Crypto News: China sets up a climate money fight

Today's newsletter looks at what will be one of the hottest topics at the UN climate summit in Azerbaijan next month: China's status as a developing nation. You can also find the full story on Bloomberg.com.

Later, read why Mexico's President Claudia Sheinbaum, a climate scientist, is betting on decades of fossil fuel. For unlimited access to climate and energy news, please subscribe.

By Dan Murtaugh, John Ainger, and Alfred Cang

If China can go to the moon, asked the European Union's climate commissioner in September, why isn't it paying more toward climate action? Wopke Hoekstra's quip laid bare a point of contention that will loom over November's United Nations climate summit in Baku, Azerbaijan: How can the world's second-largest economy be simultaneously "developed"—at the cutting edge of science and technology—yet still be officially classed as "developing"—allowed concessions on emissions and access to global funds?

China likes to think of itself as a hybrid superpower, a compromise description that serves its diplomatic goals. In climate finance, though, the position is untenable. If a nation is considered developed, it's expected to pay into a $100 billion-a-year UN pot. For the US, this meant an estimated $9.5 billion in 2023. Developing nations not only have no such obligation but can also use the money to mitigate the impact of hotter summers and more frequent storms.

A key target in Baku is to agree on a post-2025 goal for climate finance. Developing nations—including China—want an enormous increase, to more than $1 trillion a year. For rich countries, already struggling to meet the current goal, it's paramount to add more donor nations. And they're looking to China.

COP29 Reports: Click here for comprehensive coverage of this year's climate summit. Subscribe now.

US and European leaders will push for the country to join their ranks and begin paying up. But Beijing is set on defending its developing-nation status, which allows it to spend formidable amounts of money to advance global climate goals but on its own terms.

The case for classifying the economic and political powerhouse as developed is compelling. China is the biggest source of greenhouse gas emissions. It has more steel mills and oil refineries than any other nation, an expanding nuclear weapons arsenal and, as Hoekstra noted, a major space exploration program. The US House of Representatives last year voted unanimously that China should no longer be allowed to call itself developing.

The case for China remaining, on paper, as a developing country is no less persuasive, though. Despite steady increases in recent decades, its median income still falls below the threshold for developed countries. While the glittering skylines of megacities such as Shanghai and Shenzhen are home to some of the world's wealthiest people, the country still has hundreds of millions living below the poverty line.

The climate finance debate dates to the 2009 Copenhagen climate summit. There it was agreed that developed nations, which had benefited from decades of polluting industries, should contribute $100 billion a year by 2020 to support climate action in developing nations, a goal not reached until 2022.

With that target expiring in 2025, nations in November must come up with a new figure. The UN estimates the developing world needs $500 billion annually to enact its climate plans. Other analysts put the figure at anywhere from $1 trillion to $6 trillion. "We recognize our responsibility," says Jennifer Morgan, Germany's special envoy for climate. "We just think that others that also have wealth and contributed emissions historically should also do the same."

Read the full story to learn how China could respond to calls for it to contribute toward climate finance targets at COP.

$675 billion

This is how much China invested in green tech last year. It's leading the world in spending on its own energy transition.

"Instead of putting money into this big pot that it has little control over, it would rather spend the money in a way that it has a lot more say in."

Yao Zhe

Global policy adviser for Greenpeace East Asia in Beijing

While Western nations will struggle to get China to edge toward adding to the global piggy bank, Chinese envoys say the country will boost its climate financing through other channels.

By Scott Squires

Under the crystalline waters off southeast Mexico, workers are laying a pipeline that President Claudia Sheinbaum is counting on to underpin an economic boom and lift millions from poverty.

The $4.5 billion Southeast Gateway Project will deliver up to 1.3 billion cubic feet natural gas per day from Texas to the Yucatan Peninsula when it's completed next year, fueling power plants and a proposed trans-continental rail corridor intended to rival the Panama Canal.

But the project Sheinbaum inherited from her predecessor, Andres Manuel Lopez Obrador, also threatens to undercut one of her other key goals: cutting Mexico's greenhouse gas emissions.

Once operational, the Southeast Gateway pipeline could boost gross domestic product by 1% to 3% in the region. Source: TC Energy Corp.

It's a tension at the heart of Sheinbaum's vision for Mexico — and indeed, for any country looking to grow economically while also reducing its carbon footprint. It's all the more acute because of the new president's past work with the United Nations Intergovernmental Panel on Climate Change, which in a recent report was explicit about the need for deep emissions cuts in coming decades.

Her plan hinges on an aggressive campaign to add enough solar, wind and other forms of clean energy for Mexico to generate 45% of its electricity from emission-free sources by 2030, up from 24% today. It will require dramatically overhauling power grids already suffering from seasonal blackouts after years of underinvestment. The effort could cost as much as $50 billion, making it the largest buildout of energy infrastructure in a single presidential term in Mexico's history and leading some analysts to deride the plan as a "pipe dream."

Read the full story on Bloomberg.com.

The Amazon Fund is at the forefront of Brazil's efforts to promote sustainable micro-economies that don't damage the rainforest. The roughly 4 billion reais ($710 million) in its coffers include contributions from Norway, Germany, Japan, the UK and the US.

The fund is also key to the Brazilian government's lofty ambitions to end deforestation by 2030 and also President Luiz Inacio Lula da Silva's aspirations to return Brazil to a leadership role in climate negotiations.

However, the fate of the fund is dependent on political will. Lula launched it during his first term in 2008. But foreign donors halted contributions in 2019 when Lula's predecessor, Jair Bolsonaro, was in office, after his administration undermined conservation efforts. Lula rebooted the fund soon after returning to the presidency in January 2023.

While spending on programs supported by the fund has soared, critics say the scale of its efforts fall short of what's needed to address the Amazon's social crisis.

Photographer: Victor Moriyama for Bloomberg Businessweek

Mega solar power link clears hurdle. A $20 billion renewable energy corridor connecting Australia and Singapore inched closer to completion after its developer received conditional clearance from the city-state.

Small nuclear gains traction. The US is in talks with several Southeast Asian nations about deploying small modular nuclear reactors, as global interest in the low-carbon energy source increases.

SEC cracks down on ESG claim. WisdomTree Asset Management Inc. agreed to pay $4 million to settle US Securities and Exchange Commission allegations that it failed to deliver on its promise to create ETFs that avoided investments in fossil fuels.

Much of the US is experiencing a "zombie summer," with abnormally high temperatures that meteorologists expect to last through the end of October. The unseasonable warmth is bringing to the forefront an issue that doesn't get enough attention: chronic heat.

Long-term exposure to high temperatures — even if they're not record breaking — is becoming a growing health risk. It's something that cities like Phoenix, Tampa Florida, and Raleigh, North Carolina are becoming all too aware of as they see hotter days more often, that last a little bit longer.

Chronic heat poses dangers to human health, and not just during the daytime. It shows up most significantly at night, when people physiologically need a break from the heat. "Nighttime temperatures are so shockingly different" from what they were a generation ago, Kathie Dello, North Carolina's state climatologist, told Bloomberg Green.

A chart showing the change in nighttime temperatures, she said, "is truly the graph you can put in front of people and say, 'Here's a climate impact.'"

Electric vehicle sales have hit the brakes in Europe and the US in recent months, as cost-conscious drivers have opted for cars with exhaust pipes instead. Bucking the trend is ride-sharing giant Uber, which is not only adding zero emission models to its fleet, but also lobbying regulators to demand more EVs on the road. On Zero, Dara Khosrowshahi discusses the company's short and long-term green goals, and tells Akshat Rathi why he believes electric cars are good for business – not just for the environment. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.