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Economy

The $3 Trillion Green Plan To Get The Economy Out Of Intensive Care – Forbes

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The International Energy Agency has outlined a $3 trillion plan to restart the global economy while cutting greenhouse gas emissions, saying that governments have a “once-in-a-lifetime opportunity” to create jobs while decarbonizing infrastructure.

Released today, the IEA says its three-year roadmap for clean energy and efficiency investment would create nine million jobs every year and additional economic growth of 1.1% annually. The agency claims its plan will eliminate 4.5 billion tonnes (5 billion U.S. tons) of greenhouse gas emissions by 2023.

Including macroeconomic analysis from the International Monetary Fund, the plan is likely to attract the attention of policy makers facing an unprecedented economic challenge: earlier this month, the OECD policy forum forecast the most severe global peacetime recession in a century as a result of the pandemic.

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But the world also faces an even larger, potentially more deadly challenge in the form of man-made climate change. And while restrictions caused by COVID-19 worldwide caused a temporary drop in greenhouse gas emissions, recent research has shown that, as lockdowns are loosened, those emissions are already rebounding.

“Global carbon emissions flat-lined in 2019 and are set for a record decline this year,” IEA noted with the release of the report. “While this drop, which results from economic trauma, is nothing to celebrate, it provides a base from which to put emissions into structural decline.”

The report assesses six sectors of the economy—electricity, transport, buildings, industry, fuels and innovation—to home in on over 30 measures it says would generate the most value in terms of economic recovery and decarbonization. These include retrofitting buildings for better efficiency, accelerating renewable energy projects like solar PV farms, expanding rail infrastructure, and reforming fossil fuel subsidies.

Of crucial concern for treasuries, the IEA report presents the abatement cost for each measure analyzed, which is a measure of the financial cost or savings associated with reducing emissions by 1 tonne of carbon dioxide equivalent (CO2e). Many energy efficiency measures, the report notes, have a negative abatement cost, which means they can save consumers and industry money while reducing emissions.

Among the other benefits accrued, the IEA says its plan would result in a 5% reduction in air pollution globally, give 420 million people in developing countries access to “clean cooking solutions” such as biogas and electricity, and provide electricity access to an additional 270 million people.

In remarks accompanying the report, IEA Executive Director Fatih Birol said governments should take the opportunity to invest in sustainable solutions, or risk baking-in economic and environmental failure.

“As they design economic recovery plans, policymakers are having to make enormously consequential decisions in a very short space of time,” Birol said. “These decisions will shape economic and energy infrastructure for decades to come and will almost certainly determine whether the world has a chance of meeting its long-term energy and climate goals.”

The remarks correspond closely with those of climate advocates and veterans such as Christiana Figueres, the climate diplomat who last month explained that the recovery from coronavirus had the potential to make or break the fight to reduce global emissions.

Indeed, the IEA is not the only agency to have presented a green recovery plan: in April, the International Renewable Energy Agency (IRENA) unveiled a comprehensive, longer-term roadmap for reconfiguring the economy in the wake of coronavirus. And this month, management consultants McKinsey unveiled a strategy it says governments could use as a framework for deploying stimulus packages in a sustainable way. Such measures are supported by the available science: research by the University of Oxford indicates that investing in green infrastructure will not only lead to robust economic recovery but also to long-term positive outcomes for societies worldwide.

MORE FROM FORBESHow Do You Make Covid Recovery Cash Count? McKinsey Has A Plan

For its part, the IEA, a Paris-based organization which for many years was chiefly concerned with the supply of crude oil, has in recent years become something of an evangelist for sustainability. Last month the agency claimed that the European Green Deal would prove to be the “motor for the recovery” of the EU.

Introducing today’s report, Birol was unequivocal about the significance of the current moment. “Governments have a once-in-a-lifetime opportunity to reboot their economies and bring a wave of new employment opportunities while accelerating the shift to a more resilient and cleaner energy future,” he said.

“Policy makers are having to make hugely consequential decisions in a very short space of time as they draw up stimulus packages. Our sustainable recovery plan provides them with rigorous analysis and clear advice on how to tackle today’s major economic, energy and climate challenges at the same time.”

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U.S. economic growth for last quarter revised up slightly to healthy 3.4% annual rate – The Globe and Mail

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The U.S. economy grew at a solid 3.4 per cent annual pace from October through December, the government said Thursday in an upgrade from its previous estimate. The government had previously estimated that the economy expanded at a 3.2 per cent rate last quarter.

The Commerce Department’s revised measure of the nation’s gross domestic product – the total output of goods and services – confirmed that the economy decelerated from its sizzling 4.9 per cent rate of expansion in the July-September quarter.

But last quarter’s growth was still a solid performance, coming in the face of higher interest rates and powered by growing consumer spending, exports and business investment in buildings and software. It marked the sixth straight quarter in which the economy has grown at an annual rate above 2 per cent.

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For all of 2023, the U.S. economy – the world’s biggest – grew 2.5 per cent, up from 1.9 per cent in 2022. In the current January-March quarter, the economy is believed to be growing at a slower but still decent 2.1 per cent annual rate, according to a forecasting model issued by the Federal Reserve Bank of Atlanta.

Thursday’s GDP report also suggested that inflation pressures were continuing to ease. The Federal Reserve’s favoured measure of prices – called the personal consumption expenditures price index – rose at a 1.8 per cent annual rate in the fourth quarter. That was down from 2.6 per cent in the third quarter, and it was the smallest rise since 2020, when COVID-19 triggered a recession and sent prices falling.

Stripping out volatile food and energy prices, so-called core inflation amounted to 2 per cent from October through December, unchanged from the third quarter.

The economy’s resilience over the past two years has repeatedly defied predictions that the ever-higher borrowing rates the Fed engineered to fight inflation would lead to waves of layoffs and probably a recession. Beginning in March 2022, the Fed jacked up its benchmark rate 11 times, to a 23-year high, making borrowing much more expensive for businesses and households.

Yet the economy has kept growing, and employers have kept hiring – at a robust average of 251,000 added jobs a month last year and 265,000 a month from December through February.

At the same time, inflation has steadily cooled: After peaking at 9.1 per cent in June 2022, it has dropped to 3.2 per cent, though it remains above the Fed’s 2 per cent target. The combination of sturdy growth and easing inflation has raised hopes that the Fed can manage to achieve a “soft landing” by fully conquering inflation without triggering a recession.

Thursday’s report was the Commerce Department’s third and final estimate of fourth-quarter GDP growth. It will release its first estimate of January-March growth on April 25.

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Canadian economy starts the year on a rebound with 0.6 per cent growth in January – CBC.ca

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The Canadian economy grew 0.6 per cent in January, the fastest growth rate in a year, while the economy likely expanded 0.4 per cent in February, Statistics Canada said Thursday.

The rate was higher than forecasted by economists, who were expecting GDP growth of 0.4 per cent in the month. December GDP was revised to a 0.1 per cent contraction from zero growth initially reported.

January’s rise, the fastest since the 0.7 per cent growth in January 2023, was helped by a rebound in educational services as public sector strikes ended in Quebec, Statistics Canada said.

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WATCH | The Canadian economy grew more than expected in January: 

Canada’s GDP increased 0.6% in January

41 minutes ago

Duration 2:20

The Canadian economy grew 0.6 per cent in January, the fastest growth rate in a year, while the economy likely expanded 0.4 per cent in February, Statistics Canada says.

“The more surprising news today was the advance estimate for February,” which suggested that underlying momentum in the economy accelerated further that month, wrote CIBC senior economist Andrew Grantham in a note.

Thursday’s data shows the Canadian economy started 2024 on a strong note after growth stalled in the second half of last year. GDP was flat or negative on a monthly basis in four of the last six months of 2023.

More time for BoC to assess

The strong rebound could allow the Bank of Canada more time to assess whether inflation is slowing sufficiently without risking a severe downturn, though the central bank has said it does not want to stay on hold longer than needed.

Because recent inflation figures have come in below the central bank’s expectations, “it appears that much of the growth we are seeing is coming from an easing of supply constraints rather than necessarily a pick-up in underlying demand,” wrote Grantham.

“As a result, we still see scope for a gradual reduction in interest rates starting in June.”

WATCH | Bank of Canada left interest rate unchanged earlier this month: 

Bank of Canada leaves interest rate unchanged, says it’s too soon to cut

22 days ago

Duration 1:56

The Bank of Canada held its key interest rate at 5 per cent on Wednesday, with governor Tiff Macklem saying it was too soon for cuts. CBC News speaks with an economist and a couple who might be forced to sell their home if interest rates don’t come down.

The central bank has maintained its key policy rate at a 22-year high of five per cent since July, but BoC governors in March agreed that conditions for rate cuts should materialize this year if the economy evolves in line with its projections.

The bank in January forecast a growth rate of 0.5 per cent in the first quarter, and Thursday’s data keeps the economy on a path of small growth in the first three months of 2024. The BoC will release new projections along with its rate announcement on April 10.

Growth in 18 out of 20 sectors

Growth in January was broad-based, with 18 of 20 sectors increasing in the month, StatsCan said. The agency said that real estate and the rental and leasing sectors grew for the third consecutive month, as activity at the offices of real estate agents and brokers drove the gain in January.

Overall, services-producing industries grew 0.7 per cent, while the goods-producing sector expanded 0.2 per cent.

In a preliminary estimate for February, StatsCan said GDP was likely up 0.4 per cent, helped by mining, quarrying, oil and gas extraction, manufacturing and the finance and insurance industries.

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Yellen Sounds Alarm on China ‘Global Domination’ Industrial Push – Bloomberg

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US Treasury Secretary Janet Yellen slammed China’s use of subsidies to give its manufacturers in key new industries a competitive advantage, at the cost of distorting the global economy, and said she plans to press China on the issue in an upcoming visit.

“There is no country in the world that subsidizes its preferred, or priority, industries as heavily as China does,” Yellen said in an interview with MSNBC Wednesday — highlighting “massive” aid to electric-car, battery and solar producers. “China’s desire is to really have global domination of these industries.”

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