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Cambridge Institute for Sustainability Leadership (CISL)

22 April 2013 – At a private dinner at The Harvard Club in New York City, the BEI and Bloomberg New Energy Finance convened executives from major US, European and Chinese electric utilities with senior energy bankers to advance its collaboration on clean energy investment.


At the heart of the conversation was whether the portfolio value of clean energy power generation is being sufficiently reflected by the capital markets, given the policy and market uncertainty that utilities face. 

The IEA’s Chief Economist, Fatih Birol, has said “the future of energy has never been so uncertain”. It is not surprising that navigating regulatory and market uncertainties is one of the top challenges for power companies; Boards must commit capital today to keep the lights on for the decades over which generation assets need to perform. Yet they also know that future operating environments will be very different. Capital allocation decisions that assume a relatively static operating environment will clearly not prove to be resilient, let alone outperform; failing to plan for change would be to misread the reality of the transition.

The group therefore discussed:

1. What factors contribute to creating a 'Fossil Fuel Diversification Premium'?
2. How would such a premium translate into the capital markets?
3. What can the BEI and this group uniquely contribute to developing this thinking?

The group agreed that there was merit in this unique coalition developing this thinking further to see whether it is possible to demonstrate the combination of factors and scenarios in which a 'Fossil Fuel Diversification Premium' would have impact, and to whom in particular, in the capital markets.

Jeremy Wilson, Chair of the BEI’s Working Group, was then invited to address Bloomberg New Energy Finance’s Annual Summit on the topic the next day.