Archive for Opinions – Page 5

09 Dec

What 38 million obituaries reveal about how Americans define a ‘life well lived’

By Stylianos Syropoulos, Arizona State University; David Markowitz, Michigan State University, and Kyle Fiore Law, Arizona State University 

Obituaries preserve what families most want remembered about the people they cherish most. Across time, they also reveal the values each era chose to honor.

In a study published in the journal Proceedings of the National Academy of Sciences, we analyzed 38 million obituaries of Americans published from 1998 to 2024. We identified the values families most often highlight, and how those values shift across generations, regions and major historical events.

Specifically, working with psychologists Liane Young and Thomas Mazzuchi, we examined the language used on Legacy.com, an online platform where families often post obituaries and share memories of loved ones.

During their lifetime, most people tend to be guided by a small set of broad values like caring for others, honoring tradition, keeping loved ones safe and seeking personal growth. To understand how these values showed up in remembrance, we used text-analysis tools built on curated lists of everyday words people use when talking about those themes.

By analyzing the words that appeared again and again in memorials, we could see which values communities chose to emphasize when looking back on the lives of their loved ones, and how those patterns changed over time. Because the dataset included 38 million obituaries, the analysis ran on a supercomputer.

Across nearly 30 years of obituaries, words related to the value “tradition” appeared most often – many tributes described religious participation and enduring customs. Words related to the value “benevolence” – caring for the welfare of others – were also consistently prominent. In fact, tradition and benevolence formed the dominant value profile across the dataset: They appeared in more than 70% of the obituaries. By contrast, words related to values like “achievement” and “power” appeared far less often.

Historical events did leave a mark. After the attacks of Sept. 11, 2001, the language families used to remember loved ones shifted compared with the period just before the attacks – and those shifts persisted for at least a year. Words related to the value “security” – including terms like “surviving,” “health” and “order” – showed up less often. At the same time, families used more language related to values like “benevolence” and “tradition.” Terms like “caring,” “loyal” and “service” showed up more often. These changes were especially strong in New York, where the attacks had the most direct impact.

COVID-19, however, produced the most dramatic shifts. Beginning in March 2020, benevolence-related language – including terms like “love,” “sympathy” and “family” – declined sharply, and hasn’t been the same since. Tradition-related language – terms like “service,” “faith” and “heritage” – initially declined as well, then rose above baseline levels during later stages of the pandemic.

These changes show that collective disruptions impact the moral vocabulary families use when commemorating loved ones. They shift what it means to have lived a good life.

We also saw differences that reflect stereotypes about gender and age. Obituaries for men contained more language linked to achievement, conformity and power. Meanwhile, obituaries for women contained more language associated with benevolence and enjoying life’s pleasures.

Older adults were often remembered more for valuing tradition. Younger adults, on the other hand, were often remembered more for valuing the welfare of all people and nature, and for being motivated to think and act independently. Value patterns in men’s obituaries shifted more across the lifespan than those in women’s. In other words, the values highlighted in younger and older men’s obituaries differed more from each other, while women’s value profiles stayed relatively consistent across age.

Why it matters

The most visited parts of print newspapers and online memorial sites, obituaries offer a window into what societies value at different points in time.

This study contributes to the broader scientific understanding of legacy. People often hold strong preferences about how they want to be remembered, but far less is known about how they actually are remembered, in part because large-scale evidence about real memorials is rare. Our analysis of millions of obituaries helps fill that gap.

What’s next

Obituaries allow researchers to trace cultural values across time, geography and social groups. Future work can examine differences across race and occupation, as well as across regions. It could also look to earlier periods using historical obituary archives, such as those preserved in older newspapers and local records.

Another direction is to examine whether highlighting how often kindness shows up in obituaries could inspire people to be more caring in daily life.

Understanding what endures in memory helps clarify what people consider meaningful; those values shape how they choose to live.

The Research Brief is a short take on interesting academic work.The Conversation

About the Author: 

Stylianos Syropoulos, Assistant Professor of Psychology, Arizona State University; David Markowitz, Associate Professor of Communication, Michigan State University, and Kyle Fiore Law, Postdoctoral Research Scholar in Sustainability, Arizona State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
08 Dec

How keeping down borrowing costs for mortgages and other loans is built into the Fed’s ‘dual mandate’

By Arabinda Basistha, West Virginia University 

What’s the point of monetary policy?

For most of us, the main impact tends to be how much we have to pay to borrow to buy a house or car. But for the Federal Reserve, the purpose of its monetary policy is mandated by Congress.

This is widely known as the Federal Reserve’s dual mandate: promoting maximum employment and stable prices. The Fed itself refers to these two objectives regularly in its Federal Open Market Committee statements announcing its monetary policy decisions.

A third objective of monetary policy, however, is less well-known: moderate long-term interest rates.

This “third mandate” was a big news story in September 2025, when the Trump administration’s newly appointed Fed governor, Stephen Miran, referred to it in his testimony before the Senate Banking Committee. Financial markets paid close attention to this aspect of the testimony because the comments suggested that Miran and other presidential appointees may focus on this third mandate – and on driving down long-term borrowing costs – more than the Fed has in the recent past.

I’ve been closely following how the Fed conducts monetary policy for many years. Miran is correct that Congress has tasked the U.S. central bank with all three of these objectives – but that’s not the whole story. In fact, none of these goals were originally spelled out in the act that set up the Fed over a century ago.

Since then, the Fed’s goals have been revised several times – typically in response to a crisis.

The Fed’s shifting goals

The original purpose of the Fed, as explained in the Federal Reserve Act of 1913, was to provide flexibility in the nation’s currency supply and to supervise the U.S. banking system. The current dual mandate was not part of the original goals of the Fed.

Instead, its core goal was to reduce the frequent banking panics that were costly to the economy and sharply increased interest rates.

The first big change in the goals, in response to the Great Depression, was the Employment Act of 1946 that stated the goal of federal government policy – and, therefore that of the Fed – is to “promote maximum employment, production and purchasing power.”

This is where the two goals of the dual mandate first began to emerge, with purchasing power implying the Fed needed to keep inflation low.

Following the macroeconomic instability of the 1970s with high unemployment and high inflation, Congress enacted the Federal Reserve Reform Act of 1977 that formalized the Fed mandate: “maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote the goals of maximum employment, stable prices, and moderate long-term interest rates.”

In other words, Congress gave the Fed three mandates to follow in monetary policy.

What happened to the third mandate?

So why doesn’t the Fed still talk about that third mandate?

Part of the answer is that moderate long-term interest rates are a natural by-product of successfully managing the other two.

In pursuit of low inflation and maximum employment, the Fed primarily uses a short-term interest rate, known as the Federal Funds rate. When journalists report that the Fed raised or lowered interest rates, this refers to the so-called target rate that the central bank uses to control the Fed Funds rate. For example, the current target rate is a range of 3.75% to 4%, while the effective Fed Funds rate is 3.89%. Banks use the funds rate as the cost other banks must pay to borrow reserve funds for one day.

However, most of the interest rates that matter to people, businesses and the economy at large have much longer terms – such as five, 10 or 30 years. Examples include mortgages, car loans and corporate bonds. The Fed does not directly control these longer-term interest rates, which are set by financial markets.

But studies have found that the Fed’s policy decisions can influence long-term rates, primarily due to “expectations theory.” That theory argues that long-term rates reflect financial markets’ expectations of future short-term rates.

So if markets believe the Fed has inflation under control, they tend to keep long-term rates on mortgages and everything else low because they don’t expect the Fed will increase its target rate. If inflation is running high, long-term rates tend to rise because markets expect the Fed to have to lift its short-term rate to deal with it. But if unemployment is running high, long-term rates tend to fall because markets expect the Fed to reduce its short-term rate to deal with that.

Longer-term rates are, therefore, not independent of the dual mandate of the Fed. They are often an outcome of how successfully the Fed is meeting the dual mandate of full employment and stable prices currently and in the future.

As a result, the Fed doesn’t typically talk about this third mandate.

Promoting economic stability

That said, the Fed has, at times, although very rarely, influenced long-term rates directly.

For example, in late 2010, following the Great Recession of 2007-2009, the Fed purchased billions of dollars’ worth of long-term Treasury bonds and other securities – a program known as “QE2” for quantitative easing – in an effort to lower the cost of borrowing for consumers and businesses. The Fed did something similar in 1961 with Operation Twist, similarly with an aim to support the U.S. economy by reducing long-term borrowing costs.

But even this phase of quantitative easing was primarily about meeting the Fed’s dual mandate. More specifically, since inflation was already low, the Fed was trying to boost hiring in the wake of the Great Recession.

The Fed is keenly aware that longer-term interest rates that are not aligned with its dual mandate can be an important source of instability in the economy. A modern central bank’s primary goal is to promote stability in the economy, so longer-term interest rates should be at levels that are appropriate to ensure current and future economic stability.The Conversation

About the Author:

Arabinda Basistha, Associate Professor of Economics, West Virginia University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
08 Dec

Netflix-Warner deal would drive streaming market further down the road of ‘Big 3’ domination

By David R. King, Florida State University 

When it comes to major U.S. industries, three tends to be the magic number.

Historically, auto manufacturing was long dominated by Chrysler, Ford and General Motors – the so-called “Big Three,” which at one point controlled over 60% of the U.S. auto market. A dominant trio shows up elsewhere, too, in everything from the U.S. defense market – think Lockheed Martin, Boeing and Northrup Grumman – to cellphone service providers (AT&T, T-Mobile and Verizon). The same goes for the U.S. airline industry in which American, Delta and United fly higher than the rest.

The rule of three also applies to what Americans watch; the glory days of television was dominated by three giants: ABC, CBS and NBC.

Now, in the digital age, we are rapidly moving to a “Big Three” dominating streaming services: Netflix, Amazon and Disney.

The latest step in that process is Netflix’s plan to acquire Warner Bros. for US$72 billion. If approved, the move would solidify Netflix as the dominant streaming platform.

When streams converge

Starting life as a mail DVD subscription service, Netflix moved into streaming movies and TV shows in 2007, becoming a first-mover into the sphere.

Being an early adopter as viewing went from cable and legacy to online and streaming gave Netflix an advantages in also developing support technology and using subscriber data to create new content.

The subsequent impact was Netflix became a market leader, with quarterly profits now far exceeding its competitors, which often report losses.

Today, even without the Warner Bros. acquisition, Netflix has a dominant global base of over 300 million subscribers. Amazon Prime comes second with roughly 220 million subscribers, and Disney – which includes both Disney+ and Hulu – is third, with roughly 196 million subscribers. This means that between them, these three companies already control over 60% of the streaming market.

Netflix’s lead would only be reinforced by the proposed deal with Warner Bros., as it would add ownership of Warner subsidiary HBO Max, which is currently the fourth-biggest streamer in the U.S. with a combined 128 million subscribers. While some of them will overlap, Netflix is likely to still gain subscribers and better retain them with a broader selection of content.

Netflix’s move to acquire Warner Bros. also follows prior entertainment industry consolidation, driven by a desire to control content to retain streaming service subscribers.

In 2019, Disney acquired 21st Century Fox for $71.3 billion. Three years later, Amazon acquired Metro-Goldwyn-Mayer for $8.5 billion.

Should the Netflix deal go through, it would continue this trend of streaming consolidation. It would also leave a clear gap at the top between the emerging Big Three and other services, such as Paramount+ with 79 million subscribers and Apple TV+, which has around 45 million. Paramount+ was also a rival bidder for Warner Bros., and while it is protesting Netflix’s deal for Warner Bros., it likely will need to pursue other options to remain relevant in streaming.

Why industries come in threes

But why do industries converge to a handful of companies?

As an expert on mergers, I know the answer comes down to market forces relating to competition, which tends to drive consolidation of an industry into three to five firms.

From a customer perspective, there is a need for multiple options. Having more than one option avoids monopolistic practices that can see prices fixed at a higher rate. Competition between more than one big player is also a strong incentive for additional innovation to improve a product or service.

For these reasons, governments – in the U.S. and over 100 other countries – have antitrust laws and practices to avoid any industry displaying limited competition.

However, as industries become more stable, growth tends to slow and remaining businesses are forced to compete over a largely fixed market. This can separate companies into industry leaders and laggards. While leaders enjoy greater stability and predictable profits, laggards struggle to remain profitable.

Lagging companies often combine to increase their market share and reduce costs.

The result is that consolidating industries quite often land on three main players as a source of stability – one or two risks falling into the pitfalls of monopolies and duopolies, while many more than three to five can struggle to be profitable in mature industries.

What’s ahead for the laggards

The long-term viability of companies outside the “Big Three” streamers is in doubt, as the main players get bigger and smaller companies are unable to offer as much content.

A temporary solution for smaller streamers to gain subscribers is to offer teaser rates that later increase for people that forget to cancel until companies take more permanent steps. But lagging services will also face increased pressure to exit streaming by licensing content to the leading streaming services, cease operations or sell their services and content.

Additionally, companies outside the Big Three could be tempted to acquire smaller services in an attempt to maintain market share.

There are already rumors that Paramount, which was a competing bidder for Warner Bros., may seek to acquire Starz or create a joint venture with Universal, which owns Peacock.

Apple shows no immediate plan of discontinuing Apple TV+, but that may be due to the company’s high profitability and an overall cash flow that limits pressures to end its streaming service.

Still, if the Netflix-Warner Bros. deal completes, it will likely increase the valuation of other lagging streaming services due to increased scarcity of valuable content and subscribers. This is due to competitive limits that restrict the Big Three from getting bigger, making the combination of smaller streaming services more valuable.

This is reinforced by shareholders expecting similar or greater premiums from prior deals, driving the need to pay higher prices for the fewer remaining available assets.

The cost to consumers

So what does this all mean for consumers?

I believe that in general, consumers will largely not be impacted when it comes to the overall cost of entertainment, as inflationary pressures for food and housing limit available income for streaming services.

But where they access content will continue to shift away from cable television and movie theaters.

Greater stability in the streaming industry through consolidation into a Big Three model only confirms the decline in traditional cable.

Netflix’s rationale in acquiring Warner Bros. is likely to enable it to offer streaming at a lower price than the combined price of separate subscriptions, but more than Netflix alone.

This could be achieved through additional subscription tiers for Netflix subscribers wanting to add HBO Max content. Beyond competition with other members of the “Big Three,” another reason why Netflix is unlikely to raise prices significantly is that it will likely commit to not doing so in order to get the merger approved.

Netflix’s goal is to ensure it remains consumer’s first choice for streaming TV and films. So while streaming is fast becoming a Big Three industry, Netflix’s plan is to remain at the top of the triangle.The Conversation

About the Author: 

David R. King, Higdon Professor of Management, Florida State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Stock Market News
05 Dec

Week Ahead: Fed showdown to set market tone

By ForexTime 

 

  • Fed expected to cut rates for third time in 2025 
  • Updated dot plot and economic projections in focus
  • Trader’s pricing 27% chance of another cut by January 2026 
  • RUS2000: Fed decision forecasted to trigger moves of ↑ 1.8% & ↓ 2.5% 
  • XAGUSD & Bitcoin to see fresh volatility?

The Fed’s decision on December 10th could be the biggest event in Q4!

Such an event is likely to trigger fresh opportunities across markets.

To be clear, US rates are expected to be cut for the third time this year but the outlook for 2026 is harder to determine.

Considering the many variables at play, anything is on the table…

Before we take a deep dive, here is a calendar of events for the week ahead:

Monday, 8th December

  • CNY: China Balance of Trade (Nov)
  • EUR: Germany Industrial Production (Oct)
  • JPY: Japan GDP (Q3 final)
  • CHF: Swiss Consumer Confidence (Nov)

 

Tuesday, 9th December

  • GBP: BRC Retail Sales Monitor (Nov)
  • AUD: RBA Interest Rate Decision; NAB Business Confidence (Nov)
  • EUR: Germany Balance of Trade (Oct)
  • USD: US JOLTs Job Openings (Sep & Oct); ADP Employment Change Weekly; Nonfarm productivity (Q3)
  • WTI: API Crude Oil Stocks Change (w/e Dec 5)

 

Wednesday, 10th December

  • CNY: China Inflation Rate (Nov); PPI (Nov)
  • USD: Fed Interest Rate Decision; FOMC Economic Projections
  • CAD: BoC Interest Rate Decision
  • SPN35: Spain Consumer Confidence (Nov)
  • WTI: US EIA Crude Oil Stocks Change (w/e Dec 5)

 

Thursday, 11th December

  • GBP: RICS House Price Balance (Nov)
  • CHF: SNB Interest Rate Decision
  • USD: US Balance of Trade (Sep); Initial Jobless Claims (w/e Dec 6); PPI (Oct & Nov)
  • NZD: New Zealand Business PMI (Nov)
  • Brent: OPEC Monthly Report

Friday, 12th December

  • GBP: UK GDP (Oct); Industrial Production (Oct); Manufacturing Production (Oct)
  • USD: Fed Goolsbee Speech

 

Why is the December Fed meeting a big deal?

Missing economic data caused by the government shutdown and a deeply divided committee have left most scratching their heads over what to expect in 2026.

The absence of October’s NFP report and the latest CPI will force officials to decide based on incomplete information, at a time when the FOMC is more divided than in recent years.

Amidst the uncertainty, the Fed also publishes its updated economic projections and dot plot which may set the tone for policy in 2026.

 

Market expectations…

Traders are pricing in a 98% probability of a rate cut in December and expecting up to four rate cuts in 2026.

But these expectations may be heavily influenced by Fed Chair Powell’s press conference and the updated dot plot.

Will the dot plot tilt more in favour of hawks or doves? Whatever the outcome, it could rock financial markets.

Potential market impact…

Dovish tilt: supports risk assets (US equities), softens USD, lowers yields; bullish for gold/silver and Bitcoin.

Hawkish tilt: pressures equities, boosts USD, lifts yields; headwind for precious metals and cryptos.

 

Here is how these assets are forecasted to react in a 6-hour period after the Fed decision.

 

Source: Bloomberg.

  • USDInd: ↑ 0.6 % or ↓ 0.2%
  • NAS100: ↑ 1.6 % or ↓ 1.5%
  • US500: ↑ 1.3 % or ↓ 1.3%
  • XAUUSD: ↑ 0.3 % or ↓ 1.0%
  • BITCOIN: ↑ 2.0 % or ↓ 1.8%
  • RUS2000: ↑ 1.8 % or ↓ 2.5%
  • XAGUSD: ↑ 0.5 % or ↓ 1.4%

 

Looking at the charts, RUS2000, BITCOIN and XAGUSD could be set for significant price swings. Key price levels have been identified on the charts.

 

RUS2000

FXTM’s RUS2000 tracks the smallest 2000 publicly listed US companies that are more reflective of true economic conditions.

It has gained roughly 13% year-to-date, trading roughly 1% away from its all-time high.

Key levels of interest can be found at 2547.6, 2500. and 2465.0.

 

BITCOIN

Bitcoin is back above $90,000 but bulls need to take out the psychological $100,000 to regain back control.

As highlighted earlier, a dovish tile may boost prices higher while a hawkish tilt may spark a selloff.

 

XAGUSD

Silver is up almost 100% year-to-date, hitting an all-time high earlier in the week.

If the Fed signals further rate cuts in 2026, this could fuel the rally – opening a path to fresh highs.

Key levels can be found at $58.90, $54.40 and $49.50.

 

Forex-Time-LogoArticle by ForexTime

 

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Opinions
02 Dec

A backlash against AI imagery in ads may have begun as brands promote ‘human-made’

By Paul Harrison, Deakin University 

In a wave of new ads, brands like Heineken, Polaroid and Cadbury have started hating on artificial intelligence (AI), celebrating their work as “human-made”.

But in these advertising campaigns on TV, billboards on New York streets and on social media, the companies are signalling something larger.

Even Apple’s new series release, Pluribus, includes the phrase “Made by Humans” in the closing credits.

Other brands including H&M and Guess have faced a backlash for using AI brand ambassadors instead of humans.

These gestures suggest we have reached a cultural moment in the evolution of this technology, where people are unsure what creativity means when machines can now produce much of what we see, hear and perhaps even be moved by.

This feels like efficiency – for executives

At a surface level, AI offers efficiencies such as faster production, cheaper visuals, instant personalisation, and automated decisions. Government and business have rushed toward it, drawn by promises of productivity and innovation. And there is no doubt that this promise is deeply seductive. Indeed, efficiency is what AI excels at.

In the context of marketing and advertising, this “promise”, at least at face value, seems to translate to smaller marketing budgets, better targeting, automated decisions (including by chatbots) and rapid deployment of ad campaigns.

For executives, this is exciting and feels like real progress, with cheaper, faster and more measurable brand campaigns.

But advertising has never really just been about efficiency. It has always relied on a degree of emotional truth and creative mystery. That psychological anchor – a belief that human intention sits behind what we are looking at – turns out to matter more than we like to admit.

Turns out, people care about authenticity

Indeed, people often value objects more when they believe those objects carry traces of a person’s intention or history. This is the case even when those images don’t differ in any material way from a computer-generated image.

To some degree, this signals consumers are sensitive to the presence of a human creator, because when visually compelling computer-generated images are labelled as machine-made, people tend to rate them less favourably.

Indeed, when the same paintings are randomly labelled as either “human created” or “AI created”, people consistently judge the works they believe to be “human created” as more beautiful, meaningful and profound.

It seems the simple presence of an AI label reduces the perceived creativity and value.

A betrayal of creativity

However, there is an important caveat here. These studies rely on people being told who made the work. The effect is a result of attribution, not perception. And so this limitation points towards a deeper problem.

If evaluations change purely because people believe a work was machine made, the response is not about quality, it is about meaning. It reflects a belief that creativity is tied to intention, effort and expression. These are qualities an algorithm doesn’t possess, even when it creates something visually persuasive. In other words, the label carries emotional weight.

There are, of course, obvious examples of when AI goes comedically wrong. In early 2024, the Queensland Symphony Orchestra promoted its brand using a very strange AI-generated image most people instantly recognised as unnatural. Part of the backlash, along with the unsettling weirdness of the image, was the perception an arts organisation was betraying human creativity.

But as AI systems improve, people often struggle to distinguish synthetic from real. Indeed, AI generated faces are judged by many to be just as real, and sometimes more trustworthy, than actual photographs.

Research shows people overestimate their ability to detect deepfakes, and often mistake deepfake videos as authentic.

Although we can see emerging patterns here, the empirical research in this area is being outpaced by AI’s evolving capabilities. So we are often trying to understand psychological responses to a technology that has already evolved since the research took place.

As AI becomes more sophisticated, the boundary between human and machine-made creativity will become harder to perceive. Commerce may not be particularly troubled by this. If the output performs well, the question of origin become secondary.

Why we value creativity

But creative work has never been only about generating content. It is a way for people to express emotion, experience, memory, dissent and interpretation.

And perhaps this is why the rise of “Made by Humans” actually matters. Marketers are not simply selling provenance, they are responding to a deeper cultural anxiety about authorship in a moment when the boundaries of creativity are becoming harder to perceive.

Indeed, one could argue there is an ironic tension here. Marketing is one of the professions most exposed to being superseded by the same technology marketers are now trying to differentiate themselves from.

So whether these human-made claims are a commercial tactic or a sincere defence of creative intention, there is significantly more at stake than just another way to drive sales.The Conversation

About the Author:

Paul Harrison, Director, Master of Business Administration Program (MBA); Co-Director, Better Consumption Lab, Deakin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Programming
21 Nov

$2B Counter-Strike 2 crash exposes a legal black hole: Your digital investments aren’t really yours

By João Marinotti, Indiana University 

In late October 2025, as much as US$2 billion vanished from a digital marketplace. This wasn’t a hack or a bubble bursting. It happened because one company, Valve, changed the rules for its video game Counter-Strike 2, a popular first-person shooter with a global player base of nearly 30 million monthly users.

For years, its players have bought, sold and traded digital cosmetic items, known as “skins.” Some rare items, particularly knives and gloves, commanded high prices in real-world money – up to $1.5 million – leading some gamers to treat the market like an investment portfolio. As a result, many investment-style analytics websites charge monthly fees for financial insight, trends and transaction data from this digital marketplace.

In one fell swoop, Valve unilaterally changed the game. It expanded the “trade up contract,” allowing players to exchange – or “trade up” – a number of their common assets into knives or gloves.

By flipping this switch, Valve instantly upended digital scarcity. The market was flooded with new supply, and the value of existing high-end items collapsed. Prices plummeted, initially erasing half the market’s total value, which exceeded $6 billion before the recent crash. Although a partial recovery brought the net loss to roughly 25%, significant volatility continues, leaving investors unsure whether the bottom has truly fallen out.

Many of those who saw their digital fortunes evaporate immediately wondered whether there was anything they could do to get their money back. Speaking as a law professor and a gamer myself, the answer isn’t what they want to hear: no. In fact, the existing legal structure largely protects Valve’s ability to engage in this sort of digital market manipulation. Players and investors were simply out of luck.

The Counter-Strike 2 crash reveals a troubling reality that extends far beyond video games: Corporations have built exchange-scale investment markets governed primarily by private terms-of-service agreements, rather than the robust set of public regulations that oversee traditional financial and consumer markets. These digital economies occupy a legal blind spot, lacking the fundamental guardrails of property rights, meaningful consumer protection or even securities regulation.

Buyer’s guides like this one have cropped up on YouTube.

Your digital ‘property’ isn’t really yours

If you spend real money on a digital item, it may feel like you should own it. Legally, you don’t.

The digital economy is built on a crucial distinction between ownership and licensing. When users sign up for Steam, Valve’s platform, they agree to the Steam subscriber agreement. Buried in that contract is a critical piece of legalese stating that all digital assets and services provided by Valve, including the Counter-Strike 2 skins, are merely “licensed, not sold.” The license granted to users “confers no title or ownership” at all. This isn’t meaningless corporate jargon; it’s a legal standard routinely affirmed by U.S. courts.

The legal implication is clear: Because players only license their skins, they have no property rights over them. When Valve changed the game’s mechanics in a way that collapsed the items’ market value, it didn’t steal, damage or destroy anyone’s “property.” In the eyes of the law, Valve simply altered the conditions of a license, something that its terms-of-service agreement allows it to do unilaterally, at any time, for any reason.

Consumer protection laws don’t apply

While the Counter-Strike 2 crash may seem like a violation of consumer rights, current laws are ill-equipped to handle this type of corporate behavior.

Lawmakers have begun addressing concerns about digital goods, primarily focusing on instances where purchased movies or games disappear entirely from user libraries. For example, California recently enacted AB 2426. This law requires transparency, prohibiting terms like “buy” or “purchase” unless the consumer confirms that they understand they will receive only a revocable license.

As commendable as this law is, it protects only against confusion and loss of access, not loss of market value when platforms rebalance virtual economies. Valve can comply with consumer transparency laws and still adjust the supply of digital items, rendering them valueless overnight. Ultimately, current consumer protection laws are designed to ensure users know what they are licensing. They do not, however, create ownership interests or protect the speculative value of those digital items.

Game items are treated like unregulated stocks

Perhaps the most significant legal vacuum is the absence of financial regulation. The Counter-Strike 2 economy, a multibillion-dollar ecosystem with dedicated investors and third-party cash markets, looks and behaves like a traditional financial market. Yet, it remains outside the purview of any financial regulator, such as the U.S. Securities and Exchange Commission.

Under U.S. law, the primary standard for determining whether an asset should be governed as a security is the Howey test. According to this Supreme Court precedent, an asset is a security if it meets four criteria. Securities involve an “investment of money” in a “common enterprise” with a reasonable expectation of “profits” derived from the “efforts of others.”

Counter-Strike 2 skins arguably meet all of these criteria. Participants invest real money in a common enterprise – Valve’s platform – with an expectation of profit. Crucially, that profit depends on the “efforts of others.” The SEC notes this prong is met when a promoter provides “essential managerial efforts” that affect the enterprise’s success. Valve controls the game’s development, manages the platform and – as the recent update proves – dictates item supply and scarcity.

If a publicly traded company unilaterally changed its rules in a way that predictably tanked the price of its own shares, regulators would immediately investigate for market manipulation. So how can Valve get away with this? Three things cut against the skins’ status as securities.

First is their “consumptive intent” – skins are primarily game cosmetics. Second, there’s no way to convert the skins into dollars within Valve’s own ecosystem. In other words, third-party markets allow users to cash out, but these markets operate outside Valve’s own immediate control. And finally, the Howey test generally governs assets, such as stocks and bonds, that grant investors enforceable rights. Valve’s licensing scheme attempts to circumvent this by ensuring players hold nothing but a revocable license.

In my view, the $2 billion crash is a wake-up call. As digital economies grow in financial significance, society must decide: Will these markets continue to be governed solely by private corporate contracts? Or will they require integration into more robust legal frameworks, such as securities regulation, consumer protection and property law?The Conversation

About the Author:

João Marinotti, Associate Professor of Law, Indiana University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Cryptocurrencies Opinions
21 Nov

A bold new investment fund aims to channel billions into tropical forest protection – one key change can make it better

By Jason Gray, University of California, Los Angeles 

The world is losing vast swaths of forests to agriculture, logging, mining and fires every year — more than 20 million acres in 2024 alone, roughly the size of South Carolina.

That’s bad news because tropical forests in particular regulate rainfall, shelter plant and animal species and act as a thermostat for the planet by storing carbon, keeping it out of the atmosphere where it would heat up the planet. The United Nations estimates that deforestation and forest degradation globally contribute about 11% of total greenhouse gas emissions.

Over the years, countries have committed to reverse that forest loss, and many organizations, governments, and Indigenous and local communities have worked hard to advance those goals. Many of their efforts have been at least partly successful.

For instance, Brazil credits stronger law enforcement and better monitoring at the state and national levels for helping reduce illegal land clearing and deforestation in the Amazon. The deforestation rate there fell by 31% from 2023 to 2024.

Funding from governments and the private sector is helping communities restore land that has already been cleared. Other programs protect forests through payments for ecosystem services, such as paying landowners to maintain existing forests and the benefits those forests provide. These programs provide money to a government, community or landowner based on verified results that the forest is being protected over time.

And yet, despite these and many other efforts, the world is falling short on its commitments to protect tropical forests. The planet lost 6.7 million hectares of tropical forest, nearly 26,000 square miles (67,000 square kilometers), in 2024 alone.

Law enforcement is not enough by itself. When enforcement is weakened, as happened in Brazil from 2019 to 2023, illegal land clearing and forest loss ramp back up. Programs that pay landowners to keep forests standing also have drawbacks. Research has shown they might only temporarily reduce deforestation if they don’t continue payments long term.

The problem is that deforestation is often driven by economic factors such as global demand for crops, cattle and minerals such as gold and copper. This demand provides significant incentives to farmers, companies and governments to continue clearing forests.

The amount of money committed to protecting forests globally is about US$5.7 billion per year – a fraction of the tens of billions of dollars banks and investors put into the companies that drive deforestation.

Simply put, the scale of the deforestation problem is massive, and new efforts are needed to truly reverse the economic drivers or causes of deforestation.

In order to increase the amount of funding to protect tropical forests, Brazil launched a global program on Nov. 6, 2025, ahead of the annual U.N. climate conference, called the Tropical Forest Forever Facility, or TFFF. It is an innovative approach that combines money from countries and private investors to compensate countries for preserving tropical forests.

As an environmental law scholar who works in climate policy development, including to protect tropical forests, I believe the design of the program has real promise. But I also see room to improve it by bringing in states and provinces to ensure money reaches programs closer to the ground that will pay off for the environment.

What makes the Tropical Forest Forever Facility different?

The Tropical Forest Forever Facility seeks to tackle the deforestation problem by focusing on the issue of scale – both geographic and economic.

First, it will measure results across entire countries rather than at the smaller landowner level. That can help reduce deforestation more broadly within countries and influence national policies that currently contribute to deforestation. It focuses on the amount of forest area protected rather than estimating the amount of carbon in the trees.

Second, it seeks to raise billions of dollars. This is important to counter the economic incentives for clearing forests for agriculture, livestock and timber.

The mechanics of raising these funds is intriguing – Brazil is seeking an initial $25 billion from national governments and foundations, and then another $100 billion from investors. These funds would be invested in securities – think the stock and bond markets – and returns on those investments, after a percentage is paid to investors, would be paid to countries that demonstrate successful forest protection.

These countries would be expected to invest their results-based payments into forest conservation initiatives, in particular to support communities doing the protection work on the ground, including ensuring that at least 20% directly supports local communities and Indigenous peoples whose territories often have the lowest rates of deforestation thanks to their efforts.

Most of the loss to commodities is in South America and Southeast Asia.
Where different types of deforestation are most prominent. Shifting agriculture, shown in yellow, reflects land temporarily cleared for agriculture and later allowed to regrow.
Project Drawdown, data from Curtis et al., 2018, CC BY-ND

Finally, the Tropical Forest Forever Facility recognizes that, like past efforts, it is not a silver bullet. It is being designed to complement other programs and policies, including carbon market approaches that raise money for forest protection by selling carbon credits to governments and companies that need to lower their emissions.

What has been the reaction so far?

The new forest investment fund is attracting interest because of its size, ambition and design.

Brazil and Indonesia were the first to contribute, committing $1 billion each. Norway added $3 billion on Nov. 7, and several other countries also committed to support it.

The Tropical Forest Forever Facility still has a long way to go toward its $125 billion goal, but it will likely draw additional commitments during the U.N. climate conference, COP30, being held Nov. 10-21, 2025, in Brazil. World leaders and negotiators are meeting in the Amazon for the first time.

How can the Tropical Forest Forever Facility be improved?

The Tropical Forest Forever Facility’s design has drawn some criticism, both for how the money is raised and for routing the money through national governments. While the fund’s design could draw more investors, if its investments don’t have strong returns in a given year, the fund might not receive any money, likely leaving a gap in expected payments for the programs and communities protecting forests.

Many existing international funding programs also provide money solely to national governments, as the Amazon Fund and the U.N.’s Global Environment Facility do. However, a lot of the actual work to reduce deforestation, from policy innovation to implementation and enforcement, takes place at the state and provincial levels.

One way to improve the Tropical Forest Forever Facility’s implementation would be to include state- and provincial-level governments in decisions about how payments will be used and ensure those funds make it to the people taking action in their territories.

The Governors’ Climate and Forests Task Force, a group of 45 states and provinces from 11 countries, has been giving feedback on how to incorporate that recommendation.

The task force developed a Blueprint for a New Forest Economy, which can help connect efforts such as the Tropical Forest Forever Facility to state- and community-level forest protection initiatives so funding reaches projects that can pay off for forest protection.

The Tropical Forest Forever Facility is an example of the type of innovative mechanism that could accelerate action globally. But to truly succeed, it will need to be coordinated with state and provincial governments, communities and others doing the work on the ground. The world’s forests – and people – depend on it.The Conversation

About the Author:

Jason Gray, Environmental Attorney, Emmett Institute on Climate Change and the Environment, University of California, Los Angeles

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Energy Opinions
20 Nov

As AI leader Nvidia posts record results, Warren Buffett’s made a surprise bet on Google

By Cameron Shackell, The University of Queensland; Queensland University of Technology 

The world’s most valuable publicly listed company, US microchip maker Nvidia, has reported record $US57 billion revenue in the third quarter of 2025, beating Wall Street estimates. The chipmaker said revenue will rise again to $US65 billion in the last part of the year.

The better than expected results calmed global investors’ jitters following a tumultuous week for Nvidia and broader worries about the artificial intelligence (AI) bubble bursting.

Just weeks ago, Nvidia became the first company valued at more than $US5 trillion – surpassing others in the “magnificent seven” tech companies: Alphabet (owner of Google), Amazon, Apple, Tesla, Meta (owner of Facebook, Instagram and Whatsapp) and Microsoft.

Nvidia stocks were up more than 5% to $US196 in after-hours trading immediately following the results.

Over the past week, news broke that tech billionaire Peter Thiel’s hedge fund had sold its entire stake in Nvidia in the third quarter of 2025 – more than half a million shares, worth around $US100 million.

But in that same quarter, an even more famous billionaire’s firm made a surprise bet on Alphabet, signalling confidence in Google’s ability to profit from the AI era.

Fortune Live Media, CC BY-NC-ND

Buffett’s new stake in Google

Based in Omaha, Nebraska in the United States, Berkshire Hathaway is a global investing giant, led for decades by 95-year-old veteran Warren Buffett.

Berkshire Hathaway’s latest quarterly filing reveals the company accumulated a US$4.3 billion stake in Alphabet over the September quarter.

The size of the investment suggests a strategic decision – especially as the same filing showed Berkshire had significantly sold down its massive Apple position. (Apple remains Berkshire’s single largest stock holding, currently worth about US$64 billion.)

Buffett is about to step down as Berkshire’s chief executive. Analysts are speculating this investment may offer a pre-retirement clue about where durable profits in the digital economy could come from.

Buffett’s record of picking winners with ‘moats’

Buffett has picked many winners over the decades, from American Express to Coca Cola.

Yet he has long expressed scepticism toward technology businesses. He also has form in getting big tech bets wrong, most notably his underwhelming investment in IBM a decade ago.

With Peter Thiel and Japan’s richest man Masayoshi Son both recently exiting Nvidia, it may be tempting to think the “Oracle of Omaha” is turning up as the party is ending.

But that framing misunderstands Buffett’s investment philosophy and the nature of Google’s business.

Buffett is not late to AI. He is doing what he’s always done: betting on a company he believes has an “economic moat”: a built-in advantage that keeps competitors out.

His firm’s latest move signals they see Google’s moat as widening in the generative-AI era.

Two alligators in Google’s moat

Google won the search engine wars of the late 1990s because it excelled in two key areas: reducing search cost and navigating the law.

Over the years, those advantages have acted like alligators in Google’s moat, keeping competitors at bay.

Google understood earlier and better than anyone that reducing search cost – the time and effort to find reliable information – was the internet’s core economic opportunity.

Google founders Sergey Brin and Larry Page in 2008, ten years after launching the company.
Joi Ito/Wikimedia Commons, CC BY

Company founders Sergey Brin and Larry Page started with a revolutionary search algorithm. But the real innovation was the business model that followed: giving away search for free, then auctioning off highly targeted advertising beside the results.

Google Ads now brings in tens of billions of dollars a year for Alphabet.

But establishing that business model wasn’t easy. Google had to weave its way through pre-internet intellectual property law and global anxiety about change.

The search giant has fended off actions over copyright and trademarks and managed international regulatory attention, while protecting its brand from scandals.

These business superpowers will matter as generative AI mutates how we search and brings a new wave of scrutiny over intellectual property.

Berkshire Hathaway likely sees Google’s track record in these areas as an advantage rivals cannot easily copy.

What if the AI bubble bursts?

Perhaps the genius of Berkshire’s investment is recognising that if the AI bubble bursts, it could bring down some of the “magnificent seven” tech leaders – but perhaps not its most durable members.

Consumer-facing giants like Google and Apple would probably weather an AI crash well. Google’s core advertising business sailed through the global financial crisis of 2008, the COVID crash, and the inflationary bear market of 2022.

By contrast, newer “megacaps” like Nvidia may struggle in a downturn.

Plenty could still go wrong

There’s no guarantee Google will be able to capitalise on the new economics of AI, especially with so many ongoing intellectual property and regulatory risks.

Google’s brand, like Buffett, could just get old. Younger people are using search engines less, with more using AI or social media to get their answers.

New tech, such as “agentic shopping” or “recommender systems”, can increasingly bypass search altogether.

But with its rivers of online advertising gold, experience back to the dawn of the commercial internet, and capacity to use its platforms to nurture new habits among its vast user base, Alphabet is far from a bad bet.

Disclaimer: This article provides general information only and does not take into account your personal objectives, financial situation, or needs. It is not intended as financial advice. All investments carry risk.The Conversation

Cameron Shackell, Adjunct Fellow, Centre for Policy Futures, The University of Queensland; Queensland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Stock Market News
20 Nov

Yes, there is an AI investment bubble – here are three scenarios for how it could end

By Sergi Basco

Booms and busts are a recurring feature of modern economics, but when an asset’s value becomes overinflated, a boom quickly becomes a bubble.

The two most recent major bubble episodes were the dot-com bubble in the United States (1996-2000) and the housing bubbles that emerged around 2006 in different countries. Both ended in recession – the former relatively mild, and the latter catastrophically bad. Recent, dizzying increases in the stock prices of AI-related companies have now got many investors asking “are we witnessing another asset price bubble?”

It is important to put the current AI boom in context. The stock price of Nvidia – which manufactures many of the computer chips that power the AI industry – has multiplied by 13 since the start of 2023. Stocks in other AI-related companies like Microsoft and Google’s parent company Alphabet have multiplied by 2.1 and 3.2, respectively. In comparison, the S&P 500, which tracks the stocks of the most important US firms, has multiplied by just 1.8 in the same period.

It is important to emphasise that these AI-related companies are included in the S&P 500, making the difference with non-AI companies even larger. Accordingly, it seems that there is an AI-bubble – but it won’t necessarily end in a repeat of 2008.

How a bubble forms

The price of any stock can be broken down into two components: its fundamental value, and the inflated bubble value. If the stock’s price is above its fundamental value, there is a bubble in its price.

The fundamental value of an asset is the discounted sum of its expected future dividends. The key word here is “expected”. Given that no one, not even ChatGPT, can predict the future, the fundamental value depends on the subjective expectations of each investor. They might be optimistic or pessimistic; in time, some will be proven right, and others wrong.

Optimistic investors expect that AI will change the world, and that the owners of this technology will make (almost) infinite profits. Not knowing which company will emerge victorious, they invest in all AI-related companies.

In contrast, pessimistic investors think that AI is just sophisticated software, as opposed to truly groundbreaking technology, and they will see bubbles everywhere.

A third possibility is the more sophisticated investors. These are people that think – or know – that there is a bubble, but keep investing in the hope of being able to ride the wave and get off before it is too late.

The last of these possibilities is reminiscent of the infamous quote from Citigroup CEO Chuck Prince before the 2008 housing bubble burst: “as long as the music is playing, you’ve got to get up and dance”.

As an economist, I can say safely that it is impossible for all AI-related companies to end up dominating the market. This means, beyond a doubt, that the value of at least some AI-related stocks have a large bubble component.

A shortage of assets

Asset price bubbles can be the market’s natural response to a shortage of assets. In a moment when the demand for assets exceeds the supply (especially for safe assets like government bonds), there is room for other, newer assets to emerge.

This pattern explains the emergence of, for example, the 1990s dot-com bubble and the subsequent 2000s housing bubble. In that context, the growing role of China in financial markets increased the demand for assets in the West – the money first went to dot-com companies in the 1990s and, when that bubble burst, to fund housing via mortgage-backed securities.

In today’s context, a combination of factors have paved the way for the AI bubble: excitement around new technology, low interest rates (another sign of shortage of assets) and huge amounts of of cash flowing into large corporations.

The bubble bursts: good, bad and ugly scenarios

At the very least, part of the soaring value of AI-related stocks is a bubble – and a bubble cannot stay inflated forever. It has to either burst on its own, or, ideally, be carefully deflated through targeted government or Central Bank measures. The current AI bubble could end in one of three scenarios: good, bad, or ugly.

Good: boom not bubble

During the dot-com bubble, many bad firms received too much money – the classic example was Pets.com. But the bubble also provided financing to companies like Google, which (arguably) contributed to making the internet a productivity-enhancing technology.

Something similar may happen with AI, as the current flurry of investment could, in the long run, create something good: technology that benefits humanity, and eventually yields return on investment. Without bubble-levels of cashflow, it would not be funded.

In this optimistic scenario I am assuming that AI, even though it may displace some jobs in the short term (as most technology does), will turn out to be good for workers. I am also assuming that it, obviously, won’t lead to the extinction of humanity. For this to be the case, governments need to introduce proper, robust regulations. It is also important to emphasise that there is no need for countries to invent or invest in new technologies – they must adapt them and provide applications to make them useful.

Bad: a gentle burst

All bubbles eventually burst. As things stand, we do not know when this will happen, nor the extent of the potential damage, but there will probably be a market correction when enough investors realise that multiple companies are overvalued. This decline in the stock market is bound to cause a recession.

Hopefully, it will be short-lived like the 2001 recession that followed the burst of the dot-com bubble. While no recession is painless, this one was relatively mild, and lasted less than one year in the US.

However, the burst of the AI bubble may be more painful because more households participate (either directly or indirectly via mutual funds) in the stock market than 20 years ago.

Even though the job of Central Banks is not to control asset prices, they may need to consider raising interest rates to deflate the bubble before it gets too large. The more sudden the crash, the deeper and costlier any ensuing recession will be.

Ugly: crash and burn

The burst of the AI-bubble would be ugly if it shares more features than we imagine with the 2000s housing bubble. On the positive side, AI stocks are not houses. This is good because when housing bubbles burst, the impacts on the economy are larger and longer-lasting than with other assets.

The housing bubble alone did not cause the 2008 financial crisis – it also caused the global financial system to collapse. Another reason to be optimistic is that the role of commercial banks in AI finance is much smaller than in housing – a vast amount of every bank’s money is perpetually tied up in mortgages.

However, one important caveat is that we do not how the financial system will react if these huge AI companies default on their debt. Alarmingly, this seems to be how they are currently financing new investments – a recent Bank of America analysis warned that large tech companies are relying heavily on debt to build new data centres, many of which are to cover demand that doesn’t actually exist yet.

A weekly e-mail in English featuring expertise from scholars and researchers. It provides an introduction to the diversity of research coming out of the continent and considers some of the key issues facing European countries. Get the newsletter!The Conversation

Sergi Basco, Profesor Agregado de Economia, Universitat de Barcelona

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Programming
17 Nov
solar systems

Renewable energy is cheaper and healthier – so why isn’t it replacing fossil fuels faster?

By Jay Gulledge, University of Notre Dame; University of Tennessee 

You might not know it from the headlines, but there is some good news about the global fight against climate change.

A decade ago, the cheapest way to meet growing demand for electricity was to build more coal or natural gas power plants. Not anymore. Solar and wind power aren’t just better for the climate; they’re also less expensive today than fossil fuels at utility scale, and they’re less harmful to people’s health.

Yet renewable energy projects face headwinds, including in the world’s fast-growing developing countries. I study energy and climate solutions and their impact on society, and I see ways to overcome those challenges and expand renewable energy – but it will require international cooperation.

Falling clean energy prices

As their technologies have matured, solar power and wind power have become cheaper than coal and natural gas for utility-scale electricity generation in most areas, in large part because the fuel is free. The total global power generation from renewable sources saved US$467 billion in avoided fuel costs in 2024 alone.

As a result of falling prices, over 90% of all electricity-generating capacity added worldwide in 2024 came from clean energy sources, according to data from the International Renewable Energy Agency.

At the end of 2024, renewable energy accounted for 46% of global installed electric power capacity, with a record 585 gigawatts of renewable energy capacity added that year — about three times the total generating capacity in Texas.

Health benefits of leaving fossil fuels

Beyond affordability, replacing fossil fuels with renewable energy is healthier.

Burning coal, oil and natural gas releases tiny particles into the air along with toxic gases; these pollutants can make people sick. A recent study found air pollution from fossil fuels causes an estimated 5 million deaths worldwide a year, based on 2019 data.

For example, using natural gas to fuel stoves and other appliances releases benzene, a known carcinogen. The health risks of this exposure in some homes has been found to be comparable to secondhand tobacco smoke. Natural gas combustion has also been linked to childhood asthma, with an estimated 12.7% of U.S. childhood asthma cases attributable to gas stoves, according to one study.

Fossil fuels are also the leading sources of climate-warming greenhouse gases. When they’re burned to generate electricity or run factories, vehicles and appliances, they release carbon dioxide and other gases that accumulate in the atmosphere and trap heat near the Earth’s surface. That accumulation has been raising global temperatures and causing more heat stress, respiratory illnesses and the spread of disease.

Electrifying buildings, cars and appliances, and powering them with renewable energy, reduces these air pollutants while slowing climate change.

So what’s the problem?

In spite of the demonstrated economic and health benefits of transitioning to renewable energy, regulatory inertia, political gridlock and a lack of investment are holding back renewable energy deployment in much of the world.

In the United States, for example, major energy projects take an average of 4.5 years to permit, and approval of new transmission lines can take a decade or longer. A large majority of planned new power projects in the U.S. use solar power, and these delays are slowing the deployment of renewable energy.

The 2024 Energy Permitting Reform Act introduced by Sens. Joe Manchin, a Democrat from West Virginia, and John Barrasso, a Republican from Wyoming, to speed approvals failed to pass. Manchin called it “just another example of politics getting in the way of doing what’s best for the country.”

An even bigger challenge faces developing countries whose economies are growing fast.

These countries need to meet soaring energy demand. The International Energy Agency expects emerging economies to account for 85% of added electricity demand from 2025 through 2027. Yet renewable energy development lags in most of them. The main reason is the high price of financing renewable energy construction.

Chart showing wealthier countries have lower borrowing costs
Most of the cost of a renewable energy project is incurred up front in construction. Savings occur over its lifetime because it has no fuel costs. As a result, the levelized cost of energy (LCOE) for those projects varies depending on the cost of financing to build them. The chart shows what happens when borrowing costs are higher in developed countries. It illustrates the share of financing in each project’s levelized cost of energy in 2024 versus the weighted average cost of capital (WACC). The yellow dots are solar projects; black and gray are offshore and onshore wind.
Adapted from IRENA, 2025, CC BY

In many developing countries, wind and solar projects cost more to finance than coal or gas. Fossil projects have a longer history, and financial and policy mechanisms have been developed over decades to lower lender risk for those projects. These include government payment guarantees, stable fuel contracts and long-term revenue deals that help guarantee the lender will be repaid.

Both lenders and governments have less experience with renewable energy projects. As a result, these projects often come with weaker government guarantees. This raises the risk to lenders, so they charge higher interest rates, making renewable projects more expensive upfront, even if the projects have lower lifetime costs.

To lower borrowing costs, governments and international development banks can take steps to make renewable projects a safer bet for investors. For example, they can keep energy policies stable and use public funds or insurance to cover part of the lenders’ investment risk.

When investors trust they’ll get paid, interest rates drop dramatically and renewable energy becomes the cheaper option.

Without international cooperation to lower finance costs, developing economies could miss out on the renewable-energy revolution and lock in decades of growing greenhouse gas emissions from fossil fuels, making climate change worse.

The path ahead

To avoid the worst effects of climate change, countries have agreed to cut their greenhouse gas emissions over the next few decades.

Achieving this goal won’t be easy, but it is significantly less difficult now that renewable energy is more affordable over the long run than fossil fuels.

Switching the world’s power supply to renewable energy and electrifying buildings and local transportation would cut about half of today’s greenhouse-gas emissions. The other half comes from sectors where it is harder to cut emissions — steel, cement and chemical production, aviation and shipping, and agriculture and land use. Solutions are being developed but need time to mature. Good governance, political support and accessible finance will be critical for these sectors as well.

The transition to renewable energy offers big economic and health benefits alongside lower climate risks — if countries can overcome political obstacles at home and cooperate to expand financing for developing economies.The Conversation

About the Author:

Jay Gulledge, Visiting Professor of Practice in Global Affairs, University of Notre Dame; University of Tennessee

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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