Weekly Headlines - 21st Feb 2023
The never-ending Adani saga, Search for the new World Bank Chief, and South Asia's looming energy crisis
What’s up this week?
🌱ESG markets shudder as Adani Group credit arrangements suggest inadvertent financing of heavy polluters
The financing arrangements across the Adani Group have introduced a new risk, where green investments leaked into funding the Carmichael coal mine. With more than 500 funds registered in EU as promotion towards ESG goals actually holding Adani stocks, this is a hard hit towards sustainable investing, even though MSCI and S&P Global have responded with consequences. Adani’s spokesperson have declined comments and threatened legal action amidst these allegations.
🌱US leads search for new World Bank chief with climate at heart
The US Treasury is racing to assemble a list of contenders with strong credentials in climate finance to lead the overhaul of the World Bank, following the early exit of Trump appointee David Malpass.Frustration with Malpass had been building in the US administration for some time, however, and had boiled over after he failed to acknowledge human-caused climate change at a conference late last year. He said afterwards that he had been misunderstood. The US, which traditionally chooses the World Bank president, is expected to select a candidate who could attract the backing of other leading shareholders and accelerate its reform to put climate change at the heart of its work.
🌱India invokes emergency law to force coal-based power plants to up output
An emergency law was set up to force power plants that run on imported coal to maximise output ahead of an expected record surge in power usage this summer. Most of India’s power plants that use imported coal have not been able to operate at full capacity because of the difficulty to compete with power generated from cheap domestic coal. This is due to India’s expectations that there would be an 8% increase in coal consumption in the financial year ending in March 2024 because of its increased economic activity and erratic weather, boosting growth in demand for power.
🌱Gas shortage exposes fragile South Asian economies to more pain
In Pakistan and Bangladesh more than 40% of annual retail sales occur in the 30 days of Ramadan, making malls packed at night; however an official order force shutting malls by 8.30pm has been announced to save energy to avoid the repeat of massive power cuts they faced last year, with a prediction of worsening crisis as the imports of liquefied natural gas has dropped. The shut down at these hours have the estimated impact of job losses for 3-4 million people. As LNG prices are unlikely to ease to help South Asia, there is an expectation for industries to rebound to China’s goods which would push prices up in 2023.
🌱EU Approves Over $550 Million for Steel Decarbonization Initiatives at ArcelorMittal
The European Commission approved US$557 million state aid to fund projects that seek to advance efforts of decarbonising steelmaking through the steel and mining company ArcelorMittal. As demand for fossil-free steel is expected to continue increasing, steelmaking supply chains still remain a challenging sector to abate as it is one of the biggest emitters of CO2 internationally. ArcelorMittal’s lofty commitment to achieving company-wide net zero emissions by 2050 is coupled with its promise to share the technicalities developed from these projects with other European steel producers.
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Chart of the Week
Across the US, a new revolution is under way in sectors from solar to nuclear, carbon capture to green hydrogen — and its goals are profound: to rejuvenate the country’s rustbelt, decarbonise the world’s biggest economy, and wrest control of the 21st-century’s energy supply chains from China, the world’s cleantech superpower. Last year’s colossal Inflation Reduction Act and its hundreds of billions of dollars in cleantech subsidies are designed to spur private-sector investment and accelerate the country’s decarbonisation effort. It is expected that the Inflation Reduction Act will boost renewable investment to nearly $114bn a year by 2031. Read more on the Financial Times.
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This newsletter is jointly distributed by General Pacific. General Pacific is an advisory house and venture builder with a focus on growing high-impact businesses, with the potential to be game-changers and disruptors in their respective sectors in Southeast Asia.
