Financial sector warns on costs, others still in denial

Two major reports published yesterday have forecast massive potential costs from damage caused by floods, storms and heatwaves resulting from global climate change and called for immediate action from governments and the financial industry to act.

The first report, from the Association of British Insurers (ABI), predicts that within 75 years worldwide costs of storms could increase to €22 billion (£15 billion) per year, costs of flooding in Europe could rise by €122 billion (£82 billion), and insurance capital required to cover storm damage could rise by €64 billion (£43 billion).

The second, a joint report from the WWF and Allianz Global Investors, warns that the financial industry must take these risks into account and that a clear political framework at international level is essential.

Meanwhile, however, the gulf between the United States and the rest of the G8 on climate change is as wide as ever, reports the UK's Guardian. The US continues to be the only country refusing to acknowledge the link between greenhouse gas emissions and climate change.

The Washington Post published an editorial two days ago full of misleading statements and sweeping generalisations, claiming that Europeans are doing nothing to reduce emissions, and that in order to do so, they would have to stop using electricity and driving cars. This is nonsense, and it completely ignores the raft of new legislation that Europeans are enacting. While the author has a right to express his opinion, the Post should consider whether it is appropriate to publish rather offensive editorials, which fuel misunderstandings between the Europe and the US, and between the US and the rest of the world.

Additional source:

Euractiv

Oil prices, the G8 and the untold story

The front page of the Financial Times weekend edition, like most newspapers, says US shares tumbled on Friday after oil reached $60 a barrel. Analysts say oil may soon reach as much as $70 a barrel (especially because in the fourth quarter of the year demand goes up when people turn their heating systems on). Many predict the price will not to fall until it has peaked at a high enough level to have a significant impact on the economy (which may take some time). Then, the slowdown will cause demand to go down, which will lower prices.
While it is true that oil prices are high mainly because of sustained economic growth in parts of the world, there also another untold truth. Governments have the power to avoid economic impacts by taking immediate action to reduce demand in a cost-effective way and without lowering the living standards of their population.
The FT itself has covered this issue in the past. A few months ago, the International Energy Agency issued a report analysing measures that governments can use to “save oil in a hurry”. The potential oil savings and implementation costs of rapid oil demand restraint measures for transport, could reduce world oil demand by up to a million barrels per day or more.
While that report was written with real energy emergencies in mind, there is a huge potential for starting to reduce demand before we get to an emergency. The European Commission estimates the trading block could reduce primary energy demand by 20% without reducing standards of living.
The article on the FT weekend edition says that the issue of oil prices is going to be on top of the agenda at the G8. But is it really? So how come the G8 negotiators deleted wording in their draft report on climate on the huge potential for reducing "stand-by" losses? These are caused by the increasing tendency for product manufacturers to design appliances and electronic products in a way so that they are always on and cannot be properly or easily switched off. Consumers think those flickering lights amount to nothing, but they do have an impact on their electricity costs and on the national energy bill.
The wording of the G8 document, before it was deleted, suggested that something as simple as eliminating stand-by in electric appliances could avoid the need for around 24 large-sized power plants around the world (some of which will certainly be fueled by oil). Would this be very costly to do? No. Would this reduce our standards of living? No (although it may force us to actually get up to switch the TV on, instead of leaving it on day and night - but that may get us some useful excercise...a good thing in times of rising obesity I think).
Unfortunately, no large newspaper is reporting this story. Too bad. I have been a journalist, and I realise that it is far more interesting to write about the latest controversy about nuclear than something called stand-by, which sounds, yawn, boring. But it's not, and failure to report this and other simple demand reduction options ultimately gives the public (and politicians) the wrong picture on the problem and most cost-effective solutions. Journalists will say: "Well, since governments are not acting, there is no story to write about". But isn't it a story in itself that one of the most simple and cost-effective solutions to both climate change and oil demand surges is being ignored if not deliberately suppressed? And is this lack of coverage in the press because "there is no story" ultimately at risk of causing a self-fulfilling prophecy?

"Bush has it backwards"

Another strongly-worded editorial, this time from the Minneapolis Star Tribune. Looks like the press on both sides of Atlantic is getting worked up about climate change policy!

Here's an abstract:
"..the president's men are attempting to swing the other G-8 industrialized nations away from supporting Kyoto-style reductions, and toward Bush's every-nation-for-itself approach. As negotiators draft a climate policy for approval at next month's meeting of the G-8 leaders, U.S. representatives have insisted on changes that, true to form, minimize the dangers of the warming atmosphere and leave each nation to decide its own responsibility.

Even the document's benign opening statement -- "Our world is warming" -- has been challenged by Washington. It would be just as sensible to remove all references to the world's being round. This is a shameful stance for a country that remains, by far, the world's biggest consumer of fossil fuels and, consequently, the biggest producer of globe-warming pollution. It can only further diminish America's standing as a cooperating member of the world community, and lend cover to the developing countries seeking to resist global accords that would hinder their exploding industrial growth.

Bush has it backwards. As the other G-8 leaders know, as most of the world knows, and as a growing number of big multinational corporations know, the day of reckoning on global warming cannot be postponed forever. In the meantime, it makes sense to begin a transition to industrial systems that ease the loads of warming gases in the earth's atmosphere -- and, in the process, achieve technological leadership that will be prized in the not-so-distant future."

We could save energy easily, but...

The European Commission is convinced that it can be done. Dramatically reducing our energy consumption to the benefit of economic competitiveness, security and environmental protection, while maintaining our living standards. This week, it has issued its anticipated ambitious plans to slash energy demand by 20%. (for more, also read my previous post on this)

Despite this, the international community is still struggling to find an agreement on climate change. It appears increasingly unlikely this agreement will happen at the upcoming G8, as Tony Blair may have hoped. The Financial Times yesterday said he "may be preparing to soft-pedal on global warming in exchange for Mr Bush's support on aid for Africa... That would not only be short-sighted but horribly ironic, since Africa is one of the principal victims of climate change, across a range of phenomena spanning desertification and disease, migration and ensuing conflict over scarce resources."

"The US will not go the Kyoto route but nor will it fully mobilise its research and ingenuity around this problem until it recognises it as a world-changing phenomenon that can no longer be ignored."

Meanwhile, the scientific community is getting more and more angry....