Anthony Hobley Nick Breeze COP23 interview

UK based Carbon Tracker Initiative has played a key role showing big businesses, including fossil fuel companies, a route out of the business as usual high CO2 emitting path that is driving humanity towards catastrophe. Anthony Hobley has been at COP23 telling delegates “we are in a technology driven low carbon energy transition” and changing course “just makes financial sense”. NICK BREEZE catches up with him.

Nick Breeze: We are 2yrs on from Paris. Are we making any progress at the COP?

Anthony Hobley: Yes and no. I think clearly we are seeing that in the real world, in the real economy, the finance and economics are changing. We are in a energy revolution. There is a paradigm shift going on where we are beginning to see that the clean technology, the clean energy, just makes financial sense.

Increasingly the incumbents, the existing sources [of energy], no longer make the financial sense they used to. In many cases we are having to subsidise fossil fuel, coal for example, for it to continue and compete with the alternatives.

On the political side, clearly things are muddier than it was two years ago, we all know that. My faith is in the fact that this is an unstoppable transition. We are in a technology driven, low carbon transition.

The million dollar question is whether it will happen fast enough to deliver a stable climate.

Nick Breeze: As of this moment, is it?

Anthony Hobley: As of this moment we are going in the right direction, we are just not going fast enough. We need to step up ambition. I think the work we do at CarbonTracker can help because using financial analysis, the numbers, we can show that it makes financial sense.

I think non-state actors and governments see that. They see that it is in their financial economic and political interest to step up ambition. It is in their interest to do so.

Nick Breeze: Is it also because you are talking their language?

Anthony Hobley: The financial markets and business are not going to take this seriously unless you are talking their language about the issues they care about, you know, like risk and return. And you are doing that, not in some abstract qualitative basis but you are doing that doing numbers. Quantitative analysis that stacks up.

Nick Breeze: You mention the incumbents. A new report out today states that emissions from the fossil fuel industry rose by 2% in 2017 from 2016. Does this signal a problem of emissions getting worse and not better?

Anthony Hobley: Yes, we have a problem and we know we have got to get that emissions profile, we’ve got to bend it down by 2020. We are in the endgame for fossil fuels and of course they are pushing back. If someone came along and told you that your house was condemned but you still have the debt on it, you still have to pay the mortgage, of course you are going to push back.

So we have to come up with a way that everyone sees a way through this, including the incumbents. The good news for the incumbents is that there is still a good business for the next thirty years with the oil and gas that they’ve got but they have to go ex-growth.

That is the message we have to get across to them. The silver lining here is that it makes financial sense for them to do so. We can preserve shareholder value and the value of those companies for three decades if they go ex-growth on the 2 degrees pathway.

Nick Breeze: That’s the route out for the fossil fuel companies. We all know about the power of the fossil fuel lobby; what’s the traction you are getting with policymakers with your message.

Anthony Hobley: I think that’s the interesting thing. Carbon Tracker… we are not focussed necessarily on the policymakers or government. Our audience is the financial markets and particularly the asset owners and the asset managers but because of the credibility we have in the financial markets, we find  the policymakers, in particularly the final coal policymakers, coming to us to seek our views on how they ensure transparency in the markets, so investors can understand the risks and opportunities.

The task force that the governor of the Bank of England, Mark Carney set-up, the Task Force on Climate Related Financial Disclosure, so we’re starting to work with them and others to see how we can implement those recommendations. The key here around disclosures, particularly here, disclosures have been backward looking. When you are in a world that is changing, there is no point looking in the rear view mirror, you’ve got to be looking out in front of you.

So we’ve got to come up with disclosures that that are very forward looking, so scenarios that allow you to stress test the business models of those companies and see how they can change. That is critical.

I’ll finish your question with one point. Our recent US coal report showed that 78% of US coal fired generation now has to be subsidised by the consumer to compete with the cleaner alternatives. If that continues by 2020 US consumers could be paying an extra 10 billion dollars a year. For some of them that could be an 10% of their energy bill.

Nick Breeze: When you say cleaner technologies, do you include natural gas and fracking?

Anthony Hobley: Natural gas and increasingly wind and solar. It’s a mix but we are in a paradigm shift. It is tipping and I think even with gas, over time it is going to tip away from gas as well.

What is so exciting about clean tech is that we are probably only at the beginning of the S-curve in terms of the scale-up and the reductions in cost of those technologies.

Nick Breeze: That does relate back to one of the messages that is coming out of this COP around the idea of ambition. Can you define or break that word down because it has become a buzz word here.

Anthony Hobley: The Paris Agreement is based on countries coming up with their own commitments, their own nationally determined commitments (NDC’s). What was built into the Paris Agreement was a ratchet mechanism, i.e. we come back in a few years, in 2018, and review those targets with a view to increasing the ambition in those country-level targets, by 2020.

The buzzword now is ratcheting up ambition because what everyone wants, and what we need if we are going to get anywhere need 2ºC, is companies to ratchet up that ambition. Because the aggregate ambition in the existing targets, NDC’s, will not get us to 2ºC, it’ll be more like 2.7-3ºC.

So we know we have to ratchet up ambition if we have any chance of keeping at or below 2 degrees.

And I think the work that we do will help because to date we have all been talking about how people have to try harder, you have to use more effort, you have got to work harder. People even use analogies of pushing a boulder up a hill.

By why does anyone want to do that? If that is the option…it sounds very painful and very difficult and very costly. The reality is that the way you are going to build your economy, the way you are going to build jobs and prosperity is with investment in all the things that are going to help us reduce emissions and all the things that are going to help us comply with our, as countries, our National Determined Commitments (NDC’s). All the things that will make it easier for us to ratchet up the ambition.

So, if you can show governments that by increasing ambition, it is going to increase jobs, it is going to increase the growth of their economy, it is going to increase prosperity and it just makes financial sense, it is going to be a lot easier to persuade them to do that.

Nick Breeze: So you are not pushing the boulder up the hill and there are subsidiary benefits along the way?

Anthony Hobley: Yeah, you are going with the grain. This is the point, we are in a paradigm shift, we are in a technology driven low carbon energy transition. We have just got to speed that up!

Anthony Hobley is the Chief Executive Officer of the Carbon Tracker Initiative https://www.carbontracker.org

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