Climate change is high on President Joe Biden’s agenda. Last week, on his first day in office, the United States rejoined the Paris climate accord. Reuters reports he’s expected to announce a climate order that will introduce new regulations and make climate change a national security priority.
And Biden has tied economic recovery to climate investment — new jobs, new infrastructure and new funding. I spoke with Jay Koh, managing director of the private equity firm Lightsmith Group, which is focused on climate adaptation technology. The following is an edited transcript of our conversation.
Jay Koh: You’re going to have to rebuild the economy for some kind of future. So let’s say we did a big infrastructure package, which I think [U.S. transportation secretary nominee Pete] Buttigieg was talking about, are we going to build bridges for the sea levels and river levels that we have today, or the ones that we think are likely to be around 10, 20 or 50 years from now? And I would suggest the latter is a better idea than the former, including many of the components that we saw, really, in stark contrast last year, like how does this impact different types of communities? Where’s the equity and justice implications for the kind of future that we’re building, both from an environmental-implications standpoint, and then more broadly speaking, in a diversity and inclusion universe as well as different distributions of how that impact has occurred economically?
Molly Wood: There’s a big conference on climate adaptation starting this week, which is virtual. But I wonder what role is the U.S. expected to play in that?
Koh: I think it’s expected to play a major role over the course of the entire year and beyond. There is a lot of attention being focused on what it means for the U.S. to be back in a leadership position, not just re-signing onto the Paris Agreement, but taking a real leadership position in terms of reductions in greenhouse gas emissions — where our net-zero targeting is really going to go and what we’re going to do to do that. But also, I think a real opportunity to seize a leadership position around adaptation and climate resilience.
Wood: What is your sense of how big a role resilience is slated to play? Are there any official announcements on that front?
Koh: Well, I’d say that there are probably three pieces of that puzzle. Two of those pieces seem very positive. The big macro of having climate be an incredibly important, clear priority of the U.S. government now, again, is I think well expressed in the fact that’s the third thing that President Biden signed — you know, getting back into the Paris Agreement. And the fact that this has been an integrated approach where you don’t just see climate off on an island by itself, but folks with climate experience, like Janet Yellen going to the Treasury and talking about climate change, Pete Buttigieg talking about it in the context of infrastructure. People being put in place in the [Office of Management and Budget] and National Security Council, the National Economic Council and so on. So this will be an integrated approach, not just at the macro level, but at the personnel level. Now, the last piece of that is, what actually happens, where’s the programming? Where’s the actual activity? What’s the details of the policy? And we’re going to see that unfold going forward. But indications, at least from the outside, even just in the last couple of days since the beginning of the new administration, are very strong, and we’ve gotten a bunch of happy inbound emails from friends across the Atlantic welcoming us back to the community of nations.
Wood: Do these moves create a more optimistic investment environment? Do you think people are going to feel more comfortable now putting their money toward climate technologies?
Koh: I think so, yes. In two ways. The first is, I think it’s become very clear that at the policy level, increasing numbers of governments, investors and companies are really making commitments to go to net zero. The other piece of it is, I think there’s now an increased recognition intertwined with the COVID-19 experience that there are real global challenges out there, and some of which are not visible before they happen, then become incredibly impactful. So I think that recognition and the signaling of new commitments at the corporate level, at the government level, at the investor level, create a much better environment for entrepreneurs and innovators and investors to kind of begin to deploy capital.
Related links: More insight from Molly Wood
A statement released Friday by the Global Center on Adaptation, which is sponsoring that summit I mentioned, called for a dramatic increase in adaptation funding to protect people and other species from climate change. It was signed by more than 3,000 scientists.
And former U.N. Secretary-General Ban Ki-moon, the chair of the center, called for economic recovery packages from countries around the globe to include investments in mitigation technologies to slow warming and climate adaptation to build resilience to extreme weather, agricultural disruption and drought. Ban said future centuries could be defined by how green the global pandemic recovery is. But the center noted that by a margin of 4 to 1, governments were passing stimulus measures that supported fossil fuels and carbon-intensive industries.