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US Retailers Cut Workforce to Preserve Liquidity

Sources: BLS, Euler Hermes, Allianz Research calculations

Retailers of nonessential goods are taking drastic measures to preserve liquidity and profit margins by cutting more than a million of the industry’s jobs in the U.S. There’s been a 59% drop in employment in clothing stores alone according to a Euler Hermes report.

1.7 million jobs were cut between February and April in the industry, and 30,000 to 50,000 stores could disappear by the end of 2021, the report says. Some companies are even deferring rent payments: In April, an estimated 20% to 40% of retail rent payments were made.

As retailers start to reopen, there will be intense price competition, the report says. “Purchased goods account for 60-70% of retail expenses,” and retailers will be eager to turn their inventory into cash.

Both the CARES Act and the Main Street Lending Program have provided financial relief in terms of bumping consumer spending and offering loan programs, and the National Retail Federation is negotiating additional measures to help save thousands of stores. 

Demand for Coal Remains Resilient in Asian Countries

Source: IEA

Global coal demand fell 5% in 2020 — the biggest decline since World War II. Europe and the U.S. saw significant declines in demand, but demand for coal in Asia remained steady, according to the International Energy Agency. 

Transitioning to renewable energy sources, a major drop in electricity use due to COVID-19 lockdowns and lower natural gas prices all contributed to declining demand for coal in 2020. Whereas demand for coal fell by over 15% in North America and Europe, IEA expects China’s coal use to have declined by less than 1% for 2020. China and other Southeast Asian countries combined account for about 75% of global coal demand. 

Despite the negative impact that coal use has on global climate goals, the IEA expects the industry to rebound in 2021 — depending on electricity demand and industrial output post-pandemic. Driven by China, India and Southeast Asia, coal consumption is expected to rise by 2.6% this year.

Cost of Solar Electricity Plummeted in the Last Decade

Source: OurWorldinData.org

Electricity prices are expressed in ‘levelized costs of energy’ (LCOE). LCOE captures the cost of building the power plant itself as well as the ongoing costs for fuel and operating the power plant over its lifetime.

The price of solar electricity dropped by 89% in the last 10 years, becoming the world’s cheapest source of electricity. A learning curve related to the sector’s technology, involving “innovation that reduce[d] the amount of labor, time, energy, and raw materials needed to produce the technology,” resulted in a steep decline in its cost, according to author Ramez Naam. Offshore wind power saw a similar technology learning curve with prices falling by 70%. 

The price of electricity from coal has remained nearly the same, dropping only by $2 per MWh to $109 over the last 10 years. The costs of electricity from wind and solar are now significantly lower than electricity from coal at $41 and $40 per MWh, respectively. 

Increased use of solar and wind electricity would lead to more jobs, lower prices for consumers and a more sustainable environment. “The more renewable energy technologies we deploy, the more their costs will fall. More growth will mean even more growth,” wrote Our World in Data.

Asia-Pacific Embraces AI, While Other Countries Remain Wary

Source: Pew Research Center

More than half of the 20 countries surveyed believe that artificial intelligence brings value to their society, compared to 33%, which believe the technology creates a negative impact. This survey, by Pew Research Center, finds that less than half of the countries surveyed saw this technology having a positive impact on society in terms of job automation.

Views of AI were especially positive in the Asia-Pacific region, with 72% of the public in Singapore and 69% in South Korea seeing it as a good thing for their countries. Not surprisingly so, as many countries in this region have dominated the field of AI. For example, South Korea has the highest robots-to-human workers ratio in the nation, followed by Singapore. Singapore has also expressed a goal of becoming the world’s first “smart nation.” 

The COVID-19 pandemic has accelerated the use of AI technologies. Half of global businesses have increased the speed of incorporating automating tasks in their workday, while many executives see this technology as a key lever for success in 2021.

Global Plastic Waste Is a Major Risk for Everyone

Source: University of Leeds

Every year, nearly 30 million tons of plastic are discarded on land, 50 million tons are burned in the air and 11 million tons are dumped into the ocean, according to a computer model from the University of Leeds, U.K

Plastic waste predominantly comes from high-income countries; however, middle- to low-income countries have less access to waste collection services, thereby producing more poor waste management. Improving waste collection services is the most important factor in reducing plastic pollution, which will require political, societal and corporate support.

Businesses also need to cut back on plastic for global improvements to be made. The packaging industry accounts for the highest use — and waste — of plastic, at 146 million tons in 2015. There are multiple ways that businesses can eliminate waste, such as substituting plastic with compostable materials, and selling products and packaging that are recyclable.

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