Climate change discussion is ‘more urgent than ever before’ to gain independence from Russia

The global drive to mitigate climate change and embrace renewable energy “is more urgent than ever before” – not only to combat the recent uptick in associated secondary perils, such as flooding, but to also secure independence from the world’s key fossil fuel provider, Russia.

This is according to Torsten Jeworrek, chief executive of reinsurance at Munich Re, who was addressing delegates attending Rendez-Vous de Septembre in Monte Carlo on 11 September 2022.

According to March 2022 data from Paris-based intergovernmental organisation the International Energy Agency (IEA), Russia was the world’s largest fossil fuels exporter in 2021.

This means that since the onset of Russia’s invasion into Ukraine, which began in February 2022, “global energy markets have been thrown into turmoil, with major energy security and supply risks worldwide”, the IEA stated.

Speaking during a briefing event, Jeworrek told trade press: “After two years of Covid, we now – of course – have the next global crisis and this time it’s not corona. It caused [by] the war – Russians against Ukraine.

“This will have deep implications on the economy, on the supply of gas, maybe oil, other fossil [fuel] resources. It will also have a very deep impact on our industry.

“We are absolutely convinced that climate change and this need for transformation from [being a] fossil [fuel]-driven industry and economy to a renewable-driven economy is more urgent than ever before.

“Not only because we see the disasters and losses, flood events and wildfires, the heatwaves this summer in Europe. We also see political reasons to discuss climate change and the transformation towards renewable energy – this is to make us independent from fossil energy and Russia.”

Going greener

Munich Re board member Thomas Blunck added that the effects of man-made climate change were becoming more evident.

For example, he said that “Europe will continue to be a heatwave hotspot” and in the UK specifically, this type of weather event is now 10 times more likely to occur due to “human-caused climate change”.

Blunck believes that Munich Re – and the reinsurance industry more broadly – needs to approach climate change using a five-step strategy.

This includes:

• Understand – Identifying risks, sharing data and knowledge.
• Measure – Expand modelling techniques.
• Manage – Create risk transfer, risk management and prevention propositions.
• Enable – Tapping into new technologies.
• Invest – Allocating capital to renewable energy projects and environmental, social and governance (ESG) linked investments.

For Blunck, Munich Re is walking the talk.

He explained: “We have products that allow to mitigate the risk of new technologies and we have a team focused especially on renewable technologies.

“And in our investment arena, we have right now €1.7bn (£1.47bn) invested into infrastructure projects of renewable energies. We intend to increase that amount below €3bn (£2.9bn) by 2025. After that, we will continue growing in this space.”

Munich Re has ringfenced investment for this field of up to €7.3bn (£6.3bn).

“Reducing the insurance gap is a major worldwide initiative and also, for us, a very big topic. By designing coverages that address very specific local needs, that take into consideration the local weather patterns [and] continuously learning and further developing we provide solutions for that,” Blunck added.

This includes Munich Re’s latest initiative, HySure. The reinsurer is currently “talking to potential pilot clients” that wish to tap into the new product.

HySure provides cover for hydrogen production plants, protecting against excessive electrolyser repair costs, underperformance in hydrogen production and a potential insufficient availability of electrolysers.

An electrolyser is an apparatus that produces hydrogen through a chemical process which separates hydrogen and oxygen molecules using electricity.

Blunck said HySure has been designed to “push boundaries” and help mitigate climate change.

• Insurance Times has converted euro amounts into pounds using an exchange rate of £1 = €1.16, which was correct as of 1 September 2022.