Last week’s Global Status Report from the Renewable Energy Policy Network for the 21st Century (REN21) makes for striking reading. In 2015 global new investment in renewable energy hit a new record at over $285 billion. Of that figure $265 billion went into renewable power, more than double the amount invested in new coal and gas-fired power generation. Led by China, India and Brazil, for the first time ever investment in renewable power in developing countries exceeded that in developed countries. The figures demonstrate the accelerating growth in decarbonised power generation around the world.
Yesterday the price of carbon in the EU Emissions Trading Scheme (EU ETS) – the carbon market the EU describes as its principal policy tool for decarbonisation - hovered around €6 per tonne of carbon (€/tCO2), far below the €30/tCO2 analysts consider the minimum price for driving emissions reductions and low carbon investment. That morning Conservative MEP Ian Duncan released his draft report for the European Parliament’s Environment Committee on the European Commission’s reform proposals for the EU ETS in the period 2021 to 2030. The price barely moved. In seeking to ensure his draft emerges from the European Parliament in (something like) one piece, Duncan has sacrificed ambition for compromise.
Seven years ago as it prepared for G20 summit in London the British government debated internally whether the G8 was worth bothering about. The contention then was that a successful G20 would leave no space for the G8, while the G20 might not succeed if groups of countries caucused before G20 summits. Seven years later, and shorn of Russia, the G7 appears to be in good health, with a successful summit hosted by Japan in Ise-Shima just last week. But among the press statements, the 32-page communique and the photo-ops was there really much for anyone else to bother about?
At the end of last week the European Commission released its latest proposed bindings of market access terms in the long-running Trade in Services Agreement (TiSA) negotiations in Geneva. For anyone with the inclination to scan a draft services schedule, the EU TiSA text is interesting because it is a timely illustration for businesses of what trading services in the UK from London might look like if the UK voted to leave the EU on June 23. If the UK was to opt leave both the EU and the EEA its guaranteed access to the EU market might revert to looking something like the TiSA schedule.
The Digital Single Market strategy was launched with great fanfare last year with the aim of creating an online consumer market of over 500 million people and to give encouragement to the growth of European digital companies large enough to compete with the Googles and the Alibabas. The implicit trade-off in this agenda was that the interests of cross-border consumers and companies should be prioritised over businesses using national, more traditional business models. Developments this week suggest that this trade-off is no longer at the heart of the EU approach.
The European political establishment breathed a sigh of relief when the former Austrian Green leader Alexander Van Der Bellen won that country’s Presidential election by a razor-thin 0.7% margin a couple of days ago. Although Van Der Bellen is himself an outsider, he was more palatable to the mainstream, and his victory prevented FPO candidate Norbert Hofer from becoming the EU’s first far-right head of state.
Another week, another banking union/disunion issue. A draft set of European Commission proposals in the public domain this week seem to confirm the intent not to seek explicit EU harmonisation of minimum eligible liability requirements (so-called MREL) for bail in. This is an EU counterpart for TLAC, although applicable to all banks, not just SIFIs, and accounted in different ways and on different scope.
Right after John Kerry met with the CEO’s of Europe’s largest banks last week in London, HSBC’s chief legal officer reflected the general mood among UK banks when he said that his firm had “no intention of doing any new business involving Iran”. Given that this was the point of the meeting, one wonders why Kerry bothered showing up.
On Monday 9 May 2016 at 23:10 something remarkable happened. For the first time since 1882 coal made no contribution to UK electricity generation. At the same moment, Germany, Europe’s leader in renewable energy and home to the Energiewende (‘energy transition’), was generating three quarters of its electricity from a mixture of hard coal and even more polluting lignite (see Figure 1).
Fitch Ratings this week concluded that Brexit would increase political risk across Europe by boosting populist political parties, including many who are Eurosceptic, and by changing the political centre of gravity in the EU. There is not much to disagree with in that. As the referendum debate grinds on, however, it is also worth considering some of the ways in which the political risks for the rest of Europe will feed back and impact on the UK following a vote for Brexit.