No stopping energy transition now – despite Trump

For the most part, speakers at Investor Group on Climate Change’s annual summit remain hopeful that there has been enough progress that momentum in energy transition can be maintained even if the US takes a step back. Locally, there are hopes that Australia’s transition could actually benefit from the consequences of the incoming Trump administration.

Kathryn Lee Senior Staff Writer KANGANEWS

While acknowledging Donald Trump’s global influence, Nathan Fabian, chief sustainable systems officer at UN Principles for Responsible Investment, argued that the opposition to transition he represents is a minority view. “The bigger trend is trying to save our place on the planet at a level of warming we can tolerate,” Fabian said.

In Fabian’s view, the world has come too far since Trump last came to power in 2016 for his return to slow momentum. “The amount of progress since the last Trump presidency is enormous,” he said. “This is clearly evident across the G20. In fact, an optimistic view of the level of policy reform will see us meet the Paris Agreement – as in we will achieve well below 2 degrees of warming.”

Likewise, Tim Buckley, director of Climate Energy Finance, agreed that the economics, technology development and scale of manufacturing related to zero emissions technologies has fundamentally changed, to the extent that it is unlikely momentum can be quashed.

“The transition and transformation is totally unstoppable,” Buckley insisted. “China’s leadership is so advanced that the US can choose to follow, or it will lose. It is going to happen, it is going to happen globally, and it is on track."

The change of political climate in the US is significant, speakers at the IGCC event acknowledged: Fabian said the election result is “an aberration that will add volatility and sand in the wheels” and that this will “need to be managed”.

But investors should keep moving forward nonetheless. “It will be challenging, and US managers will come under pressure and will have to find ways to still get capital away in a way that supports our beneficiaries and clients,” Fabian added. “But let’s try and stay the course to the bigger picture.”

“The transition and transformation is totally unstoppable. China’s leadership is so advanced that the US can choose to follow, or it will lose. It is going to happen, it is going to happen globally, and it is on track.”

TIM BUCKLEY CLIMATE ENERGY FINANCE

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Photo credit: IGCC / Melissa Hobbs Business Photography

Indeed, Zoe Whitton, managing director and head of strategy and impact at Pollination, argued that most of the gains the world has made have occurred during periods of challenging political circumstances. Policy can help, but Whitton pointed out that investors are not involved in climate investment because of government and neither, for the most part, are they limited by it.

“It sounds quite mechanistic to go from an election to this statement, but our capital systems have a responsibility, they have power and – particularly in this moment – they have endurance,” she added.

The optimism in discussions at the IGCC event was not universal, however. Sonya Sawtell-Rickson, chief investment officer at HESTA, said she has fears about the impact of some of Trump’s agenda, including the potential for significant legislative rollback, removing environmental protections and a new wave of investment in oil and gas. “He represents a real anti-ESG movement,” she said.

“A lot of very large global asset managers are based in the US, and we are already seeing them starting to backtrack their public positions. They are not as ambitious anymore: they are not as active in their voting or as outspoken about their commitments.”

SONYA SAWTELL-RICKSON HESTA

Photo credit: IGCC / Melissa Hobbs Business Photography

The issue is that Trump is not a lone actor: the sentiment he vocalises was already emerging in some US states prior to the election, Sawtell-Rickson continued. The spread of this trend could have significant implications for capital allocation.

“A lot of very large global asset managers are based in the US, and we are already seeing them starting to backtrack their public positions,” Sawtell-Rickson noted. “They are not as ambitious any more: they are not as active in their voting or as outspoken about their commitments.”

SHIFTING CAPITAL

In Australia specifically, speakers at the IGCC event discussed a clearer runway of opportunity for Australia if the US winds back supportive policy settings for climate investment. This might attract more capital to Australian projects, suggested Clean Energy Finance Corporation (CEFC)’s chief investment officer, renewables and sustainable finance, Monique Miller.

Miller noted that when CEFC surveys large institutional investors overseas about why they do not invest in Australian renewables, they often hear that it is because they get a better risk-return in the US. This could change if the suite of US opportunities shrinks or changes profile.

Likewise, Buckley said there have already been signs of changing commitments. “Overnight, Trinasolar exited US manufacturing. Trinasolar is absolutely keen to invest in Australia with SunDrive and bring investment technology jobs to Australia,” he said. “The money is going to flow, we just need the right policy framework. [The US]’s loss will be Australia’s gain.”

  • This is the first of series of articles covering discussions at the IGCC conference that will be published by KangaNews over the coming days.