The Ex-Presidents, Banks, Car Companies, and Restaurants Selling Out Earth’s Future
We are buying ourselves, and everyone who comes after us, a life in endless wartime, all because we can’t be bothered to rapidly transform our energy system.
In one of the gigglier moments in modern movie history, Dr. Evil, awakening from 30 years of cryogenic sleep, threatens the world with utter destruction unless it pays him… one million dollars. (His criminal accomplices explain inflation to him, and he ups his price to $100 billion; happily, Austin Powers saves the world, and the cash).
Former U.S. President Donald Trump has his own number—a clean billion, which is what he told fossil fuel executives they should pay in return for giving them literally anything they want in his next administration. That they would use that power to once-and-for-all overheat the Earth is a given; the level of corruption and danger here is so over the top that it almost seems like a movie—but not a comedy, unless you run ExxonMobil.
That’s not the only valuation we’ve gotten in recent weeks. In a largely overlooked story a few weeks ago, a Reuters team obtained the report that Citibank had prepared for the Federal Reserve, outlining its exposure to climate risk—or, more exactly, the risk of the world actually taking this problem seriously and tackling it head-on. The report said that
The analysis said that if efforts to combat climate change ramped up enough to put the world on a path to bringing greenhouse gas emissions down to zero on a net basis by 2050, the bank would suffer $10.3 billion in loan losses over 10 years, more than the $7.1 billion in losses expected if those efforts did not speed up…
While the estimated hit to Citigroup would be small in relation to the $730 billion wholesale loan book assessed, the analysis provides rare insight into how the transition away from fossil fuels could affect a top Wall Street bank in a key area of its business.
The losses would occur because some of Citigroup’s borrowers in the oil, gas, and real estate sectors would take a financial hit if the world was immediately put on track to curb overall greenhouse gas emissions to zero on a net basis by 2050, the document reviewed by Reuters showed.
One way of reading this is to say that Citibank values the Earth at something less than the $3.2 billion it would lose if we stopped climate change. We can make this assumption because Citibank—along with its confreres in the big banking world—continue to pour huge amounts of money into the fossil fuel sector, completely ignoring the advice of scientists, and of the International Energy Agency which called for a halt to all new investments in 2021. The latest evidence of their incredible disregard for the future came this week, when Rainforest Action Network and partners issued the 2024 version of the invaluable Banking on Climate Chaosreport. The 2024 edition shows that Citi has tossed just shy of $400 billion at the industry since the Paris climate accords were signed, good for second place on the all-time list just behind Chase and just ahead of Bank of America.
This explains why, among other things, there will be a Summer of Heat on Wall Street, starting soon—with civil disobedience centered on Citibank. (There’s even an Elders Week, which Third Act is helping coordinate—if you can remember banking before ATMs, we’ll see you July 8-13.)
But there have been other estimates recently, far more realistic.
I wrote a few weeks ago about a new study that found global incomes would fall by a fifth. Now there’s an even newer study that goes that one better. It comes from economists at Harvard and Northwestern, and instead of using the traditional method of examining how much damage climate change will do country by country and then adding it up, they attempt to model the effects of global climate shocks—big disasters. There’s an excellent summary by one of the authors on Twitter, but I will highlight just a couple of points. Assuming the temperature increases 3°C—which is more or less the track we’re on, and I think pretty much guaranteed if Trump and his ilk succeed in slowing the transition to a clean energy economy—then there will be
a 31% welfare loss in permanent consumption equivalent in 2024, that grows to nearly 52% by 2100. Our results also indicate that world GDP per capita would be 37% higher today had no warming occurred between 1960 and 2019 instead of the 0.75°C observed increase in global mean temperature.
Those numbers to those who know how to read them are stark and staggering—the world would be far richer today were it not for global warming, and that number will just keep going up. But here’s the line that sticks in my mind:
“These magnitudes are comparable to the economic damage caused by fighting a war domestically and permanently.”
That is to say, we are buying ourselves, and everyone who comes after us, a life in endless wartime, all because we can’t be bothered to rapidly transform our energy system. And when I say “can’t be bothered,” I mean it. The oil companies are treacherous, but that makes venal sense: They’ve got no other business to fall back on (Well, except for Shell, which is learning to market completely bogus carbon credits). The banks are, in a sense, even more venal: Citi would lose a small fraction of its business if it behaved with any kind of moral clarity, but that is clearly too much to ask.
But others are… just ridiculous. In a remarkable piece of reporting, Bloomberg’s Ben Elgin details how the California Restaurant Association put the kibosh on the city of Berkeley’s plan to prevent new restaurants from using gas, and instead getting them to use induction cooktops. Read it and weep:
When Berkeley became the first city in the country to ban the extension of gas pipes into new buildings, it targeted a contentious source of climate pollution. The combustion of gas inside of homes and businesses to power things like furnaces, water heaters, and stoves accounts for 9% of California’s emissions, or 33 million metric tons of heat-trapping gases per year, equivalent to the entire climate footprint of Hong Kong.
With the U.S. gas system continuing to expand—the industry connects one new customer to the gas grid each minute—Berkeley was the first to try to stop this climate problem from becoming bigger. Since it enacted its ordinance in 2019, more than 100 cities, counties, and states across the country have followed.
Today, these efforts are reeling. The California Restaurant Association took the city to court in November 2019, arguing that its 20,000-plus members preferred cooking with a gas flame and that, even though the rule wouldn’t require changes to existing buildings, such an ordinance would limit their options when opening new locations. Moreover, they argued, federal energy laws preempt these aggressive local ordinances.
After a see-sawing legal battle, the restaurants prevailed. When Berkeley’s last-ditch request for a rehearing was rejected earlier this year, the city in March canceled its ordinance, prompting a jubilant CRA to declare it a “significant triumph for chefs and restaurateurs.”
Now, Bloomberg Green has learned, a coalition of gas companies and their supporters are planning to wield the restaurants’ legal victory to beat back similar rules across the western U.S. This puts restaurants directly at odds with a hospitableplanet, as there’s no feasible pathway to avert catastrophic warming if places like California don’t sharply reduce gas combustion in buildings, according to climate experts.
I’m the cook in our household, and I’ve used induction cooktops for years—$60 from Amazon. They work better than gas—boil faster, finer temperature control—but even if they worked worse, who cares? We’ve got to actually make some changes or we can’t actually have a working world. Who’s going to go out for dinner on a melting planet. It’s incredible to have perfectly fine substitutes for fossil-powered technology and then refuse to use it: Take, for example, the automakers, who a new study this week found to be united in their efforts to sabotage the transition to EVs
An analysis of climate policy advocacy in seven key regions (Australia, EU, India, Japan, South Korea, U.K., and the U.S.) finds that auto associations are leading efforts to delay and weaken key climate rules for light-duty vehicles.
In the U.S., the Alliance for Automotive Innovation has led opposition to ambitious fuel economy (CAFE) and GHG emissions standards, while in Australia, the Federal Chamber of Automotive Industries (FCAI) led a strategic campaign to weaken fuel efficiency standards.
Of the eight automotive industry associations included in this study, every automaker (except Tesla), remains a member of at least two of these groups, with most automakers a member of at least five of these associations globally.
If all of this seems overwrought to you—how could climate change actually do that much damage to our economy?—then finish off by reading a report by the veteran climate reporter Chris Flavelle in today’s Times. It delineates what global warming is currently doing to the home insurance market in the U.S.—which is to say, threatening to collapse it:
The insurance turmoil caused by climate change—which had been concentrated in Florida, California, and Louisiana—is fast becoming a contagion, spreading to states like Iowa, Arkansas, Ohio, Utah, and Washington. Even in the Northeast, where homeowners insurance was still generally profitable last year, the trends are worsening.
In 2023, insurers lost money on homeowners coverage in 18 states, more than a third of the country, according to a New York Times analysis of newly available financial data. That’s up from 12 states five years ago, and eight states in 2013. The result is that insurance companies are raising premiums by as much as 50% or more, cutting back on coverage or leaving entire states altogether. Nationally, over the last decade, insurers paid out more in claims than they received in premiums, according to the ratings firm Moody’s, and those losses are increasing.
The growing tumult is affecting people whose homes have never been damaged and who have dutifully paid their premiums, year after year. Cancellation notices have left them scrambling to find coverage to protect what is often their single biggest investment. As a last resort, many are ending up in high-risk insurance pools created by states that are backed by the public and offer less coverage than standard policies. By and large, state regulators lack strategies to restore stability to the market.
As the former state insurance commissioner of California put it, “I believe we’re marching toward an uninsureable future.”
And since the insurance industry is the part of our capitalist system that we task with understanding risk, that’s saying something.
