Climate change's economic toll continues to mount

Every three weeks, the U.S. experiences an extreme weather event in which damages and costs top $1 billion.

That compares with every four months in the 1980s, when adjusted for inflation, according to the latest installment of the U.S. National Climate Assessment released November 14.

Created in 1990, the national climate assessment is mandated by law and is produced every four years, though it sometimes gets delayed. This latest version—the fifth—expands on findings from the last assessment in 2018 and was written by more than 750 experts and reviewed by 14 federal agencies. 

For the first time, the assessment includes a separate chapter on the economic impacts associated with climate action, noted Amrith Ramkumar of The Wall Street Journal. The chapter “really paints a much broader picture of the ways in which climate change is affecting daily life,” said Delavane Diaz, a principal team lead at the Electric Power Research Institute and a co-author of the report. To enable people to see the impacts of climate change in their city and state, the Biden administration has created an online tool.

Due to global warming, average temperatures in the United States are rising about 60 percent faster than they are in the world as a whole. Every part of the country is feeling the effects of the warming planet, the report finds. Rising fatalities from extreme heat in the Southwest. Earlier and longer pollen seasons in Texas. Northward expansion of crop pests in the Corn Belt. More damaging hail storms in Wyoming and Nebraska. Stronger hurricanes in Puerto Rico and the Virgin Islands. Shifting ranges for disease-spreading ticks and mosquitoes in many regions.

For every 1 degree Fahrenheit that the planet warms, the U.S. economy’s growth each year is 0.13 percentage points slower than it would be otherwise, according to the report. As The New York Times’ Raymond Zhong pointed out, that seemingly small effect can add up, over decades, to a sizable amount of forgone prosperity.

The report concludes that Americans’ efforts have mostly been “incremental” instead of “transformative”: installing air-conditioners rather than redesigning buildings, increasing irrigation rather than reimagining how and where crops are grown, elevating homes rather than directing new development away from floodplains. About 40 percent of the U.S. population lives in coastal communities exposed to sea level rise, and millions of homeowners could be displaced by the end of the century, according to the assessment.

Switching to zero-carbon energy could reduce air pollution enough to prevent 200,000 to 2 million deaths by 2050, the report says. 

The National Climate Assessment is extremely influential in legal and policy circles, and affects everything from court cases about who should foot the bill for wildfire damage, to local decisions about how tall to build coastal flood barriers, NPR reported. "It really shapes the way that people understand, and therefore act, in relation to climate change," says Michael Burger, the director of the Sabin Center for Climate Change Law at Columbia University.

Progress toward putting an honest price on carbon

If you’re on this page, you probably fully understand that the prices of products containing carbon do not include all the costs they impose on society. The list includes medical costs related to polluted air, wildfire and hurricane damage due in part to climate change, and more.

So we applaud the Biden administration’s September 21 decision to determine an honest carbon price and use it in federal government purchasing choices. As The New York Times’ Coral Davenport wrote, “The idea is to take into account the greenhouse gases generated by goods and projects, how they contribute to global warming, and the cost of that to the economy.”

As she pointed out, “the potential impact is significant. The federal government is the world’s largest consumer of goods and services, spending roughly $600 billion each year. The changes could shift purchases for the federal government’s fleet of roughly 600,000 cars and trucks from gasoline-powered to all-electric vehicles, redirect the flow of billions of dollars of government grants and reshape or kill some major construction projects.”

A White House fact sheet cited a recent federal finding that climate-related disasters could increase federal spending by more than $100 billion annually and decrease annual federal revenue by up to $2 trillion by the end of the century. 

“It will be the first time this ‘whole of government approach’ is used to evaluate the climate consequences of government actions,” said Richard Revesz, the president’s regulatory chief.

“This is a very big deal,” said U.S. Senator Sheldon Whitehouse, the leading advocate in Congress for a strong, governmentwide social cost of carbon. This action, he noted, “will put the full weight of federal government decisions into fighting climate change – a solution I’ve been encouraging for many years. The International Monetary Fund has calculated the American government subsidy for Big Oil at $760 billion per year, none of which reflects the harm and damage the industry’s products do to the planet.  

“Under President Biden’s leadership, America is fighting back on behalf of taxpayers and will begin factoring the true costs of carbon pollution into a wide array of government actions, cutting back on taxpayers’ bills for climate-related disasters over the long term.  The biggest private sector companies have been doing this for years because it makes good economic sense.  By incorporating the social cost of carbon into procurement calculations, today’s action will result in economies of scale for clean energy and low-emission products, bringing down prices for consumers.”

As PoliticoPro’s Alex Guillen explained, the social cost of carbon was first calculated by the Obama administration and included only carbon dioxide. It was expanded to include other climate pollutants, notably methane and nitrous oxide. The price was determined to be $42. Under President Donald Trump, that figure was lowered to less than $5.

Biden ordered that cost restored to roughly the same level established under Obama (an inflation-adjusted $51) and directed an interagency working group to overhaul the metric. In November 2022, EPA issued a proposal with three possible levels for the social cost of carbon, including $120. That proposal will be finalized after EPA has reviewed public comments.

Coming up this fall is a U.S. Supreme Court decision on whether to hear an appeal by Missouri and other Republican-held states that challenges the use of the social cost metric. That case failed in a federal district court and in the 8th U.S. Circuit Court of Appeals. Both courts ruled the states lacked standing to bring their lawsuit because they failed to show they had been actually harmed by the metric.

We strongly advocate enactment of a fee on carbon to incorporate the costs of carbon in all prices throughout the nation’s economy.

Seventy percent of Americans would "make money" on carbon tax & dividend

The political consensus is that a carbon fee (a/k/a carbon tax) is a loser. Any new tax is a long shot, and when you’re talking about one that will increase the cost of filling your gas tank, it’s an even longer shot.

But a recent blog post by Frank Lysy, an economist who was formerly with the World Bank, takes issue with that conventional wisdom. He drives home the point that if all the tax revenue goes back to the American people, as many of us in the climate community have proposed, AND if supporters do a better job of explaining this proposal, the votes may well materialize.

Lysy emphasizes that 70 percent of Americans would receive more in the form of a “dividend” than they pay in a carbon tax. As he explains it:

“The US Treasury published a study of this scheme in January 2017, and estimated that such a tax would generate $194 billion of revenues in its initial year (which was assumed to be 2019).  This would allow for a distribution of $583 to every American (man, woman, and child – not just adults).  Furthermore, the authors …concluded that…the bottom 70%, as ranked by income, would enjoy a net benefit, while only the richest 30% would pay a net cost.”

Critics often argue that a tax on consumption is unfair to those with low incomes. But, Lysy points out, “[t]hose in the poorest 10% of households would receive an estimated $535 net benefit per person from such a scheme. The cost of the goods they consume would go up by $48 per person over the course of a year, but they would receive back $583.” The reality is that the well-to-do consume a lot more energy and thus would pay much more in carbon taxes.

Lysy compared this carbon tax proposal to what used to be called the food stamps program (formally now called SNAP, for Supplemental Nutrition Assistance Program). It is the largest cash income transfer program in the U.S. designed specifically to assist the poor. “The carbon tax scheme would be of greater benefit than food stamps are, on average, for lower middle-class households (those in the 3rd decile and above),” he calculated.

And it’s not as if high-income Americans would suffer. “In dollar terms,” Lysy wrote, “the richest 10% would pay in a net $1,166 per person in this scheme… But this would be just 1.0% of their per-person incomes. The 9th decile (families in the 80 to 90th percentile) would pay in a net of 0.7% of their incomes, and the 8th decile would pay in a net of 0.3%.”

Lysy compares this free market approach to the alternative: a regulatory solution to climate change. “Such systems are not good, by their nature, at handling innovations, as by definition innovations are not foreseen,” he explains. “Yet innovations are precisely what one should want to encourage… A carbon tax program would similarly encourage innovations, while regulatory schemes can not handle them well.”

What about imports? “There would also be a border-tax adjustment on goods imported, which would create the incentive for other countries to join in such a scheme (as the US would charge the same carbon tax on such goods when the source country hadn’t, but with those revenues then distributed to Americans).”

To help win over skeptics, Lysy suggests sending initial rebate checks before the carbon taxes are to go into effect, an idea termed a “prebate.” That would help overcome the fear that somehow the revenue would go into government coffers and never come back.

Please encourage your U.S. senators and House member to take a fresh look at the numbers–and vote for this common-sense solution. Let’s not wait for more hurricanes, floods, droughts and wildfires.

Labor & Environmental Groups Finding Common Ground

The labor movement and environmental groups have not always been the best of friends. Labor tended to view environmental regulations as impediments to construction, auto manufacturing, and other activities that provided good jobs that paid well.

Both sides seem to be moving beyond that old construct. One clear sign of the determination to work together to hasten the transition to a low-carbon economy is the BlueGreen Alliance. It was founded by the United Steelworkers and the Sierra Club, a duo that its executive director, Jason Walsh, describes as the “original odd bedfellows.”

The Alliance has grown to include 14 major national and international unions and environmental groups that collectively represent about 50 million Americans. The guiding principle that keeps these groups together is a belief that Americans shouldn’t have to choose between good jobs and a clean environment; we can and must have both.

Research by the International Labour Organization (ILO) and the Worldwide International Renewable Energy Agency (IRENA) documented that employment in renewable energy reached 12.7 million in 2021, a jump of 700,000 new jobs in one year, despite the lingering effects of COVID-19 and the growing energy crisis.

Solar photovoltaic (PV) has so far provided the biggest share of renewable energy jobs (4.3 million), followed by hydropower and biofuels (2.4 million each), and wind power (1.3 million). Other sectors like geothermal, heat pumps and ocean energy make up the rest of the jobs growth. 

Guy Ryder, who recently completed ten years as ILO’s director-general, said; “Beyond the numbers, there is a growing focus on the quality of jobs and the conditions of work in renewable energies, to ensure decent and productive employment. The increasing share of female employment suggests that dedicated policies and training can significantly enhance the participation of women in renewable energy occupations, inclusion and ultimately, achieve a just transition for all. I encourage governments, workers’ and employers’ organizations to remain firmly committed to a sustainable energy transition, which is indispensable for the future of work.”

Of course, there can be friction between labor and the environmental movement. “Permitting and siting certainly is a tension point that we are working through,” Walsh told Dan Gearino of Inside Climate News, “particularly with all of these new investments coming online. That requires us as a country to build a lot of stuff at speed and scale, and figuring out a position for our coalition that honors and protects our existing environmental laws, while also building out a lot of infrastructure, is a needle that we have to thread. 

“We are working internally right now to be able to put forward a unified position on permitting reform, and particularly focusing on transmission, which all of our labor and environmental partners recognize is absolutely a critical part of realizing the climate benefits of the investments from the Inflation Reduction Act.”

Another challenge for the alliance, Walsh told Inside Climate News, is the pay gap. “We were and still are—because the law hasn’t fully kicked in yet—seeing significant gaps in wages between workers in renewable energy sectors and workers and fossil fuel sectors. And that’s a big problem. It’s an equity problem, and it is a political problem. And we certainly can’t expect workers to accept the necessity of this transition if their jobs are going away, or they’re getting other jobs in clean energy sectors that pay less and offer less voice on the job and security on the job. So, our push for clean energy investments with strong labor and equity standards was an enormous unifier.”

As implementation of the Inflation Reduction Act (IRA) continues, there will be more and more opportunities for labor and environmental groups to cooperate on the energy transition. Of course, that transition would occur more rapidly if Congress put an honest price on carbon.

Wind & solar power ride to the rescue in Texas

You probably know that Texas, a hot place, has been dangerously hot recently. Many parts of the Lone Star State have routinely had highs exceeding 100 degrees, and the heat index, which includes humidity, climbed as high as 125 degrees in some Gulf Coast cities.

Fortunately, the state has been able to meet skyrocketing power demands, thanks to renewable energy sources. The amount of solar energy generated in Texas has doubled since the start of last year, The New York Times’ David Goodman reported. “And it is set to roughly double again by the end of next year, according to data from the Electric Reliability Council of Texas. Already, the state rivals California in how much power it gets from commercial solar farms, which are sprouting across Texas at a rapid pace, from the baked-dry ranches of West Texas to the booming suburbs southwest of Houston.”

So far this year, about 7 percent of the electric power used in Texas has come from solar, and 31 percent from wind.

Solar energy and batteries played a large role in preventing power outages during the latest heat wave—even as other energy sources struggled to stay online, Kristoffer Tigue wrote in Inside Climate News.

“Yesterday at 6:31CT, one of the four nuclear units in Texas stopped producing power,” Doug Lewin, an energy consultant and president of Austin-based Stoic Energy, wrote on Twitter June 16. “A new fast acting backup reserve (ECRS, which is mostly batteries) stabilized the grid and prevented bigger problems.”

“Renewables are definitely saving the grid and saving our wallets,” said Alison Silverstein, an independent energy consultant based in Austin, referring to the impact on electricity prices.

Texas still trails California in the amount of solar power on the roofs of homes. But in the growth of solar farms, it has been rapidly outstripping the Golden State, Goodman reported in The Times. In Fort Bend County, outside Houston, there are now six large solar farms, up from one in 2020.

Some of the credit goes to former Gov. Rick Perry, a Republican who helped establish Texas as the leading state for wind power. He backed a multibillion-dollar effort in 2005 to create transmission lines to bring power from the windy western part of the state to the major population centers.

Unfortunately, the oil and gas industry remains so politically strong in Texas that the Republican-dominated State Senate passed several bills in the spring that contained provisions that would add new costs and regulations to the solar and wind industries and severely limit the number of new projects in the state, energy experts told The Times. Those bills failed to pass before the legislative session ended, but they are likely to be reintroduced when the Senate reconvenes.

“Renewables have proved a favorite scapegoat for any problems with Texas’s power system — even when they’re actually the key to alleviating those problems,” columnist Catherine Rampell wrote recently. 

Thanks to the Inflation Reduction Act’s incentives for development of solar and wind energy, other states may be able to catch up with Texas. The transition would be even swifter if Congress taxed carbon dioxide emissions.