The 'Gigaton Throwdown' and the Big Hairy Audacious Question

futurelab default header

Some of my favorite questions begin with the same four words: "What would it take…" What follows those four words can be just about anything, as in: What would it take to … make solar energy as cheap and efficient as fossil fuel-based electricity?… routinely build zero-waste factories?… recycle 90 percent of the waste in my city within five years?… make organic foods cost-competitive with conventional ones? … make airplanes operate on electric power? … create zero-energy low-income housing? And so on.

Such big, hairy audacious questions get past the ideal to the real, looking at the specific changes in technologies, policies, capital flows, and cultural norms that would be required to achieve a goal.

Sunil Paul has asked one such audacious question — and answered it, too. His Gigaton Throwdown report, released today, asks: What would it take to aggressively scale up clean energy to have a major impact on job growth, energy independence, and climate change over the next 10 years? Specifically, the report examines what it would take "to reach gigaton scale for nine technologies currently attractive to investors."

To attain gigaton scale, a single technology must reduce annual emissions of carbon dioxide and equivalent greenhouse gases (CO2e) by at least 1 billion metric tons — a gigaton — by 2020. For an electricity generation technology, this is equivalent to an installed capacity of 205 gigawatts (GW) of carbon-free energy (at 100% capacity factor) in 2020.

The good news, the study concludes:

Eight of the nine technologies that we analyzed are capable of aggressive scale-up to avoid at least 1 billion tons of carbon dioxide equivalent emissions (CO2e) reductions by 2020. Of these nine, there are seven — building efficiency, concentrated solar power, construction materials, nuclear, biofuels, solar photovoltaics, and wind — that are ready to scale up aggressively today. One, geothermal, can scale up fully after an intense period of research, development, and deployment of pilot plants for new engineered geothermal systems. Combined, these eight technologies can meet over 50% of new global energy demand with reliable, clean, low-carbon energy and would avoid over 8 gigatons of CO2e reductions globally.

The bad news: Annual investment in these technologies must grow more than threefold in the next 10 years to make good on climate stabilization goals.

The Gigaton Throwdown project began two years ago, when Paul — part of a wave of successful tech entrepreneurs who found their way to cleantech after the one-two punch of 9/11 and the dot-com bust — heard a friend say, "You know, you clean technology guys could make a bunch of money and not make that big of a difference." As Paul told me recently, "It struck me that, ‘Wow, he’s right. Many of these technologies could increase by a factor of 10 and I’d do well, but it just would not make that big a difference.’ That essentially started a quest on my part to find out what does it take to really make a difference."

A big part of the challenge was creating a framework: How do you think about a problem of this magnitude? The notion of gigatons, says Paul, "made a lot of sense because one gigaton per year is enough to make a major difference by 2020. We chose an amount that matters and we chose a time frame that’s relevant to entrepreneurs and investors."

Paul engaged dozens of people — the mailing list of people connected to the project listed more than 130 names, including venture capitalists, academics, entrepreneurs, lawyers, policy makers, nonprofit leaders, and corporate types from utilities, energy companies, Wall Street investment houses, engineering firms, and others. A group of post-docs at the University of Michigan and Stanford, and faculty at Drexel and Berkeley did a lot of the heavy lifting.

Their report (download – PDF) looks at nine "pathways" that could achieve gigaton scale. One of the pathways, wind power, was found to be already growing fast enough to achieve gigaton scale.

The wind industry has been growing at an annual rate of 28% over the last decade and will soon reach 100 gigawatts (GW) of installed capacity globally. At currently projected growth rates, it will exceed half a terawatt (TW) of installed capacity by 2020 and deliver close to 2 gigatons of CO2e reductions. Efficiency technologies, solar, biofuels, and nuclear all offer solutions that have been tested and deployed and can scale more rapidly than the current projections. These are not laboratory curiosities. They are active technologies that are supplying power in multiple markets. With sound policy support, they will do much more.

Meanwhile, another technology, plug-in hybrid electric vehicles (PHEVs), was seen to face "severe challenges to achieving massive scale in the near-term."

To reach the gigaton target, the [auto] industry would need an estimated 300 million PHEVs on the road in 2020. This is equivalent to the total number of new cars to be added to the fleet worldwide in the next 10 years. While perhaps technically feasible, the disruption to current operations, the junking of existing vehicles, and the sheer amount of capital needed for this transition make this pathway infeasible by 2020 in our estimation. We do not include PHEVs in our gigaton projections.

What would it take for technologies reach gigaton scale? In a word: policies. At least, that’s the principal conclusion of the Gigaton Throwdown report. And that makes sense, to a point. The Obama administration and Congress — not to mention their counterparts in other countries — are focusing on energy and climate issues like never before. This is a time for policy makers to step up with the right kinds of laws and incentives at a scale sufficient to make a difference. The report urges a range of policy prescriptions: long-term stable carbon pricing, loan guarantees, tax credits, government purchasing, renewable energy standards, fuel standards, efficiency standards, and more — a lengthy list that has long comprised the wish list of the clean-energy community.

But it’s not all about government — and it’s not even all about money. The markets for clean technology involve a coordinated effort in three principal areas: technology, policy, and capital. Each of these plays a role in scaling technologies, clean or otherwise, and each of these "levers" must be pulled in proper sequence so as to create sustained, orderly markets that can exist without subsidies. Oh, and education, too — lots of it, to encourage legislators, business executives, investors, and voters about these critical needs.

"We sort of already get the technology pieces of it," Paul responded when I pointed this out. "And we know there is a lot of capital sitting on the sidelines that is ready to invest given the right kind of long-term opportunity." What’s needed now, he says, is political leadership and action.

"The single most important action to direct this flow of capital is stable policy that establishes a meaningful price on carbon," he explained. "This will encourage investment across the clean energy sector and allow capital to flow to the most cost-effective technologies."

There’s no shortage of capital needed: The eight technologies at gigaton scale represent an investment opportunity of over $5 trillion dollars over the next 10 years, according to the report. At this scale, says Paul, clean energy — including efficiency improvements — would meet close to two-thirds of the new global capacity requirements in 2020.

I’m not able to quibble with such figures — or the overall strategy, for that matter. In fact, despite some skepticism about the approach, I like the overall vision. Thinking in gigatons should become the new metric for considering technologies, policies, and investments. Paul says that at least two companies — Serious Materials, a green buildings materials start-up based in Silicon Valley, and Novozymes, a Danish company focusing on biofuels and other "bioinnovations" — have already started doing so, with others to follow. Paul says his own investment firm, Spring Ventures, is doing likewise.

If that’s the case — if "gigaton-scale" becomes a lens through which innovators and policymakers view their work — the considerable efforts of Paul and his colleagues will represent a valuable contribution to moving clean energy technology forward to achieve the scale and speed it deserves.

Original Post: