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2 October, 2018

We insure our cars, why not our climate?

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Although over 97% of the scientific evidence agrees that climate change is a direct result of human induced carbon emissions, there will always be those that focus on the 3%.

Lobbying and special-interest groups commonly highlight the ‘uncertainty’, using it to support their stance that action against this critical global issue is unnecessary, and that calling for a reduction in carbon emissions is unwarranted.

 

However, with the damages and costs forecasted to be incurred as a result of climate change, can we afford to take the risk?

 

In fact, for those unwilling to accept the overwhelming scientific evidence, why not consider the ‘risk’ of climate change as we would many other forms of risk…?

 

 

Insurance – Protection against a possible eventuality

 

When purchasing a car or a new home, it’s common to also purchase insurance (in some cases, it’s a legal requirement). The insurance guarantees that in the event of loss or damage relating to our new possessions, we receive a payment as compensation.

 

Do we do this because we are certain that such misfortunes will occur? Are we 100% sure that our car will be stolen, or our home will catch fire?

 

No, we purchase insurance because as much as we would hope to avoid such calamities, we recognise that they are a possibility. We acknowledge that by paying a small premium in the form of insurance, we have invested in coverage and support should a worst case scenario come to pass.

 

Why not then, apply the same logic to climate change?

 

 

Carbon pricing as insurance

 

By implementing a carbon pricing policy, we are effectively incurring a small ‘insurance premium’ against the possibility of climate change. Not only will a carbon price incentivise emitters to reduce their carbon emissions, the funds raised will also allow us to finance further carbon reduction efforts, thus lowering the ‘risk’ of climate change.

 

The risk can be further mitigated by implementing carbon pricing in the form of a Cap & Trade system (in which a quota on emissions can be set, limiting the amount of carbon emissions that can be produced within a set period and penalising those that are found to be non-compliant).

 

Historically, governments have been unable to insure the world against the risk of climate change. However, much as our property and possessions are insured not by governments but via third parties, so too can we insure our climate. The emmi Foundation, operating as a not-for-profit, has identified that in today’s world it is possible to take advantage of blockchain technology and the interconnectivity of social media to deliver such a solution.

 

With emmi, consumers and businesses will have the ability to set a carbon price at a social level. Powered by the blockchain, the carbon pricing registry will be unbiased, incorruptible, and completely transparent. Furthermore, by interlinking with emmi’s social platform emitters will be able to inform and engage with consumers, effectively communicating their actions to mitigate the risk of climate change.

 

 

The majority of risks we insure against are far less certain than that of climate change as a direct result of human induced carbon emissions.

 

As such, even for those that still see climate change as a risk rather than a certainty, it should still be possible to see the benefit in investing in a little insurance.