CHAPTER 11

A PLAN FOR GETTING TO ZERO

When I was in Paris in 2015 for the climate conference, I couldn’t help wondering: Can we really do this?

It was inspiring to see leaders from around the world come together to embrace climate goals as nearly every nation committed to cut its emissions. But with one poll after another showing that climate change was still a marginal political issue (at best), I worried that we’d never have the will to do this hard job.

I’m glad to say that the public’s interest in climate change has grown much more than I thought it would. Over the past few years, the global conversation about climate change has taken a remarkable turn for the better. Political will is growing at every level as voters around the world demand action and cities and states commit to making dramatic reductions that support (or, as in the United States, fill in for) their national goals.

Now we need to pair these goals with specific plans for achieving them—just as, in the early days of Microsoft, Paul Allen and I had a goal (“a computer on every desk and in every home,” as we put it) and spent the next decade building and executing a plan to reach it. People thought we were crazy to dream so big, but that challenge was nothing compared with what it’ll take to deal with climate change, a massive undertaking that will involve people and institutions around the world.

Chapter 10 was all about the role governments need to play in achieving that goal. In this chapter, I’ll propose a plan for how we can avoid a climate disaster, focusing on the specific steps government leaders and policy makers can take. (You can find more detail on each element below at breakthroughenergy.org.) In the next chapter, I’ll lay out what each of us can do as individuals to support this plan.

How quickly do we need to get to zero? Science tells us that in order to avoid a climate catastrophe, rich countries should reach net-zero emissions by 2050. You’ve probably heard people say we can decarbonize deeply even sooner—by 2030.

Unfortunately, for all the reasons I’ve laid out in this book, 2030 is not realistic. Considering how fundamental fossil fuels are in our lives, there’s simply no way we’ll stop using them widely within a decade.

What we can do—and need to do—in the next 10 years is adopt the policies that will put us on a path to deep decarbonization by 2050.

This is a crucial distinction, though it’s not one that’s immediately obvious. In fact, it might seem like “reduce by 2030” and “get to zero by 2050” are complementary. Isn’t 2030 a stop on the way to 2050?

Not necessarily. Making reductions by 2030 the wrong way might actually prevent us from ever getting to zero.

Why? Because the things we’d do to get small reductions by 2030 are radically different from the things we’d do to get to zero by 2050. They’re really two different pathways, with different measures of success, and we have to choose between them. It’s great to have goals for 2030, as long as they’re milestones on the way to zero by 2050.

Here’s why. If we set out to reduce emissions only somewhat by 2030, we’ll focus on the efforts that will get us to that goal—even if those efforts make it harder, or impossible, to reach the ultimate goal of getting to zero.

For example, if “reduce by 2030” is the only measure of success, then it would be tempting to replace coal-fired power plants with gas-fired ones; after all, that would reduce our emissions of carbon dioxide. But any gas plants built between now and 2030 will still be in operation come 2050—they have to run for decades in order to recoup the cost of building them—and natural gas plants still produce greenhouse gases. We would meet our “reduce by 2030” goal but have little hope of ever getting to zero.

On the other hand, if our “reduce by 2030” goal is a milestone toward “zero by 2050,” then it makes little sense to spend a lot of time or money switching from coal to gas. Instead, we’re better off pursuing two strategies at the same time: First, going all out to deliver zero-carbon electricity cheaply and reliably; and second, electrifying as widely as possible—everything from vehicles to industrial processes and heat pumps, even in places that currently rely on fossil fuels for their electricity.

If we think the only thing that matters is reducing emissions by 2030, then this approach would be a failure, since it might deliver only marginal reductions within a decade. But we’d be setting ourselves up for long-term success. With every breakthrough in generating, storing, and delivering clean electricity, we would march closer and closer to zero.

So if you want a measuring stick for which countries are making progress on climate change and which ones aren’t, don’t simply look for the ones that are reducing their emissions. Look for the ones that are setting themselves up to get to zero. Their emissions might not be changing much now, but they deserve credit for getting on the right path.

I agree with the 2030 advocates on one thing: This is urgent work. We are at the same point today with climate change as we were several years ago with pandemics. Health experts were telling us that a massive outbreak was virtually inevitable. Despite their warnings, the world didn’t do enough to prepare—and then suddenly had to scramble to make up for lost time. We should not make the same mistake with climate change. Given that we’ll need these breakthroughs before 2050, and given what we know about how long it takes to develop and roll out new energy sources, we need to start now. If we do start now, tapping into the power of science and innovation and ensuring that solutions work for the poorest, we can avoid repeating the mistakes of pandemic preparation with climate change. This plan sets us on that path.

Innovation and the Law of Supply and Demand

As I argued at the outset—and as I hope has become clear in the intervening chapters—any comprehensive climate plan has to tap into many different disciplines. Climate science tells us why we need to deal with this problem but not how to deal with it. For that, we’ll need biology, chemistry, physics, political science, economics, engineering, and other sciences. Not that everyone needs to understand every subject, any more than Paul and I were experts at marketing, partnering with businesses, or working with governments when we started out. What Microsoft needed—and what we need now to deal with climate change—is an approach that allows many different disciplines to put us on the right path.

In energy, software, and just about every other pursuit, it’s a mistake to think of innovation only in the strict, technological sense. Innovation is not just a matter of inventing a new machine or some new process; it’s also coming up with new approaches to business models, supply chains, markets, and policies that will help new inventions come to life and reach a global scale. Innovation is both new devices and new ways of doing things.

With those provisos in mind, I’ve divided the different elements of my plan into two categories. These categories will sound familiar if you’ve taken Economics 101: One involves expanding the supply of innovations—the number of new ideas that get tested—and the other involves accelerating the demand for innovations. The two work hand in hand, in a push-and-pull fashion. Without demand for innovation, inventors and policy makers won’t have any incentive to push out new ideas; without a steady supply of innovations, buyers won’t have the green products the world needs to get to zero.

I realize this may sound like business-school theory, but it’s actually quite practical. The Gates Foundation’s whole approach to saving lives is based on the idea that we need to be pushing innovation for the poor while also increasing demand for it. And at Microsoft, we created a large group that did nothing but research, something I’m proud of to this day. Essentially, their job is to increase the supply of innovations. We also spent a great deal of time listening to customers, who told us what they wanted our software to do; that’s the innovation demand side, and it gave us crucial information that shaped our research efforts.

Expanding the Supply of Innovation

The work in this first phase is classic research and development, where great scientists and engineers dream up the technologies we need. Although we have a number of cost-competitive low-carbon solutions today, we still don’t have all the technologies we need to get to zero emissions globally. I mentioned the most important ones we still need in chapters 4 through 9; here’s the list again for quick reference (you can put the words “cheap enough for middle-income countries to buy” in every item on the list):

Technologies needed

To get these technologies ready soon enough to make a difference, governments need to do the following:

  1. Quintuple clean energy and climate-related R&D over the next decade. Direct public investment in research and development is one of the most important things we can do to fight climate change, but governments aren’t doing nearly enough of it. In total, government funding for clean energy R&D amounts to about $22 billion per year, only around 0.02 percent of the global economy. Americans spend more than that on gasoline in a single month. The United States, which is by far the largest investor in clean energy research, spends only about $7 billion per year.

    How much should we spend? I think the National Institutes of Health (NIH) is a good comparison. The NIH, with a budget of about $37 billion a year, has developed lifesaving drugs and treatments that Americans—and people around the world—rely on every day. It’s a great model, and an example of the ambition we need for climate change. And although quintupling an R&D budget sounds like a lot of money, it pales in comparison to the size of the challenge—and it’s a powerful indicator of just how seriously a government takes the problem.

  2. Make bigger bets on high-risk, high-reward R&D projects. It’s not just a question of how much governments spend. What they spend it on matters too.

    Governments have been burned by investing in clean energy before (look up “Solyndra scandal” if you need a reminder), and policy makers understandably don’t want to look as if they are wasting taxpayers’ money. But this fear of failure makes R&D portfolios shortsighted. They tend to skew toward safer investments that could and should be funded by the private sector. The real value of government leadership in R&D is that it can take chances on bold ideas that might fail or might not pay off right away. This is especially true of scientific enterprises that remain too risky for the private sector to pursue for the reasons I touched on in chapter 10.

    To see what happens when governments make a big bet the right way, consider the Human Genome Project (HGP). Designed to map the complete set of human genes and make the results available to the public, it was a landmark research project led by the U.S. Department of Energy and the National Institutes of Health, with partners in the U.K., France, Germany, Japan, and China. The project took 13 years and billions of dollars, but it has pointed the way to new tests or treatments for dozens of genetic conditions, including inherited colon cancer, Alzheimer’s disease, and familial breast cancer. An independent study of the HGP found that every $1 invested by the federal government in the project generated $141 in returns to the U.S. economy.

    By the same token, we need governments to commit to funding mega-scale projects (in the range of hundreds of millions or billions of dollars) that can advance the science of clean energy—especially in the areas I listed above. And they need to commit to funding them for the long haul so that researchers know they’ll have a steady flow of support for years to come.

  3. Match R&D with our greatest needs. There’s a practical distinction between blue-sky research into novel scientific concepts (also called basic research) and efforts to take scientific discoveries and make them useful (what’s known as applied or translational research). Although they’re different things, it’s a mistake to think—as some purists do—that basic science shouldn’t be tainted by considering how it might lead to a useful commercial product. Some of the best inventions have emerged when scientists start their research with an end use in mind; Louis Pasteur’s work on microbiology, for example, led to vaccines and pasteurization. We need more government programs that integrate basic and applied research in the areas where we most need breakthroughs.

    The U.S. Department of Energy’s SunShot Initiative is a good example of how this can work. In 2011, the program’s leaders set a goal of driving down the cost of solar energy to $0.06 per kilowatt-hour within the decade. They focused on early-stage R&D, but they also encouraged private companies, universities, and national laboratories to concentrate on efforts like lowering the cost of solar-power systems, removing bureaucratic barriers, and making it cheaper to finance a solar-power system. Thanks to this integrated approach, SunShot met its goal in 2017, three years ahead of schedule.

  4. Work with industry from the beginning. Another artificial distinction I’ve run into is the idea that early-stage innovation is for governments and later-stage innovation is for industries. This just isn’t how it works in reality—especially when it comes to the kinds of tough technical challenges we have in energy, where the most important measure of success for any idea is the ability to reach national or even global scale. Partnerships at an early stage will bring in the people who know how to do that. Governments and industry will need to work together to overcome barriers and speed up the innovation cycle. Businesses can help prototype new technologies, provide insight into the marketplace, and co-invest in projects. And, of course, they’re the ones who will commercialize technology, so it makes sense to bring them in early.

Accelerating the Demand for Innovation

The demand side is a little more complicated than the supply piece. It actually involves two steps: the proof phase, and the scale-up phase.

After an approach has been tested in the lab, it needs to be proven in the market. In the tech world, this proof phase is quick and cheap; it doesn’t take long to demonstrate whether a new smartphone model works and will appeal to customers. But in energy, it’s much harder and more expensive.

You have to find out whether the idea that worked in the laboratory still works under real-world conditions. (Maybe the agricultural waste you want to turn into a biofuel is much wetter than the stuff you used in the lab and therefore doesn’t produce as much energy as you expected.) You also have to drive down the cost and risks of early adoption, develop supply chains, test your business model, and help consumers get comfortable with the new technology. Ideas currently in the proof phase include low-carbon cement, next-generation nuclear fission, carbon capture and sequestration, offshore wind, cellulosic ethanol (a type of advanced biofuel), and meat alternatives.

The proof phase is a valley of death, a place where good ideas go to die. Often, the risks that come with testing new products and introducing them in the market are simply too great. Investors get scared off. This is particularly true for low-carbon technologies, which can require a lot of capital to get going and may require consumers to change their behavior pretty substantially.

Governments (as well as big companies) can help energy start-ups make it out of the valley alive because they’re massive consumers. If they prioritize buying green, they’ll help bring more products to market by creating certainty and reducing costs.

Use procurement power. Governments at all levels—national, state, and local—buy enormous amounts of fuel, cement, and steel. They build and operate planes and trucks and cars, and they consume gigawatts’ worth of electricity. This puts them in the perfect position to drive emerging technologies into the market at relatively low cost—especially if you factor in the social benefits of bringing these technologies to scale. Defense departments can commit to buying some low-carbon liquid fuels for planes and ships. State governments can use low-emissions cement and steel in construction projects. Utilities can invest in long-duration storage.

Every bureaucrat who makes purchasing decisions should have an incentive to look for green products, understanding how to figure in the cost of the externalities we talked about in chapter 10.

By the way, this isn’t a particularly new idea. It’s how the internet took off in the early days: There was public R&D funding, of course, but also a committed buyer—the U.S. government—waiting on the other end.

Create incentives that lower costs and reduce risk. In addition to buying things themselves, governments can give the private sector various incentives to go green. Tax credits, loan guarantees, and other tools can help reduce the Green Premiums and drive demand for new technologies. Because many of these products will be expensive for some time to come, prospective buyers will need access to long-term financing, as well as the confidence that comes from consistent and predictable government policies.

Governments can play a huge role by adopting zero-carbon policies and shaping the way markets attract money for these projects. A few principles: Government policies should be technology neutral (benefiting any solutions that reduce emissions, rather than a few favored ones), predictable (as opposed to regularly expiring and then getting extended, as happens frequently now), and flexible (so that many different companies and investors can take advantage of them, not just those with large federal tax bills).

Build the infrastructure that will get new technologies to market. Even cost-competitive low-carbon technologies won’t be able to gain market share if the infrastructure isn’t in place to get them to market in the first place. Governments at all levels need to help get that infrastructure built. This includes transmission lines for wind and solar, charging stations for electric vehicles, and pipelines for captured carbon dioxide and hydrogen.

Change the rules so new technologies can compete. Once the infrastructure is built, we’ll need new market rules that allow the new technologies to be competitive. Electricity markets that were designed around 20th-century technologies often put 21st-century technologies at a disadvantage. For example, in most markets, utilities that invest in long-duration storage aren’t appropriately compensated for the value they’re providing to the grid. Regulations make it hard to use more advanced biofuels in cars and trucks. And, as I mentioned in chapter 10, some new forms of low-carbon concrete can’t compete because of outdated government rules.

So far in this chapter, I’ve been covering the development phase—policies that can spark the creation and adoption of energy breakthroughs. Now let’s turn to the scale-up phase—rapid, large-scale deployment. You can only reach this stage once the cost is low enough, your supply chains and business models are well developed, and consumers have shown that they’ll buy what you’re selling. Onshore wind, solar power, and electric vehicles are all in the scale-up phase.

But scaling them up won’t be easy. We need to more than triple the amount of power in just a few decades, with the majority of the new electrons coming from wind, solar, and other forms of clean energy. We need to be adopting electric vehicles as fast as we bought clothes dryers and color TVs when those became available. We need to transform the way we make and grow things while continuing to deliver the roads, bridges, and food we all rely on.

Luckily, as I mentioned in chapter 10, we’re no strangers to scaling up energy technologies. We drove rural electrification and expanded the domestic production of fossil fuels by tying policy and innovation together. You might consider some of those policies—like various tax advantages for oil companies—subsidies for fossil fuels, but they’re really just a tool for deploying a technology we thought was valuable. Remember that until the late 1970s—when the concept of climate change first entered the national debate—it was widely accepted that the best way to raise the quality of life and spread economic development was to expand the use of fossil fuels. Now we can take the lessons we learned from the purposeful growth of fossil fuels and apply them to clean energy.

What does that mean in practice?

Put a price on carbon. Whether it’s a carbon tax or a cap-and-trade system where companies can buy and sell the right to emit carbon, putting a price on emissions is one of the most important things we can do to eliminate Green Premiums.

In the near term, the value of a carbon price is that by raising the cost of fossil fuels, it tells the market that there will be extra costs associated with products that emit greenhouse gas emissions. Where the revenue from this carbon price goes is not as important as the market signal sent by the price itself. Many economists argue that the money can be returned to consumers or businesses to cover the resulting increase in energy prices, though there’s also a strong argument that it should go to R&D and other incentives to help solve climate change.

In the longer term, as we get closer to net-zero emissions, the carbon price could be set at the cost of direct air capture, and the revenues could be used to pay for pulling carbon out of the air.

Although it would be a fundamental shift in the way we think about pricing goods, the concept of a carbon price has broad acceptance among economists from many schools of thought and across the political spectrum. Getting it right is going to be technically and politically hard, in the United States and around the world. Will people be willing to pay that much more for their gasoline and every other product in their lives that involves greenhouse gas emissions, which is pretty much all of them? I’m not going to prescribe what the solution should look like, but the core objective is to make sure everyone pays the true cost of their emissions.

Clean electricity standards. Twenty-nine U.S. states and the European Union have adopted a type of performance standard called a renewable portfolio standard. The idea here is to require electrical utilities to get a certain percentage of their electricity from renewable sources. These are flexible, market-based mechanisms; for example, utilities with access to more renewable resources can sell credits to those with fewer. But there’s a problem with the way this approach is carried out today: It limits utilities to using only certain approved low-carbon technologies (wind, solar, geothermal, sometimes hydro), and it excludes options like nuclear power and carbon capture. That effectively raises the overall cost of lowering emissions.

Clean electricity standards, which a growing number of states are now looking to adopt, are a better way to go. Rather than emphasizing renewable sources in particular, they allow any clean energy technology—including nuclear and carbon capture—to count toward meeting the standard. It’s a flexible, cost-effective approach.

Clean fuel standards. This idea of flexible performance standard can be applied to other sectors too, to reduce the emissions from cars and buildings as well as power plants. For example, a clean fuel standard applied to the transportation sector would accelerate deployment of electric vehicles, advanced biofuels, electrofuels, and other low-carbon solutions. As with a clean electricity standard, it would be technology neutral, and regulated entities could be allowed to trade credits, both of which lower the cost to consumers. California has created a model for this with its Low Carbon Fuel Standard. At the national level, the United States has the basis for such a policy with the Renewable Fuel Standard, which can be reformed to address the limitations I mentioned in chapter 10 and expanded to cover other low-carbon solutions (including electricity and electrofuels). This would make it a powerful tool in addressing climate change. The EU’s Renewable Energy Directive provides a similar opportunity in Europe.

Clean product standards. Performance standards can also help accelerate the deployment of low-emissions cement, steel, plastics, and other carbon-intensive products. Governments can start the process by setting standards in their procurement programs and by creating labeling programs that give all buyers information about how “clean” different suppliers are. Then we can expand these to standards covering all carbon-intensive goods sold in a market, not just whatever’s being bought by governments. Imported goods would have to qualify too, which would address countries’ concerns that lowering emissions from their manufacturing sectors will make their products more expensive and put them at a competitive disadvantage.

Out with the old. In addition to rolling out new technology as fast as possible, governments will need to retire inefficient, fossil-fueled equipment—whether power plants or automobiles—faster than they might otherwise. It costs a lot to build power plants, and the energy they produce is only cheap if you can spread the cost of construction over their useful life span. As a result, utility companies and their regulatory agencies are loath to shut down a perfectly good operating plant that may have decades of useful life ahead of it. Policy-based incentives, through either the tax code or utility regulation, can accelerate this process.

Who’s on First?

No single government body could fully implement a plan like the one I’ve outlined; the decision-making authority is simply too dispersed. We’ll need action at all levels of government, from local transportation planners to national legislatures and environmental regulators.

The exact mix will vary from one country to another, but I’ll touch on a few common themes that are true in most places today.

Local governments play an important role in determining how buildings are constructed and what kinds of energy they use, whether buses and police cars run on electricity, whether there’s a charging infrastructure for electric vehicles, and how waste gets managed.

Most state or provincial governments have a central role in regulating electricity, planning infrastructure like roads and bridges, and selecting the materials that go into these projects.

National governments generally have authority over activities that cross state or international borders, so they write the rules that shape electricity markets, adopt pollution regulations, and create standards for vehicles and fuels. They also have enormous procurement power, are the primary source of fiscal incentives, and usually fund more public R&D than any other level of government.

In short, every national government needs to do three things.

First, make it a goal to get to zero—by 2050 for rich countries, and as soon after 2050 as possible for middle-income countries.

Second, develop specific plans for meeting those goals. To get to zero by 2050, we’ll need to have the policy and market structures in place by 2030.

And third, any country that’s in a position to fund research needs to make sure it’s on track to make clean energy so cheap—to reduce the Green Premiums so much—that middle-income countries will be able to get to zero.

To show you how it can all work together, here’s what a whole-of-government approach to accelerating innovation could look like in the United States.

Federal Government

The U.S. government does more to drive the supply of energy innovation than anyone else. It’s the biggest funder and performer of energy research and development, with 12 different federal agencies involved in research (the Department of Energy has by far the largest share). It has all sorts of tools for managing the direction and pace of energy R&D: research grants, loan programs, tax incentives, laboratory facilities, pilot programs, public-private partnerships, and more.

The federal government also plays a central role in driving the demand for green products and policies. It helps fund roads and bridges built by state and local governments, regulates cross-state infrastructure like transmission lines, pipelines, and highways, and helps set the rules for multistate electricity and fuel markets. And it collects most tax revenue, which means that federal financial incentives will be the most effective at driving change.

When it comes to scaling up new technologies, the federal government plays the largest role of anyone. It regulates interstate commerce and has primary authority over international trade and investment policy, meaning we’ll need federal policies to reduce any sources of emissions that cross state lines or international borders. (According to The Economist—one of my favorite magazines—U.S. emissions would be about 8 percent higher if you included all the products that Americans consume but are made elsewhere. Britain’s would be about 40 percent higher.) Although carbon pricing, clean electricity standards, clean fuel standards, and clean product standards should all be adopted at a state level, they’ll be more effective if they’re implemented across the country.

In practice, that means Congress needs to provide funding for R&D, government procurement, and developing infrastructure, and it needs to create, modify, or extend financial incentives for green policies and products.

Meanwhile, in the executive branch, the Department of Energy does in-house research and funds other work as well; it would play a central role in implementing a federal clean electricity standard. The Environmental Protection Agency would be charged with designing and implementing an expanded clean fuel standard. The Federal Energy Regulatory Commission, which oversees wholesale electricity markets and interstate transmission and pipeline projects, would need to regulate the infrastructure and market elements of a plan.

The list goes on. The Department of Agriculture does key work on land use and agricultural emissions; the Department of Defense buys advanced low-emissions fuels and materials; the National Science Foundation funds research; the Department of Transportation helps fund roads and bridges; and so on.

Finally, there’s the matter of how we finance the work it’ll take to get to zero. We can’t know with any precision how much getting to zero will cost over time—it will depend on the success and speed of innovation and the effectiveness of deployment—but we know that it will require massive investment.

The United States is lucky to have mature and creative capital markets that can grab great ideas and get them developed and deployed quickly; I’ve suggested ways that the federal government can help move those markets in the right direction and partner with the private sector in new ways. Other countries—China, India, and many European nations, for example—don’t have private markets that are as strong, but they can still make big public investments for climate change. And multilateral banks, like the World Bank and development banks in Asia, Africa, and Europe, are also looking to get more involved.

Two things are clear. First, the amount of money invested in getting to zero, and adapting to the damage that we know is coming, will need to ramp up dramatically and for the long haul. To me, this means that governments and multilateral banks will need to find much better ways to tap private capital. Their coffers aren’t big enough to do this on their own.

Second, the time frames for climate investment are long, and the risks are high. So the public sector should be using its financial strength to lengthen the investment horizon—reflecting the fact that returns may not come for many years—and reduce the risk of these investments. It’ll be tricky to mix public and private money on such a large scale, but it’s essential. We need our best minds in finance working on this problem.

State Governments

In America, many states are leading the way. Twenty-four states and Puerto Rico have joined the bipartisan U.S. Climate Alliance, committing to meet the Paris Agreement goals of reducing emissions by at least 26 percent by 2025. Although that’s not nearly enough to reduce nationwide emissions as much as we need to, it’s not tilting at windmills either. States can play a crucial role in demonstrating innovative technologies and policies, such as using their utilities and road construction projects to drive technologies like long-duration storage and low-emissions cement into the market.

States can also test policies like carbon pricing, clean electricity standards, and clean fuel standards before we implement them across the country. And they can join together in regional alliances, the way California and other western states are looking at joining up their grids and as some states in the Northeast have done with a cap-and-trade program to lower emissions. The U.S. Climate Alliance and the cities that have aligned with it represent more than 60 percent of the U.S. economy, which means they have a phenomenal ability to create markets and show how we can get new ideas to scale.

State legislatures would be responsible for adopting state-level carbon-pricing systems, clean energy standards, and clean fuel standards. They would also direct state agencies and public utility or service commissions to change their procurement policies so they prioritize advanced low-emissions technologies.

State agencies are responsible for meeting goals set by the legislature and by the governor. They oversee energy efficiency and buildings-related policy, manage state transport-related policy and investment, enforce pollution standards, and regulate agriculture and other uses of land.

In the unlikely event that someone runs up to you and demands, “What’s the most obscure agency with an underappreciated impact on climate change?” you could do worse than say, “My state’s public utility commission,” or “My state’s public service commission.” (The name varies from state to state.) Most people have never heard of PUCs or PSCs, but they’re actually responsible for many of the regulations related to electricity in the United States. For example, they approve investment plans proposed by electric utilities and determine the price that consumers pay for electricity. And they’ll become only more important as we meet more of our energy needs with electricity.

Local Governments

Mayors across the United States and around the world are committing to reduce emissions. Twelve major American cities have set a goal of being carbon neutral by 2050, and more than 300 have pledged to meet the goals of the Paris Agreement.

Cities don’t have as much influence on emissions as state and federal governments, but they’re far from powerless. Although they can’t set their own vehicle emissions standards, for example, they can buy electric buses, fund more charging stations for electric vehicles, use zoning laws to increase density so people travel less between work and home, and potentially restrict access to their roads by fossil-fuel-powered vehicles. They can also establish green building policies, electrify their vehicle fleets, and set procurement guidelines and performance standards for municipally owned buildings.

And some cities—Seattle, Nashville, and Austin, for example—own the local utility company, giving them oversight over whether they get their electricity from clean sources. Cities like these can also allow the building of clean energy projects on city land.

City councils can take action similar to that of state legislatures and the U.S. Congress, funding climate policy priorities and requiring local government agencies to take action.

Local agencies, like their state and federal counterparts, oversee different policy priorities. Building departments enforce efficiency requirements; transit agencies can go electric and influence the materials used in roads and bridges; waste management agencies operate large vehicle fleets and have influence over emissions from landfills.

Back to the federal level for one last point: how rich countries can help eliminate the free-rider problem.

There’s no way to sugarcoat the fact that getting to zero won’t come for free. We have to invest more money in research, and we need policies that drive the markets toward clean energy products that are, right now, more expensive than their greenhouse-gas-emitting counterparts.

But it’s hard to impose higher costs now in exchange for a better climate later. The Green Premiums give countries, and especially middle- and low-income countries, a major incentive to resist cutting their emissions. We’ve already seen example after example around the world—Canada, the Philippines, Brazil, Australia, France, and others—in which the public makes it clear with their votes and their voices that they don’t want to pay more for gasoline, heating oil, and other basics.

The problem is not that people in these countries want the climate to get hotter. The problem is that they’re worried about how much the solutions will cost them.

So how do we solve the free-rider problem?

It helps to set ambitious goals and commit to meeting them, the way countries around the world did with the 2015 Paris Agreement. It’s easy to mock international agreements, but they’re part of how progress happens: If you like having an ozone layer, you can thank an international agreement called the Montreal Protocol.

Once these goals are set, forums like the COP 21 are where countries get together to report on their progress and share what’s working. And they serve as a mechanism for pressing national governments to do their part. When the world’s governments agree that there’s value in reducing emissions, it becomes harder—though far from impossible, as we have seen—to be the outlier who says, “I don’t care. I’m going to keep emitting greenhouse gases.”

What about those who refuse to go along? It’s notoriously difficult to hold a country accountable for something like its carbon emissions. But it’s not out of the question. For example, governments that adopt a price on carbon can create what’s called a border adjustment—making sure that the carbon price on some product is paid whether that product was made domestically or imported from somewhere else. (They’d need to make allowances for products from low-income countries where the priority is to drive economic growth, not to reduce their already very low carbon emissions.)

And even countries without a carbon tax can make it clear that they won’t make trade agreements and enter multilateral partnerships with anyone who hasn’t made it a priority to reduce greenhouse gases and adopted the policies to accomplish it (again, with allowances for low-income countries). In essence, governments can say to each other, “If you want to do business with us, you’ll have to take climate change seriously.”

Finally, and in my view most important, we have to lower the Green Premiums. It’s the only way to make it easier for middle- and low-income countries to reduce their emissions and eventually get to zero, and it will happen only if rich countries—especially the United States, Japan, and European nations—take the lead. After all, that’s where much of the world’s innovation happens.

And—this is a really important point—lowering the Green Premiums that the world pays is not charity. Countries like the United States shouldn’t see investing in clean energy R&D as just a favor to the rest of the world. They should also see it as an opportunity to make scientific breakthroughs that will give birth to new industries composed of major new companies, creating jobs and reducing emissions at the same time.

Think about all the good that comes from medical research funded by the National Institutes of Health. The NIH publishes its results so scientists around the world can benefit from the work, but its funding also builds up capacity in American universities that are, in turn, connected to both start-ups and big companies. The result: an American export—advanced medical expertise—that creates a lot of high-paying jobs at home and saves lives around the world.

It’s a similar story in technology, where early investments by the Department of Defense led to the creation of the internet and the microchips that powered the personal computer revolution.

And the same thing can happen in clean energy. There are markets worth billions of dollars waiting for someone to invent low-cost, zero-carbon cement or steel, or a net-zero liquid fuel. As I’ve tried to show, making these breakthroughs and getting them to scale will be hard, but the opportunities are so big that it’s worth getting out in front of the rest of the world. Someone will invent these technologies. It’s just a question of who and how soon.

There’s a lot that individuals can do, from the local level to the national level, to accelerate this agenda. We’ll cover that in the next and final chapter.