STEP 8:
Plan for the Sticks and Carrots of Policy

Step 8 is where you dive into the world of policy and figure out how it can help (or hinder) your venture. It's important to start thinking about policy at the outset, because it can influence many aspects of your strategy and operations.

From an entrepreneur’s perspective, the world of policy can be divided into two categories: sticks and carrots.

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

Carrots are policies that positively incentivize desirable outcomes. In the United States, incentives have been 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.

By the end of Step 8, you’ll have a clear plan for integrating policy into your market strategy.