Kerry Proposes Public-Private Cooperation to Help Close Climate Gap

Kerry Proposes Public-Private Partnership to Help Close Climate Finance Gap

The First Movers Coalition (FMC) is making moves at COP27. The FMC is a public-private partnership that encourages innovation in clean technology by making commitments to invest in low carbon and no carbon technologies. The group launched last year at COP26 in Glasgow, agreeing to make advance purchase commitments by 2030 for decarbonization technologies across seven high-emissions sectors including steel, aluminum, shipping, trucking, and aviation. Participating corporations include Apple, Amazon, Ford Motor Company, Volvo, United Airlines, Delta Airlines, and more.

According to the US State Department, over the past year, "the First Movers Coalition has expanded to include 65 companies, representing more than 10% of the global Fortune 2000 by market value, as well as ten government partners.” Corporate members of the FMC have put up $12 billion towards building up emerging innovations and bringing them to scale.

Ahead of COP27, the FMC announced another major expansion, focusing on an eighth high-emissions sector: cement and concrete. Cement and concrete make up 7% of global emissions. Without decarbonization initiatives, the sector is predicted to account for 9% by 2050. Companies collaborating with the FMC agreed to purchase at least 10% near-zero carbon cement and concrete by 2030.

Reuters: US Climate Envoy Kerry announce First Movers Coalition Expansion at WEF, May 25, 2022.

"Cement is the second most consumed product globally after potable water, and the demand signal that top companies have set today for near-zero concrete will drive critical investment in next-generation technologies,” said John Kerry, US Special Presidential Envoy for Climate. He added:

I am also delighted with the increased commitments we have announced across our existing long-distance transport, heavy industry and carbon removal sectors. This unprecedented $12 billion dollar demand signal will bring competitive technologies to market this decade that are needed to decarbonize so-called 'hard-to-abate’ sectors of the global economy.

World Economic Forum: COP27 | First Movers Coalition Leaders Panel, November 8, 2022.

Cradle to Cradle Products Innovation Institute: First Movers Coalition with Nancy Gillis, World Economic Forum, September 1, 2022.

New York Times Events: Steel, Cement and Chemicals | How Do We Get Industry to Net Zero, November 9, 2022.

Why This Matters

Large corporations have typically been huge contributors to climate change -- as of 2017, just 100 companies have been the source of more than 70% of the world’s greenhouse gas emissions since 1988. Meanwhile, the world’s richest billionaires each emit about 3 million metric tons of carbon dioxide on average per year, the majority of which come from investments. Collectively, the total annual carbon emissions of the world’s richest equal those of the entirety of France

Funneling investments into greener sources such as those promoted by the FMC is critical to achieving net-zero. Of the roughly $2.6 trillion needed annually over the next few years to eliminate or offset planet-warming emissions by midcentury, 70% could come from the private sector.

"We need a greater synergy between public and private finance," Kerry said in October at the Council on Foreign Relations in Washington, DC "It's been talked about for a long time; it's got to happen."

IMF: Scaling up Private Sector Financing for Climate, October 7, 2022.

New York Times Events: Inside Private-Sector Finance and Climate, July 1, 2022.

The Provocative Plan Encouraging Public-Private Collaboration

Kerry has launched another initiative at COP27 to encourage private investment in the climate: the Energy Transition Accelerator (ETA), a carbon offset plan that would give money to developing countries to fund their decarbonization efforts. "If Kerry and the international community of climate advocates can design this thing well and convince companies to join it, this could be the largest single source of climate finance for developing countries ever,” Nigel Purvis, CEO of Climate Advisers, told the Washington Post.

This idea has been met with some skepticism from NGOs who fear it is a substitute for adaptation financing from wealthy governments. Kerry’s plan focuses on decarbonizing the developing world, while it is rich countries like the US that pump the most carbon into the atmosphere. Historically, some renewable energy projects have been built without local input, resulting in devastating consequences. A Chilean hydropower project built with carbon market funding diverted water from pastures and put local agriculture at risk, for example, while a carbon offset project in Uganda displaced thousands of people living in nearby villages.

Another question mark is transparency and accountability. In many places, carbon offsets haven’t worked. Their impact is difficult to calculate and hard to enforce, meaning that many corporations fudge the books. In fact, the UN just released a report that found rampant greenwashing in many corporations’ net-zero pledges.

"The absence of standards, regulations and rigor in voluntary carbon markets is deeply concerning,” UN Secretary General António Guterres said on Tuesday. "Targets must be reached through real emissions cuts.”

Some fear the ETA is a way for the US government to avoid funding loss and damage in lower-income nations. "Climate finance is an obligation, a moral and legal obligation,” Dipti Bhatnagar, Climate Justice and Energy Program coordinator for Friends of the Earth International, told the Washington Post. "It’s not optional. It’s not something the US can just get private companies to pay.” Kerry disagrees: "No government has the trillions needed for this transition, we need all hands on deck.”

The ETA’s architects -- which include the State Department, the Rockefeller Foundation, Bezos Earth Fund, PepsiCo, and Microsoft -- argue this proposal is one important leg in an overall roadmap, given how hard it has been to spur global cooperation on decarbonization.

Further, the Washington Post reports:

Leaders of the coalition say there will be safeguards -- including preventing fossil fuel companies from participating in the trading -- and they argue the benefits could be substantial. If the group could eliminate 2.3 billion tons of greenhouse gas emissions, it would be about the equivalent of the annual output of India, according to Climate Advisers.

World Economic Forum: COP27 | John Kerry | We need the deeply capable capacity of the private sector, November 8, 2022.

World Economic Forum: COP27 | John F. Kerry | There’s advantages to being a pioneer, November 8, 2022.

Wall Street Journal: John Kerry Interview | Governments, Private Sector Must Collaborate on Climate, April 21, 2021.