Explosions in Nord Stream, chaos in the UK, and more - Issue #24
The Big Picture
On 25 September, as work on the previous edition of this newsletter drew to a close, came eye-popping news. The Economic Times, India’s largest-selling financial paper, reported the Indian government is mulling water trading (spots and futures, as in other commodities). Since water is increasingly becoming a scarce commodity, a senior government official told the paper, "(Niti) Aayog will come up with draft recommendations to promote water trading and setting up of water regulation authority."
This idea borders on the farcical. India is indeed gripped by water shortages. Water conflicts, too, are rife across India --- between rich and poor farmers; between caste groups; between communities; between villages and industries; between towns and villages; between factories and cities; one could go on – but it is extraordinarily irresponsible policy-making to think trading can resolve such disputes. All it will do, instead, is direct water to its most profitable use.
Take the ET report. “Water is traded on the Chicago Mercantile Exchange in the US,” it says. “The contracts tied to California water prices see participation from actual users such as farmers and municipalities and financial investors like hedge funds.
Here is how that logic is likely to play out in India. In water-stressed Gujarat, where Vedanta-Foxconn have just announced a semiconductor fab (which is water-guzzling), local farming communities, already in financial crisis, will have to bid for water futures against the semiconductor plant.
The people ET spoke to think this is workable. “The irrigated and rain-dependent agriculture in India could be insured against droughts by locking in prices in the water futures market which would substantially reduce the government's additional expense on drought relief measures.”
The questions write themselves. Can India’s cash-strapped farmers bid for water futures? Do they have the money -- or the awareness needed to participate in such platforms? If they actually want the water – instead of trading in it – can acre-feets of water even be delivered? At what cost? This is not techno-optimism. It is more akin to Darwinism – around control over water.
India is indeed staring at an acute water crisis. Even as water demand rises, water stocks are falling – not only are glaciers retreating, groundwater depleting, and rivers drying, pollution is further reducing the stocks of potable water.
What doesn’t change are our policy responses. We continue to do everything short of what is actually needed.
News of the Week
On the energy front, last week was especially eventful.
The war in Ukraine is not going in Russia’s favour. Last week, for instance, Ukraine took back the town of Lyman. Russia’s response was drastic, as it mobilised new military drafts and hurriedly formalised the annexation of almost the entirety of the eastern flank of Ukraine. Last week, mysterious leaks developed in undersea sections of Nord Stream 1 and 2, the pipes which supply Russian gas to Europe. Anywhere between
100,000 to 350,000 tonnes of methane
are estimated to have been released from the leaks before they were plugged, with the UNEP terming it the
largest methane release
ever recorded.
Continuing with geopolitics, countries like South Korea are worried as the world tries to reduce its dependence on China for semiconductor chips. “This week, South Korea’s science minister warned that a “sense of crisis” was gripping his country’s much-valued semiconductor industry amid the intensifying global chip war,” reported Financial Times. “Governments in China, the US, the EU, Japan and India have collectively promised $190bn of subsidies over a decade as they seek to localise manufacturing capacity. The sheer scale of state intervention is likely to result in overcapacity in some segments, which could trigger future dumping and trade disputes. But the wall of money may also amplify the wild cyclical swings that have historically characterised the industry.”
Other big global developments this week? Liz Truss’ government almost created an economic crisis in the UK – and has reaped one of the bluntest Financial Times edits ever.
In Brazil, election results have been less than overwhelmingly favouring Lula. A second poll between him and Bolsonaro will be held on 30 October. Among other things, the future of the Amazon (and, by extension, the planet) hangs in the balance.
Turning to renewables, last week had good news. There is a potential breakthrough in battery technology.
Countries are also adding renewables faster than ever before. Take the US. The country’s installed utility-scale electricity generation capacity stands at a little over a terawatt. It’s now on track to add another terawatt of (renewable) power generation or storage capacity – as much as what was added in the last century. Or take China. It has rolled out a new battery technology for damping troughs and crests in the grid – Vanadium.
Back home in India, too, the shift continues – if not due to policy, then due to price. The country has hiked gas prices, adding to the fuel’s uncompetitiveness. Sales of CNG vehicles have been falling for a while now. This hike won’t help. Tata Motors has launched India’s first electric car priced below Rs 10 lakh in tandem. Now to see how it fares.
In other news, the Delhi government has again rolled out its plan for fighting air pollution.
One wonders how it will fare. India is deeply indifferent to environmental concerns. As this newsletter gets written, trees are being felled in Hasdeo Arand.
Finally, Suzlon founder Tulsi Tanti passed away. Here is an obit by Rachita Prasad of Moneycontrol.
CarbonCopy Longread
“As of September 22, 2022, pledges made by the US, the UK, European Commission, Spain and Canada remain undelivered. So around $230 million is outstanding out of the $356 million that was pledged i.e. 65% is yet to be delivered.” Read here.
Climate Longreads
On China’s year of bad climate. “To some observers, China’s catastrophic summer may appear to be an indictment of Beijing not having done enough to meet the current climatic moment. But the truth is that China has done a lot to mitigate the effects of climate change, as well as adapt to its effects. And while the Chinese government could certainly do more, the unveiling of the 2035 adaptation plan makes it clear that there is a lot more to come. The problem facing Beijing, then, is the same faced by Washington, Brussels, and elsewhere: Climate change is already here, and things are going to get worse before they get better. China, like the rest of the world, is going to have to buckle in and work harder than ever.” Read here. (Vox)
The Sri Lankan crisis has affected farmers: “For many years, all five have owed money to microfinance companies. They’d paid off astronomical interest out of the money from each season’s harvest, and then borrowed to help fund the following season’s planting. Every week, the microfinance agent rolls up to the front door on his motorbike. He peeks inside, and asks why they have not sold their furniture if they are as broke as they say.” Read here. (Fifty Two)
Poultry farms are creating an environmental crisis in India. “The Indian government has issued guidelines and best practices for poultry farms to follow, but state governments haven’t enforced them properly. Monitoring local ecosystems and studying the environmental impacts of poultry farms in more detail, and undertaking environmental surveillance to understand less-known aspects such as antimicrobial resistance or emerging zoonoses, could be the need of the hour as a changing climate and habitat loss increase the risks of diseases spilling over from animals to people.” Read here. (The Wire Science).
On climate change and political stability. “As climate change accelerates, a looming question is what effects warming will have on the stability and organization of political systems. We argue that extreme weather associated with climate change can reshape societal relations by altering citizen perceptions of their political environment. We develop a theory of climate change and political mobilization which emphasizes the mediating role of citizens’ beliefs about their leaders, the state, and one another. We provide causal evidence for our claims using panel data at the household level for India (2005-2012). We find an increase in temperature of 3◦ Celsius reduces trust in political leaders and domestic security forces by around 2 percentage points (PP) while increasing cooperation by 3PP.” Read here.
Climate Video of the Week
The Financial Times tries to make sense of Brazil’s fractured vote.
Book of the Week
Two books on the amazon rainforest, this week around.
The first is fiction, with the same epic scope as The Grapes Of Wrath, which talks about the first inroads by Cacao farmers into the Amazon. This is The Violent Land, by Jorge Amado. Read more about it here. That book was written in 1943. The second book, a work of non-fiction, extends our understanding of the battles over the Amazon till 1990. This is The Fate of The Forest: Developers, Destroyers, and Defenders of the Amazon, by Susanna Hecht and Alexander Cockburn.
We are now on the lookout for a worthy follow-up to these two. If you have any suggestions, do please write in.