June was a record breaker for temperatures in the UK, hitting 37.7°C in Norfolk. Ironically, that was bang in the middle of London Climate Action Week and the extreme heat caused train cancellations, which prevented members of the Liontrust Sustainable Future team from attending the events in person.
Crucially, this heatwave is not an isolated anomaly but has actually been made more intense and more likely by human-induced climate change.
Here are the hard facts around emissions and climate change. Since 1992 and the first Earth Summit, when controlling carbon dioxide emissions was first declared a priority, carbon dioxide concentrations in the atmosphere have risen 20%. This has been sufficient to lift global temperatures by 1.2°C.
In addition, the rate at which we are putting carbon dioxide into the atmosphere has increased from 22 to 40 gigatonnes a year. Using a bathtub analogy, we have all agreed we want less water in the bath, but we have kept opening the taps wider.
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These trends are not encouraging. Our societies depend on plentiful energy, yet sourcing this through burning fossil fuels is causing a hotter and more volatile climate.
Is the challenge insurmountable? Well, we actually believe not. Access to energy is key to a successful modern society. This means energy that is affordable, secure and clean. Solving these three is the energy trilemma.
There is a quiet revolution happening that is transforming energy systems across the world. Solar and wind-generated electricity, alongside batteries, offer the solution to decarbonise our economies in the next few decades. Importantly, this can happen while maintaining and growing our economies and the essential services that they provide.
In that same sweltering week in June, I was in Munich to attend the Intersolar Messe. This is Europe's largest solar and battery trade fair, and the scale was absolutely vast: 100,000 metres squared of photovoltaic panels, inverters, batteries and control systems.
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Solar power is big business. Last year, $2 trillion worth of solar capacity was installed and the cost of panels themselves has fallen by 98% in the last 20 years, following a massive scale-up in production from China, alongside ever-improving cell efficiencies.
With investment in solar, wind, batteries and grid infrastructure, we can produce affordable, reliable and plentiful electricity without burning. And this is the essential first step in bringing that 40 gigatonnes a year down.
In fact, 40% of our emissions is directly from electricity generation. But clean, affordable and secure electricity is actually what unlocks the decarbonisation of the other sectors. It allows the electrification of transport and industry to switch its heating and cooling away from gas and to electricity.
It can feel like an impossible challenge when you look at where we are, but the signs are there that we are turning a corner.
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China, for instance, has for years been the centre of emissions growth, but now they have been flat for nearly two years. In fact, per capita emissions in the UK are half what they were in 1992. Change happens in a non-linear way, especially when there is a solution that is just cheaper, better and faster to deploy.
We have a long history of investing in companies helping to accelerate this transition to a lower carbon economy. We are invested in a range of companies like Siemens, Vestas, Exelon and National Grid which will see strong growth as we decarbonise.
Our energy systems are in the midst of a dramatic and also necessary transition. It is too late to prevent some warming, but the faster we invest in this change, the more likely it is that we leave future generations a planet with both a manageable climate and a strong economy.
Peter Michaelis is head of Liontrust Sustainable Investment.
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