How the energy crisis affects the transition to net-zero
“The global goal is net-zero by 2050, but we need to speed up to reach that goal. And to do that, the transition needs to be profitable and our politics predictable”, says John Turesson, country manager for SEB in Norway.
According to Turesson, it is unfortunate that humans are often reactive rather than proactive when it comes to problem solving.??
“It takes a crisis for something to happen. Now there’s an ongoing energy security crisis, so a lot is happening within that field, which will accelerate the transition. The current situation also shows that Europe would benefit from being in control of its own energy production. And if you're going to build new energy production today, you obviously do it using renewables.”??
Another thing that accelerates the transition is the current high fossil energy prices, which makes it more profitable to change to renewables. And some major changes will be needed if we are to go from 51 billion tonnes of greenhouse gases in yearly emissions to net-zero.??
“Just to switch to renewables will not be enough. We’ll also need lots of new solutions, which is why we need to facilitate innovation. There needs to be innovation clusters that can provide start-up companies with support. Incentives – and stable favourable frameworks – are also called for, so that more companies and people dare to invest. They can only take so much risk.”??
Political predictability key ingredient
Another important ingredient to boost the sustainable transition is, according to Turesson, political predictability.??
“If we change for example the political guidelines, conditions, taxes and subsidies, investors don't know what they sign up for. For example, the government in Norway has proposed to increase certain taxes on power production, which would also affect renewable investments. Not knowing what return you’ll get might scare the investors off.”?
As for all banks, SEB must decide whether to exclude companies that are not considered sustainable today.??
“Personally, I believe in trying to see the whole picture. Our clear plan is to reach net-zero by 2050, but many of the companies that have large emissions today are also making huge investments to be able to switch to renewables and other sustainable solutions. If we stop working with these companies, the transition will slow down. But it’s important to put pressure on companies that don’t do anything. By excluding the companies that we don’t find ambitious enough, we also put more pressure on the ones we want to impact and work with.?
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Important to see the entire value chain
In addition, according to Turesson it is important to see the entire value chain when it comes to transition.??
“Like mining, for example. Many ESG funds cannot invest in mining, but they are eager to invest in renewables. However, you cannot build wind parks or solar parks without mining the raw material needed to produce the equipment. So, if everyone quits mining today, we can't make the transition either.”?
So, if it takes a crisis for something to happen, what about the ongoing climate crisis???
“Unfortunately, it seems like the climate crisis needs to get even worse and effect everybody before people will really react and start making some major changes. Just look at the ocean acidification – in the Oslo Fjord, there are almost no fish left as a result of all the nitrates that run into the water. There has been very little focus on doing something about the problem – even though we have all been aware of it. ?
Hopefully the climate will benefit from the energy crisis and the changes that are now being made. We can’t continue pushing evidence away.”?
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