On October 1-5, the Intergovernmental Panel on Climate Change (IPCC) –the UN body charged with assessing the science related to climate change– will meet in Incheon, Republic of Korea. Since its establishment in 1988, the IPCC has strived to provide policymakers with regular scientific assessments concerning climate change, its implications and potential future risks, as well as to put forward adaptation and mitigation strategies. To date, the IPCC has published five comprehensive assessment reports reviewing the latest climate science, as well as several special reports on specific topics.
The purpose of next week’s meeting is to review the Special Report Global Warming of 1.5ºC that will be released on October 8 under the full name Global Warming of 1.5°C, an IPCC special report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. It will be the first of three special reports to be issued in 2018 and 2019, prior to the 6th Assessment Report expected in 2022. For this occasion, Valérie Masson-Delmotte, French scientist and co-chair of the Working Group 1 in charge of the 1.5°C special report, made an introduction at the French Ministry for an Ecological and Solidary Transition on September 20. For obvious reasons, not much could be disclosed on the report itself –its contents and conclusions are still subject to official approvals, and delegations from all governments will review word by word the Summary for Policymakers and press releases– yet, some ideas are still worth mentioning.
During the UNFCCC Conference of the Parties at its 21st meeting in December 2015 (COP21), it was agreed upon to keep the increase in global average temperature to well below 2 °C above pre-industrial levels, and to limit the increase to 1.5 °C, which is assumed to reduce the risks and effects of climate change. At the time, the consequences of adhering to a 1.5°C warming were not yet studied, which the IPCC was commissioned to do in this special report. As Mrs. Masson-Delmotte reaffirmed last week, it is now scientifically demonstrated that humans are partially responsible in climate change. The risks are known as well: serious threats to ecosystems, an increase in extreme weather events, wider distribution of impacts, global aggregation of impacts, and larger-scale singular events. What is still unknown are the thresholds: until what point is it possible to go before there is no coming back? To date we still don’t have the answer, so it is essential to act now. Hopefully things are still reversible, and the transition towards a more resilient society still reachable.
Scientists argue that climate change exacerbates extreme weather events, both in frequency and severity, so the costs related to physical climate risks are only expected to rise. Currently, insurance absorbs a significant part of these costs and, as such, strongly participates in providing resilience to climate change. But if the world keeps following the current warming trajectory, it is not known whether insurance will be able to play the same role in the future. What would be the point for an insurer to cover a risk that is certain to recur every year? In any case, a lot less people would be able to afford insurance, due to the premiums which would have to be charged. This means that a substantial proportion of the economy could become uninsurable and consequently much less stable. Another idea developed in the special report is the strong relation between the fight against climate change and the goals of sustainable development. Whilst its conclusions are not yet available, it seems increasingly evident that the more the climate changes, the more social inequalities could grow. The most vulnerable populations will predictably be the most affected, with significant social consequences such as conflicts, water wars, and millions of climate refugees that governments will have to deal with.
So, where does that leave us? Ultimately it is up to the governments around the world to create the frameworks needed to tackle climate change through strong policy action. And yet, as of now we see no link between the risk of climatic catastrophes and the introduction of policies in response. A case in point is the current direction of President Trump’s administration despite the economic consequences of the 2017 hurricane season or of the Californian wildfires. For that reason, the IPCC focuses on providing policymakers with enough knowledge to take relevant decisions and define (globally) ambitious strategies to fight against climate change. The importance of making such a link is true as well in finance, as the transition to a low-carbon economy requires capital and dedicated investments. Hopefully, the 1.5°C report will show the economic benefits of limiting global warming to 1.5°C rather than 2°C. Indeed, the more the climate changes, the more bearings it will have economically speaking to adapt to new climate variables. The warming trajectory has its importance as well: if the 2°C target (and even more so the 1.5°C target) is overstepped –which is currently set to happen– the cost of going back to such thresholds will be considerable. For one, significant amounts of CO2 would have to be retrieved from the atmosphere, and the technology to achieve this does not exist yet.
Finally, an argument often heard is that ecology is no priority compared to more significant issues, such as economic growth, employment, social questions or international relations. To be sure, more stringent policies in our fundamental systems (transportation, urbanism, energy, industry, agribusiness) could make life more constrained at first, but we have reached a point where these cannot be treated separately from the environment anymore. From now on, every dollar spent on addressing environmental issues will save more in economic loss and help reduce future human vulnerability to the changing climate. In 2014, research from the Global Commission on the Economy and Climate demonstrated that ambitious climate action does not need to cost much more than business-as-usual growth. In 2018, it even shows that acting for the climate now could deliver at least $26 trillion in economic benefits through 2030.
To conclude, let’s keep our eyes open for next week’s IPCC special report and hope that it will be completely useful in convincing decision makers that the time for action is not in 20 years, not in 10 years, but today.