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"Intelligent Insight"
In three landmark events around the world, the shape of obligations of Governments and Companies in relation to reducing emissions is being reshaped by the courts and hedge funds. The question is: who has a duty of care, to whom?
Go to the Walk The World Universe at https://walktheworld.com.au/
The BIS has released a report “The “Green Swan” where they discuss how our changing climate leads directly to financial stability risks, but they also say Central Banks cannot alleviate these risks. Green Swan events require a whole new way of thinking…. they represent a new type of risk.
https://www.bis.org/publ/othp31.htm
The BIS – The Central Bankers’ Banker, has released a report “The Green Swan“, in which they discuss the issue of ” Central banking and financial stability in the age of climate change”. Specifically they warn that expecting Central Banks to do “Green QE” to mitigate financial risks relating to climate variation is unrealistic, saying that while banks in financial distress in an ordinary crisis can be resolved, this will be far more difficult in the case of economies that are no longer viable because of climate change. Intervening as climate rescuers of last resort could therefore affect central bank’s credibility and crudely expose the limited substitutability between financial and natural capital. This is more evidence of the pressures building to react to climate variability. Hence, climate-related risks are a source of financial risk.
They conclude: while climate change risk management policy could drag central banks into uncharted waters: on the one hand, they cannot simply sit still until other branches of government jump into action; on the other, the precedent of unconventional monetary policies of the past decade (following the 2007–08 Great Financial Crisis), may put strong sociopolitical pressure on central banks to take on new roles like addressing climate change. Such calls are excessive and unfair to the extent that the instruments that central banks and supervisors have at their disposal cannot substitute for the many areas of interventions that are necessary to achieve a global low-carbon transition. But these calls might be voiced regardless, precisely because of the procrastination that has been the dominant modus operandi of many governments for quite a while. The prime responsibility for ensuring a successful low-carbon transition rests with other branches of government, and insufficient action on their part puts central banks at risk of no longer being able to deliver on their mandates of financial (and price) stability”.
Now, let me add that I have read widely on this issue, and have looked at the data – I find the evidence for greater energy in the climate system convincing. In terms of the underlying causes, my view is some can be traced to natural variation, but this does not explain the correlations we are seeing, thus I have concluded that human activity is also adding to the problem. While we cannot control the natural variations, we can and should tackle that which we can address. Hence my stance. This is the biggest challenge we face, frankly. But the polarisation between “deniers and believers” is a false politically led dichotomy. This is not a religion!
David Wallace-Wells recently observed in The Uninhabitable Earth (2019), “We have done as much damage to the fate of the planet and its ability to sustain human life and civilization since Al Gore published his first book on the climate than in all the centuries – all the millenniums – that came before.”
The BIS says that climate change poses an unprecedented challenge to the governance of global socioeconomic and financial systems. Our current production and consumption patterns cause unsustainable emissions of greenhouse gases (GHGs), especially carbon dioxide (CO2): their accumulated concentration in the atmosphere above critical thresholds is increasingly recognised as being beyond our ecosystem’s absorptive and recycling capabilities. The continued increase in temperatures has already started affecting ecosystems and socioeconomic systems across the world but, alarmingly, climate science indicates that the worst impacts are yet to come. These include sea level rise, increases in weather extremes, droughts and floods, and soil erosion. Associated impacts could include a massive extinction of wildlife, as well as sharp increases in human migration, conflicts, poverty and inequality.
Scientists today recommend reducing GHG emissions, starting immediately. In this regard, the 2015 United Nations Climate Change Conference and resulting Paris Agreement among 196 countries to reduce GHG emissions on a global scale was a major political achievement. Under the Paris Agreement signatories agree to reduce greenhouse gas emissions “as soon as possible” and to do their best to keep global warming “to well below 2 degrees” Celsius (2°C), with the aim of limiting the increase to 1.5°C. Yet global emissions have kept rising since then and nothing indicates that this trend is reverting. Countries’ already planned production of coal, oil and gas is inconsistent with limiting warming to 1.5°C or 2°C, thus creating a “production gap”, a discrepancy between government plans and coherent decarbonisation pathways.
Changing our production and consumption patterns and our lifestyles to transition to a low-carbon economy is a tough collective action problem. There is still considerable uncertainty on the effects of climate change and on the most urgent priorities. There will be winners and losers from climate change mitigation, exacerbating free rider problems. And, perhaps even more problematically, there are large time lags before climate damages become apparent and irreversible (especially to climate change sceptics): the most damaging effects will be felt beyond the traditional time horizons of policymakers and other economic and financial decision-makers. This is what Mark Carney referred to as “the tragedy of the horizon”: while the physical impacts of climate change will be felt over a long-term horizon, with massive costs and possible civilisational impacts on future generations, the time horizon in which financial, economic and political players plan and act is much shorter. For instance, the time horizon of rating
Ominously, David Wallace-Wells recently observed in The Uninhabitable Earth (2019), “We have done as much damage to the fate of the planet and its ability to sustain human life and civilization since Al Gore published his first book on the climate than in all the centuries – all the millenniums – that came before.”
Our framing of the problem is that climate change represents a green swan – it is a new type of systemic risk that involves interacting, nonlinear, fundamentally unpredictable, environmental, social, economic and geopolitical dynamics, which are irreversibly transformed by the growing concentration of greenhouse gases in the atmosphere. Climate-related risks are not simply black swans, ie tail risk events. With the complex chain reactions between degraded ecological conditions and unpredictable social, economic and political responses, with the risk of triggering tipping points, climate change represents a colossal and potentially irreversible risk of staggering complexity.
Revisiting financial stability in the age of climate change
The reflections on the relationship between climate change and the financial system are still in their early stages: despite rare warnings on the significant risks that climate change could pose to the financial system, the subject was mostly seen as a fringe topic until a few years ago. But the situation has changed radically in recent times, as climate change’s potentially disruptive impacts on the financial system have started to become more apparent, and the role of the financial system in mitigating climate change has been recognised.
This growing awareness of the financial risks posed by climate change can be related to three main developments. First, the Paris Agreement’s Article 2.1(c) explicitly recognised the need to “mak[e] finance flows compatible with a pathway toward low greenhouse gas emissions and climate-resilient development”, thereby paving the way to a radical reorientation of capital allocation. Second, the Governor of the Bank of England, Mark Carney suggested the possibility of a systemic financial crisis caused by climate-related events. Third, in December 2017 the Central Banks and Supervisors Network for Greening the Financial System (NGFS) was created by a group of central banks and supervisors willing to contribute to the development of environment and climate risk management in the financial sector, and to mobilise mainstream finance to support the transition toward a sustainable economy.
The NGFS quickly acknowledged that “climate-related risks are a source of financial risk. It is therefore within the mandates of central banks and supervisors to ensure the financial system is resilient to these risks”. The NGFS also acknowledged that these risks are tied to complex layers of interactions between the macroeconomic, financial and climate systems (NGFS.
As this book will extensively discuss, assessing climate-related risks involves dealing with multiple forces that interact with one another, causing dynamic, nonlinear and disruptive dynamics that can affect the solvency of financial and non-financial firms, as well as households’ and sovereigns’ creditworthiness.
In the worst case scenario, central banks may have to confront a situation where they are called upon by their local constituencies to intervene as climate rescuers of last resort For example, a new financial crisis caused by green swan events severely affecting the financial health of the banking and insurance sectors could force central banks to intervene and buy a large set of carbon-intensive assets and/or assets stricken by physical impacts.
But there is a key difference between green swan and black swan events: since the accumulation of atmospheric CO2 beyond certain thresholds can lead to irreversible impacts, the biophysical causes of the crisis will be difficult, if not impossible, to undo at a later stage. Similarly, in the case of a crisis triggered by a rapid transition to a low-carbon economy, there would be little ground for central banks to rescue the holders of assets in carbon-intensive companies. While banks in financial distress in an ordinary crisis can be resolved, this will be far more difficult in the case of economies that are no longer viable because of climate change. Intervening as climate rescuers of last resort could therefore affect central bank’s credibility and crudely expose the limited substitutability between financial and natural capital.
Given the severity of these risks, the uncertainty involved and the awareness of the interventions of central banks following the 2007–08 Great Financial Crisis, the sociopolitical pressure is already mounting to make central banks (perhaps again) the “only game in town” and to substitute for other if not all government interventions, this time to fight climate change. For instance, it has been suggested that central banks could engage in “green quantitative easing”10 in order to solve the complex socioeconomic problems related to a low-carbon transition.
Relying too much on central banks would be misguided for many reasons. First, it may distort markets further and create disincentives: the instruments that central banks and supervisors have at their disposal cannot substitute for the many areas of interventions that are needed to transition to a global low-carbon economy. That includes fiscal, regulatory and standard-setting authorities in the real and financial world whose actions should reinforce each other. Second, and perhaps most importantly, it risks overburdening central banks’ existing mandates. True, mandates can evolve, but these changes and institutional arrangements are very complex issues because they require building new sociopolitical equilibria, reputation and credibility. Although central banks’ mandates have evolved from time to time, these changes have taken place along with broader sociopolitical adjustments, not to replace them.
We look at the latest BOM data, and consider the implications in the context of the current politicisation of climate change and bush fires debate.
With the help of an article from the Conversation, we examine some of the underlying issues.
The Bank of England released a discussion paper and scenarios for the finance sector to consider the risks of climate change (whatever the cause). They conclude that financial assets are at risk and these risks need to be recognised and accounted for.
According to the Bank of England, climate change creates risks to both the safety and soundness of individual firms and to the stability of the financial system. These risks are already starting to crystallise, and have the potential to increase substantially in the future. There is a pressing need for central banks, regulators and financial firms to accelerate their capacity to assess and manage these risks.
So, the Bank of England has published a discussion paper which sets out its proposed framework for the 2021 Biennial Exploratory Scenario (‘BES’) exercise.
The objective of the BES is to test the resilience of the largest banks and insurers (‘firms’) to the physical and transition risks associated with different possible climate scenarios, and the financial system’s exposure more broadly to climate-related risk.
They say, conducting a climate stress test poses distinct challenges compared to conventional macrofinancial or insurance stress tests. To ensure it is effective in light of these challenges, the Bank is using this discussion paper to consult relevant stakeholders on the design of the exercise. This includes financial firms, climate scientists, economists, other industry experts, and informed stakeholder groups.
Whilst climate-related risks will materialise over decades, actions today will affect the size of those future risks. It is therefore important that firms, and other stakeholders such as the Bank, continue to develop innovative approaches to measure climate-related risks before it is too late to ensure resilience to them. The BES will use exploratory scenarios to size these future risks and to explore how firms might respond to them materialising, rather than testing firms’ capital adequacy.
The key features of the BES are:
The Governor Mark Carney said: “The BES is a pioneering exercise, which builds on the considerable progress in addressing climate related risks that has already been made by firms, central banks and regulators. Climate change will affect the value of virtually every financial asset; the BES will help ensure the core of our financial system is resilient to those changes.”
Sarah Breeden the Executive Director sponsor for climate change said “None of us can know exactly how climate change will unfold, but we do know that it will create risks to the financial system. I am excited that this ground-breaking exercise will for the first time allow us to quantify this risk and so determine the actions we need to take today if we are to minimise these future risks.”
The Bank is consulting on the design of the exercise and welcomes feedback on the feasibility and the robustness of these proposals from firms, their counterparties, climate scientists, economists and other industry experts by 18 March 2020. The final BES framework will be published in the second half of 2020 and the results of the exercise will be published in 2021.
The Banks concludes, there are many challenges involved in designing such an exercise and this proposal seeks to balance various trade-offs. These include providing a comprehensive description of the potential risks while also creating a tractable exercise for firms, and providing sufficient detail in the scenarios to allow results to be aggregated consistently while also providing scope for firms to assess the risks in a granular way.
Suddenly, at the level of central banks, Australia is regarded as an investment risk. Via The Conversation.
On Wednesday Martin Flodén, the deputy governor of Sweden’s central bank, announced that because Australia and Canada were “not known for good climate work”.
As a result the bank had sold its holdings of bonds issued by the Canadian province of Alberta and by the Australian states of Queensland and Western Australia.
Central banks normally make the news when they change their “cash rate” and households pay less (or more) on their mortgages.
But central banks such as Australia’s Reserve Bank and the European Central Bank, the People’s Bank of China and the US Federal Reserve have broader responsibilities.
They can see climate change affecting their ability to manage their economies and deliver financial stability.
As an example, the new managing director of the International Monetary Fund Kristalina Georgieva warned last month that the necessary transition away from fossil fuels would lead to significant amounts of “stranded assets”.
Those assets will be coal mines and oil fields that become worthless, endangering the banks that have lent to develop them. More frequent floods, storms and fires will pose risks for insurance companies. Climate change will make these and other shocks more frequent and more severe.
In a speech in March the deputy governor of Australia’s Reserve Bank Guy Debelle said we needed to stop thinking of extreme events as cyclical.
We need to think in terms of trend rather than cycles in the weather. Droughts have generally been regarded (at least economically) as cyclical events that recur every so often. In contrast, climate change is a trend change. The impact of a trend is ongoing, whereas a cycle is temporary.
And he said the changes that will be imposed on us and the changes we will need might be abrupt.
The transition path to a less carbon-intensive world is clearly quite different depending on whether it is managed as a gradual process or is abrupt. The trend changes aren’t likely to be smooth. There is likely to be volatility around the trend, with the potential for damaging outcomes from spikes above the trend.
Australia’s central bank and others are going further then just responding to the impacts of climate change. They are doing their part to moderate it.
Over thirty central banks (including Australia’s), and a number of financial supervisory agencies, have created a Network for Greening the Financial System.
Its purpose is to enhance the role of the financial system in mobilising finance to support the transitions that will be needed. The US Federal Reserve has not joined yet but is considering how to participate.
One of its credos is that central banks should lead by example in their own investments.
They hold and manage over A$17 trillion. That makes them enormously large investors and a huge influence on global markets.
As part of their traditional focus on the liquidity, safety and returns from assets, they are taking into account climate change in deciding how to invest.
The are increasingly putting their money into “green bonds”, which are securities whose proceeds are used to finance projects that combat climate change or the depletion of biodiversity and natural resources.
Over A$300 billion worth of green bonds were issued in 2018, with the total stock now over A$1 trillion.
While large, that is still less than 1% of the stock of conventional securities. It means green bonds are less liquid and have higher buying and selling costs.
It also means smaller central banks lack the skills to deal with them.
These problems have been addressed by the Bank for International Settlements, a bank owned by 60 of the central banks.
In September it launched a green bond fund that will pool investments from 140 (mostly central bank) clients.
Its products will initially be denominated in US dollars but will later also be available in euros. It will be supported by an advisory committee of the world’s top central bankers.
It is alert to the risk of “greenwashing” and will only buy bonds that comply with the International Capital Market Association’s Green Bond Principles or the Climate Bond Initiative’s Climate Bond Standard.
Launching the fund in Basel, Switzerland, the bank’s head of banking Peter Zöllner said he was
confident that, by aggregating the investment power of central banks, we can influence the behaviour of market participants and have some impact on how green investment standards develop
It’s an important role. Traditionally focused on keeping the financial system safe, our central banks are increasingly turning to using their stewardship of the financial system to keep us, and our environment, safe.
Author: John Hawkins, Assistant professor, University of Canberra
An executive board member of APRA has told delegates that failing to take action on climate change now will lead to much higher economic costs in the long term, via InvestorDaily.
Executive board member Geoff Summerhayes spoke to the International Insurance Society Global Insurance Forum in Singapore and told delegates that short-term pains were needed for long-term gains.
“The level of economic structural change needed to prepare for the transition to the low-carbon economy cannot be undertaken without a cost,” he said.
“But it’s also true that failing to act carries its own price tag due to such factors as extreme weather, more frequent droughts and higher sea levels.”
Mr Summerhayes said that Australia had its share of the climate change debate, with one side calling for action and the other viewing climate change action as expensive.
“The risk is global, yet the costs of action may not fall evenly on a national basis. And second, the benefits will accrue in the future, but many of the costs of change must be borne now. For the Australian community, this remains a highly contentious set of issues,” he said.
Talking to experts in risk management, Mr Summerhayes called on the insurance industry to play a leadership role in bringing forward better data for what the costs of climate action are.
“By developing more sophisticated tools and models, and especially through enhanced disclosure of climate-related financial risks, insurers can help business and community leaders make decisions in the best interests of both environmental and economic sustainability,” he said.
APRA raised the issue in 2017 of the financial risks of climate change and since then has been endorsed by the RBA and ASIC as well.
“When a central bank, a prudential regulator and a conduct regulator, with barely a hipster beard or hemp shirt between them, start warning that climate change is a financial risk, it’s clear that position is now orthodox economic thinking,” Mr Summerhayes said.
How best to act remains a challenge, Mr Summerhayes admitted, and people were still debating who should carry the burden and whether the benefits were worth the costs.
“Government spending decisions may need to be reprioritised, and not every member of society will be able to bear these short-term costs equally comfortably,” he said.
However, what many forgot is that economic change also presents economic opportunities, the board member added.
“Forward-thinking businesses have for years been seeking to get ahead of the low-carbon curve by developing new products, expanding into untapped markets or investing in green finance opportunities,” he said.
Ultimately, it was a fight between short-term impact or long-term damage, Mr Summerhayes said.
“Controlled but aggressive change with a major short-term impact but lower long-term economic cost? Or uncontrolled change, limited short-term impact and much greater long-term economic damage?
“When put like that, it seems such a straight-forward decision, but in reality, businesses around the world are struggling to find the appropriate balance.”
Climate risk was ultimately an environmental and economic problem, and Mr Summerhayes said framing it as a cost-of-living problem presented a false dichotomy.
“That approach risks deceiving investors or consumers into believing there is no economic downside to acting slowly or not at all. In reality, we pay something now or we pay a lot more later. Either way, there is a cost,” Mr Summerhayes said.
Ultimately, better data could help everyone to better understand the physical risk trade-off and the reality that there was no avoiding the costs of adjusting to a low-carbon future.
“Taking strong, effective action now to promote an early, orderly economic transition is essential to minimising those costs and optimising the benefits. Those unwilling to buy into the need to do so will find they pay a far greater price in the long run,” he said.
RBA Deputy Governor Guy Debelle, spoke at a public forum hosted by the Centre for Policy Development. Here are some edited highlights.
I will talk about how climate change affects the objectives of monetary policy and some of the challenges that arise in thinking about climate change.
Finally, I will also briefly discuss how climate change affects financial stability.
Let me start by highlighting a few of the dimensions that we need to consider:
The economics profession has examined the effects of climate change at least since Nobel Prize winner William Nordhaus in 1977. Since then, it has become an area of considerably more active research in the profession.[4] There has been a large body of research around the appropriate design of policies to address climate change (such as the design of carbon pricing mechanisms), but not that much in terms of what it might imply for macroeconomic policies, with one notable exception being the work of Warwick McKibbin and co-authors.[5]
How does climate affect monetary policy? Monetary policy’s objectives in Australia are full employment/output and inflation. Hence the effect of climate on these variables is an appropriate way to consider the effect of climate change on the economy and the implications for monetary policy. The economy is changing all the time in response to a large number of forces. Monetary policy is always having to analyse and assess these forces and their impact on the economy. But few of these forces have the scale, persistence and systemic risk of climate change.
A longstanding way of thinking about monetary policy and economic management is in terms of demand and supply shocks.[6] A positive demand shock increases output and increases prices. The monetary policy response to a positive demand shock is straightforward: tighten policy. Climate events have been good examples of supply shocks. Indeed, droughts are often the textbook example used to illustrate a supply shock. A negative supply shock reduces output but increases prices. That is a more complicated monetary policy challenge because the two parts of the RBA’s dual mandate, output and inflation, are moving in opposite directions. Historically, the monetary policy response has been to look through the impact on prices, on the presumption that the impact is temporary. The banana price episode in 2011 after Cyclone Yasi is a good example of this. The spike in banana prices and inflation was temporary, although quite substantial. It boosted inflation by 0.7 percentage points. The Reserve Bank looked through the effect of the banana price rise on inflation. After the banana crop returned to normal, prices settled down and inflation returned to its previous rate.
The response to such a shock is relatively straightforward if the climate events are temporary and discrete: droughts are assumed to end; the destruction of the banana crop or the closure of the iron ore port because of a cyclone is temporary; things return to where they were before the climate event. That said, the output that is lost is generally lost forever. It is not made up again later, but rather output returns to its former level.
The recent IPCC report documents that climate change is a trend rather than cyclical, which makes the assessment much more complicated. What if droughts are more frequent, or cyclones happen more often? The supply shock is no longer temporary but close to permanent. That situation is more challenging to assess and respond to.
Having talked about the macroeconomic impact of climate change and how that might affect monetary policy, I will briefly discuss climate through the lens of financial stability implications.[10] Financial stability is also a core part of the Reserve Bank’s mandate. Challenges for financial stability may arise from both physical and transition risks of climate change. For example, insurers may face large, unanticipated payouts because of climate change-related property damage and business losses. In some cases businesses and households could lose access to insurance. Companies that generate significant pollution might face reputational damage or legal liability from their activities, and changes to regulation could cause previously valuable assets to become uneconomic. All of these consequences could precipitate sharp adjustments in asset prices, which would have consequences for financial stability.
The reason that I will only cover the implications of climate change for financial stability only briefly today is that it has been very eloquently discussed by Geoff Summerhayes (APRA) and John Price (ASIC) including at this forum over the past two years.[11] I would very much endorse the points that Geoff and John have made. Geoff stresses the need for businesses, including those in the financial sector to implement the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD).[12] I strongly endorse this point. We have seen progress on this front in recent years, but there is more to be done. Financial stability will be better served by an orderly transition rather than an abrupt disorderly one.
One area that Geoff highlighted in a recent speech is that there is a data gap which needs to be addressed:[13] ‘The challenge governments, regulators and financial institutions face in responding to the wide-ranging impacts of climate change is to make sound decisions in the face of uncertainty about how these risks will play out.’ In that regard, Geoff mentions one challenge that I spoke about earlier in the context of monetary policy. Namely, taking the climate modelling and mapping that into our macroeconomic models. For businesses and financial markets, that challenge is understanding the climate modelling and conducting the scenario analysis to determine the potential impact on their business and investments.
With swathes of New South Wales still smouldering and temperature records tumbling all over the world, Malcolm Turnbull is losing his grip on the prime ministership, partly because of his inability to land a very modest emissions policy. His is the latest failure in a decade-long story of broken climate policy in Australia.
Like most voters, scientists are tired of these political games when clearly so much more is on the line.
That’s because what is happening now with extreme weather events and longer fire seasons is exactly what we forecast a decade ago. This isn’t breaking news. In fact, the science around the role of climate change in extreme temperatures is so solid that the editors of the world-leading Bulletin of the American Meteorological Society have discouraged scientists from researching extreme temperatures in its annual extreme events issue.
Why? Because, according to the journal’s editors, the scientific value of these studies is now “limited”. The climate signal in extreme heat events has become so clear that it is no longer a novel line of investigation. In short, climate change now plays a role in every extreme heat event.
Contrast this with the equivocation of our political leaders. Turnbull claimed in March this year that “you can’t attribute any particular event – whether it’s a flood or fire or a drought or a storm — to climate change”. He made this statement after 69 houses in Tathra in southern NSW were destroyed by an unseasonably late bushfire during a heatwave – and heatwaves are clearly linked to climate change.
Former prime minister Tony Abbott made an almost identical claim back in 2013, after an early season bushfire in the Blue Mountains destroyed 196 homes, during a succession of hot days in a warmer than average October.
Just this month, drought was declared for all of NSW and the bushfire season began two months early. The state had its earliest ever total fire ban, and fires have already burned through large parts of coastal southern NSW.
Australia’s fire season is now so long, it overlaps with California’s, stretching our resources and our ability to prepare for and respond to catastrophic fires.
Clear evidence
In light of the clear evidence, it takes a very special kind of politician to ignore the role of climate change in extreme weather events. It’s hard to imagine why anyone would choose to play party political games as whole townships are threatened by fire and drought extends through NSW and Queensland.
And yet Turnbull has dumped plans to legislate even the lower boundary of Australia’s Paris Agreement emissions target as part of the National Energy Guarantee. The result is that Australia is once again left without a sensible climate policy.
Turnbull’s backdown also tells us exactly how far his and his colleagues’ political vision extends into the future: as far ahead as the next election. But while our leaders struggle with political myopia, the heart of climate science remains a big-vision, long-term approach.
Decades ago climate scientists told us that the first signs of climate change would appear in the temperature record, and extreme heat events would become more common and more extreme. This is exactly what has happened, only much faster than projected.
The first study to tease out the climate change component in an extreme heat event was an examination by the UK Met Office of the 2003 European heatwave that killed an estimated 70,000 people. It took almost two years to produce that result.
Today, scientific advances mean that researchers can do this kind of attribution study in mere days. As a result of these improvements, the attribution of climate change’s role in many extreme temperatures is now unequivocal. More recent research shows that some 2016 events across the world, including the extended mass bleaching on the Great Barrier Reef, could not conceivably have happened without climate change.
Turning our focus to the coming decades, we find that even if the world meets the more generous Paris goal of keeping global warming below 2℃, Sydney and Melbourne could see 50℃ days and 25 more heatwave days every summer. Worryingly, right now we are on track to exceed 3℃ of warming.Now let’s add some perspective about what we are currently experiencing. Australia’s supercharged heatwaves and winter bushfires have occurred with just 1℃ of global warming.
Yet even with this small amount the climate signal is so clear that when one of the authors of this article was asked by a reporter if there was likely a climate change influence on our hot April, she confidently replied, “I would bet my house on it”. Four months later, the bet is still on.
It is time to stop dismissing our record-breaking temperatures, droughts and winter bushfires as natural variability. The role of climate change in extreme heat is now so pervasive that it is almost a given.
Asking climate scientists whether global warming plays a role in extreme temperature events is like asking a medical researcher whether a case of the ‘flu might just be linked to the influenza virus. The answer is obvious.
Any politician who ignores the clear link between weather extremes and climate change – choosing instead to trot out platitudes about how Australia’s climate has always been tough, or quote Dorothea Mackellar (who, surprisingly enough, was not a climate scientist) – is effectively saying “let’s do nothing about this growing problem”.
An attitude of “nothing to see here” from our leaders, when all the evidence says otherwise, leaves our health sector, economy, ecosystems and, as we see now, our struggling farmers exposed to climate change impacts.
It may also leave those politicians and industry leaders making such claims wide open to potential liability for future loss and damages, if recent legal cases are any guide.
For almost a decade, most of our politicians have been so busy bickering over who gets to be leader that they have failed to show the real leadership required to look at Australia’s future beyond the next election cycle.
Enough. Most Australian voters surely care less about who is running the country than they do about making sure our country is still a habitable place to live in the future.
Authors: Sophie Lewis ARC DECRA Fellow, UNSW, Sarah Perkins-Kirkpatrick Research Fellow, UNSW
