Wednesday, September 30, 2015

Mark Carney Again Warns of Climate Change Induced Financial Collapse. Is Anyone Listening?

The former governor of the Bank of England said it. The current governor of the Bank of England is saying the same thing - to anyone who'll listen.  Mark Carney who recently left the top perch at the Bank of Canada to sit on the top perch of the Bank of England says, unless we get climate change under control, soon (as in now), we'll enter an era of financial crises and collapsing living standards.

In a speech to the insurance market Lloyd’s of London on Tuesday, Carney said insurers were heavily exposed to climate change risks and that time was running out to deal with global warming.

The governor said that proposals would probably be put to the G20 meeting in Turkey in November urging the world’s leading developed and developing countries to bring in tougher corporate disclosure standards so that investors could better judge climate change risks.

...“The challenges currently posed by climate change pale in significance compared with what might come,” Carney said. “The far-sighted amongst you are anticipating broader global impacts on property, migration and political stability, as well as food and water security. So why isn’t more being done to address it?”

...“Climate change is the tragedy of the horizon. We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix.

“The horizon for monetary policy extends out to two to three years. For financial stability it is a bit longer, but typically only to the outer boundaries of the credit cycle – about a decade. In other words, once climate change becomes a defining issue for financial stability, it may already be too late.”

Carney addressed the subject that Canada's political leadership relentlessly avoids mentioning, the looming Carbon Bubble, and the inevitability that high-cost, high-carbon fossil fuels - yes, including bitumen - will become "stranded assets."

“Take, for example, the International Panel on Climate Change’s estimate of a carbon budget that would likely limit global temperature rises to 2 degrees [centigrade] above pre-industrial levels.

“That budget amounts to between a fifth and a third of the world’s proven reserves of oil, gas and coal.  If that estimate is even approximately correct it would render the vast majority of reserves “stranded” – oil, gas and coal that will be literally unusable without expensive carbon-capture technology, which itself alters fossil fuel economics.

So far the best we're getting out of our political leadership are promises of carbon pricing or cap and trade schemes with the revenues handed off to the provinces in one form or another. Nobody is willing to say they'll take that money and keep it in Ottawa's treasury and use it to replace and reinforce our national infrastructure that is already decaying and definitely not Anthropocene-ready.

Our supposed leaders are waiting for market conditions to kill off Athabasca but there's no discussion of who cleans up the mess afterwards, after the foreign oil companies have bugged out.  We're not discussing the enormous environmental hazard that is Athabasca, how we're going to clean it up and at what cost and who'll get stuck with the tab or what awaits Alberta and the rest of Canada if we don't clean it up. These are conversations that come with price tags of hundreds of billions of dollars, definitely not suited for delicate ears wanting to hear only lies about balanced budgets and sunny tomorrows.


Lorne said...

"These are conversations that come with price tags of hundreds of billions of dollars, definitely not suited for delicate ears wanting to hear only lies about balanced budgets and sunny tomorrows."

You've nailed the real problem right there, Mound. To paraphrase that hoary movie line, "We can't handle the truth!" Any wonder we are being pandered to?

The Mound of Sound said...

If it was only pandering, Lorne, I wouldn't mind. Yet it's the unprincipled squandering of something vital we have in rapidly dwindling supply - time.

I'm quite confident that we will act, eventually, but not until it's much too late. The titans of business aren't fools. They know we'll have to act. But their approach has been and remains "just not yet." There is still great wealth to be extracted from pursuing some thoroughly reprehensible opportunities. That's what sowing doubt is all about - buying time - for them or, rather, stealing time from us.

Anonymous said...

Anyong said .. What is new? The Banks have always used a crisis to scare the masses from Margaret Thatcher forward.

The Mound of Sound said...

Anyong, you're way off mark if you think Carney is out to "scare the masses" with his remarks about climate change.

Anonymous said...

Anyong dear Mound, I read what Carney said in your piece regarding the environment and understood it. I made a comment about bankers...they are part of the reason the world is in the mess it is..which means the environment and also the financial state the world is in.