FtF News #104 – 2nd June 2021
Big Oil takes a hit, China clamps down on crypto, and the US drought continues to worsen
Hello, and welcome to Forge the Future, your weekly rundown of the latest climate news.
This week saw what many are calling a major victory for activist investing (see Planet Positives for more). It’s certainly a significant win, but barely scratches the surface of what needs to be done. It touches on the ever-present tension within the climate crisis – in a world ruled by money, how do you price nature, health and happiness?
There are many proponents that say the monetary system can be evolved, with ideas like ESG and carbon pricing to bring those hidden costs into the light. However, I wonder sometimes whether the focus on price, on wealth is inherently biased against pricing things historically deemed less valuable by those in power. And if so, what then? It is a huge and existential question, and one that smarter minds than I have pondered for a long time. Still, I do ponder what a world less focused on price, on wealth could be.
State of the world
Climate research and findings, weather events and studies
2021, whilst definitely marked by some unusual weather, has largely been a cooler year, according to Carbon Brief’s latest State of the Climate report. The tail-end of the La Niña effect that began last year has lowered temperatures enough to make the first four months of 2021 merely the seventh-warmest on record. However, temperatures are likely to climb as the year progresses, and overall, the year is still firmly in the top ten warmest ever.
Northeast India and Bangladesh are reeling from the impact of Tropical Cyclone Yaas, which struck the region last week. Whilst it looks to have been less severe than Cyclone Tauktae, which struck west India barely a week before, it still brought significant flooding, and left at least 50,000 homeless.
Drought conditions in the US continue to worsen, with 84% of the western US officially in drought, and 47% rated extreme or severe – the two strongest categories. The drought has been ongoing for years, but has strengthened considerably this year, with weak snowfall and the complete absence of so-called ‘monsoon’ rains in Arizona and New Mexico. Many states are now bracing for an even worse wildfire season than last year, even as major fires burn already in three states.
37% of all heat-related deaths can be attributed to climate change, according to a new study which looked at data across 43 countries over the past 30 years. The risk is not evenly distributed, either, with the proportion in some countries reaching as high as 75%. Southern Europe, the Middle East, SE Asia and South America were all identified as regions heavily affected by climate impacts.
Planet positives
Moving towards a greener and more equitable world
A shift in the tides?
This week saw a slew of small but significant push backs for major oil companies. The biggest was likely activist investor Engine No. 1 winning at least 2 seats on the board of Exxon Mobil. The investor owns only 0.02% of the company’s stock, but has been kicking up a storm, pushing for greater climate action and environmental responsibility. Somehow they won the support of a number of larger investors and gained several seats on the board, although their attempts to unseat the CEO were unsuccessful.
Shell also lost a major court battle in the Netherlands, with the judge ruling that the company must cut its scope 3 emissions by 45% versus 2019 levels by 2030. Shell is appealing the decision, but it nevertheless stands as a significant victory for legal challenges to oil companies. Finally, a majority of Chevron investors voted in favour of another activist investor’s proposal to force the company to reduce its emissions.
What does this mean? It certainly seems like the tide is turning against oil companies, with formerly faithful investors now more willing to support calls for climate action. However, as the Huffington Post identified, the tobacco industry (a model for the oil industry in more ways than one) hit a similar point decades back. Whilst that meant the end of rapid growth for those firms, tobacco is still very much profitable today. More action is needed to ensure that energy demand is permanently shifted away from oil.
Bitcoin bans
China has been playing an increasing role in crypto mining – so much so that a new study suggests it could miss its climate goals if mining remains unchecked by policy. Fortunately, it looks like the Chinese are in fact moving to clamp down on crypto, with Inner Mongolia (a major mining region) moving to revoke business licences for miners. Beijing has also vowed to crack down on mining and trading as part of a wider move to limit the levels of crypto work done in the country. Environmental factors have likely played a role in this decision (the central government put pressure on Inner Mongolia after the region missed climate goals), but there’s also probably geopolitics in the mix too, given the scale of operations at stake here. Still, if it reduces mining and lowers the price of bitcoin, the outcome is likely a positive one for the environment.
Adverse circumstances
Events that move the needle in the wrong direction
A little less conversation, a little more action?
Joe Biden won the US election on a number of key platforms, not least being not Trump. However, he also stood on a platform of radical climate action. In the first few months of the Biden presidency, there have been many targets, goals and speeches, but the real legacy is in the actions taken. There have been plenty of encouraging signs – repeals of a number of the most egregious Trump-era EPA environmental rollbacks – but this week saw the other side of the coin.
The Biden administration came out in favour of a huge Alaskan oil drilling operation which would produce over 100,000 barrels of oil a day for 30 years or more. The project highlights many of the tensions and compromises that will likely come in the next four years – it faces fierce environmental opposition, but is backed by the state of Alaska, and key officials, who may be needed to help support other initiatives. Politics is filled with compromises, but the question remains as to whether this is the right hand to play right now, or an indication of a government whose climate commitment is little more than skin deep. Only time will tell.
On a related note, an analysis of the EPA’s prosecution record has found that the agency is on track to prosecute even less cases this year than under Trump. However, this may not be an indictment of the current administration – the EPA’s prosecution rate has been falling for the past 20 years. The underlying cause is unclear – is it a shift in priorities, a lack of funding, or some other factor at play?
Long Reads
Interesting deep-dives into climate-related topics
Marine ‘dead zones’ are an increasing problem across the world, with as many as 700 regions suffering from marine damage worldwide. The economic damage is estimated in the billions, but attempts to limit the agricultural run-off that tends to cause them have been largely ineffective. Some are looking to seaweed as a potential solution – seaweed not only absorbs the nitrates and phosphorus that cause the algal blooms and de-oxygenation, but also can be sold for a profit – an important consideration in our money-centric world.
Quick Headlines
Some quick climate news nuggets to sate your appetite
The US is finally opening up its west coast to offshore wind, after the Navy withdrew long-standing objections.
Indonesia has announced that it won’t build any new coal power plants (though those under construction will be completed).
EV battery sales have more than doubled in the first four months of 2021 versus the same period last year.