At GreenBiz’s annual climate tech conference last week, VERGE 22, the Inflation Reduction Act (IRA) was a major topic of conversation among the sustainability professionals, policymakers and cleantech entrepreneurs gathered in San Jose, California.
As U.S. Secretary of Energy Jennifer Granholm said in her keynote, "What the Biden-Harris Climate Agenda Means for Clean Energy and Communities," the IRA represents a new paradigm for all companies, especially those in the climate space. The federal government is set to "marshal roughly half a trillion dollars for clean energy deployment and climate action," she described. "And that doesn't even count the funding that's gonna flow in from a private sector that sees real certainty now in these spaces."
So how can your organization or business plug in? It depends on several factors: size, funds available and goals, experts explained during the VERGE 22 panel "Leveraging Public Policy to Commercialize Climate Tech." They offered customized advice for this diverse set of companies.
For startups, resource allocation is key
The IRA has a significant amount of money earmarked for small- to medium-sized enterprises, said Kelly Fleming, vice president of climate change government affairs firm Boundary Stone Partners.
"A big part of that conversation was making sure that the benefits of this go to small and medium-sized enterprises," Fleming said. "And that it's accessible for them — and things like tax credits aren't overburdensome for people that don't have a huge corporate legal office to help them figure all of that out."
New tax benefits for small businesses could help them switch to renewables, implement energy efficiency improvements and buy new, large electric and fuel cell vehicles. There are also tax credits available for small businesses that invest in R&D. To take advantage of these, Fleming said that small businesses can start engaging with federal departments now, many of which currently have open calls for information.
"They're looking for input on how those credits will impact the company," she said. "They'll come out with guidance, depending on when the statutory deadline is, by the end of the year. So engaging in that process is really important and that'll probably be ongoing for the next couple of years as these phase in."
Fleming said that small businesses can start engaging with federal departments now, many of which currently have open calls for information.
Joselyn Lai, co-founder and CEO of geothermal startup Bedrock Energy, stressed that understanding your own company’s goals is the first step to leveraging public policy in the same panel. "You have to understand your business strategy and your business model first and all the sensitivities thereof," she said. "And without really deeply understanding that, there's really no effective regulatory strategy that you can really initiate because it's just so dependent on what your success is contingent on. And only after that, then it's about execution."
Understanding your markets and where the government plays in is crucial, she added, adding that early-stage companies should prioritize securing their marketplace first. Then, they can look for loans or grants, and later on, maybe even come to see the government as a customer or buyer of services or products. She suggested that, in fact, the best advisers for these kinds of tasks might already be in an organization’s network — investors, venture capital firms and board members who have been through the process before can likely offer strategic direction.
For many small companies that might not already be engaging with lobbyists or staffing governmental affairs advisers, Lai noted, a more worthwhile use of limited resources might be to hire qualified tax or law professionals who understand what’s in the IRA.
"Probably as a seed or a startup, you’re not really going to change the Treasury's mind dramatically on how they should interpret something for you, but you can have a really great tax lawyer help you structure the best PPA for your offering," she said.
For more midsize, established companies, pursuing public policy beyond the IRA can be beneficial
There’s a world of policy beyond just the IRA, the panelists agreed. Larger companies and those pursuing groundbreaking technology can focus on collaboration with government agencies at several levels.
Christine Turner, senior vice president of Boundary Stone Partners, said that government agencies truly want to work with climate tech and climate tech-adjacent businesses of all sizes. "There's a very strong role for the government that we see in terms of maintaining our competitiveness internationally and building partnerships across allied countries to really meet this moment and help us businesses remain competitive in the global environment,” she explained. Turner noted that this can start on the seemingly smallest level. "It's important to have a relationship with your local representatives," she advised. "You get them to be your advocates, but then also, [you] figure out who the key players that you want to have are."
There's a very strong role for the government that we see in terms of maintaining our competitiveness internationally.
Many agencies have private sector engagement offices, and getting involved at the local level also helps when these politicians make state-level regulations.
"I want you to realize that the government wants your input," Turner added. "So please give it to them." Fleming said that companies with more funding for government affairs specialists or for lobbyists should determine if they need a generalist or a specialist to meet their goals. Again, that entails having a fully developed internal market and operations strategy.
The road ahead
"A lot of these technologies, as we all know, are still being developed, and we have to figure out which ones are really going to scale successfully and meet the challenge," Turner said. "That's a lot of storytelling, honestly."
The story of climate tech is still being written, but with private investment in climate tech booming and a renewed focus on climate in policymaking, startups and larger companies have a massive opportunity in front of them.