What might actually turn the tide in climate change

As always, follow the money.

Ten years ago, the “cost of capital” for developing oil and gas as compared to renewable projects was pretty much the same, falling consistently between 8% and 10%. But not anymore.

The threshold of projected return that can financially justify a new oil project is now at 20% for long-cycle developments, while for renewables it’s dropped to somewhere between 3% and 5%.

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“This year will mark the first time in history that renewable power will be the largest area of energy investment.”

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Will Hares, an analyst at Bloomberg Intelligence, said pressure from ESG investors is the best explanation for the widening difference between dirty and clean.

“Oil companies are finding it increasingly difficult to raise financing amid rising ESG and sustainability concerns, while banks are under pressure from their own investors to reduce or eliminate fossil-fuel financing,” Hares said.

This is resulting in more expensive debt financing (in some cases double-digit coupons), which, when coupled with depressed equity valuations, leaves most oil companies facing higher costs for capital.

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Spending is expected to peak between 2035 and 2040, driven largely by expenditures on power networks, charging networks, building upgrades and a massive expansion of renewable power sources such as clean hydrogen.

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Mark Carney, the former central banker turned climate envoy, said more than 450 financial firms representing $130 trillion of assets have pledged to bring their lending and investing activities in line with the goals of the 2015 Paris agreement. The announcement, however, didn’t mollify skeptics who are quick to point out that details on how the industry would actually meet this target were lacking—a hallmark of the greenwashing scourge.

  Bloomberg

...but hey, do what you want...you will anyway.