Standard Chartered Bank CEO Bill Winters explains where we go from here.

How rising energy costs have impacted the carbon markets

Finance

How rising energy costs have impacted the carbon markets


we have all these things going on with carbon market. This is now not a hugely traded asset, but is rising very rapidly. But it's also happening in the context of a global energy crisis. Just just moments ago, President Zelensky called for actually much more aggressive sanctions, which presumably raise energy prices further. A couple hours ago, there was a session this morning um about the global energy markets where half the people said the crisis in Ukraine is going to accelerate the transition and the other half the people said it's going to have the opposite impact. Help us understand from your perspective, your your company, your bank is right in the middle of trading this, do you see the, the big rise in prices and the growing concern about high energy costs as taking the air out of the carbon markets, Do you think it's going to accelerate investment in this area? How should we think about the big picture? I think that both both sides of the question that you posed and answers that you got are very present and Sanjay talked about the, the, the tremendous financing gap that exists, which has been closed for big parts of the world, but it's wide open and others. So in developing countries, the financing gap for two to convert these projects into reality is massive. We're talking trillions of dollars, Uh you know, probably $4 trillion dollars of financing gaps. So it's not that the money isn't there, it's just not always being directed in the right places. So on the one hand, if there's any silver lining in this war, it's it is that the price of energy is high and the focus on energy security is high and there is a massive investment into renewables right now or alternatives. And that's clearly a good thing. Uh The flip side is that the cost of living crisis which obviously begins with energy prices but extends to food and pretty much everything else that's that we consume on the planet uh is putting tremendous financial pressure on the poorest uh, countries and the poorest people in the world. And we have to solve both those problems. We have, we have to capitalize on getting all that money from, from was waiting to be invested in scale into high quality projects And high quality solutions, including investments in research which will get us to this 10-15, 5 to 15 years. And by the way, if we don't solve the nature problem first, it doesn't matter what technology we build today, it will be too late. So we must remember that, that there is a solution out there, but but it can only exist as a solution if we solve the protection of the existing carbon sinks uh, today, starting, you know, and and and Sanjay and company been doing it for quite a while. Yeah. So where are we? We, we've got it, we've got a tug of war going on, we've got to solve two problems at the same time in order to solve that, that uh, that that direction of money that's wealth transfer that that this andre talked to. We clearly have to have a level of standardization that doesn't exist today. So, uh the integrity council for the voluntary carbon markets has uh formally constituted last year to set a level of standards that will buy charter by commitment coming out of a task force that I chaired be set at a very high quality standard. That's the that's the intention, I'm sure that that's what we will deliver uh to do that in a granular enough way so that people can say with confidence, I'm putting my money into something that will not be questioned in terms of the efficacy of this project. And uh and once that standardization is in place, we can unleash a lot of this money. Uh we can seriously ramp up the projects that are being created and the Conservation International of course is at the very, very hard of that. Uh but there will be a flourishing industry if we can get that money pipe working uh faster and better than it is today. And if we can do that with confidence that also has the effect of putting companies like Standard Chartered Bank or Salesforce or anybody else that has made a net zero commitment, it puts us directly in the limelight. I mean, we we have no excuse but to one exactly as Salesforce's doing, reducing carbon emissions in in every way that we can, but then taking those difficult or impossible to abate uh reminders and using the offset market as the most effective way to make a contribution to Net zero. At the end of the process, it's your mop up. It can't be the core. But once we have that that standardized market in place there and we have a clear articulation, as the Minister said of what the demand side integrity is, what is a net zero commitment. What does it actually mean for a corporation? How's it going to be checked? How is it going to be audited? And that's what the C. M. I. Is doing. So that this this integrity council, the semi working working hand in glove to make sure that both sides of the equation are covered. We do all that we can solve this problem?