Many clean energy innovations available today, like wind, solar, and lithium-ion batteries, are starting to compete with the emissions-intensive technologies they were designed to replace. These technologies are now cheap enough for productive markets to help them get to scale. But the decline in price for all these technologies took decades, and more investment earlier could have brought down costs faster.
Today, many clean technologies that show potential in reducing emissions are still in the early stages of development. The challenge is that we can’t wait decades for the next generation of clean technologies to become competitive with fossil fuel incumbents. Meeting our climate goals and reaching net-zero emissions by 2050 means transforming our entire physical economy, and that will require accelerating the entire innovation pipeline at an unprecedented pace. That means we have to invest heavily now to bring down the costs of critical clean technologies. And we need to build the creative financing structures that will help them develop and deploy more quickly.
That’s why we’re working with partners across the public and private sectors to explore building a program called Catalyst, which would provide a platform for rapidly commercializing emerging technologies. Through a creative, blended financing approach, Catalyst would significantly decrease the price of new clean products, increase their availability in the market, and demonstrate how to finance the infrastructure of decarbonization at scale.
Catalyst would start by focusing on four critical technologies for decarbonization:
- Green hydrogen
- Sustainable aviation fuel (SAF)
- Long-duration energy storage (LDES)
- Direct air capture (DAC)
These clean innovations have already proven their potential at a small scale, but right now, the timelines for their development are still way too long. They are at the critical turning point where an influx of capital can turn them into viable commercial products much more quickly – we call this the catalytic stage.
We believe this type of program would jumpstart this process by raising money from philanthropists, governments, and companies looking for ways to transition to cleaner business models. We would make the large capital investments needed to bring down the cost of these emerging technologies and help businesses negotiate agreements with customers and suppliers by buying down any remaining extra cost associated with the clean product or service. (We call this the Green Premium.) And we would develop a blended financing facility to deploy grants, loans, and equity investment to access the markets these technologies will need to be successful.
Learning from Solar
To understand both the urgency and promise of investing at the catalytic stage, it’s useful to look at another clean technology that’s come a long way since its early days: solar power.
In 1975, it cost about $100 to produce a watt of electricity from a solar panel. Today, it can cost only $1 (or about 21 cents in 1975 dollars). This decrease is incredible – and it’s still happening – which is why solar power is rapidly growing across the country.
But its path here was anything but steady or pre-ordained. Although the government invested in solar research and development at first, funding plateaued in the ‘80s and ‘90s. Only in the past two decades has investment in solar increased substantially, driving solar to the lower cost and faster pace of deployment that we see today (and still, we should be deploying it even faster).
So, at Breakthrough Energy we asked the question: what if we had accelerated investment in solar earlier? What would have been the impact, for example, of $5 billion more of funding between 1985 and 1990 (that’s about $12 billion in today’s dollars) when it was at the catalytic phase? The impact would have been substantial. Solar would have reached scale eight years sooner and allowed us to reduce emissions by an additional 70% through 2030.
Additional investment from Catalyst will accelerate technology cost declines and market adoption. If we had invested $5B in 1985, solar costs would have come down sooner. As a result of these cost declines, solar would have been adopted more quickly into the market.
Eight years sooner might not seem like a lot, but consider that we are now operating on a timeline of just 30 years to reach net-zero emissions and avoid a climate disaster. Any action today that accelerates innovation – whether it’s the invention of a new solution or the maturation of an existing technology – means fewer emissions and less climate harm. We have to make the right investments today for the next set of critical climate technologies, and every year counts. We can learn from the solar journey to design solutions for scaling low-carbon solutions in the future.
The Catalyzed Emissions Reduction Framework
We need to ensure that the next generation of critical climate technologies gets to scale as quickly as possible. While the journeys of solar and wind were remarkable, we can’t afford to wait as long for new low-carbon solutions. In order to rapidly commercialize these new technologies, we need to create the right structure to incentivize investment from companies, individuals, and governments.
As our first step, we’re excited to partner with the global non-profit CDP to build the Catalyzed Emissions Reduction Framework to spur large-scale investments in the new climate solutions that will underpin a zero-carbon economy.
The Catalyzed Emissions Reduction Framework will quantify the climate value of investments that help scale technologies critical to a net-zero future. By creating a framework and a tool to use it, individuals, companies, and governments will be able to assess their climate impact and receive credit for investing in activities that will eliminate the sources of emissions permanently and over the long term. Establishing clear, quality metrics for these types of investments is a critical step toward funding technologies in an effective and efficient way.
Over the last several years, many companies and governments have committed to reaching net-zero emissions by 2050. Aligning the private sector around this shared goal will be necessary if we are to avoid the worst impacts of climate change. But while ambitious goals and targets are critical, what are even more important are credible and detailed plans to achieve them. Companies, for instance, need to fully transition their business models away from fossil fuels, but right now only a subset of the low-carbon solutions they’ll need to get to zero are widely available. There are no cost-effective ways to reduce emissions from business travel, decarbonize manufacturing, or reach 100% clean electricity.
In order to achieve our net-zero goals, companies need to invest in innovation and catalyze development of the cost-effective climate technologies that will replace the fossil fuel-based products we depend on. There are many promising clean technologies that could do just that, like sustainable aviation fuel or green hydrogen, but they are still in the early stages of development and deployment. And because they remain expensive, they do not receive the investment needed to lower their costs and make them competitive with existing fossil fuel-based technologies. The Catalyzed Emissions Reduction Framework will fill this critical funding gap.
A Framework for Progress
Over the coming months, we’re proud to work with CDP to build this powerful tool. We want it to be possible for anyone to go online and put their dollars toward the critical climate technologies. Check out a preview below of how the Catalyzed Emissions Reduction Framework could make a new stage of climate progress possible.
Are you at a company that’s interested in exploring ways to partner on Catalyst or seeking to learn more about the Catalyzed Emissions Reduction Framework?