Mar 24, 2022 - Economy & Business

Saule Omarova’s plan for "public venture capital"

illustration of light bulb surrounded by foliage

Illustration: Sarah Grillo/Axios

A once in a century pandemic, increasing climate-related disasters, the threat of a World War 3-level conflict, and supply chain upheaval are driving increased momentum for big ideas when it comes to updating American infrastructure, and even tackling climate change.

The big picture: A paper unveiled today from Saule Omarova seeks to create a federal agency — a National Investment Authority — that would direct and facilitate investment in green infrastructure. It's one of many proposals seeking to address the growing pileup of climate and energy related crises.

  • The Biden administration, which has tackled climate with a number of policies, told Axios' Hans Nichols earlier this week that it has a "historic set of ideas on the table for investment in the U.S. energy sector."
  • And proposals are coming from less expected corners: JPMorgan Chase CEO Jamie Dimon is pushing the federal government to do more on energy and climate, Hans reported.

Why it matters: You just need to look at the surge in oil and gas prices and the huge bills racked up after each increasingly worse weather event, to understand that markets alone can't deal with the mega-challenges the U.S. is facing.

  • Pandemic-driven supply chain bottlenecks were a wake up call for many policymakers, and the war in Ukraine is driving increased interest in a transition to clean energy.
  • "There’s almost no path to physically developing a more sustainable economy that doesn’t require significant public investment," said Adie Tomer, a senior fellow at Brookings who focuses on infrastructure policy.

Catch up fast: Omarova has been working on this proposal for a few years. She is a progressive, a fellow at the Berggruen Institute and a Cornell law professor who gained national recognition when her nomination to lead the Office of the Comptroller of the Currency fell through late last year.

  • The proposed National Investment Authority (NIA) would fund projects directly, as well as act as a kind of Fannie Mae for private investment in infrastructure — buying up the debt that backs projects the way the housing agency buys up mortgages and packages them into securities.
  • It would be a type of "public venture capital fund," Omarova tells Axios, making proactive investments in promising projects that private sector investors might typically shy away from.
  • This is in contrast to lending programs in place now at the Department of Energy that offer loan guarantees to firms that apply.
  • It's similar to a plan from the Bipartisan Policy Center that would create a Clean Energy Deployment Agency.

While private equity firms invest in certain kinds of infrastructure and even climate tech, they're generally driven by profits — and a public agency would have other goals in mind, like the public interest and long-term sustainability.

Between the lines: This week's move by the SEC to require climate risk disclosure is a sign of a growing recognition that climate change is happening and poses real, material risks to businesses.

  • The SEC's move is a climate breakthrough, Tomer said, and could be the moment the country starts taking these challenges more seriously.

Reality check: Mention climate these days and the political blowback will follow. The chances of any big ideas becoming real are slim.

  • "It's a trillion dollar question," Omarova said. "If I knew how to sell [this] effectively to politicians, I would have done it by now."

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