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Mark Carney Sees ‘Wall of Opportunity’ for Energy Investors

Mark Carney, vice chair and head of transition investing for Brookfield Asset Management Inc., speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Wednesday, Oct. 12, 2022. This year's conference theme is "The Search for Stability in an Era of Uncertainty, Realignment and Transformation."

(Bloomberg) —

Renewable-energy assets are primed for an era of growth as they emerge as the answer to both energy security risks and efforts to fight climate change, according to Mark Carney, the former Bank of England governor.

“The smart money” is following “an absolute wall of opportunity in just rolling out clean energy at scale,” Carney, who is vice chair at Brookfield Asset Management Inc. as well as co-chair of the Glasgow Financial Alliance for Net Zero, said in an interview with Bloomberg Television’s Francine Lacqua at the COP27 climate summit in Egypt on Tuesday. 

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As Vladimir Putin’s invasion of Ukraine leaves parts of Europe facing the prospect of blackouts through the winter, there’s an ongoing debate over how best to allocate capital in energy markets. Some argue that investors need to pile more capital into oil, gas and even coal to boost supplies quickly. Others say that now is the time to ratchet up spending on renewables as the world runs out of time to escape a global climate catastrophe.

“A lot of the answer to energy security problems that have been exposed by Russia’s illegal war have to do with sustainability,” Carney said. “That’s why you’ve seen a five-fold increase in the ambition in the European Union for this decade. That’s why you’ve seen the big roll-out with the Inflation Reduction Act in the United States…these are solutions to not just climate issues, but geopolitical issues.”Play Video

Carney said Brookfield has “gone from 20 gigawatts in our pipeline of building renewables to over 100 gigawatts in just 12 months,” which “gives you a sense of how fast things are moving.” Investors also need to look “at every single company” to figure out which have plans to “get their emissions down,” he said. “If they’re going to get their emissions down — and faster than their peers — they’re going to unlock value.”

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But members of the finance industry have warned that war and an energy supply crisis are complicating efforts to shut off the financing to fossil fuels. Tracey McDermott, who chairs the Net Zero Banking Alliance within GFANZ and is also group head of conduct, financial crime and compliance at Standard Chartered Plc, has described the dilemma as “complex.”

GFANZ, of which Carney is the chief architect, has managed to attract around 100 new signatories over the past year, and now numbers about 550 members representing roughly $150 trillion in assets under management. Carney has pointed to that growth as a key achievement in steering global finance toward a more climate friendly form of capital allocation. 

But climate activists have argued that GFANZ’s expansion has come at the cost of credible net-zero targets, as membership terms of the voluntary alliance are eased. Criticism came to a head earlier this year after GFANZ said it was no longer a requirement to follow guidance from the UN-backed group, Race to Zero, which had proposed binding restrictions on fossil finance. 

Instead, GFANZ has strengthened its collaboration with the United Nations, including the UN Framework Convention on Climate Change, Race to Zero’s parent entity, it said in late October. The alliance also said that UNFCCC Executive Secretary Simon Stiell will join its Principals Group, which sets the strategic direction and priorities of GFANZ and oversees its cross-sector work.

Carney said it’s not a given that all GFANZ members will be as successful in reducing emissions as others, and pointed to data challenges as a key hurdle. 

(GFANZ is co-chaired by Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)

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© 2022 Bloomberg L.P.

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