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Yahoo
3 days ago
- Business
- Yahoo
As extreme heat becomes the new normal, how will it affect a location's capacity to attract investment?
Any local will tell you that, if you can avoid it, August in Madrid is a no-go. It is so hot that you can feel the heat rising from the pavement and through your shoes. Many businesses will even shut down for the entire month as people flock back to their hometowns, the beach, or wherever they can keep cool. This year, that feeling arrived two months early, as the city experienced the hottest June on record. This level of heat is not only a health hazard (Madrid experienced 108 heat-related deaths in June), it is also a chronic business risk – and yet, businesses are being drawn to Madrid like never before. The city has experienced significant growth in the past few years, with investments in early-stage startups growing by 18.5% from 2023 to 2024. Most recently, it was named the eighth top start-up ecosystem in Europe in Startup Genome's annual report. A similar phenomenon was observed in the US by a 2024 study, where some of the fastest-growing cities in the country were also the most exposed to heat-related risks. 'Heat is an underrepresented risk, and it is maybe not something that is being factored in as much as increasing hurricanes or decreasing rainfall,' William Nichols, climate and resilience team lead at Verisk Maplecroft, tells Investment Monitor. 'We might argue that it is being disregarded.' As the effects of climate change continue to disrupt society, companies will have to face how heat risks affect their operational continuity. Therefore, a location's exposure to heat-related risks will become an increasingly relevant factor as companies decide where to make their next investment. While a few years ago the ESG (environmental, social and governance) paradigm encouraged companies to control their emissions, now it is the other way around, with companies forced to think about 'how the climate is impacting [them] in terms of [...] decision-making, planning, operational stability and continuity', Nichols says. Understanding heat risks Heat risks are harder to account for in climate risk scenarios because they represent a 'sort of widespread web of risks, rather than a direct risk', Nichols explains. However, higher than average temperatures can affect the availability of essential resources such as energy and water, as well as affect worker safety and productivity (particularly in industries that require outside work such as agriculture and construction). Investors have typically focused more on the effects of acute risks such as hurricanes or wildfires. This is partially because the losses from these events are easier to measure than those that come from heat risks over time. One of the main risks posed by extreme heat is a strain on energy resources. Power outages caused by heat are a prime example of how these risks can affect businesses. Scientist-led non-profit Climate Central published a report in 2024 that outlined how, in the US, there were 60% more heat-related power outages between 2014 and 2023 than in the previous ten-year period. 'Increasing heat impacts across the world have raised the demand for cooling, leading to increased energy usage,' Dr Radhika Khosla, associate professor of the Smith School of Enterprise and Environment at Oxford University, tells Investment Monitor. 'We have seen the impact of this in the UK, where, for instance, in 2023, a coal-fired power station was restarted to deal in part with energy demand from air conditioning.' Energy demand is on the rise The rise of energy-intensive digital infrastructure such as data centres, which require a lot of cooling, strains resources even further, yet a recent study by Verisk Maplecroft found that more than half of the world's top 100 data centre hubs are in locations highly exposed to heat-related risks. These hubs are mostly in North America in states with ample energy supply, such as Virginia or Texas. However, outside of the US, Asia is the region with the fastest growth rate. Laura Schwartz, a co-author of the study and a senior analyst at Verisk Maplecroft, told Investment Monitor that South East Asia is a major subset of the growth in the region and 'that is absolutely key when you are looking at the issue of heat and tropical climates'. 'I heard in a clean tech industry forum in Singapore, 'this is the worst place to build data centres from a heat perspective', but it is not that they can't have data centres, they are needed everywhere,' Schwartz outlines. Ultimately, the biggest driver for industry is cost, so even if a location has higher cooling requirements, if energy is cheap, as it is in South East Asia due to a heavy reliance on coal and fossil fuels, 'it is not a deal breaker', Schartz explains. And yet, once these problems become evident, local governments have had to react. Singapore, for example, famously placed a moratorium on building new data centres from 2019 to 2022 due to their high energy demand. Recently, Texas passed a law that gives grid operators the power to disconnect data centres during a crisis and have them switch to backup generators. In Singapore, friction between the high energy demands from data centres, complicated by a warm climate, has led to an increased interest in innovative cooling methods. In 2023, it launched the Sustainable Tropical Data Centre Testbed to enable scientists to experiment with more energy-efficient cooling methods that can adapt to tropical climates. Fossil fuel dependence entrenches heat risks Even if some businesses can insulate themselves from these risks, such as those with office workers that have access to air conditioning in some parts of the world, Khosla warns that 'global business is going to see impacts from extreme heat somewhere in their networks or supply chains'. 'The problems are most acute for businesses in developing countries that will often have least access while enduring the highest temperatures overall,' she says. Higher energy demands, driven by more digital infrastructure and overall higher cooling requirements, risk entrenching a reliance on non-renewable energy sources to fill that supply gap. 'Arguably, the most important change we can make is to ensure we can cool ourselves sustainably and without making climate change even worse," Khosla concludes. "Until we remove fossil fuels from our energy grids, this vicious cycle of burning gas and coal to keep cool will remain." "As extreme heat becomes the new normal, how will it affect a location's capacity to attract investment?" was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
10-07-2025
- Business
- Yahoo
US-Brazil tariff confrontation fueled by 'geopolitical dynamics'
US President Donald Trump threatened to impose 50% tariffs on Brazilian goods through a letter posted on social media yesterday (July 9). He cited the trial of close ally and former Brazilian President Jair Bolsonaro, which he called a "witch hunt", and Brazil's clashes with US tech companies as reasons for the tariffs, which he said would go into effect on 1 August. Bolsonaro is facing a trial for his alleged role in a 2022 coup attempt. Brazilian President Luis Inácio Lula da Silva responded through a social media post, saying that if the US imposed tariffs, the country would reciprocate and match US rates. Lula emphasised that Brazil is "a sovereign country with independent institutions and will not accept any tutelage". "Given the stark divergence between both administrations, a slow-burning confrontation between Washington and Brasília was on the cards from the get-go," Mariano Machado, principal analyst for the Americas at Verisk Maplecroft, said in an email note to Investment Monitor. "President Luiz Inácio Lula da Silva's doctrine of 'active non-alignment' was always destined to draw scrutiny from the US administration." When Trump announced 'reciprocal' tariffs in April, Brazil faced the lowest possible rate at 10%. These tariffs were quickly postponed for a 90-day period, which ended on 9 July. As was expected by many, this deadline was once again delayed by three weeks, until 1 August. Only two trade deals have been reached in the three months of negotiations, with Vietnam and the UK. The tariff threats on Brazil are also unusual because, according to US Government data, the US had a trade surplus with Brazil of $7.4b in 2024, as opposed to many other countries that were targeted with high tariffs, with which the US has trade deficits. Lula highlighted this in his post, calling Trump's claim that the US has a trade deficit with Brazil "inaccurate." "Though the current dispute is framed in bilateral terms, geopolitical dynamics are the driving force. Brazil has walked a fine line between commercial interest and political positioning — evident in the cautiously worded 16,000-word BRICS declaration," Machado outlined. "A string of recent agreements with China on critical infrastructure appears to have recalibrated Washington's view of Brazil's strategic alignment." The warnings against Brazil came a few days after Trump threatened to impose additional tariffs on member countries of BRICS over what he called their "anti-American policies". BRICS leaders recently gathered in Rio de Janeiro, Brazil, where they released a joint statement in which they criticised uneven tariff policies, military strikes on Iran and called on Israel to withdraw its military from the Gaza Strip. In terms of the effects that the tariffs could have if imposed, Machado suggested that a "50% tariff turns Brazil's principal export artery into a liability overnight". He warned: "Crude oil, iron ore, aircraft, pulp, coffee, and beef – together accounting for roughly 75% of Brazil's $40.3bn in exports to the US last year – now face margin compression so steep that several could become commercially unviable or lose market share within weeks." "US-Brazil tariff confrontation fueled by 'geopolitical dynamics'" was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Scientific American
10-07-2025
- Business
- Scientific American
Heat Waves Endanger Data Centers That Power AI
CLIMATEWIRE | Data center hubs worldwide are increasingly threatened by rising temperatures as climate change continues to accelerate. Hotter weather puts pressure on water resources and electricity generation that help keep data centers from overheating. Competition over water can lead to conflict with local communities, while power outages can disrupt businesses. Both outcomes can strain data center operations, according to new research from risk intelligence company Verisk Maplecroft. 'Data center operators are innovating solutions to increase resilience and offset sustainability concerns, but rising temperatures increase these challenges,' Capucine May, senior analyst at Verisk Maplecroft, said in the report. On supporting science journalism If you're enjoying this article, consider supporting our award-winning journalism by subscribing. By purchasing a subscription you are helping to ensure the future of impactful stories about the discoveries and ideas shaping our world today. The research comes as data centers boom to meet growing demands for artificial intelligence and cloud computing. Many are built to optimize water use and energy to withstand potential disruptions, the report said. But there could be challenges ahead as the pace of climate change quickens and as energy demand grows. 'Solutions are likely to come from a mixture of innovation and technological development, policy interventions and incentives, such as requiring concurrent renewable energy development, as well as responsible investment practices,' Olivia Dobson, director of resilience at Verisk Maplecroft, said in an email. Yet in the U.S., the Trump administration is slashing clean energy incentives and arguing that more fossil fuel production is needed to support the growth of data centers for AI, which it is prioritizing. Fossil fuel emissions are the main cause of climate change. One recent study argued that AI can be used to help power data centers with cleaner forms of energy, such as wind and solar. Research shows that heat waves are expected to become more frequent and severe as climate change accelerates, adding to the strain on energy systems as demand spikes for power needed to run air conditioners and other cooling systems. A recent heat wave in Europe drove power demand up 14 percent and led to power outages due to cooling problems at nuclear plants, according to Ember, a global energy think tank. Record-breaking global temperatures last year caused electricity demand to spike during certain months in the U.S., China and India — leading to a surge in coal power generation. The new report looks at the top 100 data center hubs globally, located in areas such as Los Angeles; Dubai, United Arab Emirates; and Bangkok. It found that 56 percent of those hubs would have to meet increasing cooling demands each year. In a scenario where countries fail to cut planet-warming emissions and global temperatures rise above 4 degrees Celsius compared to preindustrial times, around two-thirds of data centers could be at high or very high risk by 2040. On average, those hubs could see an 83 percent increase in the number of days that trigger cooling requirements between 2030 and 2080, the research said. In the next five years, more than half of the top data center cities could also have to grapple with water shortages. Water is a primary means of providing cooling. Cities facing the greatest risk are in the Middle East, such as Dubai and Istanbul. U.S. cities will also be at high or very high risk by 2030, the research said, pointing to Los Angeles, Denver and Phoenix. It notes that energy demand is expected to grow in the next five years, as extreme heat challenges power transmission. 'The changing climate will increasingly impact aging power infrastructure even in currently 'low' risk markets,' the report said. It has already happened. A severe heat wave in 2022 knocked out data centers in London used by Google and Oracle, which attributed the outages to problems with their cooling systems, Bloomberg reported. A data center for the social media platform X succumbed to heat a few months later in California.
The Star
09-07-2025
- Politics
- The Star
Analysis-Kenya's Ruto faces tough task taming protests and winning over Gen Z
NAIROBI (Reuters) -Protesters braving police batons, water cannon and occasional bullets on Kenya's streets this week have taken up a rallying cry that is likely to unnerve its embattled president, William Ruto: "Ruto wantam", or Ruto one-term. Ruto won power almost three years ago vowing to protect the poor and end police violence, but he is facing mounting public dissatisfaction over high living costs, corruption and police brutality that could yet seal his fate as a "wantam" leader. As the faint drum beat of the 2027 election grows louder, analysts say, his administration will need not only to deliver on its economic promises but also adopt a more conciliatory tone to win over a younger, better-educated population. "Persistent economic hardship and widespread allegations of police violence pose serious challenges to any ambitions he may have for securing re-election in 2027," said Mucahid Durmaz, Senior Africa Analyst at risk intelligence firm Verisk Maplecroft. A government-funded rights group said 31 people were killed nationwide in the latest anti-government protests on Monday, held to mark the 35th anniversary of pro-democracy rallies. Police fired to disperse the demonstrators after also using tear gas and water cannon. "We can't feed our families, so we have to be on the street to stop the increasing prices, to stop the (police) abductions, and to stand up for our country," said Festus Muiruri, a 22-year-old protester in the capital Nairobi. "We want the president to hear us." But Ruto's government has been consistently slow to respond to public discontent. Last year, he only abandoned proposed tax hikes after protesters overran parliament in unprecedented scenes flashed across TV screens around the world. His interior minister, Kipchumba Murkomen, branded last month's protests as a "coup attempt" by what he called "criminal anarchists". GEN Z Unlike his predecessors, Ruto faces a generation of uncompromising young Kenyans desperate for economic opportunities, who can mobilise amorphously through social media, bypassing opposition parties and leaders. The so-called "Gen Z" protesters, the product of free schooling introduced two decades ago, have no recollection of authoritarian rule. Many were not yet born when Kenya introduced multi-party elections in 1992. With up to 800,000 young people entering the job market each year, Gen Z are more educated than their elders, but also more likely to be unemployed, according to a report by Afrobarometer, a pollster. "They have no memory of the rough times," said Macharia Munene, a professor of history and international relations at the United States International University (USIU) in Nairobi. "They've learned how to ask questions." Discontent with the government found a lightning rod last month with the death of blogger Albert Ojwang in police custody. On June 25 some 19 people lost their lives in demonstrations over Ojwang's death. The administration's hardline response to protesters has rattled investors in East Africa's largest economy. Business expectations fell to their second-lowest level on record in May, according to a survey by Stanbic Bank Kenya. "Repeated protests and shutdowns will continue to erode investor confidence and disrupt economic activity, especially if the government continues to prioritise force over dialogue," said Jervin Naidoo from Oxford Economics. 'BLIND, DEAF AND DUMB' Despite the swelling disillusionment, Kenyans are left with few options for now. Ruto's large parliamentary majority ensures he won't be unseated prematurely. He also faces a weak and fractured opposition which is yet to find a standard bearer for the next election. Following last year's protests, Ruto brought former Prime Minister Raila Odinga into his government, neutralising his main threat. He has two more years to turn things around, or use his incumbency to help ensure a second term. Ruto will hope that his increased social spending and programmes aimed at tackling youth unemployment, combined with positive economic prospects and a decline in inflation, will bolster his appeal, according to Control Risks. However, that may not be enough to avoid "wantam", said Javas Bigambo, a political commentator. "The government is perceived to be blind, deaf and dumb by the young people. This perception needs to be managed. Dealing with the protesters with this condescending attitude will only worsen Ruto's re-election prospects," he said. "It is urgent that measures are taken to bridge the divide." (Reporting by Edwin Okoth and Hereward HollandEditing by Ammu Kannampilly and Gareth Jones)
Observer
30-06-2025
- Business
- Observer
How conflicts reshape air travel
By Anupreeta Das When Israel launched surprise missile attacks on Iran, prompting retaliatory strikes, Gulf countries closed their skies, forcing more than two dozen of the world's major airlines to divert or cancel flights. When India and Pakistan engaged in a brief but intense conflict in May, Pakistan and India each banned the use of their skies by the other's airlines. After Russia began its war on Ukraine in 2022 and closed its airspace to Western airlines, many American and European airlines were forced to redraw flight paths — a disruption that remains today. In recent years, airlines worldwide have increasingly had to deal with geopolitics, as extended wars and sudden conflicts require them to abruptly remap major routes and recalculate profitability. The risk was clear in 2014, when a Malaysia Airlines jet was shot down over a part of Ukraine controlled by pro-Russia separatists, killing all 298 people on board. In December, dozens died when an Azerbaijan Airlines plane crashed while over Russian airspace, likely after being hit by its air defence systems. More than 4.5 per cent of the world's land mass is affected by conflict, a rise of 65 per cent since 2021, according to a report last year by Verisk Maplecroft, a risk consultancy. Conflict is among the biggest causes of disruption for the civil aviation sector, which operates more than 100,000 commercial flights carrying 10 million people a day. Airlines must already balance passenger demand, weather, fuel costs, government regulations, and pilot and crew schedules for each flight. The recent exchange of attacks between Iran and Israel was particularly disruptive for global carriers because Middle Eastern cities are often pit stops between Asian and European destinations. Qatar Airways was forced to divert more than 90 flights after Iran's strike on an American military base in Qatar last Monday, disrupting travel for more than 20,000 passengers. Despite the ceasefire between Iran and Israel, airlines are prepared for the possibility that attacks might resume. Many have suspended routes through the Middle East. Since 2022, many airlines have had to reroute flights to avoid Russia, the world's biggest country by area, with an airspace crucial to long-distance flights connecting Europe and North America to large parts of Asia. An extra hour of flying the kind of large plane used on long, international routes can add about $10,000 in costs, mainly in fuel, labour and maintenance expenses, said Andreas Schäfer, a professor at the UCL Energy Institute at University College London. In a competitive market with limited demand, that can quickly bring an airline 'very close to the limits of profitability,' he said. Some carriers added stops to previously nonstop flights or abandoned newly unprofitable routes. Others flew with fewer passengers or less cargo because demand had fallen or the airlines couldn't justify the expense of flying the longer distances with a full load. In extreme cases, business models had to be redrawn. Finnair, which is based in Finland, a neighbour to Russia, had spent decades making itself a hub for flights between Europe and Asia. That strategy unravelled after the war began. Its flights to Asia are now as much as 40 per cent longer than before, severely hindering Finnair's ability to compete with Chinese airlines, which remain free to use Russian airspace. A direct flight from Helsinki to Shanghai, for example, is now just under nine hours on China's Juneyao Airlines, but takes more than 12 hours on Finnair. As a result, Finnair has had to focus on flights elsewhere. Unable to fly over Russia, American carriers suffered too. A popular nonstop route between New Delhi and Newark on United Airlines that flew over Russia took as little as 13 hours; since the war of Ukraine, US airlines have been flying via Europe, which has added an hour or two.
