Economy

Dems debut carbon tax proposal on same day as Europe, targeting China

24/7 Wall St. Staff

Published: July 16, 2021 9:33 am

By David Callaway, Callaway Climate Insights

Firemen standing on the roof of their vehicle climb into an inundated house in the flooded Ehrang neighborhood in Trier, western Germany, on Thursday.

At least 33 are dead and dozens are missing missing as floods sweep Germany, western Europe.

📷 Ernst Mettlach / AFP pic.twitter.com/HSONO20vEY

— NBC News (@NBCNews) July 15, 2021

At least 44 people have died and scores are missing after devastating flooding in Germany, Belgium and nearby regions. Read more below in our editor’s picks section.

It was attached with no fanfare and little notice, but the Democrats’ proposal to institute a carbon tax on imports from polluting countries as part of their $3.5 trillion economic plan is a game-changer in climate change circles.

The idea, long favored by climate activists and businesses, had been resisted for years by Democrats after a stinging defeat on a cap-and-trade initiative a decade ago. But with Europe jumping in Wednesday with a carbon border tariff as the centerpiece of a bold climate change strategy, the idea has finally found light.

That it appeared on the same day as Europe’s plan is no coincidence. Climate czar John Kerry said two months ago the U.S. was considering something similar, though nobody really believed him at the time. And there is some credence to the theory that the Republicans might go for it, as it would tax someone other than Americans.

In addition to raising money and protecting U.S. companies that do spend more to decarbonize their products from imports from more pollutive countries, the tax is a line being drawn in the sand by the U.S. and Europe together — against China (See David Callaway’s ZEUS column today).

The idea is fraught with complications, not the least of which is how would the U.S. measure the carbon output of products from other countries effectively. And as part of a kitchen sink strategy by the Democrats to force all their progressive climate ideas through a reconciliation package, it is unlikely to survive negotiations to get all 50 Democratic Senate votes.

But the idea of a price on carbon, long favored by markets and investors, is now undeniably a portion of the Democratic platform.

More insights below. . . .

ZEUS: New climate report on megacities highlights the China challenge

. . . . A new report that shows China is home to 23 of the top 25 worst megacities in greenhouse gas emissions is part of a growing series of networks helping investors — and governments — to dramatically narrow down the list of global warming priorities, writes David Callaway. At some point soon, the climate crisis will go beyond the ability of goodwill and diplomacy to control it, if it hasn’t already. That will lead to some challenging geopolitical decisions. . . .

Thursday’s subscriber insights: The renewables boom is quickly turning into a consolidation frenzy – for European buyers

. . . . The surge in wind and energy projects in the U.S. in the past few years is suddenly turning into a massive acquisition opportunity for strategic buyers, mostly in Europe. Where are the U.S. private equity firms? Read more here. . . .

. . . . Checking in on early trading of shares of VOTE, the new exchange-traded fund dedicated to fighting fossil fuel companies started by Engine No. 1 last month, after it made a name for itself defeating ExxonMobil (XOM) in a proxy battle for four board seats. Two weeks after launch, there is very little volume, but the price of the ETF is up a bit more than 2%, trading at $51.49 this morning. With proxy season mostly over, this one could be a sleeper for a while, but we’ll keep checking. . . .

. . . . The 401(k) industry, which has been slow to move on ESG offerings, is about to take a big step forward, with the Thrift Savings Plan (TSP) starting to offer new funds with ESG strategies to its 6.3 million participants. Read more here. . . .

. . . . Sobering news from the International Energy Agency this morning with a report that shows reopening economies around the world will cause electricity use to surge the next two years, more than can be accommodated by renewable energy supplies, meaning more fossil fuel usage. As a result, carbon emissions from the electricity sector will continue to set new highs through 2022. Renewable energy growth is strong, but our energy demands are still stronger. . . .

. . . . The first electric-powered tugboat — an 82-foot-long vessel — in the U.S. is being built in Alabama and is targeted for use in the Port of San Diego. It’s causing a buzz in maritime circles, where the problem of carbon emissions is even bigger than in the airline industry. Read more here. . . .

Editor’s picks: Deadly flooding in Germany, Belgium; plus, WTO tackles fishing subsidies

Many thanks to Russian hockey legend and UN Goodwill Ambassador Slava Fetisov for hosting me and sharing his efforts to protect the environment. Further proof everyone can be a key player in the fight against the climate crisis. pic.twitter.com/5DknZV5eJU

— Climate @ State (@ClimateAtState) July 14, 2021

Deadly flooding in German and Belgium

As many as 45 people were reported to have died and dozens more were missing Thursday after unrelenting rains in Germany and Belgium caused heavy flooding that swept cars away and caused houses to collapse. The Associated Press reported the recent storms in western Europe made rivers and reservoirs burst their banks, triggering flash floods overnight. “I grieve for those who have lost their lives in this disaster,” German Chancellor Angela Merkel said during a visit to Washington, expressing shock at the scope of the flooding. “We still don’t know the number. But it will be many.” The German Joint Information and Situation Centre activated the CopernicusEMS Rapid Mapping Service to monitor flood evolution in the Rhineland-Palatinate area. More severe flooding is expected along the Moselle river.

WTO tackles fishing subsidies

In what some are calling an existential crisis for the World Trade Organization, negotiators and environmentalists are hoping the group can reach agreement on a proposal to slash the widespread fishing subsidies that are considered to be the biggest factor in depleting the world’s fish stocks. According to a report from Reuters, the WTO says it is “on the cusp” of a deal. Director-General Ngozi Okonjo-Iweala said the ministerial meeting, being held virtually, “should kick us along the path towards agreement,” before a November session intended to seal the deal. Sustainable fish stocks have plunged from 90% of the total in 1990 to below 66% in 2017, the U.N. Food and Agriculture Organization says.

BlackRock names Speth to renewable power team in Asia-Pacific

BlackRock (BLK) has named Valerie Speth as managing director for its Renewable Power team in Asia-Pacific. Speth will be based in Singapore and will lead investment and portfolio management efforts in Southeast Asia for BlackRock’s current flagship Global Renewable Power strategy and the Climate Finance Partnership (CFP) program in Asia. Eco-business reports Speth comes to BlackRock from juwi, a global expert in turnkey renewable power projects, where she was the regional director for APAC. She previously led corporate strategy at juwi in Germany with a specialism in the energy sector. BlackRock’s global head of renewable power, David Giodano said that rapid population growth, rising country income and access to electricity throughout APAC is driving demand for energy creating “unprecedented investment opportunities” for the firm’s clients.

Latest findings: New research, studies and projects

Mighty Amazon flips from carbon sink to carbon source

Results from a nine-year research project in the eastern Amazon rainforest finds that significant deforestation in eastern and southeastern Brazil has been associated with a long-term decrease in rainfall and increase in temperature during the dry season, turning what was once a forest that absorbed CO₂ into a source of planet-warming CO₂ emissions. A report from the National Oceanic and Atmospheric Administration’s research news says the study area, which represents about 20% of the Amazon basin, has lost 30% of its rainforest. “Using nearly 10 years of CO₂ measurements, we found that the more deforested and climate-stressed eastern Amazon, especially the southeast, was a net emitter of CO₂ to the atmosphere, especially as a result of fires,” said John Miller, a scientist with NOAA’s Global Monitoring Laboratory and a co-author. “On the other hand, the wetter, more intact western and central Amazon, was neither a carbon sink nor source of atmospheric CO₂, with the absorption by healthy forests balancing the emissions from fires.” The study was published in the journal Nature.

More of the latest research:

• The Effects of Climate Change on Labor and Capital Reallocation
• Are Climate Change Policies Politically Costly?

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