Insurance companies are increasingly shouldering many of the costs associated with a warming planet, whether it be from extreme weather damage or reimbursing farmers for lost crops. Multi-national insurance giants Aviva, Aegon, and Amlin, which together manage $1.2tn in assets, released a statement calling on the leaders of the world's biggest economies to commit to ending coal, oil, and gas subsidies within four years.
"Climate change in particular represents the mother of all risks—to business and to society as a whole. And that risk is magnified by the way in which fossil fuel subsidies distort the energy market," said Aviva CEO Mark Wilson. "These subsidies are simply unsustainable." Wilson added, "We're calling on governments to kick away these carbon crutches, reveal the true impact to society of fossil fuels and take into account the price we will pay in the future for relying on them."
In the first half of 2016 alone, natural catastrophes have caused $70bn in losses, of which $27bn was insured, according to an assessment by insurance and reinsurance company Munich RE—with events of particular note being climate-related "storms in the U.S. and Europe, massive forest fires in Canada, and the complete absence of typhoons in the northwestern Pacific." And housing data firm Zillow recently published an analysis which found that as many as 1.9 million homes across the country could be underwater by 2100 if the seas rise as much as climate scientists predict, amounting to property losses in the hundreds of billions of dollars.
In 2009, G20 leaders agreed to "rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption." Five years later, this goal rings "empty" to Shelagh Whitley, research fellow at the Overseas Development Institute (ODI), which estimates that such assistance amounts of roughly $444bn each year.
"These subsidies fuel dangerous climate change," said Whitley. "If we are to have any chance of meeting the 2°C target set at the Paris climate summit then governments need to start a program of rapid decarbonization. The finance sector recognizes the importance of moving away from fossil fuels, governments need to realize they may be the only ones left not moving."
The Sierra Club recently launched its Fossil Free Finance campaign to encourage G20 governments to stop pouring public money "into the pockets of Big Coal, Oil, and Gas each year, exacerbating the climate crisis, polluting our air and water, opening up new fossil fuel reserves, and hurting our families and communities. In the past seven years, we’ve seen historic climate progress across the U.S. and around the globe," said Sierra Club executive director Michael Brune. "But while the world moves forward toward a 100 percent clean energy economy, G20 leaders have remained stagnant, with the world waiting on empty promises."
The state will not willingly enforce strong environmental protection laws against companies because it does not want to cut into their profits (and its own tax revenue). In addition, it is often feared that strong environmental laws will make countries 'unattractive for investment'. However there is an argument presented that some capitalists especially those who feel the detrimental effects of climate change will try to direct governments in a more environmentally friendly direction. They argue that we should not underestimate the flexibility of capital to restructure itself in response to the environmental crises and to open up new areas of capital accumulation outside the fossil fuel industries. But as the journal, Aufheben, says:
“Green capitalism is still capitalism. Capitalism is still a system of class exploitation that will seek to impose its costs of restructuring onto the proletariat. That remains so even if it manages to stop itself destroying the planet…The costs of reorienting global capital accumulation away from fossil fuels grow by the day. Should capitalism move in this direction, it is inevitable that capital will attempt to impose the costs of this transition onto the proletariat, whether through inadequate adaptation measures leading to population displacements or through 'green austerity'…”