Tuesday, June 24, 2014

A Time to Act

In a new op-ed in the New York Times on June 21, Hank Paulson says he's seeing the same systemic stresses that nearly brought down the banking system, and which led to the Great Recession, are playing out in the global climate. He makes a call for action on all fronts in order to avoid the catastrophic consequences of emitting more carbon. To quote his op-ed: "We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked." He cites the Risky Business report, a bipartisan project backed by three former US Treasury secretaries, that sets out estimates of the potential costs of problems such as flooding caused by rising temperatures and higher sea levels.

"That means the decisions we’re making today — to continue along a path that’s almost entirely carbon-dependent — are locking us in for long-term consequences that we will not be able to change but only adapt to, at enormous cost. To protect New York City from rising seas and storm surges is expected to cost at least $20 billion initially, and eventually far more. And that’s just one coastal city."

Its aim is to move the debate in the US, which has become characterised by partisan divisions, into a more practical assessment by business and political leaders of how to manage the risks posed by climate change. The study looks only at the US, and only at potential costs, rather than possible solutions.The project is chaired by Hank Paulson, who was Treasury secretary under President George W Bush; Michael Bloomberg, the former mayor of New York; and Tom Steyer, the former hedge fund manager turned environmental campaigner.

Mr Paulson, who was chairman and chief executive of Goldman Sachs, the investment bank, between 1999 and 2006, and then led the US administration’s response to the financial turmoil of 2008, drew a parallel between climate change and the “failure of risk management” that led to the crisis. “We are experiencing a climate bubble,” he said. “In the run-up to the financial crisis, we incentivised lending. Today we are encouraging the overuse of fossil fuels.”

A June 8 article discussing this in the Financial Times also reveals that the analysis, based on work by Rhodium, a consultancy, and academics at Rutgers and Berkeley universities, attempts to calculate financial values for climate risks including flooding and storm damage, heat-related deaths, working hours and energy demand, broken down by state and locality. Because of the large uncertainties involved in predicting both how far temperatures will increase and what the effects of those higher temperatures will be, the estimates of potential damage come in wide ranges.What turns up in many of these estimates is that the greatest potential costs come from flooding in Florida and Louisiana and heat-related deaths in California, Arizona, Texas and Florida.

Back in 2012, tracking the hottest year on the planet at that time, the Daily Kos outlined the destructive path of climate change and raised the alarm that the US is ground zero for climate change in the southern part of the country. This is due to the carbon emissions that are forcing temperatures into extremes not seen before, and we are rapidly burning into the remaining "safe" budget of total carbon emissions:

"What most U.S. politicians and the the political junkies here don't understand is that the U.S. is ground zero for climate change. Most of the additional heat from global warming is going into the oceans and the north Atlantic is taking up the most heat of all the world's oceans. That heat is moving the big high pressure north and east towards Europe. That shift of the high pressure dries out the western and central U.S. Our bread baskets heat up and dry up."

California Senator Dianne Feinstein has expressed her awareness of this issue in her public missive earlier this month in "A Time to Act", emphasizing that legislation must be set into place immediately to address the dangers ahead of us.