COP26: Key Takeaways and Quotes from Week 1

This episode is a wee bit different from previous shows. With loads of big headlines coming out of the first week of COP26 in Glasgow, it seems like a quick roundup is in order to separate the news from the noise. There were also a few notable quotes (and even one song) that are worth highlighting.  I hope this episode helps you get caught up fast!

Related links:
The Green Grid Initiative
Mark Carney and GFANZ
SBTi aims to define "net-zero"
BlackRock's Larry Fink on greenwashing
Global methane reduction pledge
IFRS Foundation announces International Sustainability Standards Board
Greta Thunberg owns her critics with net-zero pledge for bad language

More resources:
GHD - A Supercharged Transition
GHD - Future Energy

More Podcasts from SmartBrief:
The Modern Money SmartPod
Touchpoints - A conversation about care, connection and costs in US health care

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Transcript

This episode of the Renewable energy SmartPod is brought to you by GHD.

Getting to net-zero won't be easy, but with the power of commitment, anything's possible. At GHD, we're making energy, water and urbanization sustainable for generations to come. Relentlessly pursuing a greener future with our clients and our communities. That's the power of commitment. That's GHD.

Sean McMahon

What’s up everyone and welcome to the Renewable Energy SmartPod. I’m your host Sean McMahon and today’s episode is gonna be different from previous shows. With all the news coming out of the first week of COP26 in Glasgow, I am just gonna do a quick roundup of some of the biggest stories from the conference … and I also want to highlight one or two interesting quotes from the event. 

In fact, I want to start things off with the first quote. So here it is: “There is a deficit of credibility and a surplus of confusion over emissions reductions and net zero targets.” Now… At the end of this news roundup, I will tell you why that quote is significant and here’s a clue: it’s more about WHO said it ... and why THAT really matters.

As far as news coming out of the conference, fans of renewables will certainly applaud the launch of the Green Grids Initiative. Spearheaded by UK Prime Minister Boris Johnson, Indian Prime Minister Narendra Modi and a host of other leaders, the initiative aims to see international grids carrying more wind and solar on every continent. With backers in the US, UK, India, France, Africa, the Gulf, Latin America and Southeast Asia, the Green Grids Initiative will prioritize the development of utility-scale wind and solar and transmission lines around the world. Considering all the trouble even the most developed countries have with transmission and interconnection, this initiative could end up being a very big deal.

Finance news as it relates to the energy transition has been a huge topic so far in Glasgow and perhaps the biggest announcement came from Mark Carney and the Glasgow Financial Alliance for Net Zero … which is also know by its acronym  -GFANZ. Members of this global coalition of financial services firms with a whopping $130 trillion in combined assets pledged to use science-based guidelines to reach net-zero carbon emissions by 2050. Almost as impressive as that headline-grabbing $130 trillion figure was how fast skeptics scoffed at the announcement. People have heard banks talking the talk before, but they are waiting for banks to walk the walk. That leads to one of the great quotes I want to share. Ben Caldecott, director of the Oxford Sustainable Finance Group at the University of Oxford and director of the U.K. Centre for Greening Finance & Investment responded to the GFANZ announcement as follows: “We urgently need to focus on the quality and integrity of promises made by financial institutions, not simply their quantity.” Ouch… questioning the “integrity of promises” sounds like a very elegant and refined way of calling … well, calling you know what on the financial services industry and its promises.

And Mark Carney is certainly caught in a tough spot. His reputation is a big reason why he was able to cajole banks around the world into joining the GFANZ. But his track record is also what draws the ire of many skeptics. His illustrious career has included stints as the not only the Governor of the Bank of England, but before that, the Bank of Canada. And during all those years of wielding actual policymaking power, how many successful initiatives did he launch aimed at tackling the climate crisis? Not a lot.

To be fair, financial services firms aren’t doing themselves or Mark Carney any favors. The next interesting time from COP26 centers on how those firms can’t even agree on what the term net-zero means. It’s true. The Science Based Targets initiative -- or SBTi -- made news this week by saying it would help all those finance firms solve this riddle and find the true meaning of net-zero. And apparently, it might not be as easy as it sounds. SBTi says it is studying not one, not two, but three broad approaches for how Finance firms can reach net-zero emissions. Let the arbitrage begin.

And speaking of arbitrage, Blackrock boss Larry Fink sounded the alarm on the sidelines of COP26 about how the disdain investors are showing for companies with any links to fossil fuels might end up hurting efforts to cut greenhouse gas emissions. If ownership of fossil fuel operations shifts from public companies to private companies, Fink says it would results in “the largest capital-market arbitrage in our lifetimes.” And you know what, if private companies aren’t held to the same reporting and disclosure standards as public companies, then Fink will be right.

After this quick message from today’s sponsor, we’ll talk about that methane pledge and one other development at COP26 that might take a long time to pay dividends, but when it does, it might be huge.

ADVERTISEMTENT

Getting to netzero won't be easy, but we know we have to make the next 10 years count.  At GHD, we're a global professional services firm committed to making energy, water and urbanization sustainable for generations to come. That means transforming with purpose locally and globally. It means relentlessly pursuing a greener future with our clients and with our communities. With innovation and technical expertise at our core, we believe net-zero can be achieved. That's the power of commitment. That's GHD.

Sean McMahon

Back to our news roundup from week one of COP26. Another big story was the pledge by more than 100 countries to join the US and the European Union in reducing methane emissions by 30% by the end of this decade. Since oil and gas operations are a major source of methane emissions, this might not seem like much of a renewables story, but the key is who will be made to foot the bill for reducing those emissions. In some countries, the government might pay the bill. But in jurisdictions where oil and gas companies have to pay the bill, that will hit their bottom lines and make them less attractive to investors. And THAT would be a very good thing for the renewables sector.

We opened this roundup with hopeful news about the Green Grids Initiative, so we are gonna end the roundup with another positive development. Don’t worry … I haven’t forgotten about revealing the source of that opening quote. I’m gonna get to that. But first, the IFRS Foundation announced in Glasgow that it has made progress on the launch of the International Sustainability Standards Board -- the ISSB. So much of the future of sustainable investing hinges on clearly defined environmental and sustainability standards. Investors are flocking to ESG funds so some clear standards are long overdue. Now I know some of you might have a hard time getting excited about news from the world of financial reporting standards. I get it. And the work of the ISSB will be slow and methodical, but it also might -- I stress might -- end up being a game-changer. Think about that story I just shared about Finance firms not knowing how define net-zero. I was a bit cheeky while sharing that story, but make no mistake … Finance firms aren’t the only ones questioning the validity of net-zero. The conference is only half over, but COP26 is dangerously close to being the event where net-zero went from being a goal that is revered to a term that is ridiculed.

If you don’t believe me, consider the words this week from two people at opposite ends of the “establishment” spectrum. Whether you love Greta Thunberg or hate her, you gotta admit she’s a master at wielding words like a scalpel. She took part in a cheeky sing-a-long in Glasgow that took the words to the well-known song "She'll be coming 'round the mountain," and changed them to "You can shove your climate crisis up your a**e" … you know what… When video of this got out, people who were oh-so-offended by the change in lyrics, chastised Thunberg for being so vulgar. Not normally a fan of net-zero pledges, Thunberg responded via Tweet with a net-zero pledge of her own: “I am pleased to announce that I've decided to go net-zero on swear words and bad language. In the event that I should say something inappropriate I pledge to compensate that by saying something nice.”  I think the kids these days would call that a burn. 

As for the other person .. the one from the opposite end of the establishment spectrum as Thunberg, I already shared that person’s words with you at the top of the show. Here is that quote again: “There is a deficit of credibility and a surplus of confusion over emissions reductions and net zero targets.” The reason I said it was important because of WHO said those words is because they came from United Nations Secretary-General Antonio Guterres. 20 years ago, you might have heard something like that from a protester outside a COP. Ten years ago you might have heard it from someone during a low-level panel discussion. To hear it from the boss of the United Nations - the organization that is putting on the event -- means this COP is different. It means Guterres … the most establishment of establishment people at COP26 … is just as tired as Thunberg of nothing but talk. 

That’s our show for today. I am gonna put links to some of the stories in the show notes. Once again I’d like to thank the exclusive sponsor of this episode: GHD.