Steven Chu: ‘Wall Street analysts are totally amoral’ on climate

When Steven Chu was US energy secretary, he addressed a small group of senators about climate change. “I said, ‘Imagine you’re on your deathbed, you’re surrounded by your family, and one of your grandchildren says, ‘Grandpa, you were in a position to do something about this, and you did nothing. Didn’t you love us?’ I was told [by the White House chief of staff] I can’t say that anymore. Why not? Because it makes them feel very uncomfortable.”

Chu broke a mould in US politics: a Nobel-prizewinning physicist, he was, when appointed in 2009, the first practising scientist to become energy secretary. “Chu’s the right guy . . . He actually deserved his Nobel Prize,” joked his boss, Barack Obama, himself a Nobel laureate. Chu became a key voice for alternative energy, overseeing a $465mn loan that kept Tesla afloat and pushing new nuclear plants.

The Biden administration has now gone much further than Obama’s, which failed to pass major climate legislation. Yet Chu and others concerned about the climate are now the ones feeling very uncomfortable. Global temperatures have broken records for 11 straight months. Meanwhile, markets are punishing companies making green investments.

Chu has advised Shell on its climate transition. The oil company has come under pressure from markets for having more ambitious climate targets than peers such as ExxonMobil and Chevron, even though most of its capital expenditure is still in oil and gas. Shell dropped a key climate target in March.

“The Wall Street analysts . . . are totally amoral,” sighs Chu. Isn’t it their job to be amoral? “There is some truth to that, up to a point. If a Wall Street analyst were asked, would it be better to start sterilising types of people with inheritable malconditions, is that good financial advice to a society? There are limits.”

Have analysts gone beyond those limits? “They could say, if you’re within 10 or 20 per cent [of peers’ returns], if you’re within striking distance, you’re doing the right thing, it’s not quite as profitable, but it will get better.”

Chu’s frustrations have been long brewing. Before being energy secretary, he dared to suggest the government should boost petrol prices to European levels.

[Scientists] should go into government for five years, maybe 10 years, as a matter of public service

At a Nobel ceremony, Chu met “whatshisname at Yale”. William Nordhaus, winner of the 2018 Nobel Prize for economics? “Yeah. He got his Nobel Prize for what the damages might be for climate, and what’s the smartest way to get there.”

Nordhaus’s model concluded in 2008 that it would be inefficient for the world to cut emissions more than 25 per cent by 2050. But that conclusion had a little-cited caveat — that catastrophic events would not upturn human societies. Chu points out that, in fact, extreme weather and desertification will play havoc with agriculture in entire countries. There are likely to be millions of climate refugees. In recent years, “maybe 10mn refugees going into Europe has completely changed politics. Imagine 200mn.” The World Bank predicts that 216mn people could be displaced within their own countries by climate change by 2050.

Chu argues that the people who best appreciate climate risks are not old-school economists, with their unrealistic discount rates, but the military. “The US Armed Forces was my biggest advocate when I was in DC . . . When there’s instability, there are wars. They would see young men and women going to war and dying.”

Faced with climate inaction, some people have got angry; others have become resigned. Chu has doubled down on science. He is seeking out the hard climate problems. He argues that further technology breakthroughs are needed — in electricity distribution, batteries, fertilisers, buildings that last centuries, and more.

In a lecture at the UK’s Royal Academy of Engineering, where he is an international fellow, Chu laid out the challenge. We sometimes refer to previous energy transitions — from wood to coal, or from coal to gas. Chu points out that they never really happened. Humans mostly added new sources of energy. Now, in less than three decades, we hope to transition away from oil, gas and coal. Chu doesn’t believe it’s possible, but he argues we must go as fast as we can.

The good news is the falling cost of renewables. Solar and wind costs will fall “by another two-fold”. The lifespan of solar panels will increase “to 20-25 years”. But transmission and distribution lines are still “too expensive”.

Renewables generate too much energy at some times and too little at others. That creates a need for storage. California now has 10GW of battery capacity, connected to the grid, up 1,250 per cent since 2019. But Chu thinks utility-scale batteries are also still too costly. For now, he argues the best form of storage is using surplus electricity to pump water to the top of hydroelectric dams. Surplus electricity can also be converted into hydrogen, using fuel cells. 

Chu is an advocate for nuclear power, and helped to persuade California governor Gavin Newsom to extend the lifespan of the state’s last nuclear plant. But critics argue that nuclear is less complementary than it seems to renewables: it cannot simply be fired up when renewable generation is low. Unlike renewables, its costs have spiralled: two new Vogtle reactors in Georgia, which Chu approved as energy secretary, ended up $17bn over budget and seven years late.

“When we were building reactors in the early ’80s, they were about six or eight times less expensive per unit of energy. How do you get back to that?”

Chu points to two sources of cost overruns: mid-project changes demanded by politicians, and “silly” questions by the Nuclear Regulatory Commission, which oversees US nuclear projects. But he also seems stumped: “We don’t know how to do big projects, period. The Three Gorges Dam [in China] was way over budget.”

Many politicians enthuse about small modular reactors, smaller nuclear plants whose production can be standardised. Sceptics, such as the economist Chris Goodall, argue that there is no evidence they will be cheaper per unit of output. Can Chu see evidence that SMRs will be cheaper? “I don’t know.” Even if SMRs prove commercial, they “will not be widely deployed for at least 25 years. [It] isn’t going to move the needle by 2050. So get that out of your system!”

On nuclear fusion, which promises almost limitless energy, Chu expects an even longer wait: “minimum 40 years” to bring a commercial reactor into operation. He argues it’s still worth investing in research now.

He is working to see whether naturally occurring hydrogen can be mined from underground rock formations, at less than half the cost of industrially produced hydrogen. “If it turns out to be true, it’s going to really transform the world.” Chu is on the board of a carbon capture company, Svante, which aims to clean up industrial emissions. He says his team at Stanford is close to coming up with a way of eliminating most of the thermodynamic energy penalty — that is, a plant’s loss of efficiency when carbon capture tech is added.

Chu’s time as energy secretary was marked by a political furore over a loan to solar company Solyndra, which went bankrupt partly because of Chinese competition. The biggest solar-panel makers in Germany and China also went bust, although the latter received a government bailout.

Does he share the Biden administration’s concerns with cheap Chinese imports of electric vehicles? Like many climate sceptics, he is conflicted. “I am worried. It’s almost like a known business plan . . . China is going to oversupply, they’re going to ruin the market for EVs, which is good — just like solar got really cheap.”

Should US politicians be protecting domestic producers? “I don’t think the US alone can do it. I think Europe and the US should be joining forces.” But tariffs alone will not “stimulate innovations to regain the lead” that the west once had, through Tesla.

Chu’s scientific curiosity sits alongside a political pessimism. No country will reach net zero by 2050 “aside from Norway, Iceland, a few countries like that . . . It’s going to take much longer”. The international target of “1.5C is gone, so is 2C. I think we’ll probably go over 3C”.

Does Chu worry the public will conclude it is too late to act? “If you have children and they go a little astray, is that your attitude? It’s too late?!” He points out that 3C of warming could become 4C, an even worse prospect, unless we act.

Do scientists make good politicians? “Most of them, no. But most politicians don’t make good leaders anyway!” He criticises one scientist-politician, Angela Merkel, for having “caved to the Green party” by closing nuclear stations. I note that a climate scientist, Claudia Sheinbaum, is favourite to win the Mexican presidency, but has weak green credentials.

His view is that scientists “should go into government for five years, maybe 10 years, as a matter of public service” then go back to science. “If you want to be a terminal politician, your rudder will change what you do.”

I wonder if Chu will, like other politicians, regret not doing more on climate. “I pushed pretty hard,” he says. Then he again recounts the story of his talk to US senators. He pauses for laughter, as if he’s telling it fresh. When you work on climate, you probably get used to repeating yourself — because nobody seems to listen the first time.

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