The forces pushing back against the green transition

Today’s top stories

• Candidates loyal to imprisoned former prime minister Imran Khan stormed to a shock lead in Pakistan’s election results count, despite a military-backed campaign of arrests and harassment. Here’s our recent Big Read on the country’s political tensions.

• US President Joe Biden hit back at a US Department of Justice report that cast him as a “well-meaning, elderly man with a poor memory”. The report had spared him of criminal charges in a probe into handling of sensitive material.

• The FT revealed that revenue growth at OpenAI was surging thanks to its flagship AI product ChatGPT. The business is likely to become one of the handful of Silicon Valley companies, including Google and Meta, to have revenues of $1bn within a decade of being founded.

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Good evening.

The UK Labour party’s decision to drop its £28bn a year green spending plans highlights the challenges facing western politicians as they confront the destructiveness of a warming climate already breaching critical temperature benchmarks and a backlash from voters and parts of business.

Labour blamed the move to water down its target, which some had viewed as an “albatross” around its neck, on the government’s mishandling of the economy, which looks set to leave Sir Keir Starmer’s party with a dire inheritance should it win the forthcoming general election.

The green transition is also convulsing the business world, particularly in the oil and gas sector where fossil fuels are driving record returns in the face of calls from investors and consumers to transition faster to renewable energy.

This week has seen BP follow ExxonMobil and Chevron in reporting the second-highest annual profits in more than a decade, as has ConocoPhillips, the world’s biggest independent oil producer.  

The slow pace of oil companies’ transition to clean energy — encapsulated by the head of Brazil’s Petrobras who told the FT his business intended to be one of the last remaining producers on the planet — has caused dismay among some investors. PFZW, Europe’s third-largest pension fund, this week sold €2.8bn in oil holdings and abandoned efforts to persuade oil and gas companies to produce “verifiable” transition plans to support the Paris climate agreement.

PFZW’s decision follows a similar move by the Church of England last year and comes after countries around the world agreed to transition away from fossil fuels by 2050 at the UN COP28 climate summit in December.

The head of Norway’s $1.5tn oil fund, the world’s largest sovereign wealth fund, this week hit out at ExxonMobil’s decision to sue shareholders who had submitted a motion at the company’s annual meeting calling on the company to set more ambitious emissions targets, even after the proposal was withdrawn. As today’s Moral Money newsletter (for Premium subscribers) explains, the case could have a chilling effect on shareholders agitating for change.

But even as the evidence stacks up on the urgent need to tackle the climate emergency (see Science section below), in the political world at least, forces seem to be pushing in the opposite direction as a global backlash against climate action gathers pace, making the task of enacting green policies even tougher. And where governments have pushed through climate-friendly measures — such as the US freezing approvals for liquefied natural gas plants — pushback from industry has been fierce.

In that context, says FT columnist Stephen Bush, Labour’s retreat (which follows the watering down of the government’s own green policies) means the UK, which for a long time has been a global outlier on climate policy, “now looks rather more like a normal European country as far as green politics are concerned”.

Need to know: UK and Europe economy

A long-awaited report showed UK pension funds lost £425bn in a year of bond market crisis sparked by Liz Truss’s “mini” Budget that led to forced asset selling by retirement schemes.

Global investors warned that an overhaul of UK stock market listing rules aimed at attracting more growth companies would erode shareholder rights and undermine the country’s reputation for good governance and its attractiveness as a financial centre.

John Burn-Murdoch examines why young people in Britain are turning away from conservatism, unlike many of their peers in the rest of the world. The reason, he suggests, is that economic shocks thought to be worldwide have hit Britain’s young adults harder than most, with Brexit fuelling their distaste for Tories.

Theodor Weimer, head of the German stock exchange, said he was “deeply concerned” about the rise of far-right politics in the country. “If they were successful that would be fatal, not only for our democracies but also for Germany and Europe as key financial centres,” he argued. German chancellor Olaf Scholz said last week that leaving the EU, as proposed by the far-right Alternative for Germany party, would destroy the country’s wealth.

Need to know: Global economy

Xi Jinping and Vladimir Putin rejected US “interference” in their affairs as the Chinese and Russian leaders announced their determination to “cultivate new momentum for co-operation”.

US Democrats are putting together a “Plan B” to keep funding for Ukraine after Senate Republicans, encouraged by former president Donald Trump, voted down a bipartisan $118bn deal that had tied support for Kyiv to a crackdown on immigration at the US-Mexico border. Ukraine meanwhile is running short of ammunition.

Chinese consumer prices fell at the fastest annual rate in 15 years in January, underlining the challenges facing policymakers as they try to restore investor confidence in the world’s second-largest economy. The bigger than forecast drop of 0.8 per cent was the fourth consecutive month of decline.

Need to know: business

Google released Gemini, its latest generative AI system, as a free Apple and Android app. A more advanced subscription-based model will be integrated into its suite of productivity tools including Gmail and Google Docs.

Shares in Maersk, the world’s second-largest container shipping line, plunged after it warned of a “difficult patch” for the industry, suspended its share buyback programme and slashed its dividend.

Barclays is buying the bulk of Tesco’s banking business for £600mn in a deal that highlights the retreat of UK supermarket chains from their ill-fated expansion into financial services.

Starbucks and McDonald’s have been hit by global protests and boycotts related to Israel’s military offensive in Gaza. Economists say such campaigns could have lasting consequences if they went on long enough to cause consumers to shift buying patterns.

“Enshittification” is coming for absolutely everything. Academic and author Cory Doctorow describes the slow decay of online platforms and why we need a digital nervous system “fit to co-ordinate the mass movements we will need to fight fascism, end genocide, save our planet and our species”.

Science round-up

The average global temperature has for the first time breached the critical yardstick of 1.5C above pre-industrial levels over a 12-month period, according to the European earth observation agency, after the hottest January on record.

Faster than expected global warming also appeared to be confirmed by research on Caribbean Sea sponges, although some scientists questioned whether world trends could be extrapolated from data from a single species and region.

European scientists set a new record for the amount of energy generated from nuclear fusion. The output (enough to boil about 70 kettles) remains far from commercially viable levels but the UK government hopes a new project in Nottingham — Spherical Tokamak for Energy Production (STEP) — will become one of the first fusion machines in the world to supply power to the grid by the early 2040s.

The FT editorial board lauded the €16bn European bid to build the world’s costliest instrument dedicated purely to scientific inquiry: a giant particle accelerator beneath the Swiss-French borderland. “It should be seen as a global collaboration, much needed in a time of geopolitical turmoil, to understand better the universe in which we all live,” the FT said.   

Elon Musk’s hyping of his Neuralink project on brain-computer interfaces may be a little overdone but it has shone a light on a technology that strikes many as far-fetched, but which has recently started to return promising results.

“Children are the R&D department of the human species — the blue-sky guys, the brainstormers. Adults are production and marketing.” Innovation editor John Thornhill discusses the study of babies’ extraordinary processing powers to develop artificial intelligence models.

Some good news

New research suggests men prescribed erectile dysfunction drugs are also less likely to develop Alzheimer’s disease years later.

Source: Economy - ft.com