The Cost of Inaction
Plus the energy transition accelerates, the price of carbon tanks, and a step forward on plastics
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This week, I’ve been able to really immerse myself in the blue economy.
The 9th Annual Economist World Ocean Summit was held virtually over the last four days.
While disappointed that I wasn’t able to get a trip to Lisbon out of it, I have nevertheless come out of this week more energized than ever about addressing challenges and finding opportunities in the future ocean economy.
I have about 100 pages of notes to sift through and I haven’t even reviewed all of the on-demand sessions that I wasn’t able to attend live, so this newsletter won’t really be about the Ocean Summit per se.
But, you’ll be sure to hear more about it in the weeks to come.
IPCC Sounds Alarm
“I have seen many scientific reports in my time, but nothing like this. This is code red for humanity. We must combine forces now to avert climate catastrophe.”
-UN secretary-general, António Guterres
The Cost of Inaction
“the world stands to lose 10% of total economic value from climate change by 2050 if net-zero targets aren’t met. Asia, which has been the bulwark of economic growth in recent decades, stands to lose 26.5% of GDP by 2050, while Africa and the Middle East could lose up to 27.6%.”
+The IPCC report and the need for climate action - WEForum
I’ll admit that I haven’t read the full report yet, so am relying on interpretations of others. The full report can be found here:
+Climate Change 2022: Impacts, Adaptation and Vulnerability - IPCC
Energy Transition
It’s going to be hard to get away from energy transition news over the next decade(s).
Uncommitted timelines that were drawn out into the distant future just weeks ago will compress into the immediate now.
Global alliances, core philosophies, and supply chains that were once thought of as nearly unchangeable are being upended (cars, you’re next).
+How US LNG could help Europe and climate - CSIS
In a constantly flowing cycle of inventory depletion and rebuilding, the current supply disruption in Europe is already playing out into next year.
+Europe prepares for high gas prices to last into 2023 - Reuters
Shipping & Ports
“Telegraphic transfer, equivalent to cash pre-payment, requires buyers to transfer funds to sellers up front, a challenge for some cash-strapped independent refiners with each Aframax tanker-sized cargo now costing more than $85 million, the sources said.”
+China welcomes Russian oil tankers with alternative payment options - gCaptain
As we saw at the beginning of the pandemic, when ports close you don’t want to be the last one on the boat.
+Over 1,000 mariners are stranded near Ukraine - gCaptain
Offshore Wind
The offshore wind market is evolving rapidly.
Last week I pointed out the massive interest in a US federal auction for offshore wind leases.
Local projects and states are at the forefront of development, but there are still policy wrinkles to be ironed out.
Orsted, the world’s largest offshore wind developer, has its largest US office in Boston. However, the company didn’t participate in recent local contract auctions in the Massachusetts area.
“A price cap baked into state law that requires each bid to be lower than the winning bids in the previous rounds. It’s a rule designed to keep prices under control for consumers. But it threatens Massachusetts’ early lead in a nascent but quickly growing sector, and the on-shore jobs and factories it could bring.”
+In race for offshore wind jobs, Mass. is falling behind. So now what? - Boston Globe
I’ve noted the lack of offshore wind infrastructure in the US to support stated goals and targets in this sector.
This will change, and perhaps faster than most thought.
“The development of the South Brooklyn Marine Terminal is part of a 15-year plan announced in the fall of 2021 to make New York City a major hub for the offshore wind industry.”
+NYC to turn Brooklyn port into a hub for offshore wind farm construction - CNBC
“Macquarie, the world’s largest infrastructure bank, is betting on offshore wind power by launching a London-headquartered business that will seek institutional investment to develop new projects worldwide.”
+Macquarie’s GIG to launch offshore wind business - FT
Of course, it isn’t easy… (see price caps above)
+'Offshore wind is fundamentally sick... no one's making money': ex-Orsted technology chief - Recharge News
Deep sea mining
Part of the Ocean Summit was a panel on deep sea mining.
I respect the industry representative that showed up to attempt a balanced conversation and be the voice of the ‘pros’ but I’m firmly in the camp of the ‘cons’.
While the explosion in demand for metals in minerals in the ‘electrification of everything’ is real, the utter destruction that deep sea mining has on ecosystems and biodiversity is a price too high to pay.
+The Deep Ocean Is Essential for Life on Earth—but It Is Under Threat - PEW
+Out of sight - but not out of min(e)d - PlanetTracker
Carbon - Speaking of broken markets
I mentioned a few weeks ago being invested in a carbon ETF (GRN).
How did it work out? Not great!
I understood to a degree some of the challenges with the EU carbon market when I got in, so sized my position accordingly.
This is what can happen when a ‘market’ is subject to political concerns instead of purely economic ones.
“I could imagine to increase the transparency and surveillance of the market and to change article 29a that enables the Commission to intervene in the market, if the price increase is too sharp”.
+EU carbon price falls after lawmaker suggests market tweaks to prevent spikes - Reuters
Silly me. I thought a rising price for carbon was the whole point.
To be continued…
Growing blue carbon
“The seagrass mapping and carbon assessment project will provide the first-ever field validated map of seagrass and estimate the amount of carbon held within seagrass meadows in Seychelles.”
+Seychelles Seagrass Research Supports Country’s Climate Commitment - PEW
What does Ukraine have to do with seafood?
Like disruptions in energy, interruption in the food systems can lead to chaos, suffering, and mass migration.
Shortages one food source will lead to stresses on whatever is available, including near-shore fisheries.
+These Countries Face Unprecedented Hunger Crises Due To The Ukraine War - ZeroHedge
And, if you haven’t noticed, your seafood is not immune from the inflationary pricing pressures being felt elsewhere in the food supply chain.
“To give some indication of how fast salmon prices have been rising, the average figure was NOK 82.64 per kilo, 62% higher than February 2021 and 9% up on January this year.”
+Norwegian salmon exports and prices hit another record - Fish Farmer
Efficiency and aquatech
Similarly to other parts of the economy, efficiency gains in aquaculture are the low hanging fruit.
The aquatech industry is a fascinating one and something I’m looking to keep an eye on as companies are applying blockchain technology and satellite imaging to centuries-old industries like aquaculture and seaweed farming.
“low productivity shrimp farms (extensive systems) consume a third of all land used by shrimp farming (farm area and land required for feed ingredients) yet contribute just 11 percent of production by volume.”
+How satellites can support the sustainable intensification of shrimp farms - The Fish Site
This is what sustainable, artisanal fishing looks like.
Pole and line caught tuna is available in my local Whole Foods. Be sure to look for it!
Plastics
International agreements can seem vague and ill-defined. But they are hard-fought, complicated wins for those involved.
Just go read about the 20 year fight to curb harmful fishing subsidies (maybe this is the year!).
Getting into the details can take a while, but people I follow were excited about this plastics deal.
Tears were shed.
“It is expected to present a legally binding instrument, which would reflect diverse alternatives to address the full lifecycle of plastics, the design of reusable and recyclable products and materials, and the need for enhanced international collaboration to facilitate access to technology, capacity building and scientific and technical cooperation.”
+Historic day in the campaign to beat plastic pollution - UNEP
+What you need to know about the plastic pollution resolution - UNEP
Tourism
I wanted to mention one quick disappointment from the Ocean Summit this week.
I was really looking forward to a panel on “powering the ships of tomorrow” that included a person from Royal Caribbean cruises to hear how the cruise industry was addressing climate and their impact on coastal communities.
Spoiler alert. They didn’t show up.
I’m sure there was a good reason.
Web3 - So We Bought a Kelp Farm
“The NFT holders will also benefit from a dedicated NFT “reflection pool” whereby the reflections accrued on a dedicated and ringfenced amount of $BEACH, will (during the five year term), be periodically airdropped to NFT holders.”
When I figure out what an NFT, reflection pool, or airdrop is I’ll let you know.
+So we bought a kelp farm - Beach Collective
Miami is already becoming a hub for crypto and web3 startups. It is a suitable place for a blue economy hub as well.
“Seaworthy Collective is a venture studio and community devoted to scaling restorative ocean and maritime startups.”
+Seaworthy Collective wants to make South Florida a hub for ocean technology - MiamiINNO
Something Scary, Something Amazing
First, the scary.
People love to point out statistics.
When people argue with you about probability, there is a good chance they really don’t understand the implications of low probability events.
Climate change is no longer considered low probability, which makes the potential of all the subsequent possible outcomes all the more terrifying.
And, the amazing…
I’ll leave you with this cool little dude.
The ocean is amazing. Let’s keep it that way.
Thanks again for reading. Have a great weekend!
Doug
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