Climate ChangeAn Actuarial View

UK weather record; my wake up call Fossil fuels, a long term view Alternative greenhouse gas stabilisation targets Psychology of climate change Where should humanity aim?

Change to Climate in the United Kingdom

Carbon dioxide emissions from use of fossil fuelsFrom the beginning of the industrial revolution

Source: U.S.Environmental Protection Agency

Carbon dioxide emissions from use of fossil fuelsFrom the beginning of human history (c.3000 B.C.)Now is the tip of the peak - a unique moment in history

Annual CO2 emissions from fossil-fuel burning 3000 B.C. to 7000 A.D.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

-3000 -2000 -1000 0 1000 2000 3000 4000 5000 6000 7000

Mill

ion

met

ric to

ns c

arbo

n di

oxid

e

Refer: M.King Hubbert

Alternative Targets for Carbon Dioxide Stabilization

500 ppm CO2e (≈450 ppm CO2 + 50 ppm other) Nicholas Stern is calling for a target stabilization level of no more than 500ppm CO2e. This target gives >10% chance of 4 degrees warming.

450 ppm CO2e (≈400 ppm CO2 + 50ppm other) David King (ex-UK Government chief scientists) says anything above 450ppm CO2e carries an unacceptable risk. Even at 450ppm CO2e it is highly likely that there will be more than 2 degrees C of warming. This is a critical point that is still not appreciated by most people.

350 ppm CO2 James Hansen (head of the NASA Goddard Institute) is now saying that the maximum safe level of atmospheric CO2 is no more than 350ppm and it may be lower.

Worldview

“Worldview” is the set of beliefs, attitudes and values that comprises our mental model of the world.

Our worldview is our window on the world, we see the world through it.

It is also a filter. We tend to see only information that confirms our existing worldview.

Different Worldviews

“We, the human species, are confronting a planetary emergency - a threat to the survival of our civilization that is gathering ominous and destructive potential” – Al Gore, Nobel Prize acceptance speech, Dec 2007

“Goodbye from the world's biggest polluter.”

– George Bush, G8 Summit, July 2008

Why is our worldview so hard to change?

Neuroscience has started to tell us why. Our brains have evolved to be:

Slow, noisy and imprecise – as design features. But incredibly energy efficient. 20 watts power

requirement. We think as little as possible! Changing our

mental models takes energy, our brains avoid it when possible.

Refer: “How we make decisions” by Read Montague

Psychological Biases and heuristics

Prospect theory (insurance as a magic word) Availability Inaccurate estimation of probabilities - valence Overconfidence Anchoring and adjustment – underreaction

Refer to: “Making Actuaries Less Human – lessons from behavioural finance”

Cognitive Dissonance

Inconsistent cognitions produce dissonance (a state of unpleasant arousal) when:

You have freedom to decide You are committed to your behaviour The behaviour leads to forseeable adverse

consequencesThe easiest way to reduce dissonance is to

change beliefs.Refer: “Mistakes were made (but not by me)” by C.Tavris and E.Aronson

Psychology of climate change recap Worldview - don’t see need for change Anchoring – wrong target Cognitive dissonance – don’t change targetConclusions: We all need to make up our own minds Do not expect those responsible to choose the

right targets. Be prepared to fight.

How much time is left to act?

“The Arctic epitomizes the global climate situation. The most rapid feasible slowdown of CO2 emissions … may just have a chance of avoiding disastrous climate change.”

“We are on the precipice of climate system tipping points beyond which there is no redemption.”

- James Hansen, Director, NASA Goddard Institute for Space Studies, New York

Target CO2:

< 350 ppm To preserve creation, the planet on

which civilization developed

Al Gore’s proposal for clean energy12th July 2008

“America must commit to producing 100 percent of our electricity from renewable energy and other clean sources within 10 years.”