# Election Fever: Fate of Climate Fight Hangs in Balance

An episode of [Switched On](https://invisiblenetwork.ai/podcast/1469286286), 1 Feb 2024, 32 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/01a10738-3608-4dec-883c-ae3c00026b36/09eb555a-6585-4d75-9d2b-b10900555d81/audio.mp3?utm_source=Podcast&in_playlist=6d114f63-833d-4b78-bbf5-ae3c00026b44

Set against a backdrop of geopolitical tensions, this year will see elections taking place in markets that account for a combined 67% of global GDP. With the uncertainty that changes in leadership can bring, could these crucial votes lead to a slowing of investment in the energy transition as investors wait for the results and clear policy direction? On today’s show, Dana is joined by BloombergNEF’s Head of Global Policy, Victoria Cuming, and US policy analyst, Derrick Flakoll. Together they discuss the implications for the Inflation Reduction Act should Donald Trump return to the White House, how useful polling data really is, and if growing right-leaning sentiment will be reflected in the upcoming European Parliament elections. Links to research notes from this episode: Wave of Elections Poses Risk for the Energy Transition - https://www.bnef.com/insights/33191 See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: This is Dana Perkins and your listening to Switched on
[0:03] Speaker 1: the bn EF podcast. It is a year of elections
[0:07] Speaker 1: around the world and if you look at all the
[0:09] Speaker 1: countries with upcoming elections together, they account for sixty seven
[0:13] Speaker 1: percent of global GDP. In addition to the longer term
[0:16] Speaker 1: implications for climate friendly policy, depending upon who is or
[0:20] Speaker 1: isn't elected, geopolitical uncertainty could lead to a slowing of
[0:25] Speaker 1: investment in the energy transition this year while investors await
[0:28] Speaker 1: results and ultimately stability. Good climate policy can boost low
[0:33] Speaker 1: carbon energy roll out and help nations reach their net
[0:35] Speaker 1: zero targets, but without it, necessary emissions reductions by twenty
[0:39] Speaker 1: fifty are even less certain. Today, I'm joined by bnef's
[0:43] Speaker 1: head of Global Policy, Victoria Cumming and US policy analyst
[0:47] Speaker 1: Derek Flackl. They discuss the potential implications for the Inflation
[0:51] Speaker 1: Reduction Act in the United States and should the likely
[0:53] Speaker 1: Republican presidential nominee Donald Trump return to the Oval Office,
[0:57] Speaker 1: will he be interested and able to repeal the IRA.
[1:01] Speaker 1: In addition to the United States, we preview upcoming elections
[1:05] Speaker 1: in Canada and Mexico and in Europe with growing right
[1:08] Speaker 1: leaning sentiment. Will this be reflected in European Parliament and
[1:12] Speaker 1: in the United Kingdom. What will happen between the Conservatives
[1:16] Speaker 1: and labor when it comes to climate in Asia? Is
[1:19] Speaker 1: it possible that political stability in India, Indonesia or South
[1:23] Speaker 1: Korea could lead to more favorable climate policy? And could
[1:27] Speaker 1: this be the year that the ANC loses power in
[1:30] Speaker 1: South Africa after several decades. We also chat about whether
[1:33] Speaker 1: anyone can really trust the polling data to access BNF's
[1:38] Speaker 1: research note highlighted on today's show titled Wave of Elections
[1:41] Speaker 1: poses risk for the Energy Transition. BNAF subscribers are going
[1:45] Speaker 1: to be able to find it at BNF dot Com
[1:47] Speaker 1: or at BENF go on the Bloomberg terminal. But right now,
[1:50] Speaker 1: let's speak with Vicky and Derek about the global elections
[1:53] Speaker 1: in twenty twenty four and what this could mean for
[1:55] Speaker 1: the energy transition. Vicky, thank you for joining.
[2:08] Speaker 2: Today, Thank you very much for having me.
[2:11] Speaker 1: And Derek thank you for joining us today as well.
[2:13] Speaker 3: Thank you very much for having me.
[2:15] Speaker 1: So we're here to talk about what is going to
[2:18] Speaker 1: be very exciting and very important election year in the
[2:22] Speaker 1: climate space, with a number of elections coming up in
[2:24] Speaker 1: twenty twenty four, and we'll get into the individual countries
[2:28] Speaker 1: in this show, and I hope both of you will
[2:30] Speaker 1: be able to provide some real perspective on those. But
[2:32] Speaker 1: before we dive into that, can you give us a
[2:34] Speaker 1: bit of context about why this year in particular is
[2:38] Speaker 1: so important from a climate standpoint when it comes to elections.
[2:41] Speaker 2: So it's kind of unprecedented the number of elections that
[2:45] Speaker 2: we have this year at all levels of government all
[2:48] Speaker 2: around the world. So I think economy is responsible for
[2:51] Speaker 2: around two thirds of global GDP, in half of the
[2:54] Speaker 2: world's population actually have elections this year. And these elections
[2:59] Speaker 2: have both term ramifications in terms of markets and policy making,
[3:04] Speaker 2: but they also have significant ramifications in the longer term
[3:07] Speaker 2: depending on outcome of those elections. And we're at a
[3:10] Speaker 2: particularly crucial stage in terms of the energy transition, because
[3:14] Speaker 2: governments are trying to put in place those concrete policies
[3:17] Speaker 2: that actually enable them to achieve their twenty thirty climate plans,
[3:21] Speaker 2: but also get them really on the road to achieving
[3:23] Speaker 2: that zero by the middle of the century.
[3:26] Speaker 1: One way to get a feel for what could happen
[3:29] Speaker 1: in a number of these countries has typically been to
[3:31] Speaker 1: turn to polls, but can we really trust polls and
[3:35] Speaker 1: what are polls able to tell us?
[3:37] Speaker 2: So I think opinion polls definitely can provide some information,
[3:41] Speaker 2: like a snap shot at that time of the potential
[3:44] Speaker 2: outcome of the elections, but it really is a snapshot
[3:48] Speaker 2: of the particular moment when the poll is taken, and
[3:51] Speaker 2: it really depends on the underlying methodology of the polls
[3:54] Speaker 2: as to how accurate they're going to be, because we
[3:56] Speaker 2: have seen in recent votes and elections in the UK
[4:01] Speaker 2: and the US when we had the Brexit vote, that
[4:03] Speaker 2: the polls were somewhat misleading. They were unaligned with what
[4:06] Speaker 2: actually happened, and that can be for various reasons, including
[4:10] Speaker 2: the sample that they've used for the poll is unrepresentative,
[4:13] Speaker 2: or it's made up of people that have particularly strong
[4:17] Speaker 2: political views they don't necessarily reflect when you actually the
[4:21] Speaker 2: participants in the polls themselves may not be wholly truthful,
[4:25] Speaker 2: whether intentionally or unintentionally. So in the UK we have
[4:29] Speaker 2: had this trend of what are called shy Tories Tories
[4:32] Speaker 2: what referred to as the Conservative Party, so where respondents
[4:36] Speaker 2: to polls actually don't want to admit that they vote
[4:39] Speaker 2: for the Conservative Party. Or more recently, we have this
[4:42] Speaker 2: phenomenon of shy switches, So these are ones where they
[4:45] Speaker 2: state in public that they support the Conservative Party, but
[4:48] Speaker 2: they don't actually intend to vote for it. So really
[4:51] Speaker 2: they can provide useful information as part of overall assessment,
[4:55] Speaker 2: but they should be taken with a pinch of salt.
[4:57] Speaker 1: So if we can't really predict what's going to happen,
[5:00] Speaker 1: the polls are really not telling us what we need
[5:02] Speaker 1: them to because people aren't even being honest in those polls.
[5:05] Speaker 1: That raises the question regarding those who are thinking about
[5:08] Speaker 1: investing in these markets and in some of the companies
[5:11] Speaker 1: in these markets, what does that really mean for investors
[5:15] Speaker 1: in are they able to make bets based on how
[5:18] Speaker 1: they're predicting the future? Do they really just back away?
[5:21] Speaker 2: So I think we can talk really now about like
[5:24] Speaker 2: the short term implications of having all these elections, So
[5:27] Speaker 2: really the kind of catchphrases uncertainty. So in terms of
[5:31] Speaker 2: investment and markets, there's elevated risk and that can weigh
[5:35] Speaker 2: down investor sentiment, especially from foreign investors, and that energy sectors,
[5:40] Speaker 2: particularly new energy, are particularly exposed to these elevated risks
[5:45] Speaker 2: because in large part the technology deployment, for example, depends
[5:49] Speaker 2: on policy and political support, so there is evidence to
[5:53] Speaker 2: suggest that some of the kind of stock markets might
[5:56] Speaker 2: be more muted in the run up to elections. Investments
[5:59] Speaker 2: and energy transition technologies and processes could be reduced, and
[6:03] Speaker 2: companies may be less willing to or might want to
[6:07] Speaker 2: press hold on making final investment decisions for large projects,
[6:11] Speaker 2: especially where they depend on policy support. So we can
[6:15] Speaker 2: see things like short term fluctuations in markets due to
[6:19] Speaker 2: big announcements like the opinion polls like interim votes where
[6:23] Speaker 2: we see debates between the contenders for the elections, and
[6:27] Speaker 2: also when the parties release their manifestos, and in terms
[6:30] Speaker 2: of kind of the policy risks, it differs across markets
[6:34] Speaker 2: depending on what their overall electoral process is. But in general,
[6:38] Speaker 2: there is, as I've said, a lot of political uncertainty,
[6:41] Speaker 2: so we could see that the incumbent government tries to
[6:44] Speaker 2: kind of rush through a whole load of policy and
[6:46] Speaker 2: legislation in the run up to the election. And this
[6:49] Speaker 2: can see especially where in cases where there's like a
[6:52] Speaker 2: change in political administration is expected, this can see a
[6:56] Speaker 2: rush of companies trying to take advantage of policy and
[7:00] Speaker 2: incentives that could well be changed when the new government
[7:04] Speaker 2: comes in place, then we expect to see a real
[7:07] Speaker 2: slow down in the policy making process. This can be
[7:10] Speaker 2: official periods of quiet time for policy makers, like in
[7:14] Speaker 2: the EU and the UK, where the current government can't
[7:17] Speaker 2: make big announcements of policies, or indeed the whole legister
[7:21] Speaker 2: shuts down. So this kind of likely to see, especially
[7:25] Speaker 2: in the second half of the year, real slow down
[7:27] Speaker 2: in policy making, which is really tricky because as I
[7:30] Speaker 2: mentioned earlier, we don't have that long un till governments
[7:33] Speaker 2: need to meet their twenty thirty climate plans and they
[7:36] Speaker 2: really need to put in place these policies, especially in
[7:39] Speaker 2: slow to take action sectors like say industry.
[7:43] Speaker 1: So this year, not only are we really expecting to
[7:45] Speaker 1: see a lot less activity in some of these markets,
[7:49] Speaker 1: we're also expecting to see a lot less activity in
[7:52] Speaker 1: terms of the policy that's coming through. And that is
[7:55] Speaker 1: certainly seen in the United States. You know, Derek, maybe
[7:58] Speaker 1: you can tell us a little bit about what this
[8:00] Speaker 1: year is likely to hold in the US in the
[8:04] Speaker 1: run up to the election.
[8:06] Speaker 3: So in the United States, it's looking like another very
[8:08] Speaker 3: competitive election this year at the presidential level. We're likely
[8:11] Speaker 3: to see a rematch between former President Donald Trump, Republican
[8:15] Speaker 3: likes the oil and gas industry, not as big a
[8:17] Speaker 3: fan of the clean energy transition, and President Biden, the
[8:20] Speaker 3: incumbent Democrat president who passed the Infliction Reduction Acts, the
[8:24] Speaker 3: US's signature climate and indugery subsidy program. Both houses of Congress,
[8:28] Speaker 3: the House and the Senate are likely to be competitive
[8:30] Speaker 3: as well, and what that means is nobody wants to
[8:32] Speaker 3: do anything particularly controversial. As such, we can expect lawmaking
[8:36] Speaker 3: to effectively shut down for the rest of the year,
[8:39] Speaker 3: with a few small exceptions of by partisan interest, like
[8:41] Speaker 3: a potential tax deal that would improve business tax expenses
[8:45] Speaker 3: for a variety of different companies. Now, when it happens
[8:49] Speaker 3: when the election takes place is a very different story.
[8:52] Speaker 3: There's a pretty stark choice between Biden, who would likely
[8:55] Speaker 3: continue his path of engaging with US allies and continuing
[9:00] Speaker 3: to subsidize clean electricity build out, grid build out, and Trump,
[9:04] Speaker 3: who's vowed to repeal the Inflation Reduction Act and double
[9:07] Speaker 3: down on oil and gas drilling and exports.
[9:10] Speaker 1: So you mentioned that Trump has promised to repeal the
[9:12] Speaker 1: Inflation Reduction Act, which is a bit surprising given that
[9:15] Speaker 1: many of the policies are actually benefiting what we would
[9:17] Speaker 1: consider to be read or predominantly voting Republican states. Can
[9:21] Speaker 1: you tell us whether or not that's even likely and
[9:25] Speaker 1: how possible it is to repeal the IRA.
[9:28] Speaker 3: I would say it's possible, but not likely. At the
[9:30] Speaker 3: end of the day, as you mentioned, you would need
[9:32] Speaker 3: both Houses of Congress and the President to all agree
[9:35] Speaker 3: to repeal the law, and with so many Republican constituencies
[9:38] Speaker 3: benefiting from the Inflation Reduction Act, it's unlikely that you
[9:41] Speaker 3: could really repeal it wholesale and get away with that.
[9:43] Speaker 3: In fact, many credits in the law, such as credits
[9:46] Speaker 3: for clean hydrogen and carbon capture, are pretty favorable to
[9:50] Speaker 3: the oil and gas industry, which tends to have a
[9:52] Speaker 3: lot of institutional links with Republican states and Republican politicians.
[9:55] Speaker 3: Which you're more likely to see is attempts at targeted repeal,
[9:58] Speaker 3: which require a large and united enough party across all
[10:02] Speaker 3: three veto points both Houses of Congress and the presidency
[10:05] Speaker 3: to achieve. Now that said, the president does have a
[10:08] Speaker 3: lot of autonomy to write or rewrite regulations within the
[10:12] Speaker 3: bounds of the law, so, for example, Trump could, out
[10:15] Speaker 3: of a focus on American industrialization and global competition over
[10:19] Speaker 3: emissions reductions, loosen some of the rules around clean hydrogen production,
[10:23] Speaker 3: likely resulting in emissions but creating potentially a more competitive
[10:27] Speaker 3: industry in the short term. There's also questions about electric
[10:30] Speaker 3: vehicle tax credits. Those have some pretty strict rules written
[10:33] Speaker 3: into them, trying to exclude Chinese companies, where the leaders
[10:36] Speaker 3: in the electric vehicle battery industry from benefiting. The Biden
[10:40] Speaker 3: administration has walked a narrow tightrope to enforce the law
[10:44] Speaker 3: while still allowing key technologies to flow into the US. Trump, however,
[10:49] Speaker 3: is more likely to tighten those so that Chinese companies
[10:52] Speaker 3: are completely excluded, probably to the detriment of the U
[10:54] Speaker 3: SEV industry. There's also questions about discretionary or voluntary spending
[10:58] Speaker 3: programs like the Department of Use Loan Program's office that
[11:01] Speaker 3: has hundreds of billions of dollars in loan guarantee authority
[11:04] Speaker 3: that President Trump could simply refuse to give out, and
[11:07] Speaker 3: that could slow down the deployment of new technologies that
[11:10] Speaker 3: aren't otherwise subsidized in the IRA.
[11:12] Speaker 1: The IRA has in many respects put the US kind
[11:15] Speaker 1: of central to many companies' strategy when it comes to
[11:18] Speaker 1: international climate policy. What is at stake from an international
[11:24] Speaker 1: policy standpoint with the outcomes of this US election.
[11:28] Speaker 2: So internationally, if you cast your mind back to Trump's
[11:32] Speaker 2: previous presidency, he withdrew the US from the Paris Agreement,
[11:36] Speaker 2: and so the Republicans have suggested that they would likely
[11:40] Speaker 2: try to do the same thing this time round if
[11:42] Speaker 2: a Republican president has put in place, if that were
[11:45] Speaker 2: to happen, So in the kind of short term, we've
[11:49] Speaker 2: got the COP twenty nine coming up at the end
[11:51] Speaker 2: of this year, so the new Republican president would not
[11:54] Speaker 2: be inaugurated by that time, but would have been elected
[11:57] Speaker 2: just a few days before COP twenty nine begins. So
[12:00] Speaker 2: if the wider and administration goes to COP and makes
[12:03] Speaker 2: any promises, this would severely undermine them. And in the
[12:06] Speaker 2: longer term, it would mean that any deal that's reached
[12:10] Speaker 2: at COP wouldn't cover the second biggest emitter. So I
[12:13] Speaker 2: think currently the US accounts are something like eleven percent
[12:16] Speaker 2: of global emissions, So that would put bigger ONUS onto
[12:20] Speaker 2: the parties that are still within the Paris Agreement and
[12:22] Speaker 2: make it harder to limit global warming to one point
[12:26] Speaker 2: five or two degrees above pre industrial levels. It also
[12:30] Speaker 2: has implications in terms of climate finance for developing countries.
[12:34] Speaker 2: So we've seen the support that's been given to the
[12:37] Speaker 2: UN's Green Climate Funds really fluctuate in the last three
[12:41] Speaker 2: rounds of replenishment because of the previous US withdrawal. So
[12:45] Speaker 2: in the years when the US was still part of Paris,
[12:49] Speaker 2: it accounted for around a fifth to a quarter of
[12:52] Speaker 2: the finance that was contributed towards this fund. So we
[12:56] Speaker 2: could also see implications for these what we're known as
[12:59] Speaker 2: just detransition partnerships. So these have been a country driven
[13:04] Speaker 2: alliances between a developing country and various so called developed countries,
[13:09] Speaker 2: for example announced for South Africa and Indonesia. The US
[13:13] Speaker 2: has been part of that. So a US withdrawal from
[13:16] Speaker 2: the Powis Agreement would suggest that it would be less
[13:19] Speaker 2: willing to contribute to these funding mechanisms, which were kind
[13:22] Speaker 2: of deemed as to be one of the successes in
[13:25] Speaker 2: recent years in terms of making progress towards climate action.
[13:30] Speaker 1: Now, we could sit here and talk about the United
[13:32] Speaker 1: States all day, and I'm sure there are plenty of
[13:34] Speaker 1: other shows that are going to do just that. But
[13:36] Speaker 1: let's keep on moving through other parts of North America,
[13:39] Speaker 1: because there are a number of countries having elections this year,
[13:43] Speaker 1: as we stated at the beginning of the show. So
[13:45] Speaker 1: let's go next to Canada. What's happening in Canada, as
[13:48] Speaker 1: they're having an election this year too.
[13:50] Speaker 3: So Canada is having some provincial level elections that are
[13:53] Speaker 3: guaranteed to happen this year in three provinces which equate
[13:56] Speaker 3: to about nineteen percent of its population, British Columbia and
[13:59] Speaker 3: early leader in climate energy policy, Saskatchewan, and also the
[14:03] Speaker 3: Atlantic province of New Brunswick. In everyone where but New Brunswick,
[14:06] Speaker 3: there's not likely to be a changeover in New Brunswick.
[14:09] Speaker 3: You might see a decrease in investment in climate hostile politics,
[14:13] Speaker 3: you might say. More importantly, however, at the national level,
[14:17] Speaker 3: there may be an early election. One is due by
[14:20] Speaker 3: next year, but that depends on a lot of political factors.
[14:24] Speaker 3: The reason we want to flag this so early, however,
[14:26] Speaker 3: is it has major implications for Canada's carbon pricing system.
[14:30] Speaker 3: Canada has been an early leader in this space and
[14:32] Speaker 3: one of the few advanced democracies to independently pass a
[14:35] Speaker 3: strong carbon price, but it's been one of the major
[14:38] Speaker 3: political targets, I guess you could say for the Conservative
[14:41] Speaker 3: Party as run by Pierre Pauliev who's likely to win
[14:44] Speaker 3: the next election whenever it comes. He's promised to repeal
[14:47] Speaker 3: the carbon taxes his first act in office, and so
[14:50] Speaker 3: currently the government of Liberal Prime Minister Justin Trudeau is
[14:54] Speaker 3: rushing to finalize contracts for difference, which would essentially guarantee
[14:59] Speaker 3: a carbon price for s specific companies or projects long
[15:02] Speaker 3: after its own government leaves. So only one carbon contract
[15:06] Speaker 3: for difference has already been agreed for a carbon capture project,
[15:09] Speaker 3: and any new ones will be essential to ensuring the
[15:13] Speaker 3: long term legacy of the carbon price. Otherwise we're likely
[15:16] Speaker 3: to see a similar dynamic to Australia and other early
[15:18] Speaker 3: later in carbon pricing, which saw a switch over to
[15:22] Speaker 3: a more conservative government and the immediate repeal of that price,
[15:27] Speaker 3: leading to a sort of limited climate ambition for almost
[15:30] Speaker 3: a decade thereafter.
[15:32] Speaker 1: So let's talk next about Mexico, which is also having
[15:35] Speaker 1: an election and has really been a beneficial recipient of
[15:38] Speaker 1: some of the near shoring that's taken place as a
[15:41] Speaker 1: part of the US Inflation Reduction Act. Would this upcoming
[15:44] Speaker 1: election change any elements of that? And what does this
[15:47] Speaker 1: election mean for climate in Mexico.
[15:50] Speaker 2: So with the way that the Mexican political system works
[15:54] Speaker 2: is that the current president who's known as Amlo, cannot
[15:58] Speaker 2: stand again, so we know that will definitely be a
[16:01] Speaker 2: change in political leader. There are two main contenders now.
[16:05] Speaker 2: The contender that's kind of been the chosen successor, let's say,
[16:09] Speaker 2: is Cloudia Schambaum As she currently leads in the polls
[16:12] Speaker 2: against the opposition candidate Galvez. So shamam could be somewhat
[16:17] Speaker 2: positive in terms of the climate transition in Mexico. So
[16:21] Speaker 2: Amlo during his years in control, has really efforts to
[16:24] Speaker 2: strengthen the powers of the state in the energy sector
[16:27] Speaker 2: and this has led to protracted legal and regulatory uncertainty,
[16:31] Speaker 2: which has a deterred private investment. And we've really seen
[16:35] Speaker 2: that in the renewable space where deployment has slowed down.
[16:38] Speaker 2: And also the kind of efforts to do near shuring.
[16:41] Speaker 2: So near shuring is where international companies set up more
[16:45] Speaker 2: production in Mexico, for example, to be closer to the
[16:48] Speaker 2: US so they can take advantage of some of the
[16:51] Speaker 2: subsidies that aren't offer under the IRA, so AMLO's chosen successor,
[16:55] Speaker 2: Shane Baum, is somewhat of an environmentalist and does support renewables,
[17:01] Speaker 2: but she is also defended Anaalos views on energy. So
[17:05] Speaker 2: if she does win, we would expecting minor policy improvements,
[17:11] Speaker 2: but they are unlikely to kind of result in significant changes,
[17:14] Speaker 2: whereas the opposition Galvez, if she is put in place,
[17:19] Speaker 2: then we could see more extensive changes.
[17:21] Speaker 1: Next, let's pivot Asia, and let's start in the most
[17:24] Speaker 1: populous country in the world, certainly important for global politics
[17:28] Speaker 1: and global climate. Let's talk about India.
[17:31] Speaker 2: So India now, actually, unlike some of the other elections
[17:34] Speaker 2: that we're going to be talking about, this one has
[17:37] Speaker 2: a more certain outcome. We do expect Modi to retain
[17:40] Speaker 2: power for the next five years and therefore we expect
[17:44] Speaker 2: relatively little change in terms of the policies for the
[17:48] Speaker 2: energy transition. But if you don't mind it or will
[17:50] Speaker 2: switch to one that is less certain, which is Indonesia.
[17:53] Speaker 2: So coming up in lesser than a month, there's elections
[17:57] Speaker 2: to vote for the new president and legislature. Current president
[18:00] Speaker 2: we can't stand again and his government has had like
[18:04] Speaker 2: a significant impact on energy transition policy. So they have
[18:07] Speaker 2: pledged to increase clean energy investments and phase out coal.
[18:11] Speaker 2: Out of the three candidates, so Buswayden is probably the
[18:14] Speaker 2: most progressive candidate. He would be likely to see more
[18:18] Speaker 2: substantive changes in favor of climate policy. However, the other
[18:23] Speaker 2: two candidates are less ambitious in terms of promoting climate action.
[18:27] Speaker 2: Of the two, Pronoos seems to be more committed to
[18:30] Speaker 2: reducing coal use than Serbianto. But the other thing to
[18:33] Speaker 2: flag is something I mentioned earlier, So Indonesia has one
[18:36] Speaker 2: of these jet pees, these just energy transition energy plans,
[18:40] Speaker 2: So that's sort of crucial stage at the moment, and
[18:42] Speaker 2: that the government is actually trying to finalize right now.
[18:45] Speaker 2: The investment plan and the plan that they actually released
[18:49] Speaker 2: at the end of last year was a step in
[18:51] Speaker 2: the right direction, but it is at a crucial stage
[18:53] Speaker 2: of kind of devising what they're going to do. So
[18:56] Speaker 2: the outcome of the election could have some kind of
[18:58] Speaker 2: implications for that as well.
[19:00] Speaker 1: That Indonesia elections coming up very soon too. It's February fourteenth,
[19:04] Speaker 1: so right around the bend. And if anybody wants to
[19:07] Speaker 1: dig back through the switch down archives, we actually had
[19:10] Speaker 1: one of the candidates Nsbezweida and here on this show,
[19:13] Speaker 1: I believe at the beginning of last year. But pivoting now,
[19:17] Speaker 1: we're rather continuing with our coverage of elections around the world.
[19:22] Speaker 1: Let's next talk about what's happening in South Korea with
[19:25] Speaker 1: an election due in April.
[19:27] Speaker 2: Yes, so this is a legislature election. So currently the
[19:32] Speaker 2: People Power Party the PPP controls the presidency and they're
[19:36] Speaker 2: hoping to kind of regained ground in the parliament from
[19:39] Speaker 2: the main opposition party, the Democratic Party of Korea, which
[19:43] Speaker 2: won a landslide victory in the last election in twenty twenty.
[19:47] Speaker 2: So the short answer is, actually, regardless of the outcome,
[19:51] Speaker 2: there's no expectation to see a major shift in climate ambition.
[19:54] Speaker 2: We'd expect them to keep their twenty thirty missions target
[19:59] Speaker 2: and their broad ending see their Climate Plan. We could
[20:01] Speaker 2: see some moderate changes though, So if the president unions
[20:06] Speaker 2: PPP the People Power Party actually do manage to regain
[20:10] Speaker 2: ground in the National Assembly, then we could see vast
[20:13] Speaker 2: tracked support for the pro nuclear policies, which would be
[20:17] Speaker 2: expense of renewables. However, if the DPK kind of maintains
[20:22] Speaker 2: its dominance in their assembly, then it's bills that are
[20:25] Speaker 2: seeking to promote renewables and carbon pricing could gain momentum.
[20:30] Speaker 1: So the next election likely to take place this year,
[20:32] Speaker 1: although we don't yet have a date, because that is
[20:35] Speaker 1: how it works here in the UK. What is likely
[20:37] Speaker 1: to happen in the United Kingdom, or rather what's up
[20:40] Speaker 1: its stake when it comes to Labor versus Conservatives in
[20:44] Speaker 1: the year head.
[20:45] Speaker 2: So you're absolutely right. The UK is unlike the US,
[20:49] Speaker 2: there's no kind of a set date for an election.
[20:52] Speaker 2: We know it needs to happen by January twenty twenty five,
[20:56] Speaker 2: and it seems likely will happen this year because the
[20:59] Speaker 2: parties and want to do all their campaigning over Christmas.
[21:02] Speaker 2: Very likely, and more pertinently, the Prime Minister Isshisunak has
[21:06] Speaker 2: indicated that it's likely to be in the second half
[21:08] Speaker 2: of the year. But that does mean that we could
[21:10] Speaker 2: have increased uncertainty really over most of this year. So
[21:14] Speaker 2: currently the Labor Party is ahead of the incumbent Conservatives
[21:19] Speaker 2: in the polls, but we do expect this gap to
[21:21] Speaker 2: narrow as we get closer to the election, because that
[21:23] Speaker 2: does tend to happen. We do think that climate and
[21:26] Speaker 2: biodiversity is likely to be a key issue for this election,
[21:30] Speaker 2: and if the current poles are incorrect and the incumbent
[21:34] Speaker 2: government is re elected, however, we don't expect to see
[21:37] Speaker 2: significant changes in policy support. However, on the bright side
[21:42] Speaker 2: for the energy transition, if the Labor government or other
[21:45] Speaker 2: if Labor Party is indeed elected and made government or
[21:49] Speaker 2: at least the majority party, we would expect them to
[21:52] Speaker 2: boost support four policies to cut emissions and to tackle
[21:56] Speaker 2: nature loss. So our Labor leader Skistar House pledged to
[22:01] Speaker 2: so called speed ahead with green investments. However, there have
[22:04] Speaker 2: been statements made by various members the Labor Party more
[22:07] Speaker 2: recently that suggested some of these plans could be watered
[22:10] Speaker 2: down depending on the state of the public finances. However,
[22:14] Speaker 2: there are some actions pledged by the Labor Party so
[22:18] Speaker 2: farther don't actually rely on considerable spending, things like revamping
[22:23] Speaker 2: the planning system for onshore renewable projects, and that could
[22:26] Speaker 2: have a credible impact in terms of the energy transition.
[22:30] Speaker 1: And I'm just thinking back to what you said earlier
[22:32] Speaker 1: in the show about how in election years you can
[22:35] Speaker 1: see climate policy or policy really of all kinds slow down,
[22:38] Speaker 1: and not as much happened within the government. So the
[22:41] Speaker 1: downside in some respects of Sunak saying that there will
[22:44] Speaker 1: be an election but it won't be till the second
[22:46] Speaker 1: half of the year. Is this slow down effect in
[22:48] Speaker 1: the UK. In addition, now next thinking about the continent,
[22:52] Speaker 1: So the European Union have their own set of elections,
[22:56] Speaker 1: and the European Union is very significant because they set
[22:59] Speaker 1: the climate policy that would cover all of their member
[23:02] Speaker 1: states across that whole area. So what's happening in the EU.
[23:06] Speaker 2: So if you'll give me, if you'll bear with me
[23:09] Speaker 2: the kind of importance of what's happening this year and
[23:12] Speaker 2: recent trends. To understand it kind of requires some understanding
[23:15] Speaker 2: of how the EU works. So there are three main institutions.
[23:19] Speaker 2: So this year the European Parliament, so it's made up
[23:22] Speaker 2: of members of the European Parliament that are directly elected
[23:25] Speaker 2: by citizens. They have their scheduled elections in June. So
[23:31] Speaker 2: this has been kind of heralded as a make or
[23:32] Speaker 2: break vote not only for the European Union as a whole,
[23:35] Speaker 2: which sounds quite dramatic, but also for its net zero
[23:39] Speaker 2: plan known as the Green Deal. So current polls suggest
[23:42] Speaker 2: that the Parliament's going to see a significant shift to
[23:45] Speaker 2: the right, So the kind of center right European People's Party,
[23:49] Speaker 2: the EPP is set to remain the largest political group,
[23:53] Speaker 2: but may well again not secure sufficien seats for an
[23:56] Speaker 2: outright majority. Now, in the current parliament that's been in
[24:00] Speaker 2: place for the last four years, there's been an informal
[24:03] Speaker 2: coalition between the center right EPP and then the Socialists
[24:07] Speaker 2: and Democrats and the liberal renew Europe. However, we may
[24:11] Speaker 2: see that in fact in the next election the EPP
[24:15] Speaker 2: is the biggest party, it intends to switch to further
[24:20] Speaker 2: right parties like the ECR and ID, and these two
[24:24] Speaker 2: parties are likely to see significant gains if the polls
[24:27] Speaker 2: are correct in the elections, to the detriment of the
[24:30] Speaker 2: Greens and the Liberals. So this is particularly significant because
[24:35] Speaker 2: the most laws of the EU have to be passed
[24:38] Speaker 2: by both the European Parliament and the Council of the EU.
[24:41] Speaker 2: Council of the EU is made up of member state
[24:45] Speaker 2: governments or representatives. Now, in the last few years, the
[24:48] Speaker 2: European Parliament has tended to be the more ambitious party
[24:52] Speaker 2: in terms of promoting climate action compared with the Council,
[24:56] Speaker 2: but if we do have this shift to the right
[24:58] Speaker 2: in the Parliament, that they may become less supportive of
[25:01] Speaker 2: these policies. This is especially significant because we're at the
[25:06] Speaker 2: stage of where the EU has agreed the Green Deal
[25:09] Speaker 2: and its high level commitments, but it now needs to
[25:11] Speaker 2: pass all these detailed policies and concrete measures to achieve
[25:15] Speaker 2: those commitments, and we could see more pushback from some
[25:20] Speaker 2: European parliament political groups if this shift to the right
[25:24] Speaker 2: actually materializes. The thing to also mention is that, as
[25:27] Speaker 2: I said, the Council, which is the other co legislator,
[25:30] Speaker 2: that is also seeing its own shift to the right,
[25:33] Speaker 2: because you may well have heard in the news there
[25:36] Speaker 2: has been more support for populist and far right policies
[25:40] Speaker 2: in various member states of the EU, like the Netherlands
[25:44] Speaker 2: and Italy. So that could mean that the Council is
[25:46] Speaker 2: even less supportive than it has been previously in terms
[25:49] Speaker 2: of climate action. And the other thing to note is
[25:52] Speaker 2: that the third institution is the European Commission, which kind
[25:56] Speaker 2: of acts like the administrative arm. It comes up with
[25:59] Speaker 2: the proposals which are then approved by the Parliament and
[26:02] Speaker 2: the Council. Now the College of Commissioners so these are
[26:06] Speaker 2: kind of the heads of departments for the Commission. They
[26:08] Speaker 2: are also scheduled to change this year, and they also
[26:11] Speaker 2: tend to change as in like they're often not kept
[26:14] Speaker 2: on for subsequent terms, and the selection of those they're
[26:18] Speaker 2: selected by the Council and the Parliament. Therefore, they will
[26:22] Speaker 2: also depend on what's happening at national level, and therefore
[26:26] Speaker 2: this shift to the right at national level could effect
[26:28] Speaker 2: who's actually made into the new commissioners. So one thing
[26:32] Speaker 2: just to note as well is this could have implications
[26:34] Speaker 2: for a domestic or intra EU policy. But the EU
[26:39] Speaker 2: has also been probably one of the biggest advocates and
[26:43] Speaker 2: major economies who have pushed for climate action in the
[26:46] Speaker 2: international negotiations. So if we do see, say the US,
[26:51] Speaker 2: which is also pushed for bold climate action, and these negotiations,
[26:55] Speaker 2: we see the US say withdraw from the Paris Agreement
[26:58] Speaker 2: and the EU become less then this has even kind
[27:01] Speaker 2: of more further less optimistic grammifications for global climate deals
[27:06] Speaker 2: in the future.
[27:07] Speaker 1: One of the things that I've been hearing at events
[27:09] Speaker 1: and when I see people, they talk about how this
[27:11] Speaker 1: attention has shifted to the US because the Inflation Reduction
[27:15] Speaker 1: Act and that they're looking to Europe to essentially, at
[27:19] Speaker 1: this EU level past a different set of laws that
[27:22] Speaker 1: will make it a more attractive environment. Do you think
[27:25] Speaker 1: that with this potential shift to the right and change
[27:28] Speaker 1: in who's actually over there in Brussels, they'll essentially walk
[27:32] Speaker 1: away from that and that will no longer be part
[27:35] Speaker 1: of their strategy to attract investment. They won't be going
[27:38] Speaker 1: as fervently for those green dollars and those businesses that
[27:42] Speaker 1: are part of the transition.
[27:43] Speaker 2: I think it's not as click out as you might imagine,
[27:46] Speaker 2: because say the kind of center right and further right parties,
[27:50] Speaker 2: they often do support industry and companies, so they will
[27:54] Speaker 2: likely be in favor of attracting as much as investment
[27:57] Speaker 2: and support to local businesses possi. However, whether they want
[28:02] Speaker 2: to do it through substantive green support or say ambitious
[28:06] Speaker 2: climate regulations, that is less likely. So even if we
[28:09] Speaker 2: look at the center right political group the EVP in
[28:12] Speaker 2: the European Parliament, they have in the last four years
[28:15] Speaker 2: only voted for sixteen percent of the green policies that
[28:19] Speaker 2: came up, So it's quite uncertain, but it's less likely
[28:23] Speaker 2: that they were therefore advocate some of the more ambitious
[28:27] Speaker 2: policies that are up currently up for debate and being
[28:30] Speaker 2: devised by the European Commission to promote these green dollars
[28:34] Speaker 2: in terms of kind of industrial support that's focused on
[28:37] Speaker 2: the energies transition.
[28:39] Speaker 1: So one final country I'd love to hear more about
[28:41] Speaker 1: is South Africa. They've been having rolling blackouts and their
[28:44] Speaker 1: energy system is well controlled by a state owned utility ESCAM,
[28:49] Speaker 1: and there have been some changes there in terms of
[28:52] Speaker 1: trying to look towards a more secure energy system, and
[28:54] Speaker 1: their approaches included the incorporation of additional gas. Do we
[28:59] Speaker 1: think that this election is essentially one that could go
[29:02] Speaker 1: either way? And are there changes that we could essentially
[29:06] Speaker 1: be looking for when it comes to their energy policy
[29:09] Speaker 1: or is it more likely to be election year or
[29:11] Speaker 1: not a year of more of the same.
[29:13] Speaker 2: So yes, absolutely, this is a crucial election for South
[29:16] Speaker 2: Africa because we could actually see that the ruling African
[29:20] Speaker 2: National Congress that ANC, which has been in power since
[29:24] Speaker 2: nineteen ninety four, could see support wane and it could
[29:28] Speaker 2: lose its overall majority in the National Assembly. So we've started,
[29:32] Speaker 2: actually the ANC start to have talks with opposition groups
[29:36] Speaker 2: about potential alliances informal or formal. So, as you mentioned
[29:41] Speaker 2: es CON the state owned utility, it's seem significant financial
[29:45] Speaker 2: losses in the last few years as well of allegation
[29:48] Speaker 2: of mismanagement and corruption, and South Africa has had possibly
[29:51] Speaker 2: its worst year in terms of blackouts known as load
[29:54] Speaker 2: shedding over the last year. Energy is likely to be
[29:58] Speaker 2: at the heart of the this year. However, it's not
[30:02] Speaker 2: clear that we'll see significant change even if the ANC
[30:05] Speaker 2: does indeed lose its overall majority. So the ANC has
[30:09] Speaker 2: had a mixed record, I think it's fair to say,
[30:11] Speaker 2: and clean energy policy are shown by the kind of
[30:13] Speaker 2: fluctuations and support for its renewables auction program, and its
[30:17] Speaker 2: ministers have been criticized for blocking this path away from coal.
[30:22] Speaker 2: So if the election kind of weakens the ANC and
[30:25] Speaker 2: those other parties come in and they do have more
[30:28] Speaker 2: ambitious climate and energy policies, then we could seek more
[30:32] Speaker 2: support for unbundling es COM or indeed more support for
[30:36] Speaker 2: renewables and other kind of clean energy technologies.
[30:39] Speaker 1: Great well, thank you for taking us on this trip
[30:42] Speaker 1: really around the world and what is a momentous election year,
[30:45] Speaker 1: Vicky Derek, thank you very much for being here today.
[30:48] Speaker 2: Thank you very much for having us, Thank you very much.
[30:50] Speaker 1: Dinner Switched Down produced by Cam Gray with production assistance
[31:02] Speaker 1: from Kamala Shelling and Ulushi Kurunorate. Bloomberg NEF is a
[31:06] Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This
[31:09] Speaker 1: recording does not constitute, nor should it be construed, as
[31:12] Speaker 1: investment in vice, investment recommendations, or a recommendation as to
[31:15] Speaker 1: an investment or other strategy. Bloomberg NEIF should not be
[31:18] Speaker 1: considered as information sufficient upon which to base an investment decision.
[31:22] Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes
[31:25] Speaker 1: any representation or warranty as to the accuracy or completeness
[31:29] Speaker 1: of the information contained in this recording, and any liability
[31:32] Speaker 1: as a result of this recording is expressly disclaimed.

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