In this informative session, experts discuss the urgent need for global collaboration to address climate change, emphasizing the importance of investing in climate-resilient infrastructure, decarbonizing the global economy, and integrating natural capital into economic models. Key figures reveal an unprecedented rise in greenhouse gas emissions and significant economic opportunities linked to sustainable investments, such as renewable energy and infrastructure in developing countries. The conversation highlights Brazil's potential role in leading sustainable development while managing its considerable biodiversity resources and addressing the challenges posed by its current emission rates.

The panel underscores the importance of innovation and collaboration, involving all stakeholders in transforming to a net-zero economy. Experts identify the major challenges, such as securing necessary capital, scaling technologies, and maintaining affordability. They stress the need for coherent policies and regulatory frameworks to ensure a fair balance between economic growth and environmental preservation, while leveraging Brazil's unique position as an ecological powerhouse to set a global example.

Main takeaways from the video:

Please remember to turn on the CC button to view the subtitles.

Key Vocabularies and Common Phrases:

1. resilient [rɪˈzɪl.i.ənt] - (adjective) - Able to withstand or recover quickly from difficult conditions. - Synonyms: (flexible, tough, adaptable)

Investing in resilient infrastructure in developing countries could deliver $4.2 trillion over its lifetime.

2. decarbonize [diːˈkɑːr.bə.naɪz] - (verb) - To reduce or remove the carbon emissions associated with a process. - Synonyms: (decrease emissions, clean, neutralize carbon)

The question is how to decarbonize the global economy and avoid making it worse.

3. trilemma [traɪˈlɛmə] - (noun) - A situation in which a difficult choice has to be made between three alternatives, especially when each is equally undesirable. - Synonyms: (dilemma, quandary, predicament)

So those three together we call the energy trilemma, which is an equation that is very, very difficult to solve.

4. net zero [nɛt ˈzɪə.roʊ] - (adjective phrase) - Refers to achieving an overall balance between the greenhouse gases put into the atmosphere and those taken out. - Synonyms: (emission free, carbon neutral, balanced emissions)

Transforming the global economy towards net zero is a massive undertaking that takes significant amount of capital.

5. ecosystem services [ˈiː.kəʊ.sɪs.təm ˈsɜː.vɪsɪz] - (noun phrase) - Benefits provided by ecosystems that contribute to making human life both possible and worth living. - Synonyms: (environmental services, ecological services, natural benefits)

Over 50% of the global GDP is dependent highly or moderately in ecosystem services.

6. pollination [ˌpɒl.əˈneɪ.ʃən] - (noun) - The transfer of pollen to a stigma, ovule, flower, or plant to allow fertilization. - Synonyms: (fertilization, cross-pollination, reproduction)

Services provided by nature be air and water purification, pollination, carbon sequestration, you name it.

7. sequestration [ˌsiː.kwəˈstreɪ.ʃən] - (noun) - The action of taking legal possession of assets until a debt has been paid or other claims have been met. - Synonyms: (confiscation, isolation, sequestrating)

Services provided by nature be air and water purification, pollination, carbon sequestration, you name it.

8. infrastructure [ˈɪn.frəˌstrʌk.tʃər] - (noun) - The basic physical and organizational structures and facilities needed for the operation of a society or enterprise. - Synonyms: (framework, foundation, base)

Significant investment in infrastructure is needed over the next 15 years, around $90 trillion by 2030.

9. mainstreamed [ˈmeɪnˌstriːmd] - (verb) - Integrated into the prevailing current of thought or action. - Synonyms: (incorporated, integrated, normalized)

You have an interesting vision on why natural capital should be included and mainstreamed in balance sheets.

10. biofuels [ˈbaɪ.oʊˌfjʊəlz] - (noun) - Fuels derived directly from living matter. - Synonyms: (biocombustibles, green fuels, renewable energy sources)

We are adopting biofuels in our light vehicle fleets.

Climate-Proofing the Economy

Stage has already passed through us and now we are in the deal with it stage dealing with climate change and its consequences. And for that you already know very well these facts. The last 10 years the Earth is now about 1.2 Celsius degrees warmer than it was in the pre industrial era. And the greenhouse gas emissions reached a new record high in 2023. So we're going to talk today about what the world, but also the developing economies need to do and can achieve by joining forces while considering innovative economic approaches.

And these are a couple of hopeful fun facts, I should say. According to the UN, significant investment in infrastructure is needed over the next 15 years, around $90 trillion by 2030. But new infrastructure must be compatible with the climate goals. Do you agree with me? Investing in resilient infrastructure in developing countries could deliver $4.2 trillion over its lifetime. That means an investment of $1 in resilient infrastructure on average yields to $4 in benefits. And last but not least, sustainable agriculture and strong forest protection. This is a message for Brazil could generate over $2 trillion per year of economic benefits, creating millions of of jobs.

So the question is how to decarbonize the global economy and avoid making it worse. First and second, Mr. Hans Kobler, welcome. Thank you for joining us remotely. You, Mr. Kobler, as a technology investor specialized in energy transition with 4.5 billion assets over management, what are the capital requirements that need to be collaborating and currently where is the failure? You also talked recently, you wrote a letter where you talked about that trilemma.

Yeah, well, first of all, thank you for having me. I'm very sad I couldn't be there with you in person. I was looking forward to it. But the airline didn't comply last night on the short notice. But you gave the numbers. You know, transforming the global economy towards net zero is a massive undertaking that takes significant amount of capital. 90 trillion, 150 trillion if you believe McKinsey. It's an enormous amount of money and people all want to go clean. There's a fundamental push towards that. But it also has to be affordable. And that sort of is the first challenge in that effort. And it has to be secure, secure from against the environment, has to be secure against the national a threat where the countries need to look at their supply first. So those three together we call the energy trilemma, which is an equation that is very, very difficult to solve.

In our view, the only way to do that is through innovation and collaboration, bringing together the innovators, the incumbents that are sitting on massive infrastructure Deployments that have still useful life and the capital and get them to be creative. Because what we are trying to do is very difficult. And from a financing perspective, we have a very strong supply. On the venture side, fostering innovation. I think we see tons of infrastructure that one mentioned infrastructure capital that is willing to put money to work once it's de risk. The hard part that is missing in many countries really across the world is that sort of missing middle where you are trying to scale up technologies in different regions and you do that before it's fully de risked with a strong offtake.

And some of the projects that we are looking at to decarbonize a global economy are just in capital requirements in the hundreds, if not billions of dollars. And to put that to risk is I think one of the major challenges we face today. Thank you, Mr. Hans Kobler, for that. I want to go to you Ilona, because you have an interesting vision now that Mr. Kobler was saying about getting creative, you have an interesting vision on why natural capital should be included and mainstreamed in balance sheets, in the business models and also decision making. And this the same way as climate now is an inevitable thing. So can you elaborate on this?

Sure. Thank you, Ximena. So to start, I'm really here to make the case for nature. It's not to make it more complex, to be honest. It's just otherwise there's no solution. So we need to integrate both lenses, climate, biodiversity into decision making. And why that? So if you look, over 50% of the global GDP is dependent highly or moderately in ecosystem services. Services provided by nature be air and water purification, pollination, carbon sequestration, you name it. A recent study by the Global Water Economy Commission just says that by 2050, 50% of the global food industry will be impacted by water crisis.

So what can we do to prevent that? Because we talk a lot about climate, but we are. It's not only for Brazil, like biodiversity is key. So what can we do? I think we really need and we should have done that. So we need to fasten up to mainstream natural accounting, natural capital accounting and valuation in balance sheets, in income statements. It's the only way we're going to incentivize business to actually protect and also restore nature at the speed we need. And this is not about monetizing natural assets for the markets. Like nature is honestly priceless. If we just account for the services that just the Amazon forest has to rain cycles just daily, we'd have like $1 trillion on electricity bill per day. So we can't price nature, but you need to value it.

And what is being done? Because this seems a lot, but actually you have to start a framework called the tanfd. So the Task Force for Nature Financial Disclosure to help businesses to understand nature in a value chain. We have already concrete examples of governments, but also companies dealing with natural capital. So just to know, China created something called the gross ecosystem Product just to help governments account for their performance, environmental performance. This is being piloted in over 200 sites, but also by Colombia, Sri Lanka, Sweden and other countries companies also. So I'll just mention Natura in Brazil, Natura Cosmetic Co.

Here they have something called the integrated Prof. And loss statement where they account not only for the financial returns, but for natural capital, social capital and also human capital. So what they do is to just help senior management to maximize returns across all four capitals. Right. So how do we go about that in terms of scale? So it's still, I would say very small adopters of the natural capital. I would say mainstreaming. But we have technologies today that we could use at a. I would say better price. We need to improve the price point. But remote sensing, AI, Edna, bioacoustics, it's there to help us doing that. I would say we will need regulation.

It's not a very, I'd say simple message, but we'll need regulation. Because in the countries where we see advancements, yes, it's coming from also compulsory regulations. But above all, I think we need honestly bold and responsible leadership. And I would say we have to start in rooms like this and it's the basis for future proofing our economies for ourselves, for future generations. So really include the nature lens, the biodiversity lands. I'm heading from cop 16 like to cop 16 in Cali tomorrow and hoping to push it there. But this needs to come as less complex issue. Let's do it together, let's learn how to do it. But fast, fast, that's the key.

And also talking about these frameworks to understand nature. Miguel Zeta is welcome as one of the, as the CEO of one of the biggest companies here in Brazil. What's your take? First of all, Jimena, thank you very much for having us today. Here, perhaps a word of context about ccr. We are the largest mobility platform in Brazil and in Latin America. We run toll roads, urban mobility which comprises trains, barges and subways. And we have a 20 airport network in our platform, in our airports platform, have a $5 billion CapEx plan going forward. So we are one of the main investors in infrastructure in Brazil.

And the challenge that Yolena was commenting is deeply ingrained in our strategy. So we have devised a vision for 2035. That vision has, when it comes to sustainability, five pillars. The first one is climate and environmental impact. The second one is impacting on the planet, also in our value chain, so our partners, equally important the engagement of our people. And to have all this happening at the same time, you have to have a deep transformation in the culture of the company and of society. And just a comment on these five pillars. When it comes to climate impact, we are pledging to be carbon neutral by 2035, which is for the sector self regulation.

Oh yes, you lost. The sector today doesn't impose any imperative for carbon emissions reduction. So we have self regulation target to be carbon neutral on scopes one and two by 2035. And you can dwell on that if you want. You can talk about that later. We are migrating all of our energy consumptions to the renewable space. So we want to be all green, 100% of our energy being sourced by renewables. And when it comes to nature, we are committing to be no net loss and if possible, nature positive. Which means that after our intervention, after our infrastructure investments, we want to leave the ecosystems better than they were before our investments.

But how to do that? Sorry to interrupt. Go ahead, please. How to do that? When the energy. Well, the transportation sector where your company navigates, it's responsible in the case of Brazil, for 9% of emissions worldwide, maybe 70% is, is that correct? It's around 10, 15%. And what we're doing today is picking all of the scope ones and two sources of emissions and working on pathways to reduce to zero by 2035. So we are migrating energy consumption to the renewable space. We are adopting biofuels in our light vehicle fleets. We are controlling fugitive emissions in air conditions. So everything that is Today generating scopes 1 and 2 emissions is being tackled to guarantee that we can reduce our carbon footprint.

On top of that, I think the nature equation is also very relevant, even more relevant in Brazil, because as we all know, this is the center of the world when it comes to biodiversity, when it comes to rainforest, when it comes to water. So it's really a very deep responsibility that we, companies, corporations that operate in Brazil, we have to be proactive in the sense of being ahead of the schedule, being ahead of the net zero 2050 milestone, which as we know, according to science, is what's needed to control temperature rise by the 1.5 degrees threshold that we all know. So we are being proactive and going ahead of the schedule.

Where do you think companies are failing when it comes for their sustainability strategies? I think there is an equation that has to be tackled which is fair value creation and impact in the ecosystems, in society, in the environment. And in our case, what we have devised, Ximena, is what we call an NPV positive strategy. So going to net zero, going to carbon neutrality by 2035 in the case of CCR will be net positive, which means we'll generate value because we are going to reduce 20% our energy costs by migrating all our consumptions to the renewable space. So I think these two equations, they are compatible.

Taking care of nature and doing profitable and good business. So that's the equation that we have to have to drive Mr. Kobler, back to you because there's another key factor to consider and we already talked about a little bit that runs in parallel with the economic approach that is technology. And you are currently looking for technologies and companies that are critical to your partners. So which are the ones that are being helpful to them to prepare for decarbonization? Yeah, it's a, you know, there's not. The challenge we are facing is enormous and there's no really a one size fits all or one solution that will cure us of all evil.

But if you break it down into the two key components to decarbonize, you know, we have to make sure that the problem doesn't get worse. That means we have to decarbonize the global economy. And then secondly, we need to enable them to deal with the more challenging environment we are facing. On the first topic, decarbonizing the global economy, it's not, it's not too complicated, right? decarbonize supply. The geothermal, nuclear, wind, solar, we are investing quite a bit there. It means electrify demand. You make industrial processes, transportation, electric to use that carbon free source and then connect the two in, in infrastructure that is stable and resilient and can sustain the attacks from a more ferocious environment that we are facing.

So that really goes from very simple things where we replace wooden distribution poles with composite poles that are more storm resistant to taking, you know, we are in Brazil, we are in Boston Metal, you know, sort of making the steel manufacturing more carbon efficient to, to dealing with the volatility of demand supply where we need long term seasonal storage like form. So it's really a multitude of technical solutions. We have probably 80% of the technologies we need today. So for them it's more a matter of scaling them. That's where we as eip, we try to help in that process by bringing together those innovators that often sit in America or in Europe, but connecting them with the emerging economies, with the emerging markets and making it a little bit easier for them to deploy. So that's certainly a key theme for us.

And then 20% of technologies, I think we still need a little bit more work because they clean electron can't do it all. Ultimately we need the clean molecules to help in here, whether that's hydrogen or ammonia. You know, some of the carbon capture technologies, it's, it's, it's not a one size fits all. We need all hands on deck for this. And, and you know, and I think we need to think of this as a global problem where, you know, the greatest ideas are sometimes coming from the most unusual places. And, and having that global exchange is very critical in our view. Great. Now Ilona, there's a tricky problem for emerging economies today, as you know, because how to curb emissions while still trying to get the standards of an economically developed country. Best example, Brazil itself.

Sure. And Ximena, I think It's a catch 22, but it's the last train that countries such as Brazil, but also if you take the whole G77, that's the last train train we have to the developed world. So I think Brazil has at the moment several plans. I say the master plan that connects to others is the ecological transformation plan led by the Minister of Finance. But you have also, you know, a biofuels plan, of course, you have the climate plan from the Ministry of Environment and others that connect into a, let's say a plan that would go through all the sectors that you mentioned here.

And because it's say country that is looking also for the nature land. So nature is also big. And why is this important? I think if we don't have ambition, because we can be Brazil is a food basket, but we can be, let's say a green power with low carbon agriculture, green energy power, but also keep our biodiversity intact because otherwise there's no climate, food or energy security without that. And so these plans are important. So how do we finance there? So today in fact it's being launched and yesterday the president of the national bank just said here today at the annual meetings of the IMF and World bank is being launched the country platform. This is also an endeavor by foreign Ministries of Brazil.

BNDs, our national development bank supported by defense. So Bloomberg is also with Brazil with attract investment because it's not because people are being nice to Brazil, it's because it's going to be A win win situation. We're going to decarbonize, we're going to protect our nature and companies will produce cheaper, cleaner products in Brazil. And so if we succeed, and I think we have to, and I think everyone in this room wants Brazil to succeed, many other countries will follow because Brazil is a role model to the developing world. But if we fail, that's tragic and we can't fail for all the reasons we said here before. So I don't think it's a choice, I think it's a must.

And of course there are issues. Let's say we have to align domestic policy. There is not a straight line with some of the ministries, but it's the last train to catch. And I wouldn't say that the world is not looking. I would say this region should be looked at as also, let's say, a basket of opportunities to decarbonize. So we can help. It's a win win situation. So do come and do help us to improve the regulation and the stability mechanisms to hedge our exchange rate. All this is coming into place small scale still. Hopefully the culture platform can help like accelerate and also disseminate the possibilities worldwide.

Thank you, Ilona and Miguel, now that she mentions this plan presented at the IMF meetings right now. You also mentioned Brazil can serve as the largest sustainability powerhouse in the world. But how is that when Brazil is currently one of the major greenhouse gas emitters? I think we all know that Brazil is the largest ecology superpower in the world, with the largest rainforest, with the largest water reserve, the largest biodiversity in the world. 20% of the whole biodiversity of the world is in Brazil. The greenest energy matrix. 90% of the electricity that is generated in Brazil comes from renewable sources. So this country is really a superpower powerhouse when it comes to sustainability.

There is, according to Boston Consulting, there is a huge investment opportunity of around 2 to 3 trillion dollars till 2050 in four areas, energy. So energy transition is definitely one of the leading drivers of that investment. Carbon markets, agriculture that Ilona has already mentioned, and the industry, green industry, cement, steel, with low carbon footprints. So there is really an outstanding opportunity of converging to Brazil investment that will be relevant for the country, for the economic development of the country, but also for the sustainability equation, which we think is being challenging in Brazil.

We also know that Brazil is one of the most affected countries by climate change. We've had recently, since the beginning of the year, very significant demonstrations of that. The flooding in river and Du Sul, the wildfires in the country. So we are in A moment of very strong pressure upon the climate. So I think we have to work in parallel in two agendas. The mitigation agenda to reduce emissions and to try to be more carbon friendly, more carbon neutral than we are today. And when you take the carbon footprint of Brazil, at least in 2019, 2020, half of that was generated by deforestation. So if you stop illegal deforestation in Brazil, you curb 50% of carbon emissions, which brings Brazil down to a rank which is not in the top 10 emitters in the world.

So that's very relevant. So mitigation agenda is relevant, but adaptation agenda is also very significant. And we know that in the mitigation space, private initiative is more prone to invest. So 2/3 of mitigation investments come from private companies, whilst in adaptation it's less than 10%. So you got to have public policies, those public policies, they have to be translated into adequate regulatory frameworks, they have to bring incentives on board and they have to channel incentives to guarantee that all the private initiative goes in the same direction. But it's very, very critical in the infrastructure business as we all witnessed it since the beginning of the year.

So in that sense, you all know Brazil will be hosting the next year cup, the cop 30. So what does the Brazilian government needs to present, to contribute, to really contribute to the net zero goal? I will love to hear about you 3. What do you expect, Ilona? So Brazil is together with the Troika, which is the three countries that hosted or will host COP designed the slogan, like mission 1.5. So first let's get the NDCs on track. So, so this is very important because we're today off the 1.5 limit, which, and I think when we see also the drought in the Amazon, drought in the Amazon, which is also biodiversity loss. So it's really scary what's happening. It's exponential, we don't know the effect, it's cascading.

So multiple crises we can't afford. So I think what Brazil has to deliver because it has a very ambitious NDC and we have even more to be launched now at Baku. Well, zero deforestation, zero illegal deforestation, but over 95% of deforestation in Brazil is illegal. So means almost, it's really almost zero deforestation. But we also need to restore. We need to restore as of today, our industry says 12 million hectares. So it's an immense opportunity for ecological and productive restoration to restore biodiversity. But if we don't include natural capital in the valuation, these models don't stand up. So honestly, you have to price the externalities.

Otherwise they're going to keep oh, I can't invest in nature, nature based solutions because they don't have the return. Well, of course they do. We're using without paying. So I think that's something that for Brazil also to deliver at COP 30 we're going to have to have this conversation. That's why I'm bringing this subject here today. I know it's a hard one, but it's a must do one. Let's account for that. Let's invest in nature. Let's really support the opportunities that we have on the ground because this will have not only like a green transition, but adjust and grin because there's a plenty of opportunity.

Thank you, Mr. Kobler. I think there is a big opportunity for Brazil or for the bigger emerging economies to, to kind of jump start some of the efforts we have in Western Europe and in North America. Here in the US and in Europe we are suffering a little bit. What used to be called nimby, not in my backyard, we are now calling it Bananas Built. Absolutely nothing near anyone anytime soon. It takes forever to deploy new technologies to build transmission distribution lines. And I think that's where the emerging economies could jump ahead like India jumped ahead and just skip the landlines when they went to mobile phones. I would hope there's an opportunity for Brazil to take a leadership here as well and makes the adaptation of those new technologies easier and faster and could take a big role. Just with COP coming up, I think would be a good thing to focus on.

Thank you Mr. Koevler for joining us and Miguel, of course, your point of view please. I think Hans and Yelona have already mentioned the most critical topics. I would add that this is a very significant moment for Brazil for the world to draw attention to rainforest preservation and to avoid deforestation, which we all know that it's going south. So we don't need that. The other point I think will be critical. It's going to be water management. And in the Amazon region we are in the center of that debate. So I think it will be also a topic that will be very relevant for discussion. And the last one, perhaps the last two indigenous populations, I think the role of indigenous populations in that area is paramount to you and will be obviously in the center stage of the debate.

And also one recurrent topic which we think is COP after COP is being debated is the loss and damage funds. So the $100 billion fund that is needed to help emerging economies, the South Hemisphere to deal with climate change. I think it's really critical to put that in place and in an effective way. So I think for Brazil, it will be paramount to have this copy in Bela and Para.

Thank you. And thank you for joining this conversation. Thank you. Thank you, Hans.

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