Unpacking the ‘how to’ conversation at Climate Week NYC
By Ian Simm, Founder & CEO. This article was first published in Citywire Wealth Manager
I always need to do a reality check when attending an international summit on saving the environment. Is it really appropriate that hundreds of people hop continents on CO2-spewing aircraft to admonish everyone else for doing the same, or similar? Are those hours spent travelling and in conversations really worth it?
Despite these niggles, now that the dust has settled after New York Climate Week, I have to conclude that it was a special event. Yes, the diehard, would-be revolutionaries were there, pounding the table but skating over how we could implement their radical ideas. But there was also a second, quieter conversation – probably involving, for the first time, a majority of attendees – that attempted to unpack with a new sense of urgency and conviction what it’s going to take to deliver on lofty climate goals. This is the conversation that we need to focus on and extend as the clock ticks.
In my view, this ‘how to’ conversation is now focusing on three distinct types of problem.
First, those problems where, broadly, we know what needs to be done, but there’s a long way to go, found most obviously in the transition to a low-carbon energy system.
The cost of power generated from wind and solar PV power is now competitive with fossil fuel alternatives in many situations; today’s challenges are focused on how to design and build power grids and markets that can cope with widely dispersed, intermittent generation, and how to source the vast quantities of raw materials required to scale up.
The solutions here include ramping up dialogue between private companies and regulators to ensure that system changes are optimal and that experience in one country is shared with others, alongside communicating to the general public the importance of individual developments, for example opening a new copper mine or erecting a high voltage transmission cable.
The second type of problem is where we think we know what’s necessary, but there are specific bottlenecks and much uncertainty.
In these harder-to-abate sectors such as steel, aluminium, cement, air-travel and shipping, there is typically a technology and engineering roadmap to low or zero GHG emissions, but also significant barriers – particularly cost, and in some cases first-mover disadvantage, land-use challenges and unwanted side-effects. Although the solution for each sector is bespoke, a common feature is the critical role that could be played by major buyers and suppliers agreeing target volumes of the new low-carbon product or solution, for example 10% sustainable aluminium by 2030.
We also need targeted research and development to stimulate the innovation required to break down specific barriers, for example how to manufacture low-carbon cement at scale; here, government funding can play a key role and international collaboration can ensure that the deployment of new technologies isn’t slowed down by cumbersome patents.
The third problem area is the one in which we have barely begun to define the question, let alone mapped the solution.
The most obvious topic here is biodiversity. For decades, in much of the developed world regulators have required that the initiation of new construction or land-use change be subject to an environmental impact assessment (EIAs), a science-based study aiming to identify likely or potential pollution or damage to ecosystems. Inevitably, these EIAs have often fallen short of what’s required, either because enforcement was lax or absent or because they failed to take account of larger-scale, systemic issues such as the effect of similar, cumulative developments.
The recent launch of the Taskforce for Nature-related Financial Disclosures has provided a welcome jolt for investors to pay attention to this topic by requiring them to analyse and disclose the impacts and dependencies of their investee companies on nature. The high-level TNFD framework, which was announced at New York Climate Week, promises to be a strong contribution to our eventual response to combatting biodiversity loss. However, it’s vital that we recognise that, unlike climate where damage to the atmosphere is the same regardless of the location of the emissions, ecosystems are local or multi-local. Consequently, the analysis of damage is rarely straightforward, and we need to be careful to examine critically any claims that solutions have been found.
Against this backdrop, I was particularly pleased that Impax had a high profile throughout Climate Week. After 25 years of demonstrating that the transition to a more sustainable economy is providing excellent opportunities for investors, I’m more convinced than ever that society can halt climate change in time to preserve a habitable planet, enable less prosperous nations to grow richer and preserve aggregate wealth in developed countries. This is clearly not straightforward, so we need to broaden and deepen that second, thoughtful conversation, sharing best practice and encouraging those taking initiatives to raise their level of ambition, expand the set of participants and disseminate the learning quickly.
As we enter the fourth quarter of one of the worst years on record for natural disasters, and with the El Niño effect likely to compound this problem over the next couple of years, there’s not a moment to lose.