Episode 141: John Lochner, VP of Innovation at NYSERDA

Jan 25

Today's guest is John Lochner, VP of Innovation at NYSERDA.

The New York State Energy Research and Development Authority (NYSERDA) is a government agency focused on climate energy innovation. With a team of around 350 people, it supports clean solutions through catalytic capital and public policies.

Dedicating his career to energy for the last decade, John worked at Credit Suisse in renewable energy, sold a cleantech startup, and spent several years at environmental non-profits. He now serves as the VP of Innovation at NYSERDA. His team focuses on research and development and funds a portfolio of climate startups in New York. They are working with an $800M tenure fund to finance their projects and programs. John oversees this fund and is involved in a handful of accelerators in the greater New York community. NYSERDA provides John the opportunity to match his private-sector knowledge with government support to enable a clean and just energy transformation.

In this episode, John and I explore what led him to focus on energy, his role on the innovation team, and NYSERDA's charter. He also explains where he sees the biggest levers for change, what role the government should play in the energy transition, and why New York state is a pioneer in this space. John is a great guest who sits at the forefront of the green revolution!

Enjoy the show!

You can find me on Twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.

Episode recorded December 14th, 2020.

In Today's episode we cover:

How and why John became concerned with climate change
NYSERDA's mission and history
Initiatives and services that NYSERDA provides
The Climate Leadership and Community Protection Act and how it has affected NYSERDA's charter
The innovation group's purpose and John's role on the team
KPIs NYSERDA uses to assess its progress and milestones the group is striving to hit
Problems and projects NYSERDA will tackle that the public sector avoids
NYSERDA's evaluation process when taking on new projects and investments
How NYSERDA's fund is structured and the key differences between a private equity fund and a government fund
Why New York State is a pioneer in this space and how it compares to other states with similar organizations
The role individual states play in the clean transitions versus that of the federal government
What John thinks President Biden should prioritize in his first 100 days
What sectors have the most impact on the clean transition

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Today's guest is John Lochner, vice president of innovation at NYSERDA or New York State Energy Research and Development Authority. NYSERDA was established in 1975 and they are a New York state public benefit corporation located in Albany, New York with regional offices in New York City, Buffalo and West Valley. What they do is they offer information and analysis, programs, technical expertise and funding aimed at helping New Yorkers increase energy efficiency, save money, use renewable energy and reduce their reliance on fossil fuels.
NYSERDA's employees are charged with protecting the environment and creating clean energy jobs. NYSERDA also collaborates with businesses, industry, the federal government, academia, the environmental community, public interest groups and energy market participants to reduce energy consumption and greenhouse gas emissions.
Now, John's role as VP of innovation is an interesting one because he is involved with a bunch of accelerators in the greater New York community, and he also oversees a fund that invests in technology companies. We spent a lot of time in this episode unpacking not only what NYSERDA does and its scope of responsibilities, but also the innovation team and how that plays out vis-à-vis other types of capital and what stages and what types of checks and how they think about returns and a bunch of other things.
We also have a great discussion about the role of states in general, versus the federal government in bringing about the clean energy transition. And New York as a pioneer, we talked about why they've been able to have the success that they've had and what we can do to get more states to follow suit. John, welcome on the show.
John Lochner: Thanks very much for having me.
Jason Jacobs: Thanks for coming. I know it is a busy time of year and everyone's juggling multiple priorities, so I'm honored that you took the time out of your schedule to make time for MCJ. And I know our audience will appreciate it as well.
John Lochner: Appreciate it. I, I'm honored to be on.
Jason Jacobs: Well, why don't we just take things from the top? So what is NYSERDA?
John Lochner: Sure. NYSERDA, which stands for, and it's perhaps a little bit outdated though, the New York State Energy Research and Development Authority, is New York state's clean energy and energy innovation agency and also one of the two agencies tasked with managing the Climate Leadership and Community Protection Act, the climate legislation in the state and the authority that fosters market transformation to support energy and climate outcomes through grants, policies, and a variety of other tools.
Jason Jacobs: Great. And how long has the organization been around?
John Lochner: The organization started in 1975 as a response to the 73 oil embargo to support lower cost from a systemic perspective, power energy for the state and has been around and growing ever since.
Jason Jacobs: And what are the primary offerings of NYSERDA and to whom?
John Lochner: We focus quite a bit of our energy on innovation, which is what I run. We have a transportation sector that focuses on clean transportation, policy, market development and innovation. We run much of what you've heard of in the offshore wind and large scale renewables world in the state, including sighting and solicitations. And we do quite a bit of work in policy and building infrastructure as well.
Jason Jacobs: And then for that innovation piece that you take on, what does that look like? What is the charter of the innovation side of the organization?
John Lochner: Sure. The innovation team, and, and actually NYSERDA started really as a research and development authority, hence the name, the innovation team is split into two pieces, an R&D team and a technology to market team. And the R&D team invests in R&D projects mostly, but we also fund the development of external centers of excellence as well in research and we provide technical and regulatory support as well for scale-up.
And the technology to market team funds a portfolio of climate startup support programs, including incubators, accelerators, free consulting services, and a variety of other solutions to help a climate tech early stage startup ecosystem in the state. And then most recently we launched a $10 million convertible note out of that team to support startups as the kind of current economic conditions continue to be risky, I guess, at best.
Jason Jacobs: And, well, I have lots of questions about the innovation team and NYSERDA in general, but before we get too far down the path, maybe we can take a step back and just talk about you. So have you always been an energy guy or how did find your way into doing the work that you do?
John Lochner: Yeah, I've been in energy a little over a decade. I started out my career in management consulting, investment banking, some private equity, but really with my time at Credit Suisse about a decade ago, focused in on renewable energy. And then from there jumped into clean energy tech enabled services startup. And since that sold in 2015 have spent a number of years with some big environmental nonprofits helping develop programs in the space.
And I got to NYSERDA just through one of those random introductions for coffee that snowballed into a full-time job, but I couldn't be happier with where I am. We really have a tremendous opportunity to support the state and the nation in reaching our climate goals.
Jason Jacobs: And when in your career did you first start thinking about climate goals and why?
John Lochner: You know, I've always enjoyed personally being out in nature, whether it's, you know, skiing, surfing, all sorts of different activities. And I think that has always percolated into what I've thought about in terms of what I wanted to do in my career. I've always thought it important to understand where the private sector is coming from, which is why most of my life has been in the private sector. But NYSERDA has given me an opportunity to kind of match my knowledge of the private sector with using government support to enable the private sector to reach climate goals. But the climate's always been of interest to me.
Jason Jacobs: And I guess looking at the climate problem overall, especially given the diversity of experiences that you have in investment banking, on the NGO side and now working in government, I mean, how do you think about the climate problem and the biggest levers that we might have to address it?
John Lochner: What has it really hit home to me I think in the last few years is the timeline over which we have to hit our goals. And so there are so many things we can be doing and should be doing to help reach our climate goals, but we really need to think about all of those things within the context of, we really only have a few decades to address the climate and not meet all of those worst case scenarios estimates.
And then again, nobody knows exactly when or exactly how, but it really to me puts, puts timeliness on my priority list when I think about what to do. And so if I think about innovation, there are a variety of innovations that are out there. They are partially proven, partly in the market, but need support with financing, de-risking and have an opportunity to provide a substantial portion of the solution that we need by mid century.
And so I think quite a bit about focusing on those efforts. Obviously alongside we need quite a bit on the policy realm, a carbon tax would be one of the most obvious ways I think to attack a variety of different problems. And we need political will, but we also need, I think, social wealth.
Jason Jacobs: And when it comes to NYSERDA's charter, given the wide array of solution types that we need, not just in innovation, but as you said in policy, and I mean, I would even argue in things like education, in fixing our democracy, in activism, in philanthropy and on and on and on, uh, journalism, how do you think about, or how does the organization think about what key buckets it will focus on and within those buckets, the types of initiatives and services that you will provide?
John Lochner: Sure. Again, the Climate Leadership and Community Protection Act, which passed in 2019 has really set the table for NYSERDA and the department of environmental conservation to come up with a roadmap to meet the goals of 2050 and the interim goals as well. And we're currently in a process with the climate action council of developing a set of prioritized agenda items in terms of policy, innovation across the board, you name it, what's needed to get the state to those goals. And so we're really in the middle of doing that right now and coming up with the frameworks that we need to execute successfully.
Jason Jacobs: And given that every sector of the economy needs to decarbonize, how does NYSERDA think about focus areas from a sector standpoint? Are there any key areas that you explicitly do not focus on?
John Lochner: I don't think there is any area we do not focus on. [Laughs]. The climate legislation requires us to ensure a just transition, and so we think quite a bit about supporting environmental justice communities and disadvantaged communities and ensuring that the transition over the next 30 years is a fair and equitable one.
And that has implications for how we think about building stock and how we think about citing of renewable energy and how we think about even the idea of offsets versus replacing polluting projects in place. And so that's something that really is front of mind I think right now. Resilience is becoming more front of mind as well. How do we ensure that as climate impacts continue, I mean, we've seen Hurricane Sandy of course already.
We know that we're already feeling the effects of climate change. You know, how do we mitigate those effects? Because again, in many instances, those effects fall to disadvantaged communities on a disproportionate basis. You know, otherwise I would say it's the Climate Action Council's job really right now to help us prioritize as a state where we need to go and in what order.
Jason Jacobs: And just tactically about how many people work in the NYSERDA organization and what kinds of skillsets exist on the team?
John Lochner: We're about 350 people right now. We have policy expertise, renewable energy, project development expertise, financing expertise, early stage innovation investment expertise, quite a bit of solid project management and government policy expertise as well. It's really a diverse team of really impressive skill sets. And again, New York is very lucky to have a NYSERDA. There're not many states with an organization like this.
Jason Jacobs: Why do you think that is?
John Lochner: That's a great question. I'm not sure I have a good answer. California has a great organization, Massachusetts has a strong organization. New York is one of the larger economies in the world on a standalone basis as is California. That may be one of the reasons why we're able to have such an organization. But to be honest, I don't know that answer.
Jason Jacobs: And with such a diversity of skill sets on the team, how is that set up? I mean, is each division set up and working fully independently? Is there a lot of collaboration and shared resources across? What are the internal dynamics look like with that diversity of skills under one roof?
John Lochner: I would think of it the same way I think about how NYSERDA interacts with other agencies of the state of New York. We are all trying to get to the same goal. And there are numerous touch points that we all have to coordinate on to ensure that we're optimizing the use of our time, the use of our dollars and making sure that we reach that goal in the most effective way possible.
So there is constant, and I would say at all levels, coordination across NYSERDA and then across the state as well. And as an example, I, my team helped to develop an MOU with the Department of Financial Services, and so NYSERDA and Department of Financial Services signed that MOU saying that we were going to coordinate on climate finance and insurance.
And that will end up being most likely a broad range of things, including early stage support to climate risk analysis metrics and other perhaps innovation subject matter, as well as more broadly policy and support that would help drive for example, what we do in buildings and how we think about building financing.
Jason Jacobs: Got it. So really, if you look at the state of New York, and I'm going to try to, this is a little trick I do to test how well I'm understanding something, is I try to condense and summarize what I thought I heard as a test of how well I understand it. So it sounds like NYSERDA is a government agency, and within it there's 350 or so people with diverse skill sets.
And if you think about the clean energy transition that we need to go through and make sure that from a standards department, from the making sure the right policies get put in place at the state level, making sure that there might be, let's say awareness within the different municipalities or regions across the state of the policies and how to think about them and the effects, there is an innovation arm that has catalytic capital for companies that are pushing innovations that can help with this transition. Really kind of anything and everything that can facilitate transition, you try to foster that from a government level to help the state get to where it needs to go.
John Lochner: Yeah, I, that, that sounds right. I think we are fostering transformation to reach our climate goals as a state, both within the state and in the private sector.
Jason Jacobs: And it sounds like the innovation arm, so there's the catalytic capital that you mentioned, are there other aspects to innovation that are under that group's charter?
John Lochner: Yeah. So we fund out of a roughly $800 million tenure fund all of our projects and programs. And they include investment programs, they include support to the ecosystem and they include developing the right relationships for the state in terms of pushing forward a state climate innovation agenda. We see innovation as offering a tremendous opportunity for the state to build a green economy, support jobs and support a revenue positive opportunity for the transition.
And so, you know, if we look at California and the tech markets there and the kind of movement of capital and jobs into the Bay Area in particular, but also LA and other places, you know, New York has an opportunity because it is ahead in climate to take some of those same leadership positions in some of the climate tech innovation areas that we're focused on.
Jason Jacobs: And when you talk about some of those goals around jobs and innovation and the innovation agenda, if you will, what are the key KPIs that you are tracking against to know if you're on track? And what are some of the key milestones as a group that you're trying to hit, whether it be one year out, two years out, even five years out, if you think and plan that far ahead?
John Lochner: Yeah. So for our specific investments that we make, we look at follow on funding, we look at patents, we look at exits, we look at overall portfolio metrics such as leverage. So for every dollar of state money that we're spending, how many dollars come in after us and are crowded in. And we also track jobs and economic development impact. At the end of the day, we are a New York organization, we really do care about supporting New York.
And we've also been working with ARPA-E, the federal innovation lab and energy and coordinating with them on how they track their own success and exploring a variety of new metrics as well. You know, other ways we think about our, measuring our success to what I just mentioned, supporting innovation across New York state, I think there's a tremendous economic development value there.
Innovation is one of the largest jobs multipliers of any sector. And tech innovation, I don't know if many folks are aware, is responsible for roughly three quarters of all economic developments since World War I and improvements of quality of life since World War I. So innovation is a tool to reach our climate goals while also supporting a just transition and a better quality of life. It really is perhaps one of the best options we have.
In terms of other ways we measure our success, I'd just say innovation to some extent is an art form and putting together the right process to ensure that we are constantly making the best decisions is something we're always trying to get better at, it's something always worth improving on. And so thinking about all of our decision-making and all of our analyses and all of our diligence and standardizing and then constantly improving is something else we really care about doing.
And lastly, I'd say there are so many opportunities to invest capital across the climate space. We really need to be catalytic in what we do. We need to be using our dollars in the best way possible. And so constantly ensuring that we are attacking kind of the biggest, most ambitious problems, the problems that the private sector won't, the problems that if we don't attack, we won't be able to achieve our goals, it's a constant refinement, I think, of our portfolio and where we need to focus.
Jason Jacobs: Any examples come to mind of something that the private sector won't that either you have backed in the past or would like to directionally?
John Lochner: Sure. And sometimes it gets pretty specific here, but we can look at long duration storage technologies. In many cases, there are not markets for long duration storage although many states understand that they will need long duration storage as part of a clean grid solution, particularly with substantial intermittent renewables.
And so a lot of these projects or companies have been able to get some equity capital, some other funding for a variety of sources, but when they go to actually develop projects, it's quite difficult to raise capital to develop these projects. And so we have supported a number of those and we'll continue to, to support projects and demonstrations like those where there is a funding and a market gap, but at the same time, we know 10 years from now if we don't have long duration storage, we're going to have a problem hitting our goals.
Jason Jacobs: So I guess it depends on who you talk to. But one question that I have about catalytic capital is I understand that catalytic capital is when technologies or innovations are important for a mission, and that there is a gap where maybe they can't attract market based capital. How important is it that if you're going to make one of these catalytic capital investments, that it ends up being a market opportunity that looks a certain way at end state or in some defined timeframe? And if that's important, what is that metric and what is that timeframe that you look at?
John Lochner: So it's very important when we think about what we do, if there isn't an off-ramp to our capital, we really aren't scaled to be able to support any technology for a decade or two and wait for the market to come in then. It's very project and investment dependent in terms of the timeline and in terms of the next steps. And we are able to be quite patient, but we certainly, in all of our investing and frankly, all of the work that we do including our technical and policy support, we're looking for what's the next step for what we are going to enable and how is that going to come about?
Jason Jacobs: And is it structured like a fund?
John Lochner: In some ways, yes, in some ways, no. It is a fund, but it is a government fund. And so it does not play by the same rules as a venture fund or a private equity fund would.
Jason Jacobs: What are some of the differences?
John Lochner: We do look at leverage for instance, and investment return in terms of additional capital that comes in and eventual value of our investments. But at the same time, we by definition cannot be picking the winners on a near term basis. So if you think about a venture fund looking for five to eight year returns and exits, if we're investing in those opportunities, then we're just duplicating what the private sector is doing and so we're not really providing additional value to the economy.
Other ways we are, again, as an arm of the state, we are looking to support solutions that are going to be necessary for the state to be successful. And there's a Venn diagram there with what would be successful nationally or for a private sector investor. But there's certainly a lot of opportunities where the state needs something that the private sector wouldn't necessarily pick up.
Jason Jacobs: How often is that list from the state refreshed?
John Lochner: We do very regular refreshing of our focus areas. I've been at NYSERDA about 18 months. And it perhaps it's a little bit different this time because we had our climate act come into being during my time at NYSERDA. But we have done about three strategic refreshes of the innovation portfolio in the last 18 months.
Jason Jacobs: And in terms of those focus areas, when you do those refreshes, are the skillsets that are required on the internal team shifting in terms of what's needed?
John Lochner: They are. This is something that NYSERDA has been, I think, very good at as we are constantly in need of new expertise. And rather than choosing to hire additional teams constantly, what we do is we look to leverage our relationships in the corporate sector and the national and global R&D sector and innovation and bring in the right experts to help us understand where we should be using our dollars and where we should be focusing.
Much of our capital is deployed using independent advisory boards or independent scoring committees of experts that help determine where to put the capital as well. And so internally we have a core skillset of supporting project management, government procurement, we have core expertise around energy and climate policy. But when it comes to saying, okay, now we need to look at direct air capture for instance, or now we need to look at hydrogen, we have a broad spectrum of experts that will pull into a variety of different pieces of the development of that strategy and in the execution of it.
Jason Jacobs: As I've talked to different fund managers of different pools of capital, some of them catalytic, some of them are market based, some of them are the climate focus, some of them not, but I hear different criteria thrown around. Like some are more comfortable with science risk, for example, and others don't want to touch climate risk.
Some of them care a lot about capital efficiency and others, they absorb more capital over time, that's no issue. Some want to avoid significant project finance requirements. Others want to stay away from anything that requires future policy change that isn't yet in place today, like a price on carbon. So as NYSERDA is evaluating opportunities, where do you stand on those different criteria? And are there any ones that I didn't mention that you think about a lot?
John Lochner: So we really care about impact. We're willing to take tech risk, policy risk, a variety of different risk that private sector won't. And again, that is the best use of our capital because we are so unique in terms of where our capital comes from and how we're allowed to deploy it. And so it's very much finding where the private sector says, we will not take this technology risk, that's where we want to spend our money.
And where we see policy moving one direction, 10 or 20 years down the line and others don't want to take the risk that it will end up being there, if New York state is saying, we believe that's where our policy is going, that's where we invest into that policy risk. So we are playing really, again, that filling those gaps where the private sector typically says, you know, we don't want to do that. And so the green bank's another great example at NYSERDA of an organization that says, where is the private sector not helping the energy transition? Okay, that's where we will finance.
Jason Jacobs: And when it comes to the companies that you invest in and the rounds that come together, are you typically coming in outside of a standard round, or are you coming in as part of a larger investment syndicate? And if it's part of a larger syndicate, what types of investors are you usually alongside of?
John Lochner: Yeah, we typically in in our own rounds. We have had a few different programs where we have coordinated our funding with the funding of others. It's been complicated because if we do that, our theory that we're catalyzing something becomes a little bit more confusing. With our latest convertible note, we are providing the capital ahead of additional capital, but requiring additional capital in order to close.
And our goal there is that specifically the offer of our money is catalyzing that additional capital. Historically though, we've funded companies at a time where they've had a new product development opportunity, a scaling opportunity, some other opportunity that is not going to probably hit a traditional investors threshold for a new round or a new valuation. And so we've supported them in order to get them to that next level.
Jason Jacobs: How are you finding these opportunities or how are they finding you?
John Lochner: So NYSERDA is not new. We have a long history with many investors, many startups, many R&D shops, corporate, the federal government, you name it. We are all in regular contact. And another important issue for using our capital appropriately is making sure we know how everyone else is using their capital.
And at the end of the day, this is a small universe of high quality companies and high quality ideas and there is a lot of capital out there. And it is relatively easy at our level and with a large team to sink into what folks are doing, what different companies are out there, what their needs are and how those match up with NYSERDA and New York.
Jason Jacobs: And how do you define and measure impact with these companies?
John Lochner: We've been going through quite a bit over the last year of trying to redefine how we do that for the climate act in particular. And so we've been thinking much longer and harder about gigatons of carbon dioxide equivalent. We have run into a couple of issues, one being that in order to look at every single investment that we make and truly develop a robust lifecycle analysis and carbon mitigation analysis, it's extremely expensive.
And we can afford to do that in certain cases, but in certain cases, we're not sure it's quite worth it. Additionally, in certain cases, what we're really funding is a product or a solution or a company that we think will change the dynamics of an industry and drive that industry towards a decarbonized future. And so the measurement is, did the industry change or didn't it?
With the amount of capital that we're deploying in a lot of cases, it's really about the broader relationships that we bring to bear and the coordination of policy and the state with what the private sector is doing and making sure that we are educating all parties appropriately to help drive that change. And so it's more than just the dollars. It's really a coordinating role that we play.
And it's difficult, frankly, in a lot of cases to really measure exactly what have we done, what did our partners do, what would they have done without us anyway? It's a constantly refining process where we're actually hoping to make some next steps there on the next six months.
Jason Jacobs: And what is your typical check size or check range? And what is your typical involvement level, if any, as it relates to board seats or any other way you might engage with a company post-investment?
John Lochner: On the R&D side, our typical check size is anywhere from $50,000 up to a couple of million and our sweet spot's probably in the $500 million range. We tend to be relatively hands-on with R&D projects. The goal is to provide that technical support, that policy support to build relationships with potential customers. That's where we see a lot of our value add.
We don't take board seats, we don't take active roles in the governance of these companies. We're really providing funding to support specific next steps. On the tech to market side it's very similar. Our dollar amounts are usually roughly the same. They can be lower, maybe 250 to 500,000 depending on what we're doing or the intervention that we're looking at providing.
And again, we're not looking to be part of a governance structure. Increasingly what we've been doing is setting up external funding, external organizations. We have six external incubators, they run themselves, we provide funding. We fund two accelerators. Again, they have their own boards, they have their own management structures. We provide guidance and support like any other board member might, but in many cases don't even vote. We're looking to build something bigger than ourselves. We're never going to be able to provide all of these services to the entire ecosystem.
Jason Jacobs: Are there situations where these companies might be bidding for some type of business with the state? And if so, what is your approach just in terms of whether to get involved and how to get involved in those processes, if at all?
John Lochner: What type of process exactly?
Jason Jacobs: Oh, let's say they're selling software or selling services, they're selling something and the state might be a customer of that software or service.
John Lochner: Typically, the state is not buying a lot of products that we're investing in because we're too early stage and the state is looking for other solutions that are proven. But when there is an overlap, it generally does not change anything that we do in terms of our process or how we think about the opportunity.
Jason Jacobs: Cool. And then you mentioned accelerators, but we haven't talked really about those. Can you talk a bit about the nature of your involvement with accelerators and if there are any in particular that you might want to highlight that you've been working with most recently?
John Lochner: Yeah, absolutely. One of them is just getting off the ground and that'll be an upstate in Rochester. And so maybe I won't go too much into that one right now. But the other one has been up and running now for, wow, I guess the better part of a year. And it's The Clean Fight, which is the New York City outpost of New Energy Nexus and they've-
Jason Jacobs: Great name by the way.
John Lochner: Thank you. Thank you. I didn't choose it. I won't take credit. Their first focus in their first cohort is around building tech and they're looking at later stage businesses and helping them come into New York or the ones that are in New York, helping them get to the next level. And we're very excited to be partnering with New Energy Nexus here. Again, I think there's just tremendous value to taking proven models of support that are global and helping them expand in New York rather than trying to reinvent the wheel ourselves.
Jason Jacobs: And what's the NYSERDA role with that one just as an example?
John Lochner: Sure. So we are a funder. We have a non-voting board seat. Otherwise, we like we do with all of our incubators accelerators and other partners, as much as possible, we support their networking, their integration with the New York ecosystem, introductions to corporate and state partners and support with what's going on with the rest of NYSERDA and the rest of the state.
Jason Jacobs: And then maybe for the last set of topics, if it's okay, I'd love to kind of pull it up a level and just talk about maybe any key learnings. Because it seems like, as you said, New York is way ahead of the game as it relates to the amount of resource and how well coordinated that resource is in tackling this problem at a state level. I mean, how do you think about the role of the states, for example, versus the role of the federal government and how those should interrelate in terms of tackling climate change and tackling the clean energy transition?
John Lochner: You know, there's a ideal version of that and then there's a realistic version of that. And I guess I'll start with innovation. It would make a lot of sense for the federal government to fund a lot of the basic and applied R&D that needs to happen across the country in a coordinated strategy to support all of the different innovation needed for climate change and hitting our decarbonization goals.
You know, the DOE itself admits that it's not spending enough money. I think every analysis I've ever seen suggests we're not spending anywhere near the amount of money we need in innovation. And so what does that suggest? Well, it means there's opportunity for others to play a role there and that every dollar that we can matters quite a bit.
Perhaps in an ideal world, New York state would only take later stage pilots and demonstrations, support them in the state, educate state actors on these innovations, help de-risk perhaps a little bit later stage. But given where we are with the federal government, that's not the only need of the state and the nation. I would think a similar thing, I think about the climate act to begin with.
If the federal government had come out with a carbon tax or with a climate act, that would have been the most, uh, easiest to implement solution for the whole country, play by the same rules and create a large market that's standard. In absence of that, I think New York has acted and other states have acted. We are pushing ahead as much as possible, and hopefully we can provide templates, including how to do and how not to do in certain cases, a lot of what the state has done at the federal level for, for next administration.
Jason Jacobs: And given how different the populations are, how different the jobs are, how different the landscape is, how different the weather is, how different the economies are, how different the politics are, et cetera, et cetera, I would imagine that there are some stark differences as it relates to the right areas to prioritize and how those priorities are allocated in terms of percentages as you look from state to state to state.
So I guess one, do you agree with that? And two, if you do agree with that, what are the implications as it relates to even if the federal government were to say, look, to take on a bigger role in this transition, you know, the dangers of say one size fits all versus leaving the autonomy in the state's hands to get it right.
John Lochner: I do agree with you. It's definitely a very different game at the federal government, and every state is unique in many cases. At the same time, if you look at offshore wind, the DOE and NYSERDA set up the US National Offshore Wind R&D Consortium. It's a national body. We have, I believe, over a dozen states now as members.
There is a large contingent of states for many of the different technologies that we need to hit our decarbonization goals, where many, many states have the same interests or similar interests. So up and down the Eastern seaboard, offshore wind is a key piece of the solution.
Distributed solar is a key piece of solution for many states, so is utility scale solar, so would hydrogen potentially be of great interest to many states, so would carbon capture, so with natural carbon solutions. So it's certainly not a one size fits all, but I think there are a variety of different solutions that are multi-state at a scale where the federal government could be in the right position to help coordinate and fund.
Jason Jacobs: And what are some states that you look up to and consider a peer group as it relates to pioneering and helping be role models to pave the way and help other states to figure out how they can get out of the starting gates and move faster?
John Lochner: I would cite the US Climate Alliance as being extremely helpful as a, as a non-state entity, but as an entity that, that really its mission is really to do just that. We certainly coordinate on the innovation side with California and Massachusetts quite a bit, as well as the federal government.
To your point, I think different states are at different stages in different pieces of the climate puzzle and so I'd look to a broad range of states, frankly, depending what topic we're discussing. Hawaii, I think has done some tremendous work as well in, in different pieces, smart grid, they've got Elemental accelerator, which I know works very closely with the government there. And I think that's a great model for them, which I think is great for us as well.
Jason Jacobs: And if someone from the Biden transition team called you up in a few weeks and asked for your counsel on what types of things they should prioritize in their first hundred days, let's say, what would you tell them?
John Lochner: Let me stick to the innovation piece perhaps a little bit here too. But there is... and maybe I'll, I'll use the Offshore Wind R&D Consortium again as an example. There is an opportunity for the federal government to push economic development and innovation to support our climate goals through offering, I think, bigger prizes to states.
There are a lot of cost share models where the state can share or can offer up a half a million dollars or a million dollars to cost share with a DOE program. And that's phenomenal. And it creates a support mechanism for the best and brightest, I guess, across the all 50 states. At the same time, there are opportunities for ecosystems to develop in specific climate technologies.
And as much as the federal government could provide the types of incentives to excite states in trying to build and own those ecosystems, that could really drive the coordination of economic development of building it back from the Coronavirus and the decarbonisation in a much more accelerated fashion, which I think is what we need.
Jason Jacobs: Actually, one thing I realized that you had said earlier that I, I love to just poke on a bit, you mentioned the just transition, the importance of the just transition and how that's one of the things that NYSERDA cares a lot about. How does that manifest in terms of innovation specifically? Is that a separate and distinct group that focuses on that, or is that interwoven into the work that you do in innovation? And if so, how?
John Lochner: Yeah, it's not a separate group. We NYSERDA and the state look at it and the law requires that 35% of benefits go to disadvantaged communities. And that's a minimum. That's not a, we've hit 35%, check the box. Innovation in some ways is more difficult to loop into that.
But to be honest, I've had some great conversations recently with some EJ stakeholders around what they want to see from innovation and how they want to see systems of energy and environmental power change and what that means in terms of ownership of energy assets, what it means in terms of whether we think about a distributed model versus a large scale model, what it means for micro grids. And so I think there's actually tremendous opportunity for innovation too to support the interests and needs of disadvantaged communities in EJ stakeholder groups.
The other thing I would mention here is we are in the process of developing three transportation prizes, all focused on environmental justice and disadvantaged communities. One on advanced mobility, clean and active, one on supporting the reduction of air pollution directly through electrification and active transport modes, and then one on electrification of heavy and medium duty vehicles.
And all of those are looking to support demonstrations and pilots that are able to scale after that demonstration or pilot, and that are specifically focused on disadvantaged communities. So plenty of our focus in our work is going that direction.
Jason Jacobs: Awesome. Yeah. I'm glad I circled back on that one. And last question is just if you had a hundred billion dollars and you could allocate it towards anything to maximize its impact on the clean energy transition, where would you put it, how would you allocate it?
John Lochner: Let me start with human capital. Having the right people in the right places to help push things along is tremendously important. And having those people know the state of the art is tremendously important. And so I would spend billions on city planners, resiliency planners, R&D, PhDs, the right policy and lobbying experts, you name it.
I would spend billions on innovation. The IAA says 75% of the technologies we need to reach our mid-century goals are still early stage so we need billions and billions in innovation. And I would spend billions on education. I think that's another piece. Without broad scale understanding and agreement on what the problem is and how best to solve it, we're not going to get there.
Jason Jacobs: Awesome. And John, is there anything I didn't ask you that I should have or any parting words for our listeners?
John Lochner: Know just, you know, NYSERDA is really out there looking for the best ideas and the best partners across the globe, and we'd love to hear from you and a certain innovation. If you're a early stage tech company in climate across the board, if you are a company with an R&D idea, we'd love to hear from you.
Jason Jacobs: Great. Well, John, thank you so much for coming on the show and for all of the important work that you do.
John Lochner: Thanks so much.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is .co, not .com. Someday, we'll get the .com, but right now, .co. You can also find me on Twitter at jjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made be say that. Thank you.