Climate impact will be least of worries if U.S. govt shuts down
Market turmoil sending warning of chaos to come.
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Unsettled outlook: Satellite imagery from the National Hurricane Center on Wednesday shows tropical storm Philippe, about 500 miles east of the northern Leeward Islands, and another area of likely storm formation hot on its heels.
Every time the U.S. government is threatened by politics with a shutdown, constituencies from travel to military to social programs forecast disaster, and this year the climate chorus is no different.
A shutdown next week would halt vital government spending tied to President Joe Biden’s infrastructure plan and Inflation Recovery Act. It would delay disaster spending of as much as $2.8 billion at the Federal Emergency Management Agency (FEMA) right in the middle of hurricane season.
It would delay regulations and spending to stop pollution by the Environmental Protection Agency and possibly delay the upcoming climate disclosure rules by the Securities and Exchange Commission (which many argue might not be a bad thing).
But all of that is nothing compared to what plummeting markets will do to future investment in the solar, wind, battery, electric vehicle, and carbon capture companies that are the ultimate hope of a technology solution to the climate crisis.
Investors and politicians are being warned by markets this week and while that might not be enough to break the stubbornness in the House before a shutdown starts, it will certainly attract attention next week once it starts.
Think 6% short-term rates and a doubling of stocks in the S&P 500 at 52-week lows, and you get the picture. Great market crises are often caused by stupid moves in Washington, and this one is shaping up to be a doozy.
On the plus side, it will be a helluva buying opportunity at some point soon.
Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.
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A rough quarter for clean energy stocks
. . . . Even taking into account so-called seasonal weakness, U.S. stocks have had a dismal third quarter. And among stocks in the climate space the damage was even more severe. Of the 50 stocks in the Callaway Climate Index, all but four fell during the quarter, through Sept. 26.
The price-weighted index itself fell 25%, led lower by weakness in solar stocks. A weaker-than-expected outlook from Solaredge in early August hammered the shares, which continued to slide throughout the quarter. Maxeon Solar Technologies and Sunnova also fell sharply during the period.
The CCI Natural Resources index was off 26.7% through Tuesday. That came despite a huge lithium discovery on the Nevada-Oregon border announced during the quarter.
Wind stocks slumped as well, with the Callaway Climate Wind Index off 19.3%. Danish wind giant Orsted saw its shares fall more than 40% during the quarter.
The sole “winner” in the quarter was the electric vehicle sector, which managed to match the S&P 500’s 4% decline during the period. That was all the more impressive given that EV giant Tesla TSLA 0.00%↑ was off 6.7% during the quarter.
Climate disclosure costs hurting ESG profits
. . . . As the Securities and Exchange Commission prepares to roll out its new climate disclosure rules, and as California unveils its own emissions disclosure law, analysts are starting to focus on the cost of tallying up climate risk, writes Mark Hulbert. According to one new study, these types of costs are actually raising the cost of equity at some companies trying to be more environmentally friendly, not lowering it. The study focused on companies with high ESG ratings, which are themselves somewhat subjective. But company profits are not, and that is what investors are watching. . . .
Thursday’s subscriber insights
Skeptical on climate change? This summer changed a lot of minds
. . . . For many years, it seemed that those who believed in climate change were a relatively small number of scientists and tree-huggers. And Al Gore. But now the experience of extreme conditions — particularly this summer’s extreme heat — is drawing more to the belief that global warming is, indeed, an issue, according to a new poll. Read more here. . . .
Why Trump's 'batty' whales — and other political talk — should give you pause
. . . . Beware the effects of economic downturns — and politics — on efforts. In England, rough economic times has led UK Prime Minister Rishi Sunak to reverse course and allow new oil drilling in the North Sea. And in Germany, troubles in the building trade have led to a u-turn in efforts to construct more green-friendly buildings. And then there’s Donald Trump, who has a wacky pronouncement on whales and wind turbines. Read more here. . . .
Editor’s picks: Fighting the climate crisis on the beaches and in the oceans
Seeking shells for green solutions
Washington-based startup Tidal Vision recently raised more than $20 million to expand its green chemistry business that turns waste crab shells into a biopolymer called chitosan that now outperforms synthetic chemicals. Chitosan is a sugar that comes from the outer skeleton of shellfish, including crab, lobster, and shrimp. It has many commercial and biomedical uses. GeekWire reports the company, in Bellingham, Wash., was launched in 2015 by a former Alaska fisherman and employs about 80 people. “Our mission is to try to create positive and systemic environmental impact by making these chitosan technologies applicable for mass adoption, where they’ve historically only been available for niche applications,” co-founder and CEO Craig Kasberg told GeekWire.
Some climate warriors love seafood
Thriving sea otter populations help fight the climate crisis, says the National Resources Defense Council. Sea otters, particularly because of their love of tasty sea urchins, are critical to ensuring that massive kelp forests flourish and store as much carbon as possible. The U.S. Department of the Interior adds that “these adorable animals stay together in groups, called rafts, for protection from predators, and so they don’t accidentally float away. They’ll hang out with friends and family and dive deep to catch food.”
Explain that: Record low growth for Antarctic sea ice
. . . . NASA’s Earth Observatory reports that Antarctic sea ice reached its lowest maximum extent on record earlier this month at a time when the ice cover should have been growing at a much faster pace during the darkest and coldest months. The map above shows the sea ice extent on September 10, 2023. “It’s a record-smashing sea ice low in the Antarctic,” said Walt Meier, a sea ice scientist at the National Snow and Ice Data Center. “Sea ice growth appears low around nearly the whole continent as opposed to any one region.” NASA reports sea ice around Antarctica reached its lowest winter maximum extent on Sept. 10, 2023, at 6.5 million square miles, according to researchers at NASA and the NSIDC. That’s 398,000 square miles (1.03 million square kilometers) below the previous record-low reached in 1986 — a difference equal to roughly the size of Texas and California combined. The average maximum extent between 1981 and 2010 was 7.22 million square miles. NASA’s Earth Observatory says scientists are working to understand the cause of the meager growth of the Antarctic sea ice, which could include a combination of factors such as El Niño, wind patterns, and warming ocean temperatures. New research has shown that ocean heat is likely playing an important role in slowing cold season ice growth and enhancing warm season melting.
Words to live by . . . .
“Autumn is a second spring when every leaf is a flower.” — Albert Camus.