The Nuances of Energy Transition Investments

Guest

Larry Fink

CEO, BlackRock

Transcript

Larry Fink [00:00:03] The positive side of the growth of the capital markets is is something that is so underreported. The capital markets are driving more of economic activity than ever before. If you look at the magnitude of what the of the balance sheets of banks 15 years ago pre financial crisis and the role and responsibility of the capital markets 15 years ago to look at those two levels today the global capital markets have grown so much larger than the balance sheet of banking. This has profound implications.

Jason Bordoff [00:00:37] The energy transition is going to require a lot of investment. In fact, the International Energy Agency estimates that getting on the path to net zero by 2050 will require over $4 trillion of annual clean energy investment by the end of this decade. That’s more than triple what society spends today. And reaching that level will necessarily involve both public and private spending. But a smooth energy transition involves more than just spending on clean energy. In the wake of last year’s energy shortages, many countries are clamoring for more investment in oil gas supply, too. At the same time, the volatile geopolitics of energy and the tricky domestic politics of climate action make today an especially challenging moment for those investing in the energy system and putting capital to work. How are investors and asset managers navigating the rapidly changing outlook for the energy sector? What economic headwinds are they facing? For the first half of 2023 and beyond? And how can they balance the need for investing in today’s energy system along with tomorrow’s clean energy economy? 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, Larry Fink, Larry’s the chairman and chief executive officer of BlackRock, the world’s largest asset manager. Larry founded the company in 1988, and the value of its assets reached a total of $10 trillion in 2022. As its leader, Larry has emerged as a key voice for the finance community in the energy transition. In addition to his leadership at BlackRock, Larry serves as a member of the Board of Trustees of the World Economic Forum. Larry joined me for a fireside chat during the 10th anniversary Columbia Global Energy Summit, which took place in New York City on April 12th. This episode of Columbia Energy Exchange is a recording of that live in-person conversation. I hope you enjoy the discussion. We’ll get to energy and climate, obviously, and sustainable investing. But maybe we could start with the macro economic outlook. In just the past few months, we’ve seen lots of financial challenges, tightening questions about the economy’s resilience, questions about a credit crunch in the banking system as you meet with clients and world leaders. Talk a little bit about how you’re advising them and how you see the risks for the economy moving forward.

Larry Fink [00:03:07] Well, welcome, Columbia. It’s great to be here. So thank you for inviting me. Thank you. The world is in a pretty substantial transition and transitions are scary. Transitions are are unsettling. Obviously, we’re focusing on an energy transition of some sort. We’re focusing on. The transition and how we think about globalization. We are in a transition from a deflationary, low inflationary world to an inflationary world. All of that is hitting us at the same time. And then you overlay now a world where we had 30 years of essential peace to a world of unsettled geopolitical issues. And all of that leads to greater uncertainty. And much of that uncertainty really translates into more people have fear and less people have hope. And the key for any society is hope that you believe tomorrow’s future is better than today. Now, that’s the foundation of finance. That’s actually the foundation of American finance. And, you know, when I think about when I travel the world so much, when I see so many different countries and people, I mean, the big differentiating factor between America and the rest of the world is there’s more hope of the future in the United States than any any other place in the world. And I would say substantially that hope is lessened. It’s lessened throughout the world. And you see that as so many different indicators. You see that in birthrates, where birthrates are now starting to really fall dramatically. Here in the United States. We’ve had obviously decelerating birthrates in so many places in the developed world already, and that’s just all accelerating. And people think about that. That’s to be the greatest indicator of hope when you believe that your children will have a better tomorrow than today. BlackRock 54% of all the assets we manage are retirement. And you think about yourself why on earth would anybody invest for a 30 year outcome like retirement unless you believe retirement is going to be a better outcome, or if you not keep all your money in a bank account? So all of this is leading to what I would call. You know, this transition. And the only way we’re going to get out of this transition is truly global leadership. And I think this this fear, this fear is actually, in my mind, muddling this whole idea of where are we going in energy transition. That’s a major component of what this, this, this today is all about. And I really do believe how we are navigating all this is really a function of the the greater fear about tomorrow. And if we don’t do long term planning as a country, as a world, will never get to the outcomes that we’re trying to ascribe to the other obsessions are going to be about. But getting back to the global economy, we have, I think we’re going to have stickier inflation for longer. Well, to me, that’s probably the most important thing I’m going to say. I don’t see how we are going to get below 4% inflation. And so. Which in my mind will lead to probably a more more tightening by the Federal Reserve and other central banks, which will lead probably ultimately to some more, you know, displacement. And, you know, we are going to see the risk of of years of of low interest rates. The years that investing in illiquid assets are it’s all going to come and we’re going to see some issues. I don’t think we’re to see systemic issues, but we’re going to just see some real drag, whether it is in commercial real estate or we’re going to see big mismatches like we’re seeing in the banking crisis now, duration mismatch with some of the institutions that quite frankly, did not do it, adequate job of matching assets and liabilities. And and we are going to see other banks probably that will will need some type of government assistance. So to me, everything flows through this inflationary issue. And then that you target that in with the the inflation. The prime reason why I believe inflation going to be so sticky. When I. Spend time with leaders of different countries and our political leaders here. You don’t hear the word globalization anymore. In fact, when you say you’re a globalist, you’re you’re considered a bad human being today. And we are now refocusing on issues around national security, whether it’s national security for food ships, national security for energy, national security. Three or four years ago, you never heard those issues uttered. And all of that leads to as a re-imagination of supply chains. And I’m saying that in a positive way. Re-Imagine supply chains. Which really means more fragmentation. Let’s be clear. The reason why we have these global supply chains is because for 30 years we believed to can provide cheaper products to more people. That’s the ultimate way of providing the most progressive way of living and economy by people kind of have more at a cheaper price. That is no longer the the notion. The notion is more about security and other issues. And I’m not making it editorializing. This may be the right policy. I’m not a I’m not an expert in in terms of issues that are that are related to security and that so many people in government know a lot more than I do. But I ask everybody when we are doing this, when we’re thinking about supply chains, reimagination, I asked the question, have you factored in at what cost? What is it? You know, what is it cost? And I don’t believe that has been ever a component of thought anymore. You know, we’re building new chip factories in the United States. At what cost? I am. You know, I’m just taking a quote out of the founder of one of the companies that is building a factory here. And they already made a notion that the chips are going to be a lot more expensive here in manufacture than they would have been elsewhere. And so we are doing this and that. I’m not trying to suggest this is a bad outcome, but we should just understand that outcome will lead to more elevated prices for longer, which will lead to a, you know, a Federal Reserve policy. Missions. The mission is about bringing and arresting inflation. And so you have this countervailing issue. You have government for government reasons, trying to reorient how we navigate our economy. And this is not just true in the United States, and all of this is not the type of government policies that we saw for 20, 30 years. And so all of this is just going to be with us for longer. And it’s and in that respect, it means we are going to have probably have elevated inflation and we’re going to have the costs of higher interest rates for longer. That is going to ripple through the economy. And so we’ll see how that all plays out. And I would say this is the same thing true for Europe and other places in the world. So I’m not trying to just keep it pinned.

Jason Bordoff [00:10:42] Yeah, you put a lot of really interesting topics on the table. By the way, just you said maybe some more, I think ripples to come with. But with banks, for example, do we need do we have enough regulation of financial institutions and or do we need more? And if so, what kind?

Larry Fink [00:10:57] Probably the most interesting statistic. Is we have the positive side of the growth of the capital markets. Is is something that is so underreported. The capital markets are driving more of economic activity than ever before. So in one way, the economic activity has not been blunted by some bank issues as much. So that’s a real positive. And that’s why I think just the small failures of some of these banks already have not really altered the economy that dramatically. Do we need more regulation? It seems so. But but but the bigger notion is where we don’t spend enough time understanding. If you look at the magnitude of what of the balance sheets of banks 15 years ago, pre financial crisis and the role and responsibility of the capital markets 15 years ago, look at those two levels today. The global capital markets have grown so much larger than the balance sheet of banking. This has profound implications. And even because this financial crisis the last few weeks related to we’ve seen hundreds of billions of dollars leaving the banking system going into the capital markets. Now, that is really very deflationary because banks have the ability to translate those deposits into, you know, what, 8 to 1 loans. You know, they have leverage. The capital markets, basically you have a liability of an asset at its all match. And so you could say it’s better match, there’s less systemic risks. At the same time, though, as more and more capital moves out of the banking system into the capital markets, we actually then have less flexibility because we have less leverage in the system, which could be into eventuality of of of a really decelerating monetary money supply, which is very deflationary ultimately.

Jason Bordoff [00:13:01] I mean, you laid out a number of risks and obviously you founded BlackRock 35 years ago with a foundation of understanding risk and helping clients navigate it. Let’s turn now to the topic of what we do every day energy and climate change. Talk to us about the risks associated with climate change and then also the risks associated with how we do something about climate change and a clean energy transition. If we don’t get that quite right as we try to navigate that multi-decade process. How should how should we understand that those risks and how should your clients approach them?

Larry Fink [00:13:37] Well, you said multi-decade. And there lies the fundamental problem. Can we get leadership to think for multiple decades, especially when when elections are every two years in so many cases, what we’re asking. So I believe we will never have an adequate transition unless we are able to develop technologies to make sustainable and renewable energy. Fairly price so we don’t create this big imbalance. I know this is going to be very hard. A lot of people right in the audience disagrees with me. I just don’t think political reality will allow that to happen. And that’s what we’re seeing right now in this in this conversation that’s going on right now related to ESG and other things like that. The conversation is more about short term and how do we assure that we have energy security? How do we assure that we have energy priced at the at a price that is fair and just? And then more importantly, the one thing that we never talked about even before we had these whole issues related to sustainability. No one has ever come up with a proper solution. How do we bring the emerging world forward and the emerging world? In my mind, we never had a good answer. How are we going to move the emerging world forward? And the only way we could bring any country forward, developed or developing country forward is is through better technology to bring down the cost. And at the same time developing. And I know later on you’re going to have some energy CEOs and, you know, they’re spending a great deal of time trying to focus on this, too. They’re part of the solution. And importantly, they’re going to be probably the leaders in sequestration because they own the geology. And so it’s going to be a combination of, you know, coming up with better technology to bring it down. I mean, you know, the IRA is a fantastic bill. But, you know, if we’re going to really have this forward, hopefully the IRA in other forms and other countries that we develop new technologies to truly bring down the cost of decarbonization in a more rapid way are bringing down the cost of sequestration and air capture. That’s the only way we’re going to be able to get this done. And I really believe we need a honest and pragmatic approach. Jason You know, I host meetings with leaders of NGOs and leaders of energy companies. And, you know, most of the time the conversation is talking above and around and we need to have a conversation. This is why I’m so happy to see, you know, post-COVID, a lot of people in a room. We need to have a conversation. We need to be thoughtful about it. But we we need to find ways to be working together. And instead of talking around each other over and under. And this is something that we’re not doing enough of. Am I an optimist that we are or are we going to find new technologies to bring down the cost of decarbonization? I do. But I also believe that, you know, before we do that, we’re going to have to ensure that we have adequacy in our energy policy. You know, we’re seeing the energy markets around the world, and maybe Dan Yergin talked about it earlier. I didn’t there wasn’t part of that. But know there are many forecasts that we’re going to be really shy hydrocarbons in the next few years. What are we going to do about that? You know, if that’s the case, obviously the emerging worlds in worse trouble and the utilization of coal and other things is going to happen. And so these are complex answers, especially in the realm that we have. You know, we have some components of society are going to be harmed by this and other components are going to be benefited. But how do we unify this together so we we can bring it forward together? How do we ensure that the developing world is being brought forward just as fast as. And so, you know, when I go to to Washington or any to any state legislator, I mean, these are the worries I hear from every political leader and not just here in the United States, but I could say also, you know, in parts of Europe and in parts of Asia, how do we create a fair and just transition that we can move forward? And where are we going to find the capital, by the way, to finance all this? And and and so.

Jason Bordoff [00:18:16] Answer your question. I think that’s on my list.

Larry Fink [00:18:21] Okay. Without the capital, we you know, we’re investing quite a lot in new companies, new start ups. I actually believe there are going to be quite a few, you know, unicorns that are going to be in the in this decarbonization process. We’re really excited meeting some.

Jason Bordoff [00:18:36] You said the next thousand unicorns of the companies.

Larry Fink [00:18:38] And I, I believe that more than ever before, it’s not going to be a food delivery company again, you know. So I’m absolutely convinced that that’s where it’s going to take it. So how do we develop that at the same time, making sure we have a we have natural national security taking care of. We have. And how do we make sure we have a fair and just transition? And, you know, to me, this is this is something it’s very hard to have that. I mean, depending on where I go in this country or where I go in other parts of the world, they all want. They all want to have those answers before they move forward. And I think it’s that consternation right now and that fear of the future. Getting back to my basic premise, we have more fear and less optimism in the world, less hope. This is what we need to be doing more than ever before.

Jason Bordoff [00:19:33] A lot of that investment, at least a trillion a year by 2030, according to the IEA, is going to need to be in emerging and developing economies.

Larry Fink [00:19:40] And that’s where I don’t see the capital.

Jason Bordoff [00:19:42] Yeah, that’s my question. The real and perceived risks are higher there. How are we going to get capital to work in those parts of the world?

Larry Fink [00:19:47] I have no idea. It’s not good. We’re really not being truthful to selves. We do not have any financial mechanism to bring the capital to the emerging world like we need if if it indeed it’s that much money. This is why in in 2021, in a speech I gave to the G20, why we need to reimagine these the multilateral development banks like the World Bank and the IMF. Secretary Yellen is now starting to talk about this.

Jason Bordoff [00:20:21] What is the role of the NDB is in the World Bank? We have new leadership coming in.

Larry Fink [00:20:25] Yeah, we’re going to Asia coming in and we’ve we’ve had conversations. Look at they they were designed, you know, Brentwood, they were designed when banking was a different business. Banks provided most of the capital to the emerging world. Then we had all these different rolling crises in the emerging world. And then more importantly, we had something called Dodd-Frank in the Basel capital standards. Let’s be clear. Banks really have a very modest ability to lend to non-investment grade countries. You know, the developing world or just above the investment grade. They just can’t do it for capital. So we have to find new sources of capital. There’s just not enough sources of capital unless we have the country of origin. And maybe one of the developing banks provide the first loss piece. Right now, the World Bank and the IMF, basically their capital structure is they provide the senior lending and the way they wanted the private markets to provide the junior and subordinated pieces. There’s just not enough capital. And that’s especially when we’re talking about retirement savings, where you have a whole different fiduciary standard in investing your retirement savings in that. So. So look at this is where I’m an alarmist. I don’t believe enough focus is being done on how do we if we really want to be faithful about this idea, we need the emerging market world to come along with us. We need to be we need to get the equity owners of these development banks to rethink about and reimagine the charters of these institutions. The problem is it’s going to require a lot more capital for these institutions if they’re going to be the junior lender. The first loss piece, if we had that mechanism, then there would be quite a bit of private capital that would come there. But right now, you know, whether you’re investing in a in a in a country in Africa or a country in Southeast Asia that needs help. Every project is like baking bread. And if you can’t get to a trillions of dollars of financing. Project by project. By project by project. And so we need to be realistic about if we are really faithful to this notion that we have to bring the whole world forward together, then we have to reimagine the whole world’s mechanism to finance the developing world moving forward together.

Jason Bordoff [00:23:04] We there’s some questions that have come in, not surprisingly. Several are about something you mentioned quickly earlier, which is this kind of in some corners, backlash to sustainable investing. And I wanted to ask you to say more about it, but but also the implications. What will it mean for sustainable investing and that huge investments you just talked about we needed and also maybe a two part question, what does it mean for for climate investment, clean energy investment? Also, I’m just wondering what you think. You know, one of the bedrocks of American economic power has been the unified nature of our capital markets. And I wonder whether we’re now seeing different states and different parties seek to direct how investors should and should not exercise fiduciary duty. And do you think that that polarization, seemingly increasing willingness of elected leaders to impose some of those views that sort of pose a threat to capital markets and American economic power?

Larry Fink [00:23:59] Well, we’re responsible for approximately $9 trillion, so it’s a lot of money. There’s not a penny of that. Money is ours. Our job is to be faithful to each and every client and their wishes. Okay? I can’t instill my views. I can give them recommendations. Whether we like the market or not like the market, we may like a subset of the market. We may like, you know, a sector. We may like, a country we might like, you know, the five year part of the yield curve versus a 30 year or one year. But so our job is to give guidance and support and as a fiduciary to every client, our job is to be following what they are, what their wishes are. And that’s what I think is going on in America today more than ever. It is just the the real statement of it is it is not our money. And we are going to tell you how we want our money to be invested. Actually, I don’t have a problem with that because we’ve always followed the notion as a fiduciary that each and every client has the ability to determine how their money is being put to work. And I and and I think some people have forgotten that. I could tell you we never forgotten that. I mean, some people say we have. But the reality is our job is to be a steward of every individual’s money. And our job is to be faithful to their contract, to what our responsibilities are. And indeed, there are going to be some states who are going to say to us, you cannot factor in ESG at all or decarbonization at all with our money. And some states are saying you have to factor that across everything you do. And so that’s their right as as the owners of that capital now within their constituency, I don’t think it’s one way or the other, unfortunately. And that’s what’s going on right now. You have in some states that are they believe this is it’s right for every part of their constituencies. And we’re talking about, you know, schoolteachers, money, fireman’s pension fund. We’re talking about, you know, the you know. And so, you know, I think any reaction in any one state has to be from the bottom up. And but our job and I know a lot of people don’t want to hear that our job is to be a steward to other people’s money. It’s not to imposing any other. And I wrote this May 20, 23 letter. It is not our job to listen to anybody else whose it’s not their money. Our job is to be a steward for each and everyone’s money. Now we have some strong views on where money should be put. Every day we have strong views. We put our purpose. Do we believe over the long run, investing in a decarbonization portfolio is going to produce good? Returns over a long period of time. Yes, we do. At the same time, we said never. A lot of people hated me for this. Even my 2020 letter, I said, Do not divest in hydrocarbons. I do not believe in divestiture because the reality is when people you know, maybe in this I don’t know, did Columbia force that pension fund to divest? I know some universities did. I’m against that because it’s not moving. It’s not you’re not change the ecosystem of the world. It may be moving from public hands into private hands. And that’s that that doesn’t change the ecosystem at all. It just moves it from public and private. And so our job always was as working with energy companies without sleep, you know, But quite frankly, if we have a blue state to them, you know, that wanted us to divest of hydrocarbons, we will we have the same issue going on in China today. There are a lot of states who said we don’t want to have exposure to China. That’s your wish. We will do that. We will invest in it index minus China or whatever that may be. You know, I don’t want to be in alcohol or tobacco. We we get these types of requests all the time. And that’s you know, our job is to be a provider of ideas and say, we will do what you want us to do. We may disagree, but it’s your this is your right to do it. Now, I would say in Europe, it’s a very different ecosystem. In Europe, everything you do in Europe at this moment is through the lens of decarbonization and sustainability. And so in Europe, it’s pretty consistent societal demand. And so once again, I have to be a fiduciary in Europe. We have to be working with them for them. At the same time, I have to work for each and every client we have in every state of the United States and be the best we can as a fiduciary for their earned money.

Jason Bordoff [00:28:48] And you made that really clear in your most recent annual letter. And you mentioned your 2020 letter about, you know, we’re not it’s not time to get out of fossil fuels completely. It also said, I think the letter to clients somewhat famously, we believe sustainability should be our new standard for investing. And I’m just wondering, like as as an identity, as a firm for BlackRock, when you’re in a world, is it irreconcilable where you have demands from some people who’s managed money, you managed to forswear fossil fuels, Why other others? Only if you reject sustainable investing principles as a whole. What does it mean for BlackRock as a firm?

Larry Fink [00:29:24] It actually it just reconfirms our view of choice. You know, clients, you know, I mean, here’s an interesting statistic. In the last five years, clients awarded BlackRock $1.8 trillion in net new money. We’re doing something right. We’re providing great guidance. We’re providing great returns. We’re a fiduciary to everybody. So the answer is, I don’t believe you know, I may have an opinion on where we need to go, but our clients don’t choose to go down that pathway. Our job is to be working with that client. And over time, maybe clients change your views. We always clients change your views on a lot of different investment outcomes. I mean, you know, what do you think about what is what is going to be the best investments for the next ten years? I promise you, those investments are not what we thought was good the last four years. And, you know, things are going to be evolving and changing and opportunities. Our job is to provide the best returns that we believe are attained under the parameters of each and every client ask us to do. And that’s what we try to do. I have you know, that I, I have investment views about the next ten years, and I try to portray those in my letters where I believe everything is going. But once again, it’s not my money. My job is to be a steward for every schoolteacher and firemen’s money, irregardless. And it’s their job to inform me how they want their hard earned savings to be managed.

Jason Bordoff [00:30:59] And one last question, because you mentioned some of these risks, growing world of fragmentation, industrial policy, the questions about cost from increased focus on security of supply chains. And you later, obviously when you look at the outlook in the amount of capital we need for clean energy investment, what are the biggest barriers now and what do we need to do to overcome those? How big a difference will things like the IRA make to do that?

Larry Fink [00:31:22] Well, the biggest barriers cost against cost. And when we have deficits, the scale that the United States has in a way we have more and geopolitical issues, that becomes a bigger issue. I mean, let’s be clear. Our deficits are going to be hurting our ability in the future. And so the key is, is, you know, to me, the number one thing that we need to be hoping for, that we have a you know, that we have a technology boom in this area of decarbonization that allows us to really swiftly move towards those outcomes. You know, there’s no question if you look at one of thing, I talk when I talk about inflation, one of the big reasons why inflation is so much higher now is because we’ve lost a lot of productivity. Productivity has fallen the last few years in the United States. A big reason productivity fall in remote working does not work. It just it does not work. You cannot create any horizontal connectivity. You firms had to hire more people to do the same amount of work. Productivity fell. Interesting. A big bank in New York announced that they’re demanding all their managing directors back five days a week. This is I think you’re going to start seeing it because every CEO I talked to already tells me remote working has not worked. It has not worked in technology. It has not worked in any other way. But remote working is really important when people have family issues or other things like that. So it’d be much kinder and gentler in working with your team. But, you know, to grow and build an organization that and hopefully we have to grow and build productivity. If we don’t grow productivity, we have a worse outcome in the future. So to me, getting back to decarbonization and the what we have to hope for is new technologies to bring down the costs that are going to be non subsidized. So that we could move forward. And the IRA is an incredible opportunity to see accelerated demand in these technologies. They might win. You know, we are raising billions of dollars right now. We just closed the first fund on doing this. And we see a huge amount of interest from clients in all states on new technologies and decarbonization. So and throughout the world. So we have to be hopeful that these thousand unicorns are going to be the the juice that really transforms decarbonization and move us forward. And then we need good governmental planning, how to evoke this and how to make sure that we have a fair and just transition for all. We you know, we saw what, you know, through the industrial transformation of the United States over the last 30 years. How many people were left behind in our country? How many parts of the world were left behind? And I don’t I think today with social media and all these other issues, it’s harder to have to move that. And so for all of us, our job is to really just be try to be working alongside everybody, to move forward. But also, you know, if anybody wants to put some money to work in decarbonization, I know where to put it.

Jason Bordoff [00:34:50] You talked about the importance of dialog, and that’s why this agenda today as leaders from civil society, leaders from the energy industry, leaders from the developed world, the developing world. And so thank you for being part of that dialog today.

Larry Fink [00:35:01] And let me just finish one thing. I mean, a lot of people in the NGO world that excoriate some of the energy leaders. I think the energy leaders have done an incredible job of trying to think about this. In our conversation, Jason, you were part of some of them. I mean, they are they are really trying to be thoughtful how to making sure that we can do this. Now, for some some people in the room, it may not be fast enough, but how do we now navigate this? How do we have a conversation? How do we make America a better place for the future? How do we build a future where more people can have hope? And it’s going to be having these conversations, these dialogs, working with industry, working with new, you know, unicorns to try to move this forward. So we’re going to have a better future.

Jason Bordoff [00:35:45] Please join me in thinking Larry Fink for joining us. Thank you again, Larry Fink. 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’s School of International and Public Affairs. The show is hosted by me, Jason Bordoff, and by Bill Loveless. The show is produced by Stephen Lacy and Aaron Heartache from Postscript Media. Additional support from Daniel Propper, Louisa Palacios, Gautam Jain, Natalie Volk and Kyu Lee Roy Campanella engineered the show. For more information about the podcast or the Center on Global Energy Policy, visit us online at Energy Policy, Columbia Dot edu or follow us on social media at Columbia View Energy. 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 energy transition is going to require a lot of investment. In fact, the International Energy Agency estimates that getting on the path to net zero by 2050 will require over $4 trillion of annual clean energy investment by the end of the decade. That’s more than triple what is spent today, and reaching that level will involve both public and private spending.

A smooth transition involves more than just spending on clean energy. In the wake of last year’s energy shortages, many countries are clamoring for more investment in oil and gas supply. At the same time, the volatile geopolitics of energy – and the tricky domestic politics of climate action – make today an especially challenging moment for those investing in the energy system.

How are investors and asset managers navigating the rapidly-changing outlook for the energy sector? What economic headwinds are they facing in the first half of 2023? And how can they balance the need for investing in today’s energy system along with tomorrow’s clean energy economy?

This week, host Jason Bordoff talks with Larry Fink about financing the energy transition.

Larry is the Chairman and Chief Executive Officer of BlackRock – the world’s largest asset manager. Larry founded the company in 1988, and the value of its assets reached a total of $10 trillion in 2022. In addition to his leadership at BlackRock, Larry serves as a member of the Board of Trustees of the World Economic Forum.

This episode of the Columbia Energy Exchange is a recording of a live, in-person conversation that took place on April 12th during the Columbia Global Energy Summit 2023.

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