Joe Dutton, energy innovation lead at Axis, a global specialty insurer and reinsurer, talks with us about their recently launched Lloyd’s syndicate that is underwriting the risks and opportunities of the energy transition.
Paul Ellis: Joe, tell us about the Lloyd’s syndicate that Axis has just launched.
Joe Dutton: I think a key part of the syndicate is not that it’s a renewable energy syndicate. It’s not a net zero syndicate. It’s one that helps companies and countries on their transition from their particular starting point to where they do eventually get to net zero.
And that means there’s a whole range of technologies that are involved. Some of them are from the renewable energy sector, where you have solar, battery storage or wind farms for example, But also, it’s more innovative technology around biofuels, biomass, and also infrastructure to support the energy sector, subsea interconnectors, transmission lines, EV charging networks.
The scope of the syndicate is very broad. But at its heart is something that we think is very important, which is a demonstrable reduction of emissions.
PE: The technologies are advancing so quickly it’s hard to keep up with them, and the capital markets are struggling in that process, as are the regulatory bodies. From your point of view, give us the current status of the global energy transition.
JD: Renewable energy is exposed to interest rates more than other types of energy. They’re very capital intensive. … And for insurers, we’re dealing with things that are being built that didn’t exist 5 to 6 years ago, which are being scaled up in new environments, new places in the world.
In the first half of this year, across Europe renewables supplied more electricity than gas and coal combined, which was unimaginable a decade ago. And I think that speaks to the resilience of renewables, but also its strength in how, particularly with solar, it can be scaled and deployed much quicker.
From an investment perspective, despite the up and down that renewables have had in the past couple of years, there is no shortage of investment going into the sector from different actors than we thought, with private equity and investment funds putting billions into clean energy.
Earlier this year Axis undertook a survey of 600 companies across the U.K. and U.S. to take a temperature check on how they see the role of the energy transition and how they see the role of insurance. The group was split between energy producers and energy buyers.
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