 I would now like to introduce Chris Field, our facilitator for the panel discussion. Chris is the Perry L. McCarty director of the Stanford Woods Institute for the Environment and the Melvin and Joan Lane professor for interdisciplinary environmental studies at Stanford University. Chris will lead a conversation amongst our five speakers today. So over to you, Chris. Thank you, Sarah. And thanks to everyone, especially to Tom, David, Greg, Inej and Karen for presentations that were really information packed and super insightful. I'm going to start out with a question that puts the perspective of equity in the context of the major themes we heard from today's presentations. We heard a lot about an approach to solutions that's not top-down command and control that's really diverse and iterative based on an adaptive management. How do you think that aligns with the priority that you've already outlined for solutions that are equitable as well as resultant rapid decarbonization? How do you assure that there's some kind of alignment between the equity considerations and the decarbonization results? Yeah, that's a great question and go ahead and have a chance to because for me, I've really changed my thinking about it. I've really gone from thinking about that as a tradeoff to thinking about it as a way to broaden support for a really difficult necessarily long-lived project. And I mean, as I showed that kind of evolution of climate policy, I think in the past, I think people would have maybe thought of equity as kind of a competing goal with doing something quickly on climate change. But if we're going to be at this for the next several decades and beyond, it's got to be seen as something that benefits lots of people, not just a few. And so I think it's absolutely just crucial to the durability of the whole project. So I think it's actually been really helpful to broaden the coalition of people in support of some of these efforts and exactly the work that Inesh is talking about. Having now becoming more receptive from policymakers is a huge advantage. So I just see it as kind of key to the whole project. But let me continue to focus on this equity aspect. And I want to ask a question of Karen. You talked a lot about the availability of finance basically in the rich world. But many of the needs that are most profound are going to be in the poor world. And could you speak a little bit about the way Bank of America sees the transfer of technologies, the transfer of learning and the transfer of finance to the countries that are going to need that as this whole agenda moves forward? Yeah, I think the disproportion of capital that's available to the developed world compared to the developing world is real. And I think what you're pointing out is clear in a symmetry. But given the size of capital markets in the US and Europe and developed Asia versus the rest of the world, that is not without reason. But when you think about decarbonization, clearly carbon all gets released into the atmosphere. So this is actually a very equitable damage to everyone, but the capital available to to decarbonize is not symmetric. So what we're doing is we realized that the risk and credit considerations in those countries is clearly different, right? Financing a utility scale, wind and solar project in the US is totally different than financing something Bangladesh. Bangladesh has a lot of climate vulnerability. We have to help. So a lot of this is working. I hate this word blended finance because I think it's very cliche, but it really is a partnership with development banks, with export import banks, such that a G turbine can be brought to Bangladesh, you know, a OPEC or a DFC type of government guaranteed agency can help de-risk, you know, the first loss and then the bank or investor capital can then come on top. Without that, you won't be able to get there. You won't be able to get the banks to take the project financing on because simply doesn't fit within our Basel III framework and all the regulations we have to comply between Dodd-Frank and the Fed and FDIC and OCC and so on and so forth. So when they want us to operate in a way that has certain liquidity and capital constraints, we need those help. We need the help of, you know, essentially a risk credit enhancement, but also potentially in certain cases, corporate help in terms of people that have the incentives to use their products overseas where the Exxon Bank and other export credit agencies can come in. And we have successfully done different examples, different transactions. We just completed a water transaction and sanitation transaction in India and Africa with the Water.org organization with DFC and that's a government guaranteed agency. So we got that financed. We would have never done that at Bank of America standalone basis. So I do believe that the blended finance and the partnership structures to de-risk. Sometimes we also need technical assistance. So we do work with World Bank, for example, in certain countries, we don't have the technical expertise, but more of those partnerships. It's very, very painful and complex, but we have to be at it. We have to continue to be at it. We also work with the web and UN. So that's the only way to accomplish a little bit more symmetry in the capital deployment. Let me stick with this international theme with a question for Tom. So when you hear about the need for blended finance and the different risk tolerance of the entities that are likely to be involved in this kind of international finance, how do you see that lining up with the IEA projections? Does that introduce new challenges that wouldn't be there in the context of a developed country strategy or a direct financing strategy? Thank you, Chris. That's a fantastic opportunity for me to say that this very day, we published our latest report on financing and investment in emerging economies and developing markets. So the topic is spot-on, and our report has similar messages to those that Karen was flagging. The disjuncture between the rich world where the capital is and the cheap cost of capital for the rich world compared to the orders of magnitude, higher cost of capital in the developing world. Even before you get to the energy sector and innovative technologies, just the country risk is so vastly different. There's a huge gap there which really does need a government or a public bank to come in with blended finance to take some of that risk, whether it's exchange rate risk or other aspects of country risk. There are multiple tools out there already where that kind of blended finance can be developed, and there really is a major need for it. And yes, I mean the story is relatively simple and it comes to rich world financing, clean energy investments in the rich world. There's four trillion dollars, as we just heard, going in that direction in the developing world already. When you turn to the developing world, the risk differentials are great and the need for all sorts of different instruments has become very apparent very fast. And along the same line of the distribution of resources between developed country and developing country actors, David, you pointed out the real risk of a large flow of the current resources going into low quality nature-based offsets. What do you see as tea levers that can be deployed in order to redirect some of that finance toward the higher quality products like the end of focus of this whole workshop? Yeah, so I think there's tremendous inequality in the allocation of capital right now in the international markets and we can come up with all kinds of clever mechanisms to address them. Blended finance is the flavor of the day. Appreciate it Karen's comments about cliche here. I feel like we should have climate change bingo and we should put maybe blended finance right now should occupy the center and then change it and at some point during one of these meetings someone will yell bingo or carbon or whatever it is and they'll get a prize and we're offset maybe. Well one way to deal with this is just to get the quality control problem in the nature-based solutions under control and that requires more than third-party verification. It requires a really careful scrub of the fundamental problem around additionality. I happen to think that the problem is essentially unsolvable. Other people think the problem is solvable. We should be running experiments that are serious as opposed to having half a billion dollars of fraud flowing through the California market alone roughly maybe more. So that'll redirect some of the capital but fundamentally I think the key point is that these magical solutions that deal with the risk you know greater risk in emerging economies and so on. I just want to underscore what Tom said about the report by the way I was at the advisory committee for that report. It's a terrific report. The IEA is a really fantastic job here and it opens a whole space for looking at these kinds of questions but the mechanisms that address this problem are only as good as people believe the mechanisms are really going to work and the moment they don't believe the mechanisms are going to work then almost all the real behavior of deployment of capital and politics gets focused on gaming the mechanism as opposed to deploying the capital to emission reduction. I think right now where there's still a huge although there's a lot of trillion moving around you know trillion dollars isn't quite what it used to be but there's still you know it's still you know more money to find a catch up for a good party. It's a lot of it still is of this kind of gaming variety where it's not quite clear how much real new capital is being deployed. Karen you talk quite a lot about the the process that the bank uses in order to assess high quality products. Do you feel like you're making progress on this question of being able to identify and eliminate the lower quality and identify and invest in the higher quality products in this space? Yeah we do that for ourselves so when we think about it you know we think you know it's it's you know high quality and low quality seems very judgmental but it really is just what's more defendable and what's less defendable a reforestation on a burned down land is probably more defendable than IFM in Hawk Mountain right so we don't want to go through some of the examples but you know when you think about projects that people can argue are you going to cut that down anyway or you know so it's just we don't want to go there we'd rather pay double the price to get a sort of less debatable or more defendable offset than something that we have to sort of like answer questions right so that's how we think about it at our company but I can tell you we also have companies that come to us and that's the reality and unfortunately that is the reality and people will say I have declared my CEO has declared carbon neutrality and that's zero and the carbon emissions reduction goal by this year so I need to buy 250,000 tons at as cheaply as possible so then they're looking at landfill gas and certain IFM and they're just looking for the cheapest they can buy because those are verified right again to their point these are verified by the the top verification and certification agencies the top four it's you know it's retired on the registries you know but the quality of that to your all of your points may not be you know may not be as let's say beneficial to the environment as some of the other instruments right so I think a lot of this is you know we I actually sit on 1t.org you know on behalf of the bank and we really sort of argue in terms of USDA what's the government's role can they set up a verification or certification process from the US government such that we don't have to debate which NGO's verification methodology is is is more solid you know the true additionality I think a lot of companies just want to buy a solid product but I think the current process and the verification you know landscape as you would know is very fragmented and it takes a long time and it's very slow and so I think that's why collectively you saw 160 million tons of CO2 offsets being offered last year but if you look at how many billion tons of offsets high quality offsets to your point that need to be bought for companies to stay on this trajectory of you know decarbonization I think it's in the billions if not tens of billions so we have a massive supply and demand you know a symmetry right now because we don't have a marketplace right so we don't have a marketplace we don't have an ecosystem that's well established a lot of the efforts have been you know sort of set up to do this right Mark Carney has the task force to scale voluntary carbon but no one so far hasn't addressed the verification or certification question that make that as defendable to people like David as possible yeah and it is critically important that there be customers who care about the quality like the bank and like many of the entities you deal with let me switch gears just slightly and and ask about how to avoid investments in sort of mid-stage technologies that aren't really solving the problem and and tend to lock in future investments Greg let me turn to you on this this one about how how to think about managing the timescale in a way that the the investments that really receive the financing and receive the impetus are the ones that are you know have a chance to really be durable and and prevent us from locking in intermediate technologies that nobody's going to be satisfied with yeah oh that's a great question I mean the lock-in uh issue is an interesting one because on one hand as you say there's a danger to locking in to the wrong thing but on the other hand we all want to lock in to something that works like the what Tom was talking about cost reductions and learning curves that's lock-in and that's the best lock-in we can get because we need these things to work to demonstrate reliability to get more efficient and to get the cost down and so we want to lock into the right things and avoid locking into the wrong thing so it's really a selection issue and that is a tricky thing right now and I think I can see from Karen's comments about you know trying to really focus on the ones that are going to to work and pay off and and not being too interested in you know experimenting and spraying a lot of bets in a lot of different places and to some extent I do think we're at a pretty nascent stage unfortunately with some of these technologies and the clear pathways are not that obvious and so what can help in this situation is to support some technological diversity and it's not really probably the role for a bank to do that but it's certainly a role for the public sector to do that to maybe have some you know niche markets 45q is probably a good example of that maybe you have a higher 45q for something that's earlier stage or has more permanence associated with it or something that you know maybe won't do that well in the near term but has a longer term payoff so I think there's some ways the public sector can really make an effort to support diversity and not just in funding research and and doing early stage work but doing the mid stage which I think is what you're referring to Chris in terms of funding some demonstrations maybe some public procurement contracts and things to to get some scale on some of these technologies that are still unproven unreliable and maybe not quite at the stage at which Karen's group is ready to invest and when we when we think about the importance of diversity and especially making investments in the technologies that can scale with smaller units as as Greg has discussed Tom how do you see that fitting into the level of aspirations that we need to have in order to be in the in the universe that the IA is projected is do you see a pathway that really takes advantage of the of the the scalability of small units or do we need to also be committing to big projects I think we go for anything we possibly can given the overall scale of what's needed I think yeah I mean the example given was with solar panels I mean solar farms large ground-based farms are great and you can scale up but but there's also massive scope for rooftop solar which is a completely different finance model completely different model but it is perfectly scalable and on working with with individual houses on with with small scale and I heard the other day people even talking of the changing nature of the nuclear industry and again we thought we needed to scale up to bring costs down in nuclear industry but there's plenty of examples where scaling up scaling up has actually added costs to to large-scale nuclear plants and you get all sorts of civil engineering problems on top of the the the technology issues and the suggestion there is that scaling back on nuclear small small small and medium modules modules might actually be a more cost-effective way to develop nuclear so I think we can explore every model that might work and if it's rolled it up on small-scale versions then let's try that as well great thank you we only have time for probably one more question and I'd like everybody to weigh in on the question of finding the accelerator that that all of you spoke about at some points and Greg showed pictures of David if there if there is one key thing that needs to happen in the next few years in order for us to find this accelerator on climate action what is it well let me say something that's uncharacteristic because I there's a lot of moving parts here and we look for example what Karen's talking about where she's on the you know mainly in the debt financing side of things one needs to have at-risk equity finance you have to have at-risk public sector finance and diversity for all the reasons we're talking about here but what's happened what's really moved push the accelerator button is activism actually CEOs who and corporate and political leaders who believe that if they don't get in front of this issue that something catastrophic is going to happen to their electoral prospects or their company totally changes the risk calculation and changes the deployment capital not always for the Bastia and a lot of bogus stuff like you know somebody runs in and buys a bunch of offsets so that people will be angry at the next company and not your company I totally get that but that role here and I've been involved in some of this work including recently with some of the shareholder activities that is a different kind of incentive structure and it is not like a carbon tax but it has a much more seismic impact yeah thanks thanks so much Tom what do you think is the big thing we need the next big thing to drive us on an accelerated pathway I guess my reaction was to look at the next step after what David flagged up after you get that activism and the political momentum you then create the with a government that's motivated and with an industry that's buying into it you create a credible policy regime I mean I flagged up that when we had the jump CCS projects for 2020 that comes with the global change in incredible serious climate policy that's happened in the last few months and that once industry takes is credible and an irreversible and an accelerating policy world then Karen's risk assessment changes completely the sense of unsafe assets which are going to have a lifetime cut short by the regulatory regime or by standards or by by public pressure that changes the risk assessment and the obverse of that is that the business models of of efficiency and renewables and in clean energy tech become more understood and more more people realize that these are and and inevitability in policy and regulatory terms so they become lower risk and more investable so I think it's the credibility of the regulatory framework that will drive investor decisions and that regulatory comes from what David was talking about that the political vote space as well Karen is is there a sufficiently credible regulatory framework in place and what do we need in order to find the accelerator the regulatory framework is more developing EU and the UK right now than the US right I think the SEC and the Fed and CFTC they're all studying this right now but I do think it starts from you know the regulatory regime around ESG disclosure which carbon disclosure is a part of that and then your net zero glide path and how do you to Sarah's question how do you even verify validate your emissions and your emissions reduction path all of that is not really established and climate risk is being talked a lot but it's not just a risk equation it's obviously also a business bottom line issue so I do think that needs to converge that needs to be kind of finalized pretty soon so company can start report once you have data you can analyze and you can then you can critique but I do think also for this particular space in terms of carbon removal carbon sequestration storage to really really take off and getting that trillion of capital that we're saying that's ready to invest in the space I do think that bridge from you know what David said about VC early stage P yeah a lot of those companies are financed by that and grants right but I think a lot of that needs to bridge into potentially more bank and capital markets financing that's where 45Q plays a major major role I think the rules around 45Q can be more clarified can be less stringent you know why is only for industrial size for example so things like that can can be expanded because cannot under emphasize the the role that tax credits played for wind and solar and EV right so why shouldn't that play a major role in this space and in a YB so pure YB so restrictive essentially so I think that's that's going to be very needed so the standards of regulation convergence and clarification is needed I do think companies a lot of companies voluntarily report but the quality needs to be there but I also really think the last thing we talk about is verification or certification why leave it to the private sector to to imagine and and to have room for error the thing is investors don't have the capabilities to understand what's credible what's not credible so why not have a very robust verification process such that this is the go standard this is what people should use I think that's just too much of a cottage industry right now on the verification great thank you and that last word to Greg you're the one who introduced the concept of the accelerator and talked about operation warp speed which was primarily a government funded entity is is that the key something like that you know I think we want to get to a point where the technology is reliable the markets are credible the infrastructure is supportive and you know things that have worked to get there in the past other than just a slow incremental process that takes decades are catalytic efforts where there's something sustained for say five years it was you know solar in Germany Denmark with wind power eds in China and the offshore wind in the UK there's plenty of examples out there where you've got a bunch of efforts put together at the same time and it's catalytic because there's fertile ground the technologies there there's activism there's interests and there's capability and there's capital and so you do need this push and I think if we did something similar in many different directions under CDR for something like five years then we could really get on the pathway to you know widespread deployment and cost reductions but there's there's got to be something intentional I think a lot of it has to come from the public sector in order to get these other pieces to really engage in a big serious way that's sustained