The private sector has agreed to invest more than $4 billion as part of an Obama administration effort to increase funding in energy sources that could help fight climate change, the White House said Tuesday.
The figure is more than double what the administration had set out to leverage through several new programs and investment tools it announced in February. The White House wants to work more closely with foundations, philanthropies, institutional investors and businesses to jump-start clean energy technology that the administration is leaning on to cut greenhouse gas emissions and meet its climate change goals.
“Long-term investors — such as foundations, family office investors and institutional investors — can play a catalytic role in accelerating the transition to a low-carbon economy. Philanthropists can help fund clean energy innovation at the earliest stages, where bold new ideas are emerging from our labs, universities, and startups, while investors can scale up the most promising of these innovations,” the White House said.
The administration announced a series of executive actions: Increasing access to federal clean energy research; boosting transparency on federal clean energy spending; and establishing more favorable Treasury Department terms for foundations by allowing them to fund clean energy projects through “mission-driven” and program-related investments, the latter of which allows foundations to recycle funds after repayment or return of equity.
The announcement comes as the White House is set to host a Clean Energy Investment Summit, where Vice President Joe Biden will deliver remarks.
A consortium of pension funds and endowments that include the University of California’s office of the chief investment officer and the Alaska Permanent Fund agreed to invest more than $1 billion in an initiative to target commercial companies that “would not fit into existing fund structures” to “produce impactful and profitable solutions to climate change.” The consortium hopes to mobilize $2.5 billion over five years.
The CREO Network and Cleantech Syndicate, a collection of deep-pocketed family offices, advisers and investors, said they would invest $2 billion in clean technology over the next five years. The members of that group already have invested more than $1.5 billion in clean energy, the White House said.
Goldman Sachs also announced it would co-invest in or finance clean energy companies, including those working on “smart grid” technology and advanced battery storage.
The announcements come as environmental groups in recent months have put increasing pressure on foundations, universities, pensions and other institutional lenders regarding energy investments.
Activists want those funds to to dump fossil fuel stocks out of concern for climate change. They argue that it’s imperative to leave the fuel in the ground because burning it would emit greenhouse gases that most scientists say warm the planet. Activists also contend that shareholders in fossil fuel companies would suffer if nations act on climate policies that would make burning fossil fuels costlier, thereby devaluing fossil fuel reserves.
But others have questioned the effectiveness of divestment as an approach to climate change. Skeptics of the approach contend divestment reduces influence within companies while imposing too little a difference on companies’ stock prices to alter their business strategies.
