by Pierre Abadie Group Climate Director, Tikehau Capital
In this article, Pierre Abadie reflects on human development and the unintended environmental consequences, especially with the reliance on fossil fuels, leading to the current climate crisis.
Over the past 12,000 years, the conditions on our planet have been remarkably favourable for our development. We've enjoyed a stable climate, abundant water, clean air, rich biodiversity, and a protective ozone layer. However, our trajectory took an unforeseen turn as we stumbled upon fossil fuels, which powered the machinery we invented. This discovery propelled us to drastically increase our ability to extract natural resources and transform them into the material goods we use and discard. The industrial revolution of the last 150 years undeniably enhanced our quality of life, evident in the doubling of our average life expectancy during this period.
Yet, a critical element has been overlooked in this progress. Our economy relies entirely on the stability of our biosphere and the nature it encompasses. Regrettably, on our path of development, we severed our connection to the natural world and the living systems around us. Through a collective lack of discernment, humans have emerged as the primary force of change on Earth, even surpassing the influence of geophysical forces.
Today, our planet is grappling with an unprecedented climate crisis. With the average temperature already having risen by 1.2°C since the preindustrial era, the American, European, and Asian continents are simultaneously enduring extreme heatwaves. Thermometers are soaring past 45°C, leading to water shortages, electricity cuts, and uncontrollable forest fires1. Polar glaciers are melting at an alarming pace, and ocean temperatures are reaching record highs.
These dramatic events were foreseen by the scientists of the Intergovernmental Panel on Climate Change (IPCC). According to their latest assessment report, human activity undeniably bears responsibility for global warming, which, at the current rate, is projected to reach 1.5°C by the early 2030s. Meanwhile, we continue to sing the tune that a technology from the fantastical realm of “unicorns” will magically resolve the climate crisis with a wave of its wand.
Ironically, the very workings of our economy have played a pivotal role in creating the climate crisis. Yet, it is also the economy that has the potential to facilitate our ability our ability to adapt, control and ultimately resolve this crisis. Decarbonising our economy will play an instrumental role in stabilising, or even slowing down, the pace of warming2. Let's remain pragmatic. In the short term, veering away from a market economy is not reasonable. It has fostered development and elevated the living standards of billions. However, let's ensure it's not disconnected from reality. Let's re-anchor it to the real world and wield it in service of ecological transition.
The path to carbon neutrality is clear and hinges not only on new technology, laws or t taxes. It hinges on reducing the carbon footprint of our existing systems and assets. This calls for insulating buildings, enhancing factory efficiency, proliferating electric vehicles, and expanding renewable energy capacity.
Pierre Abadie Group Climate Director, Tikehau Capital
Decarbonisation and economic adaptation have the potential to form the most significant structural growth vector of the next decade. According to the IMF, this segment alone accounts for 6 to 10% of the upcoming global GDP and has the potential to create over 30 million jobs3.
The direction is clear, and the goal is precise: halve our emissions in under 3,000 days4. It is no longer time to procrastinate or wait for miraculous solutions. Every economic actor must assume their share of responsibility. Companies must become pioneers of this transformation by actively reducing their emissions. Financial institutions must also play a crucial role by directing 4 to 6 trillion dollars of global savings annually towards financing the transition to a decarbonised economy5.
The challenges we face are immense, but they are not insurmountable. The crises we see unfolding today are the result of our actions as a collective human society. Our innovation, growth, and development have had unintended consequences on the environment that sustains us. Yet, there is hope, for it is within our power to change the course we are on. By recognising the interdependence between our economy, the biosphere, and the natural world, we can forge a new path forward—one that harnesses the potential of the market economy to drive sustainable change. Through decarbonisation, adaptation, and a collective commitment to preserving our planet, we can navigate the challenges of the present and ensure a more stable and harmonious future for all life on Earth.
About Tikehau Capital
Tikehau Capital is a global alternative asset management group with €42.0 billion of assets under management (at 30 September 2023). Tikehau Capital has developed a wide range of expertise across four asset classes (private debt, real assets, private equity and capital markets strategies) as well as multi-asset and special opportunities strategies. Tikehau Capital is a founder led team with a differentiated business model, a strong balance sheet, proprietary global deal flow and a track record of backing high quality companies and executives. Deeply rooted in the real economy, Tikehau Capital provides bespoke and innovative alternative financing solutions to companies it invests in and seeks to create long-term value for its investors, while generating positive impacts on society.
Learn more about Tikehau Capital: www.tikehaucapital.com
About the Author
Pierre Abadie joined Tikehau Capital in 2018 and serves as Group Climate Director and Co-head of the Group’s Private Equity Decarbonisation Strategy. He has over 20 years’ experience in the energy and energy transition sectors and has been actively investing in renewable assets and decarbonisation companies for more than a decade. Pierre previously worked at TotalEnergies for 16 years, most notably in the Gas and Renewables division, before joining TikehauCapital in 2018 to launch the Private Equity Decarbonisation Strategy. Pierre Abadie trained as an engineer at the Ecole Centrale and is a graduate of IFP Energie Nouvelle. He also holds a degree in physics from the Pierre and Marie Curie University (Sorbonne University).
Reference
1Source: Intergovernmental Panel on Climate Change, Sixth Assessment Report (2021)
2Source: Intergovernmental Panel on Climate Change, Sixth Assessment Report (2021)
3Source: International Monetary Fund (IMF), Mobilizing Private Climate Financing in Emerging Market and Developing Economies (2022)
4.Source: Intergovernmental Panel on Climate Change, Sixth Assessment Report (2021)
5.Source: International Monetary Fund (IMF), Mobilizing Private Climate Financing in Emerging Market and Developing Economies (2022)