Mar 21, 2022
Patch’s CEO Brennan Spellacy, along with four other innovators in the climate tech space— Charm Industrial, Climeworks, Normative, and Sylvera—recently met with US Special Presidential Envoy for Climate, Secretary John Kerry, and Salesforce Chair, Co-CEO, and Co-Founder, Marc Benioff, to discuss how innovation and technology are delivering climate solutions.
It’s not every day that a Silicon Valley-based startup gets the opportunity to meet with senior elected officials, but executives and government leaders alike recognize that this is a critical time to leverage technology and innovation, with a narrowing window to address the growing impacts of climate change. As UN Secretary-General António Guterres has said, this is “code red for humanity” with no time to waste.
At Patch, we believe that engaging early and often with partners and stakeholders is absolutely essential in climate tech, a complex and rapidly evolving space with many new entrants and diverse sets of incentives. A plugged-in policy environment will make the difference between successfully scaling the innovation needed to reach our global targets in the short timeframe that remains, or facing a future of devastating climate impacts. This type of continued dialogue between elected officials and innovators is how we can best understand—together—which investments and interventions will be most impactful.
We were honored to be part of the conversation with Secretary Kerry and to share our frontline perspective of carbon markets. We offered insights into the opportunities we see and our view on which actions would make the biggest difference in scaling the technologies we know we need.
Here are five measures we think would help support and scale the climate tech ecosystem, particularly carbon markets.
Directing government funds and programs would go a long way in scaling innovation. These would include expanded production tax incentives like 45Q (a US federal tax credit for carbon storage), which would apply to all carbon removal technologies regardless of the technology type (hence, ‘tech neutral’). We’ve seen a lot of incredibly supportive investments for Direct Air Capture via the US federal Infrastructure Investment and Jobs Act that became law in 2021 and know that many other technologies would benefit from such support.
We know that lack of demand for new low-carbon products, such as low-carbon steel and sustainable aviation fuel, is a critical barrier to scaling promising low-carbon technologies. Supporting the creation of market demand through advance purchase commitments and coalitions of “first-movers” is known to help.
The US State Department and the World Economic Forum, for example, have launched a program called the “First Movers Coalition”, which intends to accelerate market demand for low-carbon solutions across seven key sectors. The Carbon Dioxide Removal Leadership Act, a model legislation championed by Open Air Collective (of which Patch is a supporting signatory), is a multi-state legislative mission to create government-led carbon removal procurement programs across North America and the world. These market-moving programs can make a massive difference.
In the voluntary carbon markets, protocols and standards for carbon credits can vary depending on the certification body that developed the protocol, such as Verra, Gold Standard, Climate Action Reserve, and American Carbon Registry. This creates confusion and inefficiencies in the market. A move towards more universal quality standards in the voluntary markets is something that governments can help support.
Project financing and capital allocation is a known challenge in the carbon removal sector for several reasons, including technology risks for more novel technologies that are not yet commercially proven and adverse event risks, such as wildfires, for nature-based solutions. Investment incentives, such as the 45Q tax credit, have gone a long way to support carbon capture and storage projects. We would see more impact if these incentives were enhanced in the US, implemented in other countries, and creatively expanded to include other carbon removal project types, such as nature-based solutions.
Over 3,100 organizations have voluntarily indicated support for “TCFD-aligned” climate risk disclosure, i.e. requirements for corporations above a certain size or in a certain category to disclose their climate risk according to the principles set out in the Task Force on Climate-Related Financial Disclosures. A number of jurisdictions including Brazil, the European Union, Hong Kong, Japan, New Zealand, Singapore, Switzerland, and the United Kingdom have also announced requirements for various domestic organizations to report in alignment with the TCFD recommendations.
We know that strong rules for such disclosures raise the bar for climate action and provide clarity of demand in the carbon markets. We’ll be watching for more action here, including proposed guidance for US companies from the Securities Exchange Commission (SEC).
We look forward to continued collaboration between technology companies and governments—partnerships that facilitate faster innovation and yield the biggest impact for reversing climate change.
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