Category Archives: Climate change
The revolving door between government & big business
Yesterday’s headlines review of ONS report: 2008-2019, richest 10% enjoy biggest gains in household wealth
Andrew Pendleton (New Economics Foundation) reminds us that since Margaret Thatcher first stood on the steps of Number 10 in 1979, successive UK governments have chosen to withdraw all but the barest bones of support from Britain’s foundational industries, of which steel is one. He questions whether any owner of steel manufacturers in the UK could thrive in the hostile environment UK governments have created.
Failed by the current government’s blind faith in markets, Pendleton writes, the people of Scunthorpe and many other places have had no voice whatsoever in how the economy was run, until ‘the blunt instrument of the EU referendum’. The loss of this significant company will intensify the sense of loss that contributed to the Brexit vote
There are risks in selling to the Turkish Military Pension Fund or to the Chinese Jingye Group, about which very little is known, industrially, but the interest of foreign buyers suggests that British Steel is seen as a potentially viable asset.
Many tonnes of steel will be needed to build a cleaner economy – for wind turbines, electric vehicles and the rail lines made in Scunthorpe, critical to a decarbonised economy. As Pendleton points out, steel production is ‘problematic’ for climate change – but steel production in Scunthorpe can be ‘greened’ by investing to reduce its carbon emissions, eventually reaching zero as coal-free production (below) becomes the norm.
In Germany, Thyssenkrupp recently demonstrated running a steel blast furnace completely on hydrogen – opening up the prospect of zero-emissions steel production by using renewable hydrogen.
Hydrogen will become cheaper as current methods, which rely on creating hydrogen fuel from purified water, are superseded by less expensive technologies such as one being developed by Stanford researchers, who have been separating hydrogen and oxygen gas from seawater via electricity.
And millions of tonnes of carbon used in shipping will be saved by using steel close to where it is manufactured
Pendleton sees the current economic model, ‘now the default preference of our policy-makers’, as absurd; in Fife, steel fabrication firm BiFab is in mothballs (right) while energy giant EDF imports the casings for the turbines on its new offshore wind farm from Indonesia.
He points out that Indonesia and some of our European neighbours’ governments habitually intervene to ensure that ‘foundational industries’ have guaranteed supply chains and amply-filled order books.
British Steel owners Greybull, a private investment company which owns many other industries, are unlikely to be seriously affected, but the company’s workforce, its suppliers, Scunthorpe and the wider economy will. It will be a disaster, politically and economically. Andrew Pendleton ends:
“Nothing short of immediate nationalisation is needed; anything less will be a betrayal of a whole town and will send shockwaves through the UK’s industrial heartlands . . .
“It is not too late for the government to step in and take the company over, which would have the immediate effect of keeping people in work and the economy of a town afloat. This is absolutely government’s proper role. But it shouldn’t stop there. After nationalisation should come a three-pronged approach:
- focus on industrial strategy for British Steel in order to secure its supply chains
- fill up its order book with a proactive procurement policy.
- and create a worker owned company who could then benefit from an ownership dividend
“Given the UK’s need to invest and build green infrastructure, such as railways, steel is of national strategic importance”.
Read Andrew Pendleton’s article here.
Patrick Jenkins (Financial Times) attended a debate held by the FT City Network, a panel of more than 50 senior figures from across the City of London, during which ‘two of the world’s biggest fund management bosses’ pleaded for reform.
He reported that these pleas were made in response to an address by Gail Bradbrook, co-founder of Extinction Rebellion, in which she called for wholesale reform of the current economic system to avert global disaster.
Recent protests have focussed in part on the City of London and the role that banks, asset managers and insurers play in financing and sustaining some of the world’s most environmentally damaging industries, from oil extraction to vehicle manufacture.
Several participants praised the part that UK-based climate change activist group Extinction Rebellion has played — alongside others, including Swedish teenager Greta Thunberg and film-maker David Attenborough.
Anne Richards, chief executive of Fidelity International, said the world must end “our obsession with ever-increasing GDP” and the “primacy of shareholders” to foster the kind of long-term thinking that would help protect the environment and “pivot [away] from the Milton Friedman concept of capitalism and the primacy of shareholders, who may have a very short-term involvement with an individual company, towards a wider stakeholder approach”.
Andreas Utermann, CEO of Allianz Global Investors, said that the world’s growth mania — “nominal GDP growth, supported by population growth, [and profit] growth” — was clearly unsustainable, and suggested that capitalism in its current form is “borrowing from the future while destroying the environment . . . A more holistic approach to ‘growth’ needs to evolve, looking to capture societal and environmental benefits and costs . . . More sophisticated measures than GDP per capita are required to determine whether capitalism is delivering to all stakeholders without borrowing from the future while destroying the environment. It was self-evident that this is not sustainable”.
A number of City Network contributors said that, while it was impossible to blacklist climate unfriendly firms instantly, it was vital that companies set tough environmental targets, measure whether they were met and reward managers on their performance, rather than on short-term profit. Other interventions showed that a wider range of contributors to the debate believe that business and government must urgently improve their response to the growing evidence of environmental catastrophe.
“Mr Corbyn comes to life on the stump”
Above: Corbyn in Trafford, May 2019
Mr Shrimsley estimates that a vote share above 30% may be enough to prevent a Tory majority adding that, given likely losses in Remain strongholds, Mr Johnson needs 40-50 gains.
Other points made include those summarised below.
Having alienated the Democratic Unionists, the Conservatives have no natural coalition partners and face the ‘potentially wrecking impact’ of Nigel Farage’s Brexit Party.
Several other parties might support Labour or at least tolerate an anti-Johnson administration. The early evidence is that Remainers may be reconciling themselves to voting Labour where necessary.
Labour has a coherent narrative. The last three years have been no advert for Tory efficiency and the last nine have not left most people feeling better off
It has a raft of policies with appeal to core groups. It has baubles for young and old, tenants and workers. It will not be outbid on public services.
Voters’ current experiences are of austerity and cuts. Labour can, for example, note that Mr Johnson’s promised 20,000 extra police will only restore numbers to their 2010 level.
Plans to nationalise water and rail companies will play well, as will promises to give workers more say and more pay.
Labour also has a radical agenda on the environment, perhaps the most salient issue for younger voters.
And the wild card? As Camilla Cavendish (former No10 adviser) points out: “Mr Corbyn comes to life on the stump; Mr Johnson doesn’t always seem to do his homework”
A surge in number of young people registering to vote has been reported as more than 300,000 applications were submitted in two days. There was a big spike on the day the election was announced.
- A third were from people under 25.
- Nearly two-thirds of applications were from people aged 34 and under
- and 4% came from those aged 65 and over.
Dr James Sloam is co-director of Centre for European Politics at Royal Holloway University, currently leading a project for the Greater London Assembly investigating the key policy issues for young people and questions of civic and political engagement and their relevance to the UN Sustainable Development Goals.
Dr Sloam argues that there has been a step-change in youth political participation, as young people have been attracted in large numbers to Jeremy Corbyn’s message. In the 2017 general election, turnout amongst 18-24 year olds rose from 43% in 2015 to 54% and polling data showed that most of them voted Labour.
BBC journalist Laura Lea points out that this is the generation that has borne the brunt of the financial crisis with uncertainty, unemployment and wage freezes being a staple of their adult life. Young people have experienced the tightest pay squeeze in the wake of the financial crisis – with real pay falling by 13%, according to the Resolution Foundation.
And – we add – they will have to face the increasing hazards of climate change.
Over the past few years we’ve seen a trend in which the Labour Party has become Greener and the Green Party has become “Leftier”. I fervently wish for further rapprochement.
While feeling despair at the head-in-sand attitudes and empty rhetoric in much of Westminster, Whitehall and the City – especially the City – I was enthralled by a presentation given in my constituency of Stroud last month by Alan Simpson, Jeremy Corbyn and John McDonnell’s advisor on climate change and sustainable economics. If anyone is unfamiliar with his policy ideas, I urge them to look him up and read these essays.
A future Labour government will do its utmost to adopt Simpson’s plans, which include:
- local renewal energy cooperatives,
- an agricultural policy reset to penalise high greenhouse gas emissions,
- a far more locally-based economy (community wealth building – thriving in many locations and now to be adopted in Stroud),
- a far more integrated, publicly-owned transport system…
- and of course real measures to curb tax “avoidance” by the heavyweight national and global corporations, and tackle our hideous income inequality.
- First and foremost though – greenhouse emissions must be HALVED every ten years.
We should all be taking notice of the wonderful Greta Thunberg’s message
Real change can’t come too soon, and the only way we’re ever going to see real change in the UK is to put a Labour/Green government? into power at the earliest possible opportunity.
I can’t see how diluting the non-Conservative vote at the next general election is going to achieve anything except more Tory-led acceleration to destruction.
I realise some will find their tribal loyalties tested – but the nightmare we’ve created transcends such petty concerns.
Media 104: The fight-back? Seriously flawed FT article on the next 30 years of fossil fuelled energy
The message from the article’s author, Nick Butler: “Loved or not, the energy companies will still be giving us products we need and they will thrive over the next three decades . . . Wind and solar power are of limited value in meeting industrial energy requirements”.
He stresses the continuing weighting of investment in favour of oil and gas against renewables and focuses on the latest long-term international outlook, which “paints a picture of the world to 2050, on the basis of current policy, reasonable expectations of economic and population growth across the world”.
Sounds good: but this report “comes from the US Energy Information Administration — an independent agency in September”. However, according to its hyperlink and Investopedia, the Energy Information Administration (EIA) is a government agency formed in 1977.
In addition to this incorrect information, the author attribution – ‘energy commentator for the FT and chair of The Policy Institute at King’s College London’ – fails to add his significant previous employment as Senior Policy Adviser in the Prime Ministers policy unit and BP’s Group Vice President for Strategy and Policy.
Not so: a scroll through the report saw no input from such companies and a word search of the report, using the names of three of the largest oil companies, found ‘no results’.
He concedes that the energy transition is indeed happening (see Bloomberg, above) but asserts that its impact is small and “on this analysis will largely remain focused on the generation of electricity”.
The report, Butler continues, gives a picture of two very different worlds.
“On the one hand, in the developed OECD countries energy demand in volume terms thanks to efficiency gains, minimal population growth and public policy — is static to falling and the supply is getting progressively cleaner. In the rapidly growing Asian economies, population increases and the desire to escape poverty are pushing up both demand and emissions shows an inherently unsustainable future. The trends it describes are a recipe for serious global warming and climate instability.”
As the website of UK Oil & Gas PLC (UKOG) reminds us, there is no alternative (TINA): oil is indispensable: it heats homes, provides fuel for water, air and road transport and is used in plastics, fertilisers, detergents, paints and medicines.
Is Butler unaware of research under way to redesign many of these products to eliminate oil use. The use of electric heating is growing and of electric road and waterway transport, mainly ferries? And though emissions will be reduced by increasing localisation of supplies, there will be some need for clean shipping; for nearly three years the first Chinese 2000-tonne electric cargo ship has been in business. Japan and Norway are also working in this sector, with Japan’s Komatsu Ltd developing its first electric-powered digger.
Many commentators see the need to phase out long-distance air travel, but there will always be the need for some air transport during emergencies and the BBC reports progress towards such a capability: July’s Paris Airshow saw the launch of the world’s first all-electric nine-passenger aircraft for which orders are now being placed
Years ago, Dave Lindorff wrote about ‘ecological cataclysm’: “it is useful to look at the hypocrisy of the energy companies when it comes to an even worse crisis threatening life itself on the planet – rapid climate change due to increasing carbon in the atmosphere”.
His advice is more reliable than Butler’s: Watch What Big Oil Does, Not What It Pays to Have Said.
DSEI arms exhibition protestors call for government spending on peace, adequate public services and addressing climate change
Extinction Rebellion demonstrators, who used a signature XR boat to block access to the DSEI arms fair to be held in the Excel Centre in Royal Albert Way said that war creates devastating environmental damage and with a warming climate leading to more extreme weather and causing more failed harvests and droughts, as food and water runs out, we can expect more conflict and a much bigger refugee crisis. They added:
“The UK has to own up to its part in creating these global problems, take real leadership in reducing warming and conflict, and create deliberative democracies which can solve this emergency.”
West Ham MP Lyn Brown said: “The DSEI arms fair causes a massive inconvenience for local residents every two years, from the added traffic and security it always requires. Added to the inconvenience to local people, the arms fair also piles an unwanted and unneeded burden on our local public services, like our police, ambulances, hospitals and transport, all already massively overstretched due to nine long years of Tory austerity cuts. Despite asking questions in Parliament for months, the Government haven’t been able to reassure me that we won’t be seeking to sell weapons to regimes that abuse human rights or are killing innocents in places like Yemen. I’m proud to stand with the Newham residents who are raising their voices against the arms fair this year, and I hope that together we can stop the DSEI from returning to our borough in 2021.”
Demonstrators advocated that instead of helping to promote and subsidise the sales of armaments, government should be creating an emergency budget:
- to bring down emissions and increase biodiversity,
- to transfer jobs from the arms industry into the sustainable economy now
- to stop fuelling conflict around the world
- and instead support ‘peace diplomacy’.
Extinction Rebellion’s Liam Geary Baulch said: “We envision a world where people have a right to a future and a right to live in peace with a home, food, and water – all things that are put at risk by fuelling conflict and the climate and ecological emergency around the world.
(Ed) Is Jim Pickard’s language in this article – seize, confiscate, state raid, expropriate – actually adding to Project Fear, which is becoming Project Cold Hard Reality according to the Scotsman – no doubt thinking of the number of jobs and assets moving to continental Europe?
In a letter today signed by over eighty economists, including Richard Wilkinson, Guy Standing, Prem Sikka, Kate Raworth, Richard Murphy, Steve Keen, Joseph Huber, John Christensen, Dani Rodrik, Thomas Piketty and lead signatory, David Blanchflower, the FT is charged with failing to appreciate the severity of the UK’s current economic condition. The indications include:
- the country’s ‘meagre recovery’ from the 2008 banking crisis, fuelled by rising household debt,
- stagnating earnings,
- a housing market crisis,
- the wealthiest disproportionately benefiting from growth since the 1980s and
- a failure to take adequate action to prevent climate and environmental breakdown and prepare for their effects.
They point out that all political parties in the UK are proposing increases in public spending to meet these challenges – and charge the FT with reproducing a number of misconceptions:
Labour’s proposals are affordable: the FT’s source, an Office for Budget Responsibility analysis, “ignored the impact of public spending on growth, and thus on tax receipts” – a critical relationship noted by senior IMF economists in their critique of austerity.
The economists pointed out that government can borrow at negative real interest rates to fund pressing infrastructure, education and environment projects, many of which offer returns well above zero, generating higher future tax receipts to spend on social and environmental needs such as those listed above. At present, they observe, taxation levels in the UK remain lower than in most well-provided European countries.
They corrected the implication that a mechanism such as an Inclusive Ownership Fund (p.42) would require companies to pay out cash out; companies would issue new shares to be placed in a mutual fund – just as shares are now issued for executive compensation.
After being reminded that in the 1940s and 1980s, major policy changes were made in response to a failed economic model – at first seen as overly radical but later accepted across the political spectrum – the FT editor might heed the advice of the critical reader whom he invited to write a letter:
“There needs to be a revolution in the FT — not the communist type of revolution, but a revolution that turns the mindset to see the world beyond a white middle-class neo-liberal tinted lens.”
In 2018, one of the longest dry spells on record left part of the Rhine in Germany at record low levels for months, forcing freighters to reduce their cargo or stop using the river altogether. Some inland ports lay idle and it is estimated that millions of tons of goods had to be transported by rail or road, raising costs significantly – twice or three times as much by rail and around five times as much by road, according to Handelsblatt Today.
The Rhine is vitally important to life and commerce in the region. Roughly 80% of the 223 million tons of cargo transported by ship in Germany each year travels the Rhine, which links the country’s industrial heartland to Belgium, the Netherlands and the North Sea. Parts of the Danube and the Elbe – Germany’s other major rivers – were also drying up.
The slump in the river’s water levels dented Germany’s economic growth by 0.4% in the final quarter of 2018 and by 0.3% in the preceding three months, according to estimates from JPMorgan economist Greg Fuzesi in January. Fuzesi said at the time he anticipated a 0.55% contribution to GDP in the first quarter of this year as the river’s water levels normalize. At least 0.7 percentage points had been shaved off economic growth last year, adding to a series of shocks that almost tipped the nation into a recession.
- Ships carrying the large and heavy components of a wind farm could no longer reach Kubler’s Mannheim terminal.
- Because they cannot be carried on rail, or for more than a couple of miles on roads, Kübler’s storage area at its terminal lay empty.
- This stopped the building of the wind farm.
- A trade group in Germany put farmers’ losses at several billion dollars.
- The German chemical giant BASF had to decrease production at one of its plants because the Rhine, whose water it uses to cool production, was too low.
- Gas stations in the region that relied on tankers to deliver from refineries in the Netherlands ran out of fuel.
- About half of Germany’s river ferries stopped running, according to the Federal Waterways and Shipping Administration
- River cruise ships had to transport their passengers by bus for parts of their journey.
- Thousands of fish in the Swiss section of the river died because of the heat and low oxygen levels.
- In November, natural gas prices increased 13% throughout Europe as coal barges could not reach coal-powered plants.
- The world’s largest chemical company BASF, which operates the world’s largest integrated chemical plant on the western bank of the Rhine, said the overall cost of 2018 dry season was $285 million.
- Steel maker ThyssenKrupp could not receive raw materials to one of its mills in Duisburg, forcing the company to delay its shipments to customers including automotive giant Volkswagen.
- Contargo, which usually moves approximately 50,000 containers a month on around 40 barges, was forced to reduce its operations to three barges. Its statement noted the situation had become so extreme that barges could no longer navigate the Middle Rhine without danger.
- Tourism was among the hardest hit sectors since the river is frequently used by boats cruising up and down the Rhine to visit castles, vineyards and other sights.
In January and February this year, Rhine barge operators introduced a low water surcharge on exports and imports, as – we noted – did Montreal shipping companies, when, due to the lower water level of the St Lawrence river, ships had a limited loading capacity and fewer containers could be loaded on board,.
Bloomberg reported that water levels at many Rhineland locations were now back to normal for the time of year and barges that handle hundreds of fuel shipments up and down the river each year were able to reach all destinations fully loaded — something they had not been able to do for months, according to Rotterdam-based broker Riverlake Barging.
BASF’s CEO Martin Brudermueller is calling for new locks and dams to be built to keep the river navigable in dry season. The shipping lane could be made deeper, but that would take years, if not decades, and would cost millions.
“Our research shows an increase in instability,” said Hagen Koch, who studies rivers at the Potsdam Institute for Climate Impact Research. “The extremes are going to happen more often.” The Rhine’s flow relies not just on annual rainfall, but also on enormous long-term reserves of water in the Alps. Melting snow and glaciers, as well as Lake Constance, feed the upper parts of the river, but with climate change, those reserves are lower. There are reasons to believe such weather will become more frequent with a warming climate.