Why is the EU loosening its green policies for companies?

CGTN Europe interviewed Kevin Leung, Sustainable Finance Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA)

Transcript

00:00Let's talk now to Kevin Leung who's Sustainable Finance Analyst at the

00:03Global Think Tank Institute for Energy Economics and Financial Analysis.

00:08Welcome Kevin, good to see you. So this new Green Deal, welcome, the new Green

00:13Deal being brought in by Europe, designed to boost efficiency rather

00:19but it is actually going to make companies less accountable for missing

00:23green targets. So is it really a get-out clause allowing them to swerve their

00:28climate commitments? So when we look at the Green Industrial Deal that

00:34announced today, we look at the climate targets, climate goals going hand-in-hand

00:41in economic competitiveness being integrated into one cohesive strategy

00:46and that's reassuring to see to start with. It's quite become clear that they

00:51recognize the cost of inaction is higher than cost of action when it comes to

00:56climate change in Europe. But then it's also important to note that energy

01:01transition is central for all this. So from our point of view, we don't see

01:06every solution can actually be viable to support the EU climate goals. For

01:12example, based on our analysis, we saw gas demand has already come down over the

01:18last few years and there's at the same time continued investment in energy

01:23infrastructure. We see that the role of LNG being a transition power in the

01:30power mix is quite limited and in fact it has contributed to price volatility.

01:34Let's talk about one company which is reversing the energy transition if you

01:39like, that's BP. It's announced a switch in its strategy to move away from

01:44renewables, putting more money back into oil and gas. What do you make of that

01:48decision? So as we know, BP faces a new active investor but probably in general

01:55market pressures, pressures from shareholders to boost short-term

02:00profitability and to return those profits to them. And also, you know, the

02:06macroeconomic conditions as well. But at the same time, I guess bear in mind that

02:11the energy transition is the mega trend, is the structural trend and not just in

02:16Europe but around the world as well. So long-term investors and in particular

02:21not just shareholders, also bondholders currently staying put but then

02:26potentially also very much scrutinizing this pivot whether or not it's aligned

02:31with their investment mandate and particularly for those investors who are

02:35long-term minded, who are to provide a long-term stable returns to fulfill their

02:40fiduciary duty. Thank you very much indeed for coming on the programme. Kevin

02:44Leung from the Institute for Energy Economics and Financial Analysis.