International tourism won’t return to pre-pandemic levels until 2024 at the earliest
Global tourism saw a 4% increase last year, compared with 2020, which was the worst year on record as international arrivals plunged by 73%, the World Tourism Organization (UNWTO) said. The highly contagious Covid-19 Omicron variant, though mild, will “disrupt the recovery” in early 2022, it added.
According to the UN body, tourism arrivals around the globe are not expected to return to their pre-pandemic levels until 2024 at the earliest.
“The pace of recovery remains slow and uneven across world regions due to varying degrees of mobility restrictions, vaccination rates and traveler confidence,” the UNWTO said.
In Europe and the Americas, foreign visitor arrivals rose by 19% and 17%, respectively, last year over 2020.
Meanwhile, in the Middle East, arrivals declined by 24% last year, while in the Asia-Pacific region they were 65% below 2020 levels, and 94% down from pre-Covid levels.
The agency forecast a rise of 30% to 78% in international arrivals this year over 2021, while remaining far below 2019 levels.
It said that tourism revenue in 2020 was down 72% on the previous year.
“The economic contribution of tourism in 2021 [measured in tourism direct gross domestic product] is estimated at $1.9 trillion, above the $1.6 trillion in 2020, but still well below the pre-pandemic value of $3.5 trillion,” the UNWTO said.
Tensions between nations have helped send European energy bills to a historic high
The price of energy across the world has skyrocketed to unprecedented levels in a trend that is being exacerbated by geopolitical pressures, says the European Commission.
The soaring cost of gas has clearly impacted energy prices on the continent, according to European Commissioner for Energy Kadri Simson.
However, strife between and within nations has inevitably had a knock-on effect too.
February futures prices at the Netherlands’ Title Transfer Facility, a virtual trading point for natural gas, reportedly surged to $915 per 1,000 cubic meters on Friday, or €78 ($88.5) per megawatt hour in household terms.
In December, they hit a record high in Europe of nearly $2,200 per 1,000 cubic meters, which constituted an almost 400% rise since the start of the year.
“This is a particularly important time for the energy sector, both for its current state and for its future,” Simson said after a meeting with European energy ministers in France on Saturday.
“In the short term, we are faced with unusually high energy commodity prices – a trend intensified by geopolitical tensions.”
She affirmed that the current astronomically high prices for electricity and gas were placing an intolerable burden on homeowners and businesses alike across the European Union, but said national leaders were taking all possible steps to cushion them from future market shocks.
“These actions taken by member states to protect the consumers amount to more than €21 billion – a remarkable and swift effort by the EU governments,” Simson said.
The battery storage industry is getting billions poured into gigafactories, with new projects popping up left and right
A few years ago, battery energy storage began drawing attention as what one industry executive at the time called the Holy Grail of renewable energy. In the years since, EVs have stolen the spotlight but now battery storage is back, larger than life and, quite likely, twice as expensive.
The ongoing energy crunch in Europe is one good illustration of why, if we are going down the renewable energy path, we need to build battery storage – and a lot of it. One cause of the crunch, admitted unwillingly but still admitted, was lower than usual wind power output. With storage, at least some of that output might have been stored for later use.
The Financial Times reported this month that the battery storage industry is getting billions poured into gigafactories, where battery cells for electric vehicles (EVs) and storage installations are made. According to the report, energy storage companies raised $5.5 billion in venture capital funds over the first nine months of 2021 across 59 deals. This compared with just $1.2 billion across 91 deals during the same period of 2020.
“Batteries will play an increasingly important role in allowing high levels of penetration of variable renewable energy like wind and solar on the grid,” the FT quoted Oxford Institute for Energy Studies research fellow Barbara Finamore as saying.
“The [investment] numbers are changing so fast, people cannot keep up with how many gigafactories are in the pipeline.”
The above smacks of a future bubble, but given the net-zero targets of the Paris Agreement, investors are excused for buying into this particular bubble. Among these targets, per the International Energy Agency, is selling only electric cars from 2035 onwards and having two-thirds of the global energy supply come from wind, solar, biomass, hydropower, and geothermal. This is one massive undertaking that cannot happen without equally massive storage.
In October last year, energy consultancy Wood Mackenzie forecast that battery storage would really take off after the worst of the pandemic passes.
“With the market recovering following the pandemic and a growing acceptance of energy storage as a mainstream power technology, the total energy storage market will double in size in 2021 to reach 56 GWh, with that number expected to increase by 17x in 2030,” Le Xu, senior analyst, Power and Renewables, wrote.
An expected increase is one thing. The cost of this expected increase and its usefulness is quite another matter. For starters, the Wood Mac forecast sees a doubling of global lithium-ion battery manufacturing capacity. This means a surge in demand for battery metals and minerals such as lithium, nickel, and manganese. For seconds, the world consumes huge amounts of energy every minute. Storage will need to become a lot more compact and cheaper to handle this consumption. And this will be tricky.
Lithium prices are on the climb as demand for the metal rises with battery demand projections and more gigafactories in the pipeline. But the lithium market is already in a deficit, which means even higher prices ahead.
Nickel demand is on its way to outpacing supply, according to Rystad Energy, with the market seen swinging into a deficit in two years. This means more upward cost pressure for batteries.
And the shortage of metals is not all. There is also the ESG aspect of their mining to consider – an aspect that has become essential for European governments, which are also the ones with the most ambitious renewable energy plans for the future. Europe, in other words, is picky about its, say, lithium and cobalt supply. It wants to make sure that it was mined ethically. And this automatically makes it expensive because it limits the places where these metals can be sourced, and puts constraints on the miners.
So, battery cells are only going to become more expensive at a time when they need to become cheaper, so energy and EVs become more affordable, and adoption increases. But this is not the biggest problem of energy storage. The biggest problem is that the amount of storage needed to be deployed in order to ensure energy supply security is truly insane.
Bjorn Lomborg, president of an environmental think-tank and a vocal critic of the renewable energy push in its current form, wrote on Twitter earlier this month that Asia consumes 25 GWh of electricity per minute. The continent has a battery storage capacity of 13 GWh, which is enough for 31 seconds of consumption. With plans in place to boost battery storage capacity 25 times, in 2030, Asia will have enough storage for about 10 minutes of consumption.
But perhaps some would say the whole continent of Asia is not a good example. After all, battery storage capacity there is not exactly equally distributed and aimed at securing the energy supply of the whole of Asia. So let’s take another example. Germany’s per-capita energy consumption for 2018 stood at 6.8 GWh. Germany’s population is over 83 million people. So, Germany alone will need more than the world’s total projected storage capacity for 2021 to secure its energy supply, assuming a 100-percent renewable grid, which is the purpose of the energy transition. It would need a lot more.
It is true that without energy storage, wind and solar are far from reaching their full potential and far from being reliable sources of electricity. Yet the factors determining the commercial viability of storage installations are such that the projections made by Wood Mac and virtually every other energy forecaster out there might end up feeding a bubble that will sooner or later burst.
Positive trade balance underpins growth of national currency as overseas demand for Chinese-made goods surges
In 2021, Beijing’s trade surplus reached an all-time high of $676 billion, boosted by buoyant demand for Chinese-made goods across the world, while a major decline in outbound travel amid the Covid pandemic also limited the deficit in services trade.
The surplus on China’s current account climbed to an eight-year high of $224.2 billion, while the capital account surplus hit $83.2 billion, the highest since records began in 2010, Bloomberg reports, citing calculations based on data released by the State Administration of Foreign Exchange.
The reported figures reflect the nation’s robust trade surplus during the coronavirus pandemic and inflows into yuan-denominated bonds, according to Stephen Chiu, chief Asia FX at Bloomberg.
The soaring surplus bolstered a rallying yuan that strengthened by 2.7% against the US dollar in 2021, extending the gains of 6.7% recorded for the previous year. China’s national currency is climbing toward 6.33 per dollar, a level last recorded in December, when the People’s Bank of China increased the foreign-currency reserve ratio to cool the gains.
“In 2022, overall forex settlements are likely to be similar to last year, especially in terms of a robust current account surplus,” Chiu told Bloomberg.
“Even though global economic growth may slow cyclically, China’s exports are likely to continue to constitute a large share globally because the pandemic continues.”
Last year, foreign investors reportedly expanded their holdings of Chinese sovereign bonds by 575.6 billion yuan ($90.9 billion), marking the fastest pace on record.
Meanwhile, foreign exchange settlement under securities investment in the capital account jumped to $23 billion in December, the highest since records began in 2010.
The big returns of yuan-denominated assets along with the stability of the yuan exchange rate attracts foreign capital, according to Ken Cheung, chief Asian FX strategist at Mizuho Bank, as quoted by Bloomberg.
Wealth of world’s 5 richest people tumbled by $85 billion in a brutal week for tech stocks
The world’s five richest tech billionaires collectively lost $85.07 billion of their wealth in the first few weeks of 2022 due to a market rout. Stock markets dropped the most last week since the outbreak of the pandemic on fears of rising interest rates and inflation. The tech-heavy Nasdaq index slid 8% last week and is down 13% this year.
The losses sent the fortune of the world’s richest person, Elon Musk, down to $243 billion. The net worth of the SpaceX and Tesla founder tumbled $27 billion since the start of the year, according to the Bloomberg Billionaires Index. Data shows it is nearly $100 billion lower than November 2021, when Musk’s net worth peaked at $335 billion.
The world’s second-richest person, Amazon founder Jeff Bezos, has lost around $25 billion in 2022. Microsoft co-founder Bill Gates saw a $9.5 billion drop in his net worth since January 1, while Google co-founder Larry Page’s net worth declined by $12 billion. Facebook’s Mark Zuckerberg’s net worth (sixth on Bloomberg’s rich list) also nosedived by about $12 billion so far this year. All of them saw losses in their tech stock holdings.
The only billionaire in the top five who avoided losses last week was French luxury fashion mogul Bernard Arnault. Even so, the wealth of the chairman and CEO of the luxury giant LVMH is down $10.5 billion so far this year. Arnault is on the cusp of re-taking the number two spot in the Bloomberg index from Bezos.
