Better be safe than sorry: economic optimization risks tipping of important Earth system elements

06/15/2018 - Optimizing economic welfare without constraints might put human well-being at risk, a new climate study argues. While being successful in bringing down costs of greenhouse gas reductions for instance, the concept of profit maximization alone does not suffice to avoid the tipping of critical elements in the Earth system which could lead to dramatic changes of our livelihood. The scientists use mathematical experiments to compare economic optimization to the governance concepts of sustainability and the more recent approach of a safe operating space for humanity. All of these turn out to have their benefits and deficits, yet the profit-maximizing approach shows the greatest likelihood of producing outcomes that harm people or the environment.
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Experts meet at Global Solutions Summit in Berlin

06/05/2018 - More than 1100 policy thinkers and policy leaders from all around the world came together recently at the Global Solutions Summit in Berlin to discuss crucial topics for global governance in the context of the next G20 summits in Argentina and Japan. Official delegates from the T20 Argentina and the T20 Japan, Nobel Laureates and high level speakers like German Chancellor Angela Merkel participated in the Berlin Summit of think tanks, policy makers, business leaders and NGOs.
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German Federal Government appoints Schellnhuber to coal commission

06/06/2018 - The German Federal Government appointed Hans Joachim Schellnhuber, Director of the Potsdam Institute for Climate Impact Research to their coal commission. The high-ranking "commission for growth, structural change and employment" - so the official name - is supposed to present a strategy for coal until the end of this year. Fossil fuels are the cause for a significant part of greenhouse gas emissions in Germany and the world, and hence for climate risks. The composition of the expert panel had been in discussion for some time, it will be steered by no less than four ministries: Economic Affairs, Environment, Labour and Interior.
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China floods to hit US economy: climate effects through trade chains

05/28/2018 - Intensifying river floods could lead to regional production losses worldwide caused by global warming. This might not only hamper local economies around the globe – the effects might also propagate through the global network of trade and supply chains, a study now published in Nature Climate Change shows. It is the first to assess this effect for flooding on a global scale, using a newly developed dynamic economic model. It finds that economic flood damages in China, which could, without further adaption, increase by 80 percent within the next 20 years, might also affect EU and US industries. The US economy might be specifically vulnerable due to its unbalanced trade relation with China. Contrary to US president Trump’s current tariff sanctions, the study suggests that building stronger and thus more balanced trade relations might be a useful strategy to mitigate economic losses caused by intensifying weather extremes.
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Wealth inequality: closing the gap by taxing land and bequests

22/03/2018 - To reduce wealth inequality without diminishing the economic performance of a country, a policy package of bequest taxes and land value taxes could be the optimal solution. Such a policy package would, in fact, have a strong advantage over corporate taxation, a new study published in the journal International Tax and Public Finance finds. It is the first analysis to include the so far neglected factor of land for tackling wealth inequality. Land is of great interest for studying inequality as climate change might increase land prices and thereby affect housing costs. The cost increase could be countered by smart taxes that would at the same time reduce overall inequality in a country, and hence possibly help to reduce tensions in society that are amplified by populism.
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"Consulted by the Pope": Catholic Academy of Bavaria honours climate economist Edenhofer

05/16/2018 - The Catholic Academy of Bavaria honours the climate economist Ottmar Edenhofer with its Romano Guardini Prize. "As a renowned economist, committed political advisor, and public admonisher, Ottmar Edenhofer has restlessly pointed to climate change as one of the most pressing problems on Earth, and has proposed concrete solutions," the Academy explained. "Not least Pope Francis was seeking Ottmar Edenhofer’s advice repeatedly and intensively for his encyclical Laudato Si. Both are convinced that environmental degradation and poverty are closely intertwined problems that can only be resolved together in the 'concern about our common house'.” Edenhofer is Chief Economist and designated new Director of the Potsdam Institute for Climate Impact Research (PIK), a member of Leibniz Association; as well he is Director of the Mercator Research Institute on Global Commons and Climate Change (MCC) and Professor at Technische Universität Berlin (TUB).
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PIK experts at the intersessional climate conference in Bonn

11/05/2018 - In the run-up to this year´s UN climate conference in Katowice in Poland, about 3000 experts and observers met in Bonn to discuss how to implement the Paris Agreement which is to enter into force in 2020. Two key elements of these “intersessionals” were the progress in advancing the Paris Agreement “rulebook”, and the initial in-person phase of the Talanoa dialogue that was introduced at COP23 last year. Several scientists from the Potsdam Institute for Climate Impact Research (PIK) took part in various meetings and presentations in Bonn.
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Early Summer Monsoon forecast for India

05/07/2018 - the Indian Summer Monsoon will likely reach Central India between 11 and 19 June, according to the new forecast method developed at the Potsdam Institute for Climate Impact Research (PIK). The unique forecast had been developed specially for the central part of India where, before, early forecasting has never been made. The novel approach based on an analysis of observational data allows predicting the monsoon onset date 40 days in advance. Elena Surovyatkina leads the forecasts that showed to be successful already two years in a row. The monsoon onset date is of crucial importance for hundreds of millions of people in India. Climate change affects monsoon variability and hence makes accurate forecasting even more important.
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Bankers, UN and scientists help assess climate risks for finance

04/26/2018 - Together, 16 banks, the United Nations, business consultants and scientists produced first guidance to help the financial industry become more transparent on climate-related risks and opportunities. The report they jointly published, entitled “Extending our horizons”, is based on economic scenarios provided by the Potsdam Instititute for Climate Impact Research, the International Institute for Applied Systems Analysis, and the International Energy Agency. The innovative methodology will support banks to implement the ground-breaking recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (FSB TCFD). It focuses on changes that the transition to a low-carbon economy will present to businesses. A complementary report on the physical impacts of climate change for businesses is planned for release in late June.
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Edenhofer and Foreign Minister Maas visit the United Nations

29/03/2018 - The designated Director and chief economist of the Potsdam Institute for Climate Impact Research, Ottmar Edenhofer, accompanied the new Federal Foreign Minister Heiko Maas on his first visit to the United Nations in New York. Edenhofer was the only guest of the ministerial delegation. Germany seeks a non-permanent seat on the UN Security Council in 2019 and 2020. Minister Maas held a number of talks and campaigned for strengthening the United Nations in times of national unilateralist leanings.
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Stock-take 2018: Rapid emissions reductions would keep CO2 removal and costs in check

03/29/2018 - Rapid greenhouse-gas emissions reductions are needed if governments want to keep in check both the costs of the transition towards climate stabilization and the amount of removing already emitted CO2 from the atmosphere. To this end, emissions in 2030 would need to be at least 20 percent below what countries have pledged under the Paris climate agreement, a new study finds – an insight that is directly relevant for the global stock-take scheduled for the UN climate summit in Poland later this year. Removing CO2 from the atmosphere through technical methods including carbon capture and underground storage (CCS) or increased use of plants to suck up CO2 comes with a number of risks and uncertainties, and hence the interest of limiting them.
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Coal phase-out: Announcing CO2-pricing triggers divestment

01/29/2018 - Putting the Paris climate agreement into practice will trigger opposed reactions by investors on the one hand and fossil fuel owners on the other hand. It has been feared that the anticipation of strong CO2 reduction policies might – a ‘green paradox’ – drive up these emissions: before the regulations kick in, fossil fuel owners might accelerate their resource extraction to maximize profits. Yet at the same time, investors might stop putting their money into coal power plants as they can expect their assets to become stranded. Now for the first time a study investigates both effects that to date have been discussed only separately. On balance, divestment beats the green paradox if substantial carbon pricing is credibly announced, a team of energy economists finds. Consequently, overall CO2 emissions would be effectively reduced.
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Coalition-building for pricing CO2 could make sense even for egoistic countries

02/26/2018 - Even countries that tend to act in an egoistic way in the long run have an incentive to participate in international climate stabilization pathways and couple CO2 pricing systems, a new game-theoretical study shows. Yet they might only do this if pioneer coalitions for pricing greenhouse gas emissions make the first steps. If this is the case, the egoistic countries temporarily enjoy the benefits of avoided climate change without paying for it, but in the longer term can join the pioneers and link to their already established models of CO2 pricing. Forming larger and larger coalitions always reaps additional benefits of avoided damages from climate change. These benefits, even though unequally distributed across the coalition members, can be distributed via financial transfers. This makes it attractive to join, even for egoistic countries.
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PIK ranked as the top climate think tank worldwide

14/02/2018 - The Potsdam Institute for Climate Impact Research (PIK) is the world’s most influential environmental think tank, a new ranking shows. For the ninth year in a row, PIK has been ranked among the top think tanks in the world working on environmental policy. The "Global Go To Think Tank Index Report 2017" that has just been published by the University of Pennsylvania, altogether considered more than 6,500 institutions across the globe.
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Reports of coal’s terminal decline are premature

02/07/2018 - While less new coal-fired power plants are now being built in China and India, the planned expansion in the use of coal in fast-growing emerging economies, such as Turkey, Indonesia and Vietnam, will in part cancel out the reduction. Only if the countries of the world actively counteract this trend, they can achieve the climate goals agreed in the Paris Agreement. These are the results of the study “Reports of coal’s terminal decline may be exaggerated,” authored by researchers from the Potsdam Institute on Climate Impact Research (PIK) and the Mercator Research Institute on Global Commons and Climate Change (MCC), published in the journal Environmental Research Letters
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Biomass plantations not compatible with planetary boundaries

01/22/2018 - Planting trees or grasses on a grand scale in plantations to extract CO2 from the atmosphere - this could make a long-term contribution to climate protection, but it would push the planet beyond ecological limits in other dimensions. A new study by the Potsdam Institute for Climate Impact Research (PIK) in the journal Nature Climate Change now for the first time establishes a connection between ambitious international climate objectives and the more comprehensive concept of planetary boundaries. If biomass plantations in which plants bind carbon dioxide during growth are massively expanded, this would entail enormous risks for areas that are already stressed, such as biodiversity, biogeochemical flows, water resources and land use. According to the study, biomass as a means to capture and store CO2 can therefore only make a limited contribution. In order to stabilize the climate, a rapid reduction of greenhouse gas emissions from the combustion of coal, oil and gas is crucial.
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Detecting abrupt transitions – be it in ocean heat or financial markets

01/03/2018 - From stock indices to sea surface temperatures, a lot of relevant data comes in the form of time series. Reliable detection of abrupt transitions such as a downswing of stock values or water warming during an El Niño event in the Pacific is obviously important, but most analyses fail to take into account the uncertainties in the data. The challenge is to distinguish sudden changes while being aware of the underlying uncertainties. Although there are a number of change point detection methods, scientists now propose for the first time an approach that accurately represents the time series uncertainties and thus provide a more robust analysis.
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