Billionaire investor predicts energy crisis will drive green spending boom

Billionaire hedge fund founder Sir Christopher Hohn expects the biggest “demand disruption” for oil since the shock of the 1970s will trigger a surge in investment in renewables.

The activist investor, whose TCI Fund Management holds more than $40 billion in assets, said high oil prices are “a positive thing” for the climate, as the energy crisis causes a “dramatic acceleration” in the decarbonization.

“This is a massive wake-up call that will accelerate decarbonization and investment by countries and governments,” Hohn said at the Financial Times Climate Capital conference.

“The whole world should now be focused on finding alternatives, whether renewable energy, nuclear, hydrogen or synthetic fuels. Suddenly, all of these things are much more economical.

He pointed to the EU’s recent boost to renewable energy funding, as part of a plan to cut Russian gas imports by two-thirds in a year.

Even as oil and gas companies reap record profits from high prices after Russia invaded Ukraine, Hohn said climate-focused investors will ultimately benefit from the energy price shock .

“The spike in oil prices, which may well be structural, must lead to incentives for accelerated decarbonization,” Hohn said. “Personally, I believe we will have a demand disruption like in the 1970s, and there will be a dramatic acceleration in decarbonization. In fact, I consider it a positive thing.

Hohn has made climate disclosures a hallmark of TCI activism and has lobbied companies to give shareholders a vote on their climate plans. Spanish airport operator Aena and aircraft manufacturer Airbus have thus improved their emissions targets. Hohn has also pushed for tougher mandatory regulations on corporate climate information.

“Corporate decarbonization will not happen through voluntary methods,” Hohn said.

As an investor in several North American railroads, Hohn’s TCI is also lobbying Canadian National Railways, Canadian Pacific Railway and Union Pacific Railway for regulations to cover sector emissions. The trains run on highly polluting diesel fuel, and Hohn believes regulation is inevitable and necessary to encourage investment in other fuel technologies.

“Right now, there is very little effort, minimal effort, in alternative technologies, such as hydrogen or synthetic fuels or electrification, because those investments affect short-term profits,” did he declare.

Hohn is also backing a new ratings agency that will assess corporate emissions strategies, through his charity, The Children’s Investment Fund Foundation. The Climate Action-plan Rating Center (Climate-Arc) will analyze data from public companies and publish ratings of climate plans.

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Investors often struggle to analyze corporate climate plans “because there’s so much greenwashing going on,” Hohn said. “I expect a lot of companies to get an F grade if they don’t do enough.”

Even companies with net-zero emissions goals have not established plans on how to achieve those goals, he added. “The impact is going to be a bit like ‘the emperor has no clothes’.”

A group of 680 financial institutions representing $130 billion in assets will also launch a request on Monday for companies to disclose data on climate change, deforestation and water security through the nonprofit group CDP.

The CDP, which includes Hohn’s charity CIFF among its funders, assigns a rating to companies that self-report the data. This is a different approach to the Climate-Arc proposal, which will award scores regardless of whether the company wants to be rated.

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