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CLIMATE CHANGE ● GLOBAL
7 January 20192018 in review: Extreme events vs political events
Hot, wet and on fire: 2018 was a year in which the impacts of climate change played out in line
with the science. Extreme events – floods, droughts, storms and wildfires – continued to cause
physical and social devastation across the world. The more unusual events such as wildfires in
Sweden demonstrated the importance of adequate preparation and resilience. Insured
losses from natural disasters also remained high. Adaptation rose steadily up the climate
agenda to take on much greater prominence than before, although it has not quite reached
parity with mitigation. However, as weather records were broken in 2018, global political
developments proved a distraction. See The Earth is a ball (16 July 2018), More heat, less
wheat (8 August 2018), Climate-to-weather evidence stacks up (20 September 2018).
Moving forward: The rulebook for implementing the Paris Agreement was largely agreed at
COP24 in Poland in December. But it is a compromise that fails to match the urgency of
the issue – with several key points pushed out to future meetings. It covers most of the crucial
elements, such as guidance on climate pledges, adaptation and support – all with ‘flexibility’.
However, the rulebook does not spell out how ambitious subsequent climate pledges must be
as detailed guidance on the features of each nation’s climate contribution remained scant.
Investors and businesses will be relieved that the Paris Agreement remains in place, and with
greater clarity on how countries might follow through with policy – however ambition is the
remaining piece of the jigsaw. See COP24: Moving forward (18 December 2018).
From now on, my 5 priorities will be: ambition, ambition,
ambition, ambition and ambition
UN Secretary General António Guterres at the conclusion of COP24
Wavering: Some 184 Parties have now officially ratified the Paris Agreement. Although the US
remains the only Party to have formally signalled its intention to withdraw, elsewhere changes in
government have dented the national resolve on climate change in a few countries. For
example, the new government in Brazil has indicated less support for global climate cooperation
and the new prime minister in Australia has remained noticeably silent on climate issues. The
US continued its rollback of climate policies under the current Administration – however, climate
action at the sub-national level has jumped to fill in the federal gap as public awareness grows.
Action together: The trend to form and join coalitions which champion specific climate actions
continued throughout 2018. This collaboration is a means to enhance impact as well as put
pressure on those not participating (for now). Various initiatives added new members to their
ranks last year – cities on climate actions and becoming carbon neutral; corporate strategies to
put in place ‘science-based targets’; and the various “100-programs” (renewable energy, electric
vehicles, energy productivity). See Don’t miss out on the action (28 September 2018).
The lower, the better: Climate science received a boost from the IPCC’s Special Report on
1.5°C (SR1.5) which looked at the magnitude of the impacts and the benefits of limiting warming
to half a degree lower. The report found that the 1.5°C was still feasible within the laws of
physics and chemistry but there was no single solution – a whole systems approach was
required to meet the target. The key datapoints were: a 45% reduction in emissions is required
by 2030; net zero emissions is required by 2050; at the current pace of warming, the Earth is
likely to breach 1.5°C of warming by 2040. See Does 1.5°C matter (8 October 2018).
Payal Negi contributed to this
report. Payal Negi is employed
by a non-US affiliate of HSBC
Securities (USA) Inc. and is not
registered/qualified pursuant to
FINRA regulations
The operational guidelines
for the Paris Agreement are
now in place…
...but ambition is lacking
Political distractions have
caused jitters…
…and catalysed more action
The science cries urgencyCLIMATE CHANGE ● GLOBAL
7 January 2019
A year for reflection in 2019
Following the task to deliver a rulebook last year, 2019 will be one for reflection – on how to
reduce emissions and embed resilience; how to align policy with the latest science; how to
speed up the transition as the Earth continues to warm.
If El Nio develops, 2019 is likely to be warmer than 2018
WMO climate statement, 29 November 2018
According to the World Meteorological Organization (WMO), 2018 is on track to be the fourth
warmest year on record – despite La Nia (effectively a cooling effect) in the first quarter. There
are growing signs from multiple meteorological agencies that the oscillation is tending towards
El Nio conditions in early 2019.
Chart 1: Global land-ocean temperaturesChart 2: Global temperature anomaly
distribution
Source: UK Met Office; HSBC. Note: Global average of near land-surface air
temperature and sea-surface temperature relative to 1961-1990 average
Source: UK Met Office, HSBC. Note: Deviation for all three time periods measured against mean refers to 1961-1990 baseline Note: Distribution is between 2.5sd &
3.5sd, The midpoint is taken as 3d
13.0
13.3
13.6
13.9
14.2
14.5
14.8
185318681883189819131928194319581973198820032018
Absolute tempDecadal average
oC2018 was the fourth warmest with
temperature rise of ~ 1.0°C despite having
a weak La Nia (cooling) effect
0%
10%
20%
30%
40%
50%
-3d -2d-1dM 1d 2d3d4d5d6d
% of obs.
Temp anomaly (Std dev)
1931-19601961-1990
1991-2018
20 of the
last 28 yrs
are 3sd
from the
mean
Mismatch – policy ambition
As the Earth warms and GHGs accumulate, the urgency to address
climate change is not being met with suitably ambitious policies
Special reports on climate science will improve understanding and
should increase the pressure to align longer-term climate strategies
Elections are not likely to be climate shattering but political
distractions will continue even as climate-aligned proposals emerge
The last four years (2015-18)
have also been the top-four
warmest years on record
CLIMATE CHANGE ● GLOBAL
7 January 2019Balancing scientific urgency with commitments and policy
In our view, there is a mismatch between the three pillars required to solve climate change:
1. The urgency that is becoming increasingly clear with the latest science and prevalence of
evermore intense and damaging extreme events;
2. The commitments that Parties as well as businesses pledge or set targets towards;
3. The implementation of those commitments through legislated policies and corporate
strategies.
Accumulation: For example, emissions of greenhouse gases (GHG) are on the rise again after
a slowdown of three years, leading to ever increasing atmospheric concentrations of carbon
dioxide (CO2) (Chart 3).
Chart 3: Atmospheric concentrations of CO2 continue their relentless rise
Source: NOAA
The UN ‘Emissions Gap Report 2018’, which was presented just ahead of COP24, provides a
stark warning on the current level of aggregate ambition of national climate pledges. The
report concludes that if the emission gap is not closed by 2030, the goal of limiting warming to
2°C will be beyond reach. However, global emissions are not projected to peak by 2030 (based
on climate pledges alone), with the gap between emissions declines for a 2°C scenario and
climate pledges still widening (Chart 4).
In addition, the associated policies that need to be enacted just for climate pledges to be
implemented are not yet in place – regardless of the ambition levels of those pledges. In other
words, current policies will allow emissions to increase over and above aggregate pledges by
about 6 GtCO2e. However, current forays into implementing certain climate policies have faced
backlash, especially in France, Germany, parts of the US and Canada.
1.1
2.6
2.11.21.6
2.0
2.5
1.82.0
2.11.72.1
1.52.3
1.92.0
2.7
1.92.3
3.3
2.12.3
350
360
370
380
390
400
410
199199199200200200200200200200200200200201201201201201201201201201Annual increase in concentrationAnnual average CO2 Concentration
(ppm)
Higher annual increase in CO2
concentrations coincide with observed El
Nioyears of 1997-98, 2002-03, 2013-14
Highest GHG concentration
on record in 2018 (until
September), avg: 407.3ppm
Questions remain around
delivery of promises
GHGs continue to
accumulate in the
atmosphere
The window to narrow the
emissions gap is closing。。。