MARK SHAPLAND: Pragmatic plan needed to end our dependency on fossil fuels once new sources are good and cheap enough to replace them
Eco warriors may be on the right side of history. Generations to come may look back on our consumerist economy, and our addiction to fossil fuels with utter bafflement.
‘Surely not,’ they may say. ‘They extracted resources from the earth’s core and burnt them in full knowledge the world was melting – really?’ Net zero by 2050 as a target is needed to set an aspiration, even if it is too ambitious. India’s prime minister Narendra Modi admitted as much in Glasgow.
What is up for debate is how we get there. Whether climate change evangelists like it or not, the globe as it is runs on Big Oil. As well as the issue of transitioning to cleaner energy, there are also implications for the financial world.
Future in our hands: What the energy crisis has shown in the UK is that the current strategy for moving to renewables is shambolic and failing
The petrodollar trade between the US and Middle East states is one of the biggest in finance, worth trillions of dollars per year.
Weaning bankers, traders and investors off Big Oil will take years: there is simply too much money to be made. What the energy crisis has shown in the UK is that the current strategy for moving to renewables is shambolic and failing.
The race to build wind and solar farms with the help of state subsidies while shutting down oil and gas exploration leaves us vulnerable. If we get the timing of the transition wrong, it could be catastrophic.
Analysts and commentators are reluctant to go on the record for fear of being branded climate change deniers. But there is a clear concern that we are replacing current energy sources with ones that are less controllable or reliable, such as solar and wind. ‘Reckless and ridiculous’ is how one specialist sees it. What is needed is a pragmatic plan that will end our dependency on fossil fuels once the new sources are good and cheap enough to replace them.
Instead of targets, genuine incentives are required. The oil and gas majors should continue exploring and extracting, for now. If Shell and BP don’t do it then other, possibly less responsible operators will. And these activities will generate billions in profits to finance the green energy revolution.
But we must see a rising percentage of profits each year going to develop cleaner technologies. Eventually, all profits must flow into green energy. Initially profits could be channelled to top universities, the oil companies’ own R&D departments and to green energy start-ups. Fund managers should ensure oil majors stick to their word.
This approach could mean investors retain dividends and the global energy system keeps rolling until fossil fuels are redundant. Ensuring money goes to science-focused universities and start-ups might also provide the game changer needed: a spark of genius to act as a catalyst.
The problem with technologies such as solar is the sun doesn’t always shine, while, given our geological fragility, fracking is unlikely ever to get the green light. Nuclear, which should be part of the mix, has stalled and it’s still early days for hydrogen.
Who knows – we might, just might, find a technology that saves us all.
Not many would fancy Antonio Horta-Osorio’s clear-up job at Credit Suisse, caused by fallout from Greensill and Archegos.
While Antonio is in Zurich, his daughter Maria swans around with David Cameron, one of the architects of the Greensill collapse. They work together at tech firm Afiniti AI, headquartered in sunny Bermuda, and could both receive hefty paydays should the company eventually float.
Bet the father/daughter Whatsapps are interesting!