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Business Times
3 days ago
- Climate
- Business Times
Highways baking at 70 deg C signal a red-hot summer from China to the US
[BOSTON/LONDON/HONG KONG] In northern China, road surfaces have soared to 70 deg C. In California's Central Valley, temperatures are reaching into the triple digits Fahrenheit. Across much of Spain, the mercury has risen so high that it's prompting warnings for tourists. Weeks before the official start of the Northern Hemisphere's summer, signs are emerging that the coming months will be blistering in North America, Europe and Asia. There's even a chance that the season could shatter global high-temperature records, said Daniel Swain, a climatologist at the University of California, Los Angeles. The scorching conditions threaten to tax power grids, wilt crops and send energy prices soaring across three continents. Hot, dry weather is also elevating the risk of wildfires, with blazes already erupting in Alberta, the epicentre of Canada's oil industry. The human and economic consequences are dire: Extreme heat is expected to inflict about US$200 billion in annual losses in the US alone by 2030, a number that will more than double by 2050, according to one estimate. All three northern continents face sweltering temperatures fuelled by climate change – particularly the western and central US and Canada, as well as western and northern Europe, Swain said. Because a warmer atmosphere holds more moisture, these regions will also see areas of intense rain and flooding, he said. 'I'd expect to see further instances of extreme to record-shattering downpours and flood events in regions prone to heavy precipitation during the warm season,' Swain said. In the Atlantic, the heat is raising ocean temperatures, boosting the odds of an unusually active hurricane season. The absence of El Nino, a warming of the equatorial Pacific that can cause storm-wrecking wind conditions across the Atlantic, also means more hurricanes and tropical storms may develop and grow in the Atlantic and Caribbean, including oil- and gas-producing areas along the US Gulf Coast. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Due to kinks in the summer jet stream, there is a rising chance of derechos – wide arcs of severe thunderstorms that can travel hundreds of miles and cause billions of US dollars in damage – across the Midwest and northern Plains, said Paul Pastelok, lead US long-range forecaster at AccuWeather. This turmoil across the continent may also leave the Gulf Coast, particularly Texas, vulnerable to more hurricane strikes. The sizzling weather will increase energy demand. About 89 million people across three grids spanning parts of the central US are at elevated risk of power supply shortfalls this summer, according to the North American Electric Reliability. Power prices across the grid stretching from Chicago to the Mid-Atlantic are likely to rise with sustained heat because of low coal stockpiles, Bank of America analysts led by Francisco Blanch wrote in a note to clients. New England power is also vulnerable to spikes, the analysts said. US natural gas price gains have been muted so far despite the prospect of hot weather and rising exports of the power plant fuel to Europe and Asia. But the chances of gas reaching US$4.60 per million British thermal units this year – a jump of more than 30 per cent from current levels – are rising as the heat could limit stockpile increases, leaving the market primed for a rally before winter heating demand kicks in, according to analysts with RBC Capital markets led by Christopher Louney. Extreme heat also threatens to wither crops and shrivel rivers, raising food prices as the cost of goods and services remains elevated. Drought has been intensifying in areas of the US where soy, corn or wheat is grown. If the parched conditions persist, water levels on the Mississippi River could drop, roiling barge traffic that's crucial to transporting crops across the country. Dry Europe Across Europe, the world's fastest-warming continent, little rainfall and early drying has set the stage for intense heat waves, droughts and dangerous wildfire conditions, commercial meteorologists and government forecasters say. Forecast models favour high-pressure weather patterns emerging and enduring this summer, similar to ones that plagued the continent during the first few months of the year. Those patterns suppressed wind speeds and cloud cover, leading to low wind generation and record solar power in Europe – a scenario likely to repeat this summer, according to Atmospheric G2. The high pressure is also likely to block North Atlantic ocean moisture, boosting the risk of heat waves and worsening drought, said Andrew Pedrini, a meteorologist with the weather analytics firm. 'I personally fear that we will hear a lot about extremes this summer,' he said. In Portugal and Spain last week, one of the hottest air masses in more than three decades pushed in from Africa, sending temperatures above 38 deg C. The heat comes after an Apr 28 blackout left the Iberian Peninsula without electricity for hours, hitting public transport, telecommunications systems and other services. With high pressure isolating regions from the cooling effect of moist westerly winds, temperatures in central and southern Europe could climb especially high. While that pattern is expected to reduce the chances of rain, rising heat could supercharge storms that do manage to form with torrential rain and damaging hail. Though water levels on the Rhine River have improved after rains in recent weeks, a recurrence of drought could upend a crucial trade route and send barge rates soaring. Long-term forecast models show conditions could support heavy rain in western Norway and the northern UK from June to August, according to data from Europe's Copernicus satellite programme. Asia outlook In Asia, Japan will likely have a warmer-than-normal summer, according to the Japan Meteorological Agency. South-east Asia will also be hotter than average, the Asean Specialised Meteorological Centre said. China, with the exception of some far northern areas, is expected to bake this June as well, the China Meteorological Administration said. Drought in the northern part of the country has hit the wheat crop during a key growth period, threatening output of a staple food grain just as Beijing remains entangled in a trade war with the US, a major agricultural products supplier. Though rains are forecast in the region, providing some relief to the parched farm fields, the quick swing from dry to wet raises the risk of floods, landslides and crop damage. Already, intense heat in parts of China has sent asphalt temperatures surging. The National Energy Administration expects peak electricity demand to be about 100 gigawatts higher this summer than last year, the equivalent of needing to turn on all the power plants in the UK at once. Across the Northern Hemisphere, the extreme heat is a reflection of how much warmer the Earth is compared with a few decades ago, Swain said. Since 1959, Europe in particular, but parts of the Pacific Northwest, northeastern Canada, as well as parts of Mexico, Africa and the Middle East have seen a marked increase in summer heat. 'An increase in heat extremes is the most obvious symptom of climate change,' said Karen McKinnon, a professor who studies the statistics behind climate change at UCLA. 'Even seemingly small changes in temperatures of a few degrees can make summers feel substantially more extreme.' BLOOMBERG
Business Times
3 days ago
- Business
- Business Times
Solar, wind energy could power a third of Asean data centres in 2030: report
[SINGAPORE] Solar and wind energy could power up to a third of data centres in South-east Asia in 2030 via power grids and without the need for batteries, said a report by energy think-tank Ember. 'This indicates that high battery costs are not an immediate barrier to adopting these electricity sources for data centres,' said Ember, which made the forecast based on estimates of power consumption and solar and wind capacity. South-east Asia is emerging as a data centre hub, but the International Energy Agency has forecast that regional data centres' electricity usage will nearly double by 2030, from 2024 levels. The six major regional economies – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – have 2.9 gigawatts (GW) of data centre capacity in the pipeline, Ember noted in the report. It expects data centres to account for between 2 per cent and 30 per cent of national electricity demand by 2030 in each of these countries. Malaysia is at the upper end of the range. The country's demand for data centre electricity is projected to rise from 9 Terawatt-hour (TWh) in 2024 to 68 TWh in 2030 – accounting for 30 per cent of national power consumption and exceeding Singapore's total 2023 electricity use. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up As at February 2025, Malaysia hosts 507 megawatts (MW) of operational data centre capacity, mostly in Johor. This is expected to grow to 1.96 GW of installed capacity in the coming years, Ember noted. The think tank forecasts that the resulting emissions from Malaysia's data centres could hit 40 million tonnes of carbon dioxide equivalent (MtCO2e) by 2030, the highest in the region. This is especially since the country's power supply is dominated by coal and gas. Indonesia's data centre emissions are expected to quadruple in the same period, from 6.7 TWh in 2024 to 26 TWh by 2030. The country hosts 307 MW of operating data centre capacity as at February 2025, primarily in greater Jakarta, but also increasingly in Batam. Meanwhile, data centre emissions from the Philippines are expected to rise by 14 times, from 0.8 MtCO2e in 2024 to 10.5 MtCO2e by 2030. This comes as data centre capacity is set to hit 300 MW by 2025. Globally, the information, communication and technology sector is estimated to account for up to 2.1 to 3.9 per cent of greenhouse gas emissions, comparable to Indonesia's 3.6 per cent share of global emissions in 2023, Ember noted. This figure is set to rise with growing demand for data storage, processing and generative artificial intelligence. Solar, wind opportunity Ember believes that South-east Asia can power data centres without raising emissions, if there is the right policy support, market access and infrastructure planning. It estimated that between US$45 billion and US$75 billion will need to be invested in solar and wind capacity by 2030 to power the region's data centres sustainably. Clean energy is already gaining traction in the region. For instance, Malaysia is developing a 1,000 MW solar farm to power the Johor-Singapore special economic zone. 'Prioritising solar and wind power… would help ensure data centres drive sustainable digital growth rather than deepen reliance on fossil fuels,' said Shabrina Nadhila, Ember's Asia energy analyst. Ember also called for options for smaller data centre operators to procure clean energy. This could include virtual power purchase agreements (PPAs) and green tariffs, where utilities companies offer electricity from renewable sources. 'Expanding these options can improve access to and affordability of solar and wind, while broader programs and targeted incentives can accelerate storage adoption alongside intermittent renewables,' said Ember. Energy efficiency Beyond renewable energy, it will also be crucial for data centres to implement energy efficiency measures from the design phase, said Ember. For instance, optimising air flow in the data centre lowers electricity requirements to run fans for cooling. Immersion cooling can also reduce power consumption by 40 per cent compared to traditional cooling methods, it noted. The think tank highlighted Singapore for incentivising the adoption of green data centre technologies. It called for more targeted incentives in South-east Asia, as well as national frameworks to guide sustainable data centre development.
Business Times
25-05-2025
- Business
- Business Times
ESG-aligned indices in Asean outperform conventional benchmarks: CGS International
[SINGAPORE] Stock market indices that include South-east Asian companies screened for their environmental, social and governance (ESG) practices tend to outperform their conventional benchmarks, said a recent report by financial services provider CGS International. This indicates that the premium Asean companies can get from strong ESG performance – whether through higher valuations, lower costs of capital or better investor sentiment – has matured into a structural signal rather than a transient recovery, the report noted. The report found that between May 2022 and May 2025, the ESG-aligned index FTSE4Good Asean 5 generated an annualised return of 5.1 per cent, and achieved a 3.6 per cent alpha against the FTSE Asean All-Share Index. Similarly, the FTSE4Good Bursa Malaysia had an annualised return of 3.5 per cent over the same period, and outperformed the FTSE Bursa Malaysia EMAS index by 0.4 per cent. 'This hints that ESG momentum is no longer a lagging catch-up. It is now a repeatable source of risk-adjusted alpha, especially when integrated into capital allocation decisions,' said the report. ESG performers and laggards Regulatory momentum in Asean – such as the growing number of mandatory sustainability reporting requirements – as well as better transparency in ESG scoring systems, are leading investors to price ESG performers structurally, and penalise laggards as part of their Asean strategy. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Research shows that Asean stocks with low ESG risk delivered positive returns in several markets over a three-year horizon. In Malaysia and Thailand, for example, companies with clear ESG transition pathways and consistent disclosure momentum outpaced their country indices. Institutional investors in these markets have also expressed a growing preference for sustainability-aligned portfolios for downside protection and structural exposure to regulatory and thematic tailwinds. Similarly, poor ESG performance now carries visible commercial and financial consequences. The reported noted that companies in Malaysia, Vietnam and Indonesia have faced import bans and exclusion from global supply chains due to labour or environmental violations. Beyond reputational risks, companies with ESG controversies also face capital market penalties as they contend with higher risk premiums in bond pricing and less access to ESG-linked lending. With local regulators such as those in Indonesia trying to mandate ESG integration into credit risk evaluation and Philippines banks having to report on ESG-linked capital allocation from this year, the financing costs for ESG laggards will inevitably go up. 'The cost of non-alignment is enforced through both market mechanisms and institutional standards. Sustainability blind spots, once overlooked, are now being priced into both trade and capital costs,' said the report. 'This shift marks a reassertion of the ESG premium through improved data quality, risk-adjusted performance and investor alignment. Where ESG was once overlooked due to insufficient signal fidelity, credible transitions and regulation-backed disclosures are now enabling that premium to be priced in,' it added. Asean companies are also not just adopting ESG strategies to meet basic disclosure compliance, but are leveraging ESG to differentiate their business models, and deepen investor engagement. For example, Indonesia's Bank Central Asia aligned its credit allocation with ESG principles, excluded borrowers involved in unsustainable sectors and increased its green loan portfolio to 23 per cent of total lending in mid-2024. 'ESG is now guiding capital allocation decisions, reshaping business portfolios and offering visibility to long-term investors seeking resilience and transition alignment. This transition from reporting to repositioning strengthens the ESG alpha thesis, particularly in sectors with high regulatory exposure and stakeholder sensitivity,' said the report. Integrating ESG into equity allocation Beside supportive regulation, this gradual repositioning of ESG investing is a result of it being initially seen as a specialist approach into a structural allocation theme over the last three years, with institutional asset owners increasingly embedding ESG into mandates, and rebalancing equity allocation based on ESG transitions. Malaysia's retirement savings fund Employees Provident Fund, Singapore's state investor Temasek, as well as Thailand's Government Pension Fund have actively tilted their portfolios towards ESG improvers. Allocation decisions are increasingly based on ESG trajectory signals, particularly those tied to climate reporting upgrades, governance remediation and sector-specific policy responsiveness. These trends underscore a shift in practice that ESG momentum is no longer aspirational, but already embedded in active capital allocation decisions. 'This convergence in investor behaviour and regulatory architecture ensures that ESG remains an embedded, credible theme in global capital markets. These trends create a structural tailwind for ESG-integrated portfolios, particularly in under-covered or inefficient markets where mispriced ESG momentum can generate alpha,' said the report. Investors in Asean should therefore approach ESG integration as a structured signal used to enhance selectivity and allocate into companies exhibiting both transition visibility and valuation headroom. Despite the growing ESG momentum in South-east Asia, the report also highlighted several risks to watch out for. These are inconsistent disclosures and regulatory divergence across the region; superficial compliance; execution gaps when implementing ESG strategies; as well as ESG scoring instability due to changes in methodologies.
Business Times
23-05-2025
- Business
- Business Times
Asia's coming sustainable beauty revolution
ASIA'S beauty industry stands at a pivotal crossroads. It may lead with sustainable innovation or risk falling behind in an increasingly regulated, values-driven market. The continent is already the world's beauty powerhouse. Total sales are projected to hit US$249 billion by 2028, growing at 4.8 per cent compound annual growth rate and outpacing both North America and Europe. For brands competing in this dynamic region, sustainability is no longer a side project. It's the foundation for future growth and the key to long-term market leadership. The continued hovering threat of Donald Trump's tariffs has become an unexpected catalyst, accelerating the shift towards regional self-sufficiency and giving sustainability practices a sharper competitive edge. In Asia's fast-growing beauty sector, this moment presents a powerful opportunity. Consumer imperative Sustainability for beauty isn't just good ethics – it's good business. This precept is deeply aligned with regional consumer values. Clean beauty in Asia is not a trend, but a reflection of cultural ideals rooted in harmony, balance and respect for nature. The Chinese concept of 'liang' celebrates natural, effortless radiance, while the Indian Ayurvedic traditions tie physical beauty to internal wellness through herbal rituals and detox practices. These are not surface-level preferences – they reflect a lifestyle and mindset that prioritises well-being, transparency and environmental integrity. Today's consumers expect products to reflect these values, from ingredient sourcing to ethical manufacturing. These expectations are now reshaping the market. According to Euromonitor, 31 per cent of Asia-Pacific beauty consumers prioritise all-natural ingredients, while 25 per cent demand sourcing transparency. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Clean beauty in Asia extends far beyond formulation – it encompasses packaging, production methods, and waste reduction. Eco-conscious consumers are rewarding brands that reduce plastic use, adopt circular models and disclose their sustainability practices. The results speak for themselves: sustainable beauty products in Asia grew at 9 per cent compound annual growth rate between 2020 and 2023, nearly double the market's average. By 2027, the continent is expected to contribute over half of new sales in such products. For beauty brands, the message is clear. Sustainability is no longer a differentiator – it is the precursor of entry. Winning in this market means localising not just language, but values. Asia moves ahead In the West, sustainability is being met with increasing hesitation. 'Green hushing' has emerged in the US, particularly with the return of Trump-era deregulation, where brands are downplaying sustainability efforts for fear of political or consumer backlash. In Europe, too, brands are treading carefully due to rising scepticism and anti-greenwashing scrutiny. By contrast, Asia is stepping up. Governments are enacting clear, enforceable sustainability policies – pushing brands towards greener practices: China has made 'green consumption' part of its national strategy. Its e-commerce platforms must meet green packaging standards, and beauty imports are subject to new cosmetic safety and environmental labelling laws; India has implemented Extended Producer Responsibility rules for plastic packaging, making companies accountable for collection and recycling; Japan introduced its Plastic Resource Circulation Act, mandating corporate reporting on plastic usage and requiring eco-friendly product design; Singapore has launched the Zero Waste Masterplan, offering tax incentives for sustainable packaging and R&D grants for eco-product innovation; South Korea passed the K-Eco Labeling Act, requiring disclosure of recyclability and pushing refillable product formats. It also banned microplastics in rinse-off cosmetics; Thailand is banning single-use plastics in phases and offers subsidies for companies switching to biodegradable packaging. Green growth areas To seize this moment, brands must think beyond compliance and redesign their business around sustainability. Here are a few ways how leading brands are stepping up their sustainability agenda. 1. Packaging that protects the planet: Lightweight bioplastics and biodegradable materials are the future. Companies like Sulapac in Japan and Veolia in China are leading the charge with innovative packaging alternatives. Even Chanel is getting in the game, using 3D-printed mascara brushes to cut plastic use. Local sourcing will also help brands manage costs while reducing carbon footprints. 2. Smarter manufacturing and supply chains: Eco-consciousness starts behind the scenes. Shiseido's use of AI to forecast demand cut overproduction by 17 per cent – saving US$10 million a year. Blockchain is helping trace ethical ingredient sourcing. Cleaner operations mean fewer resources wasted, lower emissions and leaner operations. 3. Responsible consumption in the digital age: The digital tools that once fuelled hyper-consumerism can now help reverse it. Virtual try-ons reduce product returns, and artificial intelligence-powered recommendations encourage smarter buying. Sephora and Tmall are already using these tools to reduce waste while keeping customers happy. 4. Circular beauty models: Brands such as The Body Shop are normalising refill stations, and AmorePacific's AMORE:CYCLE initiative aims for 100 per cent recycled bottles. Waterless products – like Kao's shampoo sheets – are also gaining ground. These aren't gimmicks; they reflect real shifts in consumer behaviour towards more mindful consumption. Paying off and futureproofing Legacy systems, especially in packaging, still rely heavily on plastic. Sustainable materials can be heavier and more expensive. Small beauty players, in particular, may find it hard to scale eco-friendly solutions. But the payoff is significant: lower long-term costs, loyal consumers and reduced regulatory risk. The shift will require upfront investment but so did e-commerce, and no brand today would trade that back. Asia's beauty market isn't just large – it's influential. Trends born in Tokyo, Seoul and Shanghai often set the pace for the rest of the world. That means what happens here matters globally. Consumers are sending a clear signal: they want products that are effective, ethical and in harmony with their values. Eco-consciousness, once a niche concern, is now mainstream. Brands that align with this movement – by investing in sustainable sourcing, transparent storytelling and responsible packaging – will thrive. It's not just about perfection. It's about progress and intention. And in Asia, where cultural values, consumer demand and regulations are converging, the time to be future-proof is now. Lawrence Loh is director of Centre for Governance and Sustainability at NUS Business School where he is also professor in practice of strategy and policy. Belle Tran is an MBA student at NUS Business School.
Business Times
23-05-2025
- Business
- Business Times
The expensive green delusion
ASK families in Germany and the UK what happens when more and more supposedly cheap solar and wind power is added to the national power mix, and they can tell you by looking at their utility bills: it gets far more expensive. This goes against everything that we're being told. Green energy is supposed to be incredibly cheap. But we're not hearing the real story. The idea that power should get cheaper as we get more green energy is only true if we exclusively used electricity when the sun is shining and the wind is blowing. But modern societies need power around-the-clock. When there is no sun and wind, green energy needs plenty of back-up, often powered by fossil fuels. What this means is that we pay for not one but two power systems. And as the back-up fossil fuel power sources are used less, they need to earn their capital costs back in fewer hours, leading to even more expensive power. This means real energy costs of solar and wind are far higher. One study looking at China showed that the real cost of solar power on average turns out to be twice as high as coal, while a peer-reviewed study of Germany and Texas shows solar and wind are many times more expensive than fossil fuels. Germany and the UK now have so much low-cost solar and wind that their electricity costs have become among the world's most expensive. The latest data from the International Energy Agency makes it clear that there is a strong and clear correlation between more solar and wind and much higher average energy prices for households and industries. In a country with little or no solar and wind, the average electricity cost is a bit over US$0.11 per kilowatt hour (kWh). For every 10 percentage points of solar and wind, the cost increases by more than US$0.04. The results are nearly similar for 2019, before any impacts of Covid and the Ukraine war. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Look at Germany, where US$0.34 per kWh means over twice the US cost and nearly four times the Chinese price. Germany has installed so much solar and wind that at full capacity, it could produce two-times the country's electricity demand. In reality, on days with plenty of wind and sun, renewable energy produces close to 70 per cent of Germany's needs. Such days get excited press attention. The press hardly mentions the days that are dark and still, when solar and wind deliver almost nothing. Twice this winter, when all of Europe was cloudy and nearly windless, solar and wind delivered less than 4 per cent of the daily power Germany needed. Battery technology can't cope: Germany's entire battery storage runs out in about 20 minutes. That leaves more than 23 hours of energy that needs to be powered mostly by fossil fuels. The result: During these lulls, Germany saw some of the costliest power prices, with wholesale prices reaching a phenomenal US$1 per kWh. At least climate-enthused governments in Europe are generally honest about these costs because electricity prices include most solar and wind costs, so consumers feel the impact of green energy policies. However, in the US, solar and wind costs are paid indirectly through tax deductions, implying that the actual cost of electricity with solar and wind is perhaps 25 per cent higher than stated prices. Poor countries are especially hurt by the lie of cheap green energy. Rich countries now refuse to help poor countries with fossil fuel projects. If solar and wind really were cheaper, the world's poorer countries would have an inexpensive way to leapfrog from today's energy poverty to energy abundance. New energy infrastructure would all be solar and wind. Yet, this only happens in rich countries, where electricity consumption is declining, while generous subsidies and a large, existing fossil fuel backup infrastructure make our solar and wind deception possible. Instead, across poorer countries, where electricity consumption rose almost 5 per cent from 2022 to 2023, most of the addition came from fossil fuels, with coal contributing more than all solar and wind additions. In China, there was more new coal than new solar and wind. Bangladesh added 13 times more coal than solar and wind. Despite India's ambitious solar targets, its coal additions were three times larger than solar and wind additions. This is the background to the US bribery accusations of the Indian billionaire Gautam Adani: Since most Indian states don't want to 'risk 'intermittent' renewables', according to Reuters, he allegedly had to massively bribe government officials to buy power from his US$6 billion solar project. We will only fix climate change and make a transition when green energy truly becomes cheaper than fossil fuels. Investment in green energy research and development – for example, to develop fourth-generation nuclear and much cheaper batteries – should be our priority. But mostly, we need to face up to the truth. The claim that cheap solar and wind is taking over from fossil fuels is a dangerous, expensive lie. The writer is president of the Copenhagen Consensus, visiting fellow at Stanford University's Hoover Institution, and author of False Alarm and Best Things First
