Looking up

I feel like I have at least three reasons to be cheerful this morning:

Firstly, the Met Office has released the results of their latest survey (see above) on our attitudes to reducing our carbon footprint and they are very heartening. It seems that most of us are looking up after all.

Secondly, it is also encouraging within the context of Extinction Rebellion’s wider strategy to mobilise 3.5% of the population into campaigning to end the fossil fuel economy and replace it with something better which works for everyone.

On 21 April we will be arriving in London to test out the level of support we now have. My third reason to be cheerful is that an impressive list of other organisations will be joining the demonstration, including Greenpeace, Friends of the Earth, Earth Day, NHS Workers Say No, Greener Practice, Global Justice Now, Black Lives Matter local groups, Don’t Pay UK, CND and the PCS Union.

Meanwhile the Bank of England is pondering whether to raise interest rates even further in response to a vegetable shortage and panicking when the inevitable fall in inflation (which is bound to happen once the comparisons used to calculate it are post the initial price shock) does not coincide with the smooth curves in their models.

And the Government? A reminder of their top 5 priorities:

It becomes easy to see why the XR UK Strategy 2022 document says:

Those in power are neither willing nor capable of acting on the climate and ecological crisis. They lack the courage, conviction and creativity to do what is required.

So it looks like, once again, it is up to the rest of us to do what we have already understood needs to be done.

Seth Godin claims that all successful cultural change has a very simple two step loop to it: of awareness followed by tension and then further awareness, etc.

It does not look like the awareness is so much the issue any more, but what about the tension, ie why should we take action? I think the Government are providing the tension in buckets at the moment.

He summarises with a 3 point plan:

  • Tell 10 people.
  • Create tension among the 10 so they take action.
  • The action causes each of them to tell 10 people.

So this is me creating tension apparently. My wife would say I do that every time I open my mouth. And if 10 of you turn up on 21 April to wave a banner with me I will have a fourth reason to be cheerful!

Work hard, live hard, save hard?

Photo from the Climate Strike and march in Pittsburgh on 9/24/21. Link from: https://www.flickr.com/photos/9602574@N02/51512352257/. Photo taken by Mark Dixon(https://www.flickr.com/people/9602574@N02). This file is licensed under the Creative Commons Attribution 2.0 Generic license.

Mark Blyth wrote a great book about how it was a dangerous idea; Simon Wren Lewis described it as a con; Stephanie Kelton defined it as the “deliberate infliction of harm upon society in the presence of alternatives”; Frances Coppola wrote about its terrible price; Steve Keen described it as naive; Mariana Mazzucato, Robert Skidelsky, Ann Pettifor, David Blanchflower and others wrote in the New Statesman on why the UK should not impose it in response to higher debt following the pandemic; and Richard Murphy gave the possible reasons for imposing it as “ignorance, dogmatism and spite”.

What are all of these economists talking about? Austerity. And nearly all of the criticism thrown at this “dangerous” idea is that it does not work economically (ie it will not bring down government debt levels or boost economic growth, the usual justifications given for pursuing it): a criticism for which there is a large and ever growing data set in support.

Now there are any number of Four Yorkshiremen out there to say that this thing we’re calling austerity is luxury and that we are all snowflakes to complain about it, so let’s be clear about what is meant here. Clara Mattei, in her excellent new book The Capital Order, describes the three forms of austerity policies: fiscal, monetary and industrial, usually used in combination. Fiscal austerity (reducing public spending, particularly on health, education and benefits and increasing the burden of taxation) and monetary austerity (reductions in the money supply and increases in interest rates) are familiar to most of us and normally the only elements of austerity discussed in the media. To these Mattei adds the idea of industrial austerity, which includes (often described as supply side policies, with the connotation of getting the economy fit to compete in world markets) policies aimed at reducing the negotiating power of workers, from anti-union legislation, to reductions in unemployment benefits, minimum wage levels and wage levels and job security within the public sector.

The contention of The Capital Order is that the reason that austerity has been used again and again in the last 100 years, despite repeatedly failing to achieve the economic goals used to justify it, is that its goals have not been economic but political. The political goal of austerity policies is to defend capitalism whenever events make it seem likely that people will look for alternatives (think World War I or the socialism following World War II or the 2008 crash, or now, the pandemic). Whenever government intervention in the economy has been needed on a sufficient scale to demonstrate that economies can strike a different balance between capital accumulation and labour power, austerity has been brought out immediately afterwards to put labour power back in its box, by making nearly everyone too poor, too busy and too regulated to be able to protest about it.

If this premise is accepted, and I think Mattei makes a convincing case in her analysis of post-World War I austerity policies in Italy and the UK, then the implications are profound. Rather than repeated wrong-headed economic policies by people who do not understand economics, we would instead have deliberate political policies by people who completely understand what they are trying to achieve by them.

The other part of the strategy, via the first international financial conferences in Brussels and then Genoa, in 1920 and 1922 respectively, was to establish an international consensus for policies where “individuals had to work harder, consume less, expect less from the government as a social actor, and renounce any from of labour action that would impede the flow of production.” Lord Chalmers, former permanent secretary at the UK Treasury, summarised this approach as: “work hard, live hard, save hard”. The aim was to return to a pre World War I economic orthodoxy and therefore remove what would be very painful economic measures for most people from the political sphere and into the sphere of “economic science”.

A quotation from the League of Nations in 1920 sums up the how important it was that such a consensus be achieved, to make it extremely difficult for any country to stand against it:

This principle must be clearly brought home to the peoples of all countries; for it will be impossible otherwise to arouse them from a dream of false hopes and illusions to the recognition of hard facts.

These “hard facts” then become the justification for sticking with economic policies, however discredited they might be economically, and buttress them: against alternative economic views (the effective shutdown of the New Approaches to Economic Challenges (NAEC) unit of the OECD being the most recent high profile example) and against popular pressure to change course (eg through such measures as central bank independence from government control over monetary austerity or proposed legislation to limit the scope of political protest).

And of course this effective outlawing of alternative schools of economic thought has other implications too. For example, as Steve Keen has shown, the potential impact of climate change in economic models to date has been disastrously underestimated, allowing fossil fuel lobbyists to delay climate action as a result.

We have all three types of austerity in play at the moment in the UK: monetary, fiscal and industrial. We can either believe that this is designed to force our compliance with the mantra to “work hard, live hard, save hard” even if we do not want to, or that it is for the economic reasons given. The former option requires us to believe that the elites in nearly every government in the world are committed to defending capitalism at all costs and that, if we want to contest this, we will have the political battle of our lives on our hands with the odds steadily more stacked against us with every new piece of legislation passed; the latter requires us to believe that our governments are economically ignorant, dogmatic and spiteful. All our current problems and our solutions to them: from the economic crisis, to the ecological crisis and the increasing political crises globally (what Adam Tooze calls the polycrisis) – depend on what we decide to believe.


I am installing a gas boiler.

“What’s that?” some of you may say. After all I have certainly banged on about climate change quite a bit in the past. Some of you might assume that “Swampy Dave”, as my wife sometimes refers to me in conversation, would be installing a heat pump or solar panels or wind turbines or perhaps all three. Am I not a total hypocrite?

To which the answer is yes. I am a total hypocrite. And I must say the episode has left me chastened and a little bit reluctant to discuss it. It is, as Stephen Fry describes it very well here, one of the strongest reasons that people amongst the 1% like myself do not campaign more about the climate emergency.

But I have begun to think that this is all a massive piece of self-indulgence on my part (and of course, by making it all about me, it is). So, instead, I have decided to make it all about me, by talking you through the Gas Decision or GD for short, because it has certainly clarified for me why we are not transitioning from fossil fuels more quickly.

Our gas boiler has been on the blink for a bit, but coaxed along by our local gas engineer who, I think out of concern for minimising costs to us, was reluctant to suggest any major action if it could be delayed. Then it started to leak water, slowly at first, and then faster, before giving up the ghost altogether in early November. I had during the boiler’s demise had one or two conversations about what we might replace it with. Raising the idea of heat pumps got me puffed out cheeks and rolling of eyes and the opinion that it was very complicated.

I looked online. There is a page called “Find a heat pump installer” on the gov.uk website, with long lists which you can search by distance from your postcode. I chose a couple of nearish ones and contacted them. No response. I then tried Octopus (our supplier, OVO, were not offering heat pump installation), who said they were run off their feet trying to install heat pumps and had a 6 month waiting list. However they did have a referral system, where you could enter your details and installers on their list would contact you.

I tried this and got a couple of calls. Neither local. We chose one who sounded particularly helpful on the phone and made an appointment for their sales person to come round. They were very persuasive, and we subsequently arranged to have the energy performance survey necessary to proceed. This established that about half of our radiators would need replacing, but that our piping was fine. We had had quite a bit of discussion about where the heat pump should go, and were thinking possibly between the first floor windows so that it wouldn’t be humming (or whatever noise heat pumps make) whenever we went out in the garden. We even had the National Grid come round to check that our connection could cope with the additional electricity demand (they had assumed at first that this was for an electric vehicle charging point, as this is apparently the most common reason for calling them round).

The cost of installation, even with the £5,000 Government grant, is at least £5,000 more than a gas boiler. We had been told that we would save money on energy once it was installed, but the savings turned out not to be significant (if there were any at all) once the full calculations had been done. The reason for this is how much more you pay for each kWh of electricity compared to gas. OVO currently charge us 9.83p per kWh for gas (with a standing charge of 27.12p per day) and 32.11p per kWh for electricity (with a standing charge of 46.8p per day). So, despite the heat pump being massively more efficient than the gas boiler alternative, it would really have to be going it some to overturn these price differences.

But, at that stage, we were still prepared to go ahead with the installation (I refer you to the “Swampy” comments above), we just needed to speak to some previous customers to reassure ourselves about their overall experience, perhaps see (and hear) it in situ, etc. And then it unfortunately started to unravel. Despite describing themselves as the number one heat pump installer in the UK, the company we had engaged were unable to provide us with anyone in or near Birmingham willing to tell us about their experiences (they eventually produced one name, but we couldn’t get a reply from them). So we started looking at the reviews on Trustpilot, etc, which were decidedly mixed and talked a lot about poor after sales service, and which seemed to be very dependent on the particular engineer doing the work. And the ones for the heat pump they were planning to install were full of stories involving the installers and the manufacturer pointing the finger at each other when things went wrong. Suddenly it seemed like too big a risk to take.

Meanwhile, the unseasonably warm autumn had slid into a very seasonably freezing December and we needed to get working radiators again. And so we decided we didn’t have time to go out to the heat pump market again, with more surveys etc, and plumped for a replacement gas boiler for our existing system. I am not particularly proud of the decision, and perhaps we were just unlucky with our experience, but it does seem to me that we are not making it easy for people to choose heat pumps in the UK currently. This appears to be borne out by the Department for Business Energy & Industrial Strategy’s UK Energy in Brief 2022 report (p13), which shows that, of the 19.4% of energy supplied from low carbon sources in 2021, only 0.7% was from heat pumps. As Chris Stark, Chief Executive of the UK’s Climate Change Committee, has tweeted recently: “THE MOST IMPORTANT THING is to make electricity cheaper than gas for consumers. It should be a key objective for Treasury’s tax policies and BEIS energy market reforms. It will transform the economics of low-carbon heat.” I certainly think it would have transformed our decision.

And today is the day! The weather outside is frightful (it hit minus 6 as the installation vans arrived and needed the doors thrown open to let in all the gear), but our new piece of fossil fuel infrastructure is being installed as I type. I will at least be a warm hypocrite.

Cop out

The Congress of Berlin: Disraeli as a tooth-drawer, assisted by Queen Victoria, operates on Sultan Abdul Hamid II of the Ottoman Empire, surrounded by political figures from France, Germany etc. Coloured lithograph by J.J. van Brederode after Jan Steen, 1878. (Steen, Jan, 1626-1679 Reference: 778482i)

If you think COP27 is just a virtue-signalling tree-hugging “gathering of people in Egypt” then Rishi Sunak’s decision not to attend it will make a lot of sense as he tries to grapple with his domestic economic agenda ahead of the autumn statement next month. The Treasury has said that the aim of the statement will be to “to put public spending on a sustainable footing, get debt falling and restore stability.” If you remember, the cause of the “instability” was the foreign exchange and gilt markets, and the lack of confidence in the UK’s economic management internationally. One of the causes of the problems with the UK’s economic management was a failure to think internationally.

COP27 is, in reality, an important international economic conference. This conference is going to be focused on, amongst other things, food security, water security and investing in the future of energy. The support with energy bills is, of course, a major element in the debt levels Sunak is worrying about and, as the cost of living crisis worsens (exacerbated by the Monetary Policy Committee’s expected further increase in interest rates on 3 November), food security is going to rapidly move up his agenda in the coming months. The only difference between the most important concerns of the autumn statement and COP27 are therefore timeframes. COP27 is about medium to long-term thinking. Sunak has indicated, by not attending, that he is only concerned with short-term thinking.

Then there is the agenda around providing a just transition to a net-zero world (ie not skewed in favour of the already wealthy countries) and the sustainability of communities made vulnerable by climate change. This is where the conference starts to resemble other famous international conferences of the past which made the reputations of British statesmen. The illustration above is from the Congress of Berlin in 1878, when the then Tory Prime Minister, Benjamin Disraeli, “acquired” Cyprus in a great powers carve up of the globe. In 1944, towards the end of the second world war, John Maynard Keynes famously sparred with Harry Dexter White from the US Treasury at Bretton Woods as the post-war economic consensus was thrashed out at an international economic conference. They matter.

Of course we don’t carve up the globe any more, you may think, but yes we do. As George Monbiot has pointed out in his excellent Regenesis, the ghost acres (ie the the area, outside their own land, that farms need to operate) of UK agriculture can be as much as 2-3 times as many as the acres we farm domestically. A WWF report from 2020 suggested that the UK’s overseas land footprint has increased by 15% on average compared to their 2011-15 analysis. Between 2016 and 2018, an area equivalent to 88% of the total UK land area was required to supply the UK’s demand for just seven agricultural and forest commodities – beef and leather, cocoa, palm oil, pulp and paper, rubber, soy, and timber. Every time we insist on domestic economic growth as a non-negotiable element of our economic policy, we are effectively exercising a land grab in the global south to achieve it. If Sunak was interested in establishing himself as an international statesman, he would be at COP27.

And finally, of course, there is the terrible human rights record of the Egyptian state, which needs to be called out and challenged to avoid COP27 being just a public relations victory for the military regime led by General Abdel Fatah al-Sisi.

But Sunak has turned his back on all of that, so that he can spend a bit more time with the spreadsheets and economic forecasts in his bunker in Downing Street. It suggests a small-minded, short-term thinker, lacking in vision and ambition. Copping out should not be an option for any Prime Minister, even during a crisis.

Do cuttlefish dream of the passive electroreception of sharks?

Tom-and-Jerry-tom-and-jerry-81353_800_600” by momokacma is licensed under CC BY 2.0.

We do it all the time. We assume that the animals around us experience the world as we do, with our obsession with the visual sense. We are used to anthropomorphising animals in our cartoons, but it goes much further than that: for instance if, like a dog, your sensory world or Umwelt is primarily based on smell rather than sight, then that daily walk you take with your dog has very different highlights and notable features (amazingly the slits on the side of a dog’s nostrils allow it to smell on out-breaths as well as in-breaths). We have sayings based on these anthropomorphisms: for example, the “unconcerned” frog in the water as it is heated to boiling (cited by Emily Maitlis in her recent speech in Edinburgh) may not be unconcerned at all, merely showing its distress by filling the air with smells like peanut butter, cashew nuts or curry rather than via the reactions we would expect from a human.

Our vision is not even all that extraordinary compared to some other animals. Mantis shrimps have more classes of photoreceptors covering the ultraviolet spectrum than we have in total. They are the only animals who can detect circular polarization, where the plane in which the light is polarized also rotates. However they are much worse than us at telling our visual range of colours apart and may not even have a conception of colour as we know it at all. We don’t know.

We are not even sure how many senses there are. Aristotle said there were five (sight, hearing, smell, taste and touch), but missed our senses of proprioception (ie awareness of your own body) and equilibrioception (ie sense of balance). There are also animals who have a secondary system for detecting odours, or who detect the body heat of their prey via their brain’s visual centre or have sensors which both detect electric fields and pressure. How should we categorise these and does a clear division between senses make any sense? We don’t know.

Elephants can hear each other several miles apart just after sunset, but we don’t know what they are listening for. Beaked whales have a range of crests, ridges and bumps on their skulls which are not outwardly visible other than via the echolocation they use, but we don’t know why.

And finally, for now, the cuttlefish of the title. When cuttlefish sense sharks, who have passive electroreception (ie the ability to detect electric fields in other animals), they stop moving, hold their breath and cover their gill cavities to reduce the voltage of their electric fields by up to 90%. I could go on, but all of this and so much more is contained in Ed Yong’s masterful An Immense World, which I could not recommend more highly, not only for the content but also for the wonderful joyful writing throughout (AC/DC’s Rock and Roll Ain’t Noise Pollution even gets a mention!).

The recurring theme for me is how much we still don’t know about all of these animals, and the amazing new discoveries which are being made every year. Every animal perceives a different world from the one we think we are living in, many of these perceptions currently (and in some cases perhaps permanently) impossible for us to understand. It takes an extraordinary level of anthropomorphic arrogance for us to convert all of those strange and wonderful lives into the concept of natural capital.

The Institute and Faculty of Actuaries’ Biodiversity and Natural Capital Working Party defined natural capital in their paper from April 2021 (which acknowledges the concerns I am raising here and those raised by others) as follows:

The concept of ‘natural capital’ therefore aims to recognise nature as an asset and aims to ensure that
the goods and services offered by nature become a part of decision making by governments,
businesses, and individuals regarding resource allocation, growth and development.

The Dasgupta Review has gone further, focusing on the economics of diversity. As it acknowledges:

The Review has developed the economics of biodiversity by viewing Nature in anthropocentric
terms. That is an altogether narrow viewpoint, but it has a justification. If, as we have shown in
Part I, Nature should be protected and promoted even when valued solely for its uses to us, we
would have even stronger reasons to protect and promote it if we were to acknowledge that it
has intrinsic value.

I strongly disagree. As George Monbiot pointed out several years ago, markets change the meaning of the things we discuss, replacing moral obligations with commercial relationships. The latest article in The Actuary magazine on natural capital discusses ecosystem collapse in its final paragraph in terms of how it would “negatively impact GDP” and “economic value”.

Once the diversity of nature can be reduced to a monetary amount or metric value, it can obviously be modelled much more easily but, as we have seen again and again within the finance sector and elsewhere, that is at the expense of consideration of any other aspect of our relationship with it.

Perhaps cuttlefish do dream of the passive electroreception of sharks. If they only knew what we were up to, they might instead have nightmares about their balance sheet entries in our spreadsheets.

Terraforming in reverse

Side by side images en:User:Ittiz created to show what Mars might look like at various stages while being terraformed in vertical alignment. The horizontal alignment is here: en:Image:MarsTransition.jpg http://commons.wikimedia.org/w/index.php?title=Image:MarsTransitionV.jpg&oldid=11571800. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Terraforming was a concept I first remember coming across in Star Trek 2: The Wrath of Khan in 1982 when “The Genesis Device”, and its effect on a dead planet, was described as “matter is reorganised with life-generating results”. The astronomer Carl Sagan had previously proposed the planetary engineering of Venus in 1961 and Mars in 1973. Martyn J. Fogg subsequently started publishing articles on terraforming in 1985 before publishing Terraforming: Engineering Planetary Environments in 1995. Fogg defined planetary engineering as using technology to change the global properties of a planet (he called this geoengineering if Earth was the planet in question). Terraforming he defined as planetary engineering which was specifically directed at enhancing the capacity of a planet to support life as we know it.

There are still advocates of terraforming as a project that humans should be actively working towards. Others suggest, that unless Earth is going to be unavoidably uninhabitable, it is likely to be our best bet as a future home for all but a relatively tiny number (Kim Stanley Robinson’s novel Aurora is the most memorable advocate for this position in my view, which takes us on a gruelling exploration of a terraforming expedition over several generations which then allows us to view Earth afresh with alien eyes).

What is clear is that we are not currently terraforming Earth in Fogg’s sense, as most of our planetary engineering (what we call the global economy) appears to be specifically directed at reducing the capacity of Earth to support life as we know it. We are terraforming in reverse.

Terraforming is an example of an idea you might get to as a result of very long-term thinking (there is a nice article about this in Vox, with views from Roman Kznaric, Nick Beckstead, Hilary Greaves and William MacAskill included) – I tend towards the Kznaric view that we cannot predict the knock-on effects of technological shifts in 200 or 300 years, but we know we’ll still need to breathe air and drink water, so working to prevent climate change and pandemics is very likely to be really good for us today, the near future and the long-run future too.

The danger of discussion of the very long-term is that it can create the idea that nothing we do over the next few years matters. However as we have pushed up to and beyond planetary capacity in so many areas now and have developed a global economy with planetary engineering capabilities of unprecedented power, this is no longer true if it ever was. What seems obvious to me is that we mustn’t make decisions now which lock in damage to planetary life-supporting capacity for generations to come, such as the “carbon bombs” described by George Monbiot here.

Terraforming in reverse is not the direction to choose, whichever generation we belong to.

Black ball

Cartoon of a black ball powering the planet

Imagine all of the fossil fuel energy available to the Earth and its inhabitants before our emissions from using that energy mean that we will have, on average, a climate 1.5oC warmer than pre-industrial levels. Imagine it as a big black ball located, for convenience, in China, as we have exported many of the most carbon-intensive manufacturing processes we all need there, and that we are all sucking the energy we need from this black ball 24/7 until it is exhausted.

We are currently at 1.2oC above pre-industrial levels on average and have seen the consequences this summer in the UK, and in the unprecedented number and size of wildfires still raging across Spain and Portugal in particular, to name a few of the events which have been made much more likely by climate breakdown.

The last estimate of the size of the ball came from the IPCC AR6 Report of 2021, which indicated that the remaining carbon budget to remain with a 50% chance of staying at or below 1.5°C of global warming is 580 billion tonnes CO2 and about 420 billion tonnes CO2 for a two-thirds chance of limiting warming to 1.5°C, all as at 2018. Annual global CO2 emissions in 2019 were 36.7 billion tonnes, in 2020 they were 34.8 billion tonnes and in 2021 they rebounded to 36.4 billion tonnes. So that ball is shrinking very fast.

Why the obsession with 1.5°C? Well, it is what we and most other countries signed up to in Paris in 2015. 2°C was agreed to be a much worse outcome than 1.5°C – we can already see the results of current warming where 20% of the global population lives with 1.5°C warming in at least one season of the year, but a global average of 2°C compared to 1.5°C would increase the proportion of the population exposed to severe heatwaves at least once every 5 years from 14% to 37%. NASA have an article on this here.

Can we make the ball bigger, by removing some of the carbon dioxide? If you look at the pathways that the IPCC discuss, you will see that they are split between those where temperatures are stabilised at or below 1.5°C warming and those which go above but are then brought back down later in the century. In its most recent report published in April, the IPCC said the use of CO2 removal is now “unavoidable”, if the world is to reach net-zero greenhouse gas emissions. Where the UK is in its programme of carbon removal is discussed here. However, to get it into perspective, global carbon removal to date is still in the experimental stage, and there are many problems remaining to be overcome with most of the proposed methods, so such efforts must be additional rather than in anyway an alternative to drastically cutting our emissions.

Back to the ball. If this represented all of the remaining water in the world (the scientific consensus at 3°C warming has Indian monsoon rains failing, the Himalayan glaciers supplying the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers decreasing by up to 90% and the Amazonian rain forest basin drying out completely), would you think about it differently? Would you continue washing your car every weekend, watering your lawn, and power-washing your drives and patios on the assumption that we would invent a new way of making water? Simon Brodkin has done a good bit in answer to this, which is both very funny and terrifyingly plausible.

Some Don’t Like It Hot

Levels of body temperatures at which extreme hot and cold sensors are triggered – data source: An Immense World – Ed Yong

In January this year, the southern hemisphere experienced, in some cases, record-breaking heatwaves, with temperatures reaching 50.7° C in Western Australia. In the last few weeks, it has been the turn of the northern hemisphere.

In the UK this week, we recorded the highest day (40.3° C in Coningsby in Lincolnshire) and night (25.8° C in Kenley in Surrey) temperatures ever. What is clear is that climate change has already significantly changed the probabilities of extreme weather events occurring in the UK, meaning that our own past experiences of weather ranges and likelihoods are now out of date.

This is likely to have many consequences. This week our railways literally went into meltdown in places, with New Street operating an “exit only” policy for a period while no trains were running to or from the station at all. Overhead cables were damaged, requiring lengthy repair work and buckling rails led to widespread speed restrictions across the network. This is because the heat tolerances of our railway system were set in cooler times, meaning that most of the network can operate up to around 46° C. As track temperatures can be up to 20° hotter than air temperatures, this threshold was widely exceeded.

So, if our infrastructure has limits, what about life on the planet? Well yes, in animals these are controlled by proteins called TRP channels, which allow neurons to be stimulated at temperatures which would be immediately extremely harmful to the organisms concerned. A few of these are shown above. In humans, this is a body temperature of around 42° C (a healthy temperature is around 37° C and our bodies work hard to keep it there, but we starts to feel unwell from 37.8° C upwards and may become comatose at 42° C. We are likely to die or at least suffer serious brain damage at 43° C), but the hot and cold limits vary hugely between different species. So rapid changes in the temperature distributions means that habitable areas, which would need to be at temperatures well short of these limits, for a wide range of animals and plants will also be changing rapidly, requiring migration or extinction for many.

In humans, where we have more control over our environments, we will still need to adapt many of our practices, from how we construct our infrastructure, to how we use resources and spend our time. One obvious question that has come up this week is why we don’t have a maximum workplace temperature (currently we don’t have a minimum either, although we do have guidance around minimum temperatures). The House of Commons Library Briefing Note on this from 2010 can be found here.

In Germany, a maximum of 26°C is the norm but the guidelines state that, if the outside temperature is higher, a workplace temperature may in certain circumstances be higher than 26°C.

In Spain, Real Decreto 486 of 1997 lays down that, in places where sedentary work takes place, the temperature should be between 17 and 27°C. In places of light physical work, an acceptable temperature will be between 14 and 25°C, although there are some limitations and conditions around these requirements.

There are clearly complications around setting a maximum comfort level which would probably also need to account for humidity and activity, but the Health and Safety Executive have suggested 30° C in their guidance as a maximum acceptable temperature, less if the work is strenuous. They also suggest polling employees to see if a particular temperature is comfortable, making adjustments if more than 10% are uncomfortable in an air-conditioned office.

There are now renewed calls to introduce a maximum workplace temperature in law. And, as Lord Turner so eloquently put it on Sky News, this is at only 1.2°C warming. If all of the promises made at Glasgow are kept we may stay between 1.8°C and 2.5°C. However in the UK, the Climate Change Committee, the body set up specifically to monitor our compliance with our climate commitments, has already said that our current programmes will not deliver net zero. And Liz Truss, who may be Prime Minister in 6 weeks, has vowed to halt the only green levies we have so far been able to put into law.

In the meantime, it appears to be a great time to be a Melanophila, or fire-chasing, beetle.

What Stuart Kirk was not criticised for and what this tells us about financial markets

For those of you totally immersed in the daily to and fro of the finance industry, this post about Stuart Kirk will probably seem a little late in the day. For those of you who are not, let me explain briefly what I am talking about today!

Stuart Kirk was Global Head of Responsible Investments at HSBC Asset Management. On 19 May 2022 he gave a talk at the FT Live Moral Money Summit Europe conference with the provocative title of Why investors need not worry about climate risk. Stuart’s talk was a real crowd splitter. Many called for his dismissal (HSBC subsequently suspended him), others regarded his talk as a missed opportunity and full of things which were not true, while others have regarded his stance as speaking truth to power.

However what interests me most about all of the column inches devoted to the affair is what he has not been criticised for and what this tells us about financial markets.

What Stuart said was structured around the following 12 statements:

  1. Unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong.
  2. As the warnings became ever graver, the more asset prices INCREASED in value.
  3. One of only three explanations can explain the impending end of the world and higher risk asset prices:
    1. Climate risk is negligible.
    2. Climate risk is already in the price.
    3. All investors are wrong.
  4. Even by the UN IPCC own numbers, climate change will have a negligible effect on the world economy – A (large) temperature rise of 3.6 degrees by 2100 means a loss of 2.6 per cent o global GDP. Let’s assume 5%.
  5. Adaption is cheap and effective: climate related costs relative to GDP and mortality rates are down.
  6. Perhaps the biggest error of thinking with climate risk is confusing volumes and values – Plenty of things happen between a volume disruption and a move in asset values.
  7. Climate “winners” and losers” can create value. Climate “winners” and “losers” can destroy value.
  8. The difference between volumes and value is regularly made clear in markets.
  9. Even if climate risk isn’t negligible, it’s too far into the future to matter for most companies.
  10. To make climate change appear like a significant threat, scaremongers are torturing their models.
  11. It’s easy to show that climate change is an investment risk if you engineer a bond market collapse.
  12. Climate change isn’t a long-run risk just like wars, energy crises, pandemics, financial crises and so on (with the graphs shown above to supposedly prove this point).

Can you spot the pattern here? All of these statements are about the map that Stuart is standing in (think of Joey standing in his map to orientate himself in Friends). It is a complicated map of asset prices and charts and reports written by lots of other people standing in the map with Stuart, but it is still just a map. And the map is the territory as far as Stuart is concerned. If something does not appear in his map, it is not worth worrying about. And climate risk is struggling to make it into his map. In Stuart’s view, this is a problem for climate risk, and the people “torturing” their models to make climate risk appear significant and piling him up with regulatory reporting responsibilities are very annoying.

But of course this take is completely upside down. This is not a problem for climate risk. Rather climate risk is a problem for us and the fact that it does not appear in our models unless we torture them (which I am sure is true) means that we have the wrong models. Because the scientific consensus about the consequences of climate change on our current trajectory of between 3 and 4 degrees warming are (amongst others from Mark Lynas’ Six Degrees: Our Future on a Hotter Planet):

Africa […] split between the north which will see a recovery of rainfall and the south which becomes drier […] beyond human adaptation.
Indian monsoon rains will fail. The Himalayan glaciers providing the waters of the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers [will decrease] by up to 90%.
The Amazonian rain forest basin will dry out completely. In Brazil, Venezuela, Columbia, East Peru and Bolivia life will become increasingly difficult due to wild fires which will cause intense air pollution and searing heat. The smoke will blot out the sun. Drought will be permanent in the sub-tropics and Central America.
Australia will become the world’s driest nation.
In the US Gulf of Mexico high sea temperatures will drive 180+ mph winds. Houston will be vulnerable to flooding by 2045. Galveston will be inundated. Many plant species will become extinct as they will be unable to adapt to such a sudden change in climate.
The [IPCC] in its 2007 report concluded that all major planetary granaries will require adaptive measures at 2.5° temperature rise regardless of precipitation rates.[and] food prices [will] soar. Population transfers will be bigger than anything ever seen in the history of mankind. [The feedback effects from the] Amazon rain forests dry[ing] out and wild fires develop[ing] [will lead] to those fires [releasing] more CO2, global warming [intensifying] as a result, vegetation and soil begin[ning] to release CO2 rather than absorb[ing] it, all of which could push the 3° scenario to a 4°-5.5° [one].

Much of the discussion about the talk was that Stuart was speaking out bravely and that HSBC had only suspended him to silence inconvenient truths, that he had been silenced by “extreme environmental ideology“. I have no idea about all of the reasons why HSBC suspended Stuart other than their official statements, but it seems clear to me that many people in the finance industry agree with what he said. This suggests to me an extreme ideology of its own of resolutely refusing to look out of the window.

In Kim Stanley Robinson’s excellent New York 2140, global sea levels have risen by 50 feet. Everyone lives in tower blocks connected by sky bridges which occasionally topple into the canals which were once streets. I used to think that money markets would not survive events like this, but Robinson posits what I believe is a more likely future scenario. The Intertidal Property Pricing Index is developed instead, carefully constructed to be reasonably stable despite the instability of the actual real estate being valued, and people bet on it. And soon everyone is fixated on what this index is saying daily rather than the buildings collapsing around them.

This is exactly what our finance sector will do of course, there will be money to be made out of such activities after all. And so expectations that they will, in any way, be a leader out of the climate emergency are, in my view, unrealistic.

We will however need the finance industry to facilitate aspects of how we transform our economies over the next 10 to 20 years. And this will involve much more of the regulation which annoys Stuart and others so much.

Could climate change slash global GDP by 18%? It’s much worse than that

Last week, the news from the Actuary magazine was that climate change could slash global GDP by 18%. This was based on a Swiss Re report, the economics of climate change, from which the analysis above is taken.

According to the report, “The current trajectory of temperature increases, assuming action with respect to climate change mitigation pledges, points to global warming of 2.0–2.6°C by mid-century.” It was unclear why they had decided to stop at 2050, when current commitments continue to push temperatures up until 2100. And the scenarios from the IPCC’s AR5 Synthesis Report (see below) show that the path we are currently on diverges far more considerably from the Paris agreements after 2050. Climate effects are very long-term and many of the impacts of a 2-3°C warming would be irreversible ones, ensuring continuing losses at similar or greater levels for decades to come, and that is before we even consider the much higher probabilities of feedback effects: from the melting of the permafrost, additional methane releases, loss of Amazonian carbon and the loss of the albedo reflectivity of Arctic ice. The Swiss Re report makes clear that is has not considered these.

You might notice that there is a separate column to the left, in a different colour, with the title “Well-below 2°C increases” and sub-title of “Paris target”. It is actually an agreement which 189 countries have signed up to, including the UK. As the Paris Agreement says (Article 2 Point 1):

This Agreement, in enhancing the implementation of the Convention, including its objective, aims to strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty, including by:
(a) Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature
increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;

There has been some debate over whether the Agreement is aiming for 1.5°C warming with a 50% chance of staying below it, or for “well below” 1.5°C similar to the 2°C goal with a 66% chance of avoiding more than 1.5°C warming, but the modelling used for the next IPCC report has adopted the latter definition. Either way, I cannot see why Swiss Re has decided to put the Paris Agreement targets in a different column from what it calls the “likely range of temperature gains” as if those we have committed to are no longer feasible to aim at.

In saying this, I do not underestimate the massive challenge of keeping to the Paris target. As Mark Lynas says in Our Final Warning, at the end of 2018 over 1,000 GW of additional fossil-fuelled electrical power generation capacity was planned, permitted or already under construction around the world, equivalent to adding an additional 188 Gt CO2 into the atmosphere to the 658 Gt already baked in from existing infrastructure, which gives a total of 846 Gt of CO2 not including impacts from deforestation, agriculture and future land-use change. This compares to a future carbon budget as estimated at the end of 2018 by the IPCC (although estimates of this vary considerably) of 420 Gt of CO2 (or 1,170  Gt of CO2 for 2°C warming). So an extraordinary change of direction is required and we should be very cautious of getting anywhere near these limits when we do not know precisely where they are.

Which brings me onto the modelling of economic impacts. The first thing to say is that modelling in terms of impact on GDP, while guaranteed to get the attention of the financial community, is perhaps not the best way of communicating the devastation of runaway climate change.

In the summary of Mark Lynas’ excellent book Six Degrees: Our Future on A Hotter Planet , which summarised the scientific consensus already arrived at by 2007, the three degree increase for which damages are being estimated is expected to lead to Africa […] split between the north which will see a recovery of rainfall and the south which becomes drier […] beyond human adaptation. Indian monsoon rains will fail. The Himalayan glaciers providing the waters of the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers [will decrease] by up to 90%. The [IPCC] in its 2007 report concluded that all major planetary granaries will require adaptive measures at 2.5° temperature rise regardless of precipitation rates.[and] food prices [will] soar. Population transfers will be bigger than anything ever seen in the history of mankind. [The feedback effects from the] Amazon rain forests dry[ing] out and wild fires develop[ing] [will lead] to those fires [releasing] more CO2, global warming [intensifying] as a result, vegetation and soil begin[ning] to release CO2 rather than absorb[ing] it, all of which could push the 3° scenario to a 4°-5.5° [one]. The recent update to this: Our Final Warning, describes “entering the three-degree world means we are now living in a hotter climate than any experienced on Earth throughout the entire history of our species”. These impacts, which are likely to pose existential risks for many, appear totally inconsistent with the economic loss modelling shown above.

In his 2020 paper, The appallingly bad neoclassical economics of climate change (apologies, Journal access required), Steve Keen says in the abstract:

Forecasts by economists of the economic damage from climate change have been notably sanguine, compared to warnings by scientists about damage to the biosphere. This is because economists made their own predictions of damages, using three spurious methods: assuming that about 90% of GDP
will be unaffected by climate change, because it happens indoors; using the relationship between temperature and GDP today as a proxy for the impact
of global warming over time; and using surveys that diluted extreme warnings from scientists with optimistic expectations from economists. Nordhaus has misrepresented the scientific literature to justify using a smooth function to describe the damage to GDP from climate change. Correcting for these errors makes it feasible that the economic damages from climate change are at least an order of magnitude worse than forecast by economists, and may be so great as to threaten the survival of human civilization.

There follows a demolition of the methodologies employed by Nordhaus and others in this field. To be fair to the Swiss Re report, some of the criticisms in Keen’s paper appear to have been borne in mind when constructing their model, eg:

A shortcoming of our model build so far is that some economic impacts are linearly estimated: non-linearities are not adequately captured. We use multiplicative factors of 5 and 10 to simulate the increasing severity of outcomes from nonlinearities… Importantly, the framework does not consider
tipping points, events such as the partial disintegration of ice sheets, biosphere collapses or permafrost loss, that pose a threat of abrupt and irreversible climate change. This is because it is thought that tipping points will materialise well after our model horizon of mid-century only.

And as the Swiss Re report also acknowledges:

It is likely that the estimated impacts of GDP damages from climate change will rise as existing modelling develops to incorporate economic linkages in trade, migration and other channels, and to generalise the results to multiple countries.

And they are getting criticisms from the usual suspects of climate denial, eg Bjorn Lomberg on Twitter here, that even their attempts to date to quantify the uncertainties caused by non-linearity are a step too far.

And yet there remains a problem with these analyses in that they fail to capture existential risk. One of the things Steve Keen points out in his paper is the different attitude Nordhaus found towards estimating damages from climate change in natural scientists as opposed to economists. Natural scientists typically estimated the damage at 20-30 times higher than economists and some refused to cooperate with the exercise at all:

I must tell you that I marvel that economists are willing to make quantitative estimates of economic consequences of climate change where the only measures available are estimates of global surface average increases in temperature. As [one] who has spent his career worrying about the vagaries of the dynamics of the atmosphere, I marvel that they can translate a single global number, an extremely poor surrogate for a description of the climatic conditions, into quantitative estimates of impacts of global economic conditions. 

But how do you calibrate what is clearly a complicated model that Swiss Re and Moody’s have constructed for this analysis? Obviously we all have a very recent GDP fall in our minds at the moment – here is a summary from the UK Commons Library of Economic Indicators as at 30 April 2021 (themselves sourced from OECDstat and Eurostat):

This shows an almost identical GDP fall of 10.5% year on year in Q2 2020 for the OECD as predicted in the event of a 3.2°C warming, although it has bounced back pretty quickly since. For a longer term view of the global data, Our World In Data have an Annual growth in GDP per capita graph which runs from 1961 to 2017 (see below).

One very large GDP fall which stands out in the data here is the 26.5% fall in China in 1961. This was towards the end of the China’s Great Famine, in which approximately 3 million people died of starvation over a 3 year period. This certainly qualifies as an existential event and Swiss Re’s modelling suggest something of similar proportions in Asia and Africa at 3.2°C warming.

The biggest danger in all of this is that rich countries will look at a 10.6% reduction in GDP (at 3.2°C warming) and think this liveable with and adaptable to for their populations. After all, Simon Wren Lewis calculates that the austerity policies between 2010 and 2018 in the UK reduced GDP by nearly half of this amount every year for at least the second half of this period, compared to where it would have been without these policies, with an estimated cumulative loss of 15.9% of GDP. An 18.1% overall world average loss, however, effectively means more than a 25% loss for the rest of the world outside the OECD, as the OECD accounts for around half of the world’s total GDP which, even if we did not allow for the acknowledged likelihood that these are underestimates, is still in the Chinese Famine category of disaster and neither liveable with nor adaptable to.

We are already seeing vaccine nationalism carve up the world between rich and poor countries, with up until last month only 0.3% of the vaccines administered around the world having gone to people in low-income countries. This is likely to reduce the ability of poorer countries to be represented properly at this year’s COP26 when it frames a global response to the climate change which will affect them so disproportionately. And the losses if we do not act will be measured in far more frequent floods and sea level rise, extreme storms and heatwaves, crop failures, water and food shortages and mass migration on a scale we have never seen before, not GDP.

Could climate change slash global GDP by 18%? It’s much worse than that.