Until very recently, there wasn’t agreement on the end goal for tackling climate change. Different camps have used different yardsticks for measuring: renewable growth, emission caps, temperature limits, you name it … But these frameworks haven’t been robust enough to bring everyone together and move a solution forward.
And just within the past six months, after decades of negotiation and deliberation, we know what the framework must be. It must be deep decarbonization. It’s technology agnostic. And the timing is urgent.
As a venture capitalist I’m always looking for challenges that are ripe for technology-driven disruption. Climate change—as much as it’s a scientific and political challenge—is also a technology and business challenge. It is a particular business challenge because most people think it will cost us money. In fact, decarbonizing does not cost more money, if you look at the problem correctly.
You all are going to play a big role in solving climate change. And in fact, even reverse it in due course. This situation presents an enormous opportunity for all of us to work together and deploy real solutions to save the world.
Roadmap of Today’s Talk
I am going to talk about three things today:
(1) Climate change and the challenge posed by the imminent retirement of the existing U.S. nuclear fleet. There is an urgent need for clean energy solutions.
(2) I’m going to talk about my lessons as a venture capitalist. How applying Silicon Valley methods to nuclear innovation is a new way forward. NASA faced a similar inflection point when the government turned to the private sector for smart, fast, cost-effective innovation. And it succeeded. A unique private/public partnership was formed and the private space industry was born.
(3) I’m going to talk about the innovation that is taking place right now. The need for leadership in supporting the new way forward. For nuclear to play a role in this climate crisis, as a country we must do all we can to support the budding new nuclear industry.
It’s clear that we need MAJOR advances in every form of clean energy technology RIGHT NOW, to meet our climate commitments here in the U.S. and globally. Deep decarbonization is the watchword. It requires an “all of the above” mobilization.
Time is now our enemy in addressing climate change. Most of the experts and their models suggest that unless we truly make progress in the next 10 to 15 years, we will be unable to keep our multinational agreed goal of limiting Earth heating to two degrees Celsius.
And in light of climate change concerns, you all know that we’re at risk of losing nearly half of our nuclear fleet in the next 20 years.
Just recently we lost Fort Calhoun and now Diablo Canyon, making a total of 8 plants in recent times—approximately 10 gigawatts of carbon-free electricity leaving the U.S. grid.
This is a HUGE loss of the U.S. carbon-free electricity production—we’re talking upwards of 30 percent of the total U.S. carbon-free electricity production going offline!
Not losing more nuclear plants is essential to avoid backsliding on our climate commitments right out of the gate.
Therefore, we must be pushing for new, advanced reactors with competitive economics, so we and the world have options ready to go to replace these plants when the current fleet does eventually retire, and to fill global market needs for electricity with U.S. technologies. This is a perfect economic opportunity for the United States, with a huge humanitarian impact of bringing 2 billion people out of energy poverty, and stopping climate change in its tracks.
This cannot be done in a vacuum. No one company, one country, one industry can pull this off. It will take a partnership of the federal government and the private sector to do this. We need new creative strategies for how federal programs interact and support the budding private nuclear sector in meeting climate goals.
I believe this can be achieved with nuclear innovation and venture capital.
But before I explain how we can do this, let me provide some background on my experience as a venture capitalist and how I apply a lifetime of venture wisdom to new nuclear innovation.
I am a venture capitalist, before that a start-up entrepreneur, and before that a nuclear engineer. I have invested in over 70 startup companies over the last 28 years, all at their earliest stages, often just an idea.
I know it’s rather bold, but I claim that the three greatest American inventions in the latter half of the 20th century are:
The startup ecosystem and company.
Professional venture capital.
And nuclear power. Well, I suppose the transistor is probably the greatest invention, but it doesn’t work without electricity!
Sometime I pinch myself when I see this pattern but I believe that all three of these enormous inventions have come together, and are ready to attack climate change.
Why do I say this?
I have witnessed and assisted ambitious, dedicated entrepreneurs make things happen on time scales that are short, with dollars that are few—and yet have an enormous impact that touch each of our lives. This is very exciting. These entrepreneurs were backed by venture capital. Venture capitalists are people who believe in change and are willing to risk all their money to enable great things to come to market.
I have personally participated and observed whole industries created, and others completely transformed, with venture-capital-backed companies.
As to climate change, nuclear power is simply the fastest path to large-scale, zero-carbon production of power for everyone. I say this not to exclude solar, wind, and other zero-carbon sources, but in terms of scale and impact—nuclear can’t be beat.
I cannot think of a more powerful solution to stop climate change in its tracks than these three capabilities combining forces.
Want proof? Results do matter, so let me give you a few stats.
Venture Capital Results
If you were to sum up all the revenue from all the venture-backed companies in the last 60 years, you’d find that their output represents 20 percent of the U.S. GDP, or $3.4 trillion.
You know these companies. They are Uber, Hewlett Packard, Apple, Intel, Cisco, Starbucks, Federal Express, Amazon, Netflix, Google, Facebook, Genentech, Amgen, Genetics Institute, and many, many, many more. The whole biotech industry was created by venture-capital-backed entrepreneurs.
Further, these same companies account for 11 percent of all the non-government jobs in the United States. 11 percent is about 12 million jobs.
While these statistics are incredibly impressive, the one statistic that really impresses people is that all of these results happened with an investment of 0.5 percent of all the private capital available in the United States—ONE HALF OF ONE PERCENT. That’s a sliver of the capital available in our economy.
These results are a true testament to the commitment of the innovator and the power of innovation in the American economy. It was true sixty years ago, and it’s true today.
The Silicon Valley Innovation Model
The Silicon Valley was born just after World War II. The idea of combining innovation with funding to develop new capabilities such as microwaves, semiconductors, and ultimately microcomputers was well on its way in the 1950s in Northern California, and Boston, too. In 1948, Shockley and others perfected the transistor at Bell Labs. In 1956, Shockley moved back to Palo Alto to take care of his ailing mother and opened Shockley Labs in Mountain View. Soon thereafter, the semiconductor industry was born with Fairchild in 1957 and Intel in 1969. This put the silicon in the Santa Clara Valley. In the 1970s came personal computing with Apple in 1977 and many, many others. It wasn’t until 1982 when National Geographic coined the term, Silicon Valley. The rest, as they say, is history.
Over the decades the Silicon Valley has perfected the innovation cycle of entrepreneurs and venture capital. It’s a complex system of people, innovation, education, inspiration, and forgiveness. However, today, THE VALLEY runs on two simple yet very powerful principles.
(1) Many shots on goal. And …
(2) Fast, fast, fast.
Let me explain.
“Many shots on goal” is a term borrowed from hockey’s Wayne Gretzky. The thought is: if you don’t shoot, you don’t score.
Therefore, the more you shoot, the more you increase your chances of scoring.
Makes perfect sense. Right?
In the Valley, every idea, good or bad, is copied 20 times over and sometimes in the matter of a year or so.
Twenty copies of the same idea is a lot of shots on goal and a lot of competition emerges.
This is actually a very healthy thing. It allows THE MARKET to see choices and make decisions about what matters.
Also, with 20 companies working on the same problem at the same time, you get a lot of competitive juices flowing, lots of unanticipated sharing, and lots of innovation. Facebook wasn’t the first social media company. Intel wasn’t the first semiconductor company. And Apple wasn’t the first personal computer company. They just happened to build it best on the shoulders of others, and the market liked it.
The second principle of moving fast cannot be understated.
In a market where ideas are copied quickly, the best competitive advantage is speed. Invention and patents are important in rich technical markets, but not all.
And being first means you have to learn fast and innovate even more quickly.
Since everyone knows this in Silicon Valley, it is completely normal to be asked to work long hours, work smartly, and to borrow ideas from each other, thereby reducing the number of mistakes.
It’s about solving very hard problems, as fast as possible, with as little resources as necessary and as little of time as practical.
This is today’s Silicon Valley. Honed over decades, hailed as a great economic engine, and where new things happen every day. But not everything.
With my venture experience in hand, and the rise of climate change as a global issue, I and others decided to begin a campaign to change how we do nuclear in the United States. Our beginning was making the documentary Pandora’s Promise in 2012. A movie—who’s seen it? Thank you. About 2 million people have seen it so far.
Then what? It became very clear to us all that the broader nuclear energy community—led by industry and supported by the federal government—needs to change. It needs to do what the Silicon Valley has done so well.
First, it needed to start taking many shots on goal.
For 38 years since Three Mile Island, not many new reactors have been designed or even tested. The reactors that were built were very much standard and incremental to the existing fleet. And as such, they became more and more expensive over time, not cheaper. In the world of nuclear power, over decades the innovation cycle morphed to one of government top-down decision-making and no real risk-taking. Top-down decision-making is not an innovative system. And today’s reactor plants are just too expensive. Too expensive.
But folks, the landscape is shifting and this shift is being led by entrepreneurs—entrepreneurs who are passionate about solving the climate-change problem with nuclear energy. Tapping this passion is our country’s opportunity.
People say change is hard. In my world change is opportunity. And right now it’s staring new nuclear right in the face. But we need public support that allows innovators to capitalize on that opportunity. Currently, I don’t believe we have that support needed for complete success, but it is improving. More can and must be done. Oddly, and fortunately, we have been here before in other industries.
Other federal agencies and programs have evolved to capitalize on opportunities presented by changing conditions—and they’ve done this by enabling private sector innovators to blossom.
The NASA Example
NASA faced a similar situation in the early 2000s.
The space shuttles that moved people and cargo to the International Space Station were set to retire in 2011.
Not to mention—the shuttle program was more expensive than NASA thought, the shuttles were flying less than they’d planned, and there were two BIG accidents resulting in death of people—Challenger and Columbia. Sound familiar?
So they were in a similar position on a lot of levels. Actually, given the stellar safety record of the U.S. nuclear industry, NASA’s position was a lot more difficult.
Then, in 2004, the White House announced a major paradigm shift in NASA’s mission.
President Bush basically said to NASA and to industry, we need you to support the development of a vibrant commercial space flight sector—and we’ll work with you to build it from the ground up.
To stimulate early interest, NASA funded many projects at relatively low amounts of capital. This sent a very clear message to the private sector where NASA thought to invest its time in innovation, and frankly what was possible. As a result, a fledgling private space industry was born. NASA was suddenly enabling many shots on goal.
As the companies demonstrated success—as defined by clear technology readiness levels and additional funding—the private capital market began to sort out the winners by providing more private capital to its chosen ones.
The government’s role shifted from one of top-down technology design and selection, to that of a customer. NASA began letting contracts to these innovative companies, thereby also participating in market selection of the best solutions. NASA was moving decisively … and FAST.
In parallel to this staged funding, NASA laid the groundwork for a modernized regulatory system—including a certification program, engineering standards, testing, and analyses for these companies’ products.
By enabling the private sector, NASA leveraged its limited resources but considerable experience, revitalized its programs and got the spaceships it needed—and in doing so it created a thriving world-class private space industry.
Ten years down the road, NASA has succeeded. America has succeeded. Again.
So, now it is possible to design, build, and launch a reusable spacecraft in four years—and actually deliver cargo to the ISS—all from the ground up—IN SEVEN YEARS. While most people know Boeing and SpaceX, few know that today at the Mojave Air and Space Port in southern California, there are over 25 companies backed by over $3 billion private dollars working on space flight including space tourism.
New Nuclear Day Is Here
I’d argue the new nuclear industry is further along than NASA was when it began its transition. But we have to push hard and work fast.
In 2014 our little group started talking to the White House, the DOE, senators, congressmen, and the NRC. Any good argument needs evidence. So we set out to discover who was doing nuclear. I was personally invested in two, and knew of a few more. But just how many were there? We discovered that in North America, there are over 50 organizations working on new nuclear—this data was amazingly compelling. And folks, these companies are already backed by nearly $1.6 billion in private capital!
The DOE was so skeptical with this claim that in early 2015 they asked me to assemble some of the funders, many of them billionaires, to come to Washington to talk about this. After I stopped laughing, I suggested a conference call. And in March 2015, we had six billionaires and venture capitalists talking to the head of DOE-NE about why they are doing what they are doing. That call changed everything.
Disruption and Innovation: Recommendations
So HOW do we achieve the same type of paradigm shift NASA’s been able to make? I think we need four things to happen. First, leadership from the very top. Second, private-public partnerships with the incredible DOE national labs. Third, a modernized and more flexible regulatory regime. And fourth, a staged funding mechanism at the federal level that can help drive these technologies forward.
It will take change at the top levels of the administration—and it’s got to be done in a way that is embraced all the way down to each of the facilities and every person working on nuclear energy on a daily basis.
And this starts by making nuclear energy a national priority to meet our climate and energy needs—and explicitly setting the goal for deployment and commercialization of advanced reactors.
The beginning of the new NASA program was marked with a speech by then president George W. Bush, where he addressed the nation on the importance of space research.
When the president stands up and says, look, we’re doing this—that puts force and urgency on the agenda within the agencies and with the public.
We asked the White House to make a speech … But no speech resulted. But we got an unequivocal support at COP 21 with strong U.S. presence and leadership.
That said, the most recent DOE draft vision and strategy report for nuclear energy is actually a fantastic document—it is the best one I’ve read in a long time.
It sets a goal of licensing two non-Light Water Reactors by 2030.
This is the right idea, but let me be clear: It must be and it can be done even faster if we are to have any chance against climate change—and a clear White House endorsement sure would help light that fire.
The math suggests that we’re going to need to be already deploying a range of clean technologies including new nuclear technologies starting in 2030 if we want to stay on target to meet our climate goals by 2050.
That means our first deployments have to come earlier—we’re talking 2025, fully commercialized and ready to go. Bold goals indeed that need to be expressed.
China is planning to deploy advanced reactors in 2018, so clearly this is less of a technology barrier than just a decision to do it.
The NASA experience shows THAT THIS IS POSSIBLE—but getting there will require a new level of leadership and commitment from the next administration.
Private-Public Partnerships with the National Labs
We need to start structuring our federal R&D programs so that they are goal-oriented—aimed at commercializing technologies. For the labs, this means opening their doors, figuring out what the private innovators need, and helping them get it.
The DOE has the best labs in the world. Historically and largely today, the labs set their research agendas and get their funding. If that aligns with industry needs, great. If not, oh well. Don’t get me wrong—research is essential. But it needs more focus.
What I’m advocating for is the opposite—a bottom-up approach where labs listen to industry first, and then the two groups coordinate and plan how lab resources can most effectively meet innovation industry needs. An aligned partnership driven by entrepreneurs. I’m not suggesting we stop our science research, but surely opening the labs and their vast talent for the private sector to engage will change the game for the United States.
Regular assessment of private sector needs should take place to identify common areas where a solution will benefit multiple companies or applications, and to be fair, this is already starting to happen—the GAIN folks are doing workshops that are very much in this vein. I applaud GAIN. Thank you, Mr. Secretary.
So we’re on the right track—but really need the DOE to adopt this as an operating principle, not just a one-off. I’m very hopeful.
Modernizing the regulatory framework
Additionally, and as you are all well too aware, nuclear developers need a well-defined, affordable, and predictable licensing process. By law, the NRC is the agency to provide this.
The NRC is often hailed as the gold standard for regulation of nuclear power in the world. Producing an incredible safety record is definitely worth bragging about. But remember, gold is heavy, expensive, and very difficult to move. We need to rethink how we do this and move the gold with leverage while still keeping the GOLD.
There are some pretty logical ways to make NRC more efficient and responsive to innovation—WITHOUT compromising safety.
The Clean Air Task Force and Nuclear Innovation Alliance have made a comprehensive set of recommendations to develop a staged licensing process and presented these to the NRC and key members of Congress who have oversight. The game is afoot. Now we need funding.
This goal of the new framework is to provide developers with clear, early feedback on a predictable schedule—something that will make it easier to attract and maintain private investment throughout their company life.
By the way, the United States has done this before. Both the FDA and the FAA have regulatory processes that work very well in protecting the public and ensuring safety while providing the enormous benefits of pharmaceuticals and flight, respectively. This all with predictable, understandable, milestone-based regulatory processes that investors and entrepreneurs understand.
The NRC must respond to this challenge. Chairman Burns is responding, but Congress is the ultimate leverage with the NRC—Congress controls spending.
We have seen positive indications with bipartisan bills supporting modernization passed out of Congressional committees, and we anticipate these will be passed into law early in the next Congress, or even perhaps this fall, according to my latest sources. Your congressman Bill Flores supports these bills.
The next Congress and administration need to take up these recommendations on January 21 to ensure that we continue to make progress.
Again, however, the question remains—can the NRC and Congress move fast enough and make sufficient change to make a difference in time?
That in part will be up to all of us. It is our government, after all.
Secure Funding and Staged Advancement and Financing Structure
DOE must have a well-defined process for advancing technologies through the innovation process. The steps and rules need to be clear as day for all involved. This, again, can be based on the successful NASA model.
Start by supporting all of the advanced nuclear companies, and continue to support those who reach key milestones until you have products on the market.
Under GAIN, the DOE just let $82 million to a wide variety of startup nuclear companies to assist them in their work.
New leadership at DOE is leaning forward and making this happen—people like Secretary Moniz and John Kotek at DOE-NE and Mark Peters at INL, to name only a few, are really helping to move this forward. Again, thank you, Mr. Secretary, for pushing this agenda and putting our money to work.
New Ways Forward—Underway!
The future of the human race is at stake here. America is again poised to lead.
We need to move rapidly to deploy zero CO2 emission sources for electricity in order to avoid the worst impacts of climate change. And the energy poverty of 2 billion people is simply unacceptable.
Big, audacious technological innovation can happen in a short time. It’s not easy but it can happen.
America has proven an ability to do amazing things when she has to. We have to.
Three years ago, when a group of us producers of Pandora’s Promise met at my home in Portola Valley to discuss what’s possible, no one thought we’d be able to change our government like we have.
In our quest, when we discovered these 50 ambitious nuclear startups backed by private capital in our country alone, we knew that there was a way forward. The entrepreneurs were ahead of all of us—they always are. Our job was to loop in the U.S. government with all its might and capability.
Since that time, we’ve moved from new nuclear being an unheard-of industry of one-off companies working in isolation, to the DOE rolling out a vision for this burgeoning sector and the NRC soliciting new licensing ideas. Further, Congress, both the Democrats and Republicans, got it, and got it fast passing legislation. This is a non-partisan issue, folks.
The promise of economically viable, new nuclear technologies is breathing new life into the nuclear sector as a whole, and has helped draw attention to the vital importance of nuclear (existing and new) in the fight against climate change.
Who could have imagined all this change just a few years ago? Believe me, not my wife and most of my friends!
This is an idea whose time is now. New nuclear is creating momentum and opportunity for everyone. It’s up to all of us to keep this momentum moving forward—to make sure the next administration and Congress understand the urgency and promise of nuclear innovation.
So, in closing I believe … no, I know, that with American entrepreneurship, venture capital, a new DOE partnership with the private sector, and a modern regulatory regime, we can make this happen. We have to make this happen. It’s our only planet. And it’s your planet.
We have a special opportunity to develop, scale, and deploy new nuclear technology needed to decarbonize our electricity generation and fight climate change. This opportunity has a shelf life. Time is running out.
There is a lot everyone in this room can do to advocate for more effective policies, to communicate the importance of nuclear innovation as a climate solution, and to represent this industry proudly.
My advice for you here at Texas A&M: Finish your degree. Get your graduate degree. Use the power of social networking to connect with your friends and colleagues of similar goals and ambitions. There is a fantastic future ahead for all of you.
For more information, Third Way—a think tank I advise and have supported in this effort—has set up a webpage providing some resources of how everyone can get more involved. But there are many resources out there.
Or you can email me or call me. I’m happy to provide you an assignment.
Good luck. And gig ‘em, Aggies.