Insurance and Climate Change column

Report: Despite Pandemic-Driven Emission Redux, We’re Headed to 3-Degrees Warming

By | December 17, 2020

A new report finds that despite a brief dip in carbon dioxide emissions caused by the pandemic, the world is still heading for a temperature rise in excess of 3°C this century, a mark that is well beyond the Paris Agreement goals of limiting global warming to below 2°C.

This eleventh edition of the United Nations Environment Programme (UNEP) Emissions Gap Report assesses the gap between estimated future global greenhouse gas emissions if nations implement climate mitigation pledges and the global emission levels from least-cost pathways aligned with achieving the temperature goals of the Paris accord.

In other words, it’s the difference between “where we are likely to be and where we need to be,” which is known as the emissions gap, the report explains.

“Although 2020 emissions will be lower than in 2019 due to the COVID-19 crisis and associated responses, (global greenhouse gas) concentrations in the atmosphere continue to rise, with the immediate reduction in emissions expected to have a negligible long-term impact on climate change,” the report states. “However, the unprecedented scale of COVID-19 economic recovery measures presents the opening for a low-carbon transition that creates the structural changes required for sustained emissions reductions. Seizing this opening will be critical to bridging the emissions gap.”

Among the findings in the report are:

  • CO2 emissions could decrease by about 7% in 2020 compared with 2019 emission levels due to COVID-19, with a smaller drop expected in GHG emissions as non-CO² is likely to be less affected. However, atmospheric concentrations of GHGs continue to rise.
  • The COVID-19 crisis offers only a short-term reduction in global emissions and will not contribute significantly to emissions reductions by 2030 unless countries pursue an economic recovery that incorporates strong decarbonization.
  • The emissions gap has not been narrowed compared with 2019 and is, as yet, unaffected by COVID-19.
  • Current policy frameworks to address emissions are weak and additional policies are required to bridge the gap between the current trajectories of shipping and aviation and GHG emissions pathways consistent with the Paris Agreement temperature goals. Changes in technology, operations, fuel use and demand all need to be driven by new policies.

Lloyd’s

Lloyd’s is asking its managing agents to no longer provide new insurance coverage for coal-fired power plants, thermal coal mines, oil sands and new arctic energy exploration.

Lloyd’s on Thursday made an announcement as part of its new market-wide strategy that aims to align with the United Nations’ Sustainable Development Goals and supports the principles included in the Paris Agreement on climate, according to an article on Thursday in Insurance Journal.

The strategy also includes ending new investments in these areas by Lloyd’s market participants and by the Corporation of Lloyd’s from Jan. 1, 2022, according to Lloyd’s first Environmental, Social and Governance Report 2020.

Other insurers and reinsurers like Allianz, AXA, AXIS Capital, Chubb, Generali, Hannover Re, The Hartford, Liberty Mutual, Munich Re, QBE, SCOR, Swiss Re and Zurich Insurance have already cut their insurance and/or investments in carbon-producing fossil fuel businesses and activities.

The Insure Our Future campaign, which has pushed for such moves for some time, called Lloyd’s announcement “a step in the right direction.”

“Lloyd’s is sending a message to the U.S. insurance industry that it cannot continue its unchecked support for climate-wrecking projects under the Lloyd’s name,” Elana Sulakshana, energy finance campaigner at Rainforest Action Network, part of the Insure Our Future effort, said in a statement. “Building on today’s momentum, we will continue pressuring the U.S. insurance industry to match and exceed Lloyd’s policies across their entire fossil fuel underwriting and investment portfolios.”

Prior to the Lloyd’s announcement, at least 24 insurance companies globally had ended or limited their coverage for coal projects, representing nearly half the global reinsurance market, while nine insurers had limited or ended cover for tar sands, according to the group.

Ceres

A collaboration of 21 global companies this week released “a first-ever set of cross-sectoral fleet electrification principles” to provide guidance for auto and truck manufacturers, regulators, policymakers, and utilities to help advance the commercial electric vehicle market.

The Corporate Electric Vehicle Alliance is led by the sustainability advocate Ceres. It was formed in early 2020 to accelerate the business transition to EVs.

Members of the alliance include Amazon, AT&T, Best Buy, DHL, Exelon, IKEA, Siemens, National Grid and Uber.

The group’s “fleet electrification principles” outline criteria that would support companies in electrifying their transportation and logistics fleets and networks.

The principles are:

  • Greater variety and volume of zero-emission vehicle model options
  • Access to cost-effective charging infrastructure and flexible rates
  • More transparency on new model release timing and availability
  • Upfront cost parity with ICE vehicles
  • Integrated access to renewable energy
  • Improved coordination with and support from electric power companies and utility regulators
  • Strategically sited and widely available charging infrastructure
  • Technology interoperability and streamlined charging standards
  • Employee commute and regional transportation decarbonization

“This timely action made by ambitious companies to decarbonize the U.S. transportation sector provides critical private sector momentum leading up to the inauguration of President-elect Biden, who has vowed action to combat the climate crisis, as well as the crucial COP26 in Glasgow,” states an announcement outlining the principles.

Swiss Re

Climate change will become more costly for society in the future, according to Jean Haegeli, Swiss Re Group chief economist.

“As with COVID-19, climate change will be a huge test of global resilience. Neither pandemics nor climate change are ‘black swan’ events. But while COVID-19 has an expiry date, climate change does not, and failure to ‘green’ the global economic recovery now will increase costs for society in future,” said Haegeli in a statement.

Haegeli’s comments came along with the Swiss Re Institute’s preliminary sigma estimates, which show insurance industry losses from natural catastrophes and man-made disasters across the globe amounted to US$83 billion in 2020, making it the fifth-costliest year for the industry since 1970.

Natural catastrophes caused US$76 billion of global insured losses, according to the report, which was covered in an article on Wednesday in Insurance Journal. That’s up 40% from 2019, mostly from secondary peril events, including severe convective storms and wildfires in the U.S. Manmade insured losses came to $7 billion in 2020, down 17% from the previous year, the report shows.

The North Atlantic hurricane season was an active one, with a record 30 named storms, but the insured losses of US$20 billion are considered moderate compared with the record seasons of 2005 and 2017, said Swiss Re.

Five named storms made landfall in the U.S. state of Louisiana alone, a record, however most U.S. landfalls did not hit densely populated areas in 2020, the report shows.

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  • December 17, 2020 at 5:34 pm
    Craig Winston Cornell says:
    Ah, yes. The Paris Climate Accord. Where dozens of countries paraded their good intentions by signing on to an agreement with no enforcement mechanism. Where China and India a... read more
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