How New York State Is Becoming the CleanTech Capital with John Lochner of NYSERDA


This post is by MPD from @MPD - Medium


On this episode I chat with John Lochner, the Vice President of Innovation at New York State Energy Research and Development Authority (NYSERDA).

NYSERDA is the government entity in the state of New York that is taking the lead to help drive innovation in the CleanTech ecosystem. Not only are they helping NY meet climate goals, but they’re also helping to write the playbook for how governments can drive the initiatives and investments needed to combat climate change. This is a wildly interesting and important topic and what they’re doing is incredible.

Listen via your preferred platform or watch/read below.

Twitter: @NYSERDA@mpd

Guest Links: NYSERDA, Facebook, LinkedIn, Instagram, NASEO

Podcast Links: Website, YouTube, Twitter, Facebook, LinkedIn

Transcript:

MPD: Welcome everybody. I’m Mark Peter Davis, managing partner of interplay ventures on this podcast. I interview innovators about their strategies, industries, and decisions. On today’s episode, I chat with John Lockner, the vice president of innovation at night. Nice Serta is the New York state energy research and development authority.

It was established back in 1975 to support clean energy and protect the environment. John is also a board observer at the clean fight and accelerator helping growth stage, clean energy startups win in New York, and they’re also boosting economic opportunity and creating jobs prior to his public service.

John served in a variety of finance and clean energy roles at firms like Oliver’s. Merrill Lynch, credit Suisse, and importantly, the national resource defense council. He did his undergraduate at duke and has a master’s from Harvard and an MBA from Wharton. Now, given John’s background, this episode is focused on how governments can help startups fight climate change.

As recent reports indicate climate change is here to stay. And while there are many ways to lessen its effects, we’re facing a massive transformation of how our society operates. Creating a need for new types of innovation through NYSERDA and the clean fight. John is helping to scale the clean tech startup ecosystem in the state of New York it’s issues like climate change that require the leadership of institution as big as government to take charge.

And I served as helping to write the playbook for how governments can drive clean tech initiatives that are needed to make a real difference. And John’s a hell of a guy and you’ll hear during our talk, he is clearly the right person for this. Uh, this is a wildly interesting and important topic, and I hope you enjoy learning about it as much as I did

welcome John. Thanks

John Lochner: very much.

MPD: So tell us, I think a lot of people listening to this are not going to know a whole lot about NYSERDA. Uh, the government does so many things, uh, but it’s, it’s lost in the messaging and the. Would you mind just giving us like a high level overview, what the organization’s

John Lochner: about?

Absolutely. And, and I think you’re right. The government does work in mysterious ways, um, to you to what you said. We were founded in 1975 as a response to the oil shocks at the time, uh, to think about system-wide affordability and resiliency, uh, in the face of escalating energy prices. Um, since then we’ve taken on a number of different roles over the decades, but the, the latest and greatest is we are now one of the authorities of the state that that’s really driving the decarbonisation, the climate goals.

Um, we are a co-chair of the climate action council, which is the organization set up by the state to set forth, uh, how we actually reached these climate goals. Um, we also have a lot of typical functions. Not that these would be typical to most listeners, but of a state energy organizations. So we deal with nuclear regulatory issues.

We deal with, uh, resiliency planning in terms of energy, in the case of hurricanes or natural catastrophes and a whole host of other things. I mean, we really, um, we, uh, we run the gamut in terms of what we do in energy and climate.

MPD: Okay. There’s a lot there to unpack. So I want to dive into each of those, if you don’t mind.

The climate goals you’re referring to. Are those climate goals established at the state level?

John Lochner: Are they yeah, there they are state climate goals in ninth, in 2019 in July, we passed the climate leadership and community protection act in the state. And that became effective in January, 2020 that law, uh, sets out that we must decarbonize 85% by from our 1990 figures by 24.

Um, so that is, it’s no longer a, um, gosh, we hope we’re going to get there. It’s a bylaw we have to get there. And then we’ve got some interim targets as well. 70% of the state’s electricity supply needs to be renewably produced by 2030. We’ve got to drive down emissions by 40% by 2030. And then we have specific some specific installation goals or in some renewable technologies like offshore, wind, solar and energy storage.

Um, and, and, and I first also mentioned very importantly, in the climate law, the climate act sets, sets out that we must drive an equitable evolution towards a decarbonized economy by which. Uh, citizens can’t be left behind environmental justice communities. Can’t be left behind disadvantaged communities.

Can’t be left behind. And so the law puts a strong focus on economic development, green jobs, and requires us to ensure that at no less than 35% of the benefits of this de-carbonization transformation are received by those disadvantaged communities.

MPD: Okay. Well layer by layer. I

John Lochner: know. Keep.

MPD: Okay. Fascinating.

All right. So one thing I keep hearing look, the, the, the date you’re throwing out the 20, 30, 20 50, for anyone following climate change. You’re hearing those dates tossed around in relation to the Paris climate accord federal policy. They’re everywhere. And they’re always benchmarked against 1990. I don’t know enough about this.

W what is, what is so magical about the 90 19 90 date and is 20, 30 soon enough?

John Lochner: Um, You know, I don’t know enough about the history of the 1990 date. So I may not be particularly like

MPD: a spike pollution year. Why did they pick that date?

John Lochner: Yeah. You know, um, I said that is a great question for which I should have an answer and don’t um, so I’ll have to leave that one there next guy.

Yeah, exactly. Next Gus. Thank you very much for having me. I really appreciate it. Um, it’s been. Um, w where I can be more helpful around the 20, 30 days, um, the, the IPC report that came out, I believe yesterday, really set forth the fact that we need to decarbonize and, and let’s ignore the details for a second tremendously by 2030 that we have roughly a decade to do a lot in order to ensure that the world is on track, to not more, more than 1.5 to two degrees Celsius, uh, So, is it too late though?

Um, it’s really hard to say it’s nobody knows every time the IPC C report comes out, it looks worse and it looks worse sooner into the future. Right. Then the last report. And so all we know is we need to be moving as quickly as possible on as many fronts as possible. And that I would say New York is doing.

And I’d say the byte administration is also doing the same thing. Um, You know, there were a couple of articles that came out recently with respect to the infrastructure plan out of the byte administration that looked at the fact that, uh, some of the targets for Evie adoption and Evie charging deployment literally would strain the utility, his ability to deploy.

Right. And we’re talking literally how many people do the utilities hire? How many people can be in the field? How many of each was, can they install? Um, I do think we can make those targets, but we really are kind of hitting. Um, that threshold I’d say of, of using all the pieces in the puzzle or all the tools in the toolkit to get there.

Yeah. So what does a

MPD: VP of innovation do? And I NYSERDA what is,

John Lochner: what is your job stay very busy. Um, uh, we are, the state is currently in the process of drafting it’s scoping plan for how to get from a to B. Um, how do we reach our de-carbonization equals. That work is in process. We expect to have a final set of recommendations and plans by 2023.

But in the meantime, there are plenty of no regrets solutions that, that we can move towards. And so that’s, that’s really what we’re doing in, um, as we wait for the kind of final decision as to which direction the state’s going to move to, to execute. So my team invests out of a, roughly $800 million pot of funding, and we invest directly into anything from applied research papers, all the way through to, um, demonstrations and pilots.

Uh, and then we also invest in startups support, uh, programming. So we have, uh, a free program that provides expert consultants, where we pick up the tab for startups. We fund the clean fight, uh, New York city based new energy nexus outpost focused on buildings and storage among other sectors. Uh, we found other accelerators.

We put out a solicitation to create a program to support carbon devalue commercialization. Um, so we, we really are trying to develop an ecosystem. Number one, in the state of climate technology companies, uh, but also produce the right technologies for the state to be successful with its own decarbonization goals.

MPD: Okay. So the innovation side is both create jobs and put us keep things moving towards these goals. But it sounds like the plan you’re talking about is going to be a little bit more lockstep of, Hey, we need to hit a certain decarbonisation number on a certain day. And here are the things that are going to be explicit milestones.

They’re going to happen. What, what what’s in that when people are, I’m sure, it sounds like it’s not nailed down, but what are the types of buckets that people are thinking about for people who are listening? Who know we have global warming? No, there’s a problem. No, it’s in the media. No, the politicians are talking about it.

What are the things that people actually, what are the levers that you guys actually have to have?

John Lochner: Yeah. So, I mean, for first and foremost, I think something the state did early was we put out gigawatt deployment targets for renewable energy. So we said, we’re going to put nine gigawatts of offshore wind in New York state.

And that is relatively simple. Right? You say, you’re going to build it, you go and build it. Um, first you’ve got to finance it. So we created a, a, uh, Um, basically we require, uh, organizations in the state to buy certain renewable energy credits and those fund, the development of the offshore wind, uh, which we then feed into the system to provide low cost affordable, clean electricity, um, when it comes to.

The building sector, the industrial sectors, the agricultural sectors. So that, that work really is ongoing. Uh, but it’s, it’s really, it’s a mix of carrots and sticks. It’s regulation, it’s support of deployment of existing technologies or nascent technologies to get them into the market faster. Um, it’s coordination with corporations and utilities in the state to get them to move alongside us.

Um, we use procurement as a tool to drive uptake of newer technologies. Um, and, and in many instances, we, we just, by the simple fact of convening and demonstrating to the private sector, directionally where we’re headed and why, you know, we help dispar the private sector to move in the same direction, because hopefully we’re, we’re a trustworthy partner and they realize that if we’re moving that direction, they better move in the same direction.

Right.

MPD: Is this is a strategy here for what it’s actually going to take for the world to move in the right direction. You know, kind of winning by a thousand cuts, if that phrase even makes any sense, it’s kind of inverted. Um, there is a really like, Hey, there’s two industries that account for a huge percentage of it.

And we just need to do those industries differently for three or four. Is there an 80 20 rule applying here?

John Lochner: Yeah, it’s um, it’s a little bit in the middle. Uh, the power sector. Um, is perhaps for this DeLong in terms of decarbonization. And we have a lot of the technologies we need for decarbonization of the power sector, solar wind, geothermal.

Um,

MPD: so it’s just a matter of money and rolling it out now on the power.

John Lochner: Yeah. Um, it is more complicated than that, but it’s a question of, yes. How much does it cost and how quickly can you do it versus can it happen? Um, in most instance, Uh, for the transport sector, the transport sectors, about 30% of all carbon emissions in the state.

Um, on, on the one hand, it’s an 80 20, you got to deal with on-road vehicles, right? Um, on the other hand, you’ve got to deal with aviation. You gotta deal with Marine. You gotta deal with off-road vehicles and they all present their own problems. Uh, but if we dealt with just on-road transportation, we’d be feeling pretty good about where we were heading.

Uh, the building sector in New York in particular, uh, is, is relatively dirty. Uh, we have a lot of old buildings. They use, uh, varying amounts and types of oil and natural gas for heating in particular, figuring out how to, how to change that, how to decarbonize those buildings is one of the things new York’s really focused.

Uh, some states have a lot more electrification into how they built their building stock originally, but you know, up and down the Eastern seaboard, Western Europe, places where we’ve got buildings going back centuries, it’s pretty much the same problem. Um, in industry a little bit more difficult and a little bit more bespoke.

How do you decarbonize a blast furnace? How do you decarbonize aluminum smelting? How to decarbonize cement? Uh, You know, hydrogen clean fuels can play a role. Uh, carbon capture might be able to play a role there, a variety of technologies. It’s uh, the industrial sector does provide quite a bit of the overall carbon footprint.

Um, but, but it’s not an 80 20 rule in terms of the solutions. So if we were to

MPD: tackle, it may feel like, uh, it sounds like energy, which I had suspected and automobiles. We obviously know there’s a path there at least towards, uh, electric. Right. Uh, solutions. I know that they still produce carbon somewhere up the chain.

Um, is there a path? It are the, both of those in the bucket of we know how to do it, but it’s just a matter of money and policy and will and process. And where do you, where do the buildings sit in that? So taking a step back, those first things you mentioned, do we know how to solve all of those sections?

And if we did, are we in a pretty good place overall? Or is it still not enough?

John Lochner: So, let me, let me, um, we know how to do all of this. The question then becomes at what price, how quickly who pays. Um, we could decarbonize any building. Uh, it just might cost quite a bit. So in, in, in for, for cars, for instance, Tesla’s very successful, plenty of other electric vehicle makers out there.

It’s very clear. They work. It’s very clear consumers like them. Um, we get to some challenges and electrification for heavier duty vehicles thinking about 18 wheelers, thinking about trash trucks, but Tesla’s working

MPD: on lease the 18 Wheeler

John Lochner: too. Right? Tesla is so, so are many others. Um, I think there’s an open question as to whether there’s a better electrification solution there than perhaps a fuel cell vehicle, uh, which is also being worked on by a number of OEM.

Um, and so again, it comes down to price reliability. How do you provide the value that the owner of an 18 Wheeler wants? Um, but we know how to do it. It again, just comes to price on the building side. Same thing. I mean, you know, I live in a building in New York city with central heat. You could rip and replace the boiler and all the infrastructure in the building, it would just cost.

Right. And so the question is, is there a way to reuse it again, renewable natural gas, clean hydrogen? What are the solutions? What are the implications? There are coal pollutants produced by some of the decarbonized solutions. And so we got to think about that as well. On the heat pump side, heat pumps have a high global warming, potential working fluids in them.

Um, on the hydrogen side, uh, if you combust it, you produce not. So we’ve got to keep thinking about what are all the ramifications of decarbonizing and not just decarbonize and create other pollutant problems at the same time.

MPD: Yeah, it’s fascinating because it’s so clear that as I suspected a lot of this, we have a path to do.

It may not be cost-effective yet, but the people who would bear the expense of fixing it are not the people who are hurt by the pollution necessarily, at least not directly. So there’s this, it’s this misalignment at its core, isn’t it? Or is it.

John Lochner: Yeah. Um, I mean, certainly there have been, uh, there is a mismatch between who is likely to be harmed most by climate change who has probably created the most, uh, carbon dioxide equivalent, uh, tons of gas.

Um, and then who pays, I think is still a little bit of an open question. Um, if, if a utility funds an energy efficiency solution for a private bill, Uh, the argument is made that that’s good for the system. Um, but it’s obviously better for that one building. Um, and so we, we’ve got to continue to think about how do we socialize these costs, uh, in a way that’s appropriate for society.

And I, I don’t know that anyone has the answer to that.

MPD: Yeah. Is there a number when you look at the energy space, it’ll cost total cost of the automotive? Is it, is there a number out there and I’m sure it’s, you know, the game is just knowing what I know about kind of how we scale. Uh, as costs come down, I’m sure the cost will come down materially and this will all be viable hopefully soon enough time.

That’s the scary part. Yeah. Um, is there

John Lochner: a number that there are many numbers in the process of being developed? Uh, and that’s, again, that’s part of what the climate action council is doing right now. Got it. Yeah. We did X number of studies. You got to integrate them all, make sure they’ve got all the right assumptions.

Make sure all the assumptions are, are uniform across studies and figure out what are the, um, implications of moving forward simultaneously in all the different sectors. Uh, but look, I’m I’m, I’m an optimist, uh, to, to your point around technology curves, cost curve. When we start to scale this stuff, it just gets less and less expensive.

Right. And it happens pretty quickly. And we’ve seen that with solar and we’ve seen it in other pieces of the, of the climate tech ecosystem. And I think some other key pieces that, that we need perhaps to get to our 20, 40, 20, 50 goals we’ll have the same kind of trajectory. I sound like

a

MPD: pretty good partner, a financial partner for a lot of these startups.

Is there, are there other things that you guys offer to the clean tech companies that you might be investing? That are value, add services, you know, partnerships or relationships or introductions, where else do you kind of help?

John Lochner: Yeah, so we, we definitely provide money, which everyone loves. Um, but, but I do think, uh, you know, and we are, um, we have concessionary capital with a, an ability to take risks as is appropriate, uh, that the private sector.

Um, and so we are able to support startups in ways that that traditional investors will not. Um, and that really is our role. And so that the capital is, is, um, not the only thing we do, but it really is important when we think about where do we invest in, how do we invest into startups that we want to become commercially viable to.

We want venture to flow into our other capital to flow into. Um, but we only invest when we think those other folks. Can you describe

MPD: a target company. So for folks listening, they can know that they should reach out to your

John Lochner: team. Sure. And, and, and it really is. We invest in long duration storage, hydrogen, uh, electrolysis companies, um, uh, companies that, that develop financial products to drive energy efficiency, adoption.

Uh, we really invest across a variety of sectors, but if, if you’re a company that has a solution. Uh, that is going to drive substantial decarbonisation and you have risks that are risks, that the private sector are not willing to fund you to take whether it’s new product development, uh, whether it’s development of databases, of information that you’d need to let’s say, provide statistically significant analysis that would drive adoption of your technology.

These are the types of things we, we love to invest in. Um, if you want to pilot, uh, Uh, geothermal long duration storage technology that, you know, it was only been piloted in three other places in the world call us, um, that that’s, that’s really who we are. And then, you know, to your previous comment, we add a lot of value, I think, by being the voice of the state and, uh, regulators to those startups and providing communication between the startups and those regulators.

Startups understand kind of where they fit in, in the states, uh, bureaucracy and the state’s bureaucracy understands the up and coming opportunities that we need to make sure our regulations and our rules and laws allow for fascinating.

MPD: So do the companies need to be New York based to come to you? Or is it just that let’s say they’re, you know, in Paris and they want to launch something and you guys are the most aggressive opportunities to capital out there.

Can they be. Yeah, I can do something.

John Lochner: It really depends on the program. Um, some of our programs we fund specifically to try to find those companies in Paris and, and bring them here. Some of the companies are more focused on, on local startups. A lot of them think about benefit to New York and benefit to New York is, is in a lot of ways.

Not about whether your headquarters this year it’s are you hiring here? Are you selling here? Are you helping decarbonize? Um, and so we, we, we think a little bit more broadly in terms of a lot of our programming. What’s the best

MPD: way for companies

John Lochner: to get in touch with you guys? Um, you know, for every solicitation that we have out on the street, there is a nice sturdy email attached to it.

And that is a real person who will actually respond to you. Um, so that is one way to do it. The other way is to just, you know, drop me a LinkedIn or an email, um, We love to talk to companies. We love to know who’s doing what out there in the market. And we love to sync people up with our ecosystem. So John,

MPD: why should a company choose to do all of this in New York?

Why not another?

John Lochner: Yeah. Um, because we have the most aggressive climate law in the country. And so we’re going to be the first to try things out. We’re going to be the first defined, uh, what works and what doesn’t, we’re going to be the place with your first, second and third class. So you’re going to do it here first with us.

Take your lessons and grow here and elsewhere. Um, we’re also really laser focused on green jobs and the development of a green economy, uh, which means you are a priority. If you’re working in this space, we care about you. Every agency and authority is focused on climate and focused on making sure that what you do works here.

MPD: As you know, I’m more on the it side of the world. Uh, for my day job is, is New York. Kind of dominant already and its position as a climate change hub or is that not even established yet in the states?

John Lochner: I, you know, Boston, Silicon valley I think are, are traditionally perceived as, as the real climate tech hubs with New York.

We are growing. We’ve got phenomenal upstate assets. We’ve got phenomenal experts, including a Nobel Laureate and lithium ion storage. We’ve got one of the national labs Brookhaven down in long island, which does tremendous work across climate technologies. We’ve got a tremendous amount going on, but I really do believe the next five or 10 years New York can really just do amazing things with its economy by focusing on climate change.

What

MPD: pieces of the ecosystem do you think are missing that would make New York and even more attractive? What do we need to lean into to make it even more of a no brainer location for any founder? Uh,

John Lochner: we need to, well downstate, obviously there there’s a cost to live in New York city, which makes New York more difficult as a place for startups.

Um, to join an ecosystem, but you know,

MPD: relative to Silicon valley

John Lochner: or others. Well, that’s true. That’s a good point. It to be the case. Yeah, you’re right.

MPD: Um,

John Lochner: you know, I guess I would say, I think we can always do that. Uh, we can support the development of networks. We can support the development of ecosystems.

We can support coordination between universities and commercialization centers. I think we can take a look at, um, how to build specific ecosystems, particularly. I think upstate just has some tremendous opportunities, including the Rochester area to become truly kind of world-class centers. We’ve got the people we’ve got the educational institutions.

An entrepreneurial ecosystem. We just need to kind of like that spark, how can we help light the spark? Uh, you know, in some ways it comes down to money, um, uh, and what, what the Biden ministration is doing is hopefully going to help us there. Uh, but certainly a nicer here. We’re trying to, I it’s, it’s a, it’s one of our traditional roles.

It’s convening, coordinating, communicating, developing good plans, and then finding the right partner second.

MPD: So, is there a nice Serta in every other state around the country, or is this a unique program?

John Lochner: We are pretty unique. Um, other states have similar entities, California, Massachusetts really stand out.

Um, many other states have, uh, an energy office or an organization that does some of what we do, but NYSERDA is, is in California. I should say. Also we’re really at a, at a different. Uh, and in different size and, and, and moving perhaps a little bit more aggressively than, than other states,

MPD: what can we do to help those other states catch up or move forward?

Or is it evaluate your playbook and, you know, do the same thing or what’s needed? What’s, what’s holding that.

John Lochner: Yeah. Um, there is a national association of state energy organizations NASCIO, uh, that we, uh, participate in and they do a great job of coordinating across states and then with the federal government, um, and bringing, I think best practices and lessons learned from state to state.

We certainly have regular conversations with our counterparts in other states. And, and honestly, you know, one of the things that, that I think could help accelerate the whole climate agenda. Is really bringing more and more good people into the ecosystem, particularly into government. And as those people come in and, and, you know, spend a few years in a role and, you know, inevitably people move to different places for different reasons.

Uh, we’ve had plenty of, um, people leave New York for a variety of reasons and end up in governor’s offices and Maine, Missouri, you name it. So taking whatever they’ve learned here and bringing it to where they go. So there’s a bit of an

MPD: alumni network going on. Absolutely. Okay, interesting. And are people reaching out and saying, Hey, we want to start nicer to like program in state X and then able to do it, or is it, is there a broader public will kind of, you know, political support thing that’s required at the same

John Lochner: time?

Yeah. I definitely heard that from a few states. It really is. Um, New York is really lucky, uh, to have nice sorta, uh, The politics, the funding mechanism, kind of everything that has to align for a state to be able to really do what New York does is, is special. So I’m sure many states will, um, will develop some form of a Serta or some structure because climate change is, is going to require some entity to lead.

Uh, but, but we really do. Decades of institutional relationships and coordination that allows us to operate in a, in a unique way. All right. I’m going to

MPD: leave here with a final question for you. What can the average citizen and or entrepreneurs out there do to support your efforts? What can we be doing to kind of help you guys run this forward?

John Lochner: Um, A number of things. Uh, if you are a, a, an investor or a startup in the climate tech ecosystem, um, please help learn the language of regulation and of policy. Just like we learn the language of startups. Um, it’s very important for us to be able to, to speak a common language with the private side. Uh, and to have the private sector speak directly to us, to the regulators, to other pieces of the state, to educate them and us on, on what’s really going on and how we can AF policy regs, et cetera, to be most successful for, for those of you outside of the climate tech space, just in tech, generally, it’s your, your personal buying decisions, uh, it’s your vote?

Uh, it’s it’s everything that you. Um, this is a inevitably, we are only able to operate with the will of the people and the voters. Um, and we move, give or take at the pace that voters want us to be. And so anything you can do to make sure that we are, um, moving as an accelerated fashion as we can. We appreciate, do you

MPD: feel like you guys are going full speed now on that point or do you or gloves aren’t all the way off you need, you need more support from the community and the citizens to get this going faster.

John Lochner: I think we are moving at a, at a heroic pace. Uh, Yeah, but I’ll leave it there. I think we are moving at an absolutely heroic pace.

MPD: Okay. That’s awesome. Thank you for doing this. Thank you for your public service. I’ve known you for a long time. It is very cool that you were doing this and I couldn’t think of anyone better for it.

So, um, I’m grateful, you know, you’re taking up the mantle here for everybody

John Lochner: and I appreciate it. You do great work too. Glad to be on. Hey, thanks for being on the show. Thank you.

MPD: Thanks to John for being on today. Uh, not only did I learn a ton about climate change, it was very interesting for me to understand what New York state is doing to drive clean tech within its state. I hope other governments see this playbook and use it in their local regions as well. If you liked what you heard abuse, look us up with a like, or a five-star review and feel free to share with a friend.

You can find me on Twitter at M P D. And to hear more of my conversations with innovators, subscribe on YouTube, Facebook for any major podcast platform, just search for innovation with Mark Peter Davis.


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