How Joe Biden’s climate plan will juice green tech investing in the US

Cross governmental thinking, tech advances and more bi-partisanship than people think will drive a major US shift.

“Joe Biden has put forward the most comprehensive and far-reaching plan for addressing climate change of any successful candidate for president,” Nicole Systrom, founder of climate consultancy Sutro Energy Group, tells RI. “We’re already starting from a position where the president elect and vice-president elect are committed to addressing the problem. Their policies have elements in there that we’d all expect to see, renewable fuels, electrification, public transport, but there are two emphases in the new plan that are really exciting; the first is a strong emphasis on climate justice and the second is a strong emphasis on climate innovation.”

What does Systrom expect Biden to do in the first months of his administration? “We’ll see a lot of executive action to try and roll back some of the actions of the Trump administration,” she says.

She notes that alongside attacks on clean air and clean water regulations, there are a number of climate negative policies that are continuing even during the last days of the Trump administration, such as selling off fossil fuel drilling rights in the Alaskan wilderness.

But Systrom points to a third major development in Biden’s approach to addressing the climate crisis compared to previous US administrations: “Another piece that is unique is that the administration does not plan to limit work on climate to the EPA [Environmental Protection Agency] and the Department of Energy. The transition team has candidates for all cabinet positions who are looking at solving the climate crisis through any department they will be appointed to. The administration itself – its infrastructure – understands that it will need to address climate change through any actions they take – Treasury, Housing, Transport, everything! That’s never happened before.”

On the international front, Biden has been clear about re-entering the Paris climate agreement and attending COP 26 in Glasgow later this year. Systrom says: “One of the most important things the administration can do, in addition to focusing at home, is to work with the international community on addressing climate, which Trump didn’t do for the last four years. This can be done through the UN but it can also be something the US government talks about every time with other international governments.”

Following the run-off election for two US senate seats in the state of Georgia on 5 January, the Democratic party now has de-facto control of the senate. In any case, Systrom was less concerned about potential obstruction from the Republican party to Biden’s plans than others: “I feel more hopeful that more action can occur than some of the pessimists were saying, because there are a lot more bipartisan areas than are commonly recognised; with climate innovation and deployment of those technologies being one of the most important.”

Systrom points out that even with Trump in power over the last four years, renewable energy is already cheaper than fossil fuels in many parts of the US, therefore the economic drivers of the process of transfer to renewables are already in motion.

“People who are not traditionally aligned with climate,” she adds, “may feel that outside a Trump administration they can actually address reality. I live in California and I’ve had to live inside for two months (due to wildfires). The Gulf states [including Louisiana, Mississippi, Texas] have been hit by a record number of hurricanes and these things are barely being reported. These natural disasters are tough for the country to deal with but they do make it clear that the climate crisis is here and has to be addressed. Hopefully all of this gives Republicans permission to speak.”

Systrom says that for Biden to achieve his ambitious agenda will require deep engagement from US citizens. As RI has written previously, a lot of work actually happens at the state and community level, which has continued despite the Trump administration’s efforts. “This is not enough for the US to meet its Paris commitments,” she said, “but it is a lot.”

Sutro Energy Group, Systrom’s company, works with entrepreneurs, investors and philanthropists to accelerate solutions to climate change, most of which is focused on early-stage climate innovation. “It’s not focused on the invention of the wind turbine; we have that technology,” she says, “it’s about developing the enabling technologies that will make turbines more efficient and cheaper.” Sutro also provides support to innovators working on new battery technology, fossil-fuel-free development of hydrogen energy generation, and carbon capture and utilisation.

“Some of the companies that I am working with are working on, for example, enhancements to solar panels; not developing the panels themselves, but working on perovskite technology, which is a coating that can enhance the efficiency of the solar panel.”

The investors she works with include foundations, institutional and individual foundations, family offices and early-stage climate technology firms. “Especially, I have been working with those high-net-worth individuals who have multiple types of capital to put to use: a foundation, a donor-advised fund and just regular investment money. The advantage family offices have is that they don’t have to think about climate as either philanthropy or market-rate investment; they can approach the problem from both sides.”

The companies she teams these investors up with are not just tech companies, developing hard technology or science-based, physical products, she says. Most of what they produce is for business-to-business sales, and their customers are utilities, communities or large corporations: “These are not customers who just try something. The sales cycle is very long and a utility is not going to plug a wave generator into its grid unless they are pretty sure that it is going to work. This all takes time and capital to get through that cycle.”

RI asks Systrom to explain how family offices’ approach to investment works in practice for these kinds of climate/impact allocations: “Family offices still have financial return metrics they have to hit, but they can think more creatively about how to deploy capital and think about making an investment that is higher risk and/or longer-term than would be typical for venture capital. An office that is sufficiently sophisticated can meet with a company, get to know it and decide that it wants to invest. But it can also determine that what the investee company needs is an equity investment, or a project finance pool, or debt, and [it can] provide an ‘investment’ in the most appropriate format.”

She explains that venture firms were rarely able to act in this way and that a pension fund investor “would require the company to meet with multiple teams to achieve that level of flexibility. These [family office] investors can deploy capital in the most optimal way; that could just be financial, or it could be financial and impact, or just impact; there’s just more flexibility there.”