Bill Gates on the High Cost of Being Poor

Guest post by Andrew McKillop

Energy Energy Energy

Bill Gates has rotated and swiveled 180-degrees from his former self-righteous stance on the Global Warming issue, or “threat”, and the instant no brainer elite solution of using a lot less energy. Fossil of course. Now he says poor countries must use more energy but we could take the “US paradigm”. The US is a very long way from being an oil exporter and is still a long way from being a natural gas exporter – but is a large and growing coal exporter. The US exports energy! Exporting coal along with Windows (whose constant “upgrades” are always more difficult to beat into usable shape) makes economic sense. This coal is cheap energy – very cheap energy.

Gates says he has discovered that energy is the Big Thing but if he wants to know about the role of coal in economic development, all he has to do is try China. Now the world’s biggest industrial nation it also chokes on the urban smog produced by it burning 3 billion tons of coal a year – one half of the world’s total consumption of coal. Coal was 100% essential to China’s economic takeoff.

Electricity generation in China is dominated by conventional thermal and that is dominated by coal.  But with the opening of the Three Gorges Dam power scheme, hydroelectric power has grown to a very significant 17% of the total.

In his blog dated June 25, Gates said that the fight against poverty in low-income countries, moving them up to afford Windows, needs energy. Energy and more energy. He said: “For years, I took energy for granted. There’s no telling how many times I walked into my office, flipped a light switch, and powered up a PC without thinking at all about the magic of getting electricity any time I wanted it”.

But after getting lucky with Windows he started traveling to poor countries and found, OMG!, that poor people tend to steal the Windows and the electricity that they can’t afford to buy. Gates said: “I remember going to Buenos Aires and seeing where the government had run big wires to distribute electricity. But people couldn’t afford it, so they tapped their own power cables into the government’s and stole the electricity”.

Gates should think about another version of this problem – caused by sheer economic stupidity. Using IBRD, IEA and energy industry estimates, at least 2 million barrels a day, energy equivalent, of natural gas is either flared or vented into the sky, or lost in pipelines and LNG tankers. The gas is too cheap. Oil is worth more, like Windows is worth more than Linux! So the gas is very literally thrown away and we don’t need to talk about how much CO2 that means.

The oil energy equivalent of this gas is close to 60% of the total oil consumption of all African nations combined.

Oil in the lowest-income countries (Gates repeatedly cites Ethiopia) is sold in half-liter doses, because it is rare and dear. Bottled gas simply isn’t available outside city areas. Gates is shocked or depressed by the facts he singles out, that according to the UN, roughly 1.4 billion persons worldwide have no electricity at all, and in most poor countries electricity costs at least 25 US cents a kWh. That is way above two-times average domestic prices in the US (but certainly not in Europe).

Getting Real About Energy Economics

Bill Gates gets unreal about the subject, fast. He puts the cart way before the horse – saying that cheap electricity “powered the American economic miracle”. He says: “Think about what it has meant to America to have access to affordable, reliable energy…. [t]he American construction industry never would have taken off if we didn’t have lots of affordable energy for making cement and steel…[t]he historian Vaclav Smil found that in the 20th century the average American’s energy use jumped 60-fold and the [real] price we pay for electricity fell by 98%”.

Ask Europeans about that – now paying well above 25 US cents per kWh in several countries (pricing their domestic power at $450 per barrel equivalent), and paying pump prices for gasoline often above $8.50 per US gallon, proving at least one thing. Rich countries can pay more for energy even if its unpopular and not too good for the economy!

Gates needs to take out a history book and check how far behind, and how much slower electricity consumption grew – compared to coal, oil and gas. To be sure, he talks about oil lamps and oil (and wood) stoves in Africa causing cancer and blindness, but oil and gas lighting preceded electric lighting. Also, despite the first-ever private cars produced in any quantity being electric-powered, this didn’t last long. Oil and gas lighting got replaced by electric lighting. Electric cars got replaced by oil-fueled cars.

All energy prices dropped, both in absolute and relative terms, but coal, oil and gas prices dropped further and more than electric power prices. Only in a very few special cases – due to hydropower resource endowments – did we have cheap electricity from the start. For example Norway and Iceland, and Nepal when or if its massive hydropower resources are developed in the face of stubborn non-cooperation from India. Several African countries also have huge undeveloped hydropower resources. Gates unfortunately prefers so-called micro solutions, where the “entre-pre-noorial urge”, as its called in American can get the right gimmick to market, fastest!

After making a plea for more energy everywhere, Gates brings in that sombre two-word that seems to haunt him and other elites. He says: “And what about climate change?”

Low Carbon Low Income

So we move into the Low Carbon agenda lightning fast. We might guess Gates approves of biodegradable whale-oil lighting, because with no shame Gates recycles one of his TED talks from years back, 2010. At the time, with other Silicon Valley billionaires such as Vinod Khosla, Gates stampeded into any kind of miracle biomass energy e.g.“light low carbon bio-oils” ”

Gates’ 2010 TED talk on energy crisis was trailered with this statement. “Bill Gates unveils his vision for the world’s energy future, describing the need for “miracles” to avoid planetary catastrophe and explaining why he’s backing a dramatically different type of nuclear reactor. The necessary goal? Zero carbon emissions globally by 2050”.

So Gates thinks nuke power is good for poor countries? A scary thought.

Some people say that however much things change, they stay the same! But not always. Taking only two low-income east African countries – Mozambique and Tanzania – their massive offshore resource discoveries of natural gas, made since 2009 with potentials for NGLs production from the gas, have transformed their economic outlook. Several west African countries, and other east African countries are also sharing this hydrocarbon resource bonanza. In totally classic fashion, the energy bonanza will precede national energy development, linked with economic development and using revenues from the resources to pay for costly new infrastructures.

Gates seems to think he has an “alternate model”. This is the shaky paradigm of micro-scale Low Carbon energy solutions which are shoehorned into an economic structure and system which isn’t adapted to the fake Quick Fix. It will be expensive and it will be disappointing. Back in 2010, maybe, Bill Gates could play dumb about this reality, but it is hard to keep up that act, today. To be sure, he makes a predictable nod in favour of Barack Obama’s “crusade for clean energy”, but has to admit that “Some places don’t get enough regular sunlight or reliable wind to depend heavily on these sources. In any case, these and other clean-energy technologies are still too expensive to be rolled out widely in poor countries”.

Rather incredibly, Gates bemoans the simple basic fact that low income countries aren’t waiting for Low Carbon quick fixes. He says: “They’re building large numbers of coal plants and other fossil-fuel infrastructure now. That’s very unfortunate, but it’s understandable”. In fact, with any kind of large power plants – and especially if they run on intermittent renewable energy sources – there is no escaping the need for costly but unavoidable power infrastructures, and this is exactly what low income countries need.

Building the infrastructures sufficiently flexible, smart or intelligent to waste the minimum of input energy used to make the electricity, and able to avoid brownouts and – even worse – blackouts is the real challenge. Arbitrarily using Climate Diktat to eliminate anything but the renewables to produce power will make the challenge so huge it cannot be surmounted.

Do As I Say – Not As I Do

The real problem for Gates and other holier-than-thou billionaires who got lucky and got rich on the back of cheap energy is that nobody is interested in their whine. Transition away from fossil fuels, to renewables, is a century-long process and, like Gates admits, the low income countries really don’t have the time to waste. The need energy right now, like he also admits.

Due to pompous billionaire grandstanding on Climate Correct – and we can cite plenty of other artistes working this act, such as Britain’s Richard Branson – there has already been a hardening of political attitudes in emerging and low income non-Western countries on the subject. India is one good example. India doesn’t want to know, anymore.

The Western countries’ obsession with oil – shown by its somber tomfoolery in Iraq – is real. Western grandstanding on how poor nations must use expensive energy right now, “to save the planet” is unreal.

Gates can get real whenever he wants – if he wants. As already cited in this article, thrown away gas is a world problem today, and energy resource of tomorrow. World undeveloped hydropower resources – and hydropower can operate 24/24 and is not intermittent – are especially concentrated in low income developing countries, including Nepal and DR Congo. There is no way this power can be used inside these countries- it will have to be exported, meaning power transport infrastructures, and local/regional power intensive industries have to be developed.

More than 20 years ago, for OAPEC’s then acting Secretary General, I produced studies and reports, published by OAPEC in its Official Journal on a North Africa-Middle East gas gathering initiative linked to power transport development, and power export to Europe. Much later on, we got Desertec, a nicely-intentioned but muddle-headed concept for spending around $400 billion on developing solar and windpower energy assets in the MENA region and exporting power to Europe.

What Gates doesn’t want to know, nor the promoters of Desertec, is that the cart has to come after the horse. Start with easily-developed and abundant local energy resources, either fossil or renewable, develop the power infrastructures – and then you can start preaching Low Carbon! Not before.

Extended Bio

Andrew McKillop has held posts in national, international and Euro Commission energy, and energy policy divisions and agencies.

These missions have for example included role of National energy coordinator, Govt of Papua NG, Director of Information at the AREC technology transfer subsidiary of OAPEC, Kuwait, Senior energy research associate at the UN ILO and UNDP, Senior advisor to President, Hydro & Power Authority of British Columbia, Canada (BC Hydro), Seminar leader at the Administrative Staff College of India, Hyderabad, study, Senior energy associate at the Canadian Science Council, and elsewhere.

Andrew McKillop is a regular contributor to many specialist oil and energy Web sites. He was first energy editor of the journal ‘The Ecologist’ and has published works with other analysts, e.g. ‘Oil Crisis and Economic Adjustment’, Pinter Publishing, with Dr Salah al-Shaikhly, currently the Interim Iraqi government’s Ambassador to London.


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10 Responses to Bill Gates on the High Cost of Being Poor

  1. Jim Woods says:

    I’ve always rated Energy Matters as impartial view on the energy markets, but when your blogposts start to use emotive language such as “self-righteous” it beging to lose its had-earned intellectual credibilty. Few have that position, and I hope you work hard to keep it. 🙂

  2. Ralph W says:

    When I visited a remote Himalayan village 15 years ago, the only mod con was a battery powered storm lantern, recharged by a solar panel with a broken connector. It gave 3 hours of light, then you went to bed.
    The village was 5000 feet above the nearest road, access by a rough path. There was a new bridge across the valley, but nobody used it, the access paths had been destroyed in the last earthquake.
    The village had a diesel powered grain mill, installed at considerable expense (not least to the donkeys that had to haul it up the mountain), to save the villagers having to carry their grain down the mountain on their backs, then carry the flour back up the mountain again. Nobody used it, They couldn’t afford the diesel.

    Whilst I was there I could hear the blasting as the government built a road into the next valley. Nobody in the village had the remotest chance of ever owning a vehicle, even a bicycle would be pointless on the rough mountain paths.

    That cheap solar lantern went a long way.

    • Mark M says:

      I am not reading anything into whatever your position may be, but your post is perfect example of why urbanization has been such a force since WWII. Urbanization, after all, is a means to providing access to energy and the fruits of energy to many, at the lowest cost. When a nation becomes wealthy, it can extend the reach and benefits to those who remain behind in the countryside. The immediate challenge for developing (and developed) countries is managing the growth.

      The woolly headed and/or self-serving supporters of NGOs that try to defend a purported idyllic and/or self-imposed isolation of those who lag far behind the modern world, such as the indigenous of the Peruvian Maranon Basin, the Kayans of Thailand and Burma, or your example from the Himalayas just don’t get it. When the children of those who lives are vested in the ways of old understand the differences between what their parents have lived and what the city could offer, they make a rational choice. My observation is that although there may be angst, the parents also understand those choices. If they are smart, and there are always smart ones (but often also corrupt ones) among them, they leverage the sentiments espoused by the NGOs to extract the maximum from those who would exploit whatever resources they may sit on. Unfortunately they do not always understand how best to use that leverage and are usually exploited by the NGOs.

  3. Willem Post says:


    I like the graph showing China’s energy generation. RE, other than hydro, was near zero at the end of 2012.

    China burned 3.8 and 4.0 billion metric ton in 2011, and 2012, respectively.

    China is THE major culprit; it emitted about 10,000 million metric ton of CO2 in 2013.

    China burns almost 50% of all the coal in the world AND does it in a dirty manner.

    China’s air pollution control systems of coal fired plants typically have efficiencies of 95% or less, whereas fabric-filter based systems in Europe and the US have efficiencies of 99.5% or greater, and catch almost all particulate greater than 0.5 micron.

    On these small particles water vapor condenses. As a result the atmosphere does not only contain the usual quantity of water, but also the quantity on all these small particles, one reason rain storm events are more intense.

    NOTE: The particles of emissions from jet planes at 35,000 ft are even smaller, in the order of 50 to 100 molecules. The water vapor of combustion condenses on some of these particles, producing visible contrails, which spread out to form veil-like clouds.

    That means for every 1,000 lbs of flyash, about 50 – 100 lbs escapes into the atmosphere in China, whereas in Europe and Japan it is about 5 lbs or less.

    Additionally, ultra-super-critical, coal -fired generating plants, more prevalent in the US and Europe, are about 42% efficient, whereas existing standard plants in China have efficiencies of about 30%.

    Just getting China to clean up its coal plants would result in a significant decrease of CO2 and particulate in the atmosphere.

    • Euan Mearns says:

      Willem, thanks for insight. There is an oft quoted statistic that China is completing 1 new coal fired power station per week (or something like that) and I believe that part of this is replacing old very dirty plant with new cleaner more efficient plant. China I imagine will go through a similar evolution to Europe. In the UK clean air legislation was passed in 1956 – the year before I was born, that resulted in new and better plant being constructed away from the urban areas. It is the plants that are now being closed under the Large Power Plant directive of the EU – I’m not sure to what extent the plant closed in the UK actually presents a health hazard or not – we had a discussion about that some time ago.

  4. Kit P says:

    Why is that innovative thinkers that make millions using small amounts of electricity somehow think they are more innovative that the likes of Edison or Tesla? Or how about Einstein, Fermi, or Rickover? Long before Silicon Valley the power industry was changing the world.
    In the power industry we use Key performance indicators (KPI) benched marked to standards. For the safest cleanest home is an all electric home. Replacing coal heating and cooking is a huge improvement. Here in China I am seeing lots of induction table top ‘hot plates’. There is a 5000 MWe coal plant 5 miles from us. I see the plume walking to work daily. It as a state of the art pollution controls system. The plume is water vapor not Sox or NOx. The other direction on the road we are building nukes.
    The first point I would like to make is China is changing rapidly for the better. We were in a city last week with 27 million people. The air quality was good. On the four hour trip we saw many non point sources (agricultural burning, small factories). The air quality was moderate but nothing like LA in the 70s. So check to make sure your facts are up to date. The second point is folks like Bill Gates are not going to make the environment better or produce power. The take the forum as “self-righteous” hypocrites too lazy to do any homework. If Bill Gates said he was going to solve the dairy farm manure issue in his backyard, that would have been great but he is promoting impractical nuke reactors that will never get built.

    • Willem Post says:

      “The first point I would like to make is China is changing rapidly for the better.”

      And your evidence for your thinking is?

      If you look at China’s CO2 emissions vs time, one sees a steeply rising curve. To max the CO2 rise to zero and have it turn will take at least 3-5 DECADES.

  5. Guthrum says:

    You ruin your dispassionate analytical approach by such an “ad hominem” attack on Bill Gates – or anyone else for that matter. Attack his arguments as you can, but these personal, almost bitter, sniping reduces you considerably. Reason should be your weapon, not insults. Leave those to deniers and political fools. Shame on you! You know better….

    • Euan Mearns says:

      I’m not sure if your criticism is directed at me or the author of the article, Andrew McKillop? I’ve scan read the article again and am not sure there are any ad hominem attacks in there.

      The style is however overtly sarcastic and I believe the author is somewhat frustrated and angry at certain developments in the energy world made by “the elite” with good intentions, but based on minimal understanding of real energy issues. For example I recently levelled similar criticism at Ban ki-Moon who seems to believe he knows how to solve the world’s energy future and has assumed a mandate to intervene.

      Nevertheless, your criticism is noted. E

  6. Thank goodness some appear to be working on thorium breeder nuclear reactors!

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