Managing the Risks of Climate Tech Moonshots

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New climate mitigation technologies are essential for addressing the climate crisis and ensuring a stable climate future, and philanthropists should invest in them. Given the current trajectory and velocity of warming, there is little doubt of the need to move beyond proven technologies in renewable energy to pursue a range of additional solutions, from carbon removal to hydrogen energy, next-generation nuclear and much more. 

Philanthropists and impact investors have a crucial role to play in financing these promising but unproven emissions reductions solutions. Philanthropy can take risks that governments and commercial investors, hemmed in by political constraints or market pressures, cannot, providing early-stage risk capital for technologies that otherwise might never receive funding.

But just as new emissions reduction technologies have potential for transformative scale and impact, they also bring significant risks and possible unintended consequences. The risks fall most acutely on Black, brown, indigenous and low-income communities that have historically suffered the greatest adverse impacts of environmental pollution. For instance, carbon capture technologies could pollute communities located near coal plants, while next-generation nuclear technologies could bring hazards to communities near nuclear plants or nuclear waste storage sites. The potential harms of some technology moonshots — for example, geoengineering to cool the atmosphere or efforts to increase the alkalinity of the oceans to enable them to absorb more carbon — have much broader impact, with possible unintended consequences that could be globally catastrophic.

How can philanthropists support the development of emerging technologies that could be crucial for stabilizing the climate, while at the same time managing their unintended consequences and harms? They must pursue a multilayered investment strategy that tests new technologies to understand their potential impacts, both positive and negative, and combines financing for socially responsible technologies and projects with investments in the governing capacity and self-determination of local communities. Below are four important elements of the broader investment ecosystem that need to be in place to mitigate potential negative impacts of climate-related technologies.

Back projects and technology companies that are committed to minimizing harm and are accountable to community stakeholders. Philanthropists can use grants, recoverable grants, program-related investments and endowment capital to support for-profit, early stage companies and projects that are developing promising climate mitigation technologies and advance one or more charitable purposes. However, funders and investors must vet technology companies and projects carefully to understand their potential social and ecological impacts and to ensure that they are accountable to the communities they may impact.

The nonprofit investment intermediary Prime Coalition and the nonprofit accelerator Elemental Excelerator are doing the important work of identifying, vetting and supporting climate tech companies that have potential for large-scale impact in emissions reductions and a strong commitment to social equity. For project-based investments, Elemental Excelerator has created the Square Partnerships model, a set of recommended stakeholder engagement practices, including community partnerships agreements, that promote equitable project deployment. 

“The end users of new technologies and those whose communities are impacted by the deployment of climate solutions have expertise that we view as required for best-in-class investment decision-making,” said Prime Coalition Executive Director Sarah Kearney. “Without their input, and ideally, ownership in the process, capital deployment decisions are under-informed from the outset.” 

Build the capacity and power of impacted communities. Michelle Martinez, director of the Tishman Center for Social Justice and the Environment at the University of Michigan, has argued that in the face of an existential climate crisis, local communities should have the power of self-determination. As she puts it, “All people deserve a fighting chance to survive the climate crisis, but we are seeing huge disparities in communities’ ability to respond.” For Black, brown, indigenous and low-income communities most likely to experience harm from the unintended consequences of new climate technologies, self-determination means having a voice in policies and projects that impact them, including the power to veto projects whose harms outweigh their benefits.

To foster the self-determination of front-line communities, philanthropists must get more resources to grassroots environmental justice organizations. Environmental justice groups are scandalously under-resourced — one recent study estimated they received a mere 1.3% of funding from top environmental donors during a two-year period — and yet they are pitted against powerful, deep-pocketed industries with outsized influence in state legislatures and regulatory agencies. 

The Inflation Reduction Act (IRA) has created an immediate opportunity to scale the capacity of environmental justice organizations. The IRA includes $60 billion in environmental justice investments and provides funds for capacity-building to help environmental justice organizations engage in permitting and siting decisions for local technology projects. Philanthropists can make targeted investments now to help these groups fully leverage the resources available through the IRA. 

Danielle Deane-Ryan, director of equitable climate solutions at the Bezos Earth Fund, argues that “getting resources to impacted communities and involving them in our climate work is a moral imperative, but it’s also a strategic necessity.” Engaging local communities in shaping new climate technologies builds broader political support for the public policy measures needed to develop and scale those technologies.

Bring more people from front-line communities into the workforces, c-suites and boardrooms of climate tech companies. Black and Hispanic Americans are underrepresented in the climate NGO and clean energy workforce. Meanwhile,the venture capital and commercial investment sectors are overwhelmingly white. So long as those developing and investing in climate tech hail predominantly from white, affluent communities, they will bring major blind spots in understanding how new technologies can impact low-income communities and communities of color. 

What can philanthropy do? There are nonprofits and donor networks seeking to address the lack of diversity in technology sectors broadly, and environmental tech specifically. Browning the Green Space works with leaders in education, clean tech and the public sector to increase the participation and leadership of women and people of color in the clean energy sector. The Public Interest Technology University Network (PIT-UN), which includes 59 universities, supports university programs that are building a diverse pipeline of technologists who understand the social, community and ecological impacts of climate change and climate tech innovation. 

For example, PIT-UN supports a program at Miami Dade College that provides free online courses on how to model flooding and other risks associated with climate change. The courses are an entry point to the environmental sciences for students of diverse racial and economic backgrounds.

Protect and strengthen our democracy. What new technologies take root in our society, and whom they benefit or harm, are a function of our broader power dynamics. Maximizing the benefits and minimizing the harms of climate mitigation technology requires robust, responsive and equitable democratic institutions and an active and empowered citizenry. 

Consider that the enactment of the IRA, the largest-ever public investment in cleantech and green infrastructure in the U.S., was the result of years of democratic organizing to build political will for climate action and overcome the powerful opposition of the fossil fuel industry. As public investment in climate tech flows in through the IRA, ensuring that these new technologies achieve their intended impacts and minimize their potential harms similarly requires effective democratic governance and oversight. Our regulatory institutions and processes must keep pace with the speed of new investment in tech development and deployment. 

Climate tech funders must therefore also be democracy funders. We must invest in the health of our democratic institutions and systems — safeguarding equitable access to the ballot, reducing the influence of money in politics, and preventing the rise of authoritarianism that could undermine free and fair elections and our system of checks and balances. We must support the construction of a democratic regulatory infrastructure that safeguards self-determination for local communities and gives them tools to weigh in on cleantech projects, and, if necessary, to veto them. We must level the playing field in our politics between powerful industry interests and community stakeholders. 

Technological innovation is an essential weapon in our fight against climate change, and philanthropy has a vital role to play in catalyzing it. But to ensure that technology is a force for good and not harm, philanthropists must also attend to the social and political ecosystem in which our technologies are deployed. The ability of all people to survive the climate crisis depends as much on the health of our polity as it does the boldness of our technological moonshots.

Bruce Boyd is executive director of the Morrison Family Foundation and a board member of The Windward Fund and of Arabella Advisors. Loren McArthur is head of thought leadership at Arabella Advisors.