CLIMATE CHANGE IS THE SAUCE, WHILE INDUSTRIAL COMPETITIVENESS IS THE FEAST
By Bruce Piasecki, author of Doing More with Less: The New Way to Wealth and 2040: A Fable
Today, July 15, 2021, is a historic day in the world’s fight to address climate change. At least three developments of global market consequence were transacted today, after years of preparations.
- First, in Brussels, EUROPE challenged the rest of the world by articulating a set of rigorous moves away from fossil fuel consumption. More on their ambitious blueprint for radical change and social transformation below.
- Second, in WASHINGTON, President Biden and Congressional Democrats began their push for a 3.5 trillion dollar “infrastructure” bill centered on a distinct social and climate agenda. Note that this is centered on climate; up until now climate was tertiary not primary. More on that shortly on these far-reaching goals for our age of carbon and capital constraints.
- Finally, today marks the first in a series of mid-months where DIRECT DEPOSITS of financial relief were being placed into the accounts of more than 25 million Americans in need of help regarding the size of their families. You can think of this as a new deal where America realizes it is more like Europe and Asia than we know.
EUROPE LEADS THE WORLD ON GETTING PAST THE LAST ONE HUNDRED YEARS ON THE PETROCHEMICAL TREADMILL
This European plan is focused on specific energy transformation actions; each happening in step sequence across the next 9 years. “Our current fossil fuel economy has reached its limit,” the president of the European Commission, Ursula von der Leyen, said from Brussels. This the position of a 27 nation bloc that will put these nations in a lock-step march to carbon neutrality by 2050.
The devil of course is in the details — the kind of details my firm eats for breakfast and lunch each day, but I need you to know that the details are quite spicy, and the sauce truly an international cuisine. It is not enough to be an ugly American any longer if you want to win this race. This set of actions calls for a reduction of European emissions of greenhouse gas emissions by 55 percent by 2030 compared with 1990 standards.
You know the rest of the world is watching.
CHINA has announced its massive Electric Car station goals; shifting the nature of the car.
The Biden people, and Congress at large, are keenly away from this giant European step forward, as are the many multinationals that operate both in Europe, China, and North America. The great investment houses, from Macquarie in Australia to their Green Bank in Manhattan, from JPMorgan to CITI and Barclays — they all are watching this for the new musical scores on how money will be played, borrowed and won.
And while these new European positions will be hard on select businesses and consumers, it is more than a proposal, having been hammered out in painful details. This set of actions in Europe has a tough balance of pain and profit in it. Europe was the first to declare goals by 2050, and now TODAY they have spelt out the concrete road map for all to follow.
And they are being tough on themselves up front, for example, requiring a net of 38.5 percent renewals of all energy consumed in Europe by 2030.
MEANWHILE IN AMERICA
The Democrats have added a carbon tax to their sweeping budget proposal, in a fashion both coordinated with the European allies, but also timed to win votes. The Europeans published for this world of experts a transparent 291 page report on how they are doing it, the framework, the trade-offs, and the still to be hammered out inter border tariffs.
The Democrats did not provide the details, which is why I will stop here on this American side of the ledger, until further notice in a month or two.
WHAT IS THIS TITLE?
If you think of climate change as being the sauce, you will see that the fundamental issue at stake is the flow of capital. If climate change is the sauce, industrial competitiveness is the feast. There will be winners and losers in this massive change in industrial competitiveness.
I use this colorful title because we all know of the world as having several hundred different kinds of sauce, from chile crisps to chermoula, from buffalo sauce to fruit caramel, from blistering tomato dressings, to whipped cream and tartar sauce. I like the best sauce moyo with mango.
It must be the same with climate change.
One size of a solution does not fit all cities, all regions, all consumers.
As the Europeans demonstrate across their 27 involved nation states, climate solutions must be thought of as a sauce we can taste and tolerate. What is at stake — in choosing before you Yangnyeom Sauce or Zhug or Thousand Island Dressing or even the now universal salt rich Teriyaki Sauces — is the very nature of competition. It is industrial revitalization that is the feast of these new policies/goals/objectives.
Sure, it is painful to admit that the day now shapes the destiny of some losers we’ve all gotten used to. But it is a delight to note that this all happened July 15, 2021.
A brand new world awaits.
