STIRLING: Central banks use wildly unrealistic report to set climate 'damage function' markets

Climate policy analyst Roger Pielke, Jr. is reporting that a 2024 paper which projected enormous GDP losses due to climate change has become a tent peg of central bank climate policies, despite being wildly exaggerated. The paper in question was published in Nature and is titled “The Economic Commitment of Climate Change,” by Kotz et al. (KLW24). According to Pielke, Jr., the paper’s finding affected important policy settings, including the US Congressional Budget Office, the OECD, the World Bank, and the UK Office for Budget Responsibility.Worse, a consortium of some 100 central banks around the world which makes up the Network for Greening the Financial System, now uses this study as a key part of the official NGFS "damage function." Banks and financial institutions now use this for projecting future costs of climate change, thus skewing how society sets policy to respond to climate change..EDITORIAL: Rolling out the blood red carpet for terrorists.According to the NGFS website, “Considering current policies, global GDP losses due to climate change are projected to reach -15% by 2050 and around -30% in 2100. Climate-related risks are a major source of financial risk and it is therefore within the mandates of central banks and supervisors to ensure the financial system is resilient to these risks.”NGFS was set up in 2017 at the Paris “One Planet Summit” by 8 central banks and three bank governors, including Mark Carney, then governor of the Bank of England. Pielke, Jr. notes that “KLW24 and its application in policy by the NGFS and others are fatally flawed.”.Numerous critics alerted Nature to problems with the paper at the time, and one by Schötz was published recently, “We find that their analysis underestimates uncertainty owing to large, unaccounted-for spatial correlations on the subnational level, rendering their results statistically insignificant when properly corrected. Thus, their study does not provide the robust empirical evidence needed to inform climate policy.”According to Pielke, Jr., “Hopper posted his critique of the NGFS “damage function” (which originated in KLW24) on 9 December 2024.” Did NGFS follow up? Pielke, Jr., writes, quoting Hopper, “A general review and update of NGFS model control procedures is necessary to restore faith in their [NGFS] climate toolkit and data.”“The more troubling questions remain unanswered: did any central bank or other regulator follow up with Nature or Kotz et al. when it was publicly revealed that there was a problem with the model they use to regulate banks? If they did not, why not? Are regulators putting their thumb on the scale, targeting a pre-determined conclusion rather than using the best scientific evidence?”.EDITORIAL: Poilievre’s Alberta triumph, a landslide with fault lines.Pielke, Jr. has long been critical of banks misusing the implausible Representative Concentration Pathway (RCP) 8.5 computer simulation as if “business-as-usual.” RCP 8.5 computer simulation results are the source of the much proclaimed “climate emergency.” Friends of Science Society has written numerous open letters to Canada’s Office of the Superintendent of Financial Institutions and the Bank of Canada to alert them to the problems with RCP 8.5 and the impossibility of reaching Net Zero. A 2023 report by retired energy economist, former public servant, and diplomat, Robert Lyman, outlines why this scenario is implausible and inappropriate for climate policy planning..Pielke, Jr. and colleague Justin Ritchie have been instrumental in exposing the misuse of RCP 8.5 in climate science academic papers. The “climate emergency” RCP 8.5 scenario has enjoyed unfettered proliferation through the world of finance, largely driven by ‘green’ billionaires and their funded environmental non-governmental organizations (ENGOs), according to Pielke, Jr.These “green banking” initiatives, based on faulty information like that of KLW24, and the misuse of RCP 8.5, have complicated and threatened corporate activity in Canada and made essential energy and mining industries appear to be a “climate risk” for banks and insurers, when this is not the case. Friends of Science Society also issued an Open Letter to the Canadian Securities Administrators on the problems of climate-risk reporting, as outlined by the Canadians Sustainability Standards Board in 2024..BC nurse suspended, fined nearly $94,000 over ‘I ♥ JK Rowling’ billboard.Canada has all it needs to be an energy superpower. These climate damage projection errors, exaggerations, and deficiencies in due diligence on climate science and alleged risk stand in the way. These must be corrected at the Office of the Supervisor of Financial Institutions, on down through banks, insurers, pension funds and asset managers, securities administrators, and through government departments like Environment and Climate Change Canada and even down through municipal governments.Simply put, as CLINTEL — the climate emergency intelligence network out of the Netherlands says — there is no climate emergency. But there is a dire and growing economic and energy emergency in industrialized nations of the West, especially in Canada – driven by the misuse of RCP 8.5 and the blind acceptance by the NGFS central banks of a wildly exaggerated claim of future GDP climate damage.