Climate change was high on the agenda at this month’s Reuters Next virtual summit. Terry Slavin reports on some of the key takeaways
With Joe Biden entering the White House vowing to make climate change action one of its biggest priorities as president, it was little surprise that the fight against climate change was a major theme running through Reuters Next, the four-day virtual summit, 11-14 January, in which leading names in business, finance, politics, tech and media discussed the most pressing issues of our age.
Patricia Espinosa, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC), welcomed Biden’s promises to decarbonise the U.S. economy, and particularly his appointment of John Kerry, who was instrumental in forging the 2015 Paris Agreement, as Biden’s climate czar.
“Since Paris we’ve seen a lack of leadership, with no country assuming leadership for moving forward fast,” Espinosa said. “The U.S. played a very important role in getting the Paris Agreement [to keep global temperature rises to ‘well below’ 2C], so we are certainly hoping we will see this leadership coming back.”
But she pointed out that there are only 10 months remaining until the UNFCCC conference in Glasgow later this year, when countries are being urged to go beyond their 2015 commitments and work towards the more ambitious goal of keeping temperature rises within 1.5C.
We are still very far from where we need to be, even at the level of leaders
The IPCC report in 2018 warned that a 2C world would mean a catastrophic loss of ecosystems and bring danger of global instability. “We need to work towards a 1.5C goal, and that isn’t going to be easy.”
So far, only 75 of 197 countries have submitted renewed commitments, or nationally determined contributions (NDCs). “We are still very far from where we need to be, even at the level of leaders. … This agenda is not at the level of priority it requires.”
Professor Jeffery Sachs, director of the Center for Sustainable Development at Columbia University, said the most important thing the U.S. can do is to carry through with Biden’s campaign pledge for the U.S. economy to be net-zero emissions by 2050, following the examples of the EU, UK, South Korea, Japan and China, which has set a 2060 net-zero goal.
“Much of it will be achieved just through the regulatory process. State regulators when permitting new power should only permit zero-carbon power,” Sachs said. Regulation will also be needed to drive an aggressive move to electric vehicles to decarbonise its transport sector. “Country after country is saying after 2030, after 2025 in some cases, after 2035, there will be no more internal combustion vehicles…. We need to be doing it too.”
At a panel on Climate and Environmental Justice, participants said the United States’ historical role as the biggest CO2 emitter meant it had a special responsibility to remedy the disproportionate impact climate change is already having on developing countries, marginalised communities and women by investing in climate resilience, not just CO2 mitigation.
Mohamed Adow, director of Power Shift Africa, a Nairobi thinktank, pointed out that the U.S. has still not paid $2bn of an Obama-era pledge to contribute $3bn to the Green Climate Fund to help developing countries respond to climate change. “That’s something that he must do quickly to restore the trust of the world,” he said after what he described as the ignominy of the Trump years.
He said the trillions of dollars being poured into Covid recovery by the U.S. and other countries needs to be channelled into green economy.
One lesson from Covid, which you can apply to climate change, is listen to the bloody scientists for a change
The future of the oil and gas industry in a carbon-constrained world was another recurrent theme in Reuters Next, taken up by environmental and social activists, corporates and investors.
During a panel discussion called “Keep it in the ground”, Janet Redman, climate campaign director for Greenpeace USA, said the climate science was very clear: “Since we have more [greenhouse gas] emissions locked in [through existing reserves] than the planet can handle already, we have to stop new oil and gas and coal development, and wind down some of the production that we have already locked in.”
That view was supported by Sean Kidney, CEO of Climate Bonds Initiative. During a panel on carbon accountancy, Kidney criticised oil major Shell for allowing for an expansion of natural gas when it set a net-zero by 2050 goal last year.
He pointed out that the European Union’s taxonomy, or rulebook, to reach its target of a 55% cut in CO2 emissions by 2030, rules out investment in unabated natural gas.
“One lesson from Covid, which you can apply to climate change, is listen to the bloody scientists for a change. … What the scientists are saying is [fossil fuel activities] have got to stop. No new [development], and we have to sweat the old ones out much faster.”
This of course raises the risk of stranded assets, and the question of whether ESG investors should divest from energy stocks, the subject of another panel discussion.
Adam Matthews, director of ethics and engagement at the Church of England Pensions Board, who leads on engaging with Shell in the Climate Action 100+ group of investors, was less critical of the Anglo-Dutch company, saying that while it needed to go further and faster, it was on a pathway to transition – something that can’t be said of ExxonMobil, from which the fund divested fully last October.
A big threat to oil is hard to find
“I do believe it’s possible for an oil and gas company to transition, but you need transparency in the intention, you need transparency in the plan, and you need transparency with your shareholders.”
Asked how banks should respond to campaigns to divest from fossil fuel companies, John Flint, former group chief executive at HSBC Holdings Plc, said “banks should all feel the pressure to have a credible climate strategy” which may involve divesting from some companies. “But the suggestion that banks on a blanket basis stop financing fossil fuels is dangerous” and would lead to the collapse of the global energy system.
In an interview with two Reuters journalists, Michael Wirth, CEO of U.S. oil major Chevron, saw no risk of stranded assets. Wirth expects the oil sector’s contribution to the energy mix to remain the same as today by 2030, amid rising demand from a growing global population. “A big threat to oil is hard to find,” he said.
But Wirth maintained that Chevron supported the Paris Agreement, and was working to lower its carbon footprint, with investments in carbon offsets, wind and solar power and nascent technologies like hydrogen and geothermal.
The clear message from three speakers from the nuclear energy industry was that concerns about the safety of nuclear waste disposal were misplaced, and that a big expansion of nuclear, which supplies 11% of the world’s energy, is needed to “close the gap” if the world is to wean itself off fossil fuels.
Dan Poneman, president and CEO of Centrus Energy Corp, said: “If we want to have a prayer of getting anywhere near to reaching the Paris Agreement target … you need to probably double the contribution of nuclear. If you want to get to 1.5C, the case is that much stronger [for nuclear] … and that assumes maximum deployment of wind, solar and battery storage. You don’t close the gap without a lot of new nuclear.”
Each kilogram of lithium that is produced enables orders of magnitudes of avoided greenhouse gas emissions
He said the next generation of nuclear technology would be small, modular reactors and fourth-generation reactors, which don’t use light-water coolants.
With a big chunk of Joe Biden’s $2tn climate plan expected to be earmarked to boost the global battery sector for energy storage and electric vehicles, the sustainability of lithium mining was also in focus.
Independent researchers have found that lithium extraction has had a negative impact on the vegetation and soil moisture of Chile’s Atacama desert, the driest place on Earth, and top lithium producers SQM and Albemarle have come under fire from NGOs, indigenous people and business and human rights groups. But Eric Norris, president of U.S.-based Albemarle Corp, said it was working hard to educate automakers and communities that its operations are not threatening drinking water supplies and ecosystems. And he said the environmental impact of lithium was overwhelmingly positive.
“Each kilogram of lithium that is produced enables orders of magnitudes of avoided greenhouse gas emissions … through green miles driven by electric vehicles.”
Juan Carlos Jobet, Chile’s minister for energy and mining, said in a wide-ranging interview that water was a “challenge” for the lithium industry in Chile, but that it was being addressed as part of a lithium roadmap. He also said that the country’s entire mining industry accounted for only 3% of the country’s water consumption.
And he revealed ambitious plans to make Chile the “Saudi Arabia of green hydrogen”, with more than 30 pilot projects to produce green hydrogen or its derivatives. One, which has funding from German auto maker Porsche, Siemens and the German Development Fund, is looking to produce hydrogen from wind energy, mix it with CO2, and synthesise it into a fuel that can be used in conventional combustion fuel cars, with the first molecule to be produced by the end of the year.
We are the most data-driven world that’s ever been, but it isn’t resulting in the changes needed
But there were also thought-provoking reminders that the climate emergency requires more than a technological fix.
In a panel session on the Arctic Frontier, Ilarion Merculieff, president for the Global Center for Indigenous Leadership and Lifeways, said the perspectives of native people, whose lives are most closely attuned with nature, need to be integrated into science to understand what is happening to the planet.
He pointed out that 100 years of data on fur seals hadn’t led scientists to understand why their populations, like that of many species, are now declining.
“We are the most data-driven world that’s ever been, but it isn’t resulting in the changes needed. ... We have to understand that everything is connected and we can’t solve the problem by addressing one issue alone. The climate crisis is a symptom, not a cause.”
This article appears in the January 2021 issue of the Sustainable Business Review. See also:
Policy Watch: President Biden sets about tackling climate change with ‘all-star’ team
Brand Watch: U.S. oil majors feel heat as climate divide widens with European competitors
ESG Watch: Investors urged to set science-based climate targets, and join UN’s race to zero
Interview: How WEF converts blue-sky thinking into real-world action
Where is Big Carbon in the race to net zero?UNFCCC Patricia Espinosa Paris Agreement CO2 emissions Joe Biden fossil fuels divestment nuclear energy lithium