00:00WE HAD A LOT OF CONVERSATIONS WITH FOLKS HERE THIS WEEK ABOUT CLIMATE INFRASTRUCTURE, ENERGY INFRASTRUCTURE, THE TRANSITION THAT MAY OR MAY NOT STILL BE TAKING PLACE. THAT TRANSITION, THAT I GUESS STARTED A FEW YEARS AGO, MAYBE WAS INTERRUPTED A LITTLE BIT BECAUSE OF THE PANDEMIC AND NOW THE WAR IN UKRAINE. DOES THAT GET BACK ON TRACK? EDWIN: YEAH. IT’S INTERESTING FOR US. I ATTENDED A PANEL DISCUSSION EARLIER YESTERDAY. AND FROM OUR VANTAGEPOINT, WITH OVER $500 BILLION INVESTED IN SUSTAINABLE CAPABILITIES ACROSS BLACKROCK, THE THING ABOUT EQUITY AND ALTERNATIVE CAPAB CAPABILITIES TOO, YOU REALLY ARE SEEING A SIGNIFICANT ADVANCE FOR PRIVATE CAPITAL TO HELP SUPPORT THE TRANSITION. SO I THINK SOME OF THE ESTIMATES WE’VE SEEN OVER THE YEARS IS THAT TO GET TO A NET ZERO BY 2050 WILL REQUIRE ABOUT $125 TRILLION WORTH OF INVESTMENT. EXTRAORDINARY AMOUNT OF CAPITAL. AND THE REALITY IS IT’S NOT JUST ABOUT THE POWER INDUSTRY. I THINK THE THING IS, IT HAS NO BORDERS. IT’S NOT ABOUT ANY SINGLE INDUSTRY. AND IT’S GOING TO BE SOMETHING THAT -- ONE OF THE BIGGEST INVESTMENTS IN OUR IN OUR LIFETIME. ROMAINE: WHERE DOES A CHUNK OF THE MONEY GOING TO COME FROM? WILL IT BE THE PRIVATE SECTOR OR WILL YOU SEE MORE FISCAL AND GOVERNMENT SPENDING PICK UP SOME OF THE SLACK? EDWIN: DEFINITELY BOTH. THE REALITY IS GIVEN THE AMOUNT OF ALTERNATIVES, IN PARTICULAR, $13 TRILLION INDUSTRY TODAY, WHEN YOU THINK OF THE SPECIFIC INSTITUTION IN BLACKROCK, THEY’RE TELLING US THEY’LL INCREASE EVEN A PENSION PLAN FROM 25% ALTERNATIVES TO MAYBE 35%. SO WITH THAT CAPITAL COMING TO THE MARKET AND QUITE FRANKLY, THEIR AMBITION TO BE PART OF THE JOURNEY, 88% OF THEM TOLD US WITH E, S, G, IS ONE OF THEIR PRIMARY CONSIDERATIONS WHEN IT COMES TO INVESTING. WHICH MEANS AS WE TAKE A STEP BACK AND THINK ABOUT THE SOLUTIONS WHICH HAVE TO BRING TO THEM, KNOWING THAT 88% OF THEM WANT TO ADDRESS IT, IT TELLS US THEY’RE CONSCIOUS ABOUT THE TRANSITION THAT NEEDS TO BE. ROMAINE: THERE’S A LOT OF COMPETITION IN THIS SPACE. BLACKROCK IS AT RELATIVELY THE TOP OF THE HEAP. I WONDER IF YOU KEEP AN EYE ON SOME OF THE COMPANIES THAT ARE COMING INTO THIS SPACE, TRYING TO OFFER FINANCING THAT MAYBE WOULDN’T HAVE BEEN TRADITIONAL IN THE PAST? EDWIN: IT’S GREAT. WE NEED IT. OF THE $125 TRILLION REQUIRED, IT’S ESTIMATED $4 TRILLION A YEAR IS NECESSARY. QUITE FRANKLY, SINCE DECEMBER, 2015, BACK IN PARIS, YOU KNOW, WE HAVEN’T SEEN $4 TRILLION BEING SPENT PER YEAR. SO I THINK THERE’S MORE CONFIDENCE IN THE MANAGERS, THE INVESTMENTS AND HOW THESE INVESTMENTS CAN ADD TO BOTH THE WEALTH AND INSTITUTIONAL PORTFOLIOS. YOU’RE SEEING MUCH MORE CAPITAL WITHIN THE SPACE. ROMAINE: WITHIN CONVERSATIONS WITHIN BLACKROCK AND EVEN YOUR COLLEAGUES OUTSIDE BLACKROCK, IS THERE TALK ABOUT THE POLITICAL POLARIZATION? IT’S EASY TO SIT HERE AND TALK ABOUT WHAT WE NEED TO FIGHT CLIMATE CHANGE OR FOR RENEWABLE ENERGY BUT WE KNOW THESE ARE STILL HOT BUTTON ISSUES. POLITICIANS HAVE A WAY OF AVOIDING IT BECAUSE THEY DON’T WANT TO EARN THE WRATH OF THE CONSTITUENCY. HOW MUCH DOES IT FACTOR INTO THE DISCUSSION? EDWIN: IT’S A BIG PART. TO THINK THEY CAN DRIVE POLICY, PERMITTING ALL THE TYPES OF ACTIONS THAT WOULD BE SUPPORTED FOR SUCH AN INVESTMENT, I CAN’T THINK OF WHAT WE’VE DONE FOR MORE THAN 15 YEARS WITH WIND AND SOLAR. RENE RENEWABLE POWER IS A HUGE PART OF THE FUTURE. WE WOULD ESTIMATE ABOUT $26 TRILLION IS REQUIRED BETWEEN NOW AND 2050 TO GET TO NET ZERO. THAT BEING SAID, THE ABILITY FOR US TO CONTINUE TO DEVELOP WIND AND SOLAR FARMS THROUGHOUT NORTH AMERICA AND VARIOUS OTHER COUNTRIES THROUGHOUT THE WORLD IS REALLY, REALLY IMPORTANT. THE SUPPORT OF GOVERNMENT AND POLICY AROUND THAT AS THEY TRANSITION FROM FOSSIL FUELS, EVEN NUCLEAR TO KIND OF CLEANER FORMS OF ENERGY TO DRIVE I THINK IS A REALLY BIG PART OF WHAT THE FUTURE HAS TO BE. ROMAINE: GIVEN THE WAR IN UKRAINE AND THE DISRUPTIONS WE’RE SEEING, PARTICULARLY IN THE EUROPEAN ENERGY MARKETS, DO YOU THINK WE’LL SEE A BIGGER EMBRACE OF FOSSIL FUELS, AT LEAST IN THE SHORT TERM, OR DO YOU THINK THEY WILL HEY CONTINUE AND ACCELERATE THE PATH TOWARD ALTERNATIVE AND RENEWABLE SOURCES OF ENERGY? EDWIN: IT’S AN INTERESTING THOUGHT. I THINK THE CONFUSION PROBABLY THAT’S EXISTED FOR THE PAST NUMBER OF YEARS, WE COULDN’T TURN OFF OIL. WE COULDN’T TURN OFF GAS. THE REALITY IS WE’RE SO DEPENDENT ON THESE SOURCES FOR QUITE SOMETIME. IT NEEDS TO BE MEASURED. IT NEEDS TO BE THOUGHTFUL. IT NEEDS TO BE FAIR, THE TRANSITION. I THINK THE THING THAT BROUGHT TOP TO PEOPLE’S MIND, INCLUDING GOVERNMENT, GIVEN THE RUSSIA AND UKRAINE CRISIS, GIVEN HOW AWFUL IT IS, THE DEPENDENCE ON ROGUE NATIONS AND FOREIGN STATES. THAT DEPENDENCE HAS BE TO REJECTED. AND BRINGING IN NEW SOURCES OF ENERGY, EVEN CLEAN ENERGY, WIND AND SOLAR IN PARTICULAR, WILL BE PART OF THE SOLUTION GOING FORWARD. ROMAINE: YOU’RE -- EDWIN: YOU’LL HEAR BLUE AND GREEN HYDROGEN. IT IS IS A CATALYST TO DO MORE. PARTICULARLY EUROPE, YOU’RE SEEING THE EUROPEAN NATIONS WANTING TO ADDRESS THAT DEPENDENCY AND DIVERSIFY THE RISK TOWARDS RUSSIA.
