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July 14, 2021


Peter Garrison

Thanks, Joe.


Here is some updates on the international political front from yesterday's WSJ:

Climate politics seem to be undergoing a rapid and significant shift in many places, and not in the direction environmental activists hoped. To wit: Voters have started noticing how much they’re each going to have to spend to reduce carbon emissions, and they don’t like it.

It’s a startlingly broad phenomenon. The Swiss last month rejected a referendum to impose a fuel tax and a tax on airline tickets. The British cabinet, which on Wednesday proposed major new carbon restrictions for transport industries, also is split over previously announced plans to ban gas-fired home heating and require landlords to boost energy efficiency in rental units.

President Emmanuel Macron has seen his agenda knocked off course for the better part of three years by grassroots protests against a diesel tax hike that started in 2018.

Meanwhile in Japan, climate-minded shareholders have just wrapped up a disastrous (for them) season of annual shareholder meetings. Resolutions codifying aggressive corporate carbon targets were defeated at all three companies where activists proposed them— Mitsubishi UFJ, Sumitomo and Kansai Electric Power.

This followed the announcement in April that Japan’s Government Pension Investment Fund, the world’s largest with around $1.6 trillion under management, is abandoning trendy ESG investing. (It stands for “environmental, social and governance.”) The strategy was a financial loser, and “we can’t sacrifice returns for the sake of buying environmental names or ESG names,” Kenji Shiomura, senior director of the fund’s investment strategy department, said in an interview with Bloomberg. Given Japan’s impending glut of retirees and shortage of workers, Bloomberg’s reporters had to concede that “pensions are a more sensitive subject than climate change.”

Primarily climate activists are victims of their own success. For a variety of reasons—some market-based and benign, and others regulatory and expensive—carbon intensity in developed economies has declined markedly in recent decades. By one count, the U.S. now emits 0.28 kilogram of carbon dioxide for every dollar of gross domestic product, down from more than 0.8 kilogram in the 1970s (using constant 2010 dollars). Britain’s emissions per dollar of GDP have declined to around 0.13 kilogram from above 0.6 kilogram in the same span, and Japan’s to 0.18 from 0.36.

This suggests that further reductions in emissions in these economies are likely to be much harder and costlier to eke out. Note how, despite fantastical promises about the economic benefits of electric cars or green jobs, it always seems to require uncountable trillions of dollars for taxpayer-financed Green New Deals and an extra couple of hundred bucks on your household heating bill to get from here to there.

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