The stated aim of the Paris Agreement is to keep “a global temperature rise this century well below 2˚C above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5˚C.”
Half a degree doesn’t sound like much. But the Intergovernmental Panel on Climate Change (IPCC)’s report last week made clear that there is a world of difference. It lists a litany of step changes across extreme weather, sea levels, land use, natural ecosystems, ocean acidity, health and poverty if the temperature rise hits 2˚ rather than 1.5, including:
- Up to several hundred million more people both exposed to climate change-related risks and susceptible to poverty by 2050
- 10 million more people affected by risks associated with rising sea levels
- Double the proportion of the world population exposed to a climate-change induced increase in water stress
- One sea ice-free Arctic per decade rather than one per century.
So trying to limit the temperature rise to 1.5 degrees is important. But to do that, the world would need to reverse its decades-long rise in carbon emissions effectively immediately, and hit net-zero somewhere around mid-century. It doesn’t take an expert to realise from this graph from the report that that is a tall order indeed.
Given this, it was heartening to see the UK Government follow through on its commitment to ask the Committee on Climate Change (CCC) formally to consider the UK’s greenhouse gas targets in light of the report content. It would be even better if it matched long-term ambition with sufficient short-term action. It was only in June that the CCC concluded starkly in its 2018 Progress Report that “The UK is not on course to meet the legally binding fourth and fifth carbon budgets [2023-2032].” Despite progress in power generation, there is a lot more to be done, and soon. And those budgets will no doubt look generous when lined up against a net-zero trajectory. Sadly, the Government has already taken off the table the idea that these might be sensibly tightened in light of a new target, explicitly carving out the 2018-2032 period from the scope of the CCC assessment. In addition, the Government’s decision this month to significantly reduce support for electric vehicles, is but one example of short-term decisions that threaten to stifle the limited momentum that has been building outside of power.
The IPCC report also notes that “directing finance towards investment in infrastructure for mitigation and adaptation” will be an important in limiting risks. It is timely then to see the UK’s Prudential Regulation Authority (PRA) publish its consultation this week seeking views on a draft Supervisory Statement for banks and insurers setting out expectations around how firms address the financial risks from climate change – in turn, one hopes, beginning a crucial shift in capital allocation in line with the huge challenge of transition and adaptation that lies ahead. The Bank of England plays a leading role in driving regulatory thinking across Europe and globally, so we expect this will be important as leading practice develops in this area. We’ll address the PRA consultation in more detail soon in an upcoming blog.