MATHIAS STECK    Hello and welcome to the 11th series of the DNV Talks Energy podcast. I’m your host, Mathias Steck. COP26 was seen by many as the last major hope to secure the commitments needed to avoid the worst effects of climate change. This episode will focus on whether the conference lived up to expectations, what the most significant agreements were and what this all means for the future of our planet. I’m joined by several guests today who attended or were closely following the historic event and key developments in Glasgow. Helen Bertelli, President and Co-Founder of Women in Climate Tech, a platform supporting women fighting the climate crisis. Francisco Laverón Simavilla, Head of Energy Policy at Iberdrola, the world’s largest producer of wind power. And my colleague, Lucy Craig, Senior Vice President of Growth Innovation and Digital at DNV Energy Systems. We hope you enjoy the episode.

COP26 saw a number of political and financial commitments made with a view to securing a low-carbon future. I’d like to begin our discussion by putting a simple question to each of you. In your opinion, was the event a success? Let’s start with Helen, move to Francisco, and then, finally, Lucy.

HELEN BERTELLI   Thanks. This is a big question. I think one of the positive things about COP is, it sets a tone, it begets action. So, for example, I'm based in the United States and we saw a frenzy of action, including the infrastructure bill, which will have big impacts on renewable energy, for example, in the United States. That was very much pushed through so that United States could have a win before coming to COP. So, I think it sets a tone, it begets activity, but the negative is, of course, it's becoming ever more likely we won't reach 1.5. I think the danger of COP is that it creates expectations that it alone cannot meet. By definition, it's an exercise in diplomacy, so all parties tend to come away rather uncomfortable. This is because most political leaders lack the ability to actually enforce change on private industry. And so, that’s where my point comes in here, investors can. It was a NOAA scientist, Steve Montska, famously said, COP can't provide the motivation to solve the climate crisis. That needs to be found beforehand and brought to the meeting. I think you're going to see private industry playing an even more critical role in the coming years in doing this work. And I think that will have to be true in tackling climate change, private industry, private capital’s going to be key. So, from that perspective, I think there are some positive developments from COP.

MATHIAS STECK    Thank you, Helen. Francisco, what is your view?

FRANCISCO LAVERÓN SIMAVILLA   Thank you, Mathias. I think that the Glasgow COP26 has exceeded expectations in terms of political announcements and progressing negotiations by agreeing on the general guidelines to implement the pending aspects of the Paris Agreement. For example, Article 6, the plan to review the financial objective, transparency framework, etc. However, urgent short-term actions and the means to set a credible and solid roadmap towards elimination of fossil fuels from the energy mix are missing and this is, I think, very clear. The framework agreement for the negotiations, the so-called Glasgow Climate Pact, has maintained the reference to moving towards the 1.5 scenario. This is important and the wording on the reduction of coal and fossil subsidies has been disappointing in the end, which has been very impoverished by the pressure from China and India. Ultimately, it is necessary to continue pressing for the approval of plans, policies, and regulations that allow short-term action in line with the long-term net zero emission targets.

MATHIAS STECK    Thank you, Francisco. Lucy, what is your view?

LUCY CRAIG    I think we need to be clear that the bold commitments that were needed from the participants to clearly be on the path to 1.5˚C were not met. We could see that in the disappointment of those who are most closely involved. And by pushing some important decisions to next year in Egypt, actions that are needed urgently will be delayed. So, that 1.5˚C limit is threatened. But there is good news, as Francisco has already pointed out. What we see as a big step forward, is that that there’s clear recognition of all the participants of the scale of the problem and the need to limit temperature rise to 1.5˚C that in Paris was not achieved. Of course, there are individual agreements that were extremely important and are setting us down on the right track. I think also, apart from the formal agreements that were taken during COP, there have been important events during the summit. For example, the US and China pledging to work together and with other countries on tackling climate change. And then, my own personal experience, I think, backs up what Helen mentioned earlier, is that there’s a huge momentum, a huge commitment from business, a lot of activities that companies are undertaking. And so, that momentum is now unstoppable. We see that companies are being driven by demand from consumers, but also by their own principles and corporate social responsibility agendas. That momentum from business and across industry will certainly be moving us in the right direction.

MATHIAS STECK    Thanks to all of you. This was really interesting to get everyone’s different perspective. In this episode, we’ll cover each of the major COP outcomes, but I want to start by looking at political agreements. Francisco, what were the most significant declarations from your perspective, and why do you think this is the case?

FRANCISCO LAVERÓN SIMAVILLA    Yes, Mathias. I think that there has been a huge number of political commitments, campaigns, and alliances in a great variety of areas, appealing to the urgency to act from both governments and companies. The main areas have been supporting the 1.5˚C scenario, coal closure linked to this transition, development and collaboration in clean technologies, reduction of methane emissions, disclosure and transparency, and climate financial adaptation. From a political point of view, the China-United States declaration has been very important to jointly reinforce climate action within the framework of the 1.5˚C scenario. We’ll remember that the Paris Agreement was preceded by the China-United States Summit. India has also surprised, possibly with a strong announcement of renewable growth to 2030 of 500 GW of clean energy for that year, but its goal of climate neutrality to 2070 lacks ambition. Some examples of future declaration and partnerships by public and private stakeholders are the declarations dedicated to the transition from coal to clean energy by a large group of countries and leaders of civil society and companies, in fact with Iberdrola in it. The declaration of more than 30 countries, including USA, Canada and Italy, committed to ending public support for fossil fuels by the end of 2022. The Glasgow Breakthrough Agenda, where more than 35 countries, including European Union or India, will collaborate to promote clean energy in all sectors by 2030. And as an important final point, the Secretary General of the United Nations is forming a group of experts which in the next six months will recommend a framework to assess credibility, and accounting and verification of the commitments announced by non-state actors.

MATHIAS STECK    Thank you, Francisco. DNV’s Energy Transition Outlook finds the world will exhaust the carbon budget for the Paris Agreement’s 1.5˚C limit on global warming by just 2029. Did agreements at COP give you any confidence, Lucy, that this projection can be improved upon?

LUCY CRAIG    Thank you, Mathias. Well, in the run-up to COP in DNV we launched our analysis of what it would take to close the gap between the trajectory we are on, which as you say is to exhaust the 1.5˚C carbon budget by 2029 and the 2˚C budget by 2053, and where we need to be to reach net zero by 2050. And so, therefore, also be on the right track to limit temperature rise to 1.5˚C. This requires massive action. It requires scaling up renewables much faster than the trajectory we’re currently on, as well as scaling down fossil fuels. It means reducing fossil fuel emissions by 30% by 2030, which actually, is less ambitious than some of the other studies we’ve seen. But it does mean implementing clear policy action and starting to take actions globally now. So, if we look at what actually happened, Francisco’s already mentioned India’s commitment. And, while the net zero by 2070 may seem rather unambitious, as mentioned by Francisco, those short-term targets to 2030 are actually very ambitious. In our own Pathway to Net Zero report, we in DNV anticipated that the Indian subcontinent would be later than other regions in reaching net zero. So, this is not really a surprise and, actually, it's quite aligned with our modelling. We have to recognize that some nations, like India, are not yet in a position to reach net zero by 2050. That means that those nations, which have been responsible for most of the emissions until now, so, USA, Europe, China, we all need to move faster. And in those countries where the technology is already deployed and investment is available, our studies show that those countries should be carbon negative by 2050. So, Europe and the USA, are those regions which, according to our Pathway to Net Zero, need to be net negative, which would enable other areas to move down that trajectory at also a fast pace, but a realistic pace. Other positive signs that the gap is closing, I think an important one is that while we see solar and wind are on a track to enable decarbonization of the power sector, they need further finance. And so, their finance commitments are important in that direction. Also, the big challenge of the hard-to-abate sectors. When I talk about hard-to-abate, we mean heavy industry, aviation, maritime, heavy transport. There, we see that hydrogen plays an important role. Francisco mentioned the initiative of 28 companies coordinated by the World Business Council for Sustainable Development. They made major commitments to accelerate the decarbonization of hydrogen, drive up the demand for hydrogen. So, creating a hydrogen economy faster than the current trajectory would indicate. All these elements on the finance side that Helen also mentioned, on the technology side, accelerating the pace of hydrogen development, and also, recognizing that the pace of the transition has to be faster in some regions than others, I see that progress has certainly been made.

MATHIAS STECK    Thank you, Lucy. Building upon what Lucy just told us there, Helen, what was your take on how COP agreements could accelerate the transition to renewable energy and supporting technologies?

HELEN BERTELLI    Again, I think COP plays a role in setting a tone. There are a lot of developments to keep an eye on. I mentioned the infrastructure bill in the United States that’s going to have a huge impact. We’re already seeing on the ground solar investments, for example, ramping up significantly in some states, in advance of expected tax incentives, which play a huge role in the development of these technologies. I do want to bring up a topic that I think is very important. So, I run Women in Climate Tech, and we’re an international organization. About half of our members come from very, very large (organizations). Their sustainability offices are in Amazon, Microsoft, you name it. Very big businesses. And about the other half are women who are entrepreneurs and are starting businesses to meet demand in this area. We did a survey recently, so many interesting results from that, but one I did want to mention, as it pertains to the vernacular and how we talk about climate change. That is, we asked about the importance of climate risk in the work of all these women around the world. And 70% of respondents said that climate risk is extremely or very important to their organization’s work. Then we asked about climate opportunity. 81% said that climate opportunities are extremely or very important to their organization’s work. The reason I bring this up, you talk to most sustainability officers and people working in this space, they’ll say they’re seeing a similar paradigm. And that is, people respond to opportunity. We know the risks. There’s incredible risks, there’s going to be incredible, horrible ramifications around the world from climate change. There are also opportunities for us to look at. And I think to the extent that we could couch conversation as opening opportunities, we’ll have an even better impact on the conversation. When I talk about opportunities, we’re seeing, for example, Lucy, you just spoke about heavy industry. Several of our members are doing very incredible things in decarbonizing concrete, for example, which is very difficult to decarbonize, using biotechnology to turn carbon from heavy industry into precursors for plastics, medicines or consumer products. For which there is absolutely gargantuan demand. We’re seeing some of our women start companies to grow plants that sequester precious metals, rather than having to go into the ground and get them. So, if you look at the sector, there’s incredible entrepreneurship occurring that’s very promising and very, very exciting, and I think we can see very fast changes that don’t necessarily render the entire heavy industry sector. That don’t necessarily put them out of business, but leverages what’s there and helps them in the transition to a low carbon economy. So, I think there’s some very exciting things to look at. Couching these opportunities and putting them front and centre, I think is important.

MATHIAS STECK    Thank you, Helen. Francisco, from Iberdrola’s perspective, as a global energy company at the heart of the transition. How will new policies and funding commitments support and incentivize a move away from fossil fuel reliance, and towards greater renewable energy adoption?

FRANCISCO LAVERÓN SIMAVILLA    Well, under the Glasgow Climate Pact, governments will need to review their short-term commitments reflected in their NDCs for the next COP in Cairo because they are not enough to keep us in the 1.5 path. From my point of view, action should focus on getting rid of coal in power generation, set ambitious targets for methane leakage, speed up the electrification of transport and cooling and heating in buildings, and increase energy efficiency as much as we can, and put an end to deforestation, also, this is very important. Civil society also will have to translate into action all their commitments and declarations.

MATHIAS STECK    We have had some fascinating insights so far on the energy transition and how COP26 worked to accelerate this through political consensus. I now want to turn to some of the effects of climate change, and also the effects of the energy transition itself, and what specifically has been agreed at COP to address this. So, we know that pollution caused by developed countries disproportionately affects developing countries. I'd like to ask you whether you feel enough progress has been made at COP on tackling this disparity. Can we start with Helen, then Francisco and, finally, Lucy?

HELEN BERTELLI    When it comes to pollution, specifically, I think there was some exciting developments with regard to mercury, for example. Of course, you can look at pollution holistically, as it pertains to warming the planet, so, carbon emissions. I do think developing nations have been given a very raw hand and reunification has not been as swift as perhaps it should have been. I think that that is because we are dealing with, again, politics and global organizations that struggle to get funding, especially in the light of issues such as COVID-19 affecting markets and tax revenue and so on and so forth. Developing countries are always going to suffer as a result of promises that are withdrawn because of emergencies and things that happen. I do think the tracking of scope through emissions has the ability to help address this issue in a way that perhaps international bodies cannot. So, when I say that the vast majority, 65% to 95% of emissions come from Scope 3 emissions from many companies. Those Scope 3 emissions tend to be the raw materials, many, many of which are produced in developing countries. So, the developing countries, big businesses are going to come down on these developing countries like a ton of bricks when it comes to cleaning up Scope 3 emissions. And you can imagine, that could cause lots of lay-offs and lots of challenges, if not done in a sensible, socially responsible way. I think the Scope 3 emission challenge, with every challenge there’s always the opportunity. I like to talk about opportunity. And I think that, keeping in mind how developing nations can be bolstered through direct investment from the companies that utilize the raw materials that they develop, through Scope 3 emissions, I think investigating mechanisms for that could be incredibly valuable. And could really make the difference in enabling these communities to withstand the shocks that are coming.

MATHIAS STECK    Francesco, what about you?

FRANCISCO LAVERÓN SIMAVILLA    Talking of the collaboration of developed countries towards developing countries, I think that this COP has been disappointing because developed countries’ efforts towards developing countries are not enough and, fell short, in Glasgow. Basically because of two main issues. The first one is that the objective of the 100 billion funding hasn’t been fulfilled. Both in terms of quantity, because we haven’t reached that figure, and almost more important, in quality, as this money should be reflected in transfer and not in loans or warranties. Also, developed countries have failed to reach their required support for loss and damage to most vulnerable countries, and this is also a quite an important issue. I think in the next COP we have to focus very much on these two issues if we want to be successful and reach the targets that we have in the Paris Agreement.

MATHIAS STECK    Thanks, Francisco. Lucy, what is your view?

LUCY CRAIG    Absolutely, I agree that this is an important topic and an area where global approach is needed. As Francisco mentioned, it's disappointing that the $100 billion target has not been met, both in quantity, but also in timing. And that actually, the timing has now been set for 2023, rather than 2020. Even the level is not sufficient to really achieve a Paris-compliant energy transition. But we see other areas where action is needed because unlocking private sector funding is also essential to really ensure that the transition is happening faster in emerging economies. Their government funding should be used to encourage policy change, to de-risk projects, and get capital flowing into the economies that need them, by creating the conditions for private capital to join in. Another topic I'd like to touch on is, of course, the international transfer of knowledge and best practice. That is also very important. We see that technologies, which have already come down the cost curve in the richer nations, can be deployed in emerging economies. But also, there needs to be investment in the technologies, such as hydrogen, carbon capture and storage, and energy storage. So, the newer technologies, which are going to be very important for decarbonization globally.

MATHIAS STECK    Yes, you just mentioned the importance of funding in emerging countries, and I would like to go a bit deeper there. So, Lucy, what technologies will support decarbonization in developing countries? And do you actually feel that agreements and funding pledges made at COP are enough to accelerate the implementation?

LUCY CRAIG    In terms of the technologies, they will largely be the same as are already supporting decarbonization in the richer nations. But there is the advantage that in many cases, these can leapfrog the early development stages that have already taken place. So, wind and solar are already the lowest cost alternative for power generation in most parts of the world, but in emerging markets, they remain large challenges, for example, on enabling their integration. So, there needs to be huge investment in the build-out of power grids in the developing nations and, also, uptake of digital technologies, which will enable managing the complexity of a much more complex power grid. Therefore, technology transfer will be very important. Another area where work is needed, of course, is also on the supply chain because ensuring a healthy supply chain to keep costs down and build the local economy is an essential part of ensuring the uptake of more renewable technologies.

MATHIAS STECK    Thank you, Lucy. Another vital part of ensuring a just transition, a major focus at COP26, is enabling a diverse range of voices, skills, and experience, to come together to make it happen. Helen, your organization, Women in Climate Tech, focuses on amplifying the voices of women in the sector. Did you feel that COP helped to make progress here?

HELEN BERTELLI    I think that COP greatly overlooked this issue at first, resulting in lots of bad PR and lots of organizations sprouting up saying, hey, wait a minute, we need at least 50% representation at the table. When it comes to gender, you’re not talking about a minority, you’re talking about more than half the population of the planet. So, climate change is referred to as an existential threat very commonly now, and one of the things that I like to think a lot about is the fact that if that’s true, we need existential solutions. That is, we need a rethinking of the structures, the very structures. The leadership, the decision making, everything that got us here. So, you could say we need sexistential thinking, but the point is, that women are greatly impacted by climate change. There’s a lot of data now showing that the vast majority of people displaced by climate impacts are women. It's a multifaceted problem, there’s gender violence that escalates when there are disasters. And you also have, just one example, women in developing countries are not necessarily taught to swim or to climb trees. So, when flood waters come in, they’re the first to be swept away. It's a very multifaceted challenge. But I will say, it extends all the way up through the chain of command, even into countries such as United States, women are vastly underrepresented in all aspects of leadership. I talk to many of our members coming in Women in Climate Tech. We had a member apply just a couple of months ago who has a climate tech business. Her brother has to be on the name of the business, even though he does not work in it, because she is not allowed to get capital. She can't walk into a bank and get a loan for her business. It's a problem that is very prevalent. We also have a lot of research to share, that women are necessarily very close to the solution. There’s a lot of studies to show that women in leadership can increase profitability of companies. There’s emerging research from Bloomberg to show that women’s leadership speeds sustainability efforts. So, we’re doing a lot of work in this area to show that, again, gender and diversity is not necessarily a hand-wringing exercise, but can actually reduce risks across the supply chain, if we can only get capital to women in developing nations. If we can only get women in roles of leadership, we will have a better result. And so, I would like to see that happening a lot faster. I think the UK government is taking a wonderful leadership role. I think they recently at COP announced an almost $150 million grant to research the impacts of climate on women. I think that’s a great start. I’d like to see more of that.

MATHIAS STECK    Thanks, Helen, for these really interesting insights. COP26 was a short moment in time where agreements were made to shape the future of our energy mix. But it's now over, delegates are back at their desks and working on their day jobs. So, my final question to everyone today is, how do politicians, investors, technology companies and all the other stakeholders, reinforce what was agreed at COP with ongoing action? Let’s start with Lucy, then Francisco and, finally, Helen.

LUCY CRAIG    Well, one achievement from COP26 is that there is now consensus that there is only one target, and that is limiting temperature rise to 1.5˚C. That in itself is a big step forward and we can see this from the nearly 200 countries participating, from all the business and industry partners taking part in this, from citizens, from all the NGOs that were attending the event in Glasgow. There’s now a momentum which is unstoppable. But for me, the big question is how fast that movement will accelerate to deliver on these aims. Now all the parties will have to come back to the negotiating table every year. I see that it's up to all of us working in this sector to keep up the pressure and the momentum to move us down the pathway to net zero much faster.

MATHIAS STECK    Thank you, Lucy. Francesco.

FRANCISCO LAVERÓN SIMAVILLA    In a nutshell, I think that we almost go from words to seats. So, governments and investors should do their planning, long-term and short-term planning, and align all their acts in the short-term to the 1.5 pathway. As an example, Iberdrola as an investor in the energy landscape has just disclosed an ambition investment plan in this line. So, we have, of course, the target to be carbon neutral globally by 2050, but was also have 2030 ambitious targets. First, we have committed to becoming carbon neutral in Europe and to limit our global generation carbon intensity to 50 g of CO2 per kwh. That’s achieving an 86% reduction in three decades and this is in line with the 1.5 Paris target, which has been approved by the Science Based Target Initiative. As Helen said, Scope 3 is complicated, and in this target we have included the three Scopes 1, 2 and 3. So, for all these plans we have an investment of €150 billion until 2030, basically in renewables, electricity networks, storage, bringing hydrogen and charging facilities for electric vehicles, so everything is directed to clean energy. We will multiply by two our 35 GW current renewable capacity to reach 60 GW in 2025, and we will multiply by three to reach 95 GW by 2030. This is equivalent to one fifth of the last target announced by India. We will also reach 3 GW of electrolyser capacity for green hydrogen in 2030, and again, this is equivalent to three fourths of the target of Spain for that date. In conclusion, we have long-term carbon neutral targets, but we are already acting firmly in the short term with investments in the next year that’s set a path to arrive there. Also, I would like to stress that investments are okay, but we need to make alliances to push towards these objectives. We are very active and we are very committed in climate action in general, so we are making many alliances, we are participating in events in many other aspects, trying to make awareness of the problems and the opportunities of the energy transition.

MATHIAS STECK    Very good. Thank you, Francisco. Helen, what is your view?

HELEN BERTELLI    Thank you. I’d like to talk about two things. The first is training and the second is reframing the way we think. We’re doing a lot of work on the aspect of training. There is a massive need for training and retraining people, not just for renewable energy careers, but every job, in every organization is going to touch climate, if it doesn’t already. You can throw masses of capital into the solution, but if you don’t have people trained to know where to put it and how to allocate it, then you’re lost. We physically don’t have the people. We don’t have enough people working in this space. One of the first, and most important, things we need to do is train more people and expedite this process. The second thing I want to say is how to rethink the way that we approach business and politics, and negotiation. We saw a lot at COP, talking about we need to listen to indigenous populations, they’re central to protecting our world’s forests, our world’s natural resources. We need to listen to women. We need to listen to minorities and people who are most at risk. And I just wanted to throw this statistic out there. There’s a lot of challenges with bringing developing nations to the table, as we know, they face huge challenges decarbonizing. But the female economy represents a market more than twice the size of India and China combined. By 2028, female consumers will control about 15 trillion of global consumer spending. Maybe we don’t just have to think about things within the traditional geography lines. Maybe we can think about activating populations and think about elevating voices in a way that will get us there faster than just using the traditional paradigms. And that’s food for thought.

MATHIAS STECK    Thank you very much, Helen. Unfortunately, we are at the end of our time. But thanks for these great insights from all of you, Helen, Lucy and Francisco.

MATHIAS STECK    Thanks for joining us for this week’s episode. It was really interesting to speak to our guests, who all bring a unique perspective on what was a pivotal two weeks in the race to achieve decarbonization. Join us next time, where we’ll focus on mobilising finance, and the major agreements made at COP26 to ensure capital reaches the right place at the right time. To hear more podcasts in the series, please visit dnv.com/talksenergy.