Thursday, 15 January 2015

Taking the carbon out of economic growth – how to regulate financial institutions - Prof Colin Haslam, Professor in Accounting and Finance at Queen Mary

Image: Rochester Factory Credit: Ben Reierson License: CC BY 2.0

Reducing carbon emissions is a major global challenge. Over the last four decades the amount of carbon dioxide equivalent (CO2e) emitted annually into the atmosphere has increased from 32 billion tonnes to 45 billion tonnes and CO2e concentrations in the atmosphere are increasing at an annual rate of 1 part per million. If these trends continue, scientists expect that surface climate temperatures will increase to levels exceeding 2 degrees Celsius (2oC) above pre-industrial levels. In turn, this could contribute to accelerate melting of glacial ice, higher tides, additional flooding and a host of other volatile climate related events.

Reducing CO2 emissions has been a legal obligation for governments under the Kyoto agreement, which has recently been extended from 2013 to 2020. It is a major challenge because, at a global level, although we are reducing carbon intensity per financial unit of GDP by about 1 percent per year, global GDP itself is growing at over 3 percent. So it is reasonable to expect that carbon emissions will continue to grow at 2 percent per annum. Any growth in emissions risks inflating temperatures closer to and even above the + 2oC target, which governments have set in the climate negotiations at the UN.