The Trillion Dollar Policy Push by the US and Europe

By: Juan Pablo Quintero and Stella Liu

This week, we decode the $1.2 trillion (yes, with a “T”) Infrastructure Investments and Job Act passed by Congress in 2021 and another $1+ trillion policy push led by the EU in the Green Deal.

But first, here’s a rundown of the coolest company and job we heard in our network 😎

⚡ Cool company alert: Solar and wind energy suffer from intermittency issues aka the sun doesn’t always shine and the wind doesn’t always blow. Enter Energy Dome, a breakthrough energy storage solution that uses CO2 in a closed-loop cycle to store energy generated from renewable sources. Unlike traditional lithium-ion batteries, the technology uses non-critical minerals and off-the-shelf components, dramatically reducing capex by nearly half while maintaining a high round-trip efficiency. Investors such as Breakthrough Energy (Bill Gate’s VC) and Barclays have backed this startup, and Energy Dome recently raised an oversubscribed $60M Series B round last year. They are hiring a mix of technical and non-technical roles including a Group Buyer role that would be perfect for an ex-consultant with energy experience.

💸 Climate job: Allied Climate Partners is hiring an Analyst, an Associate, and a VP of Investments. Allied Climate Partners is a philanthropic investment fund that catalyzes investments in climate solutions in emerging markets. The fund is backed by Bezos Earth Fund, Soros Economic Development Fund, Three Cairns, and more, and they work with leading Development Finance Institutions like IFC, DFC, BII, AfDB, etc. Check out these roles here.

💰 Infrastructure Investments and Job Act (2021)

The passing of the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) represented the largest US infrastructure investment in generations. The gargantuan bill includes funding for modernizing and building out infrastructure from roads and bridges to broadband and drinking water. 

While IRA policies are designed to encourage investment and expand access to sustainable technologies for consumers and companies, the IIJA focuses on building the infrastructure to support technology rollout and rapid scaling.

Source: Blackrock

The act allocates funding to various climate-related infrastructure projects including:

• $65 billion for electric grid and transmission upgrades and modernization

• $50 billion for climate resiliency projects including protection against “droughts, extreme heat, flooding, and wildfires” 

• $21 billion to clean pollution in Superfund and brownfield sites

• $12 billion to carbon management solutions, including Direct Air Capture

• $9.5 billion to build hydrogen hubs and clean hydrogen manufacturing

• $7.5 billion to build a nationwide network of 500,000 EV charging stations

Other policies include investments in public transit and passenger rail, port modernization, and hydrogen infrastructure.

While most companies may not be direct beneficiaries of the funding in the IIJA, they will likely benefit from the buildout of infrastructure that enables electrification and clean transportation, and from the mitigation investments to reduce the operational impacts of extreme weather events.

💰EU Green Deal

The EU Green Deal, launched in December 2019, is a package of policies that aim for the EU to reach climate neutrality by 2050. Total spending through 2030 is expected to reach €1 trillion and catalyze innovation across all climate technologies:

Source: KPMG 

European Climate Law (2021)

The European climate law regulation encodes the political ambition to reduce carbon emissions 55% by 2030 (compared to 1990 levels) and reach climate neutrality by 2050 into a legal obligation for the EU and its 27 member states.   

“Fit for 55” Package (2021, in progress)

A set of policy proposals that will align EU climate, energy, and transport policies with the Union’s climate goals: 

• EU Emissions Trading System (ETS): 

  • Extends industries covered by the ETS compliance carbon credit market and implements a faster reduction of emissions allowances

  • Introduces a Carbon Border Adjustment Mechanism to price emissions embedded in imported products to prevent companies from bypassing EU policies

• Energy Efficiency Directive:

  • Sets a target to use energy efficiency measures to decrease energy demand by 38% from 2007 levels by 2030 (a reduction of 29% from 2007 levels was achieved in 2020)  

• Renewable Energy Directive: 

  • Sets a target to increase the share of renewables powering the EU energy market to 40% by 2030 (renewable power made up a 22% share of energy generation in 2020)

• Carbon Emission Standards for Vehicles: 

  • Sets a target to decrease emissions of new cars by 55% by 2030 and 100% by 2035, compared to 2021 levels. It is expected that the target will be met by manufacturers transitioning to sell mostly EV vehicles, however, there will be allowances to sell new gasoline-powered vehicles using CO2-neutral fuels.  

  • Develops markets and infrastructure for EV vehicles, sustainable aviation fuels, shipping fuels, and green hydrogen

Green Deal Industrial Plan (in progress)

• Speeds up permitting for new projects through the Net-Zero Industry Act

• Increases industrial access to commodity inputs and green power through the Critical Raw Materials Act and a reform of the electricity market design

• Commits approximately €250 billion in financing to companies investing in transition projects through:

  • REPowerEU: focuses on reducing electricity demand, increasing efficiency, and deploying renewables through tax incentives

  • Invest EU: funds sustainable infrastructure and private green projects by guaranteeing loans through the European Investment Bank and partner institutions

  • Innovation Fund: provides grants to support the launch of decarbonization technologies; currently investing in developing the EU green hydrogen industry

• Develops up-skilling and re-skilling programs for climate transition jobs in partnership with the private sector

• Cooperates with other countries through Free Trade Agreements to support the green transition and develop resilient supply chains

Circular Economy Action Plan (2020)

Introduces a variety of initiatives to lower the ecological impact of products, minimize waste, and reuse materials where possible:

• Restricts single-use products

• Improves product design

• Transforms waste into high-quality material inputs 

• Incorporates recycled material in production. 

Just Transition Fund (2021)

• Mobilizes €17.5 billion of funding through 2027 for companies and industries most affected by the move to a low-carbon economy

• Supports investment in small-and-midsize enterprises and new firms, clean energy technologies and emissions reductions, and reskilling of workers  

EU Forest Strategy for 2030 (2022)

• Requires mandatory due diligence for operators trading products including palm oil, beef, timber, coffee, cocoa, and soy in the EU market 

• Aims to ensure that the production of these commodities does not contribute to deforestation and forest degradation worldwide

Get ready for your third dose of policy in our next issue as we discuss why ICE (non-EVs) cars may be completely phased out by 2040, the semiconductor CHIPS Act, compliance (not voluntary!) carbon markets, and ESG regulation. 

Your policy nerds, 

Juan Pablo Quintero and Stella Liu

P.S. Ping us via LinkedIn to keep the conversation going!