The International Energy Agency’s advice to COP26 policy-makers pulled few punches.
It’s one thing when pressure groups insist on the need to ‘keep it in the ground’. It’s quite another when the message comes from the International Energy Agency (IAE), the foremost global authority and policy advisor on the sector. Responding to the UK government’s request for a guide for policy-makers at COP26, the 400 milestones of the IAE’s net-zero emissions 2050 (NZE) roadmap give a stark warning to energy producers, consumers and investors: no new oil or gas fields, or coal mines, beyond 2021; no new fossil-fuel boilers from 2025; net-zero emissions electricity in advanced economies by 2035, and globally by 2040.
Looking at the wider economic impact of the transition to a low-carbon economy, the IAE said its NZE scenario could yield a 25 million net increase in jobs. Many may query the IAE’s inclusion of technologies still in development (although US Climate Envoy John Kerry might be relieved). But the agency pointed out its roadmap is one of many possible future options, and it’s hard to argue with the observation that “clean energy innovation” will be critical, as will “a singular, unwavering focus from all governments”.
Kerry’s rose-tinted musings notwithstanding, the Biden administration demonstrated its unwavering focus with a Ford F-150 Lightning test drive and an executive order aimed at identifying, reporting and managing the financial impact of climate change on US households, businesses and the finance system. The order authorises Treasury Secretary Janet Yellen to bolster financial stability against climate-related risks, although regulators including the Securities and Exchange Commission are already on the case.
Meanwhile in Europe, MEPs voted through a €17.5 billion Just Transition Fund, aimed at supporting regions and communities impacted by the closure of fossil fuel facilities. Ahead of next month’s climate-focused G7 summit, the UK government finalised plans to export methane emissions to the other side of the world. UK Climate Champion Nigel Topping may need his “stubborn optimism”.
It’s not known whether Shell shareholders had time to read the IAE report before voting on the firm’s energy transition strategy, but support levels for the board’s vision and a rival shareholder proposal reflected continued differences of perspective. Elsewhere, there was evidence of growing harmony – or at least productive dialogue – among asset owners and managers on the nature of sustainable investing, even under increasing scrutiny of managers’ net-zero commitments and stewardship policies.
While energy and climate-related issues have understandably dominated the week, investors’ thoughts will no doubt be turning to tomorrow’s Biodiversity Day, marked this year under the slogan, ‘We’re part of the solution’. There are already commitments and comments aplenty, but many of the hard yards of measurement frameworks lie ahead.