 It's my exciting duty today to introduce our speakers, Alicia Seiger and Tom Heller, who currently run the Sustainable Finance Initiative here, the newest initiative in the Precourt Institute, newest four. I've known both of them for a long time, and I know they've been struggling as many of us have with why are we going so slowly in climate change policy, and they both kind of through different routes, Alicia's an MBA, Stanford MBA and has worked at the law school and the business school on sustainable finance over the years, Tom's an old school, old school, old time law professor who took a sojourn for 11 years and stood up the Climate Policy Initiative up in San Francisco, so he was gone for 11 years and now he's been back for two years probably to run the Sustainable Finance Initiative. I think they both came to the conclusion, which people like me who tried to do climate policy somewhat uninfluentially that maybe one of the biggest constraints on that was climate finance, meaning getting the money to make the investments that people like me who do the modeling and people who kivots about climate policy and don't necessarily actually make the investments, the money people. So I was thinking about this, it's kind of like the old Clinton campaign speech, it's the money stupid, so maybe in climate policy it's the financing, I wouldn't say stupid to anybody, but I think they wouldn't either. But this is kind of the big, in my mind, over the last 35 years the big truly new thing. Now they've been both working on this for a decade or more, probably more than a decade, a decade to two decade, just slowly coming to this conclusion that finance is maybe the biggest constraint and there are many opportunities under the constraints that you do see, so they're gonna do a talk with a somewhat catchy title, Settling Climate Accounts, Navigating the Road to Net Zero. I hope you all enjoy it. Thank you so much, John. That was a very nice introduction. It is really a pleasure to be here. I know you can't see my face, but I have a big smile on my face, because it's really exciting. This book is finally here in the world. I also feel like this mask is gonna cover my eyes at some point, so if I can't see you, let me know if you can still see me. Thank you guys for coming. I know you in the room get credit for being here, but folks at home, I know you have a choice of what you do on a Wednesday, or Monday afternoon, or whenever you're watching this, so appreciate it. This book, as John just noted is, I mean it's not just a year of hard work, but it's decades, really, decades of study and experience, and so we're really thrilled to share it with you. Just before I get started on the talk, I wanted to share a personal story. I decided to devote my life's work to climate because of a book I read, My Freshman Year in College. I was a freshman at Duke, and I read Al Gore's Earth and the Balance, and it really galvanized my interest and dedication to addressing climate, and I'm not comparing either myself or Tom Heller to Al Gore by any stretch, but I do hope, yeah, I do appreciate the power of a book and to inspire imagination and action, and I hope ours drives you in some new way. So today we're gonna cover 215 pages in 40 minutes. We got a little bit of a late start, but I promise to keep us on time. I'm gonna stick to my notes, because this is the first time we've done this talk, and we have a lot to cover, and I wanna make sure I keep on time because we've got Tom Heller joining us from Venice, special guest star from the middle of the night there, who we're gonna turn to before we turn to Q&A. Before I get too far into it, I've gotta show you these names and faces. I mean, this was a team effort. These are our contributing authors. They are Lorenzo Bernastoni, Esther Choi, So Young In, Richard Kaufman, Mark Rostin, Kim Schumacher, Garish Ramali, and Uday Vardarjan. They are primarily fellows at the Steyr-Taylor Center or the Sustainable Finance Initiative. We've got a few guest stars in there. Many of them are giving talks on their individual chapters as part of So Young Sustainable Finance Initiative seminar this quarter. Hope you can tune into those. But this team project was really born out of the coordination and companionship that came with zooming over the pandemic. And we started with what I would call kind of a loosely associated volume of work that might've looked like a different research paper stapled together, if we were to call it a book. And at some point around January of this year, actually, we realized that we had a collection of really important things to say about the practice of net zero, which itself was emerging as the dominant frame for the climate action story. And so we really got motivated then to double down and make this a real book with an attempt to get it out in time for the COP, which is why it's so exciting. We actually pulled that off. Four month production cycle is a pretty tight turn in the publishing business. And we wanted to help really shape the conversation going into the COP in Glasgow next week, but more importantly, really help kind of reconcile what comes out of it and also offer really a timeless view for practitioners to help serve them long after the COP26 news cycle has passed. I also want to give a shout out, she's not pictured here, but to Sophie Janisky, who's a MBA student who took some time off during COVID and actually helped us as a project manager drive our trains on time, or this book would never have happened on its schedule. So I want to just spend a second on the title because it was intentional and it's fun and reveals the depth, the complexity, and the playfulness. Yes, actual playfulness of this volume. I know a book on climate accounting doesn't sound very playful, but indeed it is when you start diving into the tech. So we aim to settle climate accounts in three senses of accounting. First as a narrative. So we wrapped the volumes technical analysis in storytelling with narratives that ground the reader in the climate action story of past, present, and future. And the book also dives deep into accounting in its more familiar form, right, is the process of analyzing and verifying and reporting financial accounts. And then finally, the book emphasizes the need to nourish and drive greater accountability. So who's gonna make sure net zero adds up? I also want to take a second here to just answer the question you may or may not be asking yourselves, why did they take the time to write a book when the world moves at the speed of tweets? And I would say to that because solving climate requires thinking slow. It requires conscious reasoning. And reading books fosters more conscious reasoning and gives you the space to embrace the complexity of climate action. That doesn't happen reading tweets or even news articles. I would also note that books are fact checked and ours contains many references. So this was really a labor of love. Our goal isn't to sell books and that's not why we're here talking to you. It's really, we hope you'll read it, but really we hope to animate and drive action and hope. So what are we gonna talk about today specifically? So a roadmap for today. We're gonna just beat this roadmap metaphor to the pavement, so forgive me. So we're gonna start with where are we on the net zero road. I appreciate you all have different starting points in this room. I'm sure folks at home have different starting points whether you're an expert or a neo fight I hope you'll learn something from today's discussion. We're gonna cover a lot of ground and in the end I hope you'll be a better driver on the net zero road. So from this starting point we're gonna cover three turns that define the climate action story since the Paris Agreement. Then we'll take a quick bite out of the meat of the book. Part one of the book looks at the dynamics of net zero finance and part two looks at the roles of states in driving markets and transitions. And then we'll turn to the still open accounts looking at what questions need to be settled for net zero to work. And then finally we'll turn ahead by turning nine hours ahead to Venice where Tom will give us a look into the future. So where are we? To start I'm gonna just define net zero. It's the term countries, businesses and investors use to define an end state they will reach by X state usually 2050, sometimes earlier, sometimes later where total greenhouse gas emissions minus removals will amount to zero. For well over a century scientists have figured that changing CO2 levels would change temperatures in the atmosphere. You may not know it but it was actually a woman scientist who first hypothesized about this connection Eunice Newton Foot in the 1850s. The latest IPCC report which I'm sure you are all familiar with has 195 scientists around the world who generally couch everything in uncertain terms essentially screaming in no uncertain terms that humans are causing temperatures to rise. So that's where a turn to this picture to help you understand why we must get to net zero. So let's take a step back 100 million years back and look at global temperatures. So 100 million years ago the earth was a lot hotter. It fluctuated mostly down till about 100,000 years ago when we went through cycles of plus minus five degrees C. That's basically the difference between London being pretty balmy and London being covered in ice. So humans emerged into this picture the middle square here and were basically nomads until about 12,000 years ago moving to the right when the climate started to stabilize. And what happened when the climate stabilized was they could settle into what we now know as civilization. So they could stay in one place. They could build houses, businesses, plant agriculture, plant roots. But as you can see on the far right as a result of increasing levels of greenhouse gas emissions in the atmosphere we're leaving the chapter of a stable climate. It's likely in fact that this year we will depart the band that any civilized person has ever experienced. And that has tremendous implications for societies. Think about the nomads, right? We're now talking about mass migration, climate refugees, uninhabitable regions. Most financial and economic models and indeed most decision making assumes that the future looks like the past only with more growth. And so it goes that future generations will be wealthier and therefore it'll be cheaper to pay for damages later than to invest in prevention now. But those models and assumptions are built on the fundamental assumption of a stable climate. They don't account for exposure to extreme heat, precipitation, flooding and fire and we're departing the world of our financial, economic and mental models. So if nothing else, I hope you take away from this slide that climate change is not an environmental problem. It's an everything problem. We're talking about the stability of civilization as we know it. So this unsettling picture isn't new. Fast forward 130 plus years from UNIS and many scientists and even policymakers were sounding the alarm about climate change and its profound implications. And in 1992, the first major global climate conference got underway in Rio. The first 20 years along the road from Rio was not the uncongested super highway that the original drivers of climate action had hoped for and anticipated. The original plan was for climate action to be governed at the country level through political actors engaging in legal agreements and operating through multilateral institutions. There was a consensus that a single price was rational and necessary. There was widespread acceptance that common but differentiated rules could be applied to advanced and emerging economies until expected growth allowed developing countries to graduate into full and equal status. An implicit in these core tenants was a vision of the future that included stable growth leading to increasing demand for cleaner energy and global convergence around democratic and market-centered principles. How it started veered from how it's going around 2009 in Copenhagen. That's where our tensions ran high at that conference of parties driven by the recognition of how far off course drivers were from the original plan. So it was in Copenhagen where we really said goodbye to the original expectations and it was in Paris in 2015 where there was a near spectacular repair of coordinated climate action but in a restructured constitution to pledge, review and ratchet non-standardized national determined contributions. So instead of a single monitorable instrument priced on carbon that would have allowed an easy integration tracking and review of national climate actions we got a diverse portfolio of regulations and subsidies that far underpriced the social cost of carbon. We got pervasive gaming in the north in north to south transfers of climate finance see the clean development mechanism and growth didn't go as planned, right? We had the, was constrained by the 2008-09 financial crisis in the West and again a few years later in lead emerging market economies and this anticipated convergence to democratic and market-centered institutions stumbled in the West and if anything across Asia a state-driven economic development proved an effective model for managing growth. So it wasn't all bad news, some things went right. So prices of renewables fell, they fell to parity if not below the cost of new coal and gas. Similar progress down learning curves can be traced to batteries and electric vehicles. The haze of climate skepticism that impeded the power of leading edge science lifted across large and politically significant populations. And with that acceptance and socialization of climate science on top of increasing and widespread climate impacts led to a mainstreaming of climate concern. So it's against this juxtaposition of what proceeded as anticipated and what went off course that we can understand three recent turns in the climate action story since Paris. These turns are imagined in our telling of the climate action story and they're largely concurrent and overlapping. The first two turns, the turn to green finance and the turn to risk materialized in earnest after the Paris Agreement in 2015. And the third turn, the turn to net zero hit escape velocity in 2020 and has taken the lead as the world's next perhaps last best hope to get climate action on track. So let's turn to green finance first. This turn was built on the belief that climate progress could be assumed on a type of autopilot where economic growth and efficient markets would propel the world on a path to a low carbon transition. The optimism of green finance centered on the perception that falling prices would make it easy to build only green. It has three central tenants. The first is that as long as there's growing demand and capital markets are efficient, each new investment can advance the transition. The second tenant is that replacing dirty infrastructure with clean would yield job growth with only a marginal reliance on taxes and subsidies and that those would eventually sunset. And finally, the last tenant was that while regulation and new financial vehicles might help green finance, the limits of public budgets and limits of policy reform won't slow it down. Arguably, the turn to green finance stuck the landing for renewables, but the world can't buy its way through the necessary pace and scale required to decarbonize across all economic sectors and geographies. So then, we turn to risk. The turn to risk inverted the lens on green finance and followed its rise by several years. The turn to risk emphasizes the problems that arise when green finance isn't enough. It has brought new vehicles and instruments that ultimately may breed the institutional capacity for coordinated management of transition risk, including things like the task force on climate related financial disclosure framework and subsequent moves to standardize global climate related reporting. But the turn to risk quickly refilled methodological and institutional puzzles. For one, the focus has been on the risks of winding down, but the risks associated with the timing and value of replacing these activities is still unexamined. Second, the methods and models needed to understand transition risk at a useful level of granularity are more in the domain of the financial modeling community than the climate modeling community. This is something Professor Wine and I've talked about and a merger we're exploring here at Stanford. And then finally, last piece of this puzzle here is that both physical and transition risks are highly subject to strategic and political behavior. And as a result, much of the risk on the system is currently being transferred to governments in the form of disaster relief, unemployment benefits, and other bailout schemes. This really limits the incentives for private firms to act and limits the ability of states to respond to further stress. Perhaps the greatest disadvantage though is how far the turn to risk may depart from issues of equity and justice. So the COVID-19 pandemic has highlighted the need to attend to these issues and at the same time made them worse. The turn to risk without attention to equity, risk creating a new wave of climate redlining by limiting investment in the most vulnerable and marginalized communities. So I hope the context setting of the first two turns helps you better understand where we are now in the climate action story and that is this net zero ascendancy. Net zero combines the themes of both green finance and risk. And in this way, the turn to net zero both reanimates post-Paris climate politics through its allusions to the politics of democratization and equality. And it also captures the growth promises of green finance and the regulatory and financial infrastructure of the turn to risk. Its appeal is driven in part by the fact that net zero steers around the principal difficulties of the other two turns. It slides past transition on the upside by ignoring difficult questions around distributing the transitions gains and losses. And through its emphasis on emissions alignment, it avoids the granular and strategic challenges of downside risk. Yet as our research has shown, net zero is at risk of taking the easy road and in so doing, missing its desired destination. That's when we come to take a little bite out of the book here. So again, this is going to be an unsatisfyingly brief tour of the chapters. Hope you read it, but want to give you the preview. So first, this part one explores the dynamics of net zero finance. And taking a deeper look in here, these are the chapters that comprise the first part of the book. So in chapter two, Mark Rostin applies modern portfolios theory to net zero financial markets and products and questions the outperformance claims that abound. In chapter three, So Young and Kim examine the ecology of data sourcing, provision and rating in net zero accounting and identify economic and organizational insights about incentives to game disclosure behavior. They also coin a new term, carbon washing, to define misleading information about carbon related impacts and actions of a company or its products. In chapter four, Mark Rostin comes at us again this time with a look at scope three emissions accounting. Scope three emissions are primarily the responsibility of someone else. So why should anyone be focused on measuring and managing them? In chapter five, Richard Kaufman and Mark Rostin review the history of the asset management industry asking if specialization, fees and intermediation have delayed or stalled financing of the climate transition. And in the second part of the book, we investigate the role of states in shaping net zero markets and transitions. More specifically, our focus on the challenges of accounting for climate through private markets in part one isn't meant to suggest that the world has converged on a common approach. In fact, quite the opposite is true. And so in chapter six, So Young and Esther built a case study of blended finance for green investments in Korea, a state driven society representative of much of the world where the state organizes climate intensive sectors differently than market driven economies. Their case study reveals both global and Asia specific questions about the governance of the sustainability transition. In chapter seven, Lorenzo tackles critical accounting questions for carbon offsets which have catapulted to the main stage in the proliferation of net zero pledges and actions and claims. He looks at how offsets fit with the net zero framework and highlights the challenges with the production of offsets. At the project level, looking at additionality and leakage and at the system level, questions around reconciling corporate action with country level commitments. For those of you who are regular subscribers to Bloomberg Green, you may have noticed that today's feature editorial was about this very issue and questioning Shell's carbon offset claims as an example. In chapter eight, Grish and Tom look at the movement from green to transition finance and question whether new labels lead to more noise or serve a purpose. And finally, in chapter nine, Uday travels more deeply into the scope of transition risk management and focuses on equity. He looks at political theory, US state regulatory practice and the fairness and effectiveness of distributing the gains and losses associated with the climate transition. So after all that meat of the book, we still have some open accounts. Taken together, the chapters of the volume expose a collection of these unsettled accounts, problematic and persistent features of net zero implementation that bring into question both the accountability and credibility of net zero accounting in the triple senses of accounting for climate. These open accounts defy and resist consensual or authoritative settlement, while at the same time increasing incentives to gain the regime. The roster of open accounts fall into four categories, noise, coverage, timing and management. Let's talk about noise. Net zero accounting depends on good data. We don't have it yet. The emerging ecology of sustainable finance data providers, ratings agencies and thematic products is coalescing into a specialized and generally self-governed domain. Last count, there was somewhere around $35 trillion invested in sustainable strategies. If that were true, we wouldn't have a world on fire. So there's a real and still unmet need to drive toward better standards and conventions to protect against carbon washing and to better align incentives that motivate managers of net zero financial products, Allah, Mark Ross and Richard Kaufman's chapter. Some emerging efforts like the IFRS and the Value Reporting Initiative show promising signs globally. And if you've been tracking the news here at home, the SEC, the Fed and even some work Tom and I have done in California are showing signals that there will be moves in this direction in relatively short order. Now we can turn to coverage and boundaries. So even with the best data, confounding questions remain about coverage and boundaries of emissions accounting. How was even the most well-intended actor to measure her scope three emissions? Take the big tech companies, right? They're making net zero pledges, but their emissions are basically zero in the US. All their growth is happening in Asia. So they're having to try to build renewables or price carbon in Asian markets. Or if they make hardware, they're having to zero out the emissions of their largely Asian-based supply chains. So long as governments fail to put a price on carbon, businesses are left to determine their own prices based on their own risk and alternative pathways. That's not an efficient market to say the least. We already saw this movie play out in California with auto emission standards and the US auto manufacturers finding themselves in the hot seat with the Trump administration that didn't want to see emissions governed or essentially priced at the state or corporate level. There are also questions of coverage. Where should the lines be drawn? Should McKinsey count its engagement with big oil and its scope three emissions? What about insurance companies? And how can we avoid the risk that scope three emissions drop by means of accounting rather than any real emissions reductions? Scope three is a big target. Most of Fortune 500 companies emissions are scope three. So we're gonna need strong reporting conventions for net zero to add up. Let's talk about timing. Like comedy, climate action is all about timing. There's little doubt that the future will be low carbon. The only question is whether we can arrive there without doing lasting if not catastrophic damage by being too slow in getting there. Net zero tends to look at 2050 as an end date of transitions completion. The shift in carbon accounting's emphasis on carbon footprints to carbon futures puts substantial reliance on carbon offsets. So net zero hinges on a transition away from carbon intensive systems playing out quickly and fairly across jurisdictions in very different stages of development and political capacity. Such a transition is hard to time. Also net zero is a flow concept as shown on the left but climate is a stock problem as shown on the right. So we ask how conventions can address issues of timing so that the stock of greenhouse gases in the atmosphere stays within desired levels. And who has the crystal ball to see whether it's safer to bet on technologies far into the future or avoided emissions today? And finally, perhaps the sharpest rough edge of net zero in practice has to do with management. Once emissions are known, coverage is appropriately applied and timing issues are sorted, how should actors respond? This remains largely uncharted territory. A close look reveals a wide gap between net zero risk objectives and methods. If the practice of net zero is aligning emissions with normative targets, practitioners run the risk of solving an accounting problem rather than a climate problem. And they run the risks that emissions in the real economy continue largely unabated in jurisdictions beyond the reach of net zero ledgers or self-governed associations. And so with an appreciation of how we got here, the meat of the book and our unsettled accounts, we turn to Tom in Venice to turn ahead. Over to you, Tom. Thank you, Alicia. I think you've done most of the work. I just would like to put a little bit of context around what we're doing. As Alicia said early in her remarks, the turn to net zero marks a very significant shift away from a system that originally started to try and work only through nation states and governments to mainstreaming and in many ways privatizing the agenda for climate action. And in the book and in work that we will continue to do in the future, we're going to hopefully advance the fact that if we make the best case possible for net zero, there's still going to be issues that probably will demand public action. And what I'd like to do is very quickly just point to some of those. I don't want to point to infrastructure too much without the E at the end of the word, but let me just say a few words about each. Stewardship, the interesting thing is that nation states or even subnational governments like California are participants in the net zero system. China is issuing its net zero structure. It calls it N plus one after yesterday. But they are actual players in the game at the same time they are the regulators. And that puts nations, governments in an odd position in which they have to deal with the fact that they are the regulators of this large mass of noisy data that is proliferating in the private sector. In effect, they are both participants and stewards of the system in which they are participating. And in their regulatory role, I think they will have to act to reduce the relative chaos of non-comparability between the different forms and standards for net zero that are proliferating so quickly. On infrastructure, again, I expect governments will have to play a strong role. Basically, we are moving from a system of hard infrastructure facilities that are very complicated power stations one might think of that one can turn on or off to much softer systems in which software that involves and control systems that involves integrating between a great many producers of energy, both variable energy like wind and solar and flexible energy that can be turned on or off whether that is done by firing up a gas plant or creating large numbers of batteries or pumped hydro stations or altering the demand structures that affect when power is available and when it is used. The main point is that the soft infrastructure systems that are so critical to integrating these low carbon systems have very different investable qualities than do many of the physical systems that we have financed largely through project finance. And the nature of financing in tangible assets at large scale, most of which run at zero marginal cost raises a series of questions about whether private investment will be forthcoming in ways that suggest that the kinds of infrastructure programs that we see being discussed in the United States now or in China will necessarily involve substantial amounts of public finance. The third issue, equity. The transitions that are going to occur will substantially change the nature of distributional systems and the benefits that are received from energy and from the disadvantages, the pollution that go along with energy. Alicia had mentioned earlier that we will probably need very substantial funding for those elements that are being wound down in the system just as we need funding for the investment in new carbon facilities that are being built up. And here, if we look at the COP26 negotiations that will take place, we can see that equity is at the very heart of what they are fighting about at the most. Will the North translate $100 billion to the developing countries of the South every year? Will the North pay for loss and damages that are done by climate? Will the various commitments and pledges that are being made to net zero by the developing countries be funded in part by the Northern or advanced industrial countries? Equity is at the heart of this structure and equity issues, distributional issues usually demand the state. The fourth point, diplomacy. We need to coordinate between countries. The essence of the international system as it was first created, talked about the right of sovereign nations to decide how they wanted to trade off economic and social development against sustainability. That principle has been at the heart of the multilateral negotiations since the beginning. But if net zero implies that each corporation in forming its own supply chain might begin to put their own prices on the climate performance of their various suppliers and rearrange their supply chains according to this re-weighted for sustainability dimension thereof, then we're really going to run into strong international structures because the trade-offs that were promised to sovereign nations are suddenly being made by various private actors. And the last point, accountability, Alicia's talked about it, does it all add up? It's a very tenuous and difficult problem that really has been at the heart of the diplomatic failures. By adding up, we simply mean that there are carbon budgets over which various nations presumably have pieces assigned to them. That is, nations are supposed to be able to either emit more carbon up to a certain level or they are asked to maintain their stocks of stored carbon, whether in trees or in the soils at particular levels. The problem becomes if we start creating a lot of offsets and other structures that say, I won't cut down my trees if you pay me and then you can emit. The fact is that we can imagine a spiral in which everybody says all nations say, I'm going to cut down my forest unless you pay me and that will permit you to continue to emit and the whole system will simply break the budget extremely quickly. So my sense is that in each of these areas we have even in the best circumstances of net zero a very large reliance on public sector behavior that covers or touches on each of the activities that are below and we intend to continue working on this. And then if we can just see the last slide please. These are simply things to look out for very carefully. We have to really look out for the downside risks. In other words, we have to worry about winding down what has been 25 to 30% of most of our economies which are in the fossil energy sector. You can't just take those out of the system without creating enormous instability. But at the same time, when we think of the upside of a new cleaner carbon low carbon system, it is a system simply building outwind and solar by themselves because of the nature of these new sources of low carbon energy will not be enough. You need to turn to new systems of market design or policy, new business models and new financing structures. And it may be that we're much better at building out a wind farm than we are about building out new policy structures to deal with the different risk here. We have to look out for to use the last sense of the title word in our book. It's a question of management. Who is really going to manage the timing and the nature of winding down the high carbon system and winding up without leaving a big hole in the economy and without leaving disenfranchised and inequitably treated communities. This process which will go on over the next 20 years. We have done such things in the past when we started in World War II in the United States. We created a special agency called the Office of Price Administration that wound down the still caught in depression economy and wound up the economy that then sustained the United States for 30 years after winning the war. But that was a case which poses challenges in the context of climate. The last two points I'd like to make, look out for mostly in Asia. Asia is really in a different position than we are. We have gas as a hybrid and flexible fuel that can outcompete coal in the United States and in some other parts of the West. In Asia, there really is not supply of gas at prices. Anything like those in the United States as we're now seeing in this so-called energy crisis that many of you may be noting. The fleet of energy facilities in Asia is much younger than in the United States and so it has to be amortized and written off. The fleet is largely on the books of the state, many of which do not have stable financial systems because it's done through state enterprises and funded through state banks. That's a very different situation when the facilities are largely on the balance sheet of firms and in Asia, it has become very clear that they see a sharp connection between the digital economy and the green economy, between sustainability and technical change. And that's the last point I'd like to leave you with. We are going through multiple transitions, ESG, environment, social, governance, all are under substantial change. And it is precisely in the rise of technological systems, AI systems, robotics systems, that we see the possibility of managing much more complex, much more multi-sided energy, transportation, heating and agricultural systems. But the multiple transitions each pose risks, whether it's to the future of work or to the future of money, as well as to the future of a sustainable planet. And it's those multiple transitions that demand coordination that we forecast in looking at the book and where we have every intention of continuing to work on a continuing basis. So Alicia, back to you for wrapping up or moving to Q&A. Thanks, Tom, that was great. Thank you. So I was wondering, you were talking about reaching net zero and this relates to mitigation, but I was wondering if the same analysis applies to adaptation to climate change and if there is room for investments from the private sector in adaptation, mostly in developing countries such as mine, Colombia. Yeah, that's it. Sure, the question was that our talk here in the book seems to focus on mitigation and the question is whether the same considerations are told for adaptation or what the special circumstances are around adaptation finance, and particularly in Colombia. And Tom, I have to turn it to you since you have spent much time in Latin America and South America. I think it's a very strong question. Net zero is definitely focused on mitigation and the failures to reach an international accommodation on mitigation that began at Copenhagen and then moved up toward Paris, but the international negotiations have always been focused on adaptation at the same time. I think that the remarks that I made about equity or the just transition can easily be absorptive of the questions that have been associated with adaptation in the sense that there are both issues of equity and the political resistance that exists among those who in one way or another are going to be damaged by the transition. So it's an interesting phenomenon and I think I'll simply leave it at that, Alicia, that the issues that are at the heart of the relatively difficult and stalled negotiations that we'll pick up next week in Glasgow are principally, at this point, about equity and when one starts to talk about loss and damage and who bears the responsibilities, both for the opportunities of building up low carbon but also recognizing the costs that are imposed in order to deal with the consequences of what has already occurred are at the very heart of the negotiation and sadly enough, at the present time, nothing within the net zero accounting allows for firms or any other actors who are adhering to the net zero rules to get credit for activity that may be remedial on the side of adaptation. You know, a question in front of the online audience. Right, yeah, just relaying from the online audience. We had a question of who is the best audience for your book? Who do you wish you could give your book to and who would then change their behavior because of what you say in the book? Good question. Oh, sorry. No, I will repeat it. It is such a good, the question is who's the audience for the book and what do we hope they do as a result of reading it? It's a wide range. I think our audience includes practitioners, deep expert practitioners across finance, policy, and business, but it is also, I think, a real resource for students of climate action in the world over, whether you're literally a student in these seats or just a lifelong learner. And I think our hope, and I'll let Tom get a word in here too, is that people really embrace the complexity of these issues. There's so much of the climate narrative that focuses on heroes and villains and sort of oversimplifies these stories in search of Hollywood endings and it's really a much more complicated picture and understanding that complexity is really key to being an effective driver on the net zero road. Tom, did you wanna add anything to that? Yeah, I'll just say, when one talks about carbon budgets and colleagues at Stanford have done brilliant work on the science of the atmospheric and oceanic and terrestrial capacity to absorb without substantial damage the quantities of carbon dioxide and it's equivalent gases. When you focus on carbon budgets, really there is not that much time left before you begin to break through to rates of change that are truly consequential. I think in that sense, we have to use the time as efficiently as possible. And one of my fears for all of the credit that we wanna give to net zero and all of the reinforcement we want to give to the privatization and the mainstreaming of climate action, there is a substantial chance that if we spend the next five or six years figuring out the kinks in the net zero system we will absorb about half the time we had to really put this under control. So the book has both a laudatory and let's go forward to try and do the best job we can with net zero, but let's not forget that there are a whole series of collective problems that really do fall into the realm of diplomacy and state behavior and not give those, deny the proper emphasis to those other issues because we won't be able to recover from their, from not focusing on them at the same time as we develop further the net zero accounting. So I had one perhaps on behalf of the audience. So you guys are kind of at this point in time heading for Glasgow and I have the feeling that you're kind of like on the biggest wave ever seen by mankind together and you've done a bunch of turns, it tricks on the wave and you are going in and needing to do an area or two to actually get where you wanna go. So the question though is more, are you optimistic or pessimistic this week about what's gonna happen next week in general and in reaction to your book? Sure, can the audience hear that question? Okay, so the question more artfully phrased than I will paraphrase is how are we feeling going into Glasgow and how does that feeling relate to the book or its ability to affect that feeling. Tom, you are on the precipice of Glasgow, you wanna take that? Yeah, I think the feeling is one of great challenge without any doubt, but with renewed energy in the sense that I started this, my own work in this area all the way back in 1991 before the Rio Earth Summit. And ever since people have said, well, what I just said a few minutes ago, we have very limited time. And what we need to do is we'll wait and the nature of the crisis will make itself felt. And as that crisis makes itself felt, people will stop giving excuses and stop delaying. The feeling going into Glasgow is we've run out of time to delay, the time is now, but it's going to be a very, very difficult negotiation because these past 25 years, past 30 years, while they've increased the sense of crisis, have also left a lot of scars on actors and people have accounts to settle, not our accounts, other accounts to settle, often in geopolitical terms. And with neither the economy nor the world geopolitical system, having a very clear shape at the present time, the burden falls on the negotiators and everyone who's involved with climate action to really take stock of the matter. So tremendous challenge, but also tremendous obligation, I think. And a lot of faith, very much fortified, I find at Stanford that we really are on the edge of technological breakthroughs. But just to repeat a point I made earlier, breakthroughs on technology, and there are lots of them out there, whether they're hydrogen or EVs or various forms of data computation that lets us know a lot more about what people are doing, but those technological breakthroughs have to be embedded and diffused through policy and business models. And I think that's going to be the job of those view who I can't see, who are sitting in the room, but that's going to be the legacy that we turn over to you, I'm afraid, real practice and less cheerleading. Well, on that note, I think we do have some social and institutional entrepreneurs here in this very audience, so we're looking forward to great things from you, but I'd actually like to send our best wishes and hopes with Alicia and Tom to Glasgow next week. And I truly hope that this book will, indeed, turn out to be something new under the sun that'll break some of these deadlocks that have hammered us, as Tom says. I think I go back almost as far as Tom. Hammered some of us, those of us who have accumulated mostly scars so far in this fight, so I'm Godspeed, and we'll all be there with you. Thanks again for a great talk.