Reserve Banks: 25% GDP Loss by 2100 if We Don’t Reduce CO2 Emissions

Investment and energy capacity. P 17, NGFS Climate Scenarios for central banks and supervisors June 2020

Guest essay by Eric Worrall

Über green former Bank of England governor Mark Carney has made some new friends.

Reserve Bank warns of 25% GDP loss by 2100 unless action taken on climate change

Australia’s central bank joins 60 others, including the Bank of England, to warn of climate risk to the economy and financial sector

Adam Morton Environment editor @adamlmorton
Fri 26 Jun 2020 03.30 AEST

More than 60 central banks, including the Reserve Bank of Australia and the Bank of England, have warned that global GDP could fall by 25% by 2100 if the world does not act to reduce global greenhouse gas emissions.

They suggested if the world acted to limit emissions to net zero by about 2070, giving a 67% chance of limiting global heating to 2C above pre-industrial levels, the impact of the climate crisis on global GDP could be about 4%.

The estimates are included in scenarios published by the Network for Greening the Financial System, a collection of 66 central banks and supervisors and 13 observer institutions. Described as the first of their kind, the scenarios are designed to guide bankers and financial regulators, including Australia’s Prudential Regulation Authority (APRA), in assessing the climate risks to the economy and financial sector.

Their launch follows warnings from financial regulators of the economic threat posed by the climate crisis. Former Bank of England governor Mark Carney last year warned it was possible the transition needed to tackle the climate crisis could result in an abrupt financial collapse, and the risk of collapse would grow the longer action was delayed. In Australia, APRA board member, Geoff Summerhayes, warned climate change posed a material risk to the entire financial system and urged companies to start adapting.

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Still no significant role for nuclear power (see the image at the top of the page). I think this lack of a role for nuclear power is particularly reprehensible in the central bank disorderly climate scenario.

The disorderly scenario suggests the world panics around 2050 and invests vast sums building renewables.

The reality of course is if the world really needed low carbon energy in a hurry, the only option to deliver this would be nuclear power. The French proved going full nuclear is an economically viable option in the 1970s. Desperate people tend to reach for what they know will work.

The reports kind of gloss over a lot of the implementation details.

P18 of future scenarios contains this gem: even as population increases during most of the century, In the Orderly scenario, methane (CH4) and nitrous oxide (N2O) emissions are also gradually reduced.

The bankers don’t explain in detail how challenging it would be for food production to support the increasing population, while at the same time nations are busy restricting nitrate fertiliser, making farm mechanisation more expensive by electrifying the agricultural sector, and returning farmland to wilderness, or converting remaining farmland to biomass production or renewable energy installations.

Perhaps they figure they are central bankers, they have provided the direction – the implementation is up to agricultural experts to figure out.

They’ve covered their butts in case all the doomsday predictions turn out to be nonsense. The reports admit there is a lot of uncertainty. For example on page 8 of Future Scenarios, Scenarios differ markedly in their economic impact, with significant uncertainty in the size of the estimates for both transition and physical risks.

55 thoughts on “Reserve Banks: 25% GDP Loss by 2100 if We Don’t Reduce CO2 Emissions

  1. European banks have gone all in on renewable (unsustainable) energy because they considered it a government backed low risk investment. Now that Germany has proven wind and solar only makes electricity more expensive the banks are getting a little nervous…as they well should. Not to mention the new awareness about end of life disposal for toxic turbine blades and solar panels. It’s becoming obvious that wind and solar are almost as bad for the environment as bio-fuels.

    • Not to mention the new awareness about end of life disposal for toxic turbine blades and solar panels.

      Utter rubbish. There are some chemically “toxic” dopants in PV cells but typically like 10-8 concentrations and effectively vitrified in pure silicon glass. This is the same level of stupidity as calling CO2 “toxic”. It isn’t.

      On the subject of the article it is interesting why there is this big, coordinated international push from our major financial institutions to start pushing the climate game. They will know that there is absolutely no way of knowing any economic factors as far out as 2100.

      What is the longest scale forecast that any central bank has made on any business sector in the past? If this was financial advice on any other sector, like oil for example, they would probably be prevented by law from making such unfounded speculative claims.

      This coordinated announcement of fictional claims gives us some idea of the global player who are hyping this fraud on humanity.

        May 23, 2018Environmental scientists and solar industry leaders are raising the red flag about used solar panels, which contain toxic heavy metals and are considered hazardous waste.
        WUWT ?

        • Old Bob, Greg says renewable disposal is a non-issue, and in his parallel universe I’m sure that’s true. But it’s a real world problem that only a liberal can turn a blind eye to.

  2. They’ve covered their butts in case all the doomsday predictions turn out to be nonsense. The reports admit there is a lot of uncertainty.

    They’re not that green.

    • yarpos
      They really are quite insane

      “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”
      Thomas Sowell

      These people have taken the “pay no price for being wrong” thingy to the nth degree as their forecasts are so far out into the future, they’ll be long dead before the chickens come home to roost. Same for most politicians, AGW/CC “scientists” and, for sure, Central Bankers.
      Don’t even get me started on economists and market analysts.

      • Letting decisions be made by those with no skin in the game was the end of the West.

        Carney, of course, is free to wreck any country he lives in, then go running back to Canada.

  3. Thank you Josh for another Friday Funny.
    Fantasy lands statements from ignoramuses who clearly live on another planet (or at least are describing one).

    • One should have put them on the Falcon heavy instead of a Tesla… They would probably have reached Mars by now…

    • yeah liked cos it made me laugh
      as well as get angry that people with jackschitt idea on much at al re climate and realworld can state such crap and get away with it.

  4. That is against a drop of 50%+ in GDP if we DO implement the idiotic responses to the climate change agenda.!

  5. The coming cooler period will have more of a negative impact than any slight warming would have had. !

    Historically, warmer times have always been times of abundance and prosperity.

    • fred250,

      Your comment reminds me of what this fellow said.

      “Civilization exists by geological consent, subject to change without notice.”

      Will Durant

  6. Tghe banks in Australia have been careful to support only subsidised renewables.
    When things get tough, like now, they rely on a Commonwealth Government guarantee for their funds and are loaned at a rate on .25% while lending out at between 11% and 19% on credit cards and at least 5% on business loans.
    ‘Nice work if you can get it, and you can get it if you try.’
    Not a bad spread.
    Interestingly they will not loan on risky renewables without government support. A win/win for their shareholders and their stability.Typically the projections are at a time when they are comfortably in retirement,
    or pushing up daisies.
    Their biggest problem is malfeasance and ineptitude plus a reliance on non productive ‘safe’ investment, like renovations and new building.
    Australia and the world needs cheap, peliable base load power. The Indians,Japanese and Chinese are onto this.
    Wither little Australia post COVID 19, if we fail to work this one out.

  7. “warnings from financial regulators of the economic threat posed by the climate crisis”

    And what “climate crisis” would that be?

    The real economic threat is from the devastation of the reliability of electricity supply systems

    as well as many other aspect of the greenie agenda.

  8. What utter garbage. More CO2 = more crops = more GDP, of every country.

    Why the hell are central banks regurgitating this fake lie? What do they hope to gain? IS it just virtue signalling, following the herd?

  9. Anybody ready to ask what gross domestic product loss can be expected from taking the actions reducing CO2 output to prevent the anticipated climate change? You know, just by way of a properly due comparison in such a momentous decision process claiming high stakes in getting it wrong. Oh, that!

    I’m getting an eerie feeling that the ‘Peter Principle’ regarding managers and government officers eventually rising to positions beyond their competence is indeed in full flower.

  10. It’s been some time since I listened to this talk but I think Bjorn Lomborg and his teams of economists worked out that the warming in the IPCC’s worst case scenario would cause a loss of GDP of 2 to 3% by 2100 which would be insignificant as they expect the worlds GDP would have increased by over 1000% by then.

  11. Its easy to come up with big numbers by ignoring the benefits that come from:

    – Plentiful energy in poor countries leading to substantial gains in efficency. Think Africa becoming the new China.
    – CO2 fertilisation effect increasing crops and green land cover;
    – Ignoring transition costs such as increased depreciation from retirement of assets before the end of their economic life;
    – Ignoring costs coming from rising inefficencies caused by an inappropriate choice of technologies driven by a fear of CO2 (Tesla’s rather than Toyota’s);
    – use of discount rates that are laughably low (think the notorius Stern report);
    – a rising temperature that is way out there (3C by 2070);
    – a loss function that is exponential in its temperature response;

    Definently not a glorious moment of policy analysis.

    • Old planning engineer.
      Good analysis.
      With age comes great wisdom.

      I’d like to add that our planet supports more plant and animal life when it is warm, and less life when cold.

      There is no logical reason to assume a continuation of the warming since the 1690s would be harmful in any way.

      The end of the Holocene Interglacial is likely to be bad news for GDP growth, but more mild global warming in the future will boost GDP growth.

      The past 150 years of global warming has been, by far, the healthiest and most prosperous 150 years for humans in history.

      If global warming in the past was 100 percent good news, then why would continued global warming in the future suddenly become 100 percent bad news?

      The claimed decline of GDP is nonsense coming from people who want to spend $trillions to replace cheap, reliable sources of energy with expensive, unreliable sources of energy.

      GDP growth is supported by cheap, reliable energy sources — wind and solar power are not the answer unless you WANT slower GDP growth.

      Warm = good
      Cold = bad

  12. The banks don’t even take into account the effects that Covid have plagued on their GDP after 1 year, and how future Covids can plague their GDP even more. Nevermind the effects CO2 can play. Microorganisms are the real GDP killer they are not even taking into account. And they are forecasting into 2100??!! Lets see them make one correct prediction for next year first. European banks don’t even know how Brexit is going to go at this time, nonetheless the weather for 2021.

    • It’s not the Covid virus that is plagueing most country’s GDP – it’s the political (over)reaction to the virus. Coming off the bottom of South Africa’s economy, and not quite coming off one of the world’s harshest lockdowns, we’re looking at at 8-10% reduction in employment, with anything up to a couple of thousand small businesses going to the wall. Adding to the loss of business and income tax, is the unprecedented ban on the sale of alcohol and tobacco. The loss of the ‘sin tax’ on those will hit the economy hard.
      And with socialist ideology overriding any sensible economic decisions, watch for S.A. to enter Trump’s list of s**thole countries by next year.
      Government is saying “Ah yes! But WE’LL get Socialism right! If the economy collapses, we’ll just pick it up and rebuild it OUR way!”

  13. I call total BS on any long term financial estimate.
    The following is just a small list of technological advances that have changed the world.
    Steam engine
    oil – ICE
    Computer -Smart phone
    Space travel
    None of the above happened overnight, BUT they didnt take 80 years.
    Try and predict the next one.

  14. My bet is that coping with higher temperatures if they arrive will cost us a lot less than 25% of GDP. So why would we do this?

    It’s a scenario that can never happen.

  15. ….errrr things have changed here in France since the 70’s, we now vote for morons who used to be bankers, we’re so lucky to have him.

    27 November 2018
    A total of 14 power reactors will be shut down in order to reduce the share of nuclear in France’s electricity generation mix from the current 75% to 50% by 2035, President Emmanuel Macron announced today.

    He also announced that support for renewables will increase from the current EUR5 billion to between EUR7 and EUR8 billion per year. Onshore wind capacity will be trebled and photovoltaic capacity increased five-fold by 2030. Offshore wind will also be developed.

    • Yes its really sad. I met some French engineers who worked on the reactor programme and the tunnel in a Calais bar once, they were all very glad to be retired.

  16. Mark Carney is te epitome of the paid capitalist lackey out to screw money from the citizen and transfer it to the elite.

    Full Marx for inventing the notion.

  17. Eric:

    “Desperate people tend to reach for what they know will work. ”

    Nooooooooooooooooooooooooooooo! Clueless desperate people grasp at straws. More correctly, Desperate people tend to reach for what they think / believe will work.

    ATB & KBO

    • True. But if one of the herd by random luck leaps to safety there’s a possibility the others will follow.

  18. I don’t understand why there is concern about a 25% drop in GDP in 80 years when much of the developed world
    is currently facing a far more serious immediate future as a result of just 6 months of the Wuhan flu.
    There are forecasts of 2m unemployed in the UK in September. UK lost 20% GDP in the last quarter . The pound is at lowest levels against dollar and euro that I can remember . The Euro needs a massive back up , which it might not get , and as for the US – I can find no words to describe the economic and social suicide taking place there.
    And the worry is about 2100?

  19. In the unlikely event that we do go down the road of the climate alarmists I would expect the world’s GDP to fall to zero because we will be back living in caves for the few that actually survive to 2100.
    Not one warmist prediction has come true why would I start believing them now?

  20. The climate change we have been experiencing is caused by the sun and the oceans over which mankind has no control. There is no action that mankind can take that will stop Mother Nature from gradually changing the Earth’s climate as she has done for eons. It is all a matter of science.

  21. 100% drop in GDP by 2050 if we don’t deal with the space alien crisis immediately. Guaranteed. It’s science, so if you disagree you’re a science denier.

    • 99% drop by 2030 if we don’t deal with the pole shift immediately. If we stop using fossil fuels, pay more taxes and pray to Gaia, we can reduce the shift to only forty degrees.

  22. ” 25% GDP loss by 2100 unless action taken”

    And it will fall by 100% if action is taken.

  23. The successful economies of the world rely on an abundant supply of inexpensive energy. Fossil fuels are a huge part of that energy supply. Getting rid of them makes energy less abundant and much more expensive.

    Their conclusion is 180 degrees from reality.

  24. The new risk mitigation standard for financial institutions is not financial risk or act of God but political correctness itself. Stupid, long-run predictions are a low-cost mitigation (political) strategy for any financial institution seeking regulatory stability. (That could be a climate consultant ad placement by the way.)

    Stupidity and a small fee, plus an ignored PC statement are a small price to pay for climate religious tolerance.

  25. In the cumulative energy investment chart:
    Why would the hot house world scenario make any investment in storage technology? Fossil fuel generation is dispatchable.
    Why is there a difference in the energy efficiency columns? Any energy saving scheme that applies to a renewable scenario can be applied to a fossil fuelled scenario.
    Why is there no column showing the required investment for transmission, and frequency control services in the renewable scenarios?

  26. Wow the utter hubris of these idiots! Nobody can predict what will happen to the GDP in 2100.

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