The First Moonshot Didn’t Disrupt an Incumbent Industry. The Climate Moonshot Must

Calls have been growing for governments to launch a “moonshot” or “Manhattan Project” scale mobilization to fight climate change. Such focused industrial policy is responsible for many of the 20th century’s most important advances, with governments defining and directly supporting ambitious, outcome-focused goals through targeted investment in research and development and technology deployment.

A successful climate moonshot could help avert the crisis by deploying existing low-carbon technologies and helping to develop new ones, dramatically reshaping the energy system and significantly reducing oil demand through 2050. But the threat of disruption to one of our biggest incumbent industries creates challenges in getting the moonshot off the launchpad in the first place.

It’s worth looking at previous examples of big government-directed investments, from pharmaceuticals to agriculture, for lessons on how a climate moonshot could gain broad political and cultural buy-in.

Lessons from previous moonshot efforts

One important distinction often missed in the current discussion is that earlier moonshot-style efforts were typically not targeted at disrupting incumbent industries. Instead, they often succeeded by creating new markets or directly benefiting incumbents. When disruption did occur, it often brought mitigating factors.

In the pharmaceutical sector, investments into new priority drugs can expand the total market for drugs, increasing industry sales.

In other cases, government investments may not have grown a market, but they did allow incumbents to capture benefits from new technologies or new ways of doing things. For example, innovation focused on increasing the productivity of key crop species was one of the main drivers of change in agriculture over the past century. Technologies developed through this approach were truly disruptive, dramatically increasing wheat and rice crop yields — but incumbents were among the natural beneficiaries.

There are cases in which investments made by one government impact incumbents in another country — for example, when Sematech saw the U.S. invest in semiconductor manufacturing to help American companies recapture market share from predominantly Japanese incumbents.

Resistance from a local incumbent industry, like oil and gas in Texas or Alberta, makes it difficult for governments to create and fund broad climate missions; instead, the focus often tends to be on short-term incremental improvements to existing industries, rather than long-term missions that might create disruption.

The reality is that the more a mission threatens to reduce an existing market, the harder it will be to launch and sustain. The original moonshot achieved a big goal, but going to the moon didn’t disrupt or replace an incumbent industry.

Climate change represents a very different kind of moonshot, and states or provinces where the oil industry has strong political backing will try to impede the mission. They may try to attack proposals[1] or pull funding into more incremental improvements or technologies that don’t disrupt existing markets; investments into improving oil field efficiency or carbon capture and storage are examples of this phenomenon.

Here are a few ways of thinking about the climate moonshot that could be helpful:

  • Focus efforts on levels of government within countries or regions that lack incumbents. States, provinces and municipalities without established oil production operations can lead where national governments cannot.
  • Explore ways for incumbents to use their competitive advantages to capture the new markets that a disruption would bring. For example, oil majors investing in EV infrastructure or mining companies meeting the significant metal and minerals requirements of an electrified transportation system could help shore up support for these industries. Intermediaries such as oil field service companies may be able to pivot more quickly than major asset owners. Identifying opportunities that draw on core competencies while still supporting disruptive innovation is a crucial component of success.
  • Engage powerful incumbents from other industries. Tech sector giants, for example, are under pressure from stakeholders to act on climate change. They have limited exposure to potential disruption from climate solutions, and may even see potential to increase their own customers and market share by helping build support while directly providing private capital. Microsoft’s recent announcement[2] that it will pursue a climate moonshot can be understood as a response to external pressure that creates opportunities and shows support for a broader public climate moonshot. 
  • Finally, helping to build public support and concern for climate action creates an expectation that fossil fuel consumption will decline, without coming from the mission itself. That creates political space to potentially solve the problem.

The scale of the climate challenge justifies a climate moonshot. A successful mission launch will require carefully considering how the incumbents are impacted by the mission’s stated goals.

***

Sara Hastings-Simon is a senior research associate at the Colorado School of Mines’ Payne Institute for Public Policy.

References

  1. ^ attack proposals (www.eenews.net)
  2. ^ Microsoft’s recent announcement (urldefense.proofpoint.com)

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