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Briefing date 12.07.2021
G20 ministers endorse carbon pricing to help tackle climate change

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G20 ministers endorse carbon pricing to help tackle climate change
Financial Times Read Article

The Financial Times says that G20 finance ministers have collectively endorsed carbon pricing for the first time, describing the once-contentious idea as one of “a wide set of tools” to tackle climate change. Meeting in Venice, G20 finance ministers announced on Saturday that solutions to climate change and biodiversity loss could include, “if appropriate, the use of carbon pricing mechanisms and incentives”. The FT adds: “Speaking at the Venice International Conference on Climate on Sunday, the day after the G20 talks, Christine Lagarde, president of the European Central Bank, also underscored the need for carbon pricing clarity, emphasising the importance of an ‘effective carbon price that reflects the true cost of carbon’…William Nordhaus, an American economist and Nobel laureate, gave the keynote address at the conference, calling for a ‘climate club’ of countries willing to commit to a carbon price…’It is a painful, painful realisation, but I think we need to face it: Our international climate policy, the approach we are taking, is at a dead end,‘ said Nordhaus referring to the annual COP climate summits.” Reuters says the G20 finance leaders took a “tentative step towards promoting the idea and coordinating carbon reduction policies”. The newswire quotes French finance minister Bruno Le Maire: “It is the first time in a G20 communique you could have these two words ‘carbon pricing’ being introduced as a solution for the fight against climate change. We have been pushing very hard to have these two words…introduced into a G20 communique.” Separately, Reuters says that BlackRock chief executive Larry Fink has “called for governments to develop a stronger long-term climate finance plan to unlock the private capital needed to fund the transition to a low-carbon economy”. Speaking to G20 finance ministers in Venice, he said without such a plan, current efforts, including on corporate sustainability disclosures, risked being “nothing more than window dressing”, says the newswire.

UK: Lower bills could open the way to greener home energy
The Times Read Article

In an interview with the Times, the UK’s business and energy secretary Kwasi Kwarteng has said that ministers are looking at the “balance” of environmental taxes on bills as part of their drive to reduce carbon emissions. The newspaper says he has “signalled” that electricity bills could be made cheaper compared with gas to persuade people to use more green energy. The newspaper continues: “Kwarteng acknowledged that the disproportionate charges on electricity – of which more than 40% was generated from renewable sources last year – needed to be examined again. ‘Clearly we’re looking at the balance,’ he said. ‘There is a balance to be struck there. We’ve got a heat and building strategy, which is coming out, which I’m sure will initiate a lot of discussion about these very issues. I wouldn’t want to pre-empt that’…Proposals being discussed by senior government advisers would compensate lower-income households for planned increases in gas bills as part of the drive to cut carbon emissions. The money would be paid regardless of an individual’s emissions. This means that those who continued to use gas would have any increase to their bill covered by the payment. However, those who switched to cheaper green energy would still get the full payment, meaning they could keep the difference. The government had been due to publish its heat and building strategy next week but this is now understood to have been delayed, possibly until the autumn. At a meeting last week Boris Johnson was said to be concerned that it did not do enough to protect consumers and wanted further safeguards.” (See Comment below.)

Separately, the Times today reports on new analysis by the National Grid which says that “people could face unaffordable electricity bills from sudden sharp rises in prices when wind and solar energy is low unless measures are introduced to protect them”. The report continues: “The utility said that controls were needed to avoid increases like those in Texas in February, where households on variable tariffs saw bills soar after a winter storm damaged the power grid. Meeting the UK’s legally binding target of net-zero emissions by 2050 will require households to switch from flat rates per unit of electricity to time-of-use tariffs, which vary according to how much renewable energy is available, according to a National Grid report.” The Times also carries a feature about how Octopus Energy is preparing for an “air-source heat pump revolution”.

The Independent has an “exclusive” claiming that “Boris Johnson’s promise of more than £11bn to help poorer countries adapt to the climate emergency will be paid for by even deeper cuts to the UK’s other overseas aid projects”. It adds: “Failure to provide fresh funding leaves the prime minister’s claim to be leading the world on the environment in tatters ahead of hosting the COP26 summit in the autumn, campaigners say. It also breaks a United Nations-brokered agreement that the cash must be ‘new and additional’, they claim, with one likening it to ‘a bailiff leaving a bunch of flowers’.” The Times looks ahead to the forthcoming National Food Strategy, which it says is due to be published this week: “[It] will encourage people to eat algae, fermented microbes and other meat alternatives as part of sweeping changes to Britain’s diet to deal with obesity and climate change.” The Sunday Times covers concerns about Scotland’s tree-planting targets with “much of the planting…taking place on shallow, boggy peat that also acts as a carbon sponge”. And the Mail on Sunday has the details of a new New Economics Foundation report which says “air passenger duty should be scrapped and replaced by a frequent flyers’ tax to help poorer families and curb carbon emissions”.

Brussels targets aviation fuel tax in drive to reduce carbon emissions
Financial Times Read Article

Several outlets look ahead to the the unveiling on Wednesday of the European Commission’s new “Fit for 55” package of policies aimed at decarbonising the bloc. The Financial Times says: “Brussels will set out plans this week to increase taxes on polluting fuels and introduce an EU-wide levy on aviation kerosene for the first time, under measures intended to put it at the forefront of global efforts to reduce carbon emissions. The European Commission will propose a revamp of its 15-year-old rule book on carbon taxes to provide an incentive for low-emissions fuel and impose levies on heavily polluting energy used in the airline and shipping industry. The measure is one of a dozen policies to be unveiled on Wednesday to ensure the EU can meet a goal of reducing average carbon emissions by 55% by 2030. Others include an extension of the EU’s emissions trading scheme, tougher CO2 rules for cars and a carbon levy on some imports.” The newspaper adds: “A draft legal text of the energy taxation directive, seen by the Financial Times, proposes gradually increasing minimum rates on the most polluting fuels such as petrol, diesel and kerosene used as jet-fuel over a period of 10 years. Zero-emissions fuels, green hydrogen and sustainable aviation fuels will face no levies for a decade under the proposed system.” A separate FT article says: “European aluminium producers are calling for exclusion from the first phase of the EU’s carbon border adjustment mechanism [CBAM], claiming the plan will put the industry at a competitive disadvantage to foreign rivals and do little to tackle climate change…At the centrepiece of the ‘Fit for 55’ package is the CBAM, a tax designed to target imports from countries that have not signed up to climate neutrality by the middle of this century and protect domestic industries not subject to the same strict environmental standards. Brussels expects to raise nearly €10bn a year from the carbon tax on imports.” Bloomberg says: “The European Commission, the bloc’s regulatory arm, plans to require emissions from new cars and vans to fall by 65% from 2030 and drop to zero from 2035, according to an EU document seen by Bloomberg News. The tougher pollution standards will be complemented by rules that will oblige national governments to bolster vehicle charging infrastructure.”

A preview piece by Reuters explains that “the European Commission will propose 12 policies on Wednesday, targeting four areas: energy, industry, transport, and the heating of buildings”. It continues: “The political road ahead will likely be rough, as EU countries and the European Parliament negotiate the proposals. Already, the plans have exposed familiar rifts between richer western and Nordic EU states where electric vehicle sales are soaring, and poorer eastern countries that are worried about the social cost of weaning their economies off coal. EU member capitals are particularly worried about the Commission’s plan to launch a carbon market for transport and home heating, potentially raising household fuel bills.” Similarly, Politico says that “the EU plans to put the squeeze on countries to make buildings more energy efficient – and that’s setting off fears of a clash between Brussels and national capitals and the possibility of a populist backlash”.

Meanwhile, the Financial Times has a feature about “one of Germany’s newest national parties – the Klimaliste, or ‘climate list’”. The newspaper continues: “They represent the double-edged sword that Germany’s growing climate activism could become for the ascendant Green party in September’s federal elections. Even as Green party leader Annalena Baerbock makes a credible bid to replace Angela Merkel as chancellor, the party once derided as a chaotic cohort of hippies and idealists is under attack from the opposite flank: for being too establishment.” The Guardian interviews Armin Laschet, Christian Democratic Union (CDU) leader who is the frontrunner to be Germany’s next chancellor. The newspaper says he “has warned the EU that joint greenhouse gas targets must not come at the cost of diminishing the prowess of German industry, signalling a reluctance to join carbon reduction schemes planned in other European countries”.

US heatwave: Wildfires rage in western states as temperatures soar
BBC News Read Article

There is continuing coverage of the heatwave and wildfires affecting the western US states. BBC News says: “Communities have been told to evacuate as firefighters struggle to battle the blazes in the extreme conditions. In California, residents were urged to cut power consumption after interstate power lines were knocked out. On Saturday, two firefighters in Arizona died when their aircraft crashed while responding to a blaze. Meanwhile, Las Vegas, Nevada, matched its all-time temperature high of 47.2C (117F) on Saturday. Firefighters battling the many wildfires in the region say the air is so dry that much of the water dropped by aircraft to quell the flames evaporates before it reaches the ground.” The region’s latest bout of extreme weather follows last month’s “heat dome”, which scientists last week said was made significantly worse by climate change. The New York Times says that there are “over 31 million people in areas under excessive heat warnings or heat advisories” and that “it is the third heatwave to sweep the region this summer”. The Guardian interviews farmers in California’s Central Valley. Farmworker Jesús Zúñiga tells the newspaper: “On these hot days we’re only able to work five or six hours, before we’d start to get sick…Sometimes my head starts to hurt, and I get dizzy…That is when I start to have doubts, so many doubts: why are we even here?”

In other US news, the Guardian covers a new report, published by a consortium of researchers from Harvard University, Georgia Institute of Technology and Syracuse University, which concludes that the Biden administration’s proposed clean energy standard “would swiftly cut planet-heating emissions and save hundreds of thousands of lives from deadly air pollution”. The newspaper adds: “A clean energy standard would require utilities to ratchet up the amount of clean energy, such as solar and wind, they use, through a system of incentives and penalties. The Biden administration hoped to include the measure in its major infrastructure bill but it was dropped after compromise negotiations with Republicans.”

Meanwhile, CNN has a lengthy feature on “how marginalised communities in the South are paying the price for ‘green energy’ in Europe”. The Independent covers the remarks of Democrat Congresswoman Alexandria Ocasio-Cortez who has “called out GOP colleagues in Congress for blocking her Green New Deal amid flooding in New York and New Jersey”.

In US-related comment, an editorial in the Wall Street Journal mocks California for its “unreliable renewables [which] are forcing the state to scramble for electricity”. The New York Times carries a “guest essay” by journalist and historian Miriam Pawel who laments California’s many challenges which are being made worse by climate change: “Some of the most consequential limits are driven by natural forces not unique to California but particularly severe here: Climate change has fuelled both the lack of water and the destructive power of wildfires…Decades of human decisions intensified the natural limits – failures to develop more public transportation, to regulate or even measure the amount of water drawn out of the earth, to limit development in fragile ecosystems.”

China’s dominance in global coal loans is overstated, study finds
South China Morning Post Read Article

The South China Morning Post covers a new study published by Boston University which concludes that Japanese and Western financiers bankroll most overseas coal power plants globally, “contrary to the misconception that most new funding comes from public financing entities in China”. The Hong- Kong-based newspaper says: “The study, by the university’s Global Development Policy Centre, said 87% of total financing for overseas coal power projects came from entities outside China, mostly from Japan, the US and Britain. Only 13% of coal power capacity that was operational or under development outside China between 2013 and mid-2019 was funded by Chinese entities – dramatically lower than previously cited estimates, which had put the number as high as 70%, the study authors said.”

Meanwhile, in other China news, Xinhua, China’s state news agency, reports that representatives from the business sector in China and the European Union (EU) have launched an “initiative” to support the commitment to “green and sustainable” development. The China-EU programme, called the Green Action Initiative, was presented at an online forum last week, the publication says. Separately, the Global Times, a state-run newspaper, says that China’s telecom giant, Huawei, is “confident” that it will achieve peak carbon emissions within five years. A Huawei executive said at a forum that the company “will soon release a detailed plan” to achieve carbon neutrality.

In addition, China’s national emissions trading scheme (ETS) will “gradually” expand its sectoral coverage and increase its trading varieties and methods once the ETS for the electricity sector goes online and its trading stabilises, reports Yicai. The Shanghai-based financial publication cites Li Gao, director-general of the Department of Climate Change of the Ministry of Ecology and Environment (MEE). Li said that the MEE aimed to achieve the “stable, effective” operation of the ETS and ensure its “healthy development”, the report said. Yicai states that the MEE plans to “orderly absorb” cement, non-ferrous metals, petrochemical, chemical and other “high-emitting” industries into the national scheme. On the same topic, the Global Times says that China’s carbon price will rise “sharply” and the market turnover will exceed 2tn yuan ($308.2bn) before 2030 after it covers more industries.

China National Radio reports that the Ministry of Natural Resources (MNR) said it was “actively promoting” the trading of “blue carbon”. Blue carbon refers to the capture and storage of carbon by marine and coastal ecosystems, the outlet states, citing an expert. It adds that Wang Hong, vice minister of MNR, said at a press conference that the trading of blue carbon is a “new field” and an “important measure” for China to realise its “dual carbon” goals. Elsewhere, China’s coal prices this year are expected to be 30% to 40% higher than last year, reports Caixin, quoting Citic Securities. “Strong demand and tight supply” are cited as the reasons

Global climate change laggards identified by MSCI emissions tracker
Financial Times Read Article

Greenhouse gas emissions from global listed companies will, reports the FT, “blow past the global warming targets set by the Paris climate accord in just six years, despite the plethora of net-zero corporate pledges”, according to a new tracker by index provider MSCI covering more than 9,000 companies. The newspaper continues: “The MSCI analysis identifies some of the worst-performers, in terms of the biggest emitters that have failed to make any disclosures at all, at a time when investors are seeking to assess the progress of listed companies in curbing climate risk. The list of climate laggards is led mainly by state-backed publicly listed companies based in India and China, including Coal India, Shaanxi Coal and Chemical Industry and China State Construction Engineering, as well as the US-based oil refiner PBF Energy.”

Meanwhile, Reuters covers a study published in the Frontiers journal which shows that “just 25 big cities – almost all of them in China – accounted for more than half of the climate-warming gases pumped out by a sample of 167 urban hubs around the world”. The newswire adds: “In per capita terms, however, emissions from cities in the richest parts of the world are still generally higher than those from urban centres in developing countries”.

Separately, Reuters reports that “India received no bids for 48 of the 67 mines up for sale as part of its plan to open up coal mining to private companies, reflecting little investor appetite for a sector clouded by environmental concerns and low margins”.


The Times view of Boris Johnson’s green agenda: No hot air
Editorial, The Times Read Article

The lead editorial in the Saturday’s edition of the Times says that “if the [UK] government is to have any chance of achieving its net-zero target, it urgently needs to start turning promising ideas into detailed policies”. It continues: “Next week was supposed to have seen the publication of Boris Johnson’s heating strategy, his plan for decarbonising the nation’s homes. Students of this government will not be surprised to learn that this has now been postponed until the autumn…Two years after ministers adopted their net-zero target, progress remains worryingly slow…Businesses need a clear framework to have the confidence to invest. In contrast, the longer the government leaves it, the greater the risk that Britain will fall behind other countries who will reap the benefits of early adoption of new technologies. The greater the risk too that the government will squander public support for net-zero transition, without which there is little chance of securing the necessary behavioural changes. The prime minister’s urgent task over the summer must be to turn vague ideas into clear policy.” In the same edition of the Times, columnist Matthew Parris writes: “Unanswered questions litter the road ahead to carbon net-zero in 2050 – as yet no more than a twinkle in the naysayer’s eye. Those unanswered questions will mount, and time is short. Sharing the costs of a plan is all very well, but only so long as you have a plan. There are tremendous holes in ours…the ifs and the maybes are numerous, the imponderables great, and much more is speculative than politicians and climate change activists seem prepared to admit. So let’s switch the conversation from the why to the how. We know why we must reduce emissions massively and urgently, and moralising comes easy. But we are some way from knowing how. Batteries? Heat pumps? Two rather lonely baskets, and many, many eggs.” David Smith, the economics editor of the Sunday Times, looks at the the recent report by Office for Budget Responsibility (OBR): “The biggest increases in emissions in recent years, unsurprisingly, have been in China and India. This creates a political problem, rooted in the economics of net-zero. As the OBR puts it, the physical risks from global warming are “largely exogenous” – in other words, coming from outside this country – while the costs and risks are “endogenous”, to be borne at home. That is what makes it a challenge. It is one thing for the government to take on its share of the cost of decarbonisation, it is another to persuade the public to do so without very large incentives.”

In the Daily Telegraph, columnist Tim Stanley writes: “The inevitable change in our climate, now horribly underway, is going to legitimise bits of the Left that hitherto were considered extreme. Unless conservatives use the state to preserve as much liberty as possible, a green-Left alliance will eventually be elected that uses environmentalism as cover to redistribute power and money. If you want to save capitalism, you’ve got to go green…There is a tension in conservatism between its promise of freedom and abundance, which are wonderful, and its determination to preserve ancient ways of living, which typically puts the spiritual before the material. There is nothing more conservative than an old lady lying down in front of a bulldozer to protect a tree from a digger. Some will say that I’ve drunk the green Kool-Aid, that this is all sheer alarmism – but I’m afraid we are simply beyond that. The things people once warned would happen, and too few of us listened, are now happening, and we cannot waste time quibbling over fact. Al Gore was right.” Separately in the Daily Telegraph, climate sceptic columnist and Conservative peer Charles Moore seeks to argue that “people are starting to confront the painful choices that net-zero involves”. In the House magazine, Rosamund Irwin has a feature headlined, “Inside the Tory party split on decarbonisation”.

The world’s electricity systems must be ready to counter the growing climate threat
Fatih Birol, LinkedIn Read Article

Writing on his LinkedIn page, International Energy Agency chief executive Fatih Birol says that “recent extreme weather events across the globe highlight the energy security risks that climate change brings”. He adds: “The recent spate of heatwaves and unusually long dry spells are fresh warnings of what lies ahead as our climate continues to heat up: an increase in the scale and frequency of extreme weather events, which will cause greater impacts and strains on our energy infrastructure…Spending today is far below the levels needed for cleaner, more electrified energy systems, particularly in emerging and developing economies. Economic recovery plans from the Covid-19 crisis offer clear opportunities for economies that have the resources to invest in enhancing grid infrastructure, but much greater international efforts are required to mobilise and channel the necessary spending in emerging and developing economies.”

Meanwhile, an editorial in the Wall Street Journal says: “Western politicians have failed to persuade their own voters to commit economic suicide by banning fossil fuels, and forget about China, Russia or India. The climate lobby’s fallback, which is starting to emerge, is to punish the foreigners and their own consumers with climate tariffs…Brussels wants to impose tariffs to bring the cost of carbon-dioxide emissions tied to an imported good into line with what a European producer would pay to produce the same good. This is an admission that the European Union’s emissions-trading scheme (ETS) is bad for the economy…The climate tariff is a tacit admission that Western elites haven’t convinced their voters to pay the price of their climate obsessions. Like Donald Trump, they now want to blame foreigners. In the process they’ll force their consumers to pay more for imports and domestic goods, and they’ll harm their own exporters if countries retaliate. The last thing the world economy needs as it recovers from a pandemic is a climate-change trade war.”

Finally, in the Washington Post, contributing columnist Isaac Stone Fish has a comment piece under the headline: “Dear progressives: You can’t fight climate change by going soft on China.” And EurActiv carries a comment piece by Connie Hedegaard, former EU climate commissioner, and Pascal Lamy, former EU trade commissioner and WTO director-general, who argue: “EU climate targets are undermined by ETS subsidies. They must end.”


Added value of CMIP6 models over CMIP5 models in simulating the climatological precipitation extremes in China
International Journal of Climatology Read Article

A new study finds that models from the sixth Coupled Model Intercomparison Project (CMIP6) reproduce extreme precipitation patterns over China more accurately than their CMIP5 predecessors. The authors simulate rainfall extremes in China over 1976-2005, testing five different rainfall indices – and finding that the CMIP6 models show “improvements” in all of them. The study finds that CMIP6 models “have obviously improved in simulating total precipitation on wet days, wet days, simple daily intensity index, and extreme precipitation amount”. However, the authors note that there is still a bias in CMIP6 models with simulating consecutive dry days.

Greenhouse-gas induced warming amplification over the Arabian Peninsula with implications for Ethiopian rainfall
Climate Dynamics Read Article

The Arabian Peninsula warmed between 2.3 and 3.1 times more than the global average over 1979-2018 and between 1.4 and 2.1 times more than the tropical average, new research finds. The authors use region model simulations to evaluate historical and future warming over the Araban Peninsula – and find that enhanced warming in the region is mainly due to “the absence of latent cooling over the dry surface”. Summer rainfall in northern Ethiopia is expected to increase by 20% by mid-century and 35% by the end of the century, the study notes. It adds that specific humidity in the region is expected to increase by 50% by the end of the century.

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