07/07/2021

(AU AFR) Big Investors Warn Australia On Climate Change

AFR - John Kehoe

Large foreign investment funds have warned they could blacklist Australia and cut billions of dollars of investments in the country if the federal government fails to join the rest of the world in committing to a net-zero 2050 greenhouse gas emissions target.

The warning backs up concerns of the Reserve Bank of Australia that the economy is at risk from foreign investors withdrawing capital because of perceptions among global fund managers that the Morrison government is resisting strong action on climate change.

Prime Minister Scott Morrison is under pressure from some Nationals MPs not to sign on to the net-zero 2050 emissions target on 2005 levels at the United Nations Climate Change Conference in Glasgow in November. Getty

The $US1.4 trillion ($1.9 trillion) investment management firm, Invesco, said Australia’s climate change policies were an important consideration for its investments under its environmental, social and corporate governance (ESG) rules.

Invesco’s UK-based Asian equities director, John Pellegry, told The Australian Financial Review that “among developed markets, Australia’s approach appears to be behind others”.

“This may impact our investments in the future if other parts of the investment universe are tackling the issues more effectively.

“An inadequate climate change policy could lead to the selling of Australian investments – for example if required by our clients or if necessary to adhere to stricter policies outside Australia – for example, EU [European Union] policies.

“A greater valuation discount would also be warranted for the additional risk of investing in companies with less growth prospects and subject to greater externality costs – such as carbon pricing – if behind the curve versus global competitors.

“This could lead us to reduce exposure to certain sectors if the risk outweighs the reward.”

Invesco had $US189billion invested in the Asia Pacific as of March 31, 2021, including in Australian assets.

RBA governor Philip Lowe has said that foreign investors and regulators were very frequently asking “what is Australian business doing to decarbonise?“.

“Many international investors are very focused on this issue,” Dr Lowe said last month. “Increasingly, overseas investors are asking about the carbon content of production and that’s a trend that is only going to continue.”

“It’s a really important issue and it’s going to become more important.“

Following the elevation of Barnaby Joyce to Deputy Prime Minister, Prime Minister Scott Morrison is under pressure from some Nationals MPs not to sign on to the net-zero 2050 emissions target on 2005 levels at the United Nations Climate Change Conference in Glasgow in November.

World leaders including US President Joe Biden and UK Prime Minister Boris Johnson, as well as local companies such as BHP and institutional investors including the $3 trillion superannuation sector, are urging Australia to make the commitment.

Mr Morrison has said his aim is to reach net zero emissions as soon as possible and preferably by 2050, though it is not official government policy and has not been endorsed by the Liberal-National cabinet.

Canadian pension funds, which are big investors in Australian infrastructure assets, said climate change was a strong consideration for their investments.

Canada’s Public Sector Pension Investment Board said climate change was one of several long-term structural trends that will “likely have a material impact on investment risks and returns, across different sectors, geographies and asset classes”.

“With respect to the Australian climate policy landscape, as is the case in all countries in which we invest, PSP Investments closely monitors climate policy regulatory developments,” a spokeswoman said.

”We will continue to evaluate any in-country developments to ensure our portfolio is well-positioned in the long run.

“This entails actively considering climate resilience at the portfolio construction level, factoring climate risks into investment decisions, seeking investment opportunities that contribute to the transition to a low-carbon economy, and encouraging enhanced disclosure on climate change risks by companies in which we invest.”

The Ontario Teachers’ Pension Plan said it was “committed to achieving a net zero greenhouse gas emissions investment portfolio by 2050”.

“Climate change is urgent, complex, and one of the greatest challenges we face as a society and as a business, and it requires partnership between investors and government to overcome this challenge,” a spokesman said.

“For us, making an impact begins with the companies we invest in and we are active, engaged investors committed to supporting the transition to clean energy in the long-term.”

Ontario Teachers’ portfolio includes the Sydney Desalination Plant, which is 100 per cent powered by renewable energy, and it holds a stake in Equis Development Pte which focuses on investing in renewable energy infrastructure in Australia and other Asia Pacific markets.

America’s second-largest public pension fund, the $US307 billion ($408 billion) California State Teachers’ Retirement System, invests in the shares of more than 230 Australian companies.

CalSTRS information officer, Thomas Lawrence, said climate change was the greatest threat to the future.

“We believe change is necessary for companies that do not have a long-term strategy for a responsible transition to a low-carbon economy,” he said.

“We are responsible for the retirement benefits of nearly 1 million members, and have a duty to our members to actively manage long-term risks within the portfolio, which includes climate risk.”

The $NZ58 billion ($54 billion) New Zealand Superannuation Fund said it was working to “significantly reduce the fund’s exposure to both fossil fuel reserves and carbon emissions”.

“Our aim by 2025 is to reduce the emissions intensity of our portfolio by 40 per cent and fossil fuel reserves by 80 per cent,” a spokesman said.

“This is achieved by removing the worst-performing companies from the portfolio and operates at a global level.

“To the extent that national climate change policy supports companies to adapt to climate change whereby they meet the requirements of our Climate Change Investment Strategy, our investment flow will adjust accordingly.”

The New Zealand Superannuation Fund holds about $70 million of Australian federal and state government bonds.

“We are starting to think about how to incorporate climate risk assessments into fixed income assets, but currently do not exclude country or corporate bonds because of their climate change exposure.”

Norway’s $US1 trillion Government Pension Fund Global last year dumped its stake in AGL Energy and put mining giant BHP “under observation”, as part of a strategy to cut its exposure to high greenhouse gas-emitting companies.

AGL and BHP both support a net-zero 2050 emissions target.

Modelling by Australian National University climate economist and former RBA board member Warwick McKibbin found that chronic climate change, extreme climate shocks and global economic policies implemented to reduce carbon could reduce Australia’s economic output by between 0.6 per cent and 1.75 per cent by 2050.

“Countries that rely on fossil fuels in energy generation in domestic production or receive substantial income flows from selling fossil fuel or fossil fuel-intensive products overseas have the most significant negative impacts on GDP,” the March report noted.

Dutch fund manager Robeco Institutional Asset Management BV last month reportedly warned it would soon start pressuring Australia to phase out its reliance on coal and other natural resources, according to an interview with Bloomberg.

Australia had a “particularly high-risk profile” on climate change, said Peter van der Werf, the Dutch firm’s senior manager of engagement and active ownership.

Cutting back on natural resources “are very hard decisions because these are obviously very important sources of revenue for the Australian economy”, Mr Van der Werf told Bloomberg.

“That’s where in those conversations, institutional investors can also provide a perspective how they would foresee such a transition to take place.”

The RBA’s Dr Lowe said last month that changes in the global energy system were opening up new sources of comparative advantage for Australia.

“We will need more investment to capitalise on this advantage, with much of this investment being in regional Australia.”

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(NZ The Guardian) New Zealand Lawyers Sue Climate Change Body Over Alleged Failure To Meet Targets

The Guardian - Eva Corlett

Lawyers say commission’s emissions budgets are inconsistent with aim of limiting global warming to 1.5C

New Zealand lawyers are suing the Climate Change Commission, saying its advice mean the country will fail to meet international obligations. Photograph: Peter Parks/AFP/Getty Images

Hundreds of top New Zealand lawyers are suing the Climate Change Commission for what they say are substantial errors in its advice to the government over reducing carbon emissions.

Lawyers for Climate Action is a group of more than 300 solicitors, barristers and academics seeking to ensure Aotearoa New Zealand meets its international climate obligations.

New Zealand emissions rise as government vows urgent action.  Read more
On Friday the group filed for a judicial review against the Climate Change Commission in the high court, alleging that the crown institute’s emission budgets are inconsistent with limiting global warming to 1.5C, that it has understated the country’s reduction targets under the Paris agreement, and that it is relying on other countries to reduce New Zealand’s emissions, instead of meeting its own domestic reductions.

The group’s president, Jenny Cooper QC, said the commission was failing in its obligations to fulfil New Zealand’s climate change law, the Paris Agreement, and the UN’s 2018 Intergovernmental Panel on Climate Change report.

The IPCC report looked at what the world needs to do to limit global warming to 1.5C. To achieve the goal, net Co2 emissions would have to be reduced by an average of 45% from 2010 levels by 2030, reaching net zero by 2050.

The commission has advised the minister for climate change, James Shaw, who is named as a second respondent in the proceedings, on New Zealand’s targets up until 2030, using the IPCC’s report.

To calculate those targets, Cooper said 45% should be subtracted from New Zealand’s net Co2 levels in 2010, which would equal 484 megatonnes of Co2 by 2030. That is a reduction from the country’s previous target of 596 megatonnes by 2030. Statistics NZ has also adopted this calculation.

The commission took a different approach and applied the 45% reduction to gross Co2 levels in 2010, reaching a 2030 goal of 568 megatonnes and resulting in a much higher amount of Co2 being released than if the lawyers’ calculations are applied.

It falls “well short” of what is required to meet that 1.5C, Cooper said.

The group argues that if Shaw was to adopt the commission’s advice, it would have grave implications for New Zealand and its global reputation. “We need to be emitting less in 2030 than in 2010 and it needs to be a lot less,” Cooper said.

New Zealand declares a climate change emergency.  Read more
“I don’t think there is any justification at all for New Zealand to be doing less than the international average, and on the contrary we should be doing more.”

The lawyers said they have no interest in slowing down action on climate change through litigation but said it was important to get the calculations right from the start.

The Climate Change Commission said it would review the proceedings but offered no further comment.

In a statement, Shaw said officials were independently analysing the commission’s advice. He said he would consider the Lawyers for Climate Action proceedings but declined to comment further as the matter is before the court.

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(Washington Post) Climate Change Has Gotten Deadly. It Will Get Worse.

Washington Post - Sarah Kaplan

Researchers say they are ‘virtually certain’ that warming from human greenhouse gas emissions played a pivotal role in recent fatalities

Residents rest at a cooling center during a heat wave in Portland, Oregon on June 28, 2021. (Maranie Staab/Bloomberg)
PORTLAND, Ore. — The emergency department at Oregon Health Sciences University had rarely been this busy, even during the worst stages of the covid-19 pandemic.

Physicians raced to provide fluids to patients who arrived breathless, dizzy and drenched in sweat. Others were brought in on stretchers, their body temperatures so high their central nervous systems had shut down. Those who could still speak told of stifling apartments and sun that made their skin sizzle. Some had tried to walk to county cooling shelters, only to collapse in the blistering heat.

“The system was overwhelmed,” said Mary Tanski, chair of OHSU’s department of emergency medicine, of the towering heat dome that toppled temperature records across the Northwest this week.

Some patients didn’t survive. In Oregon, Washington and western Canada, authorities are investigating more than 800 deaths potentially linked to the punishing heat.

It will be months before experts know precisely how many of those deaths can be specifically attributed to climate change. But researchers who specialize in the science of attribution say they are “virtually certain” that warming from human greenhouse gas emissions played a pivotal role.

It is a sign of how dangerous the climate crisis has gotten — and how much worse it can still become.

The heat dome was just one of a barrage of climate catastrophes that struck the world in recent weeks. Western wildfires are off to a scorching start, with firefighters actively battling 44 large blazes that have burned nearly 700,000 acres.

Parts of Florida and the Caribbean are bracing for landfall of Hurricane Elsa, the Atlantic’s fifth named storm in what is one of the most active starts to hurricane season on record.

Nearly half a million people in Madagascar are at risk of starvation as the country grapples with dust storms, locusts and its worst drought in decades.

In Verkhoyansk, Siberia — usually one of the coldest inhabited places on the planet — the land surface temperature was 118 degrees.

“Climate change has loaded the weather dice against us,” said Katharine Hayhoe, a climate scientist at Texas Tech University and chief scientist for the Nature Conservancy.

“These extremes are something we knew were coming,” she added. “The suffering that is here and now is because we have not heeded the warnings sufficiently.”

Humans burning fossil fuels have caused the globe to warm roughly 1 degree Celsius, or 2 degrees Fahrenheit, since the preindustrial era. It’s a seemingly incremental change, but it has led to disproportionately frequent and severe natural disasters.

Think of the climate as a bell curve, Hayhoe said, with temperatures distributed according to how common they ought to be. The center of the bell curve may have shifted just a couple of degrees, but the area of the curve now in the “extreme” zone has increased significantly.

Within the next week, researchers expect to publish a “rapid attribution” study that determines how climate change made the Northwest heat wave more likely. Yet precisely quantifying the role of climate change in the event has been difficult because the heat was just so extreme, said Michael Wehner, a climate scientist at Lawrence Berkeley National Laboratory in California who is contributing to the attribution effort.

“It’s well beyond what straightforward statistical analysis would suggest. It’s well beyond what climate models suggest,” he continued. “But it happened.”

Studies show the chance of a given tropical storm becoming a hurricane that is Category 3 or greater has grown 8 percent every decade. The acreage of the West burned by wildfire is twice what it would otherwise be. The heat wave that struck the Northwest this week brought temperatures that were as much as 11 degrees above the previous all-time high.

That increase in intensity is partly due to the fact that meteorological phenomena are occurring in a hotter world. Summers in the Northwest are about 3 degrees Fahrenheit hotter than they were a century ago.

“But there are other, nonlinear, things going on,” Wehner, adds.

For example, heat causes water to evaporate from vegetation and soil, which uses up energy and helps bring temperatures down — a phenomenon called evaporative cooling. But climate change has made the West both hotter and dryer. As the mercury ticks upward, the landscape becomes even more parched, which allows it to heat up even faster. Now, more than 93 percent of the American West is in moderate to severe drought, according to the U.S. drought monitor.

Low water levels are visible at Shasta Lake in Redding, Calif., on Friday, as the extreme drought emergency continues in parts of the West. (Justin Sullivan/Getty Images)

Another physical phenomenon, called the Clausius-Clapeyron equation, shows that for every 1 degree Celsius (1.8 degrees Fahrenheit) of warming, the atmosphere can hold 7 percent more moisture.

This means that warm conditions make storms much wetter, leading to record-breaking rainfall events like Hurricane Harvey in 2017.

Scientists have been aware of these phenomena for decades, and have long warned about the potential for even moderate amounts of global warming to trigger catastrophic weather extremes.

The heat being so devastating should be a warning sign for all of us. The 2015 Paris Climate Agreement calls for humanity to limit global warming to “well below” 2 degrees Celsius.

A subsequent report from United Nations scientists found that warming beyond 1.5 degrees Celsius would trigger catastrophic sea level rise, near-total loss of coral reefs and a calamitous increase in the frequency and intensity of natural disasters.

But the world is unlikely to meet either of those goals. Most countries have not reduced greenhouse gas emissions nearly enough to meet targets set in the Paris agreement. Even if they meet their existing pledges, researchers say the world has just a 5 percent chance of keeping warming “well below” 2 degrees.

If we continue to burn fossil fuels at the current rate, studies suggest, the Earth could be 3 to 4 degrees Celsius hotter by the end of the century. The Arctic will be free of ice in summertime. Hundreds of millions of people will suffer from food shortages and extreme drought. Huge numbers of species will be driven to extinction. Some regions will become so hot and disaster-prone they are uninhabitable.

“It’s a very different planet at those levels,” Wehner said. “This is really serious. As a society, as a species, we’re going to have to learn to adapt to this. And some things are not going to be adaptable.”

Extreme heat is likely to be one of those things. Studies of heat waves suggest that a half a degree Celsius increase in summertime temperatures can lead to a 150 percent increase in the number of heat waves that kill 100 people or more. Research published last year in the journal Science found that the human body can’t tolerate temperatures higher than 95 degrees when combined with 100 percent humidity.

The scene in emergency departments across the Northwest this week underscores that science. Wait times at the OHSU emergency department were 5 to 7 hours, Tanski said. At Swedish Health Services — Cherry Hill in Seattle, doctors were seeing patients in hallways because all the rooms were full.

“I’ve never seen anything like this,” said David Markel, an emergency physician at the Seattle hospital. During an overnight shift on Monday, he treated 12 patients for heat illness. Some were so sick their kidneys and livers were failing, their muscles starting to break down.

“I don’t claim to be an expert in climate change or environmental science,” Markel said. “But I definitely care for people who are impacted by the extremes of climate. … And it’s like, the more crises we face the more clear it is.”

Jeff Duchin, Seattle and King County’s chief public health officer, put it more bluntly: “Climate change is a health emergency,” he said in a statement this weekend. “And reducing greenhouse gas emissions is literally a matter of life and death.”

The intensity of recent weather extremes — and the certainty of still worse events to come — weighs on scientists.

Speaking over the phone, Wehner’s tone was somber as he discussed the wildfire smoke that choked California last summer, people whose homes burned down, a friend whose 90-year-old mother was killed when the town of Paradise was consumed by flames.

Haltingly, he recalled watching a newscaster interview a Pakistani man whose two children had died in a 2015 heat wave. When Wehner later investigated the event, he found that climate change had made the event 1,000 times more likely.

“It did not have to be this way,” he said. “We have known enough to take action for 20 years. And if we had taken action 20 years ago, it would be a lot easier.”

“But there’s no ‘I told you so,’” he continued. “I just feel bad. Just bad. I really wish we had been wrong. But we weren’t.”

The only comfort, said Hayhoe, is in knowing that action can still be taken. Though the world could exceed 1.5 degrees of warming within this decade, scientists say we can avoid crossing that threshold if we cut global greenhouse gas emissions by about 7.6 percent per year.

Such cuts would require an unprecedented transformation of human society. But look at the alternative, Hayhoe said.

“We have choices to make, she said. “And the quicker we make those choices, the better off we will all be. The future is in our hands.”

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