Key issues around the energy transition are touched on in a recent interview with Energy Risk. Stella Farrington, Head of Content interviews Kevin McGeeney on a range of issues relating to food security & biofuel; the voluntary carbon market, and geopolitical events’ impacts on the markets as well as on climate action.

Watch the interview here:

Latest developments in the biofuels markets

The latest development is a very sad one, the development of the Ukraine war and the pressure it puts on global food supplies. Remember, biofuels act as a safety net for global food supplies. If your concern is food insecurity through war or climate change, you should want the largest biofuel market possible. At times like these the mandates can operate as a safety valve. Reducing the mandate can release food where necessary into the food system whether as animal feed or directly for human consumption. That should be done as part of a plan to compensate the biofuel producers for their short term losses and as we see how it works to increase the mandates even up to 50 percent by 2030 so we are better able to deal with future crises.

What level are the mandates set at? Are you saying you would like to see them temporarily cut? And then raised?

Mandates are approximately 10 percent on a global level in developed markets. Given the crisis, cutting mandates is the correct move. Once we see the benefit of that safety valve, to then increase the size of the whole industry, so that we are better prepared in the future.

Voluntary Carbon Market has had a huge surge of recent interest, some reputational issues, are markets changing?

Perfect is the enemy of progress, over the decades the voluntary carbon markets (VCM) have developed as a high integrity market, that is serving its community very well. I find it quite ironic that environmentalists who say the VCM is not green enough, find themselves on the same side of the debate as the climate change deniers who are for self interest questioning the voluntary carbon market but with the goal of delaying it.

Nevertheless the voluntary carbon market has grown substantially over the last year and the prognosis is it will continue to do so. It will form a vital avenue for the private sector to reach carbon neutral on a path to implementing a true net zero.

What’s the impact of COP 26 on commodities markets and the energy transition? 

COP 26 may trigger off the development of the largest commodity market bar none across the world. Article 6 of the agreement embeds market mechanisms for governments to balance emission reductions between themselves. That provides a safe backdrop for the private sector, the corporate world where the bulk of the emissions are, to adopt market mechanisms as the cheapest most efficient way of reducing emissions. Out of that we will see the creation of this market of a size that is not paralleled with any other across the world.

In the Energy Risk Commodity Rankings, SCB won best broker for the third year running, how does a specialist environmental markets broker also win an overall broker?

It’s a combination of SCB being a heritage name in the low-carbon space, this is our 16th year. We have been helping develop some of these markets that we’re involved in. That combined with the increased global attention on the energy transition, plus our significant market share in the places we’re in. We’re a niche player and it’s a growing niche hopefully to supplant the original high-carbon alternatives.

Russia Ukraine issue is focusing governments on security of supply and affordability, particularly in the UK and Europe. Has this stalled momentum for policy around climate change?

There is no one single policy response to the crisis in Ukraine. One of the responses has been to accelerate and increase the amount of capital made available for renewable energy production across Europe and throughout other markets across the world. At the same time as that’s happening, yes, the use of high-carbon energy will increase in the short term but that is as logical as it is regrettable. It’s a necessary step in the short term. These policies all exist at the same time.