Energy transition

Adam Pawloff gave a lecture about the Energy Transition on the 28th of July as part of the Alternetive Economic and Monetary Systems Summer School (AEMS). He was talking about the role of finance in the transition towards "low greenhouse gas emissions and climate-resilient development, "reaching net-zero greenhouse gas emissions“. He also presented the intentions of many governments worldwide and their plans to achieve net -zero emissions around the middle of this century.

He further pointed out that the world's 60 largest banks have provided $4.6 trillion of fossil fuel financing since adopting the Paris Agreement. In addition, leading banks and investors are committing to align their portfolios with net-zero by 2050. During the presentation, he mentioned that the financial system, central banks, and supervisors also need to introduce explicit strategies to support the transition to net zero as the next stage in confronting the risks of climate change.

Mr. Pawloff's presentation, therefore, blamed the banks for financing the oil and gas companies. Ignoring practical considerations for how other energy sources could be developed, he suggested that 1 trillion euros might be used to fund the EU green deal instead. Mr. Pawloff's speech did not mention difficulties in switching energy sources and thus suggested that doing so was easy. Instead, Mr. Pawloff accused governments of prioritizing profit over the environment.

Adam Pawloff also mentioned the fossil fuel reserves and the role of reserves in valuation and the EU Sustainable Finance Agenda. He said that central banks and supervisors have to adjust current approaches and measures in line with a net-zero strategy: Central banks and supervisors need to develop a net-zero roadmap including long-term expectations and near-term actions.

Mr. Pawloff's presentation was a criticism of the decisions of governments to finance gas and oil companies rather than on greener energy sources. In his opening remarks, he reminded us of the Paris Agreement's goals: limiting the global average temperature to well below 2 degrees and adapting to the unavoidable effects of climate change. Mr. Pawloff, however, highlighted the last stanza of making sure that how finance was used was compatible with sustainable development.

The agreement highlights the need of ‘making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development’. Mr. Pawloff took a strong and emotional stance, hinting very strongly that all finance from fossil fuel companies needed to be removed.

Mr. Pawloff said that, "A society grows great when old men plant trees in whose shade they shall never sit." This quote highlights several things:

1) 'Old men’ are generally associated with responsibility and intelligence, as it is assumed that age means wisdom. Thus, one interpretation could be that Mr Pawloff had hope for a more positive government, which works for the long-term future rather than for short term benefits which in the long term would be detrimental. This may be a reference to how politicians will often try achieving short-term goals to impress the electorate to stay in power for longer instead of implementing long-term schemes

2) The quote also carries the blame. Considering the general tone of accusation and lack of practical solutions offered, the quote suggests a blaming of 'old men', or banks, governments and figureheads who have achieved 'nothing' and 'don't care about the future’. This is because the image of the wealthy capitalist is often unflatteringly depicted as an old man.

To conclude, Mr. Pawloff's presentation was extremely broad, focusing very briefly on a scope of potential solutions without delving into their practicality. As such, the presentation was of little overall use, consisting of little more than an attack on banks for financing the the fossil fuel industry. The tying of environmental products with the capitalist system is understandable, as capitalism is focused on short-term profit, and third-party costs, such as the environment, are often ignored by the individual in pursuit of this profit. However, the significant limitation of Mr. Pawloff's speech was the failure to consider a smaller scope of practical solutions in greater depth. For example, Mr. Pawloff did not consider the importance of gas and oil companies. They are not only valuable for providing energy but also essential to providing jobs and are far cheaper to transport and consume than green energy. While this is a controversial point, and much could be said to argue against this line of thinking, Mr. Pawloff did not mention it at all, which caused his presentation to appear extremely biased and, therefore, of limited academic purpose. The speech would, thus, only help understand climate change problems. There was very little room for critical thought, with the conclusion that funding needed to be cut being delivered without room for opposing thought. This was perhaps Mr. Pawloff's greatest failure.

Based on the lecture "Energy transition" by Adam Pawloff during AEMS 2022.
Written by: Aldin Hodžić and Dmitri Yendrzheyevskiy