GWPF | 2 Oct 2015
Mystic Mark Carney, The Bank of England’s New Seer
Bank of England boss Mark Carney was under fire last night after warning that climate change could trigger a financial crisis. Critics said the Governor’s ‘alarmist’ comments went outside his remit and accused him of ‘politicising’ the job. The banker, whose wife Diana is a prominent green campaigner, described global warming as ‘the tragedy on the horizon’ for the world economy. Critics dismissed his views, with the Financial Times saying Mr Carney’s intervention ‘comes dangerously close to taking sides’. –Hugo Duncan, Daily Mail, 2 October 2015
The future is closer than you think. This planet could become a stranded asset once the Martian microbes of doom reach us. This is a serious matter. Britain’s small businesses will find it far harder to sell their goods and services once the cosmos is ruled by Martians reaching us from our next-door neighbour in the solar system. The insurance industry is far from prepared for that eventuality. This is a macroprudential issue if ever I saw one. –Mystic Mark Carney, Financial Times, 1 October 2015
1) Bank Of England Governor Under Fire After Claiming ‘Climate Change Could Cause Crash’ – Daily Mail, 2 October 2015
2) Jeremy Warner: Who Put Mark Carney In Charge Of Our Climate Policy? – The Daily Telegraph, 1 October 2015
3) Oh Dear: Mystic Mark Carney, The Bank of England’s New Seer – Financial Times, 1 October 2015
4) India Makes UN Climate Pledge Conditional On Western Funding – Times of India, 2 October 2015
5) US Congress To Investigate Climate Scientists Behind RICO Campaign – Space Ref, 1 October 2015
Wading into the climate change debate, Mark Carney, Governor of the Bank of England, has signalled that there is almost no area of public discourse that can be considered off limits. What next? The war in Syria? Come to think of it, why not put the Bank of England in charge of everything? There was something faintly reckless and naive about the Governor’s intervention. It is no exaggeration to say that the whole of modernity is based on hydrocarbons. Without coal, oil and gas, we’d still be in an age of limited life expectancy, subsistence farming and riding to market on horse and cart. However much we might wish it, this dependence is not going to change for a long time to come. Mr Carney’s intervention was no doubt well meaning, but he should stick to the day job. –Jeremy Warner, The Daily Telegraph, 1 October 2015
The International Energy Agency, which is the most highly regarded forecaster in this sector, forecast that over the next 25 years fossil fuel demand – so far from collapsing – is likely to increase. That’s their central forecast. So, the first question is what does the Bank of England know that the International Energy Agency doesn’t know about the energy sector? The other is, although the economy is now doing very much better, there are a whole lot of remaining problems in the financial sector. Wouldn’t it be better if you focused your attention on those instead of engaging in green claptrap? –Nigel Lawson questions Mark Carney, House of Lords 10 March 2015
India on Thursday submitted its ‘climate action plan’ to a UN body at Bonn in Germany, telling the world that the country would fight the climate change by taking energy efficiency route and reducing its ‘emission intensity’ (carbon emission per unit of GDP) substantially as well as increasing the share of clean energy by huge 40% in its total energy mix by the year 2030. The country, however, clarified that “India’s INDC do not bind it to any sector specific mitigation obligation or action, including in agriculture sector. The successful implementation of INDC is contingent upon an ambitious global agreement including additional means of implementation to be provided by developed country parties, technology transfer and capacity building”. –Vishwa Mohan, Times of India, 2 October 2015
Science, Space, and Technology Committee Chairman Lamar Smith (R-Texas) today sent a letter to Dr. Jagadish Shukla, a professor of climate dynamics at George Mason University who founded the Institute of Global Environment and Society (IGES). Chairman Smith: “IGES appears to be almost fully funded by taxpayer money while simultaneously participating in partisan political activity by requesting a RICO investigation of companies and organizations that disagree with the Obama administration on climate change.” In light of the non-profit’s decision to remove the controversial letter from its website, Smith directs IGES to preserve “all e-mail, electronic documents, and data created since January 1, 2009, that can be reasonably anticipated to be subject to a request for production by the Committee.” —Space Ref, 1 October 2015
1) Bank Of England Governor Under Fire After Claiming ‘Climate Change Could Cause Crash’
Daily Mail, 2 October 2015
Hugo Duncan
Bank of England boss Mark Carney was under fire last night after warning that climate change could trigger a financial crisis.
Critics said the Governor’s ‘alarmist’ comments went outside his remit and accused him of ‘politicising’ the job.
The banker, whose wife Diana is a prominent green campaigner, described global warming as ‘the tragedy on the horizon’ for the world economy.
He said tough action to combat climate change could leave vast reserves of oil, gas and coal ‘stranded’.
Such a move could leave insurers and investors – including British families with savings and pensions – with potentially huge losses, said the former Goldman Sachs banker.
But critics dismissed his views, with the Financial Times saying Mr Carney’s intervention ‘comes dangerously close to taking sides’.
The newspaper said his views received ‘derision and praise in equal measure’ with the Governor appearing to be ‘either a far-sighted visionary or a dangerously deluded fool’ depending on your point of view.
The respected newspaper said Mr Carney was right to point out how to ‘smooth the transition to a lower carbon world’.
‘But how to force the economy along this path is a matter for governments, not central banks to dictate,’ it added.
Dr Richard Wellings, of the Institute of Economic Affairs think-tank, said: ‘There is little evidence to support his alarmist views on the impact of climate change. Indeed, Mr Carney should be far more worried about the harmful effect of the green policies designed to prevent global warming.
‘Green taxes and regulation are already suffocating economic growth in the West by driving up energy and transport costs, yet by pushing industry to China and India they do little to cut overall emissions.’
Tony Yates, a professor of economics at Birmingham University and a former Bank official, said there was a ‘risk of politicising the job’. He said: ‘Overreach of this sort risks a bout of wing-clipping by some future regime.’
Industry experts also poured scorn on the comments by the Governor. Philip Lambert, of deal broker Lambert Energy Advisory, questioned the idea that such large supplies of natural resources could become stranded at a ‘time of rising energy demand’.
see also: Nigel Lawson Grills Mark Carney On Energy Risks
2) Jeremy Warner: Who Put Mark Carney In Charge Of Our Climate Policy?
The Daily Telegraph, 1 October 2015
Like it or not, the whole of modernity is based on hydro-carbons. We’ll never convince anyone to leave fossil fuels in the ground
Like virtually everyone else, central banks failed to see the financial crisis coming. For ordinary mortals, it was excusable; they were entitled to think the authorities had matters under control. For central banks, guardians of the world’s monetary system and supposed keepers of the deep knowledge on banking crises, it was not.
Their reward for this failure was…er… to be endowed with even more powers and responsibilities than they had before. The fault, it was widely agreed, was not that they had too much power, and had failed to exercise it properly, but too little.
Along with setting interest rates and ensuring financial stability, both the Bank of England and the European Central Bank (ECB) have since been given responsibility for micro regulating the banking sector.
Both have also wandered into the fiscal sphere by engaging in large scale quantitative easing, while Mario Draghi, president of the ECB, is even credited with having saved the euro through his words and actions.
Where governments have proved unequal to the task, central banks have stepped into the breach and done what the politicians couldn’t. As if to rub it in, Mr Draghi has taken to regularly lecturing governments on the need for painful fiscal and structural reform. Small wonder these monetary technocrats are today considered more important and influential than the politicians they are notionally answerable to.
You’d have thought that managing the economy would be quite enough to be going on with, but no, if elevated to the position of demi-god on the global stage, then some degree of over-reach is only to be expected. By this week wading into the climate change debate, Mark Carney, Governor of the Bank of England, has signalled that there is almost no area of public discourse that can be considered off limits. What next? The war in Syria? Come to think of it, why not put the Bank of England in charge of everything?
I exaggerate, obviously, and to be fair, the Bank plainly does have some kind of a legitimate interest in global warming. Many financial institutions are highly exposed both to its consequences for insurance claims and the potential impact for savers if the fossil fuels industry is forced by policy action into costly retreat. Royal Dutch Shell alone accounts for nearly a tenth of all dividends paid in the UK.
If these payments are under threat, then there are huge implications for pension funds and other forms of saving. Mr Carney is perfectly entitled to point these things out, even if it scarcely seems necessary; most insurers are acutely aware of the risks, and are already well ahead of governments in preparing for them.
There was, however, also something faintly reckless and naive about the Governor’s intervention. It is no exaggeration to say that the whole of modernity is based on hydrocarbons. Without coal, oil and gas, we’d still be in an age of limited life expectancy, subsistence farming and riding to market on horse and cart. However much we might wish it, this dependence is not going to change for a long time to come.
Thirty years of extraordinarily costly research and development has resulted in a renewables industry that today accounts for a stunning – wait for it – 1 per cent of global energy supply. Never mind Asia, where they are still rolling out new coal-fired power stations at record speed, even holier-than-thou Germany, with its “Energiewende”, opened another two this week while simultaneously sanctioning an open cast mine to help fuel them.
Mr Carney made much in his speech of the idea – hatched by the UN sponsored Intergovernmental Panel on Climate Change – that up to a third of the world’s proven oil, gas and coal reserves would have to be left in the ground, or “stranded”, if the rise in global temperatures is to be limited to the prescribed 2 degrees.
What is he doing lending credence to such a tenuous concept? Even if the numerous assumptions – all questionable enough – behind the calculation turned out to be true, it is wholly unrealistic to think that once the limit has been reached, the world is suddenly going to stop burning hydrocarbons. Consider the facts. The world produces oil at the rate of roughly 93 million barrels a day. Just to meet this demand, the oil industry needs to be constantly investing in and developing its reserves. If it were to stop, production would naturally deplete at a very rapid rate, and in an age of still exponential demand growth, the price of hydrocarbons would go through the roof. That really would give Mr Carney a financial crisis to worry about.
The “stranded asset” debate is a complete red herring. What policy makers should be focusing on is not how to cap hydro-carbon production, but how to incentivise its decarbonisation through use of clean technologies. Mr Carney’s intervention was no doubt well meaning, but he should stick to the day job.
3) Oh Dear: Mystic Mark Carney, The Bank of England’s New Seer
Financial Times, 1 October 2015
Robert Shrimsley
The scene is the governor’s office at the Bank of England. Mark Carney is talking to an aide.
Governor, about your forthcoming speech to the chambers of commerce.
Yes
It seems to be about alien life forms.
You’ve seen the news from Mars?
I have, but this speech is supposed to be about labour flexibility and the downside risks to productivity.
You don’t see the downside risks from extremophile bacteria in the briny water on Mars?
Not in the short to medium term, Governor.
The future is closer than you think. This planet could become a stranded asset once the Martian microbes of doom reach us. This is a serious matter. Britain’s small businesses will find it far harder to sell their goods and services once the cosmos is ruled by Martians reaching us from our next-door neighbour in the solar system. The insurance industry is far from prepared for that eventuality. This is a macroprudential issue if ever I saw one.
There is no reason to think that Martians are about to arrive in Britain, Mr Governor.
No, they’ll come in through Greece first, but once they are in the EU we cannot prevent them travelling here.
Governor, I do wonder if we might be wandering too far off theme. This is not our field of expertise.
Neither is climate change but you saw how well that speech went down. It went viral. Do you know how hard it is for a governor’s speech to start trending on Twitter? This one had its own hashtag. I knew it was the right way to go. People are looking to the Bank of England for forward guidance.
Yes, sir, but mostly in the field of monetary policy.
Monetary policy is boring — we haven’t moved interest rates since I got here. Janet Yellen can’t even predict what she’s going to do in three weeks’ time. Whenever I try to say something interesting, the markets take a dive and we end up saying it will be some time next year. We need to branch out — we need to bring the authority of the Bank into other areas of people’s lives.
Governor, I do feel this may damage the Bank’s credibility.
Nonsense, we need to be where people need us. Warning of risks, setting out dangers, letting them know that investments can go up as well as down, offering statistical analysis of the most likely numbers to come up in the National Lottery. Making ourselves relevant to the public.
I see Governor, what else did you have in mind?
The Great British Bake Off.
Full post
4) India Makes UN Climate Pledge Conditional On Western Funding
Times of India, 2 October 2015
Vishwa Mohan
India on Thursday submitted its ‘climate action plan’ to a UN body at Bonn in Germany, telling the world that the country would fight the climate change by taking energy efficiency route and reducing its ‘emission intensity’ (carbon emission per unit of GDP) substantially as well as increasing the share of clean energy by huge 40% in its total energy mix by the year 2030.
The country, however, clarified that “India’s INDC do not bind it to any sector specific mitigation obligation or action, including in agriculture sector” and said its successful implementation would depend on cooperation from the developed countries.
It said, “India’s goal is to reduce overall emission intensity and improve energy efficiency of its economy over time and at the same time protecting the vulnerable sectors of economy and segments of our society.
“The successful implementation of INDC is contingent upon an ambitious global agreement including additional means of implementation to be provided by developed country parties, technology transfer and capacity building”.
India in its plan also emphasised on propagating “a healthy and sustainable way of living based on traditions and values of conservation and moderation”.
It also promised that the country would increase the carbon sink by creating an additional capacity of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030.
The ‘Climate Action Plan’ of individual country is called the ‘Intended Nationally Determined Contribution’ (INDC) in climate change negotiation parlance. Besides India, 147 other countries have so far submitted their respective INDCs to the United Nations Framework Convention of the Climate Change (UNFCCC).
In its 38-page INDC, India explained that it would reduce the emissions intensity of its GDP by 33 to 35% by 2030 from 2005 level and sought cooperation from the developed world to achieve about 40% cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030. The non-fossil fuel based energy includes solar, wind, bio-mass and nuclear.
It said this target would be achieved with the help of transfer of technology and low cost international finance including from Green Climate Fund (GCF).
By submitting its plan to the INDC, India met the ‘informal’ deadline of submitting it to the UNFCCC on October 1 (Thursday).
See also: Philippines Makes Conditional Climate Pledge
The Philippines aims to cut its carbon emissions by 70 percent by 2030 but only if it gets financial and technical help to meet that target at international climate change talks this year, a presidential aide said on Friday.
5) US Congress To Investigate Climate Scientists Behind RICO Campaign
Space Ref, 1 October 2015
Washington, D.C. – Science, Space, and Technology Committee Chairman Lamar Smith (R-Texas) today sent a letter to Dr. Jagadish Shukla, a professor of climate dynamics at George Mason University who founded the Institute of Global Environment and Society (IGES).
IGES is a non-profit organization that has received millions of dollars in federal grants from the National Science Foundation (NSF), National Oceanic and Atmospheric Administration (NOAA) and NASA.
According to media reports, IGES is responsible for circulating a letter to the president and senior White House officials requesting a criminal investigation of organizations who question the risks of climate change. Specifically, the letter seeks a Racketeer Influenced and Corrupt Organizations Act (RICO) investigation that would allow the government to impose criminal penalties. The letter was posted to the IGES website and later removed and replaced with a note saying it had been “inadvertently posted.”
Chairman Smith: “IGES appears to be almost fully funded by taxpayer money while simultaneously participating in partisan political activity by requesting a RICO investigation of companies and organizations that disagree with the Obama administration on climate change. In fact, IGES has reportedly received $63 million from taxpayers since 2001, comprising over 98 percent of its total revenue during that time.”
In light of the non-profit’s decision to remove the controversial letter from its website, Smith directs IGES to preserve “all e-mail, electronic documents, and data created since January 1, 2009, that can be reasonably anticipated to be subject to a request for production by the Committee.”
The full letter can be found here.
