Good policy can be a gamechanger for climate tech startups, unlocking doors and demand. America’s Inflation Reduction Act (IRA) allocated $369bn to stimulate green growth through subsidies, even tempting several European startups to shift operations stateside.
Meanwhile, the EU’s Net-Zero Industry Act, aimed at keeping clean tech production on home soil, has come under fire for lacking the clarity and funding of the US approach.
Startups are moving faster than red tape. “I see my role as a proof point for regulators to regulate more in a safe and faster way, but it's not easy,” says Rachel Delacour, CEO and cofounder of carbon management platform Sweep.
I see my role as a proof point for regulators to regulate more in a safe and faster way, but it's not easy
A handful of scaleups are also hiring heads of policy, but political advocacy isn’t in the reach of earlier-stage startups. “I wish we could spend on having people lobbying like the oil and gas companies, but we can't,” says Liv Andersson, CEO and cofounder of seed-stage biomaterials startup BioZeroc.
What policy changes would climate tech founders and investors implement if they were in office? Sifted asked them.
This article was inspired by the event theme of Sifted Summit: new rules. The event will include a track dedicated to the reality of climate tech at the minute — everyone interviewed for this piece will share their take on topics such as the rise of the infrastructure startup, whether climate tech is recession-proof and how to scale a climate tech.
Slash subsidies for polluting industries
“Stop subsidies for polluting industries. It’s a double cost: we're paying tax to subsidise and then we're paying tax to clean up. Around 20% of the EU’s annual budget goes towards subsidising animal agriculture — if we changed that, it would flip the model for alternative proteins and even the playing field.”
— George Darrah, principal at VC Systemiq Capital
Every business should disclose their waste data
“Every business should publish their waste data. At the moment, food waste is a problem that takes place behind closed doors — there is little incentive for businesses to take action to address this problem. In the last 18 months, Canada, New Zealand, Singapore, the EU and UK have released consultations mandating the public reporting of food waste data, but I’m not aware of anywhere where this is actually live.”
— Tessa Clarke, CEO and cofounder of food waste startup Olio
Introduce a carbon tax to phase out carbon associated with construction
“Introduce incentives for large-scale adoption of carbon neutral materials. Concrete is the most used material after water and altogether responsible for about 8% of the global carbon emissions. Introducing a carbon tax on embodied carbon in the built environment would incentivise developers to trial solutions with better carbon credentials.”
— Liv Andersson, CEO and cofounder of biomaterials startup BioZeroc
Establish a framework for carbon removal
“Come up with a standard for carbon removal. Buyers are having to set up their own teams to understand the product and players: a clear framework would bring more trust to the market. The US took steps towards this in the IRA 45Q [tax credit], but definitions were too tight: some carbon removal methods which are working today were left out.”
— Henrietta Moon, CEO and cofounder of carbon removal startup Carbo Culture
Publicise the outcomes of biodiversity policy
“Biodiversity credits are coming into a voluntary space. To accelerate adoption, we need more publicly available evidence around the outcomes of policy. The US [at a state level] has regulatory requirements that if you destroy something you need to do something about it. The UK is introducing the biodiversity net gain regulations this year — but it's very difficult for the [biodiversity] space to gear up in an absence of evidence of what works.”
— Zoe Balmforth, CEO and cofounder of biodiversity data and analytics startup Pivotal
Set an international standard for sustainability data
“Everything related to financial audit has been super harmonised now at a global scale. In an international audit framework, you are able to compare a Chinese company and a US company — that's fantastic. We have to do the same for non-financial data — this will allow us to take action from that data: reducing it [carbon], monitoring it. If you're not using the same data, you can't really connect and compare it.”
— Rachel Delacour, CEO and cofounder of carbon management startup Sweep
Base policy decisions on sound market insight
“Introduce market or policy incentives in accordance with actual working standards. The [UK government’s] EPC ‘C’ energy efficiency target sounds positive, but the Better Buildings Partnership identified zero correlation between energy performance and your energy performance certificate. The billions of pounds spent retrofitting these buildings before 2030 could all go to waste — when good intentions are based on bad data, we risk ensuring interventions that can deliver.”
— Luke Graham, head of research at VC Pi Labs
Want to join the conversation? Greentech Alliance are hosting a climate tech meetup at the Sifted Summit in October. Share your take on this topic in a fishbowl forum and build community with fellow climate tech founders, investors and operators. You can get your ticket for the event on October 4-5 here.
Special rates apply for startups at Sifted Summit — get your ticket here
