All about CO2

In order to get the global climate crisis under control, what matters most are avoiding the emission of greenhouse gases on the one hand and adapting to the impacts of global warming on the other. In this regard, CO₂ plays a central part. Why is it so important, what does net zero mean, and how can carbon capture help?

What is CO₂?

CO₂ is the chemical formula for the molecule carbon dioxide, which is composed of oxygen and carbon.

Carbon dioxide is one of the most important greenhouse gases and a natural component of the atmosphere. It is exhaled by living things, but decomposing organisms and volcanic eruptions can also release the gas. Once released into the atmosphere, carbon dioxide doesn’t break down on its own. In the course of photosynthesis, trees and plants convert it e.g. into the oxygen needed by human beings and animals – an essential cycle for life on our planet.

The problem: CO₂ is also produced when wood, coal, natural gas or petroleum is burnt. As a result, since the dawn of the industrial age, human beings have produced more and more CO₂. At the same time, broad expanses of land are cleared or claimed for agriculture to feed Earth’s growing population. This in turn means that less CO₂ can be stored. Over the past several decades, the percentage of CO₂ in the atmosphere has steadily climbed. According to Germany’s Federal Environmental Agency, the rate of increase has nearly quadrupled since the 1950s.

How do higher CO₂ levels affect the climate?

Besides carbon dioxide, there are other greenhouse gases, like ozone, methane and chlorofluorocarbons. Together, they lie atop the Earth like a dome of smog.

Just like the glass roof of a greenhouse, they let short-wave sunlight through but reflect the long-wave thermal radiation back to the surface. As a result, the heat is trapped and the planet grows warmer. This is referred to as the greenhouse effect. Accounting for roughly two thirds2 of total greenhouse gases, CO₂ is considered the main cause of global warming.

You can find an illustration of these complex interrelations here: https://www.munichre.com/de/risiken/klimawandel.html

What are the impacts of the anthropogenic greenhouse effect?

The increase in greenhouse gas concentrations has already led to an increase in global mean temperature.

According to the Federal Environment Agency, 2022 was the sixth-warmest year worldwide since weather records began. In Germany, the mean temperature was 2.3 degrees Celsius higher than in the reference period 1961–1990.3 According to the Intergovernmental Panel on Climate Change, the fatal consequences of this warming are: depending on the region, more and longer heat waves or droughts and more frequent floods and hurricanes. And any further increase in the global mean temperature will make the problem worse.

Climate change doesn’t simply mean that winters will become milder and summers a bit warmer. According to the World Meteorological Organisation, the number of weather-related natural disasters increased fivefold in just 50 years (1970 to 2019). During that time, more than two million people lost their lives as a result.4 Because of the greenhouse effect, considerable amounts of energy accumulate in Earth’s weather system. And when this increased energy is discharged locally, it can lead to extreme weather phenomena.

But aren’t we just experiencing freak weather conditions right now?

For the experts, the question of where weather ends and climate begins is an easy one to answer:

If you want to talk about climate and its changes, you have to look at a period of at least 30 years to make reliable statements. In their view, anything shorter falls under the heading of weather or weather conditions. Since the changes can be observed over a much longer period than 30 years, the experts assume that we are not dealing with freak weather, but with climate change. And, in fact, with anthropogenic climate change. On the basis of their data, scientists have determined that anthropogenic greenhouse-gas emissions produced since the beginning of industrialisation are largely responsible for the rising temperatures in the atmosphere and ocean.

The Paris Agreement on Climate Change and the 2-degree target – or was it 1.5 degrees?

The connection between humans and climate change has also been recognised by international politics.

In the Paris Agreement on Climate Change in late 2015, the 197 signing Parties agreed: They wanted to consistently combat climate change and reduce greenhouse-gas-related global warming to well below two – and ideally to 1.5 – degrees Celsius compared to pre-industrial levels.5 The target degree values are based on scientists’ assumptions that irreversible consequences for human beings and the environment can still be limited at these temperatures. Achieving these targets will require tremendous efforts on the part of the international community.

What can be done?

Prevention and adaptation

Greenhouse gases like carbon dioxide remain in the atmosphere for an extremely long time.

So generations to come will have to live with the concentration they inherit. Consequently, people must quickly adapt to the impacts of climate change – more intense storms, heavy rain, flooding or even droughts – and take steps to prevent them. The questions that arise now include: How can we protect ourselves from heat? How can we better prepare our cities and villages for heavy rain and flooding? How will climate change affect agriculture and human health?

Avoiding greenhouse gases

At the same time, the focus will be on significantly reducing greenhouse gas emissions from transport, private households, industry and other sources.

Measures such as the transition to renewable energies or to e-mobility require extensive investments, not least in the infrastructure for transport or energy provision. Accelerated research into greenhouse gas-neutral energy carriers such as hydrogen also needs targeted funding. Wide-scale positive effects aren’t to be expected in the short term, which makes it all the more important to launch and spur on these measures as soon as possible.

Removing greenhouse gases

When it comes to dealing with the consequences of climate change, net zero emissions come up time and again.

What the term means is that humanity would no longer produce more greenhouse gases than could be subsequently removed from the atmosphere. But producing no emissions at all is an unrealistic goal. Consequently, we also need ways and means of removing and storing CO₂ from the atmosphere. According to the IPCC climate report, in the future we’ll need to remove 10 to 20 billion tonnes of CO₂ from the atmosphere each year in order to limit global warming to a maximum of two degrees above pre-industrial levels.

There are a number of options that could be effective worldwide. In addition to afforestation, promising new technologies, referred to as carbon capture and storage (CCS) solutions, are currently being developed. Their goal is to remove CO₂ from the atmosphere and store it on a long-term basis. The state, business sector and scientific community can use targeted funding programmes to help bring suitable ideas to market and scale up their impact.

What can we do as individuals?

Each and every one of us can make a difference through our consumer behaviour. There are plenty of ways to help, like buying regional, seasonal and unpacked products and avoiding disposable ones.

Doing so avoids long transport routes and reduces the need to manufacture and dispose of packaging material – all of which reduces CO₂ emissions. Switching from a combustion engine to an electric car, using public transport, and cycling can also help to reduce CO₂ emissions. Taking shorter showers and heating less, or switching to renewable energy sources, e.g. with the help of a photovoltaic system, are further ways to make a valuable contribution to climate protection.

You can calculate your own CO₂ balance here: https://uba.co2-rechner.de/de_DE/

Last but not least: What does all this have to do with insurance?

Climate change and managing its impacts are very important issues for insurers – if nothing else, because they cover some of those impacts through their products.

These include damages caused by flooding, storms or droughts. When climate change affects the frequency and intensity of weather events, it also has consequences for insurers. In the Ahr valley, for example, the insured loss was four times as high as the second-largest insured loss from a natural disaster in Germany, namely, the flooding in 2013. Such leaps in the loss amount aren’t statistical outliers; they can be observed around the world.

As investors with often large portfolios, insurers play an important part in the necessary transformation of the economy and society by, for example, making targeted investments in renewable energy facilities such as wind farms, or by no longer investing in high-emissions areas like oil production. The same applies to their products. New technologies in the fields of power generation, transport, energy storage and industrial production are needed to limit global warming. Insurers are working on insurance solutions that make it easier to bring these technologies to market.

As a company, ERGO also wants to support the implementation of the Paris Climate Agreement and the reduction of CO2 emissions. Our latest Sustainability Report offers an overview of our goals and measures: https://www.ergo.com/en/sustainability/reporting-and-figures/sustainability-report

This article covers only part of the subject. You can find more information here:

• Federal Environmental Agency: https://www.umweltbundesamt.de/
• Potsdam Institute for Climate Impact Research: https://www.pik-potsdam.de
• Intergovernmental Panel on Climate Change: https://www.de-ipcc.de/index.php
• Munich Re: https://www.munichre.com/de/risiken/klimawandel.html