Head of The Bank of England Warns About The Dire Impacts of Climate Change
Bank of England chief Mark Carney issued a climate change warning and told the BBC that the world would face irreversible heating unless firms shift their priorities as early as possible.
Mark Carney said, although the financial sector had begun to curb fossil fuels investment, however, far too slowly.
He said leading pension fund analysis “is that if you add up the policies of all of companies out there, they are consistent with warming of 3.7-3.8C.”
Mr. Carney made the comments in a pre-recorded BBC Radio 4 Today interview.
The interview is one of several items on the program on the climate change presented by Mishal Husain. That day the show was guest-edited by environmental campaigner Greta Thunberg.
Mr. Carney added that the rise of almost 4C was “far above the 1.5 degrees that the people say they want and governments are demanding”.
The risks associated with the rise of 4C will include a nine-meter increase in sea levels affecting up to 760 million people and also blistering heatwaves and droughts and severe food supply problems, scientists say.
Mr. Carney continued: “The concern is whether we will spend another decade doing worthy things but not enough… and we will blow through the 1.5C mark very quickly. As a consequence, the climate will stabilize at a much higher level.” Mr. Carney will start his new role as United Nations special envoy for climate action and finance.
While speaking to the Today program, Mr. Carney repeated his warning that unless firms woke up to the climate crisis, many of their assets would become worthless.
“If we were to burn all those oil and gas [reserves], there’s no way we would meet carbon budget,” he said. “Up to 80% of coal assets will be stranded, [and] up to half of developed oil reserves.
“A question for every company, every financial institution, every asset manager, pension fund or insurer: what’s your plan?
“Four to five years ago, only leading institutions had begun to think about these issues and could report on them.
“Now $120tn worth of balance sheets of banks and asset managers are wanting this disclosure [of investments in fossil fuels]. But it’s not moving fast enough.”
Climate campaigners Extinction Rebellion ask whether the capitalist system can stop climate change.
According to Mr. Carney, the role of capitalism was vital to raise funds for clean technologies. But he added, it also needs incentives imposed by government, rules, and prohibitions of the most damaging activities.
He called climate change a “tragedy of the horizon,” as the time horizon of investment managers is between two and 10 years for decision-making.
“In those horizons, there will be more extreme weather events, but by the time that the extreme events become so prevalent and so obvious it’s too late to do anything about it,” he said.
“We look to political leaders to start addressing future problems today.”
On questioning the consensus on climate change, he told: “We can’t afford on this one to have selective information, spin, misdirection… It needs to be absolutely clear because we are all in on it.
“To deliver, there needs to be a shared understanding about what’s necessary. [But] it is reasonable for there to be debates at the margin about where does the role of the state stop – and what’s the role of markets.”
Mr. Carney applauded the UK government for hosting a global climate conference in Glasgow next year. He said success was “vital.”
‘Stress test’ of the Bank of England
Under the leadership of Mr. Carney, the Bank of England recently launched a “stress test” to determine the firms and sectors which would be worst-hit by climate change.
The issue is how fast financial institutions can change course. Recently, investment bank Goldman Sachs ruled out future investment for oil drilling or exploration in the Arctic.
The bank said it would not make any investment in new thermal coal mines (for power stations) anywhere in the world.
The bank also announced plans for helping its clients manage climate impacts by selling weather-related catastrophe bonds.
Insurance giant AXA said it would stop insuring any new coal construction projects, and by 2030, totally phase out existing insurance and investments in coal in the EU.
Nest, the government’s workplace pension scheme, is testing the viability of investing its Climate Aware Fund in firms compatible with a 1.5C warming.
Environmentalists applaud the moves; however, say they don’t go remotely too far. Scientists say nations must cut five-fold emissions to avoid a temperature rise over 1.5C.
Last chance to tackle ‘dire consequences’
The two vital environmental bodies’ heads have warned that 2020 is the “last chance” to bring the world together to tackle climate change for protecting communities and nature.
According to the leaders of government agencies Natural England and the Environment Agency, climate change and damage caused to nature are already having “dire consequences.”
In an article on the Green Alliance website, Natural England chairman Tony Juniper and the Environment Agency’s Emma Howard Boyd pointed to the recent flooding in which hundreds evacuated at Fishlake, Doncaster, and some are still out of their homes.
A report in October on the UK’s state of nature found two-fifths (41%) of the wildlife species in the country had declined over the past 50 years, and 13% of the species tracked were endangered species.
“It’s clear that 2020 is our last chance to bring the world together to take decisive action on climate change in order to protect our communities and reverse the alarming loss of wildlife we have witnessed in recent years,” Mr. Juniper and Ms. Howard Boyd wrote.