Climate Risk Monthly - May 2024

Welcome back to Climate Risk Monthly. The past month was packed with climate-related news — some encouraging, some less so. On one hand, we reached a new milestone in global renewable energy production, and the G7 reached a landmark agreement on the phase-out of coal. On the other hand, the impacts of climate shocks are growing in the US property insurance market, and there's a troubling new report on the future of mosquito populations. Read on to learn more!

Recent GARP Content

GARP Climate Risk Podcast | May 2

Contributed Article | May 9

GARP Risk Institute Article | May 16

GARP Climate Risk Webcast | May 21

GARP Climate Risk Podcast | May 23

GARP Risk Institute Article | May 30

May 2024 News Digest

Loss and Damage Meeting Shows Signs of Giving Developing Countries a Bigger Voice and Easier Access to Aid | Inside Climate News

The first board meeting of the United Nations’ new loss and damage fund concluded recently, and members, comprising representatives from both developed and developing countries, seemed to leave feeling optimistic. The board established that the funds should be deployed quickly based on need and that the fund’s purpose should be to provide grants rather than loans to countries impacted by climate change. The World Bank, which is hosting the fund on an interim basis, agreed.? However, an existential question for the fund looms large: Who will be contributing money, and how much can be raised?

There are several tensions underlying both the loss and damage fund and other forms of climate finance. First, wealthy countries have shown reluctance to commit funds in the amounts experts estimate are needed. Second, there are significant transparency concerns about where the money is going.?A Reuters investigation last year, for instance, found some climate funds being directed to airport expansions, a new coal-fired power plant, and even a chain of ice cream shops. As we get closer to COP29 in Azerbaijan later this year, we can expect many more discussions on these topics.

Key points:

• The board of the U.N. loss and damage fund, comprising 26 representatives from developed and developing countries concluded its first meeting and expects the fund to be finalized by the end of 2024.
• The fund has so far received pledges totalling $661 million from 19 countries, but developing countries have stated it should eventually be able to pay out $100 billion annually.
• The leader of the COP29 climate summit in Azerbaijan has signalled that transparency in how funds are used will be a significant focus of talks later this year.

Click here to read about the loss and damage fund and here to read about transparency in climate finance.

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Climate Change Could Expand Habitable Environments for Mosquitoes | Los Alamos National Laboratory

As if the increasing risk of wildfires, hurricanes, and other extreme weather events weren’t bad enough, a new study has indicated another kind of disaster from climate change: more mosquitos.?Not only will this make it harder to enjoy warm summer weather, it also has major public health implications. Named the “world’s deadliest animal” by the U.S. Center for Disease Control and Prevention, mosquitos carry many deadly diseases — most notably malaria — making any increase in their numbers or habitats a cause for concern.

The effect will not be the same everywhere. A separate study of hydrology in Africa indicates that many areas on the continent may see a significant decrease in mosquito-borne malaria transmission. However, other areas less accustomed to malaria, such as Egypt, are likely to be more at risk and will have to adapt to increased mosquito populations.?

Key points:

• Of the nine mosquito species considered in a recent study, six are expected to expand their territory due to climate change, while the other three are expected to either shift their habitats to new geographies or remain mostly unaffected.
• Some areas, such as large parts of sub-Saharan Africa, may expect fewer mosquitos in the future due to their becoming too hot and dry for mosquitos to flourish.

Click here to read the article from Los Alamos National Laboratory and here to read more about climate change’s effect on malaria transmission in Africa.

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As Insurers Around the U.S. Bleed Cash From Climate Shocks, Homeowners Lose | The New York Times

The age of for-profit property insurance may be coming to an end in the U.S. Over the past 10 years, the number of states in which homeowners’ insurance lost money has more than doubled — up from eight states in 2013 to eighteen states in 2023.?And the trend is not limited to the states you might expect. While hurricanes in the Southeast and wildfires in the West remain large drivers of losses, severe storms in the middle of the country have become just as problematic. Insurers are increasingly responding by restricting the states in which they operate, leaving homeowners with fewer and fewer options.

Property insurance in the U.S. is regulated at the state level, and different states are taking different approaches to combat this issue. Some are requiring insurers to incentivize the use of adaptive measures, such as fire-resistant roofs in California or storm-resistance in Minnesota. Other states anticipate shifting more and more residents to state-backed, high-risk insurance pools, which will ultimately be supported by taxpayers.

Key points:

• The number of U.S. states in which homeowners’ insurance is no longer profitable has grown over the past 10 years from eight states in 2013 to eighteen states in 2023.
• Insurers are increasingly exiting unprofitable markets, making policies more expensive and making it harder for homeowners to secure mortgages.
• The largest portion of losses on homeowners’ insurance policies comes from severe storms, which have been causing increasing hail and wind damage throughout the Midwest.

Click here to read the full article.

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Renewable Energy Passes 30% of World’s Electricity Supply | The Guardian

A new report found that renewable energy comprised 30% of the global electricity mix in 2023, up from 19% in 2000. In combination with nuclear energy, almost 40% of the global electricity mix came from low-carbon sources in 2023 — resulting in a record low in the carbon intensity of global power generation.

This milestone was made possible by the rapid growth of wind and solar power, rising from a less than 1% share of global electricity generation in 2000, to over 13% in 2023. Solar power was the main supplier of new electricity in 2023, growing 23% in 2023 and adding twice as much new electricity as coal.

The global target for renewable energy — set at COP28 — is 60% of the electricity mix by 2030, which is consistent with a 1.5?C warming limit. The report’s lead author noted that 2023 was a “pivot point,” as more than half of the world’s economies are now at least five years past their peak electricity generation from fossil fuels, with many developed economies peaking over a decade ago.

Key points:

• The report assessed 92% of the world’s electricity supply and demand and provided a free comprehensive dataset .
• The global electricity mix in 2023 was approximately: coal 35%, gas 23%, hydro 14%, nuclear 9%, wind 8%, solar 6%, other fossil fuels 3%, bioenergy 2%, and less than 1% from other renewable technologies.
• Over half of global electricity demand growth in 2023 was driven by five technologies: electric vehicles, heat pumps, electrolysers, air conditioning and data centers.

Click here to read the article, and here to read the full report.

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G7 to Sign Exit From Coal by 2035, but May Offer Leeway, Sources Say | Reuters and Euractiv

In late April, the G7 convened in Turin, Italy for the Ministerial Meeting on Climate, Energy and the Environment. A wide range of net-zero and sustainability-related commitments were agreed, including a phaseout of unabated coal power by 2035 — with two important caveats.

First, the 2035 date can be avoided if countries’ actions are in line with a 1.5°C warming limit and their own net-zero pathways. It is speculated that this was included to allow Germany and Japan — for whom coal power comprised 27% and 32% of their electricity generation in 2023 respectively — additional time to transition to a cleaner energy mix.

Second, the agreement refers to only ‘unabated’ coal power — which would exclude plants equipped with carbon sequestration technology. However, there are no established criteria of what portion of a coal plant’s emissions must be captured for it to be considered ‘abated’.

Nonetheless, this agreement between multiple major economies represents a significant step in the right direction and sets the stage for other countries to follow at COP29.

Key points:

• The G7 is an influential intergovernmental forum whose members are Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union.
• The decision by advanced economies to phase out unabated coal power by 2035 is consistent with the IEA’s 2023 Net-Zero Roadmap.
• Other commitments included a six-fold energy storage increase by 2030 and the founding of an international water coalition to boost water access and security.

Click here to read the article, here for further analysis, and here for the official communique.

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Thank you for reading. See you next month!