Government policy and climate change innovation | Deloitte Insights
A climate technology must traverse the valley of death to enter commercial use. Universities and government agencies recognize this problem, but haven’t solved it yet. Difficulties at this stage often are ascribed to misaligned incentives for government and a risk-reward profile too poor to justify business investment.45
Improving the federal technology transfer process will require us to mesh the traditional supply-side “push” mindset with demand-side “pull” strategies. This, in turn, will require commercialization conversations and industry input early in the R&D process.
From a technological standpoint, recent advances in fields including data management, information processing and automation open the door for dramatically more efficient and effective technology transfer. Artificial intelligence (AI) and machine learning can be leveraged to help improve the efficiency of technology transfer by identifying potential targets through matchmaking algorithms.
While new technologies may help, what may be most important are new strategies for tech transfer. DoE’s National Labs provide an example. The agency is seeking to improve its technology transfer to the private sector through innovation summits that share information and ideas between industry, universities, manufacturers, investors, customers, and experts from the agency’s R&D complex. DoE’s Technology Commercialization Fund matches private dollars to promote promising energy technologies for commercial purposes.46 And recently, the agency began identifying potential commercialization pathways in terms of the breadth of market opportunities and the challenges of integration with existing systems and supply chains.
A closer look at the market experience of many climate technologies suggests there may be four separate hurdles on the journey to commercialization. Failure at any hurdle can prevent successful adoption.47 The first is the step from lab to startup. The second is the launch of a minimally viable product in a complex marketplace. The third is the demonstration of a full-scale commercial product or facility. Finally, there’s the need to prove that the product is stable, profitable, and scalable.
To truly promote climate innovation, agencies must think about how they could affect each of these challenges. ARPA-E’s SCALEUP funding can help to bridge the third hurdle, for example, but does little for the others.48 And the need to consider these hurdles applies to more than funding. Federal, state, and local regulators, for instance, can affect all four.
Lesson 4: Don’t just identify climate risks; manage and reduce them
As the effects of climate change become increasingly visible in extreme weather events, climate risk disclosure is gaining momentum around the world. As National Economic Council director Brian Deese observed, “Our modern financial system was built on the assumption that the climate was stable … [T]oday, it’s clear that we no longer live in such a world.”49
The Biden administration’s executive order on climate-related financial risk directs all federal agencies to launch or expand efforts to analyze and lessen economic risks stemming from climate change.50 It’s not enough to identify and disclose risks; agencies need to manage the risks they identify, both the preventable and the unavoidable.
Fortunately, new tools, technologies, and techniques give agencies unprecedented abilities both to avoid certain climate-related risks and to reduce harm when such risks are unavoidable.
Cloud computing power and sophisticated AI/machine-learning algorithms, for instance, can improve our ability to parse weather data. This could help a government decide where not to build, for instance, or whether to adapt an existing site to accommodate the effects of climate change—or retreat to higher ground.
Digital twins—digital simulations of physical systems, assets, or processes—can help agencies consider the ramifications of different strategies in a variety of climate-change scenarios exploring risk reduction, as well as the social and equity impact. For instance, agencies can use digital-twin modeling to plan life-saving evacuation routes for extreme weather events, or to determine which coastal infrastructure is at greatest risk from rising sea levels. In the European Union’s “Destination Earth” initiative, scientists are creating a detailed digital twin of the entire planet to accurately map climate development and forecast extreme weather events.51
Digital twins can also provide key insights for cities in their fight against global warming. Singapore is building a “Digital Urban Climate Twin” of the city to help planners determine how factors such as traffic, vegetation and geography affect outdoor temperatures, allowing them to develop viable solutions for hotter times.52
Such tools can also help governments find the best returns for risk-reduction projects, given the inevitable limitations on time and resources. Analysis could reveal, for example, that spreading a budget across numerous smaller projects could reduce risks more effectively than would a single major initiative.
Data analysis plays a key role in understanding and mitigating risk. To this end, the Federal Emergency Management Agency (FEMA) recently introduced a free, downloadable National Risk Index (NRI) that allows agencies to assess 18 different risk factors through a single database. The NRI contains measures of social vulnerability; a community in which many residents don’t own cars, for instance, may need more assistance with evacuation in the event of a natural disaster, while one with many mobile homes is likely to face more danger in severe storms.
“Unlike traditional natural hazard risk assessments, which address one hazard at a time and target only the most vulnerable areas, the index combines multiple hazards with socioeconomic and built environmental factors to provide a holistic view of community-level risk nationwide,” according to a FEMA spokesperson.53
As FEMA evaluates applications for grants to fund hazard mitigation projects, the NRI will help it apply its resources strategically to protect as many people as possible.
Lesson 5: Overturn orthodoxies to enhance operational sustainability
As the saying goes, what got you here won’t get you there.
Consider the case of vehicle emission reductions. The federal government employs more than 280,000 employees in the nation’s capital. For decades, in an effort to cut vehicle emissions, federal agencies have used incentive programs to try to persuade those workers to carpool or take mass transit. Similarly, various governments have subsidized purchases of hybrid and electric vehicles and installed plug-in parking spots.
But none of these efforts can compare with the potential gains associated with radically reducing the number of commuters.
COVID-19 has shown that work as we know it can continue in a virtual environment. In many cases, remote work may become a permanent fixture of the new normal in a long-term, nationwide transformation. A recent survey by the Metropolitan Washington Council of Governments’ Transportation Planning Board found that 91% of D.C.-area respondents working from home said they wanted to continue working from home part-time after the pandemic subsides.54
Such order-of-magnitude changes will be essential if the United States is to meet the ambitious climate goals set by the Biden administration. Meaningful progress on this agenda will require federal agencies to overturn existing orthodoxies, which separate climate initiatives from the central mission in all but a handful of climate-focused entities.55
One agency that has successfully linked environmental considerations to its core mission is the DoD, the world’s largest consumer of fossil fuels.56 “Napoleon said that an army runs on its stomach,” said one informed observer in 2014; “the army of today runs on oil.”57 But the DoD recognizes that fossil fuels not only harm the environment but can hinder operations and put lives at risk. Oil convoys that deliver fuel to US bases are an easy target for adversaries. In Afghanistan, for example, one army soldier or civilian was killed or wounded for every 24 fuel resupply convoys.58 A successful attack could leave a base without power.
To reduce this vulnerability, DoD has begun to deploy alternative power sources such as mobile solar-power units that can be carried in the field. Such alternatives make operations more sustainable and more resilient in the face of enemy attacks and extreme weather events.59
These examples—telecommuting and portable solar power—illustrate the potential power of subverting traditional orthodoxies.60 If sustainability gains are sought only within the frame of how things have “always” been done, significant breakthroughs can be missed. But it’s not easy to change from “the way we’ve always done things.” Bold goals are one way to try to stretch people’s thinking, but it can also be useful to challenge that thinking in the details. The latest carbon footprint tools, for example, can provide a richly informed look at how various activities affect an organization’s carbon footprint. Such tools can direct attention to where it matters and allow for AI-assisted modeling of potential future states. This “what if” capability fosters creative problem-solving.61