Zach wrote last week that Vanguard was seemingly rewarded directly and quickly for its withdrawal from Net Zero Asset Managers (NZAM). There are other reports of stark realities that the Net Zero movement may be facing a tough time.
A piece in The Wall Street Journal published at the end of December stated:
“In September, the Electric Power Research Institute, the research arm of the U.S. electric utility industry, released a report titled ‘Net-Zero 2050: U.S. Economy-Wide Deep Decarbonization Scenario Analysis.’
The EPRI report concludes that the utility industry can’t attain net zero. ‘This study shows that clean electricity plus direct electrification and efficiency . . . are not sufficient by themselves to achieve net-zero economy-wide emissions.’
In other words, no amount of wind turbines, solar panels, hydropower, nuclear power, battery power, electrification of fossil-fuel technologies or energy-efficiency technologies will get us to net zero by 2050.”
Yesterday, Responsible Investor reported that New York State Comptroller Thomas DiNapoli (trustee of New York State’s $233 billion pension fund) said “It is very possible that none of us will see the kind of interim [net-zero] goals and target we’d like… That doesn’t mean we can’t make the 2040 one.” Interestingly, Di Napoli mirrored the theme of my blog from this past Monday – uncertainties and unpredictability in the world impact organizations’ ability to meet ESG goals and targets:
“‘Everything has just gotten too complicated on the energy side because of the war in Ukraine and that that’s done to energy prices and supply,’ he said. ‘It’s a much more problematic geopolitical environment.'”
These are pretty strong clues that corporate climate assumptions and goals need to include contingencies for uncertainties, missed deadlines and other unforeseen problems. This parody of Net Zero that has been circulating for awhile may cut too close to the bone in some ways. But companies that plan ahead for problems and develop contingency plans to quickly adapt to changing circumstances will be better positioned to meet decarbonization/transition economy challenges.