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Europe could be seeing the decline of its gig economy

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A food delivery courier places a bag of food into the back of his bicycle as he prepares to deliver an order from Deliveroo in London.

Simon Dawson | Bloomberg via Getty Images

In its stock market debut, British food delivery firm Deliveroo saw its share price tank around 30% as questions materialized over workers’ rights for its riders.

In the days running up to the listing, the company revised its share price as some investors opted to avoid the IPO over these concerns

Deliveroo is just one example of a wider “gig economy” that is coming under increasing scrutiny. In recent weeks, the industry has been rocked by a slew of court rulings and regulatory moves around Europe that could ultimately upend the business model.

Uber‘s loss in the U.K. Supreme Court last month forced the company to reclassify 70,000 of its British drivers as workers, giving them a minimum wage, paid vacation time and pension plans as a result.

In Spain, legislators have introduced a raft of measures that would recategorize gig workers as employees with formal contracts and benefits.

All the while, the European Commission, the EU’s executive arm, is thrashing out plans for some kind of regional reform on gig economy workers, their status and their rights.

James Farrar of the App Drivers and Couriers Union, which took the case against Uber in the U.K., said there has been some “early triumphalism” but that this is only the beginning of a turning tide in gig economy worker rights.

“We’re still reaching for the bottom rung here and we’re not there yet,” he told CNBC.

“I think what was really significant about the Supreme Court ruling is it opened up space for other claims across the gig economy to succeed.”

Preparing for change

Other companies are preparing for change in some form, whether instigated by regulation or on their own volition in advance.

Just Eat Takeaway, Europe’s biggest online food delivery firm, is moving its Just Eat delivery riders to employment contracts. Prior to the companies’ merger, the riders of the original firm called Takeaway.com were on such contracts.

“As part of this model, couriers are entitled to an hourly salary, they are paid above minimum wage, provided with employment insurance and social security, in line with local legislation,” a spokesperson said, adding that couriers are provided with equipment like bikes.

In the case of Spain, operators in the market like Glovo are waiting to see how exactly the legislation will pan out and how to respond.

Co-founder Sacha Michaud is not a fan of the route that Spanish lawmakers have taken.

“It’s quite a strict regulation, probably the strictest (in Europe) so it’s quite a radical position in the sense that it allows very little flexibility, which is one of the things that we obviously adhere to, and the riders are asking for that as well,” Michaud told CNBC.

Michaud said Glovo will “obviously adapt to the regulation” when it is in effect but said the company is more in favor of a middle ground between worker flexibility and providing benefits and security, all while avoiding the employment tag.

He added that surveys carried out on Glovo’s riders showed that most prefer a flexible model rather than stricter employment. He said this helps many riders who may be working for gig platforms in between their studies or other jobs.

“It should be social rights, yes, and see how we can maintain flexible working conditions under that. It doesn’t necessarily have to be black or white.”

This middle ground harkens to Prop 22 in California, passed last November and backed by Uber and Lyft.

It’s an approach that Uber would like to see replicated in Europe. In February, Chief Executive Dara Khosrowshahi published a paper calling on the European Commission to follow the mixed model, like that of California.

Changes in regulatory status for workers will introduce a raft of new costs. This will be front of mind for smaller start-ups in the space too.

John Ryan of U.K.-based start-up Gigable, which connects restaurants and other businesses with freelancers, said consumers could end up feeling the brunt with price increases.

“But I think people are comfortable enough with increases in pricing if they know it’s going to the drivers or there’s public support for the move but that remains to be seen,” Ryan said.

He added that the flexible model may work for some workers and others will prefer traditional employment.

“We’ll see how hard it is for people to commit to the obligations.”

Algorithmic control

Contracts and worker status are just one front in this battle, according to the ADCU’s Farrar.

His organization is also pursuing initiatives around driver access to data that companies hold on them and what he calls “algorithmic control.”

“We’re seeing an arms race in worker surveillance in the gig economy and that’s leading to problems,” he said.

The ADCU is supporting two London drivers in a case they are taking in the Netherlands against Indian ride-hailing company Ola. The drivers are seeking access to data held on them by the company, under the EU’s sweeping GDPR rules, that they say has been denied.

Farrar said technology like AI for monitoring a driver’s performance and determining how much work they get is a red flag. The group is also calling for Uber to stop using facial recognition to verify drivers.

The discussion around regulations, including those at an EU level, are focused heavily on employment status, Farrar said, but that the debate will need to get more nuanced on algorithms. 

“I think it’s being overlooked everywhere so far but we’ll be raising the topic for sure,” he said. 

“Regulators and policymakers are often catching up with this rather than on top of it.”

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World must cut methane emissions to avoid worst of climate change, UN says

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Flames from a flaring pit near a well in the Bakken Oil Field. The primary component of natural gas is methane, which is odorless when it comes directly out of the gas well. In addition to methane, natural gas typically contains other hydrocarbons such as ethane, propane, butane, and pentanes.

Orjan F. Ellingvag | Corbis News | Getty Images

A landmark United Nations report has declared that drastically cutting emissions of methane, a key component of natural gas, is necessary to avoid the worst impacts of global climate change.

The report, published Thursday by the Climate and Clear Coalition and the U.N. Environment Programme, represents a shift in the worldwide conversation on how to best address the climate crisis, which has focused on longer-term carbon dioxide reduction.

Methane is 84 times more potent than carbon and doesn’t last as long in the atmosphere before it breaks down. This makes it a critical target for reducing global warming more quickly while simultaneously working to reduce other greenhouse gases.

More than half of global methane emissions come from oil and gas extraction in the fossil fuel industry; landfills and wastewater from the waste sector; and livestock emissions from manure and enteric fermentation in the agricultural sector.

The world could slash methane emissions by up to 45% this decade, or 180 million tons a year, according to the U.N.’s Global Methane Assessment. Such a target will avoid nearly 0.3 degrees Celsius of warming by 2045 and help limit global temperature rise to 1.5 degrees Celsius, a goal of the Paris climate accord.

The report comes after methane emissions surged to record highs last year despite worldwide lockdowns during the coronavirus pandemic, according to research from the National Oceanic and Atmospheric Administration. Methane emissions are also rising faster than ever since record keeping began in the 1980s.

“Cutting methane is the strongest lever we have to slow climate change over the next 25 years and complements necessary efforts to reduce carbon dioxide,” Inger Andersen, Executive Director of the U.N. Environment Programme, said in a statement.

“The benefits to society, economies, and the environmental are numerous and far outweigh the cost,” Andersen said. “We need international cooperation to urgently reduce methane emissions as much as possible this decade.”

The fossil fuel industry has the greatest potential for reducing global emissions at little or negative cost by repairing leaks from oil and gas infrastructure, the report said. It added that companies who prevent leaks and capture methane could profit while curbing methane release.

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The report also pointed to the public health benefits of reducing methane, which is responsible for creating ground-level ozone, a dangerous air pollutant.

The 45% methane emissions reduction would prevent 255,000 premature deaths, 775,000 asthma-related hospital visits and 73 billion hours of lost labor from extreme heat and 26 million tons of crop losses each year, according to the report.

“We must tackle emissions not only from the energy sector, but also from landfills, agriculture, and abandoned coal mines,” Jutta Paulus, a Green Party member of the European Parliament, said in a statement.

“Setting aside dedicated funds for these super-emitters will be well-invested money on the path to reach our climate targets in 2030,” Paulus said.

A new study published in the journal Environmental Research Letters also said that cutting methane emissions from the oil and gas sector, agriculture and other human sources could slow global warming by as much as 30%.

Oil and gas extraction, processing and distribution account for 23% of emissions while coal mining comprises roughly 12% of emissions, the report said. Agriculture and livestock emissions from manure and enteric fermentation account for about 32% of methane emissions.

CNBC has reached out to the American Petroleum Institute, the oil and gas industry’s largest trade group, and the American Farm Bureau Federation, a lobbying group for the U.S. agricultural sector, for comment on the U.N. report.

Countries such as Russia, France and Argentina called for curbing methane emissions at the global leaders’ climate summit hosted by President Joe Biden last month.

In the U.S., the Senate recently restored an Obama-era regulation designed to reduce methane emissions from oil and gas fields by requiring companies to monitor and repair methane leaks from pipelines, storage facilities and wells.

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Bailey says inflation ‘will be a bit bumpy’ this year

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LONDON — The governor of the Bank of England on Thursday warned inflation was likely to be “a bit bumpy” this year, but insisted there was little reason to panic over the medium term.

His comments come shortly after the central bank upgraded its outlook for the U.K. economy. The central bank now believes the U.K. is on track for growth of 7.25% this year, slightly above analyst expectations and up from a previous estimate of 5%.

The U.K.’s comparatively quick vaccination rollout, a decline in the number of Covid-19 cases nationwide and the gradual easing of restrictions on economic activity were cited as reasons that led the central bank to revise its 2021 growth forecast.

On inflation, the BOE said it expects the consumer prices index to temporarily climb above its 2% target toward the end of this year, predominantly driven by developments in commodity prices.

It sees inflation returning to around 2% over the medium term.

“We think currently the policy setting is appropriate. We have got a forecast that has a very substantially strong bounce back but thereafter it comes back more into balance,” Andrew Bailey, governor of the BOE, told CNBC’s Joumanna Bercetche on Thursday.

Andrew Bailey, governor of the Bank of England, poses for a photograph on his first day in the post at the central bank in the City of London, U.K., on Monday, March 16, 2020.

Jason Alden | Bloomberg | Getty Images

“There will be an upturn in inflation this year because there are so-called base effects. Energy prices were very low this time last year and that’s coming out, so these effects will take place,” he continued.

“Inflation is going to be a bit bumpy this year in that sense as these base effects come in and out. At the moment, we are not seeing evidence that alarms us in terms of will this become embedded in higher inflation. But we will watch it very carefully,” Bailey said.

The U.K. economy contracted 10% in 2020 as a result of the coronavirus pandemic — the worst annual performance in more than three centuries.

It was more severe when compared with most other European economies, partly due to a slower move to implement strict public health measures to curb the spread of the coronavirus.

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China’s greenhouse gas emissions exceed U.S., developed world: Report

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A person walks past a coal fired power plant in Jiayuguan, Gansu province, China, on Thursday, April 1, 2021.

Qilai Shen | Bloomberg | Getty Images

China’s greenhouse gas emissions in 2019 exceeded those of the U.S. and the developed world combined, according to a report published Thursday by research and consulting firm Rhodium Group.

China’s emissions more than tripled during the past three decades, the report added.

China is now responsible for more than 27% of total global emissions. The U.S., which is the world’s second highest emitter, accounts for 11% of the global total. India is responsible for 6.6% of global emissions, edging out the 27 nations in the E.U., which account for 6.4%, the report said.

The findings come after a climate summit President Joe Biden hosted last month, during which Chinese President Xi Jinping reiterated his pledge to make sure the nation’s emissions peak by 2030. He also repeated China’s commitment to reach net-zero emissions by mid-century and urged countries to work together to combat the climate crisis.

“We must be committed to multilateralism,” Xi said during brief remarks at the summit. “China looks forward to working with the international community, including the United States, to jointly advance global environmental governance.”

Xi said China would control coal-fired generation projects and limit increases in coal consumption over the next five years, with reductions taking place in the five years following that.

However, Chinese officials have also emphasized that economic growth, which is still largely dependent on coal power, remains a priority. And the nation is still increasing construction of coal-fired power plants.

For instance, the China Development Bank and the Export-Import Bank of China together funded $474 million worth of coal projects outside China in 2020 alone. And coal accounted for more than half of China’s domestic energy generation last year, according to Li Gao, director general of China’s ecology ministry’s department of climate change.

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China, which is home to over 1.4 billion people, saw its emissions surpass 14 gigatons of carbon dioxide equivalents in 2019, more than triple 1990 levels and a 25% increase over the past decade, the Rhodium report found. China’s per capita emissions in 2019 also reached 10.1 tons, nearly tripling over the past two decades.

China’s net emissions last year also increased by roughly 1.7% even while emissions from almost all other countries declined during the coronavirus pandemic, according to Rhodium estimates.

The Rhodium Group is a U.S. think tank that provides global emissions estimates and forecasts through the ClimateDeck, a partnership with Breakthrough Energy, the initiative founded by Bill Gates.

Slashing carbon emissions is one of the few areas on which the U.S. and China have agreed to cooperate.

Days before the summit, U.S. special envoy for climate John Kerry traveled to Shanghai to meet with officials on climate change, after which the two countries released a joint statement vowing to tackle the climate crisis together with “seriousness and urgency.”

Biden has vowed to to reduce U.S. emissions by 50% to 52% by 2030, more than doubling the country’s prior commitment under the 2015 Paris climate agreement.

A goal of the accord is to keep the global temperature rise well below 2 degrees Celsius, or 3.6 degrees Fahrenheit, compared with preindustrial levels. So far, the world is set to warm up by 1.5 C, or 2.7 F, over the next two decades alone.

— CNBC’s Evelyn Cheng contributed reporting

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