Introduction:

The segment features Bill Gates, co-founder of Microsoft and the co-chair of the Bill and Melinda Gates Foundation. Gates is also the chair of Breakthrough Energy Ventures, a billion-dollar fund aimed at combating climate change through innovative energy solutions.

Formation and Goal of the Fund:

Breakthrough Energy Ventures was formed a year ago after Gates attended November climate talks. The initiative received commitments from 20 governments to double their energy R&D investments. Gates and the Breakthrough Energy Coalition pledged to take promising outcomes from these efforts and build companies focused on making energy cleaner and cheaper.

Long-term Investment and Risks:

Gates and his investment partners are prepared for a long-term commitment, willing to wait up to 20 years for a return on their investment. Despite the risks involved, especially with cheap fossil fuels being a significant roadblock, Gates remains optimistic about beating these hurdles through innovation.

Multiple Pathways to Clean Energy:

Gates outlines four potential pathways for developing alternative energy solutions:

Improving solar and wind energy while creating a more connected grid and advanced storage capabilities.

Using natural gas as a backup for renewables, with carbon sequestration to neutralize emissions.

Solar Fuels, which directly convert sunlight into liquid fuels.

Advancements in nuclear fission and fusion, making them safer and more economical.

The Need for Comprehensive Solutions:

Gates emphasizes that to truly combat climate change, solutions must cover all areas of emissions, including land use and industrial processes.

Government Involvement:

Gates mentions that the venture is also contingent upon governments fulfilling their promises to increase spending on research and development. Changes in political landscapes, however, could impact these commitments.

The segment ends abruptly without revealing Donald Trump’s recent statement, which might have implications for the project.

Breakthrough Energy Ventures:

Bill Gates discussed the formation and goals of Breakthrough Energy Ventures, a billion-dollar fund aimed at innovating in the energy sector to combat climate change. This venture aims to make clean energy cheaper and more accessible, relying on technology to bridge the gap. Gates and other private investors formed this coalition after 20 governments committed to doubling their energy R&D spending.

Innovation as a Key:

Gates emphasizes that innovation is crucial for making clean energy economically viable. This not only would make it attractive for developed countries but also for developing nations like India, who are focused on low-cost energy solutions. By making clean energy cheaper than dirty energy, the fund hopes to drive global change.

Long-term Perspective:

Gates highlighted that investors in the fund are committed to a long-term perspective, willing to wait 15 to 20 years to see returns. He mentions that this long time frame and a multi-pronged approach to innovation differentiate this venture from earlier, less successful clean-tech investments.

Alternative Energy Pathways:

Gates outlined four potential paths to cleaner energy solutions, including: 1) Improving solar and wind energy and storage capabilities; 2) Utilizing natural gas peakers with carbon sequestration; 3) Developing Solar Fuels, which are made directly from sunlight; 4) Advancing safe and cheaper nuclear fission and fusion. He noted that to reach zero emissions, innovation should cover not just energy production but also other sources of emissions like land use and industrial processes.

Political Uncertainty:

Despite political uncertainties and diverging viewpoints on climate change, Gates remains optimistic that energy R&D will maintain bipartisan support in the U.S. Congress. He mentioned that the fund is committed to progress irrespective of the climate policy scenario and aims to convince policymakers of the economic benefits of maintaining American leadership in energy innovation.

Dialogue with Trump:

Gates shared that he had his first conversation with then-President-elect Donald Trump, discussing innovation as a focus for the administration. He sensed Trump’s interest in fostering American leadership through innovation and expects further conversations to build on this dialogue.

Senate’s View on Climate Change:

Gates noted that despite a split view in the Senate on human involvement in climate change, energy R&D has seen increased backing. He believes this is due to its multi-faceted benefits, such as energy security and pollution reduction, that make it palatable across the political spectrum.

Investment Criteria:

Bill Gates outlined the investment focus of Breakthrough Energy Ventures. The fund aims to support companies that have the potential to significantly reduce climate emissions or provide cheaper energy. The venture will not merely follow mainstream solutions but will actively seek out-of-the-box innovations to fund.

Science-Driven Approach:

Gates emphasized that Breakthrough Energy Ventures will have a larger scientific team than typically seen in venture capital groups. The focus will be on in-depth analysis and exploration of promising scientific solutions to climate and energy challenges.

Investment Timing and Portfolio:

The venture aims to start investing in three months after forming its team and expects to back several dozen companies in various sectors. The venture is open to supporting unconventional solutions, such as solar fuels, which are not widely discussed in mainstream debates.

Agricultural Impact:

The fund is also considering investments in the agricultural sector, specifically targeting artificial meat. Gates points out that livestock is a significant source of methane emissions, a potent greenhouse gas. Alternative meat production could alleviate both environmental and ethical concerns related to livestock farming.

High-Profile Investors:

The venture has attracted an impressive list of global investors, including Jeff Bezos, Michael Bloomberg, Prince Ali Waleed Bin Talal, and others. The investor base is diverse, hailing from various countries, which is expected to bring in a wide range of ideas.

Fund Accessibility:

When asked whether the fund would be open to smaller investors, Gates indicated that currently, the fund has sufficient capital from high-profile investors who are committed to the long-term goals of the venture. The focus is on making impactful investments, even if it takes five or six years to allocate the initial billion-dollar fund.

Future Funding:

Gates is optimistic that if successful investments are made, current investors will be willing to contribute more funds. The aim is to spend the initial billion in three to four years if viable companies meet their investment criteria; however, the timeline could extend based on the quality of opportunities.

Capital Structure for Investments:

Bill Gates highlights that Breakthrough Energy Ventures will focus on early-stage investments. As companies succeed and move toward pilot plants and larger-scale deployment, the fund plans to bring in institutional investors and strategic partners, creating a multi-layered capital structure.

Global Reaction to U.S. Politics:

Asked about the global response to Donald Trump’s election and the potential appointment of Rex Tillerson as Secretary of State, Gates observes that there is significant interest in understanding the new directions U.S. policy may take. He notes that Trump was elected for his leadership style rather than specific policies, providing him with a broad range of options for governance.

Innovation Focus:

Gates emphasizes his intent to bring a “very strong innovation message” to political dialogues. He hopes this will influence budget priorities to accelerate research and innovation in critical areas, such as public health and epidemic control, energy solutions, and educational methodologies.

Digital Age Opportunities:

Gates sees the digital age as a pivotal time for transformative change. He argues that now is an excellent time to “double down on innovation,” whether that means streamlining government operations or bolstering research endeavors in various sectors.

America First Policy:

Although the interviewee mentions that Trump has been explicit about his “America first” administration, Gates does not provide specific commentary on this aspect, focusing instead on the opportunities for innovation and global dialogue.

Importance of U.S.-China Relations:

Bill Gates emphasizes the critical nature of maintaining trade relations between the U.S. and China. He warns against the negative outcomes that could arise from a breakdown in these relations, such as the erection of large tariff walls. This sentiment reflects his own business interests in China, including a deal to build a nuclear plant.

Trade Tariffs and Economic Strength:

Gates points out that much of the U.S. economy’s strength comes from exporters. Attempts to suppress imports can lead to other countries raising their own tariff walls, creating a tit-for-tat situation that benefits no one. Gates hopes for a nuanced approach from the President-elect’s team to avoid this scenario.

Nuclear Industry in Asia:

He brings up the example of the nuclear industry to illustrate the importance of trade relations with Asia. Gates explains that due to low natural gas prices and complex permitting in the U.S., it’s difficult for nuclear energy to compete. In contrast, Asian countries like China are more promising markets for nuclear technology.

Market Reactions and Interest Rates:

Gates acknowledges that stock prices have risen and suggests that this is connected to the low-interest-rate environment. He states that any potential rate hikes by the Federal Reserve are likely already priced into the stock market. Surprises in the interest rate policy would be the trigger for market adjustments.

Future Policy Impact:

Gates mentions that we’re entering a new phase post-January 20, touching on the need for a strong strategy to move forward in areas like education and health. He expresses a willingness to contribute to this strategy through dialogue.

Technology and Communication:

Lastly, Gates humorously notes that despite coming from the tech industry, he can’t keep up with the President-elect’s frequent tweeting. He anticipates that the new administration’s approach to communication will bring changes in how policies and sentiments are conveyed to the public.

Investment Philosophy:

Bill Gates indicates that his investment approach aligns with Warren Buffett’s long-term strategy. He emphasizes the importance of investing in great companies whose intrinsic value remains steady despite macroeconomic fluctuations. He states that his investment team adopts a long-term perspective, with limited focus on exploiting short-term macroeconomic trends.

Currency Exposure:

Gates briefly discusses his exposure to the Mexican peso, citing that the currency has been “very, very weak.” He notes that this could be an area to watch, particularly as the U.S.-Mexico relationship evolves under the new administration. Gates seems to indicate that the fate of the peso could be linked to how these international relations unfold.

Relations with Russia:

The discussion turns to Gates’ relationship with Russia, particularly in light of a statement from the Russian state that was unfavorable to Microsoft’s software. Gates clarifies that although Microsoft has tried to rectify the situation, they have not fully regained Russia’s trust. He further states he has not visited Russia in over a decade and does not have a direct relationship with the country.

Final Remarks:

The interview concludes with a note on Gates’ involvement in Breakthrough Energy Ventures but doesn’t elaborate further. Gates extends his thanks and ends the conversation.