The Daily Update: Carbon neutrality

In an interview with Bloomberg television, Bill Winters, the chief executive officer of Standard Chartered Plc, believes that it would be unreasonable for banks to stop financing the fossil-fuel industry, due in part because to do so would undermine transition efforts to cleaner energy. “We can’t have simple edicts like: No more fossil fuels. It’s just not practical,” Winters said, adding “We’re going to be dependent on fossil fuels for the next 15 or 20 years, unless there’s some miraculous technology breakthrough”.

Winter believes this is especially true of emerging markets, who need banks to guide them through a “just transition”. While he agrees coal “needs to be phased out quickly”, he thinks oil and gas will still be produced in the middle of the century.

As we have seen in recent price movements in energy, the world still needs the fossil-fuel industry, like it or not. As OPEC+ showed just a week ago, after years of hearing the ongoing global calls from all quarters to stop new investments in energy companies and producers along with being side-lined in the rush to cut emissions by large industrial economies, they are still key. Little wonder OPEC+ sees a higher oil price as essential to continued investment, along with reminding the world that it still needs them.

Winters chairs the Taskforce on Scaling Voluntary Carbon Markets, and is confident that carbon-capture technology will be a big part of the drive towards reducing carbon in the environment. This is part of the reason that he’s confident the world can achieve net-zero carbon emissions by 2050.

“I think the day that banks are completely disengaged from the fossil-fuel industry will be the day that there’s no more fossil fuels,” he said. “If you look at the International Energy Agency or the Science-Based Target Initiative, or people who have studied this carefully, in 2050, we’re still going to be producing oil and gas -- coal is more debatable. But we’ll also have by then -- and this is embedded in the science -- technology that is scalable and economic to take the carbon out of the environment”

He was also asked about the ongoing turmoil with China Evergrande Group. He said the Chinese government was not “Dumb enough” to let the ongoing fiasco with the property company turn into “something of a Lehman moment for China”. He added that Standard Chartered, which has a heavy focus on Asia, has “no concerning exposures to the property sector”.