Climate action – this is a mission possible
Time is running out. We are already feeling the effects of climate change, and our natural environment is in peril. The risk for our societies and economies is mounting.
Despite more efforts to reduce carbon emissions, our CO2 output continues to rise. The response has been too slow. As a result, the Swiss Re Institute estimates that rising temperatures could cut global GDP by as much as 14% or USD 23 trillion by 2050, compared to a world without climate change.
There is no easy solution. But with concerted action from all corners of the planet and across industries to decarbonise our economy, we can avoid this scenario. Science calls for three things to keep global warming at acceptable levels under the Paris agreement: halve emissions by 2030; reach net-zero emissions by 2050; and produce net-negative emissions throughout the second half of the century.
Net-zero means all emissions that are not yet reduced and avoided are balanced by an equivalent amount of so-called negative emissions. Net-negative means undoing our past emissions – in other words, removing more emissions from the atmosphere than are simultaneously emitted.
Consequently, besides huge cuts in emissions, there needs to be an additional commitment to rapidly scale up carbon removal. The focus here is on how we can undo our past emissions through both nature-based solutions and carbon removal technologies.
Nature-based solutions, which capture and store carbon in natural habitats such as forests, wetlands, oceans and soil, could cover some 20% of the negative emissions needed by 2100. To achieve this, we must place far greater economic value on nature: Swiss Re Institute research shows that a fifth of the world’s ecosystems are close to collapse, even though more than half of global GDP depends on biodiversity and the health of ecosystems.
Nature-based solutions for carbon removal can support the protection of ecosystems and biodiversity. They can also help protect us from the worst impacts of climate change: for example, ecosystem restoration along the coast of Louisiana could reduce expected storm surge and flood costs by USD 5.3 billion annually. But these natural solutions will not be enough: the availability of land is one limiting factor. There are also potential issues with their durability. Wildfires, for example, can quickly undo the storage of CO2 in a forest.
Technological solutions such as Direct Air Capture and Storage (DACS), where CO2 is filtered from the atmosphere by machines, can address this problem of durability. Carbon captured in this way can be indefinitely stored deep underground in liquid form, transformed into rock, or processed into long-lived products for industrial applications. DACS and other technological solutions also offer the potential of achieving the scale of carbon removal necessary to hit our climate goals, limiting warming to 1.5 degrees or less.
These solutions are currently underdeveloped, which makes them very expensive. To drive down the cost and ensure they can be scaled at pace, businesses and governments must quickly extend the use of renewables and engage with carbon removal technologies. At Swiss Re we have signed the world’s first long-term purchase agreement for DACS technology to kick-start our partnership with Climeworks. To make real progress, the private sector needs to make more such investments which can be encouraged with legislative support from the public sector.
Three steps to accelerate action
The world needs carbon removal on top of, not instead of, huge emissions reductions – and companies must support each other to do both. There are three clear steps that need to be taken. First, companies must set a Paris-aligned carbon reduction path with interim targets. Second, the emissions reduction path must be complemented by a removal path to prepare for balancing residual and overshoot emissions because waiting and hoping for prices to come down in the future is not climate leadership. Third, to make a real difference companies must help others across their own value chain to reduce their emissions.
Massive emission cuts and scaling of low carbon solutions
To decarbonise entire value chains, there must be a massive reduction in greenhouse gas emissions and scaling of low carbon solutions. It's a gargantuan task, but this is where alliances – both within and across industries – can be so beneficial. We can learn from each other and spread best practice, with the aim of accelerating the pace of change.
The Net-Zero Asset Owner Alliance and Net-Zero Insurance Alliance, both of which Swiss Re is a founding member, are good examples. The World Economic Forum Alliance of CEO Climate Leaders, which I co-chair, has grown to 114 of the largest companies on the planet. Each of them is committed to taking action to decarbonise their value chains in line with the Paris agreement.
This is mission possible
CEOs from these alliances are at COP26. We can discuss with world leaders, government officials and NGOs actions to tackle this crisis together. Undoubtedly the private sector wants to do more, but it needs governments to act on agreeing bold climate policy actions.
Our planet is suffering, and the longer we take to decarbonise and protect it, the greater the cost will be. But with global cooperation across a broad set of stakeholders this is a mission possible.