Sam Bickersteth, Chief Executive, and Mairi Dupar, Public Affairs Coordinator, CDKN.

At this week’s Chatham House Conference on Climate Change, the theme was climate resilience and security. Perhaps unsurprisingly in these tough economic  times, much of the debate was about how climate change affects economic security.  Participants were eager to discuss the economic risks of not acting on climate change. Attention crystallised on the question of how champions across  government and industry can support a ‘race to the top’ in climate-friendly investments.

Climate science sends its strongest message yet

The conference opened with a preview of likely messages from the forthcoming Fifth Assessment Report (2014) of the Intergovernmental Panel on Climate Change. Like its predecessors, this Report is due to detail the changes to the Earth’s climate, the contributions by manmade activity, and the planet’s prospects. This time, the message will be even more sobering.

A senior figure from the IPCC (whom we can’t name under Chatham House Rules) highlighted the most recent science, based on air samples extracted from miles deep  in the Greenland ice sheet, where bubbles have been trapped for millennia. This analysis shows that carbon dioxide concentrations in today’s atmosphere are a third higher than at any previous time in the past 800,000 years; the rate of increase of carbon dioxide concentrations is 100 times higher than at any other time during this period. The Greenland ice sheet is melting at an unprecedented rate.

Scientists say we should act to limit average global warming to 2 degrees Centigrade above pre-industrial levels, but there is a fast-shrinking window of opportunity to do so. We are pumping greenhouse gas emissions into the atmosphere at a faster rate than ever.  Governments’ pledges to cut emissions make up only half the cuts needed. In this context, experts in climate policy talk of a ‘six gigatonne gap’ between the amount of carbon that must be prevented from release in the atmosphere, and actual, political pledges to curb emissions.

The message is clear: the urgency to cut greenhouse gas emissions has never been greater.

The disruptive impacts of climate change are being felt already

Participants observed that climate change impacts were biting harder and deeper –and faster – than they had imagined only a few years ago. Climate change acts as a ‘multiplier’ to existing threats to human security and wellbeing. Our  global society is experiencing a shock: mass food insecurity driven by unseasonable weather and spikes in world food prices that even affects middle income households, let alone the poorest; water insecurity that causes stress for human populations and their means of livelihood.   Issues such as tensions over fossil fuel resources in the Arctic, trade conflicts around clean energy technology and carbon tax on aviation were mentioned.

The aggregate impact of extreme events such as the Thai floods are rapidly felt at global level due to the interconnected nature of supply chains.  CDKN launched its new report “Managing Climate Extremes and Disasters: Lessons from the IPCC SREX Report”, which highlights the implications of extreme events for morbidity and mortality – and risk management options available. Advances in science allow for stronger attribution between climate change and individual, extreme weather events.

Recent work by economists has reinforced the core message of Lord Stern’s 2006 report, which argues the economic wisdom of taking early action to avert dangerous climate change.   For every dollar invested today in climate mitigation, $4.30 is avoided later in “cleaning up the mess” according to the International Energy Outlook (2011).  Connie Hedegaard, the EU Commissioner for Climate Action, told Chatham House that “we need to focus on the risks of continuing business as usual. Continuing business as usual comes with a high price tag.”

Dominance of national economic interests

National economic interests are always a dominant force, and none more so than during this era of financial crisis.  Edward Davey, UK Secretary of State for Energy and Climate Change, emphasised the need to make the UK more competitive in the global economy by  gaining an advantage in green jobs in energy and construction. He noted, pointedly, that Germany has a similar strategy.   In Denmark last year, green exports grew by 28% and now accounts for 10% of total exports;

One presenter delivered an astonishing analysis of countries’ current manoeuvring for territorial expansion and a natural resources grab as a result of climate change impacts – she termed it the ‘geoeconomics and geopolitics’ of climate change. Her presentation showed how, when a Pacific atoll is flooded by sea level rise, that country’s 200 nautical mile exclusive economic zone (EEZ) disappears, opening the area to claims by others. The disappearance of tiny coral atolls in the Pacific is already causing nations to lose their EEZs and the gas, oil and minerals within them.

Enabling conditions for a ‘race to the top’

At the centre of these economic security arguments was this critical policy question:  what are the enabling conditions for a ‘race to the top’ of environmental standards and low-carbon investment?  In a world where climate impacts – sea level rise and melting ice – are setting off acrimonious races for fossil fuel extraction, it can feel as if there is a greater environmental ‘race to the bottom’ than ever before. Many businesses and governments are showing leadership in their embrace of green growth, but this behaviour has yet to reach critical mass.

Which vital ingredients are needed to attract massive financial flows to low-carbon, climate-resilient investments? What it will take to create green jobs on a ground-breaking scale? Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) said she wanted the world to reach an ‘economic tipping point’ where green investment was the ‘done thing’, not the outlier. With the fast start finance period coming to an end on 31 December 2012, there is a big gap between developed countries’ finance pledges and the $100 billion needed to finance climate adaptation and mitigation. The gap may partially be addressed by getting more countries to set targets, and tightening ambition on those that already have them. But how will the world actually deliver this transformation?

It is well recognised that the private sector must play a pivotal role in the transition to low carbon economies.   However, Chatham House discussions highlighted the importance of governmental leadership to build a more effective and consistent policy framework to enable such investments.   Some of the key conditions will include:

First, a stable, higher (and rising) global carbon price will be essential to attract investment into low carbon technologies. The long-discussed flooding of the European Union Emissions Trading Scheme with excess allowances, driving the overall price down, has taken the bottom out of the market and it requires decisive government intervention to correct this.

Second, the importance of an inclusive global political agreement to creating a ‘race to the top’ is widely recognised.

Third, government leaders have a responsibility to counter climate sceptics and vested interests, which persist in spite of the increasing recognition among the public that climate change is real and happening. Connie Hedegaard said: “Climate science is challenged still by those who have a vested interest in continuing business as usual. There is more going on than ever, in cities, board rooms, but there are still too many who have a huge interest in not changing anything.”

The big question remains whether current food price and water ‘shocks’ and other weather- and climate-related threats to human security will compel  citizens and their leaders into action. Only by making deep cuts into emissions trajectories – a particular task for the large-emitting nations—will we avoid the huge uncertainties and likely disruptions of a ‘4 degree world’.

Image courtesy World Bank