How the electric vehicle market is driving innovation on the path to a greener economy

“The real question is, how do we ensure that we put the industry on a pace to achieve the necessary goals to reduce the level of emissions that we are looking for, and ensure that we have the workforce and the market to accept that?” said Michael Regan, 16th administrator of the U.S. Environmental Protection Agency, during the Fortune Global Sustainability virtual forum on Thursday.

The production of electric vehicles, or EVs, has become politicized as both President Biden and former President Donald J. Trump visited Michigan this week, each vying for the support of blue-collar workers in the state. Trump, who is the frontrunner in the 2024 Republican primary, has attacked EVs as a threat to workers.

The Biden administration disagrees. In April, the EPA proposed new emissions cuts for new cars and trucks through 2032, which could result in a dramatic boost in the number of EVs sold within a decade. Already, EV sales in the U.S. have leaped from 0.2% of total car sales in 2011 to 4.6% in 2021.

Despite the EV innovations that were fueled by American automaker Tesla, China leads global production of EVs and has achieved strong sales at home while also boosting exports to foreign markets, most notably in Europe.

Regan says it is the responsibility of the EPA to “design a regulation to provide that certainty, so that we can corner the market, push low-carbon technologies, but most importantly, hit those emission reduction goals so that we can curb the climate crisis. That’s the goal.” 

Industry experts say the auto industry’s growing EV market is an element of some of the tension between the UAW and General Motors, Ford, and Stellantis. But Regan says that demand for EVs shows no sign of abating. “The UAW will be a part of the future,” said Regan. “We envision a very strong role for American workers.”

Consumers, investors, and regulators are calling on the private sector to make more investments in sustainability, especially as concerns about climate change and water and food scarcity rises.

“For us, it’s a journey,” said Kim Marotta, global vice president of environmental sustainability at liquor giant Beam Suntory. “We set long-term targets and the reason they are long-term is that this is a long-term initiative.”

Last year, Beam announced a $400 million expansion of the company’s Booker Noe distillery in Kentucky, an investment that will boost capacity by 50% while reducing greenhouse gas emissions by the same amount. But in 2022, Beam also saw absolute Scope 3 emissions rise, due to slower rates of decarbonization and the company’s growth. 

This echoes a global trend: Nations say they want to get serious about curbing carbon, but global emissions keep rising. 

“It is going to be a slow road for a while until we get some sizable projects that can continue to move forward,” said Marotta.

Beam Suntory has committed to achieving net-zero carbon emissions across the company’s entire value chain by 2040.

Tech giant Oracle has committed to powering its global operations with 100% renewable energy by 2025. Jon Chorley, chief sustainability officer at Oracle, said to get there, “first and foremost, you need to think about the efficiency of the data center. Are the servers being used as efficiently as possible? Are you maximizing the use of the electricity, in terms of compute?”

Some steps underway at Oracle include maximizing the efficiency of the company’s data centers, as well as integrating hardware more effectively with cooling systems and moving from carbon-based electricity to renewables. That way, Oracle is “shifting that energy, which you’ve reduced, to more and more renewables,” said Chorley.

Dow Chemical, which has committed to carbon neutrality by 2050, says it is talking to hundreds of suppliers to ensure that carbon reductions are a shared vision for the future. And each year, more suppliers are sharing disclosures and making commitments to reduce their carbon footprint. 

“Our direct engagement with them is to try to understand how much capital they are investing to decarbonize,” said Andre Argenton, chief sustainability officer and vice president of environment, health and safety at Dow Chemical. “That’s how we are making strategic choices in our long-term upstream suppliers.”

But to continue to make real progress, more technology innovations are needed to support carbon reduction. Vinod Khosla, founder and partner of venture capital firm Khosla Ventures, has said that 12 entrepreneurs must invent tech breakthroughs—on the scale of what Tesla founder Elon Musk has achieved moving the market to EVs—to solve the climate crisis. 

“That’s a science problem, and a technology problem, and an engineering problem, it’s not a finance problem,” said Khosla. “So it needs plenty of patient capital over the long haul. And that is the hard part.”