‘They’ve worked us to death’: Macy’s workers to strike on Black Friday

Michael Sainato
Wed, November 22, 2023 

Photograph: Mandel Ngan/AFP/Getty Images

Macy’s workers are planning to strike on Black Friday, alleging unfair labor practices and the retailer’s failure to reach a new union contract deal.

Four hundred workers at Macy’s locations in Washington state are planning action after 96% of workers voted in favor of authorizing the strike in October.

In 2021 and 2022, Macy’s reported profits of over $1bn. The company spent $600m on stock buybacks and paid out $173m in dividends to shareholders in 2022.

The union has criticized these profits and the Macy’s chief executive Jeff Gennette’s $11m annual pay package as the company refuses to budge on wage increases the union is asking for in a new contract.

“We would like them to share some of those profits so we can have a liveable wage,” said Azia Domingo, who has worked at Macy’s in Tukwila, Washington, for 21 years. “Macy’s CEO gets $11m per year while a lot of his workers rely on food banks, and some can’t even afford to see doctors because of the low wages and the expensive healthcare.”

Starting pay in the most recent contract with Macy’s was at or near Washington state’s minimum wage, which goes up to to $16.28 an hour from 1 January.

Domingo said low pay has made it difficult to attract and retain workers, while not properly compensating workers who have put in years of service with the company, resulting in chronic understaffing and higher workloads.

“A lot of times on the floor there will be one person covering everything – and that’s hard. More and more people are having to take on more,” added Domingo. “We work long hours. Our job titles keep getting longer and longer, and Macy’s isn’t wanting to invest in their employees and invest in keeping them long-term.”

The union, UFCW Local 3000, is planning a striking workers’ parade on Black Friday at the Macy’s Southcenter location in Tukwila, outside Seattle, to kick off the strike. Other workers represented by the union and community members will also join. Thousands of people have signed on to a petition supporting the workers’ strike and pledging not to cross the picket line.

Liisa Luick, another long-time sales associate at Macy’s in Lynnwood, Washington, claimed she had been subjected to unfair labor practices. Luick said she was suspended for two weeks without pay last year after calling the police in response to an individual posing a safety threat at the store. She said workers should not have to fear losing their jobs or being reprimanded for calling emergency services.

Other unfair labor practice charges filed by the union include being prohibited by Macy’s from speaking to workers in the workplace, surveillance of union members and bargaining in bad faith.

“We’ve had assaults in our stores, and we’ve had shootings out in our parking lots at the time when we have to walk out to our cars with no consideration at all,” said Luick.

She said pay had lagged far behind inflation even as Macy’s has been immensely profitable, as executives have been paid multimillion-dollar salaries, and as the company has put lots of money into publicity campaigns such as the Macy’s Thanksgiving Day Parade.

“They’ve worked us to death on skeletal staffing, and it’s just not fair,” said Luick. “When we see that they’ve made all these billions, when they pledged to put money back into the business, they’re establishing 30 new stores. They have the Macy’s Day Parade, they have the fireworks. We’re angry, and even our customers comment on it.”

A spokesperson for Macy’s said in an email in response to the strike and demands made by workers for a new contract: “Macy’s seeks to reach a deal that is mutually beneficial to the colleague, company and union.”

UK

TAX CUTS CREATE AUSTERITY

Families £1,900 worse off by the next election despite Hunt’s giveaways

Szu Ping Chan
Thu, 23 November 2023

Hunt

People will be £1,900 poorer by the next election despite Jeremy Hunt’s tax cuts, the Resolution Foundation has said.

This parliament is on track to be the first in which real household disposable incomes have fallen, the think tank said, despite a cut to National Insurance in the Autumn Statement and other giveaways from the Chancellor.

The Resolution Foundation said real household disposable incomes are on track to fall by 3.1pc between December 2019 and January 2025, equating to an average drop of £1,900. It means families will feel poorer at the next election than they did when the country last went to the polls.


Torsten Bell, chief executive of the Resolution Foundation, called it “a truly grim new record.”

Real incomes are falling as families feel the impact of stealth tax raids, previous tax rises and more than a decade of stagnating incomes.

Households face paying £4,300 more tax by the end of this decade compared to 2019, the Resolution Foundation said, as millions more people are dragged into higher tax brackets by inflation as their wages rise.

Despite nominal increases in pay packets, buying power is in fact still below where it was in 2008 and real average earnings are not forecast to return to their peak until 2028.

It signifies two lost decades for British workers. Mr Bell said it was “a totally unprecedented 20 year stagnation”.

The tax burden is expected to keep climbing every year for the next five years to a new record of almost 38pc of GDP by 2029, well above pre-pandemic levels of 33.1pc

The increase comes despite the Chancellor’s pledge to cut National Insurance from 12pc to 10pc, saving a worker on the average salary £450 a year.

The Office for Budget Responsibility (OBR) has predicted that seven million more workers will be dragged into higher income tax bands by 2028, including 3.4 million more who will be paying either the higher or top rate of income tax before the end of the decade.

Mr Bell said the Chancellor’s “tax cutting rhetoric clashed with tax rising reality”.

He said: “Ultimately this reflects the pressures, not only of an upcoming election, but of governing a sicker, older, slower growing Britain, amidst an era of far higher interest rates.”

Around 40pc of gains from the tax and benefit measures announced in the Autumn Statement – including boosts to Local Housing Allowance and changes to the Work Capability Assessment – will benefit the richest fifth of the population, according to the Resolution Foundation.

The top 20pc of earners will gain £1,000 on average, five times the gains seen for the bottom fifth.

However, the highest earners still lose most from decisions taken over this parliament. Taken together, the richest fifth of households are set to lose £1,100 on average as a result of all the tax and benefit measures announced since 2019. The poorest 20 per cent gain an average of £700.

Richard Hughes, the chairman of the OBR, on Wednesday warned that economic growth was likely to remain anaemic in the short term, with the UK suffering an “unpleasant” combination of high interest rates and low growth that made the outlook for the UK economy worse compared with other rich economies.

He said: “We have a worrying configuration of American-style interest rates, but European-style growth. And so the dynamics are looking particularly unpleasant for us as a G7 member because we’ve got relatively high interest rates, but we haven’t got the American GDP growth to go with it.”

Millions of pensioners paying more income tax now than when Tories took power


Szu Ping Chan
Thu, 23 November 2023 

jeremy hunt

Millions of pensioners are now paying more income tax than when the Tories took power 13 years ago, according to the Institute for Fiscal Studies (IFS).

The think tank said 8.5 million people over the age of 65 were now paying tax on their income, up from roughly 4.9 million in 2010.

This has been fuelled by the phenomenon of fiscal drag, which allows the Exchequer to rake in more tax without increasing headline rates, as well as a jump in George Osborne’s “granny tax”, said the IFS.


The levy was introduced in 2012 when the former chancellor started phasing out a century-old relief introduced by Winston Churchill that meant pensioners started paying tax at a higher income level than workers.

Estimates from the IFS show that a pensioner earning £25,000 a year through work or pension income now pays about £400 more in income tax than they did when the Conservatives and Liberal Democrats came to power in 2010.

This compares with a worker earning the same amount who will pay “about £1,200 less in income tax and National Insurance (NI)”, the think tank said.

While the number of people over 65 has also grown since 2010 from 9.9 million to 12.4 million today, Paul Johnson, director of the IFS, said the share of pensioners paying income tax had also grown.

He said: “Back in 2010 around half of pensioners paid any income tax. Now more than two-thirds do.”

Rishi Sunak’s decision to increase NI thresholds for employees, and for the self-employed in 2022, was made even as millions more were dragged into higher tax bands because of a six-year freeze in income tax thresholds.

Pensioners do not pay NI and will not benefit from the 2pc cut in the main contribution rate announced by Jeremy Hunt in the Autumn Statement.

Tom Waters, associate director at the IFS, said: “Back in 2010, those over the age of 65 had an income tax personal allowance about 50pc larger than those of working age.

“Over the first half of the 2010s the Government got rid of this higher allowance, and – together with the income tax freeze we are currently in the midst of – this has led to pensioners’ personal allowances falling in real terms.

“Combined with rising pensioner incomes this means that we have seen a substantial increase in the fraction of pensioners subject to tax, from 50pc to 68pc.

“Another four years of tax freezes and the pensions triple lock all but guarantees that we will see that figure rise yet further.”

Official forecasts show state pensioners with no other income face paying income tax from 2028 as high inflation combined with the freeze in tax bands is set to push them above the £12,570 basic-rate threshold.

Under the triple lock, pensions rise in line with rising prices or earnings, or by 2.5pc each year. The OBR has recently upgraded its forecasts for inflation and pay growth.

Applying these projections to the full new state pension indicates that payments will rise from just over £11,500 next year to around £12,800 in 2028.

If the basic-rate tax threshold remains frozen, it means those on the standard state pension – with no other private income of their own – face being forced to pay income tax.

However, Mr Johnson described the levelling of incomes enjoyed by workers and pensions as an “unequivocally a good thing”.

He said: “In 2010 the employee would have paid about £2,750 more than the pensioner, they will now pay £1,250 more.”

Real incomes are falling as families feel the impact of stealth tax raids, previous tax rises and more than a decade of stagnating incomes.

James Smith at the Resolution Foundation said: “If we look at living standards over the parliament as a whole, you basically see that the combination of high inflation plus these tax rises is a really toxic one or living standards.”

He called the fall in living standards a “really difficult backdrop going into an election year”.

Hunt’s Tax Cuts to Squeeze UK Public Services Beyond the Election


Philip Aldrick and Joe Mayes
Thu, November 23, 2023 

(Bloomberg) -- Chancellor of the Exchequer Jeremy Hunt will redouble the squeeze on Britain’s crumbling public services to pay for £21 billion ($26.2 billion) of tax cuts designed to boost growth and revive the Conservative Party’s electoral fortunes.

Government departments face a further £19 billion of cuts after the election, expected next year, on top of spending plans that the Resolution Foundation research group had already branded “implausible.” It’s austerity that compares with the measures put in place by Chancellor George Osborne in the last decade.

The Institute for Fiscal Studies said “there’s a material risk that those plans prove undeliverable.” Even the Office for Budget Responsibility, the government’s fiscal watchdog, said the program is severe enough that it’s “a significant risk to our forecast.”

Hunt outlined the cuts in his Autumn Statement as he unveiled a package of growth policies to pull the UK out of years of stagnation and draw a clear dividing line with the opposition Labour Party.

“Our choice is not big government — high spending and high tax — because we know that leads to less growth, not more,” Hunt said in an attempted dig at his Labour opponents. “Instead we reduce debt, cut taxes and reward work.”

Speaking on Sky News on Thursday, Hunt said the government will “show discipline” on public spending and acknowledged it will not rise “as fast as some people would like, but that is happening because I’m choosing to cut taxes, mainly for business.”

Hunt’s key growth policies were a a £10 billion a year reduction in national insurance contributions paid by 27 million workers, reducing the take by 2 points from 12%. A break for corporate investment will be made permanent, costing £11 billion, in a move that was widely applauded by business. Labour signaled it’s likely to keep both plans.

Despite saying the measures amounted to “the biggest package of tax cuts to be implemented since the 1980s,” the tax burden remained at a post-World War II high of 37.7% of GDP. That’s due to pre-existing policies, which will freeze income tax thresholds until 2028.

“The cuts are dwarfed by £45 billion of already announced threshold freezes,” Torsten Bell, chief executive of the Resolution Foundation, said. Had Hunt not cut taxes, the tax burden would have hit 38.4%, the OBR said.

For all Hunt’s talk of growth, it was not a thriving economy but inflation that came to his rescue. While Prime Minister Rishi Sunak has been trying to defeat inflation all year, rising prices boosted tax revenue to the Treasury, giving Hunt room for maneuver.

Trend growth, which determines living standards, was downgraded by a total of 2.4% between 2023 and 2027 but the cash size of the economy, which includes inflation effects, was upgraded by 5.5%. “Taxes aren’t being cut because inflation has fallen,” Bell said. “They’re being cut because inflation has been higher than expected.”

The result was £30 billion of headroom against his fiscal rule that debt must be falling as a share of GDP in the fifth year of the forecast. Hunt used all but £13 billion of it but half is expected to be used to scrap fuel duty in March, leaving him with the same £6.5 billion of fiscal space at the budget he had eight months ago.

Alongside full expensing and the NICs cuts, Hunt hopes to lift the economy by leveraging private capital through pension fund reforms, clearing obstacles in the planning system and ensuring work pays by getting tough on benefits while lifting the minimum wage.

The OBR judged the package will claw back 0.3% of lost growth by 2028. Full-expensing lifts business investment by £20 billion at the end of the forecast, it said, while the NICs cut and benefits reforms boost labor supply by 78,000.

The quest for stronger growth and low taxes unites both parties. Hunt’s plan to turbo-charge the economy and give households some of their money back is little different to his opposite number, Labour’s shadow chancellor Rachel Reeves.

She has attacked the 25 tax rises since Sunak became chancellor in 2021 and accused Hunt of “picking the pockets of working people.” She told reporters earlier this month: “It is because this is a government of low growth that it is a government of high taxes.”

Hunt left little doubt that the Autumn Statement teed the Conservatives up for an election in 2024, but he faces a difficult backdrop.

Inflation has more than halved, meeting Sunak’s target for the year, but remains the highest in the Group of Seven nations. The OBR warned consumer prices will be stickier than thought and not return to the Bank of England’s 2% target until early 2025.

Households are in the midst of the steepest fall in living standards since the 1950s, the OBR said. While the outlook has improved since March, real household disposable income is on track to have fallen 3.5% between 2020 and 2025.

And markets also raised concerns about the glut of gilts to pay for the £93 billion six-year stimulus. The yield on 30-year government bonds rose 10 basis points as traders adjusted to the bigger-than-expected debt issuance plans.

Even so, Hunt has some short-term giveaways for the election year, including £2.65 billion of business rates relief for retail and hospitality firms, £270 million for regional investment in 2024, and a one year freeze in alcohol duties.

For poorer households there was help, too. Benefits will rise 6.7% to provide “vital support for those on the very lowest incomes,” Hunt said. The state pension will increase 8.5% and the minimum wage is rising 10%.

The choice that Hunt mapped out was low-tax, private sector-led growth with the Tories or big-state interventionism with Labour and its £28 billion green investment plan.

Labour’s Reeves said households are paying the price of for 13 years of Tory rule. “Nothing that has been announced today will remotely compensate rising mortgages, rising taxes eating into wages, inflation high with prices still going up in the shops, public services on their knees, and too many families struggling to make ends meet,” she said in Parliament.

--With assistance from Andrew Atkinson and Greg Ritchie.

Bloomberg Businessweek

UK
Private care providers accused of profiteering and crippling council budgets


Ruby Hinchliffe
Wed, 22 November 2023 

holding hands

Private children’s care providers have been accused of profiteering, charging desperate councils with more than a million pounds a year in one case.

Buckinghamshire council said it was on track to spend £1.7m on one child’s round-the-clock care and accommodation this year.

Council leader Martin Tett said care services make up 70pc of the authority’s expenditure, and that he anticipates £50m of overspend by Christmas.

It comes as Chancellor Jeremy Hunt is under pressure to provide emergency funding for children’s services in the Autumn Statement.

Mr Tett said: “It’s crippling my budget. We had one child’s case where the annualised cost was going to be £3.2m. Fortunately, we eventually found a lower cost placement.

“The private providers which source us these services are very expensive, and they know councils are desperate.

“When people complain about a pothole not being fixed and ask what they get for paying their council tax – this is it.

The Local Government Association (LGA) has also blamed private equity-backed providers, who they say have “jacked up” their prices in the face of rising demand for children’s care services after the pandemic.

Last year, the biggest independent children’s care providers made a collective £300m profit according to a report commissioned by the LGA. It also found that councils’ spend on privately run children’s homes has more than doubled over the past six years.

The £1.7m Mr Tett’s council will spend on one child this year relates to a 15-year-old boy with mental health difficulties and a long history of serious self-harm. He needs round-the-clock, supervised care to keep him safe.

Currently, his medical diagnosis says he does not meet the threshold to be detained under Section 3 of the Mental Health Act – if it did, this would trigger automatic health funding for his treatment.

He has received some hospital care, but was discharged and so the council is now his legal guardian. His care costs £40,000 a week, most of which goes on three specialist staff per shift per day.

The council said it explored cheaper care options, but that it did not provide an adequate level of safety. The cost of the child’s care to date for this financial year is around £800,000. If costs stay at £40,000 per week, they will reach £1.75m.

Buckinghamshire council would not reveal the name of the provider, and does not break this down in its accounts. In its most recent filing, the council says it spent £112.8m on children’s services in 2021.

It also paid its corporate director of children’s services £177,300, with pension contributions of £45,488.

A spokesman for The Children’s Homes Association, which represents private, social and charitable children’s care providers, said around 50pc of its members are micro-businesses struggling to make single-digit margins.

Meanwhile, private equity-backed providers – they admitted – are “able to make significantly higher margins”.

Care Tech, which owns 400 children’s homes in the UK, was taken private last year giving it a valuation of £1.2bn.

Another firm, Outcomes First Group, is backed by Stirling Square Capital Partners, while Keys Group is owned by G-Square Capital.

The Telegraph approached all three of these firms for comment. Care Tech declined, while the other two firms did not respond.

‘There are only a couple of big providers, so they can just name their price’

Roger Gough, the leader of Kent county council, said he has seen “mostly a cost, not demand, increase” in the private childcare sector.

“Most pressure is to do with increased unit costs. Placement costs have rocketed, with cost increases in the private-equity space playing a very significant part.”

Mr Gough’s council is looking at an overspend of £43.7m, but is currently taking actions to address it.

He added: “Roads, visible services, maintenance of estates – these will suffer significantly.

“Support from the Government has tended to decline because it also has huge cost pressures. Last year’s winter was tough, roads have gotten worse.

“We’re hoping HS2 reallocation will fund this, otherwise residents’ daily lives will come under strain because of it.”

Others argue demand for children’s services has risen in tandem with placement costs. Shaun Davies, the chairman of LGA, said every council he has spoken to has seen a “huge increase” in requests for special educational needs and support.

Mr Davies, who is also the leader of Telford & Wrekin council, said: “Private care placements are costing hundreds of thousands of pounds a year. There are only a couple of big providers, so they can just name their price.”

Councils are also spending money on legal fees where parents challenge councils’ childcare provisions, Mr Davies said.

He added: “Providers make their priciest services seem all shiny and nice, knowing full-well they won’t have to pay for it.”

Load of rubbish: litter-hunters vie for unusual world title in Tokyo


Andrew MCKIRDY
Wed, 22 November 2023 

Britain won an unusual world title in Tokyo (Richard A. Brooks)

Tokyo's well-kept streets may not be the most obvious place to do it, but competitive litter-hunters on Wednesday sifted through the Japanese capital in their first world championship.

The Spogomi World Cup saw 21 countries battle it out to collect the most rubbish within a set time limit, scouring the streets in search of plastic, cigarette butts and other trash.

Spogomi founder Kenichi Mamitsuka started to pick up litter on his morning runs and realised that setting targets could turn it into a fun activity.

He organised his first competition 15 years ago, taking the title from the words "sport" and "gomi" -- Japanese for rubbish.

He said watching the event's maiden world championship was "like a dream", but he optimistically believes it can grow to an even bigger scale.

"If you form national spogomi associations, my ambition is that it could become an Olympic demonstration event," he told AFP in front of a portion of the almost 550 kilos (1,200 pounds) of rubbish collected by participants.

Armed with gloves, metal tongs and plastic rubbish bags, each team of three roamed a roughly five-square-kilometre (two square mile) collection area in Tokyo's bustling Shibuya district.

Running, ransacking existing litter bins and shadowing other teams were all forbidden, with each team followed by a referee to enforce the rules.

In both of the morning and afternoon sessions, they had 45 minutes to hunt out rubbish and another 20 to sort it into categories.

Points were awarded based on volume and type, with small items such as cigarette ends scoring highly.

Australia's Petrya Williams said that her team had "found some great spots that are like treasure maps".

"I think we've got it for the next round, we know where to look," she said, as she and her team-mates waited to weigh their haul.

- Good habits -

Each team had to earn the right to represent their country in Tokyo by winning national competitions.

Reasons for their involvement varied. Australia's Jamie Gray said his team belonged to a meditation group and "clean-up is part of our philosophy".

France's team arrived with something of an advantage -- all three members work in the refuse collection industry.

"We have a flair for it," said Usman Khan, 32.

At the end of the day, Britain were declared the winners after collecting 57 kg of rubbish.

South Africa's Philippe Louis de Froberville said Tokyo's relatively clean streets made it "harder to find the rubbish than in the competition back home".

But he believes competitive collecting can "get really big", and thinks schools are a good place to start.

"That's where you're going to get your people," said the 33-year-old from Durban, who says his passion for surfing and the ocean got him involved in collecting rubbish.

"If you start when you're young, you're going to want to do it when you're older and you're going to want to look after your environment."

Spogomi founder Mamitsuka believes changing the way people think about rubbish is key.

He says that people thought he was "making fun of activities that contribute to society" at first.

But then he began to hear stories about people getting involved and passing on good habits to their children.

"It made me think that I should keep going," he added.

"Our target is to have spogomi events in 50 countries by 2030."

amk/stu/pst

Citigroup asks employees to speak up about inappropriate behavior

Wed, November 22, 2023 

 A Citi sign is seen at the Citigroup stall on the floor of the New York Stock Exchange

By Tatiana Bautzer

NEW YORK (Reuters) - A top Citigroup executive asked employees to speak up if they see inappropriate behavior after a managing director sued the company this week, alleging she was sexually harassed by a manager in equities.

"No colleague should ever be discriminated against or harassed," Andy Morton, Citigroup's global head of markets, wrote in the memo sent on Tuesday, which referenced a recently filed lawsuit. "We will take decisive action when we determine unacceptable behavior has taken place."

Bloomberg reported the memo earlier on Wednesday.

Managing director Ardith Lindsey sued the bank in New York, saying it downplayed her complaints about Mani Singh, who had been North America Markets head of cash equity execution services before he resigned last November.

Lindsey accused Citigroup of tolerating a "notoriously hostile" environment in its equities division and said Singh subjected her to sexual harassment and abuse, including death threats.

Requests for comment made to a lawyer who represented Singh in an unrelated lawsuit were not immediately answered.

Citigroup said in an earlier statement that it will defend against Lindsey's claims.

"Part of everyone's role in creating a culture of the highest standards involves stepping in at the moment we see something wrong," Morton wrote. "If you experience or witness inappropriate behavior, you can raise your concerns through official channels without fear of retaliation," including with managers, human resources or the company's ethics hotline.

(Reporting by Tatiana Bautzer; Editing by Lananh Nguyen and Daniel Wallis)

EXPLAINER-Global fossil fuel subsidies on the rise despite calls for phase-out

Thu, November 23, 2023
By Sarah McFarlane

Nov 23 (Reuters) - World governments agreed at the COP26 climate summit in Glasgow two years ago to phase out "inefficient" fossil fuel subsidies to help fight global warming.

Since then, however, global fossil fuel subsidies have risen $2 trillion to $7 trillion, according to the International Monetary Fund, as governments around the world moved to protect consumers from rising energy prices.

At this year's climate gathering in Dubai, EU countries will be looking to harden the COP26 deal to phase out the subsidies by pushing for a deadline of 2030 to get it done, but it is unclear how much support the proposal will gain.

EU governments were among those that have increased support for fossil fuels since Glasgow, mainly as a response to energy security concerns following Russia's invasion of Ukraine.

Here are some examples of how fossil fuels are subsidised around the world.

CHINA

China's total fossil fuel subsidies were the highest in the world at $2.2 trillion in 2022, amounting to 12.5% of the country's total GDP, according to the IMF.

The bulk of the subsidies are "implicit", a category which includes undercharging for environmental costs or forgoing tax revenues, the IMF said.

Support offered to coal-fired power plants includes direct funding, preferential loans, and power purchase guarantees.

China also unveiled a new scheme earlier this month that pays coal-fired power plants not for the electricity they supply, but for making capacity ready and available to the grid when needed – a measure also used by grid operators in the U.S. to keep such plants from retiring.

A 2020 study by professors at Nanjing Audit University said China's coal subsidy policies effectively reduced China's coal prices by 4.2% and drove up output by 7.6%.

China also regularly intervenes to keep consumer power and fuel prices low. For example, it subsidises its refiners when global oil prices rise above $130 a barrel so they can keep fuel prices affordable.

UNITED STATES

U.S. fossil fuel subsidies stretch across the U.S. tax code, which makes detailing their costs complex. The IMF estimates they stood at $760 billion in 2022, a figure topped only by China.

One U.S. tax break called intangible drilling costs allows producers to deduct a majority of their costs from drilling new oil wells. The Joint Committee on Taxation, a nonpartisan panel of Congress, has estimated that eliminating it could generate $13 billion over a decade.

Another, the percentage depletion tax break which allows independent producers to recover development costs of declining oil gas and coal reserves, could generate about $12.9 billion in revenue over 10 years, it has said.

President Joe Biden, a Democrat, has proposed axing fossil fuel subsidies in his annual budget, largely a political document used in negotiations with Congress.

But his efforts have gone nowhere amid only a thin Democratic majority in the Senate and as Republicans control the House of Representatives.

RUSSIA

The world's top seaborne exporter of diesel and third largest producer of oil spent $420 billion on fossil fuel subsidies last year, according to the IMF.

These include payments to oil refineries to compensate them for selling fuel on the domestic market instead of exporting it for a higher prices.

Russia's coal industry is supported by measures including preferential rail tariffs, direct budgetary transfers for coal exploration, and tax relief on some coal mining, according to think-tank ODI.

INDIA

Fossil fuel subsidies in India totaled $350 billion last year, according to the IMF. Coal dominates India's electricity production and the country is one of the world's top producers.

Coal subsidies include exemption of customs duty on coal mining equipment, reduced haulage rates for long-distance rail, and low-interest loans for coal power plants, according to the International Institute for Sustainable Development.

EU

European governments more than doubled fossil fuel subsidies to $310 billion in 2022 in response to the energy crisis, IMF data showed.

At least 230 temporary subsidy measures were taken by governments across the EU last year, according to a European Commission report, after Russia cut gas supplies to the region.

This reversed the trend in place since 2018 of shrinking support.

Most European governments plan to reduce their reliance on fossil fuels, with the clearest commitments in coal power and fossil fuel-based heating in buildings.

MIDDLE EAST

Oil and gas producers in the Middle East including Qatar and Saudi Arabia had some of the highest fossil fuel subsidies per person, IMF data showed.

Historically, governments in the region have kept energy prices artificially low, in part to redistribute resource wealth among their populations.

Qatar provides free electricity to its citizens, for instance.

CANADA

Earlier this year Canada unveiled plans for eliminating inefficient fossil fuel subsidies.

Oil and gas projects could still receive support, however, if projects included plans for emissions reduction technologies such as carbon capture, and environmental groups criticized the plan for lacking details and leaving open certain loopholes. (Reporting by Sarah McFarlane, Timothy Gardner and David Stanway; Editing by Jan Harvey)

FutureCoal CEO Suggests ‘Cancel Coal’ Mantra Is Short-Sighted, Abated Coal Solutions Must Be Part of Energy Transition

Formerly known as the World Coal Association, FutureCoal: The Global Alliance for Sustainable Coal The group’s rebranding was launched this week.

Aaron Larson
Wed, November 22, 2023 

Speaking at the 5th annual India Coal Conference in New Delhi, FutureCoal CEO Michelle Manook said, “Government and finance policies, which embrace a ‘cancel coal’ mantra, are short-sighted and undermine the very ambitions we seek to achieve as a global community.” Formerly known as the World Coal Association, FutureCoal: The Global Alliance for Sustainable Coal is a multi-lateral organization representing the entire coal value chain including coal producers, suppliers, and consumers such as power, steel, cement, and aluminum industry companies. The group’s rebranding was launched this week. “The reality is, coal will be here for the foreseeable future, and the future of coal beyond combustion gains steady momentum. As a coal value chain, we need to transform, unite, and ensure that a responsible narrative informs global policy setting,” said Manook (Figure 1). “We need to reframe this debate to the reality. There is no legitimate reason for coal not to participate in any energy transition. Abated coal solutions exist and they must be embraced.” 

1. FutureCoal CEO Michelle Manook. Courtesy: FutureCoal[/caption] 

FutureCoal says coal’s enduring presence acknowledges countries’ autonomy in selecting energy sources that meet their specific needs, complementing renewables during intermittent periods and serving as a crucial factor for coal-dependent nations to ensure energy security, affordability, and reliability. The group points to the global energy crisis of 2021–2023 as a case in point for the importance of coal. FutureCoal noted the resilience of coal as a power generation source mitigated severe consequences that could have escalated without coal as a backup. “The closure of European industrial operations and the risk of populations suffering through unaffordable energy costs or no energy at all exemplifies the crucial role of coal,” FutureCoal said. According to the International Energy Agency’s (IEA’s) most recent Coal Market Update, issued in July 2023, a new record global high of 10,440 TWh of electricity was generated from coal in 2022. This figure represented 36% of the world’s total electricity generation. While many industry observers believe coal use in the electricity sector will decline substantially in coming decades, FutureCoal says some experts predict coal will remain the single largest source of electricity worldwide through 2040. “Despite the growing emphasis on renewable energy sources, coal remains a key player due to its abundance, cost-effectiveness, and established infrastructure in many countries,” the group said. Coal does play an important role in the energy supply of more than 80 countries, not only in terms of electricity, but also for heat production. In many countries, coal is used for residential heating during colder months from district heating systems supplied by coal-fired combined heat and power (CHP) plants. FutureCoal says while the focus is often on electricity generation, “it’s important to remember that coal’s contribution to global heat supply is also significant.” FutureCoal said coal abatement technologies can capture up to 99% of some harmful emissions. Existing coal abatement technologies include a range of efficient solutions that support both power and heat utilities. These include high-efficiency and low-emissions (HELE) plants such as ultrasupercritical (USC) units; CHP facilities; integrated gasification combined cycle (IGCC)-based technology; and co-firing coal with biomass. To achieve high rates of emission control, sulfur dioxides (SOx), nitrogen oxides (NOx), and particulate matter (PM) can all be captured to various degrees, and the waste byproducts reused in industry and construction. Other emissions, such as heavy metals, can also be captured to a large extent and safely managed. While FutureCoal does not focus greatly on carbon capture and storage (CCS) or carbon capture, utilization, and sequestration (CCUS), it does promote a Sustainable Coal Stewardship (SCS) program. SCS has a strong focus on abated coal innovation and technologies. Under SCS, abated coal has a broader definition. “It encompasses a range of responsible practices, emissions controls, efficiency gains, and advanced coal opportunities,” FutureCoal says. Many power industry insiders believe hydrogen (H2) is poised to play a pivotal role in the transition to cleaner energy resources. Surprisingly, FutureCoal says hydrogen can be produce more cheaply with coal than through other sources. “The cost of producing hydrogen from coal with CCUS [is] three times less expensive than producing low-carbon hydrogen through water electrolysis,” the group said. Specifically, it said electrolysis costs from $3 to $7.50 per kilogram (kg) of H2 produced, while the IEA reportedly pegs the average cost of producing hydrogen from coal with CCUS at $1.40–$3.10/kg H2. Meanwhile, FutureCoal said another source suggests that coal gasification with CCUS typically costs $1.90−$2.40/kg H2, with costs as low as $1.60/kg H2 in China. And clean coal-to-hydrogen projects are not just a concept. The world’s largest coal-to-hydrogen project was placed in operation in Yulin, central Shaanxi, China, in September last year. The plant boasts a total hydrogen production capacity of 350,000 tonnes annually and is expected to reduce carbon dioxide emissions by approximately 220,000 tonnes annually. “The conversion of coal to hydrogen represents an innovative application of coal abatement technologies. It simultaneously assists coal-dependent nations in achieving their development goals and decarbonization ambitions,” FutureCoal said. “A misinformed coal narrative, misinforms the market. This narrative must be corrected if we are to achieve global economic and sustainability goals,” Manook said. 

—Aaron Larson is POWER’s executive editor (@POWERmagazine).

GOLDMAN FUNDS NATIONALIZATION
Goldman Lures Hedge Funds to Bet on €22 Billion German Grid Deal

Eyk Henning and Priscila Azevedo Rocha
Wed, November 22, 2023 at 9:30 AM MST·2 min read


(Bloomberg) -- Goldman Sachs Group Inc. has been encouraging hedge funds to bet that Germany will be able to pull off an increasingly tricky takeover of the country’s biggest power grid valued at over €22 billion ($24 billion).

The bank has been offering to sell bonds issued by state-owned Dutch grid operator Tennet Holding BV in the last few weeks, when they were trading in the mid-80s, people with knowledge of the matter said. It’s flipping some notes to hedge funds by dangling the prospect of quick profits, telling them Tennet’s bond documentation indicates the securities might be redeemed at 100 if a transaction goes through, they said.

“Once the deal is announced, the Tennet bond-complex could be one of the largest rate-of-return situations in Europe,” Goldman wrote in a sales trading note this month. Several of Tennet’s bonds have language around “issuer substitution” that may trigger a change of control and repayment at their full value, according to the note.

A representative for Goldman declined to comment.

Germany has been in talks with the Dutch government over a purchase of Tennet’s local grid for nearly a year and has agreed in principle on the main terms, people familiar with the matter said. The negotiations have become increasingly fraught in recent days, however, as the German budget crisis deepens.

The Netherlands is holding federal elections Wednesday, effectively bringing an end to the country’s current caretaker government. Meanwhile, German officials are scrambling to work out the implications of a Constitutional Court judgment calling into question hundreds of billions of euros of financing in special funds, people with knowledge of the matter said. Put together, it’s unlikely any deal will be reached this year, according to the people.

The finance ministry in Berlin on Monday froze virtually all new spending authorizations for this year as it tries to identify the court ruling’s longer-term implications, government officials have said. Existing liabilities will be honored but new commitments can be unblocked only in exceptional cases, they said.

Bloomberg Businessweek

UPDATED

Exclusive-Bayer holds call with bond investors after raft of bad news

Wed, November 22, 2023 


By Shankar Ramakrishnan

(Reuters) -Bayer held a call with investors on Monday after a raft of bad news led some of them to question whether the German group had been upfront about its prospects ahead of a $5.75 billion bond issuance, three sources familiar with the situation said on Wednesday.

The bad news prompted some bond investors to question whether Bayer should sweeten the terms of the deal or outright pull it, one of the sources said.

The drug-to-pesticides group priced the investment grade bond on Thursday last week, with the deal closing on Tuesday.

On Sunday, it was hit by a major drug development setback when it aborted a large late-stage trial testing a new anti-clotting drug, that promised billions in revenue, acting on recommendation by an independent trial monitoring board.

Then in two separate lawsuits, Bayer was ordered on Friday to pay $1.56 billion to plaintiffs over its Roundup weed-killer, followed by another order on Monday to pay $165 million to employees of a school northeast of Seattle.

"From our conversations with clients, many are angry and are seriously wondering whether Bayer management rushed to bring the deal ahead of the news," said Andrew Brady, CreditSights head of basic industries research, referring to investors.

A Bayer spokesperson declined comment.

The company's bankers held a call with some of the top investors on Monday in a bid to placate them, two of the sources said.

On the call, the investors asked for clarity on whether the bad news would have material impact on the company’s earnings, one of the sources said. The company told investors it had reserves to deal with Roundup litigation, and could not have predicted the jury verdicts, the source said.

It is rare for investment-grade bonds to be pulled after they have priced, according to the sources, who are market participants.

In March 2021, Nomura Holdings flagged a possible $2 billion loss at a U.S. subsidiary, and shelved a hefty bond issuance.

Bayer priced bonds with maturities between three to 30 years. It was the 10th largest investment grade bond deal by an industrial company this year and attracted more than $22 billion in orders, according to Informa Global Markets.

Citigroup, JP Morgan, SMBC Nikko Securities America and Wells Fargo were the bookrunners on the deal.

All the banks declined comment.

The credit spreads, or the premium charged over Treasuries, on some of the bonds on Wednesday were bid 5 basis points to 23 basis points wider than where they priced last Thursday.

The events were "not enough to trigger a material adverse change clause in bond documents for investors to ask to be paid back," said CreditSights' Brady.

(Reporting by Shankar Ramakrishnan; additional reporting by Ludwig Burger and Mike Erman; editing by Paritosh Bansal and Marguerita Choy)

Bayer’s Drug and Legal Blows Leave CEO Less Room to Maneuver

Tim Loh, Bloomberg News

A sign at the Bayer AG pharmaceutical campus in Berlin, Germany, on Monday, Feb. 27, 2023. Bayer AG sees lower profit this year as it contends with falling prices for agriculture products in its crop science division, although the pharma division will probably see another year of about 1% sales growth and the consumer health unit could see sales rise by about 5%, it said. , Bloomberg

(Bloomberg) -- Bayer AG Chief Executive Officer Bill Anderson told investors that recent drug pipeline and legal setbacks have left the German company less room for maneuver as it considers a breakup.

The pharma, agriculture and consumer health conglomerate is likely to be saddled with more debt and less revenue than it had expected going forward, he said. That could affect the relative attractiveness of different restructuring approaches, as Bayer can’t overburden any new corporate entities with borrowings.

“The impact of these recent events doesn’t change what our strategic options are,” Anderson said on a call with investors Tuesday, a day after shares plunged the most in Bayer’s history. “It just may mean that some of those conditions are a little tighter than they otherwise would be.”

Anderson is dealing with the fallout of Bayer’s decision on Sunday to end a late-stage test for the anti-thrombotic drug asundexian due to a lack of efficacy. In January, Bayer projected that asundexian could reach peak sales of more than €5 billion ($5.5 billion), making it the largest among Bayer’s four “key growth drivers” for the pharma division.

On Tuesday’s call, Bayer officials confirmed plans to continue a separate late-stage trial of the drug on another group of patients, which — if successful — could mean Bayer would make money from it as early as 2026. Bayer is also reevaluating plans for a third trial that would include patients who are age 65 and up. Nonetheless, the poor results from the main asundexian trial were surprising and will force the company to revisit its projected sales for the medicine.

The pipeline setback came two days after Bayer’s Monsanto unit was ordered by a Missouri jury to pay more than $1.5 billion to three former Roundup users who blamed their cancers on the product in one of its largest trial losses over the herbicide. Bayer says it will appeal the ruling and insists the product is safe.

Bayer’s shares plunged 18% on Monday, and were little changed Tuesday. The stock has dropped 30% this year.

The events raise the stakes for Anderson, who joined the company this spring and took over as CEO in June, as he weighs a potential breakup of the conglomerate.

Anderson said he’s pushing ahead with his review, noting that he’s still open to either selling off the consumer health unit, listing it as a separate entity or spinning it off. But each of those options has a different time line in terms of raising funds and paying down debt. “That’s the kind of evaluation that we’re doing,” he said.

While he’s also considering separating the crop science division, Anderson noted that it would be easier to do so if there was a positive outlook in the agricultural commodities market and more certainty around litigation over products like Roundup.

“There’s no secret that those are general factors that we have to consider,” he said.

--With assistance from Thomas Mulier.

©2023 Bloomberg L.P.

Following setbacks, Bayer faces uphill task for its corporate overhaul: Analysts

By DTMT Network
November 22, 2023

After a challenging week marked by setbacks in both clinical trials and legal battles, Bayer's plans for a corporate overhaul are facing increased constraints, say analysts, despite the German conglomerate, led by new CEO Bill Anderson, remaining determined to proceed with its strategic review.

According to media reports, the downturn for Bayer started with the disappointment of its potential blockbuster, asundexian, failing to outperform Bristol Myers Squibb and Pfizer's Eliquis in a phase 3 trial.

Following the blood thinner's efficacy shortcomings, Bayer opted to prematurely halt the study while continuing to advance the asset in stroke treatment.


The company is now pinning its hopes on new drugs like asundexian to offset the impending loss of exclusivity on its Johnson & Johnson-partnered medication, Xarelto.

Added to Bayer's woes, a Missouri jury ordered the conglomerate to pay $1.56 billion to four plaintiffs who claimed that Bayer's Roundup weedkiller caused their cancer. The legal battles over Roundup have been ongoing since Bayer acquired Monsanto in 2018. As a consequence of these setbacks, Bayer's share price experienced a 17.5% decline recently.

The ability of Bayer to restructure its corporate framework by the targeted date of March 5, 2024, is now "further" limited, according to analysts at ODDO BHF.

In a note to clients, the analysts emphasised that the weaker pharmaceutical pipeline may necessitate cash flow from other divisions to compensate for dwindling revenues from drugs losing exclusivity.

Additionally, ongoing litigation risks in Bayer's crop science division could limit the company's flexibility in spinning off or selling the unit, they cautioned.

Despite these challenges, CEO Bill Anderson assured investors on a conference call that the recent events do not alter the strategic options available to Bayer.

He acknowledged that the impact of these events might tighten conditions but maintained that the company's ability to transform its business structure remains intact.

Anderson, who took the helm earlier in the year, faced immediate questions about whether Bayer should spin off its consumer health or crop science divisions. He reiterated the commitment to communicating a detailed strategy and financial targets by 2024, emphasising that the chosen structure must support the goals of speed, innovation, and quality.

Bayer CEO says tougher cash outlook will be considered in overhaul

PUBLISHED: NOVEMBER 21, 2023

Ref: Yahoo Finance

• Bayer's CEO Bill Anderson said the company's strategic review will consider a potentially tougher outlook for cash flows, after the German conglomerate suffered a major drug development setback, as reported by Yahoo!Finance. 
• Late Sunday, Bayer stopped a large late-stage trial testing a new anticoagulant drug due to lack of efficacy, tossing its most promising development project in doubt, and adding to litigation and debt problems.
• "Anything that affects future cash flows negatively just makes that a little tighter," Anderson said on an analyst call Tuesday. He added that "the impact of these recent events does not change what our strategic options are. It just may mean that some of those conditions are a little tighter."
• The CEO has previously said he is considering a break-up of the maker of pharmaceuticals, non-prescription treatments and products for farmers. He gave the example that a potential sale of the consumer products unit to a competitor would generate more cash, and be faster, than a partial spin-off on the stock market and gradual sale of remaining shares over time.
• Stefan Oelrich, head of pharmaceuticals, said that when reviewing the halted trial his team was surprised by a "marked difference" in efficacy of Bayer's asundexian compared to Bristol-Myers Squibb and Pfizer's Eliquis.
• Oelrich noted that the peak sales potential of more than €5 billion would be revised lower, but plans to bring the product to market in 2026 remained in place, albeit for a smaller patient group.

A new global study shows the real reason the West is still one step ahead of Asia when it comes to the digital economy–and it’s not technological prowess

Soumitra Dutta
Tue, November 21, 2023 

Taro Hama - Getty Images


Few can question Asia’s commitment to digitalization. Leading technology nations in East Asia, including Japan, South Korea, and China have consistently produced great technology companies. Korea’s Samsung continues to lead the world in mobile technologies and Japan’s Sony has emerged as a global leader in gaming. China has produced a host of leaders in the digital economy including Tencent, Xiaomi, and Alibaba to name a few. More recently, India emerged as a leader in digitalization on the back of the India Stack–a unique national public digital infrastructure that facilitates the democratization of digitalization through an open model of private partnerships. The India Stack was highlighted by Prime Minister Modi during the recently concluded G20 Summit in New Delhi as a unique contribution of the country to the world.

However, despite a widespread commitment from many economies in the East to a more digitally intensive future, they fall short of their Western counterparts.

Our latest Network Readiness Index report, which evaluates 134 economies based on a wide range of factors related to their readiness to harness the benefits of the networked digital economy, all but confirms this. The U.S. finds itself in first place for the second year running, and European nations comprise seven of the top 10, and 16 of the top 25 countries ranked.

By comparison, Singapore and the Republic of Korea are the only economies located in Asia listed within the top 10–two of only five from the Asia Pacific region ranked among the top 25. Singapore, for the second year running, has ranked second globally, and the Republic of Korea has climbed two places from last year, up from ninth to seventh. Meanwhile, China continues its forward path, securing this year a spot in the top 20 (ranking 20th) due to its formidable technological prowess.

India, ranking 60th globally, progresses at a steady pace, and China has outperformed what many would expect of an economy with its income levels. That said, the results of this year’s NRI underscore a sobering fact: Western nations continue to lead the way in a world that is becoming more digitally intensive every day.

So, what is it about economies in the West that gives them an edge in the digital economy? Findings from the NRI confirm that technological excellence–while necessary–alone is not enough.

Yes, leading Western nations do excel in technology. The United States, for example, leads investment in emerging technologies, computer software, and telecommunication services. Similarly, the U.K. (10th) ranked among the top 10 in part because of significant spending in relation to computer software. Many Western European nations also lead in technological prowess.

However, if it is simply a matter of investment, why haven’t economies such as the UAE and Malaysia–both of which scored well for investment in new technologies–ranked higher overall? It comes down to an important observation: The top-performing economies in the NRI invest not only in the realm of technology, but also in social dimensions like inclusivity and trust, which are critical to the successful roll-out and usage of technology resources within their societies.

The U.S., the top performer in future technologies, also leads in cybersecurity and e-commerce legislation. These results underscore the importance of trust in the uptake of emerging technologies by businesses and governments–areas where many Asian economies fall short in the rankings.

The NRI also notes that the governance of emerging technologies in the East remains in the shadow of European nations such as Finland, the Netherlands, and Denmark. These nations continue to set the global standard in regulation, an area where China, in particular, finds itself in the lower half of the rankings. European nations have been better able to implement mechanisms that address issues related to trust, security, and inclusion, allowing them to more fully harness the opportunities brought about by the digital era.

In other words, the most network-ready economies excel due to a harmonious integration of people and technology. They possess cutting-edge technological infrastructure, a highly skilled and adaptable workforce, efficient governance structures capable of managing digital transformations, and the ability to harness digital technologies for positive societal impact.

The West can hardly pause in continuing to invest in technology. It is playing catchup to the East in some key technology domains such as semiconductors and solar technologies. Countries in the East such as China, The Republic of Korea, and Japan are world-leading in key areas like robot density and high-tech and medium-high-tech manufacturing.

At the same time, the West must continue to lead in rolling out trustworthy and inclusive digital infrastructures in business and society. Recent efforts by governments in the U.K. and the U.S. to better regulate new technologies such as artificial intelligence are moving in the right direction. Investment in skills and the upgrading of digital capabilities in small and medium-sized businesses should be a priority for the West.

We know the value of digitalization to an economy: productivity, sustainability, and general prosperity. This year’s NRI offers us an opportunity to look deeper into the strengths and weaknesses of an economy’s approach to digital transformation and technological success. It is the lens through which we can see what gives Western–and often European–economies a technological edge at a time when digital capabilities have never been more important.

Professor Soumitra Dutta is a co-editor of the Network Readiness Index and the Dean of Saïd Business School, University of Oxford.