The IPCC (UN) report is all over every news outlet and its content and the ramifications of the analysis will be the core of our ESG and Climate piece tomorrow – in the Exhibit below we show a chart that was republished by the BBC which looks at projections around sea level increases. While the UN report has compelling academic and government backing and is certainly the most coordinated analysis on climate change, it is still littered with “most likely” and “more likely” comments, suggesting that the projections are still shrouded in uncertainty. There is a very good chart that shows “observed” climate change data over the last 50 years, and the ranges around the primary causality (human versus natural) conclusions are significant, suggesting that different models are telling very different stories, some less scary than others.
However, we argue that you should no longer be looking at climate change probability, but instead, be focused on the consequences of the extremes and the action taken. Inaction, combined with the worst-case scenarios could be a global disaster, while action, combined with the best-case scenario will result in some wasted money and some inflation, which will ultimately be deemed unnecessary with hindsight. It is not clear that we have a choice. But here is where it gets more contentious – the imperative (derived from the worst-case scenario) is abatement action now – and this is where the common sense economists need to take over rather than the environmental idealists. The job is to cut emissions as quickly as possible with as little social impact and inflation cost as possible. This likely means immediate solutions and investments in things that are not expected to be the longer-term solution. We may not have the luxury of waiting for the perfect technology or for enough renewable power to be built. This is a “duct-tape” problem today not a neat package tied up in a green bow – the green bow can come later! This is not all bad – the “duct-tape” solutions require substantial investment and likely create both jobs and economic growth – see our report tomorrow for more.
Source: BBC, UN IPCC Report, August 2021
