Coming to a Place Near You

The Paris Agreement commits governments to keeping the rise of global temperature to ​‘well below 2°C’ and to ​‘pursue efforts’ to limit it to 1.5°C. Since 2019 the United Nations has published an annual Production Gap Report. This charts the gap between published plans to produce fossil fuels and the production levels compatible with keeping the climate safe. Currently planned production by 2050 is 350% greater than is compatible with 1.5°C and 150% above that consistent with 2°C.

Clearly something has to give: either the production plans or the preservation of a safe climate. We cannot have both. This choice is determined by the physics of carbon in the atmosphere and the reaction of the earth system to those physics. Short of war, human societies have little experience of making such transformative decisions. This is particularly true when we can only succeed if nations collaborate, and if they manage to do so within a tight and exogenously determined time constraint. 

The only thing that can be said with confidence about this prospect is that there will be shocks. Whatever happens we will be in a world of dynamically increasing uncertainties as we move across a spectrum of outcomes ranging from climate policy success to climate policy failure. Navigating a path across this landscape of ever more volatile risk will require a deeper understanding than is yet much discussed about what a rapidly changing climate really means.

And the climate is changing rapidly. The Sixth Report of the Intergovernmental Panel on Climate Change, published in March, made this clear. Its message was then forcefully amplified by a summertime cascade of broken weather records throughout the planet. It is now ​“virtually certain” that 2023 will be the hottest year on record. A new record that seems likely to be broken again in 2024. 

This extraordinary summer of extreme weather is the curtain raiser for the latest round of climate summits in Dubai – COP28. At the heart of the Paris Agreement is a pledge from each country to reduce its carbon emissions and to review regularly whether those pledges would meet the goals. COP28 will conduct the first of the global stocktakes mandated by the Paris Agreement. It will assess whether the world is on course to achieve them.

Since Paris, many but not all governments have updated their initial reduction pledges. Unsurprisingly, not all Governments have delivered on the promises they made. Meanwhile, it is clear that the current pledges – the so-called Nationally Determined Contributions (NDCs) – even if fully delivered – are not enough to keep the climate safe. None of the G20 countries are on course to meet their own targets. The current UN report on NDCs shows that to remain below 1.5°C emissions must fall 43% by 2030. As things stand, they will rise by 9%.

Hence the importance of the Production Gap Report. Not only are we not currently on course for a safe climate but we are simultaneously planning to invest heavily in more of the fossil fuels that are making it unsafe. So there will be shocks. 

Governments could adopt much more vigorous policies to accelerate the energy transition. If so, energy companies and some other businesses, will face abrupt shocks to their current investment plans and revenue expectations. Or Government responses to climate change could continue to evolve too slowly. In which case there will be different shocks, to different businesses and to very many people, as the impacts of a changing climate become larger and more widespread.

One of the most significant speeches yet on climate change was delivered in June 2015 by Mark Carney, then Governor of the Bank of England. He argued that climate change posed an existential risk to macro-economic stability. In the careful, and consciously opaque, language of a central banker he was connecting the fate of the global economy directly to the fate of the planet’s climate. Eight years later, most the world’s politicians are still some way from grasping the implications of what he said.

What the Bank of England understood was that a constantly changing climate would damage, and eventually destroy, the actuarial basis for pricing risk. It then set about developing a set of tools to help, governments, financial institutions and many others acquire a comprehensive and tractable understanding of the economic consequences of climate change. There is now a network of 127 central bankers collaborating on understanding the risk climate change poses to their core task of maintaining financial stability.

Few other public bodies and most private institutions have no such a clear grasp of what climate change means for them. Mostly, this results from a poor understanding of the impact of climate change on the earth system as a whole. Some things about the causes and consequences of climate change we now know very well. But there are many that we are only just beginning to describe, let alone quantify.

We know the concentrations of greenhouse gases in the atmosphere with extraordinary precision. We know with considerable confidence the temperature rise this create. We now have an increasingly good account of how the large geophysical components of the earth system are responding to rising temperatures. There are good metrics for how weather systems, ice sheets or sea levels are changing. Even so, there is still a lot we do not fully understand about the dynamics of those systems and therefore the rate at which they will change. 

It is when we come to the biosphere that we reach the limits of our current understanding of the impacts of a changing climate. The only parts of the biosphere of which we have some systematic understanding are the ecologically impoverished systems humanity makes use of like agriculture. Even so, there is considerable uncertainty about how rising temperature will combine with other environmental factors to affect plant productivity and thus food security.

We now have a better understanding of how a rising global temperature will affect the ocean physically. In particular, the role it plays in storing and moving heat around the planet. But our understanding of the ocean biosphere is much less than even that of terrestrial ecosystems. Since about 800 million people rely on marine resources for survival, this is a large gap in our knowledge of what a changing climate means for people.

We are now beginning to get a more comprehensive understanding of both the direct and indirect impacts of climate change on human health. Reports of deaths from heat waves are now routine, enabling us to begin to track one direct effect of climate change on health. Others remains harder to measure, those on mental health in particular. 

The cumulative impact of all these stressful climate driven changes on human behaviour, individually, socially and politically, has hardly begun to be described let alone understood. Over fifty percent of people now live in cities. It will be seventy percent by the middle of the century. What these large urban populations will feel and think as they increasingly experience the impacts of climate change on their daily lives is hard to anticipate. It will act as a stress multiplier on the other multiple stresses they are experiencing from which will flow unpredictable political shocks.

Scientists are not alone in being increasingly baffled by the inability of governments to respond to the urgency of tackling climate change. Their message is now being amplified by swelling numbers of civil society organisations globally, especially among the young. It is some time since, quietly but consistently, military and intelligence bodies began to echo it. The central bankers have been followed by other public and private financial institutions, most recently by the IMF. 

This growing chorus of voices has yet to add much acceleration to the glacial pace of government action. Such progress as has been made with the energy transition has been driven more by technology, innovation and opportunity seeking than by public policy. Some of the reasons for this governmental torpor are ideological. Urgent civilisational scale change is not readily compatible with the promotion of an ever-smaller state. More of it, however, is structural. Climate change is in the wrong place in the priorities of most governments irrespective of whether they are democracies or autocracies, rich or poor, of the Left or of the Right. 

For all governments, maintaining territorial integrity is the first imperative. Without it, there is nothing to govern. The second imperative is to maintain internal security. Without this, especially in highly urbanised societies, the maintenance of territorial integrity becomes impossible. The third imperative is to maintain food, water and energy security without which internal stability becomes impossible. What is now becoming apparent is that without climate security food, water and energy security will be progressively undermined. The fifth imperative is to maintain access to markets and resources. 

In practice, most governments, democracies especially, prioritise the fifth imperative. Acquiring and maintaining access to markets and resources is what actually occupies political attention and effort. Delivering a credible prospect for rising real incomes today is the proven route to the preservation of power. Solving problems that will destroy rising real incomes tomorrow and territorial integrity eventually is much riskier to holding on power today. The fifth imperative therefore trumps the fourth imperative and is launching the world on a march of folly in which shocks and uncertainties of many kinds will compound.

The dominant theme of the current global conversation about climate change is the energy transition. Most political and institutional attention is focused on the battle between the incumbent carbon intensive fossil fuel industries and the insurgent carbon free renewables industries. Both protagonists are currently investing more than $1.5 trillion per year in new projects. But the investment in renewables is doing little more yet than covering the annual increase in energy demand. Governments, investors and analysts of all kinds are making judgements on where best to position themselves to take advantage of this battle’s outcome. 

This is a challenge of fiendish complexity but not one beyond our technology competence. Almost ninety years ago the whole US economy shifted in 12 months from producing cars and white goods to making tanks and ammunition without significant disruption. Decarbonising today’s energy system is undoubtedly a much bigger challenge but so too are the engineering, financial and management capabilities to address it. There are few voices arguing that this cannot be done but there are a lot more wondering it if will be done.

There are good reason for their doubts. The current conversation is a conversation about climate policy success. No-one much is talking about climate policy failure. In the current conversation the fossil incumbents have many advantages over the insurgents. They are well known, very large companies who are well organised collectively. They are already close to political power and bring tax revenues and dividends to the table. The carbon free insurgents are much smaller, far less well known and organised and not at all close to political power, Furthermore, they are a threat to the flow of reliable tax revenues and dividends.

To win the energy transition battle they need reinforcements. Those reinforcements must come from the missing voices. We are not yet hearing from a vast range of interests for whom climate policy failure will be a source of multiple disrupting shocks. The first harbingers of failure are already visible in successive years of broken fire, flood and drought records around the world. Winter tourism and the wine industry are already the involuntary first responders to climate policy failure.

These are but the warning tremors of the earthquake of change to come. By the middle of the next decade the whole of the northern Mediterranean littoral might experience sustained periods of 40°C+ temperatures most years. That is inside the investment horizon for tourist developments central to the prosperity of those economies. Mining companies invest billions of dollars in operations that cannot be moved and are mainly sited in areas that are already environmentally stressed. Any economic activity that has a fixed location, from farms to cities, is at risk if climate policy continues to fail. It is time they joined the conversation.