Billionaire investor Tom Steyer says clean tech will win ‘climate war’

Tom Steyer, the billionaire hedge fund manager, investor and political activist, has made climate change his primary concern for more than a decade. In his new book, Cheaper, faster, betterSteyer argues that we are nearing a tipping point where the clean energy and climate technologies he has funded for years will dominate the global energy economy.

Despite growing signs of a climate crisis, Steyer remains optimistic that capitalism has the power to “win the climate war,” as the book’s subtitle states.

“The climate impacts are worse than people expected,” Steyer said. Newsweek “We’ve recently discovered that our technological and economic capabilities to solve this problem are much greater than people realized. And that’s great.”

Steyer is a New York native who settled in San Francisco and made his fortune with Farallon Capital, a hedge fund he founded in 1986. He left Farallon in 2012 and has since become an investor, philanthropist and politician focused on clean energy.

Steyer is a major donor to climate change issues and Democratic candidates, and was a candidate himself in 2020, ending his presidential campaign with a third-place finish in the South Carolina Democratic primary. In 2021, Steyer and friend and fellow investment manager Katie Hall co-founded Galvanize Climate Solutions, a global investment firm focused on climate change.

In a wide-ranging interview, Steyer discussed the importance of climate issues in the upcoming election and why he wrote the book that says we’re on the cusp of incredible clean energy growth. This interview has been edited and condensed for length and clarity.

Newsweek:The argument in your new book is that the clean economy will win not just because it’s clean, but because it offers what’s in the title: [Cheaper Faster Better] I mean, is that correct?
StayerJeff, I’ll go a little further than that. It’s winning. If you look at where we are right now, it’s not a question of whether it’s going to happen because it’s cheaper, faster, better. It’s absolutely happening in the real world right now.

Last year, if you look at 2023, 86% of new electricity production in the world was renewable. And my point is, people are not doing it out of kindness. Everybody in the world is going to make selfish decisions about what to buy, what kind of electricity to use, what kind of car to drive, how to heat their home. Every decision is going to be selfish.

The winning products are the ones that are cheaper, faster and better, and that’s what we’re seeing. People don’t understand that renewable energy is so much cheaper than fossil fuels, and its advantage is growing dramatically every year.

Looking at global automotive trends, which people are paying close attention to, EVs are growing at an incredibly fast pace in terms of new car sales.
That means it’s not something that’s going to happen in the future, it’s happening right now.

But the increase in clean energy doesn’t seem to be replacing dirty energy yet. It seems like we’re just producing more energy to meet the world’s energy needs. What does it take to really reduce emissions and get less CO2 in the atmosphere?
We need to phase out polluting energy plants. [Clean energy] Systemic change is completely dominant, but the entire system is growing and not enough polluting energy plants are being phased out.

The United States and many other developed countries are phased out of polluting power plants, but India will need five times as much electricity by 2050.

So the question is, even if it’s 100 percent renewable, what happens to the existing power plants, and will the same be true in China? If you look at where the most dramatic growth is going to be, the question is, how will China respond? And they’re going to respond by doing what’s in their interest, which is actually cheaper, faster, and better.

I understand what you’re saying. But as you pointed out, a lot of coal-fired power plants have been shut down in the United States. But under the current administration, we’re also producing more oil than ever before. And this leads me to what I think is the crux of the problem: capitalism seems to be very good at producing more things, but not very good at consuming less. What are your thoughts on this?
Of course, that’s true. But, Jeff, I think I would use a different framework than the one you just used. The framework that I would use is technology transfer. A way to think about it, at least the way that I use it, is the “S” curve.

Essentially, a new technology is adopted very slowly while it struggles to gain dominance, but once it becomes disruptive the line goes from nearly flat to gradually rising, then becomes vertical, then flattens out at about 80%. This is the adoption curve. [true for] All kinds of technology transfers, from whale oil to petroleum, from horse-drawn carriages to automobiles.

Any significant technology transfer happens this way because there is a point at which the new disruptive technology becomes dramatically superior, and that is what we are seeing.

So what you’re saying means in a static sense. There’s a certain amount of existing infrastructure, it doesn’t change, we just build on it. Emissions don’t go up, but they don’t go down. That’s what it means.

I would say that, in fact, we live in a dynamic world, we are governed by dynamism, and as we look to the future, towards the end of this decade, we will actually [fossil fuel] Disruption will cause usage to drop dramatically and rapidly.

For the reasons you mention, it will take some time, but technology does not stand still. Last year, the cost of batteries dropped by 50 percent, which is an amazing fact.

Want to know what happened? do not have Oil and gas prices, which fell 50 percent last year.

What do you think are the key things that need to change about capitalism to make it better suited to meeting the challenges of climate change?
So if you take an economics class anywhere in the world, the answer is very simple: there are no free markets. There are markets that are built on rules that are set by humans, and that is the market in which businessmen work.

People didn’t get into oil and gas for any bad reasons: they started using it because it drove much cheaper energy, much faster growth, and better lifestyles for people all over the world.

However, the framework we have built [type of] A pollutant that people didn’t really know existed – carbon dioxide – something you can’t smell, see or touch, yet it’s warming the planet in devastating and terrifying ways.

So what makes the difference is that people are polluting for free, basically. And [polluters are] They’re making trillions of dollars a year while polluting for free. What we’re seeing in the market is that despite that free pollution, things are happening cheaper, faster and better on the renewable energy side. But that will happen faster if people have to pay for pollution.

So does that mean there will no longer be such a thing as a free ride on externalities?
Absolutely. I think we’ll get there. Once we have a chance to measure it and it’s transparent, then maybe there will be accountability. But right now, even without that, we’re winning in areas that are heavily tilted towards fossil fuels. And yet, technology wins. Technology is relentless.

I want to talk a little bit about Galvanize and how you’re addressing these challenges. One of the things that caught my eye is this idea of ​​aligning executive compensation with climate action. Tell me a little bit about that.
My basic argument in this is that people are selfish. We’d like to think that everyone will always do what is in the common good. In reality, I think people do what they are paid to do.

If you tell someone, “You’ll get paid if you achieve these goals,” they’ll figure out how to achieve those goals in order to get paid. If your compensation plan states that these goals are the foundation for your salary, success, and career trajectory, rather than just saying that you just have to achieve them, people will achieve them.

But where does that goal setting come from? Companies and shareholders are driven by the same selfish motives that you just described. What motivates them to set that goal?
I strongly believe that if a company succeeds as a clean company, it will be more resilient and last longer. If your goal as a CEO is just to make the most money this year, that’s the wrong goal for a company. You need to build the capabilities to succeed in the years to come.

If you do everything to set yourself up for the best bonus in 2024 and then hold off on 2025 or 2026, you’re putting the company at risk. That’s not the behavior of a responsible CEO. So from my perspective, there’s no way you can’t make this transition.

Let’s talk a little bit about politics. You’ve been active as a candidate and campaign donor. What do you think about the importance of climate issues in this election?
The two administrations have very different approaches to energy, they are dramatically different, and what I say in the book, and what I believe, is that this drama will play out in the markets.

In Texas, solar power has tripled in the last three years. And this isn’t because Texas lawmakers and politicians like renewable energy. It’s because renewable energy is cheaper. Much cheaper.

As oil prices fall, it makes less economic sense to build new fossil fuel power plants — not because we’re against fossil fuels, but because the money says so. As we look ahead, that will play out in a global marketplace, and we have to ask, “What is America’s role in that?”

The real question for me about the different directions of these administrations is international. This is a global issue, this is a global warming issue.

To really get this under control, we need international cooperation, cooperation at least on measurement, verification, transparency, and ultimately accountability. And traditionally, the United States has shown leadership in that. Under the last Republican administration, we retreated from international climate issues altogether.

The other thing that I think is crucial to the American people is that this is a huge opportunity for us. If we don’t create these technologies, if we take a step back and decide to go back to the 1950s and make the Tailfin Caddy, we will lose.

If we decide “no,” then we will want to back out, look in the rearview mirror and want to go back there. That would be extremely impractical and it would cost us. It would cost us economically and it would cost us politically. It would be terrible for the lifestyle of the American people and, indeed, for our standing in the world.