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Rachel Reeves’ £22bn carbon capture spend highlights investment focus

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Rachel Reeves' £22bn carbon capture spend highlights investment focus

The government will prioritise and increase investment in major projects at this month’s Budget, Chancellor Rachel Reeves has said.

In addition, she announced a nearly £22bn investment in two major new carbon capture schemes over 25 years.

She criticised plans she inherited from the previous government to cut investment as a share of the economy, saying she would not repeat “those mistakes”.

But the Conservatives said it was thanks to them that funding had already been announced for the carbon capture projects.

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After weeks of hints about the chancellor changing her self-imposed borrowing rules to allow significantly more investment in major projects, Ms Reeves has given her strongest indication yet of a significant increase to levels of state investment.

The green schemes are two new carbon capture and storage projects on Merseyside and Teesside.

The government said they will create and support thousands of jobs, draw in private investment and help the UK meet its climate goals.

Funding of up to £21.7bn over 25 years will subsidise three projects once they start capturing carbon from hydrogen, gas, and energy from waste.

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Oil and gas giants BP and Equinor will be among the firms providing private sector funding for the projects, she said, adding that other countries “would love to get this sort of investment”.

But Greenpeace UK’s policy director Doug Parr said more than £21bn “is a lot of money to spend on something that is going to extend the life of planet-heating oil and gas production”.

The chancellor said contracts such as this were never signed by the previous government because it did not prioritise capital investment – which is money spent on items such as buildings, equipment, and IT.

She directly criticised the fact that the UK’s capital budget is due to fall from 2.5% of the size of the economy to 1.6%.

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However, Conservative shadow energy secretary Claire Coutinho said “it’s thanks to the Conservatives that funding was already announced for these projects in the spring of 2023”.

She added that the announcement “will not make up for the mass deindustrialisation pathway that Ed Miliband’s costly net zero and energy policies are leading us to, with the devastating impact of his zealotry on jobs already seen in steel-making, refineries and in the North Sea”.

But Ms Reeves said the previous government “were cutting back on investment at exactly the time we needed to be increasing investment in our economy”.

“I’m not going to make those mistakes,” she said.

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Her words are the clearest confirmation of a shift in approach to spending on major projects at the Budget and Spending Review, connected with attempts to attract significant private investment at the upcoming International Investment Summit.

That summit will be a “massive opportunity for us to show what Britain has to offer to some of the biggest investors”, she said, including private equity, venture capitalists, and sovereign wealth funds.

She also denied suggestions that the government’s budget rhetoric had spread gloom among consumers and businesses, saying there would be a “drum beat” of major investments in the coming days.

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Letter: Austerity redux?

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Banker all-nighters create productivity paradox

From Chris Partridge, Stratford-on-Avon, Warwickshire, UK

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Biomass-derived plastics are double-edged sword

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Banker all-nighters create productivity paradox

You report that AP Møller Holding, the Maersk family’s investment group, is putting its weight behind moves to cut fossil fuel plastic pro­duc­tion (Report, October 1).

Plastics derived from renewable biomass, however, are a double-edged sword and may worsen environmental pollution rather than reduce it.

Bio-based plastics can only counter emissions from fossil fuel-based plastic if the electricity used in their production is entirely derived from clean, renewable sources. Otherwise, if they are produced from gas or coal-fired electricity, their emissions are four to seven times higher than that of fossil fuel-based plastics.

Furthermore, bio-based plastics do not address the root cause of the plastic pollution challenge. The current rate of plastic production is too high!

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Calling it bio-based does not mean that the plastic is biodegradable and decomposes. So, even if bio-based plastic recycling were at an optimum level globally, we would still be unable to recycle our way out of plastic pollution.

Innovators can focus more on alternative, sustainable materials with low environmental footprints and shift consumer behaviour to reduce the demand for plastic of whatever composition.

Edna Odhiambo
Climate Adviser, Nairobi, Kenya

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Abu Dhabi to welcome its first Waldorf Astoria hotel

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Abu Dhabi to welcome its first Waldorf Astoria hotel

Hilton and Aldar recently announced the signing of the UAE capital’s first Waldorf Astoria Hotels & Resorts property, which will be taking over and transforming the former The Anantara Eastern Mangroves into the Waldorf Astoria Abu Dhabi

Continue reading Abu Dhabi to welcome its first Waldorf Astoria hotel at Business Traveller.

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FPÖ victory and Austria’s myth of victimhood

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Ben Hall writes that one theory why Austria is now marching to the far right is that the country presents itself “as the first foreign victim of National Socialism”, and therefore “lacks the same culture of remembrance and . . . resistance to the far-right as Germany” (Instant Insight, October 1).

One might go a step further and suggest this notion of victimhood is a national myth, belied by the fact that Austrians wildly welcomed the Anschluss. Hitler came from Linz, and he was thus welcomed as a homeboy returning in glory. Or to put it another way, Hitler was perceived to have solved the hitherto intractable problem of German nationalism via the so-called Groß-Deutsch solution, which Bismarck had rejected.

I recall visiting Kahlenberg mountain (site of the 1683 battle which saved Europe from the Ottomans). There I found a commemorative bust of a mayor of Vienna, post-Anschluss, with a swastika engraved in its base. Why, I wondered, was this bust still on display, on a site for tourists no less? The answer may be that Austrians, far from suffering from a failure of collective memory, may actually remember all too well. The FPÖ’s victory may simply signify chickens coming home to roost.

Emeritus Professor Albion M Urdank
University of California, Los Angeles, US

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Former Google boss’s article was an eye-opener

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“War in the age of AI demands new weaponry”, the opinion piece by Eric Schmidt, former chief executive of Google and founding partner of Innovation Endeavors, was certainly an eye-opener (Opinion, FT Weekend, September 21).

“The defence industry is having a moment,” is his opening sentence. Schmidt is clearly of the opinion that providing weaponry for war is a good thing. It definitely is profitable. He talks of “weapon systems that are affordable, attritable and abundant” and says that “many more opportunities are coming for start-ups and defence unicorns.”

Affordable for whom? And at what cost to human life in numerous parts of the world? I was reminded of the Bob Dylan song “Masters of War” from 1963:

You hide in your mansion

While the young people’s blood

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Flows out of their bodies

And is buried in the mud

Ciarán Folan
An Spidéal, County Galway, Ireland

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US dockworkers suspend strike that threatened to cripple ports

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A strike that closed US east and Gulf coast ports will be suspended after the dockworkers’ union and the group representing ocean carriers reached an agreement on Thursday, averting for now a costly blow to the economy ahead of the presidential election.

The agreement extends the International Longshoremen’s Association’s employment contract, which had expired, until January 15. It will allow them to return to work for the first time in three days, the union and the shipping lines’ group said in a joint statement.

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Negotiations, which had been at an “impasse” over wages and automation for months, would now continue, the statement said.

The work stoppage, which started on Tuesday, had threatened to upend the US economy by snarling global supply chains and halting imports of fresh foods, pharmaceuticals and other consumer goods. JPMorgan analysts estimated that it could cost the US economy as much as $4.5bn a day.

The three dozen affected ports span from Maine to Texas and together handle one-quarter of the country’s annual international trade, worth $3tn, per a Conference Board analysis.

US President Joe Biden congratulated the union and the United States Maritime Alliance (USMX), which represents the carriers, on the deal, saying in a statement that it “represents critical progress towards a strong contract”.

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Frustration over the economic fallout of the strike, compounded by fears over how product shortages could delay relief efforts for states devastated by Hurricane Helene, had opened up a new line of attack on Biden and vice-president Kamala Harris, the Democratic candidate, ahead of the November 5 election.

Donald Trump, the former president and Republican nominee, claimed earlier this week the work stoppage “would never have happened” had he been in the White House.

Business leaders had also criticised Biden’s approach to the strike, repeatedly asking him to invoke a federal law that would temporarily force the longshoremen to resume loading and unloading container ships. Biden said he wanted the groups to come to an agreement on their own.

A coalition of 272 trade groups representing retailers, farmers, restaurants, meat processors, truckers and other industries had called the work stoppage a “dire situation” on Wednesday, with “massive negative ramifications for our industries and the economy”.

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It threatened the import of consumer items from bananas to coffee to clothing. Some Americans even began panic buying and hoarding toilet paper, prompting a trade group that represents paper manufacturers to issue a statement saying it did not expect the strike to have an impact on supply. An estimated 85 per cent of such products are manufactured in the US, the American Forest and Paper Association says.

ILA leaders told picketing workers the deal that included a 62 per cent raise over the six-year term of the contract. ILA members earned between $20-$39 an hour under the old contract — with overtime pay that pushed a third of New York-based workers’ annual earnings above $200,000 during fiscal year 2019-2020.

They are also fighting the adoption of port robotics that they say could eliminate jobs. Ports in the Netherlands and Australia are already primarily operated by remote-controlled cranes, employing few human workers.

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