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Industrious Labs: Deep Dive
This report was last updated in November 2022.
Contents
Examining the assumptions behind the Industrious Labs theory of change
Government passes low-carbon procurement policies (high certainty)
Corporations commit to low-carbon purchase standards (medium certainty)
Establish a supportive regulatory framework (domestic and/or international) (medium certainty)
Summary
What is Industrious Labs? Industrious Labs is a new (publicly launched in October 2022) environmental organization that aims to strategically coordinate other organizations to decarbonize heavy industry. As of October 2022, it has 12 staff, and its leadership is composed of former Sierra Club Beyond Coal campaign leaders.
What does Industrious Labs do? At a high level, Industrious Labs follows a five-step process: it (1) identifies promising heavy industries to focus on, (2) writes a strategy memo to outline its plan, (3) analyzes the CO2e averted if it succeeds, (4) builds capacity to execute its strategy, and (5) executes its strategic plan. In general, Industrious Labs’ strategic plans include three broad levers: (1) advocate to major purchasers (governments or corporations) to implement low-carbon procurement standards to apply pressure on heavy industry producers, (2) advocate to governments to change heavy industry regulation, and (3) advocate for government legislation to provide additional funding to decarbonize heavy industry and/or ensure organizations use existing funding. Specific activities vary by industry, and the degree to which these levers are necessary and/or employed by Industrious Labs depends on the industry.
How could Industrious Labs reduce greenhouse gases? Industrious Labs ultimately expects its activities to cause more heavy industry producers to switch to low-carbon production sooner than they otherwise would have, which results in avoided greenhouse gas emissions. Since Industrious Labs is a new organization, we’re unsure about its effectiveness. In general, we believe its theory of change is plausible and Industrious Labs is well-placed to develop and execute industry-specific strategies.
What is Industrious Labs’ cost-effectiveness? As a rough plausibility check, we developed a cost-effectiveness analysis (CEA) to estimate the costs and impacts of Industrious Labs’ aluminum campaign to secure corporate commitments to switch to low-carbon procurement/production. This CEA includes highly subjective guess parameters and should not be taken literally. Overall, we guess Industrious Labs could plausibly be within the range of cost-effectiveness we would consider for a top recommendation. We have low confidence in this CEA, but generally view it as a positive input to our overall assessment of Industrious Labs.
Is there room for more funding? Industrious Labs is a new organization, which makes its organizational room for more funding relatively difficult to assess. Overall, we think Industrious Labs can currently productively absorb additional funding, which could increase its growth trajectory over the next few years. In the longer-term, we think Industrious Labs is likely to have strong fundraising success, which may limit its future room for more funding.
Are there major co-benefits or adverse effects? We think the co-benefits and adverse effects of Industrious Labs’ efforts are similar to those for the broader effort to decarbonize heavy industry: it may reduce local pollution, and have unclear employment effects as global industries grow, shrink, and change due to decarbonization.
Key uncertainties and open questions: In addition to our broader uncertainties around decarbonizing heavy industry (e.g., geographic focus), we’re uncertain about Industrious Labs’ industry-specific effectiveness, organizational effectiveness, US focus, techno-feasibility assessments, and future room for more funding.
Bottom line / Next steps: We classify Industrious Labs as one of our top recommendations to reduce climate change. We believe donations to Industrious Labs are within the range of the most cost-effective giving opportunities we’ve identified, and could additionally increase its organizational growth trajectory. We plan to continue to assess our key uncertainties, and believe that we will be able to substantially improve our understanding of the severity and importance of these uncertainties as Industrious Labs begins to execute many of its strategies in 2023.
What is Industrious Labs?
Industrious Labs is an environmental campaign organization founded in July 2021. [1] In general, it aims to strategically coordinate other organizations to decarbonize heavy industry. [2] Its stated mission is to decarbonize US heavy industry by 2045, though its campaigns often include global strategies and/or impact. [3] As of October 2022, it had 12 staff. [4] Its senior leadership is composed of former Sierra Club staff that collaborated on Sierra Club’s Beyond Coal campaign efforts. [5] As of November 2022, Industrious Labs operates as an LLC, and expects to be able to accept tax-deductible donations via a 501(c)3 fiscal sponsor. [6] Industrious Labs told us it wants to maintain the flexibility of dual for-profit/nonprofit status as it determines what financial structure best allows it to achieve its mission. [7]
What does Industrious Labs do?
At a high level, Industrious Labs follows a five-step process:
It assesses the heavy industry landscape to identify a promising industry to focus on. It’s our impression that major inputs into this process include (a) assessing the GHG emissions of an industry, (b) the potential ease of decarbonizing the industry (e.g., whether it’s consolidated among a few key producers or purchasers) and (c) the comparative advantage of Industrious Labs to lead on decarbonization efforts.
It writes a 10-20 page strategy memo to outline how it plans to decarbonize the industry. Memos include relevant background, details on the specific opportunity, and a high-level strategy for achieving the opportunity.
It conducts an analysis to estimate the CO2e averted if Industrious Labs successfully executes its strategy. [8]
It builds capacity to deliver on this strategy. Depending on the industry, Industrious Labs might hire a campaign director, allocate industry-agnostic senior leadership time, develop a coalition, or bring on consultants.
It executes its strategic plan (see below).
In general, Industrious Labs’ strategic plans include three broad levers: [9]
Advocate to major purchasers (governments or corporations) to implement low-carbon procurement standards to apply pressure on heavy industry producers. Example activities include state-based activism and directly engaging with corporate executives (more below).
Advocate to governments to change heavy industry regulation. Example activities include partnering with trade organizations and engaging in lawsuits (more below).
Advocate for government legislation to provide additional funding to decarbonize heavy industry and/or ensure organizations use existing funding. Example activities include engaging in insider advocacy to federal policymakers to make explicit directives to target government funding to specific heavy industry decarbonization opportunities (more below).
Industrious Labs shared memos on aluminum, adipic acid (used in nylon and polyurethane production), cement, steel, and methane emissions from waste. [10] We think these strategies generally employ the three levers mentioned above, though the degree to which these levers are necessary and/or employed by Industrious Labs varies substantially by industry. See below for our assessment of strategy-specific examples of these levers.
How could Industrious Labs reduce greenhouse gases?
Industrious Labs theory of change
We developed a high-level theory of change to illustrate how Industrious Labs’ strategy might play out in practice (Figure 1):
We include “low-carbon production costs decrease” as an output because we believe it is an important pathway for some industries. Additionally, we think it’s useful to illustrate the virtuous cycle that can exist between producers switching to low-carbon production and low-carbon production costs declining. However, we think the degree to which cost decreases matter varies substantially by industry, and may or may not be a focus of Industrious Labs’ efforts. For example, Industrious Labs believes low-carbon steel costs are currently palatable for automakers and their consumers (more details below). [11]
Since Industrious Labs’ industry-specific strategies can vary substantially, we think it’s difficult to specify this broad theory of change further without applying it to a specific industry. Below, we outline a theory of change for Industrious Labs’ aluminum campaign (Figure 2). We think aluminum is a useful example because it is a large contributor to global greenhouse gas emissions (around 3% in 2021), is growing in demand, is global in scope, and is an ongoing Industrious Labs campaign with room for more funding. [12] Industrious Labs focuses its campaign on new aluminum production (rather than recycled aluminum re-use) since the vast majority of GHG emissions come from primary production. [13] We also think Industrious Labs’ aluminum campaign serves as a useful example because, as with several other campaigns, we (and Industrious Labs) are uncertain about its ability to have global impact (see below and Key Uncertainties section).
Examining the assumptions behind the Industrious Labs theory of change
Below, we discuss and evaluate the main assumptions related to Industrious Labs’ theory of change. For each of the assumptions, we rank whether we have low, medium, or high certainty about the assumption. [14] Our assessment is based on both primary and secondary evidence, as well as our general impression of the plausibility of the assumption. Importantly, a number of the stages of Industrious Labs’ theory of change are not amenable to easy measurement or quantification, are not supported by a robust evidence base, and/or are expected to occur in the future but have not occurred as of yet. Additionally, we think the importance of each assumption varies on an industry-by-industry basis. For example, corporate commitments may be especially important to decarbonize aluminum, while a supportive regulatory environment may be essential to decarbonize adipic acid. [15] We think Industrious Labs has generally (but not always) aligned its industry-specific strategies to focus on the assumptions that are (a) most important and (b) most likely to hold for each heavy industry.
1. Government passes low-carbon procurement policies (high certainty)
Within the US, we have high certainty that this assumption generally holds. To generate demand for low-carbon industrial products, Industrious Labs often plans to advocate to local or federal governments to pass low-carbon procurement policies. For example, its aluminum strategy includes state-based activism, “strategic communications,” and insider advocacy at the federal level to secure executive orders. [16] Based on other Giving Green reviews, we consider activism and insider advocacy as promising but uncertain strategies, for which success is more likely if strategies are contextualized and aligned to a broader theory of change. [17]
Since Industrious Labs only recently launched, it unfortunately doesn’t have a track record by which we can review its organizational effectiveness. Instead, we relied heavily on our assessments of industry-specific strategies, as well as heavy industry stakeholders’ perceptions of Industrious Labs leadership, to assess its potential efficacy. In general, we think Industrious Labs has identified moderately tractable US government procurement strategies. For example, its aluminum strategy includes advocating for an executive order to standardize a methodology for calculating embedded carbon, followed up by a specific focus on Department of Defense procurement to mandate low-carbon products from corporate suppliers. [18]
Absent Industrious Labs, “buy clean” policies are becoming increasingly commonplace, suggesting that this output is generally feasible. For example, New Jersey recently passed legislation establishing state and local purchasing requirements for low-carbon concrete, and the Biden Administration’s Buy Clean Task Force has prioritized low-carbon federal government procurement of steel, concrete, asphalt, and flat glass. [19]
From speaking with heavy industry stakeholders (primarily philanthropic funders, industry representatives, and policy experts), it’s our impression that (a) there is a role for non-profit advocacy work and (b) Industrious Labs’ leadership is well-placed to play this role. For example, a major climate philanthropy funder (information anonymized) believes that funding non-profit advocacy work to change government procurement standards is the most feasible way to generate enough demand for low-carbon products that heavy industry shifts its overall production to lower-carbon outputs, thus removing the need for harder-line regulation. [20] We heard from two stakeholders that the Industrious Labs leadership’s work conducting government advocacy as part of Sierra Club’s Beyond Campaign was highly successful, and provided them with transferable experience and credentials that will serve them well in their new organization. [21]
It’s our understanding that US federal and subnational governments are the main targets for Industrious Labs’ campaigns. However, if Industrious Labs were to expand to direct advocacy efforts of non-US governments, we would have less certainty in this assumption. For example, its adipic acid strategy includes securing a commitment from the Chinese government by leveraging international agreements. [22] It’s our impression that Industrious Labs’ focus, expertise, and comparative advantage are not in international engagement. [23] We don’t view this as a major concern, since Industrious Labs is focusing its government advocacy efforts on US governments. [24] In cases where its strategy does involve non-US government advocacy, we think Industrious Labs will explore strategic partnerships and/or coalition-building opportunities. [25]
2. Corporations commit to low-carbon purchase standards (medium certainty)
While we think corporations may generally be reluctant to make low-carbon purchase commitments, we think Industrious Labs targets high-feasibility high-return opportunities, and is moderately well-placed to run effective campaigns to secure commitments. For example, its steel strategy targets automotive companies, since they are major consumers (approximately 10% of global production) for which switching to low-carbon steel may be relatively affordable (Agora, a research organization, estimates low-carbon steel increases car prices by around 1%). [26] Around 60 industrial corporations (including Ford, GM, Mitsubishi USA, Nissan USA, and Toyota USA) have committed to reducing GHG emissions by 50% over 10 years via the Biden Administration’s “Better Climate Challenge,” which gives us some additional confidence this is a potentially feasible pathway to change. [27]
Industrious Labs’ specific activities vary by industry. For its aluminum strategy, it plans to coordinate (and sometimes fund) organizations focused on direct action activism, apply financial pressure by targeting investors and lenders, and directly engage with corporate executives. [28] For the same reasons mentioned above, we generally think Industrious Labs’ leadership is able to execute targeted campaigns, though this may vary by industry and specific approach. Additionally, it’s our impression that Industrious Labs is relatively less experienced with campaigns targeting large multinational corporations, and we think their past corporate experience may be less transferable to heavy industry sectors than their past government experience. [29]
We generally (but not always) view this assumption as especially important for assessing Industrious Labs’ potential global impact of US-focused activities, since we think corporate action is likely to be an important pathway to affecting change in countries that are major heavy industry players. For example, China is the world’s largest producer, exporter, and importer of steel. [30] Industrious Labs’ initial steel campaign targets non-Chinese major automotive firms (e.g., GM), which it expects to subsequently affect Chinese-based manufacturing via the joint ventures that Chinese companies have with these multinational firms. [31] It also plans to target automotive firms that directly purchase steel in both the US and China, and advocate for them to transition to low-carbon steel worldwide. [32]
3. Establish a supportive regulatory framework (domestic and/or international) (medium certainty)
For all its campaigns, Industrious Labs seeks to ensure there is a supportive regulatory framework in place to encourage a low-carbon transition. As with its government procurement work, Industrious Labs focuses on US subnational and federal regulation. However, unlike its procurement efforts, federal regulation could directly affect international heavy industry by imposing tariffs (e.g., a “carbon border adjustment”) or restricting US importation of high-carbon products (e.g., Chinese steel). [33]
Industrious Labs generally focuses its efforts on regulations with political support, which suggests to us that this assumption may hold. In several of its strategies, Industrious Labs either uses pre-existing regulation and/or plans to employ politically salient framing to pass new supportive regulation. For example, Industrious Labs’ aluminum strategy takes a multi-pronged regulatory approach. For one approach, it plans to use the US Environmental Protection Agency’s (EPA) already-established Clean Air Act to require US aluminum smelters to reduce GHG emissions. [34] It may regrant money to local groups to conduct their own activities, and/or use its own legal staff to apply legal pressure. [35] Simultaneously, Industrious Labs plans to partner with advocacy organizations focused on national security and/or labor interests. These organizations have experience working with corporations to advocate for trade policies such as tariffs on imported aluminum. [36]
We have relatively higher certainty in Industrious Labs’ ability to establish a domestic supportive regulatory framework, and relatively lower certainty in its efforts to influence US trade or international regulations. Though Industrious Labs targets politically supported regulation, foreign policy includes myriad interests and support may shift quickly and unexpectedly. We think there is precedent for Industrious Labs’ strategy, but are less certain that Industrious Labs will play a definitive and important role in establishing non-domestic regulation. [37]
4. Ensure transition assistance (ensure government transition funding and/or ensure corporations to use existing funding) (high certainty)
To assist industries to make the low-carbon transition, Industrious Labs seeks to ensure legislation is in place to fund heavy industry and/or support industries to take advantage of existing funding. This assumption almost exclusively focuses on US legislation, but may sometimes involve international efforts. For example, Industrious Labs’ tentative concrete strategy includes advocating for international finance institutions to fund low-carbon concrete infrastructure in low- and middle-income countries, and its steel strategy includes broader advanced economy public funding of low-carbon steel facilities. [38]
With the recent passing of the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), policy stakeholders have told us it’s highly unlikely that any additional US legislation will be passed in the next few years that provides substantial additional transition assistance to heavy industry. [39] Instead, Industrious Labs plans to advocate for policymakers to make more explicit directives that could spur targeted government funding. For example, one potential strategy in its aluminum campaign is to engage in insider advocacy with members of Congress to direct the Department of Energy to co-fund commercial applications of zero-carbon inert anode technology (expected to be licensed in 2024). [40] This is currently under discussion as part of a broader effort to finance transformative industrial technologies. [41]
Since the IRA and IIJA acts include substantial funding for heavy industry low-carbon transitions, we expect the success of this assumption to primarily hinge on Industrious Labs’ ability to support heavy industry to take advantage of this existing funding. For example, the IRA includes a $5.8 billion Advanced Industrial Facilities Deployment Program targeting industrial sectors such as steel, cement, and chemicals to use advanced low-carbon technologies. [42] Since funding is already in place, Industrious Labs will focus on advocating to corporations to use this funding and, where useful, provide technical assistance to reduce barriers to access. We think this is relatively feasible, since it is mostly “connecting the dots” and doesn’t require additional political influence or financial investment.
What is Industrious Labs’ cost-effectiveness?
As a rough plausibility check, we developed a cost-effectiveness analysis (CEA) to estimate the costs and impacts of Industrious Labs’ aluminum campaign to secure a major corporate commitment to switch to low-carbon aluminum procurement. Focusing this CEA on corporate advocacy for one industry means this CEA is likely not generalizable to Industrious Labs’ overall cost-effectiveness. Instead, it serves as a high-level sense-check of whether Industrious Labs’ efforts might be highly cost-effective. We chose to develop a more specific CEA because we think a CEA of Industrious Labs, overall, would include too many highly subjective guess parameters for us to have any confidence in its results.
Despite the narrow focus of this CEA, it also includes highly subjective guess parameters and should not be taken literally. In particular, we estimated the impact that Industrious Labs’ campaign might have on whether and when a major global automaker commits to low-carbon procurement for its US production, as well as the subsequent effects that commitment might have on the automaker’s global production, the global automotive sector, and the global aluminum industry at large. Overall, we think Industrious Labs could plausibly be within the range of cost-effectiveness we would consider for a top recommendation. [43] We have low confidence in this CEA, but generally view it as a slight positive input into our overall assessment of Industrious Labs. See below for a high-level explanation, and the model itself for additional notes and citations.
Costs: We estimated Industrious Labs’ corporate campaign costs at around $2 million, based on a multi-year effort that is a substantial portion of Industrious Labs’ overall budget.
Avoided GHG: In general, we estimated that switching to a low-carbon aluminum manufacturing process would reduce GHG emissions by around 80%.
Effectiveness: For all effects, we estimated (a) the increase in likelihood that a company or sector commits to low-carbon aluminum due to Industrious Labs and (b) the number of years Industrious Labs “moves up” the commitment. We include (b) because we think primary aluminum production will continue to counterfactually reduce in carbon intensity, so we are most interested in assessing how much Industrious Labs might speed up that process in order to avoid more years of high-carbon aluminum emissions in the meantime. In general, we assume Industrious Labs has a larger effect on smaller commitments (e.g., a 3 percentage point increase in an automaker making a US-only commitment) and a much smaller effect on larger commitments (e.g., a 0.1 percentage point increase in half of the global aluminum industry committing). We also assume smaller-scale commitments would counterfactually happen sooner than larger-scale commitments (e.g., an automaker’s US-only commitment is moved up by five years, compared to 10 years for the addressable half of the global aluminum industry).
Results: Our best guess is that Industrious Labs’ aluminum corporate advocacy efforts avoid one tCO2e for around $0.52 (range: $0.03-$12.30). Within our best guess, we additionally estimated changes in cost-effectiveness if Industrious Labs doesn’t impact larger-scale industry commitments. If Industrious Labs only impacts the automaker’s operations, its cost-effectiveness is $3 per tCO2e avoided. If it additionally impacts the global automotive industry, cost-effectiveness improves to $1.50 per tCO2e avoided. We also input our calculations into a Guesstimate sensitivity model and found similar results.
Is there room for more funding?
For heavy industry, in general, we think there is substantial room for more funding (see our deep dive on decarbonizing heavy industry). Industrious Labs is a new organization, which makes its organizational room for more funding relatively difficult to assess. Overall, we think Industrious Labs can currently effectively absorb additional funding, which could increase its growth trajectory over the next few years. In the longer-term, we think Industrious Labs is likely to have strong fundraising success, which may limit its future room for more funding.
As of October 2022, Industrious Labs is on track to meet its $3M 2022 fundraising goal and has a $1.2M funding gap to achieve the same goal for 2023. [44] As of September 2022, it is 100% funded by foundations, with most of its funding coming from Climate Imperative and ClimateWorks. [45]
For 2023, Industrious Labs would like to increase its budget to around $8.5M. [46] We are uncertain where, specifically, marginal funding from Giving Green might be allocated. From speaking with Industrious Labs, it’s our impression that marginal funding could go towards (a) more customized campaign work and (b) increasing the likelihood of additional industry campaigns:
More customized campaign work could include increased field-building (e.g., state-level organization recruitment and capacity-building for local leaders), hiring a communications staff person, and potentially regranting funds to local organizations. [47]
Industrious Labs has told us that some industry campaigns (e.g., steel) are fully funded. [48] Fundraising is at an earlier stage for other campaigns (e.g., aluminum, methane in landfills, cement, paper/pulp, and food processing), and additional funds could be directed to these efforts. [49]
Beyond 2023, we are uncertain about Industrious Labs’ longer-term room for more funding. In speaking with climate philanthropy stakeholders, we’ve received positive feedback on Industrious Labs’ leadership’s effectiveness and ability to fundraise. [50] We would not be surprised if, after establishing a relatively short track record, Industrious Labs is able to continually achieve its funding targets. On the other hand, Industrious Labs’ broad mission and aggressive growth plans suggests that its ambitions may continue to outstrip available funding if it expands its local field-building efforts, increases its regranting, and/or adds new industries to its portfolio. [51]
We think that providing additional funding to Industrious Labs soon after its founding could (a) give it increased financial confidence to grow rapidly and (b) provide a signal to other climate philanthropists that crowds in additional funding at a relatively early stage in Industrious Labs’ growth. We plan to monitor room for more funding as Industrious Labs expands.
Are there major co-benefits or adverse effects?
We think the co-benefits and adverse effects of Industrious Labs’ efforts are similar to those for the broader effort to decarbonize heavy industry (see our decarbonizing heavy industry deep dive). In particular, we think Industrious Labs’ efforts may reduce local pollution and have unclear effects on employment.
In general, we think a major benefit could be reduced local air and water pollution in areas with heavy industry manufacturing or processing facilities. Since Industrious Labs sometimes plans to use pollution laws as a mechanism to decarbonize heavy industry, we think this could be a highly likely co-benefit of some of Industrious Labs’ campaigns. [52] Decarbonizing heavy industry may also affect employment in the industry, itself. For example, if Industrious Labs successfully grows US heavy industry, this could result in increased US employment (e.g., by allowing a US aluminum smelter to remain open due to federal decarbonization funding) and/or decreased foreign country employment (e.g., if US import tariffs cause high-carbon production facilities in a foreign country to close). We haven’t looked into whether, overall, we expect decarbonizing heavy industry to increase or decrease global employment.
Key uncertainties and open questions
In addition to our broader uncertainties around decarbonizing heavy industry (see our decarbonizing heavy industry deep dive), we’re uncertain about Industrious Labs’ industry-specific effectiveness, organizational effectiveness, US focus, techno-feasibility assessment, and future room for more funding. More below.
Industry-specific effectiveness: Our analysis focused on assessing (a) Industrious Labs at a generalizable high level and (b) industry-specific strategies as examples to validate Industrious Lab’s general approach. We believe it’s highly likely that Industrial Labs’ effectiveness will vary by industry. We also think Industrious Labs is currently (and rightfully) focused on the “lowest-hanging fruit.” On one hand, this could suggest that Industrious Labs’ effectiveness will continue to decline over time. On the other hand, Industrious Labs may continue to learn and gain credibility such that future industry opportunities are relatively more cost-effective than its current portfolio. We are uncertain about this, and plan to continue to assess changes to Industrious Labs’ portfolio over time.
Organizational effectiveness: Industrious Labs began operations in July 2021, so it has not had much opportunity to demonstrate organizational effectiveness. [53] Though it’s our impression that its leadership has historically been successful in other campaign work, and that its strategy memos appear feasible and effective, we remain uncertain about Industrious Labs’ organizational effectiveness. Of particular concern are the transferability of Industrious Labs’ leadership experience to heavy industry decarbonization, the ability to rapidly hire high-performing staff in a relatively new space, and the ability to continually develop promising industry-specific strategies as Industrious Labs expands its portfolio. As Industrious Labs executes on its initial focus areas (e.g., steel), we expect to learn more about its organizational effectiveness.
US focus: As mentioned above, Industrious Labs is often heavily focused on US heavy industry. This could be relatively ineffective and/or not result in positive spillovers on global heavy industry, which we think are relatively more important to focus on given the US’s relatively minor GHG emissions from industrial processes. [54] We are particularly concerned about strategies in which Industrious Labs states that it envisions bringing heavy industry back to the US. [55] We are highly uncertain about the likelihood and effectiveness of this approach, and believe its success often primarily depends on factors that are outside of Industrious Labs’ control (e.g., labor costs in foreign countries). In practice, however, we don’t view this as highly concerning, since we don’t believe the return of US heavy industry is actually essential to Industrious Labs’ theory of change or our assessment of the broader theory of change for decarbonizing heavy industry (see our decarbonizing heavy industry deep dive). Instead, we think the US could serve as an effective context for innovation and proof of scalable concept, after which low-carbon efforts could be scaled globally. It’s our impression that Industrious Labs’ theories of change generally support this strategy, though we plan to monitor how this plays out for Industrious Labs’ current strategies, as well as how much this is a focus of future strategy.
Techno-feasibility assessments: For some heavy industries, Industrious Labs’ theories of change seem to mostly focus on political and economic pathways to scale, with the expectation that low-carbon technology will not be a blocker. For example, its aluminum strategy expects that a current joint initiative between Alcoa and Apple will result in commercially viable zero-emission anode technology by 2024. [56] As noted, we generally think this is not a major concern since Industrious Labs appears to focus on opportunities for which low-carbon technology already exists or is not expected to be a major hurdle. However, we are uncertain whether Industrious Labs is always able to accurately assess techno-feasibility (and Industrious Labs also notes its own uncertainty). [57] We address this in two ways: (1) we make our own best guess of technology’s effects on GHG emissions (e.g., in our CEA, we assume that aluminum GHG emissions are only reduced by 80% due to lack of complete zero-carbon technology) and (2) we qualitatively consider this when assessing the overall likelihood that Industrious Labs’ theory of change will succeed, especially as it relates to Industrious Labs’ efforts to ensure transition assistance for a given industry. If we are over-optimistic about this, we may be overestimating Industrious Labs’ effectiveness.
Future room for more funding: We’re uncertain about the degree to which Industrious Labs has room for more funding. We are moderately confident that it can currently productively absorb additional funding. However, as Industrious Labs develops a track record, it may enjoy substantial fundraising success. Depending on its expansion rate and strategy, it’s possible Industrious Labs’ will be able to meet its funding needs absent a recommendation from Giving Green. We plan to re-assess Industrious Labs’ room for more funding as part of our 2023 giving season review.
Bottom line / Next steps
We classify Industrious Labs as one of our top recommendations to reduce climate change, and believe that donations to Industrious Labs are within the range of the most cost-effective giving opportunities we’ve identified.
We believe Industrious Labs has developed promising strategies to cost-effectively decarbonize heavy industry, and that it can currently absorb additional funding. Though its theory of change differs by industry, we generally think its approach to generate demand for low-carbon products, establish a supportive regulatory framework, and ensure transition assistance could result in heavy industry producers switching to low-carbon production.
Though we generally view Industrious Labs as promising, we remain uncertain about Industrious Labs’ industry-specific effectiveness, organizational effectiveness, US focus, techno-feasibility assessments, and future room for more funding. We plan to continue to assess these uncertainties, and believe that we will be able to substantially improve our understanding of the severity and importance of these uncertainties as Industrious Labs begins to execute many of its strategies in 2023.
Endnotes
[1] “Founded July 2021… Plan to have a more official launch in Nov. 2022” Correspondence with Industrious Labs, 2022-09-27
[2] “Big goal: lower barriers to access for orgs to do something in this space.” Industrious Labs call notes, 2022-09-27
[3] “Mission: Decarbonize the US by 2045.” Industrious Labs call notes, 2022-09-27. Global strategy example: “Build Low Carbon Cement in the Global South” Cement Campaign Strategy, 2022-10-24.pdf.
[4] “12 staff…4 staff for overall coalition infrastructure.” Industrious Labs call notes, 2022-09-27
[5] “Victoria Chu…Partner… led programmatic and political analysis for the Sierra Club's Beyond Coal Campaign…Evan Gillespie…Partner…spent 12 years with Sierra Club developing and managing winning climate campaigns targeting coal and gas plants…Nachy Kanfer…Partner…11 years at Sierra Club as a community organizer, campaign representative.” Industrious Labs, “Our team” tab.
[6] “The partnership we're exploring with [name anonymized] is akin to a fiscal sponsorship…” Industrious Labs email correspondence, 2022-10-25.
[7] “To that point, the future you describe (in which the LLC winds down or is subsumed into the c3) is absolutely one possible future. It's not the only one though…Our MO all along has been to figure out the function and then build the form to serve it.” Industrious Labs email correspondence, 2022-10-25
[8] “Along with each of these memos, we built a comprehensive emissions analysis assessing cumulative emissions benefits from successful campaigning. If we win, how much CO2e do we save?” Industrious Labs email correspondence, 2022-09-28.
[9] “Three levers: (1) Apply pressure to producers via corporations that use heavy industry products…, (2) apply pressure to change heavy industry regulation, and (3) advocate for government legislation to provide additional funding to decarbonize heavy industry…Current funding split among these three strategies: Steel: equal split; Aluminum: convening orgs right now, so unclear where they’ll focus” Industrious Labs call notes, 2022-09-27
[10] “The overwhelming majority of adipic acid is turned into either nylon or polyurethanes” Industrious Labs Adipic Acid Memo, 2022-10-24; Industrious Labs Aluminum Memo, 2022-09-29.pdf; Industrious Labs Cement Strategy, 2022-10-24; Industrious Labs Steel Strategy Memo, 2022-10-11; Industrious Labs Waste Memo, 2022-10-11.
[11] Agora, a research organization, estimates low-carbon steel increases car prices by around 1%. “The additional premium for green steel (~200 to 300 USD per tonne of steel) can be passed on to end consumers, only marginally increasing the price of the car (<1% for a small car containing 1 tonne of steel and priced between 20,000 to 30,000 USD)” Global Steel at a Crossroads 2021.
[12] Greenhouse gas emissions: Calculation: 1.1/36.3=0.03. “The sector was directly responsible for 275 Mt of CO2 emissions in 2021 (a 2% increase on the previous year) and if indirect emissions from electricity consumption are included, that number jumps to around 1.1 Gt of CO2.” Aluminium – Analysis - IEA; “Global energy-related carbon dioxide emissions rose by 6% in 2021 to 36.3 billion tonnes” Global CO2 emissions rebounded to their highest level in history in 2021 - News - IEA.
[13] “Secondary production consumes up to 91-95% less energy than primary production because there is no need to extract metallic aluminum from aluminum-containing ores” Industrious Labs Aluminum Strategy Memo, 2022-09-29.pdf.
[14] We describe our certainty as low/medium/high to increase readability and avoid false precision. Since these terms can be interpreted differently, we use rough heuristics to define them as percentage likelihoods the assumption is, on average, correct. Low = 0-70%, medium = 70-90%, high = 90-100%.
[15] Aluminum: “We probably just need one or two early [corporate] movers…to make large procurement commitments for zero-carbon aluminum in order to ‘move the market’” Industrious Labs Aluminum Memo, 2022-09-29.pdf. “The strategy is to leverage regulatory and supply chain pressures to…remove 98% of N2O emissions from production facilities.” Industrious Labs Adipic Acid Memo, 2022-10-24.docx.
[16] “Targeted engagement in Washington, combined with strategic communications and state-based activism, will build relentless demand for these executive orders” Industrious Labs Aluminum Memo, 2022-09-29.pdf.
[17] For additional information, see Activism: Overview | Giving Green and Insider Policy Advocacy: Overview | Giving Green. These reports have not been updated recently, and may no longer be fully reflective of our current views.
[18] “Such an [executive order] would first task EPA with doing the hard work of proposing a methodology for calculating embedded carbon -- either using its §114 Clean Air Act authority to require such reporting, or via voluntary programs that set the stage for legislation. It would then instruct DOD and other federal agencies to require an embedded carbon reduction trajectory toward zero by 2030 in their products. This would be a particularly powerful inducement for large aluminum-consuming companies…for which the largest source of revenue…is defense.” Industrious Labs Aluminum Memo, 2022-09-29.pdf
[19] New Jersey: “New Jersey Senate Bill 3091...establishes…State and local purchasing requirements”; Buy Clean Task Force: “President's Biden charged his Administration through his December 2021 Federal Sustainability Plan and Executive Order 14057 to launch a Buy Clean Task Force…prioritizing the Federal Government’s purchase of steel, concrete, asphalt and flat glass products.” Federal Buy Clean Initiative | Office of the Federal Chief Sustainability Officer.
[20] Anonymized conversation, 2022-09-01.
[21] Anonymized conversations, 2022-10-21 and 2022-09-29.
[22] “The initiative will secure a commitment from the Chinese government to address the adipic acid industry by leveraging agreements made in at least one international fora.” Industrious Labs Adipic Acid Memo, 2022-10-24.docx.
[23] “Focus: Decarbonize the US by 2045.” Industrious Labs call notes, 2022-09-27. Expertise: This is based primarily on our review of staff profiles, viewable at Industrious Labs.
[24] This is based on a review of Industrious Labs’ industry-specific strategies, including Adipic Acid Memo, 2022-10-24; Industrious Labs Cement Strategy, 2022-10-24; Industrious Labs Steel Strategy Memo, 2022-10-11; Industrious Labs Waste Memo, 2022-10-11; Industrious Labs Aluminum Memo, 2022-09-29.
[25] For example, Industrious Labs is currently in the early stages of building a coalition to inform its cement strategy: “[The cement memo is] the product of a working group we've convened with several organizations. The working group process is starting to bake in alignment and build capacity beyond our organization” Industrious Labs email correspondence, 2022-10-23.
[26] “Per a ClimateWorks Foundation analysis, the global automotive industry consumes 10% of the world’s steel production” Industrious Labs Steel Strategy Memo, 2022-10-11.pdf; “The additional premium for green steel (~200 to 300 USD per tonne of steel) can be passed on to end consumers, only marginally increasing the price of the car (<1% for a small car containing 1 tonne of steel and priced between 20,000 to 30,000 USD)” Global Steel at a Crossroads 2021.
[27] “Across the industrial sector, 60 companies have joined the Better Climate Challenge where they’ve committed to reducing portfolio-wide greenhouse gas (GHG) emissions by at least 50% by 2030.” Biden-Harris Administration Rallies States, Cities, and Companies to Boost Clean American Manufacturing - The White House; “Through the Better Climate Challenge, organizations can partner with DOE to reduce portfolio-wide GHG emissions (scope 1 & 2) by at least 50% within 10 years….Ford Motor Company…General Motors…Mitsubishi Electric Automotive America…Nissan North America…Toyota Motor North America…” Better Climate Challenge.
[28] “These corporations have a global asset base and market to global consumers. To influence them, we will invest in organizations that know how to combine “name-and-shame” direct action tactics, sophisticated financial advocacy targeting investors and lenders, and inside-the-boardroom negotiation with executives to secure desired outcomes.” Industrious Labs Aluminum Memo, 2022-09-29.pdf.
[29] We think this because we think the government advocacy work is relatively similar in targets and strategy, whereas the corporate advocacy work is targeted at different types of corporations using different strategies. It’s our impression that Sierra Club’s Beyond Coal campaign often conducted highly-targeted campaigns towards state-level corporations, which we think may involve different strategies than targeting large multinational corporations. We haven’t looked closely at the details of Sierra Club’s Beyond Coal campaign, so this is primarily a high-level perspective more so than an informed conclusion.
[30] Producer: [see pie chart] “Steel production and use: geographical distribution 2021; China 52.9%” World Steel in Figures 2022 - worldsteel.org; Exporter: “China is the world’s largest steel exporter (2021 ranking).” EC China Exports Report | International Trade Administration; Importer: “China is the world’s largest steel importer (2021 ranking).” EC China Imports Report | International Trade Administration.
[31] “Smart targeting within an automotive campaign can reach into Chinese steel production via the private partnerships and joint ventures of Chinese-based manufacturers with non-Chinese major automotive firms, like [names anonymized].” Industrious Labs Steel Strategy Memo, 2022-10-11.pdf
[32] “Similarly, we're looking to target US automakers that not only buy steel in the US, but have operations in China that can be impacted by a corporate commitment.” E-mail correspondence, 2022-10-11. “(e.g., demanding [name anonymized] change to green steel procurement worldwide)” Industrious Labs call notes, 2022-09-27.
[33] “The Biden administration could use the President’s authority over trade and tariffs to establish some form of carbon-based trade protections, or Congress could enact a carbon border adjustment mechanism (CBAM).” Industrious Labs Aluminum Memo, 2022-09-29.pdf. For more information on carbon border adjustments, see: Center for Climate and Energy Solutions: Carbon Border Adjustments.
[34] “It would be relatively straightforward for EPA to address the first two sources of carbon through conventional Clean Air Act rulemaking” Industrious Labs Aluminum Memo, 2022-09-29.pdf.
[35] “regranting capacity to help local groups engage in the EPA regs, and additional legal support and additional staff as 2023 to push EPA.” E-mail correspondence, 2022-10-23.
[36] “Elected officials, government agencies, and policy analysts have raised concerns about the economic and national security risks posed by the large shares of U.S. consumption of materials like aluminum and steel that are not produced domestically or by close allies…An initiative that increases domestic production of aluminum (and steel or other materials) may win support from conservatives who are influenced by these national security concerns…For the trade policies, we will invest in organizations representing national security and labor interests and experienced in building support with business to spur the administration to act.” Industrious Labs Aluminum Memo, 2022-09-29.pdf.
[37] Precedent example: “Trump imposed 25% tariffs on imported steel and 10% on imported aluminum from most countries in 2018, arguing that these protections were necessary for U.S. national security to maintain healthy domestic production.” U.S. court upholds Trump's national security tariffs on steel imports | Reuters.
[38] “International financial institutions play a significant role in infrastructure projects such as funding cement plants and advising on cement use. With many different political and corporate actors active in the cement industry in the Global South” Industrious Labs Cement Strategy, 2022-10-24.pdf; “Coordinate efforts across the European Union, North America, United Kingdom, Japan, and South Korea to align around a suite of shared commitments by governments for…public funding for fossil-free steel facilities…” Industrious Labs Steel Memo, 2022-10-11.pdf.
[39] This is primarily based on 10+ conversations with policy stakeholders, among whom there was broad consensus that no major climate change legislation will pass until 2025 at the earliest; Inflation Reduction Act: https://www.congress.gov/bill/117th-congress/house-bill/5376/text; Infrastructure Investment and Jobs Act: https://www.congress.gov/bill/117th-congress/house-bill/3684/text.
[40] “under discussion in Congress is to task DOE with co-funding…inert anodes in primary aluminum manufacturing” Industrious Labs Aluminum Memo, 2022-09-29.pdf; “ Apple…made early investments years ago in the then-unproven technology of inert anodes. Those investments are now poised to bear fruit when ELYSIS begins commercial licensing in 2024.” Industrious Labs Aluminum Memo, 2022-09-29.pdf; “ELYSIS is a joint venture company led by Alcoa and Rio Tinto that is developing a new breakthrough technology, known as inert anode, that eliminates all direct greenhouse gases (GHGs) from the traditional smelting process and instead produces oxygen.” Start of construction of commercial-scale inert anode cells | ELYSIS.
[41] “One potential policy under discussion in Congress is to task DOE with co-funding the first three commercial-scale applications of transformative industrial technologies” Industrious Labs Aluminum Memo, 2022-09-29.pdf.
[42] “The Inflation Reduction Act’s $5.8 billion Advanced Industrial Facilities Deployment Program plays a significant role, providing financial assistance for facilities to use advanced industrial technologies…s in key, emission-intensive industrial sectors, such as iron and steel, cement, and chemicals.” The Inflation Reduction Act Drives Significant Emissions Reductions and Positions America to Reach Our Climate Goals.
[43] As a heuristic to guide our research prioritization, we consider something to plausibly be within the range of cost-effectiveness we would consider for a top recommendation if its estimated cost-effectiveness is within an order of magnitude of $1/tCO2e (i.e., less than $10/tCO2e).
[44] “in 2022, our annual budget was $3,127,324 (in addition to staffing, the budget included significant program support for experts and some regranting). We are on track to meet that target budget…Looking out to 2023, draft one of our operating budget anticipates renewals of most of our grants, but a shortfall of $1.25m. So, that's the primary gap at the moment.” E-mail correspondence, 2022-10-11.
[45] “Currently 100% funded by private foundations (mostly Climate Imperative and ClimateWorks” Industrious Labs call notes, 2022-09-27
[46] “So, when our directors input their first round of budget requests to do that work next year, our aspirational budget rose to just over $8.5million.” E-mail correspondence, 2022-10-11.
[47] Field-building: “Field Building…looking to do three things next year…complete a power and community analysis of the key industrial states to assess the current organizational capacity in the state and then recruit the kinds of organizations needed to pass policy… identify regions where additional capacity is needed and then investing in training and support to build independent local leadership…” E-mail correspondence, 2022-10-23. Communications staff person: “With $1M more funding: Hire communications staffer” Industrious Labs call notes, 2022-09-27. Regranting: “Might regrant to smaller orgs.” Industrious Labs call notes, 2022-09-27.
[48] “Our steel program today is fully funded…” E-mail correspondence, 2022-10-23.
[49] “For now...The first step as the initiative memo noted is to take on methane in landfills…Aluminum: as we head into year two of the campaign (see here for an update), we're looking to hire a corporate campaigner and an analyst….Early next year we'll start making a fundraising push on cement, paper and pulp and likely food processing, so it's possible funding could be applied there.” E-mail correspondence, 2022-10-23.
[50] Anonymized conversations, 2022-10-21 and 2022-09-29.
[51] We believe these growth plans could be part of Industrious Labs’ longer-term plans, since Industrious Labs told us it could use additional funding in 2023 on these activities. See previous paragraph for discussion and citations.
[52] Steel example: “...blast furnaces and the coke batteries that convert metallurgical coal to coke produce tremendous amounts of local air pollution…The strategy…Complementary strategies including confronting pollution from steel and coke production” Industrious Labs Steel Memo, 2022-10-11.pdf; Aluminum example: “Many of the existing aluminum smelters are operating in violation of their air, water or waste permits, and contributing to ambient air quality violations…Inadequately maintained equipment is more likely to malfunction, resulting in air and water pollution in excess of permitted levels. Enforcement actions can put significant pressure on facilities to retrofit with cleaner technologies.” Industrious Labs Aluminum Memo, 2022-09-29.pdf.
[53] “Founded July 2021” Industrious Labs call notes, 2022-09-27.
[54] According to Climate Watch, the US was responsible for 8% of global GHG emissions from industrial processes in 2019. See Climate Watch: Historical GHG emissions, filtered by “Industrial processes” for “Sectors/Subsectors”.
[55] “wants US heavy industry to green in conjunction with bringing industry production back to the US” Industrious Labs call notes, 2022-09-27.
[56] “Apple has partnered with Alcoa on a new test facility in Canada that eliminates carbon emissions from the anodes, and they predict it will be ready for wide-scale use by 2024. Shortly, it will be possible to make 100% clean aluminum if a smelter is powered by clean electricity…Those investments are now poised to bear fruit when ELYSIS begins commercial licensing in 2024.” Industrious Labs Aluminum Memo, 2022-09-29.pdf.
[57] “Risks…Technical Feasibility:...We will mitigate this risk by including a demand that all aluminum be made with carbon-free electricity, whether or not the anode technology is commercially viable at any given time.” Industrious Labs Aluminum Memo, 2022-09-29.pdf.