Could a Banking Crisis Stop Our Energy Transition Progress?

It has been a turbulent month in the financial sector, which could have big implications for the world of energy. Mobilising capital is vital for achieving international goals to curb greenhouse gas emissions and to adapt to the impacts of global warming. As the global banking system shudders from the blow of Silicon Valley Bank collapsing, is long-term climate investment being pushed further to the fringes of the agenda? 

The latest Assessment Report from the IPCC has delivered what’s been called a “final warning” on limiting global warming to 1 .5 degrees C, saying we are on course for about 3.2 degrees C of warming by the end of the century. The report, which aims to bring together and summarise the state of the world’s scientific knowledge on climate change, warns that flows of investment, especially to developing countries, “fall short of the levels needed for adaptation and to achieve mitigation goals across all sectors and regions.” 

As we learn more about the climate crisis, are we heading for another financial crisis, too? Clean energy share prices have been falling on concerns that the sector will be hit by the collapse of Silicon Valley Bank. Meanwhile, President Biden has used his first veto to protect a government regulation that seeks to encourage the use of ESG (environmental, social and governance) factors in investment decision. The Republicans are leading the charge against ESG investing, arguing that “woke Wall Street” is putting investors’ money at risk. 

On the show today: Ed Crooks is joined by Dr Melissa Lott from Columbia University, and Shanu Mathew of Lazard Asset Management, to analyse the financial storm we’ve seen brewing in the past few weeks. What exactly has been going on in the banking system? What are the implications for clean energy as the economic clouds are gathering? Rising interest rates are a big contributor to pressure on the banking system, and also have implications for renewables. 

The gang then get on to the ESG backlash: is it real, and what does it mean for investors and for clean energy companies that need capital? Finally, they review the IPCC report: although the problems it sets out look dire, there are solutions, and Melissa and Shanu have some ideas for how to make them happen.

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