Governments, corporations and nonprofits are coming up with novel ways to prod capitalism to help tackle—instead of fuel—climate change.
At least eight initiatives launched in the last two years are trying to push supply and demand of clean energy technologies that otherwise would not take root fast enough to help ward off the worst impacts of a warming planet.
The efforts include government-led initiatives like the First Movers Coalition and industry-led approaches like Frontier. They are getting a boost from the Inflation Reduction Act, the United States’ largest-ever law funding clean energy, and two other U.S. laws passed over the past year.
“There's a tremendous amount of work to do to bend capitalism to what we need it to be. But we're proving that the existing forces of capitalism can be outsmarted and redefined for better outcomes for all.”
— Dawn Lippert, founding partner of Earthshot Ventures and founder and CEO of Elemental Excelerator, a global climate technology investor and nonprofit organization
Capitalism, of course, is a broad term and we can’t tackle the entire concept in one fell swoop, but we can start to unpack it. The initiatives covered here focus on supply and demand, a core tenet of any market economy. That’s the foundation of capitalism, which is powered by free markets, private corporations and profits.
The initiatives include:
Mission Possible Partnership (MPP) is an industry- and nonprofit-led effort launched in January 2021 at the World Economic Forum’s annual conference in Davos, Switzerland. Its goal is to help decarbonize seven industrial sectors, in part by spurring demand for cleaner industrial technologies, along with new policy and finance approaches.
The First Movers Coalition was launched by the U.S. State Department in November 2021 at the United Nations climate conference. It has nine other governments involved and more than four dozen companies across a wide range of sectors, including Apple and Volvo Group. The coalition, an outgrowth of MPP, is trying to coordinate demand from those companies for new technologies in eight sectors particularly hard to clean up, including aviation and shipping. Efforts to tackle two more (chemicals and concrete) are planned for launch at the U.N. climate conference next month.
Frontier was launched in April by four tech companies (Stripe, Alphabet, Meta and Shopify and consultancy McKinsey) to commit to purchasing $925 million worth of carbon removal from companies working to develop the technology over the next decade.
Breakthrough Energy, a network of clean energy initiatives founded by Bill Gates, launched a program in July 2021 called Catalyst, which seeks to help fund first-of-their-kind commercial projects in hard-to-abate sectors like aviation and manufacturing. While the other initiatives focus largely on demand, Catalyst is looking to help ensure supply of technologies will be available to meet that demand.
The Sustainable Aviation Buyers Alliance (SABA), launched in April 2021, connects suppliers of sustainable aviation fuel (SAF) to corporate buyers. It’s an example of translating into action the ambition of efforts like the First Movers Coalition.
SteelZero (launched in December 2020) and ConcreteZero (launched in July 2022) are two initiatives by the nonprofit Climate Group working to spur demand of clean concrete and steel.
The fact that these were all launched in the last two years is impressive. But limitations exist, including the fact they’re all voluntary.
The long-term viability of some of these programs is also questionable if leadership changes. The First Movers Coalition, for example, is spearheaded by President Biden’s climate envoy John Kerry. When he leaves that post, questions will likely arise about FMC’s future.
Another challenge: potential redundancy.
“It’s starting to become a crowded dance floor in the world of helping make SAF happen,” said Andrew Chen, an expert on sustainable aviation at the nonprofit RMI. That sentiment is generally the case for other hard-to-abate sectors.
“There are some challenges in creating a unified approach, and we don’t want to confuse people with ideas and approaches,” Chen said. “I’d rather have that problem than not get anyone to pay attention at all.”
Editor’s note: Breakthrough Energy, which supports Cipher, is also a partner with FMC and helps fund MPP.
Let’s tease out a few examples of what we mean by bending capitalism, drawing first from Cipher’s recent SAF coverage.
SAF refers to clean liquid aviation fuel made from various technologies and feedstocks, but whose primary feedstock today is biofuels. It’s anywhere between two and five times more expensive than traditional fossil-based jet fuel. Subsidies in the Inflation Reduction Act could close that gap significantly.
SABA is developing a registry and certificates to connect large consumers of aviation fuel (mostly corporations) with SAF suppliers.
“All of this is to help get further upstream and provide more of a demand signal to unlock investments in actual SAF supply. If we can create a large amount of aggregated demand and clear and consistent rules, we can help pay down the premium of SAF and unlock more capital investment and production.”
— Andrew Chen, RMI
In past decades, government-led procurement efforts prompted faster market uptake in particular industries than would have occurred otherwise. But the sheer number and breadth of separate efforts appears unprecedented. It still may not be enough.
“The Inflation Reduction Act pushes us in the right direction and joined with these kinds of private-sector initiatives, it pushes us even further in the right direction,” said Robert Pollin, an economics professor and co-director of the Political Economy Research Institute at the University of Massachusetts-Amherst. “But I don’t think we’re at the point which these are strong enough measures.”
The Inflation Reduction Act could cut U.S. emissions roughly 40% below 2005 levels by 2030, compared to President Biden’s goal of at least 50% by then.
But estimates are not guaranteed.
Emissions could fall faster, thanks to what The Atlantic’s Robinson Meyer calls the “green vortex,” a feedback loop where government and private investments lower technology costs, which encourages further climate action.
Or, fossil fuels’ staying power could remain remarkably steady. Despite the past decade’s growth in renewable energy, oil, natural gas and coal’s share of world energy production has remained mostly constant for more than 30 years—around 81%, according to the International Energy Agency.
Renewable electricity is sometimes beginning to meet new power demand and offsetting growth in fossil fuels.
Source:Ember• Regional increases in fossil fuels, such as coal in Europe, were offset by declines elsewhere. Coal and natural gas power generation increased in July and August, indicating power-sector emissions could still rise this year.
Pollin says initiatives like those laid out here may not drive change fast enough if governments—especially the U.S.—don’t also pass laws with more mandates and penalties.
Chris Ward, president and CEO of Texas-based cement company Lehigh Hanson, seems to agree.
Even with expanded tax credits that subsidize cleaner cement, it won’t be enough to offset costs of making it, Ward told Cipher on the sidelines of the Global Clean Energy Action Forum in Pittsburgh, Pa., last month.
But he added: “We’re committed with or without the market pull to making green cement.”
Why? Tech companies like Amazon, Google and Microsoft are asking for it, Ward said: “They’re saying we’re only going to design buildings that are green, and we want to be the first supplier of choice.”
Lunchtime Reads and Hot Takes
How a pricey taxpayer gamble on carbon capture helps big oil — The Washington Post
Amy’s take: How much failure is too much? I’d love to see an analysis of failures in one technology area compared to another. Yes, CCS has seen a lot of failures; is it demonstrably more or less failure-ridden than wind or other cleantech faced in their earlier days?
Progressives Should Rally Around a Clean Energy Construction Boom — The New York Times
Amy’s take: As I said last week, I’m waiting for progressives to offer an alternative to Manchin’s permitting bill.
Have we already passed peak fossil fuels? — Energy Monitor
Amy’s take: The first sentence is extremely informative, and the rest is, too—backed up by helpful charts.
EU countries eye deal on more energy measures within weeks — Reuters Anca’s take: Temperatures are dropping, energy bills are rising and EU countries are in one emergency meeting after another to try to rein in the energy crisis. Finding consensus on how to tighten the belt further as a community is becoming more and more challenging.
First major U.S. cobalt mine to open in Central Idaho on Friday — Idaho Mountain Express
Amy’s take: It’s great to see so much ink given to this topic in a local newspaper. I wonder to what degree there was pushback against this project.
Amy’s take: Cool to see on-the-ground coverage of the world’s first green hydrogen facility.
The Climate Economy Is About to Explode — The Atlantic
Amy’s take: This has got me wondering: Is it a matter of time until the stocks of climatetech companies have the heft of major tech firms?
Challenge against EU ‘green’ label for gas and nuclear energy steps up — Financial Times (paywall)
Anca’s take: Following challenges by two environmental groups, Austria is also taking action against the European Commission for including gas and nuclear power as “green” investments. Expect a long legal battle ahead.
Green hydrogen revolution risks dying of thirst — Reuters
Amy’s take: The only thing that could surpass the importance of cheap, plentiful supplies of wind and solar in the energy transition is water.
Want a career saving the planet? Become an electrician. — The Washington Post
Amy’s take: When people ask me what they can do to help combat climate change, I say: Go work on it! Whether that’s on Capitol Hill or inside people’s electrical panels (and anything in between), many jobs will be ready.
New Zealand farmers may pay for greenhouse gas emissions under world-first plans — The Guardian
Anca’s take: It turns out the digestive system of New Zealand’s 6.3 million cows are among the country’s biggest environmental problems. The good news is that “all revenue from the levy will go towards new technology, research and incentive payments to farmers who adopt climate-friendly practices.”
More of what we're reading:
European wind industry ‘struggling’ with rising costs — Financial Times (paywall)
‘Loss and damage’ debate set to dominate the COP27 agenda — Financial Times
Danish Power Outage Raises Concern About Infrastructure Security — The Wall Street Journal (paywall)
After Ukraine – The Great Clean Energy Acceleration — BloombergNEF
Hydrogen fund Hy24 raises €2bn as investors seek to tap clean energy shift — Financial Times (paywall)
AND FINALLY...
Airport charging
Anca snapped this photo during a recent trip to her home country of Romania. This electric charging station is in the small airport of the Transylvanian city of Cluj. As the sign states, this was the first electric charging station at any airport parking in the country.
Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.
Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.
You received this email because you signed-up for newsletters from Cipher.
.png?upscale=true&width=1200&upscale=true&name=image%20(88).png)
