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Davos delivers on private sector commitment to decarbonize

As climate setbacks emerge globally, the Davos First Mover Coalition brings hope for a greener future

By Andrea ZanonPublished 2 years ago 3 min read
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Davos delivers on private sector commitment to decarbonize
Photo by Christoph Theisinger on Unsplash

The November 2021 Climate Summit (COP26) in Glasgow consolidated the momentum toward a transition to green growth and a decarbonized economy. Unsurprisingly, this involved a more robust partnership with the private sector to invest in clean tech and clean energy. One of the key milestones of the COP26, was the United States launch of the First Movers Coalition (FMC). This is a platform for companies and governments to commit to purchase green products and services (such as green hydrogen, green steel, and green cement) and thus jump-start the creation of markets for innovative clean energy technologies that are key for tackling the climate crisis.

Fast forward to the May 25, 2022 World Economic Forum (WEC), and the leaders meeting at Davos made the announcement of an expansion of the First Movers Coalition partnership. Bill Gates and U.S. climate Envoy John Kerry have become the leaders of the program, with the WEF playing an important brokering role. The idea is to get companies to commit in advance to buying set quantities of green coal, green steel, green hydrogen, green cement, green aluminum, and carbon removal so that companies, corporations, and capital markets have the confidence to invest now to meet that future demand.

The FMC aims to decarbonize certain “hard to abate” industrial sectors that currently account for over 30 per cent of global emissions: aluminum, aviation, chemicals, concrete, shipping, steel, and trucking, along with innovative carbon removal technologies. The International Energy Agency (IEA) made it clear that it would be tough to keep the 1.5 degrees Celsius target alive if we don’t tackle emission from these carbon intensive sectors.

The FMC is a partnership of 55 Members from top global corporations, international organizations, and governments. Each of the FMC members has made ambitious commitments to purchase green product from at least one sector. Apple, Microsoft, Boeing, Salesforce, Ford, Swiss Re, and Ball Corporation are some of the partners. The 50 corporations have a market cap of more than $8.5 trillion and would play a major role to commercialize emerging clean technologies. India, Italy, Japan, Norway, Singapore, Sweden, and the UK Joined the US as FMC government partners to help create the future markets for sustainable and greener technologies.

These identified clean technologies have a successful track record but need to be made cost effective to rapidly reach the scale needed to play a serious role in reducing the global economy carbon intensity.

The market signal

Having the FMC send a clear market “demand signal” that there is an economic prize waiting for those who act should unlock needed financing.

Investment trends in clean start up continue to be strong. According to PricewaterhouseCoopers (PWC), between October 2020 and October 2021 more than $85.7 billion was invested in climate tech. Investment reached a record of $60 billion in the first half of 2021. This represents a 210 per cent increase year on year.

Of the 78 climate tech unicorns that now exist (start-ups valued at more than $1 billion), the majority (43) are in the Mobility & Transport sector. The remainder are split between Food, Agriculture (13) Industry, Manufacturing and Resource Use (10) and Energy (9). To break this down further, two-thirds of the funding between October 2020 and September 2021 ($58 billion) was invested into Mobility & Transport, with more than a half going into electric and low greenhouse gas emissions vehicles. At the global level, there are more than 3,000 climate tech start-ups, and investment in clean tech represents 15 cents of every venture capital dollar.

Even as politicians vote against sound climate policies, chase new oil resources, coal and gas deals, and step back from policies such as Europe’s Green Deal, the FMC represents a bold move in the difficult moment climate policy is living. The private sector can create the market to shift the attention towards greener decisions. Let’s hope that the Davos Economic Forum can push the markets and the policy forward, to positively impact the way we live and do business.

Sustainability
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About the Creator

Andrea Zanon

Andrea Zanon is an international sustainable development and empowerment specialist who has dedicated his life to reducing poverty, promoting sustainability and empowering ambitious people

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