Time for sovereign markets to get fully involved in climate transition
A former UK energy minister and the COP26 president until February 2020, Claire O’Neill is known for being outspoken. When the British prime minister removed her from leading the upcoming UN climate talks, run under the UK presidency, she publicly pointed out the British government’s failure to act on climate.
The 26th UN climate change conference, known as COP26, is set to take place this November in Glasgow after being postponed because of the pandemic. Now the managing director for climate and energy of the World Business Council for Sustainable Development and a board member of consultancy Ikigai Capital, Ms O’Neill shares her views on what continues to go wrong when we talk about climate.
Are governments’ climate commitments enough?
It’s really tough, but I think this is a question for the sovereign markets: how are they going to get engaged in this transition. We talk about the COP process; we talk about the importance of the UK’s plans. [In 2019, the UK announced it would reduce its greenhouse gas emissions to net-zero by 2050, and in December it committed to cut them by at least 68% by 2030.] But where’s the global financial system to support or penalise those plans based on their quality?
Will COP26 help?
At COP, there is no natural place for those conversations to happen. The COP conversation is telling rich countries to give the poor countries more money. That’s it. There’s no nuance about how to measure good performance, how sovereign financing links to a country’s decarbonisation. It’s just not there, and it has to be because finance is the big enabler. That is why Mark Carney’s role is so important. I recruited him to be the UK’s COP26 finance adviser. [Mr Carney is also the UN special envoy for climate action and finance and the Bank of England’s former governor.]
Will US president Joe Biden’s administration make a difference?
Adding America back in the Paris accord and using their trade and diplomatic leverage to get countries like India or Brazil or China to move is so incredibly important. The US is the world’s biggest economy and also one of the most energy intensive. If they can create incentives, both for reduction in energy consumption — but also, crucially, carbon sequestration — they’d make a difference. We don’t talk enough about taking carbon out of the system, particularly using nature, and there are huge opportunities for this in the agriculture sector.
Is there enough investment into finding new solutions?
The short answer is no. Governments have subsidised the build-out of renewable energy to the tune of $4tn, and renewable energy is less than 10% of global energy supply. We need to spend more money and we need to spend it better.
We can’t believe that if governments will just subsidise and regulate, it will all be fine. The real breakthrough is the public–private conversations. There is lots of money in the private sector, but we’re not structuring projects to deliver the right kind of returns.
Do we need to talk about nuclear power too?
The challenge with nuclear is that it feels like an old industry in terms of research and development. It is incredibly expensive to build from a government point of view — [even more so for] small modular reactors, which I don’t think overcame the PR issues related to the sector as much as people might think.
China is building out huge quantities of nuclear power at a third of the cost [of what we’d pay in Europe] because of poor worker safety standards. Bill Gates is investing in ‘automated’ nuclear stations that would reduce human error, which has led to so many of the disasters of the past. [Mr Gates founded TerraPower to commercialise small nuclear power stations.] I think we would be foolish not to keep investing in nuclear energy if we can find cost effective ways to do so.
