Billionaire Investor Tom Steyer Says Clean Tech Will Win the 'Climate War'

Billionaire hedge fund manager, investor and political activist Tom Steyer has made climate change his primary focus for more than a decade. In his new book Cheaper Faster Better, Steyer argues that the clean energy and climate technologies he's been financing for years are approaching a tipping point where they will dominate the global energy economy.

Despite growing indications of a climate crisis, Steyer is bullish on capitalism's power to "win the climate war," as his book's subtitle says.

"We're doing worse in terms of climate impact than people predicted," Steyer told Newsweek recently. "But our technological capability and economic capability to solve this is so much better than people understand—it's terrific."

Steyer is a New York native who settled in San Francisco, where he made his fortune with Farallon Capital, the hedge fund he founded in 1986. He left Farallon in 2012 to focus on clean energy as an investor, philanthropist and political player.

Steyer has been a major donor to climate causes and Democratic candidates, and in 2020 became a candidate himself. His presidential campaign ended after finishing third in the Democratic primary in South Carolina. In 2021, Steyer and friend and fellow asset manager Katie Hall co-founded Galvanize Climate Solutions, a climate-focused global investment firm.

In a wide-ranging interview, Steyer talked about the climate stakes in the coming election and why he wrote a book about how clean energy is on the cusp of tremendous growth. This interview has been edited and condensed for length and clarity.

Newsweek: Your argument in the new bookis that the clean economy is going to win out not just because it's clean, but because it offers the things that the title [Cheaper Faster Better] implies. Is that correct?
Steyer: I can go a little further than that, Jeff. It is winning out. If you look at where we are right now, it's not a question of if it's going to happen because it's cheaper, faster and better. It is absolutely happening, in the real world, right now.

If you look at last year, 2023, 86 percent of new electricity generation globally was renewable. And my point is, people aren't doing it to be nice. Everyone around the world is going to make self-interested decisions about what to buy, what kind of electricity to use, what kind of cars to drive, how to heat their houses. Every decision will be self-interested.

The products that are going to win are cheaper, faster and better, and that's what we're seeing. People don't understand that renewables are much cheaper than fossil fuels and that that advantage is growing dramatically every year.

If you look globally at where we're going in terms of cars, something that people seem very focused on, EV's are moving incredibly fast in terms of new car sales.
So, it's not that it's going to happen. It is happening right now.

However, the growth in clean energy does not yet seem to be displacing the dirty energy. It seems like we're just adding more to meet the global appetite for energy. What needs to happen for the emissions to really come down and for our atmosphere to not have as much CO2 in it?
We need to retire dirty energy plants. [Clean energy] is totally dominating the change in the system, but because the system as a whole is growing, we haven't retired nearly enough dirty energy plants.

In the United States and in a lot of the developed world, we are retiring dirty plants. But in India they're going to need five times as much electricity in 2050 as they have now.

So, the question is, even if 100 percent of that is renewable, what happens to the existing plants, and is that true with China? If we look at where the most dramatic growth is, the question is, how are they going to meet it? And they're going to answer that by doing what's in their interest, what is in fact cheaper, faster and better.

I get your point. But look at the dynamic here in the United States where, as you point out, we've retired a lot of coal plants. However, under this administration, we're also producing more oil than ever before. This brings me to what I think is the nub of the thing: Capitalism seems good at producing more stuff, but not so much at making us consume less. What are your thoughts on that?
Of course, that's true, but I think I would use a different framework, Jeff, than you just did, and the framework I would use is a technology transfer. The way to think about that that, or at least the one that I use, is an "S" curve.

Basically, new technologies are adapted very slowly as they struggle to dominate, but once they're disruptive, the line goes from pretty flat to going up gradually, then it goes vertical and then it flattens out around 80 percent. And that's the curve, the adoption curve, that has been [true for] every technology transfer going back to whale oil to oil, from horse and buggy to cars.

Every single significant technology transfer happens like that because there's a point where the new disruptive technology is just dramatically better, and that's what we're seeing.

I mean, the implication of what you're saying is a static implication. There's a certain amount of existing infrastructure, it doesn't change, and we just build on top of it. We don't emit more, but we don't emit less. That's the implication.

What I'm saying is, actually, we're in a dynamic world where we are dominating the dynamism and where if you look forward, we really see a point somewhere around the end of this decade, where in fact the [fossil fuel] use really dramatically declines and falls off the cliff because of the disruption.

It takes some time, for the reason that you're saying, but technology does not stand still. Battery costs went down 50 percent last year, that is an amazing fact.

You want to know what did not go down 50 percent last year? Oil and gas prices.

What do you think are the key things that need to change to make capitalism more aligned with meeting the climate challenge?
So, if we're sitting in econ class together anywhere around the world, that's a very simple answer, which is: There is no free market. There are markets that are set up with rules set up by human beings and that is the marketplace in which businesspeople work.

We didn't do oil and gas for a bad reason. People started using oil and gas because they were driving much cheaper energy, much faster growth, better lifestyles for people around the world.

But the framework that we set up did not include a [type of] pollution that people didn't know really existed, and that pollution was CO2, something you can't smell, you can't see, you can't touch, but it is warming the earth in a way that it is destructive and scary.

So, the thing that makes that difference is, basically, people are polluting for free. And [polluters are] making a couple trillion dollars a year, polluting for free. What we're seeing in the marketplace is that, in spite of that free pollution, cheaper, faster, better is happening on the renewable side. But what would make it happen faster is if people had to pay for their pollution.

So, no more externality free rides, that sort of thing?
Of course. I think we're going to get there. When we get a chance to measure it, when it's transparent, then there may be accountability. But right now, we're winning without that, in a field that is dramatically tilted in favor of fossil fuels, even so, the technology wins. I mean, technology is relentless.

I wanted to talk a bit about Galvanize and how the company is approaching these challenges. One thing that caught my eye is this notion of aligning executive compensation with climate action. Talk to me a bit about that.
My basic thesis on this is that people are self-interested. We'd all like to think that everybody is going to do what's in the common interest at all times. I think realistically people do what they get paid to do.

If you tell somebody, "You're going to get compensated on meeting the following goals," they try and figure out how to meet them so they'll get paid. If you put it into people's compensation schemes where you say it's not just nice to do this, but these goals are something that your paycheck, your success, your career trajectory are going to be based on, people meet those.

But where does that goal-setting come from? The company and shareholders are operating with the same selfish motives that you just described. What's their motivation to set those goals?
I believe very strongly that succeeding in the context of a clean company is going to make the company resilient and last longer. If your goal as the CEO is just to make the most money this year, that is the wrong goal for a company. You have to build capability to be successful in the coming years.

If you do everything and set yourself up so that in 2024 you will get the highest bonus and to heck with 2025, '26, you have put your company at risk. That is not being a responsible CEO. So, from my point of view, there's absolutely no way we don't have to make this transition.

I want to talk a little bit about politics. You've been active as a candidate and as a campaign donor. What do you think are the climate stakes for this election?
The two potential administrations have very different approaches to energy, dramatically different. What I say in my book, and what I believe, is this drama is going to play out in the marketplace.

In Texas, they've tripled solar over the last three years. And that's not because the legislators and politicians in Texas love renewables. It's because it's cheaper—much cheaper.

As it gets cheaper, building new fossil fuel plants doesn't make sense economically—not because they are opposed to fossil fuels, but because that's what the money says. When we think about that going forward, it's going to play out globally in the marketplace and you have to ask, "What is America's role in that?"

The real question to me in terms of the different orientations of these administrations is international. This is a global question; it is global warming.

In order to really get control of this, we need international cooperation, or at least around measurement, verification, transparency and ultimately accountability. And traditionally America's role in that has been a leadership role. In the last Republican administration, we withdrew from all the international climate stuff.

One other thing which I think is absolutely critical for Americans is, this is a great chance for us. If we don't produce these technologies, if we step aside, if we decide to go back to the 1950s and try and do tailfin Caddies, we will lose.

If we decide to say no, we want to go backwards, we want to look in the rearview mirror and go back there—that is extraordinarily unrealistic, and it will cost us. It will cost us economically. It will cost us politically. That will be a terrible thing for the American people in terms of their lifestyles, and really, our position in the world.