While the markets drifted through the doldrums of August, the world we took for granted has changed irreversibly. Five years ago, I was commissioned to document COP21 - the UN sponsored 2015 conference on climate change in Paris. The Paris Agreement marked a high point of international diplomacy, with 196 nations agreeing to do whatever it takes to prevent global temperatures from rising more than two degrees above 19th century levels. Scientists had painted a grim picture of the earth rapidly heating up and a rare sense of urgency powered the congregation.
Nevertheless, the final document was vague. Questions as how to account for carbon reductions, how to achieve them, or even which sectors of the economy to include, were relegated to future meetings. And the final document was merely voluntary. Sanctions were not even contemplated. When 200 diplomats have to agree on a written document, every new provision or minor edit has to be translated into dozens of languages. Egos get puffed up. Governments draw red lines. The outcome cannot be more than the smallest common denominator.
Yet Paris felt like a new dawn, like the overdue wake-up call for all nations.
Faraway tropical archipelagos which already suffered the devastations of rising sea levels tried to push for more ambitious goals, supported by NGOs and the Holy See. Their entreaties had to yield to what was politically achievable, which was, as I said above, not much. Fault lines opened between the industrialised West and emerging economies which flagged historic and per-capita emissions and demanded money.
China, the world’s biggest polluter, responsible for 27 per cent of global greenhouse gas emissions, acted as the champion of the poor and disadvantaged, counting itself among them. It admonished the West’s industrial past, pointing out that poorer countries like they themselves, wishing to catch up, could not be expected to forgo unfettered industrialisation to compensate for the sins of others.
Gulf countries were eager to play down their role in fossil fuels, and coal-burning economies like Poland and India were insisting on “best efforts” terms. With the election of Donald Trump the following year, the US, so pivotal in the Paris conference, signed out and left the agreement in limbo.
At the beginning of this month, the UN Intergovernmental Panel for Climate Change delivered its latest assessment report which made the autumn of Paris look hopelessly optimistic. The report stated unambiguously that man-made emissions of methane and carbon dioxide are the root cause for climate degradation and that as a consequence, average temperatures are rising faster than projected.
To keep average global temperatures from rising more than 1.5 degrees from pre-industrial levels, not more than 500 billion tons of CO2 should be emitted from now on – the industrial exhaust of just 15 years. This assessment excludes the impact of deforestation and methane emitted by melting permafrost. With other words: we are too late to preserve the world as we knew it and head now dangerously fast into an inhabitable world. It’s not about coral reefs or the white rhino anymore, it is about everything: food, water supplies and a life of floods, tempests, droughts and fire. There will be summers so hot that our catacombs and WWII underground facilities will have to function as heat shelters for the frail.
Growing disruption wreaked by climate change will have enterprising winners but many more losers
Every summer, for 25 years now, my family escapes from the tourist hordes of Malta to a Greek island. Its summer temperatures are moderate, tempered by stiff winds from the sea. At night, the thermometer would regularly drop by 10 degrees, cooling our house without the help of air conditioning. Island farmers see no need for irrigation as the morning dew would reliably water vegetables and fruit trees. This idyll is shattered. Searing summer temperatures, in the last years the scourge of central, eastern and Mediterranean Europe, are now the island’s fate too.
While I write this, TV news bring pictures of Erftstadt in Germany, the town at the outskirts of Cologne which was flushed by rain into an abyss and reports on Lytton, the village in British Columbia which had disappeared in a sea of flames. Walls of fire are flickering over the screen as wildfires in Greece, Turkey, Albania, Kosovo, Northern Macedonia, Central Italy and Sicily destroy lives and livelihoods. California’s vineyards are on fire and the peat bogs of Siberia are burning.
Our island garden has given up: no tomatoes, no peppers and no cucumbers this summer, just brown stems and leaves. Our lemon and walnut trees are bare-branched. The morning dew is missing and our wells have all but dried up. The sea around the island has changed dramatically too. Shellfish, fish and molluscs became rarer and the reefs around the island are devastated by proliferating lion- fish, from the tropical Red Sea, which we have first sighted only a couple of years ago.
A while back, I happened upon a clever installation by the British artist duo Tim Noble and Sue Webster. In a dark room, the light of a projector was cast on heaps of household trash thereby artfully creating shadow images of beautiful, kitschy landscapes complete with flowers and butterflies. I was reminded of this when trying to convey to my two-year-old grandchild the beauty of nature. How fantastical will my stories sound a few years from now, when all our delight will have to focus on a lone tree, a formicary, or a carefully nurtured pot plant? The air smells of hot ash as plumes of smoke from the Peloponnese are carried over the water, blearing the sun and covering the surface of the sea and the salt pans on the coast with soot.
As investors, we worry about inflation, growth, debt and unemployment. We follow with daily apprehension flickering interest rates, employment figures, or the flaring up of COVID infections to make sound judgements on future gains or losses of stocks, bonds, commodities and real estate in order to hedge our bets. I am not sure if I can meaningfully price the much earlier than anticipated economic impact of rising sea levels, unpredictable weather phenomena or the displacement brought upon us when ever- larger parts of our globe become impossible to till and to inhabit.
The growing disruption wreaked by climate change will have enterprising winners but many more losers. Even if we could identify them, will the markets come to the same conclusions? Many goods, like soft commodities, water, energy and liveable space, will get scarce. Non-life insurance will malfunction. Analogue systems will return. The economy will sicken and inflation will be out of bounds. The economy will less resemble the stagflation of the 1970s but a war economy. Decisions of the past, like electric cars, questionable carbon-off-setting schemes, wood-pellet burning, or forgoing nuclear energy will be regretted. As our hopes to mitigate the causes for global warming dwindle, we wait far too long to better prepare for a harsh future.
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice, or advice on the buying and selling of financial products.
andreas.weitzer@timesofmalta.com
Andreas Weitzer, independent journalist based in Malta