Events dear boy, events
Posted on 10th March 2020 at 09:29
As Coronavirus dominates world news, flights are being cancelled, the oil price is sinking and Italy is in total lockdown, you might look at the World Economic Forum’s global risk prediction from the Davos annual meeting in January - only 8 weeks ago - with some interest. For the first time in the survey’s 10-year outlook, the top five global risks in terms of likelihood were all environmentally driven, with extreme weather events, human-made environmental damage, major biodiversity loss and natural disasters from earthquakes to tsunamis all the likeliest risks in 2020. In terms of the severity of impact over the next 10 years, the top risk was deemed to be the failure of climate change mitigation and adaptation.
With the benefit of perfect hindsight, an outbreak of a dangerous virus almost bringing the global economy to a standstill and the world to the brink of recession was something of an omission. The unpredictability of politics was summed up perfectly by the late Harold Macmillan, British Prime Minister from 1957-62, and his often quoted “Events dear boy, events” can be equally applied to the current situation.
However, whilst the Covid-19 crisis did not figure in the WEF top 5 for 2020, the fact is that climate change remains the defining issue of our age, and the 2020s as the decade when the world must make significant progress to reduce greenhouse gas emissions if the goal of the Paris Agreement, to keep mean global temperature rise to well below 2°C, is to be achieved. Increasingly, governments are setting net-zero targets and businesses and other organisations are under pressure to play their part and to demonstrate to their investors, customers and other stakeholders the steps they are taking to address this critical issue. To achieve this, the world has to go through a dramatic Energy Transition, shifting the world’s reliance on fossil-fuel based systems of energy production and consumption — oil, gas and coal — to renewable energy sources like wind, solar and batteries, thereby radically reducing carbon emissions. This will require a herculean effort, and the pressure is mounting.
A map shows the sharp decline in emissions over China between early January and late February as parts of the country went on lockdown in an attempt to contain the COVID-19 coronavirus.
(Image: © NASA Earth Observatory)
The empirical evidence is all around us – our world is changing. And fast. Look at this year already – we have record and life-threatening floods in the UK after one of the wettest winters ever recorded, and 3 major named storms – Ciara, Dennis and Jorge – have hit in quick succession. In Australia the latest research estimates the total damage and economic loss caused by the devastating wildfires will be $110 billion. This includes damage to homes and businesses as well as their contents and cars, job and wage losses, farm and crop losses, infrastructure damage, auxiliary business losses, school closures and the costs of power outages to businesses and individuals as well as destruction of wildlife. The estimate also accounts for economic losses due to highway closures, evacuations and increased insurance premiums throughout the affected areas, as well as reduced value of real estate across the country - home to 25.2 million people - firefighting costs, flight cancellations and delays, and the current and long-term residual health effects.
And the public narrative has changed beyond all recognition over the course of the last 12 months. There is of course the Greta effect, with a Swedish teenager creating global news headlines and speaking to the UN and every other major climate conference, and the rise of Extinction Rebellion bringing cities all over the world to a standstill. There is an increasing expectation that business has to change – keeping your social licence to operate is no longer a given.
Governments are responding - in the UK the government has set the ambitious target of achieving net zero carbon by 2050, and Scotland is aiming to better that by 5 years and hit net zero in 2045. But to achieve these goals we cannot do it by regulation alone; we need to harness the muscle of the corporate world with all of its powerful capabilities – technical, innovative, financial, social and creative.
So, who’s leading the charge? The Oil and Gas companies can certainly be viewed as the villains of the piece, but can they also be a key part of the solution? The Energy Transition will require exceptional cooperation across sectors and between businesses to co-create the pathways needed. Action is being taken, change is happening – albeit pace and scale needs to increase dramatically. On his first day in the job last month BP’s new CEO Bernard Looney announced the company aims to be net zero by 2050 and has set 10 targets – 5 for the company, and 5 to help get the world there.
Coronavirus has radically reduced global carbon output by stopping the world in its tracks. We need to achieve a successful energy transition to a stable and healthy low-carbon world through unprecedented collaboration across sectors and between businesses and governments.
At JS Global we support businesses in addressing the energy transition, and understanding climate risk and opportunity, through the implementation of the TCFD receommendations as an integral part of an effective sustainability strategy
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