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With COP29, the 29th United Nations Climate Change Conference, taking place this month, we talk to Adam Friedberg, who leads º£½ÇÊÓƵ’s Cities team in North America, about mechanisms for mobilising funding for decarbonisation and the importance of Public Private Partnerships in accelerating change.

Investing in decarbonisation is crucial for organisations aiming to mitigate climate change, enhance sustainability, and meet regulatory requirements. By reducing carbon emissions, companies not only contribute to global climate goals but also improve their long-term viability and competitiveness. Fortunately, an expanding array of public funding mechanisms, such as grants, subsidies, and tax incentives, are available to help offset the costs associated with decarbonisation efforts. Additionally, public-private partnerships often play a pivotal role in achieving successful decarbonisation, as they combine the strengths and resources of both sectors to drive innovation, share risks, and scale impactful solutions. 

We want our clients to take advantage of [funding] to drive their portfolios to be cleaner and more resilient.

As the urgency to achieve climate milestones intensifies, º£½ÇÊÓƵ’s role as a trusted advisor for clients is more important than ever, with deep technical knowledge and experience of developing net zero pathways, and with both the advisory and engineering insight to deliver them alongside clients. Adam Friedberg, who leads our cities team in North America, and has led many successful decarbonisation projects in the region, from New York City’s 1.5° Plan to The Los Angeles Countywide Sustainability Plan, says supporting clients to access available funding streams and helping them understand the economic advantages of these investments is an increasingly important part of the value we bring. 

‘Our projects are often focused on delivering more sustainable infrastructure,’ he says. ‘Clients and investors are naturally conscious of potential risks in these kinds of investments. It’s part of our job to help mitigate that risk. One way of helping to mitigate that risk is showing that there’s funding available. Whether it’s letting them know about the different funding mechanisms, or helping them successfully apply for funding, it’s increasingly important for our experts to play that early role in the process of helping to get the financial foundations in place.

‘Right now, in the US, there’s a lot of funding available. We want our clients to take advantage of that to drive their portfolios to be cleaner and more resilient. It’s important to get these things implemented now, more than ever.’ 

In the United States, a variety of public funding mechanisms are available to support companies in their decarbonisation efforts. For instance, the Department of Energy (DOE) offers substantial grants, loans and funding opportunities, such as the $42.3m initiative to support manufacturing innovations aimed at reducing carbon emissions. Additionally, the Biden-Harris Administration has announced $254m to advance next-generation technologies that significantly cut emissions across various industrial sectors.

Another notable example is the $6bn allocated to transform energy-intensive industries and reduce greenhouse gas emissions or the Environmental Protection Agency’s (EPA’s) Climate Pollution Reduction Grants (CPRG) program which is providing approximately $5 billion in grants to states, local governments, tribes, and territories. Furthermore, the Inflation Reduction Act (IRA) provides tax incentives, loans, and grants to promote the deployment of climate technologies and the development of new decarbonising solutions. These funding mechanisms are crucial in helping companies transition to more sustainable practices while maintaining economic competitiveness. 

Critically, Adam says, access to such public funding streams, act as a reassurance to the banks, opening additional sources of private financing to cover the initial outlay for projects that can tend to have a longer-term return on investment. For investors, public investment acts as an indication of public support for the project. Conversely, he points out that the public sector can often access a wider range of funding options by working in close coordination with private sector companies on decarbonisation projects, using traditional public-private partnership (PPP) models. 

‘You can have an operator come in that can potentially finance, design, build and operate, and do that in a much shorter timeframe than governmental design-build. Private sector experts know how to do these things – everything from geothermal heat networks to solar PV. These are still new technologies to a lot of people. Working with people who have done it before, mitigates that risk.’   

Funding mechanisms 

COP29, the 29th United Nations Climate Change Conference, will be held in Baku, Azerbaijan, from 11 to 22 November 2024. The focus will be on limiting global warming, adapting to the impacts of climate change, and mobilising financing for these activities.  

In the US, there are significant domestic funding initiatives for decarbonisation, such as Green Banks, the National Clean Investment Fund, the Clean Communities Investment Accelerator, which collectively mobilise billions of dollars to support clean energy and climate solutions, EPA’s Climate Pollution Reduction Grants (CPRG), Inflation Reduction Act (IRA) funding, and many others. These programmes are designed to ensure that communities have access to the capital needed to transition to a more sustainable economy. The recent Reconnecting Communities Pilot is a significant initiative aimed at addressing the negative impacts of past transportation infrastructure decisions that have divided communities. 

These subsidies created by our governments and utilities wouldn’t be available if it didn’t help the bottom line.

‘Mechanisms like Reconnecting Communities are driven by delivering a public benefit, but also a private interest, to accelerate decarbonisation,’ Adam explains. ‘It’s basically saving your capital funding and deferring it to operational funding. Capital funding is what usually talks for a lot of agencies. In the short term, it’s great for advancing decarbonisation, and in the longer term it will even itself out financially. But if the cost of fossil fuels goes up significantly, by doing this now, you’re saving yourself a lot of money later on – even with any additional operational costs. As we get more renewables on the grid, the cost of clean electricity should go down. There are major advantages to moving to these new, sustainable systems.’ 

Carbon savings 

Recent underscores the importance of comprehensive transition analytics to manage the decarbonisation rate of investment portfolios, noting that renewable energy capacity increased by a record 13% in 2022, driven by solar photovoltaics. While the initial investment in decarbonisation may be substantial, the long-term financial and environmental benefits are considerable. 

In the world’s most capitalist nation, Adam says the carrot is always given preference over the stick, when it comes to governmental mechanisms to accelerate positive change. 

‘Governments need to figure out ways for private industry to make money,’ he says. ‘That’s basically how things move along here. Understanding that is a big part of the value we bring to our clients. Being able to see what is happening on the public side and what is happening on the private side, and being able to match them up ensures the project moves forward, with funding available to realise it.’ 

Projects such as the Oakland Energy Masterplan, The New York Climate Exchange, and Battery Park Sustainability Plan have all recently demonstrated the value we are able to bring in advancing green change in the built environment in the country. 

‘A lot is around education and helping clients understand there is support out there,’ Adam says. ‘Some of it does require a longer-term investment outlook, but it’s achievable for businesses to achieve decarbonisation. The fact is, it does not make sound business sense to ignore it. They’re going to save a lot of money later on by investing in this now. The investment models need to incorporate not just historical trends but potential scenarios related to future energy prices. These subsidies created by our governments and utilities wouldn’t be available if it didn’t help the bottom line.’