Economy

UK's Nigel Topping seeks broad movement to drive global economy to net zero by 2050 – Climate Home

Published

2 years ago

February 26, 2020

Harry Miller

Companies, investors and other non-state actors need to work alongside national governments to transform the global economy towards net zero emissions by 2050, the UK’s climate action champion told Climate Home News.

Nigel Topping said he hoped 60% of world economic output will be generated in areas which have a 2050 goal of net zero emissions by the end of the UN climate talks in Glasgow, in November, up from 49% now in an estimate by the Energy and Climate Intelligence Unit think-tank.

Besides the huge diplomatic efforts the UK presidency needs to deliver ahead of the critical UN negotiations, or Cop26, cities, states, regions, businesses and investors are under growing pressure to play their part in propelling the world into a decade of ambitious climate action.

For Nigel Topping, that means re-thinking the interaction between national governments and non-state actors to create a global movement that can wean the global economy off fossil fuels.

Topping, who was appointed by the UK presidency to drive climate ambition alongside Chilean Gonzalo Muñoz, warned the divide between state and non-state actors “has been a bit too rigid in the past”.

Speaking to Climate Home News in London, the former CEO of We Mean Business, a coalition of companies working to accelerate the transition to a zero carbon economy, said: “We need to recognise that it’s a collective leadership problem.”

“How we bring coalitions of the ambitious together around these big systems transformations require everybody to act…that is what I am most keen to build on this year,” he said.

Countries are under pressure to enhance their 2030 climate plans and publish long-term decarbonisation strategies ahead of Cop26, to bridge the gap between current levels of commitments and what is needed to limit warming to 1.5C by the end of the century – the tougher goal of the Paris Agreement.

Switzerland joins few nations confirming to UN it will enhance climate action plans

To act as a driving force besides political negotiations, Topping said both the private sector and local governments will need to come up with pathways to achieve carbon neutrality by mid-century.

After the last climate talks in Madrid, 15 subnational governments, 398 cities, 786 companies and 16 investors with assets of $4 trillion committed to being carbon neutral by 2050, according to the Chilean presidency.

For Topping, the number of non-state actors that pledged to reach net zero emissions by 2050 needs to increase tenfold before Cop26, noting that such commitments are only meaningful if they include “clarity on a long-term goal and clarity of short-term action”.

That, Topping said, would send “a resounding signal to the world’s governments that everybody else is getting on with it, so you can do it to, and you must and we want you to”.

At the Glasgow summit, Topping envisioned events that would gather ministers and non-state actors representatives, including mayors, CEOs and campaigners to spur innovation and move the dial on sector-specific issues such as energy, transport, and housing.

These events would act as “ambition loops between different actors,” he said. And include “a mix of stockholders that between them really have the power to bring the transformation to a tipping point, when the markets and other governments basically have to follow”.

“We need to be really thoughtful about building the coalitions to get done what needs to be done. We can’t assume that there is a one size fits all,” he added.

Topping said he hoped to build sufficient coalitions to have “at least one big announcement a day” during Cop26, which runs from 9-19 November.

The Netherlands faces pressure as global ‘test case’ for deep emissions cuts in 2020

Real economy commitments will also help “embolden” countries to ramp up ambition Topping said, and provide evidence that some aspects of the transition are already underway.

“We’re working hard to ensure that diplomatic outreach is informed by what’s going on with the non-state actors.”

Such information will be important in moments like the EU-China summit convened by Germany in September, Topping added, as Brussels hopes to broker a climate and trade deal with Beijing to ramp up its climate target.

Building these multi-stakeholder coalitions requires “rolling up your sleeves,” he admitted. But his encouragement comes from the fact “systems change exponentially” and that society can become more sophisticated at recognising the signs a transformation is underway.

He also said that reaching 60% of the world economy in areas with a goal of net zero emissions would be a stepping stone to much greater ambition in coming years.

“If we can get to 60% now then I think we have a reasonable chance of getting to 100% by 2025 and in the next ratchet-up cycle,” Topping said. Unlike countries, “non-state actors are not waiting five years” to increase ambition, he added.

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Economy

Extreme heat is slamming the world's three biggest economies all at once – CNN

Published

29 mins ago

August 18, 2022

Harry Miller

London (CNN Business)Estimating just how catastrophic climate change will be for the global economy has historically proven challenging. But this summer, it’s increasingly evident how quickly costs can pile up.

Extreme heat and drought conditions are battering the United States, Europe and China, compounding problems for workers and businesses at a time when economic growth is already slowing sharply and adding to upward pressure on prices.

In China’s Sichuan province, all factories have been ordered shut for six days to conserve power. Ships carrying coal and chemicals are struggling to make their usual trips along Germany’s Rhine river. And people living on America’s West Coast have been asked to use less electricity as temperatures soar.

These events “have the capacity to be quite significant for the particular regions that are affected,” said Ben May, director of global macro research at Oxford Economics.

The extent of the pain could depend on how long the heatwaves and lack of rain last. But in countries like Germany, experts warn there’s little relief in sight, and companies are preparing for the worst.

A barge passes exposed rocks and sandbanks on the Rhine river in Bacharach, Germany, on Aug. 15.

Extreme weather and an economic slowdown

It’s not just the Rhine. Around the world, rivers that support global growth — the Yangtze, the Danube and the Colorado — are drying up, impeding the movement of goods, messing with irrigation systems and making it harder for power plants and factories to stay cool.

At the same time, scorching heat is hampering transportation networks, straining power supply and hurting worker productivity.

“We shouldn’t be surprised by the heat wave events,” said Bob Ward, policy and communications director at the London School of Economics’ Grantham Research Institute on Climate Change and the Environment. “They’re exactly what we predicted and are part of a trend: more frequent, more intense, all over the world.”

China is facing its fiercest heat wave in six decades, with temperatures crossing 40 degrees Celsius (104 degrees Fahrenheit) in dozens of cities. Parts of California could see temperatures as high as 109 degrees Fahrenheit this week. Earlier this summer, temperatures topped 40 degrees Celsius in the United Kingdom for the first time ever.

Dry grass is seen in Greenwich Park, England. Sixty-three percent of land in the European Union and United Kingdom — an area nearly the same size as India — is now under either drought warnings or alerts.

The global economy was already under pressure. Europe is at high risk of a recession as energy prices soar, stoked by Russia’s invasion of Ukraine. High inflation and aggressive interest rate hikes by the Federal Reserve jeopardize growth in the United States. China is grappling with the consequences of harsh coronavirus lockdowns and a real estate crisis.

“At present, we are at the most difficult point of economic stabilization,” Chinese Premier Li Keqiang said this week.

Something else to worry about

Extreme weather could exacerbate “existing pinch points” along supply chains, a major reason inflation has been difficult to bring down, May of Oxford Economics said.

China’s Sichuan province, where factories have shuttered production this week, is a hub for makers of semiconductors and solar panels. The power rationing will hit factories belonging to some of the world’s biggest electronics companies, including Apple (AAPL) supplier Foxconn and Intel (INTC).

The province is also the epicenter of China’s lithium mining industry. The shutdown may push up the cost of the raw material, which is a key component in electric car batteries.

The neighboring city of Chongqing, which sits at the confluence of the Yangtze and Jialing rivers, has also ordered factories to suspend operations for a week through next Wednesday to conserve electricity, state media The Paper reported.

The Yangtze riverbed is exposed due to drought on Aug. 17 in Chongqing, China.

Forecasts for China’s economy this year are already being downgraded as a consequence. Analysts at Nomura cut their 2022 projection for GDP growth to 2.8% on Thursday — way below the government’s 5.5% target — while Goldman Sachs trimmed its forecast to 3%.

Germany’s shrinking Rhine, meanwhile, has dropped below a critical level, impeding the flow of vessels. The river is a crucial conduit for chemicals and grain as well as commodities — including coal, which is in higher demand as the country races to fill storage facilities with natural gas ahead of the winter. Finding alternative forms of transit is difficult given labor shortages.

“It is only a matter of time before plants in the chemical or steel industry are shut down, mineral oils and building materials fail to reach their destination, or large-volume and heavy transports can no longer be carried out,” Holger Lösch, deputy director of the Federation of German Industries, said in a statement this week.

Low water levels along the Rhine shaved about 0.3 percentage points off Germany’s economic output in 2018, according to Carsten Brzeski, global head of macro at ING. But in that instance, low water wasn’t a problem until late September. This time around, it could lower GDP by at least 0.5 percentage points in the second half of this year, he estimated.

Economic sentiment in Germany continued to dip in August, according to data released this week. Brzeski said the country “would need an economic miracle” to avoid falling into a recession in the coming months.

A bathtub ring watermark at Hoover Dam/Lake Mead, the country’s largest man-made water reservoir, formed by the dam on the Colorado River.

In the American West, an extraordinary drought is draining the nation’s largest reservoirs, forcing the federal government to implement new mandatory water cuts. It’s also forcing farmers to destroy crops.

Nearly three quarters of US farmers say this year’s drought is hurting their harvest — with significant crop and income loss, according to a survey by the American Farm Bureau Federation, an insurance company and lobbying group that represents agricultural interests.

The survey was conducted across 15 states from June 8 to July 20 in extreme drought regions from Texas to North Dakota to California, which makes up nearly half of the country’s agricultural production value. In California — a state with high fruit and nut tree crops — 50% of farmers said they had to remove trees and multiyear crops due to drought, which will affect future revenue.

Without significant investment in upgrading infrastructure, costs will only keep rising, Ward of the London School of Economics noted. And the impact may not be incremental.

“There are signs these heat episodes are not just becoming slightly more intense and frequent over time. It’s happening in a kind of non-gradual way, and that will make it more difficult to adapt,” Ward said.

— Laura He, Shawn Deng, Simone McCarthy, Benjamin Brown, Aya Elamroussi, Taylor Romine and Vanessa Yurkevich contributed reporting.

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Economy

Chile's Economy Stagnates in Second Quarter as Demand Withers – Bloomberg

Published

2 hours ago

August 18, 2022

Harry Miller

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Chile’s Economy Stagnates in Second Quarter as Demand Withers Bloomberg

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Economy

Fed saw evidence of a slowing economy at its last meeting – Advisor's Edge

Published

13 hours ago

August 18, 2022

Harry Miller

Slower growth, they noted, could “set the stage” for inflation to gradually fall to the central bank’s 2% annual goal, though it remained “far above” that target.

In both June and July, the Fed sought to curb high inflation by twice raising its key rate by an unusually large three quarters of a percentage point. At their meeting last month, the policymakers said it might “become appropriate at some point to slow the pace of policy rate increases.”

The U.S. central bank had been slow to respond to a resurgence of inflation in the spring of 2021 as the economy roared back from the 2020 pandemic recession. Chair Jerome Powell characterized high inflation as merely “transitory,” mainly a result of supply chain backlogs that would soon unsnarl and ease inflationary pressure. They didn’t, and year-over-year inflation hit a 40-year high of 9.1% in June before edging lower last month.

So the Fed raised its benchmark rate at its meeting in March and again in May, June and July. Those moves have raised the central bank’s key rate, which influences many consumer and business loans, from near zero to a range of 2.25% to 2.5%, the highest since 2018.

Powell has said the Fed will do what it will take to tame inflation, and more rate hikes are expected. But many economists worry that the Fed will overdo it in the other direction by tightening credit so much as to trigger a recession.

Concerns about a potential recession have been eased, for now, by the ongoing strength of the job market. Employers added a robust 528,000 jobs last month, and the unemployment rate has hit 3.5%, matching a half-century low that was reached just before the pandemic erupted in 2020.

In the minutes released Wednesday, the Fed’s policymakers acknowledged the strength of the job market. But they also noted that hiring tends to be a lagging indicator of the economy’s health. And they pointed to signs that the job market might be cooling, including an increase in the number of Americans filing for unemployment benefits, a drop in Americans quitting their jobs and a reduction in job openings.

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