IPCC Report. The IPCC issued their Sixth Assessment Report (AR6) at the end of February, offering a bleak view of the future and concern for the present. The report in its entirety is 3675 pages long, not counting the 37 page Executive Summary. Fortunately, the organization published what they call Headline Statements – sixteen “overarching conclusions of the approved Summary for Policymakers which, taken together, provide a concise narrative.”
I pulled a few excepts from those:
The rise in weather and climate extremes has led to some irreversible impacts as natural and human systems are pushed beyond their ability to adapt.
Near-term actions that limit global warming to close to 1.5°C would substantially reduce projected losses and damages related to climate change in human systems and ecosystems, compared to higher warming levels, but cannot eliminate them all.
Beyond 2040 and depending on the level of global warming, climate change will lead to numerous risks to natural and human systems. For 127 identified key risks, assessed mid- and long-term impacts are up to multiple times higher than currently observed.
Soft limits to some human adaptation have been reached, but can be overcome by addressing a range of constraints, primarily financial, governance, institutional and policy constraints. Hard limits to adaptation have been reached in some ecosystems.
Climate resilient development is enabled when governments, civil society and the private sector make inclusive development choices that prioritise risk reduction, equity and justice, and when decision-making processes, finance and actions are integrated across governance levels, sectors and timeframes.
It is unequivocal that climate change has already disrupted human and natural systems. Past and current development trends (past emissions, development and climate change) have not advanced global climate resilient development. Societal choices and actions implemented in the next decade determine the extent to which medium- and long-term pathways will deliver higher or lower climate resilient development.
IEA report: This week, the IEA issued a report of their own with more unpleasant news, showing that “Global CO2 emissions rebounded to their highest level in history in 2021.” Some of the findings include:
Coal accounted for over 40% of the overall growth in global CO2 emissions in 2021, reaching an all-time high of 15.3 billion tonnes. CO2 emissions from natural gas rebounded well above their 2019 levels. CO2 emissions from oil remained significantly below pre-pandemic levels because of the limited recovery in global transport activity in 2021, mainly in the aviation sector.
Despite the rebound in coal use, renewable energy sources and nuclear power provided a higher share of global electricity generation than coal in 2021. Renewables-based generation reached an all-time high. Output from wind and solar PV increased while hydro generation declined due to the impacts of drought, notably in the United States and Brazil.
The use of coal for electricity generation in 2021 was intensified by record high natural gas prices. The costs of operating existing coal power plants across the United States and many European power systems were considerably lower than those of gas power plants for the majority of 2021.
Our view: These reports indicate the situation is dire and a change in approach is desperately needed. Fossil fuels in the EU play a major role in the new geopolitical and social dynamics of the situation in Ukraine. In the very near term, I expect the world will focus on the human aspect of the invasion. Major climate policy decisions in the U.S. and EU will probably be delayed – especially given that President Biden formally banned the importation of Russian oil, gas and coal yesterday. At the same time, businesses may take the opportunity to accelerate their development of alternative energy sources that also support energy independence. It may be awhile before we see any light through the foggy mist of today’s complications.
Shell apologizes. Days after Shell bought 100,000 metric tons of Russian oil at the largest discount ever against the international benchmark, the company’s CEO issued a written apology on his LinkedIn account:
“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry.
… Our actions to date have been guided by continuous discussions with governments about the need to disentangle society from Russian energy flows, while maintaining energy supplies. Threats today to stop pipeline flows to Europe further illustrate the difficult choices and potential consequences we face as we try to do this.”
Our view: Shell’s purchase wasn’t illegal at the time and from a purely business perspective, it was advantageous (at an almost $30/barrel discount). But some thought that the decision had been made in a vacuum without regard for the larger ESG context. Outrage was swift, resulting in a very public capitulation. Consumers and the general public have unprecedented influence over company actions these days, even where those actions have compelling business benefit. And there’s the rub – will near term narrowly-focused financially attractive actions cause larger problems down the road? Companies should ensure their ESG framework and culture are wholly integrated into the way employees/managers think and act. Consider this part of your internal controls – at the very least, questions can be raised and vetted internally, resulting in informed decisions.