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Climate Change & A Green Cold War – The Lloyd’s of London View

Climate Change & A Green Cold War – The Lloyd’s of London View

In Midst Of Climate Crisis, Focus On Fossil Fuel Subsidies, Not Elon Musk's Wealth From Shares Of Transformative Companies

I have been telling anyone who will listen for years (a very limited audience) that the final arbiter of climate change will be the insurance companies. Unfit for human habitation. Governments can issue all the policy papers they want about climate change, corporations can bombard the press with flowery pronouncements, and the people can march in the streets carrying signs demanding change from sunup to sundown, seven days a week, but in the final analysis the only question that matters is, “Can you get insurance for that?”

The end of coal, oil and methane will come once the industry stops insuring fossil fuel-extraction businesses. If the industry decides not to insure real estate in Florida, it will be gone. Ron DeSantis can rave and fume to his heart’s content but just like King Canute, his efforts to keep the waters from rising around him — both literally and figuratively — will be in vain.

Climate Change is a Crap Shoot

The insurance industry is a giant poker table. It is betting it can take in more money — and use that money to make more money — than it has to pay out. Tens of thousands of people are employed by the company, whose sole purpose is to determine the risk/reward balance and ensure the insurance industry benefits. Lloyd’s of London is one of the largest and best known insurance companies in the world. It doesn’t insure individual clients, it insures the insurance companies who insure individual clients. It speaks and mountains move and the heavens align, and everything we thought we understood is disrupted.

In association with the Center for Risk Studies at the University of Cambridge, Lloyd’s of London has just released a new report entitled Shifting Powers: Managing the geopolitical landscape’s challenges. Below is a summary of the 48 page report, with input from Akshat Rathi via email. Bloomberg Green. It will only give a summary. You should read the report for yourself — if you dare. Here’s the Executive Summary.

“In just the last decade, the geopolitical risk landscape has undergone something of a paradigm shift. The Western-dominant, American-led, liberally fiscal, status quo that defined the political world and economic growth for much of the second half of the 20th century no longer feels like a realistic barometer for how future events — wars, riots, elections, treaties — will play out on the global stage.

“Instead, we face a future in which multipolarity, the equal distribution of power between two or more states, changes the behavior of risks to the increasingly connected global system. The globalized system is impacted by the impact of the oil price, elections in South America, and the failure of emerging economies. As the globalized economy continues to show little signs of slowing down, these effects will likely increase in the future.

“Most of the last decade’s geopolitical upheavals can be directly attributed to the fallout from the global financial crisis and the austerity measures that followed. Covid-19 has opened many of those wounds again and will bring with it new rivalries and the legacy of national debt. Geopolitics will become more unpredictable and idiosyncratic in the short-term, with increased tensions destabilizing societies, and flowing through to international markets and business.

“All will be supercharged by rapid technological change, with the automation of labor potentially rendering millions out of work. A possible future collapse in critical infrastructure and global dependence on digital technology would have catastrophic consequences for all aspects of life, business and government.

“In the medium term, the coming decade will most likely see an increase in great power competition, and further escalation of many of the proxy confrontations that have driven conflicts in the past few years. In the long-term, the world will need to continue dealing with existential threats that would outweigh covid-19 in terms potential impacts, including nuclear proliferation and humanitarian catastrophes.

“Overall, the post-pandemic decade is likely to see profound changes in geopolitical configurations, domestic balances of power, and even fundamental worldviews. The first two decades of this century have been different than many expected. The next decade will be no less unpredictable. What currently seems certain over the next ten years is that the current crisis will not end once the vaccine rollout is completed, lockdowns lifted, and freedom of movement reestablished.”

A Green Cold War

Well, if that doesn’t keep you awake at night, I don’t know what will. Here we are. CleanTechnicaTalking about the latest Battery factory from Panasonic or NIO’s plans to Sell cars in EuropeWe should instead be focusing on the dangers to civil society that are being created by the fact the Earth is warming and will continue to warm for the foreseeable future.

Bloomberg GreenThe Shifting PowersAccording to reports, the world could follow one of three paths:

  • Green Globalization is a process where major powers work together to find solutions that put the world on the right track to meet its climate goals.
  • Climate Anarchy is a form of self-interest that takes the form mercantilism and protectionism, pushing the world in the wrong direction regarding emissions.
  • Green Cold War: The world is divided into two or three rival groups that create regional trade barriers. This causes emissions that fall somewhere between the extremes of the first and second scenarios.

It is a fundamental assumption of the Shifting PowerAnalysis shows that technology breakthroughs are unlikely to occur within the next decade. Instead, existing technologies develop at the current rates, which assumes solar power keeps getting cheaper and nuclear fusion doesn’t become a reality.

Bloomberg Green points out that what Lloyd’s of London and the University of Cambridge are saying is remarkably similar to the results of another study published in 2019 by the Payne Institute for Public Policy, Colorado School of Mines. The study provided four scenarios:

  • Big Green Deal — sees determined and concerted policies from governments driving financial markets to rapidly move capital toward carbon-free sources of energy.
  • Dirty Nationalism — leads to inward-looking policies and autocracy, which results in the failure of the Paris Agreement.
  • Muddling On — scenario is essentially where the world is today, renewables grow their share of the energy mix but the transformation is too slow to mitigate climate change.
  • Technology Breakthrough — might mean that suddenly it’s cheaper to add storage to electric grids or pull carbon dioxide from the air. This could lead to geopolitical competition.

It’s hard to predict the future

Notice how similar that last point is to the Green Cold war scenario in the Lloyd’s of London report. Matteo Ilardo is a risk researcher at the Center for Risk Studies at Cambridge University. Bloomberg GreenThe Green Cold War scenario seems to be the direction the world is heading, but there’s still time before the world commits to that path. If in fact the warnings of the scientific community about the risks of climate change don’t move the public, perhaps the conservative insurer’s geopolitical outlook might finally make people take global heating more seriously.

That could happen, but it’s a pretty thin reed to rely on to pull humanity’s chestnuts out of the fire. Perhaps the best we can hope for, is a nuclear holocaust which will wipe out all human life on the Earth and allow the planet to heal so that the next species to rule the world can try their hand at building a sustainable future. To those far-off beings — whatever they might be — we can only say, “Good luck. Would you like to buy an insurance policy?”


 

See Also
Penny Jennifer Garry (standing) with Barney Martin manager Wednesday Hulme. Both women participated in training for hairdressers in how to talk about climate action with their clients.

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