This article is sponsored by Antenna Group.
Although I am unsure of the exact year, I remember attending a renewable energy conference in the mid-2000s. It had the feel of a millennialist religious movement, complete with prophecies of a messianic world. It wasn't the promise of wolves and lambs living in harmony that spellbound the attendees, but a prophetic vision of solar energy inheriting the grid. The prophetic speakers at the conference weren't religious figures, but entrepreneurs, activists and policymakers heralding a future free of carbon emissions and a cooling planet.
Like most religious devotees, we were both believers and skeptics. Sure, it all sounded great, but the odds were against a future where the cost per kilowatt-hour of solar fell below $1, and where solar energy could realize grid parity. Yet only 15 to 20 years later, many prophecies that washed over the conference materialized. We have arrived at a new age in climate history, and it is not a moment too soon.
At Antenna Group, we have come to call this new age "The Age of Adoption." Our age is characterized by the transition from a prior era of climate tech research and innovation — an "Age of Innovation" — to the world today in which companies representing every economic sector are furiously adopting those solutions. While it is difficult to identify a start date of the Age of Adoption, future historians may identify the passage of the Inflation Reduction Act as the dawn of this era. Nonetheless, the evidence of a sea change in public opinion regarding climate and the combined efforts of the public sector and the business community strongly indicates that this new era has arrived.
While it is debatable whether public opinion drives corporate America’s priorities or vice versa, it is indisputable that the business community, representing all economic sectors, recognizes the threat posed to our climate and is taking steps to address the challenge.
Before taking action, the business community had to acknowledge the crisis. While some were slow to heed the warnings, the economic impact of climate risks has become too significant to ignore. For example, more than 200 of the biggest global companies report almost $1 trillion at risk from climate impacts, and many effects are likely to hit within five years. Half of the S&P 100 companies advocate for climate policies that align with the Paris Agreement. Transparency is critical to risk mitigation and to the credit of corporate America, more than 7,000 of the world's largest companies are disclosing their carbon footprint, while 525 of the world's largest investors have made those disclosures part of their investment criteria. Although progress has been made, the business community has a lot of catch-up to do and must accelerate its commitment to and adoption of climate technologies and solutions.
Popular opinion must favor a particular outcome if one wants to effect change in a democratic society. An effective response to the climate crisis is predicated on the public believing in climate change. Although that has not always been the case, recent polling reflects a country unified in its belief that climate change is real, and that a swift response is necessary. Today, two-thirds of Americans believe that the government should do more on climate, a sentiment that is bipartisan, as more than half of Republican voters support a range of initiatives to reduce the impact of climate change. Seventy-nine percent of Americans say the priority for the country’s energy supply should be developing alternative energy sources, such as wind and solar, while most of the public (58 percent) says government regulations will be necessary to encourage businesses and individuals to rely more on renewables.
With public support in tow, the federal government is free to support decarbonization and other climate actions with its own behavior, policymaking and checkbook. The federal government accounts for a quarter of the U.S. GDP and is the nation’s largest employer. As such, its contributions to the Age of Adoption have a transformative impact on sustainability and net-zero emissions goals, both in example-setting and by measurable impact.
To take a few recent legislative, regulatory and spending initiatives. For instance, the recently passed the Inflation Reduction Act (IRA) and its investment of $369 billion in grants, incentives, and tax credits provide, among other things, both a carrot and a stick to various industries that have been carbon mitigation laggards. The Federal Sustainability Plan, signed into law by President Joe Biden in December 2021, is historic in that it outlines a path to achieve net-zero emissions across federal operations by 2050. It also marks a commitment by the federal government to work with utilities, developers, technology firms, financiers and others to purchase electricity produced from resources that generate no carbon emissions, including solar and wind, for all its operations by 2030.
The commitment and activism of the financial services sector is an additional indicator of the arrival of the Age of Adoption. The Age of Innovation was marked by the deployment of venture capital into climate tech, but the traditional financial services sector acted more cautiously.
However, the last three to four years have witnessed the largest and most prominent financial institutions take the lead in combating climate change by aligning their investment strategies and policies with net-zero goals and Environmental, Social and Governance (ESG) commitments. For example, the Net-Zero Banking Alliance, a group representing over 40 percent of the world's banking assets, targets the industry's own carbon emissions but also allocates lending and investment funds to organizations involved in reducing carbon emissions.
The results from this and other initiatives have been tangible. In 2020 alone, the world’s top five markets recorded ESG investments worth about $35.3 trillion, more than a third of their total assets under management. And a recent global survey of nearly 9,200 investors found that 39 percent had invested in companies with a demonstrated ESG performance.
Lastly, economics, not activism, ultimately drives results in a free market and capitalist society. The Age of Innovation was high on evangelism but low on economic returns; however, the Age of Adoption is justified by the economics as well. Nearly 3.1 million of the total energy sector jobs are in net-zero aligned industries, comprising 41 percent of total energy jobs. Net-zero-aligned jobs are related to renewable energy, grid technologies, transmission and distribution, energy storage, nuclear energy, biofuels, energy efficiency and electric vehicles. A recent study by the Brookings Institute found that landing a clean energy job can equal an 8 percent to 19 percent income increase. In addition, the clean energy industry is replacing the domestic blue collar jobs that were lost over the past four decades, and paying higher wages than other industries to workers whose highest level of learning is a high school diploma.
Renewables not only create plentiful and high-paying jobs, but they are the cheapest source of new power generation in nearly all markets globally, according to a 2022 S&P report. The cost of renewables continues to decline rapidly due to technological progress and government policies that catalyze new investments in renewables, which, in turn, has led to further price drops. Critical climate technologies such as battery storage, while still somewhat expensive, continue to decline in price as demand surges and economies of scale continue to bend the cost curve.
The Industrial Revolution and its legacy of pollution, carbon emissions and fossil fuels have lasted more than two centuries with no immediate end in sight. To successfully reverse the cataclysmic impact of climate change, the Age of Adoption will have to be measured in decades, if not centuries. The stakes are immeasurably high, and it is up to us to decide whether the Age of Adoption lives up to the promise of the past few years or becomes a mere, sad footnote in the history of our planet.