News round-up, March 22, 2023
Quote of the day…
“Humanity is on thin ice, and that ice is melting fast,” the United Nations Secretary-General, António Guterres, said.
'Disgusting LNG'
…”For the time being, the protagonists in this dispute are focusing on a renewable energy directive. Two camps, one led by Germany and the other by France, are fighting it out, each with a blocking minority on a specific point: Should low-carbon hydrogen be taken into account when measuring the efforts of member states to reach the target of 45% of renewables in their energy mix by 2030?
For Berlin and its Spanish, Luxembourgish and Austrian allies, only green hydrogen, produced with wind or photovoltaic electricity, is eligible. This is unacceptable for Paris and its partners, mostly from Eastern and Central Europe. They are banking on nuclear energy to help them comply with the Paris Agreement.
Most read…
Rally in Bank Shares Lifts U.S. Stocks
Treasury yields surge ahead of Wednesday’s interest-rate decision, with traders expecting 0.25-percentage-point increase
WSJ By Sam GoldfarbFollow and Caitlin McCabeFollow
‘Rocking Chair Rebellion’: Seniors Call On Banks to Dump Big Oil
Older climate activists gathered in cities around the country for a day of action targeting banks that finance fossil fuel projects.
NYT by Cara Buckley, Published March 21, 2023POLITICAL MEMO
Head of the Eurogroup"We Have to Recognize How Quickly Things Can Change"
It has been a bad couple of weeks for banks in the U.S. and Europe. In an interview, Eurogroup head Paschal Donohoe discusses the possible dangers facing the euro area and why he remains confident.
Spiegel Interview Conducted by David Böcking, 20.03.2023France and Germany square off in Brussels over nuclear power
Nuclear energy and its potential use for producing low-carbon hydrogen are at the heart of fierce battle between Paris and Berlin over European policy.
LE MONDE BY VIRGINIE MALINGRE (BRUSSELS, EUROPE BUREAU)The U.N. Issues a Final Warning on the Climate—and a Plan
The I.P.C.C. report contains no new data; nevertheless, it manages to alarm in new ways.
The New Yorket by Elizabeth Kolbert
“We’re living in a volatile world…
it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp
Image: Germán & CoRally in Bank Shares Lifts U.S. Stocks
Treasury yields surge ahead of Wednesday’s interest-rate decision, with traders expecting 0.25-percentage-point increase
WSJ By Sam GoldfarbFollow and Caitlin McCabeFollow
Increased investor optimism about the banking system helped lift U.S. stocks Tuesday, with shares of regional banks including First Republic Bank FRC 29.47% at the forefront of a broad market rally.
Buoyed in part by reassuring comments by global financial authorities, both the S&P 500 and the Dow Jones Industrial Average posted their second consecutive day of gains for the first time since Silicon Valley Bank and Signature Bank collapsed less than two weeks ago.
Yields on U.S. government bonds also climbed sharply—with the two-year Treasury yield notching its largest single-day gain since 2009—as investors scaled back recent bets that an economic downturn could force the Federal Reserve to start cutting interest rates in the near future.
The S&P 500 gained 51.30 points, or 1.3% to 4002.87. The Dow Jones Industrial Average rose 316.02 points, or 1%, to 32560.60 and the technology-focused Nasdaq Composite climbed 184.57 points, or 1.6%, to 11860.11.
The KBW Bank index rose 5%. Shares in big U.S. banks such as JPMorgan Chase posted strong gains, while some smaller lenders surged. Shares in big U.S. banks such as JPMorgan Chase posted strong gains, while some smaller lenders surged. First Republic stock jumped $3.59, or 29%, to $15.77 after shedding nearly half of its value Monday. Western Alliance and PacWest, two other midsize banks that have come under pressure, each climbed more than 14%.
Stocks advanced ahead of Wednesday’s interest-rate decision from the Fed. Having once thought that the central bank could raise rates by 0.5 percentage point this month, investors have recently been debating whether officials will keep up their fight against inflation with a more modest 0.25 percentage increase or refrain from raising rates altogether until financial conditions stabilize.
Aiding Tuesday’s rally, Treasury Secretary Janet Yellen suggested the government could, if necessary, take further steps to shore up the banking system. Earlier this month, Ms. Yellen and other federal regulators used emergency powers to guarantee uninsured deposits at Silicon Valley Bank and Signature, while also setting up a new Federal Reserve lending program to help banks to meet withdrawal requests.
“Our intervention was necessary to protect the broader U.S. banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” Ms. Yellen said.
Meanwhile, some banking-industry representatives and lawmakers have called for an expansion of deposit insurance, although it isn’t clear whether such a move would be politically viable in Congress.
JPMorgan Chief Executive Jamie Dimon is leading discussions about new efforts to stabilize the troubled First Republic, The Wall Street Journal reported Monday. The bank has become a focus of investors worried that a flight of deposits from midsize banks triggered by the run on Silicon Valley Bank could lead to a pullback in lending and drag on economic growth.
“The equity market is not pricing in a full banking crisis,” said Seema Shah, chief global strategist at Principal Asset Management. “There’s not panic setting into that investor space, which is certainly a very important thing.”
In Europe, bank stocks and bonds also recovered, following choppy trading Monday sparked by UBS’s emergency takeover of Credit Suisse. UBS’s stock climbed 12% to 19.43 Swiss francs.
Regulators made attempts Monday to calm bond investors after a risky type of bank debt, known as additional tier 1 bonds, tumbled. The selloff came after Credit Suisse’s AT1 bonds were wiped out as part of the troubled Swiss bank’s hastily arranged sale to rival UBS.
Additional tier 1 bonds ticked higher Tuesday, with a roughly $1 billion AT1 exchange-traded fund from Invesco gaining 16 cents, or 0.8%, to $20.86.
Wall Street and investors have deliberated over whether the Fed will raise interest rates again this week.
The Fed, meanwhile, was looming larger in investors’ minds after days spent intensely focused on the banking sector.
Some analysts have argued in recent days turmoil in the banking sector would keep the Fed from raising rates on Wednesday. Nevertheless, a growing consensus has emerged that the Fed will still lift rates by 0.25 percentage point.
Fed-funds futures showed Tuesday afternoon that investors were pricing in a roughly 86% chance that the central bank lifts interest rates by 0.25 percentage point for a second consecutive time, according to data from CME Group.
“I probably agree with consensus that they are likely going to hike 25 basis points tomorrow,” said Blake Gwinn, head of U.S. rates strategy at RBC Capital Markets. “I don’t necessarily think it’s the right option, but I just think…they really want to separate out the financial stability tool kit from the inflation fighting tool kit.”
Along with its decision on interest rates, Fed officials could have a significant impact on markets by signaling what their plans are for the future.
Some analysts have warned that Fed officials, including Fed Chair Jerome Powell, may be less concerned than investors that rate increases pose a serious threat to financial stability. If that becomes apparent on Wednesday, stocks could decline, these analysts say.
In a sign that investors were already recalibrating their interest-rate bets, prices of U.S. Treasurys posted major declines Tuesday, pushing their yields higher.
The yield on the two-year U.S. Treasury note, which is especially sensitive to changes in the near-term interest-rate outlook, settled at 4.175%, according to Tradeweb, up from 3.922% Monday.
The yield on the 10-year note also climbed, to 3.603% from 3.477% Monday. Yields on both bonds, however, remain well below their levels from two weeks ago.
Wednesday’s interest-rate decision, along with accompanying economic projections and Mr. Powell’s post-meeting press conference, could have a complicated impact on the bond market, some investors said.
Typically, bond prices would fall in response to Fed guidance suggesting that higher interest rates are ahead. Yet, in the current climate, some believe that longer-term bonds could actually rally in such a scenario if investors were worried enough that higher rates would drive the economy quickly in a recession.
If it looks like Fed officials are “just going to put blinders on and hike their way through this thing, I think markets are going to look at that and just say ‘Man, this is going to break,” said Mr. Gwinn.
Image: “I think anybody is complicit that is not trying to do anything,” one protester said.Credit...Craig Hudson for The New York Times‘Rocking Chair Rebellion’: Seniors Call On Banks to Dump Big Oil
Older climate activists gathered in cities around the country for a day of action targeting banks that finance fossil fuel projects.
NYT by Cara Buckley, Published March 21, 2023They were parents, grandparents, great-aunts and great-uncles, ranging in age from their 50s to their 80s and beyond, and together they braved frigid temperatures to protest all through the night, and to rock.
Bundled in long johns, puffer coats, layered knit hats and sleeping bags, and fortified by cookies sent by courier from a sympathetic supporter, dozens of graying protesters sat in rocking chairs outside of four banks in downtown Washington for 24 hours, in a nationwide protest billed as the largest climate action ever undertaken by older folks.
Calling themselves the Rocking Chair Rebellion, they were part of more than 100 climate actions staged across the country Tuesday by Third Act, a protest group for people aged 60 and older, co-founded by Bill McKibben, the author and climate campaigner.
Their targets were Chase, the subsidiary of JP Morgan Chase, Wells Fargo, Citibank and Bank of America, the biggest investors in fossil fuel projects, according to a 2022 report by the Rainforest Action Network and other environmental groups. Collectively, the four banks have poured more than $1 trillion between 2016 and 2021 into oil and gas.
“This is the world we helped create,” said Katie Ries, 66, who is retired from the National Oceanic and Atmospheric Administration, as she sat in a rocking chair outside the Chase branch in downtown Washington shortly after an unseasonably cold dawn on Tuesday. “When you put this temporary discomfort in perspective, against what we are out here for, what we are facing, it just pales, it disappears.”
Formed in 2021, Third Act has some 50,000 members on its mailing list, according to Mr. McKibben, including a few centenarians. While the group has staged protests before, sometimes bearing signs that read “fossils against fossil fuels,” they said that Tuesday’s actions were the biggest yet, with participants driven in part by the conviction that it was unfair to lay responsibility for fixing the climate crisis at the feet of younger generations who will bear its brunt.
“I think anybody is complicit that is not trying to do anything,” one protester said.Credit...Craig Hudson for The New York Times
“For all their energy and intelligence and idealism, young people lack the structural power to make change on the scale we need in the time that we have,” said Mr. McKibben, who is 62, chatting early Tuesday before an anti-big bank climate rally in Washington’s Franklin Park. “We all vote, we ended up with most of the resources in our society. If we’re going to make Washington and Wall Street change, it’ll take a few people with hairlines like mine.”
The protests came on the heels of the latest dire report from the Intergovernmental Panel on Climate Change, which forecast that within the next decade, average global temperatures are likely to increase by 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, compared to preindustrial levels and making catastrophic weather events harder for human and other life-forms to bear. To ward off the worst, nations must cut greenhouse gasses by half by 2030, the report said, and stop adding carbon dioxide to the atmosphere by the early 2050s.
Understand the Latest News on Climate Change
Running out of time. A new report by the Intergovernmental Panel on Climate Change, a body of experts convened by the United Nations, said that Earth is likely to cross a critical threshold for global warming within the next decade, and nations will need to make an immediate and drastic shift away from fossil fuels to prevent the planet from overheating dangerously beyond that level.
A species in danger. Federal officials said that sunflower sea stars, huge starfish that until recently thrived in waters along the west coast of North America and that play a key role in keeping marine ecosystems balanced, are threatened with extinction and should be protected under the Endangered Species Act.
PFAS chemicals. The E.P.A. announced that the U.S. government intends to require utilities to remove from drinking water perfluoroalkyl and polyfluoroalkyl substances, part of a class of chemicals known as PFAS. Exposure to the chemicals, which are found in countless household items, has been linked to cancer, liver damage and other health effects.
Measuring droughts and deluges. Scientists have long cautioned that warming temperatures would lead to wetter and drier global extremes such as severe rainfall and intense droughts. A new study that used satellites that can detect changes in gravity to measure fluctuations in water shows where that may already be happening.
Yet in 2022, carbon emissions hit record highs and the top oil producers reaped a record-breaking $220 billion in profits.
And though major oil-funding banks are also investing in renewable energy sources, several protesters dismissed such efforts as greenwashing. “They’re running ads on TV, a lot of the big oil companies, about how they’re doing all these environmentally friendly things, but they’re doing record oil exploration,” said Fred Solowey, 71. “And then these phony offsets that they use a lot, to pretend that they’re going to be carbon neutral. It’s hogwash.”
For the rockers, the goal was to urge people to pull their money out of the oil-funding banks, and to goose the consciences of bank executives.
“I think anybody is complicit that is not trying to do anything,” said Pam Murphy, 64, as she sat outside the Chase branch early Tuesday, in front of a sign that read “This bank funds climate chaos.” One rocking chair over sat Susan Flashman, 68, a retired electrician who lives in Mount Rainier, Md. “We’re the activists, we’re the boomers,” Ms. Flashman said. “People our age, we’re just incensed that no nobody’s doing anything. So here we are.”
The protests came on the heels of the latest dire report from the Intergovernmental Panel on Climate Change.Credit...Craig Hudson for The New York Times
Organizers hosted a rocking chair painting party before driving the chairs to Washington.Credit...Craig Hudson for The New York Times
Most of the rocking chair activists were from the Washington metropolitan area, and sat in three-hour blocks throughout Monday night, though Ellen Barfield, 66, opted to sit multiple shifts from Monday evening until 5 a.m. Tuesday. She was a night owl anyhow, she said, and still up for the occasional all-nighter. “It’s better than a camp chair,” she said, of the seating arrangement, “And it’s poetic.”
“I mean, our climate is getting worse and worse,” Ms. Barfield continued. “We are far from doing what we need to do about it. And these banks are a big part of why, because they keep pouring money into this horrendous industry. And that has got to change, right?”
Most of the rocking chairs (there were about 50 in all) had been gathered by Lisa Finn, 57, and her husband, who live outside of Alexandria, Va., and hosted a rocking chair painting party before driving the chairs up in a U-Haul.
Along with the rally at Franklin Park (speakers included Ebony Twilley Martin, the co-executive director of Greenpeace USA; and Ben Jealous, executive director of the Sierra Club) there were marches featuring banners, outsize puppets and at least one shofar, and the blockading, with even more rocking chairs, of Wells Fargo and Chase. One protester was arrested after using paint on the street, organizers said.
Before addressing the rally, Mr. Jealous said pressure from older activists ought to make the banks take notice.
“For the banks, this is a very worrisome signal,” he said. “They can write off young people, they don’t see them as having a whole lot of money right now. They know these folks do.”
For his part, Mr. McKibben conceded that closing personal accounts in oil-funding banks was not likely to impose enough financial harm to force change, but said that merely underscored the urgent need to do more.
“We can put serious pressure on their reputations, their images, their brands, and their sense of themselves,” he said. “Right now, the most powerful people in the world are deeply complicit in the gravest crisis that the world has ever experienced. So part of today is an attempt to rouse these guys to some kind of sense of their place in history.”
Image: Germán & CoHead of the Eurogroup"We Have to Recognize How Quickly Things Can Change"
It has been a bad couple of weeks for banks in the U.S. and Europe. In an interview, Eurogroup head Paschal Donohoe discusses the possible dangers facing the euro area and why he remains confident.
Spiegel Interview Conducted by David Böcking, 20.03.2023The banking quarter of Frankfurt: Eurogroup head Paschal Donohoe has "great confidence" in the euro area.
Foto: Jürgen Ritter / IMAGO
DER SPIEGEL: Mr. Donohoe, during the European debt crisis several years ago, the Eurogroup put together bailout packages worth hundreds of billions of euros. Are we currently heading for a repeat?
Donohoe: I have great confidence in the euro area and in the euro. The frequency of economic shocks has accelerated in recent years. But the recovery from these shocks is stronger than is currently being acknowledged. Last year the question I faced everywhere was whether the euro area was going into recession. Now, we’re revising those forecasts upwards. I can’t be certain about what lies ahead. But I’m confident that we can navigate our way through a more volatile world.
Paschal Donohoe, 48, has been president of the Eurogroup - made up of finance ministers and economy ministers from the euro zone - since July 2020. Prior to entering politics, he worked for Procter & Gamble. Even though Donohoe is no longer his country's finance minister, having taken over the budget portfolio, he was re-elected as president of the Eurogroup until 2025.
DER SPIEGEL: It seems quite volatile indeed. In the U.S., Silicon Valley Bank has collapsed and a regional bank, First Republic, had to be propped up by other banks to the tune of almost $30 billion. Over the weekend, UBS took over Credit Suisse after a 50-billion-franc loan from the Swiss National Bank apparently wasn’t enough to calm the markets. Larry Fink of Blackrock is predicting that more "dominoes” might fall. Do you agree?
Donohoe: There are always risks when an economy is as deeply interconnected as the European one. But I believe that we are monitoring risks very closely and have regulated our banks much better to keep our banking system secure. Our European banks now hold far more liquidity and are much more regulated than a couple of years ago.
DER SPIEGEL: Still, we are seeing banks bailed out with public money, as in the case of Credit Suisse. What became of the promise made following the last financial crisis that banks would never again become too big to fail?
"We need to be humble and recognize how quickly things can change."
Donohoe on the situation of the banks
Donohoe: The key thing for me are banks in the euro area. And I am confident that we can manage any exposure we have to developments elsewhere in the world. We need to be humble and recognize how quickly things can change. But I believe that what we have in place will work and will make a difference this time around.
DER SPIEGEL: Nevertheless, the projects of forming banking union and unifying capital markets are far from complete.
Donohoe: Yes, but the banking union in particular is deeper and better than a decade ago. And I believe that developments over the last year will provide further momentum for the capital markets union. We have a duty to invest, especially to fight climate change. But the economic consequences of the war on Ukraine, the return of inflation and the increase in borrowing costs have made it harder to find money. That’s where a capital markets union can help.
DER SPIEGEL: The EU is currently discussing new fiscal rules. German Finance Minister Christian Lindner is unhappy with the European Commission’s plan to already apply new rules in 2024, even though they haven’t even been agreed on yet. Does the rest of the Eurogroup share that criticism?
Donohoe: There are different views, and Minister Lindner made his view very clear during the last Eurogroup meeting. Now we need to find an agreement. But what’s even more important in the short term: We have to change budgetary and fiscal policy in the aftermath of the COVID crisis.
DER SPIEGEL: You must be referring to programs like Italy’s "Superbonus 110%,” which was recently suspended. It promised up to 110 percent of renovation costs in tax credits. Have subsidies gone off the rails in recent years?
Donohoe: I make the general point that the economic policies that were put into place during COVID reflected the economic context of the time. That context has now changed, because both inflation and borrowing costs have gone up dramatically. Budget policy needs to reflect that. There is much common ground on this in the Eurogroup.
DER SPIEGEL: Is there? Countries like Germany and Italy certainly don’t seem to be on the same page.
Donohoe: There is enough agreement. But 2023 has to be the year where we turn that agreement into policy change. And there are signs of change: Italy, Spain and France have now phased out the very big tax reductions for energy that they put in place in 2022.
DER SPIEGEL: How about Germany? The German government has been heavily criticized for unilaterally announcing a 200-billion-euro package to combat the energy crisis.
Donohoe: Minister Lindner is one of the champions within the Eurogroup of sustainable public spending. Each government must decide what is the appropriate journey for them to change their energy support. And I know Minister Lindner and the German government will do the same.
DER SPIEGEL: In the past, there have been numerous violations of EU fiscal rules, but not a single country has ever actually been sanctioned. Will that ever change?
Donohoe: Yes. Credible sanctions will be an essential element of our future rules. But financial markets also evaluate whether they find national finance plans credible – and they respond if they don’t.
"Even though we will lose a lot of tax revenue, I believe it was the right thing to do."
Donohoe on Ireland's approval of a minimum tax
DER SPIEGEL: Another reform on the way is the global minimum tax. Your home country of Ireland has profited from a statutory corporate tax of only 12.5 percent in the past, and you expect to lose around a fifth of your corporate tax revenue as a result of the reform. Why did you still agree to it?
Donohoe: Because the absence of an agreement would have generated very significant risks with regards to tax policy and trade. And it would not have fit our world view to stop a process that matters to citizens all over the world. Even though we will lose a lot of tax revenue, I believe it was the right thing to do.
DER SPIEGEL: What feedback are you receiving from companies?
Donohoe: They understand why we did it. Ultimately, they want to be based in a country that is part of a global policy framework, has a good reputation and is willing to be collaborative. And we are still going to have a very competitive tax rate.
Image: A nuclear power complex in Civaux, central France. ALAIN LE BOT / PHOTONONSTOP / ALAIN LE BOT / PHOTONONSTOPFrance and Germany square off in Brussels over nuclear power
Nuclear energy and its potential use for producing low-carbon hydrogen are at the heart of fierce battle between Paris and Berlin over European policy.
Le Monde by Virginie Malingre (Brussels, Europe bureau)Since Germany decided to pull out of nuclear power after the Fukushima disaster in Japan in 2011, Paris and Berlin have been fighting each other over nuclear power.
In recent months, this diplomatic, political and economic dispute has become unusually intense as the battle against global warming and the war in Ukraine leads Europe to move away from fossil fuels.
It is in Brussels that the match is being played. Blackmail, haggling, a struggle for influence and high-dose communication make up the ingredients of this confrontation which has kept specialists on their toes. At least five EU legislative projects are already affected, struggling to deliver progress: Renewable energies, a gas package, air and maritime fuels as well as the hydrogen bank.
France and Germany are also readying their arguments for two other strategic pieces of legislation that the European Commission will soon be presenting. The first relates to the reform of the European electricity market and the second to ways to develop a competitive green industry in the European Union in the face of Chinese and American offensives.
Some of these regulations under development concern the fate of low-carbon hydrogen, i.e. produced with nuclear power to decarbonize industry and long-distance transport alongside renewable hydrogen. Others will be highly significant for the economic viability of the French nuclear sector and the competitiveness of the country.
'Disgusting LNG'
For the time being, the protagonists in this dispute are focusing on a renewable energy directive. Two camps, one led by Germany and the other by France, are fighting it out, each with a blocking minority on a specific point: Should low-carbon hydrogen be taken into account when measuring the efforts of member states to reach the target of 45% of renewables in their energy mix by 2030?
For Berlin and its Spanish, Luxembourgish and Austrian allies, only green hydrogen, produced with wind or photovoltaic electricity, is eligible. This is unacceptable for Paris and its partners, mostly from Eastern and Central Europe. They are banking on nuclear energy to help them comply with the Paris Agreement.
"Banning the use of nuclear power, which is an energy that emits less carbon than photovoltaic or wind power, is absurd," Agnès Pannier-Runacher, the French minister of energy transition, has said on multiple occasions.
"If France relies on its nuclear power, it will not do what is necessary in terms of renewables," the Germans say. "When it comes to importing disgusting LNG from shale gas or running its coal-fired power plants, Germany is less critical," French officials argue.
Paris believes that, with more than 90% of its electricity already decarbonized, it is impossible to focus on renewable energy only without eventually reducing nuclear power production. Germany, on the other hand, whose electricity is almost half fossil fuel-based, has more leeway.
The standoff could take on the same magnitude as the debate on the inclusion of nuclear power in the taxonomy, the labeling of green activities that allows private investment to be directed and which has divided Europeans for many months. Today, "two blocking minorities are facing each other. I have the feeling of being in an arena with two bulls facing each other. For the moment, everything is calm," a source told Le Monde.
On February 28, on the sidelines of a European Council of Ministers in Stockholm, Pannier-Runacher attempted a show of force. She brought together 10 countries – Slovakia, Slovenia, Bulgaria, Croatia, Poland, the Czech Republic, Hungary, Finland, Romania and the Netherlands – with the intention of laying the first foundations of a "nuclear alliance."
They signed a joint statement recognizing the role of nuclear power in securing energy supplies and meeting climate objectives. But Paris did not obtain recognition of the role of nuclear power in European legislation. This was noticed by Germany, which is convinced "that the pro-nuclear coalition around France is fragile. It is playing for time," a European diplomat said.
Empty words
"Both France and Germany are sticking to ideological positions. We have to get out of this, otherwise, it will undermine the Green Deal and the energy transition," said Pascal Canfin, chairman of the European Parliament's Environment Committee and an MEP with the pro-European party Renew Europe.
In Paris, the matter was thought to be settled after a French-German Council of Ministers on January 22. Admittedly, the negotiations had been tough and it was only the day before the meeting at the Elysée Palace between French President Emmanuel Macron and German Chancellor Olaf Scholz that the passage devoted to hydrogen in their joint declaration had been finalized.
But in the end, Macron and Scholz committed to "ensure that renewable and low-carbon hydrogen can be taken into account in the decarbonization objectives set at the European level."
This, it was thought at the Elysée, was the equivalent of German approval for any text dealing with the question of hydrogen. Even if, as a diplomat said, "it is not certain that the Chancellor had informed the Greens, who are very hostile to nuclear power. Robert Habeck, the German minister of economic affairs (Greens), immediately nuanced what was said in the joint declaration."
A few days earlier, in Barcelona on January 19, Macron and Spanish Prime Minister Pedro Sanchez had signed a treaty of friendship that also lifted – Paris believed – the Spanish obstacle on this issue. In truth, the issue of hydrogen was still open when the two leaders met face-to-face at the National Art Museum of Catalonia.
"Sanchez eventually agreed but it is not certain that he understood everything. He got a hard time from his teams and from Berlin," a source said. In return, France agreed to extend to Germany a future hydrogen pipeline that will link Barcelona and Marseille (H2Med), thus responding to a pressing request from Madrid and Berlin.
Very soon, however, France realized its partners did not feel committed in Brussels by the agreements they had signed in Paris and Barcelona. "Perhaps Germany and Spain see no reason to make concessions to France, whose nuclear power guarantees relatively low electricity prices," a source close to Macron said.
Many boundaries have moved in Germany since the start of the war in Ukraine [end of February 2022], especially on defense. Scholz cannot do everything at the same time, especially since his coalition is difficult to govern," a European diplomat added.
In any case, France's response was not long in coming. It rallied its allies and is now threatening to block the H2Med project. On the other side, the blackmail is not well received and positions have become even tenser. As a result, a February 7 negotiation meeting on the renewable energy directive was canceled. Pannier-Runacher's cries of victory on February 13, when the Commission, in a delegated act on green hydrogen, gave France a point, did not help.
Time is running out
EU leadership, which is as divided on nuclear power as the 27 member states are, is not at ease in this matter. "The Commission is tetanized, it has waited a long time for the member states to come to an agreement," Canfin said.
European Commission President Ursula von der Leyen, who has had several exchanges with Macron and Scholz on the subject, is more pragmatic but she is no less German. Above all, she has a political agenda: With the European elections of 2024 looming, Angela Merkel's former minister may want to remain in office. She cannot risk angering Paris, let alone Berlin.
"Von der Leyen is trying to balance the two," a diplomat said. In January, she gave Berlin the upper hand when she signed a memorandum of understanding with Kyiv, intended to increase cooperation between the two parties. The agreement provided for the import of only green Ukrainian hydrogen, even though Ukraine has nuclear power plants. Paris eventually obtained a correction to the text in favor of low-carbon hydrogen.
As this case shows, such memorandums between the EU and third countries also reflect the Franco-German row. "We do not want the EU to engage in an anti-nuclear crusade abroad," stressed a senior French official. On the German side, the government is counting on these agreements to secure supplies of renewable hydrogen.
"After Russian gas, Berlin is creating new dependencies," a pro-nuclear European diplomat said. "Besides, importing hydrogen by boat from Chile or New Zealand [with whom memorandums of understanding are being negotiated] is not necessarily very green."
"Every time the word hydrogen is mentioned somewhere, Paris and Berlin clash," an EU official said. Even when the issue is minor. The latest example came on February 20, when the European foreign ministers were to adopt conclusions on climate diplomacy, a classic exercise that is repeated every year after the United Nations Conference of the Parties. But this year, because it was also about hydrogen, it was not possible.
"Germany must let France develop its low-carbon hydrogen while France must let Germany develop its imported renewable hydrogen model," Canfin said. "To achieve climate neutrality in 2050, we will need nuclear and renewable energy, we must add up the solutions."
"It will take time for de-escalation to take place," a European diplomat said. For the time being, Scholz and Macron have been avoiding frontal exchanges on the subject while, behind the scenes, experts from both sides are looking for an agreement.
But time is running out. The Commission is to present its proposals for reforming the European electricity market and helping the member states develop a competitive green industry, the implications of which for nuclear power will be decisive.
If a French-German compromise on the subject has not emerged by then, discussions between European leaders, who are due to meet in Brussels on March 23-24, are likely to be much heated.
Seaboard: pioneers in power generation in the country
…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.
More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.
Image: MediaThe U.N. Issues a Final Warning on the Climate—and a Plan
The I.P.C.C. report contains no new data; nevertheless, it manages to alarm in new ways.
The New Yorket by Elizabeth KolbertThe “window of opportunity to secure a liveable and sustainable future” is “rapidly closing.” So warns the United Nations’ Intergovernmental Panel on Climate Change in its latest report, released on Monday. The findings in the document, officially known as the AR6 Synthesis Report, might be summed up as “Wake up! This is your last chance, humanity.”
According to the I.P.C.C., average global temperatures have already increased 1.1 degrees Celsius—two degrees Fahrenheit—from the late nineteenth century, and this is causing “widespread adverse impacts” for people and for other living things. “Impacts on some ecosystems are approaching irreversibility,” the report states. For every additional increment of warming, the chances of catastrophe will only increase, and the options for adaptation will contract. Climate-related and climate-unrelated disasters will begin to interact, resulting in risks that cascade “across sectors and regions.” And those who are likely to suffer the most are those who have done the least to cause the problem.
“Humanity is on thin ice, and that ice is melting fast,” the United Nations Secretary-General, António Guterres, said in a video message released for the occasion.
As the name of the synthesis report suggests, the latest from the I.P.C.C. contains no new data; it simply pulls together information that has already been published. Nevertheless, the synthesis manages to alarm in new ways. So much damage is already occurring with 1.1 degrees of warming, it observes, that probably the harms of further climate change are even greater than had been predicted. Meanwhile, the odds of avoiding a temperature increase of 1.5 degrees C—considered by many scientists to be a key threshold—are approaching zero. Even under a best-case scenario, with global greenhouse-gas emissions declining both quickly and dramatically, “warming is more likely than not to reach 1.5° C,” the report states.
The I.P.C.C. operates under extraordinary political constraints. Although its work is largely scientific, its reports are subject to approval by a global cast of diplomats. To hash out the final language for the synthesis report, delegates from all around the world gathered last week in Interlaken, Switzerland. Tellingly, the deadline for the final document kept being pushed back. According to news reports, one of the major sticking points was how to decide which nations will be eligible for aid from a new “loss and damage” fund agreed on last year, during the cop27 conference, in Egypt. (The fund is supposed to funnel money from wealthy nations that have emitted the most to poorer countries that are bearing the brunt of climate change.)
When the agreed-upon report was released, U.N. officials tried to characterize it as terrifying but also as inspirational. Guterres described it as a “how-to guide to defuse the climate time bomb.” The chair of the I.P.C.C., Hoesung Lee, an economist from South Korea, told reporters that “this report offers hope.”
The synthesis report does, indeed, show how humanity could still avoid the worst effects of climate change. Were global carbon-dioxide emissions to be cut in half by 2030 and effectively eliminated by 2050, there would, according to the I.P.C.C., still be a chance of limiting warming to 1.5° C.
“The systemic change required to achieve rapid and deep emissions reductions and transformative adaptation to climate change is unprecedented in terms of scale, but not necessarily in terms of speed,” the report notes. “Feasible, effective, and low-cost options for mitigation and adaptation are already available.”
But to imagine at this point that the latest warning from the I.P.C.C. will spur action, when so many previous ones have failed to, requires not just hope but, it would seem, something close to delusion. (The latest report is known as the AR6 Synthesis because it is part of the I.P.C.C.’s sixth assessment; this assessment and the five earlier ones each produced hundreds of pages of documentation.)
Just last week, the Biden Administration approved an enormous new oil-drilling venture, the Willow project, in Alaska. ConocoPhillips, the company in charge, plans to pump oil out of the project for thirty years, which is to say well beyond mid-century. According to a recent report by the Finland-based Centre for Research on Energy and Clean Air and the California-based Global Energy Monitor, last year China approved a hundred and six gigawatts’ worth of new coal-fired power plants, “the equivalent of two large coal power plants per week.”
Can actions like this be squared with halving emissions by 2030 and eliminating them by 2050? The simple answer is no. The I.P.C.C. is already gearing up for a seventh assessment cycle, set to begin this summer. Even before this next cycle begins, a summary of the results can be composed with, in I.P.C.C.-speak, “high confidence.” The world will continue to warm, the damage will increase, and the global response will be inadequate.
