What is it going to take to bring about substantive behavioral change needed to begin to reverse global warming? According to Richard Kaufman, the chairman of Energy and Finance for New York, it will be consumers and investors experiencing a real, quantifiable financial downturn. And this change could be but one climate catastrophe away. Unfortunately any real, abiding change is unlikely to take place until people feel the bite financially.
The indicators over this last year note that a reversal of global warming is coming way too slow. At the United Nations Framework Convention on Climate Change (COP24) last December in Poland, it was reported that carbon emissions worldwide have increased, despite the efforts of carbon reduction advocates worldwide. Dire warnings came out recently also from the National Climate Assessment, a climate report from over 300 scientific experts mandated by law every four years. “Without significant global greenhouse gas mitigation and regional adaptation efforts, climate change is expected to cause substantial losses to infrastructure and property and impede the rate of economic growth over this century.” And the latest UN Intergovernmental Panel on Climate Change (IPCC) warned that there are only 12 years left to keep global warning contained to ecologically manageable levels.
In the event of a real, substantial climate catastrophe, it won’t just be oil and gas stocks that take a major downturn; it will most likely ripple out to the entire market. Massive losses for the insurance and financial industries as communities are obliterated will result in unexpected depreciation, higher default risk of loans, and, in extreme cases, downgrading the creditworthiness of companies and states. And that depends on the scale of the actual event – the financial collapse of 2008 may seem like a day at the beach comparatively. “However, more extreme changes cannot be ruled out in the longer term, since there are considerable uncertainties, particularly in the case of warming beyond 2° to 3° Celsius.”
According to Kaufman, the sooner this catastrophic event happens, and truly awakens our political leaders and the electorate to the effects of global warming, the lesser the catastrophe could potentially be — and the more time to make the necessary adjustments. Common sense, market-based solutions can be put into place to mitigate future disasters and work towards dramatically reducing carbon emissions.
Inasmuch as there were plenty of warning signs and forecasters for all of the major financial downturns over the past century — including the aforementioned 2008 mortgage crisis — real action was not taken until after the hammer had already come down. One hopes that the opening salvo from the global warming hammer brings a light tap, just enough to really get everyone’s attention, without the widespread cost of lives and financial ruin.
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