Gates frets over aid, sees R&D as vital to green energy

Bill Gates releases second annual letter since leaving Microsoft to work full-time at his non-profit foundation

Bill Gates marked his first-full year at the Bill & Melinda Gates Foundation with his second annual letter, fretting over possible cuts in foreign aid by rich governments and noting that research into renewable energy will be critical to resolving the global climate debate.

The purpose of the annual letter, and most of its 14 pages, is to explain what the foundation has been up to over the past year and what's in store for the future. A portion of the letter is dedicated to Gates' views on topics important to the foundation, such as whether to fund green energy projects or how government aid might slow or reverse due to the global recession.

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"I am surprised that the climate debate hasn't focused more on encouraging R&D since it is critical to getting to zero emissions," he writes in the letter. He offers a tough goal for people researching green energies: "The most important innovation required to avoid climate change will be a way of producing electricity that is cheaper than coal and that emits no greenhouse gases."

The Gates Foundation won't fund such projects, he says, because the foundation is focused on work that does not attract investment from companies or individuals, such as medicine for children in poor nations and improved seeds for poor farmers. There would be a huge market for a cheap source of energy, Gates says. He is personally investing in several ideas related to green energy, though he does not name them in the letter.

"I think it is likely that out of the many possible approaches, at least one scalable innovation [in green energy] will emerge in the next 20 years and be installed widely in the 20 years after that," he said.

A major concern Gates highlights in the letter is that rich governments around the world might reduce foreign aid due to heavier debts caused by the global recession, or that commitments to initiatives such as reducing global emissions might take money away from other vital areas, such as health aid.

"The final communiqué of the Copenhagen Summit, held last December, talks about mobilizing $10 billion per year in the next three years and $100 billion per year by 2020 for developing countries, which is over three quarters of all foreign aid now given by the richest countries," he writes.

"I am concerned that some of this money will come from reducing other categories of foreign aid, especially health. If just 1 percent of the $100 billion goal came from vaccine funding, then 700,000 more children could die from preventable diseases. In the long run, not spending on health is a bad deal for the environment because improvements in health, including voluntary family planning, lead people to have smaller families, which in turn reduces the strain on the environment," he added.

Since its founding in 1994, the foundation has committed to more than $21 billion in grants on a range of activities, a statement from the foundation said. The foundation's endowment was valued at $34.17 billion as of Sep. 30, 2009.

The foundation focuses its cash on innovations that might otherwise go unfunded, such as those aimed at the poor, and looks for projects that have a low cost to maintain so individuals or governments will want to keep them going after the foundation is no longer involved. Major projects include funding the development of new vaccines for a range of diseases, including malaria, AIDS and tuberculosis, as well as new seeds for crops including corn, rice, wheat and sorghum. The foundation is also active in education, putting PCs in public libraries, and finances for the poor.

Some parts of Gates' 2010 annual letter show he's still struggling with the change to working at a nonprofit foundation compared to Microsoft, where he remains chairman. His 2009 annual letter notes that it might take time to get used to working with developing countries after spending so much time managing a company focused on the industrialized world. The 2010 letter notes incredulity over the fact many countries have not approved a new vaccine for children in over 20 years and other countries don't even have a process to decide on vaccines, despite their life-saving capabilities.

But overall he says working full-time at the foundation is a welcome change. Getting out to meet people working directly in areas the foundation is funding, from teachers in North Carolina to dairy farmers in Kenya, has been rewarding.

"Seeing the work firsthand reminds me of how urgent the needs are as well as how challenging it is to get all the right pieces to come together," he says. "I love my new job and feel lucky to get to focus my time on these problems."

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