New Commitments to Accelerate Investment in the Clean-Energy Transformation

Today in San Francisco, leaders from 23 countries representing 90 percent of clean energy investment and 75 percent of global carbon emissions are announcing new actions to accelerate the global transition to a clean-energy economy.  This means ramping up deployment of commercially available clean-energy technologies as quickly as possible in order to reduce carbon pollution and meet each country’s climate commitments under the historic Paris Agreement.  During President Obama’s administration, the cost of these technologies has plummeted here in the United States, leading to a 30-fold increase in solar electricity generation, more than a tripling electricity generation from wind, and growth of high-efficiency LED lighting by more than 200 times just since 2008.

At the same time, it is imperative to ramp up investment in the next generation of clean-energy technologies.  That’s why during the first day of the Paris climate summit last year, President Obama joined 19 other world leaders to launch Mission Innovation, a multi-nation commitment, which has now grown to include the European Union, to double government investment in clean-energy research and development over five years—and today we are announcing these Mission Innovation partners will invest a combined $30 billion per year by 2021.

The invention, development, and commercialization of clean-energy technologies requires complementary leadership roles from both government and the private sector in transitioning new technologies from the lab to the marketplace. One year ago, as part of the Clean Energy Investment Initiative, the Obama Administration announced over $4 billion in commitments by foundations, institutional investors, and other long-term investors to scale up clean-energy innovation and climate-change solutions.  Over the past year, the Administration has delivered a series of executive actions to unlock even more private-sector investment in clean-energy innovation, including the launch of the DOE’s Clean Energy Investment Center; the Treasury Department’s new guidance on mission-related investments (MRIs) and final rule on program-related investments (PRIs) that facilitate charitable-foundation impact investing; and the Department of Labor’s new guidance clarifying that environmental, social, and governance factors may have a direct relationship to the economic and financial value of an investment for certain pension funds. In the months ahead, the Administration will take new actions to further expand private-sector investment in clean energy innovation and accelerate the transition to a clean-energy economy.

Today, responding to the Administration’s call to action, many universities, entrepreneurial organizations, and investors are making new commitments to accelerate clean-energy innovation and expand investment in climate solutions. These are just some of many examples of the new work that the United States is increasingly seeing from its leaders.

AMERICA'S UNIVERSITIES LEADING THE CLEAN-ENERGY TRANSFORMATION

Innovation often begins at universities, which can serve as research institutions, birthplaces of entrepreneurship, and “first adopters” of new clean energy technologies. Twelve university presidents in the Climate Leadership Network are joining with Clean Energy Trust and Second Nature to launch Campus Cleantech Pilots, a new effort to accelerate clean-energy technology commercialization by opening universities as first-of-a-kind testing and demonstration platforms for startups.  Clean Energy Trust, a Chicago-based nonprofit startup accelerator supported by the U.S. Department of Energy (DOE), will match startups from across the country with universities, allowing the startups to deploy new technology at the university and use the results to secure a first customer or commercial pilot.  Climate Leadership Network colleges and universities in all regions of the country will get a first look at innovative technologies they can deploy across their campuses, benefit from innovative classroom and research integration, and advance the energy-related goals driven by the Climate Leadership Commitments they have made as part of the Network.  Inaugural university participants include Agnes Scott College, Ball State University, California State University-Northridge, Central Community College, George Washington University, Huston-Tillotson University, New York University, Portland State University, Rochester Institute of Technology, Spelman College, University of Minnesota-Morris, and Western Michigan University.

In addition, Stanford University is announcing Bits & Watts, a new collaboration between the Stanford Precourt Institute for Energy and the DOE’s SLAC National Accelerator Laboratory, which will focus on research, education, and translation of academic work to build a decarbonized electricity-grid system capable of handling more than 50 percent renewables and a wide range of distributed energy resources.  Bits & Watts will create and integrate knowledge from engineering, business, finance, regulatory frameworks, and behavioral sciences.  This new initiative, which has support from government and industry, will officially launch in October 2016 in collaboration with businesses, policymakers, and institutions from around the world.  

Accelerating the Success of Clean-Energy Entrepreneurs

Getting clean-energy innovations to market can require access to costly scientific equipment, along with patient, long-term capital to meet rigorous technical and market milestones.  Both government and philanthropy can play a catalytic role for entrepreneurs at the earliest stages.

For example, just last week, the DOE launched Chain Reaction Innovations, a new incubator for clean-energy entrepreneurs embedded within Argonne National Laboratory near Chicago.  Modeled after the Cyclotron Road program at Lawrence Berkeley National Laboratory, this new effort will provide entrepreneurs with access to Argonne’s deep network of 1,400 multidisciplinary researchers and engineers as well as unique tools such as the Mira supercomputer and the Advanced Photon Source.

Wells Fargo is announcing the third round of its Innovation Incubator (IN2), a first of its kind, 5-year, $10 million philanthropic incubator program funded by the Wells Fargo foundation and administered by the DOE’s National Renewable Energy Lab.  This program has created an ecosystem and platform to provide non-dilutive funding for technical assistance and business related services for startups working to bring commercial building efficiency solutions to market. Participating companies have an opportunity to test their technologies in Wells Fargo's buildings as well as receive mentorship from banking executives.

Energy Excelerator, a Hawaii-based nonprofit startup program dedicated to energy challenges, is announcing the first investments from its EEx Fund One, first launched at last year’s White House Clean Energy Investment Summit.  This fund supports portfolio startups in energy, transportation, water, and agriculture that have been successful in raising private capital.  In addition, Energy Excelerator will share its model for use by California-based clean energy startup accelerator programs, as part of the California Sustainable Energy Entrepreneur Development (CalSEED) Initiative led by the California Clean Energy Fund (CalCEF).  Supported by the Department of Energy and the Department of Defense over the past six years, the Energy Excelerator portfolio includes over 40 startups that have raised over $225 million in follow-on funding.

PRIME Coalition has also built momentum since launch at the White House Clean Energy Investment Summit by adding the John D. and Catherine T. MacArthur Foundation as the ninth philanthropic organization to support PRIME’s work. This year, PRIME has facilitated the catalytic use of charitable capital in early-stage climate innovation ventures, including participation from the Blue Haven Initiative, Ellis Family Fund at The Boston Foundation, JUST Water, Sorenson Impact Foundation, and the Will & Jada Smith Family Foundation. This summer, PRIME will tour the United States to kick-start an educational program to encourage philanthropists—foundations, donor advised funds, and philanthropic families—to combat climate change by funding early-stage climate innovation.

Aligning Investments with the Clean-Energy Transformation

Institutional investors must take the long view in order to deliver long-term value to their stakeholders, so it’s no surprise that a growing number of foundations, pension funds, and other long-term investors are aligning their portfolios with the clean-energy transformation now underway.  To help meet demand from investors, last week the Administration announced a new proposal to drive greater disclosure of greenhouse gas emissions and climate-related risk data by contractors in the Federal Government’s supply chain.

Today The McKnight Foundation is announcing that it has invested more than $370 million in clean-energy and climate solutions that align its investments with its philanthropic objectives through public and private market vehicles that address climate change. The public market investments strive to integrate long-term sustainability into the investment thesis and seek companies that produce fewer greenhouse gases than their broader market peers.  The private investments include renewable-energy development, a direct investment into a specialty financing company that drives installation of resource efficient and renewable infrastructure, and a program related investment (PRI) with a community development financial institution (CDFI) that provides low cost capital to environmentally responsible and entrepreneurial businesses in Appalachia.

Meanwhile, the Nia Community Fund, focused on grants and investments that work towards social equity and environmental sustainability in Oakland, California, is adding $5 million to its endowment that is 100% invested in sustainability and clean-energy solutions.  Building on this new commitment, Nia will seek to strengthen the clean-energy investment field by publishing impact-investing guides and other education materials for family offices, foundations, and other long-term investors.

Finally, Mercer Investment Consulting LLC, a global investment consultant, is announcing two new projects with institutional investors: one with the Center for International Environmental Law (CIEL) focused on educating U.S. public pension fund fiduciaries about the potential legal and economic risks associated with high-carbon portfolios and their opportunities to reduce those risks; and the other covering the landscape of investment products available to members of Divest/Invest Philanthropy, a coalition of over 140 foundations and other investors representing $12 billion in total assets that have committed at least 5%—and in many cases over 10%—of their respective endowments to investing in clean-energy and climate solutions.

In the President’s words, “We have to accelerate our transition to the clean energy economy of tomorrow.  And we need the world’s smartest scientists, engineers, and entrepreneurs to help us do it.”  The United States was built on the combined labor and leadership of individuals, companies, philanthropies, universities, and governments. When these organizations all work towards a common goal, transformational changes become not just possible, but inevitable. Today’s public and private-sector efforts represent yet another important series of steps down that road.