“We don't have much room for offsets anymore, we need to be focusing on absolute reductions instead.”: Kate Hampton on green economies and the end of half-measures.
In this episode of Cleaning Up, Michael Liebreich speaks to Kate Hampton, CEO of the Children’s Investment Fund Foundation since 2016.
Kate begins pointing out that time has run out for offsets to work as a panacea. Instead, the world needs to focus on absolute reductions As the Children’s Investment Fund Foundation’s work spans areas and continents, Michael and Kate discuss the role woman play in bringing everybody to a green future, as well as the geopolitical power of China.
Below is an abridged transcript of the conversation, edited for clarity.
Michael Liebreich: Kate, thank you for joining us on Cleaning Up. COP26 is coming to Glasgow. We’re all very focused on net zero pledges that now cover something like 78% of the global GDP. A lot of the action will be around turning those into Nationally Determined Contributions, so the robust plans. But there is still this negotiation around the Article 6 of the Paris Agreement, which is all about trading offsets or trading credits between countries. Is this a lot like the Clean Development Mechanism (CDM) which crashed in 2012?
Kate Hampton: We don't have much room for offsets anymore, we need to be focusing on absolute reductions instead. The real problem at the moment that is that even though it's really welcome that everyone's moving to net zero, what we're missing is the real near-term action that puts us on a good trajectory and in many instances using offsets just won't do that. So, I think there's a real problem amongst countries and companies about focusing on near-term absolute reductions. And yes, if there are some hard to abate emissions, where you can generate some carbon finance to do some difficult things, that would be great. But that's the icing on the cake. The actual cake is absolute emissions reductions in the near term.
I think there's a lot of work that needs to be done on how we segment the market between biological carbon, fossil carbon, and there needs to be some hard science on how much room is there for offsetting at all. That offsetting must be permanent, it must be discounted, and it must be focused on leveraging carbon finance into projects that actually need it. So, I think that needs to be contained. We certainly don't want all companies left off the hook by buying lots of offsets.
ML: Mark Carney said that Brookfield Asset Management, which owns an enormous renewable energy portfolio and has done sterling work building renewables was net zero despite owning oil, gas, and coal, because of the renewables offset. Of course, it doesn't work that way. He made this extraordinary misstep, saying that just because you build renewables, you can also own coal, oil, and gas, which is not true. What we really need to do is eliminate non-renewables to get to net zero.
KH: I think it's very unfortunate what Mark Carney said. It's also important to put in context that Mark Carney’s interventions from the ‘tragedy of the horizon’ speech, and with Prudential Authorities have been really, really important. So, you know, I think it's probably unlikely that he would have joined Brookfield unless he knew they were going to come up with a commitment. I just hope that arrives soon. And that rather than making this about individuals, I think what it shines a light on is the importance of having transparent and consistent principles and benchmarks for every single sector, including the financial sector. And what we don't want is a whole lot of greenwashing this year, and there is a real risk in the run up to COP26, that this gets very confusing, and that the public and young people and the environmental movement, just stand back and go hang on a sec, you know, these aren't real solutions. What are we actually doing here? So, for me, it's really important that anyone who's working in this space is really, really clear about what has integrity, what doesn't have integrity, and that we call out things that we don't think are helping us move to radical reductions in the near term.
ML: Talking of actual reductions: what about gender and plans for the post-Covid green economy? In the UK, it's very easy to say that we must have a just recovery or bounce back better. I’ve written about how energy efficiency needs to be at the heart of Covid recovery. But of course, energy efficiency is mainly a bunch of guys running around doing retrofits and insulation, or installing heat pumps, etc. It's blind to the gender issue. Is that a concern?
KH: It doesn't have to be men doing the retrofits and installing insulation. This is part of the problem with gender norms in society. Look at a country like India, for example, where women's labor force participation is going down. Green jobs will be the jobs of the future and helping a generation of young women stay in school to get trained in these important jobs would be hugely beneficial. It would be a massive boost to the economy. When you give women the opportunity to be economically independent and finish their education, it breaks the intergenerational cycle of poverty, their kids will be better educated and better fed, and go to school too. The investment in women has huge multiplier effects; way more than investing in men, sadly. I think we need to link green recovery and gendered recovery around the world. That would be hugely transformative.
ML: That’s India, another country I wanted to talk about is China – President Xi has committed to 2060 net zero. Could you ever have imagined a move like that, in your early days working on climate?
KH: I've been working on China for a long time now. It is a very technocratic decision-making environment. I think that Xi Jinping, his commitment to net zero by 2060, peaking before 2030 relaunched climate diplomacy, because we were all scratching our heads about where the momentum for COP26 was going to come from. China has been followed by several other countries committing to net zero, it's really given momentum. China has some difficult issues, millions of people are unemployed, for example. Traditionally, they've come out of difficult economic periods by building a lot of high carbon intensive infrastructure. That's how they relaunched their economy, but now they can't do a dirty recovery, they must do a green one. And you've got lots of countervailing signals: there is continued construction of coal plants, and then you've got the government coming in and challenging those decisions. I think all eyes will be on the 14th 5-year plan, which is coming out in in a couple of months, that's going to be the real test.
ML: Do you worry at all that the announcement of net zero by 2060 was actually sort of geopolitical mischief-making, that it was intended to appeal to Europeans, particularly to the left of Europe, and to distract attention from some very significant human rights violations that are going on currently in China?
KH: I'm very pragmatic when it comes to China. We're not going to solve global environmental issues without China playing a fulsome role, we're not even going to deal with the issues around debt restructuring and low-income countries coming out of the recovery without Chinese engagement. So, yes, you know, it's not always a rosy picture, but we have to keep engaging on these issues of global public goods, we have to, and I think, actually, if you look at the polling in Europe, the European publics want some kind of equidistance, between the US and the EU, because the US hasn't been a reliable partner on climate either. So you know, it's a complex picture geopolitically, I don't think it's cut-and-dried, in terms of where this will pan out. What I do know is that the US, the EU, and China have a huge responsibility to drive this agenda, and they need to do a hell of a lot more on near term ambition.