Trump and Paris: What Impact on Climate?

President Trump’s decision to withdraw the United States from the Paris Agreement triggered a strong response from the international community, and many foreign leaders quickly denounced the decision and vowed to maintain or increase their nations’ efforts. China and the European Union have announced a new alliance to lead on climate issues. In addition, U.S. states are forming alliances with other nations, with California Governor Jerry Brown traveling to meet with Chinese President Xi Jinping and sign climate partnerships with local Chinese leaders. Governor Brown also participated in an event for the Under 2 Coalition, a group of subnational actors in 33 countries committed to reducing carbon emissions, which he led California to establish in 2015. Yet the loss of U.S. federal leadership is still daunting. Other world players are looking to fill this leadership gap, including new French President Emmanuel Macron who has invited American climate scientists to continue their work in France.

Impacts on U.S. Emissions

U.S. leaders in the private sector and in state and local government are pressing forward. As David Victor notes for the Brookings Institution, the loss of U.S. federal leadership makes the path to achieving the Paris Agreement’s goals harder to achieve, but not impossible. Rhodium Group’s modeling showing the annual emissions projections,  shows that the systematic dismantlement of climate policy by the Trump Administration makes it impossible for the US to attain its 26-28% emissions reduction target. However, uncertainty from a range of other factors, including energy markets dynamics (oil and gas prices in particular) and the health of the economy could drive large variations in emission trajectory, compounding the policy uncertainty around the fate of climate policy and programs targeted by Republicans.

Rhodium Group projections of U.S. greenhouse gas emissions

Even before the Paris Agreement announcement, the administration had worked to impede the nation’s effectiveness on climate issues. Among many other programs in the line of fire, the ability to monitor carbon emissions, with budget cuts proposed to severely limit the Environmental Protection Agency’s Greenhouse Gas Inventory, and eliminate the National Aeronautics and Space Administration (NASA)’s Global Carbon Monitoring program. The loss of these tools would critically undermine the U.S.’ ability to implement and enforce emissions regulations.

Impacts on Adaptation and Resilience Funding, Domestically and Internationally

As part of the withdrawal, Trump announced that the U.S. would end its payments to the Green Climate Fund, falsely claiming that “nobody even knows” where the funding for developing nations is ending up. Yet the fund, which aims to support equally climate mitigation and adaptation projects, fully details 43 projects currently funded from the $10+ billion pledged. By ending its payments, the U.S. cuts $2 billion in expected funding, a serious blow to the fund. It is yet to be seen if other nations will increase their pledges to fill this gap. Trump’s proposed budget will cut grants and funds for the National Oceanic and Atmospheric Administration (NOAA), Department of Housing and Urban Development (HUD), and close to 50% of the EPA’s scientific research programs budget. The proposal belies previous administration claims that their EPA plans would return environmental responsibilities to states, as the budget reduces “state grants for air and water programs by 30 percent.” Other budget cuts may target innovation and fundamental research with cuts for ARPA-E and the Department of Energy.

New U.S. Coalitions Form to Support Paris Agreement 

Though funding to climate programs are at risk, leaders of U.S. cities and states are forming alliances to voice their commitment to achieving the nations’ contributions even without federal government support. The U.S. Climate Alliance, which was formed by the state governors of Washington, New York, and California, is comprised of 13 states and territories make up the alliance representing 35.9% of the country’s population.

The We Are Still In movement, which is led by Michael Bloomberg, seeks to allow subnational entities formally to submit reports on progress to the United Nations Framework Convention on Climate Change, raising questions of whether and how the Framework should allow subnational actors to participate. More than 1200 mayors, governors, college and university leaders, businesses, and investors have pledged to continue to support climate action to meet the Paris Agreement through the We Are Still In; Four Twenty Seven is proud to join these efforts as a signatory.

The effect of these new coalitions is yet to be seen, but the signal they send to other nations and advocates around the world is critical to cushion the blow from the withdrawal of the world’s second largest emitter from the Paris Agreement. The rest of the world has sent a clear signal that they remained committed to fighting climate change, with European leaders, Indian Prime Minister Modi, and Chinese Premier Xi in particular reiterating their commitment in the days that followed the announcement by Donald Trump.

What Now?

The Trump administration has brought new levels of uncertainty to climate policy in the U.S., but efforts to tear down regulatory programs are more likely to create continued confusion and delays than to deal a final blow to efforts to reduce emissions. The greatest uncertainty, however, comes from the broader policy and political context, the ability of the administration to carry out its agenda, and the impact of its proposed policy on the economy.

Meanwhile, many cities and corporations are galvanized. Their efforts to compensate the policy shifts at the federal level will not be enough to make up for the lost budget and policy ambition, but it will ensure the U.S. does not trail too far off its international commitment and keeps an informal but critical presence on the global stage.

Tipping the Balance: US and China Ratify Paris Agreement

Late Friday night, China and the U.S. announced that they formally joined the Paris Agreement. This momentous announcement tips the balance towards a quick entry into force of the Agreement, by the end of 2016 — if not by the end of September.

The Paris Agreement requires 55 percent of the 180 signatories to ratify or formally join, representing more than 55 percent of global emissions. The UNFCCC ratification status tracker, last updated as of Friday afternoon, counted 26 parties accounting for 39 percent of emissions.

26 Parties have ratified of 197 Parties to the Convention. Accounting for 39.06% of global GHG emissions.
Source: UNFCCC (accessed September 6, 2016)

China and the U.S. together are responsible for over 38 percent of global emissions, so their commitment pushed the emissions from signatories to 75 percent, well over the 55 percent threshold. Securing the missing 27 country signatures will be not a problem now that the U.S. and China have confirmed their commitment. The next wave of ratification is expected later this month, as countries gather in New York City for the annual General Assembly of the United Nations on Sept. 19.

Paris Agreement signed by President Barack Obama
Source: whitehouse.gov

The Paris Agreement announcement came late at night, on the eve of a long holiday weekend in the U.S., indicating that the Obama administration was eager to avoid media attention and not turn this decision into a presidential campaign talking point. The administration has consistently argued that the Paris Agreement was not a treaty since it did not impose any legally-binding constraint to the U.S. This interpretation ruffled feathers in Europe at the time the document was negotiated in late 2015, but enabled the administration to proceed with formally ‘joining’ the agreement with a signature from the President, without having to submit the document to ratification of the Senate.

Senate ratification (or lack thereof) had been the kiss of death for the Kyoto Protocol, and U.S. climate negotiators were intent to avoid involving the Republican-controlled Senate, which would undoubtedly oppose ratification. This accelerated procedure does, however, make the future of the Paris Agreement fully dependent upon the next U.S. President, since that same signature can be undone just as easily. Hillary Clinton has committed to pursuing current efforts from the White House to reduce GHG emissions and build resilience, while Donald Trump has made contradictory statements about climate science and announced he would pull out of the Paris Agreement if elected. Given current polls and forecasts for the November 2016 elections, we expect the U.S. will stand by its commitment to the Paris Agreement for the next four years.

Will It Be Enough?

The quick entry into force of the Paris Agreement is critical for many reasons. First, reducing emissions aggressively and early-on is the most effective way to prevent catastrophic impacts from climate change. Many scientists consider the commitments under the Paris Agreement to be insufficient to stop climate change. These commitments, known as “Intended Nationally Determined Contributions” (INDCs – or NDCs, without the “intended” for contributions announced after December 2015), are due to be updated every five years, which leaves the door open to more aggressive emission reductions in the future.

A joint study from the University of Maryland and the Pacific Northwest National Lab showed that the current emission reduction commitments, denoted “Paris – Continued Ambition” on the chart below had only a 50 percent chance to keep global warming under 2 degrees Celsius. Countries would have to increase their policy ambitions and reduce emissions much more drastically to have a shot at keeping global warming in the 1.5-2-degree range. The 2 degrees of global warming threshold is considered by a majority of climate scientists the upper limit for global warming to avoid severe and irreversible consequences.

Emissions pathways and temperature probabilities
Source: UMD and PNNL joint study, Dec 2015.

The other reason for which a quick entry into force of the Paris Agreement could be a game changer is the amount of adaptation finance it could help unlock. The Agreement sets a goal of mobilizing $100 billion a year between 2020-2025 in climate finance, both for mitigation and adaptation. This money is much needed to engage in ambitious adaptation projects in developing countries, where the impacts of climate change are expected to be most harmful.

Towards Marrakech

Climate policy remains high on the agenda for global leaders — from the Paris Agreement to the G20 statement this weekend, which ‘reaffirmed’ the G20 countries’ commitment to address climate change through emission reduction policies and climate finance. The announcement from the US and China paves the way for growing momentum ahead of the next Conference of the Parties (COP 22) in Marrakech, Morrocco, with a renewed focus on implementation and adaptation.

Policy Brief: Climate Adaptation in the California Budget

California is a leader on climate resilience and adaptation efforts in the U.S. Yet translating adaptation policies into clear budget priorities can be a challenge. This Policy Brief provides a detailed analysis of the California budget for FY 2016-2017 with regard to adaptation and resilience spending, with an eye to lessons learned for other states and opportunities for improvement and clarification for future budgets.

California’s adaptation policy builds on a growing body of legislation – namely, SB246, AB1482, SB379, and Executive Order B-30-15 highlight California’s commitment to adaptation and resilience, as do numerous state and local programs. We found that these priorities are reflected in the 2016-2017 State budget, but somewhat disjointedly.

Governor Brown’s proposed budget, which the legislature passed on July 15, does not allocate specific amounts to programs labeled as adaptation- and resilience-focused. Rather, it supports programs related to drought resiliency, infrastructure upgrades, climate change, and other issues. Therefore, tracking resilience-specific finance is difficult; to overcome this challenge, we analyzed the 2016-2017 budget by looking at both specific sections of the budget and policies that relate to climate hazards. Within certain sections, we were able to compare allocations that support climate resilience to the total allocations for sector initiatives. Policies related to hazards include those designed to protect vulnerable populations and the overall strength of the state to respond to disasters.

In our view, California’s latest budget does not yet adequately address the state’s adaptation challenges, nor does it fully reflect the state’s priorities. However, with the final round of legislation passing before the close of the legislative year on August 31, 2016, the State set itself up for success by addressing gaps in allocations, prioritizing environmental justice and setting the stage to clarify cross-departmental standards for addressing climate change. It is now essential that the state move forward with the implementation of these initiatives in a clear, communicative way, in order to ensure that state funds engender climate resilience.

Download the full policy brief (PDF)

What Brexit Means for Climate

Reposted from The Huffington Post, The Blog, view it on HuffPo HERE.

Image courtesy: Free Range Stock, photographer Daniel J Schreiber “London Landscape"

BOTTOM LINE

  • In the short run, Brexit means, at the very least, delays and complications in the process towards the ratification of the Paris Accord.
  • The financial volatility caused by the referendum’s outcome could distract the worlds’ financial regulators and have a negative impact on current efforts to better regulate climate-related financial disclosures.
  • Looking ahead, the incoming Eurosceptic government in the UK is unlikely to make climate change its priority, depriving global climate negotiations from a leader and political engine towards more ambitious GHG cuts.
  • In a worst case scenario, a full-blown global economic crisis would set back investments in clean energy, cut budget for both mitigation and adaptation efforts, and fuel further discontent from the middle-class and the unemployed.
  • Over the long run, a possible “contagion” effect enabling populist victories in upcoming elections in the US, Spain, France or Germany over the next 12 months could further hamper the enactment of effective global climate policy.

ANALYSIS

Political Implications: Impact on the Paris Accord

The only certainty regarding the impact of Brexit on climate policy comes from the extensive political uncertainty and financial volatility the referendum outcome has triggered. As the political debate turns towards the process for the UK to exit from the EU and deepening internal tensions between the UK and the “pro remain” constituents within Scotland and Northern Ireland, this uncertainty will at a minimum cause a temporary slowdown of the ratification process of the Paris Accord.

The ratification process was already expected to be long and complex for the EU. Each country has to approve the ratification domestically before the EU as a whole ratifies the accord. In the context of such a lengthy process, we think it is highly unlikely the lame-duck Cameron government would stick its neck out and push for a rapid ratification of the accord in the next three months, before its scheduled October departure. It is unclear how the UK will affect the EU ratification process during the two years preceding Britain’s formal exit from the EU.

This leaves the next government in charge of a possible ratification. Leading candidate for British Prime Minister, Boris Johnson, and the UK Independence Party leader Nigel Farage, who are credited with driving the success of the Leave vote, both do not believe in or prioritize climate change, casting a shadow of uncertainty over whether the UK might actually ratify the Paris accord at all.

However, the Paris Accord requires the ratification from 55 countries representing 55 percent of global emissions to come into forces. A refusal from the UK to ratify would send a negative signal but a single country representing 2 percent of global emissions would not bring the global process to an end. While the UK has historically been a driving force in global and EU climate negotiations, we expect the new UK government will at best be a follower, at worst a laggard and opposing force in global climate policy.

Beyond Britain: The Rise of Populism

While the direct political implications of the referendum on UK climate policy are quite predictable, we cannot rule out a potential ripple effect on the willingness from other countries to ratify the Paris accord. More generally, the UK vote signals that current populist trends in the world’s largest economies – U.S., France, Germany in particular – could bring a deep reshuffling of cards for climate policy. Populists parties are typically lukewarm, if not outright opposed to climate policy and global agreements, as illustrated by the so-called Trump Trajectory in the U.S.

A rise in climate-sceptic governments could bring to a halt the progress brought about by the Paris accord and set us back toward a high carbon emission pathway. At this point in time, however, we believe most governments have a robust understanding of the seriousness of the issue of climate change, and will do their best to proceed with the accord ratification and with meeting their targets.

Financial Implications: Impact on Efforts to Regulate and Price Climate Risk

A very immediate impact from Brexit-induced financial volatility and risk of recession will be felt on efforts to better understand, regulate and price climate-related risks on financial markets. The very institutions and individuals that have been leading this effort globally – the Financial Stability Board and its Chair, Mark Carney, who is also the Chair of the Bank of England, as well as to some extent the Securities and Exchange Commission in the U.S., are going to be entirely focused on preventing a complete collapse of the British economy and a global recession. This will necessarily cause distraction away from the recent efforts to push climate change higher on the agenda of financial decision-makers.

Assuming the world’s financial leaders are successful in preventing a global recession and the volatility of financial markets continues, we expect the discussion to resume and allow the recommendations from the Task Force on Financial Climate-Related Disclosure to garner the attention needed from global financial regulatory bodies.

However, if Britain’s decision to leave the EU were to cause continued turmoil on financial markets around the world, leading to a major recession, the impacts on climate change policy could be extensive, and mostly negative. Recessions in general are bad for the environment because jobs and financial volatility typically take precedence on the political agenda over environmental regulations and climate policy, often perceived as putting added burden on the economy. A global recession could lead to budget cuts and increased contention over energy and climate budgets, and otherwise lead to a scale back of efforts to reduce emissions.

Financial instability also means a setback for investments in clean energy, with financial flows likely to flock towards safe havens (U.S. bonds, gold) and away from riskier investments.  Expectations of trade financing faltering, credit spreads narrowing, emerging markets assets under serious stress and a worse-than-expected earnings season, impacting equity valuations all point to less money for adaptation in developing countries and a further slowdown in renewables investment levels.

Conclusion

The UK’s decision to leave the EU puts both financial markets and climate policy to the test. Financial markets were still slowly recovering from the second greatest recession in the history of modern markets, and this is where the main uncertainty stands at the time of writing. Short term volatility may bring distractions but unlikely to drive a meaningful change of course away from greater climate risk disclosures. If continued economic turmoil materialized, it could slow down investments in clean energy and put climate and environmental issues on the back burner once again.

By Emilie Mazzacurati and Camille LeBlanc

Image courtesy: Free Range Stock, photographer Daniel J Schreiber “London Landscape”

 

Redefining Climate Risk

Comment Letter from Four Twenty Seven to Task Force on Climate-Related Financial Disclosures. (Download full letter here)

May 23, 2016

Dear Chairman Bloomberg,

Four Twenty Seven, Inc., a climate resilience research and advisory firm, is pleased to submit this letter of comment for your consideration and to help inform the work of the Task Force on Climate-Related Risk Disclosures (TCFD) during Phase II.

We commend you for the important work undertaken by the TCFD and your deliberate efforts to engage practitioners and stakeholders in providing input along the way. Providing guidance around climate risk disclosures is a critical step not only to help ensure financial markets will not be blindsided by predictable risks, but also to ensure that investors send the appropriate price signals to the decision-makers for the underlying assets – from corporate boards to public officials and real estate owners — thus providing an incentive to better prepare for and adapt to the physical impacts of climate change.

Our comments stem from years of working closely with Fortune 500 corporations to help them understand climate change impacts, quantify risk and monetize costs. We anticipate this type of analysis will need to become widespread for corporations to comply with the forthcoming guidance from the TCFD, and wanted to share our lessons learned from our past work.

Our comments, detailed below following the questionnaire structure, center around two key takeaways:

  1. The need to redefine climate risk to better account for direct and indirect risks related to the physical impacts of climate change. Regulatory, technology or transition risks are by no means confined to greenhouse gases, and focusing a disclosure framework only on extreme weather events and direct physical impacts would be deeply misguided. It is critical that corporations understand, address and disclosure their exposure to risks and opportunities related to transition risk due to:
  • Regulatory changes driven by climate change (e.g. changes in underground water regulation, permitting, zoning, etc.);
  • Costs and revenues associated with finding and deploying adaptive technologies to improve corporate resilience, mitigate risk exposure and promote more efficient resources use;
  • Costs associated with capital expenditure, retrofitting or moving facilities, infrastructure and other critical assets out of harm’s way.
  • Costs and revenues associated with increasing the company’s adaptive capacity, ranging from increased legal and insurance costs to investments in human capital, supply chain risk management, engagement with local governments to support climate adaptation efforts, and other public-private partnerships.
  • Macro-economic and financial risk for property owners, market risks for certain products, etc.

 

  1. The need to incorporate climate data into decision-making processes and provide vulnerability assessments at the asset-level for both corporations and investors.
  • Corporations need to utilize fully the wealth of climate data and projections that are available, and leverage sophisticated techniques and models to incorporate uncertainty into their decision processes.
  • Climate risk analysis must be performed at the asset-level, even if the final disclosures do not include all the asset-level data, and should rely on common standards, assumptions and scenarios to enable comparison across assets and across markets.
  • Risk assessments should be subject to third-party verification to ensure they are complete and cover all the material risks.

Download Four Twenty Seven’s Comment Letter (FourTwentySeven_PhaseI_CommentLetter) for our detailed analysis on climate risk reporting.

Insights in Resilience: Local Government and Adaptation

We reached out to Aleka Seville, our Director of Community Adaptation, and asked her about what makes a resilient community.
Aleka’s responses speak to the intersections between public planning, hazard response, and the measuring and reporting the effectiveness of adaptation solutions. Learn more about how we are partnering with governments to build resilience and prepare for the impacts of climate change from our partner page.
1) What makes a community resilient?

While our shared definitions of resilience are typically quite broad, one of the factors that I see as a major enabler of resilience is the “mainstreaming” of adaptation planning – accounting for climate change impacts in nearly every public planning process, from hazard mitigation to general and capital planning.

Communities that commit to assessing climate risk within existing planning processes are able to build on existing frameworks and, sometimes, tap existing budgets, to mitigate these risks. Incorporating resilience goals and metrics into current planning processes sets the stage for critical cross-agency coordination when implementing adaptation solutions.

Local Resilience

2) Where should a community start when developing an adaptation plan or resilience strategies?

At Four Twenty Seven, we talk about the “Adaptation Learning Curve” when deciding how we can best assist a community or organization in building resilience. Key to this discussion is an understanding of where the community is starting from and where they’d like to go based on their unique vulnerabilities, climate risk exposure, and adaptation goals. It’s difficult to make progress or prioritize resilience building without first understanding and raising awareness about the problems at hand. Therefore, we often begin by offering customized training and education activities to help communities engage key stakeholders and build support for action from the very start.

3) How can you tell if a community is making progress in building resilience?

Resilience is indeed a journey – one that looks different for every community. Given jurisdictional responsibilities and limitations, cities, counties, regional agencies and states all have a role to play in creating stronger, more resilient communities. The hard part is effectively coordinating those efforts. While a specific community could be making progress towards their unique resilience goals, if these goals are not informed by the efforts of other local agencies, this is a real risk of investing in maladaptive efforts. We challenge the communities we work with to think beyond their own jurisdictions when developing resilience goals. Those goals can then be informed by metrics that reflect not only what is happening within that community, but how those efforts contribute to resilience on a broader scale.

COP21: Climate Adaptation in the Paris Agreement

b9f7640e54975ccb-a6ddcAt the 21st session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change in Paris, France, 196 countries reached a landmark climate change agreement, which for the first time puts in place a regular, iterative process for evaluating progress and enhancing actions.

In 2018, Parties to the Convention will reconvene for a global “facilitative dialogue” to assess collective progress on achieving mitigation targets. This will be followed by a periodic global stocktake to gauge collective progress on mitigation and adaptation goals, including the state of overall adaptation efforts, priorities, and the efficacy and adequacy of support. The first global stocktake will be conducted in 2023; it will then take place every five years. (See the World Resources Institute’s blog for more information.)

The Paris Agreement also seeks to strengthen adaptation efforts under the Convention and, together with the accompanying COP decision:

• Establishes the adaptation goal of “enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change.”

• Calls on countries to carry out national adaptation planning processes, which may include assessing climate change vulnerabilities and impacts to inform prioritization of actions, implementing actions to adapt and build resilience, and monitoring, evaluating, and learning from adaptation plans, policies, programs, and actions.

• Requires each country to submit and periodically update an adaptation communication, which summarizes adaptation priorities, efforts, and support needs.

• Encourages international, regional, and financial institutions to report on their efforts to integrate climate resilience considerations into their development assistance and climate finance programs.

• Urges developed countries to increase adaptation support and extends the timeframe for mobilizing $100 billion annually for climate change from 2020 to 2025; a higher funding target will be set after 2025. Developed countries have pledged $19 billion to assist developing countries, and the US has indicated it will double its support for adaptation to $800 million a year by 2020. Vietnam has also pledged $1 million to the Green Climate Fund, and various subnational entities, including Paris and Quebec, have committed funding to mechanisms such as the Least Developed Countries Fund.

• Requests that the Green Climate Fund provide expedited support to developing countries to prepare national adaptation plans and implement the priority actions identified in these plans.

For questions about international climate adaptation and climate finance, contact our expert Yoon Kim.

 

 

Do Federal Agencies Address Climate Risk in the Supply Chain?

The United States Government Accountability Office (GAO) recently released a report on how federal agencies are identifying, evaluating and addressing the impacts of climate change on their supply chains and suppliers.

Current efforts to build resilience in federal agencies

The report set out to identify the key challenges facing 24 surveyed federal agencies who where responsible for 98 percent of procurement budgets in 2013-2014. The agencies included the Department of Defense, the Department of Homeland Security, and NASA. The report was prompted by a question from Congress.

The report surveys how and whether federal agencies have planned for climate change disruptions in their adaptation plans. Indeed, in November 2013, Executive Order 13653 established a directive to these organizations to build adaptation and resilience measures into their organization: “In doing so, agencies should promote:

(1) Engagement and strong partnerships and information sharing at all levels of government;

(2) Risk-informed decision-making and the tools to facilitate it;

(3) Adaptive learning, in which experiences serve as opportunities to inform and adjust future actions; and

(4) Preparedness planning.

Few agencies are planning for climate risk in the supply chain

The report found 25 percent of agencies surveyed did not include climate risk to the agency’s supply chain, and most agencies had only included some information – general or agency-specific risks. Only three agencies had gone as far as identifying potential agency-specific actions, and one had a long term plan and strategy to address those risks.

GAO Analysis of agencies' climate adaptation plans
GAO Analysis of agency climate adaptation plans

Knowledge gaps and lack of tools are the biggest barriers

The report outlined some of the barriers to action on building resilience, citing hurdles such as planning timelines not aligning with federal budget cycles, a lack of institutional knowledge on best practices for assessing risk, and a lack of cross agency coordination to integrate adaptation strategies into shared supply chains.

It also identified information asymmetries about how adaptation success is measured as a hurdle for federal agencies. Of the 24 federal agencies surveyed, only four identified agency specific actions around building supply chain resilience. One in 24 had gone as far as mentioning budget needs to achieve their goals, and seven out of 24 did not attempt to identify the risks of climate change on their supply chains, feeling intimidated by “a lack of defined best practice.”

Getting over the barriers

Supply chains raise complex issues for organizations trying to prepare for climate change. The lack of visibility of supplier location and vulnerability make it difficult to fully assess risks, let alone identify effective measures to address and prevent or mitigate those risks.
At Four Twenty Seven, we have created tools to help large organizations in the government and private sector identify hotspots and quantify climate risk exposure in their supply chain. Learn how we can help your organization map risk across commodities and suppliers and build resilience into your organizational framework.

Lima’s Tragedy of the Climate Change Commons

Delegates talk during a break at a plenary session of the U.N. Climate Change Conference COP 20 in Lima December 12, 2014. REUTERS/Enrique Castro-Mendivil
Delegates talk during a break at a plenary session of the U.N. Climate Change Conference COP 20 in Lima December 12, 2014. REUTERS/Enrique Castro-Mendivil

The UN Climate Summit in Lima has been reluctantly considered a success in preparing the world for a global climate action plan to be signed next year in Paris. Despite the recent symbolic accord between the US and China to cut future emissions, developing nations such as China, Saudi Arabia, India, and Brazil took a hard-line stance on the issue of financial climate assistance. A unified front of developing nations successfully maintained language differentiating their role in causing climate change and limiting the burden they will bear in the final agreement.

Secretary-General ban Ki-moon addresses the UN Climate Change Conference in Lima, Peru. UN Photo/Mark Garten
UN Secretary-General Ban Ki-moon applaudes “…important advances” achieved at the Lima COP. UN Photo/Mark Garten

Although this language helped get everyone on board and paves the way for countries to begin making concrete pledges on emissions cuts to be submitted in May of 2015, this stipulation could excuses less ambitious pledges. Another ambiguous success is the removal of the vital review process providing transparency and allowing for direct comparisons between national plans after pressure from China. The talks also punted on whether or not an agreement would be legally binding, a question that will have to be answered in Paris. Nations have six months to submit their national emission reduction targets, to be signed next year at COP 2015.

Discussions at the UN climate talks in Lima, Peru hit familiar hurdles as developing nations demanded increased funding to combat climate change. Developing countries adhere to the argument that the developed world needs to pay more as it is most responsible for historic CO2 emissions that cause climate change. In contrast, the developed world says it is time for up-and-coming economies to begin doing their part in cutting emissions. The developing world was exempt from making emissions cuts in the Kyoto Protocol, but will be asked to share the burden in its successor agreement.

In addition to being less responsible for causing climate change, poorer nations are also generally at greater risk from the impacts of climate change due to their location and lack of resources and resilient infrastructure. Exemplifying this disparity in risk, Typhoon Hagupit barreled through the Philippines last week only one year after the devastation from Supertyphoon Haiyan. This rapid succession of debilitating onslaughts has given the developing nation little time to recover between storms. Due to the lack of resources and a slow bureaucracy, only 6 ports and 3 bridges have been repaired out of the 43 and 34 damaged by the storm, respectively. Although the storm caused less devastation than Haiyan, over half a million people were evacuated and business ground to a halt throughout the archipelago. Climate change is expected to increase the frequency of extreme storms.

Soldiers carry in emergency supplies as normal trade routes are shut down from Typhoon Hagupit. Erik De Castro / Reuters
Soldiers carry in emergency supplies as normal trade routes shut down from Typhoon Hagupit. Erik De Castro / Reuters

Even though Typhoon Hagupit weakened before reaching the Philippines’ coastline, it still had significant and far-reaching effects in the modern global economy. The Philippines is a manufacturing-based economy, exporting semiconductors and electronics, transport equipment, and textiles across the globe. Although tentative estimates of local damage exceed $71 million, real losses are even more significant from flights, cargo shipping, and trucking still affected even a week out from the storm. These disruptions cause a chain reaction impacting supply routes in the US, Japan, China, and Singapore among many others. This example of shared risk and interconnectedness shows the commonality climate change impacts. Reaching a global accord between all nations to limit the effects of climate change and mitigate drags on the global economy needs to be approached with that same commonality in consideration. A problem for one is a problem for all.

The high risk to developing nations contrasts heavily with their limited role in contributing to climate change. The basis for developing nations’ demands for financial assistance in reducing emissions and preparing for and recovering from impacts stems from the premise that developed nations are responsible for up to 80% of total historical greenhouse gas emissions.

The developed world is responsible for as much as 80% of historic GHG emissions, creating a conflict over who should pay for cuts now. Source: Petrolog.
The developed world is responsible for as much as 80% of historic GHG emissions, creating a conflict over who should pay for cuts now. Source: Petrolog.

One counter argument takes the stance that developing nations’ emissions are reduced through the use of modern technology during their current industrialization, which would not have been possible without technological advances resulting from the West’s industrial revolution. However, there is a general understanding that it is time for developing nations to participate in making cuts, the remaining question is simply “How much?”.

In a step towards compromise, wealthy countries have already contributed $10 billion to the Green Climate Fund, which is scheduled to reach $100 billion annually by 2020 to be distributed among developing nations to support concrete climate change mitigation initiatives. Developing nations question the likelihood of reaching this goal and whether it constitutes sufficient financial support to offset the contribution of historical western emissions to climate change.

While the outcome from the Lima negotiations is not ideal, the agreement sets the stage for countries to submit emissions reductions targets ahead of the final negotiations in Paris. The remaining tough questions will ultimately need to be answered, and will ultimately decide the success or failure of a global climate change accord.

 

When Global Warming Brings Snow, Sleet, and Ice.

The recent winter weather that buried Buffalo, NY under more than 5 feet of snow and ground life to a halt should attract the attention of US businesses leaders across the country. Although Buffalo is prone to heavy snowfalls, the long-term outlook for more frequent and severe snowstorms for business is not good. Extreme winter storms in the US have been increasing in frequency and severity over the past 30 years (graph “US winter storm loss trends, 1980-2011”: http://www.iii.org/fact-statistic/catastrophes-us), with average annual associated financial losses nearly doubling over that time.

Heavy snowfalls can halt local business activity and cause extensive physical damage. Establishments from businesses to schools and government buildings were barricaded in and could not open their doors. Driving bans were even imposed on several areas. While damage was widespread as the snow was caving in windows, doors, and roofs, some business, like Schmitt’s Collision and Glass and VSP Marketing Graphics Group, had complete cave-ins and equipment losses approaching $1 million. Even the Bills-Jets NFL game was moved to Detroit, losing the Bills both home advantage and ticket sales revenue.

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An extreme snowfall can also initiate indirect economic losses and cascade into supply chain disruptions. One hour down the blocked NY State Throughway, Rochester companies have had difficulty receiving shipments from normal supply routes and have scrambled to find replacement goods with varying degrees of success. Buffalo is home to major distributors for businesses such as the area’s major supermarket chain Wegmans. The snowfall has impacted the heavily used trucking route that runs through Buffalo from areas as distant as Wisconsin. Trucking companies are also sending out refrigerated trailers earlier than normal, at an additional cost, to prevent food from freezing because of the extreme cold.

Weather forecasts predict the snowfall to be followed by warmer weather and rain, which could lead to severe flooding from snow melt. Flood warnings have been issued as light rain and temperatures in the 50s and 60s threaten to flood areas that have never been at risk of flood before. Governor Cuomo commented on the new dangers arising from the snow melt and recommended people to leave at-risk homes early:

“Err on the side of caution…Flooding, in my opinion, is worse than dealing with snow,” Cuomo said. “It’s not water. It’s a toxic brew.”

Although it seems counter-intuitive, these winter storms are not getting worse despite global warming, but rather because of it. The complexity of this result illustrates how confusing climate change signals can be and the importance of creating accurate awareness. Scientists point to a weakening of the jet stream, the Earth’s halo of fast moving air, caused by warming in the arctic outpacing that of the rest of the world. A slower jetstream tends to meander and is more easily pushed off track, bringing warm air further north and cold air further south as its normally straight flow forms waves.

vortex1114Experts trace the recent jet stream wanderings to Typhoon Nuri. The typhoon pushed the jet stream off course and north with a large body of warm air as it moved into the northern Pacific. As the air current bulged northward, arctic air downstream had nowhere to go but south, pushing the jet stream ahead of it over the continental US. Events like this year’s “Arctic Blast” and last year’s famous “Polar Vortex” will be more easily triggered by climate change-weakened jet streams. This chain of events, along with a Lake Erie’s warming by long-term climatic changes, caused the flow of very cold air to pick up additional moisture and dump it on Buffalo as “lake effect” snow. Energy from Typhoon Nuri then proceeded to be carried down the jet stream to Buffalo, resulting in the warming spell that causes flooding. (See Al Jazeera’s excellent in-depth explanation of this phenomenon).

As the climate continues to change, events like these are predicted to become regular occurrences and not outlying record-setting events. Businesses need to ready themselves for a future of 6-foot snowfalls and be better prepared to act quickly.

Image: (c) Munich Re, Getty Images, and AccuWeather.com