Log out
My profile and settings
My bookmarks
Comment history
Please complete your account verification. Resend verification email.
today
This verification token has expired.
today
Your email address has been verified. Update my profile.
today
Your account has been deactivated. Sign in to re-activate your account.
today
View all newsletters in the newsletter archive
today
You are now unsubscribed from receiving emails.
today
Sorry, we were unable to unsubscribe you at this time.
today
0
0
Back to profile
Comment Items
You have not left any comments yet.
title
you replied to a comment:
name
description
Saved Posts
You haven’t bookmarked any posts yet.

Let’s look at how promoting health and development keeps Americans safe.

read more
Become a Gates Notes Insider
Sign up
Log out
Personal Information
Title
Mr
Mrs
Ms
Miss
Mx
Dr
Cancel
Save
This email is already registered
Cancel
Save
Please verify email address. Click verification link sent to this email address or resend verification email.
Cancel
Save
Email and Notification Settings
Send me updates from Bill Gates
You must provide an email
On
Off
Send me Gates Notes survey emails
On
Off
Send me the weekly Top of Mind newsletter
On
Off
Email me comment notifications
On
Off
On-screen comment notifications
On
Off
Interests
Select interests to personalize your profile and experience on Gates Notes.
Saving Lives
Energy Innovation
Improving Education
Alzheimer's
Philanthropy
Book Reviews
About Bill Gates
Account Deactivation
Click the link below to begin the account deactivation process.
If you would like to permanently delete your Gates Notes account and remove it’s content, please send us a request here.

Difference maker

Introducing the Green Premiums

A powerful tool for understanding clean energy and climate change.

|
0

Over the past several years, I’ve been making the case that we have to eliminate global carbon emissions. To avoid the worst effects of climate change, we need new zero-carbon ways to generate electricity, grow food, make things, move around, and keep warm and cool.

But knowing what we need to accomplish is very different from knowing how to do it—or even whether we can.

Do we have everything we need to deliver enough affordable electricity for the world, or do we need more innovation? What about things like clean fuels, steel, and cement—are they viable options yet? In short, which clean sources are effective enough and cheap enough now, and which ones aren’t yet?

Understanding the answers to these questions will help us make sure we’re putting our best minds and resources on the toughest problems in climate and energy. In my view it boils down to one issue: What is the difference in cost between a product that involves emitting carbon and an alternative that doesn’t? This difference in cost is what I call the Green Premium, and understanding it is key to making progress on climate change. (It is also a central idea in my book about climate change, which will come out in February.)

Here’s an example of a Green Premium: The average retail price for a gallon of jet fuel in the United States over the past few years has been around $2.22, while advanced biofuels for jets cost around $5.35 per gallon. The Green Premium is the difference between the two, which is $3.13, or an increase of more than 140 percent.

Since airlines would not be willing to pay more than twice as much to fuel their planes—and many customers would balk at the resulting increase in air fares—the Green Premium on biofuels suggests that we need to find ways to either make them cheaper or make jet fuel more expensive. Or a combination of the two.

Unfortunately, calculating Green Premiums is not an exact science. It involves making assumptions about the cost of emerging technologies, for example, that well-informed people can disagree about. It is also important to note that one reason the Green Premiums exist is that the prices of fossil fuels don’t factor in the damage they inflict by making the planet warmer. In many cases, clean alternatives appear more expensive because fossil fuels are artificially cheap.

So even though Green Premiums are an imperfect measure, they are better than no measure at all.

For one thing, they help us measure our progress toward eliminating carbon emissions. The bigger a Green Premium is—especially for lower-income countries like India and Nigeria whose energy needs are growing—the further we are from a zero-carbon future.

They also serve as a guide to action. In cases where the Green Premiums are big, we know we need innovations that will close the price gap. In cases where they’re small—or where clean products are actually cheaper than the polluting version—it suggests that something other than the cost is keeping zero-carbon products from being deployed, and we need to understand why.

I’ll give you two examples that show why I find Green Premiums so useful.

First, electricity. The Green Premium for electricity amounts to the additional cost of getting all power in our grid from non-emitting sources like wind, solar, nuclear power, and fossil fuel plants equipped with carbon-capture technology. For the reasons I explained in this post, there’s a high Green Premium for electricity in most parts of the world, and we need innovation to drive it closer to zero.

But clean alternatives are within striking distance in the U.S. and Europe. One study suggested that decarbonizing Europe’s power grid by 90 to 95 percent would cause rates to go up roughly 14 euros per month for a typical household in the European Union. In the United States, it would cost an extra $18 a month for the average home. While that is still a substantial premium, especially for low-income people, it’s encouraging that Europeans and Americans may be able to generate most of their electricity carbon-free for the cost of a few cups of coffee each month.

Once we know what’s driving a given Green Premium, it acts like a roadmap—it tells us the route we need to take to get to zero. In the case of electricity, one step is to keep deploying renewables where they make sense. Another is to invest more in developing technologies like long-term electricity storage, carbon capture, and advanced nuclear. And we need to modernize and expand the grids that deliver clean electricity from where it’s generated to where it’s needed—often a distance of thousands of miles.

Electricity is a relatively straightforward case. A much more complicated one is manufacturing.

Consider the process of making cement. It’s responsible for releasing carbon dioxide in two ways: when fossil fuels are burned to generate heat for cement production, and during the chemical reactions involved in the manufacturing process.

We don't yet know how to make cement without releasing this carbon. The best we can do is to capture it once it has been released and stash it away permanently, a process that adds between 75 percent and 140 percent to the cost of cement. Few construction firms would be up for absorbing such a price increase in any competitive market.

Other Green Premiums in manufacturing—for steel, for example—are also quite high. This tells us that we don’t have the tools we need to make clean manufacturing anywhere near economical enough that everyone will adopt it. We need more innovation.

As a rule, there are three levers we can pull to reduce Green Premiums:

  • Governments can use policies to either make the carbon-based version of something more expensive, or make the clean version cheaper—or, ideally, some of both. This could include requiring a certain amount of electricity or fuel to be generated in zero-carbon ways.
  • Companies and investors can commit to buying and using cleaner alternatives, investing in research and development, supporting clean-energy entrepreneurs and startups, and advocating for helpful government policies.
  • Individuals can help create markets for better, cleaner alternatives. When you buy an electric vehicle or a plant-based burger even though it costs more than the alternative, you’re saying to the companies that make these products: “There’s demand for these items. Make more and we’ll buy them.” That will drive investment in research, which helps decrease the price and ultimately makes clean products more affordable and available for everyone.

Not everyone can afford these premiums, but if you can, it’s a productive way to contribute.

I’m convinced that the Green Premium concept can bring clarity to a debate where it is badly needed right now. I hope more people embrace it and help improve the idea. Understanding the Green Premiums will help the world make the most of its efforts and funding as we work together to avoid a climate disaster.

Discussion
Thank you for being part of the Gates Notes Insider community.
Not seeing your comment? You can read our policy on moderating comments here and learn about our Gates Notes badges here.
Badge
📌
Pinned by
Gates Notes
Badge
ʼʼ
0 responses
Sort by
all
all
most
top
old
Comments loading...
CTW
Thanks for visiting the Gates Notes. We'd like your feedback.
Become a Gates Notes Insider
Join the Gates Notes community to access exclusive content, comment on stories, participate in giveaways, and more.
SIGN UP
Already have an account?
Log in here
Logout:


Become a Gates Notes Insider
Become a Gates Notes Insider
Join the Gates Notes community to get regular updates from Bill on key topics like global health and climate change, to access exclusive content, comment on stories, participate in giveaways, and more.
Already joined? Log in
Please send me updates from Breakthrough Energy on efforts to combat climate change.
On
Off
LOG IN
SIGN UP
Title
Mr
Mrs
Ms
Miss
Mx
Dr
This email is already registered. Enter a new email, try signing in or retrieve your password
Why are we collecting this information? Gates Notes may send a welcome note or other exclusive Insider mail from time to time. Additionally, some campaigns and content may only be available to users in certain areas. Gates Notes will never share and distribute your information with external parties.
Bill may send you a welcome note or other exclusive Insider mail from time to time. We will never share your information.
Sign up
We will never share or spam your email address. For more information see our Sign Up FAQ. By clicking "Sign Up" you agree to the Gates Notes Terms of Use / Privacy Policy.
Street address
City
postal_town
State Zip code
administrative_area_level_2
Country
Data
Gates Notes Insider Sign Up FAQ

Q. How do I create a Gates Notes account?

A. There are three ways you can create a Gates Notes account:

  • Sign up with Facebook. We’ll never post to your Facebook account without your permission.
  • Sign up with Twitter. We’ll never post to your Twitter account without your permission.
  • Sign up with your email. Enter your email address during sign up. We’ll email you a link for verification.

Q. Will you ever post to my Facebook or Twitter accounts without my permission?

A. No, never.

Q. How do I sign up to receive email communications from my Gates Notes account?

A. In Account Settings, click the toggle switch next to “Send me updates from Bill Gates.”

Q. How will you use the Interests I select in Account Settings?

A. We will use them to choose the Suggested Reads that appear on your profile page.

BACK
Forgot your password?
Enter the email you used to sign up and a reset password link will be sent to you.
This email is already registered. Enter a new email, try signing in or retrieve your password
Reset Password
Reset your password.
Set New Password
Your password has been reset. Please continue to the log in page.
Log in
Get emails from Bill Gates
Send me updates from Bill Gates
You must provide an email
On
Off
Email me comment notifications
On
Off
On-screen comment notifications
On
Off
This email is already registered
Finish
We will never share or spam your email address. For more information see our Sign up FAQ. By clicking "Continue" you agree to the Gates Notes Terms of Use / Privacy Policy.
You're in!
You're in!
Please check your email and click the link provided to verify your account.
Didn't get an email from us? Resend verification
Upload a profile picture
Choose image to upload
Uploading...
Uh Oh!
The image you are trying to upload is either too big or is an unacceptable format. Please upload a .jpg or .png image that is under 25MB.
Ok
Title
Mr
Mrs
Ms
Miss
Mx
Dr
Cancel
Save
This email is already registered
Cancel
Save
Please verify email address. Click verification link sent to this email address or resend verification email.
Email and notification settings
Send me updates from Bill Gates
You must provide an email
On
Off
Email me comment notifications
On
Off
On-screen comment notifications
On
Off
Select your interests
Saving Lives
Energy Innovation
Improving Education
Alzheimer's
Philanthropy
Book Reviews
About Bill Gates
Finish
Confirm Account Deactivation
Are you sure you want to deactivate your account?
Deactivating your account will unsubscribe you from Gates Notes emails, and will remove your profile and account information from public view on the Gates Notes. Please allow for 24 hours for the deactivation to fully process. You can sign back in at any time to reactivate your account and restore its content.
Deactivate My Acccount
Go Back
Your Gates Notes account has been deactivated.
Come back anytime.
Welcome back
In order to unsubscribe you will need to sign-in to your Gates Notes Insider account
Once signed in just go to your Account Settings page and set your subscription options as desired.
Sign In
Request account deletion
We’re sorry to see you go. Your request may take a few days to process; we want to double check things before hitting the big red button. Requesting an account deletion will permanently remove all of your profile content. If you’ve changed your mind about deleting your account, you can always hit cancel and deactivate instead.
Submit
Cancel
Thank You! Your request has been sent
Page https://www.gatesnotes.com:443/0z4eShzSMGDhECE_ secs = 0.0156178