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Speaker 1: Let's get to UH. The COP twenty seven. We have

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Speaker 1: a deal now that it included a historic provision to

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Speaker 1: set up a fund to help some of the poorer countries,

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Speaker 1: those countries especially that faced harm or are facing harm

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Speaker 1: as a result of a changing climate. Going to take

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Speaker 1: a close to look now with our guest Nikita sen Gal,

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Speaker 1: who is cohead of a Sustainable Investment and e s

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Speaker 1: G at Lazard Asset Management. She joins us here in

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Speaker 1: New York in our studios. Nikita, thank you for being

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Speaker 1: with us. Just give me your takeaway when you look

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Speaker 1: at the news that's trickling out of Egypt, the wrap

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Speaker 1: up of COP twenty seven. Should we take heart in

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Speaker 1: a lot of this? Is there an accomplishment that we

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Speaker 1: should feel good about? Thanks for having me, Doug. Many

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Speaker 1: are calling this the biggest win on climate since the

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Speaker 1: Paris Accord, which was in UH and this is primarily,

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Speaker 1: as you said, because of the new funding agreement on

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Speaker 1: loss and damage. Um. I think it is a huge

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Speaker 1: demonstration of solidarity in agreement from so many nations around

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Speaker 1: the world to help developing countries that are perhaps going

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Speaker 1: to face some of the largest physical impacts of climate

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Speaker 1: change in the coming decades, and we're starting to see

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Speaker 1: that already, But I do think that there are many

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Speaker 1: unknown still. Where will this money come from, what are

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Speaker 1: the trigger points that are going to result in these payments? Uh?

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Speaker 1: And then will it even be enough? Um? I would

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Speaker 1: actually like to point us to four seminal events leading

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Speaker 1: up to COP that I arguably are as important, if

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Speaker 1: not more important, than the COP decision itself. UM. So

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Speaker 1: the Inflation Reduction Act that I'm sure you've talked about,

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Speaker 1: arguably the largest climate policy coming out of the US

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Speaker 1: in its history. Uh, the euse energy policy response to

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Speaker 1: the Russia Ukraine conflict, Australia's landmark climate bill um. And

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Speaker 1: lastly the election of President Lula in Brazil that might

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Speaker 1: significantly impact the fate of the Amazon rainforest. So, Nikita,

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Speaker 1: how much is being done by individual countries as opposed

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Speaker 1: to know COP twenty seven mandates? Richelle, I think a

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Speaker 1: lot of this is a combination of a few different factors.

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Speaker 1: There is the personal desire to contribute and mitigate climate

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Speaker 1: change because it is a global issue, it is not

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Speaker 1: a regional issue. But a lot of it is also

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Speaker 1: the opportunity for countries to emerge as leaders in an

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Speaker 1: energy transition. And you know, a really good case in

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Speaker 1: point is China. China is responsible for over thirty percent

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Speaker 1: of emissions in the globe today, but when you look

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Speaker 1: at cumulative emissions, it is still behind the U, S

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Speaker 1: and the EU. And a lot of the discussion at

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Speaker 1: COP twenty seven was about this idea of cumulative culpability,

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Speaker 1: i e. What should each country's fair share of de

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Speaker 1: carbonization be and for a country like China or individual

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Speaker 1: countries around the world, the questions that we are asking

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Speaker 1: as investors, so as as active fundamental investors at LAZARD,

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Speaker 1: we're not positioned to ask or to think about what's

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Speaker 1: right or wrong or what might be the right level

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Speaker 1: of responsibility. Um Our fiduciary responsibility is to think about

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Speaker 1: how will China respond to this pressure to decarbonize, or

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Speaker 1: not just China, any of the countries that were the

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Speaker 1: UM that part took in the in the copy. Will

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Speaker 1: it come with certain trade offs to socioeconomic development? And

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Speaker 1: it's a good point for a country like China, it's

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Speaker 1: I mean, it's inextricably linked to rise in emissions. And lastly,

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Speaker 1: but perhaps most importantly, how will these countries compete on

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Speaker 1: the global stage when it comes to the energy transition

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Speaker 1: and the Inflation Reduction Act as an example of where

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Speaker 1: the U. S has come in and said we're here

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Speaker 1: to compete. So so much of the conversation has centered

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Speaker 1: around kind of reducing carbon admissions in the new technologies,

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Speaker 1: whether it's wind, whether it's solar, that you can put

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Speaker 1: in place to kind of cover um what had previously

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Speaker 1: been a polluting industry. I'm thinking of coal as a

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Speaker 1: way of generating electricity. How much of the conversation, though,

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Speaker 1: if any of it, centers on capturing emissions that are

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Speaker 1: already out there technologies that can be used to carbon

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Speaker 1: sequestration that type of stuff. Is this top of mind

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Speaker 1: for people in your industry? Are you more focused on

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Speaker 1: alternative sources of energy? I think, unfortunately the answer today

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Speaker 1: is we need any and all solutions, and so it

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Speaker 1: is top of mind UM of industry and also inevitably

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Speaker 1: then of Wall Street and the financial markets UM. And

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Speaker 1: a really good example, I think Doug Ear has been

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Speaker 1: the Ukraine Russia conflict because it's revealed, uh, the inherent

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Speaker 1: challenges and the complexity of the energy transition. So fossil

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Speaker 1: fields are pervasive in our lives. It goes into everything

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Speaker 1: from you know, the plastic in our toothbrush to the

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Speaker 1: agricultural equipment that helps grow the grains that you and

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Speaker 1: I eat. Um. And so with the Russia Ukraine situation,

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Speaker 1: energy security has risen to the top, just as we

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Speaker 1: think about energy transition. But you're talking about hydrocarbons now, right,

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Speaker 1: that's right, and I think there and and it is.

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Speaker 1: We're not in a position today where we can rid

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Speaker 1: ourselves of this dependence on fossil fields. And there are

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Speaker 1: technologies today like renewable energy that can help abate emissions

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Speaker 1: to some extent, but we have to also start thinking

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Speaker 1: about solutions to just remove the carbon from the atmosphere.

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Speaker 1: And you see provisions for that in the Inflation Reduction

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Speaker 1: Act that just came out of the US, which is

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Speaker 1: already starting to have impact on valuations of companies and

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Speaker 1: m and A activity because companies that are involved in

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Speaker 1: carbon capture and storage are starting to become you know,

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Speaker 1: interesting attractive opportunities. There is one point five degrees actually realistic.

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Speaker 1: Now we've gone to fine do we have a plan

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Speaker 1: being or even a plan c So Richard that I

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Speaker 1: will say that there are many experts on climate science

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Speaker 1: who and physicists who are now saying that it is

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Speaker 1: almost impossible to reach a one point five degrees But

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Speaker 1: I do think as as investors, again, our job is

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Speaker 1: not so much to a pine on what what should happen,

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Speaker 1: but it's more what is likely to happen. And what

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Speaker 1: has happened is with net zero or one point five

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Speaker 1: degrees gold, there has been this coalescing force of policy

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Speaker 1: and investment in technology and even shifts in consumer behavior

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Speaker 1: that is starting to impact the financial productivity of companies

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Speaker 1: and their valuations and start that is really exciting for

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Speaker 1: us as investors and therefore still pertinent to us, even

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Speaker 1: though we may never reach a one point five degree scenario.

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Speaker 1: So are you gonna expect a lot more in the

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Speaker 1: way of evolution in terms of the financial architecture behind

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Speaker 1: a lot of the technologies that you're describing, could you clarify, well,

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Speaker 1: just more advancement in the way that funding can reach

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Speaker 1: these companies or situations where you know you have a

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Speaker 1: solution that you want to bring to market, maybe that

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Speaker 1: hasn't been thought of, something that that that is maybe

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Speaker 1: at the cutting edge. Is there going to be a

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Speaker 1: way for companies startups to access funding more easily. I

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Speaker 1: do think. I think that the Department of Energy has

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Speaker 1: a fantastic loan program that is doing a ton of

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Speaker 1: work there. There's also significant amount of fun flows into

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Speaker 1: venture capital in the energy technology and clean technology space

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Speaker 1: in particular. But I do want to make a broader

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Speaker 1: point where we often think about clean tech as you

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Speaker 1: know your wind turbines, and you think of a typical

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Speaker 1: company like a vest Us or a Siemens Go Mesa.

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Speaker 1: If you think more broadly, if you're looking at just

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Speaker 1: pure play companies um renewable energy electric vehicles, they're about

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Speaker 1: three to five percent of the AQUI index, but look

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Speaker 1: at the supply chains and you're looking at more than

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Speaker 1: a quarter of the MSc I AQUI Index. So the

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Speaker 1: implications are broad. Nikita Sengal from Lazard Asset Management, thank

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Speaker 1: you so much for being with us here on day

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Speaker 1: Break Asia. This is Bloomberg