Green campaigners lambast UN climate summit hosts for clinging to fossil fuels

Hello from New York, where I spent yesterday evening at a lively gathering hosted by the Fossil Fuel Non-Proliferation Treaty Initiative, the campaign founded by Canadian activist Tzeporah Berman. Among the speakers over dinner was Susana Muhamad, environment minister of Colombia, which is one of 14 countries to have backed the drive for a legally binding international treaty restricting fossil fuel extraction.

In the absence of such constraints, many countries are increasing their fossil fuel production — including the hosts of last year’s, this year’s, and next year’s UN climate COP summits, as our first item today highlights. Also today, Patrick speaks with the chief executive of sustainable investment darling Schneider Electric.

We’ll be back on Monday with a wrap of the key takeaways from this year’s Climate Week NYC. Have a great weekend. — Simon Mundy

COP29

Environmental campaigners clash with COP ‘troika’

If government officials ever thought that volunteering to host a climate COP was an easy way to score brownie points with green campaign groups, they’ve surely been disabused of that impression by now.

Yesterday, New York hosted a meeting of the COP “troika”, with representatives of the host of last year’s UN climate summit (the United Arab Emirates), this year’s (Azerbaijan) and next year’s (Brazil). Cue a volley of criticism from environmental non-profit organisations, which lambasted the three nations — all major oil and gas producers — over their climate commitments.

The troika talks were launched this year as a means of achieving greater continuity around the COP process. But non-profit Oil Change International highlighted an unfortunate commonality between the UAE, Azerbaijan and Brazil. All three are set to increase their oil and gas production between 2023 and 2035, by 37 per cent, 4 per cent and 38 per cent respectively, according to OCI’s analysis of Rystad Energy data.

This trajectory meant the troika’s representatives met a sceptical response when they called yesterday for all countries to increase the ambition of their “nationally determined contributions”. These are pledges around climate action, in particular emissions reduction, that they are required to make under the 2015 Paris Agreement. Countries are expected to update their promises every five years — and the next iteration, outlining targets to be met by 2035, is due by early next year.

Groups including 350.org, the Climate Action Network and Greenpeace piled pressure on the troika for not providing more detail around their own NDCs, to galvanise stronger commitments by other nations.

“Today’s event led by these petrostates has once again revealed their continuing willingness to put greed before the planet’s needs,” said Namrata Chowdhary, head of public engagement at 350.org. “Without concrete commitments to halt fossil fuel expansion, it was an unforgivable exercise in mere rhetoric.”

Tracy Carty, a climate politics expert at Greenpeace International, said “what’s needed is a commitment to embed in the new 2035 NDCs the COP28 decision to transition away from fossil fuels.”

“Nothing short of that will suffice,” she said. (Simon Mundy)

Energy Transition

Schneider Electric’s focus on green hardware pays off

In the years since the Covid-19 pandemic, the French energy management and automation company Schneider Electric has been one of the top holdings in European environmental, social and governance (ESG) funds — and for good reason. Investors have seen Schneider’s share price increase more than 200 per cent in the past five years. With its work managing energy efficiency in buildings and data centres, it has become one of the top three holdings in energy transition funds, according to MSCI.

Schneider is now reaping an additional benefit from its focus on the hardware required for the energy transition. Earlier this week it announced a $237.5mn tax credit transfer deal with Kimberly-Clark, a US household goods company that sells Huggies diapers and Kleenex tissues.

The deal, made possible by clean energy tax provisions in the US Inflation Reduction Act, will allow Kimberly-Clark to buy tax credits that were awarded to Schneider for its battery cell installations.

“Schneider Electric is well positioned for the ongoing convergence of electrical hardware and software markets,” Morningstar said in a September 20 report.

Demand for these services — and resulting revenue — has a lot of room to grow, Peter Herweck, the company’s chief executive, told me in an interview.

“Most people don’t know that we are the largest provider of electrical infrastructure to data centre clients,” he said. Many of Schneider’s clients include businesses outside the top “hyperscaler” technology companies pouring billions of dollars into artificial intelligence, he said.

Also this week, Schneider announced it was involved in a solar panel project at New York’s John F Kennedy airport. The 6.6 megawatt project is part of a new terminal. Different divisions of Schneider are building the panels and delivering microgrid technology.

After a series of challenges because of Covid-19 pandemic-related supply chain problems, Schneider Electric is benefiting from the boom in data centre demand.

“We’re the largest provider of that electrical infrastructure. We say it goes from the grid all the way to the chip, and from the chip all the way to the chiller,” Herweck said. In 2023, 21 per cent of Schneider’s orders globally were in data centres and networks.

“We see demand for a data centre build out in countries where we have never seen it before,” especially in South America, Herweck said. (Patrick Temple-West)

Smart read

Executives at private equity firm KKR have been allowing blue-collar workers at portfolio companies to share in their investment gains, in an approach that appears to have won support from US vice-president Kamala Harris.