Episode 32

It’s bleak out there, isn’t it?

The Coronavirus seems to be weighing on everything and everybody, to the extent that most people are hard pressed to think about much else, based on what I’ve seen. The hospitality industry is suffering, restaurants are suffering in multiple countries, the job losses might be ticking up, airlines are suffering and so are their people.

So, it seemed to me a good moment to talk instead about the fact that I was stunned over the past few months with the momentum building on climate change. So, here’s a “good news” podcast coming up, no small thanks to Greta Thunberg, Extinction Rebellion, Alexandria Ocasio-Cortez – they’ve all been incredibly effective pressure points on climate and so have several of the U. S. Democratic candidates for president.

What I’d like to do today is take you through that momentum. I very much hope it will cheer you up, even if it’s just a little bit. Welcome to Episode 32 of The Angry Clean Energy Guy with me, Assaad Razzouk.

DELUGE OF GOOD NEWS ON CLIMATE

A relative deluge of good news on climate started earlier this year with a letter from the chairman and CEO of BlackRock.

He said climate change has become a defining factor in companies’ long term prospects. He also said that it’s a risk that markets to date have been slower to reflect and added, “I believe we’re on the edge of a fundamental reshaping of finance” and that was, as some of you may know, music to my ears because I have and others have been saying this for many years.

But it’s something else entirely when these are the words of Larry Fink of Black Rock because he’s no less than the largest investor in the world, with $7 trillion under his organization’s passive and active control.

So, what happened since? A deluge of good climate change news is what happened.

But let me begin by saying that everything I will be taking you through can of course be criticized and should be criticized for being inadequate, for being insufficient, for being weak. That, however, does not make it “nontrivial,” to use one of the favourite words of a close friend of mine, a turn of phrase that has perplexed me forever, but I love it. So, it does not make it nontrivial.

We need to take note, and we need to encourage all the people joining the fight against climate change to do more, and they will do more over the next 2 to 3 years.

Larry Fink, by the way, is not alone. Just this week, the UK’s investment industry trade body warned companies ahead of their 2020 annual general meetings that they must disclose more about how they’re handling climate change risk. And it gave them a three-year deadline to explain in their annual reports how they plan to measure and how they plan to manage the threat of climate change. That’s also hugely encouraging because if there is one thing we do know is that the capital markets, should they price climate risk correctly, would change the world.

DELUGE OF GOOD NEWS ON CLIMATE: GOVERNMENTS

So just since January, Japan has gone anti-coal, pretty much.

Japan has been really recklessly supporting overseas coal projects in countries like Vietnam and Indonesia in a completely inexplicable way other than to sell kit and bad kit at that, because it was selling worst coal plants overseas than what it allows to be built in Japan.

Finally, the Japanese government announced that it is revisiting that reckless policy, which I would expect to change within the course of this year.

Not far from Japan, Singapore also tightened its targets and increased its climate change ambition. And that’s hugely encouraging because Singapore has been a relative laggard on climate change. So, among other measures, Singapore is aiming to cut its 2030 peak greenhouse gas emissions by half by 2050, which isn’t in and of itself that ambitious – actually, it’s probably unambitious – however, it’s big progress compared to where they’re coming from.

They’re also aiming to achieve net zero emissions as soon as viable “in the second half of the century”, which is obviously too late. But these targets will tighten over time. And given that they had submitted a super-weak commitment to the United Nations, this represents progress. And I do expect them to do a lot more over the coming 2 to 3 years.

DELUGE OF GOOD NEWS ON CLIMATE: OIL, GAS, MINING, UTILITIES

Let’s look at oil and gas and mining now for a minute. There’s a new mining operation to extract oil from the tar sands in Alberta (so pretty much the absolute dirtiest thing you can do in terms of climate change of everything else that we do in terms of climate change), that’s been cancelled.

And that’s huge news because that mining operation alone was going to use up one-third of our remaining carbon budget. The company’s called Tech Resources, and it withdrew its application for that mine, thankfully.

Then shortly thereafter, Equinor, the Norwegian oil giant, found a minimum of decency and common sense and withdrew its plan to destroy the Great Australian Bight. And that’s big because the winners from not drilling that ecological treasure are people, oceans, the environment, tourism and  fishing and the losers are no one.

Then Rio Tinto, one of the really bad guys in the mining area and one of the world’s biggest producers of steelmaking ingredient iron ore, announced that it, too, is joining the bandwagon and will target by 2030 a 15% reduction in emissions from its 2018 baseline.

Now again, this is nowhere near enough, but coming from Rio Tinto, we should take it and then push them to do some more. Rio Tinto also pledged to cut its emissions to net zero by 2050 and spend $1 billion on climate related projects over the next five years. So not so bad and certainly enormously better than what they’ve been doing. They have a lot more to do, and we now just keep up the pressure on them.

If you then look at “big energy” – remember we’re only the 6^th of March and everything that I’m describing are developments that happened since early January – what you see is that Europe’s five largest utilities by market capitalization have now all approved targets or committed to set science-based targets to cut their emissions. So that would be France’s EDF, Italy’s ENI, Spain’s Iberdrola, France’s ENGIE And Danish Power Company, Orsted. They’ve all approved science-based targets, while EDF and the UK Grid operator National Grid, have committed to set one.

SCIENCE-BASED TARGETS

And that’s important because the kind of mystically named science-based targets are really a relatively simple concept.

For example, you look at the emissions that your value chain generates – so that’s everybody that you, for example, buy kit from.

You then put a cap on these emissions and start decreasing them and you start decreasing them by, for example, investing in renewable energy assets around the world, powering your own assets with renewables, buying offsets if you have to, and other tools.

The advantage of setting these science-based targets is that there is an NGO that you then file your plan with that then monitors it and that, therefore, puts some pressure on you to behave.

DELUGE OF GOOD NEWS ON CLIMATE: BANKS

Now let’s look at banks. In February, the Royal Bank of Scotland, which is re-branding now as NatWest, announced its intention to end finance for all fossil fuel clients that aren’t aligned with the Paris climate targets, which pretty much means all of them.

And if they follow through, then that’s probably the most a bank has done in terms of contributing to the fight against climate change.

Also in February, Crédit Mutuel, which is the fifth largest French bank, announced a zero tolerance approach to coal and a total phase out of coal by 2030.

Lloyds Banking Group, one of the U. K’s Big Four banks, released an updated energy policy that basically rules out financing for oil and gas operations in the Arctic National Wildlife Refuge. Now that’s definitely not good enough, but it’s also definitely progress and even the biggest and baddest of the fossil banks. J. P. Morgan Chase, made some progress when it published new restrictions on lending and underwriting of coal and Arctic oil and gas.

So all these banks, you know, they start somewhere, then they do a bit more, then they do a bit more. And what many NGOs around the world and citizens are doing are just keeping up the pressure on them because they can do so much better and they know it.

DELUGE OF GOOD NEWS ON CLIMATE: CORPORATES

Then there is an explosion of positive activity from corporates.

Delta Airlines announced an ambitious plan to become the first U. S airline to go carbon neutral. They’re also going to invest $1 billion over the next 10 years to mitigate all their emissions. Now, that’s not that easy, because airlines really don’t have an alternative to fossil fuels right this moment. But there are 100 businesses that are developing electric airlines around the world, and Delta can decrease its use of jet fuel and increase its efficiency. It could also invest in carbon removal programs in things like forestry or wetland restoration or grassland conservation or marine and soil capture. And God knows that we need them to.

Jet blue, another U. S airline, also announced that it was becoming carbon neutral on all its domestic flights this year.

And Finnair stepped up its efforts to achieve carbon neutrality by 2045 and has started to cut its emissions by half by 2025 from their level last year. Finnair, being an airline, acknowledged that most of its current emission cuts have to be achieved through carbon offsets. But it also said that it’s going to partner with Finish biofuels producer Neste to gradually increase its use of biofuels to €10 million annually by the end of 2025. And believe me, that’s not a very easy thing to do.

Then Microsoft stepped up. Microsoft is already carbon neutral, but they announced a big plan not only to be carbon negative by 2030, so 10 years from now (that’s carbon negative, so that’s taking away more emissions than they are contributing), but also announced to reduce more carbon by 2050 then they have ever emitted in their history since 1975.

Plus, Microsoft said it was going to invest $1 billion over the next four years fighting climate change. Now that announcement can be very big because Big Data, machine learning and artificial intelligence and therefore the cloud as well, which is where Microsoft and people like Amazon make a lot of their revenues, are being harnessed by Big Oil, as I talked about extensively in Episode 28 of The Angry Clean Energy Guy in an unholy alliance to increase oil and gas production.

So if Microsoft is actually quite serious about going carbon negative, they’re going to have to do something about how this cloud is being powered and what they’re doing with the oil and gas industry.

Then Amazon came through.

Amazon said 50% of its shipments are going to be carbon neutral by 2030 and that’s because it’s investing in 100,000 electric trucks; It’s investing in wind power; It’s investing in solar power.

Another tech company called Intuit also announced that it was going to reduce carbon emissions 50 times more than its current carbon footprint by 2030.

And as all of you probably know, Jeff Bezos, who’s the world’s richest man and who runs Amazon, (that’s the company, not the forest), pledged $10 billion to fight climate change. He wants to fund scientists, activists and NGOs and any effort to help preserve and protect the natural world. So, if you know how to get to him, give him a call. Go see him, help him spend that $10 billion.

And I kept the best for last. In electric vehicles, there are major changes on their way.

Volkswagen unveiled massive electric vehicles plans. They’re going to spend €33 billion to produce 26 million electric cars in the next nine years, basically trying to leapfrog Tesla to become the world’s largest electric carmaker. Now, obviously, we have to take what Volkswagen says with a grain of salt because of what it has shown it can do to cheat on emissions through its diesel scandal that cost it billions and billions of dollars. But they have a new management team in place, and I, for one, believe them because in any case, they don’t have a choice. We all want to drive electric, and we want car companies to give us enough choice to do so.

I mean, how can we all drive electric if you can only buy two electric car models? It’s not possible. Similarly, in the electric vehicle space, General Motors unveiled a $20 billion electric vehicle plan recently, and it’s going to have all its brands, Chevy, Cadillac, GMC, Buick launching new electric cars and trucks. GM is also making a strong effort on batteries because it’s got a new technology that is aiming to reduce cobalt content by 70% in its batteries and continue to drive battery cell costs down. I love the marketing spin GM put on it, which is to say that they want to “put everyone in an EV” and both General Motors and Volkswagen assure us that they can do all this profitably from the get go, which is music to my ears.

So, everything we’ve just been through has happened only since January. That’s the BlackRock letter, the UK investment industry stepping up to put pressure on companies, Japan going anti-coal, Singapore starting to shape up, Tech Frontier cancelling its tar sands mine, Equinor in Australia stopping its reckless project to destroy the Great Australian Bight, Rio Tinto cutting emissions, the six largest utilities in Europe setting science-based targets, Royal Bank of Scotland, Crédit Mutuel even J.P. Morgan and Lloyd’s doing better. Add Delta, JetBlue, Finnair, Microsoft, Amazon, Jeff Bezos, Volkswagen and General Motors – All of them unveiling what are relatively large efforts to begin to make a big difference at last.

We all know this is the decade for urgent action, and here’s a guarantee from my own pocket: All these commitments will get stronger and stronger over the course of the next decade. Some of these plans will have huge real impact. Others will have less impact, but they will improve. So, the signs of momentum are everywhere.

Let me leave you with a concluding thought. Human nature is once again not helping. We like the sensational. We like immediacy. We like panics and we don’t like to look at things relatively. And the Coronavirus is a case in point.

Contrast the wall to wall, pretty global, media coverage of the Coronavirus with the media coverage that climate change, a systemic, immediate, existential threat is receiving. A recent study just released says that major U. S. news networks devoted less than four hours, between all of them, in total, to climate change in 2019. I bet they’re broadcasting more than four hours a day on the Coronavirus as I speak.

Thank you so much for listening to me, The Angry Clean Energy Guy. As always, if you like this podcast, please consider leaving a rating or a review – and have a great couple of weeks.