In New Book, Gates Favors Market-Driven Approaches to Reduce the "Green Premium"

Microsoft found Bill Gates has been studying a number of global challenges, from poverty to potential pandemics, and using portions of is vast wealth to move potential solutions forward.

Supply Chain Digest Says...   Gates also is a believer in free markets, and wants use their power to achieve climate goals. Key to that is reducing the "green premium" – how much more it costs consumers or businesses to adopt the more green option. What do you say? Click here to send us your comments   Click here to see reader feedback

For some years now, Gates has also been focused on climate change, which he, like many others believes, imperils the planet.

He will soon also be out with a new book How to Avoid a Climate Disaster.

The Wall Street Journal and reporter Christina Binkley recently sat down with Gates, publishing a lengthy article last weekend, in which Gates shared his thoughts on climate change – and how to fix it.

Here are some highlights:

Gates believes that the world must reduce the amount of greenhouse emissions being released into the atmosphere from an estimated 51 billion tons per year to zero by 2050. Only this, Gates says, will prevent a catastrophe – and that only a technology revolution can get the job done.

Gates sees recent green advances in such areas as electric cars, solar panels, and plant-based burgers as important – but not enough.

Green technology advanced need to go beyond agriculture and electricity, Gates says, to address all carbon-generating processes, including transportation; concrete and steel production and much more. Gates believes we must invent “green steel,” as one example.

Gates also sees a direct connection between poverty and high cost energy.

“It's hard to be productive if you don't have lights to read by,” Gates says in his new book, after being stuck at homes with no lights on at night during a trip to Africa.

Gates notes that capturing carbon from the atmosphere currently costs at more than $200 a ton. He thinks it's possible to quickly get that down to $100 per ton. That would mean that to remove 51 billion tons of emissions per year would require spending $5.1 trillion per year - 6% of the world's GDP, a level he believes is manageable.

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Gates also is a believer in free markets, and wants use their power to achieve climate goals. Key to that is reducing the "green premium" – how much more it costs consumers or businesses to adopt the more green option.

For instance, Gates says that green aviation biofuel is priced with an average cost of $5.35 per gallon currently. This amounts to a green premium of more than 140% over standard jet fuel, at an average of $2.22 per gallon – too pricey for most airplane operators.

So investments in new technologies must be made.

“You bootstrap those markets to get the scale, to get the green premium down enough so that by 2050 you can say to [India] with a straight face: Buy clean steel,” Gates tells the Journal.

Interestingly, Gates invested $500 million in 2008 to get TerraPower, a Bellevue, Washington–based developer of safer nuclear energy, off the ground. Gates thinks new age nuclear technology could play a key role in reducing CO2 levels.

A prototype US new nuclear power plant using TerraPower's technology could begin producing energy in seven years – with Gates investing another $500 million to help make it happen.

Gates is a little worried that people will get sick of hearing from him this year as he travels around the world in the name of saving the planet.

“I'm just trying to avoid kryptonite as much as I can,” he tells the Journal's Binkley.

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