Self Organizing Criticality: Slowly, then All at Once

 Alex Walker, Climate Finance Program Manager at Environmental Defence, wrote about spotlighting and mythbusting this week's government studies on climate change and finance:

"The Senate Banking commmittee had a study on Thursday of Senator Rosa Galvaz's amazing Climate-Aligned Finance Act. I wouldn't call all the witnesses experts on climate finance. Let's bust some of the less-than-expert myths that were said. 

Gina Pappano, CEO of an anti-divestment organization, who is so unaware of climate change that she asked Suncor to scrap their net-zero plan - which they rejected. If Suncor believe in climate change more than you, it's an issue. 

Some great quotes include “energy is our economy…our economy is energy”. Seems to have missed the stat that Canada’s largest economic sector is real estate.
* “Investment [in oil and gas] leads to emissions reductions because investment leads to innovations”.  Lie. Reports found $10 billion+ loans made to O+G companies to reduce emissions, but every single one increased production. Investment = more oil and gas.
* “This bill would undermine the Canadian economy itself”. Also false. Not sure she actually read the bill. CAFA is designed to protect the Canadian economy against the systemic physical and transition risks of climate change.
* Finally “Nobody is doing any costing on what net-zero means to our economy”. False! Extensive modeling exists on the cost-savings of reaching net-zero over letting climate change run rampant. Climate change will cost Canada $5.5 trillion by 2100. Net-zero looking a lot cheaper now, huh?

The Senate committee also welcomed the world famous climate finance experts…the Pathways Alliance! For an example of their 'expertise' see enviromentaldefence.ca. They just spouted about the benefits of carbon capture for an hour. If this week in news tells us anything, it's that carbon capture is a costly and not economically viable technology used by oil and gas companies to continue producing oil and gas. 

Pathways did share one true thing “... a definition [of net-zero] that says our industry should not have any net emissions for its productions, that’s what we’re aiming for”. In other words, the Pathways Alliance have no plans to stop producing oil. All in all, distinct lack of focus on Bill S-243 with a lack of expertise on the issue of climate change + finance. 

Over in the house of commons, the long awaited study on “Environment and Climate Impacts related to the Canadian Financial System” began - including a witness from RBC ( a famously big fossil fuel financier). We did hear some hard truths from this hearing. “Finance doesn’t solve climate change, but everything that does requires financing,” said Barb Zvan from the University Pension Plan, and “we don’t have companies actually articulating what their decarbonisation strategies are at all”. Truth. Zvan seems to echo Mark Carney’s call to Canada to introduce mandatory and credible corporate transition plans had some shockingly weak arguments from Chisholm about LNG's role in Canada’s transition: “some of the gas we all talk about may well be useful in the context of a transition for some period of time as a potential displacement of certain fossil fuels," what a smoking gun for LNG. Overall though, something was missing from this meeting. There was no substantive discussion on how finance enables climate change - or the systemic risk climate change presents to our economy. The government simply can't ignore the core of this issue any longer.

Finally, Canada’s bank CEOs were asked to testify but they refused. They must be held accountable for their contributions to the climate disaster. Email francis.scarpaleggia@parl.gc.ca and ask for the CEOs to be called. Overall, a busy week in fossil fuel finance and climate-aligned financial regulation. The government is starting to listen, but it must take this more seriously and stop inviting parrots from the oil and gas industry. Climate finance is the missing piece of Canada's climate plan.

Will Steffan's video has been making the rounds again. I wrote about it a couple years ago - that we we're on track to see a 4°C rise by 2100, which is unsurvivable by mammal our size - but that link to it died so here it is again:

And finally, an important bit of interest from economist D.K. Gray that can also be applied to our personal experience with climate change. 

"Why everything happens slowly, then all at once. Imagine a pile of sand, growing grain by grain. Eventually, the pile will grow higher and higher until one more grain of sand will start a landslide. This phenomenon is called self organizing criticality, and it is a feature of many physical and financial systems. Think avalanches, market collapses, and other disasters. Our economy is a complex adaptive system, where all the individual agents are trying to do their best, but where individual preferences may take many of them simultaneously to the brink of financial disaster. (AKA: Saturday in Alberta…) When one fails, they take more with them. What starts out as a small failure turns into a big one. If you wish to understand the mechanisms of this happening, standard textbooks won’t teach you. I recommend A New Kind of Science by Wolfram, but especially the Misbehaviour of Markets by Mandelbrot. Yes. The Mandelbrot set fractal guy. Because the economy is fractal (with fractional exponents and dimensions), rough in places, difficult to understand and impossible to compute. But forewarned is forearmed. Things are riskier than you expect, and can change faster than you imagine."