In case you think I'm panicing, the New York Times catches up with me in U.S. Warns Climate Poses ‘Emerging Threat’ to Financial System by Alan Rappeport and Christopher Flavelle:
Climate change is an “emerging threat” to the stability of the U.S. financial system, top federal regulators warned in a report on Thursday, setting the stage for the Biden administration to take more aggressive regulatory action to prevent climate change from upending global markets and the economy.Below the fold, an even more depressing update.
Higher temperatures are leading to more natural disasters, such as hurricanes, wildfires and floods. These, in turn, are resulting in damaged property, lost income and disruptions to business activity that threaten to alter how assets, such as real estate, are valued.
At the same time, the move away from fossil fuels could cause a sudden drop in the price of stocks and other assets tied to oil, gas, coal and other energy companies, or sectors that rely on them such as carmakers and heavy manufacturing. Such a shift could hurt the stock market, retirement savings and other parts of the financial sector.
The report from the Financial Stability Oversight Council wasn't the only one released this week. The Director of National Intelligence released the National Intelligence Estimate on Climate Change. The report's key takeaways are:
We assess that climate change will increasingly exacerbate risks to US national security interests as the physical impacts increase and geopolitical tensions mount about how to respond to the challenge. Global momentum is growing for more ambitious greenhouse gas emissions reductions, but current policies and pledges are insufficient to meet the Paris Agreement goals. Countries are arguing about who should act sooner and competing to control the growing clean energy transition. Intensifying physical effects will exacerbate geopolitical flashpoints, particularly after 2030, and key countries and regions will face increasing risks of instability and need for humanitarian assistance.
- As a baseline, the IC uses the US Federal Scientific community’s high confidence in global projections of temperature increase and moderate confidence in regional projections of the intensity of extreme weather and other effects during the next two decades. Global temperatures have increased 1.1 ̊C since pre-industrial times and most likely will add 0.4 ̊C to reach 1.5 ̊C around 2030.
- The IC has moderate confidence in the pace of decarbonization and low to moderate confidence in how physical climate impacts will affect US national security interests and the nature of geopolitical conflict, given the complex dimensions of human and state decisionmaking.
Fossil fuel production planned by the world’s governments “vastly exceeds” the limit needed to keep the rise in global heating to 1.5C and avoid the worst impacts of the climate crisis, a UN report has found.That is a very scary graph.
Despite increasing pledges of action from many nations, governments have not yet made plans to wind down fossil fuel production, the report said. The gap between planned extraction of coal, oil and gas and safe limits remains as large as in 2019, when the UN first reported on the issue. The UN secretary general, António Guterres, called the disparity “stark”.
The report, produced by the UN Environment Programme (Unep) and other researchers, found global production of oil and gas is on track to rise over the next two decades, with coal production projected to fall only slightly. This results in double the fossil fuel production in 2030 that is consistent with a 1.5C rise.
Mark Sumner writes:
In particular, the sharply dropping cost of electricity from solar and wind—along with the increasing popularity of electric cars—places fossil fuels of all types in a unique bind. Prices may be high at the moment on speculation over near-future demands from China, but all those fuels—coal, oil, and natural gas—could lose value almost overnight. To a large extent, this has already happened with coal, with 11 of the top U.S. mining companies going through bankruptcy after the industry dropped sharply from 2008 peaks.Patricia Espinosa, executive secretary of the UN Framework Convention on Climate Change, said:
The whole fossil fuel sector could see much of its value erased as demand for those fuels crashes and investors take flight. Considering the size and value currently assigned to some of these companies, such a shift could not just spell doom for the fossil fuel corporations, but leave state governments, retirement funds, and individual investors holding the (suddenly empty) bag. Homes in areas dedicated to coal mining or oil and gas drilling could become worthless. So could massive refineries, giant port facilities, and thousands of miles of pipeline.
How those things are managed when the companies that once profited from them are no longer around is unclear. So is what to do about thousands of people stranded in areas that have lost their economic engine.
“We’re really talking about preserving the stability of countries, preserving the institutions that we have built over so many years, preserving the best goals that our countries have put together. The catastrophic scenario would indicate that we would have massive flows of displaced people.”
The impact would cascade, she said, adding: “It would mean less food, so probably a crisis in food security. It would leave a lot more people vulnerable to terrible situations, terrorist groups and violent groups. It would mean a lot of sources of instability.”
The weighted average Energy Return On Investment (EROI) has declined by a factor of around 5 in the past 70 years. On average, only about 85% of the energy coming out of the ground makes it into the pipelines. But the 15% also represents carbon emissions. The 85% is projected to be around 65% by 2050. Thus even if the plans in the UN report's graph were to come to fruition, and the temperature thus to rise nearly 3 ̊C, the amount of usable energy from fossil fuels would decrease.
|Delannoy et al Fig 1
Our findings question the feasibility of a global and fast energy transition, not in terms of stocks of energy resources, but in terms of flows. They imply that either the global energy transition takes place quickly enough, or we risk a worsening of climate change, a historical and long-term recession due to energy deficits (at least for some regions of the globe), or a combination of several of these problems. In other terms, we are facing a three-way conundrum: an energy transition that seems more improbable every passing year, increasing environmental threats and the risk of unprecedented energy shortages and associated economic depression in less than two decades.The problem is that replacing fossil fuels with renewables requires energy input before they output energy. Ahmed writes:
So if we delay the clean energy transformation for too long, there might not be enough energy to sustain the transition in the first place — leading to a ‘worst of all worlds’ scenario: the collapse of both the fossil fuel system and the ability to create a viable alternative.There is a small ray of hope. Empirically grounded technology forecasts and the energy transition by Way et al shows that:
if solar photovoltaics, wind, batteries and hydrogen electrolyzers continue to follow their current exponentially increasing deployment trends for another decade, we achieve a near-net-zero emissions energy system within twenty-five years. In contrast, a slower transition (which involves deployment growth trends that are lower than current rates) is more expensive and a nuclear driven transition is far more expensive.Delannoy et al may have underestimated both the rate and the energy demands of deploying renewables.
So how are government's "slow AIs" responding to this barrage of warnings? Here are Justin Rowlatt & Tom Gerken reporting for the BBC in COP26: Document leak reveals nations lobbying to change key climate report:
The leak reveals Saudi Arabia, Japan and Australia are among countries asking the UN to play down the need to move rapidly away from fossil fuels.And the UN report:
It also shows some wealthy nations are questioning paying more to poorer states to move to greener technologies.
This "lobbying" raises questions for the COP26 climate summit in November.
The leak reveals countries pushing back on UN recommendations for action and comes just days before they will be asked at the summit to make significant commitments to slow down climate change and keep global warming to 1.5 degrees.
found that countries have directed more than $300bn (£217bn) of new public finance to fossil fuel activities since the beginning of the Covid-19 pandemic, more than that provided for clean energy.A major benficiary of these taxpayer subsidies is coal millionaire Joe Manchin, currently preventing the US government taking action to reduce carbon emissions:
Joe Manchin, the powerful West Virginia Democrat who chairs the Senate energy panel and earned half a million dollars last year from coal production, is preparing to remake President Biden’s climate legislation in a way that tosses a lifeline to the fossil fuel industry — despite urgent calls from scientists that countries need to quickly pivot away from coal, gas and oil to avoid a climate catastrophe.So what about corporate "slow AIs"? Of all the corporate "slow AIs" the insurance industry's ones should be the most worried, since they'll be on the hook for a lot of the costs. But The Oil Merchant in the Gray Flannel Suit by Alexander Sammon explains
One would think, then, that the insurance industry would be among the most forceful advocates for large-scale intervention on climate change, based on, if nothing else, that good old market homily that is self-interest. The losses keep mounting in the absence of aggressive measures. Either the federal government, in tandem with private investment, pays for a major decarbonization program, or the insurance companies pay for the cleanup. That shouldn’t be a tough decision for a bunch of fund managers to make.The "slow AIs" are OK making "tepid statements", but what they are doing is much worse:
Furthermore, because of their clout and institutional power, one would also assume that if insurers put their mind to it, they could be unusually effective advocates for a green transition. Just about the only time anything gets done in Washington is in those rare moments when a corporation or industry decides they want it to happen. That could be the legacy of insurance companies and climate change.
And yet insurers have not been terribly vocal about the climate crisis. In fact, they’ve been highly resistant to even small-bore climate solutions, instead opting for tepid statements about environmental sustainability.
But by loading up on stocks of oil and gas companies and energy utilities, purchasing corporate debt of coal and other fossil fuel firms, and underwriting the development of new infrastructure like pipelines and plants, much of which is being done at record rates, the insurance industry is currently propping up the industry that is expediting its own demise. Insurance companies are financially vulnerable to the ravages of climate change, but they also happen to be profiting off of its acceleration.Some insuurers' statements are a bit less tepid. Here is Peter Giger, Group Chief Risk Officer, Zurich Insurance Group writing for the World Economic Forum:
We need to act now on our climate. Act like these tipping points are imminent. And stop thinking of climate change as a slow-moving, long-term threat that enables us to kick the problem down the road and let future generations deal with it. We must take immediate action to reduce global warming and fulfil our commitments to the Paris Agreement, and build resilience with these tipping points in mind.But notice that the call to urgent action is addressed to "we". There's nothing in his post about actions that Zurich Insurance Group is going to take.
We need to plan now to mitigate greenhouse gas emissions, but we also need to plan for the impacts, such as the ability to feed everyone on the planet, develop plans to manage flood risk, as well as manage the social and geopolitical impacts of human migrations that will be a consequence of fight or flight decisions.
And of course the fossil fuel "slow AIs" are hard at work preventing action, as Hiroko Tabuchi reports in In Your Facebook Feed: Oil Industry Pushback Against Biden Climate Plans:
The ads appear on Facebook millions of times a week. They take aim at vulnerable Democrats in Congress by name, warning that the $3.5 trillion budget bill — one of the Biden administration’s biggest efforts to pass meaningful climate policy — will wreck the United States economy.The Economist has a long article examining the prospects for the upcoming COP26 conference, hosted by Britain's buffoon of a Prime Minister. It is entitled Broken promises, energy shortages and covid-19 will hamper COP26 and reaches this conclusion:
The paid posts are part of a broad attack by the oil and gas industry against the budget bill, whose fate now hangs in the balance. Among the climate provisions that are likely to be left out of the plan is an effort to dismantle billions of dollars in fossil-fuel tax breaks — provisions that experts say incentivize the burning of fossil fuels responsible for catastrophic climate change.
On Thursday, details emerged of an agreement between Senator Chuck Schumer of New York, the majority leader, and Senator Joe Manchin III of West Virginia, a Democrat with huge sway in the divided Senate who has said he doesn’t support such an expansive bill. According to a memo outlining the agreement, first obtained by Politico, Mr. Manchin said that if the legislation were to include extensions of smaller tax credits for wind and solar power, it shouldn’t undo tax breaks for fossil fuel producers.
Any progress made at COP26 will probably be incremental, not a “big leap” of the sort John Kerry, America’s climate envoy, has promised. That will enrage grassroots activists. And it hardly matches the scale of the challenge. Two years from now a “Global Stocktake” scheduled under the Paris agreement will examine how well governments are implementing their climate plans. If their most recent climate promises are any indication, the stocktake could reveal a rather bare cupboard.How do you think you'll manage in a world 2.5-3 ̊C hotter? You'd better start figuring it out, because that's where we are heading.