Smart Money, Business & Tech will align with Paris

It was on this day 120 years ago that Max Planck first shared his quantum theory. As a result, the future of physics, technological innovation, communications, and information-sharing, were fundamentally altered. We are now moving into an age when energy, technology, and our application of science to sustainable human development, will align more closely with what we have learned from Planck’s challenge to reimagine everything.

On Saturday, we marked the 5th anniversary of the Paris Agreement, so it is worth noting the advances in business and technology that have reset the standard for smart future investment. Five years on, the world is still far from the rate of decarbonization needed to avoid catastrophic global heating, but there are critically important signs of progress.

We can now start talking about a system-level resilience imperative, where business as usual isn’t good enough, even by short-term bottom-line standards. In October, NextEra overtook ExxonMobil in market capitalization. The largest wind and solar provider in the US is now more valuable than the company that used to be the most valuable on Earth.

This is more than just a question of clean energy displacing global heating pollution. The rapid spread of wind and solar is creating new energy systems, with different financial and economic dynamics, and new opportunities in the development of critical infrastructure. Not only will there be a boom in new clean energy infrastructure development, that infrastructure will facilitate a different kind of energy management.

To be compliant with the Paris Agreement means to be on the side of smarter, more valuable investments. It means to be on the side of a better economic reality for people. It means building resilience and reducing disaster management costs. It also means the race to the top, so to speak, is now on. Nations will compete to achieve rapid deployment of high-value clean infrastructure, enhancing its short-term value and drawing in more investment.

Commitments to net zero global heating pollution have been building up steadily since 2015:

  • The European Union has committed to net zero by 2050.
  • So have Japan and South Korea.
  • China recently announced a commitment to net zero by 2060.
  • The incoming Biden administration in the US wants to realign investment across the whole economy to achieve net zero by 2050.
  • In all, more than 100 nations are now on a declared path to net zero.

And now, major investment institutions managing more than $9 trillion in assets have announced they will align their portfolios with a net zero target for 2050. This is not only a major signal; it is a structural realignment of investment priorities that will reshape markets in the next few years. Some estimate this shift will be slow, with major transition tipping points not arriving till 2030; others see new technologies and high-efficiency energy systems as ready now to take over, as soon as investment and manufacture reach required levels.

Analysis of oil and gas flaring in the US—the practice of burning off excess methane from drilling operations—shows Texas and North Dakota have significantly expanded flaring during the last few years, to historic records. While most of the US is reducing such polluting practices, these two states are investing heavily in polluting practices that will soon be obsolete.

The 2020s will be the decade of energy system change. It is not reasonable to expect the kind of unfettered growth in pollution-linked new investment that has been standard throughout the Industrial Age. Technology is changing too fast to allow for that. Information technology and breakthroughs in chemistry and physics are setting up a paradigm shift in our relationship to energy.

The UK has a 10-point energy transition plan, to catalyze green recovery and the race to zero emissions, by focusing on critical next steps in:

  1. advancing offshore wind
  2. driving the growth of low carbon hydrogen
  3. delivering new and advanced nuclear power
  4. accelerating the shift to zero emission vehicles
  5. green public transport, cycling and walking
  6. ‘jet zero’ and green ships
  7. greener buildings
  8. investing in carbon capture, usage and storage
  9. protecting our natural environment
  10. green finance and innovation

Each of these provides a useful reference for other nations, and for private enterprise. We need to advance innovation in all 10 areas if we are to stave off catastrophic climate disruption. Those that lead the pace of change will be best positioned to earn high returns and spur widespread job creation in the green economy.

2021 will be about more than just building back better from the COVID crisis; it will be about reinventing prosperity, resetting the boundaries for everyday consumption, and ensuring a more just and sustainable future for all.


Featured photo of The View from Montparnasse, by Alex Mustaros


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