by Jill Feblowitz
These days, companies and governments alike are making commitments to net zero emissions. While commitments are good, making progress requires investment. That means putting money on deploying existing technology in the near term, while continuing to fund innovation to deliver cost-effective approaches in the future. The current picture looks promising, but there is always a chance the momentum will lag.
Deploying Clean Technology
Despite COVID-19 and the economic downturn, clean energy investment did surprisingly well in the United States last year. U.S. companies, households and the government spent $85.3 billion on deployment of low-carbon technology in 2020, according to Bloomberg New Energy Finance (BNEF). Although there was an overall decline (-11%) from 2019, investment in electric transportation and residential heat pumps saw an uptick. Green bonds, which are primarily asset-linked, grew by 13% to a record $305 billion globally, after a slowdown in the first half of the year.
The federal government plays a significant role in the deployment of clean energy, mainly through policies like tax incentives, rebates and technical assistance. The U.S. Energy Act of 2020 (The Act) which was part of the Consolidated Appropriations Act, 2021, extended existing taxes incentives for solar and wind, a new emphasis on 45Q carbon capture incentives and a new offshore wind credit.
Even without legislation, the federal government can do a lot with clean energy related procurement. Think procurement of clean energy for federal facilities. Add to that the plans for the entire US federal fleet – over 645,00 vehicles – to be replaced with electric vehicles made in the US by 2035. Going forward, expect to see more spending on energy efficiency in federal buildings, IT for managing federal facilities energy usage and smart federal buildings.
Investing in Innovation
To reach decarbonization goals in a cost-effective manner, new technologies and approaches will be needed.