• Analysis
  • January 21, 2016
  • 14 minutes
  • 0

Q&A: How government can get money to cutting-edge clean energy tech

Teryn Norris on how to encourage scientists to go commercial and meet investors

Teryn Norris was an undergraduate studying public policy at Stanford when he got a phone call asking him to take a Presidential appointment at the US Department of Energy. Drawn by the chance to work on the generational problem of climate change, he has since worked to drive the clean-energy revolution with the power of private enterprise.

To do so, Norris, who was selected as one of Forbes’s top 30 under 30 in policy and law, has worked on projects like Lab-Corps, which encourages scientists to commercialize their energy technologies by introducing them to potential customers, and on the Clean Energy Investment Initiative, which has brought in $4billion of private money for early-stage energy technologies. His work is part of the movement that motivated Bill Gates, Mark Zuckerberg, Jeff Bezos and George Soros to form the Breakthrough Energy Coalition as an accompaniment to the energy research pledges at the Paris climate conference in December.

(You can read more like this in our feed on government innovation.)

He talked to Apolitical about how the problems of climate change extend beyond government’s ability to cope, and also about how he believes governments and public servants can harness the forces we will need to escape catastrophe.

What has been the focus of your work?

Essentially, it’s about a growing recognition that public budgets are constrained and we’re going to have to rely more and more on private capital to solve the problems our agencies are working on. In the Department for Energy, we were very concerned by an approximately 70% decline in early-stage investment in clean energy over the past five years or so. Even in later stage private equity deals, we were seeing a drop of more than 50%. A number of investors got burned by clean-tech because they didn’t appreciate that some of these ventures take more time and capital than IT or biotech, and the truth is that there’s now a very limited number of clean-tech venture capital firms out there.

But aren’t lots of clean-energy companies getting off the ground?

There have been successes, but while there’s been a lot of investment in mature energy technologies, the large majority of clean-tech start-ups over the past decade failed, unfortunately. We see two key gaps. One is what we call the first valley of death, which is right as a technology is getting out of the laboratory, and just starting to incorporate.

The second valley of death is where you’re talking about first commercial-scale projects, whether it’s a first-of-a-kind advanced nuclear reactor or biofuel refinery or a manufacturing facility for a new photovoltaic cell. You’re talking about tens to hundreds of millions of dollars. And while there are a number of investors out there in mature projects, there are very few private investors willing to take this kind of risk.

That was the impetus for creating the Department’s Loan Programs Office, which still has approximately $40billion of loan authority left. And that’s a nice chunk of change, but it’s not going to be enough.

Mission Innovation Apolitical

Global leaders announce their energy research pledges in Paris

What kind of technologies are we talking about here?

Everything from incremental improvements that make wind turbines and water heaters more efficient, to more game-changing advances that are currently at the laboratory and venture stage – like solar coatings as cheap as wallpaper, grid-scale batteries that are much cheaper and longer-lasting, to store intermittent power from solar and wind farms, and next-generation nuclear reactors. These are just a few examples, and the possibilities are enormous.

Why does it matter to invest in these particular high-risk technologies?

Right now, renewables’ growth rates are very high because we’re starting from a very low level and existing technologies are sufficient to make significant headway against expensive fossil fuels. But if we’re going to meet our long-term targets for carbon emissions in a way that’s affordable, while also meeting rising energy demand from developing countries, we’re going to need major technological improvements.

This is looking a few decades from now and thinking, ‘How are we going to achieve the really deep de-carbonisation, 80-plus %, that we’re going to need to avoid the worst impacts of climate change?’

The Clean Energy Investment Initiative has brought in $4billion dollars since launch in June last year. Is that going to solve the problem?

Look, we were all extremely pleased. But what makes these commitments interesting and different is that these investors were committing to taking on higher levels of risk and longer timelines than normal, including support for emerging technologies, which currently receive far less support than mature technologies.

For example, in 2015 about $280 billion was invested in mature clean-energy projects, compared to less than $4 billion in venture investments. So the commitments made last summer are not going to completely solve the problem alone, of course, but they were a very positive development that helped unlock important new sources of capital and encouraged more mission-oriented investors to get involved.

What effect is the Gates coalition going to have?

It’s very important development, building on the Clean Energy Investment Initiative, proving out the model and fulfilling the goal of mobilizing a much larger group of mission-oriented investors. The Gates coalition is especially significant when combined with the commitment that 20 countries made to double their spending on energy research and development. Together this was one of the most significant announcements made during the Paris climate negotiations.

I wouldn’t say it’s going to be the be all, end all, but if Gates and his co-investors can demonstrate a better model for investing in clean tech that’s more patient and accounts for longer-term higher-capital intensity, they might be able build a new wave of investment that will be longer lasting and more impactful.

That must be a great feeling.

It’s terrific to finally see so many governments come together to make these commitments, and to see Gates be able to rally these other billionaires.

Why did you decide to join government rather than go into private industry?

When I first got to college, there was this large effort going on to get universities to take more action on climate change. Al Gore’s An Inconvenient Truth had just come out. I worked at a couple of different think-tanks and when I was graduating, I got a call from the secretary’s office at the Department of Energy saying, ‘Would you be interested in joining up?’ And I thought, ‘What better way is there to support this and to learn about it than to actually do that.’

Teryn Norris Apolitical

Norris with President Franklin Delano Roosevelt

How have you found being on the inside?

What I enjoyed most was working on program development, where you can see real, tangible impacts from your work, often shaping tens or even hundreds of millions of dollars in public grants. Many younger appointees end up working on areas like speech-writing, event organizing, and communications work on behalf of senior officials, which is important, but it can be hard to get a foothold on the more impactful initiatives within the agencies. To do that requires diligent learning, commitment, and patience. But if you’re willing to take that deep dive and put your shoulder into it for a couple of years, you can really make a significant impact. It’s a unique opportunity.

What have you learned about how to navigate that bureaucracy and see things through?

If you’re a young person in government, trying to figure out how to get things done, a good place to start is where lots of entrepreneurs are starting today: a lean, customer discovery-type process, where you’re collecting input to identify a core need, a gap, a pain point that you’re trying to address with whatever initiative you’re developing.

Then, if what you want to do requires funding, actually learning the budget process is really important. It’s something that a lot of people don’t fully appreciate, figuring out how to get your proposal into the pipeline.

But you might also find it can be accomplished through other mechanisms, especially the convening power you have as government. One example in the DOE is called the Better Buildings Challenge, which allows owners of large commercial building space to commit to energy efficiency improvements, and it’s been highly successful simply by recognising and awarding the companies that achieve their targets.

A third: one piece that young staffers, especially political appointees, may miss is to build trusted relationships with career federal employees, who have just a great depth of knowledge and often a lot of influence on the budget process. And ultimately those career feds are going to be at the agency long after the appointees leave. And so their commitment to a programme is really important to it succeeding long term.

Finally, as Harry Truman said, ‘It’s amazing what you can accomplish if you don’t care who gets the credit.’ There’s a lot of truth in that, especially in government.

You’ve written about how climate change is similar to the situation before the ‘Green Revolution’, which is credited with saving a billion lives from starvation by transferring Western technologies to the developing world. What are the parallels?

The vast majority of energy consumption growth is going to come from developing countries and to meet that demand, we’re going to have to have a massive effort to transfer and improve the clean energy technologies that the developed world has created since the energy crises of the 1970s. We’re going to have to do that if we want to create a world where 10billion people can enjoy the lifestyles the developed world has now.

  • Teryn Norris left the Department of Energy in December to gather experience on the private investment side of the climate and energy challenge. You can follow him on Twitter here.

(Picture credit: Pexels/Pixabay)

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