COP21 Climate Change
Welcome to 2016. Towards the end of last year, the world’s nations agreed in Paris a non-binding framework agreement to slow climate change. Since then, swathes of the United States have been wracked by snow blizzards and tornadoes. Torrential rainfall has flooded, or threatened to flood, half of Britain; in China, a rain-induced mudslide has swiped Shenzhen, collapsing buildings and killing many. And Chinese stockmarkets have collapsed too.
What’s the connection ? At first glance not obvious : but look again. After the Paris COP21 conference, commentators hailed the agreement there as a major success, not because it had any binding force but because it might encourage financial markets to direct investment into low-carbon renewable energies.
Actually, that’s not how financial markets work. Still, perversely, work they do.
In 2005 the European Union launched an ambitious emissions trading market to cap atmospheric carbon dioxide pollution. Industries were issued with licences to pollute. The idea was that low polluters could sell their permits to high polluters, driving up production costs for dirty industries and encouraging them to clean up their act.
Within three or four years, Europe’s carbon emissions had plunged. But it wasn’t the CO2 trading market that did the trick. It was the financial markets crash and the consequent global economic depression. Frozen credit markets collapsed the demand for goods, shuttering factories. That pretty much killed the carbon trading market – nobody needed its pollution permits and their price dropped through the floor. But the good news is, a decade after the market opened, Europe’s carbon emissions are still way below their forecast levels.
Perhaps China’s stockmarket crash will have similar beneficial consequences – that, and the financial pain for insurers of clearing up the mess left by ever more frequent and violent tornadoes and typhoons.
Something to hope for, then. According to a study in the January 7 edition of the journal Science, the permanent impact of human activity on the environment has become so pervasive that it marks a new era in the global geological record – the Anthropocene Age. To the extent that geological eras are often distinguished by the fossil remnants of their extinct species, this is a chilling thought.
By Brian Childs
By Brian Childs