STEP 8:
Plan for the Sticks and Carrots of Policy

It's important for climate and energy startups to start thinking about policy at the outset, because it can determine their business model and market strategy.

Sticks are regulations that specify how things should be done and penalize non-compliance. It’s important for climate startups to understand relevant regulations at multiple levels: local, state, national, and sometimes even international. Some of the relevant regulations for climate startups apply to any new development, especially those around siting and permitting. Others are more climate specific.

Carrots are policies that positively incentivize desirable outcomes. In the United States, incentives are the predominant form of climate policy passed through congress. Large incumbents have an advantage in obtaining these carrots, but startups can benefit from seeking them as well. The right carrots can make the economics pencil out sooner, though they're subject to political risk.

For both sticks and carrots, climate and energy ventures have an opportunity to be policy shapers, not just policy takers, since climate policy around the world is constantly being developed and revised.