Environmental balance sheet
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The NYTÂ condenses the studyâ€™s gloomy findings: ice caps and sea ice are melting; droughts, heatwaves, and heavy rainstorms are intensifying; the ocean is acidifying; â€śfish and many other creatures are migrating toward the poles or in some cases going extinctâ€ť.Â The Economist saysÂ climate changeÂ can no longer be seen as a stand-alone risk. Instead, it is already interacting with social, political, and economic risks. All of which means,Â Philip Bump writes, â€śmore violence, less foodâ€ť.
The report â€“ which assesses the state of climate research â€“ puts an increased focus on the need for “resilience and adaptation to inevitable climate change”, saysÂ Fred Pearce. Nevertheless, the final 48-page summary of the report excluded,Â due to objectionsÂ from the US and other rich countries, a World Bank estimate that developing nations need $100 billion a year to deal with climate change’s effects. The estimate was included only in the rarely read text of the full, 2,500-page report.
No one â€“ neither governments nor markets â€“ is doing a good job putting an accurateprice on carbon. The Environmental Defense Fund, National Resources Defense Council, and the Institute for Policy Studies put out aÂ report criticizingÂ the US governmentâ€™s $37 a tonne estimate of the costs of carbon as too low. The largest carbon market in the world, the EU Emission Trading Scheme, prices a tonne of carbon at between â‚¬6 to â‚¬7, butÂ Ken Arrow and his co-authorsÂ argue that the cost of of a tonne of carbon could be as high $64:
The leading economic models all point in the same direction: that climate change causes substantial economic harm, justifying immediate action to reduce emissions. In fact, because the models omit some major risks associated with climate change, such as social unrest and disruptions to economic growth, they are probably understating future harms.
Economist William Nordhaus, in hisÂ latest book,Â The Climate Casino, advocates putting an immediate and increasing tax on carbon, and eventually doubling the cost ofÂ coal-fired power by 2030. Reviewing the book,Â Paul KrugmanÂ concludes that one course of action is much more urgent and effective than any other: “we have to sharply reduce emissions from coal-fired electricity generation”.
China is the worldâ€™s largest carbon emitter. ItÂ burnsÂ almost as much coal as the rest of the world combined, and will pass 50% sometime later this year. The country has 363 coal-fired power plants, and despite itsÂ headline grabbing investmentsÂ in green energy, it will get two-thirds of its power from coal (the US is in theÂ high 30s; globally the number isÂ 40%). The vast remainder of Chinaâ€™s electricity comes from hydroelectric dams, and this mix is unlikely to change muchÂ by 2030.
ExxonMobil, assessingÂ its climate risk, is more concerned about changing weather patterns than regulation. The oil giant predicts that global carbon regulation is â€śhighly unlikelyâ€ť, which is great for its financial future. Unfortunately, low risk for Exxon means high risk for the rest of us. â€śYou can have a healthy fossil-fuel balance sheet, or a relatively healthy planet,â€ťÂ Bill McKibben says. â€śYou canâ€™t have bothâ€ť. â€“Â Ben Walsh
On to todayâ€™s links:
The state of corporate balance sheets: more cash, less debt -Â Sam Ro
The US economy is close, but not quite back to pre-recession peak employment -Calculated Risk
Earnings haven’t caught up with the enthusiasm of Europe’s bull market -Â Dan McCrum