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Global Climate Policy Acceleration Means Sink-or-Swim Decade for Canada's Economy: Report – Canada NewsWire

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OTTAWA, ON, Oct. 21, 2021 /CNW Telbec/ – Canada’s economy faces a “sink-or-swim” decade, according to the first study to assess Canada’s economic prospects in the face of accelerating global market shifts responding to climate change.

Sink or Swim: Transforming Canada’s economy for a global low-carbon future is a major new report from the Canadian Institute for Climate Choices, Canada’s independent climate policy research institute. The report assesses Canada’s economic prospects in response to the global low-carbon transition and offers recommendations for successfully navigating that transition.

Countries responsible for over 70 per cent of global GDP and over 70 per cent of global oil demand have committed to reaching net zero emissions by mid-century. Trillions of dollars in global investment will move away from high-carbon sectors. The impact of these global shifts will be profound, shifting trade patterns, reshaping demand, and upending businesses that are too slow to adapt.

To better understand the risks and opportunities of this transition for Canada, Sink or Swim stress tests publicly traded companies under different scenarios. Without major investment, the report finds, many exporters and multinationals will see significant profit loss in the coming decades. The stakes are high for Canada, with almost 70 per cent of goods exports and over 800,000 jobs in transition-vulnerable sectors, including oil and gas, mining, heavy industry, and auto manufacturing.

To succeed in this global transition, the report concludes, Canada must use climate policy, company disclosure, and targeted public investment to mobilize private finance and improve the resilience of Canada’s workforce and impacted communities.

QUOTES

“Our analysis shows that global policy and market changes will have a profound impact on Canada’s economy and workforce. To stay competitive, Canada needs to rapidly scale up new, transition-consistent sources of growth—and successfully transform existing ones. Moving too slowly is now a greater competitive risk than moving too quickly.”

—Rachel Samson, Clean Growth Research Director, Climate Choices

“The global transition means Canada must transform its economy in the face of new market realities. With smart, certain policy and innovation across the private sector, there is a path to strong economic growth, gains in well-being, and lower emissions.”

—Don Drummond, Stauffer-Dunning Fellow and Adjunct Professor at the School of Policy Studies at Queen’s University and fellow-in-residence at the C.D. Howe Institute

“Major Canadian investors understand the pressures our economy will be facing as a result of accelerating global market shifts, and we’re issuing a strong call for increased climate accountability and transparency in the corporate sector.”
—Dustyn Lanz, CEO, Responsible Investment Association

“The Aluminum Association of Canada supports a holistic view of Canada’s trajectory towards net zero emissions. A multifaceted approach with room for everyone will support a transition to a prosperous and sustainable economy.”
—Jean Simard, President and Chief Executive Officer of the Aluminium Association of Canada

“Canadian businesses and investors need clarity on which economic activities are consistent with the transition to a low-carbon future. Without that clarity, there is a risk that finance will flow in the wrong directions and miss areas of great opportunity. The analysis in this report will support the development of practical taxonomies that can be used for transition-consistent investment decisions and financial products.”
—Barbara Zvan, CEO & President, University Pension Plan and member of Canada’s former Expert Panel on Sustainable Finance. UPP is a participating organization of the Sustainable Finance Action Council

RESOURCES

ABOUT CLIMATE CHOICES

The Canadian Institute for Climate Choices is Canada’s independent climate policy research institute, providing evidence-based policy analysis and advice to decision makers across the country.

SOURCE Canadian Institute for Climate Choices

For further information: Catharine Tunnacliffe, Director of Communications, (226) 212-9883

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Economy

'Degrowth' Is a Misguided Way to Decarbonize the Economy – Bloomberg

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Spend any time discussing climate policy and you’re sure to discover the “degrowth” movement. Its vocal proponents are hard to miss, online and off. Its core tenets might be harder to pin down, but the tagline captures the gist: Economic growth is the problem. The only way to decarbonize the economy: Degrowth!

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Omicron could pose 'significant' threat to global economy, Yellen says – Reuters

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Dec 2 (Reuters) – The Omicron variant of COVID-19 could slow global economic growth by exacerbating supply chain problems and depressing demand, U.S. Treasury Secretary Janet Yellen told the Reuters Next conference on Thursday.

Yellen cited a great deal of uncertainty about the impact of the highly contagious variant, first detected in South Africa, given the severe U.S. economic slowdown caused by the emergence of the Delta variant of COVID-19 earlier this year.

“Hopefully it’s not something that’s going to slow economic growth significantly,” Yellen said, adding, “There’s a lot of uncertainty, but it could cause significant problems. We’re still evaluating that.”

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Yellen said the new strain of the coronavirus could exacerbate supply chain problems and boost inflation, but it could also depress demand and cause slower growth, which would ease some of the inflationary pressures.

The spread of Omicron has roiled financial markets and prompted governments around the world to tighten travel and workplace restrictions. The United States reported its first case of community transmission of the new variant on Thursday.

Yellen, the former head of the Federal Reserve, also told the virtual global conference that she is ready to retire the word “transitory” to describe the current state of inflation plaguing the U.S. recovery from the COVID-19 pandemic, echoing comments from Fed Chair Jerome Powell earlier this week.

“I’m ready to retire the word transitory. I can agree that that hasn’t been an apt description of what we’re dealing with,” Yellen said.

Powell told lawmakers this week the word meant different things to different people, sowing some confusion, and it was a good time to explain more clearly what was meant. read more

STRONG ECONOMY

Treasury Secretary Janet Yellen pauses while testifying before a Senate Banking Committee hybrid hearing on oversight of the Treasury Department and the Federal Reserve on Capitol Hill in Washington, U.S., November 30, 2021. REUTERS/Elizabeth Frantz
Treasury Secretary Janet Yellen pauses while testifying before a Senate Banking Committee hybrid hearing on oversight of the Treasury Department and the Federal Reserve on Capitol Hill in Washington, U.S., November 30, 2021. REUTERS/Elizabeth Frantz

Yellen insisted that stimulus spending by the Biden administration early this year was not the major driver boosting consumer prices, which hit 31-year highs in October and are running at more than twice the Fed’s flexible inflation target of 2% annually. She blamed the surging prices mainly on supply chain issues and a mismatch between supply and demand.

Yellen said the $1.9 trillion American Rescue Plan passed by Congress earlier this year had helped vulnerable Americans get through the worst of the pandemic and fueled the strong U.S. economy.

While it may have contributed to inflation “somewhat,” she said the surge was largely due to the pandemic and the massive shift in consumption towards goods and away from services.

She said the Fed should keep a close eye on rising wages to avoid the kind of damaging and long-lasting “wage-price spiral” seen in the 1970s.

Yellen, who led the Fed from 2014 to 2018, said it was up to the U.S. central bank to decide what to do about interest rates, but noted that a strong U.S. economy, which would likely prompt rate hikes, is generally a good thing for the rest of the world. read more

President Joe Biden’s administration is working closely with the private sector to curb price increases, Yellen said, citing efforts to accelerate the loading of containers at ports and encourage domestic production of semiconductors.

She said lowering Trump-era tariffs on imported goods from China through a revived exclusion process could help ease some inflationary pressures, but would not be a “game-changer.” [nL1N2SN1M6]

While she is “open” to a visit to China to meet with government officials there on economic issues, Yellen said a trip is not currently on her agenda. But she said she would continue to engage with her Chinese counterpart, Vice Premier Liu He, on issues such as technology practices, securities markets and exchange rate practices as well as efforts to rebalance China’s economy toward consumer spending.

Yellen also told the Reuters Next audience that her mind is not yet made up on whether the Fed should create a digital dollar, following China and some other countries in developing central bank digital currencies.

She said the advantages and disadvantages of such a move needed to be weighed, including possible negative effects on the banking system, and that consensus among the Fed, the Biden administration and Congress was needed to proceed. read more

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Reporting by Alessandra Galloni, additional reporting by David Lawder, Andrea Shalal and Daniel Burns; Editing by Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

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Dollar gains as Fed hawks circle before jobs report; Aussie slumps

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The dollar leapt against its more risk-sensitive Australian and New Zealand counterparts on Friday, ahead of key U.S. jobs data that could clear the path to earlier Federal Reserve interest rate hikes, even as Omicron uncertainties cloud the outlook.

Fed officials speaking on Thursday joined Chair Jerome Powell in striking hawkish stances, with San Francisco Fed President Mary Daly saying it may be time to “start crafting a plan” to raise rates to combat inflation, and Richmond Fed President Thomas Barkin throwing his support behind “normalising policy.”

Meanwhile, the continued spread of the Omicron COVID-19 variant globally buoyed havens like the dollar and yen and pressured riskier currencies. Omicron has quickly established itself as the dominant strain in South Africa, where it was first discovered last month, and has now been found in five U.S. states including Hawaii.

“G10 FX is very much risk-off” on “renewed jitters about the Omicron cases popping up in very distant parts of the U.S., and how we might have only seen the first phase of policy restrictions in response,” said Sean Callow, a currency strategist at Westpac in Sydney.

The dollar index, which measures the greenback against six major peers, gained 0.09% to 96.173, setting it up for a 0.11% advance for the week. That would be a sixth weekly gain, the longest stretch since January 2015.

“If you strip out the noise in the market at the moment, which is driven very much by uncertainties around Omicron, the dollar is in a fairly bullish cycle,” said Kyle Rodda, a market analyst at IG in Melbourne.

“That’s on the basis that clearly U.S. economic outperformance, especially within the developed world, is fairly entrenched for the time being, and we’re really pricing in that the Fed is going to increase the pace of the tapering programme in December and set up rate hikes well before the middle of next year.”

Money markets see high odds that the Fed will raise the target rate by a quarter point at its June meeting.

Powell reiterated in testimony to Congress on Wednesday that he and fellow policymakers will consider swifter action at their Dec. 14-15 meeting.

Economists in a Reuters poll estimate the United States created 530,000 new jobs last month, continuing a run of strong data.

The dollar was flat at 113.21 yen.

The euro was little changed at $1.12975, consolidating after its drop to an almost 17-month low at $1.1186 last week.

The Aussie dropped 0.26% to $0.7076, a fourth losing session, and earlier touched a 13-month low of $0.70625.

“We continue to expect near‑term AUD moves will be driven by Omicron and the risk remains a dip below $0.7000,” Commonwealth Bank of Australia strategist Joseph Capurso wrote in a report.

Both the European Central Bank and Reserve Bank of Australia, which decides policy on Tuesday, have stuck to dovish stances, pushing back against market bets that policymakers will be forced to bow to inflationary pressures.

New Zealand’s kiwi dollar fell 0.33% to $0.6795.

 

(Reporting by Kevin Buckland; Editing by Shri Navaratnam and Sam Holmes)

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