Friday, March 23, 2018

Racing to beat climate change

The whine of high-powered electric motors is set to return to Hong Kong’s harbour-front next week as the Formula E motor racing championship rolls into town once again.

To mark the occasion, MS Amlin has polled the city’s youth about the risks that keep them awake at night. The results highlight the strength of public sentiment towards the adoption of proactive policies towards climate change — even in a city that can sometimes seem ambivalent to the issue.

Hongkongers aged between 18 and 35 say that climate change is more threatening than the rising cost of living, the lack of affordable housing and the effect of China’s government policies on Hong Kong.

The poll also shows young Hongkongers are committed to tackling climate change on a personal level, with 94% saying that climate change will impact them in their lifetime and 97% saying that they have already taken action to reduce personal contribution to climate change.

“It is great that the majority of young people have started taking steps to mitigate climate change,” said Adrian Britten, MS Amlin’s global director of communications.

These measures include recycling and reducing personal and family energy consumption — though such habits have long been common in Hong Kong due to the high cost of living and weak social safety net. Locals tend to use aircon sparingly, for example, and it is common to see old people in the city rummaging through garbage for recyclable materials. Likewise, taking public transport is far cheaper than parking a car.

Of particular relevance to MS Amlin, which sponsors the MS Amlin Andretti Formula E team, is the fact that more than half of the respondents said they would consider buying an electric vehicle.

Unfortunately, retailers of luxury petrol and diesel cars in the city are not so keen and successfully petitioned the government to scrap its tax waiver for emission-free vehicles, which encouraged the number of EVs on Hong Kong roads to skyrocket during the past three years from just 314 to 6,694. Sales have collapsed since April, when the waiver ended.

“More could be done here in Hong Kong to promote clean tech and this weekend’s all electric street race shows young Hongkongers that sustainable motoring can also be thrilling,” said Britten. However, this message was somewhat undermined at last year’s event by a parade of the least fuel-efficient vehicles on the planet — Ferraris, Lamborghinis and other supercars — driven by their local celebrity owners.

Change for good?
Insurers are split on how climate change will affect the industry overall. Some are concerned that the increasing frequency and severity of extreme weather events could make insurance even less affordable than it is today, which is a dire prediction given the low level of insurance penetration even in wealthy countries.

Hurricane Harvey’s massive rain event in Houston, for example, highlighted how the flood insurance market in the US is basically broken. This was not caused by climate change in the first instance, but the problem is set become much worse as a result.

And this kind of problem is even greater in emerging countries, where insurance penetration is considerably lower and, as a proportion of GDP, is shrinking in many places.

“Sometime in the future there will be the situation where people cannot afford any longer to buy catastrophe insurance — this is what we want to avoid,” Ernst Rauch, the head of the Corporate Climate Centre at Munich Re, told Bloomberg in November.

Warren Buffett, on the other hand, sees climate change as a driver of business — if it is even a real thing.

“Up to now, climate change has not produced more frequent nor more costly hurricanes nor other weather-related events covered by insurance,” he said in his 2016 letter to shareholders. “If super-cats become costlier and more frequent, the likely — though far from certain — effect on Berkshire’s insurance business would be to make it larger and more profitable.”

He continued: “As a shareholder of a major insurer, climate change should not be on your list of worries.”

While it’s rarely wise to disagree with the Sage of Omaha, a host of (mostly European) insurers and reinsurers joined forces with domestic and international agencies at the COP23 climate conference in Bonn this month to launch the InsuResilience Global Partnership on Climate and Disaster Risk Finance and Insurance Solutions.

The partnership aims to enable more timely and reliable post-disaster response and to better prepare for climate and disaster risk through the use of climate and disaster risk finance and insurance solutions, reducing humanitarian impacts, helping poor and vulnerable people recover more quickly, increasing local adaptive capacity and strengthening local resilience.

It remains to be seen which point of view is correct, but doing nothing and hoping for the best seems like a risky position to take — though perhaps not for an octogenarian billionaire.


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