The First Movers Coalition, launched in November at COP26 as a public-private partnership to decarbonize hard-to-abate sectors, has announced an expansion, with more companies and countries on board.
Two new sectors – aluminum and carbon dioxide removal – were also launched during a press conference at the World Economic Forum’s Annual Meeting on May 25. These join aviation, shipping, steel and trucking that were launched in Glasgow at COP26 – and which, together with other heavy industry, are responsible for 30% of global emissions.
More than 50 companies and nine countries – representing more than 40% of global GDP – have committed to clean up the world’s most carbon-intensive industry sectors through purchasing power and policy for low-carbon technology.
India, Japan and Sweden join the U.S. government on the Steering Board of the Coalition, while Denmark, Italy, Norway, Singapore and the U.K. have all committed to policies that will commercialize the green technologies these companies commit to purchasing.
Speaking at the press conference, U.S. Special Presidential Envoy for Climate, John Kerry said the initiative would “kick everybody into a higher gear” to meet climate pledges made in Glasgow.
“The IEA made it clear that after we left Glasgow with 65% of global GDP committed to plans that legitimately hold the earth’s temperature increase at 1.5C degrees, then we have to bring the other 35% on.
“These technology steps that everybody is taking here will encourage and make it easier for those other countries and companies to be able to make the decision to come on.
“The marketplace is going to do this. It’s not going to happen by government decree. It’s going to happen because people are going to see there’s a demand for this. Citizens all around the world want a better life. They want clean air, they don’t want drought, and fires and floods and storms and the threat of massive sea level rise.
“The greatest disrupter of business will be the climate crisis if we don’t move fast enough. And the greatest risk for business is not the risk of putting their money into this, it’s the risk that comes with not doing enough, with not investing.”
The First Movers Coalition was inspired by the success of advance market commitments in driving innovation in other fields, from life-saving vaccines to commercial spaceflight.
Today’s most commercially competitive clean energy technologies, such as renewable wind and solar energy, are decarbonizing the electric power system; but on their own they cannot clean up steelmaking, shipping, aviation and other hard-to-abate sectors.
The necessary technological solutions – including green hydrogen produced using renewable energy, clean ammonia and near-zero carbon aviation fuels and technologies – are not yet commercially competitive. But it’s essential to bring them to market by 2030 to achieve global net-zero emissions by 2050.
The good news is that more than $85.7 billion was invested in climate tech between October 2020 and September 2021, according to PricewaterhouseCooper’s (PwC) most recent State of Climate Tech report. Investment hit a record of $60 billion in the first half of 2021 – representing a 210% increase year on year. Globally, there are more than 3,000 climate tech start-ups – and investment in clean tech represents 14 cents of every venture capital dollar.
And the size of the deals is growing too, nearly quadrupling in H1 2021 as megadeals become increasingly common, says PwC.
“Technology is not the answer, it’s the amplifier of intent,” says the report’s co-author Leo Johnson. “And climate tech alone is not the panacea, but it’s a space that is emerging rapidly as a critical mechanism to bend the emissions curve down and get the world back on track towards 1.5°C.”
Of the 78 climate tech unicorns that now exist – privately held start-ups valued at more than $1 billion – the majority (43) are in the Mobility & Transport sector. The remainder are split between Food, Agriculture and Land Use (13) Industry, Manufacturing and Resource Use (10) and Energy (9).
Two-thirds of the overall funding between October 2020 and September 2021 – some $58 billion – went into Mobility & Transport, with more than a half going into electric and low greenhouse gas emissions vehicles. But there’s been ’significant growth’ in the hard-to-abate Industry, Manufacturing and Resource Use area, which almost quadrupled the funding it attracted in the same period to $6.9 billion. Around two-thirds of the climate tech funding went to start-ups in the U.S. – $56.6 billion – while Europe attracted $18.3 billion and China saw $9 billion.
PwC found there’s huge untapped potential to shift capital to areas that would have a greater impact on mitigating the climate crisis.
Of the 15 areas of climate tech analyzed, the five representing the vast majority of future emissions reduction potential (80%) received just a quarter of the investment between 2013 and H1 2021. Mobility & Transport received 61% of all investment funding, while representing just 16% of global emissions. The Built Environment, meanwhile, receives just 4% of funding while its contribution to emissions is 21%.
PwC says more funding is needed “across all challenge areas to enable breakthrough innovations and trigger sectoral tipping points, whilst also supporting commercially ready technologies to scale up over the next decade”.
Early-stage venture capital investors need to be more patient with capital to deliver future breakthroughs, while more targeted policies from governments will kickstart investment in hard-to-abate sectors, such as building materials, as well as carbon removal technologies.
And that’s just what the First Movers Coalition is hoping to achieve.