With Laurent Seglement from London and Gerard Reed from Berlin. This is redefining.
Energy today, on redefining energy job. It's the beginning of Cup twenty nine. Good morning, Baku.
And you've been to COPS in the past.
I haven't.
Oh yeah, I've been to Cops seven, Coup nine, Cop ten. And at the time it was party, party, party, I mean we got drunk every night, and you.
Made lots of the missions because you had to fly to all these exotic places, I know.
Yeah. Now, going a bit into the history of Bakhu, I learned that oil drilling started in Baku a decade before Connel Drake in Pennsylvania. Really okay, yeah, oh my god, didn't know that, okay. And in nineteen hundred Bakhu was producing more oil than the US.
No that letter.
And the king pins of the oil industry under the TZAR were the Nobel Brothers and now you have the Nobel Prize all from Sweden, right, okay, And they were in partnership with a company called Shell. Never heard of them. I never heard of them. And the Rothschild, oh all of them all right, Okay, that's funny, Lauren, Okay, I like that, and around that time that the employee was kind of restless, young Georgian who apparently created the strikes in their refinery. And his name was Joseph Stalin.
All right, okay, that's funny.
Before he became a gangster. Okay, enough talking about the past. We have a great guest who are very privileged. We have a lord. Great to have for those who don't know Low Turner. He was really instrumental in developing UK climate change policy. Absolutely, he was the first chair of the Climate Change Committee and at the same time he was head of the Financial Services Authority during the Financial crisis. So this guy has been taking on big challenges in his life.
Yeah, he's no Chair of the Energy Transition Commission.
Which is a group of leading CEOs committed to achieving NETZIO by mid century. A very respected voice, both with an unjumented background and a finance background. We're welcoming l Turner to talk about cop exactly. Adair, welcome to the show.
Thank you, great pleasure to be here, Darlie.
We're going to talk today about cop but before we do that, I think you actually need to explain to people what cop is.
The cops are Conferences of the parties, and they go back to the nineteen nineties when the governments of the world first agreed the unf Triple C at the UN Framework Convention on Climate Change, an agreement to take action together in a cooperative fashion to limit the impact of climate change, and that led to a set of annual usually annual conferences called the Conference of the Party's COP and they have gone on over the years, and some
of them have been much more important than others. One of the most important was COP twenty one in Paris in December twenty fifteen, where for the first time all the parties at that COP actually agreed a temperature limit to limit global warming to well below two degrees centigrade above pre industrial levels, and ideally to limit it to one point five degrees. Since Paris in twenty one, there's been a series. There was also one in the UK in Glasgow in it was going to be actually in
twenty twenty, but it got laid by COVID. It was in twenty twenty one. Then there's one been one in Egypt. Then there was one last year COP twenty eight run by the United Emirates in Dubai, and this year the COP is under the presidency. The organizers will be the Azerbaijanis and it is in Baku.
How many people go to KOP and I guess they're all not doing the same things, so you must have different concentrates, sir.
Well. The absolute core of the COP is an inter governmental negotiation. And I forget how many countries are there, but it's getting up to one hundred and nineties. Basically all the countries in the world are there. They sent
a cluster into what are called negotiating groups. Of the rich, developed countries, the poorer countries, the most vulnerable island states go into a negotiating group, and those are the countries all of the countries in the world and the negotiating groups which try to agree the things which are actually in the communicate the agreement at the end of COP and those can be agreements to set the targets, they can be agreements to have rules on how you report emissions.
They have something called Article six which is under negotiation to how you can trade carbon emissions between countries. But there is this intergovernmental process and there is a part of a COP which has a whole load of diplomats
from governments attempting to agree. What has tended to happen at COPS, and it has grown and grown over the years, is that around that actual inter governmental process there are many people there from NGOs arguing for ambitious carbon action, and there are many people from businesses, in particular businesses interested in the business of climate change mitigation. And there
are financial institutions. So the thing up as both the inner core is a negotiation and attempt to progress the intergovernmental agreement, but round it a lot of people holding panels, holding discussions and indeed meeting and doing business deals. You know, people who are interested in developing gridlinks between one country and another, but people who are arguing for one point of view or another. And that's what it is. The numbers vary. I think by COP twenty eight there are
probably thirty thousand people there in Dubai. I believe it is less this year, but I don't have the precise figures.
Yeah, I hope eighty five thousand in Dubai.
It'll be much less this year because the bluntly there aren't enough hotels or hostels in Baku to take anything like that number. They are huge events, true to say, they have a huge carbon footprint of all those people flying across the world to go to an event like that. I do worry myself as to whether it is justified to go. I haven't onto all cops and I did have a debate with myself about whether I should go
to this one in Baku. From our Energy Transition Commission last year we had a significant number when to Dubai. We had much rather bigger numbers go to Glasgow when we could all go by train. This year there will be just two of us going there, but I think
it is worthwhile. We will be trying to argue for some of the policies and actions that we believe in, and different cops have been varied in effectiveness in terms of how much we really progress the agenda and actually get decisions that make a difference.
So a dare what are your priorities then when you go there.
In previous years we have had a close relationship with the COP presidency. We have actually had a semi official role or an advisory role in helping those COP presidencies work out what might happen to emissions if the commitments that they've managed to negotiate were st to And we've been involved in that process. We do not have that relationship with the Azerbaijani COP presidency. We are, however, trying to get over many of our messages, above all about
the technological possibility and priorities. Even if we can get very pessimistic about the progress of international agreement on climate change and the fact that emissions are still creeping up and have not reached a peak, even if we should be worried that the climate is warming, it'll go over one point five degrees above pre industrial levels this year,
and we are seeing large climate effects. The thing that actually makes one optimistic is that underlying that the technologies which help can help us dramatically reduce emissions, solar photo ortaics, wind turbines, long duration storage, extensive long distance grids, batteries, electric vehicles are progressed far faster than we used to dream as possible, and we will be making that argument
and putting forward the argument for that. I will also be engaged in something called the Industrial Transition Accelerator discussions. The ITA was launched at COP twenty eight in Dubai last year. It is an official part of the COP
process rolling forward to COP thirty in Brazil. And on to COP thirty one in Australia, and it is about a set of actions that can be taken to energize the decarbonization of hard to abate sectors of the economy like steel and cement and aviation and shipping, where it would be great if we can have a global common vision of how to get there. So that will be one other very specific topic where I will be involved in discussions and trying to make the arguments for rapid action in that area.
What would you say to people who say, you know, the Old Cup movement kind of peaked between Paris and Glasgow. Glasgow it was the top of the ESG movement, and what all these initiative flowing from all the place. And now when you look at the situation of the world as it is right now, China they are doing their things and probably they're doing their thing faster than expected. The Trump just got reelected, so that doesn't board well.
Europe is like what six percent of the world emission, so I don't know if if he counter as European. So the war in Ukraine, do you still think that COPP has much relevance that it used to have a few years ago?
At one level, I'm always amazed that the COP process produces anything. This is a conference of one hundred and eighty five hundred and ninety whatever it is countries, some of them are at war with each other, some of it which are locked in extreme political disagreement and tension, and they're trying to get a unanimous agreement on a
common problem. At one level, you could say it's amazing we ever agree anything, and thank god we do agree because at least gives us a chance of at least mitigating somewhat this problem of climate change, which can only be solved if we managed to get some global agreement. I think you may be right that we are not in a great period in terms of achieving further progress. I think actually COP twenty eight did manage to make progress.
I think Glasgow did, Paris undoubtedly did. What is true is that there probably was a high point of the consensus across companies and the private sector in favor of action on climate change, which was widest somewhere around COP twenty six in Glasgow and COP twenty eight in Dubai.
And that consensus has, I think eroded above all in the States, and the States clearly has now a governing party with a newly elected president who will be in place by the end of January, most of whom actually deny the existence of climate change, and those who don't still don't want to take major actions. That is a
major setback. And even before that we had seen significant examples of for instance, US financial institutions getting much less ambitious in terms of what they said they would achieve, in part because they were getting under pressure from Republican
run states not to pursue this quote esg agenda. So look compared with how I thought about the world when I went up to Glasgow in November twenty twenty one, I am much more worried about the ability of the world to agree action that can deal with what is a huge challenge for humanity. On the other hand, I can tell you that over those three years, the cost of solar PV panels has come down another fifty percent, the cost of storage batteries has come down another twenty
five percent. The cost of evs in China is now cheaper than internal combustion engines. So one lives with a disconnect between an increasing technological possibility that if we could only get really forceful international agreement, we would get to a net zero economy far more cheaply than we used to dare hope was possible, but the direction of change in the politics has not been favorable. Russia's invasion of
Ukraine unleashed energy price increases. There weren't energy price increases of gas above all, but that a cost of living crisis, which made it much more politically difficult in Europe and the US to have support for strong action on climate change.
The recovery from COVID plus the Ukraine War unleashed generalized inflation, which has also driven up interest rates and the cost of capital, which has increased the cost of investing in the new technologies with which we'll build a zero carbon economy.
So those are undoubtedly policy and macroeconomic headwinds that we didn't face three years ago, which balance against the fact that the progress of the technologies has been quite as fast, indeed much faster than we had previously believed possible.
Derek, can you talk a little bit about how you see China and the role of the gone for and where I think I'm coming from, And Laurana, I'm sure with a greet me, it's just what we're seeing is I mean, they seem to be leading the electrification of everything, of transform electrications and the renewabilization of electrication.
China is now absolutely central to whether the world limits global warming to one point seven or to where we end up. Absolutely central. It is responsible for around a third of all global emissions now about twelve gigatons of CO two out of thirty six gigatons or so, and it's emissions per capita are now very high. China has higher emissions per capita than Europe and much higher emissions co capita than the UK, and its emissions have not yet peaked. All of which you say, well, that's a problem.
On the other hand, let's be clear, China is absolutely leading the development of the technologies which will fix this problem. Anybody who thinks that China is taking other people's intellectual property and then commercialize itself is just living in out cuckoo land. The Chinese companies in these technologies are at the absolute cutting edge of technological development. The major solar
PV companies Long and Trinner and Jinker. These are the people who are driving up the efficiency and driving down the cost of solar PV panels. Year after year after year.
Companies like Bid and Coatl are at the absolute cutting edge of new battery chemistries, which are giving us remarkable breakthroughs in terms of what's called energy density, how much energy you can pack into a kilogram or a liter of a battery, which then enables you to produce electric vehicles with much longer range, and they are driving the
development of evs. They're also driving the development of really really cheap storage batteries that enable you to have a solar panel, put a battery next to it, and in the sunny parts of the world where shines pretty much every day, you've got a complete electricity solution because of
the technologies being developed in China. So they are, at one level a huge part of the challenge, but they are a huge part of the solution, and they are deploying renewables at an extraordinary pace and way beyond the targets they've set. They still have an official target of achieving twelve hundred gigawatts of wind and solar in place
by twenty thirty. They have already shot through that and people believe that they could have well over three thousand gigawatts in place by twenty thirty, and that, by the way, illustrates an interesting thing about how China plays its hand in global negotiations. It always over delivers what it promises. It doesn't promise as much as it should, given its role in emissions, but whatever it promises it over delivers. It has currently promised that it will quote peak emissions
before twenty thirty. Everybody who is following China or ever he talks to Chinese policymakers know that they will peak emissions in about twenty twenty six and will be already quite a bit down by twenty thirty. But for whatever reason about the way they believe in playing international negotiations, they're not willing to set that. There was a famous debate at Glasgow between the Americans and them, and the
Americans saying, you have an ambition gap. You're not being ambitious enough relative to your responsibilities on how rapidly you woul bring down emissions, and the Chinese were applying to the Americans, Yeah, but you've got an implementation gap. You
make these promises, but you don't deliver them. But look, China is a crucial It becomes even more crucial with Donald Trump as president of the US and actually the relationship between Europe and China on climate change and the extent to which we can agree to work together on some aspects of this even if the US is not present, because Trump may pull the US completely out of this
process and not attend COPS in future. That European China relationship, I think is going to be crucial, and what we need to be doing is basically, first of all, welcoming the technology progress they've made and lauding them for it and treating them with the respect that they deserve for this extraordinary technological progress, and making a claim that we welcome that technology here in Europe through for instance, Chinese
inward investors, while simultaneously challenging them and saying, guys, your
emissions per capita are now higher than European. You're not bringing them down as fast as we are, and we've got to work together to bring both of our emissions down as fast as possible, and also work together to take finance and technology to parts of the world like Africa where the new technologies are so powerful that they really do provide Africa with an opportunity to build hugely more extensive electricity systems and provide electricity to the mass
of African people almost entirely based on renewables. Given the costs, they don't need fossil fuels any longer. But to do that, we need low cost finance to flow to Africa. So finance from Europe and from China. Solar panels and batteries from China could revolutionize the situation in Africa, and we should be agreeing to work together to achieve that.
But at the same time we put tariffs on the Chinese vs in Europe.
We did, but those by the way, the UK has not put tariffs, and as I understand it has no intention of putting tariffs on China evs. The UK has a commitment to drive towards electric vehicles, to ban the sale of internal bustion engines in the UK by twenty thirty, and I think our new government correctly realizes that it can only meet that if it welcomes a cheap, small Chinese evs to provide evs for the masses, rather than the beautiful but very expensive premium evs which the European
automotive industry has concentrated in providing. Even in Europe. It's important to realize that the tariffs have been imposed. It was controversial. The Spanish Prime Minister, for instance, spoke against them, the CEO of Mercedes spoke against them, but there was
an overall majority consensus for them. But they have not been set at the level of the US Chinese EV tariffs, which were just set at one hundred percent, a figure just plucked out of the air, and with the deliberate design of making sure that almost no Chinese evs go
into the US. The European ones were based on nownalysis, which was attempting to be somewhat in line with WTO rules, looking at what level of subsidy did we think that current Chinese operators were receiving from the Chinese government, And for instance, it's set a differential rate for different companies from China according to whether they were private companies or
state owned companies. Now I still think those towers were set too high, but at the level they've been set, they will not be an absolute barrier to Chinese evs coming into Europe, and I hope we will see excellent Chinese coming evs coming into Europe as well as into the UK. And I think I hope we will also see excellent Chinese automative manufacturers, such as for instance, BYD opening factories in the UK and in Europe. So yes,
there has been pushed back in Europe. But I think Europe, in its attempts to develop domestic supply chains, is going to get a much more balanced policy mix of saying we want the benefit of Chinese cost and Chinese technology, but yeah, we do want some of the jobs and value added in Europe, and I think they're trying to hit a balance there Whereas I'm afraid the US policy is as it is perceived in China and attempt to just as the Chinese put it, keep China down and
deny them economic opportunity. And I'm sure it will come that under Donald Trump, unfortunately, and.
The fine that question good cop or bad cop.
I don't have greater expectations for it. I hope that the Memento will be achieved, and I think some of the biggest areas of momentum may be away from the debate about finance, away from the debate about targets. I don't expect to see a big step forward in the overall big you know, communicate figures, but some of the debates and the targets which people are proposing on. Let's all agree that the world needs much more long duration storage. Let's all agree that the world is going to need
much more long distance grids and transmission lines. Those declarative statements actually do energize a private investment behind the technologies that we need. So if I'm looking for something good out of COP, I think it's probably more likely to come in those rather specific areas rather than the more political and policy agreement areas where I think we'll see only very slow propose are.
Thank you so much for coming on the show.
Thank you very much, Thank you, thank you very much.
So on this is over to you. You've been a cop, you know ed very well. I'd like to hear your thoughts on COP going forward.
Okay, so I'm going to rant. That's what I'm good at. On one hand, a world with scups is always better than the world without COP. It's good that the Head of States this a week per year we are gathered together and concentrate on the climate. Now, of course, this year, literally nobody's going to be there. Seizing thing's not going to be there, Muddy is not going to be there, Marcron shirts Biden. Of course, so you really wonder what's
the point once you remove the head of states. And now, of course you get all those debates of our Article six, which really nobody cares about except a few diplomat experts, and you managed to bring a lot of the countries because we the West are supposed to feel bad about the historic responsibilities, so we all out money finances called the finance cup. So how we're going to finance the
energy transition in developing countries? Well, I think China has done a lot, bringing the price of panels from one dollar to ten cents. But what I don't know if there is still a debate which is a bit of old style, you know, World Bank multilaterrole. I mean it is very heavy in a energy transition which is very decentralized. So I think there's a bit of a mismatch. Look at the end, it's a clearing house for emission accounting. That's good. Yeah, I mean those scopes, I really wonder
if they're not turning irrelevant. Knowing that it's very likely that the US are going to pull the plug on the whole climate agenda. The climate agenda was not even discussed in the US elections. It was not really a point.
So yeah, listen on the US, Laurund.
I mean the reality is inflation Reduction Act is in place. It's about jobs and energy security that's not going to stop. So that means US installations going forward of when solar clean energy cars, it's going to increase. So I'm not so negative about the US. And by the way, the other thing that makes me positive is the fact that the pattern has been taken by China, and China is not just talking. They're doing and they're leading the way,
and it's not about us going forward. It's about what is the rest the global cell going to do, and they're going to follow China. That's great. So I'm actually quite positive.
I no, no, no, I'm super positive about the energy transition. I'm really asking myself, does it make sense to bring fifty thousand people in a place and mostly oil lobbyists, to talk about climate and discuss for ages. Do we phasing phase out, phase down fossil fuels? I mean, market forces and technologies are going to do the job. I agree, And it's all well and fine to discuss climate, but less than one thousand kilometers away you've got Russian sending
missiles every night on Kieth. I don't want to talk about the Middle East because what happens there makes me sick. There are more urgent problems in the world and discussing cops. We don't do politics here and anyway, we don't vote. But you know, the US election leaves me a bit of a bitter taste because, as you said, for climate, at least the Democrats have really done a fantastic job. I hope some revengeful guys are not going to go Aftersha was on an exceptional a doe and you know
all the respect we have for him. Life continues by Delia. I used to say, we lost the one next Okay, So in conclusion, I wish all the participants to cop a good time. I'm not how much alcohol they can drink in Baku, but they're going to talk a lot, write a lot of paper. Said that it's very urgent, and then see you where is that next year? Brazil. That's going to be fun.
That's gonna be fun.
Let's go there, Yeah, let's go to cup. Okay, my friend, talk to you next week.
Looking forward to my friend, looking forward toard. Thank you for listening to redefining energy. Don't forget to rate the show and subscribe on Apple Podcast, Spotify, or the platform of your choice.