Tuesday, June 15, 2021

GWPF Newsletter: Swiss voters reject key climate change measures


Why the Swiss people rejected the new climate law

In this newsletter:

1) Climate referendum: Swiss reject higher carbon taxes
Swiss Info, 13 June 2021
2) Heinz Schmid: Why the Swiss people rejected the new climate law
Global Warming Policy Forum, 14 June 2021

3) G7 set to offer developing nations green utopia to counter China’s influence 
Financial Times, 13 June 2021
4) China rolls back climate efforts after economic officials prioritise growth
The Wall Street Journal, 9 June 2021

5) Francis Pike: How China won over the Middle East
The Spectator, 12 June 2021

6) Rupert Darwall: Decarbonisation - It's the demand side, stupid
RealClear Energy, 13 June 2021
7) And finally: Solar panels ‘chronically underperforming’ and degrading faster than anticipated
PV Tech, 12 June 2021

Full details:

1) Climate referendum: Swiss reject higher carbon taxes
Swiss Info, 13 June 2021

Swiss voters have rejected legislation at the heart of the country’s strategy to abide by the Paris Agreement on Climate Change. The CO2 law was turned down on Sunday by 51.6% of voters.

The negative outcome represents a major upset in the tiny nation that is disproportionately affected by climate change. Switzerland’s temperatures are rising at about twice the pace of the global average and its Alpine glaciers risk disappearing by the end of the century.

Opinion polls as recently as May suggested the CO2 law had strong popular support. What is clear is that the “no” camp gained significant ground in recent weeks, particularly in rural regions. Urban cantons including Basel, Zurich and Geneva voted in favour of the bill. But 21 of the 26 Swiss cantons opted for a no vote. 

The financial arguments put forward by opponents of the law are credited with tipping the balance in a period of crisis marked by the coronavirus. The emotional debate over anti-pesticide initiatives also overshadowed the issue of climate urgency.

The cost of change

In line with the Paris accord, Switzerland aims to be climate neutral by 2050. But how to best achieve that has been hotly debated. As a first step, the country’s CO2 law was revamped in a bid to reduce the Alpine nation’s greenhouse emissions to 50% of 1990 levels by 2030. Without it, Switzerland’s chances of meeting such goals are in doubt.

The government strategy had won the support of all political parties except for the right-wing People’s Party. The new CO2 law included various measures targeting road vehicles, air traffic, industrial emissions, and the renovation of buildings. Those who cut their CO2 emissions would have benefited from exemptions.

The aim was to curb the negative effects of climate change “without penalising the population or companies”.

But not everyone was convinced and opponents succeeded in collecting enough signatures to trigger a referendum on the issue. Critics included the oil lobby, homeowners, car associations, and GastroSuisse, the catering industry’s umbrella organisation. They viewed the additional taxes as too expensive and unfair as part of the population has no choice but to use a car.

Full story
2) Heinz Schmid: Why the Swiss people rejected the new climate law
Global Warming Policy Forum, 14 June 2021
Good news: The Swiss people have rejected the CO2 law in the referendum on Sunday, with 51.6% of voters saying no to the proposed carbon taxes.

Thus the CO2 law will not come into effect. Only two cantons accepted the law, Vaud and Zurich. Like many other types of left/green laws there was a clear distinction between rural and urban Swiss.
Conservative rural cantons rejected the carbon law very clearly. In the rural village in the canton of Thurgovie were we live 69% of voters said no. Our system of direct democracy has once again proven its democratic value. Both the Swiss government and parliament (the Senat and the House of Representatives) supported the CO2 law. The CO2 legislation would have been very severe for Swiss households and businesses, putting a tax of more than 200 Swiss Francs per ton of CO2 on energy. Gas and oil heatings would effectively have been prohibited and petrol at the pump costing 12 raps more per litre bringing the total tax levy up to more than 1 CHF per liter. 
In the case of the CO2 law the result is also a triumph over the main street propaganda. In Switzerland, the only political party agains the CO2 was SVP (Swiss Peoples Party). All other parties were in favour of the law. It went so far that even the Swiss Automobile Association (your RAC) was for the CO2 law too. But even more important was the fact that all mainstream media were in favour of the law too, including Swiss TV and Radio.
There are just a few newspapers now in Switzerland promoting a politic of reason and conservative values. One is Weltwoche with its owner Roger Köppel, another one is the (newly) Nebelspalter. Both are weekly newspapers like the Economist. By consequence the result is a triumph of reason over propaganda. Which – and now I come back to what you said – shows that people vote much more intelligently than  politicians and mainstream media believe, if presented with the key facts and arguments. 
Todays’ referendum was very important for Switzerland because it demonstrated to both both government and parliament that we Swiss are more down to earth and show more common sense that our political elite. 

3) G7 set to offer developing nations green utopia to counter China’s influence 
Financial Times, 13 June 2021

Environment groups criticise lack of detail on how proposals will be financed

Leaders of the G7 countries will back a western rival to China’s Belt and Road Initiative on Sunday, with a plan to mobilise billions of dollars to help developing countries tackle climate change.

Joe Biden has led calls to offer poor countries a new source of infrastructure finance, providing a “democratic” alternative to Chinese loans, which are seen in the west as a tool to spread Beijing’s influence.

Leaders at the G7 summit in Cornwall will agree what allies of Boris Johnson, the summit host, call a “green belt and road” plan, with richer countries helping fund schemes that reduce carbon emissions.

Johnson wants to focus on supporting green initiatives and has been wary of presenting the initiative as an “anti-China” effort. British officials said they wanted the group of leading western economies to “show what we are for, not who we are against”.

But the White House favours a wider package of infrastructure support and has been explicit about wanting to provide a counterweight to China’s influence.

“We have a slightly narrower focus,” said one British official.

On Saturday, G7 leaders held talks to co-ordinate China strategy. “There was broad agreement that we should co-operate with Beijing on things like fighting climate change, compete in areas like global supply chains and contest on issues like human rights,” said one official briefed on the talks.

The “Build Back Better for the World” plan will grant countries improved access to financing for low-carbon projects such as wind farms and railways.

The programme aims to boost climate funding from multilateral development banks as well as the private sector and was billed as a “Green Marshall plan” by some officials, but at a smaller scale.

G7 leaders are expected to commit to increasing their contributions to international climate finance. This will help them meet a pre-existing target of mobilising $100bn a year from rich countries to help poor countries support green growth.

However, one official watching the discussions said: “It was a short on detail on how this would be achieved.”

A senior US official said on Friday: “The United States and many of our partners and friends around the world have long been sceptical about China’s Belt and Road Initiative.”

“We’ve seen the Chinese government demonstrate a lack of transparency, poor environmental and labour standards, and a course of approach that’s left many countries worse off.”

“But until now, we haven’t offered a positive alternative that reflects our values, our standards, and our way of doing business.”

China criticised the announcement from the US and other G7 members, arguing that “genuine multilateralism” was based on the UN and not “so-called rules formulated by a small number of countries”.

“The days when global decisions were dictated by a small group of countries are long gone,” a spokesperson at the Chinese embassy in London said.

On Friday, Yang Jiechi, the top Chinese foreign policy official, also hit back at international condemnation over Beijing’s human rights abuses in Xinjiang and erosion of Hong Kong’s autonomy.

“The US side has fabricated various lies about Xinjiang in an attempt to sabotage the stability and unity in Xinjiang, which confuse right and wrong and are extremely absurd,” Yang said, according to a statement.

A White House fact sheet released on Saturday outlined the Build Back Better plan’s guiding values, which included transparency, sustainability and consultation with local communities.

But environmental groups criticised the lack of details of how the plan would be financed and operate, leading some to warn it was little more than empty promises. ....

4) China rolls back climate efforts after economic officials prioritise growth
The Wall Street Journal, 9 June 2021
Authorities have limited the scope of a carbon-trading scheme as driving growth takes priority

China’s top economic planners have put the brakes on attempts by environmental officials to reduce carbon emissions as driving growth takes priority over meeting climate targets for now, according to people familiar with the matter.
Officials at China’s main economic planning agency, the National Development and Reform Commission, have limited the initial scope of a national carbon-trading system, which is set to go into full operation later this month after pilot projects in eight Chinese cities.

The economic planning office has also gained the upper hand in negotiations over drafting a detailed road map to fulfill leader Xi Jinping’s pledges to achieve a peak in carbon-dioxide emission before 2030 and net zero emissions by 2060, the people said.

The environmental ministry has risen in prominence over the past decade and had in recent months appeared to be newly empowered to exert more influence, but the recent developments show the economic agency, which sets China’s energy and emissions targets, still has greater clout.
The dynamic of competing environmental and economic priorities is hardly unique to China. Lawmakers in the U.S. have blocked attempts to pass a national cap-and-trade market for carbon emissions over concerns about the impact on businesses and the economy, although California and states in the northeast have adopted their own systems.
China’s actions are being closely watched as the world’s largest carbon emitter. Mr. Xi has said that China will reach a peak in its carbon emissions before 2030, but he hasn’t elaborated on how the country will achieve that goal.
U.S. climate envoy John Kerry has urged his counterpart Xie Zhenhua to pursue more ambitious climate actions in the near term, but hasn’t said specifically what he is urging China to do. Leaders of the Group of Seven nations are expected to discuss putting pressure on China to reduce its financing for coal projects overseas when they meet this weekend in the U.K.

After Mr. Xi’s pledge in September, one of his top lieutenants, Vice-Premier Han Zheng, called in October for environmental officials to accelerate the launch of a national carbon market and formulate a carbon road map, signaling to Chinese policy observers that they would be charged with drafting the plans for meeting the targets.
But in March when China’s cabinet enumerated the bodies charged with drafting the road map, the economic planning agency was listed first—not the environmental officials. Beijing also set up a group of high-level party members last month to cut across bureaucratic structures, issue guidance and oversee the road map. Three out of the five members of its leadership were senior economic cadres.
Separately, when the environmental ministry released the initial rules for the emissions trading system in December, they were more limited than initially proposed.
The scheme will, for instance, involve only about 2,200 companies in the power sector, which is responsible for an estimated 30% of China’s total emissions, instead of the 6,000 companies from eight sectors that were in the initial proposal.

Rather than the absolute caps on emissions proposed by environmental officials, Chinese companies will start off with relative allowances, using benchmarks based on previous years’ performances, giving them more wiggle-room.
Behind the scenes, economic planners had weakened provisions of the scheme, fearing the potential impact on growth, according to people familiar with the matter.
Full story ($)

5) Francis Pike: How China won over the Middle East
The Spectator, 12 June 2021
Increasingly the West is losing the economic war in the Middle East.

In April, Chinese Foreign Minister Wang Yi embarked on a six-nation Middle Eastern tour to Saudi Arabia, Turkey, Iran, the United Arab Emirates, Bahrain and Oman. ‘Belt and Road’ cooperation, economic development and the Covid pandemic were the topics of discussion. The treatment of China’s Muslim Uighur population in detention camps, which some in the West have described as genocidal, didn’t come up.
Both China and Saudi Arabia cleave to the belief that internal affairs are nobody else’s business — or at least as long as there are overriding economic interests at stake. Compare the silence of Muslim countries on the Uighur issue with the loud faux anger when the Danish newspaper Jyllands--Posten published caricatures of the Prophet Mohammed in 2005. Embassies were closed and Danish products boycotted.
Between February and June 2006, Danish exports to the Middle East halved. Unlike when dealing with China, Muslim countries, in dealing with Denmark, had little to lose by playing to the religious anger on the streets.
At the 41st session of the United Nations Human Rights Council (UNHRC) in June 2019, 22 countries wrote a letter of protest regarding China’s treatment of the Uighurs. The ‘22 letter’ noted ‘credible reports of arbitrary detention in large-scale places of detention’. Surely the protesting countries included Muslim nations in support of their fellow believers? No. With the exception of Japan, all the signatories of the letter were majority white, Christian countries.
Not only did the Muslim nations fail to support the Uighurs but 21 Muslim countries co-signed a counter-letter which complained about the ‘22 letter’ for its politicisation of human rights issues. The counter-letter, which won the support of 50 nations in total, astonishingly went on to praise China’s remarkable achievements in ‘protecting and promoting human rights through development’. Signatories included four of the big five Middle Eastern countries: Iran, Saudi Arabia, Iraq and Egypt. Unlikely bedfellows indeed.

The UNHRC ‘two letters’ episode reveals a lot about the current relationship between the Middle East and China. Sophie Richardson, director for China at Human Rights Watch, has claimed that China has managed to win these countries’ support ‘because they need Chinese investment’. This view is too simplistic. The truth is that China needs the Middle East as much as the Middle East needs China.
Countries such as Saudi Arabia, Kuwait, Qatar and the United Arab Emirates do not require Chinese investment. Indeed, during Crown Prince Mohammed bin Salman’s visit to Beijing in 2019, the Saudis concluded US$28 billion of deals between the two countries including a US$10 billion project to build a Saudi-financed refinery in the Chinese coastal city of Panjin.
For Bin Salman, Xi Jinping’s Belt and Road strategy fits neatly into his own ‘Vision 2030’, the key goal of which is reducing Saudi Arabia’s dependence on oil and the diversification of the country’s economy towards service-sector development as well as infrastructure and tourism. What China can offer here is expertise.
Both China and Saudi Arabia cleave to the belief that internal affairs are nobody else’s business
For China, the importance of Saudi Arabia is obvious. Saudi oil accounts for 16.8 per cent of China’s crude oil imports. Meanwhile, Iraq, Oman and Kuwait supply China with 9.9 per cent, 6.9 per cent and 4.5 per cent respectively of their crude oil requirements. In 2019, Middle Eastern countries supplied 41.1 per cent of China’s oil imports.
No wonder then that China has established its first overseas naval base at Djibouti on the Gulf of Aden. China naturally fears that its oil and trade routes could be disrupted by the US navy around the Straits of Singapore or by China’s emerging superpower rival India. To remove the fragility of its energy supply routes from the Middle East, China is also forging ahead with the development of Pakistan’s Gwadar Port on the Arabian Sea, where it plans to build an oil pipeline across Pakistan and the Himalayas to Xinjiang Province, where pipelines connect to the rest of China.
While China has developed close relations with the great Sunni powers of the Middle East, it has not forgotten its historic ally Iran. As China moved away from coal to oil, Iran became its first important supplier; in return Chinese military technology has been central to Iran’s development of modern weapons systems including missiles. The political closeness of the relationship was highlighted by their conduct of joint naval exercises in 2017.

If China has shown an ability to remain agnostic between Shiite and Sunni nations, it has displayed an even greater ‘moral neutrality’ in the Middle East by developing important technological partnerships with Israel. There is a strong mutual interest in this relationship. Israel knows that it can no longer rely solely on the goodwill of the United States. In dealing with a politically unreliable America, Middle Eastern nations hedge their bets.

In 2019 a Rand Corporation report noted that 11 out of 87 major Chinese investments in Israel were of concern to the US. And in May last year, Secretary of State Mike Pompeo visited Israel and persuaded Netanyahu not to allow Israel’s largest desalination plant to be operated by China.
However, this hasn’t prevented a flood of Chinese business into Israel.

Increasingly the West is losing the economic war in the Middle East. China has advanced its interests at the West’s expense by not taking sides, and by refusing to apply moral strictures to the Middle East’s actors.

The West is also left with the legacy problems of its military interventions. Over the past 20 years, at great cost and questionable success, military adventurism in the Middle East has undermined the West’s position. Across much of the Muslim world, it has lost influence and popularity. As a fragile peace develops in the Middle East, it is China that is benefiting while the West is left with the bill.
6) Rupert Darwall: Decarbonisation - It's the demand side, stupid
RealClear Energy, 13 June 2021
By any standard, the London meeting of finance ministers of the Group of Seven leading Western economies a week before the G& leaders’ summit was historic. By committing to transformative structural change to meet net zero greenhouse gas targets and other environmental objectives, G7 finance ministers turned themselves into adjuncts of their environment ministries. Considerations of climate change and biodiversity loss are to be embedded into economic decision-making, they pledged. Some form of carbon tax is heading America’s way, after Treasury secretary Janet Yellen signed a communiqué that commits to “the optimal use of the range of policy levers to price carbon.”
That’s for the future. More immediately, the London meeting agreed to make climate reporting by companies mandatory across the G7. Britain’s Chancellor of the Exchequer Rishi Sunak professed himself thrilled. “This is such an important step in getting markets to play their part in tackling environmental issues and paves the way for us all to achieve our net zero goals,” he tweeted. The ostensible justification – which no doubt Gary Gensler, President Biden’s pick to chair the Securities and Exchange Commission, is already prepping – is to help investors better appraise climate risk.

Gensler’s first task should be to coach the White House on presenting a stronger case than the president did at the Earth Day virtual leaders’ climate summit. “If Wall Street is pumping billions of dollars into business that could be turned upside down when the next storm comes – and we know there will be more storms – Wall Street needs to make clear the risk it’s taking on,” the president said, without providing any evidence to substantiate such claims.

Financial markets produce acres of data. In August 2017, energy stocks were hit as Hurricane Harvey slammed into the Texas Gulf coast. Refinery production of crude oil and petroleum products plunged 44% in September. The following month, production bounced back to 92.7% of its July level and in November exceeded it. Turned upside down? Hot on Harvey’s heels came Irma, the costliest storm of the last decade. The stock market actually rose the day after Irma made landfall in Florida; energy stocks had already rebounded, and insurers rallied. “The long-run effect of these disasters unfortunately is it actually lifts economic activity because you have to rebuild all the things that have been damaged by the storms,” New York Fed president William Dudley told CNBC.

Hurricanes have devastating consequences for those unfortunate enough to be in their path. Unlike the American economy of nearly a century ago, when bad harvests and the dustbowl deepened the depression, today’s industrialized economy is highly resilient against these physical elements, as are financial markets. Perversely, though, politicians most concerned about climate change also want to make the electrical grid more exposed to bad weather by subsidizing and mandating vulnerable wind and solar farms. It makes no sense. Does that make for increased climate risk – or increased climate-policy risk? Chair Gensler might wish to explain the answer to senators when he next testifies.

In fact, the G7 finance ministers exposed the speciousness of the justification for mandating climate disclosure to protect investors by revealing the real reason for it. The communiqué speaks of greening the financial system to “reinforce government policy to meet our net zero commitments.” Climate disclosures would aid corporate reporting “on net zero alignment.” The G7 decarbonization strategy is clear: supply-side constriction by imposing an ever-tightening blockade enforced by shareholders and the capital markets, overseen by regulators such as the SEC, to squeeze carbon-emitting activities until they’re put out of business.

In his epochal book “Capitalism, Socialism and Democracy,” Joseph Schumpeter described publicly traded corporations as capitalism’s vulnerable fortresses. This is truer now than when Schumpeter was writing in the 1940s, with huge, politically controlled state and municipal pension funds. The Big Three index funds of Vanguard, BlackRock, and State Street now hold 43% of the fund industry’s U.S. equity assets, which own individual stocks and vote their proxies not out of choice or conviction but because they’re in the index. Across the Atlantic, the EU is formalizing state direction of private investment with the 2020 EU taxonomy for sustainable activities regulation designed to help meet the bloc’s decarbonization objectives.

For these reasons – and despite the collateral shareholder-value destruction – the carbon blockade of publicly traded corporations is likely to succeed in its proximate aim. But decarbonizing them is not the same as decarbonizing the economy. The reason is obvious: Partial blockades don’t work. If Exxon or Chevron or Shell don’t supply gasoline, other firms less beholden to American and European institutional investors or to the Dutch courts will. Private companies and state-owned oil companies of OPEC and Russia will gain what Western oil majors are forced to cede.

The point is emphasized by Jason Bordoff, a senior climate expert on President Obama’s National Security Council, in a comprehensive critique for “Foreign Affairs.” Emissions go down only if oil use declines, Bordoff notes. “Unless both supply and demand change in tandem, merely curbing the oil majors’ output will either shift production to less accountable producers or have potentially severe consequences on economic and national security interests.” Bordoff also casts doubt on the effectiveness of a Western-led financial blockade of the oil and gas sector. “To the extent capital from Western banks dries up, Chinese banks have also demonstrated they can fill the gap.”
Throttling the supply of oil and gas via the capital markets is not sufficient to eliminate carbon dioxide emissions. Neither is it necessary – and it’s no substitute for government policies directly aimed at suppressing demand, with combinations of vertiginously high taxes and subsidies for inefficient hydrocarbon substitutes. This takes policy deep into “if it isn’t hurting, it isn’t working” territory in terms of lost jobs and squeezed living standards. In Europe, where virtually all political parties subscribe to net zero climate policies, this might be politically survivable, but in the U.S., it’s more likely to be a one-way ticket to electoral oblivion.

The politics point in the direction of targeting Western oil companies and the requirements of effective decarbonization in order to constrain demand. It’s how the finance ministers of the seven largest, for now, capitalist economies decided to take a leaf out of the anti-capitalist progressive playbook of the People vs. Polluting Corporations. And that, in essence, is what the G7 finance ministers did.
7) And finally: Solar panels ‘chronically underperforming’ and degrading faster than anticipated
PV Tech, 12 June 2021

Solar asset underperformance continues to worsen, with projects “chronically underperforming” P99 estimates and modules degrading faster than previously anticipated, risk management firm kWh Analytics has found.

kWh Analytics’ new Solar Risk Assessment, released this week, pulls together a raft of industry experts to assess the greatest risks to the global solar industry and has identified a number of serious threats which threaten to reduce investor returns and damage the industry’s credibility moving forward.

The report itself is separated into three sections, detailing the risk to solar assets posed by financial modeling, operational performance and extreme weather. Each section features insight from a range of contributors including the likes of PV Evolution Labs, BloombergNEF, Fracsun and Nextracker.

Perhaps the most notable finding from the report, which builds on a finding from last year’s edition, is that operational solar assets are continuing to experience higher than expected rates of degradation, with annual degradation in the field observed at around 1%.

It cites recent research conducted by both National Renewable Energy Laboratory (NREL) and Lawrence Berkeley National Laboratory, as well as kWh Analytics, as demonstrating that assumptions made in 2016 – that annually solar modules would degrade by around 0.5%, is outdated and underestimates annual degradation by as much as 0.5%.
kWh Analytics’ most recent figures place the median annual degradation for residential solar systems as 1.09% and non-residential systems at 0.8%. The report states that over a 20-year asset life, project degradation could therefore be underestimated by as much as 14%, resulting in severaly overestimated performance and revenue forecasts produced within a P50 model.

The firm says the “system misalignment between actual and estimated degradation” is negatively impacting the industry, and P50 modeling assumptions should be re-evaluated and re-calibrated immediately.

Full story

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at

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