24 October 2024
Summary
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In summary:
COP16 in Cali: from agreement to action
Top of the agenda at the UN’s ongoing biodiversity conference in Cali, Colombia, is implementing the landmark Kunming-Montreal Global Biodiversity Framework, adopted in December 2022 to protect critical global ecosystems. However, 85% of countries have missed the deadline to submit their National Biodiversity Strategies and Action Plans. Our analysis highlights the significant value of ecosystem services to economic sectors. Inland wetlands provide services valued at USD71,275 per hectare annually, while coastal systems generate USD37,170 per hectare each year. In this context, Cali’s COP can play a major role in valuing natural capital and creating a market for nature to incorporate ecosystem value into financial decisions. This will be key to align economic growth, the climate transition and environmental sustainability
Power struggles: Nuclear energy and the race to net zero
Nuclear power has made a comeback in discussions surrounding the green transition this year, yet it remains a divisive topic. While traditional nuclear powerhouses like France and China continue to expand their capacity, newcomers like Kazakhstan and the Philippines are planning to develop nuclear energy for the first time. As a low-carbon energy source, nuclear offers a reliable option for decarbonizing industries that are reliant on continuous power, such as big tech, where companies recently started to explore nuclear energy to power AI. However, there are many challenges: long construction times, costs over 40% higher than wind or solar, supply-chain risks, safety concerns and waste disposal. Nevertheless, nuclear generation will play a role in the net zero transition and is expected to double by 2050.
Eurozone labor markets: the “Big Stay” conundrum
The era of the “Great Resignation” seems to be over. Despite the bloc’s underwhelming economic performance since end-2022, labor markets seem to be in great shape – at least at first glance. Unemployment has reached historic lows, stabilizing around 6.4%, while employment continues to grow – 4.5% above pre-Covid levels. But this is also because firms are still hoarding labor after the pandemic, mainly in tech, machinery & equipment, automotive and construction. There are early signs of a trend reversal – vacancy rates have started to decline and lower labor productivity has decreased workers’ bargaining power – and we do expect labor retention to soften in the Eurozone as profits normalize and wages increase. Ultimately, increasing labor market churn could improve job matching and reallocation, as well as reduce overqualification. Investing in generative AI systems could also revitalize both workers and labor markets: Proper adoption could bridge gaps between low- and high-skilled workers, lowering re-employment and training costs and streamlining onboarding.
Authors
Françoise Huang
Allianz Trade
Allianz Trade
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