ll change my thoughts. What do you do, sir? However sadly, folks like Gates reside on this digital actuality that appears loads like our Earth, however excludes stuff which doesn’t affirm their biases.
They have an inclination to have folks 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 have been chatting with Invoice Gates’s cognitive biases round vitality, and he wasn’t receiving strong stuff that challenged his biases from the folks round him. They weren’t saying, Invoice, you have been proper 15 years in the past, nevertheless it’s time to vary your thoughts. It’s exhausting. I’ve spoken to people who find themselves bounced off the bubble round Gates, and it truly is. There’s just a little court docket there. Persons are very jealous of their place in that court docket. They’re very nicely funded to do stuff that they take pleasure in, and it’s exhausting to get previous that. I really feel some remorse for among the folks in that court docket, as a result of they may have been doing higher work.
However that is form of the issue as we have a look at that. Breakthrough Power Ventures was based by six or seven billionaires, together with Branson and folks like that. They usually have been all professional nuclear folks. All of them needed to unravel 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 trying deeply into the enterprise fashions, trying deeply for disruptive applied sciences, understanding the stuff, taking huge bets on nascent applied sciences, after which being ruthless enterprise folks to create their billions and making errors, however fixing them over time. They’re not doing that anymore.
Should you have a look at Musk for example, it’s one other instance of a poor local weather conscious billionaire oligarch. The Boring Firm and Hyperloop have been actually silly concepts. However he was put up early Musk. In early Musk’s days, he simply discovered the whole lot. If he would get into disrupting city transit, he would learn 400 web page books and speak to international consultants and type his opinion and have difficult conversations. He 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 not have folks round them robust 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 now have 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 numerous his firm obtained numerous subsidies alongside the way in which. That’s a paradox. Are they a power for good or not? Actually affect. They’re big when it comes to 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 the whole lot you might have. So don’t go into nuclear. If you wish to give one thing to your kids.
GR: Let’s change the theme barely, guys. Let’s assume Invoice Gates manages to take heed to this podcast. So what will 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 have a look at transformers internationally, they’re all personalized. That is ridiculous. They have to be standardized. All the things’s standardized. And if you happen to have a look at three applied sciences which have scaled most in our vitality house, 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 deal with stuff that you may 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 might lean into that and perceive manufacturing bodily issues. Gates is sensible, however his huge successes have 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 might have 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 will not be 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 subtle 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 may win.
GR: Glorious.
LS: Okay, so huge guys prefer to learn, so I recommend you learn Professor Bent Flyvbjerg, How Large Issues Get Completed. I recommend you comply with sensible younger folks 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 executed 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 numerous crap as nicely, however that’s in all probability for an additional episode. Gents.
GR: Glorious, 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 certain.
GR: I’m trying ahead to the opposite one, as a result of that quote, to be clear, Gates remains to be extremely immune to that is nice. We’ll begin the following one with this. That is nice, guys. It is 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 undoubtedly not singing from their track sheet. So I think a few of these bubbles of affirmation bias and tribalism are breaking down. They’re in search of 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. Properly, I’ll anyway.
MB: I believe if Liebreich will get invited to hydrogen insider conferences, we must be invited to nuclear and large oil conferences. Yippee.
Outro: Thanks for listening to Redefining Power. Don’t neglect to charge the present and subscribe on Apple Podcast, Spotify, or the platform of your selection.
