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Bankers are retreating from decarbonisation as reality sinks in

From a Bloomberg article entitled UBS Banker’s Frustration Exposes Cracks in World of Climate Finance

The article makes it clear that banks are struggling to deliver on credible “decarbonisation” financial policy and remain profitable concerns. Considering how Western taxpayers spent billions bailing out banks more than a decade ago, it would be extraordinary if banks were to deliberately restrict their earnings streams through going full “dark green”.


“Banks are living and lending on planet earth, not planet NGFS,” Berkey told the group in an impassioned speech, alluding to the Network for Greening the Financial System, a collection of central bankers that creates model scenarios for how the energy transition may evolve. Details of what transpired at the meeting hosted by the Financial Stability Board — a coordinator of global regulations — came from people who were in the room but asked not to be named discussing private talks. Berkey confirmed his participation, declining to say more.

The UBS banker’s outburst, which got little pushback from those present, exposes the cracks emerging in a multitrillion-dollar transition finance project, and taps into what’s rapidly becoming one of the most contentious issues in the global banking industry. In private, senior bankers in sustainable finance divisions in London, New York, Toronto and Paris grumble about unrealistic expectations from regulators, civil society and climate activists around the industry’s role in getting the planet to net zero.

“Outburst” – translation – telling it like it is.

The standoff that’s brewing is setting the stage for a showdown at the heart of the ESG movement, where environmental, social and governance considerations are being pitted against old-fashioned capitalism.

Not really “old fashioned capitalism”. Just “capitalism”. We had more than a decade of ultra-low interest rates via quantitative easing. During this period, the business case for eliminating fossil fuels and powering a modern economy via solar, wind and happy thoughts appeared viable. With interest rates at their more normal long-term levels, some of the more fanciful projections don’t add up. This is called “reality”. Capitalism, which hinges around private property rights, voluntary exchange, and the desire to maximise the use of scarce resources that have alternative uses, is based on reality. Elsewhere, the article alludes to how capitalism produces “negative externalities” (carbon emissions) that must be controlled. What the article doesn’t stop to consider is that there are “positive externalities” from a prosperous world: more resources to fix problems, more wealth, higher living standards, more resilience, etc. (This is the broad thesis of the excellent book by Alex Epstein, Fossil Future, which totally debunks the alarmist case. See this video also featuring Epstein and Bryan Caplan, among others.)

Banks that had enthusiastically committed to align their entire operations with net zero goals are having second thoughts as the real-world ramifications of acting on those pledges become painfully apparent.

That’s what happens when you sign up to something that appears fashionable. Ditto with DEI (diversity, equity and inclusion, or, as I read the other day, “Didn’t earn it”).

Some of the world’s biggest lenders, including Deutsche Bank AG, HSBC Holdings Plc and Bank of America Corp., are adding caveats to their restrictions on financing coal, the planet’s most-polluting energy source.

Very wise.

BlackRock Inc. Chief Executive Officer Larry Fink says he has stopped using the term ESG and emphasized the world’s largest asset manager’s work with energy firms in a letter to investors this week. The firm has scaled back its participation in international climate investing alliances.

Fink is now more likely to focus on the imminent retirement crisis of the US and the developed world. Some of that has been brought around as birthrates have fallen. But hang on a minute, I thought having kids was bad for the Earth?

It is tough being green, isn’t it?

22 comments to Bankers are retreating from decarbonisation as reality sinks in

  • DiscoveredJoys

    The real world is far more complex than the abstract world the activists live in.

  • Y. Knott

    It is tough being green, isn’t it?

    I think you mean, “This life is tough, but it’s tougher when you’re stupid.” Fixed it for ya’!

  • JohnK

    It is surely obvious that “net zero” is simply impossible. It can’t be done, unless you accept the total demise of modern western society (that might be the plan).

    The question is what happens when the total unreality of “net zero” becomes apparent? Britain seems on the verge of electing a Labour government, not out of any great enthusiasm, but purely because of the shattering mess the Conservatives have made of things. But Labour policy is to ban the sale of ICE vehicles by 2030, whilst also “decarbonizing” the electricity supply industry by the same year. This is simply impossible. Even if Labour sincerely wanted to do it, it cannot be done. Reality has got to hit them at some time. When it does, I hope it is hard, and in the bollocks.

  • Ferox

    Don’t be fooled. It’s a strategic realignment at best; when they figure out how to deal with the growing unrest around climate BS they will be back again with new proposals for centralized control of the peons.

    None of these people have “seen the light”, because none of them actually believed in the climate BS to begin with. It’s just that “climate” is no longer useful due to bad PR. Time to look for the next boogeyman to use as a goad.

  • Roué le Jour

    Fink is now more likely to focus on the imminent retirement crisis of the US and the developed world.

    I suggest government lead the way by requiring its own tax consuming employees to “work until they drop” before crushing even further the poor bastard taxpayers.

  • staghounds

    “decade of ultra-low interest rates via quantitative easing.”

    Decade of free money for banks from the taxpayers, you mean.

  • Johnathan Pearce

    Indirectly. QE is a central bank operation. The taxpayer is on the hook eventually.

  • Paul Marks

    As you know, I believe that the whole monetary and financial system is legalised fraud (on a gigantic scale) – but, that being said, the fraudsters do not have to be insane.

    If the fraudsters are saying to themselves “we can not carry on supporting this Net Zero stuff – it would destroy the West, and that means destroy us as well”, then that is to be WELCOMED.

    I would much rather be ruled by sane fraudsters than by insane fraudsters. I would rather not be ruled by an international gang of fraudsters at all – but one can not have everything one wants.

    I still believe this monetary and financial system can not last – that it will collapse (although, full disclosure, it has lasted vastly longer than I thought it would) – but whilst it lasts, whilst we are ruled by a “Cantillon Effect” international elite of Credit Bubble bankers and other such, it is much better that they are sane elite, rather than a crazy elite.

  • Paul Marks

    Even in ideal conditions “renewables” are not efficient, and in bad weather they break down totally.

    Hail storms destroy solar cells, and just heavy cloud cover makes them less effective, and ice and strong winds destroy wind turbines – supposedly conservative Texas “bet the farm” on “renewables” (and got praised by the Economist magazine for doing so) – and when bad weather hit, that meant that people froze to death. Let that sink in – when you need light and heat the most, “renewables” will let you down, and you and your family will freeze to death.

    This means that if it is believed that C02 is really evil (a theory that seems to be more and more obviously based on the false presentation of data – but leave that aside for now), then there will have to be a vast expansion of NUCLEAR POWER.

  • Fraser Orr

    At best this is going to be a minor hiccup. But I wonder if the NGFS have considered, as they devalue their currency and distance it more and more from reality, what they will do when the dollar collapses, loses it status as the world’s reserve, and that status is taken up by the Yuan. As we all know, the CCP REALLY cares a lot about the “Global Warming Agenda.”

    Or, ironically, and unlikely, something less centrally controlled like BTC becomes a significant player in international trade — as GPUs pour heat and carbon dioxide into the atmosphere.

  • Paul Marks

    Fraser Orr – good points Sir

    And I think there will be a Dollar crises in a few months.

    The D.C. regime decides to steal (as oppose to “just freeze”) the U.S. Securities the Russians (very foolishly) “invested in” – whereupon the Chinese, and others (such as the Saudis) dump U.S. Securities (for fear the same thing will be done to them at some point) – and hey-pesto, there is a Dollar crises.

    The Democrats (and the rest of the establishment) do not care – as it would give them an excuse to dump Mr Biden and nominate someone else at the Chicago Convention in August.

    Even the people who produce the fake “mail-in ballots” have reservations about Mr Biden (as he is hopelessly senile) so the establishment has to dump him.

    And a Dollar crises before August will give them the excuse.

  • Runcie Balspune

    powering a modern economy via solar, wind and happy thoughts

    Missing is “and energy storage”, because solar and wind are not on-demand and need storage to compensate.

    Energy storage is expensive, unreliable, inefficient and environmentally damaging, whatever technology you use.

    Not only that, but you need to multiply up your energy generation to charge up the energy storage for when it is needed.

    Happy thoughts!

    The alternative is to have other more reliable methods of energy generation as standby.

    If you use a fossil fuel energy generator then that doesn’t get you to net zero.

    If you use a nuclear energy generator, then you may as well dispense with the solar and wind and energy storage.

  • Fraser Orr

    @runcie balspune, this is a distinction that is really important. Gasoline is favored not just because it is high in energy, but because it is high in energy density and can be readily transported. If the greenies really want a success then they need to focus on transportable energy, not just energy.

    To me, aside from being ugly as hell, windmills and solar cells are not a great solution. What would I do? I’d plant crops, probably sugar cane which I believe converts 8% of incident solar energy to chemical energy in its sugars. This seems much more efficient than expensive solar cell farms, plus it can easily be a distributed rather than centralized solution. Or alternatively, I’d float algae blooms in controlled farms on the ocean. A few high surface area barges seeded with iron would have very high productivity on relatively low utilized space.

    Both these approaches would be low impact, privately distributable, and produce high energy density, easy to transport fuel, that, as a side benefit, would do so by pulling CO₂ and H₂O out of the atmosphere — assuming that is necessarily a good thing.

    The thing is though that it is far more about centralized control and lobbying money than it is about composition of the atmosphere. So don’t hold your breath.

  • Steven R

    Nations with capable intelligence agencies have killed men for a lot less so why do people like Fink, Schwab, and Soros get a free pass? Not every country can be thrilled with what they want, so why don’t they get clipped?

  • Kirk

    Steven R said:

    Nations with capable intelligence agencies have killed men for a lot less so why do people like Fink, Schwab, and Soros get a free pass?

    Quick question: Who do you think runs those “intelligence” agencies?

    You want my opinion? Intelligence agencies are a f*cking cancer. Nations that embrace them and the entire idea of “espionage” as a means of getting ahead are committing gross self-destruction.

    Best case study? Shall we analyze Tsarist Russia, which morphed into the Soviet Union, then Russian Federation? Gee, how many “own goals” of blowback did they achieve?

    Hmmm. Tsar’s intel organs encourage the Serbs to assassinate the heir to a rival empire they were then at peace with. Boom. Cue WWI and the eventual massacre of the Tsar and his family. Russia falls to the Communists, who embrace that same line of self-destructive bullshit, and Stalin meddles in France and Germany during the 1939-40 timeframe, having the COMINTERN sabotage French defense efforts while simultaneously giving the Germans the resources to take out Western Europe. This proves to be a really great idea when France falls (guess Stalin didn’t calibrate properly…) early on, and Hitler is able to turn east with Barbarossa… Cue WWII and 20 million dead. Same crap with the Cold War… They spent so much time and treasure espionaging everyone else that they wound up running their own economy into the ground, and got a near-total systemic collapse out of it. Then, they put a former KGB agent in charge, and what does he do? Yeah; witness the power of our fully-armed espionage machine, and how it gets Russia into a war with a much smaller nation that is ripping the guts out of its armed forces. No matter what happens with Ukraine, Russia is going to leave that experience much reduced in real power. Plus, the idjits reenergized NATO at a moment when there was still a good chance of recovery for the alliance, and even convinced perennial neutrals Sweden and Finland to join… What’s next, for own goal? Convincing Austria and Switzerland to abandon neutrality and join NATO?

    Expecting any intelligence agency of any nation to actually act in the best interests of that nation is a naive and futile hope: The alphabet agencies of every nation only act in the interest of those agencies, nobody else. I’ll lay you long odds that the specific Russian “agent” that was behind building up the Black Hand and tasking them thought of one thing, and one thing only: His benighted and holy “career”. He wanted something to put on his record, to look good for advancement in the agency. Stupid bastard likely had no thought at all for potential repercussion, just like all these sorry bastards. Every time it blows up in their faces, they’re sitting there with surprised looks saying “I didn’t know it was loaded…”

    You really have to wonder, sometimes, why we even bother. I did military intelligence for the last few years of my career, and the one thing I picked up from the experience was that the higher alphabet-agency levels of that endeavor are of very questionable utility. You can disillusion yourself very, very quickly by wandering around on the classified side of the military networks. I honestly believe, at this point, that we’d be a hell of a lot better off if we just open-sourced everything and let it all hang out; the intelligence we get should only conceal sources and methods, while the raw information should just be released for everyone to see. If that had been done, a whole lot of history would be very, very different… For one thing, we’d have never suffered JFK as president; that whole “missile gap” and “bomber gap” deal would have been impossible to pull off, and it is unlikely he’d have been able to fraud himself into office the way he did. Bang, zoom… All of the 1960s changes; you’d likely have no intervention in Vietnam with Nixon in charge, and whatever flowed from there…? Who knows? The arms race would have looked a lot different, that’s for sure. Soviet Union might still be around, not having run itself into bankruptcy, so maybe that’s not an entirely good thing.

    Of course, that’s the problem with counterfactuals: Change one thing, and you’ve no idea once you get past what you think would be the first-order effects.

  • Ferox

    Kirk: the scary part of that question to me is whether NGOs like WEF have their own privately run intel agencies?

    If they do, and if those privately managed agencies possess the superiority that private entities typically enjoy over government-controlled peers, they could be seriously dangerous. They might make the US alphabet agencies look like boy scouts.

  • bobby b

    “Intelligence agencies are a f*cking cancer.”

    I’d narrow that a bit.

    We want those guys sitting in the sub on the floor of the Black Sea listening in to weak local radio conversations. We want satellites cruising quietly over Russia and China. We want to know who’s passing through the Suez or into Port LA. Advance warning of stuff is valuable.

    What we don’t want is to empower the intel bosses politically. Then we get J Edgar, and Brennan, and worse.

    But how to not empower the guy who knows all the secrets?

  • GregWA

    bobby b, re “how not to not empower the guy who knows all the secrets?”, I have a suggestion.

    First, Kirk’s suggestion, move to open sourcing everything. Then since they no longer have to work so hard gathering info, cut their budgets…a lot!

    Next, in the US, repeal the Patriot Act and other similar laws to reign in the scope of what the alphabets can do.

    Then look for them not doing it and put those guys in prison for a LONG time. No cooling off period: one week after the new law is signed, start the prosecutions! Should be able to find juries and judges who’d do that in a heartbeat!

    Go after the lower level and mid level guys, not because they are most deserving–they decidedly are NOT–but because they will be easiest to prosecute. And then the ones who are left will ignore the orders of the higher ups.

    Turn the bureaucracy on itself!

  • Kirk

    Ferox said:

    Kirk: the scary part of that question to me is whether NGOs like WEF have their own privately run intel agencies?

    My assessment is that they don’t need such a thing; they’ve co-opted the national agencies quite effectively already.

    The thing that just frosts my ‘nads about the whole thing is just how counter-productive all this game-playing really is. The players all think they’re getting ahead, and there’s some dark part of the human soul that delights in play-acting at Blofeld-like machinations, but… Where does that get you, in the end? What’s the ‘effing end-game, for Soros or Schwab? They think they’re going to wind up in charge of what’s left after they wreck everything, but… The actual track record for that crap is sorta, y’know… Bad. Look where all that sly cunning got the Russians; are they better off, as a nation? Did the Tsar even survive what his intelligence organs got up to? How much damage did Stalin and his ilk do, in the long haul, to the Russian people?

    None of this sort of activity accrues benefit, to anyone. It’d be a lot smarter to just… Stop.

    I can’t see a damn thing to benefit anyone with regards to secrecy. Look at how the CIA/FBI have warped American politics that we know about; imagine what else is going on that we don’t see… And, believe me: This crap is like with deer, in that if you see one, there are probably ten more you don’t see, nearby. And, for every ten deer, your odds of having cougars or other predators would be… Excellent.

  • phwest

    Fraser – the trouble with bio is the energy required to collect and process the biomass. Agriculture is quite energy intensive between the fertilizer, farm machinery and transport. Add to that the energy required to convert the biomass into fuel alcohol (not trivial, in particular you have to separate out all the water, which requires a lot of energy). That’s why ethanol mandates for gasoline end up increasing carbon emissions on net – it takes more energy to make the stuff than you end up with in the fuel.

    Biomass is also worse than solar when it comes to land use – unlike solar you can’t put it on waste land, you have to actually use land that could otherwise be used for food crops.

    Ocean based algae avoids the land use problem, but like off shore wind farms you trade that for a much more destructive environment for your equipment (Corrosion, storms, etc). You’ve now added salt water to your processing, another cost multiplier in terms of materials of construction. If you really want algae-based fuels you need to modify the algae to actually output hydrocarbons rather than alcohol so you can separate the fuel source from the water mechanically rather than thermally. I’ve seen all sorts of bio-synthesis ideas proposed for chemical feedstocks (my company funded a program intended to provide a bio-feedstock for acrylic acid for years, never went anywhere), they all struggle with the problems of what you compounds you can actually get out of the biology, what it takes to concentrate them to a point where you can practically do chemistry with them and how you’re going to synthesize the material you want from what you now have. One big biology problem, an engineering challenge and a non-trivial chemistry problem. Work in this field has been going on for over 20 years, and I don’t know of anything that’s ever been commercialized out of it (although I’ve been out of the field for a while).

    The industrial chemical revolution was first and foremost a means of getting away from biological feedstocks for materials like dyes and solvents, and has been building on that foundation for a century to the point where little in the way of industrial feedstocks are based on biological materials. Biofeedstocks, for chemistry or for energy are a revival of an obsolete technology. They will not allow us to maintain our current standard of living. They will likely be necessary at some point, given the finite supply of fossil and even nuclear fuels, but they are unlikely to truly replace them.

  • phwest

    As a side note – I recommend reading “Seeing like a State” by James Scott. The sections dealing with agriculture and forestry disasters are a useful warning of the risks involved in top-down policy ideas like attempting to provide energy via biology. It’s dangerous enough for food where we have no alternative.

  • Paul Marks

    Tim Pool the independent journalist who chronicled the “Occupy Wall Street” movement – gave a good account of how the movement was subverted.

    At first it was an alliance of left and right (at the time I thought it was just the left – but Tim Pool insists that was not so, that there were conservatives and libertarians as well, but that the media ignored them) – both disgusted by the bailouts and subsidies for the banks and the corporations connected to them, but then other people turned up, and took over the movement (took over as they seemed to have unlimited funds, they never had to go to work, and unlimited time – and they were utterly vicious to anyone who did not do as they told them to do).

    These people wanted to change the subject – to such things as the C02 is evil theory, but also they called everyone and everything “racist”, “sexist”, “homophobic” and so on.

    Now I am not making any formal charges – but it was real convenient for the banks and the corporations that are connected to them, that these people turned up, basically appeared from nowhere, and took over (and then destroyed) the movement that had been campaigning against them.

    Larry Fink and co may have had selfish reasons for backing DEI and so on – but then the whole scam (if it was a scam) got out of control – the university trained activists tested real power, and got the money bags types to dance to their tune.

    Still let us be fair – after all Larry Fink and the rest are also university types, they may have “internalised” this stuff themselces, really believe that there is no such thing as objective knowledge so, for example, it is only “racism” that leads to the idea that untrained people with no medical knowledge might not be very good at surgery.

    If objective knowledge and skills do not exist, are just evil “whiteness”, then the doctrines that Larry Fink, Bill Gates, and so on, push – are fine.

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