Good morning, Peter Vanham here, filling in for Alan.
If you’re reading this while waking up to a cloudy day on the East Coast or the Midwest, save a thought for those in California. The ongoing heat wave hitting the Bay Area and other parts of California may go down as the worst in history, with Tuesday having seen record temperatures everywhere from Fairfield (117°) to downtown Sacramento (113°).
For companies and workers, the consequences are plenty. But one of the most poignant ones, the L.A. Times pointed out, is that many warehouses in the state lack air conditioning. It means the effects of the extreme heat are felt most acutely by those working in the booming logistics sector, such as delivery drivers and warehouse workers.
Then, of course, there is the immediate cost of having to delay work and pay a premium for electricity. The California Independent System Operator (ISO) asked residents and companies to lower their electricity consumption yesterday, fearing an outage, and prices surged to $505 to $850 per megawatt hour, up to three to four times the June rate.
It all points to a rather bleak conclusion: just as efforts to mitigate climate change pick up speed, the need to also focus on adaptation becomes even more acute.
ISO had to use its temporary emergency power generators for the first time ever this week to avoid a blackout. They were installed last year, and use a fossil fuel—natural gas—to produce energy. Meanwhile, major logistics and retail companies, such as Amazon, are being pressured by their employees to take action against excessive heat.
In the short run, these adaptation measures are almost certain to be counterproductive towards the longer-term climate goals, given the increased energy consumption and heat production they entail. Over the medium term, however, the challenge for companies will be to combine mitigation with adaptation.
One place I draw inspiration from is Atelier Luma and its “Building for Uncertainty” project in Arles, in Southern France. I visited its converted railway warehouse during a heatwave in July. And though it had no air conditioning, the temperatures inside remained in the 70s. Its secret? Combining frugality, innovation, and locally sourced isolation materials, such as rice straw and clay.
More news below.
Musk and WW3
Just weeks after Elon Musk agreed to buy Twitter, he texted his bankers to say: “It won’t make sense to buy Twitter if we’re heading into world war three.” The message was one of several revealed in the context of the tycoon’s legal battle with the social media platform, whose lawyers argue that it backs up Twitter’s claim that Musk has been trying to wriggle out of the $44 billion deal to protect his financial interests. Financial Times
Illumina and Grail
Just days after Illumina defeated the FTC’s attempt to unwind its $7.1 billion takeover of cancer test developer Grail, the European Union has blocked it. This isn’t just a big deal for the companies involved; it’s about the future of antitrust enforcement on both sides of the Atlantic. After all, Grail has zero EU revenue, but top EU enforcer Margrethe Vestager insists “it is vital to preserve competition between early cancer-detection-test developers at this critical stage of development.” Wall Street Journal
The G7’s planned price cap on Russian oil purchases can actually work, argue Yale’s Jeffrey Sonnenfeld and Steven Tian in this Foreign Police piece: “The private sector will now find a way to adapt to the new policies to ensure compliance, especially as top CEOs privately say they much prefer the oil price cap to the alternative, a blanket ban. They are thus incentivized to proactively cooperate.” Foreign Policy
AROUND THE WATERCOOLER
Juul to pay nearly $440 million to settle states’ investigation into marketing of its e-cigarettes to teens, by Associated Press
Experts say Britain’s new Prime Minister Liz Truss is missing an opportunity to ease the U.K.’s energy crisis, by Eamon Barrett
The bottling plant I work at just got acquired by investors who want to change the future of capitalism. Let’s see how they handle our immediate concerns, by Cesar Moreira
Why California’s new Fast Food Council law is good for business, by Thomas Kochan
‘Poison’ Ivy Zelman—the analyst who predicted the 2008 housing bust—sees U.S. home prices falling in both 2023 and 2024. Here’s how much, by Lance Lambert
This edition of CEO Daily was edited by David Meyer.
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