Crypto News: Climate climbdown

Hi, I'm Phil Aldrick, Bloomberg's senior economics reporter based in London. Here's today's Readout.

Like the burning forests on Rhodes, the Tory party's climate change commitment to reach net zero by 2050 is lying in cinders.

On Monday, Prime Minister Rishi Sunak said he did not want to "give people more hassle and more costs." On Tuesday, Levelling Up Secretary Michael Gove, who was part of the government that put net zero by 2050 into law, explained that meant retreating on plans to decarbonize "our existing housing stock."

Wildfires close to the village of Vati on Rhodes on July 25. Photographer: SPYROS BAKALIS/AFP

As the Office for Budget Responsibility warned in 2021, every year wasted makes the net zero target more expensive. If it's a hassle today, the burden will be backbreaking tomorrow. With 27 years to the deadline, this government doesn't have to admit it but some poor future administration will probably have to.

The facts are straightforward. Britain's 28 million homes and 2 million non-residential buildings account for the second largest share of emissions after transport, the Climate Change Committee said last month. They are also the hardest to address.

Between 1996 and 2010, building emissions shrank 15%. Since then, there has been no progress. The next ten years will be "crucial…requiring a complete policy framework to be put in place," according to the CCC.

Instead, there has been a piecemeal set of aspirations that amount to 20% less public investment than the Office for Budget Responsibility estimates is required. Even then, the "take-up of schemes to subsidize household investment in heat pumps and insulation has been less than expected," the OBR said this month.

Now the plan is to do even less.

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The stories you need to know about this evening

UK greenhouse gas emissions dropped for the first time in two years.
Jaguar Land Rover owner Tata reported better-than-expected first-quarter income as supply-chain constraints ease.
Unilever shares advanced as the maker of Dove soap moderates price increases on personal care and beauty products.
Prices of previously owned Rolex and Patek Philippe watches will keep falling as supply remains high, according to analysts at Morgan Stanley.

The government's volte-face on net zero appears to have been inspired by last week's Uxbridge by-election, which the Tories edged against the odds by turning the poll into a single-issue referendum on the expansion of London's ultra low emission zone. The full story is more revealing.

Sadiq Khan, the London Mayor, is increasing the zone in which drivers with non-compliant cars will be charged £12.50 a day supposedly to spare Londoners from breathing lungfuls of poisonous air. An alternative way of looking at the extension is as a revenue raising measure.

Sadiq Khan Photographer: Tristan Fewings/Getty Images

Transport for London's finances have been hammered by the pandemic and the shift to working from home. As well as the bus and tube network, TfL is responsible for maintaining London's streets.

For years, repairs were cross-financed by public transport income. Then came the congestion charge and in 2019, the ULEZ — an idea originally devised by Khan's predecessor, Boris Johnson. Since 2018, road user charging income has trebled to £684 million, last year's TfL accounts show. When the ULEZ was first expanded in 2021, revenues from the scheme increased by £150 million.

For years, economists have been calling for a similar approach to climate change — higher taxes that both deter carbon intensive use and generate revenues to pay for the net zero transition. President Joe Biden has taken another course of action: subsidies. His approach is one-sided — just to spend the money because it's too politically difficult to raise taxes.

The ULEZ debate perhaps proves there is a political limit to green taxation. But it also demonstrates that governments with no money left, like Sunak's, are caught in a bind. Without the exorbitant privilege that the dollar provides, unfunded subsidies are dangerous, as Liz Truss's mini-budget backlash last September showed.

Even the opposition Labour Party seems to have taken that lesson from last year's calamity by retreating on its £28 billion annual green investment plans. Which does not bode well for green Britain, whatever color your politics.

London pay rise. Workers in the capital got a 5% average pay increase to £4,400 a month, almost double the 2.7% national average.

China mystery. The country's foreign minister disappeared in June, and now he's been replaced by his predecessor after just months in the role.

Housing head start. Britain's wealthy parents give their children a 10-year head start over their peers who don't get help in buying property.

Yeezy sales. Adidas losses narrowed following the first batch of sales of Yeezy sneakers from its canceled partnership with rapper Kanye West.

Europe's extreme heat. Wildfires and intense summers made worse by global warming threaten Europe's $2 trillion tourism and travel industry.

$20 billion

Elon Musk's decision to change Twitter's name to "X" wiped out anywhere between $4 billion and $20 billion in value, according to analysts and brand agencies.

One key story, every weekday

A list of firearms, including Sig Sauer pistols, on display in the window of a gun shop on Burapha Road in Bangkok, Thailand.
Photographer: Andre Malerba/Bloomberg

American-made guns are pouring into countries all over the globe, more so after the US made it easier to export guns in 2020. Even as America's mass shootings horrify the world and gun-crime rates rise in many of the importing countries, the US government is playing a key role as the firearm industry's booster and concierge. And there's one company that has benefited more than all the others.

Read The Big Take.

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