In our final dispatch from the CERAWeek conference by S&P Global, Felipe Alice shared some insights and key takeaways from a luncheon and dialogue session featuring tech entrepreneur, investor, and philanthropist Bill Gates.
Mr. Gates began by sharing his thoughts on the energy transition, noting that his trip to Texas started with visits to several companies working on energy transition projects. He highlighted his stops at Infinium, a company focused on next-generation clean fuels that is turning waste carbon dioxide and renewable energy into electrofuels (also known as eFuels), and Oxy, an energy company developing direct air capture projects in King Ranch, Texas. He noted that while energy transition technologies are being developed in laboratories throughout the United States, Texas is well positioned to be a center of innovation in such technologies given the substantial local energy expertise and qualified personnel as well as state-level policies that allow for such development.
Mr. Gates also discussed his Breakthrough Energy initiative, which was created to invest in 100 companies dedicated to the development of energy transition technology. He expressed his surprise at how many great and diverse companies are taking part in the initiative. He noted the current portfolio even includes applicants for heavy industry, including four companies developing applications for cement and two for steel.
Mr. Gates shared that from his perspective investment in energy transition appears to be truly picking up steam, with larger companies beginning to buy in and participate. Nevertheless, he does not believe they can achieve all their goals quite yet as the scale is just too big. For instance, he noted that 99% of steel is still produced by traditional methods. While initiatives such as Breakthrough Energy are getting off the ground, it will take an incredible effort: scaling up will be a major hurdle to overcome.
In addition, Mr. Gates explained that investors need to have a better sense of the cost and efficiency of new technologies and what the offtake market is, none of which are clear yet. Therefore, investment at a level typically seen with classic infrastructure is not yet available for these newer technologies, and while feasibility has been proven so far for solar, wind, and lithium-ion batteries, it still needs to be further developed for green hydrogen and other transition technologies. He also acknowledged that we are still in a hydrocarbon-driven economy, noting that solar power and electric vehicles only account for a small portion of energy generation and total amount of vehicles.
On the topic of nuclear energy, Mr. Gates said it’s a viable alternative that will benefit from the use of artificial intelligence (AI), especially in the design and testing of new reactor models. He also opined that he sees fusion as eventually becoming the biggest source of power in the world. He highlighted Commonwealth Fusion Systems, a company that has a promising fusion technology using high-power magnetic fields that could one day convert fusion into viable electric energy for economic use. However, Mr. Gates noted that, as with efficient steel, fusion is still a ways off.
Mr. Gates also shared his excitement about AI, but noted it still needs refinement and that it is unclear at this point what type of productivity it will deliver. He highlighted several major current applications for AI, including in materials properties, vaccines, and other pharmaceuticals, but noted that the use of AI will drive energy demand. He explained that AI development could be hindered in the coming years by constraints in chip design and electricity availability.
Some additional takeaways from Day 4 of CERAWeek included the following:
- Energy is becoming more data driven, and that data then requires more power, which results in a circular economy.
- Technology companies are already getting involved in energy and will likely take a more aggressive position to become energy players themselves (not just energy consumers, data handlers, and service providers).
- The energy transition has different answers for different regions. For example, the Middle East lacks water but has other advantageous resources. Other countries may be rich in other resources, including water, but lack the financial ability to provide incentives and further develop relevant technologies. This is why the energy transition will require a global approach.
For more information on the themes and ideas discussed at CERAWeek 2024, please contact Kirstin Gibbs or Felipe Alice. Visit our Power & Pipes blog feed to read our earlier dispatches from the conference.