Month: September 2021

Extracting value from a coal phase-out — Gireesh Shrimali (Ep. 38)

This week we speak with Gireesh Shrimali, Precourt Scholar at the Sustainable Finance Initiative at Stanford University. He is also an adjunct professor at Johns Hopkins University and involved in the Climate Investment Funds.

One of the key takeaways from our conversation is the idea of Value at Risk and the inter-relationship with transition risk. Gireesh’s examination of risk essential for understanding how we accelerate an energy transition. We begin to discuss this halfway through, and it is an essential concept for managers to understand when assess the value of their asset portfolio. It is also important to understand how established technologies, like solar and wind, are already undermining coal and gas.

We can view activists investors, like those from Engine Number One, which seated new members onto Exxon’s board, as radical energy pioneers, but Gireesh and his analysis underlines the importance of risk assessment as the energy transition speeds up. You’ll find our discussion worthwhile for understanding risk and how coal and gas are becoming stranded assets with companies unable to extract profits – thereby threatening the survivability of the companies themselves.

Links

World Bank. “Coal-Plant-Repurposing-for-Ageing-Coal-Fleets-in-Developing-Countries-Technical-Report.Pdf,” 2021. https://documents1.worldbank.org/curated/en/144181629878602689/pdf/Coal-Plant-Repurposing-for-Ageing-Coal-Fleets-in-Developing-Countries-Technical-Report.pdf.

Calculating climate financial risk: How to combine transition and physical risks? | by Gireesh Shrimali | Medium

Deploying batteries at scale in power sector: A case for battery targets complemented with DISCOM-controlled dispatch – The Economic Times (indiatimes.com)

Russia‘s Energy Chains of Value and Power — Margarita Balmaceda (Ep. 37)

This week we speak with Professor Margarita M. Balmaceda about her new book, Russian Energy Chains (2021), published by Columbia University Press, as part of the Woodrow Wilson Center series. She was on the My Energy 2050 podcast in episode 12. And we are very grateful for her to come back for launching her new book. We managed to meet in person during her visit to Budapest this week. But as you’ll hear, our conversation moves rapidly around the issues of fossil fuels and the value chains that extend from Russia all the way to Germany.

Margarita was born in Buenos Aires, Argentina, and as her profile at, Seton Hall University states,  “her professional life has centered in the USA and Eastern Europe.” But as we know from her previous publications, on Eastern Europe, including ‘Living the High Life in Minsk’ and ‘The Politics of Energy Dependency’, in addition to numerous journal articles, she is a leading scholar on Post Soviet issues and places involving the energy sector. She is also an Associate of the Davis Center for Russian and Eurasian Studies and of the Ukrainian Research Institute at Harvard University. Overall, because of her research and insight, she should be nominated as an honorary citizen of the Post-Soviet world.

Her book, Russian Energy Chains will be the leading and most authoritative book on the subject of post-Soviet energy relations. What does that mean and why is it important?

Margarita Balmaceda

This podcast is focused on the energy transition. By having Margarita document the value flows – that is who benefits and who doesn’t of the flow of oil, gas, and coal from the Russian heartland to Europe, she documents a way of life and of profits from fossil fuel extraction. And as we address toward the end of the interview, a way of life and means of governance will be under threat as the EU and other countries implement strong policies to move away from the fossil fuel era.

The point here is the topic of understanding the value created from fossil fuel extraction, shipping and usage demonstrate – as she outlines in chapter 1 – the role of power relations in the energy system. If we hope to phase out fossil fuels, we will need to address these power relations of the old (fossil fuel) order and the new (renewable) order. Russia – and the relations between EU Member States hold a strong rooting in energy – this relationship will need to be renegotiated and Margarita’s book lays down what these relations were built on, and the areas where they could change.

Links

Profile Margarita Balmaceda – Seton Hall University (shu.edu)

Amazon.com: Russian Energy Chains: The Remaking of Technopolitics from Siberia to Ukraine to the European Union (Woodrow Wilson Center Series) eBook : Balmaceda, Margarita M.: Kindle Store

Financing a Sustainable Economy — Linda Zeilina (Ep. 36)

This week our guest is Linda Zeilina, the CEO of the International Sustainable Finance Center.

The discussion, as the name implies, is about sustainable finance. But, from a very important perspective. Which is about expanding the circle for policy making, also means expanding the role of stakeholders in creating solutions where finance assists sustainability priorities, rather than simply profit opportunities.

The topic is how assisting people in governments and companies – expanding the perspectives of stakeholders, translates into better investment environments. This includes raising awareness of Environmental, Social and Governance ratings (ESGs), and the impact on investors within the EU. There is a clear connection between profits of companies and their ability to meet sustainability requirements from both the EU and – as we’ve discussed before on this podcast – from banks. There is now a clear connection between the ability of a company to make money – that is to generate profits, and the necessity to align their sustainability practices.

Linda Zeilina – Sustainable Finance

This episode is important because Linda highlights the inter-relationship between policy stability, predictability and risks. Policy and political risk are emerging as high in the Central European region. It is becoming clear that the politicians are unable or unwilling to adapt to the emerging financial penalties that exist in the EU. In the EU, defining ‘sustainability’ emerges as a clear accounting system. This is a topic for future episodes. Now is the time to develop regional and national ways to enhance sustainable business practices with the assistance of governments. 

The main takeaway in this episode was how the Central European region is representative of other developing regions. The push for more jobs and company profits can’t be done at the expense of the environment and society. It is time to create opportunities for a broad range of stakeholders to find effective ways for businesses to do business in environmentally and socially sustainable ways.

The Value of Climate Accounting — Martin Wainstein (Ep. 35)

Martin recounts his experience working for clients on energy projects and then framing his experience through research on the theories of energy transitions. Michael and Martin do a slow walk-through of the limits of current energy companies and how they lock-in our present energy system through profit motives.

Beyond Paris: IRENA delivers 2050 pathway — Gorini and Prakas (Ep. 34)

This week we speak with Ricardo Gorini and  Gayathri Prakas from the ReMap team at the International Renewable Energy Agency (IRENA). IRENA published this summer the World Energy Transitions Outlook: 1.5 degree Celsius Pathway. Our conversation today is about the report. Yes, we get technical, but we also learn about the REASON for the report. This is not your usual climate and death report – rather it’s an ambitious challenge to world leaders to actually deliver the goods by 2050. As the report makes clear, business as usual – even in a Paris scenario – doesn’t deliver the goods.  The perspective we gain by having a conversation with members of the team, that put the report together, makes us – or at least me, appreciate the importance of the findings even more.

We learn from Gayathri that the reason for the report is not just to demonstrate that renewables are the cheapest and smartest way to save the planet. We know – or at least many of you listening to this podcast do. What we find out is that the recent youth pressure for countries to do more, to fulfill the Paris Climate Agreement was the reason to push for a 1.5 Celsius scenario. Because as the report states,

Current plans fall woefully short of a 1.5°C goal. Based on existing government energy plans and targets, including the first round of Nationally Determined Contributions (NDCs) under the Paris Agreement, the policies in place will do no more than stabilise global emissions, with a slight drop as 2050 approaches. Despite clear evidence of human-caused climate change, widespread support for the Paris Agreement, and the prevalence of clean, economical, and sustainable energy options, energy-related CO2 emissions increased by 1.3% annually, on average, between 2014 and 2019.” pg 20

The basis of the report starts with the knowledge that governments are not doing enough and we need to be more ambitious to make it happen.

Gayathri Prakash

The report I really like because it maps out the measurable progress we need to make each year to realize a profound shift in technologies and practices. Personally, and professionally speaking, the report delivers a clear path forward. As Gayathri states, every day counts, and she is NOT exaggerating.

As I state in each episode of the My Energy 2050 Podcast, the purpose of this podcast is to highlight the people spreading the knowledge about the energy transition. This episode delivers a homerun on this account. We get a bit technical at times, so on the surface some of our discussion is, well, technical, but as you will hear throughout the episode, the justification and understanding of what technological and policy solutions are on the short term horizon – such as green hydrogen, can deliver a rapid and affordable energy transition.

A big thanks go to IRENA for approving this interview. And it follows episode 11, where I speak with Luis Janiero and Sean Collins about their roadmap for Central and Southeast Europe.

In short, this episode delivers an in-depth discussion on the pace of change, but also the path of technological developments and the tremendous potential we still have to unlock. Because renewables are ALREADY cheaper than fossil fuels. So let’s start working on the transition and leave fossil fuels for the fossils.

Ricardo Gorini – IRENA

” Innovations in technology, policy and markets are being implemented worldwide (IRENA, 2019a). Significant progress has been made in electric mobility, battery storage, digital technologies and artificial intelligence, among others. These shifts are also drawing greater attention to the need for sustainable exploitation and management of rare earths and other minerals, and investment in the circular economy. New and smart grids, ranging from mini to super grids, bolstered by facilitative policies and markets, are enhancing the power sector’s ability to cope with the variability of renewables. Direct uses of renewables – including bioenergy – and green hydrogen are bringing much-needed solutions in transport, buildings and industry.” World Energy Transitions Outlook: 15 degree Celsius Pathway, IRENA, pg 18

World Energy Transitions Outlook: 1.5°C Pathway (irena.org)

Links

World Energy Transitions Outlook: 1.5°C Pathway (irena.org)

Time to Build Green in Central and Southwest Europe – IRENA’s Renewable Roadmaps Team – MyEnergy2050

Gayathri Prakash | LinkedIn

Ricardo Gorini | LinkedIn

Show transcript – unedited

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