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ESG Economist - Five climate challenges in Dutch climate sectors
This analysis shows that the emission reduction trend in sectors in the post-Paris period (2017-2023) would not – if it continued – lead to achieving the 2030 target. Indeed, following the post-Paris period trend in GHG emissions, the 2030 emissions reduction target (55% below 1990 level) will not be achieved, with a 5% gap. The recent analysis by the Netherlands Environmental Assessment Agency (PBL) even suggests that on the basis of current policies the post-Paris emission reduction trend will slow for many sectors.
What to look for at COP29: the cost of delay and the Trump victory
Over the past year, very little progress was made in the ambition and implementation of policies to reduce greenhouse gas emissions globally. At the beginning of next year, countries have to submit their new national commitments to reduce emissions according to the global targets set out in the Paris Agreement (NDCs), with the end-point of the targets extended to 2035, from 2030 . To keep the Paris goals within reach all countries, in particular the G20, have to overperform on their current 2030 climate targets. The new quantifiable goal for climate finance will need to be vastly more ambitious as well as more concrete. The Trump victory in the US could have significant consequences for global climate policy, which could already have an impact on progress at COP29.
The week ahead - 18 - 22 November 2024
These are the Key Macro Events for the upcoming week.
China - October data suggest demand side is improving
China: October data suggest demand side is improving. A challenging year ahead.
Dutch macro perspectives – Internal demand drives strong third quarter growth
The Dutch economy showed solid growth as GDP expanded by 0.8% q/q in the third quarter, mostly on the back of strong spending from households and the government. This is in line with the broader eurozone, where growth increased to 0.4%, which also looks to have been driven by increased private consumption. The strong third quarter for the Dutch economy follows an already high and still upwardly revised second quarter with 1.1% q/q. Zooming out, the Dutch economy has seen a strong half year, following a period of stagnation in 2022 and 2023.
New forecasts following US election
Global Macro: Growth & inflation tariff impact to drive Fed-ECB divergence – We are updating our growth and inflation forecasts in light of the US election result last week. While the election count has not fully concluded, the Republican party looks on course to win a House majority, to accompany the presidency and the Senate majority. By controlling all three branches of government, president Trump therefore has significant power to enact his policy platform. It remains highly uncertain how far Trump will go with his tariff plans, and so there is naturally high uncertainty around our new forecasts. But broadly speaking, the main outcomes of the plans are likely to be: 1) much lower eurozone growth and inflation than in our prior baseline, 2) significantly higher US inflation, and (ultimately) lower growth. This combination is likely to mean fewer interest rate cuts by the Fed, but more rate cuts by the ECB; this will in turn continue to weigh on the euro, which has already weakened significantly in recent weeks as markets moved to price in a Trump victory.
Climate goals the Netherlands out of reach
The independent PBL Netherlands Environmental Assessment Agency has published its annual Climate and Energy Outlook for the Netherlands (KEV) 2024 ……. as already became obvious after the publication of the policy plans and coalition agreement of the new Schoof government this summer, the PBL concludes that ‘reaching 2030 climate goal has become extremely unlikely and extra policy with rapid effect is needed’. The new government’s legal target for the net reduction of Greenhouse gas (GHG) emissions is set in line with EU regulations at 55% in 2030 compared to 1990, though this is less ambitious than the target of the previous government. According to the PBL current implemented policy (‘proposed and adopted’), puts the Netherlands on track for a reduction of 44%-52% in 2030, compared to 1990 levels. Including scheduled policies does not add much to this: a net 45%-52% reduction. Besides the targets for GHG emissions, the Netherlands probably also will not meet the separate global and EU targets for methane emissions, final energy use and the share of renewable energy. As the Netherlands is likely to be non-compliant with EU regulation, the risk that the government will be subject to infringement procedures has increased.
Global manufacturing PMI shows some improvement
Global manufacturing PMI shows first improvement in five months, still in contraction mode. Global excess supply conditions continue, which helps keep a lid on global goods' price pressures.
China - Trump 2.0 versus more fiscal support
The clear victory of Donald Trump and the Republican party in the US elections leads to a material rise in external risks for the Chinese economy. At the same time, a CNY 10 trn fiscal support package was announced today following the conclusion of the NPC Standing Committee meeting this week, taking away some (but not all) of the prevailing downside risks.
The week ahead - 11 - 15 November 2024
These are the Key Macro Events for the upcoming week.