This transformative moment opens enormous opportunities to turbocharge a fossil fuel-free economy. Thanks to the Inflation Reduction Act (IRA) and other new laws, there’s not just a will but a way to accelerate decarbonization at scale by focusing the attention and actions of big businesses and banks.
That’s how Massachusetts Sen. Ed Markey, the self-described “Green New Dealmaker,” characterized the effects of policy initiatives nationally and in his home state Tuesday at the GreenFin event in Boston, produced by GreenBiz.
Goldman Sachs Research in April determined that by 2023, the IRA will create $1.2 trillion of incentives, “creating the most supportive regulatory environment in cleantech history.” The government’s original ballpark estimate was $270 billion.
“So in other words, there’s been a vast underestimation of the appetite out there — that the kids were always right — that the problem wasn’t technological, the problem was political, and just not having a level playing field, ensuring that those incentives were going to be there,” Markey said. “And now we’re seeing all of the activity, which had always been out there, but now, essentially, having activating fluid put on it.”
So in other words, there’s been a vast underestimation of the appetite out there — that the kids were always right.
The senator celebrated the potential for new federal laws to empower businesses to help steer the climate transition in every state. And against the backdrop of anticipated mandates by the U.S. Securities and Exchange Commission to force companies to disclose risks related to climate change, Markey called for embracing transparency and frowned upon businesses that tout a couple of good things they’re doing in order to mask nefarious activities.
“You can’t preach temperance from a barstool,” said Markey, who has served in Congress 47 years. “You can’t tell the rest of the world to do something, if you’re not doing it yourself. You can’t tell a kid not to smoke a cigarette with a cigar in your mouth, right? So you’ve got to be the leader yourself.”
Change comes to red and blue states
In Markey’s view, the IRA, signed 10 months ago, is about to unleash a massive revolution in how the nation, state by state, tackles climate change and environmental injustice. For example, in Massachusetts several weeks ago, Gov. Maura Healey announced the creation of a $50 million green bank to fund affordable, decarbonized housing. That’s enabled by the Greenhouse Gas Reduction Fund (GHGRF) within the IRA, which sets forth $20 billion for nonprofit green banks across the country.
“Again, this is not just for Massachusetts, but all across the country in terms of potential eligibility, and it’s going to be explosive, what happens,” Markey said. “And 40 percent of the funding, by the way, has to go into communities of color, into disadvantaged communities.”
Both Markey and Mindy Lubber, president and CEO of nonprofit Ceres, cast West Virginia as an example of a state poised for a clean-economy transformation. “We need to make sure these opportunities are in red states and blue states, purple states, any other color you want to choose,” she said. “This cannot be a partisan debate anymore … This is about the way to deal with the fact that the coal industry doesn’t have a future, but the clean energy industry has an extraordinary future.”
With help from IRA incentives, Form Energy, an energy storage startup supported by the Greentown Labs startup incubator in Boston and Houston, is bringing an iron-air battery manufacturing plant and nearly 800 jobs to Weirton, West Virginia, population 19,000. Manufacturing is planned to start in 2024.
You should feel very emboldened that this sustainable future is now irreversible.
“And there are many, many, many, many more companies all thinking about — just going back to West Virginia — that one state, moving in there,” Markey said.
Lubber called upon businesses to embrace the chance to make sweeping changes to infrastructure, products and systems. “Think about it: If every new road that’s built, and bridge and hospital and school, is built with different cement and different concrete and different steel, we start building out a future for our kids that actually is viable,” she said. “And if we don’t do it, and everything is left, same old, same old, we are not building out our future.”
Forget the fossil fuels
Markey criticized a popular line of thinking that casts renewables as a “nice” yet unrealistic option as opposed to fossil fuels. “Wind and solar are cheaper than coal and natural gas, cheaper,” he countered. “So what do you say now?”
The pressure of existing investments in older technologies locks the thinking of financial institutions into the past, Markey added. “And so what the legislation that I’ve introduced seeks to accomplish is just changing the way in which people view these issues.”
He was referring to the Fossil Free Finance Act of 2023, which he reintroduced in March alongside Reps. Ayanna Pressley of Massachusetts and Rashida Tlaib of Michigan. The act, if it became a law, would force the Federal Reserve to require big banks and other large financial institutions to halt funding for high-emitting activities and explain precisely how. It includes provisions to consider the needs of communities disproportionately harmed by environmental problems.
Momentum around treating climate risks as material to business has grown among regulators and the financial sector since Markey first introduced the bill in 2021. The government’s Financial Stability Oversight Council in October 2021 acknowledged that climate risks threaten the financial system.
Yet the world’s largest banks continue to lavish money on fossil fuel companies — to the tune of $5.5 trillion between 2016 and 2022, according to the April Banking on Climate Chaos report backed by hundreds of groups, including the Sierra Club and the Rainforest Action Network.
“Looking at coal, looking at gas going forward in the future, there’s going to be a high bar that has to be passed if it’s going to be financed,” Markey said of the bill’s intended effects. “And it’s not just because of our climate goals; it’s also because of the financial implications. These are going to be stranded assets, not just here in the United States, but around the globe, as our entire economy moves, and the global economy moves, to fossil-free sources of energy.”
Businesses ‘can’t get away from it’
Businesses sleepwalking through the landscape of climate risks and failing to follow the science must wake up, according to Lubber of Ceres, which has rallied hundreds of businesses to make climate commitments and be accountable to their timelines and goals. Copious sustainability regulations in the European Union are on the books. The SEC rules, which may require disclosures and actions regarding greenhouse gas emissions across Scopes 1, 2 and 3, are pending.
Lubber said the multinational companies she works with would prefer consistency to climate rules rather than a patchwork of international regulations. She also noted that many of the 6,000-plus public comments on the SEC’s draft were less than encouraging of the agency’s anticipated pending rules.
“Implementing and enacting climate risk disclosure rules — all that says is climate risk, when it’s material, meaning a big deal, has to be disclosed just like any other risks that companies and investors need to consider,” she said. “It’s moving forward around the world. So you can’t get away from it. If you’re a multinational company, if you’re a portfolio manager, now is the time.”
We’ve got to use these opportunities to show this is about jobs in red states.
She noted remarkable recent corporate activity on decarbonization: Three years ago, no asset managers had set net-zero goals, but now there are 340 signatories to Ceres’ Net Zero Asset Managers initiative, she said. That effort gathers asset managers who pledge to help their clients achieve net zero by 2050 across their portfolios and share interim 2030 targets as well.
And regardless of the backlash against so-called “woke” ESG investing, Ceres has signed on more than 700 global investors, with $55 trillion in assets under management, under its Freedom to Invest campaign, urging lawmakers to allow companies to consider material financial risks in their decisions.
‘You should feel very emboldened’
Markey said that critics on Fox News who call his approach “socialism” miss the irony of the fossil fuel industries receiving tax breaks and regulatory protections for 100 years.
“And what young people are saying is, give us some of that socialism for one generation, and we’ll transform our energy system in our country and we’ll provide the leadership for our world so that we can pass it on to future generations,” Markey added. “You should feel very emboldened that this sustainable future is now irreversible, not just because of the financial gain, but because of the moral necessity to do so.”
Markey credits himself with starting a movement beginning in 2019, when he introduced, with Rep. Alexandria Ocasio-Cortez, the Green New Deal resolution calling on the federal government to address climate change, mobilize millions of union jobs and address injustices. Many of its core principles later appeared in the IRA. In April, Markey and Ocasio-Cortez reintroduced the Green New Deal resolution.
On Tuesday, Markey called upon the United States to lead as the planet’s technological giant and a major emitter of greenhouse gases: “The planet is running a fever, and there are no emergency rooms for planets. We have to engage in preventative care.”