The capital exists to fund the global energy transition to renewables, but barriers such as a lack of clear policy frameworks must be addressed, and the pace of financing sped up, delegates heard today at International Energy (IE) Week in London.
There is "plenty of money, but it's not always in the right place", Bank of America chairman Julian Mylchreest said.
Renewable energy company Brookfield Renewables Partners' chief sustainability officer Kelly Goddard said there is "huge support from private investors", in reference to a $15bn fund the company raised last year, dedicated to the energy transition.
But speakers from the energy and finance sectors pointed to concerns about a lack of policy in some areas of renewable energy, which could hamper progress on decarbonisation.
"We need the governments to help put in place policies and business models", said Norwegian state-controlled Equinor's senior vice president of low carbon solutions Grete Tveit. She emphasised the need for industry and governments to collaborate, particularly on projects involving nascent technology, where a full value chain must be built from scratch. The "chicken and egg problem was avoided" by the Norwegian government's investment in the Longship carbon capture and storage (CCS) project, Tveit said.
Clear policy is crucial, speakers said. This includes "climate policy, energy policy, industrial policy… finance can't operate in a vacuum", the Glasgow Financial Alliance for Net Zero (GFANZ) technical lead Ronan Hodge said. GFANZ is a group of financial institutions that have pledged to work towards global decarbonisation.
"If you're operating within a policy vacuum… it's really difficult to be a first mover", said UK-based bank Standard Chartered's global head of transition finance Ben Daly.
But companies looking to move towards net zero should also set out clear plans, delegates heard.
"Companies need a clear plan for their future… and to be clear on their timescale", said non-profit Carbon Tracker's head of oil, gas and mining Mike Coffin. And investors are looking for transparency in the short-term too. The fund that Blackrock managing director Eduard Ruijs heads up typically looks at investments over a 5-7 year timeframe and if there is no potential for transition "that is a problem… we won't be able to sell the business", he said.
"The question around transition and transition finance is… the speed", said Standard Chartered's Daly, particularly to align with Paris climate agreement targets. The European Bank of Reconstruction and Development's director of energy Aida Sitdikova said that, in terms of finance, what is needed is "all hands on deck, and fast, from all sources."
