Friday, October 23, 2015

Why Innovative Energy is a Bad Investment, or Why the Government Should Fund It, and Other Brilliant Observations About Energy

Bill Gates has said  a bunch of brilliant thing about innovations in Energy which have been reported in a article in The Atlantic.  I'll give you a summary which is much shorter than that article.

For energy, the incentive to invent is bad.  Patents give you a 20 year exclusive on your invention, and trade secrets don't really do much better than that.  But in energy, innovations are adopted over many decades.  In digital electronics, things are adopted almost instantly.  So while innovations in digital electronics are developed by the marketplace and paid for by patents, innovations in energy will be in the public domain before they have been broadly adopted!

A very high carbon tax could force energy to change faster than it is used to.  But perhaps better to just pay for the necessary innovations publicly, since they will wind up in the public domain benefiting society as a whole by the time they are broadly deployed.

But won't the government screw it up?  What Gates says is brilliant and insightful: “Yes, the government will be somewhat inept, but the private sector is in general inept. How many companies do venture capitalists invest in that go poorly? By far most of them.”

Responding to the concern that American politicians can't even agree on whether climate change is real, Gates said: “If you’re not bringing math skills to the problem, then representative democracy is a problem.”

“... the climate problem has to be solved in the rich countries. China and the U.S. and Europe have to solve CO2 emissions, and when they do, hopefully they’ll make it cheap enough for everyone else. But the big numbers are all in the developed economies, where China’s defined into that term.”

“When I first got into this I thought, How well does the Department of Energy spend its R&D budget? And I was worried: Gosh, if I’m going to be saying it should double its budget, if it turns out it’s not very well spent, how am I going to feel about that? But as I’ve really dug into it, the DARPA money is very well spent, and the basic-science money is very well spent. The government has these “Centers of Excellence.” They should have twice as many of those things, and those things should get about four times as much money as they do.”

There's plenty of good stuff in the article that I didn't include here.