Navigating the New Climate Era

A warning in bold comes halfway through the 2025 report Introduction to Climate Intuition by J.P. Morgan Bank: “The financial, social, and ecological effects of climate change will be unevenly distributed across industries, countries, and communities. Such inequalities, or even the perception of present or growing future inequalities can fuel social unrest and conflict.” 

In other words, climate change will strike in many ways and, given the suffering and sacrifice in store, people will react strongly to any perceived injustice. After the last two UN Climate Change Conferences, it is clear that the Global South is seeking a just transition and a just settlement. Broken commitments will no longer be tolerated – and the UN Loss and Damage Fund is just the tip of the iceberg. 

Parisians bled for “Liberty, Equality, Fraternity” in the late 18th century and the people of Saint Petersburg fought for “Peace, Land and Bread” in the early 20th century. A decade ago, the United Nations pledged to “Leave No One Behind” by 2030. But what if the Sustainable Development Goals, adopted by all 193 United Nations member states, are missed by a mile? What if climate change spirals out of control? What if crops fail, wars spread and billions of people die? There are so many “what ifs”, but one thing is clear: We are entering new and uncertain times. 

Penned by Dr. Sarah Kapnick, former Chief Scientist at the National Oceanic & Atmospheric Administration, a federal US agency with (until recently) a US$6.6 billion annual budget, the report aims to bridge the gap between today’s scientific assessments and tomorrow’s policy planning. Now writing for a bank, the bottom line is to position her clients “to not only mitigate risks but also seize opportunities in this New Climate Era.” 

Overall the report makes a compelling case about the need to understand and prepare for uncertainty. Most helpful are clarifications about key elements, which you would expect to be more clear-cut by now, given the length of UN negotiations. In an astonishing revelation Kapnick writes: “The Paris Agreement did not clearly define how global temperature should be measured.” The consequences are severe: “As a result, it and the passing of a 1.5°C threshold can be interpreted several ways.” She then shares four major scenarios, with various degrees of wriggle-room: 

1. January to December average; 
2. Probability of 1.5°C being more than 1.49°C for a given set of years; 
3. 20-30 year average; 
4. 1.5°C in 2100 after “overshoot” (and potential technological “pullback”). 

Kapnick says: “The general definition of practice is to use the third definition: 20-30 year average temperature. This is due to natural variability in climate causing multi-year or multidecade departures due to volcanoes and fluctuations in ocean currents. A multi-decade average smooths out these ‘natural’ fluctuations. The World Meteorological Organization recently spelled out definition #3 as reaching 1.5°C ‘over decades’ as the benchmark for the Paris Agreement when predicting temperatures over the next decade.” 

Consider the implications for a moment. By this rationale, international authorities will not formally confirm the 1.5°C breach until mid-century, which begs the multitrillion-dollar question: How can we plan for the future if our final assessments are decades out of date? 

More helpful are the graphics on macroeconomic trends, i.e. the parallel upticks in global population, oil production, agricultural productivity, GDP and atmospheric CO2 concentrations. These have largely been enabled by technological advancements, says the author – but by the same token many in the international development community are now banking on future technologies to rein in overshoot. “Current country policies, when taken together, are projected to result in about 2.7°C of warming,” says the report, citing the Cologne-based Climate Action Tracker. 

Unlike the more linear rise of global temperature change, Kapnick notes that wildfires and heatwaves occur in nonlinear ways. Higher temperatures bring a higher probability of extreme weather events, but they remain difficult to predict and pinpoint. “For example, the likelihood for the most extreme heat waves has been growing at a more rapid pace than changes in lesser heatwaves and average temperatures,” says Kapnick. “This isn’t due to unrealistic forecasts of future climate, but is a simple mathematical fact of how shifting distributions affect probabilities of extreme events and our perception of risk above a specific threshold. In other words, while average temperatures inch up steadily, extreme events like heatwaves are happening at a faster pace.” 

Circling back to the beginning, one more troubling aspect is the core term of “intuition” – which appears in the headline and eight times throughout the brief. Some readers may ask why, in these most turbulent times, the report leads with nebulous feelings over concrete facts. Perhaps this is Kapnick’s way of nudging us towards more innovative decision-making or a way of flagging that the old world of relative certainty and stability is over. To paraphrase US political strategist Lee Atwater, perhaps perception really is reality. 

Sarah Kapnick 

Sarah Kapnick is Global Head of Climate Advisory at J.P.Morgan, where she advises the bank’s clients on climate, energy, biodiversity and sustainability topics. Previously, she was appointed by the US President as Chief Scientist at the National Oceanic and Atmospheric Administration (NOAA), where she oversaw the development of scientific strategies for climate intervention, greenhouse gas monitoring, marine biodiversity, climate macroeconomics and climate security.