President Obama and Bill Gates to announce historic investment in clean energy research

President Obama will join with the leaders of 18 other countries as well as Microsoft cofounder Bill Gates on Monday at the United Nations Climate Summit in Paris to launch a historic expansion in clean energy research and development funding.

This funding will come both in the form of public sector financing and private sector backing, and together they are likely to constitute the biggest investments in clean energy technologies in history.

Under the public sector program, which is known as Mission Innovation, each participating country will commit to a doubling of its respective research and development funding within the next five years.

This would bring total clean energy research among the 20 participating nations to about $20 billion within the next five years. While this is a major increase, some experts have called for far larger sums to be devoted to such research, given the urgent need to transition away from fossil fuels like coal, oil and natural gas in order to limit global warming.

For the U.S., which spends $5 billion per year on clean energy technology research — the most of any country in the world — the new commitment would require increasing such funding to at least $10 billion by fiscal year 2020.

The 20 countries launching the initiative include small nations like Denmark, where wind power is widely deployed, and leading emitters like the U.S., China, India and Brazil. Also involved are two nations in the Middle East, Saudi Arabia and the United Arab Emirates, as well as Germany, Canada, France, the United Kingdom, Australia, Indonesia and South Korea, among others.

The Mission Innovation countries together represent about 80% of global clean energy research and development spending and about 75% of global emissions of carbon dioxide from the power sector, a doubling of these budgets could yield new energy breakthroughs while sending a signal to developing countries that are calling for more aid from industrialized nations that have caused the majority of global warming-to-date.

"Right out of the gate, this announcement gives a major boost to the Paris talks," said Andrew Steer, president and CEO of the World Resources Institute, in a statement.

The initiative is open to participation by additional countries, with U.S. officials citing a surge in interest in just the past few weeks.

Some of the countries involved in Mission Innovation, like India, have energy priorities that are mainly aimed at increasing energy access, rather than cutting greenhouse gas emissions, and this initiative is seen as a possible way to accomplish this goal without increasing emissions of global warming pollutants like carbon dioxide and methane.

Along with this increase in public funding, a group of 28 high-profile investors, led by Microsoft co-founder and philanthropist Bill Gates, will also announce a plan to provide support for risky, early-stage clean technology projects in the industrialized and developing world, in order to boost the eventual deployment of such technologies. (Gates previously committed to spending $1 billion of his own money on clean energy research during the next five years.)

Known as the Breakthrough Energy Coalition, the private sector effort will complement the public sector moves to try to push new technologies across the dreaded “valley of death” that occurs when there is little funding to push high risk ideas that have a long return time on the investment.

In addition to Gates, this initiative has the backing of Virgin Group Founder Richard Branson, Facebook founder, chairman and CEO Mark Zuckerberg, venture capitalist John Doerr, Salesforce CEO Mark Benioff, Amazon CEO Jeff Bezos, Alibaba Group executive chairman Jack Ma, LinkedIn Founder Reid Hoffman.

The University of California system, through its chief investment officer, is also part of the Breakthrough Energy Coalition.

Brian Deese, senior advisor to President Obama, described Gates as “the intellectual architect” behind the private sector effort.

The Coalition’s set of investment principles states that only through public-private partnerships can energy access be expanded in developing nations while driving global emissions down.

“We can’t wait for the system to change through normal cycles,” Gates wrote.

The U.S. has the largest energy-related research and development budget in the world, but it was a small fraction — just 0.4% — of total federal spending on energy as of 2013, according to a paper Gates published on the coalition’s website.

Similarly, private sector research budgets among energy firms are less than such budgets at other companies, at just 0.23% of total revenues, according to a research paper Gates wrote. This compares to research budgets of about 15% of revenues for IT firms, the paper found.

Gates identified flow batteries and solar paint among the promising, but high-risk, technologies that are worthy of more private sector investment. If it works, solar paint could one day turn almost any surface into a solar energy panel.

“Humans have changed their energy diets before, but never as rapidly as we need to today. Moving this fast is unprecedented, which is all the more reason to start now,” Gates wrote.

While both initiatives are launching in Paris on Monday, they are technically separate, according to a White House fact sheet sent to reporters on Sunday.

An important caveat, though, is that the private sector investment network will be limited to focusing on countries that are part of Mission Innovation. That means that energy innovators in a country such as South Africa, which is not part of the government research and development program, would miss out on early-stage financing from the nearly 30 high-profile investors that are part of the Coalition.

Research and development has long been neglected
Mission Innovation, along with the Breakthrough Energy Coalition, are aimed at addressing a long-recognized, yet unaddressed, need for far more research and development funding if the world is to avoid the worst consequences of manmade global warming.

Over the past few decades, public sector energy-related research and development funding in countries like the U.S. has flatlined, despite numerous calls by politicians for a new Apollo Program for energy innovation. The exception to this was a significant, but temporary, surge in funding built into the Recovery Act in 2009, much of which went to high-risk, potentially high-reward technologies.

In the U.S., the majority of the additional federal clean energy spending in Mission Innovation would go to the Energy Department, which would require the support of congressional appropriators.

Energy Secretary Ernest Moniz said he sees the potential for broad bipartisan support for such an increase on Capitol Hill, despite the rancorous budgetary process in recent years.

“The innovation agenda has multiple objectives, and the innovation agenda is one that actually does attract a lot of public support,” Moniz said in a conference call with reporters. Moniz said the five-year timeline of the increased investment would amount to a 15% compounded increase in his department’s budget each year, or about $600 million more per year.

U.S. research and development spending viewed as % of discretionary (non-defense) spending, since 1962.

Moniz said that the emissions cuts being discussed in Paris, along with other measures, will help to develop a multi-trillion dollar market in the next several years, which will benefit the countries that take action earlier and more rapidly. This is increasingly recognized in both the government and private sector, he said.

May address developing country concerns about financial assistance
The new public and private sector programs could help avoid one of the many mines that lie just beneath the surface on the road to a new global climate agreement in Paris.

The issue gets to the core of why there have now been 20 climate change conferences (this is the 21st, also known as COP-21) yet we are without an effective global climate treaty to show for it.

The countries that stand to lose the most from climate change are developing nations that contributed the least to causing the problem in the first place, and they have long sought to be compensated for the increased costs involved with both developing their economies more cleanly, as well as withstanding climate shocks, such as heat waves and flooding.

At the Copenhagen Climate Summit in 2009, the U.S. and other industrialized countries committed to providing $100 billion per year in funding to assist developing nations with energy innovation and climate change adaptation measures.

So far, though, about $60 to $65 billion has been pledged, when factoring in contributions from multilateral organizations like the OECD and World Bank. The issue of climate finance is one of the biggest sources of friction between the U.S., along with some other industrialized countries, and developing nations, particularly those located in Africa and low-lying nations in the Pacific Ocean.

“This initiative and this announcement should help to send a strong signal that the world is committed to helping to try to mobilize the resources necessary to ensure that countries around the world can deploy clean energy solutions in cost-effective ways in their economies,” Deese said on Sunday, shortly before departing for Paris with the president.