CERAWeek, Day One: Top five cleantech investing moments

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."