Global Climate News - June 14-16
Climate and real estate insurance in the US; Canada Nature Strategy 2030; Denmark introduces carbon tax; Brazil's bill for EV innovation and green hydrogen;
The cover story on Climate and real estate insurance in the US in this edition has been contributed by Aanandita Sikka, Analyst at Climate Policy Initiative, and an expert on Sustainable Finance and Urban Development. Happy reading!
In this newsletter
Climate and Real Estate Insurance in the US
Biodiversity
Top stories
Climate and real estate insurance in the US
Climate analysts warn of a looming "climate bubble" in real estate. As extreme weather risks rise, lenders and insurers will revise home valuations. Eventually, this could cause the real estate bubble to burst and home prices to crash.
Recent analysis finds that climate risk is not reflecting in property values. A 2023 study published in Nature Climate Change found that flood-prone residential properties are overvalued by $237 billion. A 2022 study by actuarial firm Milliman put a much higher price tag on the bubble – $520 billion.
This over-evaluation encourages risky development in catastrophe-prone areas, further inflating the climate bubble. And claims are rising.
USD 34 billion of severe convective storm claims in 1H23 drove an estimated USD 16 billion in extra claims costs
Regulations in some states cap an increase in premiums, decoupling insurance rates and risks. Consequently, with inflation and rising extreme climate events, private insurers are labelling certain areas as uninsurable and are restricting business.Â
The chart below illustrates the maximum approved premium vs the actual cost of insuring for homes in California at increased risk from wildfires. The gap of $2900 is labeled as ‘premium suppression’.
The concern is that homeowners without affordable insurance options could trigger panic selling, leading to a sharp decline in prices of overvalued properties and potentially causing a housing market collapse.
The 2023 Nature Climate Change study found that highly overvalued properties are concentrated in counties with no flood-risk disclosure laws. Another study finds that access to information and flood-risk data leads buyers to choose less risky properties. Therefore, experts recommend regulations for sellers to disclose climate risks when selling a property to reduce overvaluation and inflation of the ‘climate bubble’.
Biodiversity
Canada has published it’s 2030 Nature Strategy to halt and reverse biodiversity loss. The strategy includes
Protecting 30% of Canada’s land and waters by 2030
Working to recover species at risk
Restoring degraded lands and ecosystems
Engaging, partnering and working with Indigenous governments and organisations
Integrating nature and climate action e.g. Natural Climate Solutions Fund
Ensuring sustainable management and use of biological resources
Carbon Pulse | Canada’s 2030 Nature Strategy (PDF) | Canada’s 2030 Nature Strategy and the Nature Accountability Bill
Initiative 20x20 is a regional partnership to restore more than 50 million hectares of degraded land in Latin America by 2030. Projects include conserving oak forests, reforesting national parks with native species, connecting different biodiverse habitats, growing cocoa on land degraded from open-pit coal mining, sustainable palm oil production and cattle ranching, and lots more. Carbon Pulse
The city of Vancouver (Canada) has passed a motion to plant 100,000 native and climate-resilient trees. In 2021, British Columbia experienced a Heat Dome event that led to an estimated 600 deaths, with 117 of these in Vancouver alone. Investigation later found that deaths were disproportionately higher in areas of the city with low green cover. The use of asphalt and concrete in cities creates ‘urban heat islands’, making air-conditioning ineffective at rising temperatures.
Buildings and concrete absorb radiation and release it as heat, making cities up to 12 degrees hotter than their rural counterparts at night — and an inability to cool down at night is one of the major drivers of deaths during heat emergencies. Heat is also more intense in apartments and condos than houses, which usually allow cross breezes and have more shade. Canada’s National Observer
More cities need action on green cover.
EU’s draft Nature Restoration Law will be discussed at a meeting of the Council of the European Union on Monday, June 17.
According to a Council document dated June 11, Italy, Hungary, the Netherlands, Poland, Finland and Sweden will oppose the bill and Austria will abstain. Belgium is also abstaining because of disagreement within its governing coalition.
Inter-American Development Bank (IDB) has published a Natural Capital and Biodiversity Mainstreaming Action Plan for Latin America and the Caribbean. Carbon Pulse
Top Stories
Denmark has introduced a carbon tax on use of fossil fuels by industries, effective from 2025.
For companies outside the EU’s quota trading system, the CO2 tax entails a payment of EUR 100 per tonnes emitted CO2 in 2030, while the rate for companies covered by the quota system is set at EUR 50 per emitted tonnes of CO2.
Scandium Canada is developing a Scandium exploration project at Crater Lake in Quebec (Canada). Scandium is used in solid oxide fuel cells (used in hydrogen production), in ceramics and electronics, and in scandium-aluminium alloys for the automotive and aerospace industries. The company has also developed scandium-aluminium powders that can be used for 3D printing parts, such as the aluminium channels in frames of solar panels. Innovation News | Website | Press Release
Singapore has been levying a carbon tax of SGD 25/ton since January 1 this year on facilities emitting at least 25,000 tons of CO2 equivalent emissions annually. The tax was set at SGD 5 from 2019-2023, is SGD 25 currently, will rise to SGD 45/ton in 2026-27, and approach SGD 50-80/tCO2e by 2030. Singapore National Climate Change Secretariat - Carbon Tax | National Environment Agency - Carbon Tax
Malaysia may introduce a carbon trading bill by the end of this year. Carbon Pulse
Bloomberg column on the possibility of a carbon tax in the US (via ET Energy)
Both houses in Brazil’s National Congress have approved a bill on electric vehicle innovation that
outlines financial incentives of 19.3bn reais (US$3.6bn) over five years and a reduction in the tax on industrialized products (IPI) to stimulate research and development of technological solutions and the production of vehicles with lower greenhouse gas emissions. bnamericas
The Senate is also looking into a bill for establishing a regulatory framework for green hydrogen.
New report finds increasing local opposition to renewable energy projects in the US. Smart Cities Dive | Opposition to Renewable Energy Facilities in the United States: June 2024 Edition
You can find all previous posts of this newsletter here.
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