By David Callaway, Callaway Climate Insights

President-elect Joe Biden won’t speak at this Saturday’s Climate Ambition Summit, hosted virtually by the UK in place of what was to be the Cop26 global summit in Glasgow. But in a sense he is taking the stage, as America’s return to the climate table highlights a flurry of new climate commitments by countries expected in the next 72 hours.

The list of countries presenting during the summit is exhaustive, and some reports suggest the British are being puckish in who they give the floor to, after making a major pledge just last week and also as they face a momentous Brexit deadline with the European Union before the end of the year. For the U.S.’s part, Los Angeles Mayor Eric Garcetti is scheduled to represent.

It’s possible the next 48 hours could see more appointments to the Biden climate team ahead of the summit, following John Kerry and Brian Deese, as well as updates from as many as three dozen countries to their climate goals, as promised in the Paris Agreement by the end of 2020.

Still, with global temperatures hovering at 1.2°C. above pre-industrial levels, closing in on the 1.5°C. Paris threshold, and a new wildfire season just starting in Australia, it’s hard to see the summit as anything more than a grand, political echo-chamber.

The real work, if it can get done, is still very much ahead of us.

More insights below. . . .

EU notebook: The politics of Europe’s vision for a hydrogen-fueled future

. . . . As the European Union inched toward a deal for its 2030 climate goals this week, the debate began to shift to the politics of a green transition, writes Stephen Rae from Dublin. Real differences among member states in how they quickly they move to renewable energy from coal, gas and even nuclear energy create the need for a flexible timeline for different countries to work out their challenges, including financial ones. One thing almost all members agree on though, is that hydrogen fuel is the future. How they get there collectively will be the challenge. In this piece, we analyze the debate between blue and green carbon, and examine the variety of routes officials think they’ll need to make it happen. . . .

Read the full European notebook

ZEUS: Expanding cap and trade with ICE’s Gordon Bennett

. . . . “Energy transitions are constant,” wrote Gordon Bennett, managing director of utility markets for the Intercontinental Exchange, in a recent treatise on energy trading. An obvious statement, maybe, but one at the heart of the global debate on how to wean industrialized nations off fossil fuels, writes David Callaway. The exchange, known as ICE, offers contracts in the three largest carbon markets in the world, and has seen record trading in the past month. As Europe moves closer to a climate plan and the Biden Administration re-takes a seat at the global climate table, the need for a global carbon market is becoming more real. In an interview from London, Bennett discusses how past changes in energy trading might pave the way for an international cap-and-trade scheme. . . .

Read the full ZEUS column

. . . . The green move on Wall Street continued to make its way from the marketing department to payroll this week as Deutsche Bank joined a select few other investment banks willing to tie their management compensation to climate criteria. Deutsche joins HSBC and BNC Paribas, one of the European leaders in climate initiatives, in tying compensation to performance on climate. Managers will be measured on the bank’s ability to reach sustainability targets, and to their contribution to the bank’s own energy consumption savings. As bonus season this year will reflect the surge in financial markets, IPOs, SPACs, and other deals, this seems an easy way to generate good climate karma in 2021 and potentially lure some of the rising tide of ESG money hitting the market. Especially if they are only tying a minority of pay to the initiatives, which appears the case. Expect to see more of this. . . .

. . . . The decision by New York’s $226 billion state pension pension fund to divest all fossil fuel stocks in the next five years is the most aggressive divestment by a major player to date, though the five-year timeline gives it ample opportunity to weigh the potential for a rebound in oil stocks to its fiduciary promises to retirees. More confusing is the promise to divest stocks of any company contributing to climate change by 2040. That would seem to be, uh, all of them. But state comptroller Thomas DiNapoli deserves credit for acknowledging that climate change is a greater risk to the long-term value of the fund than the threat of missing a rally. These funds tend to move in packs. Expect to see a few more of these early in the New Year. . . .

. . . . Battery wars rocked shares of newly-issued SPAC Quantumscape (QS) this week, with shares rising more than 20% on Wednesday on news the Volkswagen-backed company’s lithium batteries could recharge up to 80% in just 15 minutes. But shares opened more than 7% lower on Thursday after Toyota (TM) announced plans for a competing solid-state battery next year. The shares were last trading down 3%, indicating some investors saw the dip as a buying opportunity. Given the opportunities in the battery arms race going forward, this looks like a smart move. . . .

. . . . Another week, another activist going after Exxon Mobil (XOM), whose shares are down almost 40% year-to-date. But the bid by Engine No. 1, a new investment firm, seems timely given the awakening of several big pension funds this year to ESG strategies. Reports that the California State Teachers’ Retirement System, known as CalSTRS, supports it lends heft to what would otherwise be considered a nuisance bid, and could stir some internal debate on the company’s renewable plans. Especially since rival Royal Dutch Shell (RDS.A) lost several key clean energy executives recently amid a similar debate. . . .

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