Climate Change Presentation
This post reviews a climate change presentation at the Planet Summer conference by Mark Carney, former Bank of England governor and chair of the Global Financial Stability Board. The theme of this speech is Making Money Matter for Climate Action which highlights the importance of investing in climate change.
Mark Carney once delivered a climate change presentation in 2015, analyzing the relationship between climate change and financial risks, and proposed the famous Tragedy of the Horizon. This speech also became the basis for regulators to focus on climate change.
Related Post: The Relationship between Climate Change and Financial Stability
The Importance of Climate Change
Since the publication of Adam Smith’s “The Wealth of Nations”, global carbon dioxide concentrations have reached the highest level in nearly 800,000 years, and the average temperature has also increased by 1.2 degrees Celsius. The past eight years have been the hottest on record, and extreme weather events have more than tripled since 1980.
Although Adam Smith’s free market theory is the foundation of economics, market failures occur frequently. From the tragedy of the commons to today’s tragedy of the horizon, all reflect the important role of human intervention.
Current Progress on Climate Change
In order to solve the problem of climate change, the world needs to invest at least 3 trillion US dollars per year in the next few decades. Since 2020, the pace of net-zero transformation has been accelerating. At present, 90% of carbon emissions have been included in the net zero goal, and the global warming trajectory has also dropped from 3.5 degrees Celsius to 2.4 degrees Celsius.
With the strengthening of social consensus, many countries and companies have also established net zero plans. At present, 140 countries have issued net zero commitments (only 21 in 2020), and more than 8,000 companies have announced net zero plans (only 992 in 2020), which shows that the attention to climate change is continuing to grow.
Challenge of Addressing Climate Change
While global climate investment is growing rapidly, progress in clean energy has fallen short of expectations. The current global investment ratio of clean energy to conventional energy is 0.9, and this ratio needs to continue to grow to 4 in order to achieve net zero goals by 2030. In addition, the scale of climate investment in developing countries is relatively small, and it needs to reach US$1 trillion per year in 2030, which is seven times the current investment scale.
The world needs to make substantial investments in addressing climate change. Because climate change poses an existential risk to humanity, getting involved in it could pay off considerably. Taking the transaction premium of low-carbon companies as an example, the premium level was 4% in 2010, rose to 10% in 2015, and reached 23% in 2020. Investing in climate change will address market failures and lead to better returns in the future.
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