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S&P Global — 15 Mar, 2024

Daily Update: March 15, 2024

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By S&P Global

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

To Meet Climate Goals, the Global South Must Take a Different Path

The world’s wealthiest countries all took a similar path to prosperity. Cheap energy derived from fossil fuels allowed them to build their cities and industries, heat their homes, light their offices, and achieve mobility of labor. Once these goals were accomplished and their wealth guaranteed, these countries could afford to question the wisdom of fossil fuels and gradually reduce emissions. 

Europe and the US first tread this well-worn path. China has been following over the past few decades. Now the developing countries of the Global South, in Asia, Africa and South America, are eager for their own chance at rapid growth. They want the jobs, the healthcare, the schools and the opportunities that developed countries take for granted. But if they follow the same path, the damage to the planet will be incalculable.

Some political leaders in developing nations have protested the fairness of applying strict carbon targets. Why should India or sub-Saharan Africa pay a premium for renewable energy when coal is cheap and plentiful? Why should the Global South forgo inexpensive energy when the vast bulk of emissions still come from developed nations? Present energy consumption levels in sub-Saharan Africa are roughly equivalent to those in Western Europe in the 1860s. 

A recent analysis by S&P Global titled “One planet, two realities: Realizing energy transition in the Global South” lays out the factors that constrain the ability of developing nations to jump straight to renewable energy. These factors include the affordability of energy, economic and political dependence on fossil fuels, infrastructure bottlenecks, access to technology, and the high cost of capital for developing nations. 

However, the same article also illustrates why it is impractical for these countries to continue down a carbon-intensive path. If the developing world does not grow using low-carbon or no-carbon energy sources, there is almost no way to achieve the goal of limiting global temperature rise to 1.5 degrees C. As India, Africa and China build out infrastructure for fossil fuels, those newly constructed energy infrastructure assets will only serve as future arguments as to why an energy transition is economically impossible. 

This appears to place the countries of the Global South in a no-win situation. If they grow their economies with cheaper energy, global temperatures will rise, and the economic impacts of higher temperatures disproportionately affect the developing world. If they forgo cheaper energy, they will struggle to grow their economies, with impacts on the health, wealth and happiness of their citizens. 

The solution to this challenge will require the Global North to sacrifice for the good of the Global South. Multilateral development banks must be funded commensurate with the challenge of rapid decarbonization in developing countries. Wealthy countries must share knowledge, intellectual property, technology and capacity with their global neighbors. Developed nations must decarbonize rapidly to build out renewable energy capacity and drive down the cost of new technologies.

Today is Friday, March 15, 2024, and here is today's essential intelligence.

Written by Nathan Hunt.


Emerging Markets Growth Remains Solid Amid Intensifying Inflationary Pressures

Emerging markets continued to expand at a solid pace midway into the first quarter of 2024, supported by broad-based expansion across both manufacturing and service sectors. India remained the brightest spot in the emerging market space, though major emerging economies such as Brazil, mainland China and Russia all recorded growth as well.

—Read the article from S&P Global Market Intelligence

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Capital Markets

Credit FAQ: Asia Bond Markets Poised For Policy Shifts, Credit Cycle Upturn, Panelists Say

Asia-Pacific's investment-grade debt markets are in a cyclical sweet spot. This is according to investors, who cite positive policy shifts and the fact that many corporates are in a recovery-and-repair phase after a difficult few years. The credit cycle is trending up, they say, and the rates cycle is trending down.

—Read the article from S&P Global Ratings

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Global Trade

US Senators Introduce Bill To Reimpose 25% Tariff On Mexican Steel Imports

US Senators Tom Cotton and Sherrod Brown introduced legislation March 12 that would reinstate Section 232 tariffs on imports of steel from Mexico amid concerns raised by US steelmakers about a surge in steel imports from the country. The bill, known as the Stop Mexico's Steel Surge Act, has bipartisan support and is co-sponsored by eight additional Senators. Representatives Rick Crawford and Frank Mrvan are introducing companion legislation in the House of Representatives, according to a statement from Cotton's office.

—Read the article from S&P Global Commodity Insights

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GRESB Sustainability Scores Up For Majority Of US REITs In 2023

The 2023 Global Real Estate Sustainability Benchmark scores, or GRESB scores, showed an improvement in ESG efforts for the majority of scored US equity real estate investment trusts. GRESB scores capture information on ESG performance and sustainability best practices for real estate companies, covering more than 1,800 property companies, REITs, funds and property developers worldwide.

—Read the article from S&P Global Market Intelligence

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Energy & Commodities

Listen: How Are Gas Operators Navigating The Difficult Gas Environment In 2024?

Pressured by sub-$2/MMBtu prices, many US producers have decided to cut spending on gas-directed drilling and completion activity and to scale back production in 2024. But there are signs of price improvement along the futures curve in late 2024 and thereafter, due in part to the arrival of new LNG facilities, giving operators reason for optimism. In this episode, Jeremy Beaman, natural gas news editor, talks with Bryan Mcnamara and Imre Kugler, directors of upstream research, about how natural gas producers are approaching a difficult price environment and what their plans are for 2024 and 2025.

—Listen and subscribe to Commodities Focus, a podcast from S&P Global Commodity Insights

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Technology & Media

Listen: Next In Tech Episode 157: AI Investing

The world of gen AI is complex, but the web of investments in both cash and infrastructure that are supporting the many AI companies is wildly intertwined. Analyst Melissa Incera returns to look at what these interrelationships mean with host Eric Hanselman. Typical investment priorities have been contorted with strategic investors, in many cases competitors, are vying for stakes in what has become the must-have technology. Funds keep pouring in, but returns are far from assured.

—Listen and subscribe to Next in Tech, a podcast from S&P Global Market Intelligence

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