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Emerging Markets Daily - November 1
Africa's Question: To Drill or Not to Drill?, OPEC+ vs Joe Biden, Saudi Arabia in Major Bid to Lure Companies, Climate Change in 2070, China's Disneyland Lockdown
The Top 5 Stories Shaping Emerging Markets from Global Media - November 1
Africa’s Question: To Drill Or Not to Drill? Global Climate Agenda Poses Challenges, Opportunities
“Pressure is increasing on African countries to help tackle climate change by reining in their greenhouse gas (GHG) emissions and resisting the temptation to develop new oil and gas fields. Yet Africa accounted for just 4% of global GHG emissions between 1990 and 2017 despite the fact that it contains 17% of the world’s population.”
“In addition, African per capita emissions are about a fifth of the global average, leading critics to complain that radical action on the continent will stifle potential economic development for a problem that has largely been created elsewhere.”
“That has prompted a debate over whether richer countries should compensate Africa in order to keep its fossil fuels in the ground....Oil has long been one of Africa’s main export commodities, generating billions of dollars in revenue every year but also tempting governments to rely on hydrocarbon export revenues at the expense of developing a more diverse economic base.”
“Still, the international trend is unmistakeable. As oil companies look to diversify, they themselves admit that production has already begun a long-term decline, with Shell predicting an 18% fall in its output over the course of the current decade.”
“The big question is whether governments and the oil and gas sector are prepared to leave hydrocarbons stranded.” Neil Ford reports.
OPEC+ Headed for Clash With U.S As Biden Calls for More Production
“OPEC+ headed for a clash with the U.S. as more members rejected President Joe Biden’s call for the group to raise oil production faster and help reduce gasoline prices.”
“On Monday, Kuwait said the cartel should stick with its plan to increase output gradually because oil markets were well-balanced. That followed similar statements from other key members in recent days, including Iraq, Algeria, Angola and Nigeria.”
“The Organization of Petroleum Exporting Countries and its allies -- led by Saudi Arabia and Russia -- meet on Thursday with pressure from oil consumers mounting as prices climb toward $85 a barrel. American gasoline is at a seven-year high of $3.70 a gallon.”
“The U.S., India, Japan and other importers are waging a campaign to force the group to ease last year’s pandemic-triggered supply curbs more quickly.”
“OPEC+ has said that increasing crude exports would do little to bring down power prices, which have soared in parts of Europe and Asia due to shortages of natural gas and coal.”
“Still, OPEC+ has often surprised the market with sudden changes of policy. And while Riyadh and Moscow have both praised the group’s strategy, neither has directly addressed Biden’s comments in public, giving themselves room for maneuver.” Salma El Wardany and Javier Blas report.
Saudi Arabia in Major Push to Lure Companies to Set up Regional HQ’s in Kingdom
“Saudi Arabia has given licenses to 44 international entities to set up regional headquarters in the capital Riyadh, as the kingdom seeks to project an image of change to lure foreign capital and talent from places such as the United Arab Emirates.”
“Multinationals in sectors including technology, food and beverages, consulting and construction are among the entities eligible to set up headquarters. They include South Korea's Samsung, Deloitte, Unilever, Baker Hughes and Siemens…”
“The world's top oil exporter and largest Arab economy is also setting a deadline, saying in February it would give foreign entities until the end of 2023 to set up shop in Riyadh or risk losing out on government contracts.”
“Saudi Minister of Investment Khalid al-Falih told Nikkei Asia that it was not a case of merely competing with the UAE for foreign direct investment. ‘We believe all capitals of the Middle East will continue to grow and thrive with the growth of Saudi Arabia. With the achievements of Vision 2030 [and] with the growth of Riyadh, it will create a spillover effect into the region,’ al-Falih said in the interview.” Nesreen Bakhait reports.
Climate Change Could Bring Near-Unliveable Conditions for 3 Billion People
“Up to 3bn out of the projected world population of about 9bn could be exposed to temperatures on a par with the hottest parts of the Sahara by 2070, according to research by scientists from China, US and Europe.”
“However, rapid reductions in greenhouse gas emissions could halve the number of people exposed to such hot conditions. ‘The good news is that these impacts can be greatly reduced if humanity succeeds in curbing global warming,’ said study co-author Tim Lenton, climate specialist and director of the Global Systems Institute at Exeter university…”
“Global warming has resulted in a 1.1C rise in temperatures since pre-industrial times, according to scientists. This is expected to reach 1.5C within 20 years, even in the best-case scenario of deep cuts in greenhouse gas emissions. ‘Each degree of warming above present levels corresponds to roughly 1bn people falling outside of the climate niche,’ Lenton noted.”
“At present, only 0.8 per cent of the global land surface experiences mean annual temperatures greater than 29C (84.2F). If emissions continue to rise, this could spread to 19 per cent of the planet’s land area by 2070, under the worst-case scenario set out by the Intergovernmental Panel on Climate Change, the UN scientific body.” The FT reports.
China Locks 30K Visitors Inside Shanghai Disneyland After 1 Person Tested Positive for Covid
Wall Street Journal
“Shanghai Disneyland was temporarily shut down from Sunday after a visitor was found to be Covid-19-positive, underscoring the economic disruption businesses in China face as the country strives to stamp out infections.”
“The world’s most populous nation has committed to maintaining “zero tolerance” for the virus despite criticism from business groups, a close to 80% vaccination rate, and a world which is gradually learning to live with Covid-19.”
“China is taking stringent measures to contain pockets of the coronavirus in the country. It recorded 48 domestic cases on Saturday across several provinces. Though extremely low compared with countries that are moving to live with the virus, the infections have prompted business closures and mass testing in certain areas.”
“Shanghai Disneyland was required to test almost 34,000 people Sunday before visitors could leave the resort, after a woman who had attended the park a day earlier was found to be infected with Covid-19. Sunday’s visitors all tested negative but were ordered to self-isolate for another 24 hours before a second test.” Natasha Khan reports.
“The bad news is time flies. The good news is you’re the pilot.”
— Michael Altshuler