Climate change’s economic impact examined in new report

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Climate change is not a concept accepted by everyone and certainly, not by President Donald Trump. But according to a recent study from a team of researchers for The Lancet, years of inaction battling climate issues negatively affected the economy and will continue to do so.

Data points to a massive sum of money spent due to the devastation caused by major weather events, like hurricanes and wildfires. An increase in natural disasters has been directly associated with the deteriorating climate.

“Between 2000-2016, there has been a 46 percent increase in the number of weather-related disasters,” the report stated.“Economic losses linked to climate-related extreme weather events were estimated at $129 billion in 2016.”

 

Those numbers represent 2016, not the even wilder hurricane season in 2017, which saw the damage of Hurricane Harvey and Hurricane Irma, both record-breaking storms, likely costing more than $200 billion all together.

That price tag seems high, but it might be lower than it is officially tallied at, considering the cost of damage can continue to rise months following an event.  Below is a graph detailing the change in unemployment when Hurricane Katrina hit in 2005. Even by June 2006, while the New Orleans employment sum had regained some of its losses, it was not near its previous stable condition.

Therefore, if you assume that costly hurricanes will be prevalent over the next decade or so due to climate change worsened by fossil fuels, then the economy will continue to have problems. Extreme weather has cost the U.S. economy an average of $240 billion per year, and now that total seems to be on the low end for what the future holds.

Sir Robert Watson, coauthor and director at the U.K’s Tyndall Center for Climate Change Research, told National Geographic that natural disasters are not created by climate change, but noted the “intensity and frequency” of such occurrences have been made worse by hotter temperatures.

Obviously, fighting climate change to handle extreme weather starts with the knowledge that clean energy is necessary to adapt as soon and as quickly as possible.

But President Trump and EPA head Scott Pruitt don’t see a need for reducing risk, as the administration hopes to roll back Barack Obama’s standards on curbing carbon emissions in favor of coal production.

The coal industry, however, doesn’t seem like its making a comeback, which means it’s time to favor the environment by focusing on jobs created by renewable energy. These jobs are being created twice as fast as any other industry, via Quartz Media, and mainly include solar and wind installers. The solar industry itself generated roughly 260,000 jobs for Americans in 2016.

Eight of the 10 states where solar jobs grew the fastest voted for Trump in the 2016 presidential election, per CBS, and in Oklahoma, Alaska and Nebraska, solar energy workers grew by 100 percent from 2015 to 2016.

So it seems in four years, Trump won’t be able to single handedly destroy the environment. More people have come to understand the value of renewable energy, which is needed to slow climate change and protect our planet from volatile weather incidents.

U.S. Trade Commission Calls for Tariffs on Solar Energy Products

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Officials from the United States International Trade Commission, an independent federal agency that governs trade, recently announced a range of recommendations aimed at protecting domestic manufacturers of solar equipment from unfairly priced imports, especially from China. Those included limiting the imports of certain solar components and imposing tariffs of 10 percent to 35 percent on certain products.

The trade case was led by American solar producers but fought by big buyers of solar panels. Suniva, a Georgia based solar energy company, championed the case for higher tariff on imported solar energy equipment alongside another major player in the industry, SolarWorld Americas. Suniva called the International Trade Commission’s recommendations “disappointing” in a statement, saying they were not strict enough. The company called for the administration to employ stricter restrictions “necessary to save American manufacturing.”

According to LA Times, the company had previously shuttered its solar plants in Georgia and Michigan, and claimed that they could not compete with less-expensive imported solar equipment, principally from China. Big buyers of solar energy systems, however, disagreed with Suniva, saying that a higher Tarrif will drive up the price of solar panels in the U.S., undercut the cost-competitiveness of solar and ultimately reverse the progress we’ve had in promoting solar energy.

Even some of the other manufacturers in the industry disagreed with Suniva’s idea. Twenty-seven solar mounting equipment manufacturers and their domestic suppliers wrote an open letter to the U.S. International Trade Commission in response to the Suniva’s proposal. The companies worry that the high tariffs will raise prices throughout the supply chain and ultimately cost more American jobs than they would save. They argue that cheaper solar products from China have actually been a boon to their businesses and accelerated the adoption of solar energy in the United States, where it now powers millions of American homes and businesses. A representative of these companies, Frank Maisano, says that if President Trump chooses to impose the tariff, “it will set off a chain reaction threatening workers who install solar power projects, utilities who purchase the power, major commercial users of solar power, like retailers, as well as home installers.”

The recommendations from the Trade Commission will be sent to the president by Nov. 13. He will have 60 days to decide whether to accept or to reject these ideas as he makes a final decision, which will come as Mr. Trump is preparing to travel to China next week to meet with Chinese officials on a range of security and trade issues.

 

References:
https://www.nytimes.com/2017/10/31/business/solar-industry-import-tariffs.html
https://www.washingtonpost.com/news/energy-environment/wp/2017/10/31/federal-trade-panel-calls-for-protections-against-imported-solar-panels-which-trump-could-soon-implement/?utm_term=.044f208b909c
http://www.latimes.com/nation/la-na-solar-energy-tariffs-20171101-story.html

Doing business with China

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In the November issue of The Atlantic, Yoni Appelbaum has written an interesting reflection that made me think about the current status of U.S. economy: “Around the globe, those who dislike American ideas about democracy now outnumber those who favor them. […] China whispers seductively to rulers of developing nations that they, too, can keep a tight grip on power while enjoying the spoils of economic growth.” I could not help but wonder whether the “tight grip on power” that China keeps while expands its economic power all over the world, will turn out to be an actual source of strength in the future.

Everybody knows that China is one of the leading holders of U.S.A. securities with 1,200.5 billions of dollars, as listed by the US Treasury. Currently, the U.S.A.  general government gross debt is 108.1 % of the GDP, while the China’s one is only 47.6 %. Additionally, according to Bloomberg, in the United States also the household debt is rapidly raising, and what scares most is that it is raising for necessities. Indeed, the US household debt ($12.7 trillion) has reached more than the size of China’s economy. Yet, the debt’s size and the fact that China holds a big part of it, would not be big problems if the US economy’s growth kept raising greatly: perhaps this is the most important element that we have to take in consideration when we refer to the future of USA’s economy versus the China’s one.

Even though the aggregate data released by the World Bank spread positivity last week, showing that in the 2016 the US’ GDP set to 18.57 trillion USD while the China’s GDP reached only 11.2 trillion USD, the IMF data collected till now offer a different insight into USA’s economic growth. Indeed, the annual change in GDP percentage in the US is only 2.2, compared to the 6.8 percent reached by China. Especially the IMF data referring to the exports of goods report that in the second quarter of 2017 China has reached the value of $566.82 billion, more than the $382.5 billion reached by the USA. What about the trade deficit? According to the United States Census Bureau, in August the United States ran a negative balance of 239,121.25 million dollars between exports and imports. Surely, this complex economic situation reveals that China is growing undoubtedly at a very fast pace. But can free market thrive in a country that exercises a “tight grip” on its economy? By looking at the current data, the answer seems to be affirmative: but what will happen in a long-term? We know that the most valuable sources that a country needs to improve its economy are people, capital and ideas, and how can China foster ideas and innovation through its rules? Last week The New York Times has published an interesting story that portrays very well what means being an entrepreneur in China.

We are used to talking about free market and trade, and the US along with other occidental economy – the German in the first place – have been doing business with China for years pretending that its rules and its way of looking at the market were the same we are used to. Yet, President Xi Jinping “has pushed for strengthening state-owned enterprises and has called on businesspeople to maintain loyalty to the party”, reshaping board seats and making restrictions on abroad investments.

On one hand USA is letting China enter in its free market and make deals with its companies, allowing this country to increase its exports in USA and so strengthen its economy growth. On the other hand, China is not playing by the rules. Indeed, the occidental view on free market is highly different from the China’s one. The problem it is not the one which Trump often refers to, that is China stealing jobs to US workers. In fact, the problem is subtler and concerns more the fact that, in order to make fair deals, both the parties involved should play by the same rules. Yet, as revealed by Bloomberg, in order to do businesses in China foreign entrepreneurs need joint ventures to help their companies to “navigate the complex Chinese business environment”; an environment made of strict rulers and a strong government control that still struggles to let its entrepreneurs make free choices.

Therefore, in this way China can control and reduce any form of competition, the main component of free market. Perhaps, more than focusing on China stealing jobs from US workers, the U.S. government should start thinking how much China is taking from its companies by not playing by the rules set by the WTO.

The trade relationship that U.S. and other occidental countries started with China –assuming that their economies would have benefited from it- might eventually endanger our market and especially our idea of free market.

 

 

 

 

 

Brexit Trade Implications: What Now?

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Following the referendum held on Thursday, June 23, 2016 to decide whether the UK should leave or remain in the European Union, the entire world questioned what Britain’s exit from the EU would actually entail for British – and global – businesses. While there are many moving parts still up in the air, one thing is certain: Britain will have to reach a new trade agreement with the European Union. This task will be highly complex and be carried out under the immense pressure of a two-year deadline.

 

Once the United Kingdom’s formal decision to leave the European Union was notified to the European council of EU leaders, under article 50 of the Libson treaty, the UK was given a formal notice of leave from the EU. Article 50 demands a two-year timeframe for the UK to renegotiate a new legal basis for trade relationships with the remainder of the EU (however, it does enable an extension if needed).

 

The trade discussions must consider the framework for exporting and importing goods, like food and cars, two very important imports and exports for the UK, and the basis for continued services trade, such as legal advice on a big company takeover to and from the EU. Britain’s trade negotiations also must ponder changes to customs procedures, passport controls for business travel, and regulation on safety standards, health and environmental issues.

 

All the aforementioned decisions, however, are contingent upon whether or not Britain undergoes a “hard” or “soft” Brexit, said BBC News.  Hard and soft are terms that were used increasingly in  debates focused on the circumstances of the UK’s departure from the EU. While there is no concrete definition for either term, they are commonly used to refer to the closeness of the UK’s continued relationship with the EU following Brexit. On one end of the spectrum, a “hard” Brexit would entail the UK refusing to comprise on issues like the free movement of people, even if it meant leaving the single market. On the other extreme, a “soft” Brexit would more closely resemble Norway, which holds a single market (as opposed to a common market with free trade) and is forced to accept the free movement of people as a result.

 

According to The Guardian, it will be challenging for the UK to pull off a trade deal in a meager two years, particularly if the option of joining the European Economic Area (EEA) is pursued, but the British government is hesitant to accept any freedom of movement as a quid pro quo.

 

While the entire idea behind Brexit is to instill change within the British government and trade policies, John Forrest, the head of internal trade at DLA Piper law firm told The Guardian, he did not think having the UK continue carrying on trading with the EU under the same free movement principles is out of the question. “…that means freedom of movement for goods, people and capital between the UK and EU will continue to operate.” For the millions of people who campaigned and voted for leaving the EU on that Thursday in June of 2016, this possibility will be a tough pill to swallow.