Naked Capitalism on Global Warming

“Risky Business” Climate Report: Paulson, Bloomberg, Rubin, Schultz Late to Combat the Denialists

Posted on June 24, 2014 by

Those who have been involved in trying to raise awareness of the risks of global warming might have to repress a “Beware of Greeks bearing gifts” response to a new, accessible, and well written report on the probable impact of climate change on the US. The effort, called “Risky Business” has Hank Paulson, Michael Bloomberg, and Thomas Steyer, retired chairman of Farallon Capital, as co-chairs, with its other committee members including Bob Rubin, George Schultz, Henry Cisneros, Gregory Page (the executive chairman of Cargill), Donna Shalala, and Olympia Snowe. In other words, when Hank Paulson looks like the best of a bunch, there’s reason to be cautious.

Chart showing carbon emission levels from 1775 to 2100 under various scenariosYet there is a lot to welcome about this development. This is a well-funded, hugely connected and respected bi-partisan group that intends to galvanize efforts to combat greenhouse gas emissions. It represents a long-overdue split in the elites. The Kochs and other denialists have succeeded in stymieing action by raising doubts about the origins and dynamics of climate change. The report is meant to demonstrate that the US is long past having the luxury of debating whether global warming is happening, and that a sober look at the seriousness of the outcomes says we need to do something, pronto.

Even though the document focuses on economic impacts, its novel and clever feature is to give readers a tangible sense of how bad things will get by showing how many 95° average temperature days there will be in various location in the future (emphasis original):

US Map of 95 Degree Days, 1981-2010 versus versus 2020-2039
US Map of 95 Degree Days, 2040-2059 v. 2080- 2099

Extreme heat across the nation—especially in the Southwest, Southeast, and Upper Midwest—threatening labor productivity, human health, and energy systems

» By the middle of this century, the average American will likely see 27 to 50 days over 95°F each year—two to more than three times the average annual number of 95°F days we’ve seen over the past 30 years. By the end of this century, this number will likely reach 45 to 96 days over 95°F each year on average.

» As with sea level rise, these national averages mask regional extremes, especially in the Southwest, Southeast, and upper Midwest, which will likely see several months of 95°F days each year.

» Labor productivity of outdoor workers, such as those working in construction, utility maintenance, landscaping, and agriculture, could be reduced by as much as 3%, particularly in the Southeast. For context, labor productivity across the entire U.S. labor force declined about 1.5% during the famous “productivity slowdown” in the 1970s.

» Over the longer term, during portions of the year, extreme heat could surpass the threshold at which the human body can no longer maintain a normal core temperature without air conditioning, which we measure using a “Humid Heat Stroke Index” (HHSI). During these periods, anyone whose job requires them to work outdoors, as well as anyone lacking access to air conditioning, will face severe health risks and potential death.

» Demand for electricity for air conditioning will surge in those parts of the country facing the most extreme temperature increases, straining regional generation and transmission capacity and driving up costs for consumers.

The most impressive feature of the presentation is its estimates of local climate impact, in some cases down to the county level (click to enlarge).

Impact of hotter temperatures and rising sea level on various parts of the Northeast in 2100

The report is full of cheery tidbits like this:

Rising seas and greater coastal storm damage already threaten the financial value and viability of many properties and infrastructure along the Eastern Seaboard and Gulf Coast. If we stay on our current climate path, some homes and commercial properties with 30-year mortgages in places in Virginia, North Carolina, New Jersey, Alabama, Florida, and Louisiana and elsewhere could quite literally be underwater before the note is paid off.

The report then works through what the effect will be on agriculture, energy use, heat and cold related deaths, and sea level rise/flood/extreme weather damage to property. For example:

As Risk Committee member Dr. Alfred Sommer has pointed out, extreme heat will have a major impact on the capacity of local hospitals: “We just don’t have the surge capacity left in the medical system anymore. . . If these [impacts] occur in rural areas you’re particularly in trouble.” He goes on to note that in Chicago during the 1995 heat wave, local officials “didn’t even have a place to properly store [bodies from] the 700 deaths . . .that occurred over a small number of days.”

While the study does try to estimate how much more extremely hot days will lower productivity, it does not estimate other secondary effects, like the potential for higher levels of infectious diseases.

Some of the projected effects start setting in sooner than many Americans might expect. For instance, Risky Business anticipates that the annual cost of flooding, along with hurricanes and other storms will increase by $7.3 billion in the next 15 years, which is a bit more than 25%. The production of staples is also in jeopardy. From the executive summary:

Without adaptation, some Midwestern and Southern counties could see a decline in yields of more than 10% over the next 5 to 25 years should they continue to sow corn, wheat, soy and cotton, with a 1-in-20 chance of yield losses of these crops of more than 20%.

Given the professed aim of this august group to stir more serious action, the caution and conservatism of the document is perplexing. On the one hand, the 95° day analysis may be sufficiently novel and tangible as to reach both businessmen and the broader public in a way past presentations have failed, particularly since it includes commentary like this:

But the real story in this region [the Midwest] is the combined impact of heat and humidity, which we measure using the Humid Heat Stroke Index, or HHSI. The human body’s capacity to cool down in the hottest weather depends on our ability to sweat, and to have that sweat evaporate on our skin. Sweat keeps the skin temperature below 95°F, which is required for our core temperature to stay around 98.6°F. But if the outside temperature is a combination of very hot and very humid—if it reaches a HHSI of about 95°F—our sweat cannot evaporate, and our core body temperature can rise until we actually collapse from heat stroke. Even at an HHSI of 92°F, core body temperatures can get close to 104°F, which is the body’s absolute limit.

To date, the U.S. has never experienced heat-plus-humidity at this scale. The closest this country has come was in 1995 in Appleton, Wisconsin, when the HHSI hit 92°F. (At the time, the outside temperature was 101°F and the dew point was 90°F.) The only place in the world that has ever reached the unbearable HHSI of 95°F was Dhahran, Saudi Arabia, in 2003 (outside temperature of 108°F, dew point of 95°F). Our research shows that if we continue on our current path, the average Midwesterner could see an HHSI at the dangerous level of 95°F two days every year by late century, and that by the middle of the next
century, she or he can expect to experience 20 full days in a typical year of HHSI over 95°F, during which it will be functionally impossible to be outdoors.

So if that proves compelling, the authors’ and committee members’ instincts to let that information speak for itself will be proven correct.

But otherwise, the report has looked hard and well at critical first-order climate change effects: energy use, flooding/extreme weather risks, loss of agricultural production, and other extreme heat effects (loss of productivity and extreme temperature-related deaths). But as much as the facts might seem sobering to a businessman, there’s no focus on broader social effects. Once a certain level of adverse change has been breached, negative outcomes are likely to become self-reinforcing.

The Department of Defense has been studying this topic (admittedly with more focus on areas deemed to be geopolitically unstable) and the recognize how enough change in living conditions and costs generates social instability. The Arab Spring was the direct result of increases in the cost of foodstuffs and cooking fuel that pushed those who were just barely getting by into desperate straits. The DoD has modeled the impact of mass migrations when low-lying, densely populated areas like Sri Lanka become increasingly uninhabitable. What happens in the US when areas that were once vibrant Sunbelt communities start looking too costly and unpleasant to live, and they start depopulating rapidly? Where do those former residents go? And what happens to those who lack the resources to decamp? Is the US future a series of sun-blasted Detroits? The East Coast will have similar issues with cities that are vulnerable to storms and sea level rises. That level of change in where people live has to have tremendous knock-on effects in terms of damage to communities, the loss of local businesses and jobs. And Bloomberg, the US leader in militarization of local policing, is certainly aware of these risks to the 1%, as are his colleagues in this effort; that (and profiteering) are the justifications for cops suddenly tricked out like cast members of a dystopian summer action movie.

So I am genuinely not certain of what to make of this document. Is it an effort (aside from Hank Paulson, who is a long standing conservationist) to assuage their consciences? Where were they when the IPCC made its report in 2007 and a push from such top-level businessmen could have had a real impact? Or is this sort of public presentation a sign of disfunction among the business elite? In the old days, as Lambert reminds me, there was a cadre of recognized wise men who had the stature that when they pulled one of their peers aside to urge then to change course, they’d get a serious hearing. Perhaps some members of this cabal (one can imagine Gregory Page of Cargill, who has a commercial interest as well as an organization famed for its ability to gather information) might have tried private suasion and been frustrated at their difficulty in getting traction. This document might reflect the reality of our modern era, that to shift the narrative on the elite level, it needs to be reflected in mass media as well.

The perplexing bit, in addition to underselling the seriousness of the climate change issue issue by steering clear of societal impacts, is the fact that the report pointedly steers clear of making any policy recommendations. It’s hard to know what to make of a document that stresses the need for urgent action yet fails to say much about what actions would have the biggest impact. It does, in its thin “Next Steps” section, call on farmers to adapt and make anticipatory investment, and suggests that the Federal government should help. And it makes an apple-pie-and-motherhood general call for a “Public Sector Response: Instituting policies to mitigate and adapt to climate change.”

Despite the high quality and astute focus of the analysis, the fact that the committee lacked the guts to call for concerted efforts to reduce energy use (and a lot can be done by simply better planning and changes of habits with minimal lifestyle impact, although clearly more severe energy “diets” would be better). For instance, as we pointed out, BP (yes that BP) decided in 1997 to reduce its greenhouse gas emissions to its 1990 level. It thought it would take 13 years. It took three years and cost $20 million…and yielded savings of $650 million. Yet most companies are loath to put in the effort and too short-term focused to incur expenses.

But the reality is that a Marshall Plan level effort to tackle global warming would need to look hard at undoing many extended supply chains and at reducing air travel. And it goes without saying that the global elite and business executives and managers who oversee multinational operations make a lot of environmentally costly long-haul flights. As the New York Times pointed out:

For many people reading this, air travel is their most serious environmental sin. One round-trip flight from New York to Europe or to San Francisco creates a warming effect equivalent to 2 or 3 tons of carbon dioxide per person. The average American generates about 19 tons of carbon dioxide a year; the average European, 10.

So if you take five long flights a year, they may well account for three-quarters of the emissions you create. “For many people in New York City, who don’t drive much and live in apartments, this is probably going to be by far the largest part of their carbon footprint,” says Anja Kollmuss, a Zurich-based environmental consultant.

It is for me. And for people like Al Gore or Richard Branson who crisscross the world, often by private jet, proclaiming their devotion to the environment.

Though air travel emissions now account for only about 5 percent of warming, that fraction is projected to rise significantly, since the volume of air travel is increasing much faster than gains in flight fuel efficiency. (Also, emissions from most other sectors are falling.)

We used to have leaders who were at least willing to make a credible show of leading by example. JP Morgan, for all of his many faults, insisted that the members of the House of Morgan had to be models of probity to make manifest the stability and trustworthiness of his firm. While this report is a step in the right direction, Paulson, Bloomberg, Page et al would have an even bigger impact on opinion if they took some concrete steps themselves to reduce their and their organizations’ carbon use, most important by making personal changes like cutting back significantly on airplane use and naming and shaming colleagues who didn’t. But people who become members of the most exclusive clubs are the least likely to break the unwritten rules and criticize powerful peers.

When I was briefly in Caracas, I was taught a local saying, “They have changed their minds, but they haven’t changed their hearts.” This report at best might change some minds, but it will take much more to find the emotional and practical triggers to shift behavior on a widespread basis. And the runway to do that is awfully short.


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