How Finance, Technology, and Policy Are Accelerating Climate Action
December 13, 2022

By Bob Hinkle, CEO, Metrus Energy

For those of us fortunate enough to be part of COP 27, the 10-day event in Sharm el-Sheikh, Egypt was enlightening, encouraging… and sobering. Climate action is gaining momentum – spurred in no small part by recent legislation like the Inflation Reduction Act and ratification of the Kigali Amendment to the Montreal Protocol – yet the reality remains that reaching the 2030 and 2050 targets for carbon reduction will take extraordinary cooperation, effort, and innovation.

I participated in a panel convened by the Business Council for Sustainable Energy (BCSE) that focused on the theme, “The Business of Changing the Trajectory to 2030 and Beyond.” The group – which included Scott Tew from Trane Technologies, Anna Pavlova from CarbonQuest, Kyle Davis from Enel North America, and Assemblyman Howard Watts III of the Nevada State Legislature – shared a variety of perspectives on how to “bend the curve” in order to accelerate the clean energy transition.

Moderator and BCSE President Lisa Jacobson began the conversation by asking about the role that finance has to play in driving the implementation of renewable energy and energy efficiency measures. Given that the International Energy Agency estimates that by 2030, private investment will need to account for 70 percent of the projected $4 trillion investment in sustainable energy, the question brought attention to one of the biggest challenges to achieving meaningful decarbonization.

Since my day-to-day focus at Metrus is helping companies bring energy efficiency projects to life, I launched the discussion by highlighting how innovative financing can meet the challenge. Energy as a Service, for example, through which a service provider funds 100 percent of the upfront cost and repayment is covered by the generated savings, has proven to be a successful way to make efficiency upgrades in the built environment. Energy as a Service also makes it possible to broaden the scope, scale, and carbon impact of an upgrade project through bundling – essentially combining different types of efficiency upgrades and/or renewables that have different payback horizons in order to get more climate bang for the buck.

Kyle Davis, a senior director at Enel North America, the world’s largest private owner of utilities, pointed out that the Inflation Reduction Act includes new provisions that promise to improve the project financing landscape as well, including a direct pay alternative to the tax credit for nonprofits and tax credit transferability for the private sector. Kyle predicted that these options will take pressure off the tax equity market and jumpstart more investment in clean energy.

 

Decarbonization efforts boosted by innovation

If creative financing is able to encourage more organizations to set a course for a sustainable energy future, technology innovation has the potential to dramatically accelerate the journey. Trane Technologies’ Scott Tew noted that the latest clean technologies provide a tremendous opportunity to accelerate decarbonization.

Scott also argued that real progress toward net zero goals cannot happen without a systems-level approach to reducing emissions – i.e., moving beyond a focus on component efficiency and looking instead to connected environments, as well as the use of data and artificial intelligence to optimize a building’s efficiency. The built environment represents 39 percent of the world’s greenhouse gas emissions, Scott noted, and therefore represents the greatest opportunity to truly move the needle.

Regarding opportunities in the built environment, CarbonQuest’s Anna Pavlova cited a PWC report showing that the building sector had achieved a mere 0.5 percent reduction in emissions, when its target had been a 15 percent reduction. “It’s hard for [building owners] to electrify right off the bat,” Anna said, which is why technologies like carbon capture – which captures a building’s CO2 emissions and turns it into building materials – can be helpful in addressing decarbonization goals in the near term.

In a discussion about state and local policy and how regional differences intersect with and influence federal action, Howard Watts III, who was attending COP 27 as a member of the National Caucus of Environmental Legislators, emphasized how “state and local government has really been at the forefront of a lot of these policy initiatives… We’ve created a lot of the environment and momentum that has led to the federal policies we’re now seeing.” He pointed to the work Nevada has done on energy efficiency standards and building codes as examples of how demand is being transformed at the local level and giving businesses the confidence to develop and market innovative clean technologies. Howard also mentioned how the clean energy transition is creating economic opportunities for Nevada, from solar and geothermal development to lithium production.

 

Making progress by building momentum

Just five years ago, had Trane Technologies mentioned sustainability or emissions reductions to building owners, Scott Tew said, “they would have asked us to leave.” But, he noted, “today is very different. Alignment is happening.” Is it happening quickly enough? Is it happening on a broad enough scale? Those questions won’t be answered for years to come, but discussions that were sparked at COP 27 will ideally drive ongoing collaboration and fuel momentum toward meaningful progress.

 

About the author: Bob Hinkle is the CEO of Metrus Energy. Metrus removes the financial barriers to energy efficiency and clean energy projects through the efficiency-as-a-service model.

Want to see more of what is going on with BCSE?

See BCSE News

Market Trends & Factbook

The 2022 edition of the Sustainable Energy in America Factbook provides up-to-date, accurate market intelligence about the broad range of industries that are contributing to the country’s move toward cleaner energy production and more efficient energy usage.

Check Out the Factbook