Friday, April 26, 2019

Clouds on the horizon: What climate change means for retail

This is just one big brain fart.  The only point of it is that bad weather can be disruptive to business, which we all knew.  The writers cheerfully assume that ALL bad weather is due to climate change -- while making absolutely no attempt to prove that absurdity. So it actually tells us NOTHING about "What climate change means for retail"

Over the last 40 years, the United States has sustained 246 weather and climate events where the cumulative costs reached $1 billion or more each — and together caused more than $1.6 trillion in damage, according to the National Centers for Environmental Information. Already this year, as of April 9, the U.S. experienced two weather disasters with losses exceeding that milestone — and such events have been clustered together in recent years. Last year, the country saw the fourth-highest number of billion-dollar events, behind 2017, 2011 and 2016, and the fourth-highest tab for them ($91 billion), behind 2017, 2005 and 2012, according to NCEI.

While scientific discussion around climate change focuses on long-term trends and cost pile-ups, headlines tend to capture the dire consequences for human beings and their livelihoods in the immediate and short terms. Last year, for example, estimates from Hurricane Florence were that it could cost retailers some $700 million, according to Planalytics, which provides weather-related planning tools for businesses. Some businesses, like home improvement retailers The Home Depot and Lowe's, actually pick up sales in the aftermath.

But the reality is that individual weather events don't much jolt retailers' short-term bottom lines, either way. The immediate concern is, and should be, on safety, for customers and store staff, according to Paul Walsh, global director of consumer weather strategy for IBM.

However, retailers may want to take note of the havoc severe weather wreaks along the supply chain. "Anyone with a supply chain is going to be affected by climate change," Paul Dillinger, head of global product innovation at Levi Strauss & Co., told Retail Dive in an interview. "It's as much of an issue for us as for the Pentagon."

BSR, a global nonprofit organization that develops sustainable business strategies, has the specifics: "Physical climate risks from acute weather events and chronic climate patterns are disrupting the availability of raw material and energy supply, supplier operations, and local communities along the supply chain," according to a report it released last year. "There is a clear business case for companies to reduce these risks and strengthen supply chain performance by building the resilience of operations and communities along supply chains," the report reads, citing research on 99 companies that saved $14 billion through climate-related improvements, while reducing greenhouse gas emissions by 551 million tons of C02.

On the other side of the equation, retailers who do nothing to address environmental issues could be in for big losses. According to CDP, which helps companies measure and respond to the impacts of climate change, $4 trillion worth of assets will be at risk from changes to the Earth's weather by 2030.

Global climate change also has implications for inventory — the apparel that should be in stores, and at distribution and fulfillment points at which time of year is changing — according to a Planalytics report on climate change and supply chain conducted for the National Retail Federation. That research found that retailers and brands that "remove the historical impacts of weather can drive a 20-80 basis point annual improvement in profitability just in inventory management … by increasing total enterprise forecast accuracy between 2 and 6 percent on average, and up to 50 percent for specific product categories," according to the report.

"More and more it's viewed as critical and fundamental to prepare for and execute against the weather volatility that we've seen," Walsh told Retail Dive in an interview. "The fact that IBM bought The Weather Company is one sign. There's an overlap — in sustainability efforts and resiliency efforts and the integration of weather and insights. So when we start to see these tremendous swings of weather — that kind of volatility is hard to keep up with. The way you do keep up with it is to leverage these technologies to be able to respond on an enterprise scale."


Another Greenie prophecy bombs:  Coffee shortage

A repeated Greenie prophecy is that we will soon run into a shortage of coffee beans. See here and here. How is that looking?

Call it the coffee paradox. The brewed beverage has never been more popular, but the price of beans is at its lowest point in over a decade and down by a quarter since October.

A pound of wholesale arabica beans, the premium variety favoured in most coffee shops, has been selling for less than $US1 since early March on the Intercontinental Exchange in New York, below what many producers say it costs to grow and process.

Coffee drinkers might not have noticed any difference in price, given the prevalence of the $US5 latte.

What has enabled the world to be awash with coffee? Factors include major advances in coffee production and a collapse in the value in the currency of the world’s largest producer, Brazil.

All About Brazil

Prices have sagged under the weight of what is expected to be another surplus worldwide coffee crop this year. More than any other, the country behind that glut is Brazil, which has expanded its already-leading share of the world’s coffee crop.

Brazil has stolen market share from Central America because of state-sponsored research and development -- including phasing in mechanised harvesting over hand-picked methods still used elsewhere.

“The problem is that (other countries) are not able to withstand the tide that is Brazilian coffee supply,” said Keith Flury, the head of research at ED&F Man-subsidiary Volcafe Coffee Research, until 2018.

When Brazil’s currency, the real, is cheap, so is the coffee that Brazil sells in dollars to the rest of the world. And the real is 60 per cent less valuable compared with the dollar than in 2011. It has fallen 12 per cent against the dollar over the past year.

“The root causes of the low dollar coffee prices are the high productivity of Brazilian production, the strong dollar and the weak Brazilian real,” said economist Jeffrey Sachs, director at Columbia University’s Center for Sustainable Development, which is undertaking a farmer welfare study backed by the intergovernmental International Coffee Organization. “Basically, Brazil is undercutting global costs,” he said.

Cecafé, Brazil’s coffee export association, didn’t respond to a request for comment.

Caffeine High

Global arabica consumption is set to break records for the fifth straight season in 2019-20, Rabobank forecasts.

Yet despite the demand, the fall in prices has exposed a dichotomy between “the haves and the have-nots” in producer countries, said David Brooks, managing director of UK-based coffee-roasting company Percol.

When futures prices fall below $US1 a pound, some farmers cope by slashing spending on fertilisers and pesticides, according to Greg Meenahan, partnership director at World Coffee Research, an industry-funded group.

“Their crops become weak and next year’s crops have a higher incidence of failure,” Mr Meenahan said. “They’re just getting beaten up.”

In April, Colombia, another major coffee exporter, increased emergency aid to its coffee farmers.

“You see coffee products all over the shelves saying they’re sustainable, but people forget about economic sustainability,” said Roberto Vélez, chief executive officer of the National Federation of Coffee Growers of Colombia.

“You have Central Americans immigrating to the US and Africans moving up to Europe because coffee prices are too low,” Mr Vélez added.

Weaker arabica prices at the wholesale level have passed through to supermarket shelves, but they remain well above where they were a decade ago. The average price of a supermarket can of coffee has come down in recent years. US Department of Labor data put the average price of coffee sold to US consumers at $US4.34 a pound.

As for a cup served in a shop or restaurant, a 2018 UBS study found the price in many major cities around the world was around $US3. Cafe prices remain high because of strong demand and because beans are only part of the cost of producing a drink, alongside things such as rent, overheads, labour, milk and sugar.

Can prices go lower? Some analysts point to a small global deficit between supply and demand in the season ending 2020, since it is technically an “off-cycle” season in Brazil, with production falling as plants recover.

However, “the husbandry the farmers give the trees is excellent and that’s decreased the cyclicality of the crop,” said Carlos Mera, senior commodities analyst at Rabobank.


Earth Day Celebrators Should Celebrate Nuclear Power Too

Yesterday was Earth Day. Celebrate it by opposing more politically-motivated closures of nuclear power plants. Nuclear reactors provide a steady supply of electricity with no carbon emissions.

As Harvard’s Steven Pinker notes, “global decarbonization is impossible” without nuclear power. That’s because wind and solar power generation varies with the weather, keeping it from being a steady source of energy. In The New York Times, Pinker and two environmental experts say nuclear power is critical to the success of a low-carbon power grid, and it “is a fantasy” to rely on renewable energy alone:

“Wind and solar power are becoming cheaper, but they are not available around the clock, rain or shine … renewables work only with fossil-fuel [or nuclear] backup. Germany, which went all-in for renewables, has seen little reduction in carbon emissions, and, according to our calculations, at Germany’s rate of adding clean energy relative to gross domestic product, it would take the world more than a century to decarbonize, even if the country wasn’t also retiring nuclear plants early … . we actually have proven models for rapid decarbonization with economic and energy growth: France and Sweden. They decarbonized their grids decades ago and now emit less than a tenth of the world average of carbon dioxide per kilowatt-hour. They remain among the world’s most pleasant places to live and enjoy much cheaper electricity than Germany to boot.

“They did this with nuclear power. And they did it fast ... France replaced almost all of its fossil-fueled electricity with nuclear power nationwide in just 15 years; Sweden, in about 20 years. In fact, most of the fastest additions of clean electricity historically are countries rolling out nuclear power … . nuclear power is the cheapest source in South Korea. The 98 U.S. reactors today provide nearly 20 percent of the nation’s electricity generation. So why don’t the United States and other countries expand their nuclear capacity? The reasons are economics and fear.

“New nuclear power plants are hugely expensive to build in the United States today. This is why so few are being built. But they don’t need to be so costly. The key to recovering our lost ability to build affordable nuclear plants is standardization and repetition. The first product off any assembly line is expensive — it cost more than $150 million to develop the first iPhone — but costs plunge as they are built in quantity and production kinks are worked out … . China and South Korea can build reactors at one-sixth the current cost in the United States.”

In the United States, nuclear power plants are becoming more efficient and reliable. So nuclear energy production peaked in 2018, even though some nuclear power plants have closed, or are being shut down by anti-nuclear politicians in states like New York.

Under the original blueprint for the Green New Deal, which is backed by progressive leaders, all nuclear power plants would have been shut down over time. Now, however, several Democratic presidential candidates have realized that nuclear power is useful in reducing carbon emissions and slowing the rate of climate change.

The Green New Deal proposal is not a financially feasible path to a low-carbon economy. As Thomas J. Pyle of the Institute for Energy Research has noted, it would finance a lot of unnecessary and wasteful government projects that would do little for the environment.

Partly due to the cost of these projects, the Green New Deal’s overall cost has been estimated by a think-tank as at least $50 trillion and potentially over $90 trillion (four times the size of the U.S. economy). Estimates by other energy experts are similar in order of magnitude.

Meanwhile, the Green New Deal would shrink the economy by discouraging people from working, leaving the government with less money to finance clean energy. The original “Green New Deal” blueprint provided “economic security”—that is, welfare — even for those who are “unwilling to work.” Rewarding unemployment leads to fewer people working and paying taxes.

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department.


Offshore wind trouble in Mass.

The second round of bidding for offshore wind contracts hasn’t even started yet. But the complaining sure has.

A spat is unfolding around whether National Grid can back out of its commitment to a wind-farm developer if a change in state laws or regulations somehow prevents the utility from being able to pass the contract costs on to ratepayers.

National Grid wants this exit clause to protect itself. But critics are telling the state Department of Utilities that this provision, known in utility-speak as a “regulatory out,” will undermine the upcoming auction.

A 2016 state law set these auctions in motion, by requiring the state’s three major electric utilities — National Grid, Eversource, and Unitil — to buy large amounts of power from offshore wind developers. The hope was to finally spark a new industry into life in Massachusetts, while curbing greenhouse gas emissions and diversifying our sources of electricity.

Round one was considered a big success. Three developers showed up to compete, with Vineyard Wind undercutting its rivals last year with a surprisingly low price. Vineyard Wind plans to use the contracts, approved by the DPU earlier this month, to finance the construction of an 800-megawatt wind farm south of Martha’s Vineyard.

Now, we’re on to round two — and the fun has begun. An independent evaluator waved a red flag earlier this month about the “regulatory out” provision that National Grid wants this time around. The evaluator, Peregrine Research Group, acknowledged that the odds of the Massachusetts rules changing in the future are slim. But this exit clause could make wind-farm financiers nervous, Peregrine noted, potentially discouraging bidders or driving up the costs for the ones who remain.

The Conservation Law Foundation agreed with Peregrine. CLF told state regulators that the exit clause threatens the integrity of the entire process, noting that Eversource and Unitil aren’t seeking a similar provision.

No state official wants costs to go up. But there’s an added complication if they do: That 2016 state law requires that the next bid come in lower than the winning price in the first round. Peregrine argues that National Grid’s exit clause will make it that much harder for the bidders to get under the cap.

As a result, Eric Wilkinson of the Environmental League of Massachusetts says he envisions a scenario where no deals get done at all in the next round. (ELM is among the environmental groups protesting the exit clause.) That would be an embarrassment for all involved, and could allow other states — keep an eye on New York and New Jersey — to pull ahead of us in the offshore wind game.

Meanwhile, Representative Pat Haddad of Somerset is prodding her colleagues on Beacon Hill to lift the price cap, to give the wind-farm developers more leeway to invest in economic development in the South Coast region. But it’s hard to know how successful she will be at this early stage.

National Grid shows no signs of backing down. Peregrine says these exit clauses are rare in the industry. But National Grid makes a point of citing its contract with Deepwater Wind (now Orsted) in Rhode Island, which includes a similar provision. National Grid told the DPU an unfavorable legislative or regulatory change at some point in the future with regard to cost recovery “could be catastrophic” for the company.

Spokesman Bob Kievra issued a brief statement, saying that National Grid is including these terms in its model for long-term contracts “as a starting place for negotiations” due to the increasing number and scale of such contracts.

If the Department of Public Utilities has a position on the matter, it’s not saying – at least not yet.


"Code of conduct". That’s code for ‘conduct yourself as we tell you’

Increasingly, a code of conduct is becoming an employer’s power trip, their weapon of choice in the workplace to limit the basic freedoms of employees. And these deliberately vague terms become expensive legal battles for sacked employees. Two examples in the past two weeks. Last week, Peter Ridd, the highly respected professor of physics, won his court case against James Cook University after he was sacked for offending the univer­sity’s code of conduct.

JCU used its code of conduct to full effect. When Ridd raised doubts about the quality of science claiming the Great Barrier Reef was being damaged, he was accused of misconduct, not acting in a collegial way, disparaging fellow academics, not upholding the integrity and good reputation of JCU. It made no difference to the code’s enforcers that Ridd raised his concerns in a polite and measured manner, making clear that fellow academics were honest, though mistaken, in their work.

When Ridd raised funds online to help pay for his expensive legal battle with JCU, the university accused him of breaching the code of conduct. When Ridd sent an email to a student, attaching a newspaper article headed “for your amusement”, the physics professor of 30 years’ standing was censured for acting contrary to an earlier “no satire direction” when JCU told Ridd not to trivialise, satirise or parody the univer­sity’s disciplinary action against him. When Ridd mentioned JCU’s “Orwellian” attitude to free speech in an email to another supportive student, JCU censured him for another breach of the code of conduct.

Note that JCU discovered the offending email by trawling through Ridd’s correspondence in a distinctly Orwellian manner.

On it went. Actions and words parsed and censured, secrecy sought under JCU’s code of conduct to protect the university, not Ridd.

Last week, the Federal Court rejected JCU’s 17 claims against Ridd under the university’s code of conduct. Federal Court judge Salvatore Vasta made clear that JCU’s fundamental error was to assume its code of conduct “is the lens through which all behaviour must be viewed”. Rather than starting from the principle of intellectual freedom set out in clause 14 of JCU’s enterprise agreement with academics, a core value that goes to the mission of a university, JCU used its lengthy and loquacious code of conduct to restrain Ridd. Therefore, it did not occur to JCU, or to academics who complained about Ridd, that the best response was to provide evidence Ridd’s claims were wrong. The enforcers chose censure and sacking over debate.

Rejecting JCU’s position, Vasta found the intellectual freedom clause is “the lens through which the behaviour of Professor Ridd must be viewed”. The judge said intellectual freedom allows people to express opinions without fear of reprisal. That is how Charles Darwin broke free from the constraints of creationism and how Albert Einstein challenged the constraints of Newtonian physics.

JCU will surely appeal this decision. Other universities will also be hoping for a favourable legal determination that upholds their codes of conduct as the final word, trumping even an intellectual freedom clause in an enterprise agreement with academics.

All things considered then, we have reached a shameful state of affairs: university leaders spending hundreds of thousands of dollars to uphold coercive powers they have given themselves under codes of conduct but expending no intellectual effort in considering the need for a truly liberating charter of intellectual freedom such as that drawn up by the University of Chicago and adopted by dozens of other American colleges.

Vaguely drafted codes of conduct are a conduit for double standards. And that is why they are bogus legal instruments. Every law student is taught that contracts can be voided for uncertainty. A boss should only ever have power to adversely affect a person’s employment in the clearest and most precise circumstances. It is high time that proliferating codes of conduct are exposed as dangerously vague virtue-signalling instruments with a nasty kick to them, allowing bosses to terminate an employee at will.



For more postings from me, see  DISSECTING LEFTISM, TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC and AUSTRALIAN POLITICS. Home Pages are   here or   here or   here.  Email me (John Ray) here.  

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