By 2030 all you investors and executives will be operating in a world with either dramatically lower emissions or zero remaining carbon budget. That's just two business cycles away - don't waste them!
My last long piece of the year for @BloombergNEF.
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My last long piece of the year for @BloombergNEF.
about.bnef.com/blog/liebreich…
Is Paris a metaphor for the state of global climate politics? Three years ago the Paris Agreement, committing the world to limiting global warming. Today, the Paris riots, triggered by increases in fuel tax designed to help deliver France’s climate goals.
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Lofty climate ideals, soaring rhetoric, ambitious targets – meet popular push-back!
Is that the message of Paris, or is the reality more complicated?
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Is that the message of Paris, or is the reality more complicated?
about.bnef.com/blog/liebreich…
Events around the globe certainly make it easy to paint a picture of climate policy in disarray. Exhibit A is, of course, President Donald Trump’s decision in June 2017 to pull out of the Paris agreement. But also Doug Ford, Jair Bolsonaro, Scott Morrison. about.bnef.com/blog/liebreich…
Global emissions, almost flat between 2013 and 2016, returned to growth in 2017 and 2018. The EU, with emissions growth of 1.5% in 2017, has no moral high ground in Katowice to lecture the U.S. – where coal plants continue to close and emissions to drop.
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about.bnef.com/blog/liebreich…
But before you conclude that the world is failing to address the climate challenge, and that wait-and-see or business-as-usual are viable business strategies, read on.
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Reasons to be cheerful, part 1: it’s not all about climate politics.
Thousands of delegates are gathering in Katowice to discuss the Paris Rule-Book: binding rules to track voluntary commitments. Yawn.
USA is there, even though it's pulling out. WTF?
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Thousands of delegates are gathering in Katowice to discuss the Paris Rule-Book: binding rules to track voluntary commitments. Yawn.
USA is there, even though it's pulling out. WTF?
about.bnef.com/blog/liebreich…
Reasons to be cheerful, part 2: clean energy and transport fundamentals
Paris Agreement did not drive the drop in wind & solar prices that began in 2010. Katowice is not needed to drive the mainstreaming of electric vehicles that began a few years ago.
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Paris Agreement did not drive the drop in wind & solar prices that began in 2010. Katowice is not needed to drive the mainstreaming of electric vehicles that began a few years ago.
about.bnef.com/blog/liebreich…
Climate economics precede climate diplomacy, not the other way around, and the economics keep looking better and better.
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The big Chinese solar manufacturers are all planning two- to three-fold increases in capacity in the next two to three years. The solar industry will return to strong growth in the near future, powered by its unbeatable value proposition.
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The wind industry is set to have its second-best year ever. The next few years will see installations get into record territory, with 30GW of new projects in the U.S. alone and the arrival of giant offshore turbines.
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about.bnef.com/blog/liebreich…
In transportation, 2018 saw demand for EVs reach 5% of car sales in China and 2% in U.S. and Europe. With the launch of the Tesla Model 3 and hundreds of new models from big manufacturers reaching the showrooms, things are going to be accelerating fast.
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about.bnef.com/blog/liebreich…
On the streets, the Charge of the Chargers has begun – and it’s going to be a battle royal between big oil and big utility. It's a battle EV drivers can't lose. Lush!
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about.bnef.com/blog/liebreich…
In 2018, Li-ion battery production for EVs overtook production for consumer goods, just as silicon for solar overtook silicon for microchips in 2005. By 2021 lithium-ion manufacturing capacity will be 630GWh, 3x current output. Beware falling prices!
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about.bnef.com/blog/liebreich…
Bottom line: It is clearly riskier to bet against the march of clean energy and transportation than to bet on it.
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Reasons to be cheerful, part 3: finance is waking up to climate risk.
Only 990 institutions with $7.2 trillion AUM or 3% of global savings have decided to divest, but these are just the lead steers. The main herd is starting to eye its escape route.
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Only 990 institutions with $7.2 trillion AUM or 3% of global savings have decided to divest, but these are just the lead steers. The main herd is starting to eye its escape route.
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Nearly 2,400 major asset owners and asset managers with $82 trillion under management have already signed up to PRI, with total assets subject to PRI growing by 19% in the past 12 months. PRI is on its way to becoming a global industry standard.
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about.bnef.com/blog/liebreich…
By September this year, institutions with over $100 trillion of assets under management had declared their support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), chaired by @MikeBloomberg.
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Activists are becoming more confident, organized and confrontational toward those delaying climate action. Investors and executives need to worry about the threat of legal jeopardy into which excessive emissions or poor climate governance may place them.
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about.bnef.com/blog/liebreich…
The era of corporates and investors turning a blind eye to climate change, pretending it presents no risk or treating it like someone else’s problem, is surely drawing to a close.
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about.bnef.com/blog/liebreich…
Reasons to be cheerful, part 4: When in the pits, look out for the pendulum - which is on the move back toward rapid climate action almost everywhere. A few anti-climate populists look like they may shortly find themselves on the losing side of history.
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The lesson of the Paris riots is not that the public reject any and all action on climate...
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The lesson of the Paris riots is that the public expects: climate action to be efficient; policy to focus on affordable clean solutions not just on raising the cost of dirty ones; costs to be equitably shared; and the benefits to be clearly communicated.
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about.bnef.com/blog/liebreich…
Finally, some thoughts on business cycles and speed of change.
The past 15 years have demonstrated that the transition to clean energy and transportation will not be smooth. It will continue to be characterized by cycles, every six or seven years.
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The past 15 years have demonstrated that the transition to clean energy and transportation will not be smooth. It will continue to be characterized by cycles, every six or seven years.
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The first cycle of the modern clean energy transition was 2004 to 2010. Many ended the cycle bitterly disappointed. The 2nd cycle has run from 2011 until now: dramatic falls in wind and solar costs, they now provide ~7.5% of global electricity and growing.
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about.bnef.com/blog/liebreich…
In one business cycle, sectors can be transformed. In six years, LED lighting has gone from <5% of the global lighting market to > 40%; coal in the U.K. has gone from >40% to <5%; plug-in vehicles in Norway have gone from ~5% of sales to nearly 50%. Wow!
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The @IPCC_CH Special Report (SR15) says that by 2030, one of two things will have happened: either we will have reduced emissions by 45%, or we will have burned through the remaining carbon budget for a 50% chance of temperature increases below 1.5°C.
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about.bnef.com/blog/liebreich…
In just two business cycles you will find yourself in a world where either carbon emissions are dramatically lower, or there will be no remaining carbon budget, and presumably no societal license to operate carbon-intensive businesses. Because SCIENCE.
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Once you accept that the world is going to look very different at the end of the next two business cycles, whether we listen to the warnings of scientists or not, priorities become painfully, refreshingly clear.
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Ignore the noise, focus on the signal. Trump is noise. Katowice is noise. Weather is noise. News is noise. The signal is, where do you want to be at the end of two business cycles, when either emissions are down 25-45% or there's no more carbon budget?
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about.bnef.com/blog/liebreich…
What portfolio do you want to own after those two business cycles? What business do you want to be in? What business do you not want to be in? And – crucially – what do you need to do right now in order to get an edge on your competitors?
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It's looking like the Paris riots are less and less to do with climate-relatec costs and more and more to do with the same issues that led to Brexit. Good luck to M Macron getting that genie back in the bottle! And the Gilets Jaunes appear tragically poorly-educated on climate. 
