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Sustainability

Analysis: Pandemic debt adds to challenge of funding world’s climate goals

Source: Reuters

WASHINGTON, Nov 18 (Reuters) – Huge spending by governments kept the world economy afloat during the pandemic as officials mobilized a fiscal response not seen since World War Two to bolster household incomes and give businesses a fighting chance to survive the health crisis.

But the resulting nearly $300 trillion pile of debt held by governments, businesses and households will leave many countries with vulnerable finances and weigh on efforts to address urgent challenges such as climate change and ageing populations.

Even as rich and poor governments take stock of battered finances, inflation is pushing central banks toward higher interest rates and a tightening of monetary policy which, for the indebted, can only make the math less favorable.

“That means higher borrowing costs, higher interest burdens for the government and for the real sectors,” said Emre Tiftik, direct of sustainability research for the Institute of International Finance (IIF), the global association of the financial industry.

“Over the medium term, the issue is all about finding the resources to fund climate goals and most are extremely behind on that,” he added of the rapid decarbonization of the global economy needed to avert a climate crisis.

This month’s Glasgow climate talks produced some new pledges by countries to reduce carbon emissions, but left many questions unanswered about how commitments will be financed and put into practice.

According to the IIF, global debt may just about have hit its peak from the pandemic and may fall slightly by year’s end from the current $296 trillion.

But easing the reliance on carbon-based fuels and mitigating climate damage is expected to require massive public and private investment – on order of $90 trillion by 2030, according to one World Bank estimate.

At this point there’s no global plan for how to underwrite it, and governments’ share of climate investments will have to compete with social, health and other spending priorities set to intensify because of demographic trends like ageing populations.

The vast pandemic stimulus deployed by the rich world propped up their economies successfully, and was also sustainable in a landscape dominated by low or near-zero interest rates. But as the cycle switches to policy tightening, this will mean higher interest costs, higher risk of possible debt crises in emerging markets, and less capacity to meet climate goals.

“The balance of benefits and costs of debt accumulation is increasingly tilted towards costs,” scholars at the Washington-based Brookings Institution wrote last month, citing possible constraints on policy and “crowding out” of private investment.

GOING PRIVATE?

Low-income countries will be hit hardest, with some already facing unsustainable debt levels and others locked out of the more favorable financing available to wealthier countries, according to London School of Economics professor Amar Bhattacharya.

“The cost of servicing debt is very high and that can interact with climate ambition and climate vulnerability,” he said, urging more effort to restructure those countries’ debt.

By contrast, developed countries can finance debts in domestic currencies usually at low rates, and in the case of the U.S., Europe and some others, have central banks with effectively unlimited capacity to absorb debt and create bank reserves.

U.S. Congressional Budget Office projections in July 2021 showed U.S. debt service costs as a percent of gross domestic product rising only modestly in the coming decade from about 1.6% in 2020 to 2.7% in 2031 – even with overall debt rising to 106% of GDP by then, a level which in prior years would have triggered alarm bells.

“Economically the most advanced economies do not face much of a debt constraint right now,” said Jason Furman, a Harvard University economics professor who has tried to reshape the debate about public debt to focus more on the servicing costs and less on the total amount.

But it is politically sensitive, prompting Congressional officials to trim President Joe Biden’s proposed climate investments. And there’s still a chance of disruption from either an abrupt shift in Federal Reserve policy, and the potential impact on global financial markets that could trigger, or if Congress fails to raise the U.S. debt ceiling.

Europe is going through its own balancing act, as EU capitals debate how to relax rules that oblige governments to keep budget deficits below 3% of GDP and debt below 60%.

Most agree those restrictions are no longer realistic, and would require debt cuts that are way too ambitious for most EU countries, keep economic growth on track and make room for the annual 650 billion euros the EU needs to tackle climate change over the next decade.

Such realities explain the fervor in Glasgow that greeted U.N. climate envoy Mark Carney’s announcement that banks and other institutions with a total $130 trillion of private capital had made combating climate change a priority.

But as critics questioned whether all of that astronomic sum was really aligned to a net-zero carbon world, it was clear that governments, whether rich or poor, will have to figure out how they do much of the heavy-lifting, regardless of any immediate debt squeeze they may face.

What might focus minds, as the LSE’s Bhattacharya told a webinar this week, is if the investment is not found now to tame the growing climate impacts on the economy, then the world’s debt is likely to become even more unmanageable.

“That investment is the best way for actually assuring long-term debt sustainability,” he said.

Reporting by Howard Schneider and Mark John; Additional reporting and graphic by Marc Jones; Editing by Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

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Business

Freeze-Drying: A Sustainable Solution to Food Insecurity and Waste

By Sverre Puustusmaa, CEO & Founder, Tactical Solutions

The world faces a dual food crisis: widespread insecurity, with over 700 million people going hungry, and massive waste, with nearly 40% of food lost globally each year. This contradiction is staggering, but thankfully innovative technologies are offering hope.

Freeze-drying provides an effective solution to both of these challenges. This process can preserve food for up to 25 years while retaining 97% of its nutritional value, the process addresses critical issues of spoilage and accessibility. Additionally the lightweight, shelf-stable characteristics of freeze-dried food makes it ideal for emergency relief, global aid distribution, and supplying remote regions.

Freeze-drying improves food security and reduces waste by preserving surplus produce for future use. Compared to traditional preservation techniques, the method lowers greenhouse gas emissions and consumes less energy. As population growth and climate change exacerbate global challenges, freeze-drying could be crucial in developing a sustainable and resilient food system.

What is Freeze-Drying?

Freeze-drying is a preservation method that involves first freezing the food, then using a vacuum to remove water through a process called sublimation. Freeze-drying helps retain the food’s nutritional value, preserves its texture and flavor, and extends its shelf life without the need for refrigeration. Unlike traditional dehydration, which uses heat and can degrade both nutrients and taste, freeze-drying results in a lightweight product that is ideal for storage and transport.

Freeze-drying is a versatile process that can be applied to various types of food, including fruits, vegetables, dairy products, and complete meals.

Emergency Relief Support

As food insecurity becomes a growing global challenge, innovative technologies such as freeze-drying offer essential solutions. This method preserves food in a way that maintains the benefits of the original product, effectively bridging the gap between surplus resources and areas facing scarcity. From emergency aid to improvements in long-term supply chains, freeze-drying addresses a wide range of needs in the fight against hunger.

In humanitarian crises caused by natural disasters, conflicts, or pandemics, rapid access to nutritious food is vital. Freeze-dried meals are lightweight, compact, and easy to transport, making them ideal for emergency responses. With the simple addition of water, these meals can provide essential nutritions, even when infrastructure is compromised.

For isolated or underserved regions, where fresh produce is scarce due to logistical challenges, freeze-dried food offers a reliable alternative. Its long shelf life and nutrient retention ensure that communities can access essential vitamins and minerals without dependence on regular supply chains.

Freeze-drying also reduces spoilage during transit, which is especially important when moving food across long distances. Its reduced weight lowers transportation costs, while its durability minimises losses caused by handling and environmental factors.

Addressing the Food Waste Pandemic

Food waste is a major contributor to global greenhouse gas emissions, with approximately 8 – 10% attributed to discarded food. Freeze-drying can play a significant role in reducing this waste by preserving the surplus of food that goes unused everyday. For example, peak harvests that would otherwise go unsold can be processed into freeze-dried products, extending their usability and preventing spoilage.

By requiring no refrigeration during storage or transportation, freeze-dried products significantly reduce energy consumption and associated carbon emissions. These attributes make the technology a key player in building resilient, sustainable food systems.

This approach turns potential waste into a valuable, long-lasting resource. Additionally, freeze-drying uses less energy than methods like canning or freezing, making it a more sustainable choice for large-scale food preservation.

Economically speaking, freeze-drying supports local producers by creating markets for surplus crops that might otherwise be discarded. It also empowers aid organisations by enabling them to stockpile food supplies for future crises, reducing reliance on reactive procurement.

The Future of Freeze-Drying

As the global population is projected to reach 9.8 billion by 2050, the demand for food is expected to increase by 60%. This growing need will require new and innovative approaches to production, preservation, and distribution. Freeze-drying offers a scalable solution that can meet these demands while addressing sustainability goals.

For governments and organisations, investing in freeze-drying technology and infrastructure presents an opportunity to enhance food security, reduce waste, and mitigate the environmental impact of food systems. By integrating freeze-drying into supply chains, nations can build resilience against future disruptions, including climate change and geopolitical instability.

Freeze-drying is more than a technological advancement – it’s a critical tool for addressing the interconnected challenges of food insecurity and waste. By extending shelf life, retaining nutritional value, and reducing spoilage, freeze-drying has the potential to reinvent how we store and distribute food.

As the world faces growing environmental and humanitarian challenges, embracing sustainable innovations like freeze-drying will be essential to creating a more equitable and food-secure future. Through collaborative efforts between governments, aid organisations and private bodies, this technology can help reshape global food systems for the better, for everyone.


Bio:

Sverre Puustusmaa is the CEO and founder of Tactical Solutions, a company he established in 2016. With a background as a soldier in the special forces and a medic in challenging conditions, Sverre was inspired to create a solution to the low-quality military rations he encountered during critical missions. His frustration with inadequate food led to the development of a solution that prioritises high-quality, nutritious meals in all conditions.

Under Sverre’s leadership, Tactical Solutions has pioneered innovations in food technology and sustainability. The company’s mission is to deliver nutritious, economically efficient food solutions without compromising on taste, embodied through successful brands like Tactical Foodpack and Chef Urban. Sverre’s focus on quality drives his commitment to ensuring that food should never be compromised.

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Auto

How innovative lubricants are advancing sustainability in e-mobility

By Leyla Alieva, Co-Founder and CEO of NEOL Copper Technologies, and Professor Boris Zhmud, CTO, Tribonex AB

In the rapidly transforming automotive sector, e-mobility stands out as a pivotal area of innovation and growth. The advancement of e-mobility solutions is having an important impact on our society, with more people choosing greener transportation methods as they become environmentally conscious. Current environmental policies and rapid adoption mean the global electric vehicle (EV) fleet is set to grow twelve-fold by 2035[1].

However, keeping EVs, along with hybrid vehicles, well-maintained is a challenge. Securing a more sustainable future means delivering reliable e-mobility solutions, affordable for customers. Overcoming concerning worries over long-term dependability of EVs is essential to ensuring user confidence. Even though most failures in modern vehicles are electric, tribology still plays an important role. Friction and wear are always there. A faulty control module and a faulty bearing in electric motor will bring the same level of nuisance to the vehicle’s owner. Hence, effective collaboration between mechanical engineers and lubricant developers is crucial for adoption of EV technology.

While there are more environmentally friendly vehicles being manufactured, there has also been a rise in high-efficiency lubricants that can offer more substantial protection against component wear. This article will address the strenuous circumstances that cause wear in both EVs and hybrid vehicles, how these challenges can be resolved and why embracing a range of technologies will be pivotal in developing sustainable e-mobility solutions.

Facing the challenges in e-mobility lubrication

To shed light on the complexities and future trends of this critical industry, it is important to establish the lubrication challenges facing vehicle and component manufacturers. For hybrid vehicles, the intermittent operation of internal combustion engines at lower temperatures poses significant issues, such as increased water accumulation in the engine oil and higher fuel dilution. These conditions result in specific tribological stress on engine components, necessitating specialized lubricant solutions.

Fully electric vehicles present a different set of challenges. Their electric motors operate at high speeds, at around 12,000 to 18,000 rpm, and this demands that lubricants withstand these rigorous conditions, with high-performance motors reaching 24,000 rpm. These speeds are only set to increase as well. For instance, motors running at 30,000 rpm are being prepared for the next generation of EVs and there already are experimental designs of interior permanent magnet synchronous motors (IPMSM) reaching 100,000 rpm. With these extremely high speeds in mind, material compatibility and the need for effective cooling solutions further complicate the development of suitable lubricants for EVs.

Addressing these challenges requires innovative solutions in both hardware and lubricant formulations. There have been several key advancements that would support both hybrid and electric vehicles. Lower viscosity synthetic oils are a good example of a lubricant that could significantly benefit hybrid vehicles, offering improved flow in cold-start conditions.

For high-speed electric motors in EVs, methods like force lubrication and spray lubrication are being developed, as traditional splash lubrication is often inadequate. Finally, waterborne lubricants are being explored for their superior cooling properties. However, while these are hoped to be more comprehensive solutions, they are still in development.

The potential of copper filming technology

Lubricant developers are always looking for new ways to improve the sustainability and reliability of vehicle components. One avenue that is showing promise is the development of lubricants with copper filming technology. It offers unique protective properties against hydrogen-related damage, which is prevalent in tribological contacts.

The technology, particularly using metal-organic copper compounds, is compatible with EV systems, avoiding issues like copper corrosion that limit other additives. Higher affinity of copper additives to surfaces makes it potentially more effective than traditional zinc-based detergents. Furthermore, even though copper is considered to be an oxidation promotor, copper additives are not. In fact, oxidation tests show that copper additives act synergistically with antioxidants. Hence, synthetic lubricants deploying the copper filming technology are characterized by an extended service life. 

Early results from numerous real-world and laboratory-controlled projects that include testing copper filming technology in crankcase lubricants have demonstrated quantifiable performance benefits. This technology has shown to not only reduce friction but also provide wear protection, which is crucial for performance and efficiency.

Embracing collaborative development

In order to overcome these challenges around lubrication, the e-mobility sector could adopt a consortium model to enhance collaboration between mechanical engineers and lubricant developers. By bringing together hardware designers and lubricant formulators early in the development process, the industry can create tailored solutions for the diverse range of EV hardware. This approach requires open communication, collaborative testing programs and data sharing, focusing on developing bespoke solutions rather than one-size-fits-all products. Streamlining approval processes is also critical to encourage innovation, especially from smaller companies.

By embracing new approaches and lubricant technology, as well as fostering collaboration, the automotive industry can overcome the challenges of EV lubrication. As EV adoption continues to rise, there is pressure on manufacturers to make their vehicles reliable and thanks to the latest developments there is a pathway for a sustainable, efficient future.

While it would be right to be cautious about predicting a fully electric fleet within the next 20 years, there is hope that a more pragmatic multi-technology approach can achieve carbon neutrality in the future. As well as e-mobility, fuel cells, hydrogen engines, and renewable fuels each have a significant role to play. This diversified strategy is necessary to overcome the limitations of resources, current energy mixes, and the carbon footprint associated with battery manufacturing and recycling.


[1] https://www.iea.org/reports/global-ev-outlook-2024/outlook-for-electric-mobility

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Pharmaceuticals

Enhancing Energy Security in the Pharmaceutical Sector: Strategies and Challenges

By Stephen Grant, Managing Director, ENGIE Impact B2B Implementation Solutions

Energy security, referring to the uninterrupted availability of affordable energy sources, has become a paramount concern in recent years. Russia’s invasion of Ukraine and weaponisation of its energy highlighted the inherent vulnerabilities of energy supply chains. In the immediate aftermath of the war’s outbreak, Europe took measures to avoid supply disruptions, ease market pressures, and save energy.

Countries and regions around the world are now accelerating their clean energy transition through structural reforms of the energy system. This involves diversifying import routes and sources, filling gas storage tanks, and investing in infrastructure to reduce dependency on single suppliers. Additionally, they are promoting the import of renewable and low-carbon energy carriers as part of the broader goal to decarbonise the energy system while enhancing energy efficiency to reduce overall demand.

Energy supply security is not only a national issue but is also a critical concern for industries that depend on gas as their main energy source, such as the pharmaceutical sector. Given its specialised nature, stringent regulatory requirements, and reliance on continuous operation for the manufacture of critical products, this industry faces heightened risks. For pharmaceutical companies, maintaining a stable and secure energy supply is essential to ensuring the quality and safety of life-saving medications.

Strategies for Enhancing Energy Security

To enhance the energy security of an organisation, efforts should be directed towards minimising reliance on external energy sources like gas while maximising the utilisation of local, renewable energy and electrifying operations. The main strategies include:

  • Reducing energy consumption: Introducing energy efficiency measures is the first step to lowering dependence on fossil fuels. From behavioral changes to technologies that minimise energy use, such as LED lighting or heat pumps that recover and reuse waste heat, reducing demand is a ‘no-regret’ option. Energy management systems that take an end-to-end approach can have a substantial impact on demand, integrating advanced monitoring, control, and optimisation technologies to manage and reduce energy consumption across the entire production process, from energy and material sourcing to product delivery.
  • Electrification: When paired with a reliable renewable or low-carbon energy supply, electrification is synonymous with decarbonisation, as it significantly reduces the need for fossil fuels to power equipment and transport vehicles. As technologies advance, an increasing number of industrial processes can be powered by electricity.
  • On-site renewable energy solutions: This may involve installing solar panels on facility rooftops, utilising biomass boilers, and exploring geothermal energy options. Solutions must consider the geographic (availability of underground heat sources) and operational conditions of the relevant sites. On-site biogas and biomass are less common in the pharma sector as companies don’t have sufficient waste products to valorise.

These measures have the dual impact of not only promoting energy security but also enhancing energy efficiency and carbon emissions reduction. An additional driver of security is replacing aging assets, such as gas boilers, with efficient electrical boilers that can be powered by green energy.

Challenges and Financial Considerations

While the urgency and benefits of undertaking measures to improve energy security are clear, the journey is not without its challenges.

  • The cost of implementing decarbonisation solutions is one of the main reasons companies delay their efforts, as it typically involves substantial upfront capital.
  • Physical space constraints could make it impractical to implement on-site solutions like solar panels or biomass boilers. An on-site biomass solution, for instance, needs space to store the biomass.
  • Integrating new technologies into existing production processes is another big hurdle. Suppose the decision has been made to use a heat exchanger for heat recovery. This means interfering with the existing production system and potentially modifying it. Some clients view this as a risk to ongoing operations.
  • Cultural resistance from on-site engineering teams is another common obstacle. These teams are accustomed to operating their existing reliable systems. They might resist the introduction of innovative technologies, or even resent external teams interfering with methods that have been successful for many years.

The question is how to overcome these obstacles. Looking at the financial aspect, there are two approaches to consider when analysing how to make energy security projects feasible: internal carbon pricing (ICP) and as-a-service models.

Companies that prioritise reducing their carbon footprint and are willing to accept the cost can usher carbon projects through their internal commitment process by setting up an ICP mechanism, paving the way to implement reduction projects. They can assign a cost to carbon, such as $100 per ton, which is then factored into their long-term financial analysis. This approach often improves the business case for investing in low-carbon technologies by quantifying the economic benefits of reducing emissions.

Companies more concerned about reducing cost can use an as-a-service model, which eases the financial burden by shifting the upfront cost to the service provider. In this case, the energy solutions provider finances the initial capital investment for new technologies and then charges the client a service fee. This approach not only reduces the upfront cost for clients but also aligns the incentives of both parties towards achieving energy savings, carbon reductions, and energy security.

Key Success Factors

The financial side of implementation is only one aspect of a broader strategy to achieve the means to energy security. We can identify three additional factors that are instrumental to the successful implementation of energy security and decarbonisation projects:

  • Stakeholder engagement: This may be the linchpin to rolling out energy security measures. On-site engineering teams, for instance, often hold the budget of the local site. So, even if the corporate team is onboard with the solutions, the local teams must pay for them. Ensuring all stakeholders, from leadership to on-site engineering teams, are engaged and aligned with the project’s goals and understand its benefits, is paramount. Otherwise, the project could become difficult, if it’s not derailed altogether.
  • Centralised project management: A strategic approach with central control and governance helps standardise processes and technologies across different sites. Centralisation that industrialises the procurement, installation, and commissioning of technology accelerates the overall program.
  • Comprehensive agreements: Establishing master service agreements at the corporate level facilitates smoother implementation across multiple locations. These agreements provide a strategic framework that supports consistent and cohesive project execution, avoiding the complexities of negotiating individual contracts in different countries.

Building Resilience to Energy Risks

The pharmaceutical supply chain is complex and global. A breakdown of energy security at any point of this chain can have cascading effects, potentially disrupting the production and availability of essential products. The dependence on energy imports due to limited domestic energy resources, viewed in the light of potential disruptions to energy supply routes due to ongoing geopolitical complexities, has thus raised concerns about energy security in Europe, Asia, and beyond.

An appropriate response to this potential threat is within our grasp, as it dovetails with measures to accelerate the energy transition. Building energy resilience entails diversifying energy sources to reduce dependency on any single supply, improving energy efficiency to reduce overall energy needs, and enhancing local energy production to bolster self-sufficiency. Pharma companies can achieve these measures by forging strategic partnerships with service providers that merge consulting capabilities with the capability to implement the required solutions, thereby facilitating their transition to a more secure and sustainable future.

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