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    Climate Change Is Now a Defense Matter

    The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

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    New European Regulation Forces Finance to Up its ESG Game

    The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

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    When Sustainable Development Goalkeepers Fail To Make A Stop

    The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

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    US President Joe Biden’s Green New Deal Goes Local

    The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

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    China Will Decide Who Wins the Fight: Russia or the West

    The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

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    Why Joe Biden’s Green Energy Policy is Dead

    The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

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    Climate Damage and the Role of Insurance

    As a consequence of climate change, extreme weather events such as floods, droughts, heatwaves and storms have increased in frequency and severity. As Domingo Sugranyes of the Pablo VI Foundation says, “global losses from natural disasters in 2020 came to $210 billion, of which $82 billion was insured.”

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    “To cover the gap and manage catastrophic risk accumulation,” he adds, “the role of insurance and reinsurance pools is key, often drawn by traumatic events themselves.” This being said, the gap of uninsured damages is huge, which means not only a growing burden on public budgets but also on the most exposed and those directly hit. These situations will impact access and credit conditions for these populations.

    Insurer concerns are no longer individual catastrophic events, but their global and systemic effects on human societies. Andrew Cornford, a counselor at the Observatoire de la Finance in Switzerland, explains: “The problems posed to insurers … will be due to the increased … scale of the actual occurrence of events associated with these risks, to their sometimes geographically uncertain incidence, and to increased correlations between them.”

    In Cornford’s view, the problems can, to some extent, “be handled through better designed and increased capital requirements, public-sector reserves and precautionary arrangements suggested by stress testing — for which recent experience with COVID-19 may be helpful.” However, the underlying hypothesis is that the level of premiums will remain affordable to those seeking cover.

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    Nevertheless, increased property claims as a result of extreme weather events are forcing insurers to reevaluate underwriting strategies, including rebalancing their premiums and pricing strategies. Against this background, regulators have expressed concern that climate change could make it difficult for insurance companies to provide affordable financial protection. Rising premiums could make cover unaffordable, especially for disadvantaged communities that are more likely to live in regions prone to disaster.

    Instead of burdening local populations with costs of damages that occur due to the impact of climate change — caused largely by the wealthy Global North — there is an urgent need to devise underwriting strategies to transfer a substantial portion of climate-related insurance costs from the South to the North. This would allow the international community to share the burden. Otherwise, the most exposed regions of the world may well become impossible to insure by market mechanisms, which would leave only the public guarantee option open, as stressed by the economist Etienne Perrot.

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    Note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: Can private insurance alone mitigate climate change damages?

    “…pass the cost to policyholders through increased insurance premiums… ”

    Unlike randomness, which allows a probability calculation on a statistical basis, uncertainty arises from facts that are emerging — unique or too few to give rise to a stochastic calculation. Randomness is the basis of prevention and insurance systems. On the other hand, uncertainty can only be covered by contingency reserves — it’s a precaution. (The IPCC forecast [that] insurance’s prevention and precaution are the three forms of the virtue of prudence, which is the intelligence of concrete situations.)

    Henri de Castries, therefore, hypothesizes that the damaging meteorological phenomena induced by a global warming of 4 degrees are phenomena, if not unique, at least too few to enter into an insurance system. This involves the states, either directly when they compensate for the damage by compulsory levies (in France, we have known ‘the drought tax’ in the 1980s) or by obliging the insurance companies to compensate the damage, which will pass the cost on to policyholders through increased insurance premiums.

    Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

    “…public-private partnerships can be developed…”

    According to Munich Re, global losses from natural disasters in 2020 came to $210 billion, of which $82 billion was insured. To cover the gap and manage catastrophic risk accumulation, the role of insurance and reinsurance pools is key, often drawn by traumatic events themselves. Public-private partnerships are nothing new (e.g., US National Flood Insurance or the Spanish Consorcio) and can be developed.

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    Insurance plays an essential role toward mitigating damage from climate change through underwriting, prevention, disseminating knowledge and as investors. Large players have recently committed to the UN-convened net-zero insurance alliance. Artificial intelligence and big data analysis research, also supported by insurance, will increase natural disaster predictability. Insurance and reinsurance markets are efficient, though unpretentious.

    Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, former executive vice-chairman of MAPFRE international insurance group

    “…capital requirements, public-sector reserves and precautionary arrangements… ”

    Individually, most of the risks associated with a substantial rise in temperature due to climate change can be quantified, owing to past experience. The problems posed to insurers, other private financial institutions and the public sector will be due to the increased — and sometimes unpredictably increased — scale of the actual occurrence of events associated with these risks, to their sometimes geographically uncertain incidence and to increased correlations between them.

    To some extent, the resulting problems can be handled through better designed and increased capital requirements, public-sector reserves and precautionary arrangements suggested by stress testing — for which recent experience with COVID-19 may be helpful. These arrangements will entail institutional innovations, training of people to handle the consequences of the new risks and enhanced multilateral cooperation — the absence of any of which will reduce the effectiveness of the potential contribution of finance to control of damages and mitigation of their effects.

    Andrew Cornford — counselor at Observatoire de la Finance, former staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

    *[An earlier version of this article was published by From Virus to Vitamin.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    How Qatar Manages Economic Growth and CO2 Emissions

    The linkage between economic growth and environmental degradation is a well-known topic. The burning question has become whether there is a trade-off between sustaining economic activities and maintaining the conditions of natural resources, or whether economic growth can go in harmony along with environmental protection measures. The direct interconnected relationship between fossil fuel consumption and environmental degradation has posed an interesting policy challenge.

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    Burning fossil fuels releases carbon dioxide and other greenhouse gases that trap heat in the atmosphere, making them major contributors to climate change. On the other hand, high industrial activities, alongside rapidly increasing populations, put growing pressure on energy demand.

    The Example of Qatar

    Qatar has made remarkable economic achievements over the past few decades. Yet Qatar is facing a trade-off between boosting its economic growth and lowering its carbon dioxide emissions. Its strategic mandate to boost economic development, along with other areas related to sustainability, makes Qatar an interesting country to analyze.

    The World Bank defines Qatar as one of the richest countries in the world in terms of GDP per capita. Its economy is highly dependent on oil and gas production, which accounts for more than 50% of GDP, 85% of export earnings and 70% of government revenues. The country is also a major player in liquefied natural gas. Nonetheless, Qatar’s high dependence on fossil fuels has resulted in an increase in the CO2 emissions level when compared to global averages.

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    To combat the rising carbon emission percentages and lower environmental pressures, Qatar is introducing strict policy measures to achieve sustainable development through four central pillars: economic, social, human and environmental development. While many disruptions have occurred over the past few years, including fluctuations in oil and gas prices, economic downturns and a deadly pandemic, nobody expected an economic blockade.

    The Diplomatic Rift

    In June 2017, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic relations with Qatar. They prohibited Qatar-registered planes and ships from utilizing their airspace and sea routes, and the Saudis also blocked Qatar’s only land border.

    This point is of particular importance as the deterioration in relations among the Gulf neighbors urged Qatar to rethink its sustainable development goals while meeting local demand. At the beginning of the blockade, the country relied heavily on importing several commodities, especially food items. Later, it accelerated initiatives and programs to diversify the economy and reduce reliance on imports.

    Achieving carbon neutrality is also factored into all Qatar’s initiatives. For example, by the end of 2022, Qatar aims to deliver the first carbon-neutral FIFA World Cup in the history of the event. All stadiums and infrastructure are subjected to rigorous sustainability standards. Several air quality monitoring stations and extensive recycling programs are being introduced, along with the construction of the eight stadiums that will be used during the football tournament.

    Qatar has since become much more independent across several sectors, including food production and transport, making it a case study on how to transform challenges into opportunities for growth.

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    This was also evident with total carbon emissions. According to my own analysis, carbon emission per capita fell by 13% as of 2018 from a historical record in 2000. Since then, total carbon emissions have increased as the economy has grown but at a slower rate, meaning that Qatar is undergoing expanding relative decoupling. In the 2008 to 2018 period, a 1% change in GDP resulted in a fall of CO2 emissions, from 0.65% to 0.44%. This drop is very relevant to Qatar as several measures have been applied, particularly over the last 10 years, to reduce emissions.

    A Reduction in Emissions

    While Qatar’s total emissions have declined over recent years, policies to increase energy efficiency, diversify the energy mix by introducing more renewables, support technological development to improve energy efficiency in a desert climate, and implement energy demand management programs to maintain the same trend of decline and achieve climate change objectives have been increasingly crucial.  

    The heightened pressure caused by the blockade on Qatar is now over, but what is needed are more synergies and collective efforts across the Gulf Cooperation Council (GCC) to stimulate economic diversification and minimize carbon emissions. Member states of the GCC are sharing multiple environmental, social and economic factors that should incentivize them to cooperate to meet their climate change objectives and economic development goals.

    *[Saad Shannak is a scientist at Qatar Environment and Energy Research Institute, part of Hamad Bin Khalifa University (HBKU) in Qatar. The views expressed are the author’s own and do not necessarily reflect the university’s official stance.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More