Teething troubles in the green transition

Today’s top stories

• Strong retail sales data and robust results from Walmart have lifted more of the gloom on the US economy, sparking a further uptick on Wall Street and setting global stocks on course for their best week in nine months.

• Crunch talks over a ceasefire and hostage release deal in Gaza stretched into a second day in Doha, as international mediators sought to broker an agreement that would also aim to ease growing regional hostilities and avoid full-scale war between Israel and Iran.

• Paetongtarn Shinawatra was elected as Thailand’s prime minister, marking the return to power of the family that has dominated Thai politics over the past two decades.

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Good evening.

Joe Biden’s Inflation Reduction Act has been the most significant single policy in the west so far to accelerate the transition to cleaner energy. But as it marks its second birthday today, delays to key projects and a threat by would-be president Donald Trump to terminate it have added to doubts on how quickly — and at what cost — the world can move to a fossil fuel-free future.

As our Big Read highlights, Biden plans to use the IRA, alongside the Chips and Science Act, to recast the US economy. But, as columnist Gillian Tett notes, the cost of such initiatives has tended to be underestimated.

The fact that much of the $400bn in tax credits, grants and loans for renewable energy technologies has gone to former industrial heartlands, many of them in Republican areas, gives red states some ammunition against Trump’s wrecking ball. But whether it is enough in itself to truly decarbonise America is doubtful, she writes. To give just one reason: even under the Biden presidency, oil and gas production has continued to surge, contributing among other things to a huge rise in planet-warming methane gas emissions.

And although the burning of fossil fuels is recognised as the biggest contributor to greenhouse gas emissions, global leaders are still arguing over their phaseout. A huge row has broken out at the UN over the removal of a specific mention of fossil fuels from the draft of a climate pact at the centre of the Summit of the Future, which takes place in New York next month, sparking protests from more than 80 Nobel Prize winners and former world leaders.

Industrialists have also been lobbying hard. Big Tech companies, for example, likely to be some of the most energy-intensive users of the future as they race to develop power-hungry artificial intelligence, are trying to reshape how emissions are reported. 

Other sectors have balked at the rising costs of the green transition or in some cases are even doubling down on fossil fuels.

Ørsted, the Danish offshore wind developer, yesterday ditched plans for a European green fuels plant because the still nascent market was growing more slowly than expected. Glencore has ditched a radical plan to spin off its coal business after shareholders objected, in one of the most striking examples of the shift in sentiment back towards fossil fuels. And energy majors such as Shell and BP have stepped back from efforts to woo environmental, social and governance investors, promising instead to focus on their core oil and gas operations.

Other projects are also encountering difficulties. Sweden, for example, has ambitious plans for green electricity from its extensive hydropower network. Thousands of people have flocked to the far north of the country in a new gold rush, but projects are struggling to scale up, as another Big Read details.

In the meantime, evidence of climate change’s impact on the planet continues to stack up, from record temperatures across the world to wildfires in Europe, now the world’s fastest-warming continent.

Need to know: UK and Europe economy

Strong retail sales in July capped a good week for the UK economy, following news that gross domestic product grew 0.6 per cent in the second quarter, encouraging the view that the Bank of England will keep rates unchanged at its meeting in September.

Margrethe Vestager will not return for a third term as the EU’s most powerful antitrust official, with the Danish government preparing to nominate a different candidate to be their European commissioner. Vestager had become renowned for hitting US Big Tech companies with multibillion-euro fines.

Need to know: Global economy

Donald Trump promised an “economic boom” if he wins the US presidency — or a “1922-style depression” if he loses — vowing to bring down the price of cars, housing, insurance and prescription drugs (even as the current presidency claimed victory in talks with pharma groups to cut prices of 10 key medicines.) A think-tank report today, however, says the prospect of a Trump presidency “should make business leaders shudder”.

China’s industrial production grew at the slowest rate in four months in July, adding to signs of a weak start to the third quarter.

Sustainable economic reforms are tempting investment back to Ethiopia and Zambia, says academic and author Paul Collier. Wamkele Mene of the African Continental Free Trade Area says creating a single integrated market across Africa would create jobs and stem the flow of migrants from the continent.

A Big Read details how Venezuelan President Nicolás Maduro is clinging to power despite widespread protests over the validity of his recent election victory. Neighbours Brazil and Colombia have called for new elections.

Need to know: Business

SLB, the world’s biggest oilfield services company, is expanding in Russia following the departure of its main western rivals since Moscow’s full-scale invasion of Ukraine.

The FT revealed that SoftBank had talks with Intel about producing an artificial intelligence chip to compete with Nvidia but the plan foundered after the US chipmaker struggled to meet the Japanese group’s requirements.

Global fashion brands including H&M and Zara are shifting orders from Bangladesh because of the turmoil that surrounded the fall of authoritarian Prime Minister Sheikh Hasina, in which an estimated 500 people died.

Dubai’s international port operator DP World became the latest logistics company to disclose the impact of disruption caused by rebel attacks in the Red Sea. Net profits more than halved in the first half of the year.

Science round up

Vaccine bottlenecks are hampering the response to an mpox (formerly known as monkeypox) emergency in central and east Africa in echoes of the problems facing the region during the coronavirus pandemic.

A row is brewing over stricter EU rules on medical trials, which give less weight to so-called single-arm trials, where one group of patients does not receive the treatment. Pharma groups say the new guidance risks threatening new treatments for rare diseases.

Fund manager Helene Servillon says US regulators’ rejection of MDMA-assisted therapy is a missed opportunity. MDMA, commonly known as ecstasy, works by suppressing the fear response, allowing patients who suffer from PTSD to observe and reprocess painful memories.

The latest warning about the global spread of superbugs came with new research showing urban birds such as ducks and crows carry drug-resistant bacteria.

The prospect of water on Mars demands a spirit of exploration rather than exploitation, writes commentator Anjana Ahuja. Mankind should continue the search for life beyond our own planet but shield it from the worst piratical instincts of our own species, she says.

Pioneering geological research has revealed a surprise at the heart of Stonehenge: the neolithic monument’s “Altar Stone” was transported all the way from north-east Scotland.

And on the subject of prehistoric mysteries, could a doughty citizen scientist in London have cracked the code to early human writing? 

Some good news

Here’s an instructive tale of how indigenous communities in Guyana have helped save a rare bird — the red siskin — and reconnected with nature in the process.