Stronger public-private partnerships can potentially speed up coordination in energy innovation and investment, helping both the developing world and developed countries establish more environment-friendly practices, products, and services. The full story on The Hill:
This week in Paris, we are witnessing an expanded effort by the private sector to shape new approaches to energy investment that could have important ramifications worldwide.
During the One Planet Summit, Microsoft Co-Founder Bill Gates, who lead the formation of Breakthrough Energy in 2015, announced a new public-private partnership to support more coordination in energy innovation and investment.
Gates also announced that the $1 billion Breakthrough Energy Ventures Fund, which counts him and Jeff Bezos as investors, will invest its “patient capital” in five potentially transformative technology areas. These are landmark announcements.
More innovation and collaboration between the public and private sectors can make a major impact in the energy field, which is a vital sector not only for the developing world, but also for the developed world.
The developing world still lacks important energy infrastructure, and in particular, often lacks access to reliable electricity. The developed world is looking to update its infrastructure to make it more efficient and environmentally friendly, as well as more resilient to changing climate.
Even for a developed country like the U.S., 2017 has been a painful reminder of how extreme weather events can destroy vital infrastructure and set back the economies of affected areas.
The Gates-led Breakthrough Energy Coalition announced it will expand to include major global investors like General Electric, Total and BNP Paribas, and these members will be involved in piloting public-private collaborations with five governments: Canada, the European Commission, France, Mexico and the U.K.
Through these partnerships, Breakthrough Energy Coalition says it will “help these governments review how innovations are developed in each country, help make policy and regulatory recommendations to attract early and mid-stage capital for those innovations, and match promising research with investors interested in commercializing the technology.”
This type of coordination between the public and private sectors is needed, because tightening budgets worldwide and growing deficits have put greater pressure on distributing scarce financial resources to answer various economic needs and demands.
Anemic economic growth, flatlined productivity and rapidly aging populations all suggest that there is no easy way out from under this increasing debt, unless we reconsider how we finance the various demands in an innovative way.
This initiative is important because it takes some of the burden off the public sector and, according to a U.S. Treasury Department paper, “when a public private partnership transfers risks to the private sector that it can manage more cost effectively, it creates value for taxpayers by lowering long-term project costs, improving the quality of services, or both.”
This pilot program on public-private partnerships could also be applied to various policies worldwide to improve the overall process. For example, the U.S. is expected to undertake a large infrastructure project next year.
Involving the private sector in certain aspects of the project at an early stage could leverage best practices, improve the process and help prevent the waste of the taxpayer dollars, as well as bring in private-sector dollars to help fund the project.
In addition to this new public-private initiative, Gates also announced the five initial focus areas of the $1 billion Breakthrough Energy Ventures Fund. The venture fund plans to invest in grid-scale storage, liquid fuels, micro/mini grids for Africa and India, alternative building materials and geothermal energy. The ultimate goal is to figure out an energy pathway to achieve an emission-free future.
Although not explicitly mentioned, the group’s initiative is an example of what many experts call “life cycle assessment.”
According to SETAC in Brussels, life cycle assessment is a “process to evaluate the environmental burdens associated with a product, process, or activity by identifying and quantifying energy and materials used and wastes released to the environment; to assess the impact of those energy and materials used and releases to the environment; and to identify and evaluate opportunities to affect environmental improvements.”
The group’s first investment criteria points to this by stating “only invest in technologies with the potential to reduce at least half a gigaton of greenhouse gases every year.”
The groups’ investment criteria highlight best practices that could decrease waste in the overall process and maximize efficiency. First, they have a clear target goal for selection of their projects: reduce greenhouse gases.
Because they cannot be the only financier of the venture, they state that they will only invest in companies that could ultimately attract additional investment. They also plan to weed out projects at an early stage through consultation with their technical experts so as to not waste valuable capital.
They see themselves as a complement to existing investment in clean-technology and plan to help with basic “portfolio optimization” by focusing on certain areas where they can add value through their global network.
Bill Gates made his mark early on by opening the door of personal computing to millions. His latest Breakthrough Energy initiatives could open the door of prosperity and a cleaner planet to billions and introduce a new way of doing business around the world.