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Mission Innovation & Breakthrough Energy Coalition: A Clean Energy Public-Private Partnership

2/1/2016

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As I mentioned in the above article, I am encouraged by the recognition of climate change and the need for governments to take action to address it through the Paris Climate Accord reached at the end of 2015. Government actions, such as establishing energy efficiency standards or related mandates, and providing temporary incentives and funding of research and development (R&D), are essential to bringing new, low-carbon technologies to scale.
Renewable energy and efficient technologies often require upfront capital investments such as equipment or R&D, and may be too expensive to compete with existing forms of energy until they reach a scale that optimizes cost efficiencies. This state is often referred to as the “valley of death.” Well-designed incentives or regulations have helped these industries overcome this valley of death and achieve price parity (or better in some cases) with conventional, carbon-intensive sources of energy such as coal and fossil fuels.  

With scale and technology advances, solar prices have dropped by more than 80 percent, wind turbines by 20–40 percent, and LED bulbs (that are 80–85 percent more energy efficient than traditional incandescent bulbs) by 85 percent since 2008. These drops have been made possible by targeted, short-term incentives. For example, a U.S. federal tax credit of 30 percent that’s available for residential solar systems and businesses until it expires on December 31, 2016 has contributed to the recent growth in solar energy by making production costs more affordable.

Unfortunately, these advances, and the limited government incentives available thus far, have not been enough to accelerate the transition to a low-carbon economy at the pace we require. We are at a point where we need new technologies that can be brought to scale in a relatively short time period.

To address the immediate need for new technologies, 20 countries representing 80 percent of global clean energy R&D budgets have committed to doubling their R&D investments over the next five years through Mission Innovation, a global initiative that was launched in Paris last month.

The independent Breakthrough Energy Coalition (the Coalition) is even more innovative and tremendously helpful. The Coalition is a group of 28 influential investors (including Bill Gates, George Soros, Sir Richard Branson, and Ratan Tata) who are committed to providing early stage capital for promising energy solutions to enable them to reach a sustainable scale.

The Coalition will help innovators working on new technologies in the countries that sign up for Mission Innovation to overcome the valley of death. The success of these investments should be high, given the Coalition’s expertise in long-term investments and innovation. The priorities set by the Coalition for their investment strategies look promising:
  • Invest early when risks and returns prevent traditional commercial capital investments
  • Invest broadly across the following five sectors:
    1. Electricity generation and storage
    2. Transportation
    3. Industrial use
    4. Agriculture
    5. Energy system efficiency
  • Invest boldly in outliers both in developing new technologies and enabling current technologies to be significantly more efficient, scalable, or cheaper
  • Invest wisely with input from experts from leading public and private institutions
  • Invest together with countries that have committed to increased R&D investments through Mission Innovation
I applaud this pragmatic and bold approach to a new form of public-private partnership. Increased governmental funding in R&D through Mission Innovation will allow new technologies to be identified. The complementary early stage investments by private investors will help the most promising technologies come to market and upscale. Neither of these initiatives could hold the potential for significant change without the support of the other.  I look forward to seeing the results of this powerful partnership.
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The Paris Climate Accord

2/1/2016

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The adoption of the Paris Climate Accord in December was a great way to end 2015. Not only did 188 countries recognize the existence of climate change and its threat to communities and the planet, they also committed to offering plans to reduce and report on their greenhouse gas (GHG) emissions.
In addition to the overarching intention of the Accord, it includes bold and important statements throughout, which create a common set of priorities and goals that all stakeholders can work toward collectively—and, hopefully, synergistically. I would like to share and comment on some key phrases that I have italicized and grouped below, including:

…climate change is a common concern of humankind…

Climate change will touch each of our lives, and our actions play either a positive or negative part of the solution. When governments recognize the enormity of climate change’s impacts on our world, they legitimize the need to take action and emphasize the lesson that “business as usual” must not continue—for all of our sakes.

…deep reductions in global emissions will be required…

…the urgency of accelerating the implementation…

…the enduring benefits of ambitious and early action…

The signatory 188 governments have set a minimum goal of keeping average global surface temperature increase below 2 degrees Celsius, while striving to keep it below 1.5 degrees Celsius. Scientists say that 2 degrees Celsius is the level critical to avoiding a downward spiral into even more devastating impacts. This threshold not only provides a specific and measurable goal, it aligns with science that has often been minimized or ignored by politicians and climate change doubters.

Experts claim that achieving this goal of 2 degrees Celsius will require an end to industrial emissions by 2050, while the more ambitious goal of 1.5 degrees Celsius will require the end of nearly all conventional coal- or gas-powered plants, gasoline cars, ships and airplanes fueled by fossil futures by 2030. These are bold measures, “game changers” that would transform our economies into ones built on new and carbon-neutral or carbon-free sources of energy. It is worth noting that nuclear energy will likely play a bigger role in a carbon-free economy.
Stating the urgent need to take bold action lays the foundation for meaningful and effective incentives, investment in technology, and a move away from outdated or carbon intensive industries. Such a statement also reminds us that more extreme steps must be taken now, in part because of less aggressive demands in past accords.
 …acknowledging the specific needs and concerns of developing countries….

…need to enhance the provision of finance, technology and capacity-building support by developed countries…

We must recognize the dramatic social impacts of climate change to communities in developing countries and the need to help them adapt to these inevitable impacts. Developing countries can also play an important role in curbing climate change. Converting to more efficient and renewable energy sources, increasing agricultural yields, and reducing the conversion of habitats and ecosystems to agricultural production or expanded cities are just a few ways that developing countries can help this important global cause. More advanced countries should share technologies and know-how with the less resource-rich countries to help them reach their full potential.

Support for improved transparency and reporting by all Parties, including regularly reviewing and revising goals, is another positive feature of the Accords. We will need to establish and promote consistent ways to measure and report progress.

Flexibility in how different Parties achieve GHG emissions reduction goals is another important part of the Accords. Greater flexibility allows Parties to determine the best way to reduce emissions in the context of their culture, economy and sources of emissions.   

The Accord stresses the need for cooperation, integrated approaches, improved training, greater education and public awareness as well. The Accord also notes that we need more widespread sharing of good practices, experiences and lessons learned, and deployment of tools and assistance with implementation. Concerted efforts to implement efforts and changes such as these will help us accelerate and scale up effective measures that are so desperately needed.

Curbing climate change will also require significant financial investment. The 188 signatory governments have committed:
  • $100 billion for financial support for research, advancement of technology, capacity building, and
  • $100 billion annually with a focus on priorities of developing countries.
In addition, 20 countries have committed to doubling their research and development investments over the next five years under Mission Innovation, a multi-government initiative aimed at increasing clean energy research and development funding that was launched at the Paris talks. You can learn more about this in the next article.

Despite all the promise the Accord holds, I would be remiss if I didn’t acknowledge that we still need to urge all Parties who have yet to ratify and implement all elements of the Kyoto Protocols, Doha Agreement, and Cancun Agreements to do so. Complete commitment and unity by all Parties can only add strength to this important collective effort.
I should also acknowledge that the Accord is certainly not the end all. We all have a lot of work ahead of us to curb and adapt to climate change. I hope that the Accord at least provides the first and very important step forward.

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Working Toward Greater Transparency in Supply Chains: A Resource Guide from California

2/1/2016

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Even today, 27 million people are forced to work without pay, under threat of violence and without the ability to leave, to make products that are found in our households. Senate Bill (SB) 657 (SB657), also known as The California Transparency in Supply Chains Act of 2010 (The Act), went into effect on January 1, 2012. The Act requires retailers and manufacturers that sell products in California with more than $100 million a year in gross global receipts to disclose actions they have taken to eradicate slavery and human trafficking in their products’ supply chains. Companies subject to The Act are required to disclose on their websites the actions they are taking to:
1.      Verify that product supply chains are evaluated and risks of human trafficking and slavery are addressed.
2.      Audit suppliers to ensure adherence to company standards.
3.      Receive certification by direct suppliers that only materials in compliance with applicable laws regarding        slavery and human trafficking are used.
4.      Maintain internal accountability standards and corrective action procedures.
5.      Train employees on human trafficking and slavery, with a focus on the risks within supply chains.

California’s Attorney General, Kamala Harris, published The California Transparency in Supply Chains Act--A Resource Guide (The Guide) this year, which is aimed at helping companies to comply with and meet the spirit of The Act. The Guide is easy to follow and is a welcomed first step towards establishing best practices. It spells out each of the five above requirements with model disclosures for each. Here are some suggestions included in The Guide:
  • Make it easy for consumers to find and understand your company’s SB657-related disclosures.
  • Be specific and succinct in your disclosure, keeping the consumer focused on what matters most, rather than providing lengthy discussions on secondary or unrelated issues.
  • Provide a bit of detail on the nature of your company’s efforts. For example, simply stating that you have a verification protocol is discouraged. When you provide insight into what steps your company is taking under this protocol you enable consumers to better understand how you identify, evaluate and respond to risks in your supply chain.
  • Describe how your company prioritizes suppliers to be audited, trains auditors, ensures the auditors’ independence and qualifications, and is working toward continuously improving the audit protocol and program.
  • Describe what your company expects of your suppliers to certify that materials used in your company’s products are free of human trafficking and slavery—and how you ensure compliance with these expectations. Include consequences for failing to comply with your expectations or other ways in which suppliers are held accountable.
  • Disclose internal procedures to ensure your company’s staff is knowledgeable about the issue, The Act, and internal policies, including reporting violations and whistleblower protections. These procedures could include training content and personnel being trained.
 
The Resource Guide also specifically identifies supply chain actors, such as labor brokers, who should be included in a company’s program because they can play a direct role in creating a situation where workers are indebted, particularly in the case of migrant workers who agree to pay brokers for opportunities to work.
 
Lastly, The Guide provides appendices that summarize SB657 (Appendix A) and briefly describe other State and Federal Human Trafficking Laws (Appendix B).
 
I am glad to see the Attorney General publish this practical Resource Guide, and I look forward to seeing companies taking advantage of the recommendations and examples as they build or improve programs to combat forced labor and human trafficking in their supply chains. I hope this is not the last step the Attorney General makes. I would like to see monitoring of the companies’ disclosures and actions as well as similar resource guides for foreign suppliers who may require support to develop and implement effective programs in the middle of the supply chain. We must all work together to drive these and other human rights abuses out of global supply chains.

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