A quiet technical decision in climate science should trigger one of the most consequential policy corrections of this decade.
Deep within the bureaucratic machinery of global climate research sits an obscure modeling group called the Scenario Model Intercomparison Project. It is a foundational component of the Coupled Model Intercomparison Project organized by the World Climate Research Programme (WCRP), which was established in 1980 under the joint sponsorship of the World Meteorological Organization and the International Council for Science.
WCRP coordinates Earth System Model simulations driven by alternative trajectories of greenhouse gas emissions, air pollution, and land use changes. These simulations provide projections used by scientists, climate-impact researchers, and international entities like the United Nations Intergovernmental Panel on Climate Change (IPCC) to analyze risks of climate change. The projections feed into IPCC assessment reports, which are treated as the gold standard of climate analysis and shape nearly all academic research on the subject and eventually energy policy.
For years, the most alarming climate narratives leaned heavily on the RCP8.5 scenario and its successors, SSP5-8.5 and SSP3-7.0. Their fearmongering projections of extraordinary warming assume a high sensitivity of Earth’s climate system to greenhouse gases. Embracing these predictions of widespread catastrophe, researchers, policymakers, financial overseers, and others foisted onto the public all manner of burdens.
Scientist Roger Pielke Jr. examined what this means by comparing the new scenarios against previous benchmarks, saying: “The new framework has eliminated the most extreme scenarios that have dominated climate research over much of the past several decades … This is an absolutely huge development in climate science which will have lasting impacts across research and policy.”
In short, the latest projections of warming are significantly lower. Forecasts that drove many of the scariest headlines are no longer considered realistic enough to guide modeling for the next IPCC report. The “worst case” that powered a generation of alarmist narratives has been quietly retired by the community that once promoted it.
This is not an academic housekeeping exercise. The discarded scenarios are embedded in the machinery that shapes energy bills, job prospects, and the economic development of nations. Pielke points out that national climate impact reports in the United States, United Kingdom, Germany, Canada, Australia, Japan, and the Netherlands have relied on RCP8.5 or SSP5-8.5 as central reference cases.
The financial sector went even further. The Network for Greening the Financial System, a club of more than 140 central banks and supervisors, built its “Hot House World” scenario on a risk profile calibrated to RCP8.5. This scenario has informed climate stress tests at the European Central Bank, the Bank of England, the Reserve Bank of New Zealand, the Banque de France, and the U.S. Federal Reserve, influencing allocation of capital and the price of loans linked to fossil fuel projects.
For many developing countries, these documents—like IPCC’s assessment reports—are central to decisions on coal plants, pipelines, and other industrial development. When the underlying scenarios become “officially implausible,” the credibility of documents vanishes.
You might expect this news to dominate front pages and prime-time climate coverage. It has not. The narrative used to justify punitive energy policies ought to adjust. If it does not, you are witnessing a political agenda searching for new rationales.
We must completely dismantle the regulatory apparatus built on these bogus models. We cannot allow unelected banking cartels and extreme environmental groups to govern the global economy using discredited computer simulations.
This moment offers developing nations a rare opportunity to reclaim energy sovereignty. They can accelerate fossil-fuel development where it makes economic sense, integrate newer technologies where they prove competitive, and reject any framework that treats affordable energy as a luxury.
Climate deniers will be those who reject these scenario updates that upend their crisis evangelism. Their forecasts of doom are false and always have been.
Vijay Jayaraj is a contributor to The Daily Caller News Foundation and a Science and Research Associate at the CO2 Coalition. He holds an M.S. in environmental sciences from the University of East Anglia and a postgraduate degree in energy management from Robert Gordon University, both in the U.K., and a bachelor’s in engineering from Anna University, India. He served as a research associate with the Changing Oceans Research Unit at University of British Columbia, Canada.
Joseph Schumpeter was an Austrian born economist who last century coined the term “creative destruction” to describe the method by which capitalism continually reinvigorates itself. Unlike the static monarchical guild-based economies or the now-pervasive socialist states, capitalism is in constant turmoil. Ceaseless competition produces winners, losers – and progress.
Schumpeter’s key insight was that failure is essential to capitalism’s success. The outmoded and inefficient must give way to more successful models for capitalism to work its magic as the most beneficial-for-all economic engine of all time.
But that doesn’t mean the short-term consequences of failure aren’t painful to those who bear them. Buggy manufacturers, candlemakers, and others overtaken by progress were convinced that the demise of their industries would inflict lasting damage not only on themselves, but on the economy.
But the harm was mostly short term. American lore is full of stories of honest strivers who learned from their disappointments and went on to great success. Reasonably flexible workers found employment in new fields where they were often more productive.
Schumpeter was right that capitalism is fundamentally a “no pain – no gain” deal. But that can be a hard sale in a culture that has come to believe nothing bad should happen to anyone, that pain and failure are indicators of injustice.
We ditch merit-based exams because some students may feel bad. We award participation medals. We mandate facemasks just in case.
Thus, the Obama administration, after the banking collapse of 2008–09, soothed the wounds of the too-big-to-fail lending banks by bailing them out with billions of taxpayer provided funds. But the banks were engaged in exactly the behaviors that Schumpeter believed free markets were designed to punish.
The banks (at the insistence of the feds) made thousands of “sub-prime” loans, using underwriting criteria which would previously have been considered unthinkable. Worse, when the loans began to go sour, instead of cutting their losses, Wall Street repackaged them as “mortgage-backed securities.” These were sold off as far more valuable than the mortgages of which they were composed.
We all know how that ended. Yet because of the bailout, no banks failed. The perps walked away from the train wreck they had caused.
The mortgage lenders 15 years ago clearly did not fear the discipline of the market. Neither did the decision makers at Silicon Valley Bank (SVB), which has also failed due to unwise risk-taking.
SVB occupied a desirable niche, serving the local venture capitalists and tech startups. The fed pumped trillions of dollars into the economy while interest rates were held near zero, making us all feel rich. The stock market, especially tech investments, soared.
Times were good. Deposits in SVB tripled in the three years after 2019. SVB could offer generous loan terms to favored borrowers and above market returns on deposits.
But the music had to stop eventually and so it did. The feds finally raised interest rates in response to roaring inflation. SVB was forced to raise capital and sell some assets at a loss, sparking a run by depositors, which SVB was unable to withstand. The bank collapsed.
SVB had been warned. It lacked the liquidity to respond to stress because the present market value of its held-to-maturity bonds was $15.9 billion less than face value at maturity, which was the number on the balance sheets. The cash wasn’t there when needed.
Most commentators deemed this a regulatory failure. But does a banker really need a regulator to tell him not to count on zero-interest rates indefinitely? That loans to shaky borrowers might default? That bond values fall when interest rates rise?
Of course they knew. They just didn’t care – enough. If they believed their losses would be borne by others, then charging ahead through all the yellow lights to maximize gain actually made sense.
SVB, its depositors, and associated banks have all been bailed out to “stop the contagion.” That’s politically astute, even though the demise of Lehman Brothers 15 years ago hardly fazed financial markets.
But relying on government regulation, rather than market forces, to discipline bank behavior has produced a chronically unstable financial sector which lurches from crisis to crisis.
Let them fail.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
Six U.S.-based global banking firms which participate in Environmental, Social, and Governance (ESG) practices that seek to restrict investment in companies engaged in fossil fuel-related activities are under investigation by 19 states, it was announced this week.
Arizona Attorney General Mark Brnovich and 18 other state attorneys general served civil investigative demands against Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Wells Fargo related to each company’s involvement with the United Nations’ Net-Zero Banking Alliance (NZBA). The demands act as legally enforceable subpoenas.
NZBA-member banks have promised to set emissions reduction targets in their lending and investment portfolios to reach net zero by 2050. It is one example of ESG practices which have come under scrutiny for prioritizing policy initiatives ahead of sound investment strategies.
In the case of the NZBA initiative, it could lead to some farmers, oil leasing companies, suppliers, and other businesses connected with fossil-fuel production being unable to get loans or find investors from the six banking firms and their affiliates, according to Brnovich’s office.
“American banks should never put political agendas ahead of the secure retirement of their clients,” Brnovich said in announcing Arizona’s involvement in the investigation. “These financial institutions are entrusted with protecting a different type of green.”
Arizona, Kentucky, Missouri, and Texas are the leadership states on the NZBA investigation. Some of the 10 interrogatories included in the civil investigative demands served on the six banking firms seek information on:
All divisions, groups, offices, or business segments whose responsibilities relate or used to relate to membership in the Net-Zero Banking Alliance or to ESG Integration Practices, and identify all executives, directors, officers, managers, supervisors, or other leaders of each division, group, office, or business segment;
Each Global Climate Initiative with which the firm is affiliated and an explanation of the reasons for choosing to join such Global Climate Initiatives;
Who made the decision to join each Initiative, including any involvement or input from the Board of Directors, investors, or Covered Companies;
All involvement in each Global Climate Initiative, including dates as well as “any promises, pledges, or other commitments” made by each company;
A detailed description of the company’s involvement with the Net-Zero Banking Alliance, including identities of all individuals who have represented the company within the NZBA.
In August, Brnovich joined Arizona in a 21-state coalition in commenting on a U.S. Securities and Exchange Commission (SEC) proposed rule that would add requirements for investment funds which consider ESG factors in their investment decisions. The proposed SEC rule was seen by the states as an attempt to transform the agency from a “federal regulator of securities into a regulator of social ills.”
The same month, Arizona was one of 19 states which sent a letter that put investment firm BlackRock on notice that its actions on a variety of governance objectives may violate multiple state laws by using “the hard-earned money of our states’ citizens to circumvent the best possible return on investment.”
BlackRock, which oversees some pension funds in those states, has been engaging in a “quixotic climate agenda” that appeared to be sacrificing pensioners’ retirements instead of focusing solely on financial return.
“Fiduciary duty is not lip service. BlackRock has an obligation to act in the sole financial interest of its clients,” the Aug. 4 letter stated. “Given our responsibilities to the citizens of our states, we must seek clarification on BlackRock’s actions that appear to have been motivated by interests other than maximizing financial return.”
And in November 2021, Brnovich announced a review of Climate Action 100+ and its investment company members which manage trillions of dollars in assets. This was prompted by concerns that the firms will put their ESG goals ahead of well-established fiduciary duties.
This could include inappropriate pressure and anticompetitive conduct against the members’ own clients and customers who do not comply with the ESG practices of Climate Action 100+, according to the attorney general’s office.
