Energy transition a ‘huge economic opportunity’ for Greece

The transition to a carbon-free economy creates a huge economic opportunity for Greece as tourism, shipping, food and agriculture and energy systems are all transformed and the country can be a leader in the process and emerge as an economic winner. This is the view of Keith Tuffley, global co-head of Citi’s Sustainability & Corporate Transitions group, who, speaking to Kathimerini, emphasizes that the twin crises of climate change and biodiversity preservation are making us rethink how we can accommodate 10 billion people (the estimated global population up to 2050) on the planet in a sustainable way for future generations.

“We need to change, if not transform, the world economy in order to achieve net-zero emissions,” he says, describing the Paris Accords as “realistic.” “However,” he points out, “that requires significant political will, action and commitment from the private sector and changes in consumer behavior.” And the rising oil and gas prices are expected to accelerate the shift to renewables.

What does sustainability and corporate transition mean and what is Citi’s role? Could you provide an example? What is the role of the finance sector, overall?

We set up our Sustainability & Corporate Transitions (SCT) team to bring the full lens of sustainability to all our clients, across all sectors, in all regions of the world. As the world’s most global bank, Citi has a significant role to play in supporting all our clients – companies, investors, governments – in becoming more sustainable, but in a way that drives more financial value and greater prosperity. We need to transition, if not transform, the global economy to achieve net-zero emissions, to become nature-positive, and to be more socially inclusive. Finance is core to the global economy, and to every company, so the financial sector needs to become the driver of these sustainability goals. And Citi intends to be a leader. One way we do this is by focusing on the “new economy” technologies the world requires to achieve net-zero, such as direct air capture (DAC), which draws down CO2 from the atmosphere and permanently stores it away in the ground – we recently advised GIC on their investment in Climeworks in their $650m capital raise, a hugely successful outcome for the company and its investors.

Can this transition be an opportunity for growth for countries like Greece?

It can be, and should be, a huge economic opportunity for Greece, and in fact for all countries. This is the biggest economic opportunity in our lifetimes, and probably since the start of the Industrial Revolution. Why? Because the science is forcing us to adapt, to innovate, to invest, and to drive new technologies. This Sustainability Revolution, as we call it, is needed because we are reaching the limits of Planet Earth, we are breaking through the “planetary boundaries,” which is now clear with the abundant scientific evidence. So the twin crises of climate change and nature and biodiversity loss – which are now both emergencies – are making us rethink how we can fit 10 billion people (our estimated population by 2050) on the planet in a way that is sustainable for future generations. Those who can take advantage of the inevitable economic opportunities will be the winners. Tourism, shipping, food and agriculture, energy systems, are all transforming, and Greece can be a leader and an economic winner.

How realistic is the Paris Agreement, after all. Have we entered a phase of redefining sustainability? Emissions are rising instead of falling despite the compulsory pause in trade, transportation etc due to the pandemic, while recent geopolitical conflicts put into question priorities like energy crisis versus environment protection.

The latest Intergovernmental Panel on Climate Change (IPCC) report released this past week is clear – the world can still achieve 1.5 Celsius, but to do so, we need to materially accelerate the transition. So the Paris Agreement remains realistic, but it does require significant political will, private sector action and commitment, and consumer behavioral changes. Global emissions have risen by 40% over the past 30 years, and they must fall by 45% in 10 years if we are to achieve the 1.5C target. This highlights the scale and speed of the challenge. The Russia-Ukraine war should accelerate the energy transition as countries realize that renewable energy improves energy security and independence. And the rise in oil and gas prices should also accelerate the shift to renewables and the uptake in green hydrogen. And as the planet continues to warm and become more climatically unstable, everyone will become more aware of the need to move faster. So the reality is that the world cannot afford to not achieve the Paris Agreement targets as the consequences are too dire for all of us.

Are small and medium-size companies embarking on the effort for green transition and joining the big corporates? Is the investment required justified in the long run?

A vast proportion of global emissions are generated by the aggregate of small and medium-sized businesses. This is why Scope 3 emissions are so important – these are the emissions beyond the direct control of the large companies and are generated by their upstream supply chain and downstream users of their products. And small and medium-sized businesses are typically part of these value chains. We cannot possibly achieve net-zero without these SMEs playing a key role in addressing their emissions. As the data and traceability of embedded carbon improves, those companies who do not reduce their emissions will be found out, and suppliers and customers will shift their business to those companies who are net-zero. It’s what we call the “Net Zero Club.”

Are emerging and developed countries in sync in terms of environmental priorities given their different growth stage?

At Citi we have a significant presence in the emerging markets, so these are important to us. We all recognize that emerging markets are requiring more energy, more materials, and more resources to develop their economies to enable their citizens to live with prosperity. But they are also the regions that are the most vulnerable to climate change as they are less able to adapt their infrastructure and food systems to extreme weather events. So there are two key priorities here: one, for the developed countries to recognize that it is in their selfish interests to increase investment in the emerging markets to enable them to reduce their emissions whilst also increasing their energy requirements; and two, to invest in the “leapfrog” systems and technologies to allow them to achieve this. Everyone can be a winner here, as clean energy systems will address climate change, will reduce local pollution, and will be cheaper to run.