• Innovation can often, over time, reduce the price of sort after products, as a large number of companies develop more efficient, cheaper models.
  • The microwave, for example, started out as a $12,000 luxury, but innovation across the field has driven prices down as low as $50.
  • A new coalition, the Breakthrough Energy Catalyst is hoping to do the same with clean-energy technology, where adoption is often more expensive, known as Green Premiums.
  • The model hopes that a relatively modest cash injection in the field of energy storage, sustainable aviation fuel and green hydrogen can reduce prices and increase overall adoption.

When the first microwave oven hit the market in 1955, it cost roughly $12,000 in today’s dollars. These days you can pick one up at Walmart for $50.

It’s not hard to figure out why the cost dropped so dramatically. Microwaves had new features that customers liked, and they did some things better than gas or electric ovens. As demand for them rose, more companies got into the game, finding ways to make them more efficiently, building supply chains, and driving the price down. As microwaves got cheaper, more people bought them, which attracted more innovation, and so on in a virtuous cycle.

Some clean-energy products work the same way—solar power has become dramatically cheaper over the past few decades—but many don’t. At least, not yet.

Most green technologies are still more expensive than whatever they’re trying to replace, a cost difference I call Green Premiums. They don’t do the job better (other than contributing less to climate change, of course)—and in many cases, they do the job worse.

This is bad news for the fight against climate change. The world needs to eliminate greenhouse gas emissions by 2050, and reaching that point will take inventing and deploying many more clean-energy products. Although it’s great that governments are putting more money into green recovery programs and people are becoming more willing to pay the Green Premium for, say, building materials, innovation isn’t coming fast enough. Products aren’t getting cheaper or better fast enough, and the market isn’t growing as fast as it could—or needs to.

Climate change isn’t the only reason we should speed things up. Research shows that U.S. voters understand how developing clean technologies will spark new industries, creating blue-collar jobs in fields like American manufacturing that have seen big declines in the past few decades.

To accelerate the virtuous cycle of innovation, we need a new model for financing, producing, and buying new clean-energy technology.

One new model is being created by Breakthrough Energy Catalyst, a coalition of philanthropists, companies, and governments. The goal is to make the other green products follow the same cycle of early adoption, innovation, and cost reductions that made solar power and microwave ovens so much cheaper.

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