In "The Naked Ape," zoologist Desmond Morris observed that humans "tend to suffer from a strange complacency that .... we are somehow above biological control," that our collapse as the planet's dominant species is unthinkable. Morris, writing in 1967, was most worried about the perils of overpopulation, but his point applies equally well to the more recent discovery of global warming, arguably the greatest environmental threat of our time.
To the oil and coal lobbies, global warming does not exist. Self-interest can make even the most astute observers deaf and blind, not to mention dumb. But not all the time. As it happens, two of the most powerful players in the world economy, the global insurance and banking industries, are now coming to believe that their self-interest is incompatible with humanity continuing to pump six billion tons of carbon dioxide and other heat-trapping greenhouse gases into the atmosphere every year.
At risk, the financiers realize, are trillions of dollars worth of insured property and long-term investments. Most of the beaches on the East Coast of the United States could be gone within 25 years, according to a recent estimate of the Intergovernmental Panel on Climate Change (IPCC), a group of 2,500 scientists commissioned by the United Nations to study the problem. With over two trillion dollars of insured assets along U.S. coastlines alone, the threat to the insurance industry is plain. Add in the potential losses in other low-lying regions around the world, such as Amsterdam, Cairo, and the Rhine, Yangtze and Po river valleys, and the stakes become astronomical. Therefore, while world governments dawdle, leading banks and insurance companies, especially in Europe and Asia, may soon initiate a massive shift of international investment flows away from fossil fuels and towards solar energy.
The idea that giant corporations might lead the way towards a greener planet is anathema to many environmentalists. Yet the insurance and banking industries, it turns out, are taking advice from none other than Greenpeace -- specifically an ocean geologist named Jeremy Leggett, who is one of the half-dozen experts most responsible for putting the climate change issue on the international agenda.
"In the years since the Earth Summit (held in Rio de Janeiro in 1992), environmentalists have come to despair about governments actually doing what they pledge to do," says Leggett. The U.S., like most governments who signed the climate change treaty negotiated in Rio, will not meet the target of cutting greenhouse gas emissions to 1990 levels by the year 2000.
However, a follow-up conference in Rome last December was extremely significant. Formalizing a decisive shift in scientific thinking, the Rome conference endorsed the IPCC's view that "a discernible human influence" is contributing to global climate change. In other words, climate change should no longer be considered a mere theory that may or may not be borne out by future events. Man-made warming of the Earth has begun, said the IPCC scientists, and it's bound to get worse. Indeed, 1995 was the hottest year in recorded history, according to preliminary data gathered by the British Meteorological office.
According to the IPCC, the average global surface
temperature will rise 3.6 degrees Fahrenheit by 2100 -- the most rapid increase in the 10,000 years of human civilization -- if greenhouse emissions are not reduced. Disruptions -- droughts, floods and other climactic extremes -- will become more frequent, claiming untold numbers of lives, destroying billions of dollars of property and endangering food production. Sea levels will rise, rendering low-lying regions uninhabitable. And how will the world community handle the 70 million refugees the IPCC expects global warming to generate?
A number of giant insurance companies already suspect global warming has cost billions. Swiss Re, the world's second largest reinsurance company, blaming "giant storms" on global warming, says it has paid 400 million Swiss francs to Florida insurance companies in the wake of Hurricane Andrew. That hurricane's total cost to the insurance industry: $17 billion.
"(Insurance companies) know that a few major disasters caused by extreme climate events could literally bankrupt the industry in the next decade," says Hans Siders, director of the United Nations Environment Program (UNEP). No wonder Swiss Re and 42 other European and Asian insurers recently signed an accord with UNEP to address the climate change problem.
Banks are concerned as well. In a memo to fellow executives last September, Peter Blackman, assistant director of the British Bankers' Association, warned that within the (20-40 year) "lifetime of loans granted today, climate change is forecast to have a dramatic impact...."
But Blackman drew his colleagues' attention to a silver lining: "There are enormous opportunities to finance new environmental developments and the development of alternative energies," he wrote. Leggett hopes that the banking and insurance sectors will use their tremendous leverage over world capital to kick start the solar revolution. He has a formidable ally: a 41-year-old German billionaire named Rolf Gerling, who heads Gerling-Konzern Globale, another of the world's largest insurers. In February, Gerling's publishing house will release a book Leggett edited, called "Climate Change and the Financial Sector," which pulls together papers from banking and insurance executives who make the environmental and financial case for "beginning the diversion of capital flows away from carbon to solar."
Although the solar transition will be driven by market forces, governments have a crucial role to play. "Governments have to help break solar out of the price trap," says Leggett. "Until economies of scale can be realized, solar will still cost more than most fossil-fuel alternatives. It's like photocopiers. In the early days, they cost thousands of dollars. Now they cost a couple of hundred dollars."
History suggests that government procurement policies are among the most effective ways to prime the technological pump. In the U.S. in the 1960s, large-scale purchases of computers by the military lowered unit costs and sparked that industry's take off. By twiddling a knob here and there, by spending not more but more wisely, governments the world over could do likewise for solar technology.
The banking and insurance industries could
hasten the transition by giving their clients incentives to avoid fossil fuels and other ecologically damaging practices -- for example, by writing into a loan contract for a new office building requirements for energy-efficient design, lighting and building materials.
Can the human species bring its economic behavior into balance with the natural systems that make our lives on Earth possible? There is ample reason for pessimism, but occasionally there is good news. What gives the government-aided market approach to the solar transition such enormous power is the fact that capitalists will be vigorously pursuing their own self-interest rather than reluctantly obeying -- or evading -- government mandates. Even Shell Oil concedes that solar will be the world's dominant energy source by 2050, so why wait? If the solar revolution arrives soon enough, the world of 2050 might not be such an environmentally nasty place after all.