Russia leaves an open-goal for the planet.


If you’re looking for a silver lining to the dark cloud hanging over us this Monday morning, it can be found in a talk given to an FT conference by Christopher Hohn, whose hedge fund, TCI Fund Management has more than $40bn invested.

Hohn expects the greatest “demand disruption” for oil since the 1970s shock to trigger a surge in renewable energy investment. The activist investor said high oil prices are “a positive thing” for the climate as the energy crisis prompts a “dramatic acceleration” in decarbonisation.

“This is a massive wake-up call that is going to accelerate decarbonisation, and investments by countries and governments, the whole world should now be focused on seeking alternatives, whether it’s renewables or nuclear or hydrogen or synthetic fuels. Suddenly all of these things are far more economic.”

The EU plans to cut Russian gas imports by two-thirds in a year.
Russia supplies 40 per cent of the EU’s gas, with Italy, Germany and several central European countries particularly reliant. It also provides about 25 per cent of crude oil. The commission’s proposed saving is double that suggested by the International Energy Agency last week in its 10-point plan, and comes as gas prices hit record levels on rising global demand and the possibility of Russia cutting off supplies.

The proposal also relies on curbing energy usage, by lowering thermostats and improving household insulation.

“If we increase the speed by which we transit to renewables, combined with increasing our energy efficiency, combined with diversifying our energy resourcing, by the end of this year already we could have decreased our dependence on Russian gas by two-thirds,”  – Frans Timmermans, European Green Deal commissioner.

Arguments that divesting portfolios of companies that rely on the mining and sale and distribution of fossil fuels simply shifts the problem to less responsible owners are getting fewer. Here is Jonathan Klement on why he has changed his mind and now sees divestment as a way of forcing such companies to change or die.

What kept you so long?

People reading Hohn’s remarks may be asking why it takes a catastrophy to spark change. Hohn’s answer sadly ring true

“Right now, there’s very little effort, minimal effort, going into alternative technologies, such as hydrogen or synthetic fuels or electrification, because these investments hit short-term profits,”

So let’s remind ourselves of how investments work in our (retirement planning) world.

For us, the aim is to provide people with replacement income. We deploy capital patiently and expect to get long-term growth on our investments to combat the ravages of inflation – and we like income.

For us, the short-term problem of having to make immediate profit is secondary to the long-term objective of paying people pensions. So pensions should be considering the energy sector a major source of value if Hohn and Timmermans prove correct.

There are some who point towards our failure to use the pandemic as a catalyst for green investment.  Some experts say Europe and other countries already missed a similar crisis turned opportunity with the Covid-19 pandemic. “They say, never waste a good crisis. I think you already wasted one with the pandemic,”  Thijs Van de Graaf, associate professor of international politics at Ghent University told the FT. A recent research paper in the journal Nature found that G20 countries spent $14tn on economic stimulus measures during 2020 and 2021 — but only 6 per cent of this was allocated to areas that would cut emissions.

The counter-argument to Hohn’s is that this crisis will drive Europe back on a reliance on fossil fuels. That would be to miss an open goal.

It is odd that it takes a crisis to make such a change and odder still that the long-term crisis relating to our climate has not (yet) “spurred the side of our intent”. But many goals are scored by deflections and lucky interventions. We should not spurn  this goal- scoring opportunity.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Russia leaves an open-goal for the planet.

  1. Dave C says:

    “If we increase the speed by which we transit to renewables, combined with increasing our energy efficiency, combined with diversifying our energy resourcing, by the end of this year already we could have decreased our dependence on Russian gas by two-thirds,” – Frans Timmermans, European Green Deal commissioner.

    But really it’ll resolve down to this:
    “by the end of this year already we could have decreased our dependence on Russian gas by two-thirds”

    Which means this:
    We’ll buy 2/3rds of our gas from somewhere else at really high prices.

    The net result of which is this:
    Profits for gas sellers up loads.

    Which just encourages more gas extraction to sell at high prices and make profits.

    Every bit of renewable energy (solar, wind) needs gas backup generation.
    So adding more renewables will add more need for gas, vs base-load generation (coal, nuclear etc)

    This is an opportunity for gas.

    Energy efficiency. Will there really be that much efficiency on the table?
    If you mean asking everyone to wear a jumper and live in a cold house, while paying three times as much for your gas bill to enrich gas extractors, then yes.

    This is only an opportunity for people who sell gas, just not Russian gas.

    The opportunity to generate the storage capacity (batteries, hydro, potential energy) and/or vast base-load in nuclear or investment in fusion (which should get a big chunk of public investment every year, it’s like a lottery ticket for the future of humanity!), will take decades to pay off.

    But I think we need to be clear. It’ll take decades to pay off, but the pay-off should be cheap energy. That means not such great valuations, or such great income.
    We shouldn’t be investing money and decades of societies time, to make people richer.

    I get this feeling that this is seen as some opportunity to make money for pensions, but this is exactly the problem.

    Energy, and provision of it, shouldn’t be a money making exercise. It should be a fundamental basic infrastructure provided by society for itself. Ie, run by government.
    It’s not like it’s discretionary, or you can have quality competition in place.

    Our current energy predicament shows that free-market operation of energy, with an overlay of government policy, does nothing to provide certainty of supply, price stability, cleanness, future investment… it’s all just about profit margins.

    As per our other recent discussion.

    A positive move here, the one for everyone’s benefit, the communal solution, is to provide energy via government and share the costs for society equally, because we all benefit from it. From the high users making things in factories, to those who might work from home and heat their homes all day, to those who use hardly any.
    We’re all a part of this shared society. No one individual or group of people should profit from it’s provision.
    It’s an essential and critical part of our society and shouldn’t be turned into a vehicle for private investment and profiteering.

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