02 Apr I’m Alright Jack: The New IPCC Assessment Report

I’m Alright Jack

So the long awaited Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)[1] is out at last. It provides a review of the current state of scientific knowledge on global warming and forecast scenarios based on four different Representative Concentration Pathways (RCPs) of greenhouse gas emissions out to 2100.

I’m not a scientist so I won’t pontificate on the findings, but here’s a sample:

“Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, sea level has risen, and the concentrations of greenhouse gases have increased”.

“Responding to climate-related risks involves decision-making in a changing world, with continuing uncertainty about the severity and timing of climate-change impacts and with limits to the effectiveness of adaptation”.

“Adaptation and mitigation choices in the near-term will affect the risks of climate change throughout the 21st century”.

A blisteringly hot summer in Australia, a parched winter in California, a big freeze in Japan and a good old drenching in Europe are teaching us a lot about the costs of adaptation to climate change. The boat may or may not have sailed already on the alternative approach to adaptation, i.e. mitigation (or prevention is better than cure). But, if there is a case (proven or otherwise) that climate change is man-made and that mitigation is more cost effective than adaptation then it should be a no-brainer that we should take whichever mitigating steps are still open to us.

Back to the Real World

Mitigating action typically involves money now and the expenditure of money now requires politicians to make decisions that are likely to be unpopular with their voters. Even if there are no voters involved, e.g. China, there is the perennial fear that one country should not go further and faster than any of its competitors, because it could put the ground-breaker at a disadvantage in international trade.

This creates a very human dilemma for politicians who must seek proof that any unpopular decision to raise environmental taxes or lower emissions caps in cap-and trade systems is fully justified by a cost-benefit analysis of the mitigation versus adaptation choices. Witness Australia’s unwinding of its carbon tax and Europe’s struggle to finally agree to even back-loading, let alone cutting, the issuance of CO2e emissions allowances. We will never get the level of certainty needed to make a consensus on mitigating strategies a slam dunk.

Even after the event, if parts of the planet have burned to a crisp and the rest is underwater, there will still be scientists arguing about what caused climate change and economists arguing about what mitigating steps would have been justified historically on economic grounds.  And the politicians responsible for decision making will then be writing their memoirs.

The Political Backdrop

Arguably, the most humanity has done to mitigate climate change was to have an international recession sparked by the banking crisis. That put the mockers on economic growth for a while and slowed the rate of growth in energy demand. But we are emerging from recession now and the green shoots of growth can be potentially more green in 2014, as we spring back from recession, than they were 2008/2009 before companies started falling over like nine pins and taking old technologies with them.

It has always been Consilience’s opinion that there are only four countries that matter in the fight to mitigate climate change: China, India, Russia and the USA[2]. They are the four biggest, and, in the case of China and India, the fastest growing, emitters and any new deal we have from 2015 to succeed the Kyoto Protocol has to have them in or the combined efforts of the other 180+ countries will matter not a jot.

China is doing its tentative bit with its pilot cap-and-trade market auctions now underway. India, with some justification, continues to play the poverty card and looks for a CDM-type successor to help it grow greener than it otherwise would absent fears about climate change. Meanwhile the USA and Russia are pre-occupied with diplomatic cooling rather than with global warming.

Russia (and Ukraine’s) cynical exploitation of the Joint Implementation mechanism to print carbon credits before the end of the first Kyoto commitment period (end-2012) does not suggest that Russia will become a climate mitigation leader any time soon.

But it is the USA that should give the climate change mitigation lobby a frisson of concern. The recession hit US businesses and households as hard as the rest of us (OK, Germany is the exception that proves the rule). After years of blaming “the Arabs” for high oil prices, America is now in the curious position of not needing imported oil any more. In fact we may see the need for a policy change to allow the US to become a net exporter of oil in the not too distant future, thanks to the shale oil and gas revolution.  No longer will US politicians be obliged to make a green virtue of the economic necessity of promoting energy efficiency and reducing dependence on foreign imports.

Like a teenager receiving a windfall inheritance from an unknown relative, the US will want to party for a while to make up for recent years of austerity. It is, however, unlikely that any economic growth fuelled by cheap(er) domestic oil will ignore the green lessons of the last ten years. It would be a foolish CEO that invested for the future without minimising its growth in greenhouse gas emissions.

As, ExxonMobil, the poster child for US multinationals, said with a strong dose of realism on 31^st March 2014[3] “All energy sources, including carbon-based fuels, are necessary to meet future global energy demand growth as society manages the risks of climate change ….. The risk of climate change is clear and the risk warrants action..” Progress indeed for a company once vilified by Greenpeace as being “worse than other oil companies” and accused of “sabotaging international attempts to stop global warming.”[4]

Maybe there is hope for the planet yet!

Dealing with reality by Consilience CEO, Liz Bossley