Gates Raises $1 Billion as Corporate CEOs Join Race to
Scale Clean Tech
and Akshat Rathi
September 19, 2021
BlackRock is making a $100 million grant
from charitable arm
Program will fund large-scale projects in four key industries
GENERAL MOTORS C
raised more than $1 billion in corporate funding for Breakthrough
Energy Catalyst, drawing on BlackRock Inc.’s Larry Fink and Microsoft
Corp.’s Satya Nadella to rally support for some of the world’s most
demanding clean-energy projects.
making a five-year, $100 million grant from its charitable
foundation. Microsoft and
the other backers -- General
Motors Co., Bank
of America Corp., American
Airlines Group Inc., Boston
Consulting Group and ArcelorMittal
are providing a mix of equity capital and so-called offtakes, or
purchase agreements tied to the projects.
“We’re not doing
this to make money,” Fink, BlackRock’s chief executive officer, said
in an interview together with Gates on Bloomberg Television. “We’re
doing this to seed these ideas, to rapidly accelerate ideas.”
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established Breakthrough Energy Catalyst to accelerate the commercial
viability of four key solutions to the climate crisis: green hydrogen,
sustainable aviation fuel, long-duration battery storage and carbon
capture from the air. In practice, Catalyst will supply the cash
needed to get capital-intensive projects off the ground, before debt
financing and government funds can be raised to cover the remaining
90% of the cost.
Today, none of
those four solutions is cheap enough to spur widespread adoption. For
example, jet fuel derived from more-sustainable sources such as
industrial waste or alcohol is about five
expensive as kerosene.
Catalyst projects will, by operating at scale, prove that the
underlying technology can be cost-competitive and eliminate the “green
premium” over conventional standards.
“The model here
is what happened with wind and solar and lithium-ion,” Gates said.
“Those products had very high prices compared to conventional
techniques, and fortunately Germany and Japan and other buyers funded
the scale-up, and now those products fit the normal sort of
now is speed. Governments that signed the Paris Agreement on climate
in 2015 are racing to meet a mid-century goal of reaching net zero,
which requires not only emissions cuts but also removing carbon
dioxide from Earth’s atmosphere.
Nine of the
world’s largest economies and many companies, including BlackRock,
have pledged to reach that target.
Photographer: Jeff Pachoud/AFP/Getty Images
“The pathway for
solar and wind, that was a 30-year pathway to make it competitive with
hydrocarbons,” Fink said. “We don’t have 30 years. We don’t have 10
Gates, who has
estimated the cost of reaching net-zero emissions at $50 trillion, is
hoping his program becomes a model for public-private cooperation to
address the threat of climate change.
Read more: Climate Change Is Forcing Us to Adapt to a New World
Catalyst agreed to raise $1.5 billion in return for billions more in support,
some of it contingent on legislation, from the U.S. Department of
Energy. Separately, Catalyst committed $500 million in June in return
for matching funds from
the European Commission and European Investment Bank for a similar
effort across the Atlantic.
pitched Nadella and then Fink, who said he in turn had some “very
serious conversations” persuading fellow CEOs to back Catalyst.
ArcelorMittal is making a $100 million equity investment over five
years, and American Airlines also is contributing $100 million. The
other partners didn’t detail their involvement.
and scalability are two major differences between most tech products
and clean-energy solutions. While little to no capital may be required
to develop a smartphone app, even a pilot
carbon capture can cost tens of millions of dollars.
investors have mostly steered clear of ambitious green undertakings
because of uncertain returns. Gates himself has noted publicly
that he “lost a lot of money” on battery development.
Photographer: Alex Kraus/Bloomberg
oversees almost $10 trillion in assets at BlackRock, said there’s an
“enormous” amount of capital waiting to invest in technology proven to
reduce the green premium.
frightened about where the money’s coming from,” he said. “I just want
to make sure that we have the science and technology and the
viability. Once we know that, the capital will be there.”
the infusion of new cash and commitments, Catalyst is inviting
would-be projects to fill out a request for information. That’ll be
followed by a more precise and technical request for proposal, or RFP,
possibly by the end of the year.
Gates, in the
interview, laid out a timeline and some parameters:
start funding projects in 2022, probably several in each area.
cover early-stage costs such as design and add up to “maybe 10%” of
the total cost.
The plan is
to recruit a total of about 20 companies as anchor partners and
increase the pool of private capital to $3 billion.
hydrogen and sustainable jet fuel are advanced enough that they
could “get to a low price” in three to four years.
“I’d be very
disappointed if we don’t see a dramatic reduction in the green
premium, even in less than five years,” Gates said. “Because that
should let us do two rounds of projects, the first projects and then
take the learning from those first two and a half years and do a
second round that will bring the costs down even further.”
Catalyst is the
latest in a series of initiatives that Gates has founded under the
Breakthrough Energy banner. A venture-capital arm, Breathrough Energy
Ventures, raised some of its money from billionaires Jeff Bezos and
Michael Bloomberg, the founder of Bloomberg LP, the parent company of
Bloomberg News. Catalyst is run separately and funded independently.
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