In a speech commemorating the thirty-fifth anniversary of the International Energy Agency (IEA) in 2009, former U.S. secretary of state, Henry Kissinger recalled how the energy crisis of 1970s awakened the world “to a new challenge that would require both creative thinking and international cooperation.” He explained that as “global demand continues to grow, investment cycles, technologies, and supporting infrastructure will be critical.” As a top U.S. diplomat in the 1970s, Kissinger is credited with promoting energy security as a third pillar of the international order through a trifecta of initiatives to bolster incentives to energy producers to increase their supplies, encourage rational and prudent consumption of existing supplies, and improve development of alternative energy sources. These efforts contributed to the establishment of the IEA in 1974 as a principal institutional mechanism for enhancing global energy cooperation among industrialized nations. Read more>>
The energy market in the United States is undergoing a dramatic transformation, driven by technological advancement, market dynamics, and better policies and laws—none of which was a decade ago. Venture capitalists made huge profits from the computing boom of the 1980s, the internet boom of the 1990s, and now think the next boom will happen on the back of energy. These past booms, however, were fed by cheap energy: coal was cheap; natural gas was low-priced; and apart from the events following the 1973 Arab oil embargo and the 1979 Iranian Revolution, oil was comparatively cheap. However, in the space of the past decade, all that has changed. New resource finds, primarily shale resources from states such as Texas, Oklahoma, North Dakota, and Pennsylvania, exert pressure on the prices of oil and gas. At the same time, there is a growing concern of negative externalities associated with these fossil fuels. Read more>>
President Obama has released a $4 trillion budget proposal for FY 2016. It contains a range of programs designed to encourage deployment of the next generation clean energy and energy efficiency technologies. Here are the top five things to know about the budget in terms of clean energy and environmental investments.
1. Clean Power State Incentive Fund
The U.S. President proposes a $4 billion incentive fund to encourage states to make faster and deeper cuts in carbon emissions from electricity, than would be required under the Clean Power Plan. The Environmental Protection Agency (EPA) is to administer the Clean Power State Incentive Fund, which would enable states to invest in activities that advance and complement the agency’s Clean Power Plan. The administration outlines several goals, including addressing impacts from environmental pollution in low-income communities to supporting businesses to catalyze investment in renewable energy, energy efficiency and combined heat and power. The budget also includes $239 million to support reductions in greenhouse gas emissions programs at the EPA. In particular, $25 million would be used to help states develop their Clean Power Plan strategies. Read more>>
The New Climate Economy (NCE), a flagship project of the Global Commission on the Economy and Climate has released a report documenting how urbanization drives of productivity and growth in the global economy. The report titled, ‘Better Growth, Better Climate,’ observes that as the global economy undergoes a deep structural transformation the next 15 years will be marked by: (i) rapid global economic expansion by more than half, (ii) rapid technological advancement that will have profound impact on both businesses and lives, (iii) migration of a billion more people into cities, and (iv) investment of nearly US$90 trillion in infrastructure in asset intensive sectors mainly in urban, land use and energy systems.
To overcome market, policy and institutional barriers to low-carbon growth, the report recommends harnessing three key “drivers of change,” notably: raising resource efficiency, investing in infrastructure and stimulating innovation in new business models, technologies, business models and social-technical innovations and practices to stimulate both growth and emissions reduction.
Speaking at the launch of the report, Philipp Rode, the Executive Director of LSE Cities and Senior Research Fellow at the London School of Economics and Political Science said that:
dispersed peripheralized development of many developing world cities in particular leads to a very regressive form of urban development replicating income and wealth inequalities by limiting access to common goods such as healthcare, better schools, and public transport.
The report identifies better urbanization, better development, and better coordination of critical economic systems as vital drivers of change in cities.
The report recommends a 10-point global action plan, including:
- integrating climate into core economic decision-making processes to accelerate low-carbon transformation;
- phasing out subsidies for hydrocarbon fuels, and incentives for urban sprawl;
- introduce strong, predictable carbon prices;
- pursue a strong, lasting and equitable international climate treaty;
- strengthen incentives for long-term investment in forestry and forest protection;
- reduce capital costs for low-carbon infrastructure investments;
- scale up innovation in key low-carbon and climate-resilient technologies;
- emphasize on developing a connected and compact cities paradigm;
- accelerate fuel switching away from polluting coal-fired power generation to low carbon fuels; and
- restore lost or degraded forests and agricultural lands by 2030.
The unconventional oil and gas boom has shaken up energy markets in the U.S. and beyond. Across many American states, the energy sector is experiencing a number of changes far larger than in its history including improvements in policies, business models, technologies, and investment options to make energy cleaner, more plentiful and diversified, cheaper to store and capable of handling increased demand more intelligently. Technological advances have significantly enhanced production of oil and gas from shale, turning the U.S. into a major oil producer, with most of the new production coming from unconventional sources. Read more>>
A new paper strategy by the World Bank Group sets a new direction for energy sector investments focusing on expanding energy access and sustainable energy. Along with expanding access to energy, the Energy Sector Directions Paper focuses on accelerating energy efficiency and renewable energy development as per the Sustainable Energy for All initiative’s 2030 goal for doubling global energy efficiency measures and the global renewable energy mix share.
“As part of a drive for universal access, financial solutions or guarantees will be made available for the most feasible energy options for the poor and for people living in fragile and conflict-affected states. If short-term options include those with moderate or high greenhouse gas emissions, complementary support will also be provided in the medium term to harness lower-emission options.
In rural, remote or isolated areas, off-grid solutions based on renewable energy combined with energy- efficient technologies could be the most rapid means of providing cost-effective energy services. Engagement in cleaner cooking and heating solutions will grow.”
The new energy strategy paper will limit financing of new coal-fired power plants to “rare circumstances,” and only to countries with “no feasible alternatives” to coal. This follows President Obama’s “climate action” speech at Georgetown University last month calling for an end to public financing of dirty coal plants abroad.
“The WBG will provide financial support for greenfield coal power generation projects only in rare circumstances. Considerations such as meeting basic energy needs in countries with no feasible alternatives to coal and a lack of financing for coal power would define such rare cases.”
David Rogers, Executive Director of BRITE conference, which stands for brands, innovation and technology, hosted by the Center on Global Brand Leadership at Columbia Business School, discusses the challenges and promise of big data and how companies can master it to drive innovation and generate customer insight.
Talk by Jochen Harnisch, division head of the competence center environment and climate at KFW, at Stanford‘s Precourt Institute for Energy on financing required for global green energy transformation.
KFW is the development bank of Germany and Dr. Harnisch coordinates strategy and product development for climate protection and adaptation to climate change in developing and industrializing countries.
Here’s a great video of a speech delivered by Lord Nicholas Stern and sponsored by the International Monetary Fund (IMF) and World Resources Institute (WRI). Lord Stern, who is the chairman of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, explained how climate risks have changed six years after the publication of the Stern Review report, and what organizations and governments can do to transition to a low-carbon economy future. For more, check out the transcript of the speech and IMF Managing Director Christine Lagarde’s introductory remarks, and Stern Review .
For those interested in the relationship between equity markets and unemployment, here is an interesting chart by The Economist that sums up that ‘synching feeling’.
One thing is clear, producing goods in cheap labor markets and exporting them to high valued economies only end up eroding long-term viability of these advanced economies. Therefore, even if the action is highly profitable and looks good on the balance sheet (
to outsource production of some goods to cheap labor markets), this is but a short-term solution with serious long-term economic consequences.
In other news:
WSJ: Chained CPI, stocks and unemployment, imports
CNBC: Stock market to navigate negatives of earnings and economy