This week featured a slew of stories about the financial impacts of investing in clean energy and of continued avoidance of addressing climate change. For years, I have noted how the military - the bastion of tree-hugging - recognizes the impacts of climate change, and currently plans to adapt base locations and strategies to mitigate the impacts. Now, we see that another center of progressive thought - the insurance industry - recognizes the problem. Combined with recent acknowledgements by Exelon and ExxonMobil, we see a tide shifting in the understanding of what we have done and what we have left to do.
For insurers, no doubts on climate change
"And the industry expects the situation will get worse. 'Numerous studies assume a rise in summer drought periods in North America in the future and an increasing probability of severe cyclones relatively far north along the U.S. East Coast in the long term,' said Peter Höppe, who heads Geo Risks Research at the reinsurance giant Munich Re. 'The rise in sea level caused by climate change will further increase the risk of storm surge.' Most insurers, including the reinsurance companies that bear much of the ultimate risk in the industry, have little time for the arguments heard in some right-wing circles that climate change isn’t happening, and are quite comfortable with the scientific consensus that burning fossil fuels is the main culprit of global warming."
The risk to the private insurance market has limits because of the backstop afforded by government insurance programs. Whereas the private insurance industry spent just over $30 billion on climate-change-related insurance payouts last year, the government nearly quintupled the ten year average of payouts at nearly $100 billion dollars. All taxpayers cover that bill, not just those companies and individuals who contribute most to the pollution that causes climate change.
Climate-related disasters cost American taxpayers $96 billion last year
"Overall the insurance industry estimates that 2012 was the second costliest year in U.S. history for climate-related disasters, with over $139 billion in damages. But private insurers themselves only covered about 25% of these costs ($33 billion), leaving the federal government and its public insurance enterprises to pay for the majority of the remaining claims. As a result, the U.S. government paid more than three times as much as private insurers did for climate-related disasters in 2012."
This growing recognition of the impacts and dangers of climate change to our economy have started bipartisan discussion on potential policy solutions that would reset our priorities as a nation. If such measures become law - such as a carbon tax that sets a market rate for the burning of carbon and places the costs on those that cause the pollution - it would drastically change the value of fossil fuel reserves, sparking an economic shift from fossil fuel companies as the backbone of the Fortune 500, to one where their asset values drop dramatically. It is no wonder they have fought for so long to deny the negative impact of their business.
After bubbles in dot-coms and housing, here's the carbon bubble
"A few months ago, the concept of a carbon bubble went mainstream. Last December, the International Energy Agency lent its credibility when it noted that many of already-discovered deposits of coal, oil and gas might need to be placed off limits by future government steps to constrain carbon. Then came reports by Standard & Poor’s and this one from British bank HSBC PLC. The Carbon Tracker Initiative, in conjunction with the London School of Economics, updated their research in April."
Those with capital see the looming shift, and have increased investment in opportunities that avoid the growing risks associated with carbon-based economic decisions. It is also worth noting, that some of the most viable solutions come not in the manufacture-sell-repeat model, but in the customer-service model whereby the individual buys the service from the system, but the manufacturer holds responsibility for the creation, maintenance, and reclamation of the equipment. This provides for a stronger model that recognizes the limited capacity we have to manage everything associated with our lives in great detail.
Why Goldman Sachs just bet $500 million on Elon Musk's solar business
"SolarCity's customers tend to have top credit ratings but the company said it intends to use the Goldman fund to sign up those with less sterling scores. 'The Goldman lease financing will make affordable solar electricity available to more types of homeowners and organizations,' Jimmy Chuang, SolarCity's vice president of structured finance, said in a statement. 'We expect to be able to expand our offering to a broader customer base by lowering the credit requirements even further in future financings.'
The company said the Goldman fund will also allow it to reel in more schools, municipalities and organizations that don't carry credit ratings."
This all ironically reaches the mainstream media in a week when the leader of the Catholic Church calls out the financial industry for creating a cult of money, whereby money no longer serves to improve the quality of life for all, but rather to enrich the quality for life for some while tyrannizing others to the point where they have no real autonomy. Economic - and along with it energy - development is necessary to improve quality of life, but unchecked development or parasitic development can do far more harm than good. The opportunities afforded us by the knowledge of how to interact healthfully with our natural environment, and how to tap into renewable energy resources, can put us on a better path for development for the 5 billion people in our world looking to reach the "western" quality of life. I hope that over these next ten years that we take advantage of this great opportunity, not for financial gain, but to end a culture by which we commoditize humanity.
Pope Francis attacks 'cult of money' in reform call
"Attacking unchecked capitalism, the pope said the growing inequality in society was caused by 'ideologies which uphold the absolute autonomy of markets and financial speculation, and thus deny the right of control to States, which are themselves charged with providing for the common good'."
Happy Friday!
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