‘Planetary Solvency’ At Risk, Actuaries Say, as Rising Emissions Push Warming Past 1.5°C

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The world already faces a rise in multi-year droughts and is on track for financial system panics and a 50% drop in global economic activity over the decades ahead, as the annual increase in climate pollution pushes past any pathway to keep average global warming to 1.5°C, according to a flurry of new reports over the last week.

The atmospheric carbon data show up in a research report by the UK Met Office, summarized for Carbon Brief by a team of six climate scientists led by Prof. Richard Betts, the agency’s head of climate impacts research.

“In 2024, the rise in atmospheric CO2 was one of the fastest on record,” the scientists write, citing data from the Mauna Loa observatory in Hawai’i.

“Emissions of CO2 and other greenhouse gases from human activity have so far caused human-caused global warming to reach about 1.3°C above pre-industrial levels,” they add. “If warming is to be limited to 1.5°C, as set out in the Paris agreement, the build-up of CO2 and other greenhouse gases in the atmosphere will need to slow to a halt and then go into reverse.

“And, yet, the rise in atmospheric CO2 concentrations is still showing no signs of slowing.”

Overall, “concentrations of carbon dioxide are now more than 50% higher than before humans started burning large amounts of fossil fuels,” BBC reports, citing the Met Office research. “Last year, fossil fuel emissions were at record highs, while the natural world struggled to absorb as much CO2 due to factors including wildfires and drought, so more accumulated in the atmosphere.”

Three of the emissions pathways published by the Intergovernmental Panel on Climate Change in 2022 offer a 50% of holding warming below 1.5 or 1.6°C, but only if the annual increase in greenhouse gas emissions begins to slow down this decade, slows or reverses in the 2030s, then picks up the pace after that. But “not only are atmospheric CO2 concentrations still rising, the rate of rise is accelerating,” the scientists write. “While the curve needs to rapidly bend in the other direction,” they say, “the rate of rising CO2 marches onwards and upwards.”

That trend is already producing multi-year droughts that “have become drier, hotter and more frequent over the past 40 years,” Carbon Brief writes, citing a new study in the journal Science. “The global land surface affected by these extreme events has expanded at a rate of nearly 50,000 square kilometres per year in the past four decades—an area larger than Switzerland each year,” the news story states.

The study maps multi-year droughts from 1980 through 2018, using an index that captures “changes in rainfall and potential evapotranspiration, which measures the amount of water that escapes the soil and plants into the atmosphere,” Carbon Brief explains. “These long-lasting events can deplete soil moisture and leave rivers, lakes, and reservoirs parched. This, in turn, can result in ‘devastating impacts’, such as massive crop failures, tree mortality, or reduced water supply.”

The day before Carbon Brief summarized the Met Office study, the Planetary Solvency report by the UK Institute and Faculty of Actuaries (IFoA) concluded that catastrophic climate shocks could cut global gross domestic product (GDP) by 50% between 2070 and 2090. The “stark warning” from an association of professional risk management experts “hugely increases the estimate of risk to global economic well-being from climate change impacts such as fires, flooding, droughts, temperature rises, and nature breakdown,” the Guardian reports.

“Without urgent action to accelerate decarbonization, remove carbon from the atmosphere, and repair nature, the plausible worst-case hit to global economies would be 50% in the two decades before 2090,” the news story adds. “At 3°C or more of heating by 2050, there could be more than four billion deaths, significant socio-political fragmentation worldwide, failure of states (with resulting rapid, enduring, and significant loss of capital), and extinction events.”

(Recent estimates put the Earth on a trajectory for 2.7°C warming without further action to curb the greenhouse gas emissions that cause climate change. The estimates did not factor in the impacts of a second Donald Trump presidency, which Carbon Brief estimated last year at four billion tonnes of additional emissions—if he gets to implement his agenda.)

IFoA lead author Sandy Trust, a sustainable finance specialist with the Climate Financial Risk Forum, said political leaders are being blinded to the risk by economists’ predictions that put GDP losses in a 3°C world as low as 2%.

“You can’t have an economy without a society, and a society needs somewhere to live,” he told the Guardian. “Nature is our foundation, providing food, water, and air, as well as the raw materials and energy that power our economy. Threats to the stability of this foundation are risks to future human prosperity which we must take action to avoid.”

On the same day as the IFoA report, the world’s financial stability watchdog, the Basel, Switzerland-based Financial Stability Board, concluded that the mounting costs of climate shocks like wildfires, drought, floods, and storms “could cause a broader pullback in lending and downturn in investor confidence,” the Financial Times states. “The report comes amid broader concerns about the capacity of the insurance sector to cover losses associated with climate change following devastating fires in Los Angeles that are estimated to have caused tens of billions of dollars’ worth of damages.’

In the FSB’s projected future, “banks could reduce lending, including for recovery to already vulnerable households and corporates,” the agency wrote. “There could also be an abrupt, broad-based repricing of climate-physical risk, as the expectation of larger future losses are incorporated into current prices and impact sectors and jurisdictions not currently directly affected by disasters.”

Cover photo: Denis Onyodi / IFRC/DRK via Climate Visuals