The UK’s Climate Crown Slips

stability in my own country. But I can tell you today that the United Kingdom is delivering on our commitment of eleven point six billion pounds and as part of this, we will now triple our funding on adaptation to one point five billion pounds. By Richie soon At, once again promising to stick to delivering billions of pounds to tackle climate change. He was speaking at the CUP twenty seven conference here in Egypt on Monday. Of course, it was not long ago that the Prime Minister was not planning

on attending the annual summit at all. I'm Francine lack One. This is in the City in the Desert to Bloomberg's podcast connecting you to the stories and the voices at the heart of the city of London. This week I'm in Charmel Shaik for the COP twenty seven summit, considering the question how committed to the green agenda is Richie Sunak and how concerned is a city? With where he

stands with me? Bloomberg contributing editor and author of the read Out newsletter, But you have to read because it's always very funny at like restaurants and it was also the UK's government spokesperson for COP twenty six and November one, and is a co founder of zero is M, a zero consultancy, and Bloomberg Green's senior reporter and host of Bloomberg podcast Zero ac chat Ratti. Thank you both for

joining me, Thanks for having us. We're just starting. We're like, what day three and we're surviving right the UK same but you know it's supposed to be two weeks and we've got to pace ourselves. We do. We do have to pace ourselves. REREGI SOONEG rebuilding the green agenda? Is he here? There was a U turn. He wasn't going to show up. Now he showed up. He pledged some

things and saying morally he can't back down. Yeah. I think that the language of the Prime in the new Prime Minister yesterday in his speech to Cope was very very similar to language that Boris Johnson used a year ago. There wasn't. There wasn't really very much difference. Um, yes, he wasn't coming. Then he was coming, which I think I'm told explains why he had quite a late slot.

My sense is that he got into office and he was focused on the Autumn Statement, which is what is it now ten days away and um, he felt that he had to give that his all and then you know there was a backlash. Um, the UK is the president of COP twenty. Actually not anymore, but it was at that point and it was until the first day of COP seven and it is right and fitting that

the Prime Minister found time to come. I mean it was pretty awkward, right, It's Monday, the Prime Minister and you limited UK prime minister shows up and you have Boris Johnson that actually speaks ahead of him. You know, awkward. Um different Um, Look for countries around the world that we're wondering about the UK's commitment, you can make the case having double minister, former prime minister and current Prime minister that started CUP and the prime minister that ends

it is a good thing. You certainly can't doubt UK um dedication and intellectual commitment to the issue on numbers alone. UM, I think actually, oddly for me, I worked for both men, but I worked for Boris Johnson at COP twenty six. I thought that the former PM was a bit gloomier. It's incredible to think how much has changed since that last COP, and to be frank, how much damage has been done in just one year to our great common

purpose of tackling man made climate change. I mean, people said it was boosterism, but I thought it was not boot Boris boosterism. He was saying the spirit of Glasgow is in danger of of did he say dying or some something similarly catastrophic. I don't think you can say that. Yeah, I mean, and yourself will have will have views on this, but I think that actually the main theme so far of this CARP has been we had some good commitments

tolve months ago, let's push him forward. I mean, I love what you wrote actually, which has showed me the money. So it's seen maybe as a bit crass, but actually it's not, because we're here to talk about financing and that's how you get stuff done. Absolutely, and yes, there were new commitments that were made by issues and A specifically on protection of forests, and there was sum attached

to it. Ninety million and sixty five million pounds, but the total amount that the UK is committing to climate finance over the next five years hasn't changed. That's eleven point six billion. This new money for protection of forests is just coming from the same pot, and so we're expecting more at this time when the UK government is going into a mini budget where it has to find ways to cut as much of its spending as possible. The fact that they haven't cut climate is a positive sign.

But we are here at CORPS where the entire demand from developing countries is you made promises that you haven't been able to meet yet. So yes, it's a difficult time for developed countries and for developing countries, but you have to show more money. I think actually that's right. I mean, what I think is coming across loud and clear from this CORP is that the magnitude of the money needed by the developing world is just in another galaxy towards on the table at the moment. And you know,

you just up then about millions. You know, it's not enough. Billions isn't enough. And I think that that's one of the political crunches of the next five to ten years is the rich world the richer world figuring out what the mechanism is going to be because at the moment, the sums that developing world is talking about needing, they're just it's not it's not on the table at the moment. And you have to flip this around because the framework isn't to say we're just going to keep needing more

and more and more money. In fact, if you do put more money now, you will need less money in the future. Yes, that feels like a really good thing to pull off at a time where everybody is worried about a crisis. But it just fundamentally is true. But we're not worried about Chris. We're living through a crisis, right if you look at the last twelve months, and I think Boris Johnson made this point. We can't really afford his words are not mine as a UK to

give more. As Akhat says, you've got the ultimate statement in ten days, maybe maybe less have lost track um And I think it is a good thing that that that climate International Climate Finance eleven point six billion, it continues to be ring fenced at a time when lots of hard choices will have been made in the treasury right now as we speak. So it is a good thing, but it's the still the magnitude is not near to

what they to, to what developing nations will need. And this debate about loss and damage, which Boris Johnson addressed head on. The best way to fix this is not to look backwards and to try to top up some bill for loss and damage that the UK or other countries have done, but try to try to look at what the UK can do to help to take countries forward and to give them help them to achieve the

carbon reductions and the green technology that they need. He was uncomfortable about it at copy because he thinks that there will be a limit to to what will be possible. I think therefore, in that context, what is increasingly interesting are the different mechanisms. The highest profile person to push them is obviously me and my talking about a couple of options. One is winful tax arl and gas A. Now there is special drawing rights at the i m F. There will be a spectrum of these ideas that will

come out in the next few years. So is it too soon to know to say whether the UK's climate crown is slipping. Let's start with the basic fact that UK has cut the most emissions among G seven countries since n That did put UK in a leadership position going into copy and there were some lucky circumstances that made it happen. There was some serious policies that made it happen, and the UK did lead on creating a law, the Climate Change Act, which has been copied by countries.

But it is also accurate that that Crown is certainly slipping. This year the amount of renewable investment going into the UK has fallen ninety percent, and that's at the same time when Boris Johnson committed to a higher renewable target into the thirty, committed to reaching net zero on the electric grid by committed to electrifying transport which will consume

more electricity um and so the signs aren't good. The Climate Change Committee has said that UK's next carbon budget, which are coming up starting three, the UK is not on track and so that Crown is certainly slipping and Richie soon if he stays in office longer than his predecessor did, we'll certainly will have to deal with that. I mean, that was what forty days, so let's was the last days UM. But what's also interesting the guidelines

on disclosures for firms and their climate risk. And that was something that we seeing as chancellor at CUP twenty six last year, UM did and that would be the first country to bring in this kind of rules. And I think that they're publishing at the moment consultation and then in the spring will get some detail. So I mean, actually it's very knowledgeable about this, and I read this

stuff and I love this stuff, so I differ. But I also think that in many ways, the plumbing and the piping on the mechanisms that are going to lower our carbon emissions over the next ten years are just being hammered out UM, particularly the disclosure piece that Rishie launched last year. UM. That will make companies have to say, right, this is where our risk is, this is where exposure to climate is, and therefore this is how we're going

to change how we're invested or whatever. So I think we are all of us, you know, sort of watching as these things evolve and develop. So actually, how do private and public actually work together? Well, the clearest way is really near zero, right UM. Until twenty eighteen, we did not have net zero by a target. Then country started adopting it. As soon as country started adopting it,

corporations started adopting it. And when corporations adopted and they're held to account by journalists and by their shareholders there, they have to put in the money to make that happen. And so that's the very clear line through point that you can see where the transition has begun. But we're going to have to do a lot more to enable public sector money to help the private sector move along. So there's a lot of conversation happening around blended finance.

This is a term. We're developing countries which are struggling with a strong dollar, struggling with debt payments, but are also the places where renewable energy is the cheapest, do not have the financial capacity to build them. So you bring in blended finance, You bring in money from governments and philanthropies that take some of the risk away and allow private players to provide most of that capital for those projects. What does this all mean for the City

of London. So we had a conversation with Mark Karney and I'm saying, is you know the City of London still the green one of the green finance capitals of the world. He said, of course it is. London's been out ahead and you know the then chance are now Prime Minister Richie soon Act said a year ago We're going to make London the world first netzero financial center. That's smart, that's good business and honestly good for the planet. But actually we don't really know where this current government

stands on making the city of London priority. What will they do with regulation to attract some of you know, maybe the last revenue that they've had the last two years UM on this. I think that actually I'm waiting to see more what the actual banks do. So I think that a lot of the policy architecture has been put in place, and we're now as we're talking about

earlier with disclosure on climate risk. So we need to be seeing how some of these big financial institutions are starting to um not necessarily divest by the way, but are starting to deal with with the with the riskier climate parts of their portfolio. So I think that I'm I'm interested. This is what we mean by implementation, cop like, I think it's one of the many facets where it's it is the phrase of the conference, show show us the money right. It's you hear it a lot on

a number of different levels. It says we've discussed developing countries needing the hundred billions, then part of that hundred billion more of it going to adaptation. Then on top of that some going to lost and damage and so on. So there's that show us the money, but there's also show us the money in terms of in order to get to these magnitudes that we were talking about earlier, not the millions, not really the billions, but the trillions, we are going to be needing private investments to be

leveraged in. And this is what actually talks about with blended finance. I would also say from a private sector of financial transfer from private finance, the whole notion around e s G or environmental social governance is mostly a hisze right now, because there are people coming up with their own rules, their own metrics, own ways of trying to move the money in the right place. But because of lack of clarity, it's unclear if that money is actually moving and so rules need to come in place.

And that's where if the a deal of London is serious about becoming the green financial capital of the world, are one of them. It needs to play alongside government to figure out rules that will allow private finance to

understand where that money needs to go very clearly. It's I mean, the way I've been looking at it recently is I think that you and our listeners will have noticed that in the States there have been banks that have wobbled on this commitment to dealing with climate risk, and in response, chief fans, this is the Glasgow Financial net zero Alliance zero. Sorry I'm tired, um, they have had to pull their horns in. But equally, there's some

evidence that European banks are really going for it. I'm really dealing with climate risk, um, and we could you know, there's some that I'm thinking of in particular, but that they are really grasping it. So I think there is a debate. You're right, there is a debate about whether the City of London will over the next five to ten years keep that crown of being the green finance. I mean, if you're talking competition here, actually the City

of London has a good chance. Now, well, we don't know what the midterms are going to do to the US, but we do know that Republican states are trying to question e s G and that's causing these wobbles in American banks. But if City of London provides clarity, in the UK, all political parties are clear on what they want to do and net zero. In America it's a

divided government. It's forcing their regulator, the SEC, to rethink whether the clear E s G rules that it had put out will come through because it's worried about lawsuits. The City of London doesn't have to worry about all that. When you look at g fans and Mark Arney was saying that from four fifty members in Glasgow they went to five fifty. The question is do you need very aggressive frameworks and regulation but risk losing members just to hit that target, or do you rather have a broad

church with weaker targets. I think he's gone for the last, right, I mean, that's what there was. There was talk in September that raised to zero, which is the u N kind of mirror to g fans, was gonna be penalizing of banks, right, And there were a couple of institutions that said, right, well, this is too tough for us. We're off and I think for all of us. We were watching that debate and thinking, gosh, is this the beginning of a stampede away because of the different political

and economic context? Is this you know this was too good to be true twelve months ago? Now this is the rubberts sitting the road and people that are going to leave. Actually, in the end, I think they stabilized it and they kept it to a few more banks then went public with worries, but they were kept in the team. And so I think he's made the latter of your two choices. He's made that choice that he wants to keep it intact to keep everybody trying to

work this out together. And that makes sense. I mean, if everybody works together, even with less aggressive targets, is it easier to then reach our goals and five, ten fifty years. I think Carney and Givans in general probably are forced to do that because the rules around the s G aren't that clear. If governments were to provide

more clarity, then private sector will follow suit. Um right now, because so many of the commitments are voluntary commitments, where do you draw the boundaries are voluntarily decided, and if you don't like them, you can walk out of a group. If government set regulations and clear rules, then they can't do it so easily. You know, we we see banks as um as you know, all doing the same thing, but actually a lot of banks are doing different things

right now. Western Lloyd's have a different portfolio with different carbon emissions from a Barclays and HSPC with a different geographical footprints. So I can completely see why this is a really complex issue to try and corral. If you're Mark Coni, what's the one question that regulators now need to think of? So as we try and hit the targets, do you have to get finance people behind you by just looking at the economics or does this have to be a belief of people wanting to save the planet.

I think belief is one that you could have pulled off before Paris. You could be like, yes, we should believe, but now we actually have legally binding targets in law. They might be years out, decades out. Um. I think it's more about making sure that the rules will allow the private sector to go in that direction. But economically does it make sense? So if you invest in the s G and I know there's so many questions about transparency, does it just make wise financial sense to invest in

this space? That's being the case from the very beginning. There's a clear hierarchy for how to think about money spent on climate action. Three steps. The first is to avoid, which is to reduce emission so that warming doesn't happen. The second step is to minimize if varming is happening, adapt by building sea walls, by building cooling spaces so

that you can deal with the heat waves. And the third step is if you don't do either of those, there will be lost and damage and you're going to have to pay for it, and it gets more expensive every step. So the economic case has actually been there for all this time. It's just that that economic case is over decades, not over the quarter by quarter reports

that companies have to put up. I mean, and to end you, I mean these are not small easy subjects, but I mean increasingly I think people think you need a carbon price, So I'm sorry, let's have it already. Where where is the price? In in the UK and Europe? There is one right cabin trade is a carbon price? You know the UK number? What's that magic number? I

think seven. I think what political sciences have figured out is like trying to force people to accept carbon pricing It's much harder than the plain economic case that if you have a carbon price will automatically move to a cleaner world. The politics is hard, right. If you go to the gas bump and you're paying really high process for your petrol and diesel, then you are going to blame the carbon price, not all the other macroeconomic factors

that are causing that to happen. For all the social media haters, I keep on saying, this is a jolly. Why are you roll in Egypt and charm? First of all, the conditions are are not the easiest to deal with. I mean, we have some really pretty robust drivers of buggies getting us from It's like driving electric Lewis the electric buggies like Lewis Ham. I mean they scare me when when I try and write an email and they

go really fast. That each of the place you need to be Actually, can we once and for all maybe try and agree that that even if there's not going to be a big headline number, these are important because bringing people together at all levels as a state but also NGO's could give us a better chance of hitting our targets. Well, we had Lewis, you who is the U n Patron of Oceans on the podcast on Zero and he said this thing, which you know, clears up

why COP meetings have to happen. He said, sometimes you just have to look people in the eyes to agree on a difficult thing. You can have as many zoom meetings as you want, and there is an important role for zoom meetings and virtual meetings, but when it comes to these crucial things where you need to bridge the gap with diplomacy, you actually need to look the people straight in the eyes, and COP meetings have made that possible. Year over year, not enough and the progress has to

happen a lot faster going forward. But that is why meeting in person is so important. Yes, it's attached with coming footprint when you travel all this while, but it makes the work much much easier than if it was just virtual. There's some really moving stories. Some people came up to me from South Korea and they said, it took us twenty hours to get here. You know, they really wanted to come and they've you know, and they had a lot of things they wanted to know how

it was being done in the UK UM. So for a lot of people it matters hugely. Well, there is also we had the president of Mozambique this morning who said, for the price that I've paid for my delegation to come here, we could have built three schools. But we do think the money we're spending to come here is worth it. As actually says that moment of jeopardy and the encounter in the kind of visceral whites of the eyes, you're really telling me that the decisions you take are

going to raise sea level. You really think that's acceptable, that that is politically powerful. Thank you so much, actually a legraph pleasure. Thanks for listening to this week's in the City. Will be back next week, but in the meantime, if you like our show, we hope you do, please head on over to the Apple Podcasts or wherever you listen to podcasts, rate, review, and subscribe. This episode was hosted by me Francie Lackwhite, was produced by Oscar Boyd

and Smersati. Editing and sound designed by Blake Maple's Special thanks to Allegra Stratton acchat Ratty and be sure to check out Allegra's great newsletter, The Redoubts on bloomberg dot com Slash Newsletters, or check out the show notes for a link and actuats podcast zero. Find it wherever you listen to podcasts.