Larry Fink (BlackRock) believes that Spain is “undervalued” by investors

The founder and CEO of black rockLarry Fink, has valued the virtues of Spain and defends that this country is currently “undervalued” by investorsand has the potential to become a “global engine of decarbonization” due to several factors, such as its leadership in solar and wind energy, its proximity to gas sources and the presence of large international companies.

During his speech at the second edition of the BBVA Sustainability Forum, blackrock executive, the largest investment fund in the world, has predicted that Spain will be one of the leaders of the energy transition, especially in Europe. In addition to highlighting the privileged geographical situation of the country, which leads the market for renewable technologies such as wind or solar thanks to its natural resources, Fink considers that has elements to be a “reference” in other areas within decarbonization and to be able to show its “economic strength”.

However, despite defending the commitment to renewables, Fink explained that these technologies may still have problems of interruption in its supply, so it is necessary to continue promoting research into batteries and bet on gas as a technology support long-term renewables support. In this sense, he has described gas as “the hydrocarbon of the energy transition”, and welcomes the decision of the European Union to include it in the new community taxonomy as a green investment. Under his perspective, gas can be a key energy in this transition towards a decarbonized economy, for example, using this hydrocarbon instead of coal when there is no supply of renewable energies such as the sun and the wind.

Along these lines, he has warned of the risk of abandoning hydrocarbons “tomorrow”, and is committed to finding a balance between their use and the decarbonization of the economy. To this end, it defends the urgent need to build gas pipelines and liquefied natural gas (LNG) regasification plants, finding ways to reduce the waiting time to obtain the necessary permits to develop these infrastructures.

At this point, he pointed out that an example of economic distortion is high inflation, derived from events such as the invasion of Ukraine, Russia’s strategy in around gas and oil prices. All of these factors directly impact energy prices, although fossil fuels are still cheaper than less polluting alternatives. Nevertheless, Larry Fink has been shown in favor of developing new technologies so that producing energy with fewer emissions is more competitive in terms of prices.

The CEO of BlackRock has pointed to the construction of gas pipelines as one of the keys in the current energy environment, although their implementation entails high costs. In this context, he has proposed use of hydrogen as “an important component of renewable energy”. “Hydrogen is going to be, in our opinion, the energy source for large engines, for large machinery,” she explained.

Larry Fink has stated that for companies, “climate risk is an investment risk”, as he already pointed out in 2020 in his annual letter addressed to the CEOs of the companies in which he invests on behalf of his clients. But he also believes firmly that the opportunity to invest in decarbonization technology is very large. “This is about working with fossil fuel companies, not against them to get to a decarbonized future,” he said. In addition, he has valued the role of the public sector in this process, together with the private sector, “to find solutions that are not the abandonment of hydrocarbons”. “Governments have to be consistent. If we are going to move forward together, we have to ask all companies to move forward together,” she said.

For his part, the president of BBVA has made a call to “move from words to action” in the fight against climate change. Torres has remembered the effects “very obvious and tangible” observed this summer, such as heat waves, fires or floods. In this sense, he has considered that a “formidable challenge lies ahead, that of decarbonizing the economy”, which will require a high investment for the development of new technologies and their implementation throughout the world.

All this in a context of uncertainty, “that we hadn’t seen in decades”, marked by the humanitarian tragedy of the invasion of Ukraine, which has exposed the risks of energy dependence on fossil fuels; but also due to high inflation, the response of the central banks with increases in interest rates and how this is going to affect growth. At this point, Torres has raised with Larry Fink the possibility that these short-term challenges could make decarbonization difficult. To the respect, the director of BlackRock He trusts that solutions will be found, as happened with the development of vaccines against the coronavirus pandemic. However, he has called for real targets to reduce dependence on fossil fuels, with “long-term solutions”.

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