Climate Risk Monthly - July 2024

Welcome back to Climate Risk Monthly. In this month's news round-up, we explore the potential for growth in the global carbon removal market, the future impacts of hurricanes in the U.S., the tensions between climate and AI ambition, and a curious case of the vanishing islands that... didn't vanish. Read on to learn more!

We'll be taking a break next month, but will be back in September with the latest content, news and developments from the world of climate risk.

Vote On September's Special Feature

We want to hear what you're interested in! Here are four topics we're considering for a special feature in our next edition:

1. The impact of climate change on our oceans;
2. The difference between climate risk and nature risk;
3. The history of the Conference of Parties (COPs);
4. The fundamental science of climate change.

What's your top choice? Comment below or email us at [email protected] with your vote!

The Climate Risk Mini-Quiz

Want to test your knowledge of climate risk? We've devised a short quiz on topics from GARP's Sustainability & Climate Risk (SCR) program curriculum.

Click here to access the quiz.

This month’s mini-quiz focuses on Sustainability and Climate Policy, Culture, and Governance. Good luck and let us know how you do in the comments below!

Recent GARP Content

Climate Risk Podcast | 25 July

Climate Risk Podcast | 16 July

Climate Risk Webcast | 9 July

Climate Risk Podcast | 4 July

Risk Institute Article | 27 June

July 2024 News Digest

Global Carbon Removal Market Could Reach $100 Billion per Year From 2030-35, Report Says | Reuters

A recent report from Oliver Wyman suggests that global sales of CO2 removal credits could skyrocket from USD 2.7 billion in 2023 to as much as USD 100 billion a year by 2030-35. However, this growth is largely dependent on the removal of two substantial barriers: the lack of universally agreed upon standards on the quality of carbon credits and the lack of strategic guidance on how credits can be used to help meet climate targets.??

Among the report’s recommendations for scaling this market is to enable the use of carbon removals in both national decarbonization strategies and corporate transition plans. However, this issue has proved highly controversial. Corporate net-zero standard body SBTi’s CEO was forced to resign earlier this month due to outrage following their endorsement of the use of carbon credits to offset corporate scope 3 emissions (rather than reducing them).?

Critics warn that focusing too much on carbon removal credits could deter companies from mitigating their emissions in a timely and effective manner.?

Key Points:

• The anticipated growth of the carbon removals market is reliant on both corporate entities seeking to offset their emissions and investors seeking opportunities in the emerging carbon removal industry.
• USD 32 billion has been invested globally in carbon removals to date; approximately USD 21 billion in engineered solutions (e.g., direct air capture) and USD 11 billion in nature-based ones (e.g., reforestation).
• The market may only reach USD 10 billion by 2035 without the removal of key barriers to growth.

Click here to read the full article and here to read the original report.?

Global Regulatory Brief: Green Finance, July Edition | Bloomberg

With regulators around the world continuing to work on climate risk, it can be hard to stay on top of everything that’s happening. A recent feature from Bloomberg offers a nice summary of regulatory actions taken over the past several weeks.

We recommend reading through the article for a fuller understanding, but here are four takeaways:

• New Zealand and China have both published updates to their climate risk and sustainability disclosure frameworks.
• The European Supervisory Authorities and the Central Bank of Kenya have both released guidance on their taxonomies for green and sustainable investments.
• Australia and Qatar have both published information on their near-term strategy and ambitions for sustainable finance.
• Singapore and the Bank for International Settlements (BIS) are developing a climate risk platform that can integrate regulatory data with climate data to aid in identifying, monitoring, and managing climate risks.

Click here to read the full article.

AI Obsession Obscures Bigger Promise of Climate Tech | Bloomberg

AI Drives 48% Increase in Google Emissions | BBC

The rapid rise of AI in recent years is placing it in opposition with efforts to combat climate change. Many AI technologies are very energy intensive and tech companies building large AI products have seen rapid increases in their greenhouse gas emissions. Potentially even more impactful, however, is how AI projects are drawing the eyes of venture capitalists. With AI projects receiving so much attention, it may be harder for climate mitigation projects to get funding.

The tension between AI and climate funding may not be so straightforward, however. AI has the potential to improve and enable a wide range of new climate solutions, with some proponents asserting that its benefits will almost certainly outweigh its energy costs. As with greenwashing, though, it will be important for investors to distinguish between the truly valuable AI applications and those seeking only to ride the wave of investor interest.

Key Points:

• The amount invested in AI this year is expected to be of similar magnitude to the amount invested in clean energy technologies, which the IEA expects to reach USD 2 trillion in 2024.
• Google’s greenhouse gas emissions have increased 48% from 2019 levels, largely due to increasing energy demands from data centers, such as those used in running AI applications.
• Some experts and tech executives point out that AI products are expected to have a wide range of applications to climate solutions, and that the associated greenhouse gas emissions could be greatly reduced if more clean energy sources are developed.

Click here to read the Bloomberg article and here to read the BBC article.

How Future Hurricanes Could Stress Power Grids of U.S. Cities | The New York Times

Research from the Pacific Northwest National Laboratory and Electric Power Research Institute suggests that the risk of hurricane-induced power outages could become 50% higher in some areas of the U.S by 2066-2100. A newly developed hurricane model showed that increasingly severe hurricanes will make landfall more often and reach farther inland, with commensurate impacts on critical U.S. infrastructure, including the electrical grid.

Other physical climate risks are also rising in the U.S. Over the past decade alone, the number of weather-related power-outages has almost doubled, according to Climate Central. A separate study by the Union of Concerned Scientists found that sea level rise could expose more than 150 electrical substations to twice-yearly flooding by 2050.

Climate impacts on critical infrastructure are particularly significant to researchers, businesses, and policymakers for their knock-on effects, including significant health impacts, water scarcity, transport failures, security risks, and business interruptions.

Key Points:

• The Mid-Atlantic and Northeast coastal areas of the U.S. are predicted to be caught in the paths of future hurricanes.
• The average person living in Boston, Houston, and New Orleans could experience 70% more power outages per decade, with increases of 119% for Miami residents.
• The research serves as a wake-up call for policymakers to address the resilience gap in the U.S. power system, with some experts recommending investments in solar and battery technologies.

Click here to read the full article and here to read the original report.?

The Vanishing Islands That Failed to Vanish | The New York Times

Few places on Earth are as vulnerable to sea level rise as Pacific atolls – clusters of islands and coral reefs, such as the Maldives, that tend to be very close to sea level. With sea levels rising about an inch per decade since the mid-1900s, scientists studying the atolls expected to confirm the obvious: that they were slowly shrinking beneath the waves. But that’s not what they’ve found. Though some islands are slowly eroding as expected, many are holding steady – or even growing – due to ocean currents depositing new sand on their shores.

This finding is encouraging for the future resilience of the Pacific atolls, but it does not mean they are safe from climate change. It’s uncertain whether the deposits of new sand will continue in sufficient volume to counteract rising seas in the future; there is evidence that the islands have been fully submerged multiple times throughout history. Furthermore, while some islands may continue to grow, inhabitants of less stable islands are being forced to move to more stable areas. This leaves scientists with a pressing question to study: Which islands will grow, and which will soon be submerged?

Key Points:

• A study of 184 islands in the Maldives revealed that, while 42% of the islands were shrinking, 39% were relatively stable and 20% of the islands are growing.
• Islands can grow naturally due to a multitude of factors, such as ocean currents depositing more sediment in certain areas or an increase in parrotfish processing bleached coral into sand.
• While there are no signs that the Pacific Atolls will be submerged in the immediate future, the shifting size and shape of many islands is contributing to significant migration to more stable areas, putting strains on their resources.

Click here to read the full article.

Photo of the Month

Each month, we will select a reader-submitted photo to highlight in our next newsletter. If you’d like to participate, please send your photo to [email protected], along with your name and where the photo was taken.

Thanks for reading - see you in September!