Aim to solve climate and energy issues hand-in-hand – with Arjun Murti



Juan Torres Rodriguez
Fund Manager, Equity Value
Andrew Lyddon
Fund Manager, Equity Value

Energy availability, affordability, security and reliability and achieving as low a carbon and environmental footprint as possible must be addressed together, not as separate goals, argues podcast guest Arjun Murti

“There is no such thing as a ‘silver lining’ in a war,” Arjun Murti stresses more than once in a special episode of The Value Perspective podcast on the implications of Russia’s invasion for Ukraine on energy markets.  “To suggest that would be very disrespectful to all the people enduring it – and yet this terrible situation has shown how we need to address the totality of energy and climate issues and not just focus on one aspect.”


Murti – a board member of ConocoPhillips, an advisory board member at Columbia University’s Centre on Global Energy Policy and a former energy equities analyst and partner at Goldman Sachs – first appeared as our podcast guest last November. Among other things, he highlighted Three missed opportunities on achieving ‘net zero’ – fitting in well with our miniseries theme of ‘Approaching ESG from a different angle’.

Since then Murti has launched a Substack channel entitled Super-Spiked, which, he says, “takes aim at a messy energy transition era and the clash of climate policy, ESG initiatives and geopolitics with energy commodity and equity markets”. “It stemmed from my growing frustration with how everyone talked about the energy transition era,” he adds.

“As your audience may recall, my whole career has been focused on the energy space – originally covering the traditional sector and now, increasingly, a broader swathe of renewables and new energy companies. And yet there is such extremism here – people are in the bucket of either ‘I am only about climate’ or ‘I am only about fossil fuels’ – and neither extreme makes sense.

Different kind of dialogue

“The issues of energy availability, affordability, security and reliability absolutely have to go hand-in-hand with our goal to have as low a carbon and environmental footprint as possible and, really, my conversation with you in November illustrated the need to have a different kind of dialogue than is currently happening. It cannot be only about climate or only about energy affordability or any one thing. We need to deal with it all.

“On the one hand, global oil demand is still 100 million barrels a day so it makes no sense to limit supply in the US, Canada or Europe and so become more dependent on countries such as Russia. On the other hand, we still want to invest in things like wind and solar – but, in recognition of the fact both are intermittent, we need baseload power, which in addition to natural gas during the transition brings nuclear back into the equation.”

As such, Murti rejects the idea that the invasion of Ukraine or anything else can be either confirmation of the need only for oil and gas or only for renewable sources of energy. “Again, you cannot look to solve for just one thing,” he stresses. “You cannot look to solve only for climate or only for energy availability, affordability and so forth – and I think we are beginning to see some recognition of that.

“As we talked about last time, we were not on track to solve climate under the climate-only focused policies some of the world had in place. In fact, I think we were previously on track for ‘worst of all worlds’ – of high and volatile commodity prices without any appreciable change to our CO2 trajectory – in part because issues such as availability, affordability, security and reliability were not being adequately addressed.”

Wrong targets for blame

Here, argues Murti, while it is all too easy to blame wind and solar for thus far failing to shoulder the world’s energy burden, that would be to point the finger in the wrong direction. “Renewables are what they are,” he reasons. “They are a variable and intermittent source of power and their utilisation rates have very wide ranges as a result of that.

“The real problem is the people who put in place the policies to get rid of energy sources we can depend on when wind and solar are not working – so whoever decided to prematurely shut nuclear plants and walk away from natural gas or, for that matter, even coal. I am not a coal proponent – absolutely, we need to move towards lower-carbon forms of energy – but you cannot expect people to go without energy.

“And yet that is what happens when you become ideological about these things. Environmentalists have the role of explaining the environment to us – and they deserve significant credit for raising the issue of climate change and global warming and so forth. But to think they are going to be the ones who put in practice business policies that say we should only invest in solar and wind? That is a huge problem.

“It is like asking investors today to be the ones who police the environment – that is equally absurd, right? The job of an investor is to generate returns for the people who invest in their funds. It is not to determine environmental policies – that is what governments are for. And so there has been a real misallocation of responsibility here.

“The environmentalists are trying to run businesses by telling everyone solar and wind are low-cost everywhere and that is all we should do. At the same time, investors are trying to run environmental policy by telling BP and others how they should reallocate to virtue-signalling ESG initiatives. And it is all messed up. We need a more sensible conversation on this, because we are trying to solve for anything – not everything.”


Juan Torres Rodriguez
Fund Manager, Equity Value
Andrew Lyddon
Fund Manager, Equity Value


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