Economics

The European Commission has introduced a new carbon tax on imported goods called the Carbon Border Adjustment Mechanism (CBAM). This is meant to make sure that European companies and companies from other parts of the world are on the same page when it comes to carbon pricing and environmental commitments. Here are the main changes: 🔴 Emissions Reporting: Starting in October this year, companies have to start keeping track of how much carbon is linked to the goods they import. They need to start reporting this data by January 2024. This reporting will continue until the end of 2025. 🔴 Carbon Leakage Prevention: CBAM is a way to prevent companies from moving their production to places with weaker environmental rules to avoid carbon costs. It makes sure that European products and products made outside of Europe have similar carbon costs. 🔴 CBAM Certificates: Importers have to get CBAM certificates to match the carbon pricing between EU and non-EU products. They need to provide details about the product's carbon footprint, where it's from, how it's made, and its emissions data. This includes emissions during production and indirect emissions, like electricity use. 🔴 Covered Sectors: CBAM applies to industries with high carbon emissions like iron and steel, cement, fertilisers, aluminium, electricity, hydrogen, and some downstream products like screws and bolts. It also covers certain indirect emissions under certain conditions. Importers mainly need to report emissions during the transition phase until 2026. To help importers and producers outside of the EU adapt, the EU Commission is providing guidelines and tools to calculate emissions. They're also offering training materials and webinars. Some important data points to consider: 🟢 Carbon Leakage: A study by the European Environmental Bureau warns that unchecked carbon leakage could cause a 15% increase in global emissions, undermining climate efforts. CBAM aims to prevent this. 🟢 Emissions Differences: The World Trade Organization says that different countries have different emissions rules, leading to different carbon costs. CBAM aims to make this fairer. 🟢 Economic Impact: The European Commission estimates that the global carbon allowance market could be worth €4.5 billion per year by 2030. CBAM will significantly affect international trade and revenues. 🟢 Industry Shift: A study by the European Parliament Research Service shows that without CBAM, high-emission industries might move to places with weaker rules, leading to job losses and less competitiveness in the EU. 🟢 Green Transition: The International Monetary Fund says that well-designed carbon pricing like CBAM can encourage industries to become more environmentally friendly, contributing to a greener global economy. 🟢 Regulatory Challenges: CBAM's reporting requirements might be tough for importers initially. However, the long-term benefits of fair carbon pricing are expected to outweigh the challenges.

IKEA Circular Value Chain Model 🌍 IKEA offers a clear example of how circularity can be embedded across a global value chain. Its approach moves beyond product-level improvements to a systemic shift in how materials are sourced, products are designed, services are structured, and end-of-life is managed. At the design stage, IKEA applies circular principles to ensure that products can be reused, repaired, remanufactured, or recycled. Internal guidelines and evaluation tools help teams integrate these requirements consistently across categories, aiming to extend product life and reduce waste. Materials are a major focus, as they account for a significant share of the company's overall environmental footprint. IKEA is increasing the use of renewable and recycled inputs and testing alternative materials to reduce dependency on virgin resources and fossil-based components. The company is also scaling services that enable customers to participate in circular practices. This includes expanding buy-back programs, resale initiatives, and spare parts availability, as well as improving product designs to simplify disassembly and repair. To support broader change, IKEA is involved in policy dialogue and cross-sector collaboration. Through its partnerships and platforms, the company is contributing to discussions on harmonized standards, recycled material markets, and waste infrastructure. As part of its long-term strategy, IKEA recently committed significant capital through its investment arm to strengthen recycling capabilities across key materials such as plastics, textiles, wood, and mattresses. This aims to address structural barriers and accelerate access to quality secondary materials. These investments are already supporting the development of closed-loop systems in several markets, while also contributing to emissions reductions and supply chain resilience. The focus is on building scalable infrastructure that aligns with IKEA’s circularity and climate goals. The IKEA Circular Value Chain Model reflects a strategic shift from ambition to execution. It provides a practical framework for operationalizing circularity at scale, grounded in product design, material innovation, customer engagement, and long-term investment. #sustainability #business #sustainable #esg

Are you measuring what matters in your organization? A comprehensive measure of organizational effectiveness includes much more than profit margins and growth rates. The market and media often celebrate companies that show rapid financial growth or high profitability, leading to a cultural bias towards these metrics as signs of success BUT the tide is slowly turning- more businesses are recognizing the long-term value of a holistic approach to effectiveness and success. Many more businesses are embracing the concept of the "Triple Bottom Line," which measures success not just by financial profit ("Profit"), but also by the company's impact on people ("People") and the planet ("Planet"). HOWEVER 🚨 There is more work to be done! The prioritization of non-financial elements of organizational success can get pushed aside when financial pressures hit or quick results are valued. You have probably heard the phrase "What gets measured gets managed". This is generally true. Quantifying and measuring non-financial aspects of effectiveness, such as employee well-being, social impact, and workplace culture, is hugely important but remains challenging. 💡 Here's some straightforward steps to move you towards a more holistic approach to measuring success: 𝐒𝐭𝐚𝐫𝐭 𝐰𝐢𝐭𝐡 𝐜𝐥𝐞𝐚𝐫 𝐠𝐨𝐚𝐥𝐬: Define what holistic success means for your organization. This could include specific targets related to employee well-being, social impact, and environmental sustainability. 𝐄𝐧𝐠𝐚𝐠𝐞 𝐬𝐭𝐚𝐤𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬: Talk to employees, customers, and community members to understand what aspects of your business matter most to them. Their insights can help shape your holistic success framework. 𝐂𝐡𝐨𝐨𝐬𝐞 𝐫𝐞𝐥𝐞𝐯𝐚𝐧𝐭 𝐦𝐞𝐭𝐫𝐢𝐜𝐬: Based on your goals and stakeholder feedback, pick metrics that are meaningful and manageable. For example, employee satisfaction can be measured through regular surveys, while environmental impact can be tracked through energy consumption or waste reduction metrics. 𝐔𝐬𝐞 𝐞𝐱𝐢𝐬𝐭𝐢𝐧𝐠 𝐟𝐫𝐚𝐦𝐞𝐰𝐨𝐫𝐤𝐬: Look into established frameworks (like GRI or B Corp standards for sustainability; Gallups Q12 Engagement Survey for employee engagement or the Denison Organizational Culture Model to measure workplace culture). There are existing frameworks for most known elements of organizational effectiveness so it's just a matter of looking into them. 𝐈𝐧𝐭𝐞𝐠𝐫𝐚𝐭𝐞 𝐢𝐧𝐭𝐨 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧-𝐦𝐚𝐤𝐢𝐧𝐠: Ensure that these holistic metrics are part of regular business reviews and decision-making processes, not just side projects. 𝐑𝐞𝐩𝐨𝐫𝐭 𝐭𝐫𝐚𝐧𝐬𝐩𝐚𝐫𝐞𝐧𝐭𝐥𝐲: Share your progress openly, including both successes and areas for improvement. Transparency builds trust and credibility. 𝐂𝐨𝐧𝐭𝐢𝐧𝐮𝐨𝐮𝐬 𝐥𝐞𝐚𝐫𝐧𝐢𝐧𝐠: Be prepared to adapt and refine your approach as you learn what works and what doesn't. This is a journey, not a one-time task. #organizationaleffectiveness #measurewhatmatters #leaders

From my expertise working inside the FDA and alongside CBP, I can tell you this — what just happened isn’t a trade adjustment, it’s a regulatory upheaval. New import taxes are being introduced under the guise of fairness, but they’re about to trigger a domino effect that affects everyone moving products across borders — especially those regulated by federal agencies. Costs won’t just rise. Risk will. Businesses operating in highly controlled industries will now face a triple-threat: 🔸 Unpredictable border interventions 🔸 Shifting agency priorities 🔸 Higher stakes for even minor missteps I’ve seen this kind of pressure play out from the inside. It’s not just about what you bring into the country — it’s about whether your business is built to survive these shifts. If you're responsible for compliance, legal strategy, or product movement — especially in food, supplements, drugs, devices, cosmetics, or even pet goods — now’s the time to act, not react. #TradePolicy #RegulatoryStrategy #FDACompliance #TariffImpact #USImports #GlobalTrade #CBPEnforcement #SupplyChainRisks #ExecutiveLeadership #LegalStrategy #FoodLaw #PharmaCompliance #MedicalDeviceRegulations #PetIndustryRegulations #CrossBorderTrade #ProductSafety #RiskMitigation #ThoughtLeadership #USDA #LinkedInCreators

I wanted to share the most complete data I'm aware of to gauge potential inflationary effects of proposed Mexico, Canada, and China tariffs. What I've done is merge in data on domestic production, total imports, trade margins [think retailer and wholesaler markups], transportation costs, taxes & duties less subsidies, and purchaser prices from the Bureau of Economic Analysis 2023 Supply Table (71-industries) and then merged in Canadian, Chinese, and Mexican import data from the Census Bureau. For simplicity, I'm assuming a 25% across the board tariff on all three countries (note, I know the proposed expansion of tariffs on Chinese goods was just 10%, so keep in mind). Thoughts: •In the 4th column of data, we see the percentage of imports for each commodity type Canada, China, and Mexico account for. For example, 68% of oil & gas imports come from these three countries (Canada leading the way), 62% of electrical equipment (NAICS 335), etc. •To arrive at the percentage increase in purchaser prices, I multiply the Imports column by the Canadian & Chinese & Mexican percentage of imports column and then multiply by 0.25 (for the 25% tariff). I take this product and divide it by the purchaser prices column to arrive at the tariff shock estimate (last column). Across all goods, this number is 1.9%; the same figure applies for manufactured goods alone. The number ranges as high as 5.1% for electrical equipment to < 1%. •One thing to note: I'm not accounting for any cost pass-through dynamics in the supply chain (e.g., Canadian crude oil becomes more expensive means Midwest refiners increase prices to pass along higher costs). •I'm also assuming the trade margins (which are very substantial, especially for categories like apparel where they are much larger than the value of domestic production + imports) don't change. I don't see this as realistic, as sellers need to protect gross margin rates. This assumption likely counterbalances any over-estimate from the 25% tariff assumption. Implication: You can't look at these data and say that the Canada, China, and Mexican tariffs being floated won't be inflationary as it pertains to goods. My analysis gives possibly the most complete picture I've yet seen. #supplychain #shipsandshipping #economics #markets #freight

Brand extensions are the Marvel sequels of the business world: high expectations, yet often disappointing. So, how do you create 'The Godfather II' and not an ‘Iron Man 3’? The formula is simple but often ignored—align with your core brand while differentiating. Your extension isn't just a new SKU; it's a fresh narrative that needs to weave into your brand's existing story. Market differentiation needs to meet brand continuity. Don't skimp on market research. Test your idea in the form of a concept card before test launching in limited markets. Leverage your brand equity to set the brand extension up for success, but remember: that equity was hard-earned, so don't dilute it. Here, most brands trip up by launching products/services so far off the core of the main brand that they suffer from a lack of credibility and fail to take off. I have made this mistake myself. The most notable was when I tried to drive up sales of Head & Shoulders anti-dandruff conditioners in SE Asia. In Asia, conditioners are meant to keep your hair smooth and silky - why would you trust a ‘harsh’ anti-dandruff shampoo to give you that hair? Finally, set up a feedback loop. Monitor, adapt, repeat. In a crowded market, the brands that listen are the brands that last. The key to success for a brand extension lies in establishing a clear differentiation in the market while still remaining true to the core brand narrative so that consumers see this as a fresh product, sharing the brand legacy and a strong brand equity with the parent brand. In summary, to set up brand extensions for success: 1. Conduct exhaustive market research 2. Identify unique value propositions 3. Test with a limited launch 4. Leverage existing brand equity 5. Continuously monitor and adapt #marketing #brand #business

Don’t make these common mistakes in techno-economic assessments (and avoid misleading conclusions.) TEA is a powerful tool to assess the feasibility of emerging technologies. But even small mistakes can lead to misleading conclusions and poor decisions. Here are 5 key mistakes I’ve seen repeatedly—and how to fix them: 1. Overestimating Technology Performance Challenge: Assuming ideal or lab-scale performance when scaling up. Real-world conditions often bring inefficiencies. Fix: Use conservative assumptions, validate with experimental data, and conduct sensitivity analysis. 2. Ignoring Uncertainty Problem: Treating input values (e.g., costs, energy efficiency) as fixed leads to rigid, unreliable results. Fix: Perform sensitivity and scenario analyses to identify critical variables and explore best/worst cases. 3. Using Outdated or Poor-Quality Data The Problem: Relying on old data or inconsistent sources reduces the credibility of your TEA. Fix: Source data from updated literature, validated models, or credible industry benchmarks, and clearly document assumptions. If data is missing for new technologies, use proxy technologies and check uncertainties. 4. Oversimplifying Economic Analysis Problem: Focusing only on capital costs (CAPEX) while ignoring operating costs (OPEX), maintenance, or financing impacts. Or focusing on single metrics, like NPV. Fix: Include all cost components—CAPEX, OPEX, and life-cycle costs—and calculate key metrics like NPV, IRR, and payback period. 5. Neglecting Policy and Market Factors Problem: Ignoring factors like carbon pricing, subsidies, or fluctuating raw material costs can skew results. Fix: Integrate policy scenarios, market trends, and potential incentives to build a more realistic TEA. Techno-economic analysis is only as good as its assumptions and methods. Avoiding these mistakes will help you deliver insights that are credible, actionable, and valuable for decision-making. We’re going to discuss all these challenges with TEA and more during my workshop in Q1 2025. What challenges have you faced when conducting TEA? I’d love to hear your thoughts in the comments! #Research #ChemicalEngineering #Economics #Energy #PhD #Scientist #Professor

Modeling something like time series goes past just throwing features in a model. In the world of time series data, each observation is associated with a specific time point, and part of our goal is to harness the power of temporal dependencies. Enter autoregression and lagging -  concepts that taps into the correlation between current and past observations to make forecasts.  At its core, autoregression involves modeling a time series as a function of its previous values. The current value relies on its historical counterparts. To dive a bit deeper, we use lagged values as features to predict the next data point. For instance, in a simple autoregressive model of order 1 (AR(1)), we predict the current value based on the previous value multiplied by a coefficient. The coefficient determines the impact of the past value on the present one only one time period previous. One popular approach that can be used in conjunction with autoregression is the ARIMA (AutoRegressive Integrated Moving Average) model. ARIMA is a powerful time series forecasting method that incorporates autoregression, differencing, and moving average components. It's particularly effective for data with trends and seasonality. ARIMA can be fine-tuned with parameters like the order of autoregression, differencing, and moving average to achieve accurate predictions. When I was building ARIMAs for econometric time series forecasting, in addition to autoregression where you're lagging the whole model, I was also taught to lag the individual economic variables. If I was building a model for energy consumption of residential homes, the number of housing permits each month would be a relevant variable. Although, if there’s a ton of housing permits given in January, you won’t see the actual effect of that until later when the houses are built and people are actually consuming energy! That variable needed to be lagged by several months. Another innovative strategy to enhance time series forecasting is the use of neural networks, particularly Recurrent Neural Networks (RNNs) or Long Short-Term Memory (LSTM) networks. RNNs and LSTMs are designed to handle sequential data like time series. They can learn complex patterns and long-term dependencies within the data, making them powerful tools for autoregressive forecasting. Neural networks are fed with past time steps as inputs to predict future values effectively. In addition to autoregression in neural networks, I also used lagging there too! When I built an hourly model to forecast electric energy consumption, I actually built 24 individual models, one for each hour, and each hour lagged on the previous one. The energy consumption and weather of the previous hour was very important in predicting what would happen in the next forecasting period. (this model was actually used for determining where they should shift electricity during peak load times). Happy forecasting!

🚨 Breaking: Circular economy by law Scotland🏴󠁧󠁢󠁳󠁣󠁴󠁿: 6 take-aways that inspire👇 Here are 6 key takeaways from the new Scotland's Circular Economy Bill. 1️⃣ Setting clear targets: The bill requires the Scottish government to set statutory circular economy targets and publish a circular economy strategy every 5 years. This provides a clear roadmap for progress. 2️⃣ Addressing specific issues: The bill targets unsold goods disposal and single-use items. For example, it introduces powers to restrict the disposal of unsold consumer goods and place charges on single-use items like disposable cups. 3️⃣ Empowering authorities: The bill grants Scottish ministers and local councils new powers to enforce circular economy measures. This includes giving local authorities additional enforcement powers to crack down on flytipping and littering from cars. 4️⃣ Improving recycling infrastructure: The bill is supported by a £70 million Recycling Improvement Fund to help local authorities modernize their services. This aims to contribute to a step change in Scotland's recycling performance. 5️⃣ Producer responsibility: The bill aligns with the UK-wide Extended Producer Responsibility for packaging, set to be implemented from 2024 onwards. This will make producers fully responsible for the waste created by their packaging. 6️⃣ Measuring progress: The bill introduces requirements for mandatory public reporting on food waste and surplus. This will help track progress and identify areas for improvement. Congrats - we need more of that! #circulareconomy #zerowaste #linkedtopvoices

One thing that has always intrigued me is the widespread confusion between preference "eligibility" and actual preference "utilization". Many assume that once a free trade agreement or preferential scheme is put in place, traders will automatically reap the benefits. The reality is far more complex. Traders often encounter compliance challenges, or find that the preference margin doesn’t justify the additional red tape, leading them to opt for the most-favoured nation (MFN) tariff instead. With more than 600 regional trade agreements in place, this raises a crucial question: What share of global trade still takes place under the MFN conditions by the World Trade Organization? I am sure that the answer will surprise you. But before I tell you why, let me clarify that calculating this with precision—down to the national tariff level—is a number crunchers' nightmare. The challenges include limited data availability and the sheer scale of information involved. Yet ,my colleagues Tomasz Gonciarz and Thomas Verbeet rose to the occasion and produced a fascinating Staff Working Paper which dives into this intricate topic that was published yesterday (link in comments). Among the many fascinating insights is the chart below, illustrating how broad sectors of world trade utilize preferential schemes. For example, preferences seem to be proportionally very important for sectors like fruits &vegetables, transport equipment, and clothing and textiles, but not so much for other sectors. Key Insights: 1️⃣ Despite the proliferation of trade agreements, over 80% of international merchandise trade still takes place under MFN conditions, underscoring the enduring significance of WTO rules; about half of world trade takes place in MFN-duty free tariffs lines (i.e. pay no tariff). 2️⃣ While 22% of global trade is eligible for preferential tariffs, only 17% effectively benefits. Factors such as complex rules of origin, administrative burdens, or a business decision not to change the supply chain in order to comply with the rules contribute to this underutilization. 3️⃣ Trade remedies like anti-dumping and countervailing duties modestly impact global trade as a whole, affecting only 1.3% and 0.6% of global imports, respectively, though they can be quite significant in certain sectors (just think of steel and other metals...). 4️⃣ Bilateral tariff measures between the United States and China affect a significant share of their trade flows, but account for just 1.9% of global imports. Are you surprised by any of these numbers? What’s your perspective? Will MFN remain the MVP of global trade? #Economy #Economics #TradePolicy #WTO #MFN #GlobalEconomy #Tariffs #Customs #InternationalTrade #Tradenerd