The Case for Climate Capitalism

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This transcript is from a CSIS podcast published on April 1, 2024. Listen to the podcast here.

Akshat Rathi You just need a lot of different solutions, and they will work differently in different places. I wanted to showcase that, which is, it is not one thing that that'll solve this problem. It's many things.

Lisa Hyland: Hello and welcome to Energy 360, the podcast from the Energy Security and Climate Change Program at CSIS. I'm your host, Lisa Hyland.

This week, Ben Cahill interviews Akshat Rathi, a senior climate reporter for Bloomberg and author of the book Climate Capitalism: Winning the Race to Zero Emissions and Solving the Crisis of Our Age.

In exploring what climate solutions were being deployed at scale, Akshat found many examples of successful solutions and business leaders, politicians, and individuals are already implementing innovative ideas around the world.

Rathi also discusses the different approaches to climate action in countries like India, China, the U.S., and Europe, highlighting how creating the right policy environment can really unlock the potential for innovative climate solutions.

Here’s Ben to kick off the conversation.

Ben Cahill: Akshat Rathi, thank you so much for joining us on the podcast today.

Akshat Rathi: Hey, it's great to be here.

Ben Cahill: Yeah. I'm really looking forward to the conversation. Before we get into the details of your book, Climate Capitalism, can you just briefly introduce yourself and tell us a little bit about your background and your career and what you did before writing this book?

Akshat Rathi: Yeah. I'm a senior climate reporter for Bloomberg News, and I sort of got into journalism in an unusual way. I did an engineering degree studying chemical engineering in India and then a PhD in organic chemistry at Oxford. I used to write as a hobby, and after my PhD I didn't feel like I wanted to stay in academia for all that time, but I still wanted to be in a world of ideas and exploring science and technology. And so fortunately, got a job as a journalist and have been a journalist for a decade now. And I started from the place of science and technology, but now I do everything that ties to climate that could be finance, business, politics, economics, and I kind of define my beat as writing about solutions and false solutions.

Ben Cahill: Yeah, that's really interesting. So when it comes to writing about a lot of these emerging technologies, that technical background serves you pretty well, I imagine.

Akshat Rathi: Yeah, I mean, it's been useful to have scientific training to deal with what is getting more and more complicated technology for all things that we are decarbonizing.

Ben Cahill: Yeah, definitely. The book is a really enjoyable read. I think for people who are feeling hopeless or skeptical about progress on climate, it's a nice antidote to those feelings because a lot of books about climate change are pretty apocalyptic. There's a certain genre of climate books that are really about the bleak feature that we're all facing this dystopia that's coming. But I've noticed that recently there's a different type of book that a lot of people writing, which is a little bit more optimistic. I would put your book in this category. Others like Hannah Richie's recent book, not the End of the World. So, to start, maybe you can just talk about why you took this approach and why the optimism, why these particular types of stories.

Akshat Rathi: Well, I started this book in 2019 when I pitched it, and at the time when I looked around, what I saw was a public discourse that looked at the worsening problem of climate change and the worsening impacts, and then turned around and saw a lack of leadership around the world on trying to tackle the problem even though the Paris agreement had been signed, even though net zero as a framework had taken hold of at least the technocratic narrative. And I wanted to look at whether it is true that despite all these macro forces solutions aren't working as they ought to start working, we've been kind of late at this climate thing, but it felt like Paris really created a momentum, but has it translated into something? So I wanted to answer a question, and everywhere I went as a reporter, I found solutions and they were working at scale, not all of them, not everywhere, but everywhere.

There were some solutions that were starting to work at scale, and so the frame around climate capitalism that you can actually use the capitalistic economy and actually tweak it to work for tackling climate change just became stronger and stronger. It wasn't something I knew was happening and I wanted to just show you. I wanted to actually find out, and all the examples pointed to that direction. So optimism wasn't the desire, but it was the outcome from the reporting that came through. And I think we are seeing a number of books around this topic now because that's where the facts are pointing to now.

Ben Cahill: Yeah, we seem to be in an interesting moment where the effects of climate change are obviously getting worse. They're very visible to more and more people around the world, and yet all those tangible signs of progress are also growing, whether that's capital for clean energy projects around the world, the pace of electric vehicle adoption, the fallen cost of key technologies. So in a way, it seems like things are getting worse and better at the same time. So maybe a book like this that is kind of talking about people who are at the leading edge of some of these technological breakthroughs and policy innovations, these are important stories to tell.

Akshat Rathi: Yes, we do live in a two track world, right? Climate impacts will continue to get worse because we continue to put greenhouse gas emissions into the atmosphere and that's going to continue to warm the planet, and we know what that does. But it is also true that we are finally really putting our minds and capital to work on climate solutions. And it's not just a story that's happening in Europe or in China, it's also happening in the U.S., which for a long time has been laggard at climate action and has suddenly changed under this current administration. And it's happening in India, which again, as a developing country, you would expect to be able to use as much fossil fuels as they can to grow their economy, but they see an opportunity in clean energy. So it's not the same system, but climate capitalism in its different flavors is starting to play out all around the world.

Ben Cahill: So let's talk about the structure of the book. This is a book about climate, capitalism and stories of innovation around the world, but it really centers on individuals. And the way you've written the book is that each chapter is essentially about a person, a person in a different context. Some of them are political leaders, some are bureaucrats, some are entrepreneurs. A number of these people are quite famous, but others are fairly obscure bureaucrats. Maybe climate nerds know who they are, but their names are not really household names. So how did you choose which stories to tell and why did you choose this structure for the book?

Akshat Rathi: The journalistic instinct was to try and give you understanding of all the things that are needed to get to zero emissions, which is not just technologies, but also laws finance policy and to show them working in different contexts. But it's sort of natural when you try and find the places where these solution stories are played out, that there are usually one or two characters that have been in that journey for a long time, whether being the driver or being in the mix, observing how these changes are happening and even shaping them at different moments in time. And even though it's not just those individuals that have made it happen, and I hope I do a good job in trying to show that it's the system that is being changed, but that individuals do have agency because many of the things that we are doing to try and tackle climate change are things we've never done in the past. And you require people to come up with innovative ideas. And I'm not just talking about innovation and technology sense, but also policy innovation, finance, innovation. You just have to do something differently and it requires a person to do it. And so having the characters in there was helpful as a story ploy, but also not to say that they were the only reason and also not to say that they did not matter. So that hopefully is coming through with the characters and how they build these solutions out.

Ben Cahill: Yeah, it does, and it's interesting when you read through the book to try to draw out some of the common threads between these innovators and entrepreneurs or between government officials, I wonder if your objective in writing the book was to sort of draw these common threads across different contexts and different types of countries and economic systems, or if it was just a byproduct of telling these stories and then sort of seeing what worked in different places at different times.

Akshat Rathi: I mean, there is this thing in the climate energy narrative that often comes around, and it's not just because climate and energy lends itself to it. I think it's because the information ecosystem we operate in these days forces us to want to find an easy solution, a silver bullet, one thing that'll solve the problem. And as somebody who spent any amount of time looking at the climate problem, that's not the case. You just need a lot of different solutions and they will work differently in different places. I wanted to showcase that, which is, it is not one thing that that'll solve this problem. It's many things. And the book then tries to do that by showing you can actually make different economic and political context to work for those solutions. So scaling up solar in India is a very different challenge than scaling up solar in the UK because India has very different capital constraints. It has different skill sets, it has different bureaucracy, and yet because the economics of wanting deploy a clean energy technology that is cheaper can then start to drive alignment across these other hurdles and make scaling possible. And so what you learn in India can now be applied in Kenya, can be applied in Nigeria, but can't be applied in the U.S. And so you just need these different examples to really make sense of the complexity of the climate problem.

Ben Cahill: Let's spend a little bit more time on that particular question because you have a great example of a solar entrepreneur in India. That's the focus of one of the chapters of the book. In that chapter, you tell the story about what works in the Indian context. It's a country where you have higher interest rates, where capital availability is more challenging, where the government set ambitious targets for solar deployment. But if you're an entrepreneur, you have to be creative and working your way through the system. So maybe just tell a little bit more detail about that story and as you said, how it relates to other developing country context.

Akshat Rathi: So the story is about Sumant Sinha who's the CEO of this company called Renew. It's one of the largest renewable energy companies in the world, but definitely one of the largest in India. And it built itself during a time when the government had set a goal to try and meet 20,000 megawatts of solar by 2022. This was a goal set in 2014 just before the Paris Agreement. And so there was clearly a momentum to try and deploy this technology, but having a government mandate is very different from an entrepreneur actually being able to do it. And so Sumant is this person who grew up in India, studied in the us, did a finance time on Wall Street, and then went back to India for opportunities and just saw that renewable energy is a place where he could actually try and build a company, but just having the government mandate wasn't enough, he needed capital.

And that's when coming from Wall Street, he sort of tapped his finance contacts in Goldman Sachs, but also from places like the Canadian Pension Fund to bring in that capital. And then he had to work on the ground. India's a difficult place to do business, was very difficult at his time, has been getting easier as both the is growing and the government has learned about how to make business easier. So he had to figure out ways in which he could make sure he gets payments from the right places at the right time. And even though that is a unique situation that he had to overcome, as soon as Renew was able to build a few large scale renewable projects, the floodgates opened because now Indian Capital could see that actually you could make money doing this thing. And so now Renew is actually competing with other larger renewable energy players in the market that he was operating in initially. And so that to me is an example where you have to connect these dots and having individuals with different experiences and different places really helps.

Ben Cahill: Yeah, that's really interesting. Let's talk about a different market and different individual. I think one of the most interesting chapters is about Wan Gang who is a Chinese engineer. He worked at Audi in Germany, I believe he had a PhD in physics. He really became this pivotal figure in jump starting the electric vehicle industry in China. It's a great story. So I wonder if you could just talk a bit about his role in shaping China's industrial policy and the way that China established this dominant position in EV manufacturing. How did he pull it off and how do they change the system to create the system in China?

Akshat Rathi: So it won't be an exaggeration if you gave it to a historian to write the history of electric cars that actually Wan Gang is going to stand out as a bigger figure than Elon Musk at a time when, of course one gang did become a billionaire and didn't go and own a social media platform. So he's not shouting about his story to the world, but also he operated in the Communist Party where you're not supposed to be the person taking credit for what you do, but there is a sense that people have of China, which is that, well, it's a dictatorship. The dictator says this must happen. So it happens and it's nothing like it. It's a very complicated political system. And yes, there is a lot more state direction and yes, the desires of the leader are met, but there is a much more complicated way in which they're met that individuals do have agency in driving the changes.

So Wan Gang grows up in China, goes to Germany, studies, goes up the ranks in Audi, but then he looks back and he looks at China and he says, well, if Chinese people are supposed to live the kind of lifestyle that Germans do, they'll have to burn 16 times as much oil per person per year. And there's just not enough oil in the world to do that. And so he's being visited at the time by Chinese leadership, the science minister, because they want to try and figure out how the Chinese automotive engineering can get to a stage where it can compete with the rest of the world. And it just makes the case that, look, this engine has been worked on for more than a hundred years and the western automakers are really good at it. And yes, you could maybe match up to their level, but it's just going to take an amount of investment and time that you don't have, especially at a time when if you want these two BYD cars running around in China, there won't be enough oil.

So why not invest in a technology that would use a different fuel source and also create a niche for China and its automotive industry to become a global leader. And that case sunk in. He was given sort of a decade to come up with a solution set. He was given an advanced research program and he brought in industry and academia to work on the problem. He sort of showcased that at the 2008 Beijing Olympics and the outcome of it, which is just a few electric cars and a few electric buses. But the Chinese leadership recognized that even at that time, the amount of oil that was being imported and the number of cars that were being driven in China and the air pollution that was growing in China just needed the solution to now start to scale up. And so then he's made the science minister, and from 2009, 2017, the Chinese state invest 60 billion into the industry, and of course many more times from the private industry to try and build out the manufacturing of electric cars and lithium ion batteries. And of course, the result is for all of us to see it is the largest maker of electric cars in the world. In fact, it has the largest electric maker in BYD, which is bigger than Tesla now, and it is the largest maker of lithium-ion batteries. So it really captured the market for the 21st century.

Ben Cahill: And in Washington DC there's a lot of anxiety about China's dominance of clean energy supply chains. I think especially with battery technology. And we've seen that there's a tension between rapid deployment of electric vehicles and trying to encourage EV adoption as fast as possible and a real worry about being overly dependent on China because of this dominant position they have right across the supply chain for minerals processing to battery manufacturing, all the things that go into EVs. And so I think understanding the origins of that story and how targeted industrial policy in China worked is important. That might not work in many other countries, but as other countries step up and try to compete with China to capture parts of that value chain, it's important to understand the kind of scale of the activity and really how far back it went.

Akshat Rathi: Very much. And I think it happened in a time that was very recent and was happening in open and yet because as China really understanding how it played out required a lot more nuance. And I think I should credit CSIS for their work on the China transition because the 60 billion figure, for example, comes from a CSIS report. You could not get easy figures to figure out how much state investment went into this transition without doing real hard work to figure out the numbers. And that 60 billion figure is still on the conservative side. There might be more in indirect advantages that were given to the industry.

Ben Cahill: Yeah, interesting. The book is full of lots of stories about innovators and startups that are dealing with things like west emissions intensive manufacturing of cement and designing bigger and more efficient wind turbines. Lots of interesting stories, but you have one chapter that's about the International Energy Agency and fat, and I wanted to talk about that. The chapter really tells a story about one leader who changes an institutional mandate pretty quickly. I mean, the IA produces an incredible amount of data on all aspects of the energy transition, provides policy advice to governments, roadmaps to help decarbonize different societies. But all this is actually quite a recent phenomenon. I mean, what the IE is doing today is really very different than the original mandate of the agency, which was created out of the oil shocks of the seventies. And its forecasts are generating a lot of criticism too. You've probably seen in recent months there's been this kind of robust debate about whether or not the IA is strain too far from its original mandate. So what story did you want to tell about the ia? What did you notice about bureau's leadership at the institution and what did you uncover in these interviews that you did?

Akshat Rathi: So I wanted to try and figure out how in the 21st century you're going to need not just governments and companies working in tandem trying to shape climate capitalism, but also international institutions that would enable intergovernmental transfer of wealth investments but also lessens during this transition because we just have to do it at speed. And it so happened that I was starting this book at a time when the IEA was undergoing a transformation. So I was curious what that looked like and the background to it is that the I is forecast had been mocked during the early two thousands and even in the 2010s on clean energy because it was being so conservative when every year the amount of solar or wind or eventually electric cars that were being deployed, which just far being outstripped by any IA forecast. Also, the United Nations itself had recognized that they needed a global energy agency.

And I was doing a particular job because that was its mandate about making sure that there's energy security and access to fossil fuels for rich countries for the OECD countries. But that wasn't good enough for what was needed in the world, which was a lot of renewable energy deployment. And so they created the International Renewable Energy Agency in 2009. And Fatih Birol, who is sort of an unusual character, typically the IEA chiefs are people who are ministers at their member countries or former ministers. But Fathi is an economist and he was the chief economist at the time and sort of made the case that, look, it's a time that IEA needs to reinvent itself to become more relevant for what its mandate is in the 21st century, which alongside its members, were starting to look at climate as a real opportunity to try and reshape the energy landscape.

And so he makes this case at a time where, of course at that time in 2014, Russia had invaded Crimea and there was a real fear of what eventually played out in 2022 happening, which is gas supplies could be cut. And so he uses that moment and the Paris Agreement, which is happening in Paris, the headquarters where the IEA sits, as a combination of saying, look, we need to expand the mandate from purely looking at energy security and oil to including gas and renewables. And once he secured that, the changes as we see them have flowed. And of course now we've come to a point where, as you said in the recent months, the discussion has been around, well, is it going too down the clean energy route and not really looking at its energy security mandate? And I've posed those questions to the IEA and their response is simply, previously we were criticized by climate activists, now we are being criticized by the fossil fuel industry. We are clearly doing something right.

Ben Cahill: And I think an important shift for the IEA under Fatih Birol that it started to engage more with non OECD countries and with the practical problems that economies like India and China and developing countries were facing. So he pivoted it from being an OECD institution to one that's kind of engaging with transition issues in the wider world.

Akshat Rathi: And that was very important because in the 21st century, who are the biggest energy consumers? They're not just rich western economies, but also India and China, and they're big importers of fossil fuels, right? India has coal but doesn't have oil. China has coal but doesn't have oil. And so you wanted to bring in more of the energy pie to try and really grapple with the energy problem. And now I can boast that it is representing more than 80% of global energy consumption.

Ben Cahill: So let's talk about what you uncovered about the policy environment and the incentives for innovation that led to some of these breakthroughs and successes that you chronicle in the book. So you talk about a pretty wide range of different countries and situations, right? From state capitalism in China, as we've discussed to telling the story about Denmark and energy reforms after the seventies is a pretty heavy hint for the state to other countries like the us, which is a more or less a fair sort of free market system. What struck you about common threads in terms of incentives and enabling conditions in different countries?

Akshat Rathi: I would say the framework for climate capitalism that can be applied across all these economies, despite their differences, is that you are in this world where market economies definitely have advantages. There are signals that markets can provide that can be taken advantage of, but without ensuring that the costs of those profits that businesses make are accounted for, there's no way to solve this problem. How do you account for those costs can be very different in different political contests. So in the U.S., much more free market, but also a divided politics on climate gets you the Inflation Reduction Act, a sort of supercharged investment only model that's giving you tons of tax credits to try and build out the new energy technologies that we need. In Europe, which does have some financial capacity, but nothing like what the U.S. does. But it does have the political backing on climate action despite a few far-right governments coming here and there. It is committed to the transition and that it uses to try and shape the market, try and provide some incentives, but really create an ecosystem where those solutions can find a profitable outcome. China is very different, very much not just state driven, it's also jingoistic. It's trying to create national champions that can become global champions because it is a model that has worked for it in other contexts. And I would like to replicate that in every different clean energy technology. And for India, it's much more different because neither has the financial capacity nor the technology capacity that China does. And so it is trying to figure out how it can use what our economical technologies to its best outcome. And so the common thread is trying to figure out how exactly what kind of policy environment needs to be created to unlock the potential of both technologies and the people that those places have who are just waiting for opportunities to try and deploy these climate solutions. I think that is one thing that has been heartening throughout all this reporting. Everywhere I go, people understand the climate challenge and they're really waiting to try and deploy those solutions. They just need the right environment to unlock that potential.

Ben Cahill: Yeah, that's a great way to put it. The book has a couple chapters that deal with the role of investors and capital markets in driving change. So you talk about sustainability drivers at companies tell the story of Unilever, you also tell a story about activist investors, companies like ExxonMobil. So what did you learn from telling these stories about investor pressure? And I wonder if you see a big difference between what works in the United States, what works in Europe, and what might work in other contexts in terms of investor pressure driving corporate behavior to do driving companies to do different things.

Akshat Rathi: I mean, it's such an interesting question to ask right now. If you look at what's happening in the U.S. with ESG, these environmental social governance metrics, there's a real divide between the politics and the investor base. And then you look at what's happening with ESG in Europe and you have heavy handed regulations coming in and they're kind of messy and you have real fight between investors and politicians on a different dimension altogether. And yet, if you look at the global picture, we invested more money into the energy transition than ever in 2023, and we are talking $1.8 trillion now. We've kind of got into that trillions of dollars space. And so you are getting these mixed signals, which is like, oh, investors initially thought there was money to be made. And now because of what's happening with the politics and the regulations, it's not clear whether they will.

But on the other hand, you're seeing clear direction on big, huge investments. And to me, the best way to make sense of it is that with businesses having macro trends can be a real clarifying driver of profits. And the macro trend in the 21st century is that we will have to reach zero emissions eventually. You may not want to do it by 2050, it's too expensive, but you will have to do it because climate impacts are just going to keep getting worse. And the impact on your own business and the profit margins of your own business are only going to keep getting worse. And so unlike politicians who have to sell themselves every few years and who can use political wedge issues and cultural issues to their advantage and disadvantage, businesses have to operate in the real world, in the real economy and have to provide products that society wants to buy to be able to continue to profit. And that's not going to happen if they don't have an answer to climate change. So despite the sort of confusing narrative for investors right now, the macro trend is clear, and I try and give two examples in the book of how that macro trend played out. Again, just two examples, but if you're seeing confusion right now, that will play out into clarity over a decade old time and that macro direction is clear.

Ben Cahill: Yeah, I think that's a good way of framing things. I mean, obviously a lot of clean energy project developers face some challenges. Last year we kind of exited the zero interest rate environment problems with deployment, with workforce development permitting. These all came to head in the United States, and I think in other markets too. But it sounds like you're saying that was a clarifying moment and still the macro drivers for these industries are pretty clear and they'll continue fair.

Akshat Rathi: And I think even as we see some companies starting to struggle, Orsted for example, which is another chapter in the book, had a really difficult year in 2023, but already you're starting to see a turnaround. The same wind project that they had to pull out of last year, they've now won the bid again in the U.S. and we are already seeing investors, which is a manufacturer of wind turbines and wind especially, has gone through a really tough time over the past couple of years, turn around and be profitable and start to make turbines again at scale, have a big order book. And so the macro trend for the clean energy industry took a little bit of a hit because of these supply shocks because of inflation, because of interest rates. But again, they're starting to turn around. So there is just a thing about technology that sort of drives these things to be cheaper and the economics of them to be better. And those macro trends matter to investors way more than the short-term volatility of which government is in power or what policies in power. The 21st century is going to be defined by how we deal with climate change.

Ben Cahill: I wonder if you could talk about your own career trajectory and talk about climate journalism. So it seems like climate journalism is flourishing even if a lot of news organizations are struggling these days. What's changed throughout your time of covering this beat? What do you see as the exciting stories to tell about climate change in the business of climate, and how is this affecting the way that journalists cover the sector or cover all these sectors?

Akshat Rathi: It's a funny one because I have to thank Donald Trump for me getting into climate journalism in the first place.

Ben Cahill: Oh, that's not something I expected you to say.

Akshat Rathi: It was during his 2016 bid for the first presidential run where he started talking about clean coal. And my editors are like, what is he on about? And that's when I started thinking about climate solutions, which is not how I think most climate journalists have gotten into climate, but it was that period where you saw, because the business case for climate action had sunk in that both from businesses wanting to try and figure out climate solutions, but also sponsoring media organizations to write more about climate solutions, but also news organizations. Finally recognizing that with the Paris Agreement with these net zero targets that have been set with companies clearly defining net zero targets, the scope one, two, and three emissions, that there is a real change happening and that we can't be sitting on the sideline not understanding this massive macro trend. And that's resulted, as you say, in a massive growth in climate journalism all around the world, especially in U.S. and Europe.

But there's so much more to do, right in India, there's only shoots of climate journalism today. You need so much more. It's one of the most climate vulnerable countries, a huge economy, the world's most populous country. And yet, climate journalism is only just starting. So there is much more room for climate journalists to really tell the story in other parts of the world, in South America, in Africa, in India, in Southeast Asia, and that's not happening anywhere at scale. But also, as you recognize, this is happening at a time where journalism as a whole is really struggling. The business model has been difficult to compete with big tech. The social media landscape hasn't been kind to journalists, hasn't been kind to journalism. We might not see the price of a loss of journalists right now, but we will see them in a few years and maybe it's too late by that time to actually do something about it. And that would be a really difficult place to be given the number of changes that are happening to our world right now and why journalism is vital at this time.

Ben Cahill: Yeah. Well, I'm definitely glad that you've continued to tell these stories and that you've collect to them in this book. The book is Climate Capitalism, winning the Race to Zero Emissions and Solving the Crisis of Our Age. Thank you so much for joining us today. It was really great to talk with you.

Akshat Rathi: It was such a fun conversation. Thanks for having me.

Lisa Hyland: Thanks to Akshat for joining us. The book is great, and we encourage you to pick it up if you haven’t already.

You can find more episodes of Energy 360 wherever you listen to podcasts, find us at and follow us on social media for the latest updates from our team. As always, thanks for listening.