Microsoft cofounder and technology financer Bill Gates said a “heroic effort” is under way in clean energy innovation but warned that the pace of transition is falling short of what’s needed to keep global temperature rises within the Paris Agreement limit.

Gates, speaking to a packed ballroom at CERAWeek by S&P Global in Houston on Thursday, said the participation of “big companies from all the industries”, including oil and gas, coupled with “good policy” in the US, have quickened the switch to cleaner energy.

"That still probably won't achieve the most ambitious goals, which is to limit warming to 1.5 or 2 degrees (Celsius)," Gates said.

“Just the scale of every country, every source of emission, where we're just at the beginning on many things. I mean, the steel industry today is 99% traditional process.”

The first carbon-neutral steel plants “will have very substantial green premiums associated with them” and will require substantial government tax credits and "buyers who are willing to help bootstrap those markets and commit to that offtake”, he said.

“It is a very complicated thing.”

Gates said: “A heroic effort is beginning. I'm very excited about it. But we shouldn't underestimate how incredibly difficult it will be... it's far, far more difficult than anything I worked on at Microsoft.”

He has put his own considerable money where his mouth is, having founded Breakthrough Energy, with the mission of commercialising clean energy technologies, and a nuclear energy technology company called TerraPower.

Gates was in Houston while on a tour of several low-carbon projects in Texas, including the 1PointFive direct air capture project site in the Permian basin.

1PointFive is partnered with Carbon Engineering, in which Gates was a significant investor. The partnership is now a subsidiary of Occidental.

Breakthrough Energy has invested “several billion dollars” in some 100 companies from a wide range of industries, he said.

“We only invest in companies that, if they're successful, they alone could reduce half a percent of global emissions. So it's a very narrow remit. But of course, it's across all the areas of emissions. It's fusion, it's agriculture, transport, buildings, you name it — steel, cement.”

TerraPower is building a reactor in the US state of Wyoming that Gates said will use technology that enables electricity output on demand, which could provide a baseload for renewable projects.

An application to the Nuclear Regulatory Commission is in the works and the company hopes to have “a number of these (reactors)” fully approved by 2030, he said.

Gates also sees big promise in potential nuclear fusion energy alternatives.

“In the long run, fusion will be almost certainly the primary source of electricity on the planet,” Gates said.

The multibillionaire technology pioneer also said the risks associated with artificial intelligence — a topic very much in the news and on the week’s conference agenda — are real, but not yet approaching alarmists' fears that AI will supplant human control.

“We are nowhere near the AI being to the point where there's some issue of control,” he said, but added: “The AIs are powerful enough that you want the good guys, say, doing cyber defense, to have an AI that's as good as the bad guy who's doing cyber attacks.”

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