value and opportunity

The book:

What do you get if one of the richest (and maybe smartest) persons on the World decides to dedicate a few years to understand Climate Change and then writes a book about it how to solve it ?  In this case you you will get a very structured, non-dogmatic book with a lot of interesting insights.

Gates thinks that Fossil fuels are responsible for Global warming and in order to counter the worst effects, the world needs to be “net zero carbon emissions” in 2050. He makes a very convincing argument that just reducing emissions does not help anymore.

He is also very clear that reducing emissions to net zero is not easy but very hard, mostly because fossil fuels are so cheap and abundant.

The highlight of the book in y opinion is the chapter with the 5 “mental models” he created on how to analyze and prioritize potential solutions

1. Always relate an emission source /solution/ technology to the 51 bn tons of annual carbon emissions in order to get priorities right 
2. Don’t forget Cement (and steel) as major emission sources
3. Get a grip on what a gigawatt/megawatt means
4. How much space does any non-fossil power source need for a given amount of power generated ?
5. What’s the cost with the cost of Direct Air Capture (DAC) of CO2 as the ultimate benchmark

He then walks through in a very structured but easily accessible way the problems in the different sectors, starting with the Power sector (21% of emissions), the industrial sector (steel, cement etc., 31% of emissions), agriculture (19% of emissions), transport (16% of emissions), heating/cooling (7% of emissions) 

One suprise can be found here: Gates thinks that safer Nuclear power could solve the base load problem. Personal  I am not a big fan of nuclear, but his argument to put more effort into R&D is very convincing

In the following chapters he touches on the important role of Government for the transition as well as what individuals can contribute (eg eating plant based burgers…).

Summary:

In my opinion an absolute must read for anyone remotely interested in our planet and our future. Even if one doesn’t share Gates opinions, the book is clearly a very good starting point to get into the topic of global warming and the potential solutions. 

What I especially like about Gate is that he is not dogmatic and that he doesn’t have any religious mission.

My take away for investors:

• there will be much more renewable energy in the future. Much more (Solar, wind, esp. off shore wind)
• Many fossil fuel applications will go electric
• There needs to be an energy source to provide the base load as battery storage will never be enough. Gates thinks it could be safer nuclear power or maybe it is gas based (some fossil, Bio, green Hydrogen)
• He makes a very convincing case that Carbon Capture and Storage will be an important part of a Net Zero world
• Chemistry is really important in this area
• The power grids require some serious upgrades
• as a long term investor one should be very careful with investments that are related to fossil fuels. There will be constant headwinds for the foreseeable future
• Hydrogen will play a role but most likely in a very different form than some of the current Hype companies want to make investors believe