Climate risk assessment of the sovereign bond portfolio of European Insurers

In the first collaboration between climate economists, climate financial risk modellers and financial regulators, we apply the CLIMAFIN framework described in Battiston at al. (2019) to provide a forward-looking climate transition risk assessment of the sovereign bonds’ portfolios of solo insurance companies in Europe. We consider a scenario of a disorderly introduction of climate policies that cannot be fully anticipated and priced in by investors. First, we analyse the shock on the market share and profitability of carbon-intensive and low-carbon activities under climate transition risk scenarios. Second, we define the climate risk management strategy under uncertainty for a risk averse investor that aims to minimise her largest losses. Third, we price the climate policies scenarios in the probability of default of the individual sovereign bonds and in the bonds’ climate spread. Finally, we estimate the largest gains/losses on the insurance companies’ portfolios conditioned to the climate scenarios. We find that the potential impact of a disorderly transition to low-carbon economy on insurers portfolios of sovereign bonds is moderate in terms of its magnitude. However, it is non-negligible in several scenarios. Thus, it should be regularly monitored and assessed given the importance of sovereign bonds in insurers’ investment portfolios

The MESSAGEix-GLOBIOM model and scenarios for transition risk analysis

This report provides background information to the MESSAGEix-GLOBIOM scenarios that were selected to support transition risk analysis for the Task-Force for Climate Related Financial Disclosures (TCFD) Banking Pilot Phase II. The first part provides an overview of the MESSAGEix-GLOBIOM integrated assessment model, its core methodology, main components and definitions. The second part discusses the selected scenarios and motivation for this selection. The selected scenario cover a range of emission reductions that vary in stringency and pace of emission reduction. We selected the following types of scenarios: Current policy scenarios that limit climate policy to currently implemented or announced policies (NPi: National implemented policies and NDC: Nationally Determined Contributions for 2030) and scenarios with immediate global climate action based on a carbon budget (Immediate2C and Immediate1p5C). Finally, scenarios with delayed global climate action scenarios based on carbon budgets (Delayed2C) and immediate global climate action based on a peak-temperature goal (LowCDR2C and LowCDR1p5C) represent cases with steep emission reductions either immediately or after 2030

Interactie tussen boven- en ondergrondse organismen

Herstel van biodiversiteit is een moeilijk proces aangezien lang niet alle onderliggende mechanismen bekend zijn. Zo is niet bekend hoe boven- en ondergronds levende organismen elkaar beïnvloeden in hun interacties met planten en wat het effect daarvan is op de plantendiversiteit. Met behulp van een 'realistische' proefopstelling hebben we daar meer zicht op gekrege

Improving poverty and inequality modelling in climate research

As climate change progresses, the risk of adverse impacts on vulnerable populations is growing. As governments seek increased and drastic action, policymakers are likely to seek quantification of climate-change impacts and the consequences of mitigation policies on these populations. Current models used in climate research have a limited ability to represent the poor and vulnerable, or the different dimensions along which they face these risks. Best practices need to be adopted more widely, and new model features that incorporate social heterogeneity and different policy mechanisms need to be developed. Increased collaboration between modellers, economists, and other social scientists could aid these developments. We review the history and state of the art of models used in climate research, including integrated assessment models (IAMs) and national studies, and those that model mitigation and climate-change impacts. We assess how and to what extent they represent distributional impacts within countries. We argue that there is much scope to improve the representation of income distribution and poverty. Given the diversity of models, this endeavour presents fundamental challenges for some models, but possibly requires only incremental changes in others

What do near-term observations tell us about long-term developments in greenhouse gas emissions? A letter

Long-term scenarios developed by integrated assessment models are used in climate research to provide an indication of plausible long-term emissions of greenhouse gases and other radiatively active substances based on developments in the global energy system, land-use and the emissions associated with these systems The phenomena that determine these long-term developments (several decades or even centuries) are very different than those that operate on a shorter time-scales (a few years) Nevertheless, in the literature, we still often find direct comparisons between short-term observations and long-term developments that do not take into account the differing dynamics over these time scales In this letter, we discuss some of the differences between the factors that operate in the short term and those that operate in the long term We use long-term historical emissions trends to show that short-term observations are very poor indicators of long-term future emissions developments Based on this, we conclude that the performance of long-term scenarios should be evaluated against the appropriate, corresponding long-term variables and trends The research community may facilitate this by developing appropriate data sets and protocols that can be used to test the performance of long-term scenarios and the models that produce the

Mechanical properties of the mandibular condyle and consequences for habitual loading and deformation

Everts, V. [Promotor]Koolstra, J.H. [Copromotor

Endogenous simulation of low-carbon lifestyle change in global climate mitigation pathways

Global Integrated Assessment Models (IAMs) used to characterise mitigation pathways have very limited or no formal representation of lifestyles and lifestyle change. We demonstrate a novel approach to endogenously simulating low-carbon lifestyle heterogeneity and lifestyle change through soft-coupling with our new empirically-based LIFE model. Coupling LIFE to global IAMs enables dynamic simulation of distinctive lifestyle change contributions to targeted mitigation strategies. We set out the empirical basis of the LIFE model, the methodological steps for soft-coupling to a global IAM, and show results from a test application to the residential sector using the MESSAGEix-Buildings model. A first key insight is that coupling with the LIFE model introduces heterogeneous behaviour between 'engaged' types, who experience faster and higher reductions in final energy demand compared to 'disengaged' types. When we further simulate a widespread shift in normative values, this gap is closed. A second key insight is that drivers of lifestyle change, act differently across 'Improve' and 'Avoid' dimensions. The 'disengaged' types, characterised by lower incomes, are more highly responsive to energy saving 'Avoid' behaviours. Our approach demonstrates how improved understanding of lifestyle change dynamics and more realistic, empirically-based quantitative simulations in climate mitigation pathways enriches scientific and policy analysis of how to achieve Paris Climate Agreement goals