Fwd: Burnham’s climate hot potatoes
Loretta Lohman
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The UK has a new prime minister. As we wait for more details on Andy Burnham’s government, we take you through the main climate and energy issues he will have to deal with. Meanwhile, institutional investors are trying to figure out the impact of what JPMorgan calls “climate black swan risks” on their portfolios. And a country with 70% renewables in its grid won the World Cup against another with 40% wind, solar and hydro. Not that this mattered when it came to the beautiful game, but we thought you should know. Subscribe to Bloomberg.com for unlimited access to all our coverage. Top climate issues for BurnhamBy Akshat Rathi and Laura Millan The UK’s new prime minister Andy Burnham comes in at a turning point for the country’s climate plans. The first major country to turn emissions-reduction promises into law earlier this decade faces a reality check today — rising energy prices, mounting extreme-weather events and increasing attacks from climate-skeptic opponents. As mayor of Greater Manchester, Burnham was a big supporter of green causes. However, in the run-up to taking the leadership of the Labour Party, he said little about climate. In his first remarks as prime minister today, he pledged a “new economic model” for the UK and promised to deliver immediate action to reduce the cost of living.  Andy
Burnham and Marie-France van Heel, his wife, outside
10 Downing Street.
Photographer:
Chris J. Ratcliffe/Bloomberg
“We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last 40 years: a new political model and a new economic model,” he said in a speech in front of No. 10 Downing St. As Burnham gets settled in, we heard from experts about the most pressing issues he will face on the climate and energy front. Cost of living Burnham should start by embracing “pragmatism” on climate policies to stave off a populist right and deliver cheaper energy for working-class people, said Dale Vince, founder of green-power company Ecotricity, on the Zero podcast. “Most people still want action on climate change, but they don’t want to pay for it,” said Vince, who has donated more than £5 million ($6.7 million) to Labour. “Particularly, that’s true of the people that are struggling with the cost of living crisis.” Earlier this decade, “net zero” promises were heralded by governments and companies. But the term has been made politically toxic, said Vince, who has long been a champion of climate action and has funded climate activist groups, including Just Stop Oil. He said Burnham should instead talk about the green economy. “Net zero talk is about giving stuff up,” he said. “Stop talking about net zero and talk about the green economy, the jobs, sustainable growth... The kind of stuff that we gain, not what we lose.” The business magnate has developed three energy-market reforms, including changing how electricity is priced, that he says could halve energy bills. Deploying those types of policies is “the biggest thing Labour can do to tackle the cost of living crisis,” he said. Cost of energy Renewed tensions in the Middle East have once again pushed up energy prices, with oil reaching $90 a barrel today. The conflict has prompted countries to turn to homegrown energy sources. In the UK, Burnham’s team asked the civil service to draw up plans for new energy policies, with options that include potentially approving new drilling in the North Sea at the Jackdaw gas and Rosebank oil fields off the coast of Scotland, people familiar with the matter told Bloomberg last week. “Gas prices rising to near the peaks of the start of the US-Iran war is a reminder… that we are tied to international markets,” said Jess Ralston, Head of Energy at the Energy and Climate Intelligence Unit. “It’s the transition to heat pumps and net zero emissions, which means less dependence on burning oil and gas, that makes the biggest difference.” Mounting disasters UK homes and infrastructure need to simultaneously adapt to higher levels of heat for longer periods of time, sudden downpours that cause flooding and drought. Last week, London put out a draft plan saying air conditioning will probably be necessary in schools, hospitals and nursing homes. Burnham will need to find money for climate adaptation in an already stretched UK budget.  A
passenger uses a handheld fan on the London
Underground
Photographer:
Betty Laura Zapata/Bloomberg
On top of climate change, the natural phenomenon El Niño is set to increase the severity of some extreme weather events this year and next. It will also lower crop yields, pushing up food prices and hitting the UK, which imports nearly half its food. Worst of all is the human toll. At least 2,700 people died in England and Wales during the late-June heatwave that pushed temperatures between 3C and 4C higher than they would have been without global warming, according to an estimate by UK researchers.
Energy risk$90 Monday price for a barrel of crude oil amid renewed tensions in the Middle East “We don’t have any control over these international markets and more drilling in the North Sea doesn’t affect the price” Colin Walker Head of Transport at the Energy and Climate Intelligence Unit JPMorgan’s black swansInstitutional investors are trying to figure out what it would mean for their portfolios if continually rising temperatures trigger what JPMorgan Chase & Co. is calling “climate black swan risks.” The scenario is one that investors including Allianz Global Investors and Standard Life Plc say they’re taking increasingly seriously. It’s “something we really need to think about,” said Hetal Patel, head of sustainable investment research at Standard Life. The investor plans to do an “initial development” of its risk management around climate tipping points next year, he said. That will include running simulations across the firm’s £317 billion ($425 billion) portfolio to see how assets would be affected.  The tundra
near Deadhorse, Alaska.
Photographer:
Nathaniel Wilder/Bloomberg
Any investors not thinking seriously about such risks by mid-2028 would “really be out of the mainstream,” Patel said. Climate tipping points are critical thresholds in the Earth’s interconnected natural systems, including air, land, oceans and ice. JPMorgan’s “black swan” analogy reflects the fact that, though treated as a tail-risk, the impact of any single tipping point being breached would be “highly consequential.” Put simply, they’re “the most frightening part of climate change,” says Antoine Poincaré, director general of the Apave Climate School, which educates corporate executives on how to manage climate risks. Keep
reading
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