Remarks as Prepared for Delivery by NEC Director Lael Brainard at the MSCI Sustainability Institute Launch During Climate Week NYC
Thank you to Linda and the MSCI team for inviting me to join you during Climate Week, and congratulations on the launch of the MSCI Sustainability Institute.
We must meet the generational challenge of building a clean energy economy and reaching net zero emissions. President Biden has taken decisive action to put the United States on track to cut our emissions in half by 2030 and reach net zero by 2050. Accelerating this economic transformation will require investment across a range of sectors and all along the supply chain. It will require greater capacity to take risks on critical first-of-a-kind green technologies, policies that support revenue generation for new business models, and capital to reach the necessary commercial scale.
The President's climate strategy relies on a set of robust demand and supply-side incentives to drive mutually reinforcing investment at all stages of the value chain. This is the boldest climate action in history to mobilize the once-in-a-generation collective action we need.
Technological innovation will be key to success. In every period of fundamental economic transformation, technology breakthroughs have played a pivotal role—from steam engines during the industrial revolution to the internet during the information technology boom. And the clean energy economy will be no exception. According to the International Energy Agency, roughly half of the emissions reductions we're counting on globally to reach net zero will come from technologies that are not commercially available today.[1]
While other countries that must play a key role in the clean energy economy have relied on a state-driven approach, President Biden's policies are designed to be flexible as climate science and technologies evolve and to allow public incentives to be a force multiplier for private capital that will drive the green economy. Our approach is government-enabled and private-sector-led. It is the core strength of the dynamic US economy—catalyzing innovation in industries of the future.
Taken together, the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act (IRA) have the potential to catalyze a dramatic transformation of our economy toward the sectors, technologies, and places where investment will be most productive and is most urgent. Our approach seeds support from the earliest stages of R&D all the way to commercial-scale manufacturing of clean technologies—creating hundreds of thousands of good jobs in the process. These investments will also help bring down the costs of key green technologies, benefiting not only American workers, businesses, and families, but also consumers and businesses around the world.
We are already seeing important progress on this front—from battery breakthroughs to advances in direct air capture technology. These achievements are in part the result of the U.S.'s unparalleled innovation ecosystem, which includes many of you in this room. Already, companies and capital markets are responding to these incentives. In the last year, the U.S. has seen $213 billion in new clean investments from clean manufacturing to household investments in green technologies like heat pumps and EVs.[2]
Let me outline briefly how the individual pieces of the President's agenda work together to provide incentives for the private sector investments and innovation we need to achieve our climate goals. It starts with supporting basic research, including $2 billion of Inflation Reduction Act (IRA) funding for the Department of Energy's Office of Science and our national labs to modernize our research facilities and keep them on the cutting edge of climate science.[3]
For startups working to commercialize these discoveries, the IRA includes a number of tax credits that will crowd in early-stage investment in the green economy—from advanced manufacturing of clean technologies like batteries to clean hydrogen and clean fuels that will help to decarbonize heavy industry and jet travel. It includes revamped credits for clean electricity investment and production, which are technology neutral to support new forms of energy generation.
Critically, all of the credits I just mentioned are eligible for new transferability rules that allow pre-revenue companies to turn them into cash flow today, benefiting the youngest startups building the future of the green economy. That's why, according to outside estimates, funding for the earliest stage climate startups rose 23 percent in the first half of this year compared to a year prior, even as overall early-stage funding fell.[4]
As companies move from R&D to scale-up, the Biden Administration has put in place programs to accelerate their growth. This includes initiatives like the $350 billion in new or additional loan authority for the Department of Energy's Loan Programs Office to help companies build manufacturing facilities and critical energy infrastructure here in America, including repurposing and reusing legacy fossil fuel infrastructure to meet our clean energy needs.[5] Scale-up capital like this is mutually reinforcing with our support for early stage companies, giving climate investors the confidence to take smart risks because they know that if they succeed in innovating, there will be resources to support their growth.
The President's comprehensive approach to fostering green innovation is already working. The LPO has completed a number of new investments, including a clean hydrogen facility in Utah,[6] deepening American technological leadership and creating jobs.
With well-designed incentives, these innovations will be a force for job creation and economic dynamism. That is why President Biden often says that when he hears "climate" he thinks "jobs." According to outside analysis, the IRA has already led to the creation of over 170,000 good-paying and union jobs in the U.S. and is projected to add 1.5 million more over the next decade.[7]
The President's strategy also includes place-based incentives that prioritize communities that have too often been left behind during prior economic transitions—from low-income areas to the energy communities that powered our growth during the 20th century. According to the Treasury Department, 65 percent of IRA-related investments to date are in counties with above-average poverty rates, and 90 percent are in counties with weekly wages below the national average.[8] For example, in Wierton, West Virginia, a former coal and steel powerhouse that has seen decades of decline, an advanced iron-air battery storage company is building a new manufacturing facility in a former steel mill, spurred by the IRA's Advanced Manufacturing Production tax credit.
We know the innovation we need will require private sector action to deploy capital and expertise and to position the United States at the forefront of the industries of the future. With the power of American innovation, capital, hard work, and forward thinking, we can reach net zero and meet our climate goals. Thank you.
[2] https://rhg.com/research/clean-investment-monitor/
[3] https://www.whitehouse.gov/wp-content/uploads/2022/12/Inflation-Reduction-Act-Guidebook.pdf
[4] https://www.ctvc.co/climate-tech-h1-2023-venture-funding/
[5] https://www.energy.gov/lpo/inflation-reduction-act-2022
[6] https://www.energy.gov/lpo/advanced-clean-energy-storage
Joseph R. Biden, Jr., Remarks as Prepared for Delivery by NEC Director Lael Brainard at the MSCI Sustainability Institute Launch During Climate Week NYC Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/365280