It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Tuesday, February 06, 2024
Crypto mining company loses bid to force BC Hydro to provide power The Canadian Press Mon, February 5, 2024
VANCOUVER — A cryptocurrency mining company has lost a bid to force BC Hydro to provide the vast amounts of power needed for its operations, upholding the provincial government's right to pause power connections for new crypto miners.
Conifex Timber Inc., a forestry company that branched out into cryptocurrency mining, had gone to the B.C. Supreme Court to have the policy declared invalid.
But Justice Michael Tammen says in a ruling issued Friday that the government's move in December 2022 to pause new connections for cryptocurrency mining for 18 months was "reasonable" and not "unduly discriminatory." BC Hydro CEO Christopher O'Riley had told the court in an affidavit that the data centres proposed by Conifex would have consumed 2.5 million megawatt-hours of electricity each year.
That's enough to power and heat more than 570,000 apartments, according to data on the power provider's website.
Energy Minister Josie Osborne said when the policy was introduced that cryptocurrency mining consumes "massive amounts of electricity" by running high-powered computers around the clock, but adds "very few jobs" to the local economy.
This report by The Canadian Press was first published Feb. 5, 2024.
The Canadian Press
Exclusive: Bionaut Labs raises an extension round in preparation for micro-robot clinical trials Allie Garfinkle Tue, February 6, 2024 Robyn Beck—AFP/Getty Images
Have you ever seen the movie Fantastic Voyage? I hadn’t, but everyone I talked to at or around medical micro-robots startup Bionaut Labs kept telling me I had to.
Once I watched it, I saw why—the movie, released in 1966 and starring Raquel Welch, is about a futuristic technology allowing people to shrink down, so tiny that they can enter the human body to do surgery. The movie may be psychedelic and far-fetched, but if Bionaut has its way, that future is imminent (sort of).
Bionaut is building micro-robots that precisely deliver drugs to hard-to-reach areas in the human brain. The company’s goal is to build “an elegant solution…that can reach places in the body we previously just couldn’t go,” said Bionaut CEO and cofounder Michael Shpigelmacher.
So far, the company’s animal testing has been successful, and Bionaut has now raised more cash in anticipation of what will be the company’s biggest challenge yet: human clinical trials later this year.
Fortune can exclusively report that Bionaut’s raised an extension round, which involved the Mayo Clinic, along with existing investors Khosla Ventures, Upfront Ventures, and OurCrowd. Fortune has also learned that Bill Gates’ Gates Ventures has invested, per two sources familiar with the matter. (A Gates Ventures representative didn’t return two requests for comment.)
To date, Bionaut has raised over $70 million, Fortune can confirm. In 2022, the company closed its Series B, led by Khosla, bringing the total the company had raised by then to $63.2 million, according to Crunchbase. Bionaut declined to disclose valuation.
Bionaut’s micro-robot is about the size of a grain of rice and is meant to move through the human body’s bloodstream and tissue to deliver drugs far more accurately than we can today. The micro-robot is controlled through magnetism—Bionaut’s scientists and engineers move the robot through the body by tweaking the electromagnetic field.
"We think that this paradigm that we're bringing in time could spawn a whole different generation of ways to treat diseases,” said Shpigelmacher, who previously cofounded PrimeSense, a 3D sensor technology company acquired by Apple in 2013 for a reported $345 million (some reports suggested as much $360 million or $400 million). PrimeSense’s technology became FaceID.
Eventually, the company aims to deliver a wide range of treatments dispersed throughout the body via “the Bionaut.” This in mind, Bionaut’s total addressable market is unknowable, but “any number you came up with would be big enough to justify the investment,” said Samir Kaul, Khosla Ventures founding partner and managing director. OurCrowd CEO and founder Jonathan Medved echoed that sentiment: "What I'm hoping for is that one tenth of the potential is realized.”
In the near-term, the company has decided to focus on the area most requiring precision drug delivery: the brain, with the goal of treating diseases like cancer and Parkinson’s. However, the first use case the company is bringing to bear in clinical trials will be comparatively simple: Dandy-Walker Syndrome, a condition characterized by accumulating brain fluid.
Still, Bionaut faces challenges by nature of what they do—biotech hardware is a famously tough-to-predict sector, said Kazi Y. Helal, PitchBook senior emerging technology analyst.
“They’re shooting for the stars by targeting neurology, so that’s a good moat,” he said. The trouble is, it doesn’t matter if you raise a Series C, D, or make it to an IPO, if you can’t get the technology to provide its practical, promised value.
“That’s the big risk for them, and that’s where I’m a little skeptical,” said Helal. “The validation of raising money’s nice, but what’s real is when it goes into a human and there are no toxic effects. We’re still waiting for that.”
So, is this just a far-fetched, psychedelic fever dream? Bionaut’s offices are decorated with sci-fi movie posters, so I’d say they know they’re dreaming—they just have the conviction to believe they can make their dream come true.
Ultimately, Bionaut’s moonshot is its purpose.
“This is what venture is meant for, right? These kinds of big, audacious ideas––not just functional, incrementally better technologies, but genuinely new modalities, truly revolutionary technologies,” Upfront Ventures partner Kevin Zhang told me.
If Bionaut’s successful, we could be far closer to something that, decades ago, was purely sci-fi. The Fantastic Voyage’s title card reads: “Someday, perhaps tomorrow, fantastic events you are about to see can and will take place.”
Well, perhaps not tomorrow, but maybe someday soon.
Piedmont Lithium lays off 27% of workforce amid weak prices Reuters Tue, February 6, 2024 A rock is displayed at Piedmont Lithium's headquarters in Belmont
(Reuters) -U.S. miner Piedmont Lithium said on Tuesday it recently completed a 27% reduction in its workforce as part of a cost-cutting plan, amid a decline in the price of lithium.
The company said it expects to complete the majority of its cost saving initiatives by the end of the first quarter and aims to achieve about $10 million in annual savings. It had 40 employees as of Dec. 31, 2022.
In January, larger rival Albemarle had announced its intention to cut jobs and halt expansion in response to declining prices for the metal used in electric vehicle batteries.
“These cost reduction actions, while difficult, are necessary to position the company for the long-term. Lithium prices have fallen sharply, and the market consensus is currently negative," CEO Keith Phillips said in a statement.
The global supply of the metal has outpaced demand from the battery market over the last year, resulting in an 81% decline in prices, according to Benchmark Mineral Intelligence.
Piedmont said on Tuesday it has provided additional information to North Carolina regulators to obtain a long-delayed mining permit and that a decision is expected in the coming weeks.
The company has also invested in Quebec-focused Sayona Mining and Ghana-focused Atlantic Lithium, securing access to lithium from both companies.
(Reporting by Sourasis Bose in Bengaluru; Editing by Savio D'Souza and Dhanya Ann Thoppil)
Ivory Coast Cocoa Output Risks Lagging Contracted Sales Mumbi Gitau, Baudelaire Mieu and Yinka Ibukun Tue, February 6, 2024
(Bloomberg) -- Ivory Coast’s prolonged weather crises risk leading to a cocoa bean shortfall of 70,000 to 100,000 tons compared with contracted main-crop sales, according to people familiar with the matter.
Le Conseil Cafe-Cacao, the country’s regulatory body, has sold about 1.35 million tons in forward contracts for the 2023-24 main-crop that runs through March, the people said.
The CCC cautiously sold the 2023-2024 harvest to take into account the expected drop in production, a spokeswoman for the industry regulator said, declining to comment on the size of shortage. The head of the regulator earlier dismissed buyer concerns over dwindling supplies and declined to give data on beans sold so far.
Ivory Coast’s cocoa harvest is divided into two parts — the first or main-crop plucked between October through March — and a smaller mid-crop that follows.
“We remain confident we will fulfill all the contracts with the main crop,” Yves Kone, who heads the CCC, said by phone. “The harvest hasn’t yet ended. In the worst-case scenario, in the past, we’ve used the mid-crop to cover contracts.”
The CCC typically sells the bulk of a season’s expected crop months in advance to exporters who must buy the volumes they booked once the harvest starts. In surplus years, companies comfortably purchase the contracted volumes, and the regulator can sell the excess beans in the spot market. However, a production shortfall like the one playing out in Ivory Coast, means it’s likely some contracts cannot be met.
The increasing intensity of the seasonal dusty Harmattan winds in the region is sparking worries about damage to the upcoming mid-crop as well as next season’s bigger main-crop harvest. Already, the CCC has halted the 2024-25 forward sales until it has a clear picture on production.
That adds to global concerns over tight supplies that have pushed prices to the highest in four decades. The production shortfall in the top grower this season has already hurt exports, currently lagging the previous season by nearly 40%. Cocoa futures in New York soared past $5,200 a ton on Monday before pulling back slightly.
If the deficit leads to companies rolling over their unfulfilled contracts into the mid-crop it will diminish supplies available in the country. In addition to the lower output, factories in Ivory Coast may also struggle to keep processing because a tax incentive that boosted local grinding ended last year.
McDonald’s is promising ‘attention to affordability’ after the price of Big Mac meals hits $18
Orianna Rosa Royle Tue, February 6, 2024
More isn’t always more—as McDonald’s CEO recently admitted. After beefing up its prices in the hopes of generating more sales, the burger giant actually wound up turning off some core customers. Now, its chief executive Chris Kempczinski has hinted at a U-turn to lower prices, with a focus on “affordability” to boost sales.
On an earnings call Monday, Kempczinski revealed that sales in the last quarter fell short of expectations for the first time in nearly four years, thanks in part to higher menu prices.
“I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability,” Kempczinski told analysts.
The company posted global same-store sales growth of 3.4% for Q4, falling short of estimates of a 4.79% jump. In contrast, same-store sales increased by 8.8% in Q3—before the increased menu prices—beating analyst estimates at the time. Low income customers are snubbing fast food for home-cooking
Thanks to price hikes at the end of last year, the once ultra-affordable fast food chain is no longer a cheap eat option—and it’s not gone unnoticed by customers. The Chicago-based chain has taken heavy criticism over its Big Mac meals that are priced at nearly $18. Meanwhile, customers have slammed its on-off Dollar Menu for not having a single $1 item.
It’s why, according to Kempczinski, customers making less than $45,000 per year in particular have stopped ordering from McDonald’s. Instead, many have turned to home cooking as inflation has eased and the cost of groceries has come down.
“Eating at home has become more affordable,” Kempczinski added. “The battleground is certainly with that low-income consumer.”
However, Kempczinski’s definition of affordability may not meet customer's expectations. Prices at McDonald's are still expected to increase—albeit at a slower pace of 2% to 3%, versus last year’s 10%— restaurant analyst Mark Kalinowski told the New York Post.
Fortune has reached out to McDonald’s for comment. McDonald’s banked on benefitting from a 'difficult' economy
McDonald's leadership team may be surprised by the company’s latest lackluster performance.
Kempczinski previously boasted the company is banking on customers feeling the pinch and choosing to eat at McDonald's as rising costs leave them with few affordable options.
He even described the current cost of living crisis as an “opportunity” for the chain to shine.
“Between inflation remaining high, the elevated cost of fuel, interest rates, housing affordability pressures and more, consumers all over the world are having to pay more and more for everyday goods and services, proving time and time again in difficult economic times, the McDonald’s brand and our positioning on value is an opportunity for us,” Kempczinski said on a third-quarter earnings call. Middle East
Another challenge that McDonald’s bottom line has had to face is war in the Middle East. The burger giant is among several Western brands that have seen protests and boycott campaigns against them over their perceived pro-Israeli stance.
The announcement came not long after McDonald's Israel announced on social media that it gave out thousands of free meals to Israel Defense Forces personnel in October—drawing criticism from McDonald's franchises in some Muslim countries.
Starbucks has similarly slashed its annual sales forecast partly due to a hit to sales and traffic at stores in the Middle East, as well as, calls to boycott the coffee chain.
Thank America’s immigrants for killing the recession and keeping unemployment at 50-year lows, Nobel laureate Paul Krugman says Irina Ivanova Tue, February 6, 2024 Selcuk Acar—Anadolu/Getty Images
A major economic mystery of the post-pandemic U.S. is how, with the tightest labor market in decades, employers keep adding jobs every month—even as record-high inflation steadily cools.
To that question, Nobel Prize–winning economist Paul Krugman has a simple answer: It’s the immigration, stupid.
“The economy is chugging along, creating lots of jobs, inflation is basically in the rearview mirror now, and not a hint of all of the terrible stuff that was supposed to be happening,” Krugman told the New Republic’s Daily Blast podcast on Sunday.
A major reason that employers have been able to keep hiring without refueling inflation is because the labor force is growing, Krugman noted.
“How much of the increase in the labor force is foreign-born workers? How much of the increase since 2020 is foreign workers? The answer is all,” he said, adding that every aspect of U.S. outperformance relative to other advanced countries is due to its ability to grow rapidly, thanks to the availability of foreign-born workers.
Immigration to the U.S. dipped slightly at the start of the Trump administration before plummeting in 2020 amid COVID-induced lockdowns, then rebounded two years later. That’s been reflected in the labor force data: As of this month, there were 3.1 million more immigrant workers in the labor force than just before the pandemic. Meanwhile, the native-born labor force rose to 1.5 million above its pandemic level last summer, but has since shrunk to below those levels.
“The aftermath of the pandemic-era shutdowns of immigration was one of the tightest labor markets we’ve ever seen, and it started to cool as labor became more available,” Aaron Terrazas, chief economist at Glassdoor, told Fortune. “Correlation isn’t causation, of course, but it’s a natural way to think about it.”
That’s a big deal for the Federal Reserve because the Fed has been laser-focused on the job market as it decides where to take interest rates—even though workers’ raises are only partly responsible for the pandemic inflation surge.
“The economy is not only continuing to grow but it seems to be accelerating; inflation has fallen from about 9% to nearly 2% again. A big part of that is the big rebound we’ve seen in the labor force and productivity growth,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics, who also point to the increased labor-force participation of women, and mothers in particular, as a surprise factor. “That’s helped to keep growth strong and also keep inflation down. That’s something not many people were predicting.”
But doesn’t the addition of 3 million foreign-born workers mean that those jobs aren’t going to American-born workers? Well, no, Krugman says.
“They're not stealing American jobs,” he said on Daily Blast.
Foreign-born workers tend to have different skills and work in different industries, and so “they're not perfect substitutes for American workers," Krugman added. "What they do is they open up space to run the economy hotter, and almost certainly actually lead to higher employment among people born here."
Here’s one example of how that might work. Immigrants are heavily represented in the care sector, as nannies, au pairs, home health aides, and nursing-home assistants. By caring for middle- and upper-class Americans’ children and homes (at a fairly low cost), immigrants allow middle-class women to do more paid work in the workforce.
“That’s a market intervention that makes those services available for middle-class and upper-earning households, but [it creates] competition for people providing services as well,” said Terrazas. Other examples include the lower-paid ranks of health care, as well as agriculture, where low prices for food are made possible by the backbreaking work and low pay of thousands of immigrants and temporary foreign workers.
“We don’t have one immigration policy; we have different policies at different skill levels,” Terrazas added. Choosing the “right” amount of immigration necessarily means balancing different constituencies, and making deliberate choices about which industries should prioritize higher worker pay and which should focus on lower end-user prices, he said.
Of course, immigrants aren’t only workers, but “people with lives and families,” Terrazas said. “Immigrants are also consumers; they have kids, and families, and they go to school and use roads and parks and recreational facilities.”
This consumer demand is another force driving the economy forward, by creating demand for goods and services. And immigrants tend to start businesses at higher rates than native-born Americans, including businesses that then employ other people. Krugman illustrated this with an example from his childhood home of Utica, where a Bosnian refugee started the now-thriving Chobani Yogurt company. (“It's actually Bosnian yogurt,” Krugman quipped.)
“It turns out that the dynamism, the vitality of the U.S. economy is very much aided by the inflow of immigrants,” he said.
None of that means we should be advocating for fully open borders, Krugman made pains to note. But it suggests that the U.S. economy has a long way yet to go before the supply of workers becomes too much to handle.
As Apollo chief economist Torsten Slok wrote recently, the native-born workforce in the U.S. still has about 5 million “missing workers”—including people who died during the pandemic—as well as the missing growth after it.
“These 5 million missing workers are the reason why the labor market is tight and why wage inflation is likely to remain elevated,” Slok wrote. “Put differently, there is still plenty of room for job growth.”
YouTube creators raked in $70 billion in the past 3 years. The video giant just revealed its plan to grow even bigger
Alexandra Sternlicht Tue, February 6, 2024
YouTube has paid a whopping $70 billion to video publishers on its service in the last three years, reflecting how it has become a major piggy bank for both creators and media companies that reach a big enough audience.
YouTube CEO Neal Mohan announced the milestone on Tuesday in a letter to his service’s video community that also laid out YouTube’s priorities for this year. In it, he talked about a focus on artificial intelligence to make it easier to create videos, increasingly professional-quality videos, and a growing emphasis on subscriptions for consumers to watch videos ad-free while still paying dividends to content owners.
The letter comes after a strong fiscal 2023 for parent Alphabet, driven partly by YouTube’s quickly expanding ads and subscriptions businesses. The video giant, which generated over $9 billion for Alphabet last year, has become a huge source of potential growth for its parent as consumers increasingly shift their entertainment time from cable TV to streaming—in many cases on big-screen TVs in their living rooms.
“They’re watching YouTube the way we used to sit down together for traditional TV shows,” Mohan said.
In a sign of its status among creators, Mohan said, YouTube now has over 3 million channels enrolled in its ad and subscription revenue sharing program (YPP). Those channels—mostly individuals and small outfits that he described as “next-generation studios”—get a cut of any revenue their videos generate.
The creator world has become so big that Mohan, in his letter, suggested that YouTube may lobby for creators in Washington over unspecified legislation. He wrote the company will “help policymakers and partners across the industry see the economic and entertainment value that creators bring to the table.”
In terms of subscriptions, Mohan wrote of their importance to YouTube and that it will push for more in 2024. Last year, they generated $15 billion, driven by YouTube’s premium TV, music, and NFL Sunday Ticket offerings. Mohan also revealed that YouTube TV (a cable replacement) has 8 million subscribers while Music has 100 million (including trial members). The big subscription numbers show how YouTube is continuing to encroach on territory dominated by paid streamers like Netflix and Spotify Premium, particularly the latter as the music platform has 226 million paid subscribers globally (while Netflix has around 260 million).
The real venue for YouTube to compete with the likes of Netflix and Spotify is the living room. Helped by YouTube TV, NFL Sunday Ticket, and other big screen-ready content, Mohan said users average more than 1 billion hours of YouTube content on their TVs daily as opposed to watching it on their laptops or smartphones. This comes as YouTube simultaneously takes on TikTok for dominance in short, snackable video clips, especially with YouTube’s introduction of TikTok competitor Shorts.
While living room-ready content may ring alarm bells for creators—most of whom do not have the means or training to make big-picture-perfect content—Mohan hopes YouTube’s AI with “appropriate protections” will quell their fears. These AI tools include Dream Screen, which creates a professional or realistic-looking background, and Music AI Incubator, which helps with audio. “Everyone should have access to AI tools that will push the boundaries of creative expression,” he said.
GoFundMe says $30 billion has been raised on its crowdfunding and nonprofit giving platforms
Tue, February 6, 2024
NEW YORK (AP) — GoFundMe crowdfunding campaigns have generated $30 billion since 2010, the fundraising platform announced Tuesday, as younger generations look beyond institutions to make their donations.
Tim Cadogan, GoFundMe's CEO, said 150 million people have either sent or received money through the platform to date. Gen Z and millennial donors, as well as those who are not married and those who are less religious, are more likely to give through crowdfunding than to traditional nonprofits, according to a 2021 report by the Indiana University Lilly Family School of Philanthropy.
“That’s what we’re so thrilled about is that we’ve helped people come together to help each other at that level of scale,” Cadogan told The Associated Press.
GoFundMe, a privately held, for-profit company, has annually released the total amount raised on its crowdfunding platform since its founding, but hasn't published a breakdown of funds raised in an individual year. Nevertheless, it is possible to see significant growth from 2019, when it reported a total of $9 billion in cumulative gifts.
Part of that growth includes GoFundMe's acquisition of Classy in 2022, which is an online platform that facilitates giving to nonprofit organizations. Donations given through Classy are included in the reported $30 billion raised.
For comparison, charitable giving in the U.S. to nonprofit organizations reached $499.3 billion in 2022.
The most common donation on GoFundMe is $50, Cadogan said, and, for the most part, fundraising campaigns reach the personal networks of the people who started them.
“Sometimes people think you put up a GoFundMe and a bunch of strangers just jump in and give you money,” Cadogan said. “That’s not how it really works. You put up a GoFundMe and you ask the people that you know to help you.”
But sometimes campaigns capture a much broader audience, with requests around high-profile events, like disasters, garnering significant support from strangers. In 2023, GoFundMe said Jan. 2 was the “ most generous day ” on the platform as people donated to Buffalo Bills safety Damar Hamlin’s fundraiser for toys after he collapsed on live television. GoFundMe said 210,000 people donated from around the world on their platform that day.
“I think that was a very monumental collective show of appreciation for him and for the desire for people to say, ‘We’re with you,’” said Margaret Richardson, GoFundMe’s Chief Corporate Affairs Officer, of the outpouring of support for Hamlin.
Hamlin announced in May that he would transfer the more than $9 million given to the fundraiser to his nonprofit, the Chasing M’s Foundation.
The day with the single largest number of donations in 2022 was May 26, two days after the mass shooting in Uvalde, Texas.
In response to high-profile events, GoFundMe monitors campaigns connected to the event, takes steps to verify them and collects authenticated fundraisers in a hub on their website. The platform also uses its extensive database of gifts to identify what it calls anomalous campaigns and Cadogan said that the payment processors and banks who actually handle the funds sent over GoFundMe also have processes to detect fraud.
“If you’re moving money in any of the countries we operate in, we and our banking partners have to know who you are,” Cadogan said.
In its most basic form, crowdfunding — gathering small gifts for a cause or to help someone — isn't new. But the rise of online giving through platforms like GoFundMe coincides with the adoption of social media and the increase in ecommerce and the use of online financial services in general, said Benjamin Soskis, a senior research associate at the Center on Nonprofits and Philanthropy at the Urban Institute.
It's not yet clear how much giving through a crowdfunding campaign has supplanted giving to nonprofit organizations, Soskis said, in part because data about crowdfunding is less public. Nonprofit organizations have to share information about the grants they give and receive as well as donations they receive with the IRS and the public.
“If it’s true that crowdfunding is becoming a larger part of total giving, I think that their data transparency needs to reflect that, so that we can start to integrate crowdfunding into the larger analysis of charitable giving trends,” Soskis said, speaking of GoFundMe.
The company does share anonymized data with the organization GivingTuesday as part of their efforts to track giving on the Tuesday after Thanksgiving in the U.S. In 2023, initial estimates showed a 10% drop in the number of donors, which is a worrying trend for nonprofits. That's in addition to a decrease in the overall amount given to nonprofits in 2022, according to Giving USA.
Other platforms also facilitate online crowdfunding, besides GoFundMe. DonorsChoose, which allows public school teachers to fundraise for classroom supplies, says it's raised $1.6 billion for students and teachers since 2000. And Meta said in 2022, that donors had raised more than $7 billion through fundraisers on Facebook and Instagram.
Cadogan anticipates room for further growth in online donations in general as well as further potential for asking for help publicly to become more and more acceptable. He sees that ask as the first step to unlocking other people's generosity.
“A big part of what I hope that we can do over the next few years is normalize asking for help,” he said.
___
Associated Press coverage of philanthropy and nonprofits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.
Thalia Beaty, The Associated Press
EU Aims to Cut 90% of Emissions by 2040. What Does That Mean? John Ainger Tue, February 6, 2024
(Bloomberg) -- The European Union’s aim to cut 90% of emissions by 2040 is its most ambitious move yet to try to keep global warming below 1.5C.
The plan recommended by the European Commission would put the world’s largest trading bloc at the forefront of global climate efforts and require a significant overhaul of its economy and trade. Yet it’s likely to face intense debate among member states and the broader public — particularly as the region is lagging on its existing goals.
Here’s everything you need to know the new milestone on the EU’s path to eliminating emissions by mid-century.
The Target
The 90% aim recommended by the EU’s executive branch on Tuesday is set to intensify the debate on EU climate policies. The bloc already has two legally binding targets — cutting emissions by 55% this decade (it’s not yet on track) and hitting net zero by mid century. The idea is that the 2040 goal will provide a key strategic way point, but it will be for the next commission to put more flesh on the bones following EU-wide elections in June.
While 90% is preferred by the current commission as the most cost-efficient way to reach net zero, it analyzed three possible reduction goals: 80%, 85-90% and 90-95%. Frontloading efforts comes with advantages, including helping to wean the bloc off fossil fuels faster and leaving it less vulnerable to price shocks. The overall costs, when weighed against inaction, may also be cheaper.
The Price Tag
That does not mean it will be cheap. The EU estimates it will need to invest about €1.5 trillion ($1.6 trillion) every year between 2031 and 2040. It’s not fully clear where all that money will come from, but a fair amount is already sloshing around the economy, by helping to pay for fossil fuels for example. The most ambitious option analyzed by the EU showed that the region could save around €2.8 trillion in oil, gas and coal expenditure until 2050.
Funding will also come from national governments, but they have differing amounts of fiscal leeway. A key question for the next commission will be whether it decides to undertake fresh borrowing like it did during the height of the Covid-19 crisis. What’s clear is the private sector will have to cough up much of the money.
Technological Solutions
A key difference from the 2030 goal is that the 2040 target will aim for a “net” emissions cut. Fossil-fuel use for energy will have been reduced by four fifths, but still play a role. That means carbon capture technology will have to help.
By 2050, as much as 450 million tons of carbon dioxide a year will need to be captured — equivalent to the emissions footprint of Poland and Denmark combined. Global carbon capture and storage capacity was just 50 million tons in 2022, according to BloombergNEF.
A number of additional technologies will be needed, including green hydrogen for industry, batteries to decarbonize the grid and more solar and wind power generators. There are doubts on how well European manufacturers can help meet those needs amid global competition. The quest for clean tech also relies on critical raw materials, a market which is currently dominated by China.
The plan makes reference to nuclear power as a “complement” to renewables. An industry alliance to spur so-called small modular reactors will also be launched.
What to Do About Agriculture
The EU has already put in place the bulk of the rules it needs to decarbonize its energy, heating and transport sectors, but there’s still a major elephant in the room.
Europe has already gotten a taste of how difficult it is to make agriculture more environmentally friendly, with a plan to restore nature nearly torpedoed by an alliance of farming lobbies and right-of-center political parties in parliament. Commission President Ursula von der Leyen said she will withdraw efforts to halve pesticide use because it became a “symbol of polarization.”
Recently, farmers across Europe have blocked roads and driven tractors into national capitals to protest red tape and falling prices for agricultural commodities. At the same time, business-as-usual would put the bloc’s climate targets firmly out of reach. The 2040 communication provides almost no detail on how agriculture should contribute to the transition after suggestions in previous drafts seen by Bloomberg were removed.
Changing Diets and Other Citizen Obligations
Prior references to incentivize dietary shifts among citizens — such as eating less beef, which emits enormous amounts of methane into the atmosphere — were also dropped.
Such omissions highlight the EU’s broader challenge for the next decade. “Easy” decarbonization solutions are already being undertaken, such as the shift to a cleaner power system. The ones that still need to be scaled up might be more difficult, for instance convincing households to insulate homes, buy electric cars, fly less, or shift diets.
Whether the EU can really create a “just” transition — a term that’s repeated ten times throughout the text — remains to be seen.
--With assistance from Ewa Krukowska.
Bloomberg Businessweek
Boeing Finds More Misdrilled Holes on 737 in Latest Setback
Angus Whitley and Julie Johnsson Mon, February 5, 2024
(Bloomberg) -- Boeing Co. found more mistakes with holes drilled in the fuselage of its 737 Max jet, a setback that could further slow deliveries on a critical program already restricted by regulators over quality lapses.
The latest manufacturing slip originated with a supplier and will require rework on about 50 undelivered 737 jets to repair the faulty rivet holes, Boeing commercial chief Stan Deal said in a note to staff.
While he didn’t identify the contractor, a spokesman for fuselage supplier Spirit AeroSystems Holdings Inc. said it’s aware of the issue and will conduct repairs.
Boeing shares fell 2.1% as of 9:43 a.m. in New York, adding to a 20% slump this year before Monday. Spirit, which is set to report results on Tuesday, declined 3.9%.
The extra time required for inspections and repair work could delay near-term plane deliveries, Deal said in his memo, which was seen by Bloomberg News. He didn’t say whether any action would be required on the in-service 737 fleet.
“This is the only course of action given our commitment to deliver perfect airplanes every time,” Deal said in his note.
The defect follows a string of manufacturing lapses at Boeing, including a near-catastrophic panel blowout on an Alaska Airlines 737 Max last month. The Federal Aviation Administration has stepped up scrutiny of Boeing’s manufacturing and supplier systems and has capped 737 production until quality improves.
Read More: Boeing’s CEO Says ‘We Caused the Problem’ in 737 Max Blowout
The problem disclosed Sunday is the latest in a series of glitches originating with Boeing’s former aerostructures unit. A drilling fault on an aft pressure bulkhead supplied by Spirit Aero slowed deliveries of the 737 Max last year, the planemaker’s most important generator of cash flow. A separate issue with tail-fin fittings affected output earlier in 2023.
In the latest instance, Deal said a worker at a Boeing supplier flagged that two holes in the plane’s fuselage may not exactly meet specifications. The problem “is not an immediate flight safety issue and all 737s can continue operating safely,” he said.
Still, he said many employees have expressed frustration at how unfinished work, either by suppliers or within Boeing’s factories, can ripple through aircraft production lines. To address this, Boeing has recently told a major supplier to hold shipments until all work has been properly completed, he said.
“While this delay in shipment will affect our production schedule, it will improve overall quality and stability,” Deal said.
