Innovating Solutions to the Climate Crisis

Panelists discuss how the private and public sectors can partner to develop, scale, and utilize emerging technologies to mitigate and adapt to the consequences of climate change.

The Malcolm and Carolyn Wiener Annual Lecture on Science and Technology addresses issues at the intersection of science, technology, and foreign policy. It has been endowed in perpetuity through a gift from CFR members Malcolm and Carolyn Wiener.

 

VAITHEESWARAN: Good evening, ladies and gentlemen. Welcome to today’s Council on Foreign Relations Malcolm and Carolyn Weiner Annual Lecture on Science and Technology, which is titled “Innovating Solutions to the Climate Crisis.”

I’m Vijay Vaitheeswaran. I’m the global energy and climate innovation editor of the Economist. And it’s my tremendous pleasure to be your immoderate moderator today for what promises to be a very robust discussion on a very important topic.

This particular meeting is special. It is the Malcolm and Carolyn Weiner Annual Lecture on Science and Technology. It’s a lectureship that addresses issues at the intersection of science, technology, and foreign policy, and is generous endowed in perpetuity through a gift from CFR members, Malcolm and Carolyn Weiner. We’re pleased to welcome them both virtually this evening, as indeed I welcome all of our many participants who are joining us from the ether. I started to say across the country, but some may be overseas as well. So welcome, everyone, in addition to our audience here in person.

Climate innovation—easy to talk about, hard to do, I discovered. Twenty years ago precisely this year I published a book called Power to the People arguing that the imminent and rising threat of the century, climate change, would need an enormous amount of climate innovation to get to net zero emissions—a concept that was pretty unfamiliar at that time—and predicated that we would need to decentralize, decarbonize, and democratize our energy system. I can tell you, as I sit here, it’s a slow change that is coming. Twenty years on, we’re here discussing the same topic.

But there is good news. And the good news is that I think that we are really approaching a tipping point. That there is a tremendous amount of momentum now from policy, from markets, from government, from the private sector, from nongovernmental and civil society. I think this is an exciting moment to be thinking about not only the prospect, and need, and urgency of climate innovation, but their actuality. How is it working and how can we do better? How can we be more ambitious? And are we missing areas where we need to apply the kinds of skills we applied in parts of innovation to dealing with the whole of society approach to thinking about climate change?

To help us think through this incredible opportunity—I’m going to put it in a positive frame—we have three leading practitioners and experts in this area. And I’m delighted to introduce them.

We have joining us virtually Jennifer Wilcox, principal deputy assistant secretary at the Office of Fossil Energy and Carbon Management at the U.S. Department of Energy. Welcome.

We have Carmichael Roberts, founder and managing partner of Material Impact, who’s also joining us virtually. Welcome, Carmichael.

And with me here in Washington, Alice Hill, the David Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations.

So please give them a round of applause to get us going. (Applause.) We welcome their insights.

We are, I would argue, at an inflection point. And certainly the U.S. is at a pivotal moment, thanks to the triple whammy of legislation that we’ve seen in the last couple of years, most notably the Inflation Reduction Act. We are seeing the U.S. really attract tremendous amounts of investment into the area of climate innovation, clean energy infrastructure, and related areas. In addition, it’s sparked something of a global arms race which, if you put it hopefully, is a race to the top. Responses from Ottawa, to Brussels, to Delhi. We’re seeing much more attention and investment coming into the area of climate technologies and maybe even ecosystems related to

climate technologies. A new systems thinking, a new kind of industrial policy approach around the world, with the U.S. at the epicenter, I would argue. That’s the great news.

The challenge, I would put to my panelists as well, is that in order for these ambitions to be realized, we’ve got to start building stuff. And at the moment we are stuck in what I will call the bananas syndrome—build absolutely nothing anywhere near anybody. (Laughter.) And until we overcome that, we will not be able to realize the potential of those promised investments or those ambitious policies, never mind to go beyond and think even more broadly about what kind of a better energy and economic system we could imagine for all.

So with that in mind, let me start, perhaps, by turning to you, Jen. Could you give us a sense from your perch at DOE? You’ve been doing this for quite a long time, and you have quite a budget in this day in age, I think between the different laws—the bipartisan infrastructure law in particular, but also the Inflation Reduction Act. How do you see the launch of climate innovation in this new era where you have a tailwind supporting you?

WILCOX: Sure. Yeah, I’m happy to talk a little bit about the work we’re doing specifically in carbon management. More broadly, though, the Department of Energy has received $62 billion in the bipartisan infrastructure law for over the next five years to build out first-of-a-kind infrastructure. When it comes to carbon management, it’s $12 billion to spend over the next five years. Really, though, the bipartisan infrastructure law and the infrastructure funding is there for first-of-a-kind projects. It’s really a drop in the bucket in terms of what we’re going to ultimately need to get to the scale to reach net zero by 2050. And so the Inflation Reduction Act is critical because that really is about the—all of the policy levers, the tax incentives, the aspects that make it economic for the private sector to build a second, third, and fourth of a kind to really get us to the scale needed for widescale deployment.

In terms of the bipartisan infrastructure law, some of what we’re seeing in terms of first-of-a-kind demonstrations is we’re looking at integrated carbon capture and storage projects, where we’re avoiding carbon emissions from entering the atmosphere to begin with, focusing really on committed infrastructure. And so, for instance, looking at newer power plants that are expected to persist through midcentury, looking at industrial emissions that are really difficult to decarbonize today, like cement production, steel production. And then finally, we’re also looking at carbon removal.

And so in order to achieve net zero—net zero’s exactly that. And in order—whatever we’re putting in the atmosphere, we also need to be able to, you know, take out in terms of the emissions that are truly hard to decarbonize or avoid. And when you look at, from the bottom up, the emissions that are truly hard to decarbonize today, they still add up to gigatons. And so we’re going to need carbon removal, which is taking CO2 directly out of the atmosphere, in order to counterbalance those emissions that we can’t mitigate in these early days.

And so at this scale we’re at pretty low carbon removal rates, on the order of, say, thousands of tons of removal per year. We need to get to gigatons by midcentury. So significant effort at the Department of Energy to invest billions of dollars to building out this industry, such that we will have the tool and time by midcentury. And those are the direct air capture hubs. And we’re looking at $3.5 billion over the next five years to build four first-of-a-kind demonstrations in terms of these hubs, each one scaling to a million tons of removal per year.

The final piece is, is when we capture all this CO2, whether we’re pulling it out of the atmosphere or avoiding the emissions from entering the atmosphere, how do we manage that? What are we going to do with all of that CO2? And one aspect that scales with emissions is geologic storage, reversing the flow of carbon back in the earth. The same rocks that stored oil and gas for millions of years can also store CO2. And so we have $2.5 billion in the infrastructure law to really build out the capacity for geologic storage in the United States so that it's available for the private sector to be able to have an off-take for the carbon capture, really based upon the Inflation Reduction Act and all of the tax incentives, again, for the second, third, and fourth-of-a-kind.

So I think it’s a really exciting opportunity right now, but we really needed both pieces of legislation in order to build out the capacity needed to get there in time.

VAITHEESWARAN: Thank you. You’ve given a panorama of how your department is investing in these areas, to kind of kickstarting—these are technologies that are not unknown. This was not something that was invented yesterday. We’ve had carbon capture and sequestration technologies have been around. But this seems to be really about scaling, a word that you emphasized. In a few weeks I’m going to fly out to see what will be the world’s largest carbon capture facility. It’s out in the Permian Basin. Funded in part by a private oil company—private sector oil company, Oxy, in that case, with support from the government.

Can you talk about the role of partnerships with the private sector? Because even four hubs for the volumes that you’re talking about are a drop in the ocean compared to the greenhouse gas emissions of the United States in a given year, or even a given day. How do you get that kind of scaling effect that you’re hoping for after you get the catalytic effect of the first projects?

WILCOX: The first projects it’s really important that the learnings are transparent to the broader public, that we understand truly what the costs are in terms of these first-of-kind buildouts, and understand too where are the challenges. How can we think about first-of-a-kind projects to learn by doing and get costs down for second- and third-of-a-kind? And I do think, you know, the Inflation Reduction Act, now it’s priced at $180 per ton of CO2 for direct air capture. That will be a good incentive for the private sector for the, you know, Nth-of-a-kind, ultimately. But there’s also today a voluntary market when it comes to direct air capture and, more broadly, carbon removals, because it’s recognized even when you look at a corporation in terms of net zero goals and the pledges that are being made, it’s really difficult to control scope three emissions.

And so we’re seeing a lot of dedication associated with the private sector in terms of voluntary credits and payments for removals. But one of the key pieces that we’re focused on is making sure that the removals themselves are robust. And when we have engineered approaches, like the one that you’re visiting in Texas, it’s easier to quantify. It’s easier to quantify how much capture of CO2 you’re taking from the atmosphere, how much you’re storing in geologic storage reservoirs, and we have also the Environmental Protection Agency with class six permits that also requires monitoring, reporting, and verification. So all the framework is in place for these engineered approaches.

But what if we’re planting trees? What if we’re looking at increased carbon storage in soils? These are nature-based approaches to carbon removal that we also need to accelerate. But we need to do it in a way such that the carbon is stored irreversibly and durably. And so what we’re trying to do is also invest in the frameworks for those nature-based approaches, so that we can actually look at the broader portfolio and make sure that we have these tools in time.

VAITHEESWARAN: Great. Thank you. And for those of you who don’t follow the energy industry quite so closely, talk of scope three emissions, just to give an example, when an oil company produces oil that’s different from, of course, when we burn the gasoline in our cars. The part when we burn the gasoline would be called scope three emissions. And that’s a lot harder to measure, monitor, manage, than if you go upstream, where it might be a lot easier to track and to manage. But all of them matter, of course, as far as the planet is concerned.

Great. So we’ve gotten a great perspective on what the government’s doing and the role of carbon management, which is one of the tools in the toolkit in dealing with the comprehensive, broader question of climate change and the role that innovation can play. Let me turn, Carmichael, you can give us a private sector perspective on this. You’re a seasoned investor, both with your own firm and with your advisory role at Breakthrough, which is a Bill Gates venture, one that many people might have heard about. You played an important role there in some very long-term investments, as opposed to the very short-term mindset of a lot of venture capitalists, thinking about the deep and hard engineering problems that are involved in taking a huge amount of greenhouse gases out of the atmosphere, or preventing them from coming out in the first place through new methods.

Since you’ve thought about this in a different way than perhaps short-term financial investors, can you help us understand, from your point of view, where are we in accelerating climate innovation? You know, we had a clean tech boom and bust some years ago, that a lot of people bear the scars of having invested too early, maybe, or in nascent technologies. Now it’s been rebranded as a climate tech boom. But we face headwinds—a touch global economy, high interest rates. It seems to be mixed messages. What is the private sector perspective on the climate tech revolution. How do you see things?

ROBERTS: Yeah, I like what you did in terms of going backwards a little bit to the clean tech side of things. And while from a financial standpoint people can say it was a little bit early, I’m really glad that that moment happened because we had a lot of really important, well, progress and lessons that informed the second wave. So back when clean tech was being talked about, climate tech was not really a terminology in the private sector. That’s not—it was more clean tech. And interesting enough, if we go back just—you mentioned Breakthrough Energy Ventures. If you back up a little bit, you know, it feels like a firm that’s been around for twenty years. Amazingly, it’s—our very first investment was only six years ago.

And so when we’re talking, like—and to give you a sense of what things are like today, I want to just think about six years ago. So go back to 2017. And I will tell you, when we were sitting there then at Breakthrough, and hearing—just to be clear on my role at Breakthrough, I’m going to give a visual of the perspective. There’s a two-person investment committee at Breakthrough Energy Ventures that’s responsible for the—you know, the investment decisions there. By the way, one very proudly as the technical side, my partner Eric Toone on that investment committee, who is a Department of Energy alum, you know, from ARPA-E. And then there’s me. And you probably can see my periodic table behind me, so I too am a scientist like Eric. And I’m the business decisionmaker.

So the two of us sitting there at the time realized we need to get more money into the category of venture, because venture was not investing at all. And if venture’s not investing, that means the entrepreneurs and the innovators really can’t participate, whether it’s in academia or in the private sector. So you don’t really have the great ideas coming out. And fortunately—I would give a lot of credit, by the way, to DOE, because the ARPA-E program, I think, was instrumental on the way with the drumbeat for years. But just—and DOE overall. But by and large, climate was not an area even in the top five, I would say not even a top ten category, for venture capital, for entrepreneurs, for innovators, for corporates doing collaborations, just six years ago.

Today, I would say unequivocally the two most exciting areas to be in are AI and climate tech. All you got to do is go to a university and ask the twenty-year-olds where they want to work. (Laughs.) And you’ll—and what’s exciting to them. Or you go out and look at academia at what’s really exciting, and watch where the money is going. So the world has changed pretty quickly on the climate tech side of things. And, you know, we went from no companies to over 100 companies in the portfolio across a wide variety of topics. And, as you said, big bets that take a longer term. And, to Jennifer’s point, where you can remove a lot of carbon if they’re successful.

And we’re not alone. Now there are hundreds of firms all around the world who are—who are doing the same. So that’s the good news. And, by the way, that brings all the entrepreneurs. That brings all the innovators, people in completely different, unrelated categories and topics that are doing research, who now want to have an impact and bring their entrepreneurial skills and innovation to climate tech.

All right. So now during that time period—this is the first time in the last, like, call it ten months or so we’ve had serious headwinds in front of us on the private sector. Thank goodness, I will say, for the IRA, because I think that has done a tremendous amount for the private sector to keep a little extra wind beneath its sails. And climate tech is still one of the most robust areas today, in part to a lot of things, but I think in part to that legislation. It definitely plays an important role, as has been mentioned.

And so I would say right now what’s interesting—we’re at this moment now where it’s getting tough. You know, it’s a moment where we can really talk about scale. A lot of those investments over the last, you know,

six years, they need another, you know, eight years, five years, ten years, depending on which things you’re talking about. And they’re right at this moment where you really need to cross that chasm towards the scaling and at different stages. And it’s coming at a time where money is a little bit more tight. I think people are being a lot more judicious in every category of investment, different stages. But I don’t see the investment stopping, and I don’t see the innovation stopping. I’m still sitting right in my—at the forefront of that. I just think people are getting smarter, and paused a little bit, and trying to figure out how best to do this. Which I don’t see as necessarily a bad thing.

And that includes the large companies who’ve been great partners over, like, the last several years, including—

VAITHEESWARAN: That’s—

ROBERTS: Yeah.

VAITHEESWARAN: That’s’ good to hear, Carmichael. We get a clear sense not only of the strength of the direction of investment over time, some of the lessons learned, but also maybe having some of the support of a long-term set of laws, like the Inflation Reduction Act, which is a ten-year window of policy certainty, of technology neutrality in the way that the tax credits are structured, for example, giving investors some confidence that this is a policy environment where the U.S. has showed up. After a long time after we were, at the federal level, not acting decisively on climate. Indeed, the U.S. pulled out of the Kyoto Protocol. The U.S. pulled out of the Paris accords.

With this set of laws, in which many of the beneficiaries will be in red states. That’s something I wanted to point out, that though it was clearly a Democratic administration and Congress that passed it, most of the wind and solar of the U.S., much of the investment that’s been announced, is in red states. Texas is the leading renewable energy state in America, for example. So in my travels around the country researching this, it’s become pretty clear to me that there is bipartisan support for maintaining these laws, because the beneficiaries, the carrots that are being built out, are being shared widely and often are supporting on the ground many red states.

So I think that’s a good point to turn to our in-house expert, Alice. You’ve heard two perspectives, from government and from the private sector, on I would say focused on the mitigation side of things. On, you know, how do we deal with the problem? Or after the horse is out of the barn, how do try to lure it back, in the case of carbon management and in terms of reducing emissions that are already in the air. Your focus is a little bit different. You want to talk about innovation in the area of adaptation and resilience. Can you tell us, especially for those in the audience who are not experts in this area, very briefly, what you mean by adaptation and resilience? How is it distinct and perhaps neglected compared to the areas that tend to get the more glamorous investments?

HILL: Well, it’s very exciting to hear about all of these investments in mitigation. And there are two sides to the climate coin, maybe even a third developing. I don’t know how that works with a coin. But we have the mitigation side, which is cutting that blanket of harmful emissions or pollution that’s forming around the globe to cut down on the heating—whether we’re sucking it out, or we’re stopping putting it in. And then there’s what do we do with the impacts that we’re already suffering? I mean, look at Pakistan, a third of the nation underwater. We have extreme heat now in Pakistan and India. We have here in the United States just billion-dollar disasters with an upward trend. And those are happening far more frequently, far more close in time. And those are, in many instances, fueled by the higher temperatures. It just makes droughts, wildfires, flooding worse, and sea level rise.

But that side of the coin—and there’s a third, climate intervention, which I’m sure will have a lot of tech solutions. And that is really geoengineering, trying to engine the atmosphere to stop the heat somehow, not through removal of carbon but through solar radiation and putting big blankets in the Arctic and on glaciers to stop the melting, a lot of different ideas out there. But on the adaptation side, as the head of adaptation for the

United Kingdom said, it’s under-resourced, underfunded, and often ignored. And the problem with that approach is that these impacts, which are, as you read, record breaking—that means that we haven’t this—our historical records do not reflect that we’ve had events this severe so far.

None of our systems are prepared. You can look at the electric grid, communications, wastewater treatment, you name it, disaster response. None of it is really ready for the types of events that we’re having. So we desperately need innovation. We desperately need money for it. But it’s pretty well lacking. There are small pockets in the current legislation and there are a lot of opportunities to have better outcomes.

VAITHEESWARAN: Give us an example. Make it come to life for us. What’s a big, low-hanging fruit area that you see for innovation, which is the mandate of our conversation today, to help with the problem you’ve identified?

HILL: Well, big, low-hanging fruit is to figure out the climate services problem. And what are climate services? Those are services that tell people what’s ahead and what they can do to better prepare themselves. What we’ve had is an arms race. Out of the insurance industry we developed modeling that models what’s going to happen. And so ensures premiums to charge to homeowners and others in terms of their home property insurance. Reinsurers have really done some sophisticated modeling for the insurance industry. That grew out of a hurricane in 1992 in Florida, where the insurers were surprised. And they said, we want a model now, because that cost us way too much money.

But those are privatized. And we’ve seen an arms race among consultancies, among the credit agencies, and financial institutions to take that modeling in house. And it has been private modeling. So that they can use it to make financial choices for themselves. And that’s good. For the people who can pay for it, that’s good. But we don’t have that kind of climate services for the general public and for those that can’t afford. And so you’re going to get greater inequality because the more sophisticated investors can dump the property that’s highly risky, and the others it’s like a game of hot potato who’s going to end up with that property. And they may end up with it. So that would be a big one. There are many small ones.

VAITHEESWARAN: So if we see this as a—if this is a public good, is this something that the government should either fund or subsidize? Is that what you’re thinking? Would it be—what’s a model you would recommend to pursue this kind of innovation?

HILL: In my opinion? It should definitely be a public good. Because—and, just let’s—most of the modeling, much of it is based on the public good. It’s based on all the great science that the federal government does already, but they just refine it and then can use it for their own purposes. But we’re not doing that. The federal government is not doing that refinement for ordinary folks. We do have the First Steet Foundation, which is a private effort.

As you may have gone on Redfin lately, or Relator.com, you can type in your address and you’re going to get a number of—a rating for wildfire, for wind, for flooding. Now, that has recently come under some scrutiny, certainly in the media, as to what the basis of those models are. Because that is the default for homeowners looking to figure out what is their risk. And unfortunately, it doesn’t include the kind of information that might be available to a more sophisticated purchaser.

And that just means that people are making decisions that aren’t wise. And we are seeing historical levels of people moving into areas at high risk here in the United States. In the coastal regions, in regions that flood, and in regions that are vulnerable to wildfire. Now, if they have better information—maybe it’s just irrational human decision making. That could well be, and we need the social scientists to help us with that. So that might be what’s behind that. They just want to live in the forest or they want to live near water, so they don’t care. But if it’s not, we have a problem because they’re not being told, hey, by the way, this thing could burn, it could flood, and you might not have any property insurance starting next year when your insurer says: It’s too risky for me to give you a premium.

VAITHEESWARAN: Well, sometimes it’s worse than that. There are some states that even when private insurers pull out from areas that are deemed too risky, that the state provides subsidized flood insurance, for example, or storm insurance. So we have perverse incentives as well to deal with.

But let me get a quick reaction to your—let’s say—Carmichael, is this something that the private sector could find an opportunity in, or some way to democratize some of that access? You have a lot of AI plays and you’re familiar with the modeling world. What do you think?

ROBERTS: Definitely. I think there’s—you know, there are opportunities that line up quite well with the combo of mitigation and adaptation. So you just have to find the right ones. Let me give you an example. Let’s take water, for example, and even back up and think about how much—you know, how much goes into advanced manufacturing when you look at the making of plastic bottles and if you look at the transportation of water from Point A to Point B, with trucks and so forth. You just look at the carbon footprint for that for a second.

And if you say to yourself, geez, I want to try to lower that. At the same time, as things get hotter and hotter, what are we really worried about? You talk about democratization, I heard you say it earlier, I mean, boy oh boy, do you want to democratize access to clean drinking water. I mean, that’s a category that’s a no-brainer, which is not necessarily mitigation but that’s certainly climate related and absolutely an issue around adaptation when we look at how the heat map is going to just adjust things around the planet.

So if you can find an investment—and we did this, as an example. If you can find an investment that does both. Like, something that can cleverly provide water locally to everything to an individual household, no matter where they’re located on the planet, within reason, but also maybe to a local town, a community, a jurisdiction anywhere on the globe, and at the same time eliminate the transportation issue, and also decrease the need for manufacturing more bottles, then you do them both. You both have—you have a case where, if you do the math, that is making a dent in migration, but it’s absolutely addressed to adaptation at the same time. And if you can build a company like that, you can also, from a capitalist standpoint, have a real justification on the private sector. So we have a company called Source Global that does exactly that, just to pick one example.

VAITHEESWARAN: Sure, that’s a good example. Looking for more innovative business models as well. It’s not just technology when you talk about innovation. And people tend to focus on technology, novelty, the shiny object when the word “innovation” is used. But a lot of innovation is actually better ways of doing things. It can involve no technology or some, but wrapped around a better business model, let’s say, or a new and better understanding of customer, consumer needs, or citizen needs. So that’s a great example.

Now, we’ve come to the time where we turn to member questions. So I want to remind everyone that this meeting is on the record. And I’ll ask for questions first here from Washington, and then we’ll come to the Zoom. There’s a lady here with a question. We’ll get the microphone to you. Please, as ever, introduce yourself and your affiliation.

Q: Sure. My name is Chloe Demrovsky. I’m the president and CEO of Disaster Recovery Institute International. Thank you for this panel. I think I’ve—I suspect I’ve read a significant amount of your writing, in the Economist, given what you’re saying. I particularly enjoyed your reference to the banana syndrome. Certainly worth a chuckle. And I acknowledge it, but I also live in New York City where we’re building everything on top of everyone.

So that leads to my question, which is about while innovation’s an important—innovation is important in terms of new stuff and building, it’s also important on the retrofitting side. And there’s opportunities here for the private sector and also for the public sector to both encourage it and find ways to operate in an environment that is, perhaps, more challenging because you’re dealing with buildings that are already in existence and people that are already in place. So what can be done there?

VAITHEESWARAN: That’s a great question. The built environment. As a fellow New Yorker, I share your concerns about—and the building sector is the biggest contributor to emissions, of course. It’s also the one where individuals have the least control, typically, especially those that live in cities where the person who designed a building is different from the one who bought it, from the one who might lease it, or the one ultimately, if you’re a renter, let’s say, you can’t even control your heating system or your windows, and there’s not a lot of incentive for people up that value chain to put in the most efficient kind of systems because they don’t pay the heating bill. So maybe I can turn to Jen. How do you think about this question of retrofits and dealing with legacy infrastructure, is really the broader category of question. How do you think about this at DOE?

WILCOX: So from—again, from a carbon management perspective, in fact, a lot of what we’re doing is retrofits rather than rebuilds. When it comes to retrofitting an existing capital investment, at the end of the day the risk is lower in terms of building that rather than starting with a greenfield and starting from scratch. And so what we’re looking at when we think about carbon capture, for instance, we’re looking at retrofits of existing facilities—whether it’s a cement plant, a steel plant. But at the same time, we recognize when we look at carbon capture that you’re also allowing for the same supply chain to go into that infrastructure.

Now, we know that there are better ways to produce steel today that don’t involve fossil fuels, for instance. And so, for instance, you can do something where you have direct reduction using hydrogen of iron oxide. And so that’s thinking about how do we invest currently but not locking in the old. And so I think there needs to be a lot of vision in terms of as we invest today making sure that there’s a pipeline to doing what in the future isn’t such a reliance on fossil fuels. And so that’s something that we also think about in terms of transitioning to, say, hydrogen in systems.

VAITHEESWARAN: I understand we have a question on the Zoom. Let’s go there.

OPERATOR: We will take our next question from Tyler Godoff.

Q: Thank you very much. Tyler Godoff, Emerging Founder.

My question is around the need for minerals in the climate change future that we’re headed toward. Can you talk about the need for minerals, what that looks like broadly? And specifically, how many mines for these minerals will we need domestically in order to ensure that we’re mineral independent, if you will?

VAITHEESWARAN: Who wants to take a stab at that? Any of my erstwhile experts here want to jump in on the minerals topic?

WILCOX: I’m happy to kind of get it going. The others will definitely want to weigh in.

VAITHEESWARAN: Sure, get the ball rolling.

WILCOX: Well, I have good news, Tyler, for you. In that there’s actually a lot of opportunity with existing legacy wastes in the United States. So when we look at coal mining, for instance, and we have waste associated with it—it could be acid mine drainage, it could be fly ash impoundments, it could mine tailing waste. A lot of this is actually stockpiled and all located throughout the United States. And so within our office, we actually—and have funding through the bipartisan infrastructure law—to build out first-of-a-kind demonstrations to extract out critical minerals and rare earth elements from these unconventional resources, which don’t require new mining.

And when we do the back-of-the-envelope calculations of what’s going to get us to 100 percent clean electricity by 2035, we actually have enough stockpiled material in order to fulfill a lot of our demand in the United States. And the other piece of this, is that we have—you know, Alice talked before about climate services, but I see this broadly as ecosystem services. We have an opportunity to clean up legacy wastes associated with our

dependence on fossil fuels. We also have an opportunity to bring value to communities, create jobs that are actually looking like refining jobs, that take a feedstock that’s already been ground down from mining, and can be further refined to gain that high purity that’s needed to make the magnets for wind turbines, or the EV motors.

And so there’s a ton of opportunity in this space. At the end of the day, it comes at a cost. And that’s why it’s so important to have that infrastructure law funding for the costly first-of-a-kind demonstrations. But it’s not just about cost. It’s the value of being able to do this domestically. It’s the value of being able to create jobs in communities that need them. And now those folks don’t have to move to find jobs. And we’re leveraging existing skill sets from the mining community in doing this. So there’s just a lot of value added. And also, there’s a component here—and, again, I’m in fossil energy and carbon management. We work with our EERE colleagues, energy efficiency and renewable energies, and we have to think about the advanced manufacturing piece too, and the advanced processing. And so this is another opportunity to actually bring jobs to these communities, and actually bring the industries back manufacturing in the United States.

VAITHEESWARAN: Thank you, Jen.

Carmichael, I see you’re unmuting. Did you want to jump in?

ROBERTS: Yeah. I just want to build off of what Jennifer just said, and just—and add to it, and give some examples. So take everything that Jennifer said, and let’s kind of bring it to life with some examples. So we got a company called Redwood Materials, right? And I see Jennifer’s shaking her head yes, she knows exactly where I’m going with this. It’s a prime example, right? There’s an idea where this company was started by one of the cofounders of Tesla, JB Straubel, who knows a lot about batteries, you can imagine, in terms of, right, his background. And he decided to start Redwood Materials to do exactly what Jennifer said, to basically reclaim and try to figure out how to access some of the really important materials that could be recycled or rejuvenated.

That company, as Jennifer knows, has announced that it’s going to do its manufacturing in South Carolina. So this comes back to your point, Vijay. This is—the company is called Redwood Materials. Not surprisingly JB has a company out in California, where he’s out. But yet the manufacturing, look where it’s happening. And it’s a prime example. We got another company called Lilac, that is a play on words around lithium, again, trying to extract lithium. I won’t get into it, but I will tell you the places that are being pointed to in the U.S. are doing exactly what the question was asked, which is what do we have in terms of resources and how do we access, purify, and so forth?

We got a company called KoBold, where we’re looking at cobalt, and it’s a play on words. And it’s a company that has the ability to go and locate where cobalt is that you wouldn’t necessarily believe that it would be, and access those minerals, which are really important. So I can name lots of companies. So this is going on, you know, nonstop. And I agree with everything that Jennifer said. A lot of it is being fueled by the—and will be fueled by the public-private partnership.

VAITHEESWARAN: Great. Thank you. From top to bottom, you gave us excellent answers. I want to add one small point to give some perspective. And that is, while these issues of strategic mineral stocks, domestic manufacturing, domestic jobs, are quite important, I think it’s over-egging the omelet to make the analogy to energy security. People often say, well, look, you know, there was a—this is the 50th anniversary of the Arab oil embargo, let’s remember, this year. That, you know, what if they cut us off from lithium, if there’s a hostile power stops sending us rare earths?

It’s not exactly the same, for the reasons that were mentioned. You can have alternatives at home and stockpiles. But also, with EV, you use the minerals once to make the battery and the car, and then you use electricity that can be generated from domestic sources for the next thirty years. Whereas if you have a gasoline driven car, when the tanker stops arriving, if there’s an embargo by a hostile force in the Middle East, let’s say, your economy grinds to a halt within a few days, or when the strategic petroleum reserve runs out. You need oil 

every day in vast quantities to keep going. So it’s a different nature of threat, and I think we should calibrate our responses accordingly. So just a note of caution there.

Yes, let’s come to the very front row here. I see a hand.

Q: Thank you. Very interesting discussion. I’m Louise Shelley from George Mason University, and I run an institute on transnational crime and corruption.

And it’s wonderful to hear about all this legitimate entrepreneurship. But I focus a lot on the criminal entrepreneurship related to the energy sector. So the carbon markets that were started in Europe were hijacked by criminals, costing the EU $5 billion. The Sicilian mafia has been caught on wiretaps saying energy is the future, because they can steal the energy credits. And there are water mafias. Have you thought about these plans as vast amounts of money go into this, how the criminal entrepreneurs are already plotting to steal this money and undermine the efforts to engage in climate mitigation?

VAITHEESWARAN: Great question.

Alice, I’m going to turn to you. What do you think about these climate criminals?

HILL: Well, I think it’s an excellent question. I don’t have the answer. I was the chief of the major frauds unit in the Los Angeles U.S. Attorney’s Office. And I can tell you, whenever there’s a lot of money involved, there’s fraud. So let’s hope that DOJ is thinking through, and our other agencies who are handing this out, that they are thinking how the criminals could act. But I have no idea what the plans are in place. But just an excellent point.

VAITHEESWARAN: I’ll underline that. You are onto something. Obviously, there’s a huge amount of challenges involved. Already with existing carbon markets we have credits that are issued of dubious quality. A lot of companies are doing greenwashing. Sometimes it’s a don’t ask, don’t tell type of greenwashing, where they don’t look too closely at the provenance of credits, the brokers that are involved. There are some legitimate companies, of course.

But it’s very hard to ensure the integrity of all the carbon credits that are currently being claimed by companies. It far exceeds that which experts think are the quality credits. And so that means there’s a lot of dodgy credits that are running around. Or I met a broker at the last climate conference the United Nations held in Egypt, who was bragging to me—seeing my badge as a journalist—that in India he goes around to company corporate secretaries and gets them to backdate documents and so on to forge carbon credits, such that they can be sold in these markets. There’s always going to be some of that. Partly, I’m a little bit excited that the climate industry, as it were, has now become big time enough for criminals to chase it. (Laughter.) You know, back in the day there was nothing steal, right? Nobody cared. There was no money. So think of it as a positive as well.

Let’s go to our next question. There’s someone on Zoom who may have a question for us.

OPERATOR: We will take our next question from Catherine Mann.

Q: Thank you very much. This has been a very important discussion, and very interesting one. I’m a professor at Brandeis University, and I am also on the monetary policy committee at the Bank of England.

So I have a global perspective. And I think, building on the last question—which was a very important one—there is this issue that only one person in the room has mentioned the price of carbon. And I think the mention was $180 a ton. Carbon being a global market, policymakers taking alternative strategies to achieve some change in carbon footprint, whether it be emission trading scheme, whether it be taxes and subsides, whether it be the carbon adjustment mechanism—all of these are different approaches. And one wonders—and I’m a card-carrying economist—one wonders if the signal of a carbon price wouldn’t be a better strategy. And I would—I know we’re not going to get there, because this is a different world. We’re all at the second best. But talk to me

about the fragmentation of the policy strategies being undertaken around the world and the implications for the success of achieving the carbon objective when you have such fragmentation in the policy environment. Thank you.

VAITHEESWARAN: Thank you, Catherine. As somebody who has written about this for the Economist, I applaud having an economist on our calling asking an exceedingly economisty question. And I’ll disclose an interest. You know, we, at the Economist, and I personally have written numerous editorials arguing for an economy-wide nondiscriminatory carbon tax or other form of carbon pricing, that’s even revenue neutral. Where all the money is given back to citizens, but the right signal is sent to the marketplace to use things that are less greenhouse gas intensive. Of course, it has not gotten very far in the United States at the federal system, at the federal level, but a number of countries around the world do have some form of carbon pricing. The World Bank thinks maybe a quarter of the world economy has some form of carbon pricing, however low the price might be. But this is a real challenge.

I wonder maybe, Carmichael, as a private sector guy, how do you see this absence of the ideal, which would be a global harmonized carbon tax of some kind, or a carbon pricing mechanism. Instead, this messy hodgepodge of policies that are bottom up, or sideways, or backwards in some places. How do you handle this as we think about a climate challenge, for which we need speed? You know, the greenhouse gases are mounting and the scientists are growing more concerned, and yet we don’t have clear instructions, as it were, from policy.

ROBERTS: So this gets right back to—you know, I love what you said about—in the previous answer to the question that isn’t it great we’re at a moment that this is a real thing that, you know, criminals will come in and think this place is—that what we’re doing is valuable. I’ll say something very similar here, and in the same vein. It’s amazing that we’re at a spot now that, from an innovation standpoint, we’re getting companies that have to pay attention to this sort of thing? And what I mean by that is, you know, six—back six years ago, we were just sort of thinking can we just stimulate the innovation in general, and not necessarily focus on the problems that may get in the way, and have ourselves basically stagnated from doing any innovation, because you’re nervous that—of all the other things that are needed in order to get to scale.

But can we just put that aside and just try and innovate and get to a certain spot, that we can have a discussion that that could be the bottleneck and that could be the issue? Fortunately, let me tell you how we’ve been handling that at the Breakthrough Energy side of things. We have—I’m by no means—of everybody on this—today on this stage, especially Vijay, I’m the least qualified to answer the question in terms of how we solve it. But I can tell you what we have done at Breakthrough, is we have about two-thirds of our efforts and staff is focused 100 percent on policy-related matters. And so unlike me, where I’m laser-focused on the innovation side, how do we get these companies, there’s a whole group of people who are focused on the issues that have been brought up today, that are much more on the policy side, broadly speaking, with the large team that’s out there working both, you know, domestically and globally to try and help.

I will tell you, we’re still very concerned. I think these issues—I don’t have an answer to answer specifically how to solve it. But you asked a very specific question, which is how are these companies looking at this? They’re concerned. And what they need—the companies are not resourced to solve this, let’s be clear. They’re resourced to come up with innovations and ideas that can be the solutions, and how do you get them to scale from a technical and business model standpoint. But from a policy standpoint, almost none of these small companies can do this. And so it’s going to be—it’s absolutely required for other areas to come in and help solve this, not the entrepreneurs. And the entrepreneurs are just focused on their part.

VAITHEESWARAN: Thank you, Carmichael. Let’s go to the back row. There’s a gentleman with a hand up.

Q: Hi. Dan Mejia with Associated Press, working on climate issues.

So we are at the Council on Foreign Relations, but we haven’t really talked about—spoken about foreign or technology in emerging markets overseas. And, I mean, two observations. One, like, with IRA, there was a lot

of criticism from overseas that it was hampering the ability of, you know, countries in Europe, et cetera, to innovate and compete with subsidies, et cetera. And, secondly, like, in emerging economies, it’s quite clear that there isn’t enough VC capital or even, like, when DFIs are investing overseas, it’s much more downstream rather than upstream. And a little bit to Carmichael’s point about business models de-risking, like, how do you de-risk business models in the developing world? And how do you convince investors to take more risk overseas, not just because there’s ideas not just in the U.S. but overseas, but also because maybe they know what—Indians know what works better in India, et cetera? So how do we encourage that?

VAITHEESWARAN: OK, yeah, great question. How, particularly in developing countries, I presume, but globally how do we broaden this conversation in particular at attracting investment, getting those technologies that might be relevant particularly for that marketplace to spread? Who wants to take a stab at this? Jen, is there anything that the U.S. government is doing that you think would have knock-on implications for global innovation?

WILCOX: Yeah. I’m happy to take this one. One of the things that you realize—like, when we’re looking at investments in carbon capture retrofits, for instance, for cement, that’s a global industry. Many of the companies that we’re supporting in the United States, the actual facilities themselves, coupled to the technology, those have presence across the globe. You know, some of the major cement producers, for instance. And so what we’re trying to do is, again, make these—the infrastructure law funding and those first-of-a-kind demonstrations, learning by doing, making that technology and what we learn from it transparent. And so how that that company is leaning in and working on a first-of-a-kind retrofit, maybe they’re doing that in the United States but maybe they can look at their other locations across the globe and do something similar.

The other piece is, is that many of the technology providers are not U.S. companies, were actually just siting these first-of-a-kind demonstrations in the United States. But some of the major technologies are sourced out of Europe, they’re sourced out of Canada, and they weren’t even developed in the United States. But this is where we’re demonstrating them. And this leadership that we have in doing it, again, transparent, learning by doing, that learning of our technology, it’s imperative that it’s transparent so that other nations can take it, you know, the rest of the way too.

VAITHEESWARAN: Carmichael? I mean, we just heard about how we may see an innovation spillover effect, as it were, as the U.S. buys down the cost of what Bill Gates has called the green premium for some of these new technologies that makes them available for everyone in the world if the price is lower. It is something that is one argument. Do you have a perspective from your global portfolio, Carmichael?

ROBERTS: I do. I do. So I wanted to say, this is a big issue right now. So as much as—as excited as we are in terms of where we’ve come from looking at how little money has gotten invested in the climate, and as much as we say money is flowing in, we have barely scratched the surface. And definitely when you look at outside the U.S., exactly as was mentioned, so little amount of money in the private sector on the innovation side, really. And so little—so much opportunity and so little has been done.

So let me tell you what in general I think needs to be done, and I see starting to get done a bit. And that is a lot of collaboration and partnership. So you’ve got to—what we’ve got to do and what we’ve been doing is, let’s pick an area. Let’s say there’s a great set of entrepreneurs in Kenya. But the way you’re going to develop something in Kenya’s going to be very different than, obviously, we developed—developing something in Boston. And so I can tell you, we’ve done this. You go and you set up a partnership. And when you start—when the entrepreneur. And when you build a syndicate around that entrepreneur, that is the group of investors, make sure you have local investors in that syndicate.

Invite them in. Create the room. Tell them how much you need them to understand the local talent and the business models, because you do. Bring with you whatever expertise is relevant, because a lot of it is not relevant in a particular geography. And just get started on a few projects, and begin to build those examples and those case studies in the relationship. And you got to do that. And, you know, you have to spend time doing that

in Australia, you got to spend time doing that. I can tell you, people look at Europe and think it’s very different. I think the innovation in Europe and opportunity is tremendous, yet not nearly enough is happening. There’s a tremendous opportunity there. So a lot of just partnering with people on the ground and starting from grassroots is what’s key.

VAITHEESWARAN: Thank you. And I’d offer one additional thought. A huge amount of capital will need to flow from the developed world to the developing world in the next couple of decades. Dealing with foreign exchange risk, for example, there are some innovative proposals from the World Economic Forum and elsewhere on how to deal with that. That’s a huge impediment in investing in local currencies or in emerging markets. There are ideas on public-private ways of investing.

This is at the time of the World Bank/IMF meetings, after all, where there could be innovative financing mechanisms, including first-dollar risk taken by the public lender, but that might enable and unlock a lot more private sector money to come. These are ideas that are being promoted but at the moment only at very small scale. We need to see much more of this, and in particular in the areas of adaptation and resilience. To get more private sector money in, we’re going to have to see more public money going in first. Doesn’t have to be as much as, but certainly has to go take that first dollar risk, is what I would say.

We have time for just a short question, maybe, and an answer. Let’s have a microphone here, as we’re just running out of time. Please keep it short.

Q: OK. Sherri Goodman, international military counsel on climate and security in the Wilson Center.

So, Alice, picking up on your point about the climate services and the lack of a unified climate service in the U.S. So we have a—you know, a weather service, we have a world meteorological service. We’re not close to having a climate service in the U.S. And that presents risks both for the investors, Carmichael, and on the geopolitical side as well. So it doesn’t seem—since we’re not going to get a climate service in the U.S. anytime soon that would give us that improved predictive capability at a uniform scale, I’d be interested in kind of the private sector view, since there’s a lot happening there, how we’re going to sort of bridge that gap between sort of government inability to act in this area, and providing a more broader set. Both for global needs—we just talked about Africa, but we can talk about—Alice alluded to the sort of climate justice needs as well.

VAITHEESWARAN: OK. Let’s have a quick response, Alice. You and let’s see what time is left.

HILL: Oh, it’s an excellent point. I mean, if you look at the rest of the world and their access to meteorological information, it’s devastating. I can’t recall the figure for Africa, but the number of weather stations is miniscule. And, of course, if you don’t have weather that—I was talking about modeling for future events. But in order to do the modeling, you also have to have historical data as to what’s happened in that area before. And that’s just missing. They don’t have the meteorologists. They just don’t have the information. There is innovation here in this space, with trying to skip some of the stations with satellite information. The World Meteorological Organization has made a tremendous push to try to get much better data.

But to give you an example of the gaps in this data, a very small NGO, the Climate Central, that focuses on meteorology, did an analysis of some of the modeling of sea-level rise for Asian nations. And of course, Asia—coastal cities in Asia are facing some of the most severe sea-level rise risk. And they found that the difference between what the current projections were and what the measurements were, based on lidar and other things, was that we weren’t—in the original picking up the tops of trees. So we were assuming that the tops of—I guess the ground was higher than it was. We were picking up the tops of trees and not the ground itself. And so when you added the sea-level rise, it was enormous, and the numbers of people that will be affected in the very near future are in the tens of millions.

Now, do we have adaptation funding for that? No. We’ve made a promise in the developed world, that we have not honored, for $100 billion a year. Nowhere in sight. And the Biden administration is having difficulty getting

Congress to approve it. So these countries are without data. They’re without technology. And they’re without money. And I will tell you, Sherri has led the way on climate change risks posed to national security. And you can look—just think of what that means. A bunch of people who are facing severe threats, no information, no help. What are they going to do? They’re going to move and they could become bad actors. Huge opportunity for criminal conduct, terrorism. And, again, we desperately need to start working on what the plans look like for that, to help those folks, and then also defensively what happens with migration grows to really uncontrollable proportions.

VAITHEESWARAN: Well, Alice, you’ve given us a powerful call to arms to bring our meeting to a close. We should take her words to heart. There’s a lot more work to do. (Off mic)—can see, this goes far beyond technology. It goes really to policy, to mindset, I would say. A much bigger and broader way of thinking about the challenges ahead, where we’re just beginning the work.

I want to thank my panelists who have been so wonderful and thank all of you for joining us today. Please note that the video and transcript of this session will be posted on CFR’s website. And, in closing, let me just encourage you all to go forth and innovate! (Laughter.) Thank you very much. (Applause.)

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