U.S. President-elect Joe Biden speaks about the recent massive cyber attack against the U.S. and also other Biden administration goals in Wilmington, Delaware, December 22, 2020.
Leah Millis | Reuters
As we enter the third decade of the 21st century, we are on the cusp of a green industrial revolution. Now is the time for President-elect Joe Biden and his formidable team of scientific, economic, and national security experts to engage with the private sector to accelerate this historic transition to a low-carbon world.
With an ambitious $2 trillion plan that strives to address the threat of climate change more comprehensively than that of any other administration, the Biden presidency could mark a turning point in federal government policy and usher in a new era for clean energy.
And the newly announced Biden environmental team will find a receptive business community with which to cooperate. During the past several years, efforts to address climate change in the US have been led not by the federal government and federal policies—although many states and cities have continued to act on their own—but by businesses and financial markets.
The private sector has become increasingly focused on sustainability and climate risk, not only as a result of heightened awareness of climate change and accountability to stakeholders, but also as a result of dramatic innovations that have substantially lowered the price of clean energy, catalyzing a shift in markets, creating financial incentives, and motivating corporations and institutional investors to capitalize on these trends.
In fact, renewable energy is now cheaper than conventional power generation for over two-thirds of the planet. Just last year, electricity generation from renewable sources surpassed coal in the US for the first time in the modern era.
This has also been a watershed year for corporate climate announcements with a growing number of companies setting targets for zero net emissions with clear timelines and actions.
Meanwhile, an ever-growing number of investors are refusing to invest in conventional energy sources as the economics become less attractive and are instead focusing on clean technologies. The value of private equity investments in renewable energy projects has doubled in the past year, and in the past year and a half, venture funding for climate tech companies jumped to $16.1 billion—from $418 million in 2013.
This has also been a watershed year for corporate climate announcements with a growing number of companies setting targets for zero net emissions with clear timelines and actions. A slew of technology companies announced significant decarbonization goals, including Google, which pledged to offset all the carbon it has ever emitted and be 100% powered by renewable energy by 2030.
In the transportation sector, JetBlue became the first US airline to achieve carbon neutrality for all domestic flights. In the telecommunications sector, AT&T has pledged net carbon neutrality by 2035, launching a new climate change analytical tool to quantify climate risks throughout the network. Notably, several major oil and gas companies also pledged this year to substantially decarbonize their businesses, including BP, Shell, and just last month, Equinor.
According to a recent report that analyzes progress under the Paris Agreement—and notes substantial private sector momentum—over 1,500 companies accounting for $12.5 trillion of combined revenues have now set net zero emissions targets.
Over the course of modern history, there have been a number of inflection points in the energy sector that have brought transformative change: the Industrial Revolution in the 1750s and 1760s, which ushered in the rise of coal power and the use of steam; the invention of the first widely-applicable incandescent lightbulb in the 1870s, which extended the workday and improved quality of life; and the rise of oil, which overtook coal as the primary global source of power in 1964 and spurred a new era of mass-production and global transportation.
Today, we are at another such tipping point as we continue on the path towards a clean-powered world. But we must pick up the pace, acting more rapidly and comprehensively to head off the existential risks and costs of climate change.
In 2020 the private sector has led the way, but the federal government still has opportunities to re-engage. The incoming Biden administration should establish a Sustainable Recovery Task Force of business and labor leaders that can provide a private sector perspective to climate and economic policies, as well as convene a Building Back Better summit within its first 100 days, bringing together private sector representatives to advance a detailed climate agenda.
We believe this moment presents an historic opportunity for our new national leadership to join companies and institutional investors in bold climate actions to expedite the global transition to a low-carbon economy.
Laura Tyson, a former chair of the President’s Council of Economic Advisers during the Clinton administration, is a professor at the Haas School of Business at the University of California, Berkeley and a member of the Board of Advisors at Angeleno Group, LLC, a clean energy and climate solutions investment firm. Daniel Weiss is co-founder and Managing Partner of Angeleno Group.