Businesses push for clarity on fossil fuel phaseout

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• Chevron agreed to buy US oil and gas producer Hess Corporation in a $53bn all-stock deal. Consolidation of the US energy sector has heated up as developed countries attempt to reduce their reliance on fossil fuels.

• The yield on 10-year US Treasuries rose above 5 per cent for the first time since 2007 before falling back, extending the rout in bond markets as investors bet that the Federal Reserve would maintain higher interest rates for longer.

• International migration to rich countries hit an all-time high last year, driven by humanitarian crises and demand for workers, the OECD said. Some 6.1mn new permanent migrants moved to its 38 member countries, 26 per cent more than in 2021 and 14 per cent higher than in 2019, before the pandemic hit cross-border movement. Preliminary figures for 2023 suggested a further increase.

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Good evening.

“Stop dithering” appeared to be the message today in an open letter from some 130 global businesses urging world leaders to agree a timeline to ditch fossil fuels at next month’s COP28 climate summit.

Signatories to the letter, including AstraZeneca, BT, Nestlé and Unilever, said their companies were “feeling the effects and cost of increasing extreme weather events resulting from climate change” as they called for a “full phaseout of unabated fossil fuels” and a halving of emissions this decade. 

The phaseout is set to be a key flashpoint at the Dubai meeting. More than 80 countries backed the move at last year’s COP27 but there was opposition from Saudi Arabia and Russia, the latter of which recently reiterated its view. Host nation UAE, one of the world’s biggest oil and gas producers, has since said a “phase-down” should happen by “mid-century”.

There is also disagreement about climate policy within the EU: Brussels last week backtracked on its commitment to lift its emissions target after protests from Poland, Hungary and Italy.  

Oil and gas companies, accused by former US vice-president Al Gore of “capturing” UN institutions, are also wary of giving too much ground.

Meanwhile, another major advance from COP27 fell apart at the weekend after rich nations and developing countries failed to agree on arrangements for a new “loss and damage” fund to support nations suffering from the effects of global warming.

Action at state level to reduce carbon emissions is also proving problematic. In the UK, the Financial Times revealed today that three big manufacturers won free emission allowances worth millions of pounds for factories that were mothballed or slashing production. Another net zero initiative, the drive for more offshore wind, is being hindered by a lack of port infrastructure.

Looking ahead, the UK is preparing a new “advanced manufacturing plan” that will set out how the country intends to compete in the fight for global investment in green technology. The plan’s financial details are due in chancellor Jeremy Hunt’s Autumn Statement on November 22. The opposition Labour party has already committed to a £28bn plan for green investment (though it is cutting back on its pledges). The plan is loosely modelled on US president Joe Biden’s $369bn green spending package, should it win the general election that is most likely to take place next year.

Advancing technology also offers grounds for hope that the fossil fuel era is drawing to a close.

We report today on Toyota’s announcement that it will soon be able to manufacture next-generation solid-state batteries at the same rate as existing batteries for electric vehicles. The development is seen as a game-changer for the EV industry, addressing concerns such as charging time and capacity — as well as reducing the risk of your car catching fire.

Need to know: UK and Europe economy

Lord Dominic Johnson, the minister responsible for luring foreign investment to the UK, said the country should be more enthusiastic about large infrastructure projects — just weeks after prime minister Rishi Sunak slashed the HS2 rail project.

One item of infrastructure is needed above all: new housing. Fresh data today showed London renters paid more than 30 per cent of their income on rent last year.

Sahra Wagenknecht, a prominent German politician, is setting up a new leftist anti-immigration party to challenge the far-right Alternative for Germany (AfD).

Rightwing populists, meanwhile, performed strongly in Switzerland’s parliamentary elections as voters swung away from green politics amid concerns over immigration and rising energy costs. Political jockeying will now determine how the results translate into changes in government.

Need to know: Global economy

China’s stock market fell to its lowest level since before the pandemic amid disquiet over slowing economic growth, the property crisis (read more here on how that’s going) and geopolitical tensions. As for foreign policy, the Belt and Road infrastructure project is 10 years old. A Big Read tackles the question: Has the $1tn cost been worth it?

Argentina’s economy minister Sergio Massa had an unexpected win over libertarian challenger Javier Milei in the first round of the country’s presidential election, setting up a run-off next month.

In Venezuela, María Corina Machado, a centre-right former lawmaker, is projected to be the opposition’s candidate in next year’s presidential election against incumbent Nicolás Maduro, despite being banned from public office.

Israel’s economy has been severely dented since the attack by Hamas and the country’s response in Gaza. Bars and restaurants have closed, tourism has dried up and businesses have been left short staffed by the mobilisation of 360,000 army reservists. Our full coverage of the Israel-Hamas war is here.

Export restrictions from India coupled with extreme weather are threatening the global supply of rice, a staple commodity relied on by millions. A Big Read explains.

Join the FT’s Chris Giles and his international colleagues on Oct 25 from 1-2pm BST for a subscriber-exclusive webinar to unpick lessons from central banks’ battle against inflation.  Register for your ticket now and send in your questions for the panel.

Need to know: business

Shares in Apple iPhone maker Foxconn dropped after reports of an investigation into tax and land use. The move is yet another example of Chinese authorities targeting local subsidiaries of Taiwanese companies with regulatory probes and political pressure at times of tension.

More tensions between China and the west were highlighted by the detention of an executive at the WPP-owned Group M agency in Shanghai over alleged bribery, following a raid on Friday.

Private equity firms are facing the worst year in a decade for exiting investments after higher interest rates and geopolitical concerns ended the buyout industry’s boom.

The US shipping regulator has hardened its clampdown on foreign-owned carriers that clashed with American importers during recent supply chain disruptions.

Investors have flocked to the safe haven of gold since the Hamas-Israel conflict broke out, reinforcing the end of its long-term correlation with US Treasuries.

The World of Work

Is the secret to enjoying work . . . not working? Several businesses introduced “wellbeing” days during the pandemic but many have kept up the benefit — with positive results.

Some good news

AstraZeneca reported encouraging full-trial results for a new generation of lung and breast cancer drugs that could replace traditional chemotherapy.