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S&P Global — 6 November 2024
By Nathan Hunt
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
On Oct. 24, the UN Environment Programme said in a report that the world is headed toward a temperature rise of 2.6-3.1 degrees C by the end of the century. Absent significant reductions in greenhouse gas emissions and a renewed focus on commitments under the Paris agreement on climate change, the report forecast “debilitating impacts to people, planet and economies."
Atmospheric greenhouse gas emissions hit a record in 2023, S&P Global Commodity Insights reported, breaking the previous record for emissions set in 2022. According to the World Meteorological Organization, concentrations of CO2 reached 420 parts per million in 2023, and atmospheric methane has risen 265% since preindustrial days.
Much of the increase in these greenhouse gases was driven by massive fossil fuel usage in the 2010s and 2020s. Wildfires caused by extreme heat have also added significant amounts of carbon to the atmosphere. Catastrophic fires and other effects from higher temperatures can create a feedback loop in which more CO2 is released and heat-stressed plants and oceans are less able to absorb carbon.
Signatories to the Paris Agreement are preparing to gather in Baku, Azerbaijan, this month for the 2024 UN Climate Change Conference, known as COP29. Participants are required to submit revised nationally determined contributions for 2035 following the conference. Most emissions reductions must come from the G20, since its member countries contribute 77% of total emissions. Emissions in Argentina, Australia, Brazil, Canada, the EU, Japan, Russia, South Africa, the UK and the US have already peaked, but emissions reductions are not keeping pace with Paris agreement-aligned goals. For China, India, Indonesia, Mexico, Saudi Arabia, South Korea and Turkey, emissions continue to grow each year.
The UN report said that it is still technically possible to limit the global temperature rise to 1.5 degrees if countries achieve net-zero carbon emissions by mid-century. However, independent scientific organizations believe that efforts to reduce emissions have been “grossly insufficient to date.”
Today is Wednesday, November 6, 2024, and here is today’s essential intelligence.
Last Friday marked the end of COP16, the UN’s biodiversity-focused Conference of the Parties in Cali, Colombia. The UN’s climate change conference, COP29, is slated to begin Nov. 11 in Baku, Azerbaijan. One common thread in these events is the challenge of addressing the big financing gaps for a range of sustainability issues — including climate, nature and social equity.
—Listen and subscribe to the podcast from S&P Global Sustainble1
As job growth cools and inflation stalls, the Federal Reserve is expected to cut interest rates later this week. Still, government bond yields are showing that few have confidence over where the central bank may be heading next. The Fed on Nov. 7 will likely approve a reduction of 25 basis points to its benchmark interest rate, after cutting by 50 bps in September, the first drop since the early days of the COVID-19 pandemic in 2020.
—View the full infographic from S&P Global Market Intelligence
S&P Global Ratings estimates that the Central Bank of Nigeria's (CBN) capital increase requirement will add an average of 400 basis points (bps) to top-tier banks' regulatory capital ratios. The sharp increase in banks' paid-up capital will improve their loss absorption capacity in a context of high operating, credit and currency risks in Nigeria. It will also help top Nigerian banks better compete against international and other pan-African banking groups, particularly in trade finance. By strengthening their balance sheets, some mid-tier banks will be able to scale their lending to the real economy and improve credit intermediation.
—Read the article from S&P Global Ratings
UK Chancellor Rachel Reeves on Oct. 30 confirmed a three percentage point hike in North Sea oil and natural gas taxation along with the removal of an investment allowance, but refrained from a more draconian hike amid industry warnings of a hit to investment and a risk of accelerating output decline. The chancellor in her first budget since the Labour Party took office confirmed the increase already announced in July to the Energy Profits Levy, lifting the headline rate of tax for the North Sea industry to 78%, and also removing an investment allowance that provided relief from the EPL at a rate of 29%.
—Read the article from S&P Global Commodity Insights
Germany posted a second consecutive year-on-year decline in gas consumption for the week ended Oct. 27, with usage remaining well below pre-crisis levels, data from the country's energy regulator showed Nov. 1. According to Bundesnetzagentur data, total consumption averaged 2.09 TWh/d, down 8% from the same week in 2023 and 20% lower than the pre-crisis average for the week from 2018 to 2021.
—Read the article from S&P Global Commodity Insights
Venture capital funding for generative AI startups is poised to exceed the impressive records of 2023. In the first three quarters of this year, GenAI startups secured over $20 billion, according to S&P Global Market Intelligence data. That puts 2024 on track to exceed the 2023 total of $22.7 billion.
—Read the article from S&P Global Market Intelligence
Capital allocation continues to scale to meet the demands of a global industrial transformation. With that growth, however, growth, misunderstandings and gaps can arise. Ahead of COP29, join S&P Global Sustainable1 for the next installment of our Beyond ESG webinar.
—Register for the webinar from S&P Global Sustainable1