Connect with us

Economics

Net zero: UK government sued for weak strategy – so here’s what makes a good climate change plan

Plan to cut emissions quickly, use offsets sparingly and set broader goals for improving society.

Published

on

Roserunn/Shutterstock

Two-thirds of countries have now committed to reaching net zero greenhouse gas emissions at some point this century. During 2021, the share of large companies with net zero commitments jumped from one in five to one in three.

Sadly, few of these net zero targets were accompanied by measures necessary to achieve them. This discrepancy is increasingly the subject of legal challenges. The governments of the Netherlands and Germany, as well as oil major Shell, are among defendants who have been ordered by courts to cut emissions faster.

Judges found that tepid climate strategies violated the Human Rights Act by infringing on the rights of young people. Globally, the number of climate-related court cases has doubled since 2015.

The UK is the latest country whose government environmental groups have sued for failing to take sufficient action on climate change. While the country’s net zero strategy deserves praise for some aspects – like setting a deadline to phase out new petrol and diesel cars by 2030 – even the government’s climate change advisor thinks it won’t be enough to meet statutory carbon targets.

So what does a good net zero strategy look like? In a new perspective paper we set out how to get net zero right. We argue that net zero strategies can be measured against three principles: the urgent pursuit of emission cuts, the cautious use of carbon offsets and carbon removal, and alignment with broader objectives for sustainable development.

Urgency

Because global temperature change is determined by cumulative emissions, the pace at which we reduce emissions is important. The longer we wait, the sooner the remaining carbon space in the atmosphere is used up.

Net zero strategies must contain measures to start cutting emissions immediately. These are often lacking or vague. The UK strategy, for example, proposes replacing gas boilers with heat pumps, but the support programme it offers is available to only a small proportion of buildings and households.

A pilot light inside a gas boiler.
Gas boilers urgently need low-carbon replacements. Skimin0k/Shutterstock

Emissions cuts must also be comprehensive and include the most difficult sectors to decarbonise, such as heavy industry, aviation and agriculture. Tackling them will require consumers to make difficult choices, for example, on how much they travel and what they eat. Most net zero strategies shy away from spelling these out.

Integrity

The net zero strategies of many companies and governments rely heavily on carbon offsets. That is, rather than reducing their own emissions, they pay third parties to reduce theirs, for example, by funding renewable energy projects or planting trees.

This raises a number of problems. It is difficult to prove whether offsets actually reduce emissions. Many projects funded via offsets would have happened anyway. The offset market needs much more rigorous regulation.

More importantly, net zero requires all emissions to come down. Offsets shouldn’t be used to allow pollution to continue unabated. They are a last resort.

If a strategy does include using offsets, those offsets should remove carbon from the atmosphere, rather than reduce emissions elsewhere. This is the meaning of net zero – a balance between emissions and removal.

Most options for removing carbon are biological, such as tree planting. Technological solutions, such as capturing carbon directly from the air and storing it underground, are still at the pilot stage, and there are concerns about their cost and ability to safely store CO₂.

Volunteers carrying mangrove tree saplings in Malaysia.
Tree planting isn’t a get out of jail free card. Farid Suhaimi/Shutterstock

Most modelled pathways for meeting the Paris Agreement’s goal of averting dangerous climate change involve scaling up carbon removal. The world needs more investment in these techniques, but also stronger legal frameworks to ensure their risks are managed properly, and an honest public debate to make sure people are on board with it.

Sustainability

Net zero strategies don’t work in isolation. They must be aligned with broader environmental, social and economic objectives.

Net zero strategies will fail unless they proactively manage the impact of decarbonisation policies on workers, communities and households. Thankfully, labour market interventions like re-skilling programmes can help workers transition into low-carbon employment and social welfare payments can shield households in poverty from energy price rises. Both must form an integral part of net zero strategies.

Climate action can have multiple additional benefits, for biodiversity, public health, and food security. But this is not guaranteed. Interventions can have unintended consequences. For example, commercial plantations of exotic tree species in naturally treeless habitats may claim to store carbon, but they could crowd out native species, rob local people of traditional livelihoods or succumb to pests and diseases.


Read more: When tree planting actually damages ecosystems


There are economic opportunities which net zero strategies should aim to capture. Low-carbon technologies like electric vehicles may unleash a virtuous cycle of innovation, investment and growth as information technology did two decades ago. More immediately, investment in, for example, home energy efficiency and renewable energy could help the economy recover from the pandemic in a sustainable way. Unfortunately, only a fraction of economic recovery packages offered by governments have been genuinely green.

The necessity of reaching net zero emissions is a scientific reality. The growth in net zero targets suggests that political and business leaders know this to be true. They are still struggling to make social, economic and political sense of net zero, as the emergence of court challenges shows.

But we are starting to understand how to get net zero right. If interpreted and governed well, net zero could be the best hope we have for climate action.


Imagine weekly climate newsletter

Don’t have time to read about climate change as much as you’d like?
Get a weekly roundup in your inbox instead. Every Wednesday, The Conversation’s environment editor writes Imagine, a short email that goes a little deeper into just one climate issue. Join the 10,000+ readers who’ve subscribed so far.


Sam Fankhauser receives funding from the University of Oxford's Strategic Research Fund for Oxford Net Zero and the UK Economic and Social Research Council (ESRC) for the Place-based Climate Action Network (PCAN).

Kaya Axelsson receives funding from the University of Oxford's Strategic Research Fund for Oxford Net Zero and the World Business Council for Sustainable Development.

Read More

Continue Reading

Economics

Hotels: Occupancy Rate Down 3.5% Compared to Same Week in 2019

From CoStar: STR: Weekly US Hotel Revenue per Available Room Reaches Highest Level Since July 2019U.S. hotel performance increased from the previous week, according to STR‘s latest data through May 21.May 15-21, 2022 (percentage change from comparable …

Published

on

U.S. hotel performance increased from the previous week, according to STR‘s latest data through May 21.

May 15-21, 2022 (percentage change from comparable week in 2019*):

Occupancy: 68.6% (-3.5%)
• Average daily rate (ADR): $151.75 (+13.4%)
• Revenue per available room (RevPAR): $104.06 (+9.5%)

*Due to the pandemic impact, STR is measuring recovery against comparable time periods from 2019.
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2022, black is 2020, blue is the median, and dashed light blue is for 2021.  Dashed purple is 2019 (STR is comparing to a strong year for hotels).

The 4-week average of the occupancy rate above the median rate for the previous 20 years (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The 4-week average of the occupancy rate will mostly move sideways seasonally until the summer travel season.

Read More

Continue Reading

Economics

“This Is A Crucible Moment” – Sequoia’s Ominous Warning To Companies On How To “Avoid The Death Spiral”

"This Is A Crucible Moment" – Sequoia’s Ominous Warning To Companies On How To "Avoid The Death Spiral"

"This is not a time to panic. It is…

Published

on

"This Is A Crucible Moment" - Sequoia's Ominous Warning To Companies On How To "Avoid The Death Spiral"

"This is not a time to panic. It is a time to pause and reassess," begins the thought-provoking presentation from veteran venture capital firm Sequoia Capital.

But that's about as 'positive' as they get as the founders of the firm warn of a prolonged market downturn and urges the startups in its portfolio to preserve cash and brace for worse to come.

"We believe this is a Crucible Moment, one that will present challenges and opportunities for many of you. First and foremost, we must recognize the changing environment and shift our mindset to respond with intention rather than regret."

And in its somewhat ubiquitous historically grim outlooks (its "R.I.P Good Times" in 2008 and "Black Swan" memo in March 2020 have become legendary) don't expect a quick rescue and recovery this time.

"Sustained inflation, and geopolitical conflicts further limit the ability for a quick-fix policy solution. As such, we do not believe that this is going to be another steep correction followed by an equally swift V-shaped recovery, like we saw at the outset of the pandemic," the note said.

They argue that it will be "Survival of the Quickest"...

In particular, Sequoia urged companies to look at cutting projects, R&D, marketing, and other expenses, noting that companies should be ready to cut in the next 30 days.

"We expect the market downturn to impact consumer behaviour, labour markets, supply chains and more. It will be a longer recovery and while we can't predict how long, we can advise you on ways to prepare and get through to the other side," it said.

The founders/CEOs who face reality, adapt fast, have discipline rather than regret will not just survive, but win, noting that "It is easier to preserve cash when you have more than six months left. Recruiting is about to get easier. All the FANG have hiring freezes."

They conclude their presenttation by noting that:

"At Sequoia, we believe that the one who wins is the one most prepared."

In other words America, brace for capex cuts, hiring freezes to accelerate, and growth to evaporate.

*  *  *

Read the full presentation below:

Tyler Durden Thu, 05/26/2022 - 15:45

Read More

Continue Reading

Economics

Best Day For Discretionary Stocks Since COVID-Crash As Consumer Recession Bets Get Steamrolled

Best Day For Discretionary Stocks Since COVID-Crash As Consumer Recession Bets Get Steamrolled

A week ago, following dismal guidance by Walmart,…

Published

on

Best Day For Discretionary Stocks Since COVID-Crash As Consumer Recession Bets Get Steamrolled

A week ago, following dismal guidance by Walmart, Target indicated that it is seeing a shift in the consumer wallet away from the pandemic purchases and into reopening purchases - including apparel - and the pace of this shift caught some retailers off guard on inventory. WMT, COST, and TGT all saw their stocks fall sharply last week as investor concerns around a US consumer slowdown mounted and investors reconsidered just where, if anywhere, you can play "defense" in the current market.

But as Goldman's Chris Hussey writes today, this week, results from companies like DKS, Macy's, JWN, WSM, DLTR, and DG painted a decidedly different picture.

Deep discount retailers Dollar Tree - or rather Dollar 25 Tree - and Dollar General both posted strong results and DLTR raised top-line guidance.

Which isn't surprising: as we discussed in "Middle Class Is Shutting Down As Spending By The Rich Remains Robust" when consumers are trading down - as they are doing now due to Biden's runaway inflation - dollar stores see more business.

As a result, Dollar Tree surged as much as 20% on Thursday, the biggest intraday move since October 2020. Evercore ISI said Dollar Tree's move to a "$1.25 price point" last November from $1 “came in the nick of time" adding that "given the broad-based inflationary cost pressures, the 25% price increase drove material sales and margin upside for both the namesake division and the total company," wrote analyst Michael Montani who also said that while freight, transport, and labor headwinds are real, some of the pressure cited by Target last week was likely company specific.

The analyst concluded that the read-across from DG and DLTR is “favorable,” and it seems that the low-end consumer is “hanging in better than initially thought.” Or rather, the middle-class is getting crushed and it has no choice but to trade down to the cheapest retail outlets.

And with countless shorts having piled up and getting massively squeezed, the S&P 500 Consumer Discretionary Index today has risen as much as 5.6%, its best day since April 2020, as optimism on the health of the consumer returns following a string of better-than-expected earnings reports from retailers.

Top performers in the S5COND index include Dollar Tree, Dollar General, Norwegian Cruise, Caesars Entertainment and Carnival; the Discretionary Index is on pace for its best week since March 18, when the group climbed 9.3%; the index sank 7.4% as Walmart and Target reports spooked investors. The index is still down almost 30% YTD.

"Retail earnings are bullish.... with four blow-outs,” said Vital Knowledge’s Adam Crisafulli, referring to quarterly reports from Williams-Sonoma, Macy’s, Dollar General, and Dollar Tree.  “The overall retail industry is experiencing stark changes and the market is incorrectly conflating these shifts with underlying demand weakness when the actual health of the consumer is much better than it seems,” Crisafulli says, although there are many - this website included - who wholeheartedly disagree with his optimistic view of the US consumer.

Remarkably, thanks to today’s rally, even Burlington Stores, which sank as much as 12% in premarket on disappointing results, is trading up as much as 11% and some say, the rally helped reverse the earlier tumble in NVDA shares.

The discretionary group is also getting a boost from airline operators Southwest and JetBlue, helping travel-related names, while on the economic front, better-than-expected personal consumption (for the revised Q1 GDP print). and jobless claims may be adding to the bullishness according to Bloomberg.

Tyler Durden Thu, 05/26/2022 - 15:00

Read More

Continue Reading

Trending