How are Governments and Policies Enabling Climate Tech?
The scale and urgency of the climate crisis requires coordinated efforts across industries, countries and continents.
Only governments can effectively orchestrate collaboration at the scale required.
McKinsey analysis suggests that as much as 90% of 2050 baseline man-made emissions could be abated with existing climate tech.
It is, therefore, essential that policy and governments support the scaling and development of climate tech.
Fred Onduri, Chair of the UN Climate Technology Centre and Network Advisory Board, says: “We've witnessed first hand the transformative impact of leveraging technology to address climate change, especially in countries most vulnerable to its effects.
“Technology serves as a powerful tool in our efforts to combat climate change and transition towards more sustainable practices.”
Funding the future of climate tech
The United States made headlines in 2022 with the passage of the Inflation Reduction Act, marking the nation's largest ever climate investment.
This legislative milestone is just one example of a global trend. Across continents, governments are deploying an arsenal of financial tools to stimulate climate tech growth.
Tax credits have emerged as a popular mechanism, incentivising companies to direct resources into green solutions.
Chad Klekar, Vice President for Resources and Energy Transition at Capgemini, says: “When it comes to understanding and taking advantage of the US Inflation Reduction Act, every member of the C-suite has a role to play.
“The act is far more extensive with opportunities and incentives than most companies realise.”
These financial incentives are proving effective in mobilising private sector investment, creating a multiplier effect on public funds.
Simultaneously, direct government funding is being channelled into crucial research areas, laying the groundwork for breakthrough technologies.
By stepping in with funding during the early-to-middle stages of climate tech development, governments are bridging critical gaps when private capital typically shies away.
Public-private partnerships for climate tech
Governments are increasingly joining forces with private enterprises, forming powerful alliances to tackle climate challenges.
These public-private partnerships are yielding tangible results across various sectors.
In the US, Montgomery County, Maryland is home to a collaboration between local authorities and private companies to electrify the public bus system.
AlphaStruxure, created by Schneider Electric and The Carlyle Group, supported the county’s Department of General Services to build a bus microgrid that uses solar power.
Juan Macias, CEO of AlphaStruxure, says: “We are thrilled to partner with Montgomery County on this holistic solution that delivers improved, cleaner services to county constituents.
“This benchmark project serves as a national model for municipalities and private fleet owners across the county.”
Across the Atlantic, the Dutch government has teamed up with private sector players to establish the Dutch Fund for Climate and Development (DFCD), channelling investments into climate projects.
The DFCD is powered by a consortium of expert organisations including WWF Netherlands and FMO.
Policy as a climate tech catalyst
Governments are crafting regulations that limit greenhouse gas emissions and incentivise the adoption of clean technologies.
These policy frameworks are reshaping market dynamics, making green solutions not just environmentally sound but economically attractive.
The International Energy Agency says: “Stronger international cooperation and robust policy development is needed to spread progress to all regions, particularly emerging markets and developing economies.”
Carbon pricing mechanisms are gaining traction in various regions, putting a tangible cost on emissions.
While sometimes controversial, these policies are forcing industries to re-evaluate their carbon footprints and invest in cleaner alternatives.
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