UN’S decarbonisation mission impossible

According to Oliver Bäte, Allianz’s CEO, the group’s climate and decarbonisation actions would:

 ...include the phasing out of coal investments, the use of environmental, social and governance scoring in investment decisions across its portfolio of own investments, and scaling up its investments in renewable energy. Allianz is one of the leading private investors in renewable energy, with more than EUR 2.5 billion committed and plans to at least double these investments.

He stressed that PDC needs “an ambitious and reliable regulatory environment now to live up to our commitment to scaling back our financing of carbon-intensive businesses, and investing in renewables and low-carbon infrastructure. If this is fulfilled, then climate protection will not fail because of a lack of funding.” (my italics)

There was a ‘cautionary note regarding forward-looking statements’ as the end of the PDC media release.

The statements contained herein may include prospects, statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such forward-looking statements. Etc. (my italics)

But there was no mention that changes in outlook could arise due, say, to a decline in scientific ‘consensus’ about climate theory; the continuing lack of empirical validation for climate-model ‘predictions’; doubts about public statements claiming quantifiable links between atmospheric carbon dioxide, anthropogenic greenhouse gas emissions and future global temperatures; more revelations about the accuracy of agency data collection over time, and so on.

Whether by accident or design, only a handful attended the PDC’s 25-minute media conference (video here.)  But Fred Pearce, a freelance journalist reporting for Yale Environment 360, Joel Penrick of Green TV – producer of this 56-second classic, What is climate change denial?, and Miranda Johnson of The Economist were there. Nick Nuttall, UNFCCC’s Head of Communications, was the moderator.

Miranda Johnson asked: “How do you balance fiduciary duties against a low-carbon portfolio, and in transitioning to an increasing low-carbon portfolio?” (14.4min.)

Fiduciary duties: the duties of loyalty and care. Pet owners have FDs. So do managers of other people’s money. For them, there is an eleventh and twelfth commandment: “Thou shalt not be casual about due diligence. Thou shalt consider all the actual or potential risks involved in an investment opportunity.”

Oliver Bäte: “FD is not the real issue (24min.) The real issue in Allianz’s mind is often the legal frameworks for investing in RE infrastructure that are spanning decades – so you need to commit money for several decades – are not properly protecting long-term investors.”

“We are very often at the mercy of the public mainstream [voters] and courts that in hindsight declare some of these contracts invalid and therefore make it very difficult for long-term investors to justify committing money for decades.”

“So let me summarise. It is not a problem of financiers not wanting to put the money in, or a lack of liquidity. It is the wrong incentives from the public [voters] – and the wrong legal frameworks for funding infrastructure – that make it very difficult in practice.” (25min.)

Mr Bäte was right to be anxious. Governments are elected and elected governments change their policies. The UK government is one of them. A week after the COP21 ‘landmark deal in Paris’, Britain cut more RE subsidies.