Climate change makes Europe heatwave even hotter

Experts have concluded that human-driven changes added up to 3 degrees Celsius to the recent record-breaking temperatures, write Eric Roston, Mathew Carr and Lisa Pham

Heat scorched Western Europe this July, in what will likely be confirmed as the hottest month in recorded history, the UN’s World Meteorological Organisation has noted.

“This is not your grandfather’s summer,” UN secretary general Antonio Gutierrez said.

The impact of human activity on the extreme temperatures is the subject of the latest analysis by World Weather Attribution (WWA), a research collaboration that provides near-real-time analysis of climate change’s impacts on weather.

Last Friday the group concluded that human-driven changes to the atmosphere added from 1.5 degrees to 3 degrees Celsius (2.7 to 5.4 Fahrenheit) to the heatwave. Without greenhouse gas emissions, the July heatwave would have had very little chance of occurring at all in France, where temperatures hit 43.6C outside Paris on July 25. In a pre-industrial climate, thermometers might reach that high only once every 1,000 years.

“At all locations analysed, the change in probability of the event is large, and in several cases it is so large that a reliable estimate cannot be established,” write the WWA authors.

The numbers out are relentless. The Netherlands and Belgium exceeded 40 degrees Celsius (104 Fahrenheit) for the first time last month.

Scientists have gained much more confidence evaluating how climate change may affect an extreme weather event over the last 15 years, although it remains a young field. Researchers are increasingly studying shorter-term events, such as heavy precipitation and tornadoes, said Robert Vautard, a senior scientist at France’s National Center for Scientific Research and a WWA co-author.

The breakthrough came in 2004, when researchers found that climate change had made the previous year’s Western European heatwave about twice as likely to occur as it would have in a world without greenhouse gas pollution. The 2003 heatwave killed as many as 70,000 people, including more than 15,000 in France.

The continent was better prepared this time around. Nations issued warnings, and public officials advised people how to protect themselves. France elevated the status of its Plan Canicule (Heatwave Plan) to the third-highest of four levels on July 22 and helped vulnerable populations prepare for the extreme temperatures.

Meanwhile, the Bank of England for the first time is asking British insurers to gauge how global warming might impact the value of the stocks and bonds they hold — and its potential to upend financial markets.

The central bank, which regulates Britain’s financial services industry, included three scenarios related to climate change in a broader stress test of how robust the industry would be in times of strain. It’s asking for answers by October 31.

The exercise, which started in June, is part of a broader effort by BOE Governor, Mark Carney, to focus the attention of investors both on environmental issues and on how those are creating new risks for the financial system. After almost 200 nations backed the 2015 Paris Agreement on climate change agreeing limits on fossil fuel emissions, economies everywhere are adding regulations on pollution from coal and spurring investment in renewables such as wind and solar.

“What’s most interesting is the way the stress test will change the way the insurers will think about these particular sectors,” said Mark Lewis, global head of sustainability research at BNP Paribas SA’s asset management unit.

The three climate scenarios by the bank’s Prudential Regulation Authority are “exploratory” in nature. The “hypothetical narratives” are designed to “promote discussion on how business models and balance sheets may need to adapt, not about assessing current financial resilience,” it said in a guidelines document published on June 18.

Under the most dramatic scenario, rapid global action to halt climate change results in a “disorderly transition”.

It suggests “shock parameters” where the shares of oil companies plunge 42% in three years and coal users lose two-thirds of their value. Car-makers would also suffer as traditional engines are scrapped in favour of electric vehicles.

Another scenario envisions an orderly transition and warming in the atmosphere kept well below 2 degrees Celsius (3.6 degrees Fahrenheit) since pre-industrial levels. The economy would shift toward zero carbon emissions by 2050. A third outlook was for little tightening of environmental regulations, resulting in warming of 4 degrees by 2100 and more significant changes to the climate.

The assumptions set out by the PRA are “purposely non-exhaustive as the goal of this scenario analysis is investigatory in nature,” the regulator said.

The PRA recognises that for different portfolios, the materiality of natural catastrophe perils and asset classes affected will differ.

The exercise may prompt shareholders to see insurers as a more risky prospect, said David Lunsford, co-founder and head of development at Carbon Delta AG, which advises on climate risks and provided input to the PRA as it drew up its request.

“The interest of the PRA is to look at the most extreme scenarios. While many people think insurers understand natural disasters enough to cope with climate change, the issue will present many challenges. Some insurance companies might be more exposed than was expected before the tests,” he said.

Insurers including Aviva Plc and Prudential Plc declined to comment. Lewis at BNP said the scenarios might set off some deep thinking about how other investors will react to political developments on the environment in the months and years ahead.

“It becomes a sort of game-theory thing. Do you think Insurer X will sell? Do you think Insurer Y will sell? All of a sudden you are thinking ‘I don’t want to be the last guy holding this stuff’.”

The PRA doesn’t intend to disclose the results of the tests for individual insurers and it will publish a summary of the results in the first quarter of 2020.