Private companies and the US financial community will play a crucial role in pushing the energy transition forward as trillions of dollars will need to be invested in existing and new technologies to rapidly decarbonize the economy, officials and executives said June 8.
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"We can do this -- there is the largest marketplace the world has ever known" for clean energy development, and "probably something like $20 trillion will be allocated to the market over the next years," John Kerry, US special presidential envoy for climate, said during the remotely held Clean Power Conference organized by trade group American Clean Power Association.
"I personally believe it is the private sector that is going to make the greatest difference here because no government has the amount of money necessary to accelerate this transition at scale," Kerry said.
The private sector will see the economic opportunity, and already banks, asset managers and corporations understand there is money to be made in the savings, new technologies and products that will come online as part of the decarbonization effort, he said.
Asked about the US role in addressing global climate change and the need to reduce greenhouse gas emissions after pulling out of the Paris climate accord under President Donald Trump, Kerry acknowledged that US politics remain "highly polarized" and some people have "declared war on science."
However, he again cited marketplace developments with ESG conversations happening in boardrooms around the world, sustainable development goal discussions happening globally and the prospect of companies having to formally disclose their climate impacts. These things will drive the energy transition with or without the US, he said.
These private sector trends will "have a profound impact on where people think capital should go and what the risks will be," Kerry said. He and other members of the Biden administration have worked in recent months with six major US banks and asset managers to determine these institutions will allocate over the next 10 years about $4.16 trillion in climate investment.
"That's their floor, and I'm convinced the ceiling is much higher," he said, as investment flows into battery technologies and other forms of energy storage, direct air capture of carbon dioxide and small modular nuclear power reactors.
"The amounts of money that are going to be invested in this transition will make it near impossible for anybody ... to go against science and the efforts of every other country in the world," Kerry said.
Momentum toward transition
From speaking with energy companies, Kerry said he's been told that the US has the ability to transport hydrogen and ammonia through existing pipelines, though retrofits will be needed, and it will not necessarily work everywhere.
Facts keep driving momentum toward the US energy transition with recent headlines about Boston being at risk of sea level rise and Miami already dealing with flooding, "and unless we act, this gets worse," Kerry said, adding that economic analysis shows more money will be spent to deal with damage than if we build resilience now.
In a separate panel discussion about the role of the clean energy industry in the transition, JC Sandberg, chief advocacy officer for the American Clean Power Association, said that while government policy is important, capital allocation and other factors are "driving us toward this clean energy future."
As the cost of clean electricity comes down and more jobs are created, "hopefully we can pull out of this partisan morass," he said.
Driving renewable power to supply 50% of US electricity by 2030 can create almost 5 million jobs, Craig Cornelius, CEO of Clearway Energy Group, said. And siting clean electricity projects at retired fossil fuel-fired power plants makes sense because the electrical infrastructure is already in place, he said.
Collaborating with fossil fuel industries can also help with workforce transition, where oil and gas workers, for example, could find jobs in the offshore wind or hydrogen industries, Cornelius said. He added that "tons of people" at his company used to run coal-fired power plants.
Power grid reliability is also a major focus amid the transition to more intermittent renewable electricity. Increasingly, low-cost storage supplied with renewables could help bring "semi-dispatchable resources" onto the grid, Cornelius said.