Last month, the most thorough scientific review of climate science in history was released by the Intergovernmental Panel on Climate Change. However, confirmation of clear, dangerous and present epochal changes in our planet drowned in the noisy coverage of the UK’s carnival-esque party conferences, the US Government shutdown, and coquettish phone calls between Americans and Iranians.
Alarmingly, fossil fuel interests and climate change deniers were successful in getting into the weeds and flooding the media with sceptical stories, benefiting from the media’s instinct for “balance” even in an area where the science has become uncontroversial, thus giving undue space to extremists peddling modern versions of the Roman Inquisition attacks on Galileo. The IPCC experts were forced to mount a rear guard action defending the obvious: that our actions are radically changing the planet; that the consequences may be apocalyptic; and that 750 million people are already threatened by an epidemic of disease and community destruction.
As a result, a renewed push for concrete climate action never materialised whereas we should have had a mobilisation of citizens and civil society around concrete, immediate and decisive policies rooted in the scientific and economic rigor of the IPCC report.
What should these climate action policies – ‘a consensus of the sensible’ if you will – look like?
First, governments should lighten the load on citizens’ wallets by phasing out fossil fuel subsidies. Tax payers worldwide pay for climate change twice, once by subsidising dirty fuels to the tune of $1.9 trillion per year (the conservative estimate from the IMF), then again by footing the bill for extreme weather events, floods and droughts fuelled by a changing climate. Releasing some $2 trillion per year of funding is likely to go most of the way, if not all the way, in paying for solutions to climate change and for adaptation strategies.
Second, natural capital should be priced into companies’ financial performance. Today, economic performance is judged by imperfect markets without any regard to the usage of precious natural resources. As a result, some “profitable” companies and “growing” economies are in fact monsters greedily ignoring the needs of future generations. For example, we already know that some 80 per cent of known fossil reserves cannot be extracted without extremely serious consequences across our economies, yet stock markets continue to assign value to companies on the basis of these reserves, without taking into account the consequences of extracting them. That’s nonsense and the minute it stops, much more capital will flow to opportunities that are correctly priced, for example renewable energy.
Third, the G20 countries must introduce a carbon price across their economies because carbon markets represent up to 50 per cent of the solution in the fight against global warming. A carbon price is critical to mobilize the private sector (which accounts for 70 per cent of global GDP and 70 per cent of employment) as Government resources worldwide are simply not enough to do the job. Domestic carbon markets are spreading and linking up around the world, and are likely by 2015 to cover some 4 billion people. Yet fossil fuel industry lobbying continues to deliver watered down versions of this effective instrument or even worse, no carbon price at all for the aviation and shipping industries or for several G20 members happy to lead from the back.
Fourth, the high population countries of China, India, Indonesia and the Philippines, at the forefront of the suffering from climate change, should turn the UN climate talks on their heads by leading from the front and taking on binding commitments to cut their emissions, irrespective of whether the US, Russia or Saudi Arabia follow. These countries have a unique opportunity to shame everyone else into action and to use performance standards, regulations, and a carbon price to mobilise capital on a large scale and drive a low carbon transformation of their economies.
Fifth, the insurance industry must be pushed to correctly price climate change in its products in two ways: premiums to insure fossil fuel-based activities should increase significantly to reflect the enormous damage caused by extracting them and using them (oil and gas companies not only benefit from at least $775 billion of direct subsidies per year, their insurance premiums don’t reflect the reality of climate change); and climate risks must become a systematic feature of actuaries’ analysis across all insurance products.
Finally, China and the US should continue their successful partnership expanding the use of the Montreal Protocol (a global agreement to protect the ozone layer) to cover more harmful gases. At the recent G20 in Russia, this partnership successfully co-opted everyone else to reduce the equivalent of 100 billion tonnes of carbon dioxide by 2050 by eliminating HFCs.
The noise surrounding the IPCC report shows how effective the noxious fog pumped out by polluters’ spin machines can be, but we can’t let it hide how derisory current climate action is.