Net Zero devotees spout plenty of hot air
Are you up to speed with the Transition Plan Taskforce? No? How about the Race To Resilience? Oh, and not forgetting the snappily-named Glasgow Financial Alliance for Net Zero. By now, you will have guessed that these worthy organisations are the standard-bearers for renewable energy, all trying to promote ways of getting the world to work without burning hydrocarbons.
They do generate plenty of hot air on their beautifully-presented websites, as well as providing an employment sideline for the great and good. The Transition Plan Taskforce has assembled a steering group of a dozen of them under co-chairmen Amanda Blanc (Aviva) and John Glen (HM Treasury), with a further 33 in the “delivery group”. They – or more likely, a posse of underlings who will actually do the work – have all been asked to “develop a gold standard for transition plans” and to try and root out the popular corporate sport of greenwashing. Even the Financial Conduct Authority is getting in on the act, setting up an advisory board on the unholy trinity of Environment, Social and Governance issues.
The GFANZ is also full of grand ideas. Indeed, it wants to hear from you on the meaty subject of “measuring portfolio alignment: enhancement, convergence and adoption”, to produce a report in time for the next talkfest at COP27. Given the combined intellectual weight of all these worthy bodies, you might think we were well on the way to a lovely green future without hydrocarbons, but have you noticed anything yet? Try as I might, I can find no reference anywhere to the chasm between us and those broad sunlit uplands.
It’s as if the seismic event that has opened the chasm did not exist. If anything demonstrated our civilisation’s dependence on oil and gas, it is the cost-of-living crisis, most vividly demonstrated by Citicorp’s forecast of 18 per cent inflation in the UK next winter. While all the worthy bodies above produce reports, make recommendations, set down guidelines and hold more meetings, our way of life is under threat. It cannot be maintained by windmills, solar panels and double-glazing, even if the entire country and much of the sea was to be covered with them.
Russia’s war in Ukraine is increasingly ours too, and thanks to the last few years’ demonisation of anything to do with fossil fuels, the immediate cost is much higher than it should have been. We need these businesses as never before. Not that Mark Carney and Michael Bloomberg of the GFANZ seem to have noticed. Only last week they were welcoming the UN’s latest attack on coal, emphasising that “there is no rationale for financing new coal projects.”
One rationale might be that coal helps keep the lights on while we work out a way of coping with climate change, preferably one which does not involve giving up decades of progress on living standards. EDF, the French-owed fuel supplier, warned this week that half of the UK’s households face fuel poverty this winter at current prices. And none of these worthy bodies address the fact that China is continuing to build coal-fired power stations, or the $25-a-barrel competitive advantage handed to that country from buying sanctioned Russian crude oil.
Of course, all this is beyond the remit of these groups as they beaver away finding “climate champions”, asking for “transition plans” or “bringing together existing and new net-zero finance initiatives.” Secretly, many of the clever people working in these, and other politically-inspired make-work projects, must know that Net Zero by 2050 is a fantasy, whatever the wishful thinking embodied in the legislation. Like the prime minister and his successor, they can pontificate about it endlessly, but really they have no idea what to do.
Sophisticated, moi?
Oh yes, we all want others to think we know what we’re doing, and reluctance to admit that we don’t is the single biggest factor that drives the booming investment scam industry in the UK. The rules set down by the Financial Conduct Authority try to steer between protection of the innocent and the risk appetite of investors. Certain investments can only be sold to “sophisticated investors”, and the FCA handbook has a definition (although if it is on the website, it is very well hidden).
The sophistication test looks quite tough. Are you, or have you just been, a director of a company with turnover of more than £1m? Have you had at least two years’ experience working in the financial sector? Have you made more than one recent investment in an unlisted company? Choose at least one of these to qualify, and “understand that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money…invested.” All very fine, except that anyone can self-certify to a salesman applying sufficient pressure.
Which brings us to the Blackmore Bond, an “investment” which caused much misery and was recently exposed in a gruesome Panorama programme. It was painfully clear that the investors interviewed could not by any stretch of the imagination be called sophisticated, yet they put £47m between them into the company’s mini-bonds. The best estimate from the administrator is that there is £5m left, before administration costs.
The bonds were not regulated by the FCA, and the collapse has been a slow-motion car crash, with the first warnings flashing more than two years ago when the bonds started missing interest payments. This saga has a few more reels to run yet, and as is the current fashion, investors want compensation from the taxpayer. Since at least some of them clearly failed the definition of sophisticated investor, there is at least prima facie evidence of mis-selling by the bonds’ promoters. It is at them, surely, that the FCA should be directing its legal firepower.