Advance market commitments to decarbonize heavy industry

A coalition of companies organized by the U.S. government is promising to purchase low-carbon versions of commodities from “hard to abate” heavy industries. This sort of policy is called an advanced market commitment, which the U.S. has used in the past to accelerate the development of new technologies. With guaranteed revenue from the government, manufacturers are able to take risks to create products that they might not have otherwise.

In the leadup to COP26 last year, John Kerry, U.S. special presidential envoy for climate, announced the First Movers Coalition (FMC) in collaboration with the World Economic Forum. It now involves 65 companies—including Delta, Maersk, and Rio Tinto—that will buy or supply a percentage of low-carbon products by 2030. India, Norway and eight other countries have signed on, too. The coalition has also committed to purchase carbon removal, adding to the wave of similar pledges like the $1 billion Frontier Fund.

So how will the FMC work?

In this episode, Shayle talks to FMC’s brainchild, Varun Sivaram. Varun is managing director and senior advisor for clean energy and innovation in Kerry's office.

They cover topics like:

• Why advanced market commitments are not silver bullets
• The FMC’s ability to make companies keep their commitments 
• How the FMC is developing standards for low-carbon products
• How much progress coalition members have made toward their targets 
• How the Inflation Reduction Act and the FMC support each other
• The FMC’s ability to endure changes of administration
• When we can stop calling these sectors “hard to abate”

 Recommended Resources:

• Bloomberg: Companies Commit to Buying Super-Green Cement in Corporate Climate Club
• Columbia University: To Bring Emissions-Slashing Technologies to Market, the United States Needs Targeted Demand-Pull Innovation Policies
• Harvard University: Using Advance Market Commitments for Public Purpose Technology Development
• Catalyst: Growing the carbon dioxide removal market

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