Snatched from the jaws of defeat, the Inflation Reduction Act (IRA) will hasten the transition of key markets—for energy, vehicles, cement, and more—toward “greener” technologies. However, the IRA is just one early part of a massive, decades-long push to shift markets from high-carbon to low- and zero-carbon technologies. And while governments and private organizations have initiated transitions through a first wave of limited interventions, these market shifts are happening too slowly to reduce emissions at a pace that would limit warming to 1.5 degrees Celsius.

With the climate clock ticking, the time has come to launch a more expansive second wave of green market shaping. To understand what is possible, we can look to the field of global health. Since 2000, global health organizations have pioneered a diverse set of privately-driven market-shaping interventions—to organize and de-risk demand while orchestrating forward progress across all sides of the market—that have dramatically accelerated access to improved healthcare products across the developing world.

While the stakes of the green transition are enormously high, we have thus far deployed a much thinner arsenal of market-shaping tactics. We have too narrowly relied on major government policies and “push” funding—such as grants, loans, and equity investment—while under-exploiting the kind of creative finance interventions and aggressive “quarterbacking” that have propelled market-shaping efforts in global health. Seizing this huge untapped opportunity must become the cornerstone of an ambitious second wave of market shaping.

Unlocking the Power of Market Shaping for Decarbonization

We’ve gained momentum in global decarbonization. But there is still a long way to go, and our green market shaping efforts tend to turn too quickly (or too narrowly) to big policy interventions like the IRA or the German feed-in tariffs that have transformed the economics of solar power. The policy-setting, financial, and regulatory powers of governments will be absolutely critical. But given the magnitude of the climate challenge, we cannot pin our hopes on a continuous wave of bold IRA-like legislation at the national level. And global health experience shows how private market-shaping activity can multiply government funding or incentives.

Read the full article about the climate fight by Dai Ellis and Oliver Sabot at Stanford Social Innovation Review.