Sustainable finance, risk and transition to clean technology
Reported by Victor Lovic, CSaP Policy Intern
The Centre for Science and Policy (CSaP), in collaboration with Professor Charles Kennel, Director Emeritus at the Scripps Institution of Oceanography, University of California San Diego, delivered the 2022 series of climate change seminars hosted by Christ’s College, Cambridge.The first seminar, on 27 January 2022, focused on sustainable finance, risk, and the transition to clean technology.
It was chaired by Emily Farnworth, Co-Director, Hughes Hall Centre for Climate Engagement.
- Panellists: Michael Liebreich, Chairman and CEO, Liebreich Associates.
- Dr Emily Shuckburgh, Director of Cambridge Zero at University of Cambridge.
To watch the seminar back, please click on the link below:
A discussion of COP26 in Glasgow served as a starting point for the seminar. One of the main outcomes of the conference were the new net-zero pledges by various countries, notably China (by 2060) and India (by 2070). Shuckburgh emphasised that these and other current pledges are not enough to limit global warming to 1.5°C, which is why another key outcome was the agreement for countries to return in one year with enhanced pledges. Additionally, a large focus of COP26 was the transition from ambition, which characterised the Paris conference, to action, which occurs at the sector level in the real economy. The UK COP26 Presidency therefore adopted a strategy whereby the conference consisted of several parallel lines of work focussed on specific areas (such as coal).
"If we want Africa, India, the big developing countries to leapfrog [fossil fuels], then we've got to help them to do that."
Liebreich agreed with Shuckburgh and emphasised further that COP26 delivered substantial progress. He explained that it was a test of the approach adopted in the Paris Agreement, including the adoption of ratcheting mechanisms, voluntary contributions, and verification processes. This approach was contrasted with the Copenhagen COP15, which instead focused on extensive negotiations, legally enforceable mechanisms, and top-down implementation. Liebreich argued that voluntary pledges, while not legally enforceable, are part of a progression, from pledge to Nationally Determined Contributions, to domestic legislation, through to change in the real economy. The capacity of the real economy itself influences what countries can pledge, in a self-reinforcing cycle where advances in technology allow for more ambitious climate targets, which in turn provide signals for investment in the green transition. According to Liebreich, COP26 demonstrated that this process is working, though of course has a long way to go.
During the 2010s, climate finance investment stalled, but it is now starting to rise again due to investments in renewables and transportation especially. Liebreich said he sees a “clear line of sight” for energy and transportation in reaching net zero, though perhaps not by 2050. However, he emphasised that we have not yet solved all the challenges in transitioning these industries away from fossil fuels, and investment in fossil fuel infrastructure is still needed in the interim to maintain affordable energy services. This is especially true of developing countries, which need investment in their energy infrastructures, including fossil fuels, to grow and improve standards of living.
"It's going to involve a lot of steel, a lot of copper, a lot of nickel, a lot of cobalt, and a lot of lithium. And the supply chains there do not yet exist."
Shuckburgh emphasised that a “just transition” away from fossil fuels is needed, that provides clean energy for all while still maintaining and improving standards of living for the worst-off members of society, but that achieving this will be challenging. A further challenge is maintaining the current momentum in climate action in the face of geopolitical threats like trade-wars or shifts in geopolitical power. Shuckburgh emphasised that the key near term policies needed are for countries to draw out action plans for achieving their climate pledges. The emphasis should be on how to move from ambition to action, and from pledges to changes in the real economy.
Both panellists were optimistic about COP26, however a member of the audience asked: what they were disappointed by? Liebreich said the Global Methane Pledge and argued that a 30% reduction in methane emissions by 2030 is a “joke and an insult”. He said it is not ambitious enough, given that it is a tractable issue we can address with current technologies. He argued for a 30% reduction by 2025 instead, with a 70% reduction by 2030. Meanwhile Shuckburgh said that it was of course extremely positive that the US had returned to climate negotiations, however the country had gone quiet in the months since the conference. She added that India’s 2070 net zero pledge was encouraging, but it lacks the detail as to how it will be achieved, especially with regard to short-term ambition.
A second question was asked about the importance of resource efficiency and economic growth. Shuckburgh said that we need to improve resource efficiency alongside other approaches and use all the means available to us to tackle the climate crisis. As for economic growth, Shuckburgh granted that there is a discussion to be had about alternative measure to GDP that might better capture what we care about, like wellbeing. She noted that research is already underway at the University Cambridge about how to measure the future of ‘progress’ beyond GDP. Of course, there is a trade-off between how easy it is to measure a given metric and how precisely that metric captures what we care about. GDP is used largely due to the ease with which it can be measured. Liebreich however cautioned against getting rid of GDP altogether, since GDP correlates strongly with jobs, which in turn improves wellbeing, engagement, and inclusion in society.
"We talk a lot in terms of climate related risks on the physical side about cascading risks and systemic risk. That's just as true on the geopolitical side."
Farnworth concluded the seminar with the following question: will the momentum generated at Paris and Glasgow continue to overcome challenges, such as the geopolitical ones discussed? Liebreich and Shuckburgh agreed that we have to keep the momentum up on climate action, while not losing sight of other global challenges. Shuckburgh said that, unlike many threats to society, climate change is a very predictable global crisis. She stressed that we know what the consequences of inaction are, and this can keep us focused on the required response in the face of challenges.
To watch the second Climate Seminar back - Behaviour Change and Sustainability - please click here.