Day: December 10, 2018

Environment ministers from nearly 200 countries are arriving in the Polish city of Katowice to join haggling over ways to advance the 2015 Paris accord to curb climate change. National leaders have stayed away from this year’s climate change conference largely because it is devoted to agreeing the details of the implementation of the Paris agreement.

But as ever, the devil is in the details.

Ahead of the ministerial arrivals, climate activists from around the world marched Saturday in the Polish city to vent their frustration and to urge governments to “wake up” and “make the planet green again.”

“It’s time to save our home,” they chanted near the hall hosting the two-week U.N. Climate Change Conference.

Meanwhile, 1,500 kilometers away police in Paris battled Yellow Vest protesters mounting their fourth Saturday of action against the government of French President Emmanuel Macron, a revolt triggered initially by the imposition of higher taxes on fuel.

For Western governments, even environmentally-friendly ones, climate change poses a massive political dilemma the protests in France are bringing home.

Impose the tax hikes and costly regulations scientists say are needed to lower emissions and move economies away from dependency on fossil fuels and governments risk prompting a backlash, largely from lower-income workers and pensioners who can ill-afford to bear the expense. Or move slowly and risk blow back from climate activists and their supporters among largely middle-class and higher-income groups able to adapt with less hardship.

Squaring the circle between those who demand fast-track climate-friendly measures and those who want to slow down and mitigate the impact of moving towards a low-carbon future isn’t going to be easy, as the Paris protests demonstrate, say analysts.

Poland, which is hosting this year’s conference, used the opening last Monday of the 24th U.N. climate change conference to emphasize the dilemma and to try to temper ambitions when delegates come to finalize the rule book for the Paris agreement to make the accord operational.

Among other things Polish leaders called for a “just transition” for fossil fuel industries that face cuts and closures amid efforts to reduce greenhouse gas emissions, warning a badly managed transition to a low-carbon, renewable-energy future will cause major disruption to industry, hardship for ordinary people and could trigger social unrest not just in France, but in other industrialized nations.

Many climate activists attending the conference dismiss warnings about social and political repercussions, seeing them as merely efforts to impede progress, apply the brakes and of providing specious justification for propping up fossil-fuel industries.

British naturalist and documentary-maker David Attenborough gave voice to their frustration last week at the conference, warning time is running out to avert irreversible disaster.

“If we don’t take action, the collapse of our civilizations and the extinction of much of the natural world is on the horizon. The world’s people have spoken, their message is clear, time is running out, they want you, the decision-makers, to act now. They’re supporting you in making tough decisions, but they’re also willing to make sacrifices in their daily lives,” he said.

Climate activists remain furious that attempts to incorporate a key scientific study into the talks failed last week. U.N. Intergovernmental Panel on Climate Change report, published in October, said the world is completely off track from curbing global warming and is heading towards a catastrophic three-centigrade jump in temperatures this century.

Four oil-producing countries, the United States, Saudi Arabia, Kuwait and Russia, opposed the inclusion of the IPCC report into the conference’s key negotiating text. The report is likely to resurface in the final week of bargaining.

The issue of a “just transition” is fast developing into one of the core climate-related issues governments are debating, and it is prompting the attention of investor organizations as well as organized labor.

“As the world begins its much-needed transition from high-carbon to low-carbon economies, investors will have to look beyond physical environmental issues and consider the social aspects of workers and their communities who will be impacted by the move away from carbon-intensive industries,” says Fiona Reynolds, chief executive of the Principles for Responsible Investment, an international network of major institutional investors.

 
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General Motors is fighting to retain a valuable tax credit for electric vehicles as the nation’s largest automaker contends with the political fallout triggered by its plans to shutter several U.S. factories and shed thousands of workers.

Preserving the $7,500 tax incentive for buyers is crucial for GM as the company pivots from internal combustion engines in favor of building cars powered by batteries or hydrogen fuel cells. Yet the layoffs and plant closings could imperil GM’s push to keep the incentive. It helps make plug-ins such as the $36,000 Chevy Bolt more affordable at a time when competition from other electric vehicle makers is heating up.

GM faces opposition from President Donald Trump and other Republicans who consider the credit a waste of taxpayer money and want it eliminated. Trump, who has pledged a manufacturing rebirth in the Midwest, reacted angrily to GM’s “transformation “ announcement late last month, declaring that his administration was “looking at cutting all GM subsidies, including for electric cars.”

The company already is on the verge of being phased out of the tax credit program unless Congress changes a law that caps the break at 200,000 vehicles per manufacturer. Without the incentive, GM may be forced to cut the price of its electric cars to keep prospective customers from taking their business elsewhere, according to automotive industry experts.

As evidence of the credit’s importance to GM’s future, the automaker has expanded its lobbying footprint in Washington and even joined forces with two rivals, Tesla and Nissan, to call for 200,000-vehicle limit to be scrapped.

Standing in the way of that goal is Sen. John Barrasso, R-Wyo., the chairman of the Senate Environment and Public Works Committee. Barrasso introduced legislation in October to abolish the tax credit, a move he said would save about $20 billion over the next 10 years. He has argued the market for electric vehicles is already established and “no longer needs the crutch of government assistance.”

“The idea of the subsidies had to do with trying to make sure that electric vehicles would be a viable technology,” Barrasso said. “Well, that’s clearly there.”

The tax credit came up briefly during a private meeting on Wednesday between Ohio’s senators, Republican Rob Portman and Democrat Sherrod Brown, and GM chief executive Mary Barra, according to a congressional aide familiar with the conversation. As part of the restructuring, GM said it will stop making the Chevy Cruze at its Lordstown, Ohio, plant by March and is considering closing the plant for good.

Portman told Barra that it’s difficult to help with priorities such as the electric vehicle credit when GM is moving production out of Ohio, according to the aide, who was not authorized to publicly discuss the private conversation and spoke on condition of anonymity.

One of the lobbyists working to salvage the credit for GM is Kent Hance, a former chancellor of Texas Tech University who is well connected in GOP circles, according to his online profile. Hance lists his role as a fundraiser for the campaigns of outgoing House Speaker Paul Ryan, R-Wis., Senate Majority Leader Mitch McConnell, R-Ky., House Majority Leader Kevin McCarthy, R-Calif., and others. He has known Rick Perry, the energy secretary and former Texas governor, for nearly 30 years.

GM in early August named a former Trump White House official, Everett Eissenstat, its senior vice president for global public policy, a post that oversees the company’s lobbying operations. Eissenstat, however, is not registered as a lobbyist, according to disclosure records filed with Congress. Before coming to GM, he was Trump’s deputy assistant for international economic affairs.

Under federal law, the $7,500 credit for buyers begins to phase out after a manufacturer has sold 200,000 qualifying electric vehicles. GM has estimated it will hit that threshold by the end of December, just as the Bolt will be facing new and potentially stiff competition.

Sam Abuelsamid, a senior analyst at Navigant Research, said Hyundai and Kia each will be selling compact SUVs in the U.S. beginning early next year that can travel 240 miles on a single battery charge, about the same as the Bolt. Ford will be launching a number of new plug-in hybrid models in 2019, including the Lincoln Aviator, Explorer and Escape.

“With the intensifying market shift away from cars to utility vehicles all of these are expected to be more popular than the Bolt,” Abuelsamid said. To remain competitive against the new entries, “GM will likely have to cut the (retail price) of the Bolt as well as any additional EVs they launch next year by the corresponding reduction in the tax credits,” he said.

Karl Brauer, executive publisher of Autotrader and Kelley Blue Book, said the credit is “hugely important” to electric vehicle manufacturers. Lowering the up-front cost of the vehicle typically plays a significant role in sales, he said, citing surveys that show more consumers would buy electric vehicles if the cars were affordably priced.

GM joined forces with Tesla and Nissan as well as several consumer and environmental groups to broaden its lobbying push even further. The EV Drive Coalition, which was launched in November, urged lawmakers in an open letter last week to put a provision in the must-pass government spending bill that does away with the 200,000-car limit.

“Eliminating the per-manufacturer cap will level the playing field for all EV manufacturers and spur innovation among domestic manufacturers, ensuring America’s leadership in the hyper-competitive, global auto market,” the coalition said.

Tesla hit its 200,000 mark in July and Nissan has sold nearly 128,000 electric vehicles, according to data compiled by the car shopping site Edmunds.com. Other automakers are a long way from the ceiling: Hyundai, for example, has sold 15,550 plug-in vehicles, the numbers show, while Toyota is around 94,000 in electric vehicle sales.

Jeannine Ginivan, a GM spokeswoman, said the tax credit should be modified but declined to say whether the automaker backs a specific piece of legislation that would remove the cap.

“We believe an important part of reaching a zero emissions future and establishing the U.S. as the leader in electrification is to continue to provide a federal tax credit to help make electric vehicles more affordable for all customers,” Ginivan said in an email.

In addition to GM’s in-house lobbyists, four lobbyists from Hance Scarborough, the Austin, Texas-based firm that Hance founded in 1994, are working on GM’s behalf, including Hance, according to disclosure records.

GM also contracted with two other lobbying firms earlier this year to focus on electric and automated vehicle issues: the Polaris-Hutton Group and the DS2 Group. A fourth firm, the S-3 Group, was hired by GM in 2014 and earlier this year added the tax credit to its portfolio of lobbying issues.

 
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Stocks around the world are falling Monday morning, and U.S. indexes gave up modest early gains and turned lower, hurt by sharp drops for energy and financial companies.

The British pound is dropping after the U.K. prime minister postponed a vote on its departure from the European Union, and oil has resumed its sharp slide.

Keeping score: The S&P 500 index lost 47 points, or 1.8 percent, to 2,585, as of 11 a.m. Eastern time. The Dow Jones industrial average fell 435 points, or 1.8 percent, to 23,904, and the Nasdaq composite dropped 73, or 1.1 percent, to 6,894.

U.S. indexes have been lurching up and down since October, mostly down, and the S&P 500 plunged 4.6 percent last week for its biggest loss in more than eight months, as investors felt the U.S. and China are still nowhere close to ending their trade dispute.

Volatility has been high not only week to week but also minute to minute. The S&P 500 zoomed from a gain of 0.2 percent to a loss of 1.8 percent Monday morning.

Brexit pause: British Prime Minister Theresa May postponed a vote on her deal for Britain to exit the European Union, which had been scheduled for Tuesday. She acknowledged that she would have lost the vote by a significant margin.

The pound sank to $1.2517, down from $1.2751 late Friday. The FTSE 100 stock index fell 0.5 percent.

Huawei CFO Arrest: China raised the pressure over the weekend on the United States and Canada following the detention of Huawei Chief Financial Officer Meng Wanzhou. She is suspected of trying to evade U.S. trade curbs on Iran, and she was detained while changing planes in Canada.

China summoned both the U.S. and Canadian ambassadors to meetings over the weekend, where it protested the detention and called it “extremely egregious.”

Meng’s arrest has jolted the stock market, and investors fear it is adding to the tensions between the world’s two largest economies.

Energy: Benchmark U.S. crude fell 98 cents, or 1.8 percent, to $51.66 per barrel in New York. Brent crude, the international standard, lost 40 cents to $61.27 a barrel.

It’s a resumption of the steep decline for crude’s price that began in October. Last week, crude steadied after OPEC and other major oil producers said they will reduce production by 1.2 million barrels a day starting from January. The cuts will last for six months.

Energy stocks in the S&P 500 fell 2.7 percent for the largest loss among the 11 sectors that make up the index.

Overseas markets: In Europe, Germany’s DAX lost 1.2 percent, and the CAC 40 in France declined 1.1 percent.

Asian stocks were hurt by weak economic data from Japan and China. Revised data showed the Japanese economy shrank by 2.5 percent in the third quarter, a larger decline than analysts expected. Chinese imports and exports climbed at a much slower pace in November than they had in October.

Japan’s benchmark Nikkei 225 slid 2.1 percent, South Korea’s Kospi fell 1.1 percent and Hong Kong’s Hang Seng shed 1.2 percent.

Bulking up: Nutrisystem surged 27.5 percent to $43.61 after Tivity Health agreed to buy it for $47 a share in cash and stock. That’s a 37 percent premium from the weight loss company’s closing price on Friday. Tivity stock dropped 32.7 percent to $27.32.

Bad reviews: One of Yelp’s biggest shareholders said it wants online reviews company Yelp to add new directors to its board. SQN Investors said the board hasn’t held itself responsible for strategic mistakes and weak quarterly reports, and should add representatives for shareholders.

The stock rose 2 percent to $35.27.

Bonds: The yield on the 10-year Treasury note fell to 2.83 percent from 2.85 percent late Friday. The 30-year yield fell to 3.11 percent from 3.14 percent.

Other currencies: The dollar rose to 112.94 Japanese yen from 112.64 yen late Friday. The euro slipped to $1.1375 from $1.1422.
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Japan’s economy contracted 2.5 percent in the third quarter of this year, July-September, which marks the worst downturn in the past four years. 

The revised data released Monday was more than double the initial estimate of a 1.2 percent contraction.

The slide is in part driven by a series of natural disasters that hit Japan, which forced factories to cut production, and contributed to lower consumer demand and corporate investment. To a lesser extent, the U.S.-China trade dispute has had its impact on Japanese economy. 

The adjusted gross domestic product, the total value of a nation’s goods and services, also dipped 0.6 percent in the third quarter compared to the previous one, according to the data released from the Cabinet Office.

Economists, however, say that the setback for the world’s third-biggest economy is likely temporary.
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