Tuesday, February 27, 2024
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Climate urgency dominates New Economy Forum

SINGAPORE (BLOOMBERG) – Climate change, the energy transition and the financial plumbing needed to channel trillions of dollars toward green investment dominated discussions on the third and final day of the Bloomberg New Economy Forum in Singapore.

US Special Presidential Envoy for Climate John Kerry led the call for real progress at the COP28 summit starting later this month, stressing the importance of sticking to the goal of capping global warming to 1.5C.

“This year is going to be worse than last year, and next year is going to be worse than this year. It’s baked in with the rising temperatures,” Kerry said. “We will wind up with, sometime in this century, a low-carbon, no-carbon economy. What is not certain is that we will wind up there with the speed necessary to avoid the worst consequences of this crisis.”

Aminath Shauna, minister of environment, climate change and technology for the Maldives, an island nation that’s facing the threat of rising sea levels, described the need for action in personal terms.

“I don’t want to be a climate refugee, I don’t want my daughter to be a climate refugee” she said. “Finance is there, technology is there, what we need is the world and international organisations, governments, to identify and to say the climate issue is a climate crisis.”

Aminath Shauna. PHOTO: BLOOMBERG

Governments, businesses and investors will gather in Dubai for COP28 at the end of the month to discuss issues such as contributions to a fund to compensate global warming victims and whether to expand the pool of wealthy donor nations for climate finance.

A recent report by the Independent Expert Group sees USD3 trillion needed per year by 2030 for developing countries, of which USD1.8 trillion represents additional investments in climate action. The past 12 months have been the hottest on record as 99 per cent of the world’s population experienced above-average warmth, according to new analysis.

Mark Carney, chair and head of transition investing at Brookfield Asset Management, stressed the need to increase green capital flows into emerging countries. “That needs to scale from where it is today, at a couple hundred million, to a trillion of cross-border capital by the end of the decade,” said Carney, who is also chair of Bloomberg Inc’s board. “Those are big, big numbers.”

Speaking on the same panel, Macquarie Group Ltd Chief Executive Officer Shemara Wikramanayake pointed to the need for patience and progress at COP28, but also to the need for more climate investment opportunities with credible financial returns to match funds already mobilised.

“I would say the money we are investing is not charitable,” she said. “We have savers of the world, retirees – we have to get returns for risk. So we have to go on this journey of creating investments.”

Shemara Wikramanayake. PHOTO: BLOOMBERG

Speakers including Kerry praised the US Inflation Reduction Act for attracting green investment. But the acclaim wasn’t universal: Li Zhen, chairman of Chinese battery maker Gotion High-Tech Co, said American companies will still have to interact with other companies in the world, adding that he is “very confident” that Gotion can escape being declared a foreign entity of concern in the IRA.

“I don’t think the Inflation Reduction Act or other policies can completely stop companies from going global,” he said. “Companies thrive through competition, not through subsidies.”

Geopolitical issues dominated conversations on day one of the forum, with Singapore Foreign Minister Vivian Balakrishnan saying the world is facing a “moment of danger.”

John Waldron, president and chief operating officer of Goldman Sachs Group Inc, said inflation remained the single-biggest risk to the global economic outlook.

Day two turned to new technologies such as artificial intelligence and how they will change the way we live and work.

John Kerry, US special presidential envoy for climate, during the Bloomberg New Economy Forum in Singapore on Friday. PHOTO: BLOOMBERG

“Generative AI is the next new thing in machine learning,” Citadel founder Ken Griffin said Thursday.

AI will lower the cost of creating blockbuster animated movies drastically, according to longtime industry executive Jeffrey Katzenberg. Julian Ma, the founder and CEO of Inceptio Technology, said fully autonomous trucks – which he called “freight robots” – would become a reality in future, with no driver and dispatched and managed virtually from the cloud.