Next year, the Kyoto protocol expires. It is the only legally binding international agreement to curb CO2 emissions. And if recent reports in the press are accurate, the world’s biggest economies are united in their opposition to making a new agreement. The reports add that the United Nations appears to accept their stance.
It’s expected that no new global climate agreement will be negotiated before 2016 at the earliest and that would mean it not coming into force before 2020.
Many scientists and campaigners believe that postponing an agreement on emissions until 2020 will kill any hope of avoiding catastrophic climate change. Faith Birol, chief economist of the International Energy Agency (IEA) and one the world’s authorities on climate change economics, told the Guardian newspaper, “If we do not have an international agreement whose effect is put in place by 2017 then the door to holding temperatures below 2C will be closed forever.”
Delegates at the next round of talks, which take place in Durban South Africa next week, have a lot to take in. Last year, global carbon dioxide emissions rose by more than 5%, despite the worst recession in 80 years, the IEA said.
Meanwhile the UN Intergovernmental Panel on Climate Change (IPCC) has called on nations to pro-actively come up with disaster management plans to tackle the rising risk of catastrophic weather events linked to climate change induced by human activities.
In its recent report, the IPCC stated that it is almost certain of a rise in heat waves in the future, and it expects occurrence of catastrophes with relatively higher magnitude, including heavier rainfall, more powerful cyclones and more severe droughts.
The IPCC said that there are high chances of extreme weather and that it is “virtually certain” about increases in the frequency of daily temperature extremes that will occur in the 21st century on the global scale. A one-in-20 year hottest day is likely to become a one-in-two year event by the end of the 21st century in most regions, under one emissions scenario, it said.
It added that “it is likely that the frequency of heavy precipitation or the proportion of heavy rainfall from heavy falls will increase” across regions, mainly in high latitudes and tropical areas.
The IPCC further added that, though the frequency of tropical cyclones could fall down, the ones that occur would be more powerful.
Droughts could become more severe due to lesser precipitation and higher evapotranspiration – a term used to describe the sum of evaporation and plant transpiration from the Earth's land surface to atmosphere – and that there is a high chance of occurrence of landslides triggered by shrinking glaciers and permafrost.
It is getting harder to ignore these warnings. Even in the US, where (manmade) climate change denial has always been the consensus opinion, views are changing. A new report from the New York State Energy Research and Development Authority (Responding to Climate Change In New York State) starts by acknowledging that temperatures are increasing, precipitation patterns are changing and the sea level is rising. It attributes the changes to emissions.
“These climatic changes are projected to occur at much faster than natural rates because of increased amounts of greenhouse gases in the atmosphere… These climate changes are already having impacts in some aspects of society, the economy, and natural ecosystems and these impacts are expected to increase,” the report says. “Not all of these changes will be gradual. When certain tipping points are crossed, impacts can increase dramatically. Past climate is no longer a reliable guide to the future.”
The insurance industry would do well to read the report. Here’s some “takeaways” that don’t require any further comment:
* Temperatures are expected to rise across the state, by 1.5°F to 3°F by the 2020s, 3°F to 5.5°F by the 2050s, and 4°F to 9°F by the 2080s. The lower ends of these ranges are for lower greenhouse gas emissions scenarios (in which society reduces heat-trapping emissions) and the higher ends for higher emissions scenarios (in which emissions continue to increase). Sharp cuts in global emissions could result in temperature increases lower than the bottoms of these ranges, while a continuation of business-as-usual could result in increases higher than the high ends.
* Annual average precipitation is projected to increase by up to 5% by the 2020s, up to 10 percent by the 2050s, and up to 15 percent by the 2080s. This will not be distributed evenly over the course of the year. Much of this additional precipitation is likely to occur during the winter months as rain, with the possibility of slightly reduced precipitation projected for the late summer and early fall. Continuing the observed trend, more precipitation is expected to fall in heavy downpours and less in light rains.
* Sea level rise projections that do not include significant melting of the polar ice sheets (which is already observed to be occurring) suggest one to five inches of rise by the 2020s, five to 12 inches by the 2050s, and eight to 23 inches by the 2080s. Scenarios that include rapid melting of polar ice project four to 10 inches of sea level rise by the 2020s, 17 to 29 inches by the 2050s, and 37 to 55 inches by the 2080s.
With this gloomy and potentially expensive forecast in mind, can the insurance industry help? That’s a question Munich Re is asking its constituency. And according to its online survey, the industry could take direct action. Check out the responses: it could be that opinion is beginning to harden in the insurance sector as the realities of climate change hit home in terms exposures. But whether policymakers will take notice in time still seems a distant hope.