Scientists are thinking more about how they communicate to decision-makers on climate change. Prompted by frustration over a lack of action despite compelling evidence, some are calling for a ‘common climate language’.
This is very welcome. The difficulty of translating the possibilities and probabilities of scientific projection to the certainties and time frames used by capital markets is a significant barrier to these markets fully integrating climate change.
A new study published this week may point to one way of tackling this.
The study, led by Myles Allen of Oxford University grimly finds that the world has already burned half the fossil fuels necessary to bring about a 2˚C rise in average global temperatures.
With this research, his team argues for the current range of targets and timetables on climate change to be re-framed as an available budget (‘we can only burn another x tonnes of carbon’).
This got me wondering…
...would a shift of narrative from targets to budgets help investors and their regulators understand the impact (and possibilities) of climate change?
Whilst this might be dismissed as trivial semantics, such shifts – as pointed out in this piece - may be the key to ‘greening our brains’.
This is very welcome. The difficulty of translating the possibilities and probabilities of scientific projection to the certainties and time frames used by capital markets is a significant barrier to these markets fully integrating climate change.
A new study published this week may point to one way of tackling this.
The study, led by Myles Allen of Oxford University grimly finds that the world has already burned half the fossil fuels necessary to bring about a 2˚C rise in average global temperatures.
With this research, his team argues for the current range of targets and timetables on climate change to be re-framed as an available budget (‘we can only burn another x tonnes of carbon’).
This got me wondering…
...would a shift of narrative from targets to budgets help investors and their regulators understand the impact (and possibilities) of climate change?
Whilst this might be dismissed as trivial semantics, such shifts – as pointed out in this piece - may be the key to ‘greening our brains’.
I don't think this is trivial semantics at all - I think you raise an excellent point - the 'carbon budget approach' hardens the scientific debate in a way that is useful for investors. Most interestingly, it gives birth to a notion of 'carbon-supply' that is similar to the notion of 'money supply' - perhaps we will start to see this extended to incorporate CO, C1, C2 - that become as well understood (?!) as metrics of money supply M0, M1, M2 & M3 etc - particularly if the two can operate in parallel - and ultimately become fungible through carbon markets.
ReplyDelete...and more thoughts - although markets are traditionally very bad at pricing externalities - they are very good at pricing scarcity of commodities - carbon markets currently operate on politically-enforced scarcity / this arguably creates a scientifically-enforced scarcity which over-rides investors' inbuilt scepticism about government action
ReplyDeleteI agree.
ReplyDeleteThis is a good idea that shifts the thinking of people in control of money from looking at climate change from an outsider-like perspective and into a framework that they understand and can practically work with.
It makes more sense to set budgets on climate impact rather than to go after it with high-level rhetoric and slogans of "Go Green!" with no real KPI to bump it against.
- Angelo
from Refinance Bad Credit Blog