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      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.

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      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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      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.

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      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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      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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      The Dirty Relationship Between Russia and China

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      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.

      Embed from Getty Images

      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

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      Biden administration plans to spend $5bn to build EV charging network across US

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      Biden administration plans to spend $5bn to build EV charging network across USElectric vehicle stations to be placed every 50 miles along interstate highways to spur adoption of zero-emission cars The Biden administration has unveiled a plan to award nearly $5bn over five years to build thousands of electric vehicle charging stations.The nationwide network of electric vehicle charging stations would place new or upgraded ones every 50 miles (80km) along interstate highways as part of the administration’s plan to spur widespread adoption of zero-emission cars.Under Department of Transportation requirements, states must submit plans to the federal government and can begin construction this year if they focus first on highway routes, rather than neighborhoods and shopping centers, that can allow people to take their electric vehicles long distances.Start me up: ‘car guy’ Joe Biden accelerates push to turn America electricRead moreEach station would need to have at least four fast-charger ports, which enable drivers to fully recharge their vehicles in about an hour.Many technical details are to be worked out, and the administration acknowledges it will take work to persuade drivers accustomed to gas-powered cars, particularly in rural areas. The money is far less than the $15bn that Biden had envisioned to fulfill a campaign promise of 500,000 charging stations by 2030, and it may take substantial private investment to make the plan work.“A century ago, America ushered in the modern automotive era; now America must lead the electric vehicle revolution,” the transportation secretary, Pete Buttigieg, said.Buttigieg made the announcement in front of the transportation department along with White House officials, flanked by a pair of black Ford Mustang Mach-E SUVs in the federal government’s growing electric fleet that he and the energy secretary, Jennifer Granholm, drive. The vehicle’s retail price starts around $44,000 and climbs to $60,000-plus including options, and they are currently made in Mexico.Electric cars on show in Washington as Biden pushes for green revolution Read moreButtigieg made a special appeal to rural drivers, suggesting that big wide open spaces of the US no longer need to be a “valley of death” for EV drivers.“Many might think of them as a luxury item,” he said. “The reality is nobody benefits more from EVs in principle than those who drive the longest distances, often our rural Americans.”The law provides an additional $2.5bn for local grants, planned for later this year, to fill remaining gaps in the charging network in rural areas and in disadvantaged communities, which currently are less likely to own the higher-priced electric vehicles. States failing to meet all the federal requirements risk delays in getting approval from the Federal Highway Administration or not getting money at all.Biden also has set a goal of 50% electric vehicle sales by 2030, part of a broader effort to become zero emissions economy-wide by 2050.Electric vehicles amounted to less than 3% of US new auto sales last year, but forecasters expect big increases in the next decade. Consumers bought about 400,000 fully electric vehicles.Amid the petrol crisis, is it time to switch to an electric car?Read moreBiden hopes to do even more to promote electric vehicles, including a provision in his stalled social and environmental bill for a $7,500 tax credit for people who buy electric vehicles.“It’s going to help ensure that America leads the world on electric vehicles,” Biden said this week about American companies expanding EV infrastructure.“China has been leading the race up to now, but this is about to change,” he said.“Because America is building convenient, reliable, equitable national public charging networks. So wherever you live, charging an electric vehicle will be quick and easy.”Granholm described the initial $5bn investment as creating “the spine” of the national network. Jessika Trancik, a professor at the Massachusetts Institute of Technology who studies EV charging, called the administration’s approach a good first step. She said a successful strategy to spur wider EV use would require charging stations in a host of different locations, including faster charging along highways and slower charging near homes and workplaces.TopicsElectric, hybrid and low-emission carsMotoringPete ButtigiegUS politicsnewsReuse this content More

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      in US Politics

      Wealthy California town cites mountain lion habitat to deny affordable housing

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      Wealthy California town cites mountain lion habitat to deny affordable housing Officials in Woodside – a mansion-filled, tech entrepreneur enclave – claim wildcat land keeps them from building multi-unit homes At first glance, the town of Woodside may look more like a sprawl of mansions built on big-tech billions than crucial habitat for threatened California mountain lions.But town officials might suggest looking again.The wealthy San Francisco Bay area suburb has said it cannot approve the development of new duplexes or fourplexes to ease the statewide housing shortage because it encompasses the habitat of the elusive wildcats.Crow-plagued California city turns to lasers and boomboxes to clear the airRead moreResidents in Woodside had long bristled at SB 9 – a new California measure that makes it easier to build multi-unit housing in neighborhoods previously reserved for single-family homes. But a clause in the measure exempts areas that are considered habitat for protected species. “Given that Woodside – in its entirety” is habitat for mountain lions that environmental groups are petitioning to list as threatened or endangered under the state’s Endangered Species Act, “no parcel within Woodside is currently eligible for an SB 9 project”, the town’s planning director wrote in a memo on 27 January.Critics of the town council, including many housing advocates, have accused the town of cynically using environmental concerns to avoid compliance with state law. “This is nimbyism disguised as environmentalism,” said Scott Wiener, a California senator who co-authored SB 9. “The notion that building duplexes hurts mountain lions – it’s just ridiculous.”Woodside is not only a habitat for mountain lions, but also for notable tech entrepreneurs including the Intuit co-founder Scott Cook and Oracle co-founder Larry Ellison. The latter modeled his 23-acre Woodside estate on a 16th-century Japanese imperial palace. The median home price in the town is $5.5m, and the median household income is more than $250,000. The landscape is scattered with sizable mansions and estates as well as sprawling ranches.Mountain lions – also called pumas, cougars and panthers – have been known to wander into suburbs and cities across California, and may occasionally traverse the town. “You can see there’s a fair amount of habitat in the undeveloped areas around the city,” said Winston Vickers, director of the Mountain Lion Project at the UC Davis Wildlife Health Center.“Any development should be done with careful consideration of whether it is going to impact a nearby travel corridor, green belt or large adjacent habitat area for mountain lions,” Vickers said. “But to say that any expansion of housing, anywhere in a given city, would likely impact mountain lions is likely a bit of a stretch.”Woodside’s mayor, Dick Brown, declined an interview request from the Guardian. “We love animals,” he told AlmanacNews. “Every house that’s built is one more acre taken away from [mountain lions’] habitat. Where are they going to go? Pretty soon we’ll have nothing but asphalt and no animals or birds.”As far as wildlife biologists know, mountain lions are not especially comfortable on land zoned for single family homes, nor are they particularly put off by two-story apartment buildings.The biggest challenge that mountain lions are facing is “ex-urban development pushing into the wild areas that they need, and major roadways cutting through those habitats,” said Josh Rosenau, a conservation advocate with the Mountain Lion Foundation, one of the organizations seeking to have the mountain lions in the south and central coast listed as threatened or endangered under the California Endangered Species Act.In most cases, “increasing [housing] density where possible, is going to be better for mountain lions ultimately”, he said, than expanding construction further into wildland areas.As California pushes to expand housing amid a crisis of housing affordability and homelessness, communities across the state have resisted efforts to build more densely, often using the state’s strict environmental laws as a shield. With SB 9 taking effect this year, cities across the state also sought to pass design restrictions, or designate historic districts and sites in a scramble to find loopholes in the law.Earlier last month, Woodside had passed an ordinance prohibiting basements in SB 9 developments, capping their size to 800 square feet – the minimum required by the law – and prohibiting their construction in “very high fire severity zones, for health and safety reasons”.“My hope is that Woodside thinks better of its position, and figures out how to comply with this new law,” Wiener said.Or there’s an option that some critics have offered: return all the land to the mountain lions that once prowled there freely.TopicsCaliforniaWildlifeUS politicsnewsReuse this content More

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      in World Politics

      What Yemenis Can Learn From the Indian Farmers’ Protests

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      Surprisingly, ending the war in, or rather on, Yemen is no longer an immediate concern. The gratuitous violence can continue, for there are now other priorities, or so we are told. Amongst them are development and fostering resilience, whatever these mean amidst an ongoing war. Wars do not have to come to an end. “Fragility, conflict, and violence (FCV) has become the new development frontier,” reads a concept note by the World Bank. Once again, development agencies in Yemen are failing to walk the line between development and de-development. Have developmental interventions become an instrument of subjection and keeping countries of the agrarian south in check?

      Throughout the war, international policymakers have overemphasized the role of the private sector in addressing Yemen’s severe food crisis, insofar as they have tirelessly insisted since the late 1960s that opening the local market to unrestricted food imports would feed a growing population and drive economic growth. Commercial staple food imports — as well as food assistance — are vital during the war.

      Indian Farmer Protests Explained (Interactive)

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      However, be that as it may, the role of commercial food importers in postwar, post-neoliberalism Yemen must not be blown out of proportion. Reducing Yemen’s deep agrarian and rural social crisis to wartime and postwar commercial food import issues shows that the root causes of the country’s severe food crisis continue to be gravely misunderstood or deliberately overlooked.

      To begin with, Yemen’s absurd, inordinate dependence on staple food imports is but a consequence of bad policy. Regrettably, it was a policy that failed to preserve the rural sector’s productivity, let alone stimulating it and accumulating wealth. Rehashing past failed agricultural development policies is evidence of two distributing realities.

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      The first is Yemeni elites’ lack of capacity to imagine alternative paths of development in Yemen. The second is international policymakers’ position that developed countries exclusively can adopt national agricultural policy frameworks that avowedly control food supply through production and import controls and pricing mechanisms, whereas developing countries cannot do the same to support their agriculture sector.

      Inspiration and Lessons

      To end this long deadlock between Yemen’s autonomy and global capitalism, perhaps one ought to draw attention to India’s social struggle for inspiration and lessons.

      It is not in Yemen’s national interest to continue ignoring its small and marginalized farmers. In a rural society like Yemen, they are the engine of a healthy economy. The vast majority of the population continues to live in rural Yemen. Current official estimates put Yemen’s rural population at about 70%. This reality limits the role of the private sector in sustaining rural livelihoods. While some might argue that Yemen’s private sector should not be viewed as a monolith, consisting only of large conglomerates, to lump smallholding agriculture and agricultural commercialization together under the umbrella of the private sector is fundamentally flawed.

      Small farmers in Yemen are subsistence households, each representing a domestic unit of agricultural production that is economically self-sufficient and combines production and consumption functions. This rural social organization is not the same as one where farmers are reduced to landless, wage earners. Thus, small and marginalized farmers cannot be pigeonholed as private sector actors. Worse is to drop them from the economic equation altogether, especially in so-called developing countries.

      Without making this fundamental distinction between smallholding agriculture in Yemen and private sector activity, and without understanding why domestic food production is a matter of national priority to Yemeni citizens, Yemeni elites and international policymakers alike will continue to bungle the task of putting the country on the right path to development.

      Food Sovereignty and Security

      Many seem to think of Yemen as a big chicken farm that only needs to be fed somehow. They do not understand, or do not want to understand, that at issue is food sovereignty as well as food security. Yemen is a sovereign nation. Yemenis are a people who have the right, needless to say, to choose what to farm, how to farm and how to define the relationship between their local market and the international market. Choosing whether to eat homegrown sorghum or imported wheat is a fundamental national question of utmost importance, not a trade finance problem.

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      Private sector activity is not an economic activity that occurs in an empty space; it occurs within social spheres. It impacts domestic production, changes the modes of production within a society and, consequently, remolds all social formations and economic relations. Agrarian changes are social changes. One cannot discuss private sector activity and commercial food imports in isolation from their long-term social impacts. This is lesson number one from five decades of steady economic decline and social regress. It is Yemen’s rural population that has marched down the road to impoverishment and starvation, and they know exactly how — but not why — they got there in the first place. In rural Yemen, lives and land are at stake.

      Millions of people in Yemen are famished neither because of the war nor because the private sector is unable to import enough staple foods, in spite of significant and critical wartime challenges. Yemenis are starving because the country has systematically lost its long-standing ability to produce food, particularly staple grains. The magnitude of production losses in Yemen’s agriculture sector has fundamentally limited the economy’s resilience to shocks. Economic resilience is the ability of the country’s main productive forces to cope, recover and reconstruct. How can you cripple a country’s most tangible, corporeal and immediate branch of production and, at the same time, foster resilience? Speaking of resilience of an incapacitated agriculture sector is a logical fallacy and is, therefore, meaningless and a distraction from the real problem.

      Causing Alarm

      According to the Food and Agriculture Organization Corporate Statistical Database (FAOSTAT), Yemen produced on its domestic soil on average 98% of its grains during 1961-65; namely, sorghum, millet, barley, maize and wheat, in this order. Sorghum production in Yemen peaked at 921,000 tons in 1975. In sharp contrast, the country domestically produced on average only 18% of its total supply of the same grains during 2011-15 and imported the rest. By 2015, the production of sorghum had plummeted to 221,510 tons. To make an already alarming situation unmanageable, the ongoing war more than halved Yemen’s total domestic grain production. Most notably, sorghum production reached a record low of 162,277 tons in 2016, followed by another record low of 155,722 tons in 2018. Yet, some still argue that this decline is due to population growth, not policy.

      In a country that primarily produces and consumes sorghum — the traditional staple of man and beast in Yemen — millet and barley, an over 80% dependency on imported wheat is evidently catastrophic during war and peace. This is a well-documented socioeconomic problem. In its 2004 edition of “The State of Food and Agriculture,” the Food and Agriculture Organization (FAO) noted that the long-term damaging impact of the loss of domestic food production and exposure to price volatility on individual countries outweigh the plausible short-lived collective benefits.

      Lower international prices have moderated the food import bills of developing countries, which, as a group, are now net food importers. However, although lower basic food prices on international markets bring short-term benefits to net food-importing developing countries, lower international prices can also have negative impacts on domestic production in developing countries that might have lingering effects on their food security.

      Embed from Getty Images

      The heart of the matter is that the agriculture sector is the country’s main productive force. Unchecked private internationally integrated capital has destroyed Yemen’s rural capital and silenced the interests of the country’s sizable rural population. Further, the malintegration of Yemen’s local food market with global markets has jeopardized the country’s economic independence and prevented any real development in Yemen.

      The Issue

      There is great, non-monetary economic and social value in reclaiming and revalorizing Yemen’s domestic food production and rebuilding its basic rural infrastructure. Domestic food production is too important to Yemenis to be addressed as an afterthought. At issue is not how to procure wheat from international markets, but how to stop the hemorrhage of surpluses out of the agriculture sector.

      What serves Yemen’s national interest is to refrain from calling for increasing the country’s dependency on speculative, volatile international food markets; imposing in the guise of development and economic resilience policies that undermine the country’s ability to domestically produce adequate food for local consumption; overstating the benefits of export-oriented agriculture and cash cropping more broadly; and overlooking or downplaying the role of smallholders in generating abundant jobs and sustaining rural infrastructure. In a nutshell, any serious discussion of Yemen’s food security crisis must take into account ecological sustainability, rural livelihoods and both food security and sovereignty in the long term.

      Yemeni farmers do not yet fully understand why policymakers and development practitioners insist on promoting imports and more broadly large commercial activity, at a time when the whole world is prioritizing the opposite of these dictates: strengthening self-reliance, planning and regulating limited resources, and minimizing local markets’ exposure. Yemeni struggle has not yet reached the level of political awareness seen in India during its 2020-21 farmers’ protests. To get there, we must understand one point: tying the rural sector’s destiny to large commercial organizations cannot lead to any real growth and prosperity of the entire population.

      Indian farmers inspire us to rethink development paradigms in Yemen, for there is more to farming than exporting bananas and onions to Saudi Arabia, and there is more to the role of the private sector in national development than flooding local markets with wheat from Australia, Russia, the United States, France and other international source markets, or even import substitution.

      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 US Politics

      Electric cars on show in Washington as Biden pushes for green revolution

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      Electric cars on show in Washington as Biden pushes for green revolution Auto show dedicates entire pavilion to electric vehicles but experts say more charging stations are needed for Biden’s goal to be realizedThe Washington DC Auto Show has been showcasing alternative fuel vehicles for 15 years, but this is the first year an entire pavilion was dedicated to electric vehicles, or EVs. In part, you can thank the current occupant of the nearby White House for that.If Joe Biden has his way with his ambitious $2.2tn Build Back Better plan there will be 50% zero-emission vehicles on the road by 2030. The Biden administration also has plans to convert an estimated 600,000 of its fleet to alternative fuels as part of a renewed commitment to combat climate change.There are major issues ahead – the plan is being blocked by Republicans and there are serious equity issues to be addressed as the US transitions away from fossil fuels. But big changes are already happening, and the car show, which ends this weekend, is on it.EVs have now been adopted on a global scale, said John O’Donnell, chief executive of the Washington DC Auto Show, and the show, which focuses on public policy and gives congressional members and auto industry leaders a space to review the latest technology, needed to reflect that.“We’ve had other technologies and declared them a pavilion, but I thought it was very important right now for us to make it larger and more high profile,” said O’Donnell. Not just because of the current debate over EVs in Washington but also to “dispel the myth the US car dealers do not want to sell electric vehicles”.An aggressive transition like the one Biden envisions will require an equally aggressive overhaul of infrastructure. In the bipartisan Infrastructure Investment and Jobs Act, $7.5bn is dedicated to EV-charging infrastructure and building charging stations along highway corridors. But the industry is concerned about how that money is spent.Matthew Nelson, director of government affairs at Electrify America, said the infrastructure that serves the public must be “future-proofed”. Ultra-fast charging at 350 kW of power, or the equivalent to 20 miles of range per minute, has been his paramount message to government stakeholders. “We think it’s really important that the chargers paid for today are able to charge faster than the vehicles on the market today,” Nelson said. “The vehicles are getting faster and faster every model year. If we design for today’s vehicles it will be outdated in five years.”Electrify America, a sponsor of the EV Pavilion at the car show, has the largest network of DC (direct current) charging stations in the US. Currently, the Electrify America network consists of 800 charging stations, mostly along highway corridors, and the company is planning an increase to 1,800 charging stations with 10,000 chargers by 2026.However, 500,000 charging stations are needed to meet Biden’s goals and Nelson said they should be reliable and non-proprietary. There are 31 different brands of auto manufacturers in the US that use the same non-proprietary standard for charging and Nelson said leveraging the consensus around that single standard is in the public’s interest.Right now, consumers’ biggest concern is their bottom line, and EVs are more cost-efficient than gas-powered cars. An e-gallon – the cost to drive a comparable vehicle the same distance you could go on a gallon of gasoline – currently averages $1.16, compared with gasoline’s $2.85. Because Electrify America offers public charging their prices are a little higher than at-home chargers, but are standard in every state.Recently, Congress amended the Public Utility Regulatory Act (Purpa) that requires each state to consider EV-specific utility rates, giving them the liberty to change rates not suited for EV adoption. These demand charges lead to “extremely high-priced” electricity being charged to the stations, making it difficult to maintain low prices. States such as Colorado, Massachusetts, California, Rhode Island and Connecticut have revised these rates, but Nelson said every state should be on board.And there’s an equity element to charging. Homeowners who charge their cars in their garage do not pay demand rates, but those who charge at commercial charging stations or who live in multifamily dwellings or apartments will pay the demand rate.Incentives to support EV charging infrastructure in multi-family dwellings and more community-based charging infrastructure are important tools to making EV adoption more equitable, said Kellen Schefter, director of transportation at Edison Electric Institute, which leads the National Electric Highway Coalition. He believes the biggest barrier to EV adoption is the lack of charging infrastructure that’s affordable, equitable and reliable.Making sure investments go into those communities that are not traditionally getting those allocations is a large part of the National Electric Highway Coalition’s agenda. “There is such a great need on the infrastructure front,” said Schefter.The right policies will be critical if Biden is to hit his EV goals. O’Donnell said a wider range of tax incentives are needed to persuade the American public to swap their fuel-dependent cars for EVs.“In Build Back Better, they are proposing $12,500 per vehicle purchased, but only if it is built by a United Auto Worker manufacturer. It doesn’t seem like mass-market adoption will be achieved using only union-made vehicles. We think all electric vehicles should qualify for the full $12,500 incentive,” O’Donnell said.But while tax incentives make a difference, chargers are more meaningful said Dilip Sundaram, chief international business officer at Acrimoto, an electric autocycle company. China – the biggest EV market – has about 800,000 chargers and Sundaram said 500,000 chargers in the United States, a car-dependent country, is not enough.“In China, the tax incentive is about $2,500,” Sundaram said. “Accessibility to chargers is what is driving mass adoption. If you remove range anxiety to make sure chargers are available everywhere you will suddenly see the EV adoption increase.”“Biden wants to put the United States in a leadership role instead of a passive role on the issue of climate change, but policies need to reflect the new challenge,” Sundaram said. “So that any new structure whether it be a mall or apartment complex, has chargers.”Despite a lower than usual attendance at this year’s show because of Covid, the line to ride in the new Arcimoto was long. As attendees watched the small autocycle whip around the EV pavilion, others buzzed about the displays for the latest EV models presented by Bentley, McLaren, Polestar, Hyundai and Nissan.The star of the show was the new all-electric Ford F-150, the latest iteration of the US’s best-selling vehicle. The impressive aluminum truck can pull 10,000lb, gets 300 miles on a standard charge, and can generate power for an entire house for three days. And it’s fast – going from 0-60mph in less than five seconds.As the demand for these new high-performing EVs grows, gasoline-powered cars look more and more like relics. But for now, all eyes are on Congress as to how soon the US can transition to mass adoption, and an equitable, EV market.TopicsAutomotive industryElectric, hybrid and low-emission carsUS politicsJoe BidenMotoringfeaturesReuse this content More