In my last post, I looked at the response to the COVID pandemic as a model and highlighted a few ways that government can replicate similar strategies to make progress towards mitigating climate change. I also talked about how the private sector is the most important organizational unit of action and innovation to make progress on climate change. Let’s dig deeper. What can the government sector do to encourage and enable the private sector to act faster?
It’s a big question and I can’t pretend to have all the answers. However, a recent article by Scott Corwin (https://www.linkedin.com/in/scott-l-corwin-5a85991/) and Derek M. Pankratz (https://www.linkedin.com/in/dmpankratz/) at Deloitte Consulting - Leading in a Low Carbon Future (https://www2.deloitte.com/us/en/insights/topics/strategy/low-carbon-future.html) dovetails nicely with The Bid podcast I referenced in my last post (https://www.blackrock.com/us/individual/podcasts/the-bid#listen-now). In that podcast Paul Bodnar (https://www.linkedin.com/in/bodnarpaul/) described how entire industries, like aviation or steel production, are taking collective action to define the standards and other conditions required to pave the way to zero emissions. In their article, Mr. Corwin and Mr. Pankratz argue for a systems approach that takes this a step further. First, it describes how interdependencies between industries can have a big impact on progress. “The transition to a low-carbon economy demands the synchronized transformation of multiple, interdependent systems…Isolated initiatives miss the essential synergies in this transition.” Second, it clearly describes government as an enabler and accelerator of the necessary change. “Government, finance, and technology can play a catalytic role to underpin and enable the emergence of those systems.” You can add that government has a significant impact on how finance and technology enable the transition as well.
In Chapter 8, Regulation Plays a Big Role of Good Enough for the Climate (Good Enough for the Climate https://www.amazon.com/dp/B09NSZG6YS), I talk about the need for government action at many levels and of many different types. The U.S. Federal Government is huge and complex. The political system guiding it even more so. Within this construct, I argue for the same kind of action orientation that one might find in more “entrepreneurial” settings. It’s an entropic world. What can we do? Here is a framework and sample questions that might guide us.
Taking a systems approach as advocated by Corwin and Pankratz, how can government fill in the common pitfalls that different sectors face as they accelerate their climate mitigation efforts? These include -
Availability of enabling technologies
Availability of development capital, especially for enterprises or business models that aren’t “venture ready”
Early-stage demand for new low carbon products and services
Cost competitiveness – reducing the Green Premium
Definition of market standards – certification, transparency and trustworthiness, defining standards across industries
Measuring progress – keeping long term, detailed records of the environmental and public health indicators we are trying to influence
These challenges are the same for nearly any sector – energy production, transportation, shelter, industrial and materials. Or, as I defined them in Part 3, Existence Theorems of the book, nearly any color of carbon – Green, Gold, Blue, or Black
For starters, let’s also assume that a New Deal or Marshall Plan for climate is not coming. Given the political climate, it seems unlikely that a grand deal will be struck. The budget reconciliation bill is in limbo at best. What practical things can be done to make progress that are better than nothing? Note here that action creates momentum, and the preconditions for more action compounding and accelerating over time. This is a key notion of Chapter 5, The Science of a Bias Toward Action. So, let’s try to break down a few ideas based on the pitfalls above.
Availability of enabling technologies
Energy and Transportation
What can be done to secure more supply of rare earth metals needed for batteries?
Can the more be done to scale R&D on new nuclear reactor designs?
Availability of development capital, especially for enterprises or business models that aren’t “venture ready”
Land Management
Can the government help set standards for nature-based carbon credits?
Can land management agencies be mandated to maximize carbon sequestration benefits in their existing land management practices?
Early-stage demand for new low carbon products and services
Transportation
Can the government enact a cash for clunkers program?
As part of an infrastructure bill can the government subsidize new electric municipal and school bus fleets?
Can the government mandate that all vehicles it buys will be electric by a set date?
How can the DOD’s purchasing power be leveraged in this sector
Energy
Can all government owned and managed buildings purchase green power?
Shelter
Is it possible to mandate that all replacement heating, cooling, water heating and other building infrastructure be replaced with electric solutions utilizing green energy?
Cost competitiveness – reducing the Green Premium
Transportation
How can the subsidies for electric vehicles be extended?
Definition of market standards – certification and trustworthiness
Finance
How can the government help ensure transparency, liquidity and clear standards in the tradable emissions market?
Measuring progress
Ocean, Air and Water measurements
Defining standards for trace gas monitoring
General Questions – these might apply to any of the specific systems or sectors.
How can the government’s complexity be used as an advantage in climate policy?
What to the principals of action and innovation teach us about what government policies should be targeted?
What are the most catalytic policies that can be implemented?
Are their concepts of behavioral economics that could help us target more efficient policy?
This is a very short list. It’s just a conversation starter. What are your questions and ideas? There is no shortage of things the government could do. In fact, a group of over 150 policy makers developed a list of policy initiatives that they thought could be enacted quickly as part of the Climate 21 project (https://climate21.org/summary/). Another great source of ideas, many of them public policy solutions, is the recent book Speed and Scale – an action plan for solving our climate crisis now by John Doerr (https://www.linkedin.com/in/john-doerr-03248211/, https://www.amazon.com/Speed-Scale-Action-Solving-Climate/dp/0593420470).
In the face of the reconciliation bill limbo what do we do? Perhaps the examples from the pandemic response and a systems view described here, along with these inspiring action plans show us how we can pivot and still make rapid meaningful progress on the climate crisis.