The November 2021 Climate Summit (COP26) in Glasgow consolidated the good momentum towards a transition to Green Growth and a decarbonized economy. Unsurprisingly this involved a more robust partnership with the private sector to invest in clean tech and clean energy. One of the key milestones of the COP26, was the United States launch of the First Movers Coalition (FMC). This is a platform for companies and governments to commit to purchase green products and services (such as green hydrogen, green steel, and green cement) and thus jump-start the creation of markets for innovative clean energy technologies that are key for tackling the climate crisis.

 

Fast forward to the May 25 2022 World Economic Forum (WEC), and the the leaders meeting at Davos made the announcement of an expansion of the First Movers Coalition (FMC) partnership. Bill Gates and US climate Envoy John Kerry have the facto become the leaders of the program, with the WEF playing an important brokering role. The idea is to get companies to commit in advance to buying set quantities of green coal, green steel, green hydrogen, green cement, green aluminum, and carbon removal so that companies, corporations, and capital markets have the confidence to invest now to meet that future demand.

 

The FMC aims to decarbonize seven +1 “hard to abate” industrial sectors that currently account for over 30% of global emissions: Aluminum, Aviation, Chemicals, Concrete, Shipping, Steel, and Trucking; along with innovative Carbon Removal technologies. The International Energy Agency (IEA) made it clear that it would be tough to keep the 1.5C degrees target alive, if we don’t tackle emission from these carbon intensive sectors.

 

The FMC is a partnership of 55 Members from top global corporations, international organizations, and governments. Each of the FMC members has made ambitious commitments to purchase green product from at least 1 sector.  Apple, Microsoft, Boing, Salesforce, Ford, Swiss Re, and Ball Corporation are some of the partners. The 50 corporation have a market cap of more than $8.5 trillion and would play a large role to commercialize emerging clean technologies.  India, Italy, Japan, Norway, Singapore, Sweden, and the UK Joined the US as FMC Government Partners to help create the future markets for sustainable and greener technologies.

 

These identified clean technologies have already a successful track record but need to be made cost effective to rapidly reach the scale needed to play a role in reducing the global economy carbon intensity.

 

The Market Signal

These sector where chosen as it is difficult to find financing for large-scale green-tech projects in these “hard to abate”sectors. They are too big to attract venture investors, and too early stage to get more conventional banks and investors involved. Having the FMC send a clear market “demand signal” that there is an economic prize waiting for those who act should unlock needed financing.

 

What is happening in Green Tech early-stage market?

Investment trends in clean start up continue to be strong. According to PWC, between October 2020 and October 2021 more than $85.7 billion was invested in climate tech. Investment reached a record of $60 billion in the first half of 2021. This represents a 210% increase year on year. Of the 78 climate tech unicorns that now exist (start-ups valued at more than $1 billion), the majority (43) are in the Mobility & Transport sector. The remainder are split between Food, Agriculture (13) Industry, Manufacturing and Resource Use (10) and Energy (9). To break this down further, two-thirds of the funding between October 2020 and September 2021 ($58 billion) was invested into Mobility & Transport, with more than a half going into electric and low greenhouse gas emissions vehicles. At the global level, there are more than 3,000 climate tech start-ups, and investment in clean tech represents 15 cents of every venture capital dollar.

 

Conclusion:

Yet even as politicians vote against sound climate policies, chase new oil resources, coal and gas deals, and step back from policies such as Europe’s Green Deal, the FMC represent a bold move in the difficult moment climate policy is living. The private sector can create the market to shift the attention towards “greener” decisions. Let’s hope that the Davos Economic Forum, Bill Gates, and John Carry can push the markets and the policy to act to change the way we live.  The FMC provides opportunities for a wide range of companies to make commitments, take action, and build the clean and profitable supply chains of the future. It also brings together a range of civil society and expert organizations to build momentum, complement ongoing efforts, and input into the initiative’s design.