Peter Frankopan, historian and specialist on the Silk Road referred to the launch of the Belt and Road Initiaitve announced on September 7, 2013 by Chinese president Xi Jinping the same month as 60 years Queen Juliana christened the SS Rotterdam 60 years ago, the location of the Flemish Dutch Delta collaboration held its annual event on Novemer 7 2018 during the Zuid Holland Corridor week. EHA joined the event to spot opportunities for H2 action starting from renewable H2 production locations to applications in district heating industrial demand and mobile applications.

Peter Cobus secretary general for the Flemish Environment Ministry of presented a study on a new rail initiative the Rhein Ruhr Rail Connection (3RX) estimated at 800 mln and linked to A62. Maritime cooperation along the corridors is already happening in the Clinsh project where existing vessels are converted to alternative fuels. The N59 running through the provinces of Zuid Holland and Zeeland was indicated as an Energy Highway,  an example of an essential corridor  in the Rotterdam harbour area where national and local governemnts are working to accelerate the introduction of clean fleets along this provincial highway.

On October 29 and 30 2018 EU Transport and Environment ministers met in Graz for an informal Council. The Graz declaration included the followoing references to zero emission ambition, “forgetting” refuelling in their pitch for “appropirate infrastructure…”

“The Commission, Member States, regional and local authorities and other stakeholders should further develop the following actions:
Clean vehicles: rapid introduction of zero-emission vehicles and decarbonised fuel options

  • Accelerating the market introduction of low- and zero-emission vehicles, including the development of appropriate charging! infrastructure, with a view to long-term carbon neutrality in Europe through public procurement, incentive systems and broad support programmes for transport actors, as well as ensuring the adequate provision of clean and renewable energy and its related infrastructure. Funding and financial incentives at EU and national level should be used to provide support for accelerating the market introduction of low- and zero-emission vehicles, infrastructure and services for alternative fuels.
  • Further developing emission regulations for road vehicles beyond 2030, with the aim of increasing the market uptake of low- and zero-emission vehicles in a way that is compatible with the efforts needed to meet the commitments under the Paris Agreement.
  • Promoting the introduction of electromobility and responding to electrification needs in all modes of transport.
  • Further developing decarbonised sustainable fuel options in Europe and raising the share of renewable energy in transport while strengthening security of supply and the competitiveness of European industry.
  • Evaluating the legal framework for the promotion of alternative fuels infrastructure in order to identify if and where an update may be needed.
  • Pursuing research and innovation efforts through the relevant current and future EU funding mechanisms, focusing on innovative technologies for the decarbonisation of the transport sector, including research on batteries, and complying with the principle of technology neutrality while taking into account life cycle analysis and well-to-wheel approaches.
  • Implementing eco-driving as part of driving education schemes and launching broad campaigns for eco-driving and sustainable consumer behaviour to promote energy-saving driving styles and the purchase of low- and zero-emission vehicles.

On November 8, 2018 Benoît Cœuré, Member of the Executive Board of the ECB, at a conference on “Scaling up Green Finance: The Role of Central Banks”, organised by the Network for Greening the Financial System, the Deutsche Bundesbank and the Council on Economic Policies, in Berlin, held a speech on the effects of climate change on monetary policy

He described a scenario in which both the private and the public sector fail to take prompt action to cut CO2 emissions in line with the COP21 commitments and where “climate change is likely to affect the conduct of monetary policy in three important ways:

The first relates to our ability to correctly identify the shocks hitting the economy.

In recent years, for example, we have repeatedly observed an unusual blip in economic activity in the United States in the first quarter. This has often been attributed to a harsh winter, despite best efforts to seasonally adjust the data.

But causality is inherently difficult to establish. Indeed, statistical analysis has challenged the hypothesis that cold temperatures are behind the observed deceleration in first-quarter growth.[9]

Similarly, last month, we saw a puzzling persistence in petroleum prices in Germany despite a parallel fall in oil prices. One hypothesis is that this year’s hot summer caused the water levels in German rivers to fall to levels that only allow petrol tankers to carry half their capacity, creating supply bottlenecks.

Uncertainty also extends to the effects of regulatory responses by governments to the growing challenges posed by climate change. German growth in the third quarter is currently projected to have stalled or even contracted, probably largely due to bottlenecks in the testing process under the new Worldwide Harmonised Light Vehicles Test Procedure.

But we cannot be sure. Given the current global environment, growth may have slowed for other reasons. Or the recent emission scandal may have led to a more fundamental shift in consumer preferences.

All this means that, to the extent that climate change can be expected to amplify the frequency of adverse weather shocks, and evidence to this effect is mounting, it will become increasingly difficult for central banks to disentangle the variation in the data relevant for the assessment of the medium-term inflation outlook.[10] It will cause the signal-to-noise ratio to deteriorate and thereby increase the risk that central banks take action when in fact they shouldn’t, or vice versa.

The second implication relates to the distribution of shocks.

Put simply, the longer the risks of climate change are ignored, the higher the risks of catastrophic events, possibly with irreversible consequences for the economy. In other words, the distribution of shocks may become more “fat-tailed”.[11]

This raises one question and one concern for monetary policy. The question is whether central banks themselves should hedge against such tail risks by taking pre-emptive measures. I will turn to this in the second part of my remarks.

The concern is that monetary policy may be more often forced to adopt non-standard policy measures. The global financial crisis has shown that extreme events can quickly erode central banks’ conventional policy space. Catastrophic climate change could thus test the limits of how far monetary policy can go and, in the extreme, force us to rethink our current policy framework.

The third and final implication relates to the persistence of shocks and the inflation-output trade-off central banks may face.

Climate change, for example, will make some areas of the world less habitable, which can be expected to increase the frequency and intensity of international migration.[12]The events of recent years, though different in nature, highlight how migration can have long-lasting effects on broader labour market dynamics and, ultimately, wage developments.[13] There is evidence that migration has contributed to dampening wage growth in Germany in recent years, thereby further complicating our efforts to bring inflation back to levels closer to 2%.[14]

Similarly, in the absence of clear and tangible evidence that the demand for fossil fuels will decline, and with existing conventional oil fields depleting rapidly, persistent energy shocks cannot be ruled out.[15″

On another note and in view of the UN climate conference (COP24), a group of investors, representing $ 2 trillion led by the Church of England Pensions Board and Swedish national pension fund AP7, on October 29, 2018 sent a letter to 55 companies asking them to review relationships with key trade associations and lobbying organisations, to ensure alignment with their formal company positions supporting the implementation of the Paris climate agreement.

“We would ask you to review the lobbying positions being adopted by the organisations of which you are a member. If these lobbying positions are inconsistent with the goals of the Paris Agreement, we would encourage you to ensure they adopt positions which are in line with these goals,”  the letter reads.

The 55 high-emitting companies have been assessed by InfluenceMap, a UK-based NGO that monitors lobbying activity by companies, ranking the them according to their overall position on climate policy, the extent of their influence on policy-makers and on whether publicly-stated corporate climate policies matched those of the trade associations acting on their behalf.

One of the worst performing sectors was the auto sector, the scoring list shows, comprising Fiat, Daimler, BMW, Renault, Volkswagen and Peugeot PSA, while RWE top the list of utility companies. Among the chemicals companies, the list ranked German giants Bayer and BASF as the most active in climate lobbying, with Siemens and Danone being the most active in the food and beverage sector. The oil and gas companies, BP, Total and Royal Dutch Shell are the top three on the list.

87% of assets managed by the world’s 100 largest public pension funds are yet to undergo a formal climate risk assessment, according to research published on Tuesday (23 October), with only 15% of them adopting a coal exclusion policy,  according to research by the Asset Owners Disclosure Project (AODP). 65% of funds have no responsible investment policy with specific references to climate change.

This leaves $9.8 trillion of assets unprotected from the economic shocks of global warming, AODP warned, saying this poses a risk for investors.