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CERAWeek, Day One: Top five cleantech investing moments
02 March 2021
Day one at 2021's first virtual CERAWeek by IHS Markit is
already making waves for cleantech investors, as multiple panels
and discussions focused on the energy transition.
Here are five takeaways compiled by Peter Gardett, research and
analysis executive director on the EnergyView Climate and Cleantech
team:
Reward us by our progress, not by our current emissions
profile: That was the message from BP CEO Bernard Looney
at a session on "Reinventing Energy." Tellingly, Looney was in
conversation with the CEO of Amazon's AWS unit, Andy Jassy, whose
cloud data architecture is enabling BP's "experimentation" in its
transition from an international oil company (IOC) to what Looney
called an "IEC" — an "integrated energy company." He noted that
BP expects to double its number of customer interactions and work
with partners as it invests in a 20-fold increase in renewables and
a 10-fold increase in total low-carbon capex. "We love complexity,"
he said, making the case that big existing firms have the upper
hand in navigating the energy transition.
Everything is relative in oil & gas:
Capital will be more available to the cleanest barrel, and
downstream firms that are transitioning aspects of their operations
from a high to a low carbon footprint will have plenty of capital
available to them, Carlyle International Energy Partners Managing
Director Marcel van Poecke said at the "Investing in Energy" panel
led by IHS Markit Vice President Roger Diwan. Oil companies could
even lead the transition, said John Hess, CEO of Hess Corporation,
making the counterintuitive argument that higher oil prices could
boost emissions reductions over the long term by funding oil
company investment in relevant cleantech like hydrogen or carbon
capture and storage.
The hydrogen pure-play companies are "clearly in a
bubble," van Poecke said, noting double-digit valuation
multiples on decade-ahead earnings forecasts. He expects
established oil and gas and downstream firms to be able to take
advantage of hydrogen economics and existing infrastructure.
Sell-side firms like Credit Suisse are using their
"energy transition frameworks" as a tool for "engaging"
clients on a range of cleantech deals and risk management
opportunities, the bank's Lydie Hudson said in an ESG metrics panel
led by IHS Markit Chief Strategist Atul Arya. "Disclosure is where
there is enthusiasm to up the game" for financials, she said,
noting a wide-ranging push to align behind Task Force on
Climate-related Financial Disclosures and Sustainability Accounting
Standards Board principles and processes.
The Engie LNG project demonstrates ESG data and
analysis is now a core business imperative. When the
French government canceled a multibillion-dollar LNG deal with
Engie in October 2020, it was more than just geopolitics. The data
used to justify the decision was ESG data, and the idea that
counterparties or regulators could use complex environmental
modelling data as legitimate reasoning for changing the terms of or
even cancelling a deal has roiled project finance markets, the
Payne Institute's Morgan Bazilian said in an afternoon session on
"GHG Emissions and Competing on Carbon."