Fossil fuels are entrenched in the global energy mix, and companies continue to discover and develop oil and gas deposits in locations around the world.
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LONDON — The CEO of standard charter believes it is “ridiculous and naive” to think that fossil fuel production can be stopped immediately without any consequence, claiming that while it might be good for the climate, it would have other negative effects.
In the comments made during an interview with CNBC’s Geoff Cutmore At the City Week forum in London on Monday, Bill Winters acknowledged that most people would subscribe to what he called a “just transition”.
“Those are two really important words … it just means fair, it also means enforceable,” he said. “And transition means transition, it means it takes some time.”
“The idea that we can turn off the taps and end fossil fuels tomorrow is obviously ridiculous and naive,” Winters said. “Well, first of all, it’s not going to happen, and second of all, it would be very disturbing.”
It would be good for climate change, Winters continued, but “bad for wars, revolutions and human life because it would have… havoc.” The “final divestment option” should be taken off the table, he argued.
Winters’ comments come at a time when the use of the term “just transition” has become increasingly common in discussions related to climate change, energy, the environment and sustainability.
The subject is complex and the term itself has been defined in various ways. The environmental group Greenpeace, for example, has described it as “move towards a more sustainable economy in a way that is fair to all, including people who work in polluting industries.”
A major bank with a presence in 59 markets, Standard Chartered is listed in London and Hong Kong. It has laid out plans to reach net zero carbon emissions from its funded activity by mid-century.
According to Standard Chartered, your total Net on and off balance sheet exposure to the oil and gas industry was just over $20.65 billion in 2021.
From A to B
Achieving any kind of significant change in the planet’s energy mix represents an enormous task.
Fossil fuels play a crucial role in developed and emerging economies, and companies continue to discover and develop oil and gas fields in locations around the world.
Any transition to an energy system and economy focused on renewable energy and low-carbon technologies will require a lot of money.
Along with the huge levels of spending required, this type of change will also radically transform the way billions of people live and work.
For his part, Winters said “we have to transition,” but raised the question of what would be the best way to do it.
“How do you balance that?” he said. “What’s…the best way to get from point A to point B while making sure you take the most emitters in the world with you?”
It did no good “to set up a system where people just pay,” he said, going on to explain how he saw the reality of the situation on the ground.
“In many of the markets, in the emerging markets that Standard Chartered serves, if we tell them that… one, we’re about to screw you and [two] You are going to have to pay well, they are going to say well… we are not going to be part of that system”.
This did not help, Winters said. “Rather, we need to bring them in the most constructive way – the oil companies are part of that.”
“Some of the biggest funders of both the technological changes we’re talking about and the protection of existing carbon sinks are existing fossil fuel producers,” he said.
“Why wouldn’t we allow them to redeploy some of their equity capital, and indeed much of their equity capital, into the things that can make a big difference? For my part, I would support that at every opportunity.”
a great discussion
Winters’ comments will draw attention and concern from climate activists and campaign groups who are pushing for an abrupt end to the fossil fuel era.
They also come as high-profile bodies like the International Energy Agency address the role fossil fuels must play in the future.
In 2021, the Paris-based organization said “there should be no investment in new fossil fuel supply projects, and no more final investment decisions for new unabated coal plants.”
Together with the IEA, the latest report from the United Nations Intergovernmental Panel on Climate Change has also intervened on the issue of fossil fuels.
“Limiting global warming will require major transitions in the energy sector,” the IPCC said in a press release accompanying its publication.
“This will involve a substantial reduction in the use of fossil fuels, widespread electrification, improved energy efficiency and the use of alternative fuels (such as hydrogen),” the IPCC said.
Commenting on the report, UN Secretary-General Antonio Guterres pulled no punches.
“Climate activists are sometimes portrayed as dangerous radicals,” he said. “But the really dangerous radicals are the countries that are ramping up fossil fuel production.”
“Investing in new fossil fuel infrastructure is morally and economically insane,” Guterres said.
“Such investments will soon be stranded assets, a blot on the landscape and a blight on investment portfolios.”