Earth is Cooking – Official

December 28, 2012

The Earth seen from Apollo 17.

The Earth seen from Apollo 17. (Photo credit: Wikipedia)

The IPCC report due for release late 2013, early 2014, and which has already been leaked (then pulled), makes for damning reading. One aspect that caught my attention was the amount of global Energy Gain in the most recent time frame, or put another way, the total Heat Content gained globally. In other words, more energy from the sun has been entering than exiting the top of the earth’s atmosphere …. Our planet Earth is in radiative imbalance, and has been for some considerable time now.

The IPCC report stated with “virtual certainty’, an energy gain of 273 ZJ in the period 1971 – 2010, and between 1993 -2010 that figure is 163 ZJ.

Now to explain; the Joule is a unit of energy or amount of heat.

1Joule is the work required to produce one watt of power for one second, or one “watt second” (W·s) (compare kilowatt hour). The zettajoule (ZJ) is equal to 1021 joules is equal to:

1,000,000,000,000,000,000,000 J

For reference, 1,000 ZJ is approximately the amount of energy required to heat the entire volume of water on Earth by 1 °Celsius.

So, lets look at the more recent 1993 -2010 figure of 163 ZJ. This is equivilent to every person on earth (population 6,973,738,433 courtesy of World Bank) turning on a total of 741 single bar 1kW heaters each continuously for one whole year ……or over the same time period 1993-2010, every person on earth turning on 44 single bar 1kW heaters each continuously …..  yikes, either way …….. Earth is cooking !.

OK fun over, and now to add some serious realism …

Adding up the Earth’s energy content

To calculate the Earth’s total heat content, it is necessary to measure the ocean heat content from the upper 700 metres. Then to compute atmospheric heat content using the surface temperature record and the heat capacity of the troposphere. Land and ice heat content are also included.

A time history of the energy going to heat the Earth requires differentiating the heat content using successive linear fits over short time segments. Eight years was chosen as it’s the longest period that still separates the dips due to the El Chichon and Mt. Pinatubo volcanic eruptions (these cause short term cooling effects). The resultant energy imbalance time series is seen below:

Graph 1: An observationally based energy balance for the Earth since 1950 (Murphy 2009)

Graph 1 shows that since the early 1970’s, the planet has remained in positive energy imbalance. This is consistent with the latest IPCC report (see below). Satellite measurements confirm that more energy is coming in than radiating back into space.

cumulative energy flux into Earth 1970-2010 (IPCC)

Graph 2 (replicated here from the IPCC draft in the public interest), shows the cumulative energy flux into the Earth from changes in well-mixed greenhouse gases, short-lived greenhouse gases, solar forcing, surface albedo caused by land use, volcanic forcing, and tropospheric aerosol forcing are shown by the coloured lines; these contributions are added to give the total energy changes (dashed black line).

Energy

Energy Balance 1970-2010 (IPCC)

Graph 3 (replicated here from the IPCC draft in the public interest), shows the cumulative total energy change is balanced by the energy absorbed in the melting of ice; the warming of the atmosphere, the land, and the ocean; and the increase in outgoing radiation inferred from the temperature change of a warming Earth. These terms are represented by the time-varying thicknesses of the coloured regions. The residuals in the cumulative energy budget are indicated by the difference between the red lines and the horizontal zero line.

This energy imbalance is what is causing global warming, and it is this culmative energy that I highlighted in the numbers game above.

This graph from the upcoming IPCC report is for me the most Damning rather than the famous ‘Hockey Stick’ graph often highlighted. It shows all the effects in one shot …….. that the Earth is in energy imbalance with increassing Energy Gain and by implication warming at an increasingly alarming rate, and our oceans are the primary heat sink (as expected). That the culmative effect is driven primarily by the basket of Green House Gases and is therefore caused by human activities, and not Solar Forcing as many sceptics claim. That the outgoing radiation is also increasing (as the Earth warms), and the consequential residual is in positive energy balance ……… In short ……. Earth is cooking.

Finally an extract from the forthcoming IPCC report :

“There is consistent evidence from observations of a net energy uptake of the Earth System due to an imbalance in the energy budget. It is virtually certain that this is caused by human activities, primarily by the increase in CO2 concentrations. There is very high confidence that natural forcing contributes only a small fraction to this imbalance “

Newtz

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Regular readers of Newtz Climate Change Blog will recognise the dangers of as little as a 2 Deg C global temperature rise in creating a tipping point that can lead to irreversible climatic effects, with the real danger of positive feedback impacts creating dangerous temperature rises. The fact that since the beginning of the industrial revolution we have already ‘locked in’ a 0.8 Deg C global temperature rise will be confirmed by the latest IPCC report due for release in 2013/14; the draft of which has already been leaked.

And yet, based on accumulated emissions; (the day to day build up of carbon), the scientific data is clear that we are on track for a 3.5 to 4 Deg C rise by 2020, and upto 6 Deg by 2050 based on locked-in accumulated emissions, with the irreversible consequences of a climate that will be almost impossible for most of the species of the planet to adapt to (http://wp.me/PUSJK-S). In my micro blog of ‘The Economics of Climate Change’ I discussed how the climate scientists have been largely confined by the realism of the economic cost to mitigate climate change and consequently have adopted the most optimistic trends to fit the affordable pathways given both the economic cost and the cost to compensate the poorer nations (as agreed recently at Doha).

Current UK spending to mitigate Climate Change is less than 1% of GDP, whereas, the reality is that nearer 2% of GDP is required to simply have a decreasingly limited chance of meeting the 2050 target of less than 550ppm (parts per million) CO2. My own calculations show over 5.6% is realistically required. The short sightedness of successive UK governments is further compounded by the belief that the cost to the UK is reduced by the locked in benefits of increases in energy efficiency until 2020. They still work on data showing an expected rise in GDP from 2009 of 2.0%, yet their own data and that of the World Bank show that infact it has effectively stalled at around £1.5 trillion and expected to slightly fall.

As an aid to understanding the difficulty of achieving the UK 2050 CO2 targets i have provided the full actual model (in MS Excel format) used to balance forcing issues of energy supply and demand in an attempt to achieve the UK targets (http://wp.me/PUSJK-15). Full ‘actual’ government backed data is provided to see if you can achieve or better the target and the cost to the economy for your effort (by the way …. good luck. If you can come up wit a solution that is less than 2% of gross GDP I’m confident that both the Treasury and DECC will be very interested !).

Of course, in order to legislate sufficient funding to tackle climate change, it is necessary to have ‘real’ economic growth and maintain a favourable credit rating (AAA minimum), so as to maintain cheap borrowing, both of which are currently under severe threat. Economically we are in a triple dip recession with little hope of return to significant growth in the next three years. Likewise, the UK credit rating is already at the time of writing under warning of downgrade by Standard & Poor. In my most recent micro blog ‘The Shadow Economy and the Missing Billions’, i described how egregious tax avoidance and tax evasion are costing the UK economy more than the total Health Spend (highlighting data from World Health Organisation and UK HMRC). The total calculated cost to the public purse is in the region of £60 billion, or remarkably a loss to the treasury of close to 4.2% of the total GDP. Further, by following an aggressive tax retrieval not only reduces the ‘Tax Gap‘ but makes for legitimate trading allowing world markets to act much more optimally and consequently stimulate world economic growth.

For too long, and too often in the name of deregulation, successive UK governments have promoted ideas that have undermined effective accountability and the supply of meaningful accounts so that a company can be properly appraised upon its true economic activity. This has only assisted to reduce tax revenue, curtail the ability to close the Tax Gap and consequently undermine our ability to fund effective Climate Change.

Weak government policies and tax fraud destroys the effectiveness of markets and suppress its capacity to operate at anywhere near optimum. The government needs to better support honest businesses that want to compete on a level playing field where abuse of the tax system plays no part in their success.

Such complex tax avoidance can be tackled by the creation of a general anti-avoidance principle, such that if any step is added into an otherwise commercial arrangement for the purpose of securing a reduction in a tax liability, then that step can be ignored or challenged for tax purposes by HMRC. In effect, this makes it clear that HM Revenue & Customs would have the power to over-rule any tax avoidance scheme designed to exploit loopholes and allowances.

But wait …, The House of Lords effectively created such an arrangement in the 1980s when ruling in two cases called Furness V Dawson and Ramsey. For more than a decade the tax profession believed as a result that if such steps were taken they could be knocked down by HMRC. However, statute law never confirmed this and as result the ruling of the House of Lords was eventually challenged and in 1996 in a further House of Lords ruling, called the Westmoreland case, the principles in the two earlier decisions were overturned. The result was a flood of tax planning from which, full recovery has not been made.

A general anti-avoidance principle would make clear that this was unacceptable and would put massive pressure on tax avoiders to reform their ways, and would create penalties for them if they did not.

The link then to Rangers FC (Oldco) was first suggested in my blog ‘The Shadow Economy and the Missing Billions’. In describing the illegitimate practises of tax evaders, it drew remarkable similarities to the Rangers Big tax case (FTT), and in particular the deliberate lack of transparency and deceitful accounting with the use of suppressed data and identity disguise. These aggressive practises culminate in uncertainty when pursuing these egregious activities. That uncertainty rested on the chance that either they will not be discovered to be tax avoiding or that if they are then the interpretation placed on the law that they seek to exploit is favourable to them. Such was the fine line that Rangers FC (oldco) faced in their 2:1 majority victory over HMRC in the recent tax tribunal case (FTT). (Note: HMRC have recently announced that they are appealing this verdict).

The business practice of Rangers FC (oldco)  has resulted in huge loses to the Treasury, alleged to be in excess of £70 million (with penalties), and does not account for an alleged previous debt write off by the previous owner in the region of £60 million through aggressive accounting practices. Nor does it account for the smaller tax case against them for deliberate non payment of around £15 million of PAYE and National Insurance payments. The small (wee) tax case was incidentally the reason for Rangers FC (oldco) being placed into administration and ultimately liquidation after the refusal by HMRC to accept the administrators CVA proposal.

The emergence of a newco Rangers FC is an opportunity for the new owners to demonstrate legitimate and honest governance and from the honest taxpayers point of view, a legitimate tax revenue generating concern that long term will pay its moral and dutiful taxes in full. In its own small way will help reduce the burden of honest taxpaying businesses, and help reduce the Tax Gap.

It was disturbing to learn then that back in May 2012 during the purchase of the assets of the oldco Rangers FC, that the current owners of the (newco) Rangers FC sought to transfer £40 million of brought forward tax losses to go into the Current Balance Sheet of the newco subject to HMRC approval. Thankfully this never materialised. It is important then that such companies remain under the scrutiny of bloggers such as Paul McConville and his excellent blog site ‘Random Thoughts Re Scots Law’ (http://scotslawthoughts.wordpress.com/).

Newtz

Climate Change Tipping Point: Research Shows That Emission Reductions Must Occur by 2020.

Tax

Tax (Photo credit: 401(K) 2012)

Following on from my recent post on the Economics of Climate Change, i felt it necessary to research the fiscal angle and the impact of the Tax gap and its missing billions. The tax gap created by the shadow economy causes a loss to the treasury of sums greater than the total UK Health spending, as a percentage of GDP

When it was recently revealed how little tax companies including Starbucks and Amazon have paid in the UK, there was a public outcry and quickly convened parliamentary hearings.

The spirit of tax laws is that everybody contributes their fair share. The letter of the law is a human attempt at objectively defining rules for what “fair” is. Since “fair” is impossible to define and even subjective, then trying to define a subjective concept objectively is doomed to be flawed, and it is these flaws and the law of unintended consequences that are exploited by tax avoiders and evaders and is seen as common sense business practice in minimising tax liabilities. Of course to a degree that is correct however, abusing these flaws to grotesque extremes is only “common sense” if you are extremely short sighted !

 Starbucks for example sold something like 400m tons of coffee a year and paid almost no tax, while enjoying all the benefits that taxes pay for, including roads to transport that coffee, NHS and schooling of their workforce, policing that keeps order and protects their property and so on. Further, Starbucks are allegedly accused of “avoiding” paying the Living Wage, compared with the national minimum wage for adults requiring in many cases further state top-up for these individuals.

We’re not talking about being a bit clever, staying just under the thin line of the limit of the law; we’re talking about a massive and grotesque abuse of just about every detail …. The UK Treasury Minister recently described it as ‘morally repugnant’.

Moving on, and checking that i have copiously used the alleged phrase (he he),  it should be recognised that it is extremely hard to make a globally respected and watertight tax law where national governments cooperate equally. For example in  the Starbucks case, they paid so little tax because allegedly they didn’t make any profit.  Whooa….How?  Because losses occurred elsewhere in the world were written in the books in the UK.

 It makes perfect sense to tax companies less when they’re not making a profit to support struggling companies. Starbucks however is not struggling, healthy sales and profits were generated in the UK, they even said so a the Select Committee hearing recently – hold the line ….. ok, … over the past three years, Starbucks has reported no profit (despite describing the UK operation to investors as profitable !) , and paid no income tax, on sales of 1.2 billion pounds in the UK.

So how can you define the law so that it supports struggling companies but not companies raking in millions of profit every year, and which are kept out of the books and out of reach of the UK tax authority… Why should Britain forfeit tax monies for alleged losses incurred elsewhere?

The message is ringing out clear and loud, and that is that at a time of economic crisis we can no longer ignore the fact that tax evasion and tax avoidance undermine the very viability of the economy, and have without doubt helped create the current debt crisis that threatens the well being of millions of honest taxpayers for years to come.

For too long, and too often in the name of deregulation, successive UK governments have promoted ideas that have undermined effective regulation and the supply of meaningful accounts so that a company can be properly appraised upon its true economic activity. This has assisted to undermine tax revenues and led to significant tax fraud amongst even smaller businesses.

All destroy the effectiveness of markets and suppress its capacity to operate at anywhere near optimum. The government needs to better support honest businesses that want to compete on a level playing field where abuse of the tax system plays no part in their success

A touch deeper on Tax avoidance and evasion

To understand what might be done to tackle the issues of tax avoidance and tax evasion, the mechanisms used to undertake such activities need to be understood. Whilst not the purpose of this blog, i think it might be useful to highlight these mechanisms and the importance of transparency.

The basic structures used for the purposes of tax avoidance are different from those used for tax evasion.

This is because tax avoidance is, by definition, done through legal mechanisms where full disclosure of transactions takes place but where the outcome is not which was intended by a parliament or a tax authority. Generally exploiting ‘unintended consequence’ loopholes.

Tax evasion, on the other hand, involves at least some illegal misrepresentation of a transaction. This might be the complete non‐disclosure of a transaction contrary to the requirements of the law, or it might be the non‐disclosure of some part of the information needed to correctly appraise the transaction.

Judge Lord Templeman wrote:

A tax avoidance scheme includes one or more interlinked steps which have no commercial purpose except for the avoidance of tax otherwise payable, and can conveniently be described as artificial steps. A tax avoidance scheme does not leave the taxpayer any better or worse off but leaves the Revenue worse off.

And Lord Templeman noted in the same article, another judge (Lord Brightman) described tax avoidance schemes having the following characteristics:

First, there must be a pre‐ordained series of transactions; or, if one likes, one single composite transaction. This composite transaction may or may not include the achievement of a legitimate commercial (i.e. ) business end … Secondly there must be steps inserted which have no commercial (business) purpose apart from the avoidance of a liability to tax – not ‘no business effect’.

What is clear is that the tax avoider faces uncertainty when pursuing their activities. That uncertainty focuses mainly on taking the chance that either they may not be discovered to be tax avoiding or that if they are then the interpretation placed on the law that they seek to exploit is favourable to them.  The recent Glasgow Rangers football club  EBT tax case may be a very good example here. The risk of penalties arising as a result of their actions depends upon what the outcome of these risky situations might be.

On transparency, two terms that can be used to describe tax avoidance and evasion are ‘suppressed data’ and ‘identity disguise’.

Suppressed data refers to a situation where a person exploits current regulation to hide information from tax authorities. The use of tax havens is an obvious example.

Identity disguise refers to the alternative abuse of hiding information behind entities that the person cannot be shown to own or control. Of course the two can be combined and often are.

It is only when there is full transparency of information and available to all participants that optimal decisions can be made, for example on:

1. Where to invest the resources of a company for best return;

2. What prices to charge;

3. When to enter or exit a market;

4. Which portfolio of assets to hold within financial markets;

Transparency clearly increases the prospects for the highest overall real returns in both the real economy where goods and services are made and sold and in financial markets that meet the needs of commercial companies and individuals for capital and ultimately increasing tax yields.

Opacity therefore reduces the efficiency of those markets just as it reduces the tax yield of governments.

The Shadow economy and the cost of tax avoidance and evasion

The Shadow Economy can best be described as all market‐based legal production of goods and services that are deliberately concealed from public authorities for any of the following reasons:

 (1)  to avoid payment of income, value added or other taxes,

(2)  to avoid payment of social security contributions,

(3)  to avoid having to meet certain legal labour market standards, such as minimum wages, maximum working hours, safety standards, etc.

 

So, time then to look at some actual figures, using data from Tax Research LLP, and checked against HM Treasury 2009 figures.

 Data on the overall tax rate and government spending as a proportion of GDP, used for some comparison purposes, came from the Heritage Foundation, and for healthcare from the World Health Organisation report ‘World Health Statistics 2011’.

The following data excludes criminal activities such as burglary, robbery, drug dealing, smuggling, etc., from the estimates.

 Looking at the impact of the Shadow Economy as a percentage of GDP and Health Care in UK; the figures are rounded for this comparative purpose.

UK GDP:                                                                                            £ 1,400,000 million

Size of Shadow Economy:                                                              12.5%

Tax burden:                                                                                       34.9%

Size of Shadow Economy:                                                              £ 176,350 million

Tax lost as a result of Shadow Economy:                                    £ 61,550 million

Gov’t spending as proportion of GDP:                                         47.3 %

Health care spending as proportion of GDP:                              9.3 %

Tax lost as a proportion of tax income:                                         12.5%

Tax lost as a proportion of government spending:                      9.2%

Tax lost on shadow economy as % of Healthcare Spending:     46.9%

These figures highlight the significance of tax avoidance and evasion in the UK.

 The shadow economy of the United Kingdom is worth more than the total cost of the UK health care budget.

 Looking now at the UK deficit: (2010 data)

Annual deficit:                                                           £ 146,725 million

 Tax lost as a % of annual deficit:                          41.9%

 Gov’t borrowing :                                                      £ 1,128,650 million

 Years it would take tax lost to repay debt :          18.3 yrs

 Finally it is worth looking at the tax gap due to VAT shortfall which is generally attributable directly to tax evasion. The following data came from HMRC.

 Theoretical VAT Liability                           £ 155,700 million

VAT receipts                                                 £ 128,700 million

VAT gap                                                         £ 27,000 million

VAT gap as a share of liability                   17%

 The data clearly shows that tackling tax evasion could, in theory, entirely clear the annual deficit over a reasonably short period of years.

 This is also true for many of the EU’s member states, and more importantly, debt would cease to be an issue threatening the well being of hundreds of millions of people in Europe as a result.

Finally, it should be noted that some argue that reducing the tax gap during a period of austerity is an inappropriate course of action. Their argument is that all taxation reduces consumer demand in the economy and to therefore collect more tax at this time would reduce demand even more than is already happening and so increase the risk of recession in Europe.

This argument is partial, and false.

Whilst it is true that reducing tax rates is a mechanism for stimulating an economy during a recession because such behaviour should increase effective consumer demand. This is a policy that only works when a government deficit results and if it is pursued within a legitimate economy, and with the intention of delivering prosperity.

Ignoring tax evasion and aggressive tax avoidance is something very different indeed: that is turning a blind eye to criminality. That criminality does not increase demand; it reallocates the ability to consume from those who should enjoy it according to the democratic mandate, to those who are willing to participate in criminal activity.

 Newtz

References: Tax Research LLP, TUC report “The Missing Billions”

Economics of Climate Change

December 9, 2012

IPCC climate change report gets European launch

(Photo credit: UNISDR Photo Gallery)

Government commitment to funding policies on climate chamge are driven by economic and fiscal forecasts and as such the policy advisors on climate change tend to deliver policy proposals that can be funded within strict achievable fiscal constraints. As such they tend to opt for the optimistic trends rather than delivering proposals based on the actual data available to them. We see this conclusively in both the Stern and IPCC report and freely admitted to by contributing scientists.

and yet, even the worst case IPCC trajectory falls short of that supported again by the actual data !

The next report from the IPCC is due soon, and it will not make for easy reading …

Consequently,, the financial resourcing amounts to as little as approximately 1% of GDP, where infact, if we based it on more realistic data to achieve the 2050 targets it should more likely to be nearer 2% of GDP – that’s close to the estimated annual cost to the UK Treasury By 2050 (assuming the target of 550ppm CO2 has been met and whilst assuming positive annual economic growth (of circa 2%) – well guys last time i checked the economy had stalled !.

Newtz calculations (based on 2010 figures)

Using DECC’s own capital costs across all sectors including – Fossil Fuels, Bioenergy, Electricity, Buildings, Transport, Industry

(Not allowing for discounting or finance costs – and assuming we hold onto AAA status)

High Estimate (Capital spend) £135b.  = 8.4% of GDP 

Low Estimate (Capital spend) £90b = 5.6% of GDP

Something is’nt adding up ! – we are falling well short of funding to mitigate Climate Change !
Looking further, thee global emission of greenhouse gasses imposes costs on others that are not borne by the major emitters and these costs will be felt over a long time period by all nations regardless of contribution to emissions ……. Note: this issue is currently being addressed at the Doha conference, and there may be signs of a breakthough …. we shall see !
The exact nature of costs remains uncertain however, one certainty is that those most affected are future generations and they cannot speak up for their interests.

Taking urgent action makes good economics – delaying is dangerous and costly

The cost of cutting emissions consistent with a target of 550ppm CO2 stabilisation trajectory averages 1% of GDP per year.

cost of CC

This graph illustrates the scale of action required. A very wide range of models  suggest that cutting emissions to adopt a stabilisation trajectory at 550ppm will cost 1% of GDP per year.  Again, that finding was corroborated by the IPCC report on mitigation.  It is manageable, and importantly, it means we can grow and be green.  Delaying emissions reduction significantly constrains the opportunities to achieve lower stabilisation in the future.

In fact, comparing this to the potential costs of doing nothing, it is the other way round – if we don’t tackle climate change we will reduce growth and development.

The real costs of Climate Change

Analysis has shown that mitigation of climate change will result in a loss of 5% average per capita GDP ‘now and forever’, but these costs are not evenly distributed

Developing nations will pay higher price:

  • Sub-Sahara Africa (high non-market costs)
  • India & Southeast Asia (9-13% loss in GDP)
  • What of the poorest nations ? ….

Developed nations will vary depending upon geography, for instance the US  will potentially get off more lightly with only 1-1.2% loss in GDP.

And what of the other costs:

If these factors are taken into account, total costs are potentially as high as 20% of world GDP
Then there’s the cost of delay ….. what price the loss of civilisation !

It is increasingly unlikely that global warming will be kept below an increase of 2C (3.6F) above pre-industrial levels, a study suggests.

Data show that global CO2 emissions in 2012 hit 35.6bn tonnes, a 2.6% increase from 2011 and 58% above 1990 levels.

“These latest figures come amidst climate talks in Doha, but with emissions continuing to grow, it’s as if no-one is listening to the scientific community,” said Corinne Le Quere, director of the Tyndall Centre for Climate Change Research at the University of East Anglia.

“I am worried that the risks of dangerous climate change are too high on our current emissions trajectory,” Prof Le Quere said.

“We need a radical plan.”

The researchers’ paper says the average increases in global CO2 levels were 1.9% in the 1980s, 1.0% in the 1990 but 3.1% since 2000.

Recently, the World Meteorological Organization (WMO) reported that greenhouse gases in the atmosphere hit a new record high in 2011.

In its annual Greenhouse Gas Bulletin, the organisation said that carbon dioxide levels reached 391 parts per million in 2011.

The report estimated that carbon dioxide (CO2) accounted for 85% of the “radiative forcing” that led to global temperature rises.

Other potent greenhouse gases such as methane also recorded new highs, according to the WMO report.

By Mark Kinver Environment reporter, BBC News (ReBlog)

7.2 Degrees Fahrenheit

December 3, 2012

A New scientific report, ‘Turn Down the Heat’ claims the world is barreling down a path to hear up by 4 degrees at the end of the century if the global community fails to act on climate change, triggering a cascade of cataclysmic changes that include extreme heat-waves, declining global food stocks and a sea-level rise affecting hundreds of millions of people.

The following news article was published by the World Bank Organisation.

The world is barreling down a path to heat up by 4 degrees at the end of the century if the global community fails to act on climate change, triggering a cascade of cataclysmic changes that include extreme heat-waves, declining global food stocks and a sea-level rise affecting hundreds of millions of people, according to a new scientific report released today that was commissioned by the World Bank.

All regions of the world would suffer – some more than others – but the report finds that the poor will suffer the most.

Turn Down the Heat, a snapshot of the latest climate science prepared for the World Bank by the Potsdam Institute for Climate Impact Research (PIK) and Climate Analytics, says that the world is on a path to a 4 degree Celsius[1] (4°C) warmer world by end of this century and current greenhouse gas emissions pledges will not reduce this by much..

“A 4 degree warmer world can, and must be, avoided – we need to hold warming below 2 degrees,” said World Bank Group President Jim Yong Kim. “Lack of action on climate change threatens to make the world our children inherit a completely different world than we are living in today. Climate change is one of the single biggest challenges facing development, and we need to assume the moral responsibility to take action on behalf of future generations, especially the poorest.”

The report says that the 4°C scenarios are potentially devastating: the inundation of coastal cities; increasing risks for food production potentially leading to higher under and malnutrition rates; many dry regions becoming dryer, wet regions wetter; unprecedented heat waves in many regions, especially in the tropics; substantially exacerbated water scarcity in many regions; increased intensity of tropical cyclones; and irreversible loss of biodiversity, including coral reef systems.

The Earth system’s responses to climate change appear to be non-linear,” points out PIK Director, John Schellnhuber. “If we venture far beyond the 2 degrees guardrail, towards the 4 degrees line, the risk of crossing tipping points rises sharply. The only way to avoid this is to break the business-as-usual pattern of production and consumption.”

The report notes, however, that a 4°C world is not inevitable and that with sustained policy action warming can still be held below 2°C, which is the goal adopted by the international community and one that already brings some serious damages and risks to the environment and human populations.

“The world must tackle the problem of climate change more aggressively,” Kim said. “Greater adaptation and mitigation efforts are essential and solutions exist. We need a global response equal to the scale of the climate problem, a response that puts us on a new path of climate smart development and shared prosperity.  But time is very short.”

The World Bank Group’s work on inclusive green growth has found that with more efficient and smarter use of energy and natural resources opportunities exist to drastically reduce the climate impact of development without slowing poverty alleviation or economic growth.

While every country will take a different pathway to greener growth and balance their own need for energy access with energy sustainability, every country has green growth opportunities to exploit,” said Rachel Kyte, World Bank Vice President for Sustainable Development.

Those initiatives could include: putting the more than US$ 1 trillion of fossil fuel and other harmful subsidies to better use; introducing natural capital accounting into national accounts; expanding both public and private expenditures on green infrastructure able to withstand extreme weather and urban public transport systems designed to minimize carbon emission and maximize access to jobs and services; supporting carbon pricing and international and national emissions trading schemes; and increasing energy efficiency – especially in buildings – and the share of renewable power produced.

“This report reinforces the reality that today’s climate volatility affects everything we do,” Kyte said. “We will redouble our efforts to build adaptive capacity and resilience, as well as find solutions to the climate challenge.” 

Turn Down The Heat: Why a 4°C Warmer World Must be Avoided summarizes a range of the direct and indirect climatic consequences under the current global path for greenhouse gas emissions. Key findings include:

  • Extreme heat waves, that without global warming would be expected to occur once in several hundred years, will be experienced during almost all summer months in many regions.  The effects would not be evenly distributed.  The largest warming  would be exptected to occur over land and range from 4° C to 10° C.  Increases of 6° C or more in average monthly summer temperatures would be expected in the Mediterranean, North Africa, Middle East and parts of the United States.
  • Sea level-rise by 0.5 to 1 meter by 2100 is likely, with higher levels also possible. Some of the most highly vulnerable cities are located in Mozambique, Madagascar, Mexico, Venezuela, India, Bangladesh, Indonesia, the Philippines and Vietnam.
  • The most vulnerable regions are in the tropics, sub-tropics and towards the poles, where multiple impacts are likely to come together.
  • Agriculture, water resources, human health, biodiversity and ecosystem services are likely to be severely impacted.  This could lead to large-scale displacement of populations and consequences for human security and economic and trade systems.
  • Many small islands may not be able to sustain their populations.

The report states that the science is unequivocal that humans are the cause of global warming, and major changes are already being observed. The global mean temperature has continued to increase and is now about 0.8°C above pre-industrial levels.

While a global warming of 0.8°C may not seem large, the report notes that many climate change impacts have already started to emerge, and the shift from 0.8°C to 2.0°C warming or beyond will pose much larger challenges.  But a global mean temperature increase of 4°C approaches the known historic level of change for the planet, which harks back to the last ice age when much of central Europe and the northern United States were covered with kilometers of ice and global mean temperatures were about 4.5°C  to 7°C lower. And this contemporary human-induced climate change, the report notes, is occurring over a century, not millennia.

Kyte said, “The Bank commissioned the Potsdam Institute for Climate Impact Research and Climate Analytics to make a summary analysis of the latest climate science, as a means to better understand the potential impact of a 4°C warmer world in developing countries.”

Today, the Bank is helping 130 countries take action on climate change. Last year, it doubled its financial lending that contributes to adaptation. The Bank-administered US$7.2 billion Climate Investment Funds are now operating in 48 countries, leveraging an additional US$43 billion in clean investment.  Increasingly, the Bank is supporting action on the ground to finance the kind of projects that help the poor grow their way out of poverty, increase their resilience to climate change, and achieve emissions reductions.

[1] 4 degrees Celsius = 7.2 degrees Fahrenheit

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