‘We Are Still In’
By Rich Heidorn Jr.
BOSTON — “We Are Still In” said the button Anne Kelly wore Wednesday as New England’s clean tech community gathered here, three days after a dire report by the U.N.’s Intergovernmental Panel on Climate Change.
For Kelly, senior director of CERES’ Business for Innovative Climate and Energy Policy (BICEP) Network, the button was a rebuke to President Trump’s plan to pull the U.S. from the Paris Agreement on climate change.
The IPCC report — which warned that preventing catastrophic effects from climate change will require unprecedented global cooperation — had a sobering effect on the Horizon 18 conference, where New England clean tech companies looking to make sales and forge partnerships met with other stakeholders. (See IPCC: Urgent Action Needed to Avoid Climate Trigger.) But there was no hint of defeatism in the crowd.
“The need to move to action is more and more compelling,” said Patricia Fuller, Canada’s ambassador for climate change.
Keeping temperatures from rising more than 1.5 degrees Celsius (2.7 degrees Fahrenheit) from 1850-1900 levels will require carbon pricing, maximizing renewable energy and energy efficiency, and incorporating carbon capture and storage, Fuller said. “There is no silver bullet. Really, as someone put it recently, you need silver scattershot. You need all the tools.”
Fuller cited a September report by the Global Commission on the Economy and Climate that recently concluded that “bold action” on climate could produce economic gains of $26 trillion through 2030 and create 65 million jobs compared with business as usual. “So, this is also an opportunity,” Fuller said.
Canada is passing legislation for a federal carbon pricing system, reducing methane emissions and emissions from heavy duty vehicles, and accelerating the phaseout of coal-fired electricity. All federal buildings will run on clean power by 2025.
Because the Trump administration and Congress have failed to take similar action in the U.S., it is the states that “are in charge of progressive energy policy,” said Ed Krapels, CEO of Anbaric Development Partners.
Krapels said proposed offshore wind projects in New England represent “probably the largest single investment opportunity in clean energy in the country.” Citibank has estimated as much as $100 billion of capital spending is needed to develop 20 GW of offshore wind on the East Coast.
“While I can see why some people would be a little pessimistic about where we are with respect to the latest U.N. report, there really is an enormous amount of stuff that is very positive and very constructive that is happening. The money is here; it’s available. And I think the challenge is to create a set of policies and market structures that enable that market structure to be deployed,” Krapels said.
Among the policy challenges, Krapels said, are how the offshore transmission infrastructure is developed and the role of energy storage. (See Anbaric Pushes Offshore Grid Plans.)
“Every transmission line should look at … the role that storage can play in increasing the capacity factor of renewable resources. I think the RTOs are very open to this idea. There is a lot to be done because they’re reactive organizations. They need to have developers put forward innovative new ideas.”
Gregory Wetstone, CEO of the American Council on Renewable Energy (ACORE), said renewable generation will never reach its potential without the ability to site transmission in areas like New England. “We need to be able to have transmission to renewable resource areas and so we’ve got to get beyond the NIMBY issues,” he said.
Wetstone called the lack of carbon pricing “the biggest externality in the history of economics.”
“If you care about these issues, vote,” he told the audience.
Matthew Nicholls, managing director of distributed energy solutions for General Electric, said his optimism comes from his prior career as a semiconductor engineer, where — per Moore’s law — computers’ processing power doubled about every two years. “Everybody lowered their heads, worked with partners, worked with capital and made it happen, year after year,” he said. “We see a similar type of transformation happening in the energy industry now.”
Researchers haven’t been as successful in cracking challenges such as carbon capture, despite billions in investments. But Rolf Nordstrom, CEO of the Great Plains Institute, said he was optimistic about the success of the “carbon capture coalition,” which won a federal tax credit for the technology in February. “We had the most liberal and the most conservative members of Congress voting for that — which probably deserves the Nobel Prize,” he joked.
Transforming Transportation and Heating
Patrick Woodcock, Massachusetts’ assistant energy secretary, noted that the rise of natural gas and renewable generation has reduced U.S. power sector emissions below that of the transportation sector.
In contrast to the “unprecedented transition” in the electric sector, there has been only “incremental progress in transportation,” he said. “I see components of that disruption occurring in transportation. We have those fundamentals of cost curves coming down in batteries; disruptive companies receiving billions of dollars in investment to be at the vanguard of a new transportation system.”
Carol Grant, Rhode Island’s commissioner of energy resources, said progress also has been slower in converting the heating of buildings.
“We really have to work on transportation and on heating. Those are two areas that we have not made the same kind of progress in. … This is hugely important in heavy transport, in marine transport, in air transport. It’s not just about all of us getting electric vehicles.”
Jed Dorsheimer, managing director for financial services firm Cannaccord Genuity, also sees transportation as ripe for disruption, noting that personal vehicles sit unused about 95% of the time.
“Greed always trumps green,” he said. “I do believe most decisions — while we like to take an altruistic view of things — the economics play a heavy role. I do think this area is ripe for economics to drive decisions to change the transport industry.”
Cities and Universities
In addition to states, cities and universities are also providing climate leadership, speakers said.
Jon F. Mitchell, mayor of New Bedford, Mass., and head of the United States Conference of Mayors’ Energy Committee, boasted his city of 100,000 has the largest EV fleet of any city in the state, with 30% of its vehicles electrified. The city also has won recognition for its high per capita municipal solar capacity. The largest fishing port on the East Coast, New Bedford also is hoping to become a hub of the offshore wind industry.
Mitchell said the city’s efforts were motivated by climate change and cost savings “but also because, as an older industrial city, we saw that it’s pretty good for our brand. Instead of being seen as older and gritty and sort of struggling, we’re emerging as a place that’s seen as progressive, forward thinking and creative. And that’s what we want to be.”
Rosalie Kerr, director of sustainability for Dartmouth College, said universities can be nimbler than states and cities because renewable investments can be made with approval of just a handful of decision-makers. “There are 4,200 universities around the country. We control something like 3% of GDP. So it’s not a tiny market,” she said.
Utilities ‘at the Hinge’
Lance Pierce, president of CDP North America, a nonprofit that runs a global disclosure system for investors concerned with companies’ environmental impacts, said utilities “sit at the hinge” of the old and new energy models. “In that regard they can be catalytic, I think, in helping make some of the changes.”
Although “utilities have been spotty” in disclosing their emissions and other environmental metrics, he said, Southern Co. and Dominion Energy began providing his company with data in the last year.
Marcy Reed, executive vice president of U.S. policy and social impact for National Grid, said her company no longer refers to itself as a utility. “We consider ourselves a clean energy transition company. And that is because … we deem it our obligation, and indeed our privilege, to help think through some of these challenges.”
New York and the New England states have pledged to reduce carbon emissions by 80% below 1990 levels by 2050. That will require 10 million EVs in New England, with all light-duty sales to be EVs by 2030, Reed said.
“That just calls for a massive shift,” she acknowledged. “People think it can’t happen. Well actually it can. That’s a decade from now.”
Reality Check for Big Oil
BP, which dropped its “beyond petroleum” marketing slogan several years ago following losing bets on solar power manufacturing, is seeking to get back into the sustainability game, said David Gilmour, vice president of business development.
Gilmour said the company’s sustainability goals and investments in the Oil and Gas Climate Initiative were prompted by customers’ demand for more environmentally friendly products and the company’s need to attract new talent. “I think we really do need to be inspiring our workforce to be working for a company that actually works for real positive benefits for society. … For BP to be around in 100 years, we need to be part of the energy transition. … Given that most of these technologies are highly disruptive to our existing business, we want to be part of and actually shape the future through the work we do.”
Jarett Carson, managing director of venture firm EnerTech Capital, said although U.S. venture capital investments are likely to set a record of more than $100 billion this year, investments in clean technology and energy will be below $6 billion, down from $7.5 billion in 2011. “That seems to be a direct dichotomy with the challenge issued by the IPCC, talking about the $2.4 trillion being needed to be invested almost every year,” he said.
But Daniel Goldman, co-founder and managing director of Clean Energy Venture Management, another VC firm, said a lot of investments before 2011 were in very capital-intensive technologies. “Today we’re involved in companies that aren’t capital intensive. Our fund will only invest in a company where you don’t need more than $30 [million] or $40 million to get to cash flow break even and have a product that can scale.”
Adam E. Bergman, Wells Fargo’s senior vice president for clean tech banking, also was less troubled by the availability of capital, citing the increasing involvement of corporate venture funds and “family office” investors, who tend to have longer time horizons and lower hurdle rates than Silicon Valley VC funds. He also noted that many of the big technology bets of the past, such as solar and wind, have reached maturity.
Emily Reichert, CEO of Greentown Labs, which claims to be the largest clean tech startup incubator in the U.S., said there are also more strategic investors now, such as BP, that can provide expertise to help new companies grow. “Ten years ago, there was definitely a green bubble. There were a lot of people that were investing in clean technology that perhaps didn’t necessarily have the knowledge or information they needed. They were not experts in energy,” she said. “I think it’s a lot more positive now.”