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Columbia Energy Exchange

How Private Capital Impacts the Energy Transition


Nigel Topping

Founder, Ambition Loop; Former UN High Level Climate Champion, COP26


Nigel Topping: I think one of the problems when we talk about climate finance is, we just get our orders of magnitude wrong. We spend hundreds of billions of dollars on COVID. We’re spending hundreds of billions of dollars supporting the Ukraine, and the delta between a slow transition to net-zero and fast transition is order of magnitude, $10 trillion a year of global economic impact. So we’re really just collectively not investing enough in the transition.


Jason Bordoff: The success of the energy transition hinges on the availability of affordable capital to fund clean energy projects around the world. The rise of green industrial policy and wealthy economies has mobilized public capital to fund clean energy projects, and attracted a lot of private capital through subsidies and tax incentives.In emerging and developing economies. There are many more barriers to deploying capital for clean energy at the scale and speed needed. The IMF for example, projects that of the five trillion in annual investments needed globally by 2030 to meet the world’s net-zero goals, two trillion will need to be made in emerging and developing economies.

So what is the role of private capital in accelerating the clean energy transition? How do we mobilize that capital in emerging and developing economies? How can private sector coalitions accelerate the energy transition amidst an anti-ESG backlash or a higher cost to capital environment? And what’s the role of the private sector in global climate negotiations? This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Jason Bordoff.

Today on the show, Nigel Topping. Nigel is a distinguished visiting fellow here at the Center on Global Energy Policy and a global advisor to governments, financial institutions and private companies on climate and industrial strategy. He served as the United Kingdom’s High-Level Climate Action Champion for COP26. In this role, he mobilized the global private sector and local governments to take action on climate change, launching the Race to Zero and Race to Resilience campaigns, and with Mark Carney, GFANZ, the Glasgow Financial Alliance for Net-Zero. Nigel is also a non-executive director of the UK Infrastructure Bank and an honorary professor of economics at Exeter University.

I spoke with Nigel about the pace of technological innovation to scale the energy transition. We also discussed his experience at COP26 as the UK’s High Level Climate Champion, and the outcomes of the most recent COP28, including the significance of the new $30 billion climate fund launched by the UAE, and the loss and damage fund announced there. I hope you enjoy.

Nigel Topping, new distinguished visiting fellow at Columbia Center on Global Energy Policy, which is a privilege for us. It’s great to have you join us on the podcast. Thanks for being with us.


Nigel Topping: Well, thank you, Jason. It’s a privilege for me as well to be a visiting fellow, so I’m delighted to join you.


Jason Bordoff: Great to have you involved with us here at Columbia and spending time with us here over the course of this year, and part of last year. And glad we have this time to sort of have a bit more of an in-depth conversation about your career and what you see happening in the clean energy transition.

So just to help people understand what you’re doing now and what brought you to this work, because your background I think was studying math or maths, in plural, as you Brits confusingly call it, and then worked in manufacturing for quite a while. So just talk about how did that lead to a career in climate action and clean energy investing?


Nigel Topping: I mean, by accident, really. I mean, I went into industry after studying math, don’t worry, I’m bilingual English, American, I can cope, because I wanted to work in the real economy. And so, I went into industry at a time, interestingly, we’ll come back to this, in the UK where the idea of governments having industrial strategy, this is sort of right in the late ’80s, Reagan and Thatcher were basically anti-industrial strategy as kind of a communist plot and very much free market. And we know what that did in terms of the hollowing out of American and British manufacturing base.

But I was also a very keen mountaineer. So I spent quite a lot of time on some big expeditions to Greenland, Iceland and Patagonia. And so, I actually saw climate change upfront and personal in terms of receding glaciers in the high lefty parts of the world.


Jason Bordoff: And this was quite a while ago. We’re not talking about the last few years. You’re talking about-


Nigel Topping: No, I mean the first time it was ’87, that was on expedition to East Greenland and we were supposed to be doing some research on the snout of a glacier. And when we got to where we thought it was, it was one of the big glaciers draining the Greenland ice sheet. There was just a five-mile wide fjord of sea with little bits of ice draining out to sea. And we thought we’d made a mistake, just before digital maps for those younger viewers. But eventually we realized we were in the right place on the map that the glacier had receded 15 kilometers. So yeah, that was a long time ago now. So then I had a sort of mid-career pause when I went back to school, because of this climbing experience I’ve been interested in, and learn and hearing about climate change.

But I went back to study earth system science and systems behavior. And I came across a lot of environmentalists who would just tell me that the problem was business people, which I kind of thought was a rather lazy. And people who would have a car, and have a laptop, and all the accoutrements of modern life all made for them by businesses, and then just lazily say the problem is business, all the problem is interspersing debt, these very simple, dismissive summaries of the problem. And so, I decided then that I wanted to work on how do we use the power of business to solve global issues, particularly climate change. That was the biggest one then, and that seems to have gripped me for the last 18 years now.


Jason Bordoff: You did that for a while with the Carbon Disclosure Project as I recall. And so, just talk about the connection there. We’re obviously having a lot of discussion today about what disclosure should be expected. Here in the US we have these SEC roles that will be coming out soon. Why is that where you went and how important is disclosure to the role of the private sector in this transition?


Nigel Topping: So I went there, because I did my master’s thesis on the role of business in addressing global problems. And I did that by looking at some initiatives which had taken as their starting framing that transforming the role of business would be a way of transforming the outcomes, not campaigning against business, which is what most environmentalists were doing there. And CDP, the Carbon Disclosure Report is a really interesting example that I was introduced to. That was founded in 2000 as a kind of judo throw with capitalism sort of idea that pension funds and asset managers hold the stocks of publicly listed equities.

And just like in the great crash in ’29, there was a flowering of disclosure requirements, because people realized that investors had no idea what they were holding. There was no transparency. The thesis was investors, or asset managers, or owners who hold public equities, but don’t know what the effect of climate change would be on those stocks are investing blind, some pretty important basis. So the interesting thing, it wasn’t like you, companies, need to change your behavior, you need to tell us what you’re doing. It was like a letter written on behalf of the owners of the company saying, as your owners, we’d like to know how climate change is affecting you and how you are affecting climate change, so we can make better decisions. And that’s become a very big and important platform, and that’s led directly to TCFT, and rightly, stuff moving from voluntary to regulatory standards.


Jason Bordoff: So we’ll come back to some of that, but just to sort of bring the career to present. And then there was COP26 in Glasgow, there’s maybe more and less significant COPs, quite a significant one. And so, your role there was the high level champion. And for those listening who may not know being high level sounds good, being a champion sounds good. What is that role and what did you do in COP26?


Nigel Topping: Well, just the bridge to the role, why I got appointed to that role I’m sure is that head of the Paris COP 2015, we formed this coalition, we mean business of NGOs working with the business community. CDP was one of them, BSR series, the World Business Council, and a few others. Because we felt that the voice of businesses who understood the science and recognized that whole economic systems were going to have to change was being crowded out by a very well-effective predatory delay hydrocarbon lobby. So we formed women in business and organized actually a very effective campaign to tell the negotiators that an awful lot of businesses wanted a good outcome from Paris in terms of a strong goal ratchet processes, prices and carbon, et cetera. And so, I ran women in business for five years, and then when the UK got the presidency of COP26, one of the things that came out of Paris was the creation of this role.

I think the official title is high level climate action champion. It’s very long, but I like the action bit more than the high level bit. And so, I guess because of my work with women in business, the UK government appointed me to that role for COP26. And then, it’s one of those roles that in trying to persuade me to do it, everyone told me it’s the most important role in the world. It’s all about motivating the real economy to change, and we know that that’s where the real change comes from, and negotiations are nice, but nothing much happens there. So I said yes to the job and then asked about my budget, and discovered that there was basically no team and no budget, but I was very lucky I got to work with Gonzalo Muñoz, who was a Chilean high level champion, who’s a serial entrepreneur, and one of the godfathers of the B Corps movement in Latin America.

So we just went at it quite entrepreneurially and said, we’ve got this very powerful platform and role. The job of the champion is to work with what the UN calls non-state actors. So the private sector, cities, states, California is not a state actor, it doesn’t have a vote in the UN, but it’s a pretty important economy, and civil society to mobilize more ambition and more action in support of national governments implementing the Paris Agreement.

So we basically decided to turn that into series of campaigns reflecting the three pillars of the Paris Agreement. The Race to Zero, which is about mobilizing science-based short-term ambition from businesses mainly, but also over a thousand cities and universities and other actors. The Race to Resilience, which is about partnering with initiatives which were driving implementation of actual solutions to climate risk. And then, the Glasgow Financial Alliance for Net Zero, which I founded with Mark Carney, which mobilizes right now over 500 financial institutions with about 150 trillion, a lot of assets. And then, of course we had an extra year because of COVID, so we decided to go from mobilizing ambition to mobilizing more action. That led to what became the 2030 breakthrough agenda in Glasgow, which was very specific deployment goals for each sector, like 70 green steel plants by 2030, 15% sustainable aviation fuel by 2030, and then in the year later we launched the Sharm adaptation agenda. So it’s the same thing, how many hectares of mangrove need to be restored? How many millions of clean cook stoves sold, etc.


Jason Bordoff: And is that your general take on kind where we are with the COP UNFCCC process, now that there are negotiated texts and they are important, but as or maybe even more important, I don’t want to put words in your mouth, is what happens on the margins, these annual events where commitments are made by financial institutions or the private sector? Is that actually what you look to figure out whether these COPs are useful and making progress?


Nigel Topping: Yeah, I mean, I think there are two important domains, as you say that. I mean, the formal multilateral negotiations are really important, but part is a result of the Paris construct that recognizes that this is an agreement between sovereign nations. And so, it’s about the sovereign plans, the national STEM contributions, but also part is a result of the realization that the parties made when they created the champions role, that most of the implementation will be done by the private sector. I think the process hasn’t quite woken up to that yet. And I think the civil society and media still tend to focus more on the negotiations than a negotiated text. I think perhaps the poster child to what I see as the way forward is the troubling of renewables outcome. I mean, that had already been agreed as a part of G20 communique, a G7 communique.

There’s a whole massive private sector coalition, the Global Renewables Alliance, which is the wind, solar storage, geothermal, and other renewable sectors all behind that troubling renewables by 2030. Actually, if you look at the institutional landscape now, pretty much every sector there are those coalitions of the ambitious forming, focused on getting to those breakthrough goals by 2030. What I think we really need to see now is that bit of the COP choreography beefed up, because the other thing to remember is that COPs are the domain of environment ministers, but the energy transition and the industrial transformation is not. It’s the domain of energy ministers, industry ministers, finance ministers. So there’s a bit of a mismatch between the negotiating portfolio and the policy portfolio that we have to bridge intelligently.


Jason Bordoff: Yeah, I thought at COP28 in Dubai, I mean, just something I spend a lot of time thinking about is the geopolitics of this transition. It was the first ever trade day and you had ministers thinking about international economics and foreign policy, certainly there to discuss the war in the Middle East, but really focused on this agenda as well. To your point, it’s beyond just the realm of environment ministers. What did you think of the outcome of COP28 in Dubai relative to what people were hoping or expectations? There were questions among some about the UAE as a major oil and gas producer being the host of this. How consequential do you think the outcome was?


Nigel Topping: I think it was really pretty positive. I mean, of course a simple level one understands the concern about the CEO of an oil company presiding over an international climate negotiations. But I think it’s an oversimple concern. I mean, the individual concerned Dr. Sultan is also one of the most knowledgeable and biggest investors in renewables through his work at Masdar, right? I mean, it’s an incredible organization, probably done more than anything other than perhaps a couple of governments, including China to drive the cost down of renewables, and to spread investment in a lot of some Asian and African countries, which have not had lot of support from G20. So I think he’s really interesting. And UAE, it’s a young country that has managed to take its oil wealth and translate it into a lot of well-being and starts diversifying. And it has a net-zero 2050 target.

And by the way, that’s the multi national process. And the fact that it spreads leadership around is a good thing. I mean, if it was stuck between the UK and the US, it could have gone a lot worse as our own political circumstances wax and wane. So I think they did a good job. I mean, landing a language about phasing out fossil fuels is remarkable and it is a ratchet, and more of an emphasis on real world change. And they’ve launched that Alterra fund with 30 billion in it, a lot of it concessional. So I think they both put their money where their mouth is and did a pretty good job of choreographing, and of course very significantly and to everyone’s surprise, getting the agreement on the loss and damage fund on day one was a very, very smart political coup. I don’t know whether they engineered that or whether they just lucked out, but it changed the dynamics in terms of how good the vulnerable countries felt about the outcomes, and how much they could focus on ambition rather than fighting for that one thing, because they already had it in the bag.


Jason Bordoff: Yeah, so just for people listening who may not know the details, the UAE launched a $30 billion climate fund in partnership with some large institutional investors. I think five billion of it targeted for flows to the global south, this is the Alterra fund. Yeah, just say another word about how significant that is in terms of mobilizing private capital, but also we know so much of this capital, estimates vary between one and two trillion by 2030, but these are many times larger than they are today, need to go into emerging and developing economies. Do you think Alterra is a meaningful step forward in that?


Nigel Topping: Yeah, I do, because I think sometimes when the conversation about what needs to change is overly framed on what’s being decided in the COP, it can often slow us down. I think climate mobilizing finance has been a good example. There’s the famous 100 billion commitment made in Copenhagen, and rightly, there’s been a lot of focus on delivering that, because it’s really a token of trust and it was delivered very late, partly out frustration with the over focus on that Dr. Mahmoud Mahedian who was the Egyptian champion and I, there’s always two champions who overlap, just quite nice. Unlike the presidency where you hand on a baton, the champions, you serve two terms, so you overlap. We commissioned Nick Stern, the UK’s leading climate economist from the London School of Economics and Gareth Soloway, who was then running the UN Economic Commission for Africa, just to write a paper on what’s the whole quantum and where does it need to come from to address the climate crisis in emerging and developing countries.

That’s where the number they came up with. There’s 2.4 trillion in 2030 for emerging and developing countries, excluding China. And really importantly, half of that coming from domestic resource mobilization. And part of the problems of the politics of the negotiations is it often becomes zero-sum game. So whenever a wealthy country would raise the issue of what you emerging countries need to get your policy environment straight and you need to put your own money into the transition in your own country, the immediate response from a negotiator would be, “You are just saying that to try and get off the hook from paying the money that you owe us for causing the problem,” so the compensation doesn’t go anywhere. So the Stern Songwe paper is very helpful than saying here’s the whole needs to be a lot more focus on domestic resource mobilization. Half of the money coming from private sector, both domestic and internationally, and a whole sweep of reforms, both in the multilateral system but also domestically, that would be needed to mobilize that. That’s a four or five X of the current levels of climate finance.


Jason Bordoff: And then you mentioned the loss and damage fund. Just talk about that, both the concept of loss and damage given the steps we need to take moving forward to decarbonize as fast as possible. There are also in these discussions internationally, multilaterally a lot of discussion as there should be about who’s responsible historically for the cumulative emissions to date. And there was concern that that really could break down between wealthy and poor countries in a lot of acrimony. There ended up, as you said, on the first day being a commitment for just under I think $700 million, only 17 million as I recall from the United States, the largest historic emitter. How should we think about what was achieved on loss and damage, meaningful, a large amount of money, but still quite small relative to the scale of climate damages to be sure. And that issue, how do we think about how much of a priority that should be and where we go from here?


Nigel Topping: Well, let’s talk a bit about loss and damage, but then just broadly about how we think about investing in taking the advantage of an accelerated energy transition and avoiding the worst damages. Just a macro level. I mean, loss and damage is hugely important. Remember, there’s nearly 200 countries who are parties to the UN convention, 120 of them self-identify as vulnerable. So many of the small island states and emerging markets obviously exposed to hurricanes, and storm surges, and droughts, they’re getting in fires, they’re getting worse and worse. The construct of the convention talks about mitigation, how do we get to zero? Adaptation and resilience, how do we do stuff to cope with what’s changing anyway? And then loss and damage, we’re not going to be able to adapt our way out of everything, so some bad stuff’s going to happen. So how do we compensate people for that? And even that, you can split between say an increased frequency of harvest failure versus the complete loss of a habitat like an island, which is a sort of permanent.

And so, it’s politically been very important. I mean, Salim Sukh who sadly departed with the Bangladesh academic, really led the charge for this. And I cannot remember, in Sharm El-Sheikh, I can remember the absolute delight with which he came into my office and announced that we were going to get an operationalism of the loss and damage fund agreed in Sharm El-Sheikh, huge political breakthrough faster than people though. And then again in Dubai, the actual structure of it and where it would be housed, and the initial pledges were landed. But it’s a tiny amount, less than a billion dollars as you say. And I think that, again, it’s a tough thing to calculate, but we’re talking two to 300 billion a year of loss and damage in emerging markets. I think one of the problems when we talk about climate finance is we just get our orders of magnitude wrong.

We spend hundreds of billions of dollars on COVID. We’re spending hundreds of billions of dollars supporting the Ukraine. And if we get the delta between a slow transition to net-zero and fast transition is order of magnitude $10 trillion a year of global economic impact. So we’re really just collectively not investing enough in the transition. And you think more about the geopolitics than I do, but one of my concerns is that we’re not factoring in not only the economic damage, but the geopolitical damage of a slow transition, when you just create the conditions for mass migration, and the way that that tilts politics very much to the isolationist rights, and the way that makes it more bellicose environment.


Jason Bordoff: Yeah, no, it’s a really important point. And you’re helping us as a distinguished visiting fellow with the kind of initiative we’ve created here at the Center on Global Energy Policy with the Institute of Global Politics at the School of International Public Affairs focused on the geopolitics of the energy transition and of climate change, the physical impacts of climate change that we are, as you said, were seeing decades ago when you were hiking in Greenland, but we’re seeing with increasing severity today. We could have a whole separate podcast, and we will, on that topic. I wanted to ask you about where we are today in the private sectors, climate commitments, actions, particularly the financial community. You mentioned GFANZ when you were high level champion, the Glasgow Financial Alliance for Net-Zero, significant commitments from financial institutions to play a more active role in putting capital to work and maybe pulling out of parts of the fossil fuel economy.

And a lot of these initiatives seem to have faced some headwinds. ESG broadly is a highly politicized issue now, and I see a lot of financial institutions concerned with navigating that, and seemingly pulling the brakes a little bit. GFANZ saw the withdrawal of Munich Ray and Zurich last year, just the other day, two large asset managers, State Street and JP Morgan asset management pulled out of Climate Action 100. Are you seeing things slowing down or maybe even reversing as both these, there’s political headwinds, but there’s also cost to capital increases, supply chain problems, the economics in clean energy are becoming, in some cases more challenging for some of these investors?


Nigel Topping: Yeah, I mean, it’s a mixed bag. Let’s deal with the collective mobilization first of all. Gonzalo and I launched the Race to Zero in June 2020, when we thought the COP was going to be that year. And of course it ended up being 2021. And then with Mark, we launched GFANZ as a partnership. I think it was April the year after. And particularly we did it around, remember there was a Biden Climate Summit and we used that interim to create, there already was a net-zero asset owners alliance, but we used that process to create the net-zero banking alliance, net-zero insurance, net-zero asset managers. So there’s these sort of sectoral alliances who work… And by the time we got to Glasgow, we had about 450 financial institutions who were in GFANZ via these net-zero alliances. And the criteria for these alliances was that you had to commit to setting a science-based net-zero target and then within a year publish it, because it’s quite a complicated thing to do.

And then publish, and then implement a plan, and publish it, and then update on progress. So first thing to say is that was incredibly successful in getting to 450. And most of the major asset managers, asset owners and banks in the world are in those. And that was the thing, because they just joined the initiative. Hardly anybody had a target or a plan in Glasgow. But since then, we’ve seen the vast majority of those organizations move forward to actually publishing a target and a plan.

And so, you look at most of the big banks in the world have a finance emissions reduction target, and they’re often similar, because they’re based on the science, lots of order of magnitude, 60% reduction in finance, emissions in the power sector, and 30% in the oil and gas sector by 2030. And then yes, and actually the membership of GFANZ has continued to grow, have been the insurance initiative and some of the banks and asset managers, mainly driven by this very strange thing going on in the States, where you have people pretending to be the defenders of capitalism, actually attacking capitalism by trying to stop capitalist financial institutions from making rational decisions, by asserting that there’s some kind of conspiracy theory.

I mean, you live in the middle of that, so God help you. I’m glad I don’t, but it is problematic because of course, Wall Street’s disproportionately important in the global financial system. I think that increasingly we see the evidence that the transition is happening and it’s gone exponential in renewables, in electric vehicles, batteries, heat pumps, there’s all these technologies. We’re starting to see this, which is why the trebling by 2030 is actually entirely consistent with that. And we know that industrial transitions happen exponentially.

I think the biggest risk for both Wall Street and Main Street in the States is that going slow is just risk losing competitiveness. And again, I always use the analogy of the first oil crisis in the ’70s when Detroit decided that it could keep selling big gas guzzling cars and lost structural market share forever. And you see the same thing happening now. And the same thing will happen in the finance sector if you are not, which is why the U UAE is interesting. There’s a lot of money in the Gulf, there’s a lot of money in China supporting the transition in emerging markets, an awful lot of infrastructure in the world that’s going to be built in emerging markets in the next 20 years. If it’s not with Western capital, it will be with other sources of capital, and Western providers will lose market share.


Jason Bordoff: Let me ask you about that exponential point, because you talk often about it, and I think we’re talking a few days before this podcast comes out on the same day. The headline in the FT today is that despite dramatic and rapid growth in clean energy, emissions once again in 2023 reached a record high. So I guess the question is, is it necessarily the case that this sort of rapid annual growth, maybe exponential growth in clean energy happens at the speed and scale necessary to meet targets, like one and a half or even two degrees? I mean tripling renewables in 2030, that’s six years, not that long. We are on pace for roughly doubling, and even that is a significant improvement. So maybe that’s to your point, probably people would’ve thought doubling was difficult a few years ago, and that’s probably the baseline now.


Nigel Topping: So to break that down, first of all, when you say we’re on track, you are making a linear extrapolation of the current pace now. And so, my assertion very strongly backed by the history of transitions and by the academics of what is the most accurate way of forecasting is that you should be extrapolating the exponential, not the linear. So if you only take a linear extrapolation of the current momentum, you’re always undercooking it. And that’s a problem, A, because it’s methodologically not defensible, but it’s also a problem, because what commentators say is likely to happen influences policymakers and markets. So one thing I’m really committed is trying to make sure that everyone’s educated into the fact about exponential change. Now, does that next change, will it inevitably happen? Of course not. I mean, it happens because people solve problems. It’s a lovely interview I came across by a chip designer.

The most famous example of exponential change is Moore’s law, and it says chip designer a writer interviewed in the ’90s who said, “Everybody thinks that Moore’s law is inevitable, but we come to work every week and face unsolvable problems, and then someone solves the problem, and then we move on to the next one.”

So the exponential adoption of new technologies is driven by academics, and entrepreneurs, and industrial engineers solving problems. But you can model it in a reasonably bounded way. And the academic evidence is that modeling an exponential is a more accurate way of predicting the future than the sort of adding up current policies, which is what the IA do, or trying to understand what everything that you can see is happening right now, which of course misses the things you can’t see. So I think we can be much more confident, especially in those technologies which are on the escrow of renewables and EVs, that they will happen faster than most mainstream people think. And there’s a clue to that. If a mainstream forecaster upgrades their forecast every year, then they fundamentally have a methodological flaw, which means you should do that for them and not just take for granted what they say is going to happen.


Jason Bordoff: Yeah, I just had a whole exchange with one of our other colleagues here about the IA’s projections, reference cases, forecasts, and I think there has been criticism of the IA in the past for missing the dramatic growth in renewables. Part of that may be technological change that happens faster than you think. Part of it is because policy gets stronger, and I do think for policymakers, having been one, it is helpful to know where the world is headed if you don’t take more policy actions, because otherwise you don’t know how strong those policy actions need to be. I think it’s important for the IA to both tell people where things are likely headed, but also what additional things need to be done in policy and in technology to make sure that we achieve that outcome. As you said, it’s not inevitable. People have to go to work every day to do it.


Nigel Topping: Totally agree. And of course it’s not just engineers, it’s also policymakers. But I would say you see one of the shortcomings of one of the problems created by not thinking exponentially in the realization in the last 24 months that, oh my God, we need to strengthen the grid a lot more, and we need to deal with planning and permitting. If you had expected exponential growth, you could have seen that problem coming, and instead we’ve tripped up over exponential growth and then we’ve got to come. So yeah, so the exponential growth is driven by human innovation. It’s a familiar pattern, but it’s only delivered by humans doing remarkable things.


Jason Bordoff: Let me ask you about that, which is there are certainly cases of exponential growth and people talk about the horse and buggy to the car, and landlines to cell phones, and other things. Just to play devil’s advocate and get your reaction to this, I mean, in cases like that, the consumer utility, the benefit of moving from a horse to a car is exponential. So it takes off very quickly, because the user experience is dramatically better. The user experience for electricity coming out of the wall socket and whether it’s solar or coal isn’t particularly different. Moore’s law was about the power of the device increasing exponentially. We actually haven’t seen that in solar. We’ve seen the cost decline exponentially. We’ve seen adoption and deployment, and installed capacity increase exponentially. But I guess I’m wondering whether you think those, there are many other cases you can point to like fuel efficiency after the Arab oil embargo.

And to your point, the US and Detroit was behind the curve to smaller competitors, to other competitors overseas. We didn’t actually see fuel efficiency increase exponentially, as you know, got home at four in the morning because of a delayed plane flight. Air aviation is not much different today than it was 60 years ago. It takes longer today to get from New York to Chicago by train than it did 60 years ago. So not everything happens exponentially. I’m wondering why you think clean energy, and again, for many people the user experience of energy is not that different. Maybe a Tesla is nicer than an internal combustion engine car for some people. It’s not the same as going from a horse to a car. Why will clean energy happen exponentially without, unless policy makes it happen?


Nigel Topping: Yeah, good point. I mean, there’s pretty good literature on the nature of these technological transitions, and I think that sometimes there’s types of infrastructure that grow exponentially, like canals or railways. It’s not just about user technology. You’re right, there’s a fundamental difference in the dynamic of moving from a horse to a car, than moving from a combustion engine car to an electric vehicle car. So where it’s a straight substitution, what I understand from the research literature is that once you reach a price threshold, as long as there’s a desirability and an accessibility, there’s a desirability and an accessibility, you can’t buy the car. I remember I was on the board of the London Pension Fund and the mayor of London was introducing some quite strict low carbon zones in London, which basically was pushing van drivers towards electric vehicles.

But they came back and said, “Look, we can’t buy any electric vehicles. If we could buy one, we’d buy one. We don’t mind the policy, but don’t impose a policy on us when we can’t…” So accessibility is an issue, and desirability. So the cars have got to be good enough, and they’ve got to be cheap enough, and they’ve got to be available. But people are pretty price-sensitive, and once electric vehicles are cheaper as they increasingly are sector by sector, and of course if are a fleet owner, then you buy on the cost of ownership. So you’ll pay more for the car if it’s going to be much cheaper to run and maintain, so that the total cost of ownership has calculated and we’ve already passed that tipping point. So the same thing with renewables. Once you pass the cost tipping point, and look, we have a beautiful experimental curve of renewable adoption growth as a result of, as you said, the rights law, the learning effect of cost down that you talked about earlier.

So I don’t think the same thing with electric vehicles. So it’s basically competitive markets, it’s Schumpeterian disruption. And once the market starts to realize that there’s no car manufacturer in the world now who hasn’t got an electric vehicle, and most of them have stopped developing combustion engines, because it’s a waste of money to run two development programs. So we’ve basically decided that we’re going to lock in on electric vehicles, at least for the next few generations of cars. Maybe someone will come up with something else. But there are technologies which don’t appear to be susceptible to this learning effect, like nuclear and CCS, where the costs have hardly changed for three decades.

And of course you are right that in any case, policy is a part of that. And if you look at in the UK, I have solar panels on my roof, which would’ve been way too expensive, but there was a feed in tariff, which meant I get paid way more. So the early adopters got paid more to drive that adoption and the supply chain competence. We won’t get everyone in the UK buying electric vehicle if people aren’t confident that they can charge their cars everywhere. So policymakers making sure that the infrastructure gets built also matters. So I don’t think it’s ever just the market. It’s nearly always the market and policy makers working collaboratively to create the conditions for that exponential growth.


Jason Bordoff: Yeah, especially when you’re trying to do is deal with a fundamental externality, carbon pollution. And then as you said, policy can help bring the cost down. And when it does reach that tipping point, where maybe clean energy is even cheaper than not clean energy, then of course you can see dramatic growth. And we may be getting close to that in areas of renewables or electric vehicles, but still have a long way to go as you know in steel, cement, shipping, aviation, other parts of the economy.


Nigel Topping: But interestingly, we still keep being surprised by innovation. I’ve been in some conversations. Until recently, most people have been assuming that high temperature industrial heat is not electrifiable. It’s hard to turn electricity into very high temperature heat, 1700, 2000 degrees Celsius. But guess what? That’s a big market. So there have been entrepreneurs and engineers working on solutions, and now we’re starting to see some of those electrothermal solutions coming to market. And that’s changing the modelers assumptions about how much gas with CCS or how much hydrogen we’ll need in industrial heat. So in some sectors we’re definitely not on the exponential yet. We don’t even know what the technology’s going to be, but we’re in this very interesting experimental phase of trying out different technologies, and our assumptions from two years ago are still being proven wrong often.


Jason Bordoff: I think again, when consumers see that clean energy can in some or even many cases be cheaper, that does lead to that exponential takeoff. I wonder if you see concerns in Europe? And I’d love to hear what’s happening in the UK in particular, where are you worried there are cases where that’s headed in the other direction, where voters are starting to perceive in either reality or perception that some of these clean energy solutions like heat pumps, they may see as more expensive? We saw the UK government pull back on some of its heat pumps goals recently. Where is the state of the conversation, or Keir Starmer as he tries to get ready to win election? I see signals that people are being a little more cautious about leaning into some of these goals, because of the concerns that voters may perceive the cost of the transition as being higher than maybe the case.


Nigel Topping: Yeah, and this is where the political economy is really important. I think that conversation seems to be happening at two levels. One, distributional impacts, like is this going to be more, this is going to make life more expensive for lower income households. And you see some of the Rishi Sunak moves, which have actually been universally unhelpful from a point of view of the transition or of industry, because they just confuse people. But he kind of over-indexed on a by-election, which the Tories just hung on to, where there was some concerns about the mayor of London accelerating the implementation of very low emission zones, which would mean if you had an old dirty car you have to pay to go into London. Only applied to a very small percentage of the cars, and there was a scrappage scheme to help with that. Nevertheless, some people were concerned about that.

And it was one of the factors in the Tories hanging onto that seat where they’ve lost pretty much every other by-election that has happened in the last year. And so, I think this is one of the issues when a populist argument can beat a more rational argument, because you can just play to people’s fears. I mean, everybody’s very confident that every type of vehicle will be cheaper to buy than the combustion engine equivalent by 2030. And to say that, so yes, there’s a cost issue now for not all segments of the market are electric vehicles cheaper. So if you made the switch over now, you’d be forcing people to buy more expensive cars. But if you make it in between now and 2030, you’re not going to force anyone to buy a more expensive car. In fact, you’re creating the conditions for everyone to have a cheaper personal transport.

And of course, that applies to public transport, because buses will all be electrified as well, and delivery will all be electrified as well. So yes, it’s a concern, but it’s addressable if you explain the transition. And I think maybe he could have achieved the same by saying, “I know everyone’s concerned. We’re very confident, we’ll put in a breakpoint in our policy where we’ll review it in three years time, because it’s based on how the evidence that we’ve been presented to in which we believe that this will save money for everybody.” Interestingly, the macroeconomic evidence from the Climate Change Committee is that an earlier transition saves their country a lot of money. So it’s good for the national accounts. I think it’s also important to remember this is where in our populist and in this sense, I wouldn’t always call in a populist in this sense, which is that he behaved in a very populist way.

He made some assertions, which were just lies and misled people. He said we’re not going to have any more arbitrarily imposed transition dates, accusing the current transition dates of being arbitrary. The conservative government went through a very big consultation on whether to bring the phase out dates forward from 2040 to 2032 or 2035. And in fact, the very strong consensus from the business committee was to do it by 2030. And he’s then arbitrarily overturned that with no consultation, even with some of his own ministers. So it’s frustrating. It just confuses the market is the worst thing. And so it’s likely, and we see the evidence now that it’s putting people off investing in the UK, because they’re like, “Well, we thought you were committed, but now we’re not so sure. So maybe we’ll go somewhere that we have more confidence.”


Jason Bordoff: Just to conclude, I know we need to let you go. I was wondering if you could tell everyone what you’re doing now and what are the most important things one should be focused on to overcome some of the challenges that we’ve talked about in this conversation, to try to make sure that the private sector continues to move forward even faster despite some of the headwinds that we’ve had a conversation about in the last 45 minutes?


Nigel Topping: Well, I’ve just launched a new NGO called Ambition Loop with my colleague Gonzalo Munoz, who was the Chilean champion, because we keep being asked to, and we feel that we’ve got something to offer in leaning into this space between the public and the private, so that the evidence of momentum in the private, embolden public policymakers, and their policies can embolden the private sector, and that flywheel can turn faster and faster.

And the two things that I’m particularly focusing on are the accelerated technological breakthroughs in industry and energy, and both making the case that these are and can happen faster than many people think. And then working, for example, with the breakthrough agenda, which is 57 countries advising that initiative, which we launched in Glasgow on how the international collaboration can create the conditions. So things like green public procurement or standards when done collaboratively across countries can help drive the cost down faster. And then I launched a list of which we call the Climate Capital Mobilization Accelerator, which is working with what I call inpatient pragmatic problem solvers involved in allocating capital to climate solutions in the global south. This is the area we need to four or five X. And it’s complicated, but I think there’s more and more good people working to innovate. And as I said earlier, if we don’t get that right, my concern there is that it creates geopolitics, which are then negative in many other ways.


Jason Bordoff: And you’ll be spending time with us here at Columbia as a distinguished visiting fellow, most importantly. So great to have you with us.


Nigel Topping: Well, and the thing that I’m going to be working on with Columbia and IGP is the nexus of those issues, which is how does policymakers, particularly American policymakers think about how to optimize the opportunity for American industry and American capital in leaning into the investment in the transition all over the world. So that’s the sweet spot that I’m really excited about exploring with you.


Jason Bordoff: As are we, and looking forward to continuing to collaborate this year and beyond. So Nigel, thanks for all the work you’re doing and you did in COP26, and many other ways, and thanks for being so generous with your time to join us today to talk about it all. Appreciate it.


Nigel Topping: It’s a pleasure. Thank you very much. It’s been great to be with you.


Jason Bordoff: Thank you again, Nigel Topping, and thank you for listening to this week’s episode of Columbia Energy Exchange. The show is brought to you by the Center on Global Energy Policy at Columbia University School of International and Public Affairs. The show is hosted by me, Jason Bordoff and by Bill Loveless. The show is produced by Erin Hardick from Latitude Studios. Additional support from Lily Lee, Caroline Pittman, Victoria Prado, Martina Chao, [inaudible 00:46:07], Gautam Jain, Noah Kaufman, Luisa Palacios, and Kyu Lee. Roy Campanella engineered the show. For more information about the podcast or the Center on Global Energy Policy, please visit us online at, or follow us on social media at ColumbiaUEnergy. And please, if you feel inclined, give us a rating on Apple Podcasts, it really helps us out. Thanks again for listening. We’ll see you next week.

The success of the energy transition hinges on the availability of affordable capital to fund clean energy projects. The rise of green industrial policy in wealthy economies has mobilized public capital to fund clean energy projects, and attracted private capital through subsidies and tax incentives. 

But in emerging and developing economies, there are many more barriers to deploying capital for clean energy at the scale and speed needed. The International Monetary Fund projects that of the $5 trillion in annual investments needed globally by 2030 to meet the world’s net-zero emissions goals, $2 trillion will need to be made in emerging markets and developing economies.

So, what is the role of private capital in accelerating the clean energy transition in economies around the world? And how can private sector coalitions advance the energy transition amidst anti-ESG backlash and higher cost of capital? 

This week host Jason Bordoff talks with Nigel Topping about the pace of technological innovation to scale the energy transition, and the role of private capital in meeting global climate commitments.

Nigel is a distinguished visiting fellow at the Center on Global Energy Policy and a global advisor to governments, financial institutions, and private companies on climate and industrial strategy. He served as the United Kingdom’s High-Level Climate Action Champion for COP26. In this role, he mobilized the global private sector and local government to take action on climate change by launching the Race To Zero and Race To Resilience campaigns and, together with Mark Carney, launched the Glasgow Financial Alliance for Net Zero. Nigel is also a non-executive director of the UK Infrastructure Bank and an honorary professor of economics at Exeter University.


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