BOE Governor Carney joins Xi, Pope and Musk to fight global warming

September 30, 2015 3:11 PM

Breaking the Tragedy of the Horizon – climate change and financial stability: Bank of England Governor Mark Carney warns investors face 'huge' climate change losses - "The Financial Stability Board, an international body monitoring the global financial system that Mr Carney chairs, may recommend G20 countries make it easier for investors to compare the 'carbon intensity' of different assets."

A wholesale reassessment of prospects, especially if it were to occur suddenly, could potentially destabilise markets, spark a pro-cyclical crystallisation of losses and a persistent tightening of financial conditions. In other words, an abrupt resolution of the tragedy of horizons is in itself a financial stability risk.

also btw...

• China takes a lead on global climate change - "China's willingness to play a part is a rare bright spot in an otherwise dim picture. It comes not a moment too soon, given expectations that the year 2015 may be the hottest on record. A solution to global warming may remain a distant prospect. But at last the emerging world led by China is starting to pull its weight."
• Should central banks adopt a green agenda? - "We know central banks have the power to support asset classes and to move markets, and do so frequently in the name of financial stability. But are there other social threats that could be stabilised or mitigated by central banks in a similar way? For example, should central bank monetary policy be charged with a green agenda? Should central banks take it upon themselves to encourage and support the formation of liquid environmentally-focused markets?"
• The road to Paris: Climate change is a bread-and-butter issue - "One part of this will involve measurements, for example through the greater use of carbon budgets. 'An old adage is that which is measured can be managed', Carney says. A good illustration is provided by John Authers, who reports on the publication by MSCI, the index provider, of the carbon footprint of each company in its flagship indices... But it is well known that the ideal way to encourage decarbonisation worldwide is for there to be a worldwide price on carbon. The politically most realistic way to do that is surely through a global emissions trading scheme."
• Bill McKibben: How to Protect a Planet - "Combined with the ongoing halt to the Keystone pipeline, and the recent end to plans for the world's largest coal mine in Australia, it means activists have helped to begin defusing three of the planet's dozen or so largest 'carbon bombs'. And Shell's capitulation will make the next fights easier. It shouldn't have to be this way. In a rational world governments would be working overtime to shut off the flow of carbon to the atmosphere — instead it was Barack Obama who gave Shell the green light to go north."
• Elon Musk says humanity is currently running 'the dumbest experiment in history' - "The greater the change to the chemical composition of the physical, chemical makeup of the oceans and atmosphere [due to increased carbon emissions], the greater the long-term effect will be. Given that at some point they'll run out anyway, why run this crazy experiment to see how bad it'll be? We know it's at least some bad, and the overwhelming scientific consensus is that it'll be really bad."
• In Fiery Speeches, Francis Excoriates Global Capitalism - "An unfettered pursuit of money rules. The service of the common good is left behind. Once capital becomes an idol and guides people's decisions, once greed for money presides over the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another and, as we clearly see, it even puts at risk our common home... The first task is to put the economy at the service of peoples. Human beings and nature must not be at the service of money. Let us say NO to an economy of exclusion and inequality, where money rules, rather than service. That economy kills. That economy excludes. That economy destroys Mother Earth."

posted by kliuless (9 comments total)

Please let us be waking up fast, please let us be waking up fast, please let us be waking up fast...
posted by Reverend John at 3:20 PM on September 30, 2015 [1 favorite]

So Mark Carney is saying that fossil fuel industries could face enormous losses, not from the effects of climate change itself, but instead from future laws and popular trends that seek to lower emissions. If decarbonization (or carbon taxes) become a thing worldwide, it could make the stock of oil companies "radioactive" due to the added cost of all those emissions that they suddenly have to pay, and the lack of future revenue when fossil fuel reserves still in the ground become too expensive to extract.
posted by Kevin Street at 4:24 PM on September 30, 2015

Fantastic, I'd like to see a recompensation fund driven by cap & trade or carbon taxes as a point in future International free trade agreements. A financial lever could put action within a current political cycle.
posted by BrotherCaine at 4:29 PM on September 30, 2015

Does the Bank of England have any formal connection to the UK government? If so, I'd expect a job opening there soon. I know that no Federal Reserve bigwig would be caught dead making a statement like that, except as part of a resignation announcement.

I've suspected there is a formula written on a chalkboard at the boardroom of every Big Oil company with the legend "when X/Y*Z=100, sell all stock". But more recently, it seems as if they may have developed long-term plans to make Environmental Disaster profitable... to paraphrase a Seinfeld character, "Climate Change is real, and it's SPECTACULAR!"
posted by oneswellfoop at 4:44 PM on September 30, 2015

Does the Bank of England have any formal connection to the UK government?

yes! the BOE is the world's second oldest central bank in existence (after sweden's riksbank ;) "It was established to act as the English Government's banker, and is still the banker for the Government of the United Kingdom."

carney, fwiw, was hired in 2013 from the bank of canada, in part to clean house because canadian banks were better regulated and UK banks weren't...
posted by kliuless at 5:04 PM on September 30, 2015 [2 favorites]

Great post. Nice to see some positive news about the ongoing climate clusterfuck.
posted by AdamCSnider at 7:00 PM on September 30, 2015

I find it completely terrifying that politicians, big corporations, and powerful people like Carney are banging the drum. It signals to me that shit has hit the fan, forcefully and in great volume.
posted by five fresh fish at 4:21 AM on October 1, 2015

Five fresh fish, I knew the shot was hitting the fan when I saw this speech last year. It broke my heart to see this man stand up in front of the world and beg for the wealthy to recognize the humanity in the people who will disproportionately suffer the brunt of climate change
posted by thebotanyofsouls at 9:05 AM on October 1, 2015

I think the Davos people (ie: the world's technocrats, but not necessarily the politicians) have mostly come to accept that a tremendous shift from the carbon economy to renewables has to happen. For them it's still tomorrow's problem, but that's an improvement from thinking it was the next generation's problem, or not acknowledging climate change at all.
posted by Kevin Street at 1:37 PM on October 1, 2015