border tax on high carbon imports meant companies throughout the world had to reassess their global supply chains. The EU introducing first the Emissions Trading Scheme (ETS) and then the carbon border adjustment mechanism in the 2020s changed everything. Back in 2015-20, a globally accepted high carbon price seemed fanciful – particularly in Australia, where the mere idea was politically toxic, and a repeated Prime Minister killer. The most impactful has been the emergence of the now universal price for carbon. What financial instruments or initiatives influenced clean energy investment during the decade? Judges decided that, in the absence of any leadership from politicians, they would institute court-imposed leadership predicated on intergenerational equity. These cases took evidence from the Intergovernmental Panel on Climate Change to stop the expansion of the fossil fuel industry, recognising that their decisions would have consequences for future generations. In the early 2020s, there were landmark legal cases, including in Holland and Australia, that established governments and energy companies owed a fiduciary duty of care to young people to not cause physical harm from climate change. The legal system has also played a key role. In 2030, many younger investors won’t have even heard of some global oil companies that went into terminal decline They were brave enough to say: “We are in terminal decline, we will clean up the mess we spent over 50 years creating, and we won’t just fob off to someone else the rehabilitation liabilities our firm created.” Strong independent leaders implemented new stakeholder engagement policies that were open about the company’s core business having no future. For example, the CEO of BP, Bernard Looney, on his appointment in 2020 announced a radical climate alignment. Some transitioned fast, with change led by a new CEO, chair or board. This is not true for all energy companies. Today, many younger investors haven’t even heard of some of the oil companies they have fallen out of the top indices and headed into terminal decline. The energy transformation intensified the risk of stranded assets for fossil fuel companies. In 2030, net zero goals are entrenched across all mainstream financial sectors. This was a pledge by more than 450 institutions, then with $130 trillion in assets, to steer the global economy towards net-zero emissions and a 1.5° C limit. In financial services, these changes started to gain traction back in 2021, following the former Bank of England Governor, Mark Carney’s net-zero emissions finance alliance. Without insurance, high emissions business activity is virtually impossible. Governments realised the extreme cost of inaction, while high carbon-emitting companies understood that they could see swathes of their operations become uninvestable and uninsurable. Over the past 10 years, weather-related disasters have changed investment behaviour. The financial risks of climate change have played a huge part in redefining attitudes in global financial markets. What drove financial market to respond to the energy transition? Here are the questions and answers that should define a decade of positive change. In an ideal world in 2030, capitalism has been redefined and companies that destroy the environment cannot operate. In the abiding issue of our time, decarbonisation, there are slivers of hope and grave concerns. Looking back over a hypothetical decade of positive change, here’s what we ideally should see. And as the transition locks in, climate activists no longer need to chain themselves to buildings. Political and corporate leaders back clean energy, and the most far-sighted and first to do so ensure their success over their rivals. Climate risk analysis, once niche, has become the norm. With financing fundamentally challenged and changed, high carbon-emitting operations become uninvestable and uninsurable. High-profile legal cases establish the binding principle that governments and energy companies owed a duty of care to young people to not cause physical harm from climate change. Weather-related disasters compelled governments to act, recognising – apart from the ecological and human tragedies – the huge cost of inaction. Writing in the past tense, he flags actual events and policies happening today to “remember” the major changes that took place to achieve it. How did we get there? Tim Buckley at IEEFA imagines it for us and sends us a postcard from the future. The energy transition is on track and net-zero goals are entrenched across the global economy.
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