09/11/2022
Larry Fink, CEO of BlackRock, the world's largest asset manager (10 trillion USD in assets under management in January 2022) gave this shocking interview on 24 October 2022, unfortunately available only in French or German.
https://www.pme.ch/invest/2022/10/24/larry-fink-ceo-de-blackrock-la-suisse-est-pour-nous-lun-des-marches-les-plus-importants-539793
Here is a translation of the part about fossil fuels [my notes in square parenthesis]:
Let's talk about BlackRock's sustainability strategy. What is your position on oil and gas facilities?
We believe in the strategy that climate risks are also investment risks. If you owned carbon stocks [ie, fossil fuels] last year, you did very well. But if you own sustainability stocks [renewable energy] you have done rather poorly over the one-year horizon.
The conclusion?
When we talk about climate risk as an investment risk [who does?] we are talking about a longer time horizon. With a three-year horizon, the comparison of returns would have been more balanced [ie, we choose fast profits over sustainability].
How important is it to you to reduce carbon emissions?
Decarbonisation is very expensive. This is particularly true given the imbalances between supply and demand in gas and oil. For gas in Europe, we have extreme valuations. On the other hand, oil prices have returned to the same level as before the Russian invasion of Ukraine. However, in the long term, the energy transition is taking place and companies need to adapt their business models accordingly.
So you are not turning away from investments in gas or oil?
We have always said that we will not give up our investments in this region. We have always been an investor in gas pipelines, such as the Saudi pipeline, the Abu Dhabi pipeline, the Texas to Mexico pipeline. We are convinced that gas will continue to play a very important role in the energy mix.
This is not unanimously accepted.
Some will disagree with me. But we have not changed our mind: a quick divestment from oil and gas is not a fair and just transition. It requires a long-term planning process while investing in decarbonisation technologies [but BlackRock does not invest in decarbonisation technologies].
So where do you see the path to carbon reduction for energy production?
I am a big supporter of new technologies and believe in carbon sequestration and recovery [certainly meaning *oil* recovery, ie, CCUS]. We believe that these technologies will compensate for the continued consumption of carbon [ie, admitting CCS and CCUS are a ploy to allow the continued consumption of fossil fuels]. The pipelines that were built for gas can one day be used for hydrogen [hinting at the planned future of fossil fuel companies as they see it: blue hydrogen, ie, hydrogen from fossil fuels with carbon sequestration paid for by taxpayers].
How do you judge the development of investments in the field of sustainability in general?
As in any emerging market, there is bad behavior. But that does not mean that everything is bad. There has to be a long term comprehensive plan and a phased approach if it is to be done in a fair and equitable way. The only way to do it fairly and equitably in Europe is for governments to subsidise energy costs [hinting at subsidies for fossil fuel companies to implement CCS or CCUS].
What do you think of the action of governments before the crisis?
In many places in Europe, there were debates about limiting supply while demand remained constant. And so we had a big imbalance in hydrocarbon [fossil fuel] reinvestment. Now we see how energy prices have risen [suggesting that trying to reduce the extraction of fossil fuels can only result in high energy prices, ie, pain for everyone].
But how do you make the transition to zero emissions?
It is like a balloon. If you take out a little air, the balloon shrinks if you don't reinflate it. The same applies to conventional sources of oil and gas: if you deflate the balloon, you lose about 8% of the available energy every year. In the case of fracking, the figure is as high as 20%. In order to maintain stable energy costs for households in Europe, it is therefore essential that we continue to reinvest in these areas [justifying BlackRock’s planet-dooming investments].
What about alternative energy sources?
We have always believed that there needs to be a long-term strategy to use traditional energy sources [ie, fossil fuels] combined with investment in new technologies to replace traditional ones. Now solar and wind energy are certainly competitive with oil or gas. But the problem is that there is not always sun and wind [totally ignoring storage and the fact hybrid wind/solar plants need very little of it]. This is why wind and solar energy will not be able to prevail on their own at present. New technologies are needed.
De passage à Zurich, le patron du plus grand gestionnaire de fortune du monde se confie sur le développement durable, les cryptomonnaies, la situation mondiale et ses racines à Credit Suisse.
