Opportunities in Infrastructure for Deep Decarbonization

Opportunities in Infrastructure for Deep Decarbonization Breakthrough Energy Breakthrough Energy is a network of initiatives founded by Bill Gates, fully dedicated to helping humanity avoid a climate disaster. Through investment funds, philanthropic programs, policy advocacy, and other activities, Breakthrough Energy is helping to scale the technologies and solutions needed to reach net-zero emissions by 2050. We do this work through the following programs: — Breakthrough Energy Catalyst — Breakthrough Energy Fellows — Breakthrough Energy Ventures (BEV) — BEV Europe and BE Solutions Canada — Breakthrough Energy Sciences — Breakthrough Energy U.S. Policy & Advocacy 2 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N Getting to Zero GETTING TO ZERO REQUIRES: Understanding the Problem — The world emits 51 billion tons of greenhouse gases per year. We need to get to zero by 2050. — The Five Grand Challenges: electricity, agriculture, manufacturing and industry, transportation, and buildings. Developing Solutions — Policy solutions can lower the Green Premium, the additional cost of choosing a clean technology over one that emits more greenhouse gases. • Governments can make carbon-based options more expensive, make the cleaner versions cheaper, or both. Working Together — We need to change the way we live, across nearly every sector of the economy. — Through infrastructure, we have an opportunity to advance groundbreaking innovations and policies to get us to zero. 3 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N The Five Grand Challenges ELECTRICITY T R AN S P O R T A T I O N M AN U F AC T U R I N G & I N D U S T R Y BUILDINGS AG R I C U L T U R E How We Plug In How We Get Around How We Make Things How We Live How We Grow Things We need to find new ways to generate, store, and use lowcarbon electricity while scaling up existing technologies like wind and solar, advanced nuclear power, geothermal energy, and thermal generation with carbon capture. From EVs to low-carbon fuels, getting transportation to zero requires a complete transformation of the way goods and people get around. To get to zero, we need clean electricity and production processes. When that’s not possible, we need carbon capture, utilization, and storage (CCUS) and direct air capture technologies. From greener materials to cleaner industrial processes, we must find ways to build and use buildings without emitting carbon. Getting to zero while meeting growing food demand requires reducing fertilizer use, improving soil management, cutting methane emissions from livestock, and minimizing consumption and waste of high-carbon foods. (28%) (29%) (24%) (8%) (11%) 4 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N Manufacturing and Industry Several sector-specific barriers are preventing low-GHG options from being deployed in the industrial sector: • • Technological limitations exist for decarbonizing process emissions and high temperature heat P O L I C Y F O C U S AR E AS Firms lack access to capital due to long-term investment thinking, fragmentation of product value chains, and high upfront capital costs of new equipment Electrification • Commodity markets lack differentiation of lowercarbon industrial goods with Green Premiums Energy & Material Efficiency • Lack of developed carbon markets and regulatory uncertainty hinders investment in new technologies To get this sector to net-zero, policy action needs to encourage the development and deployment of new technologies. Low-Carbon Fuels Carbon Capture Oil & Gas Methane 5 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N Buildings Operational emissions can be reduced over time by taking steps like installing more energy-efficient systems. Embodied emissions are locked in place as soon as a building is built. So, we ultimately can’t decarbonize buildings without decarbonizing manufacturing at the same time. P O L I C Y F O C U S AR E AS Low-Carbon Building Materials • Over the next decade, embodied carbon will account for 74% of emissions from new construction Electrification • GSA’s Office of Federal High-Performance Green Buildings is already taking steps to reduce the embodied emissions of federal building projects by: Energy Efficiency • Using the best-performing materials • Using whole building life cycle assessment We need policies to accelerate these transformations. 6 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N How Congress Can Help Address technology gaps Create market demand — RD&D funding and support — Federal Buy Clean policy — Fiscal incentives for clean technologies Facilitate large-scale deployment — Embodied carbon codes and standards for federal buildings — Emissions-based performance standards for industrial products and processes Supply-side push Demand-side pull 7 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N The Power of Public Procurement Public procurement policies can create large markets for demand of lowercarbon goods and significantly reduce emissions. Between 2008-2018, public projects accounted for 32% of the embodied emissions of construction in the United States. 8 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N Demand-side: Buy Clean Buy Clean is a set of public procurement policy instruments aimed at infrastructure and building materials to rapidly reduce GHG emissions from government entities. It is also a powerful tool to incentivize the purchase of low-carbon materials from manufacturing suppliers. Under Buy Clean, Congress can use disclosure, incentives, and standards to leverage public purchasing power to create demand for low-carbon materials and ultimately shift the market. Buy Clean Transparency Act of 2019 — Requires transparency in reporting the GHG impacts of products procured by federal contracting agencies CLEAN Future Act – Buy Clean — Enhances the transparency, quality, and availability of data to calculate embodied emissions of commonly procured infrastructure products and materials — Establishes Buy Clean standards for federally funded infrastructure projects — Creates a voluntary labeling program to identify and promote products with significantly lower embodied emissions than comparable products 9 O P P O R T U N I T I E S I N I N F R AS T R U C T U R E F O R D E E P D E C AR B O N I Z A T I O N Supply-side: Funding & Incentives To reach our net-zero goals, we need clean energy innovation. The success of an innovation strategy depends on policies that incentivize R&D and encourage the deployment of emerging technologies. Congress can provide: 1. Increased R&D funding for industrial emissions 2. Increased funding and support for demonstration 3. Tax credits to spur innovation and boost manufacturing American Jobs in Energy Manufacturing Act of 2021 — Extends and modifies the 48C tax credit to boost investment in clean energy manufacturing, recycling, and industrial facilities. American Jobs Plan – Demonstration & Innovation — Calls for $15 billion in demonstration projects, including utility-scale energy storage, CCS, and hydrogen. — Calls for $35 billion in climate innovation funding 10