This morning, COP21—the UN's annual international climate change conference—kicked off in Paris with a very encouraging announcement. On one hand 20 countries—from the developed to the developing world arm-in-arm—made a commitment to double their research and development spending in the energy solutions of the future. They have labeled it “Mission Innovation.” On the other hand, 26 amazing entrepreneurs and business leaders promised to invest part of their wealth to bring these energy solutions of the future to rapid deployment. This group calls themselves the “Breakthrough Energy Coalition.” Several of RMI’s supporters are among them, including Sir Richard Branson, Tom Steyer, and Julian Robertson. The combination of these two forces (no doubt the most impressive public-private partnership to tackle the world’s most pressing challenge) carries some important lessons that we all should take to heart.
1. The energy revolution is now fully under way
With a few exceptions, government R&D has not historically been at the leading edge of innovation. But the capabilities, the scale, and the intellectual power of government labs and government-funded research at universities around the world will surely have a massive impact. R&D in the energy space has been very modest over the past decades. Significant parts of it have historically been directed to long-shot endeavors such as next-generation nuclear fission and the moonshot of large-scale nuclear fusion. A doubling now is much more powerful than appears at first glance if much of it is going to be directed to the technologies that are already emerging as the drivers of the energy transition: solar, wind, grid integration, smart energy efficiency, truly sustainable biofuels, and powerful batteries.
2. For energy innovations to get from lab to large-scale deployment we have to get across a deep valley of death.
"Valley of death" is the gloomy term that defines the period of technology demonstration, early scaling, and learning that is so much more costly in energy than, for example, in social media. A new type of solar panel, a breakthrough wind turbine technology, the latest scale-up of third-generation biofuels—all of these technologies require significant capital to get form the lab bench to deployment at scale. It is here that the entrepreneurial spirit and the deep pockets of the Breakthrough Energy Coalition will make a huge difference. Of course, these business leaders are convinced that they will make good money investing in the energy solutions of tomorrow. And of course, they are able to make some bold bets. But at the same time, they are a clear illustration that the future of energy investing is not in the fossil technologies of the past but in the low-carbon solutions of the future.
3. The combination of 1 and 2 will drive both new solutions and innovative breakthroughs as well as accelerate the large-scale deployment of the technologies that are already demonstrated to work.
Solar power is a great example. There is no doubt that future improvements of solar technologies will continue to drive down cost and make solar power more and more competitive. And the increased cost effectiveness of solar PV, at a learning curve of at least 24 percent, is continuing to make this trend more powerful every day. We do not need a new idea; rather increased research in the next generation of solar panels with even higher efficiency and therefore lower cost will no doubt keep this trend going. Similarly, concerns that we need an as-yet unknown breakthrough in energy storage will quickly be mitigated as we invest in a broader range of powerful tools that can already address the predictable variability of wind and solar power. In this way, energy innovators will show the world how we can manage a grid with very high levels of variable solar and wind, that are effectively balanced by demand management, base-load renewables like hydro power, large-scale grid integration, and distributed storage.
In all, the announcement of today symbolizes the clear message that the international negotiations in Paris are going to bring us: The energy revolution and the transition to a low-carbon world is well under way and with powerful momentum that will be difficult to stop. Smart governments and smart business leaders are putting their money where their mouth is. The days of the fossil-fuel-based, carbon-intensive energy infrastructure of the past are behind us, and the smart money is betting on the low-carbon technologies of the future. I know where I will put my money!
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