Making the Leap from 'Billions to Trillions' in Private Climate Investment

Federal officials and business leaders at a Duke University summit identified critical steps toward a low-carbon future.

While Congress has committed hundreds of billions of dollars to advance decarbonization in the United States, trillions more in private investment are needed for the country to reach its climate goals.

An all-star lineup of federal officials and private sector leaders talked with Duke University faculty about how to further catalyze private investment during the "From Billions to Trillions" summit held Feb. 28. The full day of conversations at the Fuqua School of Business drew nearly 500 people from the Duke community, the public and private sectors, nonprofit organizations and other academic institutions.

Read more about remarks from John Podesta (Senior Advisor to President Biden for Clean Energy and Innovation Implementation) at Duke Today. Recordings of the event will be released soon.

Here are just a few broad takeaways:

An influx of federal funding has spurred private investment in clean energy projects. The overwhelming consensus was that the Inflation Reduction Act (IRA)—combined with the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act and the bipartisan Infrastructure Investment and Jobs Act—has already had a transformative effect. 

John Podesta, who is leading implementation of the IRA as a senior advisor to President Biden, described the law as “government-enabled but private sector-led.” The IRA primarily works through tax credits that incentivize private investment in decarbonizing nearly every sector of the economy, including electricity, transportation, manufacturing, forestry and agriculture, Podesta said. He noted that the 10-year time horizon of the credits gives businesses certainty to plan for the future.

A clean energy economy requires a clean energy workforce. Since Biden has been in office, $650 billion in manufacturing investments have been made in both urban and rural communities—including many in North Carolina, Podesta said. Panelists pointed out that these jobs often require additional training. As manufacturing moves toward automation, work is shifting from people who operate machines to those who work on the machines themselves, said Gregg Lowe, CEO of Wolfspeed. 

Several panelists noted that many of their employees are inspired to be part of the energy transition. “Thirty years from now, our employees are going to look back at this time and say, ‘I was there when this transition happened, and I helped it happen,’” Lowe said. 

The need for training extends all the way to the upper tiers of management in companies that might not necessarily be associated with the energy transition. Melissa James, vice chairman of Morgan Stanley, pointed out the importance of “educating your C-suite executives and board members” so they can make informed decisions about issues like climate disclosure. 

Summit attendees from diverse sectors exchanged ideas and forged new connections with speakers and one another during networking breaks.

The technology necessary for decarbonization already exists—and further innovation is progressing rapidly. Throughout the day, corporate leaders, investors and public officials talked about the rapid pace of clean tech innovation, from improvements in renewables and batteries to development of hydrogen fuels and carbon capture. “What is not a stumbling block is the technology itself,” said Lucian Boldea, president and CEO of Honeywell Industrial Automation. “Whatever problem needs to be solved, there is a solution.” 

Speakers reiterated that the real challenge is scaling up the technology quickly and competitively to achieve a massive phaseout of fossil fuels.

De-risking clean energy projects for investors is critical. Building a wind farm or converting a fleet of buses from diesel to electric isn’t cheap. “We have an approach to entrepreneurship and innovation in this country that is really unmatched around the world,” said Jigar Shah, a clean tech investment veteran who now directs of the Loan Programs Office at the U.S. Department of Energy. “But in the infrastructure space, we suffer from this huge problem where we have a lot of folks who invest in A, B and C rounds and then they get to the commercial project, which often costs a billion dollars.” That big jump is often called the “valley of death” for prospective investments. 

Several panelists noted that the high costs and lengthy timelines of these projects can make it difficult for a start-up to attract traditional venture capital or debt financing. In some cases, partnerships with well-established corporations such as Microsoft can provide the necessary financing. Public-private partnerships are another possibility—Shah’s office has authority to issue nearly $400 billion in loans, and the IRA has made $100 billion in grants available. But additional new financial mechanisms are needed, panelists reiterated.

Accelerating the energy transition requires more nimble regulatory approaches. Mark Florian, managing director and head of BlackRock Global Infrastructure Funds, cited permitting as a regulatory barrier that can slow clean energy projects or even lead investors to walk away.

An old rule of thumb is that an infrastructure project can take seven years from conceptualization to permit approval before construction can begin, he said. That’s not an acceptable timeline for U.S. climate ambitions. “There are ways that we can accelerate permitting—not to cut corners, but to make sure that timelines are visible, understandable and people can invest behind,” Florian said.

Progress on U.S. climate goals hinges on cross-sectoral dialogue and collaboration, which Duke University is well-positioned to foster. In his introductory remarks, Duke University President Vincent Price noted Duke’s interdisciplinary focus on creating sustainable and equitable climate solutions, its efforts to build strong and purposeful partnerships and its ability to bring together people across industries. 

“The importance of this topic reaches across so many lines,” Price said. “We know that switching on finance via policy is essential for accelerating this energy transition. It will require unprecedented levels of cooperation and thoughtful convening.” 

“When you think about what it’s going to take to deal with our climate change challenge, we’re going to need to bring lots of people together—from the private sector, the public sector, academia, philanthropy,” added Ronnie Chatterji, Mark Burgess & Lisa Benson-Burgess Distinguished Professor at the Fuqua School of Business. “That’s really hard to do; we did that today at Duke.”

The “From Billions to Trillions” summit was organized by the Nicholas Institute for Energy, Environment & Sustainability, the Fuqua School of Business, Fuqua's Center for Energy, Development and the Global Environment and Duke Innovation & Entrepreneurship. The event was aligned with the Duke Climate Commitment, which unites the university’s education, research, operations and public service missions to address the climate crisis.