Tag Archives: economics

Coal is now too hot for insurers to handle

Empires were once built on it, but coal is now too hot for many former backers as more insurers withdraw.

LONDON, 5 December, 2019 − It’s rapidly running out of friends in the financial world: coal is now too hot for many big insurers to want anything more to do with it. The burning of coal is one of the key factors behind rising emissions of climate-changing greenhouse gases.

Now insurance companies, which play a vital role in the financing of coal plants, are announcing plans to withdraw from the sector, saying that backing organisations seeking to expand coal operations is incompatible with the 2015 Paris Agreement on climate change.

AXA, the French insurance and financial services conglomerate, is the latest to announce its withdrawal from coal projects, though this divesting programme will in some cases be phased in over a number of years.

“The fight against climate change requires engagement in a global collective action”, says Thomas Buberl, AXA’s chief executive officer.

“A plus 4°C world is not insurable. As a global insurer and investor, we know that we have a key role to play. In the spirit of the Paris Agreement, we want to accelerate our commitment and confirm our leadership in the fight against global warming”.

European phase-out

AXA says it will stop insuring any new coal construction projects. It will also totally phase out its existing insurance and investments in coal in the European Union countries by 2030, and by 2040 everywhere else.

It’s estimated that approximately 400 companies with coal plant and mine expansion plans will be affected by AXA’s action.

In 2015 AXA announced it would begin withdrawing its investments and insurance from coal projects. Two years later it said it was divesting and ending insurance in oil tar sands projects in Canada, and withdrawing insurance from a number of pipelines in the US transporting tar sands-derived oil.

A number of other large insurance and investment companies have made similar moves on coal. Allianz, the Germany-based company which is Europe’s largest insurer, announced last year that it would end insurance for all coal-fuelled power plants and for coal mines: it would also completely withdraw from the sector by 2040.

“A plus 4°C world is not insurable. As a global insurer and investor, we know that we have a key role to play. We want to accelerate our commitment in the fight against global warming”

“Banks, investors and insurers are now under great pressure to up their game on climate with new coal policy announcements”, says Kaarina Kolle of Europe Beyond Coal, a group linking various non-governmental organisations across the EU.

“This is the minimum standard for any financial institution committed to the Paris Climate Agreement’s 1.5°C warming limit.”

While climate scientists have welcomed moves to limit coal use, many nations are still heavily dependent on what is the most polluting of fossil fuels. The International Energy Agency (IEA) estimates that coal accounts for nearly 40% of electricity at present generated worldwide.

The IEA says demand rose by 1% in 2017, with a similar rise last year.  Latest statistics indicate coal use worldwide has dropped slightly this year, though total greenhouse gas emissions are still rising.

Economic slowdown

Coal consumption is forecast to drop by 11% in the US in 2019 while China, which accounts for half of total world coal consumption, is expected to use about 1% less of the fuel this year, mainly due to a slowdown in its economy.

Coal use within the EU dropped by nearly 20% in the first six months of this year.

Germany is responsible for about a third of total coal-generated power in the EU. Lignite, the most polluting coal, forms a substantial part of Germany’s energy mix.

Many countries in eastern Europe, including Poland, Romania and Bulgaria, are still heavily dependent on coal for power generation.

Eight EU countries have pledged to phase out coal use by 2030: industry analysts say other heavy coal users in the EU have to follow suit. If not, EU emissions reductions targets set under the Paris Agreement will not be met. − Climate News Network

Empires were once built on it, but coal is now too hot for many former backers as more insurers withdraw.

LONDON, 5 December, 2019 − It’s rapidly running out of friends in the financial world: coal is now too hot for many big insurers to want anything more to do with it. The burning of coal is one of the key factors behind rising emissions of climate-changing greenhouse gases.

Now insurance companies, which play a vital role in the financing of coal plants, are announcing plans to withdraw from the sector, saying that backing organisations seeking to expand coal operations is incompatible with the 2015 Paris Agreement on climate change.

AXA, the French insurance and financial services conglomerate, is the latest to announce its withdrawal from coal projects, though this divesting programme will in some cases be phased in over a number of years.

“The fight against climate change requires engagement in a global collective action”, says Thomas Buberl, AXA’s chief executive officer.

“A plus 4°C world is not insurable. As a global insurer and investor, we know that we have a key role to play. In the spirit of the Paris Agreement, we want to accelerate our commitment and confirm our leadership in the fight against global warming”.

European phase-out

AXA says it will stop insuring any new coal construction projects. It will also totally phase out its existing insurance and investments in coal in the European Union countries by 2030, and by 2040 everywhere else.

It’s estimated that approximately 400 companies with coal plant and mine expansion plans will be affected by AXA’s action.

In 2015 AXA announced it would begin withdrawing its investments and insurance from coal projects. Two years later it said it was divesting and ending insurance in oil tar sands projects in Canada, and withdrawing insurance from a number of pipelines in the US transporting tar sands-derived oil.

A number of other large insurance and investment companies have made similar moves on coal. Allianz, the Germany-based company which is Europe’s largest insurer, announced last year that it would end insurance for all coal-fuelled power plants and for coal mines: it would also completely withdraw from the sector by 2040.

“A plus 4°C world is not insurable. As a global insurer and investor, we know that we have a key role to play. We want to accelerate our commitment in the fight against global warming”

“Banks, investors and insurers are now under great pressure to up their game on climate with new coal policy announcements”, says Kaarina Kolle of Europe Beyond Coal, a group linking various non-governmental organisations across the EU.

“This is the minimum standard for any financial institution committed to the Paris Climate Agreement’s 1.5°C warming limit.”

While climate scientists have welcomed moves to limit coal use, many nations are still heavily dependent on what is the most polluting of fossil fuels. The International Energy Agency (IEA) estimates that coal accounts for nearly 40% of electricity at present generated worldwide.

The IEA says demand rose by 1% in 2017, with a similar rise last year.  Latest statistics indicate coal use worldwide has dropped slightly this year, though total greenhouse gas emissions are still rising.

Economic slowdown

Coal consumption is forecast to drop by 11% in the US in 2019 while China, which accounts for half of total world coal consumption, is expected to use about 1% less of the fuel this year, mainly due to a slowdown in its economy.

Coal use within the EU dropped by nearly 20% in the first six months of this year.

Germany is responsible for about a third of total coal-generated power in the EU. Lignite, the most polluting coal, forms a substantial part of Germany’s energy mix.

Many countries in eastern Europe, including Poland, Romania and Bulgaria, are still heavily dependent on coal for power generation.

Eight EU countries have pledged to phase out coal use by 2030: industry analysts say other heavy coal users in the EU have to follow suit. If not, EU emissions reductions targets set under the Paris Agreement will not be met. − Climate News Network

Iceland put people first to save melting economy

Faced in 2008 with a melting economy, Iceland acted fast to avoid total collapse. Icelanders’ own needs were its priority.

LONDON, 27 November, 2019 − What can you do if you’re a smallish island in the North Atlantic with a lot of snow and a melting economy? Quite a lot, it turns out, if you’re prepared to put local people’s needs first.

Iceland was hailed recently for erecting a memorial plaque to one of its most striking features, Okjökull, which shrank so drastically because of climate breakdown that it lost its status as a glacier. It was the first in Iceland to do so, and is now known, fittingly, by a diminutive, as Ok.

Barely 10 years ago, when the country was in the grip of a different crisis, the pace of its far from glacial response showed how quickly rapid changes of government policy can turn a crisis around.

Iceland was at the heart of the global financial crisis in late 2008 and was nearly destroyed by it; 97% of its banking sector collapsed in just three days. its three largest banks − Glitnir, Kaupthing and Landsbankinn − had accumulated a debt of $85 billion (£66bn), equivalent to 10 times the country’s national income (GDP), or 20 times the national budget.

These losses amounted to $330,000 for every man, woman and child on the island, whose stock market then collapsed, with huge numbers of businesses going bankrupt. Iceland approached the International Monetary Fund (IMF) for emergency aid − the first western country to do so since 1976 − and obtained a loan of $2.1bn (£1.4bn).

“It is possible that the Icelandic way of governing also played a part. Was their natural reflex to protect the many, rather than the few?”

So how did it manage to survive? First, it allowed a default on the $85bn in debt accumulated by the banks. A new national mood set in, creating lasting conditions for change and the desire for new economic approaches.

Other countries had largely let banks off the hook, but in 2015 Iceland’s Supreme Court upheld convictions against bankers at the heart of the crisis. Finance is now so sensitive that when the Prime Minister was caught up in revelations from the release of the so-called Panama Papers, he was forced from office.

The debts are now largely paid off, but most multinational businesses have left Iceland, for fear of the capital controls. A huge expansion in tourism has rescued the nation’s economy, though average wages are now much lower.

The government protected Icelanders’ bank deposits and forgave debts for a quarter of the population. As Bloomberg News reported in 2012, “Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.”

The Rapid Transition Alliance (RTA), a global initiative which aims to learn from rapid change to address urgent environmental problems, believes Iceland’s way of extricating itself quickly from the global crisis has lessons for other countries, some of which are still paying a heavy price for the events of 2008 and the way they reacted.

Contrary to the conventional wisdom that individual countries cannot independently follow radically different economic policy and control capital flows, says the RTA, Iceland shows they can, and quickly;

Radical change can usher in a virtuous circle, by becoming a habit: once you’ve started, new opportunities may open up for yet more change;

And, perhaps most surprisingly of all, the Alliance says, it is possible to put people before the demands of financial markets and still run a successful economy. Citizen engagement and economic reform can go hand in hand.

Iceland’s economy had thrived on speculative finance but, after the meltdown, rather than making the public pay for the crisis, as the Nobel economist Paul Krugman points out, Iceland “let the banks go bust and actually expanded its social safety net”. Instead of placating financial markets, it introduced temporary controls on the movement of capital to give itself room to manoeuvre.

Following this, a “pots and pans” revolution kick-started a process that led to a new citizen-drafted constitution, which succeeded in engaging half the electorate.

The constitutional exercise proposed a new approach to the ownership of natural resources for the public good, which has had a lasting effect on the country’s choices: all its electricity and heat today comes from renewable sources, and transparency has become a central part of Icelandic public life.

The RTA thinks there were several key factors that enabled such rapid and fundamental change: the extent to which the economic system was irreparably damaged; the decision by the government to respond to the people’s demands and not to those of the banks; and the decision to punish those at fault and start anew.

It concludes: “It is possible that the Icelandic way of governing also played a part, because they have a longstanding history of deeply embedded democracy and a culture that discourages hierarchy. Was their natural reflex to protect the many, rather than the few?” − Climate News Network

* * * * *

The Rapid Transition Alliance is coordinated by the New Weather Institute, the STEPS Centre at the Institute of  Development Studies, and the School of Global Studies at the University of Sussex, UK. The Climate News Network is partnering with and supported by the Rapid Transition Alliance, and will be reporting regularly on its work. If you would like to see more stories of evidence-based hope for rapid transition, please sign up here.

Do you know a story of rapid transition? If so, we’d like to hear from you. Please send us a brief outline on info@climatenewsnetwork.net. Thank you.

Faced in 2008 with a melting economy, Iceland acted fast to avoid total collapse. Icelanders’ own needs were its priority.

LONDON, 27 November, 2019 − What can you do if you’re a smallish island in the North Atlantic with a lot of snow and a melting economy? Quite a lot, it turns out, if you’re prepared to put local people’s needs first.

Iceland was hailed recently for erecting a memorial plaque to one of its most striking features, Okjökull, which shrank so drastically because of climate breakdown that it lost its status as a glacier. It was the first in Iceland to do so, and is now known, fittingly, by a diminutive, as Ok.

Barely 10 years ago, when the country was in the grip of a different crisis, the pace of its far from glacial response showed how quickly rapid changes of government policy can turn a crisis around.

Iceland was at the heart of the global financial crisis in late 2008 and was nearly destroyed by it; 97% of its banking sector collapsed in just three days. its three largest banks − Glitnir, Kaupthing and Landsbankinn − had accumulated a debt of $85 billion (£66bn), equivalent to 10 times the country’s national income (GDP), or 20 times the national budget.

These losses amounted to $330,000 for every man, woman and child on the island, whose stock market then collapsed, with huge numbers of businesses going bankrupt. Iceland approached the International Monetary Fund (IMF) for emergency aid − the first western country to do so since 1976 − and obtained a loan of $2.1bn (£1.4bn).

“It is possible that the Icelandic way of governing also played a part. Was their natural reflex to protect the many, rather than the few?”

So how did it manage to survive? First, it allowed a default on the $85bn in debt accumulated by the banks. A new national mood set in, creating lasting conditions for change and the desire for new economic approaches.

Other countries had largely let banks off the hook, but in 2015 Iceland’s Supreme Court upheld convictions against bankers at the heart of the crisis. Finance is now so sensitive that when the Prime Minister was caught up in revelations from the release of the so-called Panama Papers, he was forced from office.

The debts are now largely paid off, but most multinational businesses have left Iceland, for fear of the capital controls. A huge expansion in tourism has rescued the nation’s economy, though average wages are now much lower.

The government protected Icelanders’ bank deposits and forgave debts for a quarter of the population. As Bloomberg News reported in 2012, “Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.”

The Rapid Transition Alliance (RTA), a global initiative which aims to learn from rapid change to address urgent environmental problems, believes Iceland’s way of extricating itself quickly from the global crisis has lessons for other countries, some of which are still paying a heavy price for the events of 2008 and the way they reacted.

Contrary to the conventional wisdom that individual countries cannot independently follow radically different economic policy and control capital flows, says the RTA, Iceland shows they can, and quickly;

Radical change can usher in a virtuous circle, by becoming a habit: once you’ve started, new opportunities may open up for yet more change;

And, perhaps most surprisingly of all, the Alliance says, it is possible to put people before the demands of financial markets and still run a successful economy. Citizen engagement and economic reform can go hand in hand.

Iceland’s economy had thrived on speculative finance but, after the meltdown, rather than making the public pay for the crisis, as the Nobel economist Paul Krugman points out, Iceland “let the banks go bust and actually expanded its social safety net”. Instead of placating financial markets, it introduced temporary controls on the movement of capital to give itself room to manoeuvre.

Following this, a “pots and pans” revolution kick-started a process that led to a new citizen-drafted constitution, which succeeded in engaging half the electorate.

The constitutional exercise proposed a new approach to the ownership of natural resources for the public good, which has had a lasting effect on the country’s choices: all its electricity and heat today comes from renewable sources, and transparency has become a central part of Icelandic public life.

The RTA thinks there were several key factors that enabled such rapid and fundamental change: the extent to which the economic system was irreparably damaged; the decision by the government to respond to the people’s demands and not to those of the banks; and the decision to punish those at fault and start anew.

It concludes: “It is possible that the Icelandic way of governing also played a part, because they have a longstanding history of deeply embedded democracy and a culture that discourages hierarchy. Was their natural reflex to protect the many, rather than the few?” − Climate News Network

* * * * *

The Rapid Transition Alliance is coordinated by the New Weather Institute, the STEPS Centre at the Institute of  Development Studies, and the School of Global Studies at the University of Sussex, UK. The Climate News Network is partnering with and supported by the Rapid Transition Alliance, and will be reporting regularly on its work. If you would like to see more stories of evidence-based hope for rapid transition, please sign up here.

Do you know a story of rapid transition? If so, we’d like to hear from you. Please send us a brief outline on info@climatenewsnetwork.net. Thank you.

Climate scientists 3 Economists 0

FOR IMMEDIATE RELEASE Hold up the trophy. Open the champagne. Climate scientists have easily won the game. According to a recent study, when it comes to the accuracy of forecasts and projections, the climate side is much better at the game  than the economists’ team. London, 14 March – The study, by the New Economics Foundation (NEF), a UK based independent think-tank, examines the accuracy and precision of projections made by both climate scientists and economists over the past 20 years. First, the economists. The study looked at measures commonly used in long term UK government economic modelling and decision making, using 1995 as a baseline: the population forecast for England and the forecast for the UK Treasury’s  debt to Gross Domestic Product (GDP) ratio. In the US, the forecasts on oil prices over the period made by the US Energy Information Administration (EIA) were also examined.

Economic inaccuracies

The NEF finds the economists’ projections both inaccurate and imprecise in all three areas.  The economists saw the population of England growing at a fairly modest level from 1995 to the present – from around 49 million 20 years ago to 51.5 million now. In fact England’s population has risen steeply, particularly over the past 10 years and is now approaching 54 million.  The UK Treasury’s forecasts on the GDP to forecasts on the debt to GDP ratio fared no better, displaying “a bias towards optimism in government economic forecasts” says the study. Meanwhile the crystal ball gazing of economists at the EIA was a miserable failure: they predicted oil prices rising on a gentle curve in the 15 years 1995 to 2010. In fact prices have been extremely volatile, rising at some points by more than five times the predicted figure. And of course, the most damning judgement of the financial boffins forecasting skills is the failure of nearly all economic pundits to predict the 2008 recession.

Better projections

Contrast this with predictions made by climate scientists over the past 20 years, in particular those made by the Intergovernmental Panel on Climate Change (IPCC). Again the NEF looks at three specific areas of projection – carbon concentration in the atmosphere, the temperature anomaly and forecasts since 1995 of sea level rise.  There can be no doubt of the result, says the study. “Climate models outperform major economic forecasts on accuracy… global temperature, sea level and carbon concentration have all risen within the ranges originally forecast (by the IPCC) in 1995.” While on one level this can be looked at as a bit of amusing sparring between two academic disciplines, there is serious business going on here. The NEF makes the point that despite the dubious track record of economic forecasting, many government policy decisions are based on the data offered up.

Devious deniers

Meanwhile the climate deniers have succeeded in highlighting the narrow bands of uncertainty in the work of climate scientists – stalling action on the issue. Sections of the media collude in this process. “This emphasis on uncertainty has a negative impact on climate progress” says the report. “It slows down environmental policy and corrodes the public will to act.” The NEF draws attention to the IPCC’s 5th Assessment Report and its revised estimate of certainty – up to 95% – that humans have been the main cause of global warming from 1950 to the present. “This 95% has a precise scientific meaning. It is higher than the certainty that vitamins are good for your health and equivalent to the certainty that cigarettes cause lung cancer.” Despite this, the climate denial bandwagon continues to roll along. “We often hear the argument that climate models are too uncertain to bother taking action, but this is not borne out by the facts” says Aniol Esteban, the head of environmental economics at the NEF. “We can’t go on making huge policy and investment decisions based on financial advice no more reliable than a coin flip, while at the same time discrediting climate models with a 20 year track record of accuracy. The double standard has to end now.” – Climate News Network

FOR IMMEDIATE RELEASE Hold up the trophy. Open the champagne. Climate scientists have easily won the game. According to a recent study, when it comes to the accuracy of forecasts and projections, the climate side is much better at the game  than the economists’ team. London, 14 March – The study, by the New Economics Foundation (NEF), a UK based independent think-tank, examines the accuracy and precision of projections made by both climate scientists and economists over the past 20 years. First, the economists. The study looked at measures commonly used in long term UK government economic modelling and decision making, using 1995 as a baseline: the population forecast for England and the forecast for the UK Treasury’s  debt to Gross Domestic Product (GDP) ratio. In the US, the forecasts on oil prices over the period made by the US Energy Information Administration (EIA) were also examined.

Economic inaccuracies

The NEF finds the economists’ projections both inaccurate and imprecise in all three areas.  The economists saw the population of England growing at a fairly modest level from 1995 to the present – from around 49 million 20 years ago to 51.5 million now. In fact England’s population has risen steeply, particularly over the past 10 years and is now approaching 54 million.  The UK Treasury’s forecasts on the GDP to forecasts on the debt to GDP ratio fared no better, displaying “a bias towards optimism in government economic forecasts” says the study. Meanwhile the crystal ball gazing of economists at the EIA was a miserable failure: they predicted oil prices rising on a gentle curve in the 15 years 1995 to 2010. In fact prices have been extremely volatile, rising at some points by more than five times the predicted figure. And of course, the most damning judgement of the financial boffins forecasting skills is the failure of nearly all economic pundits to predict the 2008 recession.

Better projections

Contrast this with predictions made by climate scientists over the past 20 years, in particular those made by the Intergovernmental Panel on Climate Change (IPCC). Again the NEF looks at three specific areas of projection – carbon concentration in the atmosphere, the temperature anomaly and forecasts since 1995 of sea level rise.  There can be no doubt of the result, says the study. “Climate models outperform major economic forecasts on accuracy… global temperature, sea level and carbon concentration have all risen within the ranges originally forecast (by the IPCC) in 1995.” While on one level this can be looked at as a bit of amusing sparring between two academic disciplines, there is serious business going on here. The NEF makes the point that despite the dubious track record of economic forecasting, many government policy decisions are based on the data offered up.

Devious deniers

Meanwhile the climate deniers have succeeded in highlighting the narrow bands of uncertainty in the work of climate scientists – stalling action on the issue. Sections of the media collude in this process. “This emphasis on uncertainty has a negative impact on climate progress” says the report. “It slows down environmental policy and corrodes the public will to act.” The NEF draws attention to the IPCC’s 5th Assessment Report and its revised estimate of certainty – up to 95% – that humans have been the main cause of global warming from 1950 to the present. “This 95% has a precise scientific meaning. It is higher than the certainty that vitamins are good for your health and equivalent to the certainty that cigarettes cause lung cancer.” Despite this, the climate denial bandwagon continues to roll along. “We often hear the argument that climate models are too uncertain to bother taking action, but this is not borne out by the facts” says Aniol Esteban, the head of environmental economics at the NEF. “We can’t go on making huge policy and investment decisions based on financial advice no more reliable than a coin flip, while at the same time discrediting climate models with a 20 year track record of accuracy. The double standard has to end now.” – Climate News Network