You are listening to Redefining Energy Your co hosts from Berlin Gerard Reid and from London Laurent segalam.
Today on Really Thinking LG. We're going to have a bit of fun. This is summertime, so we're going to make some friends. But his one friend. We're going to talk about Bill Gates and his approach to energy.
The reason we're talking about this topic is because of Michael Barnard, and he wrote quite an interesting article on breakthrough energy ventures and bad investment tiases therefore bad investments, and I thought, and that's good.
I like this.
I said, let's bring Michael on to talk a little bit about I suppose about that topic. But also more importantly, why does Bill Gates think like this? I think that's, for me, the most important question.
So Michel, welcome to your show.
Thank you guys for having me. It's been fun being on a sibling channel Redefining Energy Tech, where I get had really amazing nerdy conversations. But sometimes I talk about stuff you guys care about two like money.
Yeah, it's just excuse the fact that both myself and the run of ADHs, you know, so we just we can't hand on for that long.
You know. No, it's great to have you.
But let's be clear, we're not going to talk about breakthrough energy venturer this time, although I've had a lot of things to say, because there's the good, there's the bad, and there's a lot of early stuff I'd like for energy Jerb, what's the thesis please?
What I wanted to talk Michael about was, and I've been looking at it for many years, is the philosophy behind what Bill Gates is doing, and that comes down to a Czech professor living in Canada called backlof Smell.
I actually have all his books here in my office. I really really have enjoy them and for those who don't know them, what this brilliant professor does, He's really written about the history of Enner and his whole tiece is that big revolutions across the world come about when you have a new form of energy, and related to that's a big change in transport. That's it, and I think I go along with this is great, but there's a lot that I don't go along with, and I
think that's what I'd love to talk about. I'd love to hear your thoughts on Smell and all that type of self suff.
Sure, I get together with my buddies like Paul Martin and Otters in this space and get grumbling about our fellow Canadian blacklap smell and his outsized influence. We have a couple of things to say. One is deep respect for the stuff he gets right. His research and depth and breadth is great. He's covered an amazing breadth of stuff. And I say that as someone who's covered and amazing breadth of stuff. He's broader than me, He's broader and
deeper than me. Except on energy. He wasn't deep enough, he wasn't close enough. He didn't do the analysis of specific types of things. He didn't understand some of the fundamentals of the different forms of energy. He didn't understand some of thermodynamics because that's not its place. That's such. He made some basic errors, and it took him a long time to even admit that the primary energy fallacy existed. And he's still never admitted that it's a problem for
his entire thesis about energy. It's fascinating to me, and you know, he's now somewhat of a recluse. Last time I heard his name was when Goldman Sachs released its annual report. They had a forward by him. He submitted a very very link in the essay which they condeensed down. I was cited in some chapter or other of it as well, and I was just chatting with the people over there about it. Yeah, he was wrong about energy
and as a result, Bill Gates's biases were confirmed. There's a whole bunch of interesting cognitive biases going on in this bubble of billionaires.
So Mike, maybe we can jump into them. I mean, for me, what I think the major one think is wrong. And this is me coming with my economics brain, so you come with your scientific brain off of this for me is his view is that energy transitions, by their nature are very slow, and they can take up to one hundred years. There's no doubt when you look back in history they did take one hundred years, whereas the coal revolution it's the beginning of the oil revolution, saying,
but they took one hundred years. I'm now looking and I'm going he doesn't understand technology, because there is massive technology change.
And if I just.
Take the case of solar, we've never seen an energy technology come to market as quick as this technology, and there's other ones and that's for me, the big one. I'd like to hear what you think if you think I think I'm misreading this, or you think there's one even bigger than that.
So there's three major things in my analysis, and I'd published on this a few years ago, which of course Blacklaus nolanduberbly never read and Bill Gates never read. The first one is the primary energy fallacy. He just didn't realize that we didn't need to replace all of the heat energy and coal, oil and gas. We needed to replace the useful work we got out of the heat energy, and that's about a third on average, none with efficiencies.
We need to like Saul Griffiths did calculation, came up with forty two percent was the total energy required in the United States when he needed to work with the d League last decade, basically saying that one hundred quads of energy, they only need forty two quads if they're going from renewables to electric energy services. So Smill miss that entirely, as many do. That's just a complete fail
of analysis. So that's a big one. He's off by a lot in terms of energy requirements when he discounts electrification. The second one to your point, he doesn't understand economies or manufacturing scale and modularity. He's still thinking big, big watts scale coal and nuclear plants as opposed to manufactured components put into an optimized global supply chain and constructed in parallel over an extended period of time. We're now at the point where it can put a gigawat of
offshore wind in ten months of construction. We're putting in gigwatts of solar every day now simply because of that manufacturability and that global supply chain, the standardization, and then the parallelization of construction, it's just much much faster. The third thing is he overstated our transition to a natural gas economy. He's asserting that we're forty years into a natural gas economy and only five or six years into
our wind and solar economy. But the wind and solar economy started in the seventies, so he's misstating when the wind and solar economy started and overstating the natural gas economy. And as I look around the world, I don't see his thesis being borne out in terms of actual stuff, And just look at Europe actually energy crisis. Natural gas demand has plommeted because wind and solar are fit for purpose, and there's a whole bunch of other stuff that can
be done around that. So he's got several things that are wrong, and unfortunately he never corrected any of that stuff, and it confirms Bill Gates's biases for nuclear I think there's a really good thing to talk about on this where we say when were the biases formed and why did they persist. That's a fundamental part of my analysis at THEIRS. What's your take, Gerard Laura.
I don't know how that thoughts were put together, but what I can tell you is that there's a lot of people who are taking advantage of especially the primary energy fallacy to just repeat at nauseum, we're not there. I barely scrushed the surface and so on. And here we're talking about one of my heroes. But now the guy needs a retirement. It's Danielle Jergin. I was an absolute fan when he wrote the Price, but when was that thirty five years ago? And now it's all over.
I mean, he's going to that sera week where all the oil executive oil themselves is like everything's going to be okay, nothing's going to change. Because of course there are the producers. They want people to continue to buy their oil, the first few industry and those guys, they are the firstylized in their head. And whilst they say, oh, look, Bill Gates is saying the same thing as we do. We need oil and nuclear, and then a lot of minions.
I don't want to name names, but I'm regularly in fight with those guys on LinkedIn, people who are talking about Michael.
But first, if thank you very much for summarizing that. I mean that way I couldn't done matter.
I was great.
I think you end up talking about nuclear and I'm not going to blame Smell for nuclear and Bill Gates. So I'm actually going to blame Dave McKay, who was a UK physicist who passed away a few years ago, and he wrote a book called Sustainable Energy Without the Hot Air. I really enjoyed that book as well, and there was definitely errors in it, but the major conclusion he had is we can't build an electricity system in and around renewable energy. That was really what he was
saying and there was no way around this. So as results, what we need to do is focus on energy efficiency and nuclear. So I blame him rather than smell and correct me if I'm wrong. I think what I conclude out of Smill is the conclusion that the Gates got from Spill was that the technologies are not there for this transition. Because actually, probably when even when Gates started looking at this, maybe a decade ago, Yeah, solo wasn't
what it is today. Batteries wasn't what. He has missed them, and he's got the focused on technologies which you can argue are not scalable. That's I think the mistake that he's made. And I find that's interesting that Gates has made that mistake given that he's a technologist. He just I mean whatever, it's a technologist.
At least he put money where his mouth was. So he has sunk an incredible amount looking for fusion or SMOs or that. Probably you're more attuned on the subject than me.
We have to go back further. This story for nuclear is similar to the story for hydrogen for energy in the late nineties early two thousands. For people who are climate aware and environmentally aware, they're looking for technologies which could solve the problem, and the options were fairly limited at the time. For road transportation, batteries obviously weren't fit for purpose at the time. It was a real leap of faith to say we're going to have an electric
rowth even cars, never mind trucks. In two thousand. Similarly, for nuclear, France and the United States had come out of pretty successful rollouts of nuclear programs. Is squint. They don't look too expensive, and so they needed something that could scale, They needed something that could work. Both of those things were met by nuclear and hydrogen, and so a bunch of people decided that that was the answer.
And this wind and solar stuff that had been around since the seventies and eighties clearly was just noturious stuff. So it's easy to make CRO's decisions around two thousand to two thousand and five, and Gates founded terror Power is traveling Way nuclear reactive company in two thousand and six around the same time that must put his money
into Tesla, just to compare and contrast. And so if you put all your money into those things and you've decided that those are the answers, then as time goes by, say twenty fifteen, when Breakthrough Energy Ventures was founded. By twenty fifteen, the answer was clearly that the data had changed and if we kind of go back to keyms, well, the data has changed, I will change my mind. What do you do, sir? But unfortunately, people like Gates live in this virtual reality that looks a lot like our
Earth but excludes stuff which doesn't confirm their biases. They tend to have people in filters around them which give them more what they want to know than what they don't want to know. McKay and smill, we're speaking to Bill Gates's cognitive biases around energy, and he wasn't receiving solid stuff that challenged his biases from the people around him. They weren't saying, Bill, you were right fifteen years ago, but it's time to change your mind.
It's hard.
I've spoken to people who are bounced off the bubble around Gates, and it really is there's a little court there and people are very jealous of their position in that court. They're very well funded to do stuff that they enjoy, and it's hard to get past that. I feel some regret for some of the people in that court because they couldn't been doing better work.
But this is kind of the problem.
Is we look at that breakthrough Energy of Entries was founded by six or seven billionaires, including Branson and people like that, and they were all pro nuclear people. They all wanted to solve the planet crisis. They all reached their position and opinion on technologies a decade two decades earlier, and weren't being challenged on those biases because that's not
the way their lives are set up. The stuff that enabled them to be extraordinary earlier in their careers by looking deeply into the business models, looking deeply for disruptive technologies, understanding the stuff, taking big bets on nason technologies, and then being ruthless business people to create their billions and making mistakes but solving them over time. They're not doing
that anymore. Like if you look at Musk as an example, it's another example of a poor climate aware billionaire Oligarch. The boring company and hyper loop were really stupid ideas, but he was post early Musk. In early Musk todays, he just learned everything. If he was getting too disrupting urban transit, he would read four hundred page books and talk to global experts and form his opinion and have
challenging conversations. He no longer does that. Now he has a win and then they buy time on boring machines and he starts a company. It's a divorce from reality and they no longer have people around them strong enough
to challenge and correct them when they get wrong. So it's fascinating to watch, and it's deeply unfortunate because we have this hagiography of billionaires, of the successful multi billionaires who are so influential they go to Davas and hobnobbed with world leaders, and people pay attention to them when their opinions are ten and twenty years out of date.
On Gates credits, he was very instrumental in pushing for the IR in the US, although it's a bit self serving because a lot of his company got a lot of subsidies along the way. That's a badogs. Are they forces for good or not? Certainly influence. They are huge in terms of money. Even with all the money in
the world. I can tell you, Bill Gates, if you listen the nuclear industry, can you, they can outspend everything you have, So don't go into nuclear If you want to give something to your ch learn.
Let's change the team slightly, guys. Let's assume Bill Gates manages to listen to this podcast. So what do we tell them? I give you mind one point. I just say at one point, okay, the future of this energy transition is all about standardization and scale. I don't care what it is that you know. If I don't look at transformers across the world, they're all customized. This is ridiculous.
They need to be standardized. Everything standardized. And if you look at the three penologies that have scaled most in our energy space, their wind turbines, their solar panels, their batteries, and they are all standardized and scaled.
So that's for me.
The message to him is focus on stuff that you can standardize and scale quickly if you want to make a different climate and to move this energy transition.
That's my one.
What's yours, Michael?
I would lean into that and understand manufacturing physical things Gates is brilliant, but his big successes were software things, which is an industry I'm intimately familiar with. It's very different than manufacturing hardware things. He wasn't a person who built laptops and cell phones. He was a person who built software. So understand the differences, because that's fundamental to
understanding wind and solar's dominance. And batteries dominance. And the second thing I'd say is take a moment ask yourself why it is you have this confirmation bias which is preventing you from leaning heavily into wind, solar and batteries when they're so obviously winning. Ask yourself why the system you've put up set up around you over the past twenty twenty five years is not enabling you to have
the success you had in software and disease prevention. And to be clear, I overlap with Gates and disease prevention. I helped build the world's most sophisticated communical disease management solution here in Canada after Stars one that was used in the Middle East during COVID. And so I get how transformative the Bill Mosigates foundations efforts and global disease eradication are. That's because they started in both cases with reality,
not bias. And so Bill go back to fundamentals. You're why you're losing in this domain because you can win excellent.
Okay, So big guys like to read, So I suggest you read the professor Benfiedberg How big things Get Done. I suggest you follow brilliant young people like not Burllard, like Dave Jones, they are like tons of them with fresh ideas, fresh data. And we'll do the episode on buy through. And I can tell you they've done one hundred deeps in ten years, which is a lot for a VC fund. It's a lot, you know, it's like one a month's and I don't know if it's the
mass effect. There are really great stuff, what for you. There's a lot of crap as well, but that's probably for another episode.
Gentlemen, ex up, my friends. This was good.
Okay, Girard has had his fulfilling moment. He wanted to say this for a while.
I didn't tell then way out of the system. We won't be invited. That's Serah week, that's for sure.
I'm looking forward to the other one because that quote to be care Gates is still highly resisting. This is great. We'll start the next time.
This is great.
That's a good introduction, very good.
I'm just going to say there's a sign of like Leebreak keeps getting invited two major hydrogen insider events to keynote yep, and he's definitely not singing from their song cheap. So I suspect some of these bubbles of confirmation, bias, and tribalism are breaking down. They're looking for answers to why they're not winning, and so the answers are out there.
Okay, guys, great too. Kim to you, I'm not sure we're going to be invited that next s week, although you never know, of.
Course we're going to be invited.
What I went anyway, Michael.
I think if Leebright gets invited to hydrogen insider conferences, we should be invited to nuclear and big oil conferences.
Yippie, thank you for listening to Redefining Energy. Don't forget to rate the show and subscribe on Apple, Podcast, Spotify, or the platform of your choice