The cost of carbon – losses arising from extreme weather events attributable to cumulative causal carbon emission – for 2015 was $12.27 per tonne of carbon dioxide (previous year $12.67, down 3%). For the first half of 2016, the cost has increased to $12.44 on the back of extreme weather events reported by Munich Re recently. Over US$20bn of losses were attributed to heavy storms bringing hail, torrential rain and flash floods in the US and Europe, and losses of US$3.6 bn were attributable to El Niño related wild fires in the Canadian province of Alberta caused by extreme heat and drought. Canadian tar-sand production dropped 40% as a result. In total, losses up to the end of June reportedly came to US$70bn, up 19% on the previous year.
Latest carbon dioxide emissions data from the latest BP Statistical Review of World Energy reported total world emissions of 34 billions tonnes, just up on the previous year by 0.1% (and up 17% since 2005).
Comparison of the cost of carbon using annual weather related losses (green), cumulative emissions and losses (light blue), and annual gross claims payments. (Data sources: Munich-Re, OECD and IEA. Chart: © Predict Ability Ltd.)
Predict Ability Ltd (PAL) is committed to supporting the adoption of a universal and transparent carbon price. PALcarbon is a real-time carbon pricing and reporting system for clients that takes into account the real cost of damage caused by carbon emissions. PALgamma is a computing risk engine for forecasting extreme weather related disaster events and identifying the impact of man-made climate change. Predicting the Price of Carbon: How to tackle the climate change code for good is a recent publication that addresses the goals and strategies for tackling climate change.
Author: Edward Coe
Edward Coe is Managing Director and co-founder of PAL. He has extensive experience of systems development and implementation for advanced derivative trading systems utilising a broad range of technologies supporting in house, bespoke and third party software. Edward developed the software behind PAL Carbon.