Are we ready for life beyond 1.5°C of global warming?

We are on the verge of crossing the threshold set out in the Paris Climate Agreement. David Gunn and Matthew Harris explore the ideas that may help us navigate a world of more frequent and severe climate shocks.

The aim of keeping global warming within 1.5°C of pre-industrial temperature levels has been one of the defining ambitions of climate action since the Paris Agreement in 2015. Yet, it is increasingly clear that we are on the verge of crossing this threshold with profound implications for both the planet and our societies.

As we do so, the planet will face more frequent and severe climate shocks. Events such as the Los Angeles wildfires, Saudi Arabia’s heatwaves and Somalia’s ongoing drought will become commonplace. At the same time, the likelihood of triggering climate ‘tipping points’ will also increase, with apocalyptic implications. These include the collapse of the Atlantic Ocean’s meridional overturning circulation – the large system of ocean currents that distributes heat and nutrients around the world – and the point at which the Amazon rainforest stops being able to recover from fires, drought and deforestation. 

Adapting to this changing world will require new thinking and big ideas. As part of these efforts, Chatham House’s Sustainability Accelerator – an initiative designed to speed up progress towards a more sustainable future – has recently launched The Rift, a new research project which explores how  societies might respond to a post- 1.5°C world. 

Rethinking the state

Crossing the 1.5°C threshold will challenge fundamental aspects of nationhood and identity. This is already a reality for some vulnerable small island states. Rising sea levels are expected to make the low-lying Pacific islands of Tuvalu and Kiribati uninhabitable within 20 years. Such a prospect is distressing for any country, especially those that have made such a minimal contribution to climate change. Yet the governments and communities of these islands are already adapting.

In Tuvalu, 40 per cent of the population is expected to move to Australia over the next decade, thanks to a new visa agreement. Meanwhile, as water levels threaten to submerge the island, the country is preparing to become the world’s first ‘digital nation’. With the loss of its physical territory, the government has pledged to ‘digitally recreate its land, archive its rich history and culture, and move all governmental functions into a digital space’ within the coming years. Other islands are in similar positions. What happens to the status of Kiribati if, as its government first proposed in 2014, the entire population migrates 1,000 miles across the Pacific to a new piece of land purchased from Fiji? In these circumstances, will the country and the national identity of its people still exist? 

International bodies are beginning to grapple with such questions. Last year the UN General Assembly adopted its first declaration on sea level rise and statehood, affirming that the sovereignty of these nations would be maintained, even as their physical territory is lost. In a post-1.5°C world, the dilemmas facing the Pacific Islands will become increasingly commonplace, forcing many more to rethink the idea of statehood, territory and their identity. In Indonesia, plans are already under way to relocate the capital city from Jakarta – population: more than 11 million – to Borneo in part due to rising sea levels. Many major cities, including Bangkok, New York, London and Shenzen, face similar risks.

A financial reckoning

Breaching 1.5C will also reshape systems that underpin modern society, including finance. Conventional modelling has tended to underestimate the socio-economic effects of climate change. The difficulty in accurately measuring climate risk means it is routinely excluded from the ‘stress tests’ central banks use to evaluate the resilience of the financial system.

As recently as 2022, reports commonly estimated that  1.5C of global warming would lead to reductions of just 3 to 4 per cent of global GDP. New thinking is quickly changing these assessments. In a recent report from the Institute and Faculty of Actuaries, fresh modelling on water scarcity and ecosystem loss suggests that a reduction of up to 50 per cent of GDP by the end of the century is more realistic. Such dramatic drops in global growth would present structural challenges for businesses and markets and would significantly change the spending power and mandates of governments and international institutions. 

Some risk assessment companies are already working to incorporate these uncertainties into the thinking of major institutions including the Inter-American Development Bank and the United Nations. Changing the wiring of key financial and multilateral institutions will not happen overnight, but it will be one of the important areas of innovation in the years ahead.  

Who will insure us?

The $8 trillion global insurance sector is one part of the financial system that is already experiencing significant climate disruption. Over the past six months, large shifts in market behaviour have highlighted the ways climate change is affecting the financial position of households across the world. 

Averting wider damage to the financial system will depend on how insurance providers respond. Defensive measures such as repricing, market exit and limited coverage may make sense for individual businesses in the short term. But they also create negative feedback loops – weakening the appeal of insurance products, leaving households more vulnerable, disincentivizing economic activity and placing unsustainable financial stresses on governments as they are pressed to act as insurers of last resort. 

This has led to increased concern from business leaders about the ripple effects of the struggling sector. 

This is a systemic risk that threatens the very foundation of the financial sector. If insurance is no longer available, other financial services become unavailable too. A house that cannot be insured cannot be mortgaged. No bank will issue loans for uninsurable property. Credit markets [will] freeze.’ 

Other pathways are possible. Through initiatives such as the Insurance Development Forum, the sector has a long history of collaborating to increase the resilience of the markets it serves. Established mechanisms include incentivizing risk avoidance by individual and institutional customers and resolving ‘protection gaps’ for those not served by conventional market products. Extending the scope of these mechanisms can play a vital role in accelerating societal response to a post-1.5C world – incentivizing rapid decarbonization and resilience, regenerating nature and supporting the controlled, equitable departure from regions no longer viable for human habitation. Such topics are being increasingly discussed across the sector. The decisions reached will play a significant role in shaping our future.

Mitigation, adaptation or both?

As the effects of breaching 1.5C of warming are felt more frequently, they challenge established thinking in the climate community. Over recent decades, the division between the traditional priorities of mitigation – the reduction of greenhouse gas emissions – and adaptation – the response to climate change impacts – has often encouraged fragmented, zero-sum decision-making. During this period, international dialogues, including the COPs, the UN’s annual climate change conferences, have tended to prioritize mitigation as a way to address long-term risks. 

But as the effects of climate change are felt more widely, focus is falling on adaptation measures at all levels of society. In Britain for example, growing coverage of adaptation within key climate change reports has encouraged other industries and parts of government to develop their own adaptation initiatives. 

Increasing interest in climate adaptation is not without its dangers. Groups such as Strategic Climate Risks Initiative warn about the prospects of derailment ‘doom loops’. In this scenario, governments redirect limited resources away from dealing with the causes of climate change, such as emissions, and towards current effects, such as the need for disaster relief. In so doing, emissions continue to rise, thereby increasing the likelihood and severity of climate shocks. 

Even if doom loops are avoided, other risks remain. Vested interests in fossil fuel industries are already using adaptation to distract from or delay mitigation efforts, including an excessive focus on carbon removals and geoengineering technologies. While these processes offer attractive promises to avoid the worst of climate impacts without challenging current ways of living, they are often technically unproven or probably unfeasible at the scale required to prevent runaway climate change. 

Despite the pitfalls, many see the growing emphasis on adaptation as an important way to mobilize more ambitious climate action. For decades, efforts to reduce carbon emissions have often been frustrated by their reliance on abstract predictions of future impacts and plagued by the perception that countries can benefit from a collective effort without paying their ‘fair share’ – the ‘free rider’ problem. By contrast, climate adaptation is more concrete and delivers direct benefits to those who invest in it. As a result, adaptation measures offer opportunities to mobilize a far greater range of stakeholders for climate action at both local and international scales.

Local is leading the way

The Climate Majority Project points to how this momentum is increasingly being channelled into ‘transformative adaptation’– actions such as wetlands recovery, regenerative forestry and community-scale solar power, which are designed to meet the immediate demands of climate adaptation while also delivering benefits for climate mitigation. 

In recent years, there has been an explosion of this type of innovation at a local, community-level. In Birmingham, Civic Square, a community-led organization, is working with residents to regenerate derelict buildings and transform them into spaces that better serve public needs in a post-1.5°C world. They are building libraries, gardening spaces and bicycle repair centres, with plans for a factory to offer ‘cool rooms for people living in homes that overheat in the summer.

In northeast Syria, ‘The Make Rojava Green Again’ campaign has worked through years of armed conflict and instability to develop renewable energy projects, promote sustainable agriculture and help bring an ‘ecological revolution’ to the region. Projects like these may be proliferating around the world, but they often remain at the edges of national policy and international dialogue. And while this year’s COP30 in Belém will be an important moment in determining action on a governmental and international level, the success of this next phase will also rely on progress made outside these official channels. 

From innovations in the financial sector to community-scale organizations, pockets of bold and ambitious action are already emerging. It is only by helping them to flourish that we might better face up to life in a harsher and less predictable world. 

 

 

Cover photo: By Chatham House