Insurance Farms, Banks Will Invest Funds In Solar Energy
Confronted by the risks of floods, droughts, windstorms and sea
level rise, 50 firms in the world's financial community have agreed
to boost the market for photovoltaic cells. The 50 include some
of England's biggest financial companies &emdash; Barclays', Nat
West, Lloyd's, TSB Group, Royal and Sun Alliance, as well as General
Accident (Scotland), Salomon Brothers (US), and Storebrand (Norway)
&emdash; who attended the Oxford Solar Investment Summit in December
1996. They hope through encouragement of mass production to slash
costs from £9 to £1.5 a watt, competitive with fuel
prices.
To do its part, the National Westminster Group (NatWest, a British
bank) announced in May that it will install solar panels in one
of its buildings. A UK insurance company, Guardian Royal Exchange,
has pledged cash for the installation of solar panels at its Ips-wich
headquarters. General Accident is considering a similar move.
At the same time a German insurance company, Gerling Konzern,
has announced an investment of $2 million in SunLight Power International,
a new solar energy company whose goal is to supply PV panels to
communities in developing countries who have no access to electricity.
( For more information on this project, see page one.)
The Japanese government has announced £100 million in subsidies
to put photovoltaic cells in 10,000 homes and offices. Sharp,
Sanyo, Canon and Mitsubishi have stepped up their solar divisions.
Another initiative suggested at the Summit was to persuade 40
cities to use solar power to produce heat and light for public
buildings (a project similar to the one described in Atlanta,
Georgia on page 7). And if the insurance industry invested its
$1.4 trillion in resources in green energy technologies, Summit
organizer Jeremy Leggett pointed out, it could play a crucial
role in lowering the price of photovoltaic cells.
Several reinsurance industry leaders have publicly expressed
their concern about climate change and have been active in trying
to persuade the international community to set limits on greenhouse
gases emissions. The insurance industry is worried that as extreme
weather conditions continue to increase around the world, causing
severe damage, the number of insurance claims will continue to
rise. Highly volatile weather patterns are being recognized as
one of the consequences of rising atmospheric concentrations of
greenhouse gases. "Global climate change is the single most
important issue facing the world today," says Kaj Ahlmann,
chairman and CEO of Employers Reinsurance Corp. "If we don't
do something about climate change on the global level, we'll see
some changes that will alter the lifestyle of our children and
grandchildren."
In March, Munich Reinsurance reported that natural catastrophes
for 1996 amounted to $60 billion, not a record but continuing
a trend of ever increasing losses and ever increasing costs. The
two great natural catastrophes of last year were the floods of
China and Hurricane Fran on the US east coast. The floods in the
middle and lower Yangtze from late June to mid-August were the
worst in 150 years, affecting 2 million people. About 2700 died
from the floods and landslides, and two million were made homeless.
Total economic losses amounted to $20 billion.
A comparison of the last 10 years with those of the 1960s, according
to the Munich Re report, shows there has been a four-fold increase
in "great" natural catastrophes, an eight- fold increase
in economic losses and a fifteen-fold increase in insured losses,
ands these losses are likely to become more pronounced. New extreme
meteorological conditions, no experience on how to handle them,
and no appropriate preventive action produce a recipe for catastrophe.
Bankruptcy
The Global Insurance Company, the biggest company of its kind
in the world, had to pay out most of its reserves of 70 billion
marks last year, according to a report from Greenpeace, and announced
a 500 percent rise in premiums to save itself from wholesale collapse.
It blamed the dozens of windstorms in Asia and central Europe,
and the enormous number of tornadoes in the US for its spate of
losses.
"Given the further increasing number of extreme climate
events we cannot insure against any new risks," a spokesman
for the company's board declared.
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