Philanthropic Interventions for Clean Energy
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Philanthropic Interventions For Clean Energy Strategies To Accelerate The Decarbonization Of The U.S Electric Power Sector Acknowledgments A number of individuals made significant contributions to the development of this whitepaper by lending their perspective in a roundtable dialogue or in individual conversations. In addition to Lukas Walton, these contributors include: • Ellen Alberding • Lisa Frantzis • Michael Northrop The Joyce Foundation Advanced Energy Rockefeller Brothers Fund Economy • Lauren Azar • Hannah Polikov Azar Law; Former • Ben Gaddy Advanced Energy Commissioner, Wisconsin Clean Energy Trust Economy Public Utility Commission • Jonah Goldman • Bill Ritter • Hayes Barnard Breakthrough Energy Center for the New Energy Give Power Foundation Coalition Economy at Colorado State University; Former • Norman Bay • Zach Greenberg Governor, Colorado Willkie Farr & Gallagher; Zoma Capital Former Chairman, FERC • Bill Roberts • Hal Harvey Corridor Partners • Peter Bryant Energy Innovation: Policy Walton Family Foundation and Technology • Sharon Schneider Walton Family Foundation • Melissa Cheong • Paul Kaleta Zoma Capital First Solar • Doug Scott Great Plains Institute; • Josh Cohen • Shayle Kann Former Chairman, Illinois City Lights Capital GTM Research Public Utility Commission • Mark Cupta • Richard Kauffman • Nat Simons Prelude Ventures Office of New York Prelude Ventures Governor Andrew Cuomo • Dave Danielson • Ryan Smith Breakthrough Energy • Susan Kennedy Zoma Capital Ventures Advanced Microgrid Solutions • James and Dominique • Cisco Devries Walton Renew Finance • Danny Kennedy California Clean Energy Fund • Kevin Vilkin • Amy Francetic Give Power Foundation Invenergy Future Fund • Ed Miller The Joyce Foundation • Greg Wetstone ACORE Clean Energy Trust, a 501(c)3 not-for-profit based in Chicago, works to advance clean energy innovation and adoption in the Midwest. Clean Energy Trust organized the roundtable, moderated the discussion and produced this white paper on behalf of Lukas Walton. page 2 Philanthropic Interventions For Clean Energy Introduction Clean Energy Trust convened a two-day progress towards limiting global temperature roundtable in Chicago on April 11 and April 12, increases to no more than 2°C above pre- 2017, on behalf of Lukas Walton. The goal of the industrial levels, the critical threshold articulated meeting was to identify strategies to accelerate by scientists and adopted by countries within the decarbonization of the U.S. electric power the United Nations Framework Convention on sector, with emphasis placed on identifying Climate Change.1 Given that the United States is interventions appropriate for engagement and the world’s second largest emitter of CO2 after funding by philanthropic organizations, large China (see Figure 1), and that the electric power donors, and private investors. Roundtable sector represents the greatest share of U.S. CO2 participants included a mix of industry leaders, emissions (see figure 2), this sector should cut policymakers, philanthropists, investors and the deepest and the fastest. The electric power other key stakeholders. sector has the most realistic pathways to meeting our emissions targets and strong potential for Fundamental to this dialog was the recognition coordinated action amongst the private sector, that deep decarbonization of the world’s electric stakeholders, and government. power sector is required to continue to make 2014 Global CO2 Emissions from Fossil Fuel Combustion Total US. Greenhouse Gas Emissions and Some Industrial Proocesses by Economic Sector in 2015 Japan Russian Federation Agriculture Other India 4% Electricity 5% Commercial 9 & Residential 7% EU 28 30% 12% 29% 9% 15% 21% United States Industry 27% 30% Transportation China Figure 1: Figure 2: Global Emissions by Country (2014) Source: U.S. EPA U.S. Emissions by Sector (2015) Further, while the transportation sector approaches the electric power sector in terms of emissions, most decarbonization solutions for the transportation sector hinge on electrification, which ties back to prioritizing the need to decarbonize electric power generation. Collectively, the electricity and transportation sectors account for more than half of U.S. emissions. Although there is concern about anticipated clean energy policy changes and funding cuts by the Trump Administration, the impetus for the Roundtable was not political. Rather, it was driven by the recognition that critical efforts need to be initiated today so that sound policy, market, and technology foundations can page 3 Philanthropic Interventions For Clean Energy be established to support the accelerated transformation of the U.S. electric power sector in the years and decades ahead. The luxury of time is not on our side as the impacts of climate change are increasingly felt and the risk of long-term “lock-in” of fossil fuel infrastructure is high. The size, scope, and alacrity of the transformation required argues for large-scale and proactive engagement as opposed to organic and incremental evolution. The format of the Roundtable involved subject matter experts presenting perspectives on key issues followed by discussion and debate between Roundtable participants. This process highlighted a number of facts, themes, and findings for which there was broad agreement among participants. The themes and framework laid out below draw on the discussion at the Roundtable, as well as subsequent conversations with participants and other thought leaders. Themes Emerging From The Roundtable Dialog • The clean energy transformation is underway. • Failing to think holistically can result in In 2015, non-hydro renewables were 66% of inefficient or counterproductive outcomes; i.e., all new capacity additions in the U.S.2 reducing emissions at one location (ex: solar) and inadvertently being required to add • Despite renewables representing the vast emissions elsewhere (ex: spinning reserves). majority of new capacity additions, clean energy is just getting started with non-hydro • While we can add renewable and distributed renewables representing less than 10% of energy solutions onto the legacy energy total U.S. generation capacity in 2015.3 system, this is not a strategy that is smart, efficient, or cost-effective long-term. • Continued deployment of renewable energy under the current framework (technology, • Significant modernization of the policy, infrastructure, regulation) will eventually regulatory, market, and utility business model create significant challenges such as those paradigm is necessary to enable the grid to as witnessed in California tied to solar power be modernized and for new technologies to (challenges begin to surface at approximately be deployed cost-effectively at large scale. 10% penetration, and expand significantly at • Federal policies are important and crucial penetrations of 25% or higher).4 policies remain at risk; at the same time • Flexible and responsive capacity is essential significant impact can be achieved at the but strategies for driving renewable energy regional, state, and city levels (and in deployment must also seek to optimize the collaboration with corporations), particularly overall system; the system is only as healthy working with targeted public utility commissions as the sum of its parts (electricity generation, (PUCs); for example, efforts in New York have transmission, distribution, storage, and demand demonstrated that a tremendous amount side efficiency solutions). can be accomplished at the state level, often under existing state authorities. page 4 Philanthropic Interventions For Clean Energy Framework For Targeting Intervention Strategies The decarbonization challenge is particularly well suited for philanthropy given that it is a tough, intractable societal challenge that is not well served by either the government or private sector. Much important and impactful work is already underway supported by philanthropic capital, and many more discrete intervention opportunities exist that can deliver significant impact. However, true, deep decarbonization will require greater coordination of interventions across a spectrum of issue areas. These interventions will also require dedicated and increased resources across a timeframe that spans years if not decades. Recognizing the importance of distinct but parallel intervention approaches, as well as the fact that funders will have varied interest areas, resources, and timeframes, this paper presents a framework that organizes relevant decarbonization issues into three critical “Waves” to be pursued simultaneously. While certain technologies and topics undoubtedly cut across multiple Waves (e.g., storage), the goal of this framework is to highlight leverage points that provide optionality for funders while not losing sight of the totality of the work and the coordination required. These three Waves are described below, followed by a discussion of meaningful interventions to address the challenges of each Wave. The First Wave: Protect, Embrace And Extend Clean Energy Policies The tremendous gains clean energy has achieved are due to the tireless and innovative work by countless policymakers, advocates, and industry stakeholders. Much of this success is rooted in the “stacking” of federal and state-level incentives, mandates, and goals, which, in turn, have helped bring about technological performance improvements, reduced costs, and new technologies. It is clear that these efforts must continue unabated and that First Wave interventions must