Category Archives: Climate Change

Ignorance in action

The last time I posted on the climate change debate was here in November 2014 on the release of the synthesis reports on the IPCC’s 5th assessment. The post asked whether the debate would now move on, away from the climate change deniers, given the weight of scientific opinion. Well, that was before Mr Trump. In his inane rationale for withdrawing from the (nonbinding) Paris climate agreement, Trump has provided a classic illustration of Johann Wolfgang von Goethe’s quote that “there is nothing more frightful than ignorance in action”.

The Paris agreement is far from perfect. It does not however contain hard emissions targets but rather gives a framework for voluntary reductions. Admittingly previous voluntary reductions promised by many countries have been missed but even a flawed agreement is better than nothing. Recent declines in the growth in coal use in China and India were positive initial signs.

Maybe Mr Trump’s delusional thinking is that his masterful negotiations skills mean he can negotiate a global agreement with hard emission targets! More likely, he is acting politically to shore up his mid America coal loving support given the danger that some of his core support may just be realising that his healthcare and fiscal policies are not that favourable to those at lower incomes.

I recently came across this statement from January 1954 by the Tobacco Industry Research Committee, a tobacco firm group representatives, in reaction to some of the initial medical research showing that smoking was linked to lung cancer. The group stated that “we believe the products we make are not injurious to health”. My favorite bit is the arguments cited by “distinguished authorities” below countering the emerging scientific evidence:

  1. That medical research of recent years indicates many possible causes of lung cancer.
  2. That there is no agreement among the authorities regarding what the cause is.
  3. That there is no proof that cigarette smoking is one of the causes.
  4. That statistics purporting to link cigarette smoking with the disease could apply with equal force to any one of many other aspects of modern life. Indeed the validity of the statistics themselves is questioned by numerous scientists.

Don’t these arguments sound familiar?

Risky World

The latest World Economic Forum report on global risks is out today and, as usual, it reflects current concerns rather than offering any predictions for 2017. To be fair to WEF, the top risk for 2012 to 2014 inclusive in their survey was income disparity which is commonly viewed as one of the factors behind the rise in populism.

click to enlargewef-global-risks-2017

The report states the obvious about the impact on global risks following 2016, specifically that “societal polarization, income inequality and the inward orientation of countries are spilling over into real-world politics” and that “decision-making is increasingly influenced by emotions” due to the increase in nationalism. Where this year’s report is spot on, in my view, is in relation to the top 5 global trends that will determine global developments over the next 10 years, as below.

click to enlargewef-top-5-global-trends-2017

The report also states that “although anti-establishment politics tends to blame globalization for deteriorating domestic job prospects, evidence suggests that managing technological change is a more important challenge for labour markets” and that “we are in a highly disruptive phase of technological development, at a time of rising challenges to social cohesion and policy-makers’ legitimacy”.

Among the many risks highlighted in the report is a reduction in geopolitical co-operation which is likely to be detrimental to global growth, action on global indebtedness, and climate change.  It’s particularly depressing to think that even if the commitments under the Paris agreement were delivered, which now looks doomed after the election of Trump, the United Nations Environment Programme (UNEP) estimates the world will still warm by 3.0°C to 3.2°C, still far above the 2°C limit where scary and irreversible stuff happens.

Another worrying risk is the possibility of a new arms race in an era of rapid advancements in a technology which also has a retrograde feel, especially “while risks intersect and technologies develop quickly, too often our institutions for governing international security remain reactive and slow-moving”.

All pretty cheery stuff! And on it goes.

As I write this, I’m watching reports on Mr Trump’s press conference today, and although there is no doubt that our world is riskier as we enter 2017, it will be entertaining to see this guy as the leader of the free world. Hopefully good entertaining, not depressing entertaining!

Rating Risks

The latest World Economic Forum report on global risks reflects the common concerns of its almost 750 global contributors across multiple disciplines. Such reports are often poor predictors of issues (e.g. the emergence of the migrant issue in Europe) but do reflect current thinking as the graphic below on the changing risks by likelihood and impact illustrates.

click to enlargeWEF Global Risks 2007 to 2016

It’s interesting that China hasn’t made it onto either list since 2010. The report has the following to say about a slowing Chinese economy:

The government faces a dilemma. If it tightens credit conditions, it could reduce investment more quickly than consumption can increase to compensate, and cause massive defaults among struggling and heavily leveraged companies. This could mean a much more severe economic slowdown, potentially causing a surge in unemployment and social unrest. However, if the government lets more credit flow to avoid these destabilizing defaults, it risks further increasing the indebtedness of underperforming industries and creating bigger problems down the line.

Unsurprisingly, different regions in the world have different concerns and it’s interesting to compare and contrast each.

click to enlargeWEF Regional Perspective Top 3 Risks 2016

Climate change, extreme weather and water issues are ever present risks. At least it’s reassuring to see that the 5th IPCC assessment report (as per this post) does seem to have moved the debate on from whether we humans are impacted climate to the speed of implementing the mitigation and adaption actions required. As the WEF report states, the Paris Agreement reached last December is a positive step although “to date, nearly 190 governments have submitted their climate action plans, covering over 95% of total global emissions” and “these efforts alone will not suffice as even the most optimistic estimates suggest that these pledges taken together would contain warming only to 2.7°C above pre-industrial levels.” Over 2.0°C is commonly believed to be the point where things could get extremely unpredictable. The Paris Agreement is however better than previous efforts and therefore represent progress.

Will the climate change debate now move forward?

The release of the synthesis reports by the IPCC – in summary, short and long form – earlier this month has helped to keep the climate change debate alive. I have posted (here, here, and here) on the IPCC’s 5th assessment previously. The IPCC should be applauded for trying to present their findings in different formats targeted at different audiences. Statements such as the following cannot be clearer:

“Anthropogenic greenhouse gas (GHG) emissions have increased since the pre-industrial era, driven largely by economic and population growth, and are now higher than ever. This has led to atmospheric concentrations of carbon dioxide, methane and nitrous oxide that are unprecedented in at least the last 800,000 years. Their effects, together with those of other anthropogenic drivers, have been detected throughout the climate system and are extremely likely to have been the dominant cause of the observed warming since the mid-20th century.”

The reports also try to outline a framework to manage the risk, as per the statement below.

“Adaptation and mitigation are complementary strategies for reducing and managing the risks of climate change. Substantial emissions reductions over the next few decades can reduce climate risks in the 21st century and beyond, increase prospects for effective adaptation, reduce the costs and challenges of mitigation in the longer term, and contribute to climate-resilient pathways for sustainable development.”

The IPCC estimate the costs of adaptation and mitigation of keeping climate warming below the critical 2oC inflection level at a loss of global consumption of 1%-4% in 2030 or 3%-11% in 2100. Whilst acknowledging the uncertainty in their estimates, the IPCC also provide some estimates of the investment changes needed for each of the main GHG emitting sectors involved, as the graph reproduced below shows.

click to enlargeIPCC Changes in Annual Investment Flows 2010 - 2029

The real question is whether this IPCC report will be any more successful that previous reports at instigating real action. For example, is the agreement reached today by China and the US for real or just a nice photo opportunity for Presidents Obama and Xi?

In today’s FT Martin Wolf has a rousing piece on the subject where he summaries the laissez-faire forces justifying inertia on climate change action as using the costs argument and the (freely acknowledged) uncertainties behind the science. Wolf argues that “the ethical response is that we are the beneficiaries of the efforts of our ancestors to leave a better world than the one they inherited” but concludes that such an obligation is unlikely to overcome the inertia prevalent today.

I, maybe naively, hope for better. As Wolf points out, the costs estimated in the reports, although daunting, are less than that experienced in the developed world from the financial crisis. The costs don’t take into account any economic benefits that a low carbon economy may result in. Notwithstanding this, the scale of the task in changing the trajectory of the global economy is illustrated by one of graphs from the report, as reproduced below.

click to enlargeIPCC global CO2 emissions

Although the insurance sector has a minimal impact on the debate, it is interesting to see that the UK’s Prudential Regulatory Authority (PRA) recently issued a survey to the sector asking for responses on what the regulatory approach should be to climate change.

Many industry players, such as Lloyds’ of London, have been pro-active in stimulating debate on climate change. In May, Lloyds issued a report entitled “Catastrophic Modelling and Climate Change” with contributions from industry. In the piece from Paul Wilson of RMS in the Lloyds report, they concluded that “the influence of trends in sea surface temperatures (from climate change) are shown to be a small contributor to frequency adjustments as represented in RMS medium-term forecast” but that “the impact of changes in sea-level are shown to be more significant, with changes in Superstorm Sandy’s modelled surge losses due to sea-level rise at the Battery over the past 50-years equating to approximately a 30% increase in the ground-up surge losses from Sandy’s in New York.“ In relation to US thunderstorms, another piece in the Lloyds report from Ionna Dima and Shane Latchman of AIR, concludes that “an increase in severe thunderstorm losses cannot readily be attributed to climate change. Certainly no individual season, such as was seen in 2011, can be blamed on climate change.

The uncertainties associated with the estimates in the IPCC reports are well documented (I have posted on this before here and here). The Lighthill Risk Network also has a nice report on climate model uncertainty which concludes that “understanding how climate models work, are developed, and projection uncertainty should also improve climate change resilience for society.” The report highlights the need for expanding geological data sets beyond short durations of decades and centuries which we currently base many of our climate models on.

However, as Wolf says in his FT article, we must not confuse the uncertainty of outcomes with the certainty of no outcomes. On the day that man has put a robot on a comet, let’s hope the IPCC latest assessment results in an evolution of the debate and real action on the complex issue of climate change.

Follow-on comment: Oh dear the outcome of the Philae lander may not be a good omen!!!

IPCC Risk & Uncertainty

I haven’t had time to go into the latest WGIII IPCC report in detail (indeed I haven’t had much time recently to spend on blogging) but I had a quick browse through the report and there is an excellent chapter on “Integrated Risk and Uncertainty Assessment of Climate Change Response Policies” which goes through many of the key elements of current risk management theory and practise and how they can be applied to climate change.

A previous post highlighted the difficulties of making predictions given the uncertainties involved. The report highlights the “large number of uncertainties in scientific understanding of the physical sensitivity of the climate to the build‐up of GHGs” and acknowledges that these “physical uncertainties are multiplied by the many socioeconomic uncertainties that affect how societies would respond to emission control policies”. The report calls these socioeconomic uncertainties “profound” and lists examples as the development and deployment of technologies, prices for major primary energy sources, average rates of economic growth and the distribution of benefits and costs within societies, emission patterns, and a wide array of institutional factors such as whether and how countries cooperate effectively at the international level.

The IPCC gives a medium rating (50% probability) to the statement that the “current trajectory of global annual and cumulative emissions of GHGs is inconsistent with widely discussed goals of limiting global warming at 1.5 to 2 degrees Celsius above the preindustrial level”.

Included in Chapter 2 are the graphs below. According to the report “the representative concentration pathways (RCPs) are constructed by the IPCC on the bases of plausible storylines while insuring (1) they are based on a representative set of peer reviewed scientific publications by independent groups, (2) they provide climate and atmospheric models as inputs, (3) they are harmonized to agree on a common base year, and (4) they extend to the year 2100”. The 3 scenarios (A2, A1B and B1) are multi-model global averages of surface warming (relative to 1980–1999) shown as continuations of the 20th century simulations. Shading is the plus/minus one standard deviation range of individual model annual averages and the orange line is where concentrations were held constant at year 2000 values. Time permitting; it demonstrates that the conclusions and scenarios presented in the latest report are worth finding out more about.

click to enlargeIPCC global surface temperature scenarios from RCPs

Although each scenario is likely at the mercy of the uncertainties highlighted above, the open and thoughtful way the report is presented, including highlighting the underlying weaknesses, doesn’t mean that they (or the report) can be ignored. Indeed, the recent output from the IPCC will hopefully provide the basis for informed thinking on the subject in the coming years.

The report includes a reference to Kahneman-Tversky’s certainty effect where people overweight outcomes they consider certain, relative to outcomes that are merely probable. That implies that a 50% probability of the temperature blowing through 2 degrees celsius may not be enough to force real action. Unfortunately the underlying scientific and socioeconomic uncertainties inherent in making forecasts on temperature change over the next 30 to 50 years may mean that the required level of certainty cannot ever be achieved (until of course it’s too late).