Welcome and thank you
for joining the Macquarie
GIG Green Energy Conference 2021.
A compelling program
of speakers awaits you
and we're less than a month from COP26.
And in a moment,
you'll hear about the progress
made since the Paris Agreement in 2015
and why this year's
gathering is so important.
We already know that Glasgow
will be different to Paris.
We all want to see world leaders
raise the ambition there on climate.
But it's not about reaching
a single agreement
as it was six years ago,
we now have that framework
and while government
leadership remains crucial,
the wider context has changed.
We have broad societal consensus
on the need to act,
the destination we need to reach
and the steps we need to get there.
So the challenge now is execution.
How we come together
to deliver a transition
at a scale and a pace
that takes our communities
with us, creates new jobs
and keeps essential goals of Paris
within reach.
So I want to spend my short time today
on what we see as the five
big challenges facing us
and around which corporates
and financial institutions are ready,
willing and able to act.
First, accelerating
the deployment of mature
climate solutions,
that's driving scale in wind, solar
and electric vehicles
across all geographies.
Second, supporting
the development of emerging
but essential climate
technologies and solutions
that will enable deeper decarbonisation.
Third, enabling a managed transition
for carbon intensive industries,
supporting the companies
and people who work with them
to deliver their transition
and avoid damaging disruption.
Fourth, redefining
our relationship
with the land.
From decarbonising agriculture
to advancing nature based solutions.
And finally, adaptation.
Making sure that new
and existing infrastructure is resilient
to increasingly extreme weather.
So let me take each one of these in turn,
set out the challenges
and opportunities as we see them
and where we at Macquarie
are raising our ambition.
So I'll start with accelerating
the deployment of mature technologies.
The pace of renewable
deployment needs to
accelerate from around
250 GW a year today
to more than 1 TW by 2030.
Now, the good news is
that renewables are now the cheapest form
of new generation
in almost every part of the world.
And investors interest
far outstrips project supply.
So the economics are on our side.
Where governments
set clear ambitions through NDCs
and net zero targets
backed by a strong and sustained
policy commitments
and investor friendly
enabling environments,
the private sector can direct
huge pools of capital
towards wind and solar,
increasingly without the need
for public subsidy.
However, some important
challenges do remain.
All governments must now prioritise
renewables in their
energy generation mix
and respond to a world
that is long on capital,
but short on projects.
We need to remove the bottlenecks
that hold up project development.
And we need to acknowledge
the gap in progress
between developed countries
through emerging markets
and into developing countries,
where the lack of enabling environment
for private capital
remains a barrier to investment.
We are honoured to lead the important work
with the Climate
Finance Leadership Initiative in India
and with the Glasgow
Financial Alliance for Net Zero
to mobilise the private capital
needed to give these countries
the confidence to commit
to more ambitious NDCs.
It's vital that we make progress
in this area at COP
by governments fulfilling a long standing
pledge of $100 billion
in annual climate finance,
by better aligning the work of MDBs
and DFIs to work
alongside private capital,
by building strong country
partnerships and platforms,
and by seeing the private sector
respond with investment.
Globally, Macquarie's asset management
business is working with its clients
and its portfolio companies
to deliver decarbonisation solutions
that will help the world
meet the energy transition.
And in our GIG business,
we've created a global leader
in green asset creation.
In four years,
we've supported the GIG business
to grow from its UK base
to build a 30 GW
240 project development pipeline
spanning 25 markets now.
We believe that
this powerful combination
of investing institutional capital
through our asset management business
and our asset creation in GIG
is the right blend of capability
to rise to the challenge.
We're working to develop
and finance, storage and smart grids
to support the smooth
transition of renewables.
And our asset finance
and Australian retail
banking businesses
are bringing the transition
to people's homes,
supporting their purchase
of electric vehicles
and the installation
of charging infrastructure.
Electric vehicles are now
well on their way
to cost parity,
creating a positive feedback loop
with the renewable
and grid energy storage.
Now, while the urgency
to deploy wind, solar and EVs
and storage projects is critical,
we know that it is not enough.
So my second area of focus is the need
to support the commercialisation
of emerging climate
solutions and technologies.
And as the IEA net zero report sets out,
the transition will need much more
than wind and solar.
The key focus will be on electrifying
whatever we can and adapting the grid
to adjust, shifting
to sustainable and storable
fuels like hydrogen
and delivering the promise
of carbon capture.
And while the private sector
is engaging in all of this, it's vital
that governments connect ambitions
to detailed plans, policies
and support mechanisms.
With the right market environments,
the private sector will invest,
bringing the scale and innovation
that drives down costs.
Like the rest of the market,
our progress at Macquarie
is at an early stage here,
but we've engaged across
each of these technologies, confident
that whatever the final mix
of the climate solutions,
a significant step up
investment is needed across all of them.
On hydrogen, we're working with partners
in the UK and Australia
to establish hydrogen industrial clusters.
Through Macquarie Asset Management
we're investing in portfolio companies
like Cadent in the UK to trial
the introduction of hydrogen
to the gas grid.
And GIG is connecting
renewables generation
with the production of hydrogen.
Then on carbon capture and
storage, we're working with clients
in the energy sector
to advance finance for new projects,
and our CGM business
has taken a stake in Storegga,
a pioneering CCUS company
that is leading the development
of the UK's landmark ACORN project
in Scotland's North Sea.
And more broadly,
we're working with a range of governments
to support their work
on policy frameworks
to advance these new technologies.
And one example
is the Australian Technology
Investment Roadmap,
which we've been pleased to support
in building momentum
behind hydrogen, grid reliability,
CCUS and green metals.
And while this shift to new
technologies is already
seeing an exciting group
of businesses form,
some of our largest existing companies
will play a critical role
in using their revenues
to invest in this innovation.
The transition of oil
and gas majors to become low
carbon energy majors
is one of the best
examples of this trend.
The finance sector
has an important role
to play in supporting
the managed transition of carbon
intensive industries
through active engagement.
The framework is being set
by the rapid adoption of corporate net
zero statements supported
by growing clarity
around industry specific
transition pathways.
These commitments are a vital trigger
for actions that will guide
the transformation of our private sector
over the decades ahead.
Importantly, commitments
need to be supported
by greater transparency and disclosure
to allow the market to better understand
the climate risks
and to give communities confidence
about delivery against intent.
So we're working to support our client's
climate ambitions
by bringing the full suite
of Macquarie's capabilities
together to help them,
not least through Macquarie
Capital’s market leading
renewable and infrastructure
advisory business.
And I expect this area of client
decarbonisation solutions
to be a major area of focus
in the years ahead.
On the topic of net zero,
we at Macquarie made our own commitment
earlier this year
to align the Group's
financing activities to net zero by 2050.
Our Asset Management
business has made a market
leading commitment
to manage its portfolio,
the world's largest
of infrastructure assets
with net zero emissions by 2040.
And the detail behind
this commitment is important.
All portfolio companies
will have a net zero
aligned business plan within two years.
Our commitment to engage, hold and work
through solutions
is an important principle.
Taking the example of ports,
during the span of our typical 10
to 15 years of ownership,
we can reduce emissions
from truck idling, add renewables,
electrify equipment,
and diversify activity
to reduce reliance on coal revenues.
This all helps to protect jobs
and reskill communities
for the new economy.
We see this example
play out in other energy
intensive industrial assets
greening their power supply
and gas grids, introducing
low carbon fuels.
As part of a whole economy transition,
we must redefine our relationship
to the land through
decarbonisation of agriculture
and advancing nature based solutions.
And the role of the land
in our global net zero
ambition is hard to overstate.
Encompassing issues
around water, pollination,
food production, waste management
and, of course, carbon removal.
This relationship demands careful
thought as to how we balance our needs
against maintaining
natural systems and biodiversity.
With 4.7 million hectares
of farmland under management,
we're working to improve soil health,
reduce emissions
intensity of production, and introduce
energy efficient
technologies and practices.
And in advancing nature
based solutions our CGM
business has launched
a new global carbon business
with a focus on growing
a high integrity, voluntary
carbon offset market.
We believe that this market,
although in its early stages
and always as part of a commitment
to reduce direct
emissions, has a vital role
to play in channeling private capital
to some of the most hard
to finance parts of the transition,
like developing countries
and nature based solutions.
Now, while the first four points
have focused on climate mitigation,
my final point is about
the need to radically scale
up investment in adaptation.
We sadly don't need to look far
for the tragic human and economic costs
of our changing weather,
all happening a decade earlier
than previously feared.
As the world's largest
infrastructure manager
and the custodian of critical transport,
utilities and communications
infrastructure, we understand
the priority attached to adapting.
That's why we've been an early supporter
of the work of the Global
Centre on Adaptation.
Private sector investment in adaptation
and resilience happens
through good stewardship
and planning, like designing flood
prevention into new infrastructure,
burying power lines,
and utilising geospatial technology
to mitigate the risk of wildfires
before they happen.
But while good stewardship is important,
it isn't enough.
We need to see progress at COP
on financing vital new climate
adaptation infrastructure
that doesn't currently
have a revenue stream.
For example,
how will we finance the seawalls
to protect us from rising tides?
So, there's no shortage of
challenges on our road to net zero.
But the difference between the COPs in
Paris and Glasgow is clear.
Communities, cities,
countries, companies
and colleagues share a commitment
to act on the climate crisis,
to reach the destination of net zero
and to advance the practical solutions
we need to get there.
And we at Macquarie
know what can be achieved
when objectives are aligned.
It creates a powerful partnership
that accelerates action beyond
what previously seemed possible.
And that's our opportunity now.
That's how we raise ambition
by acting together.
So I want to thank you for joining us.
We hugely value this
opportunity to connect.
And I'd like to thank our clients
for allowing us the privilege
to support you and the Macquarie staff
who are driving our
commitment in innovation
with purpose and with conviction.
We're looking forward
to seeing some of you in Glasgow.
Thank you.