In this newsletter:
1) 2022: The year ESG fell to Earth
Real Clear Energy, 27 December 2022
2) Russia bans sales of oil to countries imposing price cap
The Wall Street Journal, 28 December 2022
3) Daniel Yergin: Putin can’t count on the global oil market
The Wall Street Journal, 27 December 2022
4) Luke Coffey: Europe must act fast on energy security
Arab News, 27 December 2022
Real Clear Energy, 27 December 2022
2) Russia bans sales of oil to countries imposing price cap
The Wall Street Journal, 28 December 2022
3) Daniel Yergin: Putin can’t count on the global oil market
The Wall Street Journal, 27 December 2022
4) Luke Coffey: Europe must act fast on energy security
Arab News, 27 December 2022
5) China, the West, and the future global order
Eurasia Review, 28 December 2022
Eurasia Review, 28 December 2022
6) Judith Curry: The faux urgency of the climate crisis is giving us no time or space to build a secure energy future
Climate Etc., 27 December 2022
Climate Etc., 27 December 2022
7) No rise in temperature or rainfall in Bangladesh for 100 years
Chris Morrison, The Daily Sceptic, 28 December 2022
6) Judith Curry: The faux urgency of the climate crisis is giving us no time or space to build a secure energy future
Climate Etc., 27 December 2022
There is a growing realisation that emissions and temperature targets are now detached from the issues of human well-being and the development of our 21st century world.
JC note: this is the text of my op-ed for SkyNews that was published several weeks ago
For the past two centuries, fossil fuels have fueled humanity’s progress, improving standards of living and increasing the life span for billions of people. In the 21st century, a rapid transition away from fossil fuels has become an international imperative for climate change mitigation, under the auspices of the UN Paris Agreement. As a result, the 21st century energy transition is dominated by stringent targets to rapidly eliminate carbon dioxide emissions. However, the recent COP27 meeting in Egypt highlighted that very few of the world’s countries are on track to meet their emissions reductions commitment.
The desire for cleaner, more abundant, more reliable and less expensive sources of energy is universal. However, the goal of rapidly eliminating fossil fuels is at odds with the urgency of providing grid electricity to developing countries. Rapid deployment of wind and solar power has invariably increased electricity costs and reduced reliability, particularly with increasing penetration into the grid. Allegations of human rights abuses in China’s Xinjiang region, where global solar voltaic supplies are concentrated, are generating political conflicts that threaten the solar power industry. Global supply chains of materials needed to produce solar and wind energy plus battery storage are spawning new regional conflicts, logistical problems, supply shortages and rising costs. The large amount of land use required for wind and solar farms plus transmission lines is causing local land use conflicts in many regions.
Given the apocalyptic rhetoric surrounding climate change, does the alleged urgency of reducing carbon dioxide emissions somehow trump these other considerations? Well, the climate ‘crisis’ isn’t what it used to be. The COP27 has dropped the most extreme emissions scenario from consideration, which was the source of the most alarming predictions. Only a few years ago, an emissions trajectory that produced 2 to 3 oC warming was regarded as climate policy success. As limiting warming to 2 oC seems to be in reach, the goal posts were moved to limit the warming target to 1.5 oC. These warming targets are referenced to a baseline at the end of the 19th century; the Earth’s climate has already warmed by 1.1 oC. In context of this relatively modest warming, climate ‘crisis’ rhetoric is now linked to extreme weather events.
Attributing extreme weather and climate events to global warming can motivate a country to attempt to rapidly transition away from fossil fuels. However, we should not delude ourselves into thinking that eliminating emissions would have a noticeable impact on weather and climate extremes in the 21st century. It is very difficult to untangle the roles of natural weather and climate variability and land use from the slow creep of global warming. Looking back into the past, including paleoclimatic data, there has been more extreme weather everywhere on the planet. Thinking that we can minimize severe weather through using atmospheric carbon dioxide as a control knob is a fairy tale. In particular, Australia is responsible for slightly more than 1% of global carbon emissions. Hence, Australia’s emissions have a minimal impact on global warming as well as on Australia’s own climate.
There is growing realization that these emissions and temperature targets have become detached from the issues of human well-being and development. Yes, we need to reduce CO2 emissions over the course of the 21st century. However once we relax the faux urgency for eliminating CO2 emissions and the stringent time tables, we have time and space to envision new energy systems that can meet the diverse, growing needs of the 21st century. This includes sufficient energy to help reduce our vulnerability to surprises from extreme weather and climate events.
Chris Morrison, The Daily Sceptic, 28 December 2022
8) And finally: Putin’s war is hastening Russia's demographic crash
Bloomberg, 18 October 2022
Bloomberg, 18 October 2022
Full details:
1) 2022: The year ESG fell to Earth
Real Clear Energy, 27 December 2022
By Rupert Darwall
Real Clear Energy, 27 December 2022
By Rupert Darwall
The year 2022 brings an end to an era of illusions: a year that saw the end of the post–Cold War era and the return of geopolitics; the first energy crisis of the enforced energy transition to net zero; and the year that brought environmental, social, and governance (ESG) investing down to earth with a thump—for the year to date, BlackRock’s ESG Screened S&P 500 ETF lost 22.2% of its value, and the S&P 500 Energy Sector Index rose 54.0%.
The three are linked. By restricting investment in production of oil and gas by Western producers, ESG increases the market power of non-Western producers, thereby enabling Putin’s weaponization of energy supplies. Net zero—the holy grail of ESG—has turned out to be Russia’s most potent ally.
It wasn’t only a bad year for ESG on the stock market. Earlier this month, Vanguard announced that it was quitting Glasgow Financial Alliance for Net Zero (NZAM), set up by former governor of the Bank of England Mark Carney a little over a year ago. “We have decided to withdraw from NZAM so that we can provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks,” the world’s second-largest asset manager said.
Two months ago, Alex Edmans, coauthor of the latest edition of the standard textbook on the principles of corporate finance and professor of finance at the London Business School, published a paper titled “The End of ESG”—without a question mark. Edmans criticizes what has become the primary justification for ESG: the claim that business can generate higher returns for investors by tackling climate change. Since governments are democratically elected by a country’s citizens, they are best placed to address externalities, whereas investors disproportionately represent the elites. “If ESG is pursued for its externalities, companies and investors should be very clear that it may be at the expense of value,” Edmans says.
October also saw the publication of Terrence Keeley’s Sustainable, where the former BlackRock senior executive penned what amounts to a requiem for ESG. Rather than “doing well by doing good,” the logic of Keeley’s case, as I reviewed for RealClear Books, is that investors in conventional ESG investment products are likely to end up not doing very well and leave investors feeling good, not doing good.
It has not all been going one way. In May, HSBC terminated Stuart Kirk, its global head of research at HSBC’s asset-management arm, for voicing some hard truths about ESG. Earlier this month, HSBC announced that it will stop financing new oil and gas fields, putting the West’s third-largest bank on Putin’s side in Russia’s energy war on the West.
What is now a negative factor disadvantaging the West in a world increasingly characterized by East–West geopolitical tensions originated after a period when the United Nations had been fostering a horizontal global division between a rich North and an exploited South. As University of Pennsylvania’s professor Elizabeth Pollman records in her June 2022 paper “The Origins and Consequences of the ESG Moniker,” through the 1970s and early 1980s, the UN promoted the New International Economic Order that called for the regulation of transnational corporations on the alleged grounds that they were widening the gap between developed and developing countries.
After Kofi Annan became secretary-general in 1997, the UN shifted from a strategy of confrontation to co-optation. Speaking at the World Economic Forum in Davos in January 1999, Annan launched a Global Compact between business and the UN. In 2004, the Global Compact’s financial-sector initiative published a report titled “Who Cares Wins”—a rip-off of the British special-forces SAS motto “Who Dares Wins”—arguing for “better consideration of environmental, social and governance factors” in investment appraisals, claiming that this would both improve outcomes for investors and help the UN achieve its sustainable development goals.
ESG means different things, depending on whom you’re talking to. Is it about risk disclosure? Or about factors driving long-term shareholder value? Or is it about society holding business to account? One thing is clear: ESG’s unsustainable dual mandate of boosting shareholder returns and at the same time making the world a better place— “doing well by doing good”—was present at the creation of ESG. It was a masterstroke by ESG’s designers to incorporate “G” for governance. No investor can be against improved governance, and it helped mainstream ESG, whereas previous iterations, such as Socially Responsible Investing (SRI), remained niche.
The 2008 financial crisis subsequently turbocharged the uptake of ESG. Having caused the financial crisis, Wall Street was going to redeem itself by saving the world from a planetary catastrophe. Without climate change, ESG would have vastly less salience. Although marketed as a climate risk analysis tool, ESG is no such thing. In reality, it’s about investors and debt providers driving the decarbonization of Western companies and sunsetting its oil and gas companies.
According to ESG doctrine, there are two types of climate financial risk—physical risk and transition risk—and it’s straightforward to demonstrate that both are spurious. Take the Bank of England. For its climate stress tests, the Bank of England uses a scenario derived from the Intergovernmental Panel on Climate Change’s (IPCC) extreme and physically implausible RCP8.5 climate scenario. Roger Pielke, Jr., professor of environmental studies at the University of Colorado–Boulder, and Justin Ritchie have documented how use of the RCP8.5 scenario represents “a stubborn commitment to error,” with its absurd projection of a sixfold growth in per-capita coal consumption to 2100, based on erroneous reports in the late 1980s of virtually unlimited coal deposits in Siberia and China. The Bank of England compounds implausibility with impossibility by taking the RCP8.5 pathway of 4 degrees by the turn of the century and telescoping it into a 3.3-degree Celsius rise by 2050. Central banks resorting to these types of games constitutes strong evidence that climate physical risk is a nonissue for financial stability.
When he was governor of the Bank of England, Mark Carney gave an agenda-setting speech alleging a tragedy of the horizon as the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors. Climate catastrophes are presumed to be triggered by tipping points, one of the earliest being the melting of the Greenland and West Antarctic ice sheets. In its sixth assessment report, the IPCC declared that with sustained warming, there was limited evidence that the Greenland and West Antarctic ice sheets would disappear “over multiple millennia.” That is some time horizon. Despite the best efforts of central bankers, geologic timescales of millennia and human timescales of decades are completely out of whack.
Similarly, climate transition risk and the stranded assets trope defy economic and financial logic. If you restrict the flow of capital into a sector producing stuff that people want and are willing to pay for, the price of the output of a capital-embargoed sector will rise, as will the value of its invested capital. This, in essence, is what has been happening in energy and capital markets over the past year and explains why ESG as an investment strategy does not work. In the absence of draconian government policies to suppress demand for oil and natural gas, ESG policies strangling the supply of capital to Western oil and gas producers have two effects: they push up the price of hydrocarbons; and they displace supply from Western producers to neutral or hostile ones, with major detriment to the economies and security interests of the West.
Although the disintegration of ESG as an investment strategy became unmistakable in 2022, its existence as a political doctrine will continue until it is challenged and defeated politically. This is already happening in Red states such as Florida, Texas, West Virginia, and Utah. It also requires concerted leadership at a national level to get central bankers and financial regulators to quit playing covert climate policy and to shame banks such as HSBC into switching their support from Russia in the energy wars by dropping their anti–oil and gas financing policies. Defeating ESG not a case of “who cares wins” but “who fights wins.”
Rupert Darwall is a senior fellow of the RealClear Foundation and author of Climate-Risk Disclosure: A Flimsy Pretext for a Green Power Grab.
2) Russia bans sales of oil to countries imposing price cap
The Wall Street Journal, 28 December 2022
Action follows G-7 moves barring Western companies from insuring, financing or shipping Russian crude at prices above $60 a barrel
Russia on Tuesday banned the sale of its oil and petroleum products to countries that put a cap on their sales price, in a move that threatened more uncertainty ahead for global energy markets.
The Kremlin’s action is an attempt to undermine a plan by the U.S. and its allies to bar the shipping, financing or insuring of seaborne Russian crude unless it is sold for $60 a barrel or less—a sanction leveled in response to Russia’s invasion of neighboring Ukraine.
A decree signed by Russian President Vladimir Putin on Tuesday said exports would be banned under contracts that “directly or indirectly provide for the use of the price cap mechanism” between Feb. 1 and July 1. The order says Mr. Putin can create exemptions for the sale of oil to countries following the price cap if he wants.
How the Kremlin views oil contracts—and how broadly it provides exemptions—will shape whether it creates a major disruption to global markets. Many of Russia’s crude exports are now selling at market prices well below the $60 cap, primarily to countries like India, China and Turkey that haven’t agreed to join the Western sanctions.
Some of these shipments are proceeding with the help of Western companies in line with the cap’s terms, according to people familiar with them, while others are happening with financing, shipping and insurance from outside the Western countries enforcing sanctions.
If the Kremlin decides to curb oil exports to non-Western buyers, it could reduce global supply and push up prices. If only the Western countries that crafted the price cap are targeted, the impact would be much more muted since they have already banned most Russian imports.
“The decree is vague and provides Putin with options to keep exports going to selected countries complying with the cap,” said Simone Tagliapietra, a senior fellow at the Bruegel think tank in Brussels. “All in all, this is a sign that Russia is in a vulnerable situation, needs oil revenues and therefore cannot take drastic retaliation measures.”
While Mr. Putin’s order threatens to disrupt markets, investors appear so far to be shrugging it off. Futures contracts for Brent crude, the global price gauge, edged about 0.5% higher Tuesday to $84.33 a barrel. Russian officials have threatened for weeks to cut off their oil supplies in retaliation for the cap.
Joining the U.S. in imposing the novel price-cap sanction were the Group of Seven advanced democracies, the 27 members of the European Union and Australia. Western officials are trying to limit the price at which Russia can sell its oil in an effort to dent the Kremlin’s war chest while still keeping Russian oil flowing to markets—and therefore stabilizing global prices.
A European Commission spokeswoman said Tuesday the EU already had banned the import of Russian oil. Hungary and several other landlocked EU nations pushed for exemptions to the embargo to keep importing pipelined Russian oil. Mr. Putin may now shut off those flows.
“The G-7 and Australia have already committed to ban or phase out imports of Russian oil,” a State Department spokeswoman said.
Oil and ship-tracking analysts say Russia’s crude output has declined since the array of sanctions came into effect. The price cap, along with the EU’s import embargo, launched on Dec. 5.
Russia has exported about 2.5 million barrels of its crude each day by sea in December so far, according to commodities-data firm Kpler. That is down 22% from the average for the first 11 months of the year.
That decline, largely reflecting reduced shipments from Russia’s eastern ports, is likely due to harsh winter weather and weak demand from China as its pandemic reopening has faltered, said Matt Smith, a Kpler oil analyst.
“The number of buyers of seaborne Russian crude has dropped to half a dozen or so countries,” he added, namely India and China.
As traders and investors have tried to price in the sanctions on Russian oil, the Kremlin and its trading partners expanded a global “shadow fleet” of tankers to ship crude exports without Western financing or insurance.
It is unclear if Mr. Putin’s decree will result in Russia curbing shipments that are sold at market rates to buyers in India, for example, and facilitated by Western companies.
Late last week, Russia’s mainstay Urals crude sold at $42.40 a barrel from the Baltic port of Primorsk, according to Argus Media, which tracks commodity prices. If the market price of Urals rises above $60 a barrel, the cap’s impact on markets could become more apparent.
Robert Yawger, executive director of energy futures at Mizuho in New York, said data indicate some buyers in Southeast Asia appear more reluctant now to snap up sanctioned barrels, leaving some tankers adrift in the Asia Pacific market.
“They’re looking for a home in India and China, but [those countries] have all the crude they need right now,” Mr. Yawger said. “They’re loaded up.”
Even so, market participants aren’t likely to miss the Russian barrels, for now. Global demand for crude oil has softened in recent months, and despite a recent three-week rally following China’s reopening and severe cold weather, oil prices could falter in the coming weeks if economic activity continues to languish, Mr. Yawger said.
“The demand side of the equation is a bigger deal right now,” Mr. Yawger said. “Supply isn’t really a problem.”
The Kremlin has played down the impact of trying to cripple Russia’s energy resources. On Thursday, Mr. Putin said he doesn’t see any potential losses for the Russian oil-and-gas sector from Europe’s price cap.
His Tuesday directive followed an announcement last week by the country’s energy minister, Alexander Novak, that Moscow could cut oil output in response to the Western price caps, reducing its production by 500,000 to 700,000 barrels a day—which he described as a 5% to 7% reduction in capacity—by early next year.
European countries, meanwhile, are preparing a February ban of refined petroleum products such as diesel that some analysts expect to have a greater impact on global markets. Western countries also will impose price caps on Russian petroleum products in February.
The energy conflict running in tandem with the war has contributed to “an unprecedented amount of uncertainty on the supply side and resulting volatility in oil markets,” said Paul Sheldon, a geopolitical risk analyst at S&P Global Commodity Insights.
3) Daniel Yergin: Putin can’t count on the global oil market
The Wall Street Journal, 27 December 2022
The Russian ruler quotes Milton Friedman, but cuts in production could harm Russia and its allies.
Europe’s ban on Russian oil, combined with the U.S.-generated “cap” on Russian oil prices, marks the end of the global oil market. In its place is a partitioned market whose borders are shaped by not only economics and logistics but also geopolitical strategy. Western governments have created this new market in an effort to stifle the oil revenue fueling Vladimir Putin’s war machine. Moscow will counterattack, hoping to cause disruption, panic and a break in support for Ukraine. But Russia will have a tougher time than expected given current market conditions.
The oil market became truly global only three decades ago with the collapse of both the Soviet Union and the barriers created during the Bolshevik Revolution a century earlier. That coincided with the economic rise of China, which turned an energy self-sufficient albeit poor country into the world’s largest importer of oil. While there have been some restrictions in the global market since then—notably, sanctions on Iran and Venezuela—economic efficiency has largely determined how barrels flowed around the globe.
Until now. In the months following Mr. Putin’s invasion, the European Union and the U.K. announced they would prohibit the import of Russian crude oil effective Dec. 5. They also agreed to ban insurance and shipping “services” by their companies for Russian crude-oil shipments anywhere in the world. This meant that Moscow would be cut off from what had been its largest market—nearly four million barrels a day—and that much of the world’s tanker fleet would no longer be able to carry Russian barrels.
The U.S. was alarmed by Europe’s impending prohibition, fearing it could lead to a world oil shortage and spike in prices. Thus the Biden administration developed an ingenious idea: a price cap. The policy is intended to keep Russian oil flowing while reducing the Kremlin’s earnings from oil exports.
After intense negotiation, the U.S., EU and Group of Seven adopted a cap at $60 a barrel, to be reviewed periodically. As long as Russian oil is bought below $60, a trader can handle it, a broker can insure it, and a tanker can carry it. The details of the cap are complicated. Players along the value chain, from initial purchaser to shippers, must “attest” that they didn’t exceed the price cap. The penalties range from public shaming by their governments to large fines and outright sanctions.
The policy is working so far, thanks to a slowing world economy that has weakened petroleum prices, fear of unknown liability among market actors for violating the cap, and higher tanker rates. The current price of Russia’s main export barrel is in the mid-$40s—about 45% below the benchmark price for oil and more than 33% below the estimated $70 price on which Russia’s 2023 budget is based. This steep drop is welcomed by countries like India, which imports 85% of its oil and has gone from a negligible importer of Russian oil to vying with China to be the largest importer, albeit at heavily discounted prices.
Weak global economic growth will continue to facilitate the effectiveness of the price cap, keeping the market in a surplus and holding prices down. That could change if global oil demand spikes—say, on the heels of China’s lifting its zero-Covid policy. But such a rebound is down the road.
The more immediate challenge comes in February, when the price cap will be extended to “products” produced by Russian refineries. That includes gasoline and diesel, the latter of which is essential to European transport.
Mr. Putin, who has denounced the price cap as “stupid” and “robbery,” has made clear that he can’t stand Western countries’ setting the price of his oil. The Kremlin has assembled a “shadow” armada of 100 or more secondhand tankers that will attempt to evade the ban on Western tankers. Chinese and Indian companies can provide some of the missing maritime insurance, but that will still leave a significant gap.
The most potent weapon in Mr. Putin’s arsenal is a production cut. He has already pursued that strategy with natural gas, inflicting significant hardship on the Continent. In an October speech, Mr. Putin cited Milton Friedman: “If you want to create a shortage of tomatoes,” put on price controls, and “instantly you will have a tomato shortage. It’s the same with oil or gas.” (Mr. Putin noted that Friedman can’t be “branded a Russian agent of influence.”) He has renewed the threat of “a possible cut in production” and this week is expected to issue a decree banning sales to countries observing the price cap.
Mr. Putin has been nudging the Organization of the Petroleum Exporting Countries Plus—the group of oil-exporting countries of which Russia is a part—to embrace another production cut, but so far to no avail. In its place, Russia might cut its exports by a million or more barrels, hoping to tighten the market and send prices upward. The Kremlin might calculate that the resulting increase in price would more than offset the losses from the lower volumes of exports.
The aim would be to create a shortfall, additional economic pain and a mad scramble for supplies, with the ultimate goal that countries would be pitted against each other and the coalition supporting Ukraine would splinter. That has been Mr. Putin’s playbook on European natural gas, too, which he’s hoping will succeed this winter, possibly aided by further disruption in gas supplies.
Yet there’s a crucial distinction between the gas and oil markets—and an additional constraint with which Moscow must contend. Sharp oil cuts and the attendant price increases would be felt not only by European countries but also by those important to Russia, namely India and China, which together received about 70% of the country’s total seaborne crude-oil exports in December.
A Russian production cut would require more-intense collaboration among Western countries and companies, but they might be able to offset the effects by withdrawing more from the billion-plus barrels held by the U.S. and other allies in strategic reserves. Even then, such drawdowns might not be necessary given the current downward pressure on oil demand.
A production cut could well end up adding to the Kremlin’s long line of miscalculations. In cutting output, it would be assuming that higher prices would compensate for the reduction in volume. But after a spike, Russia might find that prices don’t make up for the lost production. The result would be a further cap on its critical oil revenue. And this it would have done to itself.
Mr. Yergin is vice chairman of S&P Global and author of “The New Map: Energy, Climate, and the Clash of Nations.”
4) Luke Coffey: Europe must act fast on energy security
Arab News, 27 December 2022
Russia’s campaign against Ukraine in February fundamentally altered the geopolitical landscape of the trans-Atlantic community. The consequences of this conflict have yet to be fully felt and will likely take years, if not decades, to be completely understood.
A World War II poster
For example, Russia’s anti-Ukraine campaign reignited a debate in Europe about defense spending that has not been seen in decades. Politicians that once paid lip service to spending more on the military are now finally putting their money where their mouth is and investing in the armed forces. Billions of euros in new military investments have been made. Billions more have been committed to future projects.
The campaign against Ukraine has also been a wake-up call for NATO. Its most recent “Strategic Concept,” published earlier this year, stated that “the Russian Federation is the most significant and direct threat to Allies’ security and to peace and stability in the Euro-Atlantic area.” Compare this wording to NATO’s previous version in 2010, which stated that the alliance remains “convinced that the security of NATO and Russia is intertwined and that a strong and constructive partnership based on mutual confidence, transparency and predictability can best serve our security.” How times have changed.
After the invasion, NATO scrambled to bolster its defenses in Central and Eastern Europe, along its border with Russia, while at the same time millions of Ukrainians fled the fighting to seek refuge across Europe.
Europe’s addiction to cheap energy created a situation of collective denial when it came to the degree of dependency on Russia.
The economic impact of this war has been felt around the world with higher food and commodity prices. This has made an already-precarious economic situation due to the COVID-19 pandemic even worse. For Ukraine itself, the economic situation has been devastating. It is estimated that almost half of its gross domestic product has been wiped out since Russia’s invasion. The cost to Ukraine’s damaged infrastructure is estimated to be more than $50 billion and counting.
However, there is one area where Europeans have acutely felt the consequences of Russia’s invasion. This is energy. The International Energy Agency recently said that the world is facing a “global energy crisis of unprecedented depth and complexity,” and that “there is no going back to the way things were.”
The pain has been acutely felt in Europe. Frankly, Europe should have seen this coming. But decades of cheap Russian oil and gas fueled its economic development and growth. Europe’s addiction to cheap energy created a situation of collective denial when it came to the degree of dependency on Russia. For many policymakers across the continent, the loss of Russian energy from Europe’s markets seemed impossible to fathom.
This state of denial manifested in two ways. First was the fervent drive to implement radical timelines to achieve “net-zero” carbon dioxide targets, while placing an unrealistic and disproportionately high emphasis on renewable energy sources. Second was the EU’s commitment to Nord Stream II, the gas pipeline that would have connected Russia directly to Germany through the Baltic Sea.
Russia preferred this method because it removed Ukraine from the transit route to European markets. Germany liked the pipeline because it would have allowed it to consolidate even more power across much of Europe. The vast majority of European countries, especially those in Eastern Europe, were concerned about Russian dominance in the continent’s energy market, but it was not until the invasion of Ukraine in February that Berlin finally woke up to the realization that supporting such a pipeline was untenable.
It is not as if the warnings were not there for Europe. Russia had a long track record of using energy supplies as a tool of foreign policy. This included Russian cyberattacks targeting energy infrastructure, including in Germany, Georgia, Ukraine and the US. Even before the invasion of Ukraine, Europe was already facing high energy prices. Now they have soared even higher. Natural gas prices in Europe are seven times higher than the recent average.
Meanwhile, the cost of electricity is 10 times higher than it was just a couple of years ago. Globally, crude oil prices are higher than they have been in several years.
There are some plans to reduce the European dependency on Russian energy. The EU will implement an embargo of Russian oil at the end of 2022. There are plans to diversify away from Russian natural gas too. Earlier this year, the EU signed a deal with Azerbaijan to import more natural gas from the Caspian region. Italy and France are looking at options to import more gas from North Africa. However, the process of diversifying away from Russian natural gas has moved at a snail’s pace.
Meanwhile, Europe still pays Russia billions of euros each week for natural gas. This dwarfs the total amount of EU military and humanitarian aid given to Ukraine so, ironically, the EU is actually funding the Kremlin’s war effort. Some countries like Hungary have even increased their Russian energy imports since the invasion of Ukraine.
There are alternatives to Russian oil and gas if Brussels can find the political will — and money. For example, the Southern Gas Corridor connects gas fields in the Caspian Sea to Southern Europe and has the potential to supply 60 billion cubic meters of natural gas per annum to European markets. Right now, the Southern Gas Corridor is delivering only 10 billion cubic meters per annum. There is also talk of finally building a trans-Caspian pipeline to bring natural gas from Central Asia to Europe, bypassing Russia. This pipeline would connect to the Southern Gas Corridor.
A pipeline is the only economically viable way to move natural gas across the Caspian Sea. This means that, right now, there is no profitable way to get Central Asia’s gas to Europe without going through Russia or Iran. Europe should take a leading role in making the proposed trans-Caspian pipeline a reality.
Kazakhstan recently announced that it would start using Azerbaijan’s Baku-Tbilisi-Ceyhan pipeline to begin transporting its crude oil to global markets next year, ending Russia’s two-decade monopoly of transporting Kazakh oil. This is a positive development that Europe should build on.
In addition, Europe’s energy security can be bolstered by the Three Seas Initiative. Launched in 2016 to facilitate the development of energy and infrastructure ties among 12 nations in Eastern, Central and Southern Europe, the initiative aims to strengthen trade, infrastructure, energy and political cooperation among countries bordering the Adriatic, Baltic and Black Seas. As a vestige of the Cold War, most infrastructure in the region runs east to west, stymying greater interconnectedness. Developing north-south interconnections and pipelines would boost Europe’s energy security.
Meanwhile, the Biden administration needs to remove the red tape that prevents the US energy sector from reaching its full potential. The more American oil and gas that can be exported to Europe, the better.
One cautionary note is worth making. As European policymakers become more desperate to find alternatives to Russian energy, some are looking toward Iran. The desperation for new sources of oil and gas explains the recent enthusiasm by some Europeans, and the Biden administration, to secure a new deal with Tehran over its nuclear program. Iranian Oil Minister Javad Owji said over the summer that the country was ready to help Europe with its energy crisis and many Europeans naively believe it has something to offer.
But the hope that Iran can come to Europe’s rescue is not aligned with reality. Iran produces a lot of natural gas, but most is for domestic consumption. What little gas may be available for the EU lacks the required pipeline and other infrastructure for export to Europe. In terms of oil, Iran is better placed to help, but there are still challenges.
Even if a new deal between the international community and Iran were signed tomorrow, it could take months to pick apart the vast economic sanctions regime that is currently in place. During this time, no oil would be exported to Europe. On top of this, Iran lacks the proper infrastructure to export significant amounts of oil to Europe because of years of chronic underinvestment. So, in the case of Iranian oil and gas, whatever could be exported to Europe would probably be too little and too late for this winter.
Then there is the moral question about shifting energy reliance away from Moscow to Tehran. Iran has been providing Russia with armed drones for use in Ukraine. In recent weeks, dozens of these suicide drones have struck civilian infrastructure targets across Ukraine. These attacks have had a detrimental impact on the electricity grid as Ukrainians head into the cold winter months. Is it wise to buy energy from a country enabling Russia’s war?
When it comes to Europe’s energy security, there are a lot of lessons to be learned. Due to the prudent steps taken by policymakers earlier this year, it looks like Europe will get through the coming winter without any major issues. However, it is next winter that should be a concern. There is no doubt that the war in Ukraine will still be ongoing. But can European policymakers find new and enduring sources of energy to keep the continent powered well into the future?
If steps are taken now, Europe can get on the path toward energy security for the first time in decades. Every barrel of oil and cubic meter of natural gas that the Europeans obtain from somewhere other than Russia and Iran will make the continent safer. The year 2023 is the time for action.
Luke Coffey is a senior fellow at the Hudson Institute.
The three are linked. By restricting investment in production of oil and gas by Western producers, ESG increases the market power of non-Western producers, thereby enabling Putin’s weaponization of energy supplies. Net zero—the holy grail of ESG—has turned out to be Russia’s most potent ally.
It wasn’t only a bad year for ESG on the stock market. Earlier this month, Vanguard announced that it was quitting Glasgow Financial Alliance for Net Zero (NZAM), set up by former governor of the Bank of England Mark Carney a little over a year ago. “We have decided to withdraw from NZAM so that we can provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks,” the world’s second-largest asset manager said.
Two months ago, Alex Edmans, coauthor of the latest edition of the standard textbook on the principles of corporate finance and professor of finance at the London Business School, published a paper titled “The End of ESG”—without a question mark. Edmans criticizes what has become the primary justification for ESG: the claim that business can generate higher returns for investors by tackling climate change. Since governments are democratically elected by a country’s citizens, they are best placed to address externalities, whereas investors disproportionately represent the elites. “If ESG is pursued for its externalities, companies and investors should be very clear that it may be at the expense of value,” Edmans says.
October also saw the publication of Terrence Keeley’s Sustainable, where the former BlackRock senior executive penned what amounts to a requiem for ESG. Rather than “doing well by doing good,” the logic of Keeley’s case, as I reviewed for RealClear Books, is that investors in conventional ESG investment products are likely to end up not doing very well and leave investors feeling good, not doing good.
It has not all been going one way. In May, HSBC terminated Stuart Kirk, its global head of research at HSBC’s asset-management arm, for voicing some hard truths about ESG. Earlier this month, HSBC announced that it will stop financing new oil and gas fields, putting the West’s third-largest bank on Putin’s side in Russia’s energy war on the West.
What is now a negative factor disadvantaging the West in a world increasingly characterized by East–West geopolitical tensions originated after a period when the United Nations had been fostering a horizontal global division between a rich North and an exploited South. As University of Pennsylvania’s professor Elizabeth Pollman records in her June 2022 paper “The Origins and Consequences of the ESG Moniker,” through the 1970s and early 1980s, the UN promoted the New International Economic Order that called for the regulation of transnational corporations on the alleged grounds that they were widening the gap between developed and developing countries.
After Kofi Annan became secretary-general in 1997, the UN shifted from a strategy of confrontation to co-optation. Speaking at the World Economic Forum in Davos in January 1999, Annan launched a Global Compact between business and the UN. In 2004, the Global Compact’s financial-sector initiative published a report titled “Who Cares Wins”—a rip-off of the British special-forces SAS motto “Who Dares Wins”—arguing for “better consideration of environmental, social and governance factors” in investment appraisals, claiming that this would both improve outcomes for investors and help the UN achieve its sustainable development goals.
ESG means different things, depending on whom you’re talking to. Is it about risk disclosure? Or about factors driving long-term shareholder value? Or is it about society holding business to account? One thing is clear: ESG’s unsustainable dual mandate of boosting shareholder returns and at the same time making the world a better place— “doing well by doing good”—was present at the creation of ESG. It was a masterstroke by ESG’s designers to incorporate “G” for governance. No investor can be against improved governance, and it helped mainstream ESG, whereas previous iterations, such as Socially Responsible Investing (SRI), remained niche.
The 2008 financial crisis subsequently turbocharged the uptake of ESG. Having caused the financial crisis, Wall Street was going to redeem itself by saving the world from a planetary catastrophe. Without climate change, ESG would have vastly less salience. Although marketed as a climate risk analysis tool, ESG is no such thing. In reality, it’s about investors and debt providers driving the decarbonization of Western companies and sunsetting its oil and gas companies.
According to ESG doctrine, there are two types of climate financial risk—physical risk and transition risk—and it’s straightforward to demonstrate that both are spurious. Take the Bank of England. For its climate stress tests, the Bank of England uses a scenario derived from the Intergovernmental Panel on Climate Change’s (IPCC) extreme and physically implausible RCP8.5 climate scenario. Roger Pielke, Jr., professor of environmental studies at the University of Colorado–Boulder, and Justin Ritchie have documented how use of the RCP8.5 scenario represents “a stubborn commitment to error,” with its absurd projection of a sixfold growth in per-capita coal consumption to 2100, based on erroneous reports in the late 1980s of virtually unlimited coal deposits in Siberia and China. The Bank of England compounds implausibility with impossibility by taking the RCP8.5 pathway of 4 degrees by the turn of the century and telescoping it into a 3.3-degree Celsius rise by 2050. Central banks resorting to these types of games constitutes strong evidence that climate physical risk is a nonissue for financial stability.
When he was governor of the Bank of England, Mark Carney gave an agenda-setting speech alleging a tragedy of the horizon as the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors. Climate catastrophes are presumed to be triggered by tipping points, one of the earliest being the melting of the Greenland and West Antarctic ice sheets. In its sixth assessment report, the IPCC declared that with sustained warming, there was limited evidence that the Greenland and West Antarctic ice sheets would disappear “over multiple millennia.” That is some time horizon. Despite the best efforts of central bankers, geologic timescales of millennia and human timescales of decades are completely out of whack.
Similarly, climate transition risk and the stranded assets trope defy economic and financial logic. If you restrict the flow of capital into a sector producing stuff that people want and are willing to pay for, the price of the output of a capital-embargoed sector will rise, as will the value of its invested capital. This, in essence, is what has been happening in energy and capital markets over the past year and explains why ESG as an investment strategy does not work. In the absence of draconian government policies to suppress demand for oil and natural gas, ESG policies strangling the supply of capital to Western oil and gas producers have two effects: they push up the price of hydrocarbons; and they displace supply from Western producers to neutral or hostile ones, with major detriment to the economies and security interests of the West.
Although the disintegration of ESG as an investment strategy became unmistakable in 2022, its existence as a political doctrine will continue until it is challenged and defeated politically. This is already happening in Red states such as Florida, Texas, West Virginia, and Utah. It also requires concerted leadership at a national level to get central bankers and financial regulators to quit playing covert climate policy and to shame banks such as HSBC into switching their support from Russia in the energy wars by dropping their anti–oil and gas financing policies. Defeating ESG not a case of “who cares wins” but “who fights wins.”
Rupert Darwall is a senior fellow of the RealClear Foundation and author of Climate-Risk Disclosure: A Flimsy Pretext for a Green Power Grab.
2) Russia bans sales of oil to countries imposing price cap
The Wall Street Journal, 28 December 2022
Action follows G-7 moves barring Western companies from insuring, financing or shipping Russian crude at prices above $60 a barrel
Russia on Tuesday banned the sale of its oil and petroleum products to countries that put a cap on their sales price, in a move that threatened more uncertainty ahead for global energy markets.
The Kremlin’s action is an attempt to undermine a plan by the U.S. and its allies to bar the shipping, financing or insuring of seaborne Russian crude unless it is sold for $60 a barrel or less—a sanction leveled in response to Russia’s invasion of neighboring Ukraine.
A decree signed by Russian President Vladimir Putin on Tuesday said exports would be banned under contracts that “directly or indirectly provide for the use of the price cap mechanism” between Feb. 1 and July 1. The order says Mr. Putin can create exemptions for the sale of oil to countries following the price cap if he wants.
How the Kremlin views oil contracts—and how broadly it provides exemptions—will shape whether it creates a major disruption to global markets. Many of Russia’s crude exports are now selling at market prices well below the $60 cap, primarily to countries like India, China and Turkey that haven’t agreed to join the Western sanctions.
Some of these shipments are proceeding with the help of Western companies in line with the cap’s terms, according to people familiar with them, while others are happening with financing, shipping and insurance from outside the Western countries enforcing sanctions.
If the Kremlin decides to curb oil exports to non-Western buyers, it could reduce global supply and push up prices. If only the Western countries that crafted the price cap are targeted, the impact would be much more muted since they have already banned most Russian imports.
“The decree is vague and provides Putin with options to keep exports going to selected countries complying with the cap,” said Simone Tagliapietra, a senior fellow at the Bruegel think tank in Brussels. “All in all, this is a sign that Russia is in a vulnerable situation, needs oil revenues and therefore cannot take drastic retaliation measures.”
While Mr. Putin’s order threatens to disrupt markets, investors appear so far to be shrugging it off. Futures contracts for Brent crude, the global price gauge, edged about 0.5% higher Tuesday to $84.33 a barrel. Russian officials have threatened for weeks to cut off their oil supplies in retaliation for the cap.
Joining the U.S. in imposing the novel price-cap sanction were the Group of Seven advanced democracies, the 27 members of the European Union and Australia. Western officials are trying to limit the price at which Russia can sell its oil in an effort to dent the Kremlin’s war chest while still keeping Russian oil flowing to markets—and therefore stabilizing global prices.
A European Commission spokeswoman said Tuesday the EU already had banned the import of Russian oil. Hungary and several other landlocked EU nations pushed for exemptions to the embargo to keep importing pipelined Russian oil. Mr. Putin may now shut off those flows.
“The G-7 and Australia have already committed to ban or phase out imports of Russian oil,” a State Department spokeswoman said.
Oil and ship-tracking analysts say Russia’s crude output has declined since the array of sanctions came into effect. The price cap, along with the EU’s import embargo, launched on Dec. 5.
Russia has exported about 2.5 million barrels of its crude each day by sea in December so far, according to commodities-data firm Kpler. That is down 22% from the average for the first 11 months of the year.
That decline, largely reflecting reduced shipments from Russia’s eastern ports, is likely due to harsh winter weather and weak demand from China as its pandemic reopening has faltered, said Matt Smith, a Kpler oil analyst.
“The number of buyers of seaborne Russian crude has dropped to half a dozen or so countries,” he added, namely India and China.
As traders and investors have tried to price in the sanctions on Russian oil, the Kremlin and its trading partners expanded a global “shadow fleet” of tankers to ship crude exports without Western financing or insurance.
It is unclear if Mr. Putin’s decree will result in Russia curbing shipments that are sold at market rates to buyers in India, for example, and facilitated by Western companies.
Late last week, Russia’s mainstay Urals crude sold at $42.40 a barrel from the Baltic port of Primorsk, according to Argus Media, which tracks commodity prices. If the market price of Urals rises above $60 a barrel, the cap’s impact on markets could become more apparent.
Robert Yawger, executive director of energy futures at Mizuho in New York, said data indicate some buyers in Southeast Asia appear more reluctant now to snap up sanctioned barrels, leaving some tankers adrift in the Asia Pacific market.
“They’re looking for a home in India and China, but [those countries] have all the crude they need right now,” Mr. Yawger said. “They’re loaded up.”
Even so, market participants aren’t likely to miss the Russian barrels, for now. Global demand for crude oil has softened in recent months, and despite a recent three-week rally following China’s reopening and severe cold weather, oil prices could falter in the coming weeks if economic activity continues to languish, Mr. Yawger said.
“The demand side of the equation is a bigger deal right now,” Mr. Yawger said. “Supply isn’t really a problem.”
The Kremlin has played down the impact of trying to cripple Russia’s energy resources. On Thursday, Mr. Putin said he doesn’t see any potential losses for the Russian oil-and-gas sector from Europe’s price cap.
His Tuesday directive followed an announcement last week by the country’s energy minister, Alexander Novak, that Moscow could cut oil output in response to the Western price caps, reducing its production by 500,000 to 700,000 barrels a day—which he described as a 5% to 7% reduction in capacity—by early next year.
European countries, meanwhile, are preparing a February ban of refined petroleum products such as diesel that some analysts expect to have a greater impact on global markets. Western countries also will impose price caps on Russian petroleum products in February.
The energy conflict running in tandem with the war has contributed to “an unprecedented amount of uncertainty on the supply side and resulting volatility in oil markets,” said Paul Sheldon, a geopolitical risk analyst at S&P Global Commodity Insights.
3) Daniel Yergin: Putin can’t count on the global oil market
The Wall Street Journal, 27 December 2022
The Russian ruler quotes Milton Friedman, but cuts in production could harm Russia and its allies.
Europe’s ban on Russian oil, combined with the U.S.-generated “cap” on Russian oil prices, marks the end of the global oil market. In its place is a partitioned market whose borders are shaped by not only economics and logistics but also geopolitical strategy. Western governments have created this new market in an effort to stifle the oil revenue fueling Vladimir Putin’s war machine. Moscow will counterattack, hoping to cause disruption, panic and a break in support for Ukraine. But Russia will have a tougher time than expected given current market conditions.
The oil market became truly global only three decades ago with the collapse of both the Soviet Union and the barriers created during the Bolshevik Revolution a century earlier. That coincided with the economic rise of China, which turned an energy self-sufficient albeit poor country into the world’s largest importer of oil. While there have been some restrictions in the global market since then—notably, sanctions on Iran and Venezuela—economic efficiency has largely determined how barrels flowed around the globe.
Until now. In the months following Mr. Putin’s invasion, the European Union and the U.K. announced they would prohibit the import of Russian crude oil effective Dec. 5. They also agreed to ban insurance and shipping “services” by their companies for Russian crude-oil shipments anywhere in the world. This meant that Moscow would be cut off from what had been its largest market—nearly four million barrels a day—and that much of the world’s tanker fleet would no longer be able to carry Russian barrels.
The U.S. was alarmed by Europe’s impending prohibition, fearing it could lead to a world oil shortage and spike in prices. Thus the Biden administration developed an ingenious idea: a price cap. The policy is intended to keep Russian oil flowing while reducing the Kremlin’s earnings from oil exports.
After intense negotiation, the U.S., EU and Group of Seven adopted a cap at $60 a barrel, to be reviewed periodically. As long as Russian oil is bought below $60, a trader can handle it, a broker can insure it, and a tanker can carry it. The details of the cap are complicated. Players along the value chain, from initial purchaser to shippers, must “attest” that they didn’t exceed the price cap. The penalties range from public shaming by their governments to large fines and outright sanctions.
The policy is working so far, thanks to a slowing world economy that has weakened petroleum prices, fear of unknown liability among market actors for violating the cap, and higher tanker rates. The current price of Russia’s main export barrel is in the mid-$40s—about 45% below the benchmark price for oil and more than 33% below the estimated $70 price on which Russia’s 2023 budget is based. This steep drop is welcomed by countries like India, which imports 85% of its oil and has gone from a negligible importer of Russian oil to vying with China to be the largest importer, albeit at heavily discounted prices.
Weak global economic growth will continue to facilitate the effectiveness of the price cap, keeping the market in a surplus and holding prices down. That could change if global oil demand spikes—say, on the heels of China’s lifting its zero-Covid policy. But such a rebound is down the road.
The more immediate challenge comes in February, when the price cap will be extended to “products” produced by Russian refineries. That includes gasoline and diesel, the latter of which is essential to European transport.
Mr. Putin, who has denounced the price cap as “stupid” and “robbery,” has made clear that he can’t stand Western countries’ setting the price of his oil. The Kremlin has assembled a “shadow” armada of 100 or more secondhand tankers that will attempt to evade the ban on Western tankers. Chinese and Indian companies can provide some of the missing maritime insurance, but that will still leave a significant gap.
The most potent weapon in Mr. Putin’s arsenal is a production cut. He has already pursued that strategy with natural gas, inflicting significant hardship on the Continent. In an October speech, Mr. Putin cited Milton Friedman: “If you want to create a shortage of tomatoes,” put on price controls, and “instantly you will have a tomato shortage. It’s the same with oil or gas.” (Mr. Putin noted that Friedman can’t be “branded a Russian agent of influence.”) He has renewed the threat of “a possible cut in production” and this week is expected to issue a decree banning sales to countries observing the price cap.
Mr. Putin has been nudging the Organization of the Petroleum Exporting Countries Plus—the group of oil-exporting countries of which Russia is a part—to embrace another production cut, but so far to no avail. In its place, Russia might cut its exports by a million or more barrels, hoping to tighten the market and send prices upward. The Kremlin might calculate that the resulting increase in price would more than offset the losses from the lower volumes of exports.
The aim would be to create a shortfall, additional economic pain and a mad scramble for supplies, with the ultimate goal that countries would be pitted against each other and the coalition supporting Ukraine would splinter. That has been Mr. Putin’s playbook on European natural gas, too, which he’s hoping will succeed this winter, possibly aided by further disruption in gas supplies.
Yet there’s a crucial distinction between the gas and oil markets—and an additional constraint with which Moscow must contend. Sharp oil cuts and the attendant price increases would be felt not only by European countries but also by those important to Russia, namely India and China, which together received about 70% of the country’s total seaborne crude-oil exports in December.
A Russian production cut would require more-intense collaboration among Western countries and companies, but they might be able to offset the effects by withdrawing more from the billion-plus barrels held by the U.S. and other allies in strategic reserves. Even then, such drawdowns might not be necessary given the current downward pressure on oil demand.
A production cut could well end up adding to the Kremlin’s long line of miscalculations. In cutting output, it would be assuming that higher prices would compensate for the reduction in volume. But after a spike, Russia might find that prices don’t make up for the lost production. The result would be a further cap on its critical oil revenue. And this it would have done to itself.
Mr. Yergin is vice chairman of S&P Global and author of “The New Map: Energy, Climate, and the Clash of Nations.”
Arab News, 27 December 2022
Russia’s campaign against Ukraine in February fundamentally altered the geopolitical landscape of the trans-Atlantic community. The consequences of this conflict have yet to be fully felt and will likely take years, if not decades, to be completely understood.
A World War II poster
For example, Russia’s anti-Ukraine campaign reignited a debate in Europe about defense spending that has not been seen in decades. Politicians that once paid lip service to spending more on the military are now finally putting their money where their mouth is and investing in the armed forces. Billions of euros in new military investments have been made. Billions more have been committed to future projects.
The campaign against Ukraine has also been a wake-up call for NATO. Its most recent “Strategic Concept,” published earlier this year, stated that “the Russian Federation is the most significant and direct threat to Allies’ security and to peace and stability in the Euro-Atlantic area.” Compare this wording to NATO’s previous version in 2010, which stated that the alliance remains “convinced that the security of NATO and Russia is intertwined and that a strong and constructive partnership based on mutual confidence, transparency and predictability can best serve our security.” How times have changed.
After the invasion, NATO scrambled to bolster its defenses in Central and Eastern Europe, along its border with Russia, while at the same time millions of Ukrainians fled the fighting to seek refuge across Europe.
Europe’s addiction to cheap energy created a situation of collective denial when it came to the degree of dependency on Russia.
The economic impact of this war has been felt around the world with higher food and commodity prices. This has made an already-precarious economic situation due to the COVID-19 pandemic even worse. For Ukraine itself, the economic situation has been devastating. It is estimated that almost half of its gross domestic product has been wiped out since Russia’s invasion. The cost to Ukraine’s damaged infrastructure is estimated to be more than $50 billion and counting.
However, there is one area where Europeans have acutely felt the consequences of Russia’s invasion. This is energy. The International Energy Agency recently said that the world is facing a “global energy crisis of unprecedented depth and complexity,” and that “there is no going back to the way things were.”
The pain has been acutely felt in Europe. Frankly, Europe should have seen this coming. But decades of cheap Russian oil and gas fueled its economic development and growth. Europe’s addiction to cheap energy created a situation of collective denial when it came to the degree of dependency on Russia. For many policymakers across the continent, the loss of Russian energy from Europe’s markets seemed impossible to fathom.
This state of denial manifested in two ways. First was the fervent drive to implement radical timelines to achieve “net-zero” carbon dioxide targets, while placing an unrealistic and disproportionately high emphasis on renewable energy sources. Second was the EU’s commitment to Nord Stream II, the gas pipeline that would have connected Russia directly to Germany through the Baltic Sea.
Russia preferred this method because it removed Ukraine from the transit route to European markets. Germany liked the pipeline because it would have allowed it to consolidate even more power across much of Europe. The vast majority of European countries, especially those in Eastern Europe, were concerned about Russian dominance in the continent’s energy market, but it was not until the invasion of Ukraine in February that Berlin finally woke up to the realization that supporting such a pipeline was untenable.
It is not as if the warnings were not there for Europe. Russia had a long track record of using energy supplies as a tool of foreign policy. This included Russian cyberattacks targeting energy infrastructure, including in Germany, Georgia, Ukraine and the US. Even before the invasion of Ukraine, Europe was already facing high energy prices. Now they have soared even higher. Natural gas prices in Europe are seven times higher than the recent average.
Meanwhile, the cost of electricity is 10 times higher than it was just a couple of years ago. Globally, crude oil prices are higher than they have been in several years.
There are some plans to reduce the European dependency on Russian energy. The EU will implement an embargo of Russian oil at the end of 2022. There are plans to diversify away from Russian natural gas too. Earlier this year, the EU signed a deal with Azerbaijan to import more natural gas from the Caspian region. Italy and France are looking at options to import more gas from North Africa. However, the process of diversifying away from Russian natural gas has moved at a snail’s pace.
Meanwhile, Europe still pays Russia billions of euros each week for natural gas. This dwarfs the total amount of EU military and humanitarian aid given to Ukraine so, ironically, the EU is actually funding the Kremlin’s war effort. Some countries like Hungary have even increased their Russian energy imports since the invasion of Ukraine.
There are alternatives to Russian oil and gas if Brussels can find the political will — and money. For example, the Southern Gas Corridor connects gas fields in the Caspian Sea to Southern Europe and has the potential to supply 60 billion cubic meters of natural gas per annum to European markets. Right now, the Southern Gas Corridor is delivering only 10 billion cubic meters per annum. There is also talk of finally building a trans-Caspian pipeline to bring natural gas from Central Asia to Europe, bypassing Russia. This pipeline would connect to the Southern Gas Corridor.
A pipeline is the only economically viable way to move natural gas across the Caspian Sea. This means that, right now, there is no profitable way to get Central Asia’s gas to Europe without going through Russia or Iran. Europe should take a leading role in making the proposed trans-Caspian pipeline a reality.
Kazakhstan recently announced that it would start using Azerbaijan’s Baku-Tbilisi-Ceyhan pipeline to begin transporting its crude oil to global markets next year, ending Russia’s two-decade monopoly of transporting Kazakh oil. This is a positive development that Europe should build on.
In addition, Europe’s energy security can be bolstered by the Three Seas Initiative. Launched in 2016 to facilitate the development of energy and infrastructure ties among 12 nations in Eastern, Central and Southern Europe, the initiative aims to strengthen trade, infrastructure, energy and political cooperation among countries bordering the Adriatic, Baltic and Black Seas. As a vestige of the Cold War, most infrastructure in the region runs east to west, stymying greater interconnectedness. Developing north-south interconnections and pipelines would boost Europe’s energy security.
Meanwhile, the Biden administration needs to remove the red tape that prevents the US energy sector from reaching its full potential. The more American oil and gas that can be exported to Europe, the better.
One cautionary note is worth making. As European policymakers become more desperate to find alternatives to Russian energy, some are looking toward Iran. The desperation for new sources of oil and gas explains the recent enthusiasm by some Europeans, and the Biden administration, to secure a new deal with Tehran over its nuclear program. Iranian Oil Minister Javad Owji said over the summer that the country was ready to help Europe with its energy crisis and many Europeans naively believe it has something to offer.
But the hope that Iran can come to Europe’s rescue is not aligned with reality. Iran produces a lot of natural gas, but most is for domestic consumption. What little gas may be available for the EU lacks the required pipeline and other infrastructure for export to Europe. In terms of oil, Iran is better placed to help, but there are still challenges.
Even if a new deal between the international community and Iran were signed tomorrow, it could take months to pick apart the vast economic sanctions regime that is currently in place. During this time, no oil would be exported to Europe. On top of this, Iran lacks the proper infrastructure to export significant amounts of oil to Europe because of years of chronic underinvestment. So, in the case of Iranian oil and gas, whatever could be exported to Europe would probably be too little and too late for this winter.
Then there is the moral question about shifting energy reliance away from Moscow to Tehran. Iran has been providing Russia with armed drones for use in Ukraine. In recent weeks, dozens of these suicide drones have struck civilian infrastructure targets across Ukraine. These attacks have had a detrimental impact on the electricity grid as Ukrainians head into the cold winter months. Is it wise to buy energy from a country enabling Russia’s war?
When it comes to Europe’s energy security, there are a lot of lessons to be learned. Due to the prudent steps taken by policymakers earlier this year, it looks like Europe will get through the coming winter without any major issues. However, it is next winter that should be a concern. There is no doubt that the war in Ukraine will still be ongoing. But can European policymakers find new and enduring sources of energy to keep the continent powered well into the future?
If steps are taken now, Europe can get on the path toward energy security for the first time in decades. Every barrel of oil and cubic meter of natural gas that the Europeans obtain from somewhere other than Russia and Iran will make the continent safer. The year 2023 is the time for action.
Luke Coffey is a senior fellow at the Hudson Institute.
5) China, the West, and the future global order
Eurasia Review, 28 December 2022
By Julian Lindley-French and Franco Algieri (With the support of The Alphen Group)
The primary purpose of this article is to respectfully communicate to a Chinese audience a Western view of the future world order.
China needs the West as much as the West needs China. However, the West has awakened geopolitically to the toxic power politics that Russia is imposing on Ukraine and China’s support for it. China is thus faced with a profound choice: alliance with a declining and weak Russia or cooperation with a powerful bloc of global democracies that Russia’s incompetent and illegal aggression is helping to forge. The West is steadily morphing into a new global Community of Democracies with states such as those in the G7, Quads, and Quints taking on increasing importance as centers of decisionmaking.2
All three groupings reflect an emerging implicit structure with the United States at their core, European democracies on one American geopolitical flank, with Australia, Japan, South Korea, and other democracies in the Indo-Pacific region on the other American geopolitical flank.
The force that is forging such a community is China as it morphs into a superpower. Specifically, China is choosing to be an aggressive putative superpower. President Xi Jinping’s aggressive worldview is of a China defined by its opposition to the United States and, by extension, America’s democratic allies and partners. A new world is being forged from within the increasingly hot cauldron of U.S.-Chinese strategic competition.
However, does that mean this new world is inevitably now set on a crash course to conflict, something akin to a re-run of the collapse of pre–World War I Europe into systemic war? Or is it not too late for both sides to forge a pragmatic peace—a peace forged from respect, rather than destructive and disrespectful confrontation? On the face of it, President Xi seems to have made his choice, but in some very important respects siding with Russia in geopolitical conflict with the community of democracies seems counterintuitive when we look at China from a Western perspective (as this article does). This perspective also implies China’s “choice” might not be as firm as some would have it—a profound but essentially simple choice between siding with Vladimir Putin and confrontation with the West or continued growth, wealth, and power through collaboration with the West?
The facts speak for themselves. Using the most favorable economic statistics for the combined Chinese and Russian economies—purchasing power parity—their combined economies are worth some $27 trillion in 2022. Using the same data for G7 countries, the core of the emerging Community, the total is $39 trillion.3 Add Australia and South Korea to the aggregate and the figure is $42 trillion. If nominal gross domestic product (GPD) is compared, the contrast is even more striking with the combined GDPs of China and Russia in 2022 totaling $20.2 trillion, while the combined GDPs of the G7 countries amount to $45.2 trillion, which when Australia and South Korea are added increases to $48.8 trillion.4 Critically, China’s trade with the democracies is over 10 times greater than that with Russia,5 while in 2020, China’s merchandise trade surplus with the rest of the world totaled $535 billion, with much of that figure due to surpluses with both the United States and Europe.6
There are two assumptions that can be drawn from these statistics and one question.
First, China’s current grand strategy is clearly aimed at displacing the United States as the preeminent global power and thus assuming a central place on the global stage. Any such ambition presupposes that “just in time” globalized trade that has made China rich will not be replaced by a just-in-case culture in the West, which will see a marked acceleration of reshoring if China is deemed a hostile power. Second, the ambition to become the preeminent global power is deeply rooted in the Chinese Communist Party (CCP).
By 2035, China may well have a larger nominal GDP than the United States, spend more on research and development, possess a world-class military, and have secured essential 21st-century resources. China may also have established a rival global currency to the dollar. However, the policy assumes that all things being equal the United States and its allies will not react in the interim. It remains highly unlikely China will ever decisively eclipse the United States as the world’s preeminent power, precisely because China is equally unlikely to become a member of the global Community of Democracies to which the “West” is transitioning. Is Russia worth the price? Russia might offer China an energy source and a useful conduit for the transshipment of goods to Europe, when Europe opens its doors to Moscow in the wake of the Ukraine war, but it offers little else to China in terms of the future development of the Chinese economy and society. Rather, Putin’s Russia is far more likely to drag China into conflicts which are not in China’s interest.
China, the West, and Power Pragmatism
The rupture in dialogue between the United States and China that has occurred in recent years has sown deep mistrust. The growing tension between economic interdependence and increasingly militarized geopolitical competition is also placing the rules-based international order under ever increasing strain. With his attack on Ukraine, Putin has now destroyed many long-held assumptions among Western elites about peace, war, economic interdependence, and globalization, while Russia’s blatant atrocities against Ukrainian civilians has further reinforced a determination in the West to respond. The belief that economic interdependence would be enough to prevent major war has again been revealed to be false, just as it was in Europe in 1914. There is now a belated realization even in Europe that the reliance on external autocratic powers to feed both its energy hungry and consumer-obese societies, far from promoting peace, has simply revealed the many vulnerabilities of a decadent West. That world is over, and the post-COVID-19 world will demand a wholly new set of geopolitical assumptions on the part of hitherto complacent Western leaders.
Equally, China would be profoundly mistaken to conflate apparent Western decadence with terminal decline. The West is not as weak or as divided as many of its Chinese detractors would like to believe. If anything, the “West” is gaining in both reach and relevance because the West itself has become a geopolitical paradox in which the “West” is no longer confined to the West. The ideas that underpin the West mean it has evolved from a place into an idea that, at times, is applied hypocritically and incompetently.7 Consequently, there is a Community of Democracies emerging worldwide that whatever the cultural influences share a profound set of beliefs about economics, law, and governance. Such a community, by its nature, is fractious and for a Chinese audience the antithesis of order, even if pluralism and harmony have always coexisted in Chinese philosophy. Equally, history would also suggest that the greater the challenge to the West, the greater the collective resolve to resist and prevail.
The result is a kind of geoeconomic standoff. China is vital to future Western peace and prosperity, while the West remains even more vital to future Chinese peace and prosperity. Whatever form the West takes, the future relationship of the democracies with China will be the defining geopolitical relationship of the 21st century. As China and the West may never be partners in the full sense of the word, and over many issues they will not, both Beijing and the U.S.-led West must avoid confrontation. It is simply not in the interest of either China or the West.8 In other words, China and the West do not have to like each other, but it is a critical interest for both sides to actively foster a level of mutual respect and understanding to at the very least establish a culture of power pragmatism at the core of the relationship that is robust enough to survive the inevitable tensions geopolitical competition will spawn.
Power pragmatism will also demand adjustments on the part of the West. The West must collectively recognize that the 400-year preponderance of Western “rules” is at an end and that new rules are now needed, of which China will be a co-architect. Equally, China must recognize that whereas an anarchic absence of rules in international relations might afford Beijing short-term opportunities, it will also ensure the enduring hostility of the West and, over the medium term, impose great costs on China. There may be temporary strategic appeal for China to be in close partnership with Putin’s Russia. However, the Ukraine tragedy has revealed that Russia is an unstable, incompetent, unreliable declining power the only real capacity of which is to act as a spoiler for those states more powerful than it is, including China.
Full essay
Eurasia Review, 28 December 2022
By Julian Lindley-French and Franco Algieri (With the support of The Alphen Group)
The primary purpose of this article is to respectfully communicate to a Chinese audience a Western view of the future world order.
China needs the West as much as the West needs China. However, the West has awakened geopolitically to the toxic power politics that Russia is imposing on Ukraine and China’s support for it. China is thus faced with a profound choice: alliance with a declining and weak Russia or cooperation with a powerful bloc of global democracies that Russia’s incompetent and illegal aggression is helping to forge. The West is steadily morphing into a new global Community of Democracies with states such as those in the G7, Quads, and Quints taking on increasing importance as centers of decisionmaking.2
All three groupings reflect an emerging implicit structure with the United States at their core, European democracies on one American geopolitical flank, with Australia, Japan, South Korea, and other democracies in the Indo-Pacific region on the other American geopolitical flank.
The force that is forging such a community is China as it morphs into a superpower. Specifically, China is choosing to be an aggressive putative superpower. President Xi Jinping’s aggressive worldview is of a China defined by its opposition to the United States and, by extension, America’s democratic allies and partners. A new world is being forged from within the increasingly hot cauldron of U.S.-Chinese strategic competition.
However, does that mean this new world is inevitably now set on a crash course to conflict, something akin to a re-run of the collapse of pre–World War I Europe into systemic war? Or is it not too late for both sides to forge a pragmatic peace—a peace forged from respect, rather than destructive and disrespectful confrontation? On the face of it, President Xi seems to have made his choice, but in some very important respects siding with Russia in geopolitical conflict with the community of democracies seems counterintuitive when we look at China from a Western perspective (as this article does). This perspective also implies China’s “choice” might not be as firm as some would have it—a profound but essentially simple choice between siding with Vladimir Putin and confrontation with the West or continued growth, wealth, and power through collaboration with the West?
The facts speak for themselves. Using the most favorable economic statistics for the combined Chinese and Russian economies—purchasing power parity—their combined economies are worth some $27 trillion in 2022. Using the same data for G7 countries, the core of the emerging Community, the total is $39 trillion.3 Add Australia and South Korea to the aggregate and the figure is $42 trillion. If nominal gross domestic product (GPD) is compared, the contrast is even more striking with the combined GDPs of China and Russia in 2022 totaling $20.2 trillion, while the combined GDPs of the G7 countries amount to $45.2 trillion, which when Australia and South Korea are added increases to $48.8 trillion.4 Critically, China’s trade with the democracies is over 10 times greater than that with Russia,5 while in 2020, China’s merchandise trade surplus with the rest of the world totaled $535 billion, with much of that figure due to surpluses with both the United States and Europe.6
There are two assumptions that can be drawn from these statistics and one question.
First, China’s current grand strategy is clearly aimed at displacing the United States as the preeminent global power and thus assuming a central place on the global stage. Any such ambition presupposes that “just in time” globalized trade that has made China rich will not be replaced by a just-in-case culture in the West, which will see a marked acceleration of reshoring if China is deemed a hostile power. Second, the ambition to become the preeminent global power is deeply rooted in the Chinese Communist Party (CCP).
By 2035, China may well have a larger nominal GDP than the United States, spend more on research and development, possess a world-class military, and have secured essential 21st-century resources. China may also have established a rival global currency to the dollar. However, the policy assumes that all things being equal the United States and its allies will not react in the interim. It remains highly unlikely China will ever decisively eclipse the United States as the world’s preeminent power, precisely because China is equally unlikely to become a member of the global Community of Democracies to which the “West” is transitioning. Is Russia worth the price? Russia might offer China an energy source and a useful conduit for the transshipment of goods to Europe, when Europe opens its doors to Moscow in the wake of the Ukraine war, but it offers little else to China in terms of the future development of the Chinese economy and society. Rather, Putin’s Russia is far more likely to drag China into conflicts which are not in China’s interest.
China, the West, and Power Pragmatism
The rupture in dialogue between the United States and China that has occurred in recent years has sown deep mistrust. The growing tension between economic interdependence and increasingly militarized geopolitical competition is also placing the rules-based international order under ever increasing strain. With his attack on Ukraine, Putin has now destroyed many long-held assumptions among Western elites about peace, war, economic interdependence, and globalization, while Russia’s blatant atrocities against Ukrainian civilians has further reinforced a determination in the West to respond. The belief that economic interdependence would be enough to prevent major war has again been revealed to be false, just as it was in Europe in 1914. There is now a belated realization even in Europe that the reliance on external autocratic powers to feed both its energy hungry and consumer-obese societies, far from promoting peace, has simply revealed the many vulnerabilities of a decadent West. That world is over, and the post-COVID-19 world will demand a wholly new set of geopolitical assumptions on the part of hitherto complacent Western leaders.
Equally, China would be profoundly mistaken to conflate apparent Western decadence with terminal decline. The West is not as weak or as divided as many of its Chinese detractors would like to believe. If anything, the “West” is gaining in both reach and relevance because the West itself has become a geopolitical paradox in which the “West” is no longer confined to the West. The ideas that underpin the West mean it has evolved from a place into an idea that, at times, is applied hypocritically and incompetently.7 Consequently, there is a Community of Democracies emerging worldwide that whatever the cultural influences share a profound set of beliefs about economics, law, and governance. Such a community, by its nature, is fractious and for a Chinese audience the antithesis of order, even if pluralism and harmony have always coexisted in Chinese philosophy. Equally, history would also suggest that the greater the challenge to the West, the greater the collective resolve to resist and prevail.
The result is a kind of geoeconomic standoff. China is vital to future Western peace and prosperity, while the West remains even more vital to future Chinese peace and prosperity. Whatever form the West takes, the future relationship of the democracies with China will be the defining geopolitical relationship of the 21st century. As China and the West may never be partners in the full sense of the word, and over many issues they will not, both Beijing and the U.S.-led West must avoid confrontation. It is simply not in the interest of either China or the West.8 In other words, China and the West do not have to like each other, but it is a critical interest for both sides to actively foster a level of mutual respect and understanding to at the very least establish a culture of power pragmatism at the core of the relationship that is robust enough to survive the inevitable tensions geopolitical competition will spawn.
Power pragmatism will also demand adjustments on the part of the West. The West must collectively recognize that the 400-year preponderance of Western “rules” is at an end and that new rules are now needed, of which China will be a co-architect. Equally, China must recognize that whereas an anarchic absence of rules in international relations might afford Beijing short-term opportunities, it will also ensure the enduring hostility of the West and, over the medium term, impose great costs on China. There may be temporary strategic appeal for China to be in close partnership with Putin’s Russia. However, the Ukraine tragedy has revealed that Russia is an unstable, incompetent, unreliable declining power the only real capacity of which is to act as a spoiler for those states more powerful than it is, including China.
Full essay
6) Judith Curry: The faux urgency of the climate crisis is giving us no time or space to build a secure energy future
Climate Etc., 27 December 2022
There is a growing realisation that emissions and temperature targets are now detached from the issues of human well-being and the development of our 21st century world.
JC note: this is the text of my op-ed for SkyNews that was published several weeks ago
For the past two centuries, fossil fuels have fueled humanity’s progress, improving standards of living and increasing the life span for billions of people. In the 21st century, a rapid transition away from fossil fuels has become an international imperative for climate change mitigation, under the auspices of the UN Paris Agreement. As a result, the 21st century energy transition is dominated by stringent targets to rapidly eliminate carbon dioxide emissions. However, the recent COP27 meeting in Egypt highlighted that very few of the world’s countries are on track to meet their emissions reductions commitment.
The desire for cleaner, more abundant, more reliable and less expensive sources of energy is universal. However, the goal of rapidly eliminating fossil fuels is at odds with the urgency of providing grid electricity to developing countries. Rapid deployment of wind and solar power has invariably increased electricity costs and reduced reliability, particularly with increasing penetration into the grid. Allegations of human rights abuses in China’s Xinjiang region, where global solar voltaic supplies are concentrated, are generating political conflicts that threaten the solar power industry. Global supply chains of materials needed to produce solar and wind energy plus battery storage are spawning new regional conflicts, logistical problems, supply shortages and rising costs. The large amount of land use required for wind and solar farms plus transmission lines is causing local land use conflicts in many regions.
Given the apocalyptic rhetoric surrounding climate change, does the alleged urgency of reducing carbon dioxide emissions somehow trump these other considerations? Well, the climate ‘crisis’ isn’t what it used to be. The COP27 has dropped the most extreme emissions scenario from consideration, which was the source of the most alarming predictions. Only a few years ago, an emissions trajectory that produced 2 to 3 oC warming was regarded as climate policy success. As limiting warming to 2 oC seems to be in reach, the goal posts were moved to limit the warming target to 1.5 oC. These warming targets are referenced to a baseline at the end of the 19th century; the Earth’s climate has already warmed by 1.1 oC. In context of this relatively modest warming, climate ‘crisis’ rhetoric is now linked to extreme weather events.
Attributing extreme weather and climate events to global warming can motivate a country to attempt to rapidly transition away from fossil fuels. However, we should not delude ourselves into thinking that eliminating emissions would have a noticeable impact on weather and climate extremes in the 21st century. It is very difficult to untangle the roles of natural weather and climate variability and land use from the slow creep of global warming. Looking back into the past, including paleoclimatic data, there has been more extreme weather everywhere on the planet. Thinking that we can minimize severe weather through using atmospheric carbon dioxide as a control knob is a fairy tale. In particular, Australia is responsible for slightly more than 1% of global carbon emissions. Hence, Australia’s emissions have a minimal impact on global warming as well as on Australia’s own climate.
There is growing realization that these emissions and temperature targets have become detached from the issues of human well-being and development. Yes, we need to reduce CO2 emissions over the course of the 21st century. However once we relax the faux urgency for eliminating CO2 emissions and the stringent time tables, we have time and space to envision new energy systems that can meet the diverse, growing needs of the 21st century. This includes sufficient energy to help reduce our vulnerability to surprises from extreme weather and climate events.
7) No rise in temperature or rainfall in Bangladesh for 100 years
Chris Morrison, The Daily Sceptic, 28 December 2022
According to figures compiled for the World Bank, the average temperature in Bangladesh is the same today as it was 100 years ago. There are the usual cyclical changes, but global warming is not much in evidence around the Bay of Bengal.
The country of Bangladesh is mostly a floodplain. Over 80% of the territory is classified as such, while 75% of the land is less than 10 metres above sea level. Heavy monsoons and widespread flooding are common. In an average year, 18% of the landmass is inundated, a figure that rose to 75% in 1988. What better place for western guilt-trippers to highlight and claim that all the natural tribulations are down to humans changing the climate? And what better ‘poster child’ for grant-hungry activists and local politicians to highlight when demanding large amounts of ‘compensation’ from developed nations to assuage the sins of industrialisation?
Earlier this year, Bangladesh was hit by the regular monsoon rains and flooding. Sky News reported that “experts say that climate change is increasing the frequency, ferocity and unpredictability of floods in Bangladesh”. Needless to say, the BBC made the same point, adding that “experts say that climate change is increasing the likelihood of events like this happening around the world”.
Presumably, when they talk about climate change, Sky and the BBC are worried about flooding being caused by rising temperatures and increased rainfall. It might therefore be considered curious that these climate changes do not seem to have affected Bangladesh.
According to figures compiled for the World Bank, the average temperature in Bangladesh is the same today as it was 100 years ago. There are the usual cyclical changes, but global warming is not much in evidence around the Bay of Bengal.
Chris Morrison, The Daily Sceptic, 28 December 2022
According to figures compiled for the World Bank, the average temperature in Bangladesh is the same today as it was 100 years ago. There are the usual cyclical changes, but global warming is not much in evidence around the Bay of Bengal.
The country of Bangladesh is mostly a floodplain. Over 80% of the territory is classified as such, while 75% of the land is less than 10 metres above sea level. Heavy monsoons and widespread flooding are common. In an average year, 18% of the landmass is inundated, a figure that rose to 75% in 1988. What better place for western guilt-trippers to highlight and claim that all the natural tribulations are down to humans changing the climate? And what better ‘poster child’ for grant-hungry activists and local politicians to highlight when demanding large amounts of ‘compensation’ from developed nations to assuage the sins of industrialisation?
Earlier this year, Bangladesh was hit by the regular monsoon rains and flooding. Sky News reported that “experts say that climate change is increasing the frequency, ferocity and unpredictability of floods in Bangladesh”. Needless to say, the BBC made the same point, adding that “experts say that climate change is increasing the likelihood of events like this happening around the world”.
Presumably, when they talk about climate change, Sky and the BBC are worried about flooding being caused by rising temperatures and increased rainfall. It might therefore be considered curious that these climate changes do not seem to have affected Bangladesh.
According to figures compiled for the World Bank, the average temperature in Bangladesh is the same today as it was 100 years ago. There are the usual cyclical changes, but global warming is not much in evidence around the Bay of Bengal.
Let’s try rainfall.
Again according to the World Bank, we see little change in the overall trend going back 100 years. If anything, rainfall has slightly decreased, and there‘s certainly nothing unusual in the recent past.
Again according to the World Bank, we see little change in the overall trend going back 100 years. If anything, rainfall has slightly decreased, and there‘s certainly nothing unusual in the recent past.
The graph shows that rainfall can vary widely between years. Severe monsoons in the past have caused enormous damage and heavy loss of life. Six catastrophic floods were recorded in the 19th century and 18 in the 20th. These days, hundreds of people can die in the flooding; in the past the figures could run into hundreds of thousands.
In a recent article in Climate Home News, it was said that Bangladeshis were dealing with wave after wave of climate chaos. The article “sponsored” by the international ngo Helvetas told its Western audience that one of the impacts of these disasters is “forced migration”. Of course, this plays into another common climate scare, suggesting, without any discernible evidence, that huge numbers of people will become ‘climate refugees’ in the future, mostly from tropical areas, and inevitably seeking to move northwards to ‘safety’.
Making Bangladesh a poster country for Western Armageddonites spreading the pseudoscientific notion that humans are causing the climate to radically change, does the country few favours. It is sited in many geographically fragile areas, and is prone to tropical cyclones. But over 160 million people are sustained by good agriculture, increased manufacturing development, and economic growth of around 6% per annum.
As countries become more prosperous, they can become more resilient in the face of what nature has always thrown at them. This appears to have happened in the case of Bangladesh, where the number of fatalities from flooding has significantly declined over the last 50 years. Surely, this is the good news story that should be spread in mainstream media, and probably would be if the climate change narrative was not embedded in every part of the discourse.
In a recent article in Climate Home News, it was said that Bangladeshis were dealing with wave after wave of climate chaos. The article “sponsored” by the international ngo Helvetas told its Western audience that one of the impacts of these disasters is “forced migration”. Of course, this plays into another common climate scare, suggesting, without any discernible evidence, that huge numbers of people will become ‘climate refugees’ in the future, mostly from tropical areas, and inevitably seeking to move northwards to ‘safety’.
Making Bangladesh a poster country for Western Armageddonites spreading the pseudoscientific notion that humans are causing the climate to radically change, does the country few favours. It is sited in many geographically fragile areas, and is prone to tropical cyclones. But over 160 million people are sustained by good agriculture, increased manufacturing development, and economic growth of around 6% per annum.
As countries become more prosperous, they can become more resilient in the face of what nature has always thrown at them. This appears to have happened in the case of Bangladesh, where the number of fatalities from flooding has significantly declined over the last 50 years. Surely, this is the good news story that should be spread in mainstream media, and probably would be if the climate change narrative was not embedded in every part of the discourse.
As we have reported throughout the year, it has been a disastrous period for climate alarmists preaching their gospel of doom to inflict a controlling Net Zero political agenda across the world. Global warming ran out of steam years ago, and no amount of ‘adjusting’ of surface temperature databases can hide that fact. Weather events are cyclical, and attributing any one event to human activity is model-driven junk science. Summer Arctic sea ice stopped declining over a decade ago, but David Attenborough still says it could all be gone by 2035. Polar bears, penguins and coral – all doing nicely thank you. More prosperous and healthier societies are learning to protect themselves against the ravages of Mother Nature. Small increases in carbon dioxide, otherwise known as plant food, continue to green up the planet, leading to higher food yields, reduced famine and healthier eco systems.
Happy eco-New Year to all my readers.
Chris Morrison is the Daily Sceptic’s Environment Editor.
Happy eco-New Year to all my readers.
Chris Morrison is the Daily Sceptic’s Environment Editor.
8) And finally: Putin’s war is hastening Russia's demographic crash
Bloomberg, 18 October 2022
Bloomberg, 18 October 2022
President Vladimir Putin spent years racing against Russia’s demographic clock, only to order an invasion of Ukraine that’s consigning his country’s population to a historic decline.
Besides casualties in the thousands on the battlefield, the enlistment of 300,000 reservists to join the fight -- and an even bigger flight of men abroad -- is derailing Putin’s goals of starting to stabilize the population already this year.
Crippling disruptions from the war are converging with a population crisis rooted in the 1990s, a period of economic hardship after the Soviet breakup that sent fertility rates plunging. Independent demographer Alexei Raksha is calling it “a perfect storm.”
Besides casualties in the thousands on the battlefield, the enlistment of 300,000 reservists to join the fight -- and an even bigger flight of men abroad -- is derailing Putin’s goals of starting to stabilize the population already this year.
Crippling disruptions from the war are converging with a population crisis rooted in the 1990s, a period of economic hardship after the Soviet breakup that sent fertility rates plunging. Independent demographer Alexei Raksha is calling it “a perfect storm.”
Plans by Putin’s government had set the goal of starting to reverse the decline in the population in 2022 before growth should resume in 2030. Yet weeks before the mobilization was announced in September, an internal report drafted for a closed-door meeting showed officials were already concluding those targets were unrealistic.
Citing the consequences of the coronavirus and migration outflows, the report instead proposed a revision that envisaged a decrease of 416,700 people in 2030.
Should military operations continue in the coming months, as expected, Russia may see less than 1.2 million births next year, the lowest in modern history, according to Igor Efremov, a researcher and specialist in demographics at the Gaidar Institute in Moscow. Total deaths in Russia average close to 2 million annually, though the number increased during the pandemic and approached 2.5 million last year.
‘Chief Blow’
“The chief blow to the birth rate will be indirect, because most families will have their planning horizon completely destroyed as a result,” Efremov said. “And the impact will be stronger the longer the mobilization lasts.”
A demographic reckoning has arrived for Russia, its economy starved of young employees and now at risk of stagnation or worse long after the war is over. Bloomberg Economics now estimates Russia’s potential growth rate at 0.5%, down two percentage points from before the war -- with demographics accounting for about a quarter of the downgrade.
Unfavorable demographics in the areas of Ukraine that Putin plans to annex is only likely to add to the challenges Russia faces from a growing population burden, Renaissance Capital economists said in a report this month.
While demographic traumas usually play out over decades, the fallout of the invasion is making the worst scenarios more likely -- and much sooner than expected.
The mobilization is upending families at perhaps the most fraught moment ever for Russian demographics, with the number of women of childbearing age down by about a third in the past decade. It’s also coinciding with one of the highest death rates in the world as well as a depleted and graying labor market, alongside immigration outflows and questions about Russia’s ability to attract workers from abroad.
For Putin, who just turned 70, Russian demography has long been an existential issue, and just last year he declared that “saving the people of Russia is our top national priority.” He’s presided over efforts to buy time with costly policies that contributed to a steep gain in longevity and ranged from lump payments for new mothers to mortgage relief for families.
But as Russia approached the invasion of Ukraine in February, it was coming off its deadliest year since World War II -- made worse by the pandemic -- with the population in decline since 2018. It reached 145.1 million on Aug. 1, a fall of 475,500 since the start of the year and down from 148.3 million in 1991, when the Soviet Union collapsed.
The continuation of the military campaign and mobilization until the end of next spring would be “catastrophic,” according to Efremov, likely bringing births down to just 1 million in the 12 months to mid-2024. The fertility rate may reach 1.2 children per woman, he said, a level Russia saw only once in 1999-2000.
A fertility rate of 2.1 is needed to keep populations stable without migration.
Citing the consequences of the coronavirus and migration outflows, the report instead proposed a revision that envisaged a decrease of 416,700 people in 2030.
Should military operations continue in the coming months, as expected, Russia may see less than 1.2 million births next year, the lowest in modern history, according to Igor Efremov, a researcher and specialist in demographics at the Gaidar Institute in Moscow. Total deaths in Russia average close to 2 million annually, though the number increased during the pandemic and approached 2.5 million last year.
‘Chief Blow’
“The chief blow to the birth rate will be indirect, because most families will have their planning horizon completely destroyed as a result,” Efremov said. “And the impact will be stronger the longer the mobilization lasts.”
A demographic reckoning has arrived for Russia, its economy starved of young employees and now at risk of stagnation or worse long after the war is over. Bloomberg Economics now estimates Russia’s potential growth rate at 0.5%, down two percentage points from before the war -- with demographics accounting for about a quarter of the downgrade.
Unfavorable demographics in the areas of Ukraine that Putin plans to annex is only likely to add to the challenges Russia faces from a growing population burden, Renaissance Capital economists said in a report this month.
While demographic traumas usually play out over decades, the fallout of the invasion is making the worst scenarios more likely -- and much sooner than expected.
The mobilization is upending families at perhaps the most fraught moment ever for Russian demographics, with the number of women of childbearing age down by about a third in the past decade. It’s also coinciding with one of the highest death rates in the world as well as a depleted and graying labor market, alongside immigration outflows and questions about Russia’s ability to attract workers from abroad.
For Putin, who just turned 70, Russian demography has long been an existential issue, and just last year he declared that “saving the people of Russia is our top national priority.” He’s presided over efforts to buy time with costly policies that contributed to a steep gain in longevity and ranged from lump payments for new mothers to mortgage relief for families.
But as Russia approached the invasion of Ukraine in February, it was coming off its deadliest year since World War II -- made worse by the pandemic -- with the population in decline since 2018. It reached 145.1 million on Aug. 1, a fall of 475,500 since the start of the year and down from 148.3 million in 1991, when the Soviet Union collapsed.
The continuation of the military campaign and mobilization until the end of next spring would be “catastrophic,” according to Efremov, likely bringing births down to just 1 million in the 12 months to mid-2024. The fertility rate may reach 1.2 children per woman, he said, a level Russia saw only once in 1999-2000.
A fertility rate of 2.1 is needed to keep populations stable without migration.
“It is likely that in conditions of uncertainty, many couples will postpone having children for some time until the situation stabilizes,” said Elena Churilova, research fellow in the Higher School Economics’s International Laboratory for Population and Health. “In 2023, we are likely to see a further decline in the birth rate.”
The London-based Net Zero Watch is a campaign group set up to highlight and discuss the serious implications of expensive and poorly considered climate change policies. The Net Zero Watch newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.netzerowatch.com.
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