Jainey Bavishi, Assistant Secretary of Commerce for Oceans and Atmosphere and Deputy Administrator, National Oceanic and Atmospheric Administration, Carla Peterman, Chief Sustainability Officer, PG&E, Sanjay Wagle, Co-founder and Managing Director, The Lightsmith Group Moderator: Molly Wood, Founder and CEO, Molly Wood Media; Co-chair, Fortune Impact Initiative
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00:00I feel like we should probably open
00:02by taking a tiny bit of issue
00:03with the title of the session that we're on right now,
00:06which I'll take responsibility for.
00:09I think we're seeing this week, right?
00:12We're seeing at this exact moment in real time
00:14that climate proofing is not a promise
00:17that anybody can make.
00:18We are also seeing in real time over these last weeks,
00:22just in the United States,
00:24that adaptation and resilience is no longer optional.
00:28It has, however, been a very small part of the conversation
00:31and more importantly,
00:32a very small part of the funding environment.
00:35So let's start by kind of trying to quantify
00:39what's been missing.
00:41And Sanjay, I'm gonna start with you.
00:42I know you've done some research on this.
00:44Yeah, sure.
00:45So the background is I've spent the last 20 years
00:48focused on investing in renewable energy
00:51and clean technologies.
00:52And about five years ago,
00:53shifted to investing in climate adaptation.
00:56And I was prompted by realization
00:59that climate adaptation is a now thing,
01:02not a future thing.
01:03I think it's apparent to everyone now
01:05that the impacts of climate change
01:07are playing out all around us all the time,
01:09disrupting every sector,
01:11whether it's disrupting shipping on the Rhine River
01:14or through the Panama Canal from droughts
01:16or worsening storms and wildfires,
01:19disrupting electric utilities.
01:21Everything's getting disrupted.
01:23But the realization was also that
01:26there's a lot of spending happening now,
01:28whether they call it climate adaptation or not,
01:30businesses, communities are already spending,
01:33by our count,
01:33tens of billions of dollars in the US alone every year
01:37dealing with these disruptions.
01:38And they may not call it climate adaptation.
01:40The challenge is to find smart ways to adapt
01:44that go beyond just minimizing the damage,
01:46but actually delivering real value to customers,
01:49perhaps even growing revenues.
01:51And so that's what we look for.
01:53What are the solutions?
01:54And we found companies in about 20 different areas
01:56of technology that have solutions
01:59for the disruptions affecting different sectors.
02:02It totaled about $300 billion of spending,
02:05and that's growing a lot faster than the base spending
02:08because that's just driven by physics,
02:10by the disruptions coming from climate change.
02:14Carla, I feel like adaptation and resilience
02:15must be a hugely reactive part of your business.
02:19And I wonder if it has become increasingly proactive.
02:22How are you approaching that?
02:24Is it a separate line item and planning mechanism for you?
02:29Yeah, so as Molly mentioned,
02:30I'm with Pacific Gas and Electric,
02:32and we serve electricity and gas to one in 20 Americans.
02:35And we've been impacted by climate change.
02:38And so for years, we've been working on
02:40investing in clean infrastructure
02:41to help mitigate climate change,
02:43but now we're also having to adapt.
02:45And as wildfire was mentioned,
02:47wildfire has been an acute climate threat
02:50that we've experienced.
02:51And what we've been able to see
02:52is that through a series of measures,
02:54we've reduced wildfire risk by 94% in our system.
02:58However, there is so much climate threat
03:01that we need to be making investments
03:03that not only address one aspect of climate change,
03:05but multiple ones.
03:07And the more time you have to plan, the better.
03:09So to address our wildfire risk, for example,
03:12we really leaned into tree trimming, vegetation management,
03:15but you have to do that every year.
03:17So we made a commitment a couple years ago
03:19to underground the power lines
03:21in our highest wildfire risk areas,
03:24because not only does that address wildfire risk,
03:26but it also addresses reliability.
03:28So getting more bang for your buck
03:30will allow you to address the immediate issues,
03:31but also really plan for long-term resilience.
03:35And then Janie, how do you think about this
03:37as you incorporate this into your work at NOAA
03:40and the department at large?
03:42Yeah, sure.
03:43So I help to run the agency whose airplanes,
03:47Hurricane Hunter airplanes are currently flying into Milton
03:50to help forecast that storm.
03:52By the way, we did the same thing for Helene,
03:54and the forecast was exactly right,
03:56but we still saw the devastating images
03:58of the destruction in Western North Carolina,
04:01as well as the loss of 200 lives, probably even more.
04:05What does this tell us?
04:06Asheville was previously known as a climate safe haven,
04:09but now we know everywhere it rains, it can also flood.
04:14And we need to take a very different approach
04:16to thinking about how we prepare for these impacts.
04:20I'm gonna invoke Sanjay's partner here,
04:23but at the beginning of the summer,
04:25we didn't know what was gonna happen
04:26with the presidential election.
04:27We didn't know what was gonna happen with inflation rates.
04:29We didn't know how many gold medals
04:31Simone Biles was gonna win,
04:32but NOAA predicted that it was gonna be
04:35an incredibly hot summer,
04:36and NOAA also predicted that it was gonna be
04:38an incredibly active hurricane season,
04:40and both of those things have been true.
04:42So we often talk about uncertainty
04:44when it comes to adaptation,
04:46but there is actually more certainty here
04:47than there is uncertainty, and it's just time to act.
04:50Yeah, let's dig into that a little bit.
04:52Sanjay, your organization produced some research,
04:55some attempts to quantify the investment opportunity
04:59in a paper called The Unavoidable Opportunity,
05:01pointing to this kind of certainty.
05:02Talk about that a little bit.
05:03Yeah, and The Unavoidable Opportunity
05:06was the idea that adaptation
05:07is something we will have to do.
05:10And just stepping back to Janie's point,
05:13as an investor or as business executives,
05:16there's really very few things we know
05:17for certain about the future.
05:19But we know that the earth will be
05:22at least as warm as it is today,
05:24and we'll have at least as many severe disruptions
05:28to different sectors as we're having today, probably more.
05:31The Unavoidable Opportunity paper was based on
05:34the IPCC's fifth assessment report,
05:36showing that no matter how aggressive
05:38our decarbonization pathway is over the next 15 years,
05:41we should expect just about the same level of warming,
05:45meaning that level of warming is pretty much locked in
05:48no matter what we do.
05:49And we're going to have to adapt to that warmer world.
05:53And so it goes on to outline what the opportunities are
05:57for addressing that in smart ways
05:58and the opportunities for investing.
06:00Give us some examples, if you would.
06:02Yeah, so we were talking about this in the green room,
06:05that everything is getting disrupted
06:06and everything is going to need solutions.
06:08And so our latest investment was actually
06:10in healthcare in Brazil,
06:12because climate change is causing
06:15booming mosquito populations throughout Latin America,
06:17warmer winters, more standing water.
06:20And there's now 10 million cases of dengue fever
06:23so far this year in Brazil,
06:25compared to a few hundred thousand in a typical year.
06:28It's a real crisis.
06:29And it's not just dengue fever, it's Zika, it's malaria,
06:33it's other mosquito-borne diseases and waterborne illnesses.
06:37And so we invested in a at-home health services company
06:42that does vaccinations and lab tests at the home.
06:46And their business is booming.
06:47They were already growing 40% a year.
06:50They're now growing even faster
06:51because there's a shortage of not enough people in Brazil
06:55are vaccinated for dengue fever.
06:57And this is one of the ways to increase the capacity
06:59of the health sector to deal
07:01with yet another climate disruption.
07:04We could spend a little time at the end of the panel
07:06probably talking about the future that we all imagine.
07:08The more time you spend, I think,
07:10studying the IPCC reports, it's not hidden information.
07:15The more you start to realize how different
07:17the future we may live in is going to look.
07:20Carla, on that note though, I wanna ask you,
07:22how do you plan for the disruptions
07:25that we are certain climate change is going to bring
07:28on top of the increased need for electricity
07:32as a result of AI and data centers,
07:34the increased need to electrify everything?
07:36It's like you're having to adapt
07:38to lots of things all at once.
07:42Well, I think the good news is when we look
07:44at what the energy system needs to look like
07:45to address dangerous climate change,
07:47it's actually just a better, cheaper system for customers.
07:50It is cleaner, cleaner in terms of air quality.
07:53It's lower cost because electricity
07:55as a dominant fuel is a more efficient fuel.
07:58It's lower cost, but we just have to get there.
08:00We have to get to 2040.
08:01And so as we think about that,
08:03we think about what are some of the early milestones.
08:05And for us, we're really focused on electric transportation
08:09because we see the opportunity for not only
08:11decarbonizing the transportation sector,
08:13which is challenging, but also that those EVs
08:16can provide a grid resource.
08:18As we're focused on having a really good grid
08:20and having reliable power, those vehicles can provide power
08:23to the grid, be really mobile batteries
08:25at times they're not been driven.
08:27And so about a month ago, we were able to support
08:30the city of Oakland in electrifying its school bus fleet.
08:33It's the first fully electric school bus fleet
08:35in the nation and over 70 vehicles.
08:38And these vehicles are not only electric,
08:39but they're bi-directional.
08:41So they're able to plug into the grid
08:43and provide power to our system at times of day
08:46when the power is needed and the sun is plentiful.
08:49And so we're doing this also in a community
08:51that can benefit from the air quality benefits
08:54and in one of our communities,
08:55which is historically disadvantaged.
08:57And so finding those opportunities
08:59that really also are proof points
09:01in making the system more affordable and accessible
09:03to some of our lower served populations is really key.
09:06We are gonna geek out later
09:07about decentralizing power generation in this whole,
09:09I'm calling it bring your own power and it's my obsession
09:13and I will stay off of it for the moment.
09:16Janie, anytime anyone says bi-directional charging,
09:19I just get like way too excited.
09:23Janie, I think there's probably a tendency
09:26when people hear NOAA and they think about adaptation
09:28and resilience, they just think seawalls.
09:30And I know that it is so much more than that.
09:33Talk about the investments that the agency is making
09:36and also just thinking about this in a much different way
09:39from sort of moment to moment protection, if you will.
09:43Yeah, absolutely.
09:43So before I came to NOAA,
09:46I was actually the chief resilience officer
09:47for New York City and we would beat ourselves over the head
09:50trying to figure out how to attract private sector investment
09:53into the seawalls we were building.
09:54And I think we were asking the wrong question, right?
09:56I think that it's about strategically finding opportunities
09:59to bring different capacities together
10:02and really leverage each other's investments.
10:03So some of the investments we're making right now
10:05with Inflation Reduction Act
10:06and bipartisan infrastructure law dollars
10:08are things like $10 million into
10:11a climate-ready workforce program
10:13because we're trying to understand
10:14what resilience jobs actually look like
10:16and share that learning widely.
10:19$60 million into ocean-based accelerators
10:22so that we can help entrepreneurs and small businesses
10:25commercialize climate-resilient solutions
10:28that are built off of marine and ocean data.
10:31I'm gonna tell you,
10:32the demand for these programs is off the charts.
10:34We have another program, $575 million
10:37into a climate resilience regional challenge,
10:39a one-time program.
10:41We received over $16 billion in eligible applications.
10:46And so I think we're putting,
10:50we're certainly investing into different kinds of solutions,
10:53into different kinds of learning that we'll be sharing.
10:56But the demand is huge,
10:58and certainly not one that we can meet
11:00with the limited dollars we have,
11:02even in this moment of unprecedented funding.
11:06Sanjay, that gets us back to you
11:07and that private sector funding
11:08and trying to catalyze that funding
11:10and also the good ideas that come out of it, the startups.
11:13Talk a little bit about LightSmith
11:14for people who don't know
11:15and how this has been part of your investment strategy
11:17for a long time.
11:18Yeah, so LightSmith manages a growth equity fund.
11:22We're a private investment firm based in New York.
11:24We manage a growth equity fund,
11:26and we invest in growth stage technology companies.
11:29Pretty standard, growth equity.
11:30The new part was investing in climate adaptation.
11:33And just at the time, five years ago,
11:36institutional investors were starting to get familiar
11:38with investing in climate mitigation,
11:40renewable energy, efficiency, electric vehicles, et cetera.
11:44But nobody knew what we meant by climate adaptation.
11:47And there isn't a track record
11:52of investing in this strategy.
11:54And so it required, or it was very helpful
11:57to have some junior capital
12:00from some philanthropies, foundations,
12:04and other investors to take a first loss position
12:08and show that the perceived risks were bearable.
12:13And that helped mobilize
12:16other traditional institutional investors.
12:19Now, of course, there's a bit of a track record
12:22and a bit more definition to the space.
12:24Can you help us put some dollars behind this?
12:26Like, how big is your fund?
12:27You're still, there aren't that many peers
12:31investing in adaptation and resilience solutions
12:34that I know of.
12:35But talk about maybe the comparison,
12:37the comparative size of these two markets.
12:39How much money has gone into decarbonization
12:41versus how much money has gone into adaptation
12:43and how big we think that market can be.
12:45Yeah, I mean, I think Climate Policy Initiative
12:49does a global landscape of climate finance.
12:52They track about $600 billion a year
12:54being invested into climate finance globally
12:57in all categories from venture up to big projects.
13:00And about 5% of that is for climate adaptation.
13:03And some of that is dual purpose.
13:05It's both climate adaptation and climate mitigation.
13:07So it's a really small part of the whole.
13:12Carla, when you make these investments,
13:14it seems that there's a little bit of a,
13:16you have climate impacting clean infrastructure, right?
13:18We're in the middle of an energy transition
13:20building renewable energy assets
13:22that themselves may end up,
13:24in addition to the existing assets,
13:26vulnerable to the effects of climate change.
13:28I mean, how much of this is a hamster on a wheel?
13:31Well, it's definitely top of mind.
13:33And one of the things that we did last year,
13:35earlier this year actually,
13:37was submit to our regulator a climate vulnerability
13:39assessment.
13:40So we assessed our assets from a 10 to 50 year time horizon
13:44to see what the vulnerability is
13:46to a range of climate risk.
13:47And we have exposure to everything,
13:49subsidence, drought, flooding, heat, wildfire.
13:52And so that's allowed us to better understand
13:55which of our assets are more at risk than others.
13:58And another part of that assessment
13:59was to meet with our communities
14:01to understand what is their adaptive capacity
14:03to respond to any disruption in power.
14:06Because dealing with one climate risk
14:07may be more feasible for one community than another.
14:10So now that we're armed with that information,
14:13that does help us to prioritize
14:14where we spend customer dollars
14:17and where we need to have some partnerships.
14:20And we're also providing that information
14:21to our communities as well.
14:23And so what's key is making sure then
14:24that the next infrastructure one puts in the ground
14:27is resilient and on the right time horizon.
14:29So yes, there's a lot of focus
14:31and need to grow infrastructure.
14:33We're seeing that need in order to increase electrification,
14:37but it's not going to be productive
14:39if we're so quickly building it based on old standards.
14:42And so for example,
14:43when we had to replace some transmission towers
14:45on one of our coastlines,
14:47the standard was to do it to a certain depth.
14:49But when we looked at what sea level rise
14:51will look like in 50 years,
14:52we said, let's make it longer and deeper now.
14:54So that's actually going to be able to last the entire time
14:58for which it was intended to be built.
15:01And then Jamie, as you look at this part
15:02of the climate solution set,
15:04what do you think we need?
15:06Whether that's specific dollar amounts
15:09or political will or innovations
15:11or anything else you can think of?
15:13I think we need partnerships.
15:14And I think absolutely innovation is going to be needed,
15:18whether it's building materials
15:20or different methods of growing our food
15:24or healthcare innovations.
15:27I mean, these challenges are going to cut across all sectors
15:31and I think Carlo is getting to that.
15:34So whether it's businesses looking at their own operations
15:36or seeing a market opportunity,
15:39I think both exist and both things are required
15:41and both things are necessary.
15:43I think of those, you know those like headphone fans
15:47that people wear now, they look like headphones,
15:50but they're actually fans that you wear around your neck.
15:52I don't know if they work, I don't have one.
15:54But those are things that didn't exist a couple years ago
15:58and now we see them around.
15:59That is an adaptation, right?
16:02Some entrepreneur realized that that was an adaptation.
16:04I think we're going to see a lot more like that
16:06and a lot more that's going to be absolutely critical
16:09to our quality of life and let's face it, our survival.
16:13I mean, I keep telling this to people,
16:14like bring me the startup that is re-imagining
16:17the fashion timing supply chain.
16:20Like stop filling Uniqlo with sweaters in September
16:25in most places at this point.
16:28Molly, I see a public-private partnership opportunity
16:31between the fashion industry and NOAA's seasonal
16:33and sub-seasonal forecasts.
16:35You gotta do it.
16:36You gotta do it.
16:37We fixed it, fixed it.
16:40And before I go, I'm just going to make one comment
16:43and then I'll let our panel go,
16:44which is I do want to address the elephant in the room,
16:45which is that for the longest time,
16:47nobody talked about adaptation and resilience
16:48because there was a sense that if we did talk about it,
16:51we were giving up on mitigation
16:53or giving up on decarbonization.
16:55And I just want to point out that Al Gore,
16:58in An Inconvenient Truth,
16:59said that adaptation was a kind of surrender
17:02and by 2013 said that in fact it was a moral imperative.
17:05And so there is a justice part of this
17:07that we can never ignore.
17:10Thank you so much.
17:10I appreciate it.