My guest today, John Doerr, is a living legend in the world of venture capital. Time and again, he’s been one of the first to identify and invest in some of the most successful companies of all time, including Amazon and Google. In addition, his New York Times number one bestseller called Measure What Matters popularized the management approach, known as objectives and key results or OKRs. Either of those alone would make him an interesting guest. Either of those alone would make him an interesting guest. But the truth is that neither of those are actually the reason that I’m so eager to sit down and talk with him today.
DOERR: This transition, Steve, to a clean-energy economy is not going to be some kind of party. There’re going to be winners and losers, and it’s going to be a bumpy and uneven transition, but the alternative is too discouraging to contemplate.
Welcome to People I (Mostly) Admire, with Steve Levitt.
The real reason I want to talk to John Doerr is that in his new book entitled Speed and Scale, he’s put together a plan that lays out exactly what needs to be done if the world is to reach zero net greenhouse gas emissions by 2050. It isn’t exhortation or moralizing. It’s a pragmatic roadmap. All these governments are pledging to become carbon neutral, but they don’t explain how they’ll do it. John Doerr actually has a plan.
LEVITT: So, you’ve written a book called Speed and Scale, which lays out a comprehensive plan to tackle climate change. And I want to get into the details of the plan later, but just to start: What’s your outlook on the climate crisis?
DOERR: I think my favorite quote from the whole book comes from the philanthropist and activist Laurene Powell Jobs. It says, “The climate crisis should be looked at as one of the greatest opportunities that’s ever been presented to humankind.”
LEVITT: And what about the costs of transitioning to a decarbonized world?
DOERR: The I.E.A. estimates the cost of this transition, all in for 40 years, is going to be $4 trillion a year. That entails replacing everything — all of our internal combustion engine vehicles, the whole oil and gas industries. That’s all the solar panels. That’s all the wind. And I think, Steve, you know the estimates from economists of the all-in social costs of a polluting carbon fossil fuel-based economy — the premature deaths, the disruption. You’ve got to ask, “How much longer are we going to endure this devastation before we realize that it’s cheaper to save the planet than it is to ruin it?
LEVITT: Yeah. The $4 trillion actually sounds pretty cheap. If the world G.D.P.’s a hundred trillion and you’re saying, “Look, the cost is only 4 percent. If everybody just paid 4 percent per year of their wealth, we could solve this.” It sounds simple compared to actually doing it. How do you think we should finance it? What’s your opinion of, say, a billionaire’s tax? Do you think that’s a sensible way to be thinking about how to finance these things?
DOERR: Well, I will gladly pay more to solve this problem. I won’t speak for all billionaires or — we can afford to do this. We can’t afford not to do it. We’re spending those monies right now on subsidies for fossil fuels. That’s, as John Kerry says, “Insane.” We’re funding our own death.
LEVITT: So, you’ve been with the venture capital firm Kleiner Perkins for over 40 years. In a typical year, roughly how many entrepreneurs looking for funding would reach out to Kleiner Perkins, and how many would get the chance to make a presentation, and how many would you eventually fund?
DOERR: So, in a typical year, we’d receive 3,000 proposals. We’d screen those 3,000 down to some 300 who we would have first meetings with. In a typical year, we’d make 60 — I’d guess — investment decisions.
LEVITT: Sixty out of 3,000. So, that is serious competition. And given the early stages of these investments, a lot of them go bust. What share of investments of those 60 would return essentially nothing in the end?
DOERR: I would guess that a fourth of the portfolio are complete write-offs, but of the remaining 75 percent, about half of those, maybe two thirds, are acquired by a larger company. And I’d say a fourth of the investments that we make overall are not only successful, but go on to be independent public companies.
LEVITT: You fund 60 ventures a year for the last 20 years — that’s over a thousand ventures. I’m guessing that you haven’t funded many that were the 18th firm into their market. Would I be accurate in that conjecture?
LEVITT: So, tell us about Google, because that’s really this amazing story in your background.
DOERR: I got a phone call — it was in 1998, I believe — from a friend of mine, Andy Bechtolsheim, who was a co-founder of Sun Microsystems. And he said, “John, I’ve just written a $50,000 check to a pair of amazing Stanford computer science dropouts, Larry Page, Sergey Brin. I think that what they’re doing could be very big.” And so, I met with Larry and Sergey straightaway, and I’ll never forget that conversation. It was in the conference room adjacent to my office, and they showed me their plan. It couldn’t have been more than 20 pages. They were very careful about what they wanted to disclose, but they showed very rapid growth of the first Google service, which was operated on a computer in their dorm room at Stanford. And they were generating so much traffic with their more relevant and more useful searches that they’d brought the Stanford network to its knees and were being thrown off campus. And so, they both wanted and needed capital to get more servers and to go build this into a business, though at the time, there was no real business model for Google. I asked them how big search — and therefore Google — would be, and Larry paused, but then replied, “10 billion.” And I about fell out of my chair. I said to him, ” Surely, you mean market capitalization?” He said, “No, John. Search in 1999 is a really crummy experience. And I can imagine that it will get better and better until we’re not just responding to keywords, but answering questions and anticipating what you want to know. Our dream is we’ll organize all the world’s information and make it universally available to everyone, anywhere, anytime, on any device.” And so, I wrote the largest check we’d ever written. I believe it was $12 million for about 12 percent of Google and have never looked back.
LEVITT: So, that was one of the best investments of all time. I went back and ran some numbers, and that stake would be worth $200 billion now. And I think it’s impossible for young people to imagine how bad search was at that time. I used to have a stable of different search engines and I would go to each of them. I’d ask my question, I would never get the answer I wanted. And someone said to me, “Hey, you should just try Google.” And I tried it once and I got exactly what I wanted, and I’ve not used another search engine other than Google essentially for the last 20 years. It’s amazing that they’ve managed to maintain that edge. For one company to be so dominant for so long — in the tech world it’s just incredibly rare, but it’s truly amazing how much value it’s bringing to people. But the story doesn’t end there, because you didn’t just give funding to Google, you also introduced them to a management approach known as OKRs that became central to their culture. What’s the story behind that?
DOERR: Shortly after we invested, I went to visit Larry and Sergey, and Google employees. And I did something that I’d done a lot of and that’s give them Andy Grove’s course. It was a one-session course on how to set goals in order to achieve real operating excellence.
LEVITT: Andy Grove was your mentor at Intel.
DOERR: Yes, he’s still regarded as one of the best managers of his or possibly any other era. Andy was an emigre from Hungary who came to the U.S. with very little, went to City University of New York, taught semiconductor physics at Berkeley. And my first summer job in Silicon Valley, somehow, I landed in Andy Grove’s course that he and other leaders at Intel taught. And one of his lessons was on setting goals or IMBOs, he called them — Intel’s Management By Objectives, which I, with permission have renamed O.K.R.s — Objectives and Key Results. And this is simply a management methodology that allows people to focus, to get aligned, to get committed, to track their progress, and then stretch for nearly impossible goals. So, I gave this course to Larry and Sergey and at the end of it I said, “So what do you think? Would you use this at Google or not?” And I’d like to tell you that Sergey enthusiastically embraced it. Not so. What he said was, “John, we don’t have any better way to manage this company, so we’ll give that a try.” I took that as a kind of ringing endorsement because every quarter since, every Googler has written down her objectives and key results and posted them on an internal website for the entire company to see. At the end of the quarter, every Googler will grade their goals, whether they achieved them or not. But the most powerful thing about this is then they’re swept aside. They’re not used for bonuses. They’re not used for promotions. They serve a higher purpose to get everybody aligned around the things that matter the most. It’s what the teams, the individuals are declaring is the most important work for them to do. And a good grade at Google is considered to be about 70 percent. You can use this tool to encourage risk-taking. As Larry Page would say, “I’d rather have a team aim for Mars and know, if they fall short of that, they’ll still get to the moon.”
LEVITT: It’s remarkable that it’s stuck for 20 years. I’m an advisor to a company that instituted O.K.R.s a couple of years ago. I had never heard of them at the time, and I was highly skeptical of the idea, and I was even less enthusiastic when I discovered I’d have to spend half a day per quarter working with the team to come up with the O.K.R.s. But it has really made a huge difference with the group. The fact that everybody knows what everyone else is supposed to do, I think is very powerful. I think the fact that they are not tied to compensation or promotion is genius because it seems so natural to tie these O.K.R.s to what people will be paid, but I think by freeing them from that connection, you accomplish that third goal you talked about, which is how do you get people to be ambitious and to actually take chances? And ultimately, because we always fall short, we’ve adopted the Google idea of a good grade is a 70 percent completion. It instills this idea that failure is okay. And I think that’s one of the hardest things in firms is to get people to admit that they failed at something rather than trying to pass the blame.
DOERR: The people who succeed at it don’t just adopt. They adapt this to their culture, their values. And Eric Schmidt said, “I can’t imagine running Google without it.”
LEVITT: So, I want to talk about your latest endeavor, which is to try to solve climate change using O.K.R.s as a framework. So, tell us about that.
DOERR: So, simply put, this book, called Speed and Scale, is a plan to transform society. It has six great goals, and the ultimate objective is to get to net-zero carbon emissions by 2050, and along the way to reduce them in half by 2030. This year, we will emit 59 gigatons of greenhouse gasses into the atmosphere wantonly, as if it’s some kind of free and open sewer. That number has got to get to net zero by 2050.
LEVITT: Do you embrace that target because you think it’s actually the right one or because it’s a good rallying cry? It seems to me that there’s nothing magical about net zero, that maybe we should be actively trying to reduce CO2 concentrations in the atmosphere, not just stabilize them. If there’s a strong case for getting to zero, there’s probably a strong case for going even further. So, I was just curious about your thoughts on that.
DOERR: I embrace net zero by 2050 because the science tells us that if we achieve that, we then have a probabilistic two-thirds chance of holding warming below 1.5 degrees Celsius. The science tells us if it’s above that, we will increase, to an unacceptable degree, the likelihood that there are runaway tipping points.
LEVITT: I’d like three out of four or four out of five, you know? Why stop at two out of three? I’m sure the answer is “Well, because the politics are such that it would be hard to push even further,” but — but I don’t think we should lose the idea that zero is not a magical number. Negative numbers would be really good, too.
DOERR: Negative numbers are very, very hard. Let me just go over the six big buckets, the sources of these emission reductions. So, the first thing we must do is electrify transportation, and that means stop using gas and diesel to power our vehicles. The second is to decarbonize the electric grid. And it simply means generating electricity with solar, wind, and safe nuclear — not with coal, not with gas. The third big opportunity is to fix our food systems, which means eating less meat and dairy, wasting less food, and while we’re at it, improve our soil health. The fourth big objective is to protect nature, and that means to stop deforestation, protect our oceans, our wetlands, our grasslands. The fifth big objective is to clean up industry. And that’s how we make materials, like steel and concrete. And then, Steve, the final thing we’ve got to do is figure out how to remove what I call the “stubborn carbon” that we’re still going to emit either due to rogue actors or needs like long-distance aviation. There’s a total of 10 gigatons out of the 59 that fall into that very difficult to solve bucket. Natural means, like kelp forests or direct air capture — the honest truth is no one knows how to do that economically today. It costs six or seven hundred dollars to remove a ton of CO2 via direct air capture. We have to do that for 10 gigatons. So, that would be $6 or $7 trillion per year. In fact, just capturing and sequestering one gigaton is equivalent to running the entire petroleum industry in reverse gear. This effort is going to require a collective coordinated effort greater than what it took to win World War II. The bottom line is what we’re doing today is not enough. We’re neither ambitious enough, nor urgent enough to get the job done. And indeed, the Glasgow Conference of Parties on Climate, according to Carbon Tracker, if we achieve the pledges that are in place, by the end of the century, we’ll have warming of 2.4 degrees Celsius. Not 1.5, 2.4. That is horrific.
LEVITT: So, in each of these six big buckets in the book, you lay out a series of O.K.R.s to achieve the particular goal. I want to get into the weeds a little bit with each of these and let’s start with the biggest, which is decarbonize the grid. Could you just run through the seven key results that underlie the objective of decarbonizing the grid?
DOERR: We’re going to decarbonize the grid. That’ll be to reduce 24 gigatons of global electricity and heating emissions to three gigatons by 2050. That’s a net reduction of 21 gigatons out of the 59 we’ve got to drive to zero.
LEVITT: And just to be clear, every one of your O.K.R.s across these big sectors applies not just to the U.S., but to the entire world, right? The U.S. has only 15 percent of worldwide emissions and any solution that focuses on the U.S. cannot be successful.
LEVITT: So, right now, if I’m correct, maybe 60 percent of our power is coming from fossil fuels? Is that right?
DOERR: That’s right. And the specifics of that one key result are that we get 50 percent of our electricity to be zero emission by 2025. Notice there’s a specific goal and a date. By 2035, we need 90 percent of the electricity to be zero emission.
LEVITT: Okay. So, that’s one key goal. The electricity has to be essentially all carbon-free. Number two.
DOERR: Number two is a way to get there, and that’s to have solar and wind be cheaper to build and operate than the polluting carbon sources, and to do that in a hundred percent of the countries in the world by 2025, up from 67 percent of the world, which is where it stands today.
LEVITT: Relative to many of your key results, that sounds like it’s within reach.
DOERR: Each of these is pragmatic. It’s achievable, but it’s also a stretch goal and it requires innovation and deployment. Solar and wind are a cheaper form of electricity than coal, typically, but there still remain entrenched interests and big investments that people are not ready to write off. In the last year, China has installed more coal than ever before. It’s also installing more solar, and the world is hungry for more energy. If we’re going to electrify everything, we’re going to need lots more energy than we use today. So, there’s no question that one of the single biggest and best things we can do is put a nail in the coffin of coal and turn off the power plants that are currently in use.
LEVITT: A huge problem right now with wind and solar is that it’s an unpredictable source of power that can’t be ramped up to meet peak demand, which makes improvements in electricity storage — which is your third key result — really critical.
DOERR: And it calls for electricity storage to be below $50 per kilowatt hour for short duration, that’s like four to 24 hours, by 2025. And below $10 per kilowatt hour for long duration storage. For example, if it was overcast in Tokyo for two weeks, which could happen, you need long duration storage to meet those needs. And we’ve set a deadline of 2030 to get that done. We’ve got to provide for a base level of electricity when the sun’s not shining and the wind’s not blowing. Another way to get there is to design a modern demand-response, high-voltage grid, so that you can move wind from, for example, in the U.S., the Great Plains states to the population centers on the coasts. It’s a systems problem, but throughout all of these realms, cost is king. We’ve got to make the right outcome the profitable outcome, so it’s the probable outcome.
LEVITT: So, one of your key results is that there’ll be no new coal or gas plants produced after 2021, and that all coal plants will be retired or be transformed into zero emissions by 2025.
DOERR: That’s key result 2.4. A very powerful one around which there was a growing consensus is number 2.5, which is methane emissions. And if we eliminate the leaks, the venting, and most of the flaring of methane from coal, oil, and gas by 2025, we’ll reduce greenhouse gas equivalents by three gigatons. That’s a huge gain in a very short period of time.
LEVITT: I’ve honestly never really heard about methane leaks inventing at the site of fossil fuel extraction. And three gigatons — that’s 5 percent of worldwide emissions are coming from this source that nobody’s talking about.
DOERR: That is a very exciting area. And there are other sources of methane besides those that I’ve identified. A very large source is the belching from cows. And there’s a fascinating early development that if you feed cows a certain kind of seaweed, you can reduce their methane emissions by 90 percent.
LEVITT: So, the sixth key result covers heating and cooking.
DOERR: Right. The global goal is to cut gas and oil usage for heating and cooking in half by 2040 in the developing countries.
LEVITT: That’s one of the few places in your entire book where you leave a little slack. Usually everything gets cut essentially to zero, but here, you were willing to settle for half. And I guess that’s just because of the impracticality of changing the way people cook and heat in much of the world?
DOERR: Totally. This is a pragmatic plan, and we will not get impoverished people who are living on the edge of survival to stop using wood to cook their food, and so we’ve got to find a way to offset that.
LEVITT: And then we have one more key result in this area. That’s number seven.
DOERR: The most important thing we can do is slash emissions, but another thing we can do is simply conserve — that is, use less energy. And so, we call for a quadrupling of the energy productivity rate. That’s a measure of how much economic activity, goods, and services we can get out of a measure of fossil fuel consumption.
LEVITT: So, to hit the goal of net zero by 2050, we need more or less every country to hit more or less every one of these seven key results we just talked about. And that’s just decarbonizing the grid. We haven’t even talked about food or transportation or other industry. Being realistic, do you actually think there’s any chance at all that we’re going to achieve this or anything close to it?
DOERR: Yes. I think this is achievable. It’s a tall order and we won’t achieve all of these. We will fall short on some and exceed on some others. But I want to emphasize this, Steve, we are fast running out of time. The estimate was just released in the last year that we have a carbon budget — it’s like a household budget — of 400 more gigatons all told. That’s how much more carbon we can emit before we go past the two-and-a-half-degree threshold. We are right now emitting 59 gigatons per year and that number is growing. That means — my basic Rice University math — we’ve got about seven more years to go at this rate. The greenhouse gasses that are emitted stay in the atmosphere for a hundred years or more. So, the world is never going to be cooler than it is today. It is going to warm. The question is, can we level off by acting now on this plan?
LEVITT: So, you’ve just made two totally different statements. One was that we need to act now, and the second implied one was that all of the evidence seems to point in the direction that despite the need to do something, we aren’t. Let’s just take one of your O.K.R.s, which is that there should be no new coal plants after 2021. Well, 2021 is about to end. And I just did a quick online search using Google. And it suggested that there are 200 coal plants under construction and 200 more in the planning phases. At the recent meetings at Glasgow, the countries couldn’t even agree to say the wording that in the long run, we should eliminate coal. It just seems like the leaders are so out of step with the actions that need to be taken to make your plan a reality.
DOERR: There was deep disagreement in Glasgow over the change of language from “phasing out coal” to what India insisted become “a phase down of coal.” And this is an important and subtle issue. That goal has an asterisk calling out the timeline which I cited for developed countries. But for developing countries, there’s 200 million Indians who have no access to electricity. While I’d love to see the developing world leapfrog straight to renewables, that’s not going to happen. This transition, Steve, to a clean-energy economy is not going to be some kind of party. It’s not a — this is not a kumbaya kind thing. There are going to be winners and losers, and it’s going to be a bumpy and uneven transition, but the alternative is too discouraging to contemplate.
You’re listening to People I (Mostly) Admire with Steve Levitt and his conversation with John Doerr. After this short break, they’ll return to talk about a carbon tax.
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LEVEY: Hey Levitt. So, in our second episode with Max Tegmark, we answered a question from a listener about how to collect and analyze data. In that discussion. You brought up the Peltzman Effect.
LEVITT: Yes, the Peltzman effect, which is named after my good friend, Sam Peltzman, an economist here at the University of Chicago. And here’s the idea when you introduce a safety device, the direct effect is to reduce the number of injuries or the harm — A seatbelt, for instance. But Peltzman pointed out, there’s actually a second effect at work. Now that I feel safer because I have a seatbelt, I might actually drive in such a crazy way that overall injuries or deaths can go up, even though I’ve introduced a safety device that actually works.
LEVEY: Right. So, during the conversation that you and I had, you said: “I will say empirically, I don’t know of any very good cases where you can actually see a safety device making things more dangerous, on net.”
LEVITT: So, even though theoretically, it’s possible that a safety device makes things worse. I stand by my position that I don’t know of any empirical cases where it’s actually been proven.
LEVEY: Well, one of our listeners wrote in to ask about American football. And wondering if helmets actually make American football more dangerous. The idea being that football players, if they weren’t wearing helmets, wouldn’t be so rough on each other.
LEVITT: So, that is particularly interesting because I had forgotten about it but that was the very first episode of Freakonomics Radio back, I think in 2010. That was the topic that Stephen Dubner took on. And, look, I think that is an intriguing case, although I would say it’s far from proven, but there is this idea that people are now getting concussions and having more long-term damage than would happen if we went back, say, to the old leather helmets that used to wear back in the 1910s and ‘20s. Is there a lot of evidence for it? Not too much, but it does at least seem like it’s a possibility.
LEVEY: Okay, Steve. So, still on the Peltzman Effect, we had another listener named Carson write in, and he brought up this point about these playgrounds in Germany. Apparently, they’re making playgrounds a little riskier for kids in the idea that at a young age, kids will learn to take calculated risks. They’ll learn their boundaries. I was also reading that insurance companies are actually very in favor of these riskier playgrounds saying that as adults, these kids will then learn how to manage risk better. So, as the father of young children, who also spends a lot of time in Germany and the United States, what do you think about this?
LEVITT: I think this sounds like total nonsense. (ML^laughs) Have you ever watched kids at a playground? To think that they use playground equipment the way it’s supposed to be used, as opposed to (ML^laughs) turning it into whatever crazy risk-taking thing they can think of. And on top of that, who believes that children are good at knowing their limits? But much more far-fetched than any of this. I have been around a lot of companies and I do not know a single company on the planet that says, let’s do something now — like introduce children to risk — because in 25 or 30 years, when those children grow up, they will be better customers. I don’t know a single company that looks ahead more than a year or two, much less 30 years. So, this sounds to me like pure fantasy.
LEVEY: Well, Carson, thanks for bringing the playgrounds to our attention. And Zach, thanks for trying to fact check us. If you have a question, we can be reached at email@example.com. That’s P-I-M-A@freakonomics.com. Steve and I read every email that’s sent, and we look forward to reading yours.
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As much as I like John Doerr’s analysis, I think there’s one enormous shortcoming. He doesn’t think like an economist. And climate change is a problem where the economic approach has so much to offer. I’m going to challenge him on that. The other topic I really want to cover is carbon-capture technologies. My own personal opinion is that we as a society are totally botching it in this area. And I’m interested to hear his reactions to my arguments.
LEVITT: So, it strikes me that you approach the climate problem like an engineer.
DOERR: Yes. I am a card-carrying engineer.
LEVITT: Okay. But it seems to me that this is a problem where thinking like an economist, not an engineer, provides some key insights and I want to give examples.
DOERR: Please do.
LEVITT: I think you put way too little emphasis on putting a price or a tax on carbon. Now you certainly mention it, but it isn’t, in my opinion, given the centrality that it deserves. The basic problem surrounding fossil fuels is that when I drive my car or I eat a T-bone steak, I get the benefit of those actions, but everyone else suffers because these activities emit greenhouse gasses, and it’s a classic case of what economists call a negative externality. If we can just get the prices right by taxing me so that I take into account the harm that my actions cause to others, the market should take care of things. And essentially economists believe if you did exactly one thing on climate change, and that was to institute an appropriate worldwide carbon tax, that alone would be most of the solution to climate change. Basically, prices would take care of things, and a lot of the things you try to engineer in your book would happen automatically because the economics would dictate it. So, what’s your response to that?
DOERR: I agree with you that a robust and increasing worldwide tax on carbon would be an ideal solution. It’s, in my judgment, politically infeasible in the U.S. If it won’t be adopted in the U.S., it’ll be hard to get the world to adopt it. I think we can achieve a relevant price on carbon by taxing with transborder adjustments — tariffs on things like imports of dirty steel. There are other parts of this problem, which you, as an economist, will appreciate better than I do, of agency, for example, that the owners of buildings who are making decisions about how much capital to put into causing them to be zero emissions or low emissions are not the people who are paying the rent. 15 years ago, when I first started working in this field, I testified in Congress that the single most important thing we could do — well, there were three things: put a price on carbon, put a price on carbon, and put a price on carbon. And we almost got that done, but in the end, three Republican supporters were persuaded that a price on carbon was a job killing energy tax. And I don’t think the prospects for a price on carbon are very good, but I call for it, globally.
LEVITT: I think you raise a good point. It seems politically infeasible in the U.S., but I think most of what you’re talking about in this book is politically infeasible. It’s just not as obvious that it’s politically infeasible because we haven’t tried to do it yet. The easiest thing to do in a global world where we had real cooperation would be, you would just put a tax — and you propose a $55 per metric ton tax, and that’s right in line with what economists tend to argue for — you would just put it right at the places where fossil fuels are extracted. In principle, it’s really easy to enforce this tax. Now, of course, politically, it’s a disaster. Eighty percent of Americans are against any increase in a gasoline tax, which is crazy at the same time that most Americans are in favor of taking steps to try to fight climate change. One could have imagined reorganizing your OKRs in your book to say, objective no. 1 is figure out how to get a global tax in place. Why didn’t you go in that direction?
DOERR: I believe I have a responsibility to be ambitious, aggressive, commensurate with the dire nature of the problem, but also realistic. I call for a price on carbon, but I don’t think it’s going to happen.
LEVITT: That surprises me because one thing you do a really nice job of in the book is talking about the need for grassroots movements to force politicians and companies into doing what is necessary. And it strikes me that the carbon tax is so simple and such a rallying cry, if someone wanted to.
DOERR: It is simple and fundamental, but I think you will agree with me that we won’t get a global tax on carbon across all sectors of the economy, unless the U.S. adopts one. Would you agree?
LEVITT: So, certainly the U.S. should do it, but I also think stranger things have happened in the U.S. than a bunch of young people starting to protest and to rally and to say, “Look, we need a carbon tax,” and putting that into place because the carbon tax you’re talking about is not even that big, actually. So, $55 per metric ton of carbon is 0.025 cents per pound of carbon. It would be the lowest tax on anything we’ve ever taxed in history. It would imply that the price of coal-produced electricity would go up by about 30 percent. It would imply that hamburger meat, which is a really bad source of greenhouse gas emissions, would go up about 50 cents. And I really think it’s been a massive failure on the part of economists and environmentalists to not have this be front and center. And I think partly because environmentalists don’t think like economists, and probably mostly hate economists, which gets in the way of doing what I think would be the simplest — not easy — and, I think, feasible path to making progress.
DOERR: I am wholly supportive of a price on carbon. I just can’t have the entire plan hinge on that. I want to go to objective number eight, which is to turn movements into action. The top key result there is to get the climate crisis to be a top two voting issue in the 20 top emitting countries and do so by 2025. There’s probably no better example of a movement leader than Greta Thunberg who, in 2018, was a lone Swede teenager protesting, sitting out school on Fridays in front of the Swedish parliament. A year later, in 2019, she’d organized and catalyzed a million-person turnout in a hundred cities across the world. She made climate a top two voting issue in Europe. Not in India, not in the United States, not in China. We have to do what Xi did in all the rest of the world by 2025 to have a hope of getting the carbon tax that you want passed through governments. Governments are lagging the action of youth, of investors, of innovators, of indigenous tribes’ leaders. Our second key result is that a majority of government officials, either elected or appointed, support this drive to net zero.
LEVITT: We haven’t talked very much about technologies to remove carbon from the air, whether they’re natural technologies or man created ones. And my stance, looking at the same kind of data you’re looking at, is that look, we’re going to botch this other path of actually reducing how much carbon we emit. So, our last best hope is — maybe it’s a moonshot, but trying to overcome this insanely difficult problem of trying to pull carbon out of the air. I’m disturbed by the fact that I think if you looked at the top hundred scientists in the world, that probably only a few of them are even working on issues related to climate change. And that seems like a mistake in terms of allocating talent to me. And as much as I believe in the market, I don’t think this is a problem that’s best solved by the market in the sense that you’ve got these individual firms — pretty small — that are jealously guarding their intellectual capital, trying to be the winners, when really, it seems like we need a collective coming together of scientific knowledge to try to solve the problem and sort out who the winners and losers will be later. How do you feel about that?
DOERR: So, I agree that we need much more investment in research and in innovation. I would agree that we’d even be well-served by a Bell Labs kind of coordinated effort.
LEVITT: I like to call it a Manhattan Project. So, obviously it’s different in a lot of ways, but I think that’s the kind of scale, intensity, and urgency that this problem warrants from the scientific community.
DOERR: No, not crazy. I would support it. I just want to — while we’re on the topic of carbon removal — make sure that people understand how awesome this challenge is. If we’re going to count on something like direct air capture to remove five gigatons, we’re going to need to get much more clean energy equivalent to — just in the United States — having solar panels to cover an area the size of the state of Florida. That process will soak up 7 percent of the world’s energy. That’s more than Mexico, the U.K., France, and Brazil. And with that CO2 that we capture, we’ve then got to pump it underground, which is the equivalent of running the entire world oil industry in reverse. Do you understand the scale at which this has to be done?
LEVITT: And what you just described was for five gigatons. And so, what I proposed is that we’re not going to get anywhere near your plan, so we’re going to need, say, 25 gigatons doing that. So, look, it seems to me that it is maybe unlikely we’ll be able to do that, but I have a lot of faith — maybe an ill-placed faith — in science and technology, and the idea that if we took the most brilliant people in the world and we incentivize them with an urgency — like we did trying to build an atomic bomb — tackling this problem you’re talking about of carbon capture, which is roughly the hardest problem that they could face. I admit I’m a little bit hoping for miracles, but on the other hand, the cost of doing that is so small. The cost of basic research is tiny. So, for a few billion dollars, we could put the scientists on the hunt. And I don’t really maybe have as much faith in universities as you do. I think universities work at a different kind of pace than the one that’s needed in this setting.
DOERR: They do. They do.
DOERR: How much faith do you have in entrepreneurs?
LEVITT: I have a lot of faith in entrepreneurs, but I want to turn the scientists into entrepreneurs. What I think motivates scientists is they want a tough problem, and they want to solve it, and they want to figure something out. And I want to blur the line between entrepreneurs and scientists, but I just don’t want the goal to be profit. I think profit gets in the way here, because profit is about a competition between a set of competing entrepreneurs, and so they guard their intellectual capital as opposed to sharing it. That’s what concerns me about the entrepreneurial approach, when in general, I love the approach.
DOERR: I’ve invested in three carbon capture companies. I think Bill Gates has invested in more. I would like to see a dozen well-funded, competitive companies that are trying to create this whole new industry. There are approaches. They’re too costly today, but if we get from $700 a ton to $100 dollars a ton — which the entrepreneurs believe is possible with scale, with volume, with experience, with cost engineering — we’ll have a solution that may tackle some of those five gigatons. You need more than cost reduction. You need early buyers who will buy down the expensive costs. And that’s what Germany did when it established a feed-in tariff for solar panels. The book tells the story of a German policymaker who established, for a decade, a declining price that the German utilities and government would pay for any renewable energy resources. The Chinese government saw this opportunity and said, “We want China to be the world leader in this new economic opportunity.” And so, they put in place solar manufacturing plants in every province, in every region funded by state capital, state loans. They sold for market share below costs. When those businesses failed the Chinese government forgave the loans and recapitalized the businesses, so that today, China is the 80 percent world supplier of the lowest cost way to make electricity. We need the same kind of gift to the world to encourage the uneconomic scale production of carbon removal. And so, the Bill Gates breakthrough energy effort, which I’m a part of, is No. 1: to fund ventures and entrepreneurs. No. 2: to galvanize governments into funding more R&D. Three, encourage fellowships for people who want to work in those realms. And four, to find buyers who will make uneconomic purchases, so that’s a feed-in-tariff-like phenomena in four fields: long duration storage, sustainable aviation fuels, green hydrogen, and carbon capture. So, companies like Microsoft or Google have said they’re going to be net zero. They’ll get to net zero by making uneconomic purchases to drive the costs down the learning curve. As you know, more money flows through markets in a day than all the governments in the world in a year. So, we’ve got to engage the private sector. We’ve got to engage capitalists and we’ve got to give them a two-part goal. Yes, make a lot of money, but do it while getting to our 59 gigaton net zero.
LEVITT: You talk like a businessman, which, in my opinion is a good thing, but what’s the reaction of the environmentalists been to your plan? They obviously like the objective. What’s been their reaction to your book?
DOERR: So, the reaction from environmentalists has been positive. The reaction I want to describe to you is from impassioned youth. And I would describe their reaction as “Blah, blah, blah. More talk, more pledges, but no action.” And they have every right to be deeply skeptical. The youth don’t trust that capitalism will solve this problem. And why should they? 15 years ago, we knew this was a problem. We didn’t act on it. Our policy makers, our businesses, are very, very late coming to the challenge, and it’s not going to be smooth. It’s not going to be easy. It holds great promise, great hope to re-imagine and rebuild every part of human activity to deal with really long-standing inequities, which are amplified by a climate crisis, whether they’re in health or education or economic opportunity.
LEVITT: So, are you optimistic?
DOERR: I don’t think we’re going to make it. I’m hopeful. There’s some mornings that I wake up and I’m exhilarated that there’s an unexpected agreement between the U.S. and China that they’re going to cooperate on climate. That was one of the biggest things to come out of Glasgow. I’m discouraged that we can’t get a global commitment to phase out coal. Honestly, Steve, we are not doing nearly enough to make it. I gave a TED talk 10 years ago, and I broke down at the end of it. I said, “I’m hopeful that I can have a conversation 10 or 15 years from now with my daughter that says you’re right. My generation created this problem and we’re on track to fix it.” We are not on track to fix it today. Let’s be really clear about that, but there’s a plan and there’s a path.
So, what do you think? This is what it will take to get to net zero greenhouse gas emissions by 2050. John Doerr’s hopeful. How about you? Me, I can’t say, “I’m hopeful.” I can definitely see Europe hitting the target. I can maybe kind of sort of imagine a scenario in which the United States does, although I think it’s a long shot. But China and India? No way. I really think as governments muddle along doing what they can, what we really need right now, is a climate Manhattan Project. I’ve talked to a number of top scientists. They’re excited. They’re ready. And the price tag, at least initially, is trivial. We just need somebody, whether it’s a government or a philanthropist, to write a check. There’s no guarantee the scientists will find a solution. But how as a society can we stand by and not even really try?
Thanks for listening and just a heads-up next week for those of you who have a little extra time around the holidays. There will be two new episodes of People I (Mostly) Admire. One in our regular feed and a bonus episode on Freakonomics Radio.
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People I (Mostly) Admire is part of the Freakonomics Radio Network, which also includes Freakonomics Radio, No Stupid Questions, and Freakonomics M.D. This show is produced by Stitcher and Renbud Radio. Morgan Levey is our producer and Jasmin Klinger is our engineer. We had help on this episode from Alina Kulman. Our staff also includes Alison Craiglow, Greg Rippin, Rebecca Lee Douglas, Zack Lapinski, Mary Diduch, Ryan Kelley, Eleanor Osborne, Emma Tyrrell, Lyric Bowditch, Jacob Clemente, and Stephen Dubner. Theme music composed by Luis Guerra. To listen ad-free, subscribe to Stitcher Premium. We can be reached at firstname.lastname@example.org, that’s P-I-M-A@freakonomics.com. Thanks for listening.
DOERR: What started me on this path was my daughter, Mary, yelling at me to say, “Dad, your generation created this problem. You better fix it.”
- John Doerr, venture capitalist.
- Speed & Scale: An Action Plan for Solving our Climate Crisis Now, by John Doerr (2021).
- “COP26: World Agrees to Phase Out Fossil Fuel Subsidies and Reduce Coal,” by Adam Vaughan (New Scientist, 2021).
- “Methane Emissions from Oil and Gas,” by Tomás de Oliveira Bredariol and Rebecca Schulz (International Energy Agency, 2021).
- “Building New Renewables Is Cheaper Than Burning Fossil Fuels,” by Will Mathis (Bloomberg, 2021).
- “Net Zero by 2050: A Roadmap for the Global Energy Sector,” by the International Energy Agency (2021).
- “World Energy Outlook 2021,” by the International Energy Agency (2021).
- “Salvation (and Profit) in Greentech,” by John Doerr (TED, 2007)
- Climate Action Tracker.
- What Matters.
- “The Dangers of Safety,” by Freakonomics Radio (2010).