Today's guest is Dr. Varun Sivaram, a Senior Visiting Fellow at Columbia University's Center for Global Energy Policy. Most recently, Varun was Chief Technology Officer for ReNew Power, India's largest renewable energy company, and was previously the director of the energy and climate program at the Council on Foreign Relations. TIME Magazine named him to its TIME 100 Next most influential people in the world, and he's also the author of the well-known book, "Taming the Sun: Innovations to Harness Solar Energy and Power the Planet." Varun’s experience is rare, in that he has lots of experience domestically and abroad, and also with both energy innovation and policy. We cover a lot of ground in this episode, and you won’t want to miss it! Enjoy the show. You can find me on twitter @jjacobs22 or @mcjpod and email at firstname.lastname@example.org, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
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Jason Jacobs: Hello everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Dr. Varun Sivaram, a senior visiting fellow at Columbia University's Center for Global Energy Policy. Most recently, he was Chief Technology Officer for ReNew Power, India's largest renewable energy company, and was previously the director of the energy and climate program at the Council on Foreign Relations. TIME Magazine named him to its TIME 100 Next most influential people in the world, and he's also the author of the well-known book, "Taming the Sun: Innovations to Harness Solar Energy and Power the Planet."
I was excited for this episode because Varun is very-well rounded, including experience both domestically and abroad as well as in innovation and in policy. We have a great discussion where we cover a wide-range of topics, including where we are in the climate fight. How Varun thinking has evolved when he first entered this field to today, where he thinks we are with the problem and where we need to go.
And of course, what is the role of innovation? What is the role of policy? What type of policy is gonna get us there? What's been holding us back? What's the role here in the U.S.? What's the role abroad? And more. Without further ado, let's bring him on. Varun Sivaram, welcome to the show.
Varun Sivaram: Thanks for having me, Jason.
Jason Jacobs: This is take two, but we're going to get it right this time.
Again, it's awesome to have you on the show. I've been a big fan for a long time. Your book and your talks and your Twitter and, and I think both the caliber of your experience, but also the diversity of your experience is going to make this a fascinating discussion. So I'm so grateful for you making the time.
Varun Sivaram: Okay. Thank you. And before we get started, just want to thank you for all the great work you've done. I love the community at My Climate Journey, all the podcasts, the folks on Slack. It's some tremendous work that you and Thai have done, so congratulations.
Jason Jacobs: Thank you so much. Jumping right in. You're kind of in the midst of a transition, so we won't talk about your current work, but maybe a better place to start then is just, I mean, I look at your experience and the diversity of your experience and the amount that you've packed into such a relatively small timeframe of a career.
So how do you describe yourself and what you do?
Varun Sivaram: Thanks. The way I describe myself is that I am a technologist who cares deeply about public policy as well. Now, I started my career only as a technologist. I started my career working at a firm called Nanosolar, which is one of those clean tech 1.0 startups, developing next generation solar technology that raised a lot of money but, unfortunately, ultimately it wouldn't be successful as many of the other clean tech 1.0 startups would fail. The ones invested between 2006 and 2011. And later on I did a PhD in physics in next generation solar technology. It's called Perovskite solar.
But since then, I've had this wonderful opportunity to take a world tour of different sectors, not just the science and technology sector, but different sectors: academia, public policy, the corporate sector, as well as different countries. As you know, I recently came back from India and I really think that getting to do a lot of diverse things has given me a different perspective on what it's going to take to achieve deep decarbonisation.
I don't think just being a technologist, like I started, is going to cut it. So I probably am most grateful for the break I got in 2013, when as a grad student in physics, I got an opportunity that was totally a surprise to me. I got to go to Washington D.C. for a summit. It was called The Academy of Achievement hosted by Wayne and Catherine Reynolds, and they put grad students from around the world together with leaders like the mayor of Los Angeles.
So that was the first time that I got real exposure to a public policy leader. The mayor subsequently was kind enough to bring me on as his energy advisor, and that's how I made that first shift from one sector to another from the science sector, developing just technologies into public policy. And I hope many other science grad students get the chance, just like I did, to get exposure to different sectors because I think that coming from a science background and then moving into public policy gave me an appreciation first for what the private sector could do and what academia could do, but also what it couldn't. You know, there's a reason that these companies that develop technologies where they spend hundreds of millions of dollars over a decade or more; there's reason many of these companies aren't well-suited to just private financing and why the federal government in the case of United States really needs to step in and take a role.
You know, that was a long winded answer to give you kind of a brief on on who I am. My goal has been to build experience across science then in public policy in the city of Los Angeles and the state of New York and at The Council on Foreign Relations in Washington D.C. where I ran the energy and climate program.
And then more recently in the corporate sector, I used to be a McKinsey consultant and I just finished a fascinating two years as the Chief Technology Officer at ReNew Power, which is India's largest renewable energy company. And I hope that over the next decade of my career—the last decade has been getting exposure to all these different sectors—over the next decade of my career I really hope to put all of these lessons to use to achieve decarbonisation at the intersection of these different sectors and both domestically and internationally.
Jason Jacobs: I kind of feel like that's why MCJ maybe resonates with you, is that, I mean, at least my ethos, and that probably spills over into the community that's getting built because people just self-selecting who maybe have a similar ethos that there's no one sector that's going to solve a systems problem of this nature and that it, it takes a village.
So, I think I've intentionally, my whole career has been spent in small, high-growth venture-backed startups, but I'm kind of feeling now, although I'm an entrepreneur at heart and I'm a builder, that innovation alone is not going to save the day. It needs to be innovation integrated into these other areas that matter: science and academia, R&D, government policy, democracy, media, consumer behavior, et cetera.
Varun Sivaram: No, I completely agree, Jason. I mean, I feel like we can work ourselves; we can tunnel ourselves into echo chambers. If all you do is you work at, say, the environmental community and you're only surrounded by people of that ilk.
Who do, by the way, wonderful work, and you only hear a limited set of experiences and opinions, you'll come to a radically different conclusion about what it'll take to achieve deep decarbonization. Then if you come from your background, Jason, or mine from Silicon Valley, where high-growth venture-backed different way of solving problems, and the answer for climate change is sort of in between and also all of the above.
And if you aren't surrounding yourself with people with radically different perspectives, people who are Democrats and Republicans, people who are private sector creators and entrepreneurs and people who are public sector administrators, stewards, you're just going to get this wrong.
Jason Jacobs: Yeah, I totally agree.
And that's one of my favorite parts of the MCJ community is just. As we were discussing before the show, just the diversity of the people that are in there and also that people don't congregate by occupation. They congregate around topics and, then when they congregate around a topic, there's just a big diversity of thinking and expertise around those topics.
And I feel like that's really the way that some of these knots are going to be untangled. The counter though, the thing I worry about, is that it takes away accountability from any one sector to carry its own weight, right? It's like, Oh, innovation can't do it alone. It needs the help of, and then it's like, that's also fingers that innovation can point to if innovation doesn't get it done.
So, how do you think about that and how do you reconcile those things?
Varun Sivaram: That's a great point. So to make it concrete, you know, I can very well argue that a company like Solyndra, which by the way, great, great engineers, very interesting product. I knew a lot of the folks who worked at Solyndra. If you're in Solyndra, you can very well say, you know what? We had a wonderful product. We were innovative folks, and we ultimately failed. Not because innovation was broken, but because energy is a really tough sector and federal government has to step in and we've gotta be insulated from China, when it becomes predatory and the way that they do foreign exports, blah, blah, blah.
And you might say, aha, there you go. You have a company not being accountable, or you have a federal government not being accountable and blaming the company, et cetera. But I actually think there are fairly well defined things that each community needs to do. And so we can actually hold each community accountable.
And that's what I spend a lot of my time doing with respect to the government. I think there are very clear things that the government needs to do that it's not doing when it comes to innovation particular, and we can't simply allow the government to point fingers and say the private sector isn't innovating enough.
For example, the federal government in the United States supports energy innovation to the tune of somewhere between seven and $9 billion per year. And depending on how you count it, it's something like one fifth to one tenth to even less of the level of funding that space, health or defense research and development gets.
It is a laughably low amount of funding that we afford to what is likely our largest national priority, which is building the competitive energy industries of the future. Clearly, one obvious thing that the federal government ought to be doing is trippling energy innovation funding over the next five years.
And that's one thing that now that I've moved back to Washington D. C. I'm going to push very hard for. And we can hold them accountable for that. It's going to be nobody else's fault but the governments, if the government does not ramp up its funding and get more intelligent in the way that it marshals those resources, and I can go through a similar laundry list of recommendations for the private sector.
Jason Jacobs: Can I just ask one question on that first point though? I mean, what would you say to the people that argue that, hey, before we go and triple the spending, can we look at how we're allocating the money that's already there? Because if we're not using that well, what makes you think if we 3x or 5x or 10 X or 100x, it's going to be any different?
Varun Sivaram: That's a great point. And I think we can walk and chew gum. So it is certainly the case that, you know, in the United States, the federal government needs to get better at deploying funding for energy innovation, and it's also the case that it needs to deploy way more resources. I can go through both of these in detail.
Again, we have clear prescriptions for both of them. So, for example, the U.S. Department of Energy has this historical structure rooted in a very convoluted history, and therefore has offices that are organized based on fuels. You have an Office of Fossil Energy. You have an office dedicated to renewable energy. And rather than do this, we really ought to reorganize the Department of Energy, so that it is application oriented. It's focused on building a flexible electricity system, or building systems to enable clean fuels, hydrogen, et cetera. Right? So applications are probably much more useful. You know, an Office of Transportation are much more useful and we can therefore allocate funding better.
Another problem with the Department of Energy is it tends to allocate funds mostly to public entities. But as a much more successful innovation engine in the federal government, the Department of Defense demonstrates it's a much better idea to marshall the private sectors. So the department of defense goes roughly 30 / 70. 30%. public, 70% private activity when it deploys its funding for innovation. That's a model I think we can learn from, and I think there's been progress under the Obama Administration. We had the creation of ARPA-E, which is this modern institution still just a fraction of the funding at $400 million. It's 5% of the federal government's budget for energy innovation.
But that's an institution that really uses universities and the private sector effectively. It invests in cross cutting initiatives and applications, not in these silos. And it's trying to solve big de-carbonization problems. So, I think we can get better at marshaling our resources and I think we can ramp up funding rapidly all at the same time.
Jason Jacobs: And you were about to switch gears and talk about the private sector.
Varun Sivaram: Yes.
Jason Jacobs: Before I rudely cut you off.
Varun Sivaram: Well, as you know. Clean tech 1.0-- the boom and bust --left us a lot of lessons. My collaborator, Ben Gaddy, and I— Ben is now at Gates Ventures—Ben and I wrote a paper called, "Why the VC Model is Wrong for Clean Tech," which by the way, got a lot of VCs mad at us. And in retrospect, we probably should have said something a little more nuanced. The nuanced view we came up with was the way venture capitalists invested in clean technologies, like solar technologies between 2006 and 2011, was just a bad idea. It led to over $25 billion of losses. But, going forward, I think the sector's learned many lessons.
It's learned that there needs to be a diversity of capital sources, not just VCs. You need some folks with long time horizons, patient capital sources. Some of these investors are coming in to fill those gaps, whether it's Breakthrough Energy Ventures or others. And again, there's a synergy, where if you're an entrepreneur, you probably ought to take some time developing your energy technology with non-dilutive public resources. You may want to go work for a Cyclotron Road or other user facilities that the federal government offers or that other sources, nonprofits, state and local governments enable you to basically take time to get your technology to a level of maturity where when you do ultimately take an equity round, you're not on the clock as hard as you were back in the clean tech 1.0 boom that ultimately resulted in the bust. There's one other crucial point that we found in our report, which has compared clean tech 1.0 to biotech. And we said, why is biotech so much more effective than Cleantech? And the conclusion was, one big reason is there are strategic acquirers in the biomedical space who, whether you're a large pharmaceutical company and you're willing to go acquire a startup or strategically partner with a startup developing some new drug. In the energy space, that wasn't the case. There wasn't that M&A activity coming through your large strategic corporates. And increasingly, I think these corporates, especially in Europe, whether you're European utility or an oil company, they are taking these steps to invest in innovation and startups.
So that ecosystem is evolving. And I think that's a good thing. But to answer your original question, every community has its own list of items to improve on, whether it's the public or the private sector. And I don't think that even though in theory, each community could say, Hey, I'm not accountable and it's the other community's fault.
I think we can hold them to account on these clear measurable deliverables.
Jason Jacobs: One of the challenges that I've had with trying to figure out how to navigate addressing climate change is that if you look at like addressing malware in internet advertising or something, it's kind of a well-defined problem.
Or if you look at like, I'm going to build expertise in SaaS companies. And whether it's a financial SaaS company or an insurance SaaS company, or a consumer SaaS company, or an enterprise SaaS company, it's all SaaS. And there's similarities across climate. It's like food innovation looks different than energy innovation, looks different than transportation innovation, which looks different than aviation innovation, et cetera. And the stages of innovation vary drastically, and innovation is only one piece of the puzzle, and it matters so much. Geography, the geography, country to country, region to region, et cetera.
So if you were stepping outside of yourself and I were stepping outside of myself and we were just having a discussion about climate change and about what we should be doing to address it, where does one even start in figuring out where to anchor or what to do, especially given that a team's like, any time you do one thing, there's unintended consequences and ripple effects that mess up something else?
Varun Sivaram: Man. That is a depressing take. It's very apt, Jason, but you're right. But the complexity of climate change makes a lot of analogies and parallels inapt. For example, in the space of innovation, a lot of people have come out and said, hey, let's have a new Apollo project or a new Manhattan project. And that's an inapt comparison because, you know, in the one case you had like a clearly well-defined goal, you know, launch this rocket, get a man on the moon, and the other hand you have with climate change, this desire or this need to get dozens of new technologies off the ground and in commercial deployment with far more stringent constraints with respect to costs than you did in the space program. Rather than a one decade investment program, we may need multiple decades around the world, not just one country, investing in dozens of technologies and fixing our regulatory framework at the same time.
All this is to say, that I agree with your framing, Jason. This is a hard problem, but that's not to say that this is an intractable problem and I think it's more useful for me to share a framework that makes this easier than one that makes it like that we should throw up our hands and feel helpless.
Jason Jacobs: And just one point of clarification that was not to say, hey, this is so hard.
It's insurmountable is to say, Hey, first let me lay it out. This is effing hard right now. It would be depressing framing if we then said and therefore we're not even going to try or what's the point. But if we say, no, this is hard, and we recognize that, and then what we've done is we've said, okay, because of these factors and because of the nature of this kind of problem, here's the approach we're going to take.
And then to lay out one, but like that's what I'm looking for from you is like, give me a reason for optimism.
Varun Sivaram: Yeah. The reason for optimism is there is actually a fair amount we know. I actually think we know the outlines of how we attack climate change, at least in each part of the world. The outline kind of takes three steps.
The first step is developing technologies that make clean energy more competitive than dirty energy, and actually so, so competitive, so cheap that we can unlock all kinds of new applications. And I'll talk about that in a second. So that's step one. A step two, and this is not serial; it's parallel. Step two is aligning market incentives so that people want to make economic decisions selfishly better aligned with decarbonization.
And the easiest way to do this as a harmonized carbon price across borders with adjustments across borders, et cetera. So that's the easiest way to constrain individual decisions in a free market economy is a carbon price. The step one is innovation. Step two is setting up the market rules and set three is what I call architecture, and this is the hardest part.
Even if you had step one and step two, you had really cheap technologies, innovative technologies, and you had a carbon price guiding everyone's buying decisions. You still would need a role for an architect. Often this will be the government to come in and say, for example, there are major infrastructure networks that we need in order for our clean energy systems to succeed.
We need high voltage transmission in this part of the country. Frankly, every part of the country. We need a pipeline network to move carbon dioxide around because we'll need a carbon economy, et cetera. So setting the architecture, both of the infrastructure and the economic markets. What does the power market look like, for example. That's an important role for government to play, but really we kind of know what to do on all three of these steps. We now have learned in the United States at least; we have half a century of learning on step one of what doesn't work in innovation and what does. On step two, every economist in the world will tell you it's a good idea to set up a carbon price.
The difficulty there is political will. And on step three, we have a fair amount of examples from around the world when it comes to transmission. China's a wonderful example of transmission. I'd argue actually, that India has done a fairly good job of building a nationwide grid that can handle at least some intermittency and renewable energy.
So we've learned some lessons on architecture as well, and now it's about putting these puzzle pieces together and spending the next couple of decades really making progress. On new technology emergence on constraining individual decisions and on the architecture of the future, we kind of know what to do. It's not so hopeless is my point.
Jason Jacobs: Well, I think what the skeptic would say is, Hey, Varun, I agree. We know what to do. In fact, we've known what to do for a long time, but we're not going to do it, and we're not showing any signs that we're going to do it. And even if we decided to do it, it's going to take way longer to get it done than we actually have.
How do you respond to that?
Varun Sivaram: So that's true. It is in fact, true that there's almost no chance we'll constrain global warming to two degrees Celsius. It is in fact, true that we've tried a lot of different things and politically it's never worked out. But I don't think we've tried the whole solution space far from it.
We are incipient in our exploration of the phase space here and the best lesson I think we can glean politically in this country over a bunch of failed initiatives in the past. We didn't pass nationwide climate legislation in 2009 we've been largely inert in our climate policy ever since president Trump took office.
The best lesson we can learn is that it's probably important to couch climate change in a broader economic and political strategy. Climate change is not a top tier issue right now, and it's not going to be a top tier issue for a long time. So politically that means that some other top tier strategy.
And I think the most compelling one is American competitiveness. That's gotta be the political strategy that motivates a bipartisan consensus. And one of the crucial pillars of enabling U.S. economic competitiveness has to be climate policy. Things that enable us to develop clean energy technologies that will help decarbonize the world.
But if we go with climate first. And we try and say, Hey, the reason we should do a carbon price is because we really ought to reduce our emissions. We probably won't make much progress in this country politically.
Jason Jacobs: And so I guess going through those in order. So if we take innovation, for example, you made the comment that we learned a lot about what does and doesn't work there from the first wave from 2006 to 2011 so what do you think the key learnings were that we should be keeping top of mind as we enter this next phase of innovation?
Varun Sivaram: Yeah, look, I think 2020 and this is one of the reasons I've moved back to the United States. I think 2020 offers us a historic political opportunity. We may be looking at the opportunity to pass pieces of legislation that really not only support innovation in the near term, but in the long run as well, and we have more to learn from than just clean tech 1.0. We had the surge in investment in clean energy of the 1970s to learn from the lesson there was, your surge really cannot be temporary.
We increased investment for energy research development deployment in the 1970s and then relaxed it in the 1980s a lot of the projects got stranded, both innovation projects and deployment projects. Now what we need is a sustained surge. So what I argue is we should have a tripling of research and development funding by 2025 and then it's got to stay at that level and continue going up.
I think we should spend $35 billion a year by 2030 and folks as diverse as Bill Gates as well as Republican Senators like Lamar Alexander, I think are on board with this agenda. In addition to making sure that funding is sustained at a high level, we really should be spending on demonstration. That's one large gap.
You often hear the term "valleys of death." It's an ill defined term, but one clear valley where we don't have enough funding is for demonstration. First of a kind demonstration.
Jason Jacobs: Plant number one. Right?
Varun Sivaram: So it's not just plant number one. So first of a kind or plant number one is useful, but then we're going to need the second and the third and the fourth and some small "N" of a kind where "N" is probably less than a hundred and almost certainly less than 10. That's where you need the demonstration funding.
Something interesting that I was studying recently. The loan guarantee program in the Obama years Recovery Act, the biggest success in my opinion from that program, possibly setting Tesla aside, is the launching of the utility scale solar photovoltaic market. The loan guarantee program supported the first five utility scale solar plants of greater than a hundred megawatts in the U.S. and around the world.
And right after those projects closed, just this wave of other projects closed and the U.S/ solar market began its meteoric rise. Now, those weren't first of a kind of projects. There was, I think over 20 gigawatts of solar deployed around the world at that time in 2009 when the loan program was authorized, but no one had ever built a plant that big.
And so demonstration comes in many, many different flavors. It comes in the first of a kind, as you and I were talking about. But it also comes up in the flavor of the first of a kind at great scale, which was the case in this utility scale solar, a technology that was already proven, but now deployed a great scale and modular technologies like solar batteries or even direct air capture or electrolyzers are probably going to have a different deployment or rather demonstration roadmap than non modular technologies like carbon capture on fossil fuel burning facilities, which you kind of have to build a big one to get going. Your first of a kind is also going to be your first of a kind at scale. And because of that projects like FutureGen, which was a Bush and Obama era, carbon capture project really didn't work out because folks didn't apprehend how difficult this first of a kind of scale was going to be because it wasn't really modular. So my point is not to be exhaustive about the lessons we've learned. I think we've learned a great deal of lessons. There are some simple ones. Make sure your funding surge is sustained. Make sure you're smart about funding, like you suggested Jason and make sure you're funding demonstration and make sure you're mobilizing the private sector, not just pumping money into the federal government.
You do these things. I think we've got a real opportunity in 2020 and beyond to jumpstart how this country competes around the world. And as a happy side-effect, we're going to be developing the technologies that can succeed here in the U.S. as well as in China, as well as in India. And that's huge.
Jason Jacobs: And if you look at the landscape today, where do you see as the biggest gaps or bottlenecks in helping that innovation reach its full potential?
Varun Sivaram: So demonstration is clearly one of them. We just talked about it. The way I think about the innovation is as a pipeline. There is no silver bullet to innovation. Innovation comes in many stages. You have basic foundational science that's really important. Then you have the development of prototypes building up the first pilot line of manufacturing, a big demonstration project, and then you have deployment incentives, and the federal government needs to think through every step of this in a very coordinated way.
I'll give you an example of how good the Obama administration was until I'm displaying my bias here, but I think the Obama administration did some wonderful, wonderful work. Fuel economy regulations are in the news right now because the Trump administration just rolled them back. We often hear about how cars were supposed to get to 54 and a half miles per gallon efficient, but truck efficiency standards for heavy duty freight are arguably just as important a standard. Now, the Obama administration had this neat system where they would fund a research and development for more efficient advanced trucking technologies. For example, lightweight materials for trucks to save fuel while they traveled long distances and they synced the results of those R&D and the opinions of experts working on this R&D with the demand standards, the standards for what the efficiency should be for the mileage standards for these trucks. That is the kind of coordination between research and development and deployment that I think needs to characterize every piece of our innovation strategy throughout that entire pipeline we're supporting technologies from inception all the way through scale deployment, and we have to be thoughtful about it.
Jason Jacobs: Here's an example of back to that systems problem and accountability. I've been pushing on this innovation and lessons learned because the entrepreneurs and investors in 2006 to 2011 they lost a lot of money, and so now they're coming back around and they're trying to figure out how do they not make the same mistakes? But when I asked you about innovation and what we need to do, you keep coming back to things that the government needs to do. And when we talk about bottlenecks, it comes back to government bottlenecks. Does that mean that there's enough private capital? Does that mean that there's enough entrepreneurship?
Does that mean that the capital is the proper types of capital for the types of innovation that are coming in, that government is the only one that needs to step up its game? Or does the private sector have a role to play as well?
Varun Sivaram: glad you called me out on that. Look, I'm knee deep in a report on the government would swipe talking about the government, but you're absolutely right, Jason.
It is not the case that only the government needs to be thoughtful about this. If anything, private capital providers are going to put their capital at risk or entrepreneurs for putting—this is their livelihood— they need to be super thoughtful about the lessons we learned in the last clean tech boom.
Now, as I shared earlier, I think folks are learning. I'm seeing increased investment, for example, in digitally enabled technologies, which are less capital intensive and therefore have a higher chance of succeeding. I am seeing the proliferation of incubators and accelerators and ways for startups to spend some time developing their technology before taking dilutive funding.
I'm seeing great activity from corporate players who are selfishly should be part of this ecosystem because they can really benefit from innovation. We were one of them. At RenewPower, we took a keen interest in evaluating and investing in startups because as a large strategic player, as a corporate, it was in our best interest to take the best the world had to offer in terms of technology, in addition to doing internal technology development. So yeah, Jason, you're absolutely right. There is no excuse for anyone in the private sector to sit back and say, yeah, I'm going to wait for the government to get its act together, and then innovation will take off.
Jason Jacobs: Well, then in another point though, you had talked about how venture capital was not the right fit for some types of innovation in the sector. Some people would say, yeah, but there's a lot of types of innovation that are a fit for venture capital, and so venture capital can focus on its piece and other forms of capital can focus on others.
But then there's other people that say, yeah, but venture capital and VC type innovation is just going to suck out of the air. They're going to get all the hype, but they're not going to be working on the most impactful stuff, and the most impactful stuff is going to suffocate, and it's the most impactful stuff that is not the right fit for VC that really matters.
So what is your view on that?
Varun Sivaram: Yeah, I tend to agree. Look, the traditional VC model is not very well-suited, as we wrote for a technology that's going to require much more than five years is going to require hundreds of millions of dollars. And it's going to play into one of these commodity markets, whether it's solar panels or batteries.
And that's why for a range of technologies, whether it's direct air capture or next generation solar, I do fear that VC only is probably the wrong capital structure.
Jason Jacobs: For like infrastructure moving atoms kinds of companies. Right? But I think what I'm asking though is there are kinds of companies that play in these sectors.
And when I say these sectors, not just within energy, but synthetic meat, you could say is a climate innovation, micromobility you could say is a climate innovation. I mean, if you open up your mind a little bit, you could say that video conferencing is a climate innovation or a marketplace to help big companies offset their emissions is a climate innovation.
And those aren't touching infrastructure at all. So I guess what I'm trying to get at is I get that for the energy innovation, it might not be the best fit for venture capital, or at least a lot of it, but does it have to be an energy innovation to matter for climate change?
Varun Sivaram: No. Let me be more precise. I think the kinds of deep tech innovations I was talking about, long duration storage, next generation solar direct air capture these innovations are necessary but perhaps not sufficient for deep de-carbonization and a range of other technologies from video conferencing to synthetic agriculture it's not clear to me are either necessary or sufficient, but can certainly be important to achieve deep, de-carbonization. And I therefore believe that venture capitalists have plenty of wonderful avenues where the model is going to work for them to contribute meaningfully to emissions reduction, even if they won't be able to cover the entire solution space that will be necessary and sufficient for deep decarbonisation.
Was that precise enough for you?
Jason Jacobs: Yeah, so let's forget venture capitals for a minute. If we're just looking at deep decarbonization, what matters the most?
Varun Sivaram: It depends where you are, Jason. I'm glad you asked the question because look, I just spent a couple of years in India. It's a different market than the U.S. In the United States, our largest source of energy related emissions is now transportation. Well, not right now when no one's driving, but you know, before this coronavirus crisis and in India, that's not the case. The most important energy related emissions, sectors, electricity, clearly with industry a close second, and that will remain true through mid century.
Transportation is growing quickly today. Just 2% of Indians own cars. But even as transportation demand multiplies many fold, transportation will barely account for 20% of emissions by 2050 so that means decarbonisation priorities look different in different places. It's a crucial insight because there's this tendency among those of us in the community to talk about decarbonisation solutions as generally uniform. You know, it sounds something like, Hey, let's electrify everything, which is a very simplistic thing. Or then you'll say, you know what? So let's just take all the cars and make them EVs. And suddenly by saying, let's take all the cars. We've made the assumption that most transportation happens in cars in India that's not the case in India. Over 80% of India's vehicles stock is two and three wheelers. So again, it looks different in different places. I'm happy to talk you through what an Indian energy transition might look like, what an American energy transition might look like, but some things are the same and some things are different.
Jason Jacobs: Yeah. But I think this brings up kind of a challenge that I'm seeing, which I think articulating for the first time on the pod, is that when you see the kind of Silicon Valley talent that is migrating into climate. It's not the slowest and weakness of the pack. There's some real horsepower that starting to come in this direction, but they don't have training.
And so what they're bringing is they understand rapid scale. They understand storytelling, they understand team building. They understand how to find product market fit. They understand like the sport of entrepreneurship. I would say. But what they don't understand is domain expertise. And so on the one hand, like take this pandemic, you have this pandemic and it doesn't seem like we're on the right path and it doesn't seem like the government is managing it well, and it seems like there's a lot of unnecessary spreading and catastrophe and death that could have been avoided.
So then you have a bunch of people rolling up their sleeves and pitching and as concerned citizens, but then you have a bunch of backlash saying that their backseat drivers and armchair epidemiologist right. Well. Same thing with climate change. You have people like me that are coming in and saying, well, shit, we're not on the right path, so I want to do everything I can.
I have some flexibility. I can work on anything I want, like I want to be here, but then when I come in, it's like, Oh, great the heroes from Silicon Valley here wearing a cape, right? What you're describing is that this is like. It's local. It's distributed, it's geopolitical. It depends on what region you're talking about.
It depends on what part of the world. It depends on the wind and the sun patterns and things like that. Right. And it's like Silicon Valley doesn't speak that language. It's like we want to go from one country to a hundred countries. We just flip a switch in the app store and we're localized and a dozen different languages and we're there.
Right. And so I guess what I'm trying to navigate is like, on the one hand, it's like, well, what does Silicon Valley need to be successful focused on this problem? But then there's another, it's like for who. Because it's the best thing to do for the problem because we're just kind of catering to Silicon Valley because we want to make sure that they feel important.
You understand what I'm trying to sort through here?
Varun Sivaram: Absolutely. I've got so many reactions.
It's a really astute perceptive point, Jason. So let me share a couple reactions. The first is a story. When I was in at Renew, I got a lot of inbound from Silicon Valley startups who would say, Hey, we can solve this problem.
You've got. And I'm like, first of all, you probably don't really know who we are. But they knew the basics. They knew that we built large wind and solar power plants in India and they wanted to solve some problems. So for example, one startup might say, Hey, you know, we're venture funded. We've got the best data scientists in the world.
We're going to forecast your wind and solar output. We can do a better than anyone else because we have great machine learning models. We have great physicists on staff and we're really good at forecasting and we're like, great, that's helpful. You know, we ran a pilot. What I did was I put them head to head with a local Indian company, an Indian startup, Indian startup, cleaned the floor with them.
And why did that happen? Well, because in addition to doing really good machine learning and forecasting, which by the way, you can do in India as well, not just Silicon Valley, the Indian company deployed manpower to go to one of my sites. And make sure that they were communicating with the folks on site so that if a turbine was going down for maintenance, that would affect the forecast for how much power my farm was going to produce.
And the IT system integration was better because they were in my office talking to me exactly about how the backend was going to integrate and therefore their forecast were nicely integrated into my workflow. So when I compared apples and oranges, Silicon Valley came last despite, as you talk about superior credentials and this amazing skill set and this awesome experience because A) there weren't boots on the ground, there wasn't local domain knowledge, and there wasn't always this willingness to roll up your sleeves. Now, I don't want to disparage Silicon Valley, and again, I am a Silicon Valley native and I came from the community.
So I really think there are a lot of well-intentioned folks who can do a lot of great work. But if I am a Silicon Valley CEO or you know, Silicon Valley VC, and I want to see my company succeed in a market like India. You've got to go to India, spend a lot of time, set up an outpost and have people who know the market deeply because if you don't, you won't be very useful.
Jason Jacobs: I can give you another analogy. So my mother-in-law was a high school teacher for many years in inner city Philadelphia. And each year they would ship in these Teach for America kids. And on the one hand it's like, Oh, the best and the brightest. And they come in and they want to do good and they want to learn and they want to help.
And they, and this is great. But then these kids come in and it's kind of like the Harvard problem. It come in and they think they have all the answers and they have no experience, you know, and they don't want to get their hands dirty. And you can look at all these Silicon Valley kids and I'm 43 but I'll still call myself a kid.
Right? And who are coming in. And it's like, Oh, we need like a teach for America for climate. Right? And it's like, for who can I actually be impactful coming in to tackle this problem? Or should I go and like stick to my knitting and leave it to the experts. Right. It's actually something I find myself wrestling with a lot, even a year and a half in.
Varun Sivaram: It's not binary, Jason, but that's a great story. It is not binary. Look, I really think that it's wonderful to see on your Slack community, the number of folks from Silicon Valley who have started genuinely impressive companies, and you're one of them, and it made great impact and now want to help out on climate.
Their hearts are in the right places. I don't think it's binary that either they've got to stick to their lane. If they really want to make an impact, there's a good route to do it, but it does require relinquishing the cape and that's, that's your term, not mine. So I, and coming over, doing some hard work and bringing on locals at a peer level, not as a know, Oh yeah, you're in journalism. You have the equivalent of a stringer where the foreign correspondent is really the boss here, and the stringer kind of shows them around. No, no, no, no. The locals really have to be your peers. They're just as good or in some way.
Jason Jacobs: So can we talk about this practically? So let's say I round it up.
Let's say we opened up applications and we said, we're going to handpick the 25 best and the brightest entrepreneurs from Silicon Valley who have done amazing things but don't have any domain experience, but that are committed to this problem, and they're coming in as learners first, and we want to give them a program to help maximize their impact that they can have.
On the broader problem of climate change, regardless of the sector, what we could do with those people. Have you ever been asked that before? Have you ever thought about that? Do you even care? You might not.
Varun Sivaram: Of course I do. I look, I will say Gates Ventures is building out a model for this and their model is not, let me go pick out the best 25 in Silicon Valley.
Their model is, I'm going to have hubs around the world and I'm going to have technologists from each of these hubs rooted in their local experience. So I guess your question is a little different, Jason. Yours is all right. Let's say I've got 25 people in Silicon Valley. What am I going to do with them?
Jason Jacobs: It might not be different though. Your answer might be, actually, I don't think that's the right way to come at this, which is a very valid answer.
Varun Sivaram: Yeah, yeah. Which I think is what I'm saying, Jason.
Jason Jacobs: I'd love to then take it in that direction. What is the best way to come at this?
Varun Sivaram: Come at what?
Jason Jacobs: If we go way back to the beginning of this discussion, you said that it's going to take connective tissue that hasn't prior existed and at the MCJ community is filled with this diversity of talent and perspectives.
And I think what I brought up is that yes, that's true. And yes, that's amazing. But also there's a little bit of, you're an apple and I'm an orange and you know about Apple things and I know about orange things, right? And so if you feel that that connective tissue across areas is important, then. What do we do to foster that to help innovation reach its fullest form? Yeah. If it's not handpicking the best from Silicon Valley, then I don't even want to lead in that way. Forget. I even mentioned that then. Like if you had a blank slate and could do anything, what would it be?
Varun Sivaram: Well, I'm going to come up with a very unsexy name because I haven't thought through this, but I would call it the sector switching fellowship.
All right? And this is a way to bring the best and the brightest from Silicon Valley. From the ranks of the government, from the military, from the private sector folks who are genuinely committed to working on climate issues and have distinguished themselves in their field. It's going to be a one or two year fellowship to switch them into a different sector and into a different country and let them learn.
And so if you're a Silicon Valley CEO, you are going to be switched into moving to Washington DC and working in the bureaucracy, or if you're in the military and you've genuinely seen the need for high energy density batteries because the war fighter can't survive very long off base with the heavy batteries you carry.
And now what you're going to do is you're going to go work in a particular market at a company. Could be a company like the one I came from, Renew Power, and the fellowship's going to fund you for one or two years to get that market experience. This sector switching fellowship, I think is a crucial way of getting people real experience in a climate related sector and in something they're not familiar with, to kind of broaden their eyes to why their way probably isn't the only thing you need to know in order to make an impact on climate.
I've been lucky to get to do this a lot, so maybe I'm speaking largely out of the bias of my own experience. I will say that there are analogs. In other fields. I think of the Schmidt science fellows. This is a fellowship that allows a science PhD. I wish this had been around when I was finishing my PhD to then go on and do a postdoc in a completely different scientific fields.
You might have a chemist going and working in biology or data science, and the Schmidt science fellowship recognizes that today's major global challenges have a large interdisciplinary component. Well, I want to extend that philosophy. Not just within academia, but without it as well. So outside of academia, can I get people within government to go to private sector vice versa?
And that I think is what will be needed to build the connective tissue. I don't think it exists.
Jason Jacobs: What about the AAAS as an example, right?
Varun Sivaram: I'm glad you were about to say that. That is one of the only examples of this connective tissue. AAAS is phenomenal where a science PhD gets to go and spend a year or two in the government, and AAAS has fellows and some of the smartest people I know.
Similarly, um, ARPA-E fellows, these are folks who again, often have a science PhD and go on to help to determine where the federal government through ARPA-E is going to send funding for these big cross cutting de-carbonization priorities. I started a class at Georgetown called clean energy innovation, and ever since folks from ARPA-E or the DOE have been taking over and teaching it in my absence.
So it is like the best community of awesome people.
Jason Jacobs: Well, we got to go the other way too. We need to take the energy policy advisor for Nancy Pelosi or, or people like that and send them to be a Silicon Valley startup kid for two years.
Varun Sivaram: I see this problem all the time. I mean, I know you're laughing, but this is actually super serious problem that I see is there's so much top talent in Washington D.C. that is not recognized in Silicon Valley.
Top top talent, like folks who are civically minded, graduated from some of the world's best universities and they go into Washington D.C. or they go into local government. And they get stuck there because the only private sector roles that a company will hire them for are government relations. And there are a few folks who get to escape this.
I have good friends who have moved on from the Obama administration and now are doing core business roles at major solar companies. But those examples are few and far between. And I personally believe it's because of a bias in the private sector against the kind of competency you can build in the public sector.
I think there's not enough opportunities for those guys to get a chance by moving back into the private sector and the private sector would benefit because in energy you need regulatory expertise as well as solid business expertise.
Jason Jacobs: It's funny, I had no experience with government kinds of people. And actually the last year and a half, I've gotten to know more than the whole rest of my career combined.
And I've met some of the people that you're describing. So I mean, Joseph, Majkut, it is a good example from Niskanen, who he was in academia and and decided to, you know, head in to do think tank work in D.C. and went or first started with government work through the AAAS fellowship program. And there's a lot of people I came running around it and I agree they are very impressive.
Innovation can't do it alone, and that it needs to work really closely in conjunction with policy and other areas. And so the fact that you are spending your time over there, but are kind of a similar systems and collaborative view. I mean, that is the community I'm trying to build in a nutshell because I think that's the kind of community we're going to need.
And so keeping people like you close is really important to me because your power alley is an area that I historically have known very little about and is fundamentally important for the things that I aspire to do.
Varun Sivaram: Hey, thanks, Jason. I am super excited to stay in touch. You and I haven't yet gotten the chance to talk much about, for example, the nexus of AI and energy.
But I think that's a super exciting field and that's where a lot of good can be done in the, from folks who have experienced deploying these methodologies and other fields to come and help us out in climate. I think there are hundreds of ripe applications right now for fast emerging digital technologies.
So. That's going to be awesome.
Jason Jacobs: Well, let me know when you find projects that have those needs, because I've got a whole community full of people, many of which have those skills and are looking to find a path for climate work to sink their teeth into. And, and the matching process right now is highly fragmented and inefficient.
Varun Sivaram: I couldn't agree with you more there. Let's definitely talk offline, Jason. We just did some VC activity on digital and energy and I have a bunch of projects that I think are interesting.
Jason Jacobs: Awesome. So two final questions and then I'll let you go if that's okay.
Varun Sivaram: Yeah, absolutely.
Jason Jacobs: We have, we have time?
Varun Sivaram: Please go ahead.
Jason Jacobs: Yeah, so one is just, if you had a hundred billion dollars and you could put it towards anything to maximize its impact on the clean energy transition, where would you put it and how would you allocate it?
Varun Sivaram: A hundred billion. Wow. I know folks are talking about 10 billion these days, but a hundred billion is exciting.
So look, my model is really based off of what I see Bill Gates and Breakthrough Energy doing. I think they're exemplars of how you allocate money to maximize your leverage. So I think of three principles. The first principle is make sure you're investing in advocacy and analysis to expand public and private investment in energy innovation as well as some of these mechanisms.
For example, incubators that we've talked about, fellows programs, we discussed creating a fellows program. The second priority is longterm capital deployment in technology companies that are solving major needs in deep decarbonization. And the third is making sure that when you distribute your money.
You follow an international distribution, you're not just focused on a particular market because as we discussed, de-carbonization looks different in different places. I loved answer when you talked with him, which was, no one can have the right answer on a a hundred billion dollars, but the best thing we can do is go find a large community of smart people, AKA My Climate Journey on Slack and crowdsource some of this.
Jason Jacobs: Yeah, that's what he said. He said, I'm going to go find the best team to help me get those answers. I thought that was really smart.
Varun Sivaram: Yeah.
Jason Jacobs: Cool. And then final question is just for anyone who's listening to the show who's like me and they're coming in and trying to learn and trying to figure out where to anchor, I guess just talk to them for a moment.
What advice do you have for them as they're trying to figure it out.
Varun Sivaram: Be like, Jason. Look, you are doing the right thing. You are talking to people who have domain expertise, but people who also come from various sectors and people who are more like yourself, Silicon Valley folks, anyone else trying to get into the sector should be following your model and you've made it easy for them to do that.
If they try and go it alone, they will fail. If they try and use too many of their priors in different fields and try and attack this field, they will also likely fail. The best way to make an impact in decarbonization is to take advantage of the rich community of experience that people have across sectors.
I plan to do that. I think you're doing it, and I think anyone else who's connected to MCJ ought to do it.
Jason Jacobs: Although you were only just re-quoting me when I said that they should leave their cape at home. That Coke quote will be solely attributed to you when this goes to press.
Varun Sivaram: Jason, I don't know whether to thank you or not.
Jason Jacobs: That comment will be on record so everyone will know it wasn't attributed to you, but anything I didn't ask you that I should have or any parting words for listeners?
Varun Sivaram: Parting words for listeners, India's energy transition is the most important one in the whole world. So anyway, thanks Jason. You were way too kind, but I'm a bigger fan of you. I hope you know that and the work you've done.
Jason Jacobs: Well, likewise, and thank you so much for coming on the show.
Varun Sivaram: You got it. Take care.
Jason Jacobs: Hey everyone. Jason here. Thanks again for joining me on my climate journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co note that is dot C O not dot com.
Someday we'll get the.com, but right now . CO. Oh, you can also find me on Twitter @jjacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear and before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.