The IPCC’s latest, most comprehensive assessment to date stated what is most clear and motivating to the climate tech innovators and communities that Elemental Excelerator works with and supports. All sectors of the economy must dramatically and rapidly transition to a net-zero future. As the IPCC Working Group III Co-Chair stated, “It’s now or never.” This decade must be one of action and intention to ensure climate tech is deployed swiftly and equitably.
Elemental’s Policy Lab team reviewed the IPCC’s Climate Change 2022 Summary for Policymakers and what it means for climate tech innovation and the policies needed to drive its deployment. Here’s the three things policymakers need to know about this report to effectively deploy climate tech solutions and reap the benefits for their constituents.
Innovate, rinse, and repeat
Innovation policies and programs are working to drive down the cost of climate technologies. When coupled with community engagement strategies and increased public and private investment, these policies are even more effective in driving deployment. The IPCC report summary shows the impact of policy on the cost of renewable energy and battery technologies to date (page 63).
At Elemental, we believe this is a winning formula that we need to repeat and scale. Policymakers need to keep doubling down and replicating proven policies and setting our targets higher. More importantly, policy leaders need to engage community leaders and tech innovators in the process of designing and implementing those policies to ensure they achieve the outcomes we are collectively striving for — broad access to climate technologies, more economic and job opportunities, better health outcomes, and more resilient communities.
This combination of urgent need and enormous possibility creates opportunities for innovators of all kinds.
The IPCC report notes that some of the most effective tools for creating more access to climate technologies are policies that expand research and development, funding for demonstration and pilot projects (particularly in overlooked communities), and incentives, standards, and other policies and programs that create demand and scale.
The report also flags some sectors where innovation policy remains limited, such as agriculture, industry, and heavy-duty transportation. Solutions like carbon storage or removal, sustainable land management, and new industrial materials and feedstocks are not developing at pace. Elemental’s Policy Lab is keenly aware of these gaps and looking to partner with our portfolio companies to drive policy change. This is why, for example, Elemental portfolio company CarbonCure partnered with the Department of Transportation in Honolulu — a county with a goal to be carbon neutral by 2045 — to pilot and then scale carbon-infused concrete in city roadways and buildings. Other portfolio companies like DroneSeed and Climate Robotics are among the innovators we are also working with to unlock emissions reductions in the agricultural sector.
Grow the pie, share the slices
Finance for mitigation and adaptation increased 60% between 2013 and 2019, according to the report. But current levels of public and private sector investment are still not sufficient to meet the climate crisis. Elemental sees two opportunities for growth in capital investment: One, more investment into climate technologies and startups is needed — the IPCC summary states that we need to at least 6x current financial flows and in some regions and sectors we need to invest even further given the uneven investment flow we are seeing today. Two, balancing investment into technology with investments into community-based organizations is needed (our Elemental TED talk goes deeper into the imbalance we’re seeing). We also need systematic change in our financial systems to appropriately value climate risks and investment opportunities.
Policymakers can help meet both these goals by advancing policies that drive more public sector climate finance, reduce uncertainty and transition risk for companies and investors through clear regulatory signals, promote international financial cooperation, and require assessment and disclosure of climate-related risks from companies and investors. These actions will in turn leverage multiples in private sector finance and drive more investment to overlooked opportunities.
One near-term opportunity to boost public sector investments in climate solutions is to ensure that funding from the Infrastructure Investment and Jobs Act of 2022 supports climate tech deployment and climate-smart and resilient infrastructure. These funds are critical for many of our portfolio companies to scale demonstration and commercialization and leverage additional private sector dollars.
It’s a sprint, not a marathon
If we don’t push to replicate, strengthen, and expand policies that advance our climate and equity goals in the next few years, global emissions will continue to rise past 2025 — a critical inflection point where we need to start driving down emissions if we hope to limit the worst climate change impacts. It’s particularly urgent to strengthen policies for sectors where we risk locking in decades of carbon emissions — like decarbonization policies for new and existing buildings to avoid continued emissions created directly and indirectly through energy use and materials supply chains and ensure housing is adapted to future climate impacts.
We have seen this kind of policy unlock startup growth on the Commercial Inflection Point scale as companies move from an initial commercial scale pilot to deploying their technologies at scale. Elemental’s funding and engagement with BlocPower, which is focused on decarbonizing aging urban buildings, supported the company’s expansion beyond its home state of New York to establish projects in California and other states that have set meaningful targets to reduce carbon emissions from buildings and the energy systems that support them.
In all, the IPCC report highlights not only an urgent need for new solutions and the dangers of deploying those solutions in inequitable ways, but also the market opportunities for startups and investors ready to collaborate with policymakers and community-based organizations to deploy new technology. The window of opportunity to halve emissions by 2030 and secure a healthier and more just world remains open if we act now with all the tools at our disposal. This combination of urgent need and enormous possibility creates opportunities for innovators of all kinds.
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