Climate Change – will the financial system survive?

One of the few bright spots in an otherwise dismal global response to the escalating climate crisis has been the preparedness of financial market regulators to force their regulated institutions to face up to the implications of climate risk.

In so doing, they have been acutely aware of the lessons learnt from the 2008 Global Financial Crisis, where scenario analysis, expert financial modelling and stress testing failed to foresee the crisis and the consequences for the banking system, investors and business alike. As a result, the global financial system was only save from collapse by a massive trillion-dollar bail out, for which the banks and corporations who caused it have yet to be held accountable.

When questioned by the Queen in 2008 as to why the crisis had occurred, the British Academy, after much introspection, responded that a “psychology of denial” led to “the failure of the collective imagination of many bright people … to understand the risks to the (financial) system as a whole.”

The reaction to the ominous warnings in the first part of the Intergovernmental Panel on Climate Change’s (IPCC) 6th Assessment Report, recently released, demonstrates that the same psychology of denial is alive and well, particularly in Australia. The financial press has erupted with ever-more incredulous claims as to why gas, oil, and even coal are absolutely essential to solving the climate crisis. Politicians are suddenly experts in silver bullet technologies that will solve our problem without understanding the limitations of their claims, and trawl the web even more vigorously than normal for any sliver of denialist evidence that the climate issue might just go away.

Fortunately, regulators with independent mandates to ensure the stability of the global financial system are taking their responsibilities seriously. To make climate risks more transparent, central banks and regulators globally are stress-testing the financial system. Most notable have been initiatives by the Task Force on Climate-related Financial Disclosures (TCFD), the European Central Bank (ECB) and the scenario work of the Network for the Greening of the Financial System (NGFS). In Australia, regulators have coordinated their work through the Council for Financial Regulators, with the Australian Prudential Regulatory Authority (APRA) initiating a climate vulnerability assessment for banks, encompassing scenarios up to 3°C of global mean warming, and issuing draft guidance for companies to stress test their own finances against scenarios up to 4°C warming.

Stress tests are simulations, relying on scenarios of future circumstances, and on models of the climate, the economy and the financial system. These techniques are valuable in reasonably well-understood circumstances, but they have severe limitations in addressing the threats which climate change now presents. The latest IPCC report has begun to discuss these issues, which include non-linear processes such as climate tipping points, cascade effects and radical uncertainty, where probabilities cannot be attached to specific outcomes, but even now the IPCC remain relatively reticent on these potentially existential, but increasingly possible, threats.

It is particularly challenging to map first-order physical climate warming impacts onto the second-order impacts in the social and financial spheres because it depends on the responses of complex human systems which cannot be reduced to probabilistic terms. In a complex world, systemic risks can arise from interactions between changes in the physical climate and human systems, so that small changes can lead to large divergences in the future state of human society.

Scenario analysis creates coherent, credible stories about alternative futures, allowing for constructive discussion on alternatives that should take into account the full range of credible evidence. But too often it is devalued and represents little more than sensitivities around some conventional strategic plan. Scenarios, properly used, can assist in securing a safe and stable future, but only if applied with brutal honesty in exploring extremes and not just a predetermined path.

Unfortunately global leaders, and Australia’s in particular, have not acted fast enough to avoid locking in extremely dangerous, and potentially catastrophic, climate impacts. Those impacts are close to moving beyond human control as global warming accelerates, evidence of which was clearly seen with the unprecedented 2019-20 Australian and Californian bushfires, the Chinese floods and Indian extreme temperatures. Even greater extremes are occurring in recent weeks in the Western USA, Canada, the Arctic, Siberia, Europe, China and the Amazon, resulting in some impacts that were not projected until around 2100.

In that context, the approach currently being used by regulators in assessing the future assumes compliance with the Paris Climate Agreement, unsustainable economic growth, a reliance on technologies not yet proven or deployed at scale, an overshoot of the Paris temperature target, and a big continuing role for gas. This worldview is being rapidly overtaken by events.

Scientists and analysts consider 4°C of warming to be an existential threat, incompatible with the maintenance of human civilisation, and 3°C to be catastrophic, perhaps leading to outright chaos in the relations between nations. Applying stress tests to such circumstances is problematic. Even at 3°C, the impacts may be so great as to be potentially infinite and unquantifiable, making scenario testing largely irrelevant.

It is unlikely that the banking system could survive such levels of warming, as discussed in our latest report: “Degrees of Risk: can the banking system survive climate warming of 3oC?”

Markets crave stability, but the world is entering an era of instability and uncertainty driven, inter alia, by climate-related financial risks. This makes the current approaches to managing these risks not fit-for-purpose. Sensible risk management, especially for highly uncertain events such as we are now facing, demands a precautionary approach, which must be applied to prevent these risks materialising.

Such precautionary action must ensure temperature outcomes do not trigger further tipping points or cascading effects which move the climate system beyond human influence, and are capable of returning it to the stable climate conditions under which human civilisation flourished. This means emergency action to keep the temperature increase to a minimum, as close to 1.5°C as possible, coupled with drawdown of current atmospheric carbon concentrations.

If the financial system is to survive and prosper, reactive disclosure of risks alone is no longer enough; time is short and mitigating those risks must become the absolute focus of regulators and regulated alike.

Company directors have a fiduciary responsibility to identify the risks to which their organisations are exposed, and to implement suitable systems to manage those risks. In the context of climate risk, boards of directors have too readily adopted recommendations from regulators and from supranational organisations such as the International Energy Agency or the IPCC, without bothering to understand the limitations of such analysis, thereby failing in their fiduciary responsibility to fully assess risk.

Regulators, here and overseas, exert great influence over financial and corporate players. If climate risk regulators imply warming of 3-4oC is manageable or can be adapted to, and such thinking becomes enshrined in the corporate psyche, as is currently happening, then regulators will be institutionalising failure, which is certainly not their intent.

Instead, regulators must now demand that the regulated proactively disclose what emergency precautionary action they are taking to ensure the world remains as close to a 1.5oC global mean temperature increase as possible.

This is just one change amongst many that must occur if humanity is to survive and prosper through the 21st Century and beyond. And it is an important one, because we cannot afford another failure of imagination.

Ian Dunlop is Chair, Advisory Board, Breakthrough National Centre for Climate Restoration.
David Spratt is Research Director of Breakthrough.

This article was published in Pearls & Irritations on 17th August 2021

The Net Zero Emission Illusion

As the need for serious action to prevent runaway global warming becomes critical, it is not surprising that efforts from the denialist lobby to prevent that action intensify, albeit in more subtle form than the blanket refusal of yesteryear to even accept that a climate problem existed.

Around the world, companies, investors, governments and other institutions are committing, with much self-congratulation, to reach net zero emissions by 2050 (NZE2050), the point at which any remaining emissions can be counterbalanced by offsetting absorption in carbon sinks, using technologies which currently do not exist at scale.

Regulators and central banks, concerned that global warming might de-stabilise the world’s financial system, are urging their regulated institutions to disclose the implications of climate change risk to their investors, and to undertake stress testing against scenarios with up to 4oC of global mean warming relative to pre-industrial levels.

Missing from this debate is any understanding of the real risks posed by climate change. Recent events such as the unprecedented 2019/20 Australian and Californian bushfires, Chinese floods and Indian extreme temperatures, along with even greater extremes occurring this year in the Western US, Canada, the Arctic, Siberia, Europe, China and the Amazon, should be a wake-up call that climate impacts are accelerating and close to moving beyond human influence.

But that is far from the case. Despite impassioned pleas from scientists and much lofty institutional rhetoric from global leaders on the need for emergency action, the emphasis on a NZE2050 pathway, is actually locking-in extremely dangerous, and potentially catastrophic, climate outcomes by refusing to rapidly reduce carbon emissions, which is now necessary to stop runaway warming.

The 1.5°C global mean warming, the lower limit of the Paris Agreement, is inevitable by 2030 irrespective of any mitigation action in the interim. The upper 2°C limit is likely before 2050, with the possibility that irreversible, self-sustaining warming may be triggered by tipping points between 1.5 – 2°C. The current global trajectory is likely to result in catastrophic warming in excess of 3°C in the second half 21C, with little chance of changing that trajectory over the next two decades by mitigation alone. 4-5°C warming is possible before 2100. The dangerous impacts we are already experiencing are happening at only 1.2°C warming.

3°C warming would be catastrophic, perhaps leading to outright chaos in relations between nations, and 4°C is an existential threat to human civilisation, with many parts of the world becoming uninhabitable leading to mass migration and social conflict. Regional temperature increases on land will be considerably higher than these global means, increasingly beyond the limits within which human physiology can operate. These temperature increases cannot be adapted to, rendering financial system stress testing irrelevant.

The assumption behind the current enthusiasm for NZE2050 is that, with a bit of tweaking and gradual action, an orderly transition can ensue, leading to a perpetuation of the current economic system and its power structures.

That is no longer possible. The degree of change required to avoid catastrophic climate impacts, and the speed with which it must be implemented, means that emergency action, akin to a wartime level of mobilisation, is essential. A major discontinuity is inevitable; we must re-boot our societies on to genuinely sustainable pathways if human civilisation is to survive

NZE2050 could result in mean temperature increases above 3°C if global tipping points trigger within the 1.5 – 2°C Paris range. As our latest Briefing Note, “Net Zero 2050 – a dangerous illusion” indicates, net zero must be reached as soon as possible, ideally by 2030, if catastrophic outcomes are to be avoided. This is a massive task far greater than anything yet contemplated officially.

Sensible risk management in these circumstances demands a precautionary approach quite different from conventional risk-management practice. It must ensure, to the extent possible, that temperature outcomes do not trigger these tipping points, and is capable of returning the climate system to the stable climate conditions under which human civilisation flourished. This means emergency action to keep global temperature increase to a minimum, as close to 1.5°C as possible, coupled with drawdown of current atmospheric carbon concentrations from the current level around 420ppm CO2, to below 350ppm CO2. The technology to achieve such drawdown in the limited time available, is not yet fully to hand at scale, further adding to climate risk.

The Australian mainstream media, with a few exceptions, ignore these realities, consumed with the supposedly disastrous short-term economic implications of any climate action, oblivious to the infinitely greater cost of inaction. The Australian Financial Review (AFR), recently opined that “Coal, along with oil and gas, will continue to supply the world’s energy during the decades-long transition to net zero”, and that, “as the demonisation of coal and gas by Australian activists shows, extremism makes the politics of the energy transition more challenging”.

The real extremists are organisations like the AFR, the Murdoch press, ideologues and fossil fuel vested interests around the world whose denialist stance has succeeded in allowing carbon emissions to continue to rise at worst case rates, placing humanity in grave danger with their insatiable greed and determination to hang on to the reins of power at all costs. If these views prevail, human civilisation as we know it will not survive.

Quite apart from the implications for humanity, directors of these organisations, even those who claim leadership on climate action like Shell, BHP, Rio, Woodside and Santos, are now in clear breach of their fiduciary responsibilities to their shareholders, because in so doing, they are destroying their shareholder’s, and their own, future. Ben van Beurden, Managing Director of Royal Dutch Shell conceded last year that: “Yeah, we knew. Everybody knew. And somehow we all ignored it.” That is not good enough, particularly as they had access to the best available science and for years have known perfectly well the implications of their actions. A failure made even more egregious by their current refusal to cut emissions rapidly, or far worse, their determination to massively increase fossil fuel use with gas-led recoveries on the erroneous, self-serving grounds it will reduce carbon emissions globally.

But nowhere is this leadership failure, and the moral and ethical vacuum behind it, more evident that with the current Australia Federal government.

Australia is one of the regions most exposed to climate threats, as the community is only too well aware from our recent drought, bushfire and flood experience. Yet politically, it is as if this never happened. For example, none of the recommendations of the Bushfire Royal Commission have been implemented, and many communities remain without adequate recovery support.

Policy, to the extent it exists, is decided by political advisers, with little real-world experience, align with fossil-fuel interests, and ideologically committed to the neoliberal unregulated market which has created the climate crisis, and proved incapable of solving it. Scared of the future, they have no vision for Australia other than a perpetuation of its fossil fuel past. Not surprising, given that former fossil fuel executives dominate government appointments, from the Prime Minister’s office down.

So reality is swept under the carpet as the government rushes headlong into its own gas-led recovery, quite deliberately designed to maximise the use of fossil fuels before the shutters finally come down on the industry.

However, the government recognised rising community concern over climate, and the electoral danger that poses if those concerns are ignored, so something had to be done. Ergo, multiple initiatives are announced, with great fanfare, to demonstrate their climate bona fides; resilience, disaster management, Great Barrier Reef research etc, all of which address the symptoms of climate change, but ignore its fundamental cause, which is excessive atmospheric carbon concentrations and the failure to rapidly reduce emissions

The Minister for Emission Reduction, Angus Taylor, even pours fuel on the fire by presiding over emission increases, re-assuring us that any climate issues will be solved with “technology not taxes “. This ignores the fact that for these technologies to work at scale, and in the short time now available, “taxes” in the form of carbon pricing are essential otherwise the massive subsidy enjoyed by fossil fuels, by not accounting for the damage caused by their use, will continue, markedly slowing the transition to a low-carbon future .

The Minister for the Environment, Sussan Ley, passes any responsibility for climate change to the Minister for increasing emissions, despite the fact it is the greatest threat to our environment; decries any duty of care to protect Australia’s children from climate harm as a result of her deliberations on approving coal mines; then makes common cause with a motley crew of climate denialist countries to prevent the UNESCO World Heritage Committee placing the Great Barrier Reef on the “in danger” list, despite the fact that it is obvious to all but the most entrenched ideologues that the reef is now in terminal decline due to climate change.

Geopolitically, the government’s immaturity and ignorance of Asia has totally disrupted relations with our largest trading partner, China, with subsequent Australian sabre-rattling designed to divert attention away from the far greater threat of climate change. After four years of Australian servility to the Trumpian cause and a long history of Western abuse, it is unsurprising that China is taking a more assertive stance in global affairs, whilst recognising that China has its own problems and wolf warrior diplomacy is not the mark of mature global leadership. But both sides sidestep the real threat of climate change, instead focussing on geopolitical point scoring. Overcoming that threat will require unprecedented global co-operation, otherwise everyone loses.

Part of which is to completely re-think the concept of defence. Vast amounts spent on ever-more sophisticated ways of killing one another are useless on a dead planet. Those resources are desperately needed to stave off the climate threat and implement genuinely sustainable, equitable, economic systems.

It is clear from its actions that the Federal government has absolutely no intention of taking climate change seriously. It has yet to commit to NZE2050, but may well do so finally at the November climate summit in Glasgow, attempting to present it, with yet more fanfare, as “Australian climate leadership”, much as John Howard did with the 1997 Kyoto Protocol “Australia Clause”, the greatest strategic mistake this country ever made which initiated three decades of climate denial.

The government has no appetite to address the big issues confronting this country, and is quite happy to destroy the prosperity and future of Australian society, its children and their own, in the interests of retaining power in the short-term.

The parallels with the Covid crisis are legion. With Covid, the government has shown itself manifestly incapable of leading or managing its core responsibilities, beset by corruption and secrecy. The climate challenge is far greater than Covid, and there are no vaccinations or quarantine against climate impacts, which from now on will increase inexorably absent decisive leadership.

The community must now seek that leadership elsewhere.

Ian Dunlop is Chair, Advisory Board, Breakthrough National Centre for Climate Restoration.
David Spratt is Research Director of Breakthrough.

This article was published in Pearls & Irritations on 8th August 2021

If Business Leaders Want To Regain Our Trust, They Must Act On Climate Risk

Business leaders seem astonished that community trust in their activities is at an all-time low, trending toward the bottom of the barrel inhabited by politicians. To the corporate leader dedicated to the capitalist, market economy success story of the last 50 years, that attitude is no doubt incomprehensible and downright ungrateful.

But it is hardly surprising given continuing scandals and declining ethics across the corporate and banking worlds, driven by the pernicious impact of short-termism, rising inequality and undue political influence; in large part the outcome of the oxymoron of “pay-for-performance” remuneration. So how is trust regained? The need for stronger leadership, ethics, greater transparency, open communications and improved culture feature prominently in current responses.

But a far more fundamental requirement is ignored, namely that business must lead on really critical issues, particularly the point raised long ago by economist Kenneth Boulding: “Anyone who considers economic growth can continue indefinitely in a finite system is either a madman or an economist”. The constraints Boulding anticipated have now arrived, as burgeoning population and economic growth crash into global biophysical limits which cannot be circumvented.

Those constraints, encompassing resource shortages, biodiversity loss and pollution in various guises, do not feature in the capitalist economic lexicon, as technology and the market are supposed to overcome all as we march toward the sunlit uplands of the neoliberal nirvana. In the real world, the entire growth model under which Australia and global economies operate, is not longer sustainable; it sowed the seeds of its own destruction some time ago and is rapidly driving itself into the ground as growth rates decline. This is the great “black elephant” of business and politics; a known, knowable fact that no-one wants to acknowledge – the unmentionable in the Business and Governance Summits currently in full swing around the country, as our leaders strive mightly to compound the problem with self-defeating subterfuges to maximise growth, not least corporate tax cuts and trade agreements.

To the community, these constraints are increasingly obvious as the quality of life for the average person deteriorates in myriad ways. The greenwash and rhetoric of much-vaunted corporate social responsibility no longer holds water when our supposed leaders are not prepared to address the issues that really count for our survival, let alone prosperity.

These range from basic considerations such as ensuring food and water availability, to the creation of genuinely sustainable global societies. However the first priority must be human-induced climate change, manifest as the lack of an atmosphere into which we can continue dumping carbon pollution from the burning of fossil fuels, agriculture and deforestation, without causing catastrophic consequences.

Climate change is accelerating far faster than expected, to the point where it now represents an existential threat to humanity, that is a threat posing permanent large negative consequences which will be irreversible, an outcome being locked in today by our insistence on expanding the use of fossil fuels. This should be a major concern in Australia given that we are more exposed than most, but instead our leaders would have us embark on massive fossil fuel expansion. Already one of the world’s largest carbon polluters when exports are included, Australia is complicit in destroying the conditions which make human life possible. There is no greater crime against humanity.

The economic and social impacts will be devastating unless that policy is rapidly reversed. The unprecedented hurricane season in the Atlantic, bushfires in the Californian winter, extreme heat in many parts of South Asia and rapid heating of the Arctic with associated instability in the Northern Hemisphere weather system, are only the most recent portents of what is to come. The worst outcomes can only be avoided now by emergency action, akin to restructuring economies on a war-footing.

It finally seems to be dawning on corporate and investor leadership that climate change is a real and present danger which is not going away. Company directors are personally liable for failing to assess and act upon climate risk, but the greenwash continues. Major corporates parade their credentials in support of serious climate action, but none of their scenarios and policies are in line with the Paris objective of constraining global temperature increase “well below 2degC above pre-industrial levels and to pursue efforts to limit the increase to 1.5degC”.

Fortunately, as understanding of the risks improves, regulatory pressure mounts. The recommendations triggered by Mark Carney, Governor of the Bank of England, via the Task Force on Climate-Related Financial Disclosure (TCFD) are gradually being taken up, with companies voluntarily disclosing the impact which a 2degC policy framework would have on their organisation, assuming such a framework was ever put in place (by governments?). Progress, but reactive and certainly not leadership. The question that must be answered is: “what are you doing proactively as a company to create a 2degC world” – more realistically closer to 1.5degC, as it is now patently clear that 2degC is far too high?

If business genuinely wishes to regain trust, it must proactively face up to the challenge posed by climate change and initiate emergency action. Beyond that, it must open up honest debate on a new economic model to replace conventional growth. It is the only way business will be sustainable in the 21st Century with a real social licence to operate.

In Churchill’s words: “Sometimes we have to do what is required”.

An edited version was published in The Guardian.

Stop Spreading Disinformation on Coal Demand

In their book Climate Change, Capitalism and Corporations, published prior to the Paris climate change meeting last December, Chris Wright and Daniel Nyberg highlighted how the dominance of neoliberalism in recent decades has locked the global economy on to a path of “creative self-destruction”, built around the oxymoron of “green capitalism”. Events since Paris have confirmed their thesis.

Just before Paris, the New York state attorney general, via the US Securities and Exchange Commission, secured undertakings from the world’s largest coal company, Peabody Energy, for violating state laws prohibiting false and misleading conduct in regard to Peabody’s public statements on risks posed by climate change. In part by misrepresenting the projections of the International Energy Agency (IEA).

For the past two decades, major companies, industry bodies, media and governments have been guilty of similar disinformation in Australia, a practice which is again evident in this election campaign.

Long ago, the IEA recognised the risks posed by human-induced climate change. It accepted that climate and energy were inextricably linked and dangerous climate change could only be avoided with fundamental change to the global energy system. Specifically by rapidly weaning ourselves off fossil fuels and transitioning to low-carbon energy supply.

The IEA has become a leading authority exploring this transition, regularly quoted by governments and business alike. It is subjected to great pressure by them to lean in suitably accommodating directions.

It handles this pressure by publishing, in its annual World Energy Outlooks (WEOs), its perspectives on the energy sector over the next 25 years. These explore the implications of taking alternative climate and energy pathways. Key scenarios are: current policies (CP) which assumes business-as-usual, new policies (NP) which extends CP with policy governments have committed to but not yet implemented, and the 450 scenario which is the pathway to keep global average temperature increase below 2C.

These scenarios are highly influential in justifying investment decisions. For Australia, global coal demand is one of the factors of greatest interest. In the WEO 2015 released last November, under CP assumptions demand would increase by 43% by 2040 compared to current levels, under NP by 12%, but under 450 scenario it declines by 36%.

The IEA takes NP as their central scenario as this is where we are headed if governments implement their commitments. However the IEA make it clear that NP is not a sustainable future. In its report, executive director Fatih Birol says: “We look to the negotiators in Paris to destroy our projections in our central scenario, which we show to be unsustainable, in order to create a new world in which energy needs are met without dangerously overheating the planet.” The Paris meeting agreed to keep global average temperature below 2C and pursue efforts to limit to 1.5C.

Warming would see global population and economic growth in steep decline or stalled. Poverty would massively increase as poorer countries are disproportionately hit by climate extremes. This is already happening.

As with Peabody, Australian organisations, through the Minerals Council, regularly misrepresent the IEA’s position. Typically they publicise the CP or NP outcomes and ignore the 450 scenario despite the fact that they publicly support the 2C limit. These inflated coal demand figures are then claimed to be IEA “forecasts”, justifying further coal investment and government support.

These organisations participate in IEA advisory committees and should be aware that scenarios are not forecasts. Scenarios demonstrate the outcome of certain choices and the IEA make it clear that CP and NP are choices we must not make. To suggest otherwise is blatant disinformation of the worst kind given the potentially catastrophic implications of distorting the IEA’s advice.

The Minerals Council of Australia has been one of the worst offenders, even in the current election campaign inconsistently using NP outcomes while claiming to support the 2C limit. The Minerals Council represents companies like BHP Billiton and Rio Tinto, who vehemently proclaim leadership on climate change and the urgent need to follow a 2C path, yet this disinformation is allowed to continue from the Minerals Council.

This propaganda is parroted by ill-informed politicians, such as energy minister Josh Frydenberg, claiming that,“The IEA tells us that 40% of today’s electricity demand is met by coal and by 2040 it will still be 30%”, and trade minister Steve Ciobo: “Global demand for coal is still going through the roof”. NP figures again, which imply an absolute increase in coal use of 23%. However the 450 scenario, to which the government supposedly committed to in Paris, shows coal’s share of electricity demand falling from 40% to 12% by 2040, an absolute reduction in coal use of 57%, which certainly requires no new coal mines.

Parts of media also to be blamed. The Australian is a serial offender but even the more balanced Fairfax press falls into the same trap. Not surprisingly, it still features prominently on coal company websites.

The government and opposition, who accept donations from fossil fuel interests which Wright and Nyberg refer to, both sing the praises of the Adani Carmichael mine in the Galilee Basin, Shenhua’s Watermark Mine on the Liverpool Plains, Kepco’s Bylong Valley adventure and Hume Coal in the Southern Highlands. All based on ill-informed premises and substantially contributing to increasing global temperatures well above 2C.

The cost to Australia, if this irresponsible misallocation of resources proceeds, would be enormous. Among other things, stranded assets as these mines are forced to shut down as climate impact intensifies; the lost opportunity of not investing in low-carbon future; the loss of agricultural productivity as mining disrupts prime farming land and water supply; and the social disruption caused to regional communities from abandoned operations. Plus, the full impact of potentially catastrophic climate change in a country more at risk than any other.

In the national interest, Australian regulators, including federal and state attorney generals, ASIC, the ASX and the Press Council urgently need to stamp out this misinformation as their overseas counterparts are doing. Particularly if we are serious about promoting “innovation, jobs and growth”.

An edited version was published in the Guardian on 1st July 2016 


Coal – The Captain’s Call & It’s Catastrophic Implications

The last few days have demonstrated just how far out of touch the Australian media and political incumbency are from critical climate change events happening around the world.

The Australian recently launched yet another tirade against supposed bias in the ABC’s handling of climate change, followed up by a stern Editorial lecture (Media Watch fails abjectly as a guardian of standards, 4th August 2015). Pretty rich from an organization which supposedly accepts the climate science and the need for urgent action, but spends its time trawling the literature for the slightest micro evidence that climate change is either not happening, or is of far less concern than the mainstream science is indicating. As well as providing an ever-open platform for absolute climate deniers to sow further disinformation and obfuscation, based on no science or hard evidence whatsoever, disrupting the development of sensible climate policy.

The Australian Financial Review subsequently condemned “eco-activists” for the costs they are supposedly inflicting on the Australian community (Eco-activism is a major cost to the community, 6th August 2015) after the courts overturned Federal Government approval of the Carmichael Mine in the Galilee Basin. Instead of condemnation, these activists should be congratulated for their fiscal responsibility in trying prevent substantial economic damage and wasted assets, which will be the outcome if the Galilee Basin coal developments are allowed to proceed.

Predictably we then had the Prime Minister’s Captain’s Call. Coal, we are told yet again, is essential for the future of humanity, and for the alleviation of poverty in countries like India. Every other consideration must now be subjugated to the interests of these major projects proceeding. Not just in the Galilee Basin, but also the Shenhua Watermark mine in the Liverpool Plains, coal seam gas everywhere and a host of others.

The preservation of biodiversity, such as the snakes and skinks in Galilee is important, but the real issue is climate change. Clearly the incumbency does not understand the implications of the latest climate science and evidence of climate change impact around the world.

Climate change is happening far faster and more extensively than officially acknowledged, largely driven by human carbon emissions.  We are experiencing substantial economic and social disruption at the 1oC warming which has already occurred relative to pre-industrial levels, let alone the additional 1oC to which we are probably committed by virtue of historic emissions. The official limit of 2oC warming is not safe, it is now highly dangerous.

If the Galilee Basin and Watermark projects proceed, it will have catastrophic climate consequences, akin to other large high-carbon expansions such as the Canadian Tar Sands.  Quite simply, as the IMF, IEA, World Bank and other authorities state, these developments cannot be allowed to happen.

Poverty, far from being alleviated by them, will be created. Have the incumbency “experts” thought about the implications of the extreme events happening right now on the Indian Subcontinent – unprecedented heat last week, unprecedented rainfall now, to which climate change is contributing significantly? Not to mention extensive damage in North America from extreme drought and fires as the El Nino intensifies, as we will no doubt experience shortly. All occurring at only 1oC global warming.

Those who lead economic debate in this country need to wake up to the fact that climate change will be the factor having the greatest impact on the Australian economy and society from now, to the point that it will fundamentally change our economic and business models.  It should be at the top of the agenda for the forthcoming National Reform Summit being promoted by both newspapers, but it is a fair bet it will not even feature.

This Captain’s Call, if the Prime Minister gets his way, will be the biggest economic disaster in Australia’s history and will fundamentally undermine our National Security. Sounder heads must prevail.

Ian Dunlop was formerly an international oil, gas and coal industry executive, chair of the Australian Coal Association and CEO of the Australian Institute of Company Directors. He is a Member of the Club of Rome, a Director of Australia21 and a Fellow of the Centre for Policy Development.

 An edited version of this article appeared in Renew Economy on 7th August 2015: