The Nobel Laureate and former US Energy Secretary explains why only rapid, radical energy innovation can head off a climate catastrophe – and what philanthropists can do to help.
If you want to help save the world, you are running out of time. This is the message that Steven Chu – Nobel Laureate, Stanford University professor, prolific inventor and former Energy Secretary of the US – is delivering, with increasing urgency, to would-be philanthropists and impact investors around the globe. “Will we achieve our goal of stopping a global average temperature rise by 2°C? Unlikely,” he says. “Virtually all carbon emission scenarios that are needed to remain below 2°C require that the entire carbon greenhouse-gas emissions of the world go negative by 2080. The world emission rate, however, is increasing – we will go through the CO₂ emission target in just 30 years.” The last time that global temperatures were on average 1°C warmer, he points out, our seas were six to nine meters higher. “This isn’t based on climate models; it’s based on fossilized sea shells found on land that used to be under water, so it’s a matter of history.”
To be clear, no one is predicting sea-level rises of this scale in the next few decades. The United Nations’ Intergovernmental Panel on Climate Change (IPCC) estimates that average sea levels will rise one meter by 2100 in the worst-case scenario. But, says Chu, the ecological shift now under way would likely take centuries when previously it used to take millennia. “The way to adapt over a few thousand years is evolution; over a few hundred years, moving entire cities will feel more like an evacuation.”
Chu has more reason than most to be pessimistic. As Energy Secretary to President Barack Obama from 2009 to 2013, he confronted the biggest energy challenge of our time: how to wean the US – and by extension the whole of the developed world – off its oil and gas habit. And last November, from his office at Stanford University, he saw the smoke drifting across campus from the worst wildfire in California’s history, the so-called ‘Camp Fire’, which killed at least 85 people and caused an estimated $16.5 billion (€14.5 billion) of damage. In the past five years, he says, the States have only had two seasons: a rainy season and a “fire season”.
He thinks staying below a 2°C global temperature rise is unlikely and that we could reach 3 to 3.5°C by the end of this century – the IPCC’s ‘middle’ scenario. He is also concerned about glacial melting. “The surprise to many scientists over the past decade or two was that Antarctica, which was expected to grow in ice, is losing ice,” he says. “We also now understand that changes in the Northern Arctic polar regions are accelerating the changes in Antarctica, and this feedback circuit is accelerating.” Yet the way he delivers such alarming news is always the same: with a mixture of steely calmness and pragmatic advice. “This doesn’t mean game over… If you’re smoking for 30 years, should you continue smoking or does your doctor say, ‘Nah, it’s too late, forget it’? You still want to stop smoking.”
Why there are reasons to be hopeful in the fight against climate change
There are some reasons to be hopeful, he says. The cost of energy from renewable sources has decreased rapidly in recent years, reaching around two cents per kilowatt-hour (kWh) at “the best sites” for solar and wind, “and there’s a very strong expectation, even among the oil and gas companies, that it will become less than two cents per kWh by 2030, without subsidy.” Faced with this reality, the traditional energy firms “know they cannot be in the fossil-fuel business in 50 years.”
Investment in renewable energy is therefore burgeoning – not only to find new methods of generation, but also to solve critical problems of storage and transmission. “Renewables are not on all the time,” Chu explains. “So their full cost has to include backup generation capacity, enhanced transmission and distribution, and energy storage.” He hails the progress of China, which recently made operational an ‘ultra-high-voltage’ power line operating at 1.1 megavolts (MV) and 12 gigawatts (GW). Over the 2,046-mile-long (3,293km) line, less than five percent of the power is lost in transmission. It is collaborating with the Swiss-Swedish engineering giant ABB on the project, but is quickly developing its own expertise while doing so, Chu points out. As a result, China’s energy grid will soon be able to transmit renewable energy efficiently across the country, from vast wind arrays in the northwest and northeast and from numerous hydroelectric dams in the southwest.
The Chinese government is also setting ambitious targets for the adoption of electric vehicles (EVs). By 2020, it wants 12 per cent of the country’s new car sales to be EVs – not, Chu says, because of some breakthrough technology, but because of air pollution. In urban China, he points out, “many kids now have asthma and their grandparents are also at risk of dying sooner, so they don’t need epidemiologists to tell them there’s a problem – they see it with their own eyes. Their leaders are very committed and breathe the same bad air.”
Some people project that all vehicles that have only internal combustion engines may be banned by 2040. Yet even this level of commitment will not be enough to avert disaster by 2100 at current trends, Chu says. Especially when, in the US, “around 40 percent of people either deny that climate change is happening – or, if it’s happening, that it isn’t primarily caused by humans.”
So, what can be done? From Chu’s point of view, the solution has to enable middle-class consumers to change their ways without making huge lifestyle sacrifices. “If governments push too hard, there will be a backlash,” he says. “The world is probably prepared to pay a 10 percent difference for clean energy, but not a factor of two difference.” And for this to happen, we need radical advances in energy technology. For example, in order to get more people to switch to EVs, the cost has to be comparable to that of internal combustion-engine vehicles. “We would need batteries where six minutes of charging could add around 150 miles of range [241km] to a 300-mile-range vehicle.” When this happens Chu says, “I believe most people would switch to EVs since the operational costs are so much lower.”
As Energy Secretary, Chu was able to funnel a significant amount of government money into radical energy innovation via ARPA-E (Advanced Research Projects Agency-Energy), which was founded in 2007 partly to “ensure that the US maintains a technological lead in developing and deploying advanced energy technologies”. The agency backs fundamental research projects that offer the possibility of revolutionary advances but are typically considered too risky for the private sector. It has had a number of successes, with 71 companies and 245 patents established on the back of its research by February 2018. However, Chu is now convinced that the public sector cannot deliver breakthroughs on the scale necessary to arrest climate change in time and avert catastrophe. “A dollar in a super-well-run private organization that doesn’t have government oversight is at least worth five dollars in a government organization,” he says.
How philanthropists could play a critical role in finding the technologies that avert a climate catastrophe
What the world urgently needs, he continues, is a ‘Bell Labs of Energy’. This is a reference to the telecommunications laboratory established in New York City in 1925 that ended up yielding some of the world’s most significant innovations, including the transistor and the laser. It was Chu’s own research on lasers at Bell Labs in the 1990s that won him the Nobel Prize in Physics (along with collaborators Claude Cohen-Tannoudji and William Daniel Phillips). He credits the culture of the place for helping him, and others, to make advances at a pace that is unlikely elsewhere.
Setting up such an institution would, he suggests, “depend on getting the right people. I’m too old for this…” However, he feels confident that the right leadership team of two to five people could be found and “would inspire others to come on board”. You would need a location next to a major university “because what you also want is the intellectual vitality this brings: access to the engineering and science departments, and to students”. And you would ideally need around $50 million to $100 million a year in funding (€44 million to €88 million), with a commitment to at least five years before having any expectation of an invention that generates revenues.
Donations from wealthy individuals could be the only way to get the idea off the ground because “they are much more willing to fund daring, innovative stuff,” Chu says. In baseball, you run the risk of striking out whenever you “swing for the fences”, as he puts it. To solve climate change, we need an organization that backs “incredible, brilliant people who want to save the world by hitting home runs.”
The cultural secrets of Bell Labs' success
Steven Chu spent nine years at telecommunications pioneer Bell Labs (now Nokia Bell Labs). He says the following four aspects of its culture were critical to making rapid technological advances:
“They were hiring the best scientists, and the management were the best of the best scientists,” Chu recalls. Good ideas got rapid funding because managers had enough technical expertise – and respect in their field – to make decisions without a peer-review process.
2. Organic collaboration
The teams at Bell Labs are very small by design. “If you’re good, you can get a technician or a postdoc,” Chu explains. “If you’re extraordinary, you can get both.” But you can never get more, which means if you want to do something significant you have to find – and convince – a collaborator within the organization.
In universities, it is not unusual to find teams of 25 people, and once you are leading a team of that size “you’re really an administrator and you spend most of your time looking for money”. At the ‘Bell Labs of Energy’, Chu says, you would ideally want a senior team of four or five people who are all practicing scientists with their own labs.
“I had six or seven principal investigators in my department, but they weren’t there to do my bidding,” Chu says. “If a department makes improper management decisions or becomes too opinionated, there are mechanisms to correct that. For example, you can be relieved of your management role.”
Paul Tyrrell is the Global Content Director at Deutsche Bank Wealth Management.
This article first appeared in the May 2019 edition of WERTE, the client magazine of Deutsche Bank Wealth Management.