Name: Keeping the Transition on Track: What to Watch for at COP27
Uploaded: 2022-09-30
Duration: 9 min 36 s

In recent years, policymakers have tried to harness a reliable and affordable energy supply, with minimal environmental impact. But the ambitions of COP26 paired with geo-political instability has made this riddle even more difficult to solve. Held in Egypt this year, the annual climate summit needs to produce concrete solutions, as COP27’s host continent, Africa, is on track to have 700 million climate refugees by 2030. A conversation with BCG’s Rich Lesser about why it’s important now, more than ever, to see legislation that boldly addresses climate change and turns promises into action.

Keeping the Transition on Track: What to Watch for at COP27

Conferences

A conversation with BCG’s Rich Lesser about why it’s important now, more than ever, to see legislation that boldly addresses climate change.

A conversation with BCG’s Rich Lesser about why it’s important now, more than ever, to see legislation that boldly addresses climate change and turns promises into action.

uh, Rich. Okay. So for those of us who are not going to be going to Egypt in a few weeks. Can you give us a preview? What is going to come out of cop 27. Yeah. So, so first it's great to be with you And I think the conversation has just been wonderful supply. I've learned a lot. And uh, it's been really interesting. I would say we have to, if we're gonna talk cop 27 it's important to take one minute back on top 26 which is, I would agree with the critics who would say versus the science versus 1.5 degrees cop 26 under delivered, I would have said versus the politics of the in going expectations. I think it got much further than many people, including me to be honest, expected going in with commitments on coal and methane and deforestation. The launch of the First Movers Coalition that john Kerry and the west launched with breakthrough energy catalyst with the fans agreements with that was discussed earlier on this in this conference. I think so. But but the truth is relative to what we need. We're not there yet. And I think that's true. And even if corporate commitments to S. B. T. I'm going up 65% you know, I mean, there's a lot of stuff that's happening, but it's not at the pace, we need, I think if we turn to what's going to happen in Egypt then in a month or five weeks at cop 27. I think we'll see two broad sets of themes. One thing will be discontinued, progress on mitigation, like how do we continue to make progress? I'm not expecting so many things to be dramatically different from a year ago in terms of new agreements on that front but you never know and we can hope it's just such a challenging world right now. I'm sure we'll come back to. I think what the Egyptians are really trying to do is also turn our attention to other things that are really important given that we will already be having some level of climate change and potentially quite a lot since we're not even on a two degree path at this point on adaptation and resilience will be a huge focus. How do we prepare for what's already underway on how do we finance the transition which some of your previous panelists have spoken to but specifically how do we ensure the just transition given the communities that are going to be impacted as we do this And how do we get the right level of collaboration between governments around the world, particularly to help the developing world war. And and I think we'll see a lot of participation from the african business community and how do we get business government and the social sector collaborating. So I think that the this cup will try to build on the momentum from the last cop I think we'll see a lot of that in cop 28 by the way as well in the u A. A year from now. But this one will also really pick up on the adaptation resilience, just transition themes great. There's, you know, it's a it's a confusing time in the world. There's a war in Ukraine, there are hurricanes tumbling through florida. What how how do you see the geopolitical instability and you know, the numerous climate events kind of affecting the tone? I think the whole world is just a more down tone than 10 months ago. Right? I mean, it's hard to the impact of the war, the impact on energy security, the impact on food security, the risk of inflation in many places. The risk of reception. I mean, I think we'd be kidding ourselves that we didn't think it would be a more challenging tone I think is it specifically relates to climate. It'll have two kinds of implications on the one hand, more energy security in many ways in the medium term aligns with more focus on renewables and other things. And and and and so I think in some ways it gets a boost on the flip side, there's so many more parts of the world that are economically challenged. We need really big investment here. And I think, you know, countries will be particularly countries that are less wealthy uh will will be challenged to how to balance rising interest rates, pressure on food security, pressure on energy security with what is even more obvious needs for focus on sustainability given the numerous climate events including the hurricane that you can never exactly chase trace the temperature rise when you look at the size of the hurricane in florida, or the droughts in china or the heat waves in various places. It's hard not to believe there's even more recognition now than there was 10 months ago and there'll be more recognition in a couple of years from now than now on the need to get on with this agenda. Sure. On a slightly more upbeat note, there's been a lot of excitement in the green room about the I. R. A. So I know you wanted to talk about some of the, some of the things you're excited about in that bill. Oh, I just thought Laura referred to it in her special in a few minutes ago, but I was with you. Um, but I, uh, we are really, it's a very important piece of legislation and I think two or three months ago, no one thought it was likely to happen. So it's not that this was a slam dunk to get this through. But the for two reasons, one is it dramatically changes the incentives around investments? Our estimate is to unlock an additional trillion dollars of investment in these technologies that will massively move the electricity structure to renewables ahead of the pace we were on before, in a sense, all sorts of new technologies from hydrogen to direct air capture and so forth. But the second is the most important thing if we're going to help the whole world de carbonized is to bring down the costs of these uh, technologies like that's so important. Part of the reason we've been so involved since the beginning with breakthrough energy catalyst and Bill Gates, that team is trying to do. Um, and I think that the amount of investment that's going in is unprecedented, unprecedented. And I think it'll have several implications. Hopefully don't lower the technology costs, it will spur other governments that want to be competitive in this to think about matching it. You know, europe is taking a more if this is carrot incentives, the european approach has been more stick, you know, raising the price of not being de carbonized. I think it'll put pressure on other countries to sort of think about the incentives that they're offering. And so I think both in terms of direct and indirect impact, it could be really Very substantial. And then the last thing I'll say, it just came out a report we published a couple of days ago. Um, it's striking how much it changes the scope three opportunities for downstream players for an auto company. It almost makes moving the net zero production of a car to zero cost. It lowers the cost for a pharma company by 70 to 80 because all of the things that were expensive in their supply chains are now very heavily subsidies if it's for their U. S. Production. These are all global companies, it doesn't yet help with the production parts that are outside the U. S. But but it dramatically changes the cost. The flip side is it's gonna take a while to build sufficient supply. As several of your guest mentioned, we're facing enormous supply challenges that I mean their scarcity sort of put a real premium on the downstream players that get their handles on this and can move faster because they will lower the cost for themselves substantially to be able to offer a this to consumers who are not ready to pay much more even though they say they want it. That's interesting. Um What in terms of incentives for companies are there things that you think more incentives that we can offer or I mean how how do we get companies to kind of change their behavior and invest in a way that's better? I I personally don't think the issue is needing more incentives in the U. S. Uh you know something's obviously you hope and I know it's so hard legislatively in the U. S. To get things done. Of course this bill won't be perfect of course when you're trying to design, I mean between this and the infrastructure bill there's $500 billion almost going into into you know the carbon. Izing energy and the whole related set of technology you can never get that right the first time there will be issues it'll need to be refined of course I think the bigger issues are can we do more to price carbon in other ways which is politically so hard everywhere in the world. We saw the yellow vest, yellow jackets whatever in in France and we we've seen how hard it is politically in the US could we do more to price carbon and can we get other parts of the world to realize how much this has changed the economics in the US how it makes us more attractive destination and feel some pressure to offer similar incentives and really drive down the cost of these technologies to make it affordable and lower income countries and accelerate the momentum because I said we're not even on a two degree path now so we need these technologies to go fast and we need all of them. I mean we need nuclear as the rolls Royce. Gentlemen said earlier we need we need hydrogen, we need direct air capture to put carbon back in the ground as well as renewable energy across across you know industries and countries. Excellent thank you so much. Good luck and I hope you'll come back and update us after cop 20. I thought we talked about that and I really appreciate you know the amount of effort that the countries that host these cops whether it was great Britain the U. K. A year ago or each now or the U. A. E. You know it's easy to focus on what we didn't get done and we wish the world was going faster. But I do think between the U. N. Efforts and the country efforts will see some progress and now we need to work together across business and government to help us go faster. It's a pleasure to be with you.