Guest essay by Eric Worrall
Über green former Bank of England governor Mark Carney has made some new friends.
Reserve Bank warns of 25% GDP loss by 2100 unless action taken on climate change
Australia’s central bank joins 60 others, including the Bank of England, to warn of climate risk to the economy and financial sector
More than 60 central banks, including the Reserve Bank of Australia and the Bank of England, have warned that global GDP could fall by 25% by 2100 if the world does not act to reduce global greenhouse gas emissions.
They suggested if the world acted to limit emissions to net zero by about 2070, giving a 67% chance of limiting global heating to 2C above pre-industrial levels, the impact of the climate crisis on global GDP could be about 4%.
The estimates are included in scenarios published by the Network for Greening the Financial System, a collection of 66 central banks and supervisors and 13 observer institutions. Described as the first of their kind, the scenarios are designed to guide bankers and financial regulators, including Australia’s Prudential Regulation Authority (APRA), in assessing the climate risks to the economy and financial sector.
Their launch follows warnings from financial regulators of the economic threat posed by the climate crisis. Former Bank of England governor Mark Carney last year warned it was possible the transition needed to tackle the climate crisis could result in an abrupt financial collapse, and the risk of collapse would grow the longer action was delayed. In Australia, APRA board member, Geoff Summerhayes, warned climate change posed a material risk to the entire financial system and urged companies to start adapting.
Still no significant role for nuclear power (see the image at the top of the page). I think this lack of a role for nuclear power is particularly reprehensible in the central bank disorderly climate scenario.
The disorderly scenario suggests the world panics around 2050 and invests vast sums building renewables.
The reality of course is if the world really needed low carbon energy in a hurry, the only option to deliver this would be nuclear power. The French proved going full nuclear is an economically viable option in the 1970s. Desperate people tend to reach for what they know will work.
The reports kind of gloss over a lot of the implementation details.
P18 of future scenarios contains this gem: even as population increases during most of the century, In the Orderly scenario, methane (CH4) and nitrous oxide (N2O) emissions are also gradually reduced.
The bankers don’t explain in detail how challenging it would be for food production to support the increasing population, while at the same time nations are busy restricting nitrate fertiliser, making farm mechanisation more expensive by electrifying the agricultural sector, and returning farmland to wilderness, or converting remaining farmland to biomass production or renewable energy installations.
Perhaps they figure they are central bankers, they have provided the direction – the implementation is up to agricultural experts to figure out.
They’ve covered their butts in case all the doomsday predictions turn out to be nonsense. The reports admit there is a lot of uncertainty. For example on page 8 of Future Scenarios, Scenarios differ markedly in their economic impact, with significant uncertainty in the size of the estimates for both transition and physical risks.
via Watts Up With That?
June 26, 2020 at 12:28AM