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Facebook’s 21-Year-Old Wunderkind Leaves for Google

Facebook hired Michael Sayman for an internship when he was 17 years old, and gave him a full-time engineering job at 18. Now, the wunderkind is leaving for Alphabet’s Google. He turned 21 last week.

At Facebook, Sayman was a product manager who helped the social-media giant understand how his generation uses their phones, advising on experimental products for teens and helping executives understand trends. At Google, he’ll be a product manager for Assistant, a voice-based service built on the search engine’s giant database.

Assistant is a top priority for Google CEO Sundar Pichai. The Mountain View, California-based company is working to embed the tool across a range of its own products and on other companies’ devices, facing stiff competition from Amazon.com’s Alexa and Apple’s Siri. Google confirmed on Monday that Sayman was hired for the Assistant team.

Facebook discovered Sayman, who taught himself to make mobile apps at age 13, because he was using the company’s developer tools for an iPhone application he created. Ahead of his internship, the company flew him out to meet CEO Mark Zuckerberg. He brought his mom. Sayman was still wearing braces when he became one of Facebook’s youngest employees.

In a Facebook post confirming his departure, Sayman said he taught himself to code by looking up tutorial videos on Google.

“On a personal level, I also see the Assistant as an opportunity for Google to lower the barrier of entry for kids/teens of all ages and backgrounds, to learn how to program — and encourage them to explore the world of computer science in ways that were once considered impossible,” he wrote. Sayman noted that Zuckerberg has been an “incredible inspiration” and “absolute pleasure to work with.”

Not a number to tweet about

Government infrastructure spending in the second quarter fell to 1.4% of GDP, the lowest level on record.

According to Thompson Reuters, investment by American municipalities in the first seven months of this year, at 50.7bn, was 20% below the same period in 2016.

Private-sector infrastructure funds show a similar trend.

The downward trend in both public and private investment suggests the administration’s lack of action has had an additional cooling effect.

Unless the federal government leads the way, there is unlikely to be much new activity.

How London threw £46m into the Thames

An expensive project becomes an expensive mistake.

The bridge’s financial foundations were hardly solid, either. Its business plan relied on rosy assumptions about the revenue that the project would generate. It hoped to hire out the bridge for £60,000 an evening, when people can use venues such as the National Portrait Gallery for less than half that amount.

In 2013 the projected capital cost was £60m-100m. In 2013-14 the Department for Transport and Transport for London (TfL), the city’s road and rail authority, committed £30m of funding each. Yet since then expenses have spiralled. The latest estimate put the capital cost at over £200m. The task of raising the extra cash fell to the Garden Bridge Trust, a charity, which tried to persuade wealthy folk to make big donations.

But donors were less forthcoming than hoped. With the project facing a shortfall of £70m, Mr Khan could have been asked to finance a bigger proportion of the bridge’s construction. Under an agreement with the previous mayor, Boris Johnson, the mayor’s office also faced ultimate liability for the estimated £3m in annual running costs. With costs rising and other sources of revenue drying up, Mr Khan refused to provide such guarantees.

The Garden Bridge Trust and TfL have already spent £37m of public money on the project and even now may have to spend another £9m, despite the fact that construction never got close to starting. All infrastructure projects have upfront costs. Yet the trust has allocated around a quarter of its total capital budget in this way, which is unusually high, says Christian Wolmar, a transport expert.

Last October Margaret Hodge, a Labour MP, was commissioned by Mr Khan to investigate the tendering process. Her report suggests that Heatherwick Studio, which won a contract to design the bridge, had little experience in the art. Its initial proposal looked pricey beside others. According to Ms Hodge’s report, Heatherwick Studio will earn £2.7m from the abandoned project. Meanwhile in July 2013 Arup, an engineering firm, was employed as a consultant. After the company had submitted its bid, TfL asked the firm to revise it. No other bidder received such treatment. TfL’s own review of the tender said that it “did not follow TfL procurement policy and procedure”. Arup, whose work on the bridge included selecting “the warm-coloured alloy for its attractive finish”, has earned at least £8.4m from the affair.

It is hard to account for the remaining £35m or so of public funds. The Garden Bridge Trust’s published accounts are not detailed and, like most charities, it is exempt from freedom-of-information laws. Lawyers’ fees have undoubtedly eaten up a chunk. The trust says that money was spent on “procuring and placing orders for materials”, including steel. This spending is surprising, since no agreement was finalised to build on what was to be the bridge’s landing site on the South Bank. One architect suspects that sitting in a Thameside warehouse are millions of pounds’ worth of prefabricated parts for the bridge.

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Batteries to change the face of energy

No need for subsidies. Higher volumes and better chemistry are causing costs to plummet.

About three-quarters of the way along one of the snaking production lines in Nissan’s Sunderland plant, a worker bolts fuel tanks into the chassis of countless Qashqais—the “urban crossover” SUVs which are the bulk of the factory’s output. But every so often something else passes along the line: an electric vehicle called a Leaf. The fuel-tank bolter changes his rhythm to add a set of lithium-ion battery packs to the floor of the Leaf. His movements are so well choreographed with the swishing robotic arms around him that he makes the shift from the internal combustion engine to the battery-charged electric vehicle look almost seamless.

Until recently, it was a transition that many found unthinkable. The internal combustion engine has been the main way of powering vehicles on land and at sea for most of the past century. That is quite the head start. Though Leafs are the world’s biggest-selling electric vehicle, the Sunderland plant, Britain’s biggest car factory, only made 17,500 of them last year. It made 310,000 Qashqais. And the Qashqais, unlike the Leafs, were profitable. Nissan has so far lost money on every Leaf it has made.

There were 750,000 electric vehicles sold worldwide last year, less than 1% of the new-car market. In 2011 Carlos Ghosn, boss of the Renault-Nissan alliance, suggested that his two companies alone would be selling twice that number by 2016, one of many boosterish predictions that have proved well wide of the mark. But if the timing of their take-off has proved uncertain, the belief that electric vehicles are going to be a big business very soon is ever more widely held. Mass-market vehicles with driving ranges close to that offered by a full tank of petrol, such as Tesla’s Model 3 and GM’s Chevrolet Bolt, have recently hit the market; a revamped Leaf will be unveiled in September. The ability to make such cars on the same production lines as fossil-fuel burners, as in Sunderland, means that they can spread more easily through the industry as production ramps up.

All we need to live today

Many forecasters reckon that the lifetime costs of owning and driving an electric car will be comparable to those for a fuel burner within a few years, leading sales of the electric cars to soar in the 2020s and to claim the majority sometime during the 2030s. China, which accounted for roughly half the electric vehicles sold last year, wants to see 2m electric and plug-in hybrid cars on its roads by 2020, and 7m within a decade. Bloomberg New Energy Finance (BNEF), a consultancy, notes that forecasts from oil companies have a lot more electric vehicles in them than they did a few years ago; OPEC now expects 266m such vehicles to be on the street by 2040 (see chart 1). Britain and France have both said that, by that time, new cars completely reliant on internal combustion engines will be illegal.

That this is even conceivable is a tribute to the remarkable expansion of the lithium-ion battery business—and to the belief that it is set to get much bigger. The first such batteries went on sale just 26 years ago, in Sony’s CCD-TR1 camcorder. The product was a hit: the batteries even more so, spreading to computers, phones, cordless power tools, e-cigarettes and beyond. The more gadgets the world has become hooked on, the more lithium-ion batteries it has needed. Last year consumer products accounted for the production of lithium-ion batteries with a total storage capacity of about 45 gigawatt-hours (GWh). To put that in context, if all those batteries were charged up they could provide Britain, which uses on average about 34GW of electricity, with about an hour and 20 minutes of juice.

In the same year production of lithium-ion batteries for electric vehicles reached just over half that capacity: 25GWh. But Sam Jaffe of Cairn ERA, a battery consultancy, expects demand for vehicle batteries to overtake that from consumer electronics as early as next year, marking a pivotal moment for the industry. Huge expansion is under way. The top five manufacturers—Japan’s Panasonic, South Korea’s LG Chem and Samsung SDI, and China’s BYD and CATL—are ramping up capital expenditure with a view to almost tripling capacity by 2020 (see chart 2). The vast $5bn gigafactory Tesla is building with Panasonic in Nevada is thought to already be producing about 4GWh a year. Tesla says it will produce 35GWh in 2018. Just four years ago, that would have been enough for all applications across the whole world.

The gigafactory is not just for cars. Hearing of electricity blackouts in South Australia, Elon Musk, Tesla’s founder, tweeted to the state’s premier in March that by the end of the year Tesla could provide enough battery storage to make sure that the grid never fell over again. At the gigafactory they are now hard at work cramming 129 megawatt-hours (MWh) of capacity into a facility designed to keep their boss’s word. When installed on the other side of the Pacific, it will be the biggest such grid-based system in the world; but many more are on the way. Industrial-scale lithium-ion battery packs—essentially lots of the battery packs used in cars wired together, their chemistry and electronics tweaked to support quicker charging and discharging—are increasingly popular with grid operators looking for ways to smooth out the effects of intermittent power supplies such as solar and wind. Smaller battery packs are being bought by consumers who want independence from the grid—or, indeed, to store the electricity they produce for themselves so that it can be sold into the grid at the most lucrative time of day or night. Batteries are becoming an integral part of the low-emissions future.

The chance to change

The fundamental operating principles of the lithium-ion battery are easily understood. When the battery is charging an electric potential pulls lithium ions into the recesses of a graphite-based electrode; when it is in use these ions migrate back through a liquid electrolyte to a much more complex electrode made of compounds containing lithium and other metals—the cathode. The fundamental operating principles of the battery business, on the other hand, are considerably more opaque, thanks to an almost paranoid taste for secrecy among suppliers and the baffling economics of the Asian conglomerates that lead the market.

All the big producers are adding capacity in part because it drives down unit costs, as the past few years have shown (see chart 3). Lithium-ion cells (the basic components of batteries) cost over $1,000 a kilowatt-hour (kWh) in 2010; last year they were in the $130-200 range. GM says it is paying $145 per kWh to LG Chem for the cells that make up the 60kWh battery for the Bolt (the pack, thanks to labour, materials and electronics, costs more than the sum of its cells). Tesla says that cells for the Model 3 are cheaper. Lower costs are not the only improvements; large amounts of R&D investment have led to better power density (more storage per kilogram) and better durability (more discharge-then-recharge cycles). The Bolt comes with a battery warranty of eight years.

But getting prices down this way has not just produced cheaper, better batteries. It has also resulted in significant overcapacity. Cairn ERA estimates that last year the manufacturing capacity for lithium-ion batteries exceeded demand by about a third. Both it and BNEF say that the battery manufacturers are either losing money or making only wafer-thin profits on every electric-vehicle battery they produce. Despite the seeming glut, though, they all have plans to expand, in part to drive prices even lower. Mr Jaffe explains their thinking as that of the “traditional Asian conglomerate model”: sacrificing margins for market share. This may be a sound strategy given the ever-greater hopes for electric vehicles in the near future. But at the moment it is also one that looks rather unnerving. Although Mr Jaffe believes that increased demand for both electric vehicles and stationary storage will justify the rush to expand, he accepts that, for now, “It feels like a gold rush—but there’s no gold.”

There are, though, other valuable metals in the picture. Making more batteries means acquiring more lithium, as well as various other metals, including cobalt, for the cathodes. These make up about 60% of the cost of a cell. Being assured of a constant supply of them is as much a strategic consideration for battery-makers as mastering electrochemistry. Since 2015 lithium prices have quadrupled, says Simon Moores of Benchmark Mineral Intelligence, a consultancy. Cobalt’s price has more than doubled over the same period; prices of chemicals containing nickel, also used in cathodes, are rising too.

New supplies of lithium should not be too hard to find; there are thought to be at least 210m tonnes of the stuff, says Mr Moores, compared with current annual production of 180,000 tonnes. New fields are being opened up. In July SQM of Chile, the world’s biggest lithium producer, said it would invest $110m in a lithium joint venture in Western Australia. Cobalt is more tricky. Not only are supplies scarcer, but a lot comes from the Democratic Republic of Congo. This raises both ethical problems (production can rely on child labour) and business ones (no one wants to depend on warlords for a vital resource). LG Chem has said it is trying to reduce the cobalt component of its battery cells, while continuing to improve their performance. Further down the road, recycling the metals from old batteries could make the industry much more sustainable.

One of the reasons manufacturers are confidently piling on capacity despite costlier raw materials is that, at the moment, little else can compete with their wares. Other battery technologies that sound as if, in principle, they might have advantages are often touted—but none of them enjoys the decades of development that have turned lithium-ion devices from an intriguing idea into a dominant technology. This work has generated a huge amount of knowledge about the fine details of manufacturability, the choice of electrolytes and the ever more sophisticated nanotechnology of the metallic cathodes.

Kenan Sahin, who heads CAMX Power, an American company that supplies materials for cathodes, says the lithium-ion battery’s cost and weight, its ability to charge and discharge repeatedly, its durability and its safety have all been achieved through an endless process of fine-tuning, rather than eureka moments. He likens battery chemistry to drug discovery in the pharmaceutical industry. “It’s really difficult. Whatever you have needs to work at large scale and the side-effects have to be acceptable,” he says. This is all hard for a would-be usurper to emulate. For the foreseeable future, ever-improving lithium-ion technology—perhaps with new solid electrolytes—will make the running, benefiting from yet more refinements the more applications it supports.

Until now, the mainstay has been a cylindrical cell called the 18650, which looks like a rifle shell. It is 65 millimetres long, 18mm in diameter and has an energy density of perhaps 250 watt-hours per kilogram. (The energy density of petrol, for comparison, is about 50 times greater; but the cell can store that much energy hundreds or thousands of times.) Tesla and Panasonic have now developed the 2170, a bit longer and wider; Mr Musk says it will be the most energy-dense battery on the market. The company says that the cost of driving a Model 3, released in late July to rave reviews, will be half that of any of its previous vehicles. At the car’s launch Mr Musk seemed a bit overawed at the prospect of producing 500,000 such vehicles next year: “Welcome to production hell,” he told the assembled workers.

On August 7th Tesla announced plans to sell bonds worth $1.5bn to support its expansion, giving a badly needed breather to the equity market, where it usually raises cash (and where its value has risen by two-thirds over the past year). The company has said that it has 455,000 pre-orders for the Model 3, which, if taken up, would generate enough cashflow by year-end to start shoring up the company’s finances. If it all goes to plan, Mr Musk hopes to see the gigafactory become the largest building in the world, cranking out 100GWh a year—and to be joined by further gigafactories elsewhere; the next would probably be in China.

All this presupposes that electric vehicles really are poised for take-off. There is no doubt that they are getting better and cheaper. But there are other constraints on their use, most notably charging. In Britain 43% of car owners do not have access to off-street parking and thus would not be able to charge cars at home. Nor are domestic supplies always up to the strains of, say, an 11kW charger; using the kettle or immersion heater during the six hours it would take to charge up a 90kWh battery could blow the fuses. The answer will be fast-charging stations, possibly like petrol stations; some car companies are beginning to build them as a way to assuage the “range anxiety” that turns some drivers off electric vehicles. Whether such facilities can expand fast enough to allow the industry’s expansive ambitions to be fulfilled remains an open question.

This uncertainty about the speed at which electric-vehicle usage will grow is one of the things that makes stationary storage an attractive alternative market for the battery-makers. Installations such as the one recently built in a nondescript lot on the outskirts of San Diego, California, by San Diego Gas & Electric (SDGE) have none of the glamour of glistening new models hitting showrooms. It is a 384,000-cell car battery impersonating a trailer park: the dullest Transformer ever. But its ordinariness is part of its beauty, says Caroline Winn, chief operating officer of SDGE; the utility uses it to offer power at times of peak demand. Modular construction meant the 120MWh facility—just a touch smaller than the one Tesla has promised South Australia—was ready to go only eight months after the start of the project. It runs so quietly it is hardly audible. Building a gas turbine to do the same job would have been cheaper but would have taken years, in the unlikely event that local residents had given it the go-ahead in the first place. The battery facility “is a lot prettier than a gas turbine,” Ms Winn says.

The final source of energy

For Tesla and other big battery-makers grid-storage projects are the most attractive part of the electricity market; they offer contracts that use up otherwise surplus capacity in satisfyingly large job lots. But there is also demand for batteries to go “behind the meter”. Tesla serves this market with its Powerwall domestic battery pack, designed to complement the solar panels and solar tiles it offers. Nissan, too, is looking at behind-the-meter applications. It is working with Eaton, an American power-management company, to put “second-life”, or partially used, Leaf batteries into packs that can provide businesses and factories with back-up power, thus replacing polluting diesel generators. The first big customer is the Amsterdam Arena, home to AFC Ajax, a football club.

Such systems do not necessarily compete on price; but governments are providing various incentives for them. In May the New York State regulator gave Con Edison, a utility, the right to allow business customers to install batteries in Brooklyn and Queens to export electricity to the grid. New York, with a rickety grid that dates back over a century to the days of George Westinghouse and Nikola Tesla, is struggling to integrate more renewable energy into its supplies, and storage offers it a new way to manage peak power demand. Jason Doling, a state energy official, says the programme should be ideal for high-rise blocks; powering lifts from the battery in mornings and evenings when electricity prices are highest would be a boon.

The New York fire department remains concerned that lithium-ion batteries in buildings pose a fire hazard, however. When they are being installed, it keeps its engines on standby. As the externally combusting fiasco of Samsung’s Galaxy Note 7 smartphones reminded the world last year, lithium-ion batteries can, if badly or over-ambitiously designed, short circuit in incendiary ways. In general, however, new materials and ceramic coatings for electrodes have made the batteries for cars very safe.

Setting aside concerns about combustion, companies that install batteries for behind-the-meter storage, and indeed for grid storage, say they are hampered by outdated regulation and by insurance problems. This limits the funding available to them, according to Anil Srivastava, who runs Leclanché, a Swiss battery-producer. They also need to find ways to make stationary storage pay. Sometimes, as in San Diego, it is pretty much the only solution to the demands of a regulator: the California Public Utilities Commission was worried about blackouts in Los Angeles in the wake of a leak at the Aliso Canyon gas-storage facility in 2015. When price is more of an object, the batteries need to find more than one service to provide, a procedure known as “revenue stacking”. For example, a system might be designed to offer power to the grid for short-term frequency regulation as well as providing a way of dealing with peak demand.

It sounds complicated. But finding more than one way to sell the same thing is second nature in the battery business, as it fine-tunes its wares for every market and every scale. And though today’s exuberance may look a little scary, in the long run that ability looks likely to see the industry do very nicely indeed.

Reloadable, 3D printed tread band from Michelin

The reloadable tread band would be applied by going to a service station equipped with modular print heads and in less time than an oil change, the client will reprint their tires and drive away.

Play Michelin Video

Design, Build and Finance Kansas City International Airport

KCI Partnership (AECOM) submits the Financial Proposal to Design, Build and Finance a new airport terminal and parking garage at Kansas City International Airport.

The core members of KCI Partnership lead the nation in designing, building and financing airport projects:
+ AECOM is the #1 aviation firm in North America per Engineering News-Record rankings.
+ AECOM Hunt & Turner Construction combined are the #1 airport contractors in North America based on combined U.S. revenues per Engineering News-Record rankings. Since 2001 we have completed or are currently completing construction at 44 of the top 50 airports in North America.
+ Oaktree, AECOM Capital, and Citigroup collectively have financed billions of dollars of US infrastructure projects – including airports. Oaktree is the only firm to complete the privatization of a medium-hub U.S. airport. AECOM Capital has invested more than $200 million in 17 projects with an enterprise value of $4.5 billion. Citigroup is the #1 airport debt underwriter in North America.

The delivery of a fully compliant Terminal Concept NT-A, for a total annual payment of $69.8 million, including debt service and required equity return, fixed over the 30-year term. This compares very favorably, to the RFQ/P Maximum Annual Payment of $85.2 million, representing savings of $15.4 million per year, or 18.1%. This results in savings for the City/Airport that total $462 million over the 30-year term.

See KCI Partnership (AECOM) financial proposal document: kcipartnership

Article originally published by Kansas City Star

The death of the internal combustion engine

It had a good run, but the end is in sight for the machine that changed the world.

“HUMAN inventiveness…has still not found a mechanical process to replace horses as the propulsion for vehicles,” lamented Le Petit Journal, a French newspaper, in December 1893.

Over the next century it would go on to power industry and change the world. In Paris in 1894 not a single electric car made it to the starting line, partly because they needed battery-replacement stations every 30 km or so. Today’s electric cars, powered by lithium-ion batteries, can do much better. The Chevy Bolt has a range of 383 km; Tesla fans recently drove a Model S more than 1,000 km on a single charge.

Last month Britain joined a lengthening list of electric-only countries, saying that all new cars must be zero-emission by 2050. Compared with existing vehicles, electric cars are much simpler and have fewer parts; they are more like computers on wheels. That means they need fewer people to assemble them and fewer subsidiary systems from specialist suppliers. Car-workers at factories that do not make electric cars are worried that they could be for the chop. With less to go wrong, the market for maintenance and spare parts will shrink.

Electric propulsion, along with ride-hailing and self-driving technology, could mean that ownership is largely replaced by “transport as a service”, in which fleets of cars offer rides on demand. Lots of shared, self-driving electric cars would let cities replace car parks (up to 24% of the area in some places) with new housing, and let people commute from far away as they sleep—sub-urbanization in reverse.

Charging car batteries from central power stations is more efficient than burning fuel in separate engines. Existing electric cars reduce carbon emissions by 54% compared with petrol-powered ones, That figure will rise as electric cars become more efficient and grid-generation becomes greener. Local air pollution will fall, too.

And then there is oil. Roughly two-thirds of oil consumption in America is on the roads. The oil industry is divided about when to expect peak demand; Royal Dutch Shell says that it could be little more than a decade away. The prospect will weigh on prices long before then. Because nobody wants to be left with useless oil in the ground, there will be a dearth of new investment, especially in new, high-cost areas such as the Arctic.

Meanwhile, a scramble for lithium is under way. The price of lithium carbonate has risen from $4,000 a tonne in 2011 to more than $14,000. Demand for cobalt and rare-earth elements for electric motors is also soaring. Lithium is used not just to power cars: utilities want giant batteries to store energy when demand is slack and release it as it peaks. Will all this make lithium-rich Chile the new Saudi Arabia? Not exactly, because electric cars do not consume it; old lithium-ion batteries from cars can be reused in power grids, and then recycled.

As the switch to electric cars reverses the trend in the rich world towards falling electricity consumption, policymakers will need to help, by ensuring that there is enough generating capacity. They may need to be the midwives to new rules and standards for public recharging stations, and the recycling of batteries, rare-earth motors and other components in “urban mines”. And they will have to cope with the turmoil as old factory jobs disappear.

Driverless electric cars in the 21st century are likely to improve the world in profound and unexpected ways, just as vehicles powered by internal combustion engines did in the 20th. But it will be a bumpy road. Buckle up.

World’s first climate disclosure lawsuit

Pressure is mounting on the private sector to consider climate change risk in annual reports after the world’s first climate disclosure lawsuit was lodged today (8 August).

Lawyers from Environmental Justice Australia (EJA) have filed proceedings on behalf of two shareholders against one of Australia’s top four banks, the Commonwealth Bank (CommBank), for failing to adequately disclose climate risk in the lender’s 2016 annual report.

This oversight means that the bank failed to provide a true and fair view of its financial position and performance, as required by the Corporations Act, the claim alleges. It also seeks an injunction to prevent the bank making the same omissions in future annual reports, and raises concerns about reputations risks to the bank regarding funding required for a proposed coal mine in Queensland.

We believe the matter is of significant public interest,” Environmental Justice Australia lawyer David Barnden said. “It should set an important precedent that will guide other companies on disclosing climate change risks.

New trend

The announcement comes amid mounting pressure for the business community to treat climate change risks as a serious financial problem. Experts suggest that the value at risk, as a result of climate change, to global manageable assets ranges from $4.2trn to $43trn between now and the end of the century. Investors already fear that the next financial crisis will be climate-related.

Earlier this summer, the G2O’s Task Force on Climate-related Financial Disclosures (TCFD) recommended that firms should disclose climate information as part of mainstream financial statements. A host of major companies, including eleven of the world’s top banks, such Barclays and Santander, have since committed to adopt key elements of the TCFD’s new framework.

Commenting on today’s announcement, UK-based environmental law firm ClientEarth said that the case against the CommBank could signal a new trend in climate risk litigation.

With this case, the risk of litigation over poor climate disclosure has become a clear reality for companies,” ClientEarth lawyer Daniel Wiseman said. “It’s unsurprising that investors are demanding companies properly disclose climate change risks – particularly where these companies have clear exposure to the fossil fuel sector. Shareholders will not be content to stand by silently without reassurance that climate risk is being adequately managed.

“Many other countries already have similar disclosure requirements to Australia. In the UK, the Bank of England and other financial regulators have now made clear that financial institutions like banks and insurers should be considering climate risk. To limit exposure to this sort of litigation, business leaders need to get acquainted, and quickly, with their legal duties and with emerging industry standards, like the TCFD recommendations.

Around 60% of the world’s biggest investors are taking steps to protect their portfolios. HSBC has launched a $1bn green bond portfolio aimed at the renewable energy sector, while Goldman Sachs announced it will leverage $150bn into clean energy financing and investments by 2025.

Why the falling oil price isn’t hurting markets

Last time, the fear was that demand was falling. This time, it is excess supply.

INVESTORS could easily get confused about the impact of oil-price rises on the economy and markets. The story seemed to be clear: high prices bad, low prices good. The two great oil shocks in the 1970s were unambiguously bad for Western economies—ushering in stagflation and transferring spending power to the oil-producing countries. In turn, low oil prices in the late 1990s coincided with the dotcom boom.

But when oil fell in the second half of 2015, that was seen as a bearish sign for the global economy and markets. Now oil is falling again, with both Brent crude and West Texas intermediate dropping more than 20%. But the decline has barely made a dent in the upward march of the S&P 500 index.

The key to the differing market reaction is why the oil price is falling. Back in 2015, the fear was falling demand. Investors worried in particular that the Chinese economy was slowing. If that assumption had been right, demand for much more than oil would have suffered. The equity markets did not rebound property until the spring of 2016.

This time round, the issue seems to be excess supply. OPEC, a cartel of oil-producing countries, has been attempting to cut production. But its output increased in May, thanks extra activity in Libya, Nigeria and Iraq. Meanwhile, the attempts of the Saudis to cripple America’s fracking production seem to have failed; figures from Baker Hughes show that the number of American oil rigs has increased for 22 consecutive weeks. American oil producers, which had financial problems in 2015, seem to have reorganised themselves and can cope with a lower oil price. The oil price slump in 2015 caused a sell-off in bonds issued by those American producers. This time, says Jim Reid of Deutsche Bank, the spreads (excess interest rate) on such bonds have risen to 531 basis points (bp), the widest for the year; but that compares with 1932bp in 2016.

If cheap oil is caused by excess supply, it is the equivalent of a tax cut for Western consumers; that ought to be good for equities. It also means lower headline inflation, which may explain why Treasury bond yields have been drifting down; the ten-year yield is 2.15%.

It seems like a big “but” is needed and here it comes. Any price is the balance between supply and demand and it is hard to tell which is the dominant force. Other commodity prices have also been weak; the Bloomberg commodity index is at a 12-month low. The Chinese authorities are tightening monetary policy again; the Federal Reserve is pushing up interest rates; hopes of a fiscal stimulus from President Donald Trump may have to wait until 2018. Low bond yields (and a flattening yield curve) are often seen as indicating a weaker economy. Markets could yet decide a weak oil price is a bad sign after all.

No policymaker can accurately predict the future

Or how America’s ten-year forecast was off by $11.7 trillion.

In February of 2001, Alan Greenspan, then still the chairman of the Federal Reserve, and still called the “Maestro”, testified to the Senate Budget Committee. The committee wanted to get started on the tax cuts George W. Bush had promised during his campaign. Mr Greenspan gave them his qualified blessing, with an argument that now sounds incredible: he was worried that America would pay down its debt too soon.

That week the Clinton administration’s Office of Management and Budget had released its final ten-year budget projections. Firms had just completed several years of capital investments in desktop computers, and workers had become more productive. This had increased corporate revenue, and consequently taxes paid to the government. A long bull market in stocks meant that the Treasury was taking in more in capital gains taxes, too. “The experience of the last five to seven years,” said Mr Greenspan, “has truly been without precedent.” The Clinton administration had apparently left Washington with a gift. The annual budget surplus by 2011 would be $889 billion, for a cumulative gain over the decade of $5.6 trillion–exactly the size of the federal debt at the end of 2000.

And so the Fed chairman told Congress he was worried that the federal government might completely pay down its debt, and perhaps even start saving, investing its wealth in private assets. This could distort the efficient allocation of capital, worried Mr Greenspan. Preventing the government from completely squaring its accounts, by cutting taxes, could be a good idea. He cautioned that those cuts should be made contingent on the appearance of actual surplus, but reporters at the time took away a less nuanced message: Alan Greenspan approves of the Bush tax plan.

Then several other things happened. The bubble in technology stocks evaporated, and with the shallow recession that followed, so did some of the forecast tax revenue. Terrorists flew planes into the Pentagon and the World Trade Center, and taxpayers had to fund two wars. Later in the decade, a huge financial crisis and deep recession reduced tax revenues, raised payments for things like unemployment insurance, and scared Congress into two separate stimulus bills. The $5.6 trillion cumulative savings that the Office of Management and Budget predicted in 2001 turned into a $6.1 trillion cumulative deficit. America’s ten-year forecast was off by $11.7 trillion.

Alan Greenspan, one of the great economists of his or any generation, did not see these things coming. We can forgive him for that; few other people did, either. The problem is not that he was wrong, but rather that we have no business thinking we know what’s going to happen over the next ten years.

As members of Congress and the administration start to talk about taxes again, they reckon their sums in ten-year increments. “This will save $400 billion” means “At the end of ten years from now, we will have saved $400 billion.” Two common tricks cavort under this blanket. The first is when the most painful changes–the ones that save the most money–don’t take hold until year seven or even year nine. The second is that today’s Congress can direct future lawmakers to figure out which painful changes to make to meet the ten-year target. Both tricks ultimately fail for the same reason: no Congress likes to make painful changes, and tomorrow’s politicians are no more virtuous than today’s.

But suppose Congress is doing its job honestly, rather than deferring hard choices. Ten-year budget projections are still misleading, for a more fundamental reason: we just aren’t that good at predicting the future. Forecasts often fail catastrophically in the face of some seismic event such as financial collapse or the Euro crisis. There is routine bias, too. A 2011 study by Jeffrey Frankel in the Oxford Review of Economic Policy found, unsurprisingly, that governments tend to be too optimistic.

Ten-year budgeting isn’t universal. The European Union directs its member states to predict budget trends over three years, and that is what most of them do. Europe has hardly been a paragon of conservative prediction since 2000, but the limited three-year horizon does admit some humility. Even a perfect model would omit what economists call “exogenous shocks”. This is a fancy way of saying “stuff we couldn’t possibly have seen coming”. Things like 19 terrorists on four planes. Or the almost total collapse of capital markets.

So during the next six months of fighting over taxes, every time you hear a member of Congress say what she’ll save over the next ten years, wonder what she’ll be willing to sign for next year. Even better, demand that Congress finally heed a bit of overlooked advice that Alan Greenspan offered back in 2001.

As for tax policy over the longer run, most economists believe that it should be directed at setting rates at the levels required to meet spending commitments, while doing so in a manner that minimizes distortions, increases efficiency, and enhances incentives for saving, investment, and work.

Simple advice. Hard to pull off.

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