Addressing the environmental credit crunch

Posted by: Paul Donovan

23 Sep 2020

Daily update

  • US President Trump was critical of China at the (virtual) UN General Assembly. Markets have expected strongly worded tweets and comments, without much substance in terms of policy ahead of the November election. However, Chinese President Xi, without specifically naming the US, was also critical. The rising temperature of Chinese comments is a little more troubling for markets.
  • Chinese President Xi pledged to take China to zero carbon emissions by 2060. As China is a relatively inefficient consumer of fossil fuels, and takes around half the world's coal supply, this is significant. The structural change of the environmental credit crunch, like the fourth industrial revolution, has been accelerated by the changes in consumer and working patterns during the pandemic.
  • The UK is again urging people to work from home (almost 45% of the UK can do so). This trend towards home working was already well underway, and increases both economic and environmental efficiency. An office desk (before flexible working) was typically occupied 24 hours a week, representing a waste of energy, real estate and equipment.
  • There is little of note on the data calendar today. Final Spanish GDP is due for the second quarter, but these numbers are not internationally comparable. PMI business sentiment opinion polls are due.

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