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Week 28: 'No love' world
Two children sit on a bench somewhere in Europe trying to avoid fast-melting ice cream in the glowing heat. Two parents stand next to them and chat about the heat. One child tells the other, “It is so hot now. Are you blind? Don’t you see it is climate change?" The other child sits quietly for some time and then responds, “Then I would like to have another ice cream now. Imagine if all the ice cream in the world melts now.”
We don’t love anymore. It has become a forgotten thing, warped in the zillion identity packages, explanations, TV programs, advice pieces, and podcasts. Commercialised, rationalised, explained. Love. Simple and utter love is gone. That little burning fire that moves mountains and splits atoms with its bare hands. That little thing worth living and dying for. It comes in so many shapes and forms, dimensions, and expressions, yet most of us know exactly how it feels when and if we feel it. Humanity has stopped loving.
At the end of the times when all of this has passed and our civilisation is in some other dimension, our time on this planet and this universe will be judged upon how much we have loved. Kindness, dignity, and humbleness are replaced by fear and indifference. Fear smells. It is a faulty smell, sweet and rotten, heavy. It creeps in, sticky and oily, finding its way to the skin, bones, and tissue. It paralyses and divides, it isolates and antagonises. Makes you alone, makes you weak, makes you survive but not live and love. Indifference kills. Sometimes fast sometimes slowly. More than many times before in the history of our human species, we need love, unconditional, genuine love for each other and for this little planet we call home.
No love here… 60 degrees celsius… in Europe
Out of love, the question is for what and who, or is it fear, we have managed to alter the climatic systems of this planet and push boundaries so far that fear of what is going to happen in the future hoovers with its stinky fingers over all of us.
Over a third of Americans are under extreme heat warnings as Vermont, still recovering from historic flooding, prepares for more storms. Floods, tornadoes, heat, more extreme weather.
The US is bracing for more extreme weather from coast to coast, with a heatwave hitting California, tornados in the Midwest, and the east expecting more rain as it continues to reel from historic flooding. Residents of Vermont, still suffering from an onslaught of dangerous weather in recent days, are preparing for another round of severe storms in the area beginning as early as Thursday night. Historic flooding in the state has damaged thousands of homes, businesses, and roads, and has left some residents stranded.
A heatwave is sweeping across parts of southern Europe, with potentially record-breaking temperatures in the coming days. Temperatures are expected to surpass 40C (104F) in parts of Spain, France, Greece, Croatia and Turkey.
In Italy, temperatures could reach as high as 48.8C (119.8F). A red alert warning has been issued for 10 cities, including Rome, Bologna and Florence. On Tuesday, a man in his forties died after collapsing in northern Italy. Italian media reported that the 44-year-old worker was painting zebra crossing lines in the town of Lodi, near Milan, before he collapsed from the heat. He was taken to hospital where he later died. Several visitors to the country have collapsed from heatstroke, including a British man outside the Colosseum in Rome.
The Cerberus heatwave - named by the Italian Meteorological Society after the three-headed monster that features in Dante's Inferno - is expected to bring more extreme conditions in the next few days.
Spain has been sweltering for days in temperatures of up to 45C (113F) and overnight temperatures in much of the country did not drop below 25C (77F). The Andalusian regional government has started a telephone assistance service for people affected by the heat which has received 54,000 calls since it opened in early June. A satellite image recorded by the EU's Copernicus Sentinel mission revealed that the land surface temperature in the Extremadura region had hit 60C (140F) on Tuesday.
A new study says 61,672 people died in Europe as a result of the heat last year. IS Global Institute in Barcelona - which researches global health - said Italy had the most deaths that could be attributable to the heat, with 18,010, while Spain had 11,324 and Germany 8,173.
Where is the sense of urgency now, like the one we had with COVID-19? Where are measures on a global scale, where are politicians, and where is WHO? Zero, nada, nothing.
More than 90% kind of love
More than 90% of the world’s largest companies will have at least one asset financially exposed to climate risks such as water stress, wildfires, or floods by the 2050s, according to research by S&P Global Sustainable1, a unit of S&P Global. Assets can include factories, warehouses, and data centres. The warming pattern is a conundrum for asset managers since they generally aren’t good at modelling short-term investment risks associated with heat waves and other location-specific disasters.
Record heat is burning investors and they don’t know it. The global heat wave is illustrating the long-term risks faced by companies and their assets, but few are hunting for vulnerabilities.
The global heat wave is also affecting the financial world. The calamity has provided a stark reminder of how asset managers are struggling to assess the impact such physical climate risks have on their investment portfolios.
The problem is that models used today can’t easily measure that risk. The lack of asset-location data is a real barrier, like in the case of exposed infrastructure, for example, some geographies aren’t set up for the thermal ranges we can expect in the future.
Blackouts are becoming more common in Asia as the usage of air conditioners and refrigeration increases. US electricity grids also are strained and the UK’s workplace regulator has reminded companies to protect their employees whether they work inside or outdoors.
The industries most affected by rising temperatures range from construction companies, which rely on manual labor, to agriculture, where yields often fall as temperatures rise, and transportation, which can be affected by heat-impacted roads, low water levels in rivers and buckling train tracks.
In 2020, London-based Impax teamed up with the New York State Common Retirement Fund to ask US companies in the S&P 500 to voluntarily disclose the locations of key assets—such as buildings, facilities and installations—whose loss or impairment would impact their financial results.
Only 13% of the companies responded. Of those that did, just three demonstrated they had seriously considered their potential liabilities from climate-related damages and had plans in place to reduce or adapt to those risks, according to Impax. Most simply provided “the occasional boilerplate sentence in a financial report to the effect that natural disasters may cause unspecified harm in the future,” the asset manager said.
Never been in love here…
There are things you should read while you are sitting. This is one of them.
Nearly 20 years ago, the economist Nicholas Stern, in a groundbreaking report for the UK government, memorably called climate change “the biggest market failure in history”. That sadly remains largely true. Emissions costs are still mostly loaded onto the planet rather than borne by polluters.
The OECD says 60 percent of carbon emissions from the world’s leading economies are completely unpriced, and only 10 percent are taxed to a level that probably reflects the true cost of carbon.
It’s an indictment of governments and their global institutions that all this time has not produced coordinated action. Divisions between and within rich and poor countries, institutional jealousies and an aversion among some big powers (particularly the US) to multilateralism have all prevented progress. More on this in this week’s ESG Radio.
Bizarrely, one of the more likely avenues for creating a global carbon pricing regime is a campaign of governments suing each other at the World Trade Organization, an institution whose credibility has been eroding for decades.
The world’s response to climate change and carbon emissions is ineluctably bound up with trade. Without convergence in carbon pricing schemes, or border measures to charge imports for the untaxed emissions created while manufacturing them, there’s a high risk of carbon leakage as production shifts to dirtier economies.
One of the biggest repositories of expertise on climate change and trade is the Paris-based OECD, which conducts research and hosts technical discussions among member governments. But the organisation’s actual policymaking function is essentially a forum for ad hoc negotiations rather than a permanent, binding legal framework, and its history as a club of rich countries weakens its legitimacy.
The organisation made a promising breakthrough in 2021, for example, when governments struck a draft global deal to reduce tax avoidance by multinational corporations. But the agreement faces strong opposition in the US Senate and among developing countries (led by India, often the chief malcontent in global economic governance issues), which complain that it will reduce their revenues.
Where negotiation fails, litigation fills the vacuum. Perhaps the most substantive and immediate conversations are coming from governments (India in particular, again) threatening to bring cases against the EU’s carbon border adjustment measure to the WTO’s dispute settlement process for discriminating against their exporters. The colossal difference, of course, is that the US has increasingly turned against the WTO dispute settlement regime. Joe Biden’s administration has maintained Donald Trump’s 2019 decision to paralyse the appeals stage of the process, forcing the EU and other countries to construct their own workaround system.
Maybe types of love in the desert…?
The United Arab Emirates president of the UN climate summit took a step forward in setting a “mid-century” timeline for the phasing down of fossil fuels produced without the capture of emissions, in his agenda for COP28.
The plan to capture greenhouse gas emissions, triple renewable energy capacity by 2030 and double energy efficiency to limit global warming was broadly welcomed but did not satisfy the demands from countries and campaigners for the phasing out of new oil and gas production.
Sultan al-Jaber put forward his vision for COP28, to be held in Dubai in December, at a meeting of G20 ministers in Brussels on Thursday, urging them to “be brutally honest about the gaps that need to be filled, the root causes and how we got to this place here today”.
In an accompanying 15-page letter to ministers, Jaber said his plan would accelerate “the inevitable and responsible phase-down of all fossil fuels” and lead to “an energy system free of unabated fossil fuels in the middle of this century”. The stardust we are made of and the message we all carry in us has been crafted for something far more beautiful than what we are seeing around the world right now. Fear is never going to help us.
And here is the love COP28 plan;
Oil and gas industry to more than halve direct emissions and emissions derived from the energy it buys, known as scopes 1 and 2.
Near-zero methane emissions by 2030.
Triple renewable energy capacity to 11,000GW, from about 3,300GW.
Double hydrogen production to 180 tonnes per year by 2030.
Double rate of energy efficiency improvements across sectors by 2030.
Loss and damage fund to be established.
Push for country governments to honour the commitment for a $100 billion adaptation fund by this year, and double adaptation finance by 2025.
G20 high-level expert group report to ‘define the contours of an adequate landscape for climate finance’.
World Bank, IMF and others to ‘standardise voluntary carbon markets and incentivise private capital and finance’.
Denmark and South Africa to oversee the global stocktake of progress towards climate goals to limit global warming to 1.5C ideally.
Germany and Canada to co-ordinate the Climate Finance Delivery Plan.
IEA and IRENA to oversee the decarbonisation road map.
A tough love
The woman in charge of getting Europe’s toughest piece of ESG legislation through the bloc’s parliament says she’s confident the US will embrace the global accountability the bill introduces, once politicians stop being distracted by lobbyists.
US scepticism toward the legislation has perhaps “been confused a little bit by the lobbying going on,” said Lara Wolters, the lawmaker helming the passage of the Corporate Sustainability Due Diligence Directive through the EU’s legislative chamber. This week, she worked to close any loopholes companies might try to use.
“What we’re after here is accountability and surely the US government doesn’t support a lack of accountability for causing or contributing to human rights harms,” Wolters, a Dutch member of the EU parliament who’s been in the chamber since 2019, said in an interview.
The comments come roughly a month after Treasury Secretary Janet Yellen warned of “negative, unintended consequences” stemming from CSDDD. If passed, the directive means large companies selling products and services in the EU — wherever they’re based — would risk civil lawsuits for failing to address human rights and environmental violations in their value chains. CSDDD would also require companies to have climate transition plans that are aligned with the Paris Agreement.
Yellen said in June that the Biden administration is “concerned about the directive’s extra-territorial scope.” There’s support for CSDDD’s high-level aims, but some requirements “where there is no clear nexus to the EU” are concerning, so talks are underway with the EU, Yellen said.
The EU’s plan to push ahead with CSDDD underscores the very different trajectory the bloc is on from the US when it comes to environmental, social and governance frameworks. In the US, Republicans have sought to ban ESG across much of the country and are penalising firms that embrace it.
In a hearing last month, US Representative Frank Lucas, a Republican from Oklahoma, said Europe shouldn’t set standards for US companies, and regulators must be “diligent” in “defending US sovereignty.”
The House Financial Services Committee is holding hearings this month, during which the matter is likely to come up. That’s as GOP lawmakers in Washington start debating how to handle ESG more broadly.
In Europe, meanwhile, lawmakers and regulators are rolling out the world’s most comprehensive set of rules ultimately designed to reinvent capitalism and steer money into greener, fairer activities. Much of the legislation is global in scope, as it requires compliance from asset managers and businesses that target EU customers.
Though far from perfect in its execution of the huge array of measures being pushed through, the European Union has moved much faster than other jurisdictions with its ESG ambitions. Wolters says that CSDDD is necessary because markets can’t be relied on to self-regulate.
A genuine love
China is the world’s factory, and it has the emissions to match. But in a planned economy, with weak environmental regulation, can anyone take on pollution at that scale? Activist Ma Jun wanted to try. In 2006, he started publishing maps online that detailed levels and sources of air and water pollution, making it possible for people in China to start discussing climate change in a serious way.
After significant initial pushback, Ma Jun’s efforts have since gained acceptance from the government and from corporations like Apple and Nike, which he tracked down as sources. On this week’s Zero, Ma Jun joined Akshat in New York for a conversation about the power that data can have in fighting climate change and how environmentalism has changed in China. You should listen to what he has to say!
Energised love… State of the world
1. ‘Energy demand love’ is growing in non-OECD countries
Global primary energy consumption reached an all-time high last year, at more than 600 exajoules. That is double the world’s energy consumption in 1985, and four times the level in 1965, when the Statistical Review’s data begins.
Worldwide energy demand is increasing, but it is a split screen in terms of economies. For the high- and middle-income economies of the Organisation for Economic Cooperation and Development, primary energy demand peaked 15 years ago — coincidentally the same year that demand in the rest of the world surpassed the OECD’s.
Demand in OECD countries has actually declined by 3.4% in absolute terms since 2007, while it has grown almost unabated in the rest of the world over the same time. In relative terms, the OECD’s role in global energy demand continues to decline, albeit slowly.
In 2007, it was responsible for just under half of total energy consumption; today, it is less than 39%. The critical questions for energy’s future are how much that demand can decline in the long run and how quickly non-OECD countries can hit their own collective peak.
2. Oil is the king of love. Or, coal is, too. (Or maybe gas)
Global demand for fossil fuels is also at an all-time high, and coal and gas individually are both in demand at record levels. And oil is, in one respect, the king of fossil fuels: It was the most consumed fossil energy in 1965 and was the most consumed almost 70 years later in 2022. Since 1965, the increase in annual consumption has been nearly identical for oil and gas, with coal about 20% behind oil. But if we look from 1974 (the start of the first oil crisis), the consumption of gas and coal has increased more than the consumption of oil. Run the same analysis from 2001 — the year of China’s accession to the World Trade Organization — and coal is king, with growth ahead of gas and almost double the growth of oil.
Finally, if we measure the increase in energy consumption from oil, coal and gas from 2011 to last year, gas has increased the most, followed by oil (about two-thirds of gas’s increase) and then coal (about one-third).
3. Ships love, and beat pipes in the global gas trade affair
Natural gas has flowed between markets for decades, via both pipelines and seaborne shipments of liquefied natural gas. Pipelines drove the bulk of the inter-regional gas trade for years, but since 2020, LNG has taken the lead in total inter-regional trade volume. Considering the ongoing war in Ukraine and Russia’s restriction of its pipeline exports, and the booming trade in LNG now led by the US, this trend could continue for years to come.
4. Renewable love, besides hydropower love follows the curve
Six decades ago, hydropower generated 95% of the world’s zero-emission electrons. By the turn of the century, that share had declined to 47.2% and nuclear power had (just barely) surpassed it, generating 48.6% of the total.
Those numbers don’t quite add up to 100%, clearly. In 2001 the combined generation from wind, solar, geothermal, biomass and other non-emitting power generation technologies made up 4.2% of the global pool of zero-emissions electricity. But those technologies (notably wind and especially solar) were at the beginning of an exponential increase in output.
In 2020, non-hydro-renewable generation surpassed nuclear; a year later, wind and solar generation alone passed nuclear. Last year, hydropower generated 4,334 terawatt-hours, while non-hydro renewables generated 4,204. Nuclear power has plateaued, and non-hydro renewables will soon overtake hydropower as a power generation group. Year-on-year growth in non-hydro renewable generation from 2021 to 2022 was more than 500 terawatt-hours, which is more than all the electricity France used last year and very close to Germany’s usage.
I wish you all a fearless and loveable week!