I'm Dana Perkins and you're listening to Switched on the b n F podcast. So each year BNF hosts a series of summits. We had to turn our summits virtual, but they continued to tell important stories for each region. In Shanghai, the topics revolved around energy, industry and transport, and in today's episode we feature an interview from our
Shanghai summit, which took place back in December. We had the pleasure of hosting John Murton, COP twenty six envoy for the UK government and he spoke about carbon neutrality and the race to net zero. Before we head into today's recording, a quick reminder that BIENNF does not provide investment or strategy advice, and we have a complete disclaimer
at the end of the show. Also, to see other interviews from this summit and other b n F summits, head to about dot BIENF dot com Forward Slash Summit. John Murton was interviewed by Veronica Henza, who leads communications at bien EF. Let's hear Veronica with John Mercy. John, welcome and thank you so much for joining our BENF summit in Shanghai. It's a pleasure to host you. Thank you great to be there. John. We've seen a number
of countries make net zero commitments recently. Can you share a few thoughts on how the economics of a low carbon transition are changing. Well, as we look towards organizing COP twenty six, we have a tail wind behind us that perhaps people organizing Company one in Paris didn't have. And that's to say that in the past, in order to encourage countries to reduce their emissions, we were having to persuade them to give up a little bit of
the economic growth. But now, because of the changing economics of renewables and zero emission vehicles and other low carbon technology, we were able to say not only that that trade off doesn't apply, and you can see that by looking at the G seven growth figures over the last thirty years, where the UK has been the fastest growing economy and also the economy that has cut it submissions the past.
Is not only does the old trade off no longer apply, but actually the reverses is true, and that in order to grow your economy you need to agree in your economy. Green economy is the fastest growing sector of the world economy, much fast in the brown economy, and so if you want to grow your economy, you have to increasingly direct it in that green direction, and markets points in that direction.
That's why Tesla is worth more than Toyota and next day energy is worth more than ex China has obviously been one of those countries making a commitment recently. What do you expect the impact of China's twenties sixty commitment to be on the energy transition overall? The Chinese commitment is obviously very very welcome, and it's having a number
of impacts. It's having a diplomatic impact. We saw that, you know, just in the six weeks after the Chinese announcement, we saw Japan, the world's third largest economy, make commitment to net zero in twenty fifty, and then weeks after that we saw the Korean economy make a commitment to to net zero by so it's having a diplomatic impact that we hope we can leverage through the world as we go forward next year. But this also will have
a market impact and economic impact. As you described, so, one would imagine if you were an investor in coal mining right now, you might be feeling that your investment was much less certain than it was before these announcements were made, and you might be considering that now would be the time to move your investment out of coal mining, for example, and into some of the sectors that are likely to profit from the shift to the low carbon economy.
And John, obviously, besides making this public statement, what would you expect, or at least wish for the steps for China to take to actually meet its Paris goals. Setting a net zero target has been really welcome, and that's
written into the Paris Agreement. All the countries that signed up to Paris signed up to the language and the Paris Agreement that that talked about a balance between anthropogenic emissions on the one hand and natural stynth on the other in the second half of the twenty one century.
So it's right that everyone is gradually signing up to these net zero goals more formally and putting a date on them through next year will be encouraging all countries to come forward with net zero goals, and including particularly those industrialized economies that have yet to do so. But sending a long term goal is one thing, but it's also really important to start working it back and working out what that means you need to do in policy terms today, next week, next year, in the next five
years and so on. We set a legally binding net zero goal in the UK back in in the summer of and over the last eighty months we've been working through very carefully what does that mean. What do we
have to do to achieve net zero? No one's ever done it before, and you know, there are certain complex things that you have to work out that you're going to do, whether that's in terms of housing standards, because any house you build today is likely to still be around in twenty fifty or twenty sixty, or in vehicle standards, because any vehicle that's sold in could still be on the road by twenty fifty, or in other areas of
your economy. So we're looking forward to working with all the countries that are setting net zero targets to discuss our experiences and to work out how we get to those those those targets in the longer term and what we need to do in the shorter term in order to put us on the right path. And John, you're engaged and climbed diplomacy, and by all Marines, I'm curious to hear your quick take on what exactly that entails.
But what are your team's goals ahead of cop next year and what are you working towards and trying to achieve. Twenty six will be the largest summit the UK has ever hosted, and it's a really important summit in the unf tripal seat process. In Copenhagen in Denmark in twenty ten and then again in Paris in tift, these major conferences, the world was trying to find an agreement on climate change that all countries could sign up to. There was
famuluere in Copenhagen and there was success in Paris. So our job in Glasgow is not to have negotiated a new treaty. The treaty was negotiated in in Paris. That the agreement was negotiated in Paris, and that had enormous strength because a d n countries signed up to to adhere to it. Our goal therever is not just to negotiate a new treaty, but to show that the existing
treaty can work. Paris's strength is its universality. But it's still unproven that the concept of voluntary action and voluntary targets, which is what NDCs, Nationally determined contributions are can work and deliver what we need to achieve in terms of limiting temperature rise, so that we can achieve o our
climate goals. So in Glasgow we have to demonstrate to the world that the Paris Agreement can work, and that this principle of voluntary action and ever increasing ambition can work, and that we can use it to deliver the goals of the Paris Agreement, which is to limit the temperature rise around the world, to know more than two degrees and as close to one point five DeGreasy as possible. So to do that, we're encouraging all countries to set long term strategies of the sort of China and Japan
and Career are now setting. We're in encouraging all countries to come forward with revised and more ambitious nationally determined contributions, that's to say, their their plans for reducing emissions over the next ten years to so that we're sending strong
signals to investors about the direction of our economies. And we're trying to support that by five campaigns that will bring together actors, not just national level governments, but actors in the corporate world, and in civil society and and the local government level to bring them together to show that actually ambitious climate action is really possible, and it's not just something we're doing for the sake of the planet, but there's something we're doing for the sake of our
economies and our lineblihoods. And those campaigns are around adaptation and resilience because climate change is already happening now and we need to make sure that we're able to help those people who are the most vulnerable to climate change and experience in the West effects too, to adapt and become more resilient in the face of it. And we're working, for example, with the insurance sector in that regard as well.
There financial elements to that. We're working on nature based solutions to show that conserving your peat lands or your forests or your swamps it's really important in terms of tackling climate change and also provides other additional services to your economy flood prevention and so on. We're working to speed the transition to renewable energy around the world. We know that the economic case for renewable energy is is
very strong. That's why two thirds of the installed capacity in the world last year was solar and wind because of the new installed capacity, but we want to accelerate that transition. And the fourth campaign is about zero mission vehicles. Again we want to accelerate the transition the uptake of
zero mission vehicle technology. And underpinning all those by four other campaigns as a campaign around finance, both to make available the finance to developing countries that was promised at Paris and again at Copenhagen, the hundred billion and dollars a year that developing countries promised, but also to make sure that the impact of climate change is really considered in financial decision making, so that whether you're a finance
minister or a finance executive on the board of your company, you understand the impact of climate change upon your activities, and you understand the impact of your activities upon climate change. And hopefully those five campaigns will enable countries to be more ambitious and also, in the case of finance in the hundred billion a year, create the political conditions so that we can conclude successfully the negotiations on the remaining
outstanding elements of the Paris rule Book. That's a very clearly fully packed agenda and the five different streams you've outlined. Does that mean that the outcomes we can expect to see in November next year, will they be more ambitious since basically we skipped a year of having come together, or will they still be kind of matching the expectations that we would have had for I'm confident and optimistic that we can deliver more ambitious outcomes in November one
that we would otherwise have been able to do. COVID nineteen has obviously been a terrible thing and impacted hugely upon society's and economies around the world, and it's been right that are our political leaders have been focused on that in twenty and it was right to delay six.
But there is a silver sort of lining to all of that, in the sense of there's a lot of money being spent now on recovery around the world, and we need to make sure that that money has spent not on propping up old brown industries that commit that the sort of contribute to the pollution and the climate change problem that we're experiencing around the world, but that that new investment to get our economies going in after COVID nineteen focuses on stimulating the green economy and accelerating
our transition to a green economy. So I'm confident that we can do that around the world. We've seen the commitments from China and Japan and here in recent months.
The delay of COP twenty six means that now we will be hosting COP twenty six after the inauguration of President Biden, who has committed to making a net zero target for the United States of America, which means that also will be hosting COP twenty six in the year when the UK holds the G seven presidency, and we can hope that the G seven summit in the summer will be the first G seven summit where all the participating countries have got net zero goals of their own,
and in a year when our Italian partners are Italian co hosts are hosting the G twenty presidency this year, so we can see the G twenty in a similar direction to supporting our cock p Relea six goals. So I'm confident that by the time we get to the end of COPT six, we'll be able to show the world that we're on an irreversible and accelerating transition to
a low carbon economy. Now for a very short break stay with us and John to what extent is your team directly involved in getting those companies to commit to
net zero targets. So we work both directly with companies and also through the UN's High Level Climate Action Champion, Nigel Topping, and we were very closely with companies to try and encourage them to take on ambitious new commitments because companies are delivering climate emissions reductions in the real world, but also they give confidence to governments that they can
be more ambitious. If you just look at the recent commitment made by the UK government to bring forward phase out for the sale of sort of internal combustion engines from a lot of that was drawn upon sort of enthusiasm in the industry to make the transition quickly so industry can help government along. And I think we've passed the days when government was dragging industry along and saying, come on, you have to do this for the sake
of planet. And now often in many areas, in many sectors, but not all sectors, it's industry dragging government along saying come on, we need to go faster. We need you to help us set the regulatory framework that will enable
the uptake of this new technologies. It's a bit similar to what you said in terms of industry actually being ahead of government what we've seen around climate disclosures right, just for instance, the TCFD that task for some climate related financial disclosures with an industry leed initiative, and now we're seeing a lot of governments making those recommendations mandatory. I think that's a good example that kind of fits
into into that. It's a great example, and you saw our Finance Minister just a couple of weeks ago made it clear that by twenty three disclosure along TCFD lines will be mandatory for all the UK listed firms, and that means if you're a pension fund manager or an investment manager, you can actually have information that enables you to make informed decisions about climate risk within your portfolio. John you just mentioned as well, um Burst Johnson's ten
point plan for a Green Industrial Revolution. In terms of the UK putting such a plan out there and hosting COUP next year as a host country for CUP, what are the expectations are there further expectations for the UK to step up on climate action and can we potentially expect other major announcements coming out from the UK in that sense, I think there are I think I mentioned
earlier on how the nature of COPS is changing. So there will still be negotiations in Glasgow and we will share those as Presidency, but the focus will not just be on negotiations, but will also be on how we're encouraging countries to come forward a new and ambitious plans.
So the role of the Presidency, whilst it used to be only a chair of the negotiations and if you like, was an impartial referee, now we also have to be a cheerleader for ambition and we can only really realistically encourage other countries to take ambitious steps to tackle climate change if we're doing that ourselves at home. And so it's really important that as hosts, we are delivering ambitious
plans for our own climate action. And you saw that with our Prime Minister's ten point plans Beach just a couple of weeks ago, where he committed us to forty
gigas of off your wind by up from ten. Now that's that will be enough to power every home in the UK with offshore wind energy, and he framed it very much in the language of jobs and in the language of a green industrial revolution, because he sees that actually this won't just be good for the climate, but it will be good for our economy, and not just the economy generally, but also the prime ministers and leveling up agenda. So it's it's sort of win win win
in so many ways. He committed to ensuring that there would be five gigawatts a year of low carbon hydrogen production in twenty thirty and the sort of the whole hydrogen economy is a green industrial revolution and waiting to happen.
And he made numerous other commitments that effect sectors like house building, bringing forward the standards for new greener houses in the UK, and also, most notably in which was really picked up on in the press, the phase out of the sale of petrol and diesel engines by twenty thirty, a whole decade earlier than we had originally planned. And increasingly the view is that actually this is not a cost to be feared, but an opportunity to be embraced.
And the analogy I use is is mobile phones. And I've spent half my working career in Africa and in Kenya, for example, where I did my PhD if you'd have said to people in in twenty years time, there'll be more phones than people in Kenya, everyone would have laughed and said, well, we can never afford that. That's never going to happen. I have to wait seven years for the state utility to bring a landline to my house to connect me to the telephones, and lo and behold.
Now you know you have more phones than people in Kenya because the technology made it in people's commercial interest to do it. And we're seeing that very much with the renewables and with zero mission vehicles and the International Energy Agency just the other day he said solar power
is the cheapest electricity we've ever had. And I was speaking to the Indian Energy Minister today and he told me that in the latest deals they've had for renewable energy in India, they brought down the cost to two point seven US cents per killer what hour. So it gives me a great challenge. I can go to other economies and saying you're paying nine twelve cents the killer what hour for your false and fuel power, how will your energy intensive industries compete with those in India that
are getting power for two point seven sense? And that really makes people sit up and listen and you know that change will start to happen very quickly. On I Suspect and John, I, I've actually meant to touch on your experience working in Africa. You've been the British ambassador to the Democratic Republic of the Congo, you had numerous
other roles in other African countries. Can you maybe share a little bit about your experience and impressions, you know, working in these countries but also with the lens in terms of how are these developing nations approaching the energy transitions and what economics are at play over there. So I'm personally really excited about the opportunities for a low
carbon transition in a lot of African economies. They because in some of the economies, and indeed some of the ones with the infrastructure that is sort of least sort of well suited currently, for example electrical transmission, the opportunities offered by renewables are immense. So in my previous job,
I was working in the DRC. As you mentioned, now, the electricity transmission grid around the DRC is essentially is not in a good state of repair and there are many outlying cities and towns that don't have access to the grid. But the great thing about renewables is that they're infinitely scalable. You can have one panel generating enough power for a household, or you can have a whole
solar farm, and the economics are very scalable. And so you can put now in place a minigrid in a town in in northern DRC, for example, and you don't have to build out a national grid to that town. You can just install a grid in that town and
it generates. They're in place, and so that that is sort of enhancing the economics of renewables, because if you compared it to say, putting a massive qualified power station in place centrally in Kishassa and then building out a grid to connect towns to that, the economics of renewables suddenly become very favorable. And that is even right down
to the rooftop level. And we've seen fantastic companies like m Copper and be Box working in Eastern and Central Africa delivering household a right to people's doors on their roots and in combination with telephone technology so that you pay a little some every day to buy the solar panels. And if you don't pay the sum. The solar panels sort of stopped working because they're controlled by a mobile phone.
So it's there's a really exciting technology out there, and that's important for the politics of the negotiations as well, because sometimes when a technology develops, it's actually more accessible in advanced industrialized economies. But all of the technology that I'm seeing in terms of renewable Angie actually is is very deployable in emerging markets, and hopefully we can use it.
Just as we saw the mobile phone give millions and millions of African consumers access to telephony for the first time, Hopefully the deployment of renewable technology can give millions and millions of African consumers access to electricity for the first time as well, and that will be a really significant win, not just for climate action, but also for people's welfare
and lifelihoods in those countries. Yeah, it's really this idea of them being able to leave prog and jump ahead using cleaner technologies basically, and John, how can the people listening in take concrete steps and drive climate action if you're operating in a country where the government hasn't yet set a long term target. Encourage your host government to
set a long term emissions reduction target. We found that that has been really helpful in the UK because it creates a field which lowers the cost of capital for investors. If you know that there's going to be a market for lower carbon economy products in your country because they're set in an zero target, it reduces your cost of capital and it makes your business more successful in the low carbon sector. So encourage your governments to set ambitious
targets because it will actually help drive your business. But also take on a target internally very interesting. Once a company takes on a target, it starts sort of mainstreaming the idea of climate action through the group, and that
has really interesting effects. And if I've spoken to the the sustainability CEOs of a number of major companies in the Asian region, and I sup to one who remained nameless, but he said he had a twenty four percent return on capital employed in his sustainability division within the company, installing essentially energy efficiency innovations within the rest of the company, and that was the highest return on capital employed in the group. It's not sexy, but it has a real
impact on the bottom line. As well as a really positive climate impact. That's great John looking ahead at longer term trends and themes that might become really important in the future. What are you looking at? Is it something around you know, gender equality and how that links back to the climate transition. Is it something around biodiversity or social welfare or I'm curious to hear your you're the
bigger trends you're watching. So as we were sort of highlighted earlier on, I'm an African development economist by by training, and so I look at it sometimes from from that lens, and I can see very much in particularly in emerging markets and some of the poorest markets are lot of the technology we've been discussing has some really positive gender impacts.
So for example, if you can install electric cookstoves in people's houses, people don't have to go and fetch firewood, and in many societies around the world it's women who go and fetch the firewood or the biomass for fuel.
And similarly, if you have electric lighting as a result of a rooftop solar panel in a poor village in Kenya or DRC or wherever, that enables more children to study after school, after school after it's got dark, and that can really enable young girls to continue with their schooling, and that itself is sort is massive for for female empowerment in those markets. So I think, to me, there's
no tension. There were just sort of reinforcements between the climate environment agenda on the one hand and also the sort of a lot of the gender issues that you're touching on on the other. My very last question for you, and we're very grateful for your time today, is it's been a very turbulent year, to say the least, and in time of crises. What are the leadership lessons you've
learned and that you would like to share with our audience. Well, for me, this year has obviously been a very unusual one, as I'm sure it has been for everyone experiencing COVID. But for me, what it's shown actually is that we can think, we can afford to think big. The fact that we're doing this interview by zoom now is perfectly normal and has been for the last few months. But a year ago we might have found that surprising. Uh, And I'd have been thinking I would do this interview
on a trip to Shanghai for the conference. UM and so we can. We can see that governments around the world have really worked together to tackle the COVID nineteen virus and there's been you see all the vaccines that are coming forward now the result of international collaborations. So if the governments of the world can work together to tackle COVID nineteen so successfully, it gives me a lot
of confidence. And if we can change all our behaviors so rapidly as we have with COVID nineteen and working from Homer zone is now normal, that gives me a lot of confidence that we can make the behavior little changes and have the international cooperation that's required to tackle
the climate prices successfully. And John, there's a lot on your plate for next year running up up to CUP, and keep those net zero commitments coming in all the best of luck and we'll be looking forward to hearing the outcomes of CUP next year and top at all as well. Thank you. Today's episode of Switched On was edited by Rex Warner of Grace Stoke Media Bloomberginnia as a service provided by Bloomberg Finance LP and its civilians.
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