Look again at that dot. That’s here. That’s home. That’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilization, every king and peasant, every young couple in love, every mother and father, hopeful child, inventor and explorer, every teacher of morals, every corrupt politician, every “superstar,” every “supreme leader,” every saint and sinner in the history of our species lived there–on a mote of dust suspended in a sunbeam.

The Earth is a very small stage in a vast cosmic arena. Think of the rivers of blood spilled by all those generals and emperors so that, in glory and triumph, they could become the momentary masters of a fraction of a dot. Think of the endless cruelties visited by the inhabitants of one corner of this pixel on the scarcely distinguishable inhabitants of some other corner, how frequent their misunderstandings, how eager they are to kill one another, how fervent their hatreds.

Our posturings, our imagined self-importance, the delusion that we have some privileged position in the Universe, are challenged by this point of pale light. Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity, in all this vastness, there is no hint that help will come from elsewhere to save us from ourselves.

The Earth is the only world known so far to harbor life. There is nowhere else, at least in the near future, to which our species could migrate. Visit, yes. Settle, not yet. Like it or not, for the moment the Earth is where we make our stand.

It has been said that astronomy is a humbling and character-building experience. There is perhaps no better demonstration of the folly of human conceits than this distant image of our tiny world. To me, it underscores our responsibility to deal more kindly with one another, and to preserve and cherish the pale blue dot, the only home we’ve ever known.

— Carl Sagan, Pale Blue Dot, 1994

This excerpt alone has moved mountains to reframe perspectives for generations to come. I refer back to it often and in college, my friend and I referred to ourselves jokingly as Saganists. One can find a lifetime of inspiration from half a sentence. For me, it was this.

What gets me excited today is the Inflation Reduction Act, which just passed through the House after approval by the Senate last week; a climate investment with no parallel in US history.

No goal is more important than responding to climate change today.

This comes at a time when doom and gloom headlines are a daily occurrence. This week alone we learned about the “’extreme heat belt’ in the US by 2053” and California’s megaflood. On top of that, America was watching as this one little man from West Virginia with coal in his pocket tries to haggle with congress over our future. When Manchin finally got out of the way and the IRA passed it was a huge sigh of relief. But it’s just the beginning…for America. What is truly needed is global collaboration on this one goal.

“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower.” 

Joe Manchin

One interesting caveat was the intense political sprint to get this over the line, even Bill Gates stepped in to lobby Manchin. The economists were able to “send this signal that the bill’s going to help with the deficit,” O’Mara said. “It’s going to be slightly deflationary and it’s going to spur growth and investment in all these areas.” Through this subtle alchemy, clean-energy investments could be reframed for Manchin as a hedge against future spikes in oil and gas prices and a way to potentially export more energy to Europe. The framing of the bill to Manchin follows the same logic of why successful policies for reducing emissions tend to avoid the word “climate.”

With President Donald Trump in the White House, there was little prospect the dinner would turn into sweeping policy. Still, the evening was organized around a very Bill Gates theme: “The role of innovation in climate,” he recalled of the discussion. “How the US was really the only country, given how quickly this needs to get done, that has that innovation power in our universities, our national labs, our risk-taking ability.”

What does it all mean for you?

It’s a summer morning somewhere in the US in the year 2030. You get out of bed and boil water for coffee on the induction stovetop before checking the news. More than half of new cars sold in the US now are EVs. Rates of childhood asthma are down, as researchers had been predicting. Coffee in hand, you step outside and unplug your car, then drive to the solar farm where you’re a technician. Down by the slowly-rising shoreline, you pass the natural gas power plant that closed a couple of years ago. What are they going to do with it? Supposedly the area around there is a lot nicer than it used to be, with a big wetland park…

This portrait of life in 2030 would have seemed like the hopeless dream of a climate optimist just a few weeks ago. Today it’s at least a little more plausible.

Consumers directly stand to benefit and may qualify for up to $10,000 — or more — in tax breaks and rebates.

Here are some realistic and tangible examples of how the average person may be affected:

• Improved air quality starts at home
  • tangible health benefits like lower rates of respiratory illness as a likely outcome of the IRA by 2030. The law provides generous rebates for homeowners to switch from gas to induction cooktops, which would cut harmful indoor pollutants. The house of the future will be fully electric with heat pumps for water and space heating.
• Healthier neighborhoods delivered by truck
  • the electrification of highly polluting heavy trucks that service ports and sprawling logistics centers that are typically located in low-income communities of color.
• More transparent supply chains
  • The IRA includes a two-part, $7,500 credit for clean vehicles. Cars qualify for half of it if key battery materials are mined in a country that the US has a free-trade agreement with or if they’ve been recycled in a North American facility. They qualify for the second half if the battery is largely assembled in North America. These provisions will incentivize carmakers to show the proof of where their critical minerals and production happened. 
• Cities that reach 100% electrification
  • Electrification won’t just happen at the level of the individual home or neighborhood. It will occur at the urban scale, with a boost from the new legislation. There’s something like 20 to 50 million American buildings that haven’t had energy upgrades in like 40 years. This bill is just going to let them leapfrog over natural gas, coal and oil to clean electricity.
• Slower-rising seas…
  • emissions-cutting actions enabled by the IRA may result in a slowdown in sea-level rise. That could end up delivering a lifeline to vulnerable coastal communities. The law provides $2.6 billion for coastal resilience. Communities of color and lower resource communities are the ones that are at greatest risk from sea-level rise from increasing storms that are coming from climate change.
• …but continued rising temperatures
  • the rise in global average temperatures already hovers at 1.2°C above the pre-industrial era, and there’s little doubt that Americans in 2030 will be experiencing even higher temperatures. 
• An entrenched green economy
  • With incentives to build renewable energy, make agriculture more efficient, promote EVs, capture carbon and much else, the IRA should bring many more Americans into the clean energy economy by the end of the decade. Because of that, emissions-intensive industries will become less and less desirable or feasible. Leah Stokes, a political science professor at the University of California at Santa Barbara, predicts that the legion of employees whose livelihoods come from clean-tech sectors kickstarted by the climate bill will create a viable political constituency by 2030. “When we have big manufacturers employing people in every state and district in this country in clean energy, that’s going to be the powerhouse when it comes to our energy policy from the federal government,” says Stokes, who is also an advisor for the lobbying group Evergreen Action. “It’s a total game changer.”
• Next-generation climate politics
  • The bill gets the US sufficiently down the road politically, by cutting emissions so that better government policy can follow later this decade. There is legitimate concern that communities that were impacted by polluted land and left behind by the fossil fuel economy are not getting sufficient investment in this bill to benefit from a cleaner economy.
• Why clean-tech VCs are excited
  • $25b in support of carbon-light agriculture and forestry. These credits are among the new tax incentives that could spur private-sector advances. Read more about what tech investors are anticipating in the climate bill.
• The 1.5°C warming goal is still alive
  • The US now is on the brink of reviving a long-shot global hope: to limit warming temperatures to 1.5° Celsius (2.7° Fahrenheit). The 1.5°C limit was enshrined into the Paris Agreement in 2015 as a shared goal of world governments. It’s a crucial threshold beyond which heat waves, rain, drought, flooding and sea-level rise become increasingly intolerable. But it’s a goal that has become seriously imperiled over the past seven years — in no small part due to the limited efforts of the US, one of the largest single sources of greenhouse gas.
  • Pollution reductions the bill helps make possible — a roughly 40% drop in emissions by the decade’s end, represent a substantial individual contribution to the global effort. It equals as much as a gigaton, or one billion tons, of annual carbon dioxide emissions avoided by 2030. That’s the equivalent of France and Germany’s combined annual emissions.
  • Another way of putting it: 2.5% of current global emissions, just by one country and one law.
• Jumpstarting green consumers
  • the consumer economy is about to be supercharged with tax incentives and rebates for things like electric cars, heat pumps and solar panels.
• Exposing a risky methane ‘loophole’ 
  • Range Resources claims to have one of the cleanest natural-gas operations in the US. Year after year, the western Pennsylvania shale pioneer reports a lower emissions rate for methane than virtually all its peers. The new climate legislation is meant to push more companies to be like Range. The bill would impose a first-of-its-kind fee on releases of the potent greenhouse gas from energy infrastructure. It’s one of the only noteworthy sticks in climate-and-energy legislation that focuses on carrots. 
  • But an examination of Environmental Protection Agency data reveals one of the pitfalls of that approach: companies have broad leeway to decide how much pollution they report, based on how they interpret more than 100 pages of complex agency rules.
  • An unorthodox reading of a single word in the EPA regulations allowed Range to slash its reported emissions from energy production by 93% in 2020 compared with the approach used by most oil and gas companies. That’s enough to move the company from the bottom of its peer rankings to the top. The EPA says this interpretation isn’t valid, although Range insists that it is.

Another inspiring book is Alex McKay’s Story from 2050, The World We Made. Alex paints a utopian green world future as written in 2050 and discusses in detail the steps we took in the early 2000s to get there. We are behind Alex’s pace but a lot of what was described in the book is slowly becoming a reality.

This is a good thing, right? Mostly yes.

While this bill has a lot of climate provisions, is also has Oil and Gas provisions. Nonetheless, it is something at a time when it seemed like the US government was still run by oil and coal.

The core idea of the IRA is pairing a series of tax credits for renewable energy, battery storage and so on with approvals for fossil fuel infrastructure, and mandatory auctioning of oil and gas drilling leases on federal lands. Now at one level, this is merely what they needed to agree to to get Senator Manchin on board. Or more accurately, this is what Manchin proposed, and what Democratic party leadership agreed to more or less sign on the dotted line.

There are some notable gaps: minimal or no support for certain types of carbon capture and efforts to strip carbon from huge industrial production of concrete, steel or fertilizer. Josh Felser, a co-founder of the early stage investment firm Climactic, was enthused about the bill’s passage but flagged the shortage of support for addressing the water crisis. “On the West Coast, there is no future that doesn’t involve desalination,” he says, referring to facilities that can remove salts and minerals from seawater to make it drinkable or useful to farmers.

Other examples include provisions that will open up new federal land to oil & gas drilling, other major oil & gas infrastructure projects that will get the go-ahead because of the bill, and investments in technologies with a questionable decarbonization track record, like CCUS.

At another level though, this bill represents some intellectual shifts on climate change in Washington DC. Over a decade ago, climate change policy was defined by proposals to “price carbon”, and more general restrictions on fossil fuel development. IRA focuses on transformative spending tax credits rather than schemes to “put a price on carbon”. However, it also goes beyond that. Rather than simply “not pricing carbon” or directly restricting fossil fuel development, it ties these spending projects to supporting fossil fuel projects.

Climate bill will help ‘prime the pump’ for startup growth

For all intents and purposes, the government just de-risked the renewable sector for investors who are risk averse to research-intensive industries. 

VCs will now treat climate tech like traditional VC which means 2 things: speed and scale.

The bill’s credits and incentives will drive down the cost of renewable energy, electric cars and other consumer purchases, such as HVAC systems and home weatherization.

Renewable sector may finally be attractive to traditional VCs.

“We bet on founders building a better future with tech that’s faster, cooler, and cheaper — not on politicians writing better policy. But, $370 billion for climate is a BFD that multiplies the value, and speeds up the deployment, of just about everything we invest in.” 

Mia Diawara, a partner at Lowercarbon Capital

One gift in the bill is the extension of the time horizon for renewable tax credits. To date, Congress has had to renew these credits every few years in a process that’s “traumatic and awful” for funding and construction cycles

It’s possible financiers will flood into areas that the government neglected. But likely not. Many of these technologies require massive funding simply for basic research, let alone marketable services. Venture capital wants to follow the subsidies. What is covered by subsidies will get funded, what is not won’t. The biggest opportunity and potential challenge is to focus where those are not looking because of perceived risk.

There will be clusters of innovation

As funding is deployed to help develop and accelerate climate change technologies, concentrated clusters of innovation will form, much like Silicon Valley saw for tech. There are a number of characteristics that new climate clusters will need to have, or at least be in proximity to: 

• Deep and broad capital markets, from early-stage venture to pensions and sovereign wealth funds
• Business-friendly environments, willing to facilitate manufacturing and deployment
• A constructive legal and regulatory environment for starting companies and protecting intellectual propertyAmple human capital, including with technology-specific engineering and programming skills 
• World-class research capabilities in the form of universities, national labs and corporate consortia 

There aren’t a lot of surprises in that list, so it’s worth adding some desirable climate-specific elements. These include: 

• Favorable geology for long-term storage of carbon dioxide 
• Ample land — this could be either high-value agricultural land for feedstocks or paradoxically, degraded land with little economic value outside of hosting manufacturing or energy production
• Favorable trade conditions for importing/exporting products 
• Biomass, crops or other available feedstocks for making new net-zero-carbon materials 
• Significant markets for selling clean power or green hydrogen

Climate’s new industrial clusters will both attract talent and test the limits of remote work. A startup can push code from anywhere, but you cannot build a reactor vessel or liquefy carbon dioxide remotely. That expertise is physical, collaborative and iterative, and will require teams to work together for long periods of time. I hope that tomorrow’s climate clusters will embody the best of today’s virtual working practices, while integrating the vast human capital that knows how to build and deploy in physical space. 

How the US and China are at odds as a result of the new bill

In the same week as the major IRA climate policy win, China suspended climate talks with the US after Nancy Pelosi’s visit to Taiwan.

Why? The IRA now positions issues of climate security as economic and national security, and puts $370b to use so the US can play catch-up on clean manufacturing – where China is miles ahead. China owns 79% of the global lithium ion battery capacity versus the US’s <6% of battery manufacturing capacity.

The IRA’s “Made In America” push manifests in the form of the new EV tax credits – which require vehicles to be built with North American minerals. By 2024, EV makers must source >40% of their battery materials from the US or trade-aligned countries in order to access half of the credit, ramping up to 80% sourcing in 2026. Vehicles with minerals from a “foreign entity of concern” (China) sacrifice qualification for any of the tax credit.

This month’s biggest climate milestones happened over one weekend. On Sunday, the US Senate approved hundreds of billions of dollars in climate and clean-energy spending. Just two days before, climate cooperation between the US and China — the world’s largest economies and emitters — came to an abrupt halt. How these two turning points shake out will determine the fate of global climate goals. The end of climate cooperation between Beijing and Washington came Friday when, in response to House Speaker Nancy Pelosi’s visit to Taiwan, China suspended climate talks. The move wrecks a dialogue that was pivotal in securing the 2015 Paris Agreement and, more recently, yielded diplomatic momentum on curbing methane at last year’s COP26 climate summit.  To longtime observers of China-US relations on climate, there’s real cause for alarm. “The signal China is sending is clearly that a geopolitical red line has been crossed,” said Li Shuo, a climate analyst at Greenpeace East Asia. China’s willingness to work with the US on climate had previously managed to survive a trade war. “We know that when major countries, in particular, cannot get along with each other then that’s certainly bad news for the climate agenda,” Then on Sunday, after more than five decades of knowing something had to be done about the “carbon dioxide problem,” the US Senate for the first time passed a major climate bill. If passed into law, as expected in the days ahead, this legislation will drastically increase clean-technology deployment and move the US closer to meeting its Paris commitment. 

It will also, over time, reduce American reliance on China’s immense supply chain for minerals and components that go into everything from electric cars to solar panels. Large parts of the $370 billion spending package are aimed at supporting green industries at home — or in countries more closely allied with US interests than China.

Taken together, these two events could mark a shifting away from climate cooperation. For Li, that’s ominous. Without China-US cooperation, after all, there would be no Paris Agreement. “The soil in climate governance is multilateralism,” he said. “I don’t think without that soil we will be able to solve climate change.”

But a transition to climate competition between the US and China might not hold back progress. For some time now, China hawks have been making the case that, rather than work with China on climate, the US and other developed countries should compete — on everything from better EV batteries to more affordable solar panels.

“In Chinese foreign policy, climate change does not hold the same environmental and moral importance that it does for many American policymakers,” wrote Andrew Erickson and Gabriel Collins in Foreign Affairs last year. “Negotiating proactively with China cannot curtail climate change; Beijing would impose unacceptable costs while failing to deliver on its end of any bargain.

According to Erickson and Collins, the Communist Party’s pact with its citizens is that, in exchange for growth and stability, they have to bear curtailed liberties and one-party rule. That means China’s foremost priority will be to maintain economic growth, which may include green technologies. That’s different from a serious commitment to decarbonizing. While government spending has made China the largest producer of solar panels, wind turbines, batteries and electric cars, it’s also made China the largest consumer of coal and largest producer of carbon-intensive steel and cement.

“China does a very good job of creating a picture that it is serious about acting on climate change,” said Taiya Smith, a senior associate focused on US-China relations and geopolitical risk at the environmental think tank E3G. “That’s very different from the work they are actually doing on climate change.”

From Smith’s point of view, the US-China conversations initiated at COP26 in Glasgow haven’t produced much tangible results. In its joint statement at the UN summit in November 2021, for example, China committed to come up with a comprehensive plan to cut methane emissions after meetings with US counterparts in the first half of this year. Nothing has come of that process, Smith said.

She sees global climate diplomacy entering a new era. While it was crucial to get countries to agree to a voluntary framework back in 2015, when the Paris Agreement was signed, last year’s global climate summit in Glasgow shows that multilateralism is reaching its limits. The last-minute intervention from US, China and India to water down language around coal use nakedly showed how big economies wield their power in global pacts.

“Now,” Smith said, “we’re all trying to figure out how to help the world continue down the energy transition” at the pace we need. The most effective answers won’t always come from global frameworks.

With the passage of the Inflation Reduction Act, the US will inject nearly $370 billion in government spending over the next decade aimed at tackling emissions. That changes the status quo. One of the largest emitters will no longer be paying lip service to climate urgency on a global stage; instead the US is actually doing something to curb its emissions by as much as 40%. 

“It is difficult for China to stay aligned with the US,” Smith said, “especially if the US is starting to move.”

Up to now, China had moved far faster in terms of support for the energy transition. In 2021 alone, BloombergNEF found that China spent nearly $300 billion on the energy transition compared to $120 billion from the US. The Senate climate legislation, if passed into law, will no doubt boost private investments in the US. But it will take years to begin to match the capacity China has built over the past decade — and playing catch up is, of course, a kind of competition.

“Having the US and China feel like they’re competing to do more on climate change in order to write the new global order is the strongest position the world could be in,” said Smith.

China may continue down the green path all in self interest. The country is among the most vulnerable to climate impacts, and an unstable climate would not make a stable country that the CCP has promised citizens.

And its split away from the US on climate may be for more reasons than the Taiwan stand off. The major theme at the next UN climate summit, to be held this fall in Egypt, will be to hold developed countries to their promises of climate finance for developing countries. That will likely be a moment for China to position itself as a champion of poorer nations. 

The next three months before countries meet in Sharm El-Sheikh for COP27 will show whether the era of cooperation has given way to competition. What we can be more sure about than ever before is that, even as the world tackles energy, food, and inflation crises or war, climate will likely feature high on the global agenda with or without a looming COP meeting.

“As long as we hold out this theory that climate change is something distinct from the rest of the diplomatic relationship, then we fail to actually understand what it is. Climate change is everything that we do. Acting on it will require fully restructuring the global economy. It’s going to force all of us to have a new way of life.”

Taiya Smith, Senior associate focused on US-China relations and geopolitical risk at the environmental think tank E3G

Now is a great time to revisit the Pale Blue Dot excerpt. Earth is the ultimate score keeper of the US vs China competitive climate game. The better we can find ways to work together, the better off we all will be.

Competition between two global superpowers with opposing deployment and innovation offensive strategies should lead to one certain winner: rapid global decarbonization.

Our green future is far from guaranteed

In addition to the China game we are playing, not a single republican voted for this bill. If republicans take control of congress in the mid-terms or the White House in 2024, they could weaken or roll back democratic policy on climate. We saw that happen in the Trump administration to climate policies from the Obama administration. 

Even if you aren’t particularly interested in climate change as a topic, this big brewing fight not only on the global scale, but at home at the state and local level will potentially reshape the U.S. economy. The aftermath of the IRA will significantly change the finances of large segments of the private sector and public sector. You may not be interested in climate policy, but climate policy is interested in you.