James Lawler: [00:00:00] Welcome to Climate News Weekly. Great to see you again, Julio. How’ve you been?
Julio Friedmann: I’ve been fabulous. Thank you. Glad to be back.
James Lawler: Great. So, let’s start this week with the EU Parliament elections. There’s been a lot of press on these elections and how they reflect, you know, a green backlash or the rise of further-to-the-right parties in these elections, which happened last Sunday. As I understand it, there’s a lot going on in these elections having to do with green policies and climate policies in the EU, but also other things. Julio, what is your takeaway from what we saw in the, in the Parliament elections in Europe?
Julio Friedmann: Right. So, for starters, the green backlash was real, and there’s sort of no polite way to say this. I mean, it just was bad news for the party. The open question is, what is the impact associated with this? I personally do not believe that we are going to see backsliding. I think the policies that exist are going to stay. Even though the Greens got hit pretty hard, the center left [00:01:00] parties did pretty well. It is also the case that what people would call nationalist or far right parties gained ground for sure. They do not have a majority. They did not dominate everything. It is true that it will make it harder to pass new laws. It is the case that the narrative that we just need to go farther left and then everyone will like us, that just has not played out ever. And it certainly hasn’t played out this time.
James Lawler: Right.
Julio Friedmann: But, this is not a Chicken Little moment either. The sky is not falling.
James Lawler: Right.
Julio Friedmann: The legislation that exists is durable, the targets are durable, the plans are durable, so Europe will continue to make progress.
James Lawler: Financial Times editorial board on June 11th published a sort of a recap of these elections, and there was one, one quote that I thought was notable:
“Policy makers committed to the green transition need to learn lessons. They must be finally attuned to the impact on consumers and ensure policies are well designed and communicated, with help for those most heavily affected. More targeted tax incentives to reduce the upfront costs of, say, installing solar panels or [00:02:00] switching to electric vehicles, could accelerate adoption by businesses and households alike.”
So, you know, if there’s a silver lining, perhaps there are lessons for future policy makers to really double down on how to make policies work for consumers, for voters.
Julio Friedmann: Yeah, absolutely. Prices matter. All of these things affect consumers directly. And if they really believe that it’s going to impact them, then they are concerned. And they don’t have to believe that in Europe. That did happen. Prices went up. And some of that is Russia, Ukraine, but not all of it. Some of it is definitely tied to specific green policies. We saw this in France seven years ago or six years ago with the Yellow Vest Protests. We saw it again this past couple of weeks.
James Lawler: Are there any particular policies, given this new balance of power, that may be repealed?
Julio Friedmann: It’s a little early to know. One of the things that’s interesting is in Italy, already, the Prime Minister decreed that certain policies were dead. Like they just were not going to do more rooftop solar, period. And I don’t think [00:03:00] there are particular policies that exist that are at risk. This has taken the foot off the accelerator. We know that in order to round the corner on climate, we need to do more, we need to go faster, we need to be bigger. That will not happen in Europe, not for a while.
James Lawler: So, another story that is related to this is also from the Financial Times, on June 4th: “Europe’s steelmakers risk missing climate targets despite billions in subsidies.” So, steelmaking is responsible for, I believe, about 7 percent of total global emissions. A huge, huge piece of the emissions pie. The companies making steel, ArcelorMittal, thyssenkrupp, Tata Steel, these are massive companies that are responsible, you know, for significant, you know, market share and also recipients of billions of euros and commitments in Europe towards decarbonization [see here and here and here], although they can’t actually be accessed until projects are actually under construction. [00:04:00]
And, one of the primary challenges it appears that these companies are having is that the methods to produce greener steel, direct reduction of iron, you know, using green hydrogen as in its most green instantiation, is, is not yet possible because we can’t make green hydrogen cheaply at the scale that we need yet. So, what’s a steel maker to do? Can they go faster? Are they just going to miss, miss their targets and we’re all going to have to be okay with that? How do you metabolize this, this news?
Julio Friedmann: Well, first of all, you have to parse this news. They are at risk for being off target. There’s an aspect of this story that I’m like, “why are you even reporting this?”. It cuts to the heart of a lot of these challenges in the hard-to-abate sectors, steel is a hard-to-abate sector. Because the technologies have not scaled, because it’s very expensive, because you have to build new infrastructure, because these are volatile markets with small margins.
So, to your question, what is a steel maker to do? They’re actually doing quite a lot. So, [00:05:00] if I were to fault anybody here, I would fault the target setters because you have to build new infrastructure, you have to build gigafactories for electrolyzers, you have to get the permits, you have to do the front-end engineering design, you have to train a new workforce. And then when you’re done, even with the €8 billion of subsidies, your steel costs twice as much as what the market will buy.
James Lawler: Yeah. Just to put these targets in context, ArcelorMittal, the steel group, their target is a 25 percent reduction in tons of CO2 released per ton of steel by 2030, and it expects that that will cost them about $10 billion, and that state federal subsidies will pay for half of those funds that are required. They have not yet drawn down on a single dollar, of which I believe they have about 3 billion pledged so far. So, people are saying, “Okay, guys, here are the billions, get the shovels in the ground” and that has not been possible yet.
Julio Friedmann: We see the same thing on this side of the Atlantic here in the [00:06:00] U.S. too, where there’s these big bags of cash that came out from the Bipartisan Infrastructure Law, and there’s these massive tax incentives that have come out of the IRA. And then everybody’s like, “Tick, tick, we’re on the clock”. And the people who do this are saying “It takes 10 years to do this”. Like, it just takes time.
James Lawler: In the steel sector, Julio, like, what are the top one or two things that need to be true in order for these decarbonization goals to be met? What might those be?
Julio Friedmann: Before I answer that question, I think the global vice president of ArcelorMittal, Aditya Mittal, spoke last Monday at Harvard about the decarbonization that he needs to do in his company. I wrote a paper on this with my colleague, Zhiyuan Fan. We wrote a how do you decarbonize steel report. It’s out there. Go to Joule Magazine, you can find it. There are a very small number of technologies and ArcelorMittal is chasing all of them. Direct reduction of iron with hydrogen is one. They are looking to do carbon capture on a set of their plants.
A third [00:07:00] is used biomass. A big part of the emissions and the energy that goes into steel making is from coke, which reduces the iron ore and so it has a chemical as well as a structural as well as an energy role, it does all these things. You can make coke today out of metallurgical coal. They are trying to make it out of biomass, make high quality biocoke as a way to reduce the carbon emissions. They are looking to electrify parts of their system with green electricity, and that’s the full list. There is nothing more. And the biggest levers are hydrogen and carbon capture, and they’re chasing those aggressively. It just takes time to do it.
So of course they’re going to miss their targets. But if they hit these targets in 2032, that’s a win. If they hit these targets in 2033, that’s a win. Like I am more interested in seeing them making progress than hitting an arbitrary target done before the engineering was done. So, even though delaying a couple of years for a company like ArcelorMittal is not critically bad, we are also seeing real-time [00:08:00] climate impacts that are really bad. These were predicted, and this week we had a bunch of them.
James Lawler: Yeah. In the Middle East, Hajj 2024 is the annual pilgrimage to Mecca and Medina. That pilgrimage starts on June 14th. That is the date that we are conducting this recording. The annual Hajj pilgrimage sees about 2 million Muslims from 180 countries who travel to Saudi Arabia.
And this year, it’ll be particularly challenging because temperatures will be several degrees Celsius, perhaps two degrees Celsius, above normal weather in those pilgrimage cities. So, they have tried to take steps to mitigate these temperatures, including installing misting systems and water stations in all of the main squares in the two cities and the floor of the Great Mosque in Mecca and the surrounding tents will be air conditioned. So, Saudi authorities are trying to take steps to mitigate this. They haven’t had to do this before.
Julio Friedmann: [00:09:00] So the Hajj is risky because there are often a lot of people who have waited their whole life to do this. So, people in their seventies or eighties are doing the Hajj and it’s going to be 111°F. And you’re outside for hours and hours and hours, and you’re crushed in with millions of people, so the risks of heat stroke are profound.
When people think about climate adaptation, they don’t necessarily think about events like the Hajj, but they’re like hugely important religious and cultural events, how do you manage that in an outdoor setting? It’s tricky business. I’m glad the Saudis are trying stuff, like air conditioning the floor and these misting stations. That’s grand, but this is clearly an interim strategy, not a long-term strategy.
James Lawler: We’re seeing a similar story in India. Maximum temperatures touching on 50.5°C, which is 123°F, in Rajasthan last month. This is in the midst of India’s election. The Indian Express reported that at least 18 officials who were staffing polling stations during the last phase of elections [00:10:00] died of heat-related issues. So, you know, and there are, there are more deaths reported in other parts of the country due to the heat wave.
Julio Friedmann: One of the things that I find most amazing about this is that people turned out in the middle of that election. People risked their lives to vote. And interestingly, Modi got pushed back. Modi has a very ambitious climate targets, but this was, in part, a comeuppance to him and people literally risked their lives and, in some cases, people died in order to vote.
This heat wave is not just terrible from the wet bulb temperature, which we’ve talked about in prior podcasts, but also, it’s in the middle of drought, and we’re seeing, as we did in prior years in Pakistan and India, drought conditions that are prolonged. And again, I’m sorry to say, predictable and predicted. Climate scientists predicted this as a likely outcome in this part of the world 20 years ago, and we are seeing those kinds of impacts now.
James Lawler: Bringing the news a bit closer to the U.S. We have [00:11:00] Florida being swept by a line of thunderstorms at the moment, crashing down on Miami and elsewhere across southern Florida. Damages are estimated likely over a billion dollars. On a single day, on Wednesday, nine and a half inches fell in one day on Fort Lauderdale, which was the most ever for a day in June. A state emergency has been declared in Miami Dade County, Broward County, Collier County, Lee and Sarasota counties. So, even though there’s been no name given to this particular storm, it is still quite serious and quite devastating.
Julio Friedmann: Yes. And again, predicted by the climate models. When you warm the oceans, when you warm the atmosphere, they hold more water and they rain a lot more. And this has been labeled a one-in-a-thousand-year flood, but in point of fact, it’s one of a series of one-in-a-hundred-years, one-in-a-five-hundred-years floods. One in a thousand years doesn’t mean it happens one every thousand years. What that means is based on hydrological data from the past, you’re [00:12:00] estimating what the frequency is. So, we’re going to see lots of one-in-a-thousand-year floods coming your way in Florida. It’s exacerbated by sea level rise, which makes it harder to drain. It is exacerbated by underinvestment in infrastructure.
We got a whole pile of work in front of us and adaptation requires a lot of infrastructure reimagining, requires seawalls, very expensive pieces of kit. We have seen that those tickets are very high and they’re often borne by municipalities. Those aren’t federal investments. Those are Miami-Dade investments. And it makes it very hard for these people to succeed.
James Lawler: Yeah. And on a related note, water temperature readings off of Butternut Key in Florida have reached 88°F, which is what they typically find in August. So, well above normal for May and June. Julio, what’s the connection between, you know, surface water temperatures and storm intensity?
Julio Friedmann: There, there are many factors that come together, but overall, if the surface water is holding more [00:13:00] heat, that warms the atmosphere, which can generate hurricanes and means the atmosphere holds more water vapor. But the basic system is you’re pumping heat into the water, you’re pumping heat into the air, and both of those lead to more moisture and more energy in the atmosphere. And moisture and more energy can very easily turn into more storms and bigger storms.
James Lawler: Yeah. It’s interesting to now consider some of the downstream impacts of these storms and of these natural, sort of, disasters that we’re seeing more and more due to weather. So, in one of Brazil’s wealthiest states, which is Rio Grande do Sul, that particular state accounts for 6.5 percent of the country’s GDP. And it’s been devastated recently by flooding due to rains and due to overflowing rivers. And the Financial Times again has an interesting story about this. This was published on June 13th: “Floods leave Brazilians with a grim choice, rebuild or leave.” And I’ll, I’ll just read from the story:
“The local economy [00:14:00] about the, about the size of that of Uruguay and Paraguay combined, was set to grow by 4.3 percent in 2024. But now, it is predicted to shrink. Economists believe the floods will shave about 0.3 percent off Brazil’s GDP this year.”
So, we’re seeing quite real impacts, huge impacts on state GDP, local economies, state economies. Do you make anything of this story, Julio?
Julio Friedmann: So even though the costs of adaptation and the cost of mitigation are substantial, the costs of inaction are larger, by a lot. And this is one example. There’s sort of no easy way about this. One of the big challenges is that when a state is hit with these kinds of storms and destruction, the question is, well, we’re going to rebuild, where does the money come from?
Often the money comes from other adaptation, other mitigation. And in a country like Brazil, which is a growing economy, the money to rebuild [00:15:00] that kind of infrastructure and fix that damage is a very large part of their GDP. So, at some point it starts to cut into other programs. At some point it cuts into military or education or healthcare. And this leaves politicians with very difficult choices. And often it will mean that the climate mitigation part suffers.
James Lawler: Yeah. And this particular set of storms here in Brazil really are quite massive. So, the scale we’re talking about is on the level of hurricane Katrina, which ravaged the U.S. in 2005. The article in the Financial Times is a very good job of actually making these economic loss is real, so they, they talk to business owners whose employees have left or have asked to move, and they can no longer sustain operations, so the pressure to do all the things we talked about earlier in this episode, to decarbonize, to enact policies that can accelerate our way to a, a better future is only mounting.
Julio Friedmann: So in the context of all of this grim climate news, [00:16:00] one of the things that never stops is innovation. And one of the stories this week in Bloomberg was actually on an innovative insurance policy to help Indian women avoid deadly heat waves during work. These are often women who have to work in tin sheds 12 hours a day, whether they’re doing garment work or some other kind of work. And if they are not in the shed, they don’t get paid. They have no livelihood. It is work or don’t get paid. And their health is very much at risk. It is, it’ll be 110, 120 temperature, wet bulb risks, all of these things that we’ve talked about before.
In Ahmedabad, this led to really deadly work conditions, and the city had put an insurance policy in place. And it’s a novel mechanism that triggers when these kinds of events happen. When you reach an extreme threshold in temperature or an extreme threshold in some other condition, then the insurance policy pays out so that these people don’t have to risk their lives to make good for their [00:17:00] families. I found this really interesting and it shows 22 districts in India, they were doing this pilot program, $340,000 in total, but it’s probably saved the lives of 40,000 or 50,000 women. And those people are mothers, those people are breadwinners, they are anchors of their family. That is a good return on investment and a good use of capital.
James Lawler: Very interesting. Final story today is the Governor of New York Kathy Hochul has rejected the congestion pricing plan that was supposed to go into effect in just a matter of weeks. The reasons that she cited were the high costs that weighed on “ordinary New Yorkers” as she sidelined this initiative, which has been in the works for over a decade, starting with Bloomberg administration a number of cycles ago. Any thoughts on this?
Julio Friedmann: So, lately I’ve been replaying the musical Hamilton in my head and, and listening to it again. And in the second act of Hamilton, George Washington says, “Winning [00:18:00] is easy. Governing is harder.“ It’s one of the key lines, and this is what we’re seeing. This is very tough news because congestion pricing works. It is a very heavy lift to get it to work for the reasons the governor mentioned. It does raise costs. It does have impacts. It is contentious.
Her democratic confer, the Governor of New Jersey, Phil Murphy is, was pushing hard to stop this. He’s like, “This will hurt New Jersey. It’ll hurt their incomes. It’ll hurt residents”. But they had built this consensus over a very long time, they had a deal. And then Governor Hochul said, nope, we’re not going to do it. And the reasons that she talked about tie us back to the parliamentary elections in the EU. It deals with prices, deals with costs, deals with impacts. And the politics of this are hard. The fact that she made this decision is another warning, like, you have to be careful about how fast and how far you can go.
The climate impacts we’ve been spending all our time talking about today show how urgent the problem is, show we need to move [00:19:00] faster and farther, reveal the costs of inaction. And at the same time, we’re behind on our steel targets, maybe. We’ve got this congestion pricing challenge; the elections show green pushback. We have to be clear eyed about how hard this is.
So, for me, the take-home from this story is bumper stickers don’t deliver votes. It’s really hard to build these consensuses, to build the facilities we need, to build durable law, these things, it’s hard to do. And we need to be humble about how hard that is and work together to make that kind of progress. I believe that New York still will do a congestion pricing law, but they’re not doing it this year.
James Lawler: Yeah. I mean, one of the, one of the biggest victims, if you think in those terms, of this sidelined policy is the MTA, which manages the subway system, which is a critical piece of infrastructure for millions of people in the city. The congestion policy was supposed to raise $15 billion [00:20:00] over a four year period for the MTA, which if you ride the subway, you know that it needs the $15 billion. So, this was an incredibly fraught and challenging decision.
You know, as someone who lives in New York, this is not, this, this feels like a really bad decision on her part, but obviously she’s weighing a lot of stakeholders here. I’m hoping personally, and probably speaking for many, that she has enough pushback on this that she reconsiders, but who knows.
Julio Friedmann: Well, and it might happen after the elections, we shall see.
James Lawler: Right, right.
That concludes Climate News Weekly for today. Julio, always a pleasure to have you. Thanks so much for sharing your wisdom and perspectives here.
