Category: Climate change

Like 2022, 2023 has been a bad year for green investments, which have generally underperformed versus other stocks. Why?

Well for a start green stocks did very well in 2020 and 2021, which set the bar high for following years. Covid played a part in this, with fossil fuel demand falling as people stayed at home and didn’t travel, so fossil fuel prices and stocks collapsed. Working from home perhaps makes people more conscious of the weather and green-minded. In the US, Joe Biden’s Build Back Better plan was developed. The floods in Germany and Belgium in summer 2021, which killed around 250 people and caused over €10 billion in property damage, manifested the immediacy of environmental breakdown to European minds. Later in the same year, British Columbia experienced unprecedented flooding, with an analogous impact on the perceptions of (some) North Americans. In the business world, international banks and multinational companies fell over themselves to develop elaborate Net Zero pathways and comply with newly developed accreditations. Green investments peaked in value towards the end of 2021.

Since then, travel has largely returned to normal after Covid, increasing fossil fuel demand again, while fossil fuel supply contracted following Russia’s invasion of Ukraine in early 2022 and subsequent international sanctions on Russian oil and gas. Oil companies have done extremely well out of the resultant high prices. A combination of the cost of living crisis and war – first Ukraine and now Israel/Gaza – has concentrated attention in developed countries on short-term survival and away from longer-term considerations. Politicians have found even more excuses than usual for delaying green targets. COP28, which starts later this month, will be held in the oil city of Dubai and overseen by the CEO of the Abu Dhabi National Oil Company: it seems likely that the message will be that oil is ‘part of the solution’, however wrong that message appears to most environmentalists.

Probably, the pendulum will swing back again in future years as large numbers die from the escalating effects of climate breakdown. Some people might give up hope, but younger people probably won’t. High oil prices, whilst good in the near term for oil companies, should encourage green technologies in the medium term. The next generation of politicians will be more environmentally responsible than the current one. All this is guesswork of course.

Meanwhile, the green lobby needs to counter widespread myths of the “EVs catch fire” or “Heat pumps don’t work when it’s cold” sort. More profoundly, it needs to figure out how to make a green(er) way of life appealing to the general public.

Green evangelism often seems to backfire – perhaps because it portrays a way of life that many would-be-sympathetic people don’t relate to. Not every green citizen needs to play guitar music round a campfire or be interested in local politics, or subsist on a diet of local mushrooms, or avoid contact sports. There are different ways of being green.

But it does need a sense of treading lightly on the planet: being willing to adapt one’s diet at least to some degree, not aspiring to owning lots of stuff or property, or feeling the need to travel the globe … at least, not feeling the need to do so in a hurry. An appreciation that we’re a part of the natural world, not somehow insulated against it. And it probably means getting involved in the local community in one way or another, without succumbing to parochialism.

Looking speculatively into the future, we can envisage an education system that is fit for purpose: one that puts sustainability at the heart of the curriculum rather than treating it as something peripheral to the core timetable; and encourages skills and mindsets that might enable humanity and other life forms to exist long into the future.

Or course, extinction is the norm: close to 100% of all species that have lived on Earth are now extinct. And in fairness to humanity, and contrary to a range of nature programmes that make the natural world out to be cute and harmonious – living in balance if it only weren’t for people – other species would probably make a mess of things too, if they had our degree of influence.

But it would be nice if we humans could buck the trend. What’s tantalising and frustrating in equal measure is that we have the capacity to do so, if only we could work out how to harness our better instincts, both individually and collectively.

It is depressing that the Government has decided today to weaken its carbon targets.  Given the existential threat to humanity, this is hardly good news.

The Government would have us believe the following narrative.  The UK has been leading the world in decarbonisation, reducing emissions by 40-50% since 1990.  We are on track for net zero by 2050 – in fact we have “consistently over-delivered” according to Rishi Sunak.  Other countries have made less progress and need to step up.  Given the cost-of-living crisis, it is appropriate for us to reduce expenditure and delay interim targets whilst encouraging the rest of the world to do more.  We are still on track to Net Zero by 2050.

I have spent my career in the energy sector and the truth is different.  Our decarbonisation in the 1990s and 2000s, to the extent that it occurred, happened for two main reasons.  Firstly, gas was very cheap and new CCGT power stations were profitable.  The electricity and gas industry regulators wanted to stimulate competition to the large incumbents and encouraged new entry.  The ‘dash for gas’, replacing coal, happened because it was profitable, not because of any particular commitment to the environment. 

Secondly, a large amount of domestic industrial activity ceased and was in effect outsourced to countries such as China.  In consequence, the emissions associated with our way of life have been increasingly attributed to other countries, not to our own account, using the Government’s production basis.

The IPCC measures the carbon footprints of individual countries on a consumption basis.  By their measure, we in Britain emit on average circa 11 tCO2e per annum per capita.  Government would have us believe the figure is about 6 tCO2e per capita.  Apart from the point above about imported emissions, the Government’s figure excludes aviation and shipping.  Based on IPCC data, we emit more per capita than the Chinese; according to our Government, we emit much less.

In reality, we are lagging behind other countries – the EU, China, even the US – in the promotion and adoption of green technologies.  We are way behind on heat pumps (partly thanks to scare-mongering about their efficacy), on electric vehicles, and on the insulation of our homes and buildings. 

We are not leaders, despite the moral posturing.