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      in US Politics

      Manchin ‘very reluctant’ on electric cars in ominous sign for Biden’s climate fight

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      Manchin ‘very reluctant’ on electric cars in ominous sign for Biden’s climate fight Centrist Democrat, who holds key swing vote in US Senate, has poured scorn on the idea of phasing out gasoline and diesel carsFaced with rising gasoline prices, many Americans are now looking to switch to an electric car. But the shift away from fossil fuel vehicles has been criticized by Senator Joe Manchin, who has said he is “very reluctant” to see the proliferation of battery-powered cars.There has been a surge in interest in buying electric vehicles (EVs) in the wake of the war in Ukraine, analysts say, with drivers in the US unnerved by gasoline prices that have surpassed $4.30 a gallon as a result of the conflict and the supply chain issues from the pandemic.‘A really bad deal’: Michigan awards GM $1bn in incentives for new electric carsRead moreJoe Biden has repeatedly championed the growth of the nascent EV market as a way to tackle the climate crisis, with America’s heavy dependency on polluting cars a major source of planet-heating emissions.But Manchin, the centrist Democrat who holds a key swing vote in the US Senate, has poured scorn on the idea of phasing out gasoline and diesel cars.“I’m very reluctant to go down the path of electric vehicles,” Manchin said at the energy conference CERAWeek, held in Houston. “I’m old enough to remember standing in line in 1974 trying to buy gas – I remember those days. I don’t want to have to be standing in line waiting for a battery for my vehicle, because we’re now dependent on a foreign supply chain, mostly China.”Manchin, who has taken more money in political donations from fossil fuel interests than any other senator, also said he has “a hard time understanding” why the federal government would invest in a network of electric car charging stations, as the Biden administration aims to do.“I’ve read history, and I remember Henry Ford inventing the Model-T, but I sure as hell don’t remember the US government building filling stations,” Manchin said to applause. “The market did that.”The West Virginia senator’s criticism is ominous for the White House’s hopes of passing major climate legislation this year. The climate elements of the Build Back Better Act, which Manchin’s opposition has so far stalled, included half a trillion dollars in clean energy tax credits as well as major rebates for electric car purchases to drive up their adoption.Manchin’s comments also come amid renewed consumer interest in EVs reported by car dealers as some Americans look to bypass the volatility of the global oil market altogether. The past month has seen a strong increase in the number of people searching online for hybrid and battery electric vehicles, according to Edmunds, a car shopping and industry analyst website.This is a continuation of the broader growth of EVs in recent years “but the major surge in interest of late is certainly more of a reaction to record gas prices sparked by the war in Ukraine”, according to Jessica Caldwell, executive director of insights at Edmunds.“Anecdotally we are hearing a lot about a greater interest in EVs because of what is going on in Ukraine, but the real test is whether that will last,” said Ed Kim, president of AutoPacific, an auto industry research firm.Kim said that gas-powered cars built in the US are already full of foreign-made parts. “Joe Manchin represents West Virginia which is dependent upon coal so I believe he has a vested interest in downplaying clean energy,” Kim said.“Look at what’s happening right now, we are seeing fuel prices we haven’t seen in years because of geopolitical issues. Any measures we take to reduce our reliance on petroleum is good for our economy, our environment and to ensure the country doesn’t come screeching to a halt.”Previous jumps in the price of gasoline, such as in 2008, saw a corresponding increase in sales of battery-powered and hybrid cars and analysts expect a similar spike as a result of the current crisis. Around half a million electric cars were sold in the US last year, up more than 80% on 2020, with consumers attracted to a slew of new models such Ford’s Mustang Mach-E and the Telsa Model Y.While traditional car makers such as Ford and GM are now making significant investments in the EV market, demand is now regularly outstripping pandemic-hit supply, meaning the ballooning interest in going electric may end in frustration. “Unfortunately, making an EV purchase is not particularly easy to do right now amid inventory shortages,” said Caldwell.Owning an electric car is far cheaper than a gas-powered one due to a lower cost of fuel and fewer mechanical problems but the up-front cost of most EVs is typically more than $40,000.This means they are often out of reach for many low-income Americans who are already forced, due to the car-centric design of US cities and suburbia, to spend a large amount of their money on running a vehicle to go to work and complete other routine trips.The Biden administration is aiming for 50% of new car sales to be electric by 2030 – last year the total share was around 3% – and industry experts say that major investments will need to be made to hit this target.“Dependence on oil is funding some of the most brutal regimes in the world today. There’s nothing to suggest any component of an EV would resemble the current national security, environmental and humanitarian cost of oil.” said Nick Nigro, founder of Atlas Public Policy.“The transition to EVs is inevitable at this point – the timeline is up to consumers and policymakers. The events in Ukraine are a reminder how volatile and destructive a dependence on oil is and that should only accelerate this timeline.”TopicsClimate crisisElectric, hybrid and low-emission carsJoe ManchinJoe BidenUS politicsDemocratsnewsReuse this content More

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      in Elections

      France’s Green Party Fails to Connect Ahead of Election

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      As a presidential election looms, the Greens lag far behind in the polls. Analysts say the party has failed to inspire voters and show them it can rule.MONTPELLIER, France — Yannick Jadot, the candidate for the French Green Party in April’s presidential elections, walked through a small cheering crowd to a podium topped with banners featuring his face, as speakers blasted a version of “What a Wonderful World” by the punk rock singer Joey Ramone. The candidate bobbed his head to the rhythm.The event on a recent afternoon in the sun-soaked central square of Montpellier, a large city on France’s Mediterranean coast, had all of the trappings of a dynamic and enthusiastic campaign. “Environmentalism is all about fun!” said a speaker introducing Mr. Jadot.But with less than 30 days to go before the first round of the French presidential elections, the Green Party’s campaign has so far failed to generate much excitement among the public. For weeks, Mr. Jadot has been stuck around 5 percent in the polls, about a third of the share of the top three right-wing contenders and one-sixth of the support for President Emmanuel Macron.The Greens’ disarray comes despite the increasing prominence of environmental concerns in France in recent years, marked by a series of climate marches and lawsuits, as well as by sweeping climate change legislation and a wave of environmental protests that have engulfed universities and cafe terraces.Green Party supporters in Montpellier. With less than 30 days to go before the first round of elections, the Greens have failed to generate much enthusiasm.Andrea Mantovani for The New York TimesMr. Jadot said in an interview that “the French are not yet invested in the election campaign,” as other more dramatic issues like the pandemic and the war in Ukraine are consuming much of their attention. He added that he remained “confident” that voters would soon focus on environmental issues.But so far, the run-up to the election has been dominated by issues like security, immigration and national identity, reflecting France’s recent shift to the right. By comparison, climate issues have largely been ignored, accounting for 2.5 percent of media coverage of the election in the past four weeks, according to a study released by several environmental groups.The problem, analysts say, is that the French Greens have failed to bring in new ideas and create a clear, coherent platform that goes beyond their core issues. They also point to the party’s struggle to be seen as a credible governmental force, capable of dealing with issues like diplomacy and defense, as is the case in Germany, where the Greens are now part of a three-party government coalition.A fountain in Montpellier. The election has been dominated by issues like security, immigration and national identity.Andrea Mantovani for The New York TimesIn a recent essay, Bruno Latour, a French anthropologist and philosopher, and Nikolaj Schultz, a Danish sociologist, said environmental parties had failed to come up with inspiring narratives conveying hope for a better world.“For now, environmental politics is succeeding in panicking minds and making them yawn with boredom,” they wrote.Hoping to shake off this negative image, Mr. Jadot recently embarked on a tour of France that will bring him to some 15 cities by early April. All of the campaign stops have been designed to create connections with voters, with Mr. Jadot addressing them from a small octagonal podium.Mr. Jadot said he wanted to solve “both sides of the equation” by convincing voters that it is time for real climate action and that doing so can also bring about a better lifestyle, or what he called “a new kind of enthusiasm.”“Taking action for the climate means economic innovation, eating well thanks to sustainable and small-scale farming,” he said. “Basically, it’s about regaining control of one’s life.”In Montpellier, where some 500 people had gathered, Mr. Jadot’s speech was filled with concrete proposals, including an $11 billion “Marshall Plan” for home insulation to cut energy consumption in half. He also plans to ban the use of dangerous pesticides and to create a new wealth tax that reflects the environmental impact of some investments.Mr. Jadot recently embarked on a tour of France that will bring him to some 15 cities by early April.Andrea Mantovani for The New York Times“On the substance, these are very relevant proposals,” said Daphné Destevian, 50, a project manager for an offshore renewable energy institute.But when it came to the candidate’s approach, Ms. Destevian was unmoved. “He yells too much,” she said. “I find it a bit aggressive.”Standing on a podium that resembled a boxing ring, Mr. Jadot struck a combative tone, castigating the government for signing free-trade agreements, attacking the French energy giant TotalEnergies and likening Mr. Macron’s pro-nuclear measures to far-right or authoritarian government policies.Jérémie Peltier, an opinion expert at the Foundation Jean-Jaurès research institute, said this tone could prove detrimental to the Greens. “When you listen to Yannick Jadot,” he said, “you feel like you’re constantly being told off.”Mr. Jadot’s supporters in Montpellier were well aware of the need to convey more optimism, like the positivity that radiated from the youth climate protests in 2019.“People are worried” because “they won’t be able to live as peacefully as they used to, to take their car, turn on the heat, put on the air conditioning without second thoughts,” said Bruno Cécillon, a longtime Green supporter.Andrea Mantovani for The New York TimesJosé Bové, a longtime Green and anti-globalization activist, said “the battle we have to win” is to prove that environmentalism “is a joyful project, one that makes people feel good.”Marie-Noël De Visscher, 70, a former researcher in agronomy, said that instead of “making people feel guilty,” the Greens had to show that “we can do great things and that taking the train is fun.”That challenge has proved particularly acute on the economic front, with the Greens struggling to reconcile the fight against climate change with combating economic insecurity. Mr. Jadot is performing poorly with working-class voters, who fear the impact of the transition to clean energy on their livelihoods.Learn More About France’s Presidential ElectionCard 1 of 6The campaign begins. More

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      in US Politics

      US fossil fuel industry leaps on Russia’s invasion of Ukraine to argue for more drilling

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      US fossil fuel industry leaps on Russia’s invasion of Ukraine to argue for more drillingPetroleum lobby calls for looser regulation and drilling on public lands to ‘ensure energy security’ The US oil and gas industry is using Russia’s invasion of Ukraine to pressure the Biden administration to throw open more land and ocean for domestic drilling and to loosen regulations for large companies attempting to ramp up their fossil fuel extraction.Just hours before Russian troops began their unprovoked assault on Ukraine, the American Petroleum Institute (API) posted a string of tweets calling for the White House to “ensure energy security at home and abroad” by allowing more oil and gas drilling on public lands, extend drilling in US waters and slash regulations faced by fossil fuel firms.API, which represents oil giants including Exxon, Chevron and Shell, has called on Biden to allow an expansion of drilling and to drop regulations that impede new gas pipelines in order to help reduce fuel costs for Americans and support European countries that have seen gas costs spiral due to concerns over supply from Russia, which provides Europe with around a third of its gas.“At a time of geopolitical strife, America should deploy its ample energy abundance – not restrict it,” said Mike Sommers, the chief executive of API. Sommers added that Biden was “needlessly choking our own plentiful supply” of fossil fuels.Some leading Republicans have joined the calls. “No administration should defend a Russian pipeline instead of refilling ours,” Senator Lisa Murkowski, an Alaska Republican, told her state’s legislature this week. “Every day, I remind the Biden administration of the immense benefits of Alaska production, energy and minerals alike, and every day I remind them that refusing to permit those activities can have harmful consequences.”Environmental groups were quick to criticize the renewed push for more drilling, accusing proponents of cynically using the deadly Ukrainian crisis to benefit large corporations and worsen the climate crisis.“Expanding oil and gas production now would do nothing to impact short term prices and would only accelerate the climate crisis, which already poses a major threat to our national security,” said Lena Moffitt, chief of staff at Evergreen Action, a climate group. “We stand in solidarity with the people of Ukraine, and stand opposed to actions by leaders of the fossil fuel industry that attempt to profit off of these harrowing atrocities.”Russia has faced a barrage of sanctions from the US and the European Union, although the western allies have so far largely steered clear of targeting the country’s vast oil and gas industry. Biden has said the sanctions will “end up costing Russia dearly, economically and strategically” but has not applied punitive measures to Rosneft, Russia’s state-owned oil company.The US president faces the opposing pressures of dealing with the climate crisis while avoiding the political headache of rising gasoline prices for American drivers. On Thursday, the price of a barrel of crude oil rose to more than $100 on the global market for the first time since 2014, amid fears over Russia’s supply.A group of 10 congressional Democrats wrote to Biden on Thursday to urge the president to release more oil from the US’s strategic petroleum reserve in order to lower fuel costs for consumers in the short term. “We know that in the long-term, eliminating US dependence on oil will provide the stability we need to keep energy costs low for American households,” the lawmakers acknowledged.The European bloc is thrashing out a plan for a long-term shift away from dependence on the fluctuating fossil fuel markets, with Ursula von der Leyen, president of the European Commission, outlining the need for “strategic independence on energy”. Europe is “doubling down on renewables”, she added.The Ukraine crisis could prove to be a “turning point” in global energy consumption, said Fatih Birol, executive director of the International Energy Agency. “There will be a transition to clean energy… it will be a difficult one, but I believe the governments will have to manage a transition if we want a planet that is safe and clean in the future,” he said.The development of solar and wind power has grown strongly in the US in recent years, although fossil fuels still account for about 80% of domestic energy consumption. Scientists have warned that emissions from the burning of coal, oil and gas must be rapidly and drastically slashed if the world is to avoid catastrophic climate impacts such as heatwaves, floods, food insecurity and societal unrest.“Clean energy is affordable and reliable; we can’t afford to wait any longer to free ourselves from the volatility of the fossil fuel market and the dictators and violence it enables,” said Moffitt.TopicsUkraineOilEuropeUS politicsBiden administrationFossil fuelsReuse this content More

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      in World Politics

      Climate Damage and the Role of Insurance

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      As a consequence of climate change, extreme weather events such as floods, droughts, heatwaves and storms have increased in frequency and severity. As Domingo Sugranyes of the Pablo VI Foundation says, “global losses from natural disasters in 2020 came to $210 billion, of which $82 billion was insured.”

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      “To cover the gap and manage catastrophic risk accumulation,” he adds, “the role of insurance and reinsurance pools is key, often drawn by traumatic events themselves.” This being said, the gap of uninsured damages is huge, which means not only a growing burden on public budgets but also on the most exposed and those directly hit. These situations will impact access and credit conditions for these populations.

      Insurer concerns are no longer individual catastrophic events, but their global and systemic effects on human societies. Andrew Cornford, a counselor at the Observatoire de la Finance in Switzerland, explains: “The problems posed to insurers … will be due to the increased … scale of the actual occurrence of events associated with these risks, to their sometimes geographically uncertain incidence, and to increased correlations between them.”

      In Cornford’s view, the problems can, to some extent, “be handled through better designed and increased capital requirements, public-sector reserves and precautionary arrangements suggested by stress testing — for which recent experience with COVID-19 may be helpful.” However, the underlying hypothesis is that the level of premiums will remain affordable to those seeking cover.

      Embed from Getty Images

      Nevertheless, increased property claims as a result of extreme weather events are forcing insurers to reevaluate underwriting strategies, including rebalancing their premiums and pricing strategies. Against this background, regulators have expressed concern that climate change could make it difficult for insurance companies to provide affordable financial protection. Rising premiums could make cover unaffordable, especially for disadvantaged communities that are more likely to live in regions prone to disaster.

      Instead of burdening local populations with costs of damages that occur due to the impact of climate change — caused largely by the wealthy Global North — there is an urgent need to devise underwriting strategies to transfer a substantial portion of climate-related insurance costs from the South to the North. This would allow the international community to share the burden. Otherwise, the most exposed regions of the world may well become impossible to insure by market mechanisms, which would leave only the public guarantee option open, as stressed by the economist Etienne Perrot.

      By Virgile Perret and Paul Dembinski

      Note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: Can private insurance alone mitigate climate change damages?

      “…pass the cost to policyholders through increased insurance premiums… ”

      Unlike randomness, which allows a probability calculation on a statistical basis, uncertainty arises from facts that are emerging — unique or too few to give rise to a stochastic calculation. Randomness is the basis of prevention and insurance systems. On the other hand, uncertainty can only be covered by contingency reserves — it’s a precaution. (The IPCC forecast [that] insurance’s prevention and precaution are the three forms of the virtue of prudence, which is the intelligence of concrete situations.)

      Henri de Castries, therefore, hypothesizes that the damaging meteorological phenomena induced by a global warming of 4 degrees are phenomena, if not unique, at least too few to enter into an insurance system. This involves the states, either directly when they compensate for the damage by compulsory levies (in France, we have known ‘the drought tax’ in the 1980s) or by obliging the insurance companies to compensate the damage, which will pass the cost on to policyholders through increased insurance premiums.

      Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

      “…public-private partnerships can be developed…”

      According to Munich Re, global losses from natural disasters in 2020 came to $210 billion, of which $82 billion was insured. To cover the gap and manage catastrophic risk accumulation, the role of insurance and reinsurance pools is key, often drawn by traumatic events themselves. Public-private partnerships are nothing new (e.g., US National Flood Insurance or the Spanish Consorcio) and can be developed.

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      Insurance plays an essential role toward mitigating damage from climate change through underwriting, prevention, disseminating knowledge and as investors. Large players have recently committed to the UN-convened net-zero insurance alliance. Artificial intelligence and big data analysis research, also supported by insurance, will increase natural disaster predictability. Insurance and reinsurance markets are efficient, though unpretentious.

      Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, former executive vice-chairman of MAPFRE international insurance group

      “…capital requirements, public-sector reserves and precautionary arrangements… ”

      Individually, most of the risks associated with a substantial rise in temperature due to climate change can be quantified, owing to past experience. The problems posed to insurers, other private financial institutions and the public sector will be due to the increased — and sometimes unpredictably increased — scale of the actual occurrence of events associated with these risks, to their sometimes geographically uncertain incidence and to increased correlations between them.

      To some extent, the resulting problems can be handled through better designed and increased capital requirements, public-sector reserves and precautionary arrangements suggested by stress testing — for which recent experience with COVID-19 may be helpful. These arrangements will entail institutional innovations, training of people to handle the consequences of the new risks and enhanced multilateral cooperation — the absence of any of which will reduce the effectiveness of the potential contribution of finance to control of damages and mitigation of their effects.

      Andrew Cornford — counselor at Observatoire de la Finance, former staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

      *[An earlier version of this article was published by From Virus to Vitamin.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      How Qatar Manages Economic Growth and CO2 Emissions

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      The linkage between economic growth and environmental degradation is a well-known topic. The burning question has become whether there is a trade-off between sustaining economic activities and maintaining the conditions of natural resources, or whether economic growth can go in harmony along with environmental protection measures. The direct interconnected relationship between fossil fuel consumption and environmental degradation has posed an interesting policy challenge.

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      Burning fossil fuels releases carbon dioxide and other greenhouse gases that trap heat in the atmosphere, making them major contributors to climate change. On the other hand, high industrial activities, alongside rapidly increasing populations, put growing pressure on energy demand.

      The Example of Qatar

      Qatar has made remarkable economic achievements over the past few decades. Yet Qatar is facing a trade-off between boosting its economic growth and lowering its carbon dioxide emissions. Its strategic mandate to boost economic development, along with other areas related to sustainability, makes Qatar an interesting country to analyze.

      The World Bank defines Qatar as one of the richest countries in the world in terms of GDP per capita. Its economy is highly dependent on oil and gas production, which accounts for more than 50% of GDP, 85% of export earnings and 70% of government revenues. The country is also a major player in liquefied natural gas. Nonetheless, Qatar’s high dependence on fossil fuels has resulted in an increase in the CO2 emissions level when compared to global averages.

      Embed from Getty Images

      To combat the rising carbon emission percentages and lower environmental pressures, Qatar is introducing strict policy measures to achieve sustainable development through four central pillars: economic, social, human and environmental development. While many disruptions have occurred over the past few years, including fluctuations in oil and gas prices, economic downturns and a deadly pandemic, nobody expected an economic blockade.

      The Diplomatic Rift

      In June 2017, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic relations with Qatar. They prohibited Qatar-registered planes and ships from utilizing their airspace and sea routes, and the Saudis also blocked Qatar’s only land border.

      This point is of particular importance as the deterioration in relations among the Gulf neighbors urged Qatar to rethink its sustainable development goals while meeting local demand. At the beginning of the blockade, the country relied heavily on importing several commodities, especially food items. Later, it accelerated initiatives and programs to diversify the economy and reduce reliance on imports.

      Achieving carbon neutrality is also factored into all Qatar’s initiatives. For example, by the end of 2022, Qatar aims to deliver the first carbon-neutral FIFA World Cup in the history of the event. All stadiums and infrastructure are subjected to rigorous sustainability standards. Several air quality monitoring stations and extensive recycling programs are being introduced, along with the construction of the eight stadiums that will be used during the football tournament.

      Qatar has since become much more independent across several sectors, including food production and transport, making it a case study on how to transform challenges into opportunities for growth.

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      This was also evident with total carbon emissions. According to my own analysis, carbon emission per capita fell by 13% as of 2018 from a historical record in 2000. Since then, total carbon emissions have increased as the economy has grown but at a slower rate, meaning that Qatar is undergoing expanding relative decoupling. In the 2008 to 2018 period, a 1% change in GDP resulted in a fall of CO2 emissions, from 0.65% to 0.44%. This drop is very relevant to Qatar as several measures have been applied, particularly over the last 10 years, to reduce emissions.

      A Reduction in Emissions

      While Qatar’s total emissions have declined over recent years, policies to increase energy efficiency, diversify the energy mix by introducing more renewables, support technological development to improve energy efficiency in a desert climate, and implement energy demand management programs to maintain the same trend of decline and achieve climate change objectives have been increasingly crucial.  

      The heightened pressure caused by the blockade on Qatar is now over, but what is needed are more synergies and collective efforts across the Gulf Cooperation Council (GCC) to stimulate economic diversification and minimize carbon emissions. Member states of the GCC are sharing multiple environmental, social and economic factors that should incentivize them to cooperate to meet their climate change objectives and economic development goals.

      *[Saad Shannak is a scientist at Qatar Environment and Energy Research Institute, part of Hamad Bin Khalifa University (HBKU) in Qatar. The views expressed are the author’s own and do not necessarily reflect the university’s official stance.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      Is Sustainable Finance More Hype Than Hope?

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      In recent years, and even more in the wake of the COVID-19 pandemic, it has become evident that finance must contribute to the development of a more sustainable economy. However, the current sustainable finance landscape is characterized by heterogeneous concepts, definitions, and industry and policy standards, which tend to undermine the credibility of this nascent market and open the door to greenwashing.

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      One of the challenges is to decide where to draw the line between sustainable and “normal” investments, and how to subdivide the universe of sustainable finance. The lack of clear rules on what can be labeled “sustainable” opens the door to unscrupulous companies and fund managers trumpeting their environmental, social and governance rating ratings — known as ESG — while simply relabeling existing funds without changing neither the underlying strategies nor the portfolio composition. As a result, some observers are concerned that “the overall prevailing mechanism is based on short-term maximization of financial returns, and [that] ESG is still essentially an idea.”

      Thus, the first step to improve the situation, according to Domingo Sugranyes of the Pablo VI Foundation, is to create “an accepted framework of definitions and metrics” at regional or global levels to identify high-level standards and align the actions undertaken by political authorities around the world. But it is also important to act on the other side of ESG, which is direct financing as opposed to the stock market. For example, the European Commission has adopted several regulations to support and improve the flow of money toward sustainable activities.

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      In addition, Archana Sinha of the Indian Social Institute suggests that broader structural reforms may be necessary “to fully integrate climate-aligned structural change with economic recovery.” Not only should the legal framework be changed so “that emissions generate costs,” says economist Ladislau Dowbor, but “international financial transactions must be taxed, so that they leave a trail, shedding light on tax havens while generating resources for sustainable practices.” Other measures, Etienne Perrot says, may include “central bank rediscount policy favoring sectors that do not use fossil fuels; active and pugnacious mobilization of the shareholders most aware of the ecological crisis; [and] monitoring of speculative drifts.”

      If sustainable finance is to become real hope instead of hype, then we will also need governments to step in to fix the rules, with a view to make any financial activity “sustainable by default,” says Eelco Fiole, an investment governance expert. Otherwise, Perrot warns, “the present enthusiasm around sustainable finance may well be short-lived.”

      By Virgile Perret and Paul Dembinski

      Note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: What needs to be put in place in order to leverage the present enthusiasm around sustainable finance?

      “…the ‘present enthusiasm around sustainable finance’ may be short-lived… ”

      “Finance is only one of the means: directing public and institutional financial flows toward investments that exclude — or fight against — the carbon economy; central bank rediscount policy favoring sectors that do not use fossil fuels; active and pugnacious mobilization of the shareholders most aware of the ecological crisis; [and] monitoring of speculative drifts. However, whatever financial modalities are adopted, these ecological costs will necessarily weigh on financial profitability. Which leaves me to fear that the ‘present enthusiasm around sustainable finance’ is short-lived.”

      Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

      “…labels should apply only to project financing related to clean energy… ”

      “All sustainable finance labels should apply only to project financing related to clean energy. Investment houses should not finance fossil fuel firms in any way to declare themselves deserving of a sustainable finance seal of approval. This also goes for green financing.”

      Oscar Ugarteche — visiting professor of economics at various universities

      “…ESG is still essentially an idea…”

      “The world produces an amount of goods and services amply sufficient to ensure everyone has a dignified life. We have the necessary technologies to produce in a sustainable way. And we presently have detailed understanding of the slow-motion catastrophe climate change represents. While the Paris conference presented the goals, the Addis Ababa conference on how to fund them reached no agreement. The overall prevailing mechanism is based on short-term maximization of financial returns, and ESG is still essentially an idea. The legal framework has to change, so that emissions generate costs. International financial transactions must be taxed, so that they leave a trail, shedding light on tax havens while generating resources for sustainable practices. The key issue is corporate governance.”

      Ladislau Dowbor — economist, professor at the Catholic University of Sao Paulo, consultant to many international agencies

      “…it is not clear that substantial public intervention is needed… ”

      “Sustainable finance is a broad umbrella, but nonetheless has a clear meaning as investment strategies and products that aim at fostering activities that promote environmental, social and governance improvements. The private sector has rapidly developed, having realized that there is a clear appetite by investors for investment with such priorities. Specific products have been created, as well as rigorous metrics and certifications. It is therefore not clear that substantial public intervention is needed (in fostering sustainable finance, by contrast to ensuring proper pricing of, for instance, CO2 where taxes are needed). Public intervention could focus on requiring disclosure of the sustainability dimension of investment by financial intermediaries to facilitate transparency.”

      Cedric Tille — professor of macroeconomics at the Graduate Institute of International and Development Studies in Geneva

      “…every financial decision should take climate risk into account… ”

      “Globally, the private sector needs altering processes, such that their investments do not worsen climate change. The Indian government needs to introduce guidelines to standardize climate-related revelations in all financial statements and push private companies to manage their exposure to climate risks in their tasks and processes. A lack of clarity about true exposures to specific climate risks for physical and financial assets, coupled with uncertainty about the size and timing of these risks, creates major vulnerabilities. It is suggested that the only way forward is to fully integrate climate-aligned structural change with economic recovery needing a fundamental shift in the entire finance system. Meaning that every financial decision should take climate risk into account and climate finance is integral to the transformation process.”

      Archana Sinha — head of the Department of Women’s Studies at the Indian Social Institute in New Delhi, India

      “…green rating for business firms…”

      “Rendering sustainable finance an effective, practical concept depends, inter alia, on (1) measures regarding definitions, sustainability reporting and regulation; (2) genuine commitment to mitigation of climate change; and (3) honest and sound assessment of outcomes. Under 1, [it] can be singled out the extension of the definitions and accounting essential to regulation, with special attention to the concepts of natural capital and of contingent assets and liabilities. Under 2, there is the need for senior bankers and other key decision-makers to evaluate and explain the charting and navigation of the new business routes required for mitigation. Under 3, there are roles for many different parties — governments, central banks, research institutions and NGOs. The roles could include development and application of green ratings for business firms and other relevant institutions, which draw on historical experience with credit ratings.”

      Andrew Cornford — counselor at Observatoire de la Finance, former staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

      “…an accepted framework of definitions and metrics…”

      “The movement toward ecological sustainability is still in its infancy in the world economy. It is real and probably here to stay, but companies and governments will meet many economic, physical and human hurdles on the way, including raw materials bottlenecks and lack of specialized talent. ESG investment can be seen as an expression of demand for sustainability in society, pressing in the right direction. But to confirm their effectiveness and credibility, ESG-motivated investors will need an accepted framework of definitions and metrics (the ‘taxonomy’ being discussed at the EU level). Ideally, one would imagine a worldwide, self-regulated consensus about environmental cost, similar to the one which led to the international acceptance of the International Financial Reporting Standards (IFRS).”

      Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, former executive vice-chairman of MAPFRE international insurance group

      “…a point of reference in public debate…”

      “A transition from enthusiasm to reality requires 3 steps:

      1: From the experts’ room to the public sphere. Sustainable finance cannot flourish without being a point of reference in public debate and a ‘visible’ concern in everyday life. Such a paradigm shift can only be initiated through a participatory, sociopolitical justification.

      2: Toward a glocal perspective. As it happens with every declaration, the 17 sustainable development goals (SDGs) and the Agenda 2030 provisions need to be part of the national and local development strategy both as aims and evaluation measures.

      3: From wishes to accountability. Various actions — mirrored in national and international law — are required to empower accountability: legislation initiatives that forbid hazardous products, give motives for ‘clean production’ and favor a circular economy, annual monitoring on sustainable practices, reduction of waste/emission and a regulatory framework for investment plans.”

      Christos Tsironis — associate professor of social theory at the Aristotle University of Thessaloniki in Greece

      “…any finance activity needs to be sustainable by default…”

      “Given that rational justice requires the current generation to have a fiduciary duty to the future generation, any finance activity needs to be sustainable by default. In that sense, we need to distinguish between finance and unsustainable finance, and [we] need to focus on diminishing unsustainable finance to the benefit of finance. This means finance needs to be defined as purposeful and needs to account for all interests at stake. This then needs to be coded into law and into incentive systems. While ESG data is important, assessing and certifying impact on a case-by-case basis gives true input for governance and direction toward social and environmental sustainability, all things considered. This requires a new moral psychology for leadership.”

      Eelco Fiole — investment governance expert, board director and adjunct professor of finance ethics in Lausanne and Neuchatel

      *[An earlier version of this article was published by From Virus to Vitamin.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      The Dirty Relationship Between Russia and China

      by

      The leaders of Russia and China are joining forces. Russian President Vladimir Putin traveled to Beijing for the Winter Olympics to show solidarity with his largest trade partner at an event that the United States, Canada, the United Kingdom and Australia are boycotting diplomatically.

      The statement that Putin signed with Chinese leader Xi Jinping confirms their overlapping interests, their joint insistence on the right to do whatever they like within their own borders, and their disgust over the destabilizing nature of various US military actions.

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      There’s much high-flown language in the statement about democracy, economic development and commitment to the Paris climate goals of 2015. But the timing of the statement suggests that it’s really about hard power. Putin didn’t travel all the way to Beijing and Xi didn’t meet with his first foreign leader in two years just to hammer out a general statement of principles. Putin wants China to have his back on Ukraine and is supporting Chinese claims over Taiwan and Hong Kong in return.

      This isn’t an easy quid pro quo, given that the two countries have long had a wary relationship. In the past, Russia eyed China’s global economic ambitions with concern, and a certain type of Russian conspiracy theorist worried about large numbers of Chinese moving into the underpopulated Russian Far East. Before Putin took over, China was uncomfortable with the political volatility of its northern neighbor. After Putin, Beijing was not happy with the Kremlin’s military escapades in its near abroad.

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      But that is changing. “For the first time in any of Russia’s recent aggressions, Putin has won the open support of China’s leader,” Robin Wright writes in The New Yorker. “China did not back Russia’s war in Georgia in 2008, or its invasion of Ukraine in 2014, nor has it recognized Russia’s annexation of Crimea.”

      The geopolitics of the new relationship between China and Russia is certainly important. But let’s take a look at what’s really fueling this new alliance. Quite literally.

      Fossil Fuel Friendship

      Inside the Arctic Circle, just across from the bleak military outpost of Novaya Zemlya, Russia has built the northernmost natural gas facility in the world: Yamal LNG. More than 200 wells have been drilled to tap into the equivalent of 4 billion barrels of oil. Nuclear-powered icebreakers clear the port of Sabetta for liquefied natural gas tankers to transport the fuel to points south. Russia also plans to build a train line to ship what it expects to be 60 million tons of natural gas per year by 2030.

      Russia can thank climate change for making it easier to access the deposits of natural gas. It can also thank China. Beijing owns about 30% of Yamal LNG. The Arctic is quite far away from China’s usual Belt and Road Initiative (BRI) projects. Yamal is also an increasingly perilous investment because melting permafrost puts all that infrastructure of extraction at risk. But China needs huge amounts of energy to keep its economy growing at the rate the central government deems necessary.

      That’s why so many of the BRI projects involving Russia are centered around fossil fuel. At the top of the list is the first Power of Siberia pipeline, which opened in 2019 to pump natural gas from the Russian Far East into China. A second such pipeline is under consideration, which would connect China to… Yamal LNG.

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      At the moment, the natural gas from the Russian Arctic supplies consumers in Europe. With a second Power of Siberia pipeline, Russia could more easily weather a boycott from European importers. Yamal, by the way, is already under US sanctions, which has made Chinese financial backing even more essential. China is investing a total of $123.87 billion in the three phases of the Power of Siberia project, which is more than any other BRI oil and gas investment and four times what China spends on energy from Saudi Arabia.

      But these are not the only Belt and Road connections between the two countries. Five of the top 10 BRI mining projects are in Russia, including a $1.8 billion coal mining complex. China is also investing in an Arctic free trade zone and upgraded rail and road links between the two countries.

      Let’s be clear: the bear and the dragon don’t see eye to eye on everything. As Gaye Christoffersen writes in The Asan Forum: “China focused on infrastructural projects useful for importing Russian natural resources, while Russia focused on developing industries in resource processing. The two sides failed to reach a consensus. Later, China insisted, as a Near-Arctic state, on equal partnership in developing the Northern Sea Route, while Russia demanded respect for its sovereignty and rejected China’s Arctic claims. They are still in disagreement despite joint efforts.”

      But the basic relationship remains: Russia has energy to sell and China is an eager buyer. In a side deal that coincided with their recent Olympic statement, for instance, China agreed to purchase $117.5 billion worth of oil and gas. “Rosneft, Russia’s largest oil producer, announced a new agreement to supply 100 million tons of crude through Kazakhstan to the Chinese state company China National Petroleum Corporation over the next ten years—while the Russian energy giant Gazprom pledged to ship 10 billion cubic meters of gas per year to China through a new pipeline,” writes Frederick Kempe at the Atlantic Council. Talk about greasing the wheels of cooperation.

      A Future Eastern Alliance?

      Putin hasn’t given up on Europe. He still has friends in Victor Orban’s Hungary and Aleksandar Vucic’s Serbia. Europe remains the biggest market for Russian oil and gas. And both NATO and the European Union continue to attract the interest of countries on Russian borders, which means that the Kremlin has to pay close attention to its western flank.

      But the Ukraine crisis, even if it doesn’t devolve into war, could represent a turning point in contemporary geopolitics.

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      Vladimir Putin and Xi Jinping share a great deal in common. They are both nationalists who derive much of their public legitimacy not from an abstract political ideology, but from their appeals to homeland. They have a mutual disgust for the liberalism of human rights and checks on government power. Despite their involvement in various global institutions, they firmly believe in a sovereignist position that puts no constraints on what they do within the borders of their countries.

      But perhaps the most operationally important aspect of their overlapping worldviews is their approach to energy and climate.

      Both China and Russia are nominally committed to addressing climate change. They have pledged to achieve carbon neutrality by 2060, though they both resort to some dodgy accounting to offset their actual emissions and meet their Paris commitments. China is more serious in terms of installing renewable energy infrastructure, with solar, wind and other sources responsible for 43% of power generation. Russia’s commitment to renewable energy at this point is negligible.

      But both remain wedded to fossil fuels. It’s a matter of economic necessity for Russia as the world’s largest exporter of natural gas, the second-largest exporter of petroleum and the third-largest exporter of coal. Fossil fuels accounted for over 60% of the country’s exports in 2019; oil and gas alone provide well over a third of the federal budget. All of this is in jeopardy because a good number of Russia’s customers are trying to wean themselves of fossil fuel imports to cut their carbon emissions and to decrease their dependency on the Kremlin.

      But not China. Despite its considerable investments into renewable energy, Beijing is still a huge consumer of fossil fuels. Chinese demand for natural gas has been rising for the last few years and won’t peak until 2035, which is bad news for the world but good news for the Russian gas industry. Oil consumption, which is more than twice that of natural gas and is rising more slowly, will peak in 2030.

      Coal is still China’s largest source of energy. “Since 2011, China has consumed more coal than the rest of the world combined,” according to ChinaPower. “As of 2020, coal made up 56.8 percent of China’s energy use.” In 2020, as Alec MacGillis points out in a New Yorker piece, China built three times more power-generating infrastructure from coal than the rest of the world combined, and it continues to mine staggering amounts of the stuff. Despite all the domestic production, however, China still relies on imports. Because of trade tensions with Australia — the world’s second-largest exporter of coal after Indonesia — China has increasingly turned to Russia to meet demand.

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      In other words, Russia and China are positioning themselves to use as much fossil fuel and emit as much carbon as they can in the next two decades to strengthen their economies and their hegemonic power in their adjacent spheres—and before international institutions acquire the resolve and the power to hold countries to their carbon reduction promises.

      Yes, other countries are slow to abandon fossil fuels. The United States, for instance, relies increasingly on natural gas for electricity generation to compensate for a marked reduction in the use of coal. Japan remains heavily dependent on oil, natural gas and coal. So, Russia and China are not unique in their attachment to these energy sources.

      But if the world’s largest consumer of fossil fuels teams up with one of the world’s largest producers, it doesn’t just discomfit NATO generals and the trans-Atlantic establishment. It should worry anyone who believes that we still have a chance to prevent runaway climate change by 2050.

      *[This article was originally published by FPIF.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More