Over the past month, the Network for Greening the Financial System (NGFS), has come under serious criticism for implementing modeling methods that are meaningless—and quite so, even in the broader context of increasingly meaningless climate change risk calculations. The situation entails a bad statistical analysis, economic results for the whole world that are highly sensitive to questionable GDP data from Uzbekistan (that’s right, Uzbekistan), and the elite scientific journal Nature which resisted reviewer warnings that something didn’t seem right with the analysis. At stake is monetary policy all over the world.

The scandal enveloping NGFS and Nature is telling of the pressure that special interests have put on science for the purpose of advocacy. It is also telling of the willingness of the editorial team at Nature to kowtow to the catastrophism narrative that captured climate change research.

The corruption of science reflects a corruption of the democratic process. In an effort to circumvent democratic process of decision making for energy and industrial policy—a process deemed too frustrating by climate hardliners—advocates have created a complex and vast NGO financial regulatory regime that can effectively steer governments and financial institutions to act on dubious climate information to curb fossil fuel use, cut emissions regardless of the consequences, and increase the cost of living in the name of avoiding ecological collapse.

Selling the tools to meet these regulations and discipline the financial system has become big business, too. And some of the authors of the climate catastrophe narrative have been reaping its rewards.

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Current NGFS Scandal

The NGFS is a coalition of central banks, regulators, and financial institutions who are working to guide financial institutions towards meeting the goals of the Paris agreement by developing best practices of “environment and climate risk management” in the financial sector. The most prominent work product of NGFS are its climate scenarios “developed primarily for risk assessment purposes, their focus being the assessment of impacts on the economy and on the financial sector over long time horizons.”

The fifth and most recent scenario version received a new damage function—that is, a calculation of the relationship between climate variables and economic output—which dramatically increased expected economic losses from climate change. Documentation for the new NGFS damage function appeared in “The economic commitment of climate change,” an April 2024 Nature paper by Maximilian Kotz, Anders Levermann, and Leonie Wenz, each affiliated with the Potsdam Institute for Climate Impact Research (PIK).

At this point, the original Kotz et al. paper has been thoroughly debunked for faulty statistics and data anomalies. But a bizarre series of events leaves Nature actively shielding the distorted methodology, NGFS, and PIK, despite the clear inaccuracies.

But this is only the latest round of open and valid critique of the NGFS scenarios. In 2021 and 2022, Roger Pielke, Jr. pointed out that NGFS was using an extreme and outdated emission scenario in their damage function. Over the same period of time, NGFS updated their model version to reduce the cumulative emission projections while increasing expected damages—an update that makes little scientific or economic sense.

Pielke notes that this is a curious feat because the different model versions relied on the same damage function developed in a paper by Matthias Kalkuhl and Leonie Wenz at PIK, which already produces extreme losses when compared to other published damage functions. However, NGFS clearly has a track record of pursuing unusually high damage values in questionable ways.

Of course, the latest controversy around the NGFS damage function created by Kotz et al. also uses the outdated emissions scenario that Pielke pointed out in earlier versions. This means that not only is the statistical process of the damage function invalid, the emissions scenario it relies on is fundamentally rooted in irrelevant and incoherent socio-economic assumptions.

Nature is clearly aware of the problems in the reliability of the methods and data of the paper but is reluctant to issue a retraction. Instead, Nature has maintained a user warning on the paper for over a year while awaiting “appropriate editorial action.”

Rigid

The primary funders of a progressive faction that has failed for 30 years to gain traction on energy policy through democratic process—because their demands are alienating and impractical, if not impossible—have forced their agenda onto the financial system.

This is more than politics as usual; this is a system of special interests that creates a rigid structure so strong as to capture the global financial regulatory system and weaken the scientific integrity of climate research all over the world. Consider that banking capital requirements and the potential for penalties for inadequate climate risk management across Europe now hinge on a single editorial decision at Nature.

Kotz et al. list their funding from PIK, but it is the pass through philanthropy, ClimateWorks, that gave PIK money for the NGFS scenario update.

The relationship between NGFS, ClimateWorks, and PIK researchers is not minor.

The NGFS is a direct offshoot of the Task Force on Climate-related Financial Disclosures (TCFD) created by Mark Carney, who is now Prime Minister of Canada. Carney put Michael Bloomberg as head of TCFD. Then, Carney co-founded NGFS which set itself up to carry out TCFD recommendations. Bloomberg Philanthropies and ClimateWorks funded development of the NGFS scenarios since the beginning.

Eventually, TCFD recommendations became enshrined into financial disclosure regulations in Europe and are being considered as a regulatory tool in the UK. California will require climate risk disclosures under TCFD recommendations beginning next year. For a hot minute, TCFD and NGFS started to work their way into the US Federal Reserve and corporate disclosure regulations. Formal adoption of TCFD recommendations into international accounting practices was a process that Bloomberg helped usher along.

Elsewhere, the Gordon and Betty Moore Foundation funds the INSPIRE program hosted by ClimateWorks and Grantham Research Institute. INSPIRE, is a “designated stakeholder” of NGFS and promotes green finance through research grantmaking; one-third of their commissioned projects have “buy-in from central bankers.”

All the while, Bloomberg Philanthropies has an advisory seat at ClimateWorks. And ClimateWorks has a seat on the advisory council of the IAM Consortium, a little known research community that organizes scenario development for the Intergovernmental Panel on Climate Change (IPCC). Researchers with important roles producing scenarios for use in IPCC reports are also creating scenarios for NGFS and other financial interests.

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Conflicts of interest

The persistent problems with the NGFS scenarios reek of severe researcher conflicts of interest (COI) and funding bias. It is well established that research outcomes are correlated with researcher COI and the interests of the research sponsor. The reasons for the correlation are complex and not necessarily nefarious, but, at times, it does indeed include outright manipulation of data and methods.

Most notably since the Paris Agreement, climate change research became increasingly entwined- not just with energy and politics, but with finance and strategic litigation. These are major interests and the philanthropic money behind climate advocacy has some of the deepest pockets and political influence. Acknowledging this development as a source of COI for researchers and their institutions with the potential to corrupt the field has lagged behind the extent to which these industries have come to rely on these researchers.

A few years ago, Ben Caldecott, Director of the Oxford Sustainable Finance Group shared in the Financial Times that financial firms were placing pressure on researchers to produce and report select findings. Caldecott wrote,

I have also heard too many stories, often from early career researchers at a range of institutions, of instances where financial institutions and ESG data providers have sought to undermine academic freedom. They have done this by trying to change the results of research before publication, or have attempted to prevent it from being published at all, to protect their products and services.

This situation is not uncommon in other industry-academic research partnerships and everyone is sensitive to when they occur in fields such as industrial chemicals, or fossil and nuclear energy. But, climate change and finance? Pfft.

Looking at the organization of funders, research institutions, and financial incentive shows multiple cells of self-serving research programs. Consider this recent example:

• In 2022, investor John Doerr gave $1 billion to Stanford University to create the Doerr School of Sustainability.

• Doerr and Al Gore are both advisors to the venture capital firm Kleiner Perkins, for which they formerly worked.

• Doerr is an adviser to Watershed, an emissions accounting and sustainability reporting platform that conveniently sells carbon credits; Gore is an investor in Watershed. Kleiner Perkins is an investor in Watershed.

• Watershed is further advised by “key architects” of the climate-related financial risk regulatory regime including those previously involved with Bloomberg, ClimateWorks, and NGFS.

• Recently, the EPA announced it would no longer update a database on emissions from goods and services. The emissions database developer left the EPA to join the Doerr school working on a program supported by Watershed and another partner.

• The new emissions program is expected to be used by “thousands of organizations worldwide to measure and report their emissions” to meet the reporting requirements created by the architects of the regulatory regime

Stanford is now the curator of emissions data for meeting financial regulatory requirements including those of central banks under NGFS—emissions data that is central to the business interests of its largest donor and his colleagues. There are tremendous political and financial stakes tied to this entire institutional regime and any research that comes out of it. The institutional and researcher COI potential is through the roof.

There are several concentrated academic research hubs generating analytical products in support of climate litigation. They are connected in their activities and funders. Let’s look at a snippet.

• The Grantham Research Institute (GRI) at London School of Economics, which hosts the NGFS-focused platform, INSPIRE, receives funding from Bezos Earth Fund and ClimateWorks.

• Bezos Earth Fund supports World Weather Attribution—a leading entity in attribution products for litigation.

• Co-Founder of INSPIRE, Nick Robins, is a board member to the Carbon Tracker Initiative which studies impacts of the energy transition on the value of fossil-fuel exposed companies; it is a longtime pioneer of the stranded asset concept. The President of Carbon Tracker Initiative, Ilmi Granoff, advises on climate litigation at Columbia University at the Sabine Center which receives funding from ClimateWorks

• NGFS advises central banks to consider climate litigation impacts on asset valuation as part of their risk management

• Researchers at GRI shows that climate litigation decreases firm asset values and a ClimateWorks funded initiative at GRI argues that banks need to improve their management of exposure to climate litigation

• Bezos Earth Fund sits next to ClimateWorks on the advisory council of the IAM Consortium, that little known research group organizing scenario development for the IPCC, and as it happens, the Sixth Assessment Report discussed climate litigation and firm asset valuation at length in the context of mitigation in the Working Group III report

This is a closed circle of funders and actors that fuel climate litigation to depress asset values to effect financial risk management decisions. They do this to negatively impact the business sustainability of the oil and gas industry so as to force a global socio-economic transition to technologies and methods in which the cabal of funders are invested. Any research that comes out of this regime should be considered within its high financial and political conflicts. It should be closely scrutinized.

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Europe, cancelled

In biomedical research, COI may lead to patient death. What happens in climate change research?

In a post for Breakthrough about a year ago, I explained that the NGFS scenarios had adopted the narrative of the Planetary Boundaries. The framework, which orients the entire research program at PIK, is explicitly a ‘limits to growth’ construct that pursues deindustrialization as ecological salvation. In this context, economic transformation is akin to the Second Coming upon which we will all be saved from capitalistic exploitation.

NGFS has considerable influence, particularly among European banks. Though it serves as a platform for regulators to develop tools and share ideas, NGFS is a hub of defective regulation. As one banking analyst put it:

Essentially, central banks and other regulators create the climate methodologies they use for bank supervision, but they present them through the NGFS.

The European Central Bank (ECB), which has a supervisory role over the central banks of the European Union, uses NGFS scenarios to stress test the Euro financial system. It has, in turn, integrated climate change assumptions into its monetary policies and “tilts” its investments towards issuers with “better climate performance.” ECB leans on the authority of NGFS to recommend other euro banks use climate scenarios in stress testing and disclosures.

One of the leaders in the technical critique of the Kotz et al. damage function was Greg Hopper of the Banking Policy Institute. Hopper recently asked if banks followed up with Nature or Kotz et al. after it was publicly revealed that there was a problem with damage function. If not, “[a]re regulators putting their thumb on the scale” to achieve their preferred outcomes? Hopper writes,

Going forward, these extreme economic assumptions in the scenarios would be used in climate stress tests of banks, practically ensuring that those tests will conclude that all global banks face material climate risks that would require higher capital levels.

Higher banking capital levels can constrain economic growth. But, under a planetary boundaries framework economic growth is not the goal; “genuine green growth” is the goal.

Germany, the industrial powerhouse of Europe, has experienced an overall industrial decline attributed to high energy costs associated with their poorly designed Energiewende transition to renewables from nuclear and other technologies. Germany’s policies have slowed its economic growth and has lent to a resurgence of German far-right politics. To boot, Germany now has higher carbon emissions per unit of GDP than the United States. Europe’s sluggish economy in recent years, headlined by Germany, may not be wholly attributable to these NGFS guided maneuvers. But it is consistent with the NGFS ethos of deindustrialization and degrowth.

The problem is that the progressive wealthy elite are circumventing democratic decision processes to achieve their ideals through the financial system in the name of a crisis they themselves spin in the media using research they fund. There is virtually no consideration for the system of conflicts of interest that’s been created by this scheme.

This is so much the case that researchers actively flaunt their shaping of the financial system and pursuit of litigation as a raison d'être for their modeling projects. Universities actively flaunt their involvement in this mess and allow entire institutes to be set up within their walls to advance a narrative of crisis everywhere—from hospitals to classrooms—that is rooted in a framework of absolute nonsense. Nature, one of the most prestigious scientific journals in the world, has turned itself into a doormat.

The outcome of this conflicted techno-authoritarianism lipsticked in green is economic decline, geopolitical instability, and a loss of scientific integrity.

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By Jessica Weinkle

The wave of layoffs and chaos unleashed by the Trump administration’s Department of Government Efficiency (DOGE) finally crashed into the National Oceanic and Atmospheric Administration (NOAA) in late February. Between about 880 terminations and a reported 500 resignations, NOAA has lost around 10% of its workforce. The terminated staff were reinstated by court order while also placed on leave.

It is difficult to overstate NOAA’s contribution to the United States. Through its collection and analysis of oceanic and atmospheric information, NOAA has helped ensure public safety and been a boon to the economy. Its work supports major industries including agriculture, energy, shipping, aviation, fisheries, insurance, and research.

It is hard to see how it will do all that now. Already, staff departures have reduced the United States’ weather observational capacity. The rapidly evolving news stream now points to potential closure of several NOAA offices around the country, at least some of which actively provide emergency weather forecasting.

Perhaps recognizing the mistake, the Trump administration scrambled to rehire critical personnel, like NOAA’s hurricane hunters. The organization is nonetheless still on notice for broader disruption and, potentially, dissolution. The White House approach to the agency mirrors the recommendations in Project 2025. The Heritage Foundation suggested NOAA be “broken up and downsized” because it is a “one of the main drivers of the climate change alarm industry.”

It is narrow minded to blame NOAA for the state of climate change science and politics. And it may or may not be the case that the Trump administration is using Project 2025 as its playbook. However, Project 2025 is hardly the first critique of NOAA’s organization, function, and status. For example, in 1996 the Department of Commerce Inspector General recommended eliminating NOAA’s ship fleet and the following year former President Clinton wanted to eliminate the NOAA Commissioned Officer Corps. A long-range view of the agency suggests that its successes have come despite its structure and budget, not because of them.

But instead of throwing the baby out with the bathwater, it is worth considering how the organization could better support U.S. interest in a wide range of matters, from resilience to extreme weather to energy and agriculture to space and marine affairs.

Tough love for NOAA

NOAA houses the National Weather Service (NWS), which is one of the oldest scientific agencies in the country and which has achieved tremendous success in weather forecasting and advancement in atmospheric and ocean sciences. Its activities in hurricane forecasting have saved countless lives, supported economic development, and led the way in tropical meteorology.

Even still, NOAA weather forecasting lags that of the European Centre for Medium-Range Weather Forecasts (ECMWF) in terms of accuracy—the difference between the forecast and what actually occurs.

In a review of efforts throughout the 1990s to improve NWS’s forecasting capabilities, for example, a National Academy of Science panel explained that the NWS “had been unable to keep up with the pace of technological advances and had nearly become obsolete by the 1980s.” Its forecasting skills continue to leave room for improvement.

For example, the graphs below use a common statistic of forecast skill to compare NOAA’s Global Forecast System (GFS, black line) to the European Centre for Medium-Range Weather Forecasts (ECMWF, red line). The bigger the number on the y-axis the better the relationship between forecasts and observations. In both the Northern Hemisphere (top) and Southern Hemisphere (bottom), the GFS is just not as good.

The difference in skill has meant that US forecasting is routinely in a position of playing catch-up. When the ECMWF performs better in critical situations, as it did in forecasting Hurricane Sandy, there is a sudden sense of alarm about United States technical capabilities but little ability to sustain coordination for long term leadership.

Shortcomings in U.S. weather forecasting capabilities are attributed to organizational inefficiencies, loyalty to legacy modeling programs, and challenges in maintaining cutting edge computing capabilities. Whereas other nations have focused their efforts on creating the best possible forecast capabilities through a single modeling powerhouse, the United States has kept its forecasting activities sprawled across various offices, models, and departments.

Immaculate Conception

Edward Wenk was a submarine engineer turned science policy sherpa during the early days of bringing NOAA to life. His detailed, fascinating, and long account of the politicking in this era of marine science is testament to the lack of broad appetite for the development of what had been coined in Congressional debate as a “wet NASA.”

Today, however, NOAA is beloved among aspiring students, ocean and atmospheric scientists, recreational sailors, and weather nerds. This is due in part to concerted engagement efforts and in part to NOAA’s immense contributions to science, technology, and public wonderment of the oceans and atmosphere.

Yet many observers are still skeptical that the cumbersome institution is a good idea—or perhaps better put, that it is as good an idea as possible.

Some of the problem goes back to NOAA’s founding. The impetus originated in the Cold War. As most thoroughly described in the late 1960s by a team of science, technology, industry, and legal experts known as the “Stratton Commission,” NOAA was intended to support the nation’s marine strategy. More specifically, NOAA would advance the U.S. capacity in managing and utilizing ocean resources to compete with Russia, improve sustainability (then, “wise use”) of marine resources, advance deep-sea mining of critical minerals, and establish the nation as a global leader of the world’s oceans.

U.S. President Richard Nixon ultimately created NOAA under the Department of Commerce through his Reorganization Plan #4 in 1970. “Since NOAA was created under the Reorganization Act and consolidated only existing agencies with well-defined prior missions,” Wenk noted, “no new missions were added.” In the years ahead, Congress assigned NOAA many of the responsibilities the Stratton Commission had originally sought, which further contributed to its jumbled architecture.

The piecemeal approach to NOAA’s activities and budget created a cumbersome and unstable organization for which oversight has proven difficult. As a result, Congress spent the past 55 years regularly debating what to do about NOAA.

Serious proposals have included improved organization, breaking up the organization, and yes, even complete dismantlement with commercialization of some data and services. There appears little real-world appetite for its dismantlement though. Even Howard Lutnick, Trump’s commerce secretary expressed no interest in breaking up NOAA during a nomination hearing.

Dear Congress

Over the past half century, questions about what to do with NOAA have become complicated by private interests in commercializing different aspects of NOAA’s activities.

What exactly could be commercialized—and the trade-offs in doing so—is an area of debate. According to former NOAA head Rick Spinrad, any commercialization would necessarily lead to death and destruction. This is unlikely. A more fine-tuned critique demonstrates that commercialization could make data and forecast information more costly, thus favoring companies with deep pockets over the diverse array of researchers, small businesses and consultants that offer individual expertise and viewpoints.

But even those tradeoffs may be mitigated. The United Kingdom MET Office, for example, offers a model of commercialization. The MET Office provides the public with weather and emergency forecast information while charging fees for more specific data and consulting. Very recently, the ECMWF announced free access to its data while maintaining pricing for high-volume users and custom needs.

The needs of the public and the needs of, for instance, energy managers or weather derivative traders, are quite different. Whereas most of the public is content with a general forecast several days out— partly sunny with a high of 72— and emergency weather forecasts, financial traders deal with business contracts that may hinge on a tenth of a degree temperature change in the forecast. Assessing how accurate a weather forecast the public needs (and the military needs) is a good starting point for deciding what parts of the weather enterprise can be commercialized.

Another area of debate about commercialization is the increased use of private satellite data as a means of building a space industry. Currently, NOAA contracts with industry partners to build the satellites it needs. NOAA launches and operates them. An alternative model is for NOAA to signal its willingness to buy satellite data, which would encourage greater private investment to build and operate this very expensive equipment. The trade-offs inherent in this kind of privatization is likewise debated.

And then there is all the great “ocean stuff” NOAA does.

The Stratton Commission intended for NOAA to support the build out of a U.S. aquaculture industry. Aside from making the development of such an industry a declared policy in 1980, Congress has not negotiated a workable regulatory framework for the industry. Aquaculture permitting in federal waters remains “complex, time consuming, and difficult to navigate” according to the Congressional Research Service.

The Stratton Commission also intended for NOAA to advance capabilities in deep seabed mineral mining. Again, in 1980, Congress gave some regulatory responsibilities to NOAA for licensing of private mineral exploration and mining. However, NOAA has not issued any exploration licenses since 1984, and the ability of U.S. businesses to exploit seabed minerals is uncertain because of Congressional hesitation to be obligated to the United Nations Convention on the Law of the Sea.

Since the 1970s, NOAA has provided significant assistance to states in their management of coastal zones in accordance with the federal Coastal Zone Management Act (CZMA). This too was a major aim of the Stratton Commission. However, the extremely localized nature of coastal development coupled with the high concentration of the nation’s population and wealth along the coasts challenges the premise that the CZMA is—or ever was—a practical policy approach.

The Future of United States Oceanic and Atmospheric Capabilities

One recent effort to streamline oversight and stabilize the “unwieldy” agency came from Representative Frank Lucas (R-OK), Chairman of the House Science Committee. Lucas’ bill would establish NOAA as an independent agency, broaden the forecasting focus of the National Weather Service while highlighting attention to forecast accuracy, and direct the Administrator to develop an agency reorganization plan. Yet Congressional clarity on what it wants from NOAA remains vague with no main goal for NOAA broad activities in research, forecasting, and data collection.

Representative Lucas’ bill also requires that NOAA’s Office of Space Commerce be “located in the principal physical location” of the Office of the Secretary of Commerce and headed by a Presidential appointee. It does not appear that the intent is to move the Office of Space Commerce out of NOAA but rather to privilege it. This is apt to create fights about who, exactly, the rest of NOAA is accountable to.

A recent essay by Breakthrough’s Seaver Wang and colleagues at the Payne Institute of Public Policy at the Colorado School of Mines makes the case that Congress has been so impotent on the front of marine affairs that it is now at a critical juncture with China over deep seabed mineral access. The United States faces “geopolitical peril.”

Congress needs to think about NOAA’s functions more strategically. Competitive skill in weather forecasting is important; space commerce may be lucrative. Neither is a substitute for the original intention of NOAA in advancing the United States leadership in the global maritime order.

Tim Gallaudet, former member of NOAA’s leadership under the first Trump administration, is vocal that the wrong thing to do is what is happening now. The indiscriminate approach to NOAA firings undermines national capabilities in profound and severe ways. “At some point, Congress is going to have to take some action” he stated recently. “This is stuff that the administration should care about. They don’t know what they’re doing is the bottom line.”

It is easy for the White House to kick things down. It is a lot harder to build awe-inspiring things that empower a nation to lead the world. Congress needs to step up.

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There are many reasons the fires that set Los Angeles ablaze in January were so severe: from development pushing into an inherently fire-prone ecosystem to California’s byzantine regulations; from an extremely dry winter season to the particularly intense Santa Ana winds.

In the aftermath of the disaster, California has turned to rebuilding. Unfortunately, local policymakers have already demonstrated a clear preference to recreate existing vulnerabilities and housing shortages, going as far as expediting permits for “like-for-like rebuilds.”

This isn’t just a California problem; many places struggle with catastrophic losses from extreme weather; indeed, as extensive and robust research and industry reporting shows, disaster losses have risen precisely because more people and property are exposed to weather extremes.

This trend should lead to thorough debate about land management, urban design, and post-disaster rebuilding: How can national prosperity and public safety be protected from disasters, specifically from rising insurance costs related to increasingly expensive disasters?

Instead, debates about insurance affordability and availability are routinely framed in the context of climate change and energy. But why?

There are two circular and self-serving reasons. The first: those who advocate that climate change poses large economic risks point to rising insurance costs as proof of concept. The second: public perception of disasters and climate change, born of politicized science and advocacy reporting, creates an “inexhaustible market” for firms selling climate change risk analytics and risk related products.

Yet framing rising disaster losses as a problem of climate change has allowed advocates, policymakers, and the public to skirt the real issues for decades. Instead, they need to do the hard work of grappling with better land management, building requirements, and ways to improve the public experience with insurance.

Insurance is essential for American prosperity and well being

In the wake of natural disasters in the United States—a wealthy country that heavily insures property—there is typically renewed attention on insurance pricing. The expectation is that “real risk pricing” in insurance is a market fix to the complex underpinnings of disaster.

The view has merit, but it is also a deceptive oversimplification.

First, insurance is a foundational component of economic activity and general wellbeing. You cannot drive a car to work without insurance. It is difficult to build wealth without buying a house, which requires insurance. In the United States, you have no real access to medical care without insurance.

Insurance is thus a forefront public concern.

In turn, long ago, the Supreme Court decided that the business of insurance is different from other sorts of commercial activity; it is “affected with a public interest.” Unlike pizza and Gucci handbags, insurance rates—the basis of the cost of insurance—are subject to heavy regulation. The battle over the extent of regulation and its wisdom has lasted over a century.

Regulators and legislators oversee the insurance regime by attempting to strike a balance between social value concerns and insurer business concerns. It is not unusual for policymakers to try to spread loss over time and a broad population through public insurance mechanisms rather than assuredly receive the public wrath for insurance costs or undermine a real estate market in the present.

Of course, if regulators rule with too heavy a hand, insurers will pack up their business and leave. This is a problem in states prone to catastrophic losses such as California, where a shockingly constrained insurance regulatory regime has run up against difficult market conditions. Insurers including State Farm have withdrawn from the state citing infeasible business conditions.

Another problem is that individual homeowners, through their individual insurance policies, may be left holding the bag for increasing catastrophic risk due to land management decisions and building regulations that they have little to no control over. For instance, it is not straightforward that individual homeowners are responsible for the catastrophic hurricane and flood loss potential in Florida that has developed over decades of population growth giving rise to the fourth largest state economy.

Complicating things still further, insurance pricing does not represent an absolute measure of risk—not in any real geophysical sense, at least. Rather, it is an integration of science, human risk perception, and market conditions. There is no one right way to calculate it, but some ways are more or less profitable, competitive, or affordable in any given year.

Rate calculations can fluctuate rapidly in response to background market conditions such as inflation, large loss events, and the introduction of new data and technologies to measure risk. For most of us, though, our incomes are basically the same each year.

Because of all this, the problem of societal vulnerability to weather extremes is not easily resolved through insurance pricing, nor does looking at the fluctuations of insurance pricing reveal much about societal exposure to climate change.

The origin story of the insurance problem as harbinger of climate change

The story of how insurance nonetheless became wrapped up in climate change narratives takes us back to the summer of 1992.

In early June of that year, the creation of the United Nations Convention on Climate Change (UNFCCC) brought climate change to the forefront of global political attention. Then, in August, Hurricane Andrew made landfall in South Florida creating economic losses unseen in the United States before then. A rash of insurer insolvencies led policymakers to implement extreme measures to avoid a collapse of the state’s economy.

The financial and societal havoc wrought by Hurricane Andrew became an instant symbol of climate change. The article below from Newsweek features a couple of today’s legendary climate scientists—then, still early in their careers. In the article, the scientists promised hurricanes would get worse with climate change. They have since established prominent careers advancing technical methodologies to prove their prophecy.

The global insurance industry, too, changed its structure and risk measurement practices. Rapidly and widely adopted catastrophe modeling revolutionized the methods for risk calculations, which in turn supported new investment practices. In Florida, sudden hikes in insurance costs led to increased use of the state’s public insurance programs.

To support these investment activities and build their catastrophe modeling, reinsurers became important sponsors of research considering the nexus of climate change and extreme weather. Yet the relationship between many reinsurers, risk analytics, and academic researchers was rarely made apparent in the published literature.

A new round of flurry over climate change came in wake of the active 2004 and 2005 hurricane seasons. Hurricane Katrina notably created a racially charged, globally publicized humanitarian crisis in New Orleans. Climate change advocates jumped at the chance to market a brewing crisis.

Depleted of capital, reinsurers demanded that catastrophe models further increase their views of future risk by moving from calculations based on the entire historical hurricane record to a shorter, near-term outlook considering current stages of climate variability supercharged by global warming.

When Florida regulators refused to allow use of these new modeling techniques in insurance pricing, insurance companies became squeezed between what they could charge homeowners and what reinsurers required to be paid.

The Florida insurance market was in havoc. Climate advocates and their philanthropic funders showcased the state’s battered and duct-taped market to foreshadow the nation’s economic future without rapid decarbonization.

But wouldn’t you know it? The 2005 hurricane season would kick off a lucky streak of the longest running drought of major hurricane landfalls in the United States lasting until Hurricane Harvey in 2017. Reinsurers ended up with so much cash they started giving more of it away to their investors through special dividends.

Less expensive reinsurance made private market insurance more affordable. Policymakers patted themselves on the back for their success in shrinking the size of Florida’s public insurance program.

But the drought ended. Large loss events have returned, as has a massive spike in inflation post-2020, new instabilities in insurance availability, a new round of cries from advocates that climate change is to blame, and a steady stream of good financial news in the reinsurance business.

The subtle shift from energy policy advocacy to risk business marketing

Following the 2016 Paris Agreement on Climate Change, climate change advocates pushed for a new financial regulatory regime to account for global warming. Eventually, aspects of these regulations took hold in Europe but were engulfed in litigation within the United States.

Around the world, an avalanche of venture capital poured into the development of climate tech including climate risk analytics. By 2020, major catastrophe model vendors serving the insurance industry were marketing their use of climate change scenarios.

The irony in all this is that insurance contracts are written on an annual basis. Those involved in the catastrophe bonds may take an outlook to a few years, at best. Climate change—which takes place over decades and centuries and is having little to no readily observable impact on current loss experience—has no practical meaning in the insurance business context. Many close to the business say that climate change is simply not a consideration when writing contracts.

But the climate change-disaster losses-marketing-advocacy spectacle does affect public and investor risk perception. Insurance industry engagement with climate change, especially among reinsurers and their research funding, is one part due diligence and one part public relations campaign. If there is a model being sold, one might as well take a look at it, use it to satisfy sustainability reporting requirements, and bolster the public image of being attentive to the issue.

Reporting in Bloomberg demonstrates that investors in catastrophe bonds demand more money in exchange for their investments because of their impression that climate change has made the loss experience markedly worse.

Although investors may be well served by these socially constructed inflated views of risk, however, this dynamic does not serve the public, which is struggling to pay insurance costs and make sense of the industry’s mixed messaging.

Dangerous misframings

To be sure, the catastrophic loss potential in some parts of the country is very, very high—and it is challenging to insure those places. Debate about the continuing insurability of catastrophic losses has been raging at least since the 1980s. It’s a serious matter.

Catastrophe modeling has enabled the insurance industry to better handle such scenarios. Florida has benefited tremendously. With the introduction of modeling for California ratemaking, the state is undoubtedly on its way to becoming a leader and beneficiary from greater development of a wildfire risk investment market, too.

Even so, the precariousness of the current system is apparent in the sometimes dramatic fluctuations in the cost of insurance reflecting swings in the cost of capital. The financial industry responds much faster to new technologies, modeling assumptions, and market dynamics than household incomes increase and the built infrastructure evolves.

What to do about insurance and the design of our cities requires rigorous discussion among industry, policymakers, and area-specific experts. It is not the place for advocacy about climate change. And yet, “climate change” has become a politically palatable reason for the increasing costs of insurance that makes housing even more unaffordable for millions of Californians and Floridians.

Such inaccuracies undermine effective understanding of the dynamics in the building and insurance industries, and real world causes of loss while also creating demand for inflated views of climate change risk. When these inflated views make their way into finance, it exacerbates the problem.

There are knock-on effects, too.

California’s former insurance commissioner, now perched up high in the ivory tower of academia, is pushing a loud campaign to fault the fossil fuel industry for the fires in Los Angeles and force it to pay to rebuild. California senators introduced legislation to enable individuals and insurers to pursue recovery of losses from the fossil fuel industry for a “climate disaster.” The United States Senate Budget Committee, whose former chairman also supports this line of reasoning, has highlighted a dark premonition of national economic collapse from climate change driven insurance costs.

The situation is an extension of the original misframing of climate change.

The 1992 UNFCCC framed a problem of “dangerous” climate change that could be resolved by market mechanisms. By mischaracterizing the fundamental industrial and innovation challenge of a world economy based on fossil fuels, the UNFCCC led us into decades of unhealthy politics, a navel-gazing, advocacy-oriented scientific enterprise, and harmful energy and development policies around the world.

The same forces and perspectives that drove climate debates off course back then are some of the same that push debates about disaster losses and insurance into the wild today—summed up into the trendy phrase: “the climate crisis is an insurance crisis.”

The extent to which climate change advocacy has captured the framing of public problems with disasters and insurance is as astounding as it is dangerous.

By Jessica Weinkle

U.S. President-elect Donald Trump has reportedly tagged Representative Garret Graves (R-LA), who serves on the Committee on Transportation and Infrastructure, to head FEMA, the Federal Emergency Management Agency.

Graves is a long-time critic of FEMA with an extensive track record in policymaking related to energy, infrastructure, and the environment including, climate change. As ranking member of the House Select Committee on the Climate Crisis, Graves has spoken in support of resilience through infrastructure and land use, wetland restoration; he has spoken on lowering emissions through an “all-of-the-above energy strategy.”

Trump’s rationale for picking him as FEMA head may have to do with Hurricane Helene, which tore through the southern United States in September 2024, just before the presidential election, causing at least 230 deaths and around $40 billion in damage in Florida and North Carolina.

As the storm’s winds died down, speculation grew that the storm’s devastating floods in western North Carolina could impact the upcoming U.S. presidential vote. Then candidate Trump took to social media to claim that the government was not aiding Republicans. And shortly after his victory, Congressional members of the House and Senate have launched investigations into FEMA, regarding reports that an employee directed disaster response teams to avoid homes with pro-Trump signage. The employee was fired shortly after the incident made the news.

In the lead-up to the FEMA oversight hearings in the House, Graves sharply criticized the agency of bias against conservatives:

I have done a deep dive looking at grants and some of the policies some of these terms that they’ve invented adding justice at the end, talking about equity. What it’s done is that it’s allowed them to redefine sort of how they are going to prioritize grants, policies, and things like that. And it’s resulted in a bias, meaning, I think in many cases the areas that are more conservative are being neglected.

In interviews the now ex-FEMA employee gave additional context: workers had been told to avoid houses with pro-Trump signs because of “political hostile encounters” and homeowners meeting aid workers in their driveways with “guns blazing.”

Emergencies and related disasters have long had their own unique politics. But there is a sense that their politicization is deepening. A view of this politicization can be traced in the way a now standard term in emergency management—resilience—is invoked, defined, and deployed.

Resilience

As a concept, resilience is nothing new. It lingered in the background of the interdisciplinary academic literature on disasters since shortly after it became an important ecological concept in the 1970s. It hit the main stage around the turn of the century, loosely conceptualized among disaster studies scholars as the opposite of vulnerability.

The concept of “resilience,” however, never solidified into one clearer meaning. There are at least three thematic understandings:

First, it can describe a system’s capacity to resist disturbance through engineering, computer science, and improved construction practices.

Second, it can describe a system’s capacity to absorb disturbance and bounce back through limited government support.

And third, it can describe a system’s capacity to adapt or bounce forward after disturbance through what the late scholar in disaster studies, Siambabala Bernard Manyena, describes as “social engineering, if not community agency” to face changing ideas of risk and improve community capabilities.

In 2021, the Congressional Research Service (CRS) reported that resilience had also become a type of code word for social constructions of climate change risk:

Over the past decade, CRS has observed a general shift from a prevalence in federal use of the term climate change adaptation to a rise in the term resilience in the context of climate change. Resilience also has become more prevalent as an objective of risk reduction more generally. The shift in use of the terms in the context of climate change policy may connote change in the concept or approach, a reduction of priority for climate change adaptation, greater integration of climate change risk management into multi-hazard management efforts, or political sensitivity to explicit references to “climate change.

Because of its vague meaning, policymakers who adopt the term “resilience” do so at risk of setting policy goals that are misunderstood, vague, or incompatible with other overriding objectives.

A Tale of Two Bills

Spending on resilience-specific projects demonstrates how different conceptions of the term play out in contexts where policymakers with different politics work together vs. when they do not work together.

On invest.gov, the federal government provides details of the projects awarded funds from the Bipartisan Infrastructure Law (BIL), Inflation Reduction Act (IRA), and the CHIPS and Science Act. As noted on the website, its data is incomplete. However, with over 74,000 projects listed, it is still a good indication of how money is being spent.

Under the project category “Resilience” are two subcategories: “Resilience” and “Climate Resilience.”

ChatGPT provided a quick narrative summary that reveals that “Resilience”projects funded predominantly by the BIL went to actual built infrastructure. Many of the projects are labeled by their road intersection. This is the first interpretation of resilience in the list above.

Climate Resilience funded by the IRA went to projects primarily related to organizations and conservation, with top big ticket items for water resources problems in the desert southwest. This is the second and third interpretation of resilience in the list above.

One explanation for the different approaches to resilience in the BIL and the IRA is that the former required cooperation across the aisle and the latter did not.

The IRA’s passage along party lines through the budget reconciliation process meant that its language did not need to pass muster by anyone beyond niche special interest groups who rally around climate change.

Perhaps that is why “climate resilience” and its derivatives appear ten times throughout the IRA text, each time referring to a different conception. The word “resilience” appears 24 times in application to a wide range of entities from forests and rural electrical systems to offshore wind transmission and Native Hawaiians.

BIL, however, was a bipartisan endeavor. The phrase “climate resilience” appears once in the legislation and in reference to assessing fish stocks when prioritizing funding for infrastructure to improve fish passage.

The word “resilience” and its derivatives, including additional associations such as systems resilience, appear 200 times in BIL. Moreover, the term is given clear definitions in the contexts of transportation projects and drinking water systems. In the context of electric grid resilience, legislators defined a “disruptive event” for which resilience was sought.

In short, “resilience” in IRA means Democratic social value priorities; “resilience” in BIL is contextually specific and pertains to infrastructure on which the broader society relies.

Mission Creep

From an historical context, the introduction of the idea of resilience to emergency management was welcomed. It implied a recognition that some are more vulnerable than others and that communities have their own grassroots capabilities of self-support through groups like churches and the Cajun Navy.

However, understanding that the poor, elderly, undocumented, and others have unique vulnerabilities that require consideration in the lead up and aftermath of a disaster is quite different from advancing a social and energy agenda under the guise of emergency management.

FEMA’s strategic plan attaches resilience to specific views of climate change such that “We must recognize that we are facing a climate crisis and educate ourselves and the nation about the impacts our changing climate poses to the field of emergency management.”

The bipartisan-supported Community Disaster Resilience Zones Act of 2022 provides for the identification of census tracts across the country to be prioritized for grant funding to improve the “climate and natural hazard resilience of vulnerable communities.”

The legislation did not define resilience, focusing instead on the acceptable means of identifying census tracts with high natural hazard risk and high social vulnerability—giving considerable discretion to presidents to identify any other relevant characteristic to prioritize some over others (including a changing climate). The legislation did not mandate any specific tool, but aspects of its wording indicate that legislators had in mind the use of FEMA’s National Risk Index, which includes considerations of hazards and social vulnerability (shown below).

FEMA produced the Community Disaster Resilience Zones by combining the National Risk Index with the Climate and Economic Resilience Screening Tool. The latter of which comprises eight indicators: climate change, energy, health, housing, legacy pollution, transportation, water and wastewater, and workforce development. The Climate and Economic Resilience Screening Tool was developed under the direction of the White House Council on Environmental Quality at the behest of an early Biden Executive Order to advance environmental justice.

So, what started out as conventional metrics of social vulnerability within the National Risk Index has spiraled into an attempt to measure a cascade of perceived social ills and a plan to remediate them through the government’s emergency management agency as part of a call for “resilience.”

In 2023, for example, the White House released a Climate Resilience Framework with the vision of “reimagining” the government’s role in advancing climate resilience. The White House defined resilience as “the ability to prepare for threats and hazards, adapt to changing conditions, and withstand and recover rapidly from adverse conditions and disruptions.” The White House focused explicitly on the impacts of climate change and aimed at an overarching social agenda to “Help communities become not only more resilient, but also more safe, healthy, equitable, and economically strong.”

This past summer, moreover, FEMA released National Resilience Guidance that appeared to drop its own longstanding definition of resilience: the “ability to adapt to changing conditions and withstand and rapidly recover from disruption due to emergencies.”

It adopted instead the White House’s definition, which encompasses fighting back against general adversity. The difference between the two definitions demonstrates the extent to which political leaders have appropriated “resilience” as signaling a broader social initiative.

Indeed, the National Resilience Guidance, which features on its cover wind turbines and community gardens, makes note that the guidance is intended to “drive collective action.” As part of this turn to collective action FEMA concludes:

To successfully build resilience, everyone must understand the role they play, and the nation must come together to work towards a shared vision of the following:

● A resilient people

● A resilient society

● A resilient economy

● A resilient built environment

● A resilient natural environment

In this sense, resilience is no longer intended as an opposite of vulnerability. Instead, it is a White House directed political project of shaping societal value preferences towards achieving a suite of domestic policies in response to the climate crisis.

’Merica

The factory-issued dictionary on my Mac defines resilience as “the capacity to withstand or to recover quickly from difficulties; toughness.” What should be one of the biggest tents under which to garner broad public support—a Resilient America— has become factionalized.

At the Liberal Patriot, the political scientist Ruy Teixeira makes the point that big tent issues have come undone by a politics that requires accepting “a vast litany of other progressive positions to join the righteous cause in any particular area.” In line with his argument, for instance: Want to build resilient American communities? Well, what do you think about global energy markets and social inequities in rates of diabetes?

It is naive to think that only the Left sees FEMA as a tool with which to buy support from specific populations in the name of a pet crisis (see: immigration). However, for his part, Representative Graves appears keenly aware of the problems posed by a resilience that is taken-up as a social project rather than one of built and natural infrastructure. Distribution of funds for risk management projects are tied to political priorities rather than clearly defined measures of hazard exposure. If resilience is just code for climate change, as the CRS indicates, or a broader progressive agenda where it does not have a bipartisan definition, then funding for resilience projects favors those already politically aligned while coercing opposing communities to fall in line.

Even still, as FEMA Administrator, Graves would lack the type of emergency and disaster management experience earned through a career in the trenches of response. It is one thing to critically identify shortcomings in administrative processes, but it is quite another to triage a San Francisco earthquake or a South Florida hurricane landfall. Some of FEMA’s darkest days have been under leadership that lacked on the ground career expertise in emergency management.

More dangerously, emergency and disaster management is now a target of politicization that breeds public distrust and fear—in a word, weakness, the antithesis of resilience.

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By Jessica Weinkle

On October 2nd, the Securities and Exchange Commission (SEC) announced it had filed and settled a cease-and-desist order against C-Quest Capital, a firm selling carbon offsets. On the same day, the Commodity Futures Trading Commission (CFTC) filed a complaint against the firm, and the Department of Justice (DOJ) announced criminal charges against C-Quest Capital’s former CEO, Ken Newcombe. All agencies made accusations of fraud.

These legal proceedings signal the real-world ramifications of the questionable assumptions underlying emissions credit schemes. Supporters promised such offset projects, once popular, would lead to not just reduced emissions, but also environmental preservation and sustainable development. In reality, they did neither. 

For his part, Newcombe was a key architect in developing a carbon market and a carbon offset industry. He spent nearly 30 years at the World Bank, where he developed the bank’s carbon trade and piloted the Global Environmental Facility. Newcombe moved on to the private market, developing carbon credit trading as a private business activity, founding C-Quest Capital and developing one of the market’s NGO regulators, Verra, the world’s largest organization that vouches for the quality of carbon credits for offsetting emission.

Newcombe’s central role in developing carbon trading places him at the forefront of the fundamental misframing of climate change as a problem to be resolved through market-driven trading mechanisms that yield sustainable development as a byproduct. 

Following the indictment, media coverage centered on the problems that manipulation of carbon accounting practices presents for investors and global efforts to reduce emissions. Lost in this perspective is the market’s targeted exploitation of the poor. 

C-Quest Capital’s cookstove carbon projects is a perfect example of this classist exploitation. Calculating carbon credits from cookstoves that produce lower emissions is a speculative practice resting on assumptions of avoided emissions. At base, the grand accomplishment elite financiers claim in cookstove projects is not poverty alleviation at scale, or even improved infrastructure, or energy access. They are simply providing the poorest people on earth with a stove that uses fewer sticks. 

There’s far more promise for carbon markets and carbon management to be found in projects on standardizable carbon removal technologies. And it is here that some are hopeful that legal action against Newcombe can further support more worthwhile industrial and market expansion.

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The CQC Scandal

Billions of people in developing countries depend on cooking fuels that produce poor air quality and cause premature death. These unhealthy fuels also produce carbon emissions. Popular cookstove carbon offset projects promise to reduce carbon dioxide emissions and improve human health by distributing more fuel-efficient stoves. 

The unraveling of the C-Quest Capital (CQC) cookstove program—one of the largest in the world—began in mid-2023 when several C-Quest employees raised concerns about discrepancies in the reporting data for the cookstoves projects. Then, in December, an exposé by a British news station created further intrigue. In interviews with users in Malawi, British reporters found that people liked the cookstoves because they produced less smoke but the stoves, made of a combination of metal and clay, broke easily. Few remained in use for longer than a year, a fact that ran counter to the numbers on deployed cookstoves in CQC’s reporting.

Months later, in early 2024, a special committee of the CQC Board of Directors initiated a self-imposed legal investigation of its accounting methods and replaced Newcombe as CEO. CQC then reported to Verra that it had over-issued millions of carbon credits from clean cookstove carbon projects. 

According to the DOJ indictment, Newcombe had committed CQC to install about 1 million stoves per year between 2021 and 2023 while raising money through special purpose vehicles. In an effort to deliver the carbon credits CQC had promised, the stove installation team started cutting corners and notified Newcombe that the project was suffering from operational issues.

At the same time, the company’s calculations for emissions reductions relied primarily on the reported number of installed cookstoves in place and operational during a given time frame and the reduced fuel used by the cookstove as compared to their conventional methods. Data came from sample surveys and was extrapolated out across the stove recipient population. In order to meet the special purpose vehicle’s contractual obligations, Newcombe inflated the number of carbon credits that the cookstove projects produced. This practice was internally referred to euphemistically as “manag[ing]’ the data.” 

Survey data indicated that the stoves reduced fuel use by only half of what CQC promised. According to the DOJ, Newcombe’s response to that information was that CQC had needed a bigger target “to make the basic economics of the deal work.” So, Newcombe and other personnel developed fraudulent survey forms. 

Further, when personnel would find households that were no longer using the stoves, they “took steps to falsely and misleadingly increase the reported number of cookstoves in place and operational,” according to the CFTC. At times, survey personnel were directed to simply make up data. The DOJ, for example, reports on a WhatsApp chat between a CQC executive and an employee managing survey data. The employee wrote:

“during an inspection of a house in which they had previously installed a stove, they discovered that ‘[t]he house is no longer there[.] [T]he beneficiary lived in a makeshift structure.’” 

The executive responded: 

“Hmm, instead of losing all the carbon as a result of getting 19 out of 20 samples, can we… build a stove in a nearby house, and say the person moved but gave the stove parts… to another household…”

The federal legal actions against CQC are billed as the first coordinated multi-agency action directed at carbon markets. It is also the first case directly tied to the CFTC’s Environmental Fraud Task Force, which was created in June 2023 to “combat environmental fraud and misconduct in derivatives and relevant spot markets.” (The Task Force did wet its feet in an earlier case characterized as a “classic Ponzi scheme” that involved crypto currency related to carbon offsets.)

Major law firms are loudly sounding warnings that the CQC case is the start of efforts to root out environmental bad actors in financial markets. The mega firm, Holland & Knight, states, “we expect [carbon markets] to remain an area of focus in a potential Kamala Harris administration.” 

Though I don’t see why a Donald Trump administration wouldn’t want to take a go at this train wreck too. 

Financialization of Poverty

For years, reporting on developments in the carbon credits market has been filled with stories of dramatic land grabs, environmentally dubious hustles, get-rich-quick schemes, spurious consent, and overall ineffectiveness.

The British news report on the CGC’s cookstove controversy incidentally highlights the elitism inherent in the ideology of the carbon credit market. The report opens with footage of men illegally collecting wood from the forest, piling it high on a bicycle, and carefully walking it four miles to town to sell for cooking. “You might wonder,” says a newscaster standing in front of a fancy screen, “is the carbon from my long haul flight really being offset? In particular, is it being offset by enough people in developing countries being encouraged to change from cooking on open fires to more climate friendly stoves.”

Indeed, how dare those poor Malawians burn illegal wood to cook beans when we have intercontinental trips planned by jumbo jet? 

The merit of the carbon credit market is frequently sold on its ability to deliver positive social and environmental benefits, not just manage carbon emissions. For instance, the Olympic and Paralympic Games Paris 2024 purchased 1.3 million carbon credits, through the carbon credit platform Abatable, with promises to empower women, protect biodiversity, and expand renewable electricity across an enormous range of countries including the Democratic Republic of the Congo, Guatemala, Kenya, Nigeria, Senegal, and beyond.

Yet, even those in finance take such claims with a large grain of salt. 

The financial firm MSCI has found that only 5% of 4,000 carbon credit generating projects on the market are considered high integrity. Their rating framework uses six metrics in two categories: 

1) The effectiveness of the project in reducing emissions beyond what would have

happened in the absence of the project

 2) Environmental/social impacts including environmental and social safeguards and

general sustainable-development impacts. 

The overall integrity rating score is calculated using a weighted formula where emissions integrity is worth a total 70% and implementation integrity is worth 30%. So, carbon credits are generally sold with lofty claims of social and economic benefits, but are judged on their representation of an actual tonne of carbon dioxide emissions. 

That carbon credits are expected to represent a certain amount of carbon emissions seems patently reasonable. What is deeply problematic is that they are also expected to achieve sustainable development goals because they are neither sustainable nor developmental. 

The carbon offset industry treats human dignity and the economic development of poor nations as a “co-benefit” in a virtual signal marketing scheme targeting the buying power of the bourgeois hipster class while heading-off their characteristic ability to mobilize shame campaigns against industry. 

The problem in offsets is not greenwashing, per se; it is a fundamental misrepresentation of the levers that produce sustainable development. Carbon offset projects are poorly suited for economic development because they target nations that need fossil fuel intensive solutions for development. They need roads, cold-storage systems, fertilizer and, yes, gas for cooking. And the technologies and efficiencies that enable environmental sustainability are made possible by the wealth gained through economic development.

A new report by The Breakthrough Institute demonstrates the extent to which developing countries- under pressure from rich nations- favor climate mitigation projects over climate adaptation projects. But it is the adaptation projects: the roads, buildings, refrigerators, and reliable baseload energy, that provide a path toward sustainable development, not the clay stoves.    

A Carbon Capture Industry for All

Carbon credit markets have not provided meaningful decarbonization. The most damning evidence came from an independent report commissioned by the influential Science Based Targets Initiative (SBTi) finding that “various types of carbon credits are ineffective in delivering their intended mitigation outcomes.” Even taken at face value, the IPCC reports that agriculture, forestry, and land based based carbon credits created emission offsets or reductions of 7.9Gt of carbon dioxide equivalents over the 10 year period of 2007-2018. During the same time period, the world produced 412Gt of carbon dioxide. 

Yet, the yearning for them has featured prominently over the decades of international climate policy. It is essential to direct all this money somewhere more beneficial for decarbonization. 

At least some proponents of carbon markets argue that the first principle for carbon credits should be that they are issued only for actual removal of carbon from the atmosphere. Doing so reduces the opportunity for fraudulent schemes based on carbon avoidances—that is carbon that would have otherwise gone into the atmosphere supposedly absent the scheme. The World Bank reports that carbon credits from technological removal fetch a far higher price because they are of a far higher quality.

Tax credits for carbon capture and utilization have been implemented under both Democratic and Republican presidents, reflecting a history of bipartisan support for the technologies that lean on existing experience, technology, and successes, and advance new technologies. The Biden administration has provided significant financial support for development of various commercial-scale direct carbon capture projects. The National Institute of Standards and Technology (NIST) announced the establishment of a Carbon Dioxide Removal Consortium to develop measurements and standards for carbon dioxide removal with an initial focus on forests and direct air capture. To boot, the IPCC is in the process of developing a special report on carbon capture removal expected in 2027. 

Frankly, carbon accounting fraud is a sideshow that reflects the interests of wealthy, market savvy people. Truly fraudulent is the idea that forest dependent, rural families living in mud huts is a good place to initiate an unregulated financial market with aspirations of decarbonizing a global economy that marginalizes the interests of these very same families.

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By Jessica Weinkle

Earlier this year, Vermont was the first state to enact climate change cost recovery legislation—better known as a Climate Superfund Act. Shortly thereafter New York passed similar legislation, and legislators in California, Maryland, and Massachusetts have introduced similar bills. Vermont’s legislation targets fossil fuel companies as liable for climate change. As a result, the state will send a bill to these companies to fund a portion of Vermont’s “climate change adaptation projects,” what one may otherwise refer to as infrastructure upgrades.

Rather than owning their responsibility to the public, Vermont legislators are creating laws that place responsibility on judges for getting infrastructure projects done by ensuring a revenue stream from fossil fuel companies. The real ploy here is in advancing climate litigation and creating headlines that ding industry in their sustainable corporate reporting.  

Meanwhile, Vermont has significant infrastructure and economic problems unrelated to climate change. Instead of putting every spare dollar from the state’s small budget towards the mutually reinforcing goals of updating infrastructure and building an economy that supports investments, the state legislature chose to jump headlong into a technocratic smear campaign, hidden within the nuance of financial practices and accounting standards. 

The situation exemplifies how climate crisis virtue signaling leads to bad politics and absurd policy.

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What is a Climate Superfund? What Will it Do?

Climate superfund laws are loosely modeled on the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). The Act enables the Environmental Protection Agency to find potentially responsible parties for environmental contamination and compel them to clean it up or pay damages. It was inspired by tragedies in the 1970s, such as Love Canal. 

However, CERCLA is more widely known as the origin of the “Hazardous Substance Superfund,” a trust fund that the EPA can use to clean up contaminated sites when there is not a viable responsible party. There is a long list of sites throughout the United States in need of remediation and these are often referred to as Superfund sites. Originally, Congress funded the Superfund with taxes on crude oil and imported petroleum, certain chemicals, and corporate income. That tax expired in the 1990s, but was reinstated by the Inflation Reduction Act.    

Vermont’s Climate Superfund Act aims to create a revenue stream to fund “climate change adaptation projects” defined by the legislation to include a wide breadth of activities from responding to weather related disasters to general infrastructure updates and preventative health care programs. The state of Vermont desperately needs money for infrastructure—sewers are failing, river infrastructure is crumbling, and the state cannot afford necessary improvements.

But this need, contrary to what Vermont’s climatist lawmakers report, has little to nothing to do with climate change. 

Whereas CERCLA targets liability and remediation of clearly defined contaminated sites such as old landfills, mines, and manufacturing plants, Vermont’s Climate Superfund Act targets a handful of fossil fuel companies as liable for anthropogenic global warming overall. Specifically, Vermont policymakers intend to hold responsible those companies engaged in the extraction or refining of fossil fuels between January 1, 1995 and December 31, 2024. If the Vermont legislators are successful, these companies will be responsible for financial damages from the warming caused by their respective one billion metric tonnes of GHG emissions. 

Vermont’s legislative diagnosis of liability for climate change mirrors the work of Richard Heede, founder of the Climate Accountability Institute. Heede’s testimony to the Vermont Judicial Committee included a slide with a list of 10 companies who emitted 1 billion metric tonnes of GHG emissions between 1995 and 2023.  

The Act indicates that Vermont legislators plan to go head to head with these 10 companies. In preparation to do so, Vermont legislators allocated $600,000 for legal fees alone—half of which they intend on recovering as the oil company payments start to roll in. 

Vermont’s Sewers and Rivers

Vermont’s Climate Superfund Act highlights the state’s stormwater, sewer, and flood infrastructure as examples of where Vermont is in need of climate adaptation financing to “prepare for future climate-change-driven disruptions.” But, the needed updates to Vermont’s stormwater and sewer systems and flood infrastructure is related to its urban history predating contemporary climate change concerns.  

Vermont has some of the oldest infrastructure in the country. As a small rural state, Vermont lacks the typical capacities of larger state economies. In some cases, the state’s wastewater pipes date to before Abraham Lincoln was president.

Many of Vermont’s sewers are what is called a “combined sewer system” and are among the earliest sewer systems constructed in the United States. These systems use the same pipes to carry stormwater and wastewater directly to a nearby body of water. Since the 1940s, increased regulation of discharge and especially federal funding made available through the Clean Water Act of 1972 advanced wastewater treatment across the nation and reduced water pollution.   

However, installation of wastewater treatment facilities could not resolve the problem of combined sewer systems in older, urbanized areas. As a result, these combined sewer overflow (CSO) systems are intentionally left to discharge into  waterbodies when overburdened by wet weather. The CSO problem was documented as early as the 1960s and gained more attention in the 1990s, when it was openly acknowledgement that retrofitting these systems was phenomenally expensive, but doing nothing about them was equally unacceptable.

Vermont’s CSO problem remains significant despite decades of effort to address it. In 2018, the state reported having spent over $60 million in CSO disconnection since 1990. Vermont put at least $30 million from the American Rescue Plan Act towards it and the Infrastructure Investment and Jobs Act gave $40 million for implementation of the multi-state Lake Champlain Basin Program which includes addressing CSO problems.    

Even still, the state’s overall wastewater treatment system is characterized as failing—it’s simply very old—and much investment continues to be needed. A 2023 review of the state of Vermont’s infrastructure explains:

Old infrastructure and operations led to 144 sewer overflow events from 2020 through 2022. From 2018 to 2021, permits issued annually to repair failed wastewater systems grew from 510 to 641.

Vermont’s city of Rutland has it particularly bad. A representative of the city’s public works department explained to the state’s legislature that components of the city’s water system are “undersized and do not function according to modern standards.” To resolve the city’s CSO problem completely would “take additional decades and cost hundreds of millions of dollars,” according to the city’s representative.  

It’s not just that Vermont has a failing sewage and wastewater system. Vermont’s dams are also old and need costly attention. 

6% of Vermont’s dams are characterized as high hazard.  In 2022, the state auditor notified the legislature in big letters that, “Some High Hazard Dams, Including State-Owned, Linger in Poor Condition for Years, Risking Human Lives.” A dam in poor condition is one that has substantial deficiencies “under normal loading conditions.” Another 12% of Vermont’s dams have significant hazard potential, meaning that failure of the dam is not likely to cause loss of life just damage property and infrastructure downstream. 

Of the four high hazard dams owned by the Vermont Department of Environmental Conservation, three of them are used for flood management and two of these were originally constructed as part of the Winooski Flood Control Projects in 1935, a response to the state’s most significant flooding event on record in 1927. 

This year and last year, Vermont experienced catastrophic river flooding. However, historic crest height data (the maximum height of the river) indicates that while the observed values are extreme, they are,at least in some locations, not unprecedented. In addition, lower crest levels exceed major and moderate flood stages (the height at which flooding occurs at a specific location).

The chart below shows historic crest heights for Winooski River at Essex Junction, a river gauge in between the cities of Burlington, the state’s biggest city, and Essex Junction. 

The yellow line shows the 15 ft moderate flood stage identified by the National Weather Service. There are 32 crest heights that have crossed this threshold over the past 100 years. There are 18 crest heights crossing the pink line that marks the 18ft major flooding stage height with several occurring in the 1930s.  The March 1936 flood was part of an historic flooding event across New England as an unusually cold and snowy winter turned into an unusually warm and wet spring.

In short, Vermont’s vulnerability to flooding predates any influence anthropogenic climate change may have on the state’s hydrology.

Vermont: The Degrowth State

Vermont has serious infrastructure challenges. Climate change may exacerbate these challenges, but it certainly didn’t create them. The infrastructure is old and is not equipped to manage the routine extreme weather events over the past century. Part of Vermont’s charm is its historic buildings and towns, but as anyone who has taken care of anything “historic” knows, nothing about it is cheap.

Meanwhile,Vermont has the second smallest population in the nation and the smallest economy. The state’s economic growth regularly underperforms neighboring New Hampshire and the nation. Young Vermonters are leaving the state in droves to search for economic opportunity.

Altogether, Vermont has old infrastructure with serious problems, and too small of a tax base to get the necessary funding to fully address it. But, instead of making policy that could do something about the sewer, stormwater, and flooding issues, Vermont lawmakers are attempting to pin the blame on climate change, and shake down fossil fuel companies to get their needed funding. 

Vermont is attempting to hold fossil fuel companies accountable for its own lack of foresight. But any effort by the state to invoice fossil fuel companies for dam upgrades is apt to be met with legal action. There is no telling whether Vermont will be able to get a dime out of the fossil fuel majors, but that might not be the goal. Vermont lawmakers are more interested in making a discursive point about climate change than actually putting every available dollar towards improving their constituents' lives.   

Vermonters will find it difficult to sue their way into modernity, and their sewage smells no sweeter than anyone else’s. 

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By Jessica Weinkle

Peak hurricane season seems to have everyone in the east and Gulf coasts on edge. Homeowners cringe at every new “formation” forecast and insurance professionals curiously watch the minutiae of every atmospheric hiccup over the Atlantic. 

In all this, my current hometown of Wilmington, North Carolina provides an ideal window onto the complicated interplay between economic development, weather extremes, and America’s challenges with homeowners insurance costs. 

In the United States, we care about the cost of homeowners insurance because we care about homeownership; if you can’t afford the insurance, then you can’t keep your mortgage. The housing sector accounts for about 16% of national GDP give or take, the state of the sector is a common indicator of the state of the U.S. economy. Although homeownership rates fluctuate, since the 1960s, over 60% of households are owner occupied. 

Homeownership matters. Vice President Kamala Harris promised that if voters made her president come November, she would build three million new homes and hand out $25,000 in first-time-buyer down payment aid.

Seeing that homeownership seems unlikely to go out of style, the next consideration is balancing trade-offs between 1) affordable homeowners insurance and 2) sustainability of the insurance business in the face of increasing the amount of property exposed to weather extremes.  

In my previous post, I emphasized the robustness of the finding that it is not climate change but exposure growth—the increasing presence of expensive infrastructure in vulnerable areas—that is the leading cause of weather related losses. Indeed, while the literature on extreme weather is nuanced, the IPCC finds no observed climate change signal in a long list of climate variables relevant for understanding debates about losses in the United States—including losses from hurricanes.     

Yet those losses are still so often pinned on climate change, which misdirects public attention toward the narrow interest of climate change politics and away from broader questions about housing development, land management, and insurance industry business practices. 

North Carolina’s Hurricane Landfalls

As we head into peak hurricane season, it is a good time to illustrate what exposure growth looks like. North Carolina as a great example. I’ve lived in coastal Wilmington for the past ten years. The region is hurricane prone, but there haven't been any major category landfalls in recent decades. In fact, the last Category 3 storm to make landfall there was nearly 30 years ago (Hurricane Fran in 1996). And the only Category 4 landfall in the state was 70 years ago (Hurricane Hazel in 1954). Prior to that, there were a couple of Category 3 landfalls in the late 1800s.  

So, major category storms do happen in North Carolina, but not often. And between these events, the state has grown in population and wealth—that is, its exposure has boomed.

 Even in the short time I’ve lived in Wilmington, that rapid growth in population and wealth has been notable. Just down the street from my home, a once undeveloped lot on the intracoastal waterway is now a luxury senior living facility. It is recent enough that Google Earth does not yet have an updated satellite photo. 

This development marks a jump in exposure: On the left, there are trees. It would be sad to lose them in a storm, but they are not insured. On the right there are 130 residences filled with cars, restaurants, various other amenities, and a few boats down by the water. All of this property is insured.

Similarly, Wilmington developed the shores of the Cape Fear River in recent years. The Riverlights development has over 3,300 units with more potentially to come. The image on the left shows the area without any development in 2007. The image on the right shows the new communities and a new lake. There is a marina and some shops and restaurants.

Where there was once nothing but wetland and sand dunes, there is now a family-friendly AnyTown, USA community. The undeveloped land on the left below and the developed community immediately down the street on the right share the same likelihood of being hit by a hurricane, but you can bet that the hurricane will be “worse” where all the little blue houses are.

Southeast North Carolina

Mouchine Guettabi, a fellow professor at the University of North Carolina Wilmington, where I work, shared figures of changing population and wealth across the state. The biggest boosts in population are apparent in North Carolina’s southeast counties, which includes Wilmington in New Hanover County. But between 2020 and 2023, it was two other counties Brunswick County and Pender County that ranked first and second in the state for population growth.

Brunswick County is home to Leland. The images below show the development of Leland from an agricultural town of 1,860 people in 1990 (left) to a city of over 30,000 in 2024 (right). You can also see the development of the region south of Leland and the increasing density in the city of Wilmington on the West side of the river. 

Brunswick County has seen a great deal of development along its Atlantic coast. The images below show this area in 1989 (left) and 2024 (right). The town of St. James arose from practically nothing toward the East (right side of frames), and agricultural land was transformed into neighborhoods behind Holden Beach toward the West.

The map below shows Brunswick County has experienced the greatest growth in wealthy people as measured by a difference between gross income of in-migrants minus that of out-migrants. But as a whole, the entire southeastern part of the state has substantially increased in wealth.

What all this means is that southeast North Carolina has experienced substantial growth in both population and wealth since its last experience with major category hurricane landfalls. 

To be sure, Americans are wealthier today than in the past. Certainly, wealth is not distributed evenly. But, as a population we are richer than we were—at least represented by the amount of stuff we have and the built environment around us. Most everyone has more stuff. In turn, when hurricanes come ashore there is more valuable insured property in the way.

What is it like today in the United States: 

• The most popular vehicle in 2024 is the Ford-150 with a price tag of about $37,000.

• 70% of households have one or two cars. 

• The average number of televisions per household is 2.3, and 95% own one or more computers.

• The median size of a new single-family home is about 2,233 square feet.

Let’s take a look at what some historic North Carolina storms would cost if they occurred this season. 

Category 4: Hurricane Hazel of 1954

When I first moved to Wilmington in January 2015, my family rented a little bungalow on Carolina Beach, a town on the southern end of Wilmington’s barrier islands. Black and white pictures of the devastation of the local community caused by Hurricane Hazel hung on the walls of the local diner. Although the storm made landfall on the border of Brunswick County south of Carolina Beach, it caused damage along most of the coast. According to original meteorological reports of Hazel: 

The devastation along the North and South Carolina beaches was staggering. Every pier in a distance of 170 miles of coastline was demolished and whole lines of beach homes literally disappeared. In some places the tide was over 17 feet higher than mean low water

What was it like in 1954?

• The most popular car sold in 1954 was the Chevy Bel-Air at a price of about $1,800 ($20,637 in 2024 dollars).

• 64% of households had one car and nearly 30% did not have any

• 65% of households owned one television

• The median size of a new single-family home was about 1,500 square feet.

Hurricane Hazel caused $281 million in losses in 1954 across New Hanover, Pender, and Brunswick counties in North Carolina and Horry County in South Carolina. 

The table below compares the social conditions of 1954 to that of 2024 represented by population across the four affected counties and wealth per capita. If a storm like Hurricane Hazel occurred this summer it may cause losses of about $53.15 billion.

Category 3: Hurricane Fran 1996

A bit over 40 years after Hazel, the southeastern region of North Carolina was hit by Hurricane Fran. I know a lot of people who remember Fran. According to reporting at NOAA, 75% of homes in Wilmington sustained some damage, with 24% sustaining major damage. Fran came ashore only slightly north of Hazel in Brunswick County

What was it like in 1996?

• The most popular vehicle sold that year was a Ford Taurus at a price of $19,000 ($37,953 in 2024$).

• About 90% of households had at least one car while 55% had two cars or more cars.

• 35% of households had three or more televisions and 65% had at least one; and 35% of households had a computer.

• The median size of a new single family home was about 2,000 square feet.

Hurricane Fran caused $3.2 billion in losses in 1996 across North Carolina’s Brunswick, New Hanover, Onslow, and Pender counties. The table below compares the social conditions of 1996 to that of 2024 represented by population across the four affected counties and wealth per capita. 

If a storm like Hurricane Fran occurred this summer it may cause losses of about $17.04 billion.

Little Boxes

America’s problems with homeowners insurance go about as far back as our love affair with homeownership. In 1950, in response to rapid growth in homeownership the insurance industry created the homeowners policy, lumping together many risks into one bargain-basement price. Deep in the actuarial literature from the time are reports of industry members vocalizing concern that the policy underpriced risk—particularly from hurricanes—and catastrophic losses were destined to be a problem.

And so they were. Hurricane Betsy, later dubbed “Billion Dollar Betsy,” struck the Gulf Coast in 1965. It was the first storm to cause a billion dollars in losses. Three years later, as part of the Housing and Urban Development Act of 1968, intended to improve equity in housing and mortgage access, the government launched and fostered state development of several publicly run insurance programs to ensure disaster recovery and continued mortgage lending.    

We’ve duct taped together a homeowners insurance system ever since. 

Experience suggests that rising insurance premiums do not whip the public into making decisions in line with the moral judgements of nameless evaluators of all things good, nor are cities moved. Rather, increasing premiums results in decreasing coverage, a phenomenon known as the protection gap.  

If the goal is affordable property insurance then a serious discourse needs to develop around policy options for mitigating risk, improving accountability for local land management decisions, the structure of the insurance regime, and dealing with normal disruptions from insurance business cycles and changing technologies. Climate change is a click-bait distraction from the hard work of economic and urban development policy. 

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By Jessica Weinkle

In recent years, alarm has grown over homeowners’ increasing insurance premiums and the difficulties they face securing necessary coverage for catastrophe risks, such as wildfires and hurricanes.

According to one estimate, average home insurance rates have increased by almost 20% between 2021 and 2023. According to another, within the last 5 years, homeowners’ insurance premiums have increased by 34%.

Headlines herald an insurance crisis. Insurers cite unprofitability upon withdrawing from hurricane and wildfire-prone states. In early July, State Farm in California requested a 50% rate hike after it had canceled 72,000 homeowners policies.

This whole insurance mess is commonly credited to climate change; climate change has made our weather extremes more frequent and intense causing increasing disaster losses, the story goes, and now we must pay the price through insurance rate hikes for not decarbonizing rapidly enough.

But this view distorts scientific knowledge and marks a tremendous disservice to the American public, which is struggling with insurance premiums for less coverage while facing the fatalistic spell of climatism.

Meanwhile, the NSF and NOAA have agreed to subsidize the reinsurance industry’s climate risk modeling needs. Reinsurance Association of America, the reinsurance industry's top interest group, with no limit on lobbying, will work with NOAA to “develop new risk-related products of significant value to RAA, the insurance industry and other stakeholders.” It’s not clear that what is of value to industry advocates is of value to the public interest.

We must clear the confusion created by climate change advocacy to gain a clearer view of the insurance challenges America is facing.

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Disasters and Climate Change

While all forms of media, policymaker rhetoric, and classroom chatter is filled with strong assertions about how climate change is apparent in more frequent and severe weather extremes and ever increasing losses- there is a dearth of evidence to support the claim. While climate change is real and important, the dominating cause of increasing losses from weather extremes is exposure growth and inflation.

Note the subtle shift from attention grabbing to substance, from future to present, in Swiss Re’s 2023 finding on the state of the reinsurance industry:

Insured losses exceeding USD 100bn [per year] globally are likely here to stay, and will grow further fuelled by economic value growth, urbanisation, and climate change.

A short while later in the report, Swiss Re states that:

The magnitude of climate change impact on the growth of natural catastrophes in frequency and severity is not explicitly quantifiable yet, whereas property value growth and urbanisation are reasonably understood risk drivers.

The first statement looks to the future. The second statement explains our current situation.

Swiss Re illustrated the importance of urbanisation as the cause of loss by using Hurricane Ian, which struck Florida in 2022 as an example. It caused so much loss precisely because the areas it hit had experienced tremendous population growth in the years before. 

Other extreme weather events where losses are largely due to population growth, increasing wealth, and inflation include severe convective storms, hurricanes, floods, and wildfires. 

The usefulness of climate change in insurance politics

Risk is a funny thing. 

The classic adage is, “Danger is real, but risk is socially constructed.”  This means that planes fall out of the sky, hurricanes make landfall, nations war. But how we think about these things or how we measure the probability of any of these things depends on our values and priorities.

Last year, a research study partially funded by a reinsurance company set out to find a climate change signal in hurricane data. The researchers concluded that discerning changes in hurricane characteristics presents epistemic uncertainty. The explain that decisions about how to frame the data depends on what you are trying to do:

How one views the situation must ultimately be based on one's particular application and the consequences of changing TC frequency…In terms of risk, it is useful to note that while in everyday language risk is associated with danger, harm or negative consequences, in business and finance risk simply refers to the uncertainty of potential outcomes, can be positive or negative.  From that perspective the epistemic uncertainty present in [hurricane] climate change signal can only serve to increase risk. 

Not everyone benefits equally from embracing epistemic uncertainty, however.

If you are a homeowner, you might argue that since it’s unclear whether any change truly exists or what changes there may be in the future, epistemic uncertainty should not be factored into insurance costs because it presents unaffordability risks.

If you are an (re)insurer, you might argue that you are better off safe than sorry, and you want to include it in your pricing- and besides, the ability to mix and match different scientific assumptions provides a competitive edge in the marketplace.

If you are an investor in an insurance linked security you might argue that using climate change assumptions to increase hurricane risk presents a convenient way to reduce the likelihood you lose your investment, while increasing the interest you can demand.

Epistemic uncertainty about climate change appears to have more potential value for industry interests than for public interests.

However, the constant stream of climate change and extreme weather hyperbolic messaging shapes expectation for the use of epistemic uncertainty in insurance pricing. In one survey of homeowners, 40% blamed corporate greed for rising insurance premiums. Another 86% noted that they thought companies were using inflation as an excuse, and 66% agreed that climate change was a contributing factor.

Note how climate change expectations relieves the industry of scrutiny for pricing epistemic uncertainty and relieves regulators of responsibility for questioning it.

Other real life things

Leading causes in rising insurance prices of late is loss experience, fluctuating market dynamics, investment opportunities, and cost of capital. This means that as the market conditions change—say, there is a global pandemic that results in a stock market crash followed by rapid inflation and interest rate hikes—the insurance industry is also influenced by that.

If you’ve tried to build anything in recent years, you know that material costs have increased substantially. One analysis estimated that replacement costs related to homeowners insurance soared 55% between 2020 and 2022. Another analysis showed construction material costs increased nearly 30% in 2021 alone. This all leads to insurance pricing increases. 

In addition, the industry has lamented skyrocketing social inflation, a term used to refer to real or perceived overly aggressive “billboard attorneys” encouraging clients to sue their insurer coupled with generous jury awards.

Further, there have been meaningful loss events. From Hurricane Wilma in 2005 to Hurricane Harvey in 2017, there was a notable drought of major hurricane landfalls in the United States.  This matters because, in the United States, hurricanes are the most costly weather events for the global insurance industry. When there aren’t major losses from U.S. hurricanes things are trending positively. When they do occur, it can have significant consequences for pricing dynamics.

Interestingly, all of these factors are reoccurring reasons for volatility in insurance pricing since homeowners began having problems with its affordability.  The clip below is from a 1968 New York Times article explaining why insurance costs were increasing.  It was in this very same year that several state and federal governments developed public insurance programs for catastrophic risk.

We need economic and infrastructure policy not climate change advocacy

Florida regulators now permit the use of climate change assumptions in estimating hurricane risk for insurance ratemaking in the state, boosting views of risk. Many other hurricane prone states use Florida’s approved models for ratemaking. This means whether there is a detectable change in hurricane frequency or severity attributed to climate change (there is not), people are being charged for it in their homeowner’s insurance.

Industry reporting suggests this is going on across the sector. At the end of the record breaking lull in major category landfalling hurricanes, reinsurer Guy Carpenter announced in 2019:

Ominously, the specter of climate change points to a future that will see only more frequent and severe weather events. Risk models will need to be recalibrated to accommodate this. 

This month, an industry news outlet announced that insurers and reinsurers are recalibrating their risk models in response to extreme weather losses. 

Elsewhere, mortgage bond investors use climate change scenarios to argue that insurance mispricing has caused an asset bubble in the U.S. residential real estate market. 

It might seem trivial if industry and climate change advocates are making the bitter pill of higher insurance costs easier to swallow for homeowners by labeling it green and encouraging emissions reductions. However, this tactic is consequential for both the economy and policy making (and science, but that’s a different conversation). 

America’s $13 trillion residential mortgage market hinges on the availability of affordable homeowner’s insurance, which has come to increasingly rely on capital market investors to help carry peak risks. This is a fickle group with different priorities than most American homeowners want to stay in their kids’ school district. The precariousness of the relationship between mortgages and affordable insurance is not even remotely caused by climate change.  Though, it may be exacerbated by a fervor for climate change, epistemic uncertainty, and misleading headlines.

That said, devastating loss potential is quite real; hurricanes in Miami do happen and lots of nightmare scenarios can be imagined for back to back catastrophic events. There are trade-offs gambling with insurer solvency in favor of mortgage market stability. Those trade-offs should be made plain without muddling them with mischaracterizations of climate science.

Prices reflect market dynamics but how the market conceptualizes risk may conflict with broader public goals and concerns. If industry is using epistemic uncertainty to meet their own business goals, it’s reasonable to question if that’s really an appropriate use of researchers’ conjecture.  The financial industry's interest in climate change science and the potential corresponding pressure this interest may be placing to create risk products by expanding epistemic uncertainty should be scrutinized by both scientists and the public.

Policymakers need to encourage innovation in public accessible risk management. Disaster insurance can be “reimagined.” Public risk pools are no longer an aberration but a useful tool for engaging and incentivizing insurance markets.

We can build more innovatively and reduce regulatory and procedural barriers to encourage industry investment in public infrastructure and risk mitigation.

Insurance premiums that rise faster than household incomes reduce affordability of insurance. This issue is intensified by the  far broader problem of  stagnating incomes for much of the population. Thus, making headway on incomes and jobs can improve our situation with catastrophe insurance.

There are many ways to address America’s insurance problem, but it requires a radical reframing of the problem from one of climate change to one of real-world economic, infrastructure, and risk mitigation policymaking.  

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In June, the U.S. House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust held a hearing on whether the investment industry had committed antitrust violations in the pursuit of environmental, social, and governance (ESG) goals. 

The focus was less on ESG in general, however, and more on the practices of Climate Action 100+ in particular. Self described as an “investor-led initiative” to reduce emissions and produce climate-related financial disclosures, Climate Action 100+ is now under fire for behaving as a “‘climate cartel’ of left-wing environmental activists and major financial institutions” that “has colluded to force American companies to ‘decarbonize’ and reach ‘net zero.’”

The Climate Cartel, the House Judiciary alleged, has “declared War on the American way of life,” targeting disfavored American companies “that allow Americans’ to drive, fly, and eat.”

The acrimony driving the hearing would come as no surprise to critics of market-based solutions to climate, who have said all along that people would get angry if decarbonization means the end of cheap energy and modern creature comforts. Rather, accelerating decarbonization requires clear government policy and coherent regulatory regimes. Investment activity towards those stated policy goals can follow. 

The investment activity set up to support the ESG ideal has made plenty of money for the firms creating ESG funds. According to commentary in the Harvard Business Review,

as passive funds have continued to grow in popularity, asset management revenues as a percentage of [assets under management] have fallen by 4.6 basis points over the past five years. ESG funds typically charge fees 40 percent higher than traditional funds making them a timely answer to asset management margin compression. 

Yet the environmental benefit from ESG is unclear. Channeling investment away from high emission companies to low emission companies is counterproductive for decreasing emissions. The low emitting companies have little to change. The high emitting companies need the investment to reduce their emissions. To make ends meet in the near term, high emitting companies may double down on their high emitting ways.    

In the context of high emission societal essentials—like energy and fertilizer—rapidly contracting the oil and gas companies does not itself make low carbon alternatives appear. What it does do is force people to source these essentials from elsewhere, at a higher cost, and with the same or worse environmental impacts.   

That lackluster performance is backed up by Climate Action 100+’s own reporting, which shows that its real accomplishment has been producing more reporting and documentation, not reducing emissions.  

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Along the same lines, the compliance costs associated with the new SEC climate risk disclosure rule (which is on pause while in legal limbo) is projected at between $6–$25 billion, depending on who is counting.  

Let’s bring it back to the hearing in the House. Republican legislators were focused on demonstrating collusion among Climate Action 100+ members and agreement to restrain trade. Key testimony came from Mindy Lubber, CEO and president of the sustainable finance nonprofit, Ceres. Lubber is also a member of the steering committee for Climate Action 100+, which Ceres helped found and manage. 

Lubber was adamant that Climate Action 100+ members acted on their own to do what is best for their own companies and they sought to accelerate company emission reductions “if there is a financial risk to those emission reductions.”  Responses to legislators’ questions consistently focused on the analytical commitments of members.  For instance, in an exchange with Representative Dan Bishop (R, NC): 

Bishop: Does signing [onto Climate Action 100+] indicate agreement?

Lubber: No. It indicates every investor will look at the financial implications of climate risk. 

Bishop: So they are signing to say, they are not agreeing to anything…

Lubber: They are agreeing to address and look at the financial risks and implication of climate change

In response to later questions Lubber states: 

“We work with a number of investors who look for information, background facts on the financial implications of climate change…” 

“We are sharing information about the financial risk of climate…”

“We do an analysis of financial risks of climate change…”

Following Lubber’s explanation, Climate Action 100+ commits investors to adopt “distinct analytical methodologies” and climate risk metrics. The underpinning of coordinated behavior among investors is their shared technical assumptions and methods about climate financial risk.  

This opens a window onto the ecosystem of climate science used in these analytical endeavors; an ecosystem long critiqued by nonconformist scientists for being too homogeneous and non-competitive.  The result is stifled innovation in research and in the development of technologies and pragmatic methods of improving resilience and sustainability.  

The problem of the real or appearance of collusion among investors guided by climate analytics is a problem of stagnant science and technology policy in the climate, earth, and sustainability sciences.     

Climate’s knowledge monopoly

There are pervasive professional and institutional pressures that keep climate change science self serving and unresponsive to societal needs and political complexity.  

The influence of the IPCC on the production and use of climate change science can not be understated. This is because, as described in 2011 by economist Richard Tol, the IPCC holds a natural monopoly on science advice for climate change policy. It’s not that there are no alternative views available; it’s that the dominance of the IPCC hinders the competitiveness of these views.

Since 2011, the development of Future Earth as a mechanism for organizing global environmental change science further reinforced the IPCC’s control of climate policy guidance. The organizations founding the Future Earth project favor earth system modeling because the institutions that they represent are resistant to change. It is a self-serving process.  

Like other monopolies, as the IPCC acts in its own best interest, quality declines, and innovation is slow. Although the IPCC offers a free service, its monopoly “brand” power has allowed it to capture areas of research and policymaking beyond its core mandate. This is particularly so in the area of scenario development. Tol explains,

While the IPCC was set-up to assess the research on climate change, it has also engaged in primary research on scenario building, standard setting, monitoring, and research funding. The IPCC is not particularly well-suited for these activities, and one may argue that it would have failed in these tasks had it not been for a cross-subsidy in kind (goodwill, reputation, trust). 

The IPCC has moved from a mechanism to report on the state of knowledge about climate change to a standard setting mechanism. Tol writes, 

The IPCC scenarios are more widely used than any of the alternatives. This is true for the climatological literature, the impact literature, and the emission reduction literature. This is partly because standardization of scenarios enables comparison of results and partly because the IPCC reports are more likely to refer to papers that use IPCC scenarios. A rational researcher would therefore use the dominant scenarios—that is, those of the IPCC. The scenarios run with the large-scale climate models are coordinated with the IPCC. Therefore, the IPCC has used its monopoly position in the market for assessment to establish a dominant position in the market for scenarios.

In my previous post, I pointed out that those making decisions about scenarios for use in IPCC reporting—and thus the broader research community—are also involved in designing scenarios for use in the financial industry.

In effect, standard setters have industry interests and they work with monopoly power. 

The IPCC is also the organization that provided legitimacy to the 1.5^oC temperature target that was codified in the Paris Agreement. That target was the result of political negotiation (not scientific assessment). Its political and technological feasibility is broadly questioned if not flatly rejected by most. Yet, the IPCC’s brand gave it credibility, and it is now used to demand massive investment towards meeting the goal. 

The IPCC is also the standard setter for emissions accounting through its production of the GWP-100 metric which is then used in emissions trading and derivatives. This is not the IPCC’s doing, but the IPCC has not refused the responsibility either. 

Finally, the influence of the IPCC has shaped the development trajectory of climate modeling toward advancing high resolution models. These models are of interest to the earth science community and financial firms projecting the consequences of climate change. But it is not the kind of modeling that is necessarily the most useful for understanding uncertainty or advantageous for policymaking and community adaptation efforts. 

More research is needed, but not that research

A court may yet decide if Climate Action 100+ has violated antitrust law. However, the phenomenon legislators are examining has much deeper roots. Busting an ESG trust will not result in stimulating more competitive and innovative activity because of the knowledge monopoly a step down the line. The trust that needs to be broken up is the stranglehold on knowledge held by the IPCC and vested scientists. 

This is good news because it is a lot easier to encourage new areas of research and innovation than it is to win antitrust suits. Development of new research agendas also serve to open inquiry and diversify viewpoints within knowledge institutions like universities and research organizations. Government agencies can signal demand for new types of knowledge which legitimizes and elevates the prestige of researchers working on non-dominant narrative areas of study.   

Well thought out research initiatives developed by the NSF, for instance, can advance understanding about scenario feasibility, legitimizing researchers in challenging the dominant perspectives held at the IPCC. Encouraging advancement of forms of modeling other than high(er) resolution climate models can encourage the development of modeling products better suited for resource strapped community adaptation decision making. 

Universities and departments can also evolve the reward structure for their researchers. Traditionally, the academic profession places much weight on peer review publishing in elite research outlets. But the peer review process leaves much to be wanting and the most elite journals have become media powerhouses skewing their incentives towards promulgating dominant dramatic narratives. Universities can give more weight to their faculty contributions to high quality research disseminated through more contemporary channels like non-university based research groups. When faculty are rewarded for contributions to creating diversity in thought in public and policy spaces it encourages researchers to explore new idea areas.

Shaking up the institutional black box of climate science can empower communities grappling with resilience planning, insurance regulators wading through industry risk analytics, and the development of more insightful state and national climate science advice that is not just a regurgitation of the monopolistic IPCC. 

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A leading story in the Wall Street Journal’s financial section last week extolled Bill Gates’s numerous climate investments. The underlying message was clear: there’s big money in climate change.

This idea should be at least somewhat familiar. New technologies to aid the energy transition and build a more ecologically principled economy implies big investment opportunities. In fact, the climate change policy arena was originally conceived with a nod to trading markets (remember cap and trade?).

But it is important not to lose sight of how this financial interest may distort climate change research and authoritative scientific assessments like those of the Intergovernmental Panel on Climate Change (IPCC) and the National Climate Assessments (NCA).

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Extreme Emissions

If you’ve followed the emission scenarios debate in recent years some of this part will be familiar.

Back in very early 2020, Zeke Hausfather, then of BTI, and Glen Peters of the Center for International Climate Research in Norway, argued in Nature that the most common emission scenario used in climate change science was misleading; the emissions in the scenario were implausibly high. Their argument followed on earlier work by Justin Rickie and Hadi Dowlatabadi that showed that the emissions scenario depended on a long outdated assumption about energy markets leading to artificial conclusions about coal use. Researcher Matthew Burgess and colleagues expanded on additional problems in the underlying socioeconomic assumptions of the scenario. Then, in 2022, Roger Pielke, Jr and colleagues, identified a range of plausible emission scenarios available to the IPCC. They identified the upper bound of that range as that which is often used as a moderate policy success story.

In the midst of this, Christopher Schwalm and colleagues, all from the Woodwell Climate Research Center, argued in PNAS that the extreme scenario was reasonable. Rather, it was the views of the other researchers that were “skewed.” The Woodwell researchers had not disclosed their work as consultants for McKinsey and Company, one of the largest consulting firms in the world, for which the researchers had led an analysis of climate physical risk using the extreme scenario they were now defending. Using the scenario, McKinsey made major media headlines with a report that prophesied a tanking of the Florida mortgage market due to climate change.

After the rash of McKinsey reports flooded the consulting world, Schwalm’s coauthor Philip Duffy received a position as Climate Science Advisor in the White House’s Office of Science and Technology Policy (OSTP). In turn, last year, OSTP acknowledged the plausibility debate and decided to justify the continued use of extreme emissions across federal agencies anyway because the “corresponding simulated climate futures cannot be ruled out,” never mind that their underlying assumptions are known to be false.

More recently, at the bottleneck of the worldwide climate change science community, researchers simultaneously advised deprioritizing extreme emissions while also giving reason to keep them around—advice that was promptly met with the decision to continue prioritizing extremes. This has direct implications for IPCC reporting because the only way into the IPCC is through that bottleneck.

Under Pressure

One reason extreme emissions scenarios may be so difficult to ditch is because of the climate analysis consulting business, which depends on them and constitutes the link between scientists and the business community. The climate change consulting business is valued at $2.2 billion, and is forecasted to reach well over $7 billion by 2033.

Extreme scenarios appear to be the industry’s bread and butter. The United Nations Environment Programme Financial Initiative (UNEP-FI) has grown alongside the financialization of climate change risk since the 1990s. In technical documentation from 2023 for their annual Climate Risk Landscape reports, UNEP writes:

Vendors often employ high emission scenarios such as the RCP 8.5 scenario. These worst-case scenarios underscore the potential financial implications of failing to address climate change effectively, and help clients grasp the magnitude of potential losses and adopt appropriate risk mitigation strategies.

The scenarios are not “worst case,” they are fanciful. And they are not used “often.” They are used almost universally. Writing in 2021, UNEPFI showed that of the 19 climate analytic firms surveys, all of them used an extreme emission scenario. The continued dependence on climate extremism is apparent in online marketing material.

UNEP 2021 provided a list of companies and their scenarios and I adapted that data to this table with information from news reports on acquisitions

Certainly, climate analytic firms will sell whatever emission scenario the client would like to buy. However, justification for using a so-called ‘mid-range’ scenario depends on the legitimacy of the extremes (you can’t have a mid without a high). In other words, so long as the high extremes remain legitimate, what is really the upper bound of plausible will be construed as moderate.

Symbiosis

When outdated science (ie. extreme scenarios) shows up in contemporary policy and regulation, it shines a light on the symbiotic relationships that hold together the belief system.

In 2021, U.S. President Joe Biden signed an executive order directing government wide analysis, disclosure, and management of climate related financial risk. The language of the executive order reflects the work of the Task Force on Climate-Related Financial Disclosures (TCFD). TCFD was initially developed in 2015 at the behest of Bank of England’s governor Mark Carney, while he was also head of the G20 Financial Stability Board. Michael Bloomberg chaired the TCFD, and its final recommendations were to use climate risk analysis in corporate disclosures.

Carney also helped found the Network for Greening the Financial System (NGFS), a coalition of central banks, which developed its own emission scenarios for use by financial regulators in climate risk analysis. Bloomberg Philanthropies and ClimateWorks provided funding for the development of NGFS scenarios—which uses extreme emissions scenarios.

The researchers that created NGFS scenarios are also some of the same people that make decisions about the prioritization and design of scenarios for climate change research with direct implications for IPCC reporting (remember the bottleneck?). This is a clear conflict of interest.

It is a conflict of interest that the researchers making decisions about scenario prioritization and development also create scenarios for central banks and other major financial interests. The consortium that organizes development of the scenarios for the IPCC has a specific Scientific Working Group on Scenarios for Climate-related Financial Analysis that is explicitly motivated by the needs of TCFD and NGFS. 

So, not only is there a bottleneck with a handful of people controlling scenarios that influence how the world understands climate change, but many of the same people work with industry that depends on those scenarios. The image below shows the conflicts of interest problem.

To carry out part of his executive order, Biden charged his climate adviser, Gina McCarthy, formerly president of Natural Resources Defense Council (NRDC), and his economic adviser, Brian Deese, formerly Global Head of Sustainable Investing at BlackRock, to lead the organization of a government-wide approach to climate financial risk.

NRDC (and other establishment environmental groups) and BlackRock were loud advocates among their respective networks for introducing climate change analytics into the financial system. For instance, NRDC called for US financial regulators to join the NGFS and the Sierra Club gathered public comment in support of the SEC climate disclosure rule.

Bloomberg’s work in climate financial risk analysis originated with a politically motivated risk modeling project he helped fund with investor and activist Tom Steyer, and Hank Paulson, with the intention of making climate change feel real and urgent to the business community. As was standard at the time, the project forecast an extreme emission scenario as the inevitable future if the world did not usher in a rapid change in investment priorities.

The project turned out the Climate Impacts Lab, a collaboration between private consultant Rhodium Group and several university researchers: Solomon Hsiang (Berkeley), Robert Kopp (Rutgers), and Michael Greenstone (Chicago). Hsiang and Kopp have both had leading roles as authors to official U.S. National Climate Assessment reports, and Kopp is closely involved in the development of federal sea level rise scenarios (which feed into the NCA).

BlackRock uses Climate Impacts Lab/Rhodium work in its financial risk analytics. And the work of the Climate Impacts Lab—along with the extreme emission scenario—is at the heart of the EPA’s social cost of carbon (SCC) calculation. The SCC is used to economically value the work of Greenstone’s carbon offset firm.

Climate Impacts Lab’s research has also become a key part of the First Street Foundation climate risk analytic services used widely in advocacy and, particularly real estate. Modeling from the First Street Foundation is reportedly embedded in the financial risk management activities of 30 government agencies including government enterprises that back U.S. mortgages.

In all this, the clearest evidence of regulatory capture has come in the form of the recent passage of a rule by the Securities and Exchange Commission requiring the use of climate analytics in the financial disclosure filings of certain companies. Emissions scenarios, in other words, now have mandated customers.

The system of shared beliefs and how it is held together in science and policy is shown below.

Arizona’s Oceanfront Property

There are many problems with this arrangement.

The first is the obvious problem of stymied and captured climate change science. Sound science is essential for good policy and democratic accountability. When science falters, everything else can come down with it.

The second is the confusion over climate risk. Although climate change does affect weather, economic losses from extreme weather have to do with our socioeconomic conditions and decisions about the built environment. The effects of climate change on current and future weather pale in comparison to the effects of our decisions about how, what, and for whom we build.

Third, investment decisions guided by risk analytics using extreme emissions scenarios are decisions guided by bad science. Finance matters; it creates opportunity for individuals and society. Our global experience shows that when uncertainty and ignorance in the financial system goes unmanaged, major problems arise all around the world. Introducing known false assumptions into investment decisions unnecessarily introduces uncertainty into the system.

Fourth, where people are using extreme emissions scenarios, they are also engaging in a theoretical modeling practice of no real meaning. Where people are using a common mid-range scenario because it seems more sensible than the extreme, they are nonetheless taking a high-end view of risk. This all seems incredibly inefficient.

Finally, I can think of no better illustration of environmentalism as a special interest: extreme emissions scenarios bring together an eager coalition of scientists, environmental groups, and the financial industry in hot pursuit of regulations that build business sectors to employ climate quants.

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From his perch overlooking the global community, UN Secretary General António Guterres has warned that the world is on the “highway to climate hell.” The president of the United States has likewise threatened that denying the impacts of climate change means condemning Americans to “a dangerous future.” Former Secretary of State John Kerry has scorned unnamed demagogues slowing the process of decarbonization.

Overblown rhetoric from the political class is nothing new. But now, the politicians have a fresh cheering section: a cohort of scientists who have set aside rational deliberation about methodology and findings in favor of empathic allyship with advocate researchers. A leading climate psychologist, for example, has argued that those not afflicted with climate anxiety must be in denial, leaning on faulty “rationalisations against existential terror of annihilation.”

Such arguments suggest that a fair amount of propaganda has made its way into the scientific method—and perhaps in no venue more clearly than the Planetary Boundaries framework.   

Advocates have positioned the framework as a functional approach to organizing society within the (perceived) limits of Earth’s ecology and human ingenuity. Although wrapped in a façade of technical exercise, the framework is scaffolded by the values and assumptions of the model creators. More than an impartial application of science, it serves as a vehicle for political messaging while maintaining an air of objectivity.  By understanding where it came from, we can see the path back to scientific integrity and rational deliberation.

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The Planetary Boundaries enterprise

On the surface, Planetary Boundaries and its various derivatives seem scientific. They appear in notable scientifically-oriented journal outlets like Nature and Science, and they tend to involve lots of complicated calculations and formulas.

The framework posits nine thresholds under which “humanity can operate safely.” These range from climate change to ocean acidification to rates of biodiversity loss. If any of the boundaries (or perhaps some of the boundaries) are transgressed (for some unknown amount of time) the earth will no longer be safe (at some unknown point in the future).

There is some logic here, but the framework is inherently arbitrary. It conflates regional and global scales, which artificially constrains policy options and presents in technocratic form a moral philosophy for social and economic development. Planetary boundaries embed the ideas of tipping points, tipping elements, and tipping cascades, which also suffer from muddle; indeed, there is “no rapidly approaching planetary cliff.” 

The idea of Planetary Boundaries first appeared in 2009 in the journal Ecology & Society as a “proof of concept paper.” The paper’s lead author, Johan Rockström, had joint association with the Stockholm Resilience Center at Stockholm University and the Stockholm Environment Institute (SEI) supported by the Swedish government.

The framework follows an “overshoot and collapse” trajectory. This means that a variable of interest—say pollution—increases beyond some limit in a system’s capacity, at which point the whole system collapses. In this way, Planetary Boundaries is a restatement of neo-Malthusian ideas of physical limits to the growth of humanity. In fact, the author team explicitly situated its framework as a follow-on to the Limits to Growth modeling exercise developed in the late 1960s and early 1970s for the Club of Rome, a group of elite entrepreneurs and scientists concerned that population growth would necessarily lead to ecological problems.

Yet framing population as a problem has never gone well for society. The publication of the Limits to Growth report in 1972 and broader efforts by the neo-Malthusian community on both sides of the Atlantic helped fuel fears that population growth would lead to catastrophe and set the stage for various population control measures around the world, including forced sterilization.

More recently, the Club of Rome (with the Stockholm Resilience Center and a few others) took up the Planetary Boundaries cause in an explicit campaign, called Earth4All, to transform the global economic system to provide an “equitable future on a finite planet” through wealth redistribution, “stabilizing the world’s population,” and degrowth. Meanwhile, another body, the Earth Commission, which Rockström co-directs, has busied itself with developing ever more boundaries humans should not cross.

And it is this morally vexed storyline at the heart of the rallying cry for a safe and just planet that has inspired crowds to march.

Cascades of Capture

Despite the chilling relationship between planetary boundaries, neo-Malthusianism, and population control, the concept has been happily taken up by a range of groups working to transform institutions like health, banking, and finance towards the Earth’s Commission’s ideals.

These institutions tend to zero in on one of the two forces neo-Malthusians have seen as sources of impending doom: population and economy.

I’ll start with concerns about population growth which underpins the concept of “planetary health.”

The original use of the term “planetary health” is attributed to Friends of the Earth in 1980, who amended the World Health Organization’s 1946 definition of health so that that “health is a state of complete physical, mental, social and ecological well-being and not merely the absence of disease—that personal health involves planetary health.”

The term then became popularized in 2015 by a joint project between The Lancet, an elite health science publication, and the Rockefeller Foundation. The project asserts that “we have been mortgaging the health of future generations to realize economic and development gains”—an idea also explicitly included in the Planetary Boundaries framework. 

Richard Horton, Editor in Chief of The Lancet, has since made it his mission to “develop the idea of planetary health—the health of human civilizations and the ecosystems on which they depend.” His ideas are embodied in The Lancet Planetary Health journal, which aims to support “radical civilisational transformation” and create a “safe and just space for humanity, respecting planetary boundaries.” 

Horton celebrates the work of Extinction Rebellion (XR) in calling on medical professionals to join the cause and “inject moral force into the political debate on climate action.”  In writing about an influential journal article on ocean circulation, XR’s Roger Hallam said “repressed scientist” who say that the planetary situation “‘kind of scary’” are “like saying Auschwitz was ‘kind of unpleasant’.” 

The problem in the simile should be apparent. The Holocaust produced millions of deaths of documented deaths at the hands of a formal genocide government policy. The research Hallam was critiquing used a computer model to estimate ocean cycling 2,800 “model years” into the future to say something about tipping in the present. But Hallam’s extreme view is supported by a science-like narrative of an earth on the brink of collapse that is legitimized by The Lancet’s advocacy-oriented editor.

If you think the problem is just academic journals and advocates, think again. In an IPCC report from 2022, the authors used the term to describe the result of resilient development. 

The IPCC’s footnotes demonstrate, however, the term’s ambiguity.  

• Planetary health is defined as “a concept based on the understanding that human health and human civilization depend on ecosystem health and the wise stewardship of ecosystems.”

• Ecosystem health is defined as “a metaphor used to describe the condition of an ecosystem, by analogy with human health.”

That is, “planetary health” is what results from the kind of development that writers of the IPCC report like and what they like is the Planetary Boundaries worldview.  

Now, to banking and finance- important institutions in economic growth.

The Network for Greening the Financial System (NGFS) is a coalition of central banks that pressures the banking sector and its regulators into meeting Paris Agreement goals. NGFS  directly invokes the idea of Planetary Boundaries in its development of scenarios for use in bank stress-testing. 

The NGFS scenario narratives (below left) get their names from an article by the Planetary Boundaries authors that appeared in PNAS (Proceedings of the National Academy of Sciences of the United States of America) in 2018. The article has one of the highest attention scores—that is, it was mentioned a lot in the news, blogs, and policy documents—in all of science. In the article, the authors set out two trajectories for humanity: a stabilized Earth and the Hothouse Earth which is “likely to be uncontrollable and dangerous to many.” It poses severe risks, the authors continue, “for health, economies, political stability (especially for the most climate vulnerable), and ultimately, the habitability of the planet for humans.” An image from the PNAS article (below right) was used in the NGFS scenarios technical documentation illustrating the fingerprints of Planetary Boundaries in the development of the scenarios (I added the pink circles in the images below).  NGFS also uses the planetary boundary framework in the development of scenarios central banks can run to assess nature-related economic and financial risk.

Planetary boundaries is also the guiding framework for the Science Based Targets Network—an initiative combining the Earth Commission with the founders of the Science Based Target Initiative. The latter (SBTi) is itself wrapped up in a complicated network of coalitions that has been the source of much ire for U.S. legislators concerned with potential antitrust violations occurring in ESG and sustainable investing activities.  

And so, it is from here that we find leading advocacy organizations promulgating ideas of systemic financial risk caused by climate change and policy entrepreneurs under the auspices the Financial Stability Board building a case for corporate disclosure on the foundation of Planetary Boundaries.  

Concentrated power

In 2018 Rockström became a co-director of the Potsdam Institute for Climate Impact Research (PIK), taking over for another Planetary Boundaries co-author, Hans Joachim Schellnhuber, who founded PIK shortly after the fall of the Berlin Wall. Schellnhuber is now director of IIASA in Austria. 

This is not just an administrative detail or notch on some researcher’s CV. It highlights formidable power in how the world has come to understand climate change and paths to mitigation. PIK and IIASA are tightly knit groups, and IIASA’s founding is bound up in the founding of the Club of Rome, with the same leading figure working to establish both in the 1970s.  

On its website, PIK explains that everything the institution does is guided by “the integration of Planetary Boundaries and Global Commons.” This work includes the development of “transformation pathways” for climate protection and sustainable development. Planetary boundaries, though, are misleading and tied up in various histories of social control. Yet the narrative has not moved on.

The difficulty in doing so is in no doubt partly due to the conflicts of interest in the organization of climate change science. The same people are prioritizing scenarios for the international research community, writing government science assessments, working in advocacy, and consulting with industry. I have discussed such conflicts at the bottleneck of global climate change science research, where those prioritizing climate scenarios for use in the research community are also involved with creating scenarios for the financial sector. 

Indeed, the NGFS scenarios creation team included those at PIK and IIASA.  If everything PIK does is guided by Planetary Boundaries, then what they create for NGFS is as well. Telling is that the team embedded the damage functions created by PIK researchers into the NGFS scenarios and at the heart of the damage function is the notoriously extreme emission scenario developed by IIASA. 

What the Planetary Boundaries framework thus represents is more than an appeal for environmental protection. It is a play for political power over social, economic, and governing systems. Many have observed that because models engage assumptions, they are inherently linked to the cultures and interests of the institutions that build them. As one early critique of the IIASA model put it, “models are more symbolic vehicles for gaining authority than objective technical frameworks.”

It is possible to be both deeply desirous of better protections for the earth’s ecological systems and biodiversity and extremely turned off by systems of power masquerading as science.

I certainly am.

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In a recent post, Breakthrough Deputy Director Alex Trembath wrote about the rash of climate litigation attempting to find the nation’s use of fossil fuels unconstitutional. Nearly all the 1,000+ cases have been dismissed—and rightly so. But a particular subset of the lawsuits is nonetheless telling for the way advocacy in climate change science has had far reaching consequences in society.   

Within the subset of cases that use minors as plaintiffs to claim that young people are uniquely harmed by climate change, one claim in particular deserves attention: climate change is causing psychological harm to children, who may suffer from debilitating climate anxiety.

On one hand, the claim matters little. These cases have largely been dismissed because, as the Ninth Circuit found:

It was beyond the power of an Article III court to order, design, supervise, or implement the plaintiffs’ requested remedial plan [to phase out fossil fuels] where any effective plan would necessarily require a host of complex policy decisions entrusted to the wisdom and discretion of the executive and legislative branches.

On the other hand, however, the specter of “climate anxiety” is not likely to quietly disappear into the night, given the way the idea has pulled even health professionals into the climate advocacy juggernaut.

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Climate anxiety in litigation

The graph below looks at select youth climate litigation–that is, cases with youth plaintiffs—from 2015 to 2023 to show the number of instances in which the words “anxiety,” “psychological,” or “mental health” appeared in the originally filed legal complaints. The latter two terms are summed together. Over time, the use of appeals to anxiety and mental health have been on an upward trajectory.

Although these complaints have mostly been dismissed, they have each solidified for the public a narrative that climate change has led to concrete injury—a necessary basis for litigation. (What I take to be a standard view on concrete injury requires a litigant to “establish that he has suffered or is imminently threatened with a concrete injury—that is, an injury that is real and not abstract.”)

As further explained in the August 2023 Held decision, one of the few (only?) that went in favor of the youth plaintiffs:

Plaintiffs’ mental health injuries directly resulting from State inaction or counterproductive action on climate change, on their own, do not establish a cognizable injury. However, Plaintiffs’ mental health injuries stemming from effects of climate change on Montana’s environment, feelings like loss, despair, and anxiety, are cognizable injuries.

Yet, many examples of mental health injuries from climate change misrepresent the human condition and the complicated interaction of society with weather extremes. 

In Genesis v EPA, for example, youth plaintiffs alleged “a government-imposed and -sanctioned climate crisis.” The case, which was dismissed, invokes mental health harms as a direct outcome of climate change. The initial complaint records that one of the plaintiffs, 17-year-old Genesis from Long Beach, has seen her life derailed by climate change:

Genesis experiences climate anxiety and instead of thinking about college, she constantly worries about the climate crisis and how it will affect her future and the future of her four younger siblings. One way Genesis deals with her anxiety is by being in nature, though this becomes more difficult as climate change worsens. The heat and smoke prevent her from even taking walks near her home. In August 2023, after Tropical Storm Hilary, Genesis was unable to take a family trip to the Colorado River, because the route, the I-5 freeway, flooded.

Another plaintiff, Maya, from Los Angeles, has a similar tale:

Maya’s anxiety around climate change rises to the level of panic attacks, which she manages by engaging in therapy and climate action. Maya feels compelled to adjust her lifestyle and activities, like eating a vegan diet, choosing not to get her driver’s license, purchasing reused items, reducing her consumption, and declining trips involving airplanes, to reduce her carbon footprint.

The claims in these cases are problematic in two ways. First, they imply that absent fossil fuels and (apparently) meat eaters, these young people would not be faced with extreme weather and wildfire. That’s simply not true. Tropical Storm Hilary, for instance, was not the first tropical cyclone to affect California—and with or without climate change, it would have presented disruptive torrential rains. Similarly, much of California is well known for being quite hot and dry in the summer, making parts of the state prone to wildfires.  Given California’s more-than-a century of fire-suppression efforts and growth of the wildland-urban interface, fires that break out today are more likely to be problematic than in the past—with or without an extra degree Celsius or two.

Second, if we take the claims at face value, they suggest that the persistent misrepresentation of climate change science is not just tricking the upcoming generation of voters into a cascade of false understanding about climate and society, energy needs, and policy and regulation. But it is also undermining their well-being and crippling their active participation in all that life has to offer.

If access to cheap energy is a reason the United States is so wealthy, and our wealth is a reason we are able to manage our large and incredibly expensive disasters, then shutting down the cheap energy supply on the false impression that it will benefit children is absurd and dangerous. Science should be an important mechanism for democratic accountability and policy prioritization. When science is misrepresented and becomes advocacy-oriented, democracy is unkeeled.

The youth climate litigation is a symptom of this faltering. Even if the cases continue to be dismissed, addressing them through due process (as is fundamental to our system of government) legitimizes and spreads the narrative that the United States is committing intergenerational injustice. This narrative has already spread from early childhood to college classrooms.

Lost in all this is the far more productive narrative of society, science, civic engagement—the narrative about the politicization of science and the complex social underpinnings of the disasters and their inequities.

The business of climate anxiety

In the graph at the start of this discussion, all the cases shown were prosecuted by Our Children’s Trust. In Held and Juliana, psychiatrist Lise van Susteren gave written testimony about the psychological harms of climate change, anxiety in particular. In her testimony for Juliana, van Susteren blames the federal government for the psychological impacts of climate change on children, who will “suffer anticipatory anxiety from their knowledge of future harm.” For some of those children, she argued, “the focus of their lives will be on running for the safety of higher ground—literally and figuratively.” For them, “their deepest and most gripping emotions are directed at the federal government for the abject injustice of being abandoned to a ferociously uncertain future.”

This is a curiously dramatic misrepresentation of politics in American democracy. But it isn’t unusual for expert to offer an opinion—however curious—that is convenient for a party in a lawsuit. Attorneys do not pick experts at random; they choose them for their ability to support an argument.

But the testimony opens an interesting window into a complicated world of climate change advocacy, research, and clinical psychology.

Van Susteren is a co-founder of the Climate Psychiatry Alliance. It is a professional organization that trains and works with “climate-aware” therapists to help them recognize “that the climate crisis is both a global threat to all life on Earth and a deeply personal threat to the mental and physical well-being.”

The Climate Psychiatry Alliance also works to turn out the vote. By partnering with an organization called VO+ER, which pairs the healthcare system with the voter registration process, a scheme promoted by the American Medical Association, among others. On the surface, getting as many people to vote as possible is a beautiful thing. Considering the situation a bit further however, one can easily imagine therapy sessions becoming opportunities for therapists to instruct patients on how to vote or in the least, how to advocate. That certainly seems to be suggested in the flier advertising the CPA- VO+ER partnership shown below.

Van Susteren is also listed as a member of the executive committee of Climate for Health, a program of ecoAmerica. The entities are focused on politicizing the health care system and using medical professionals to advance preferred climate policy. For instance, Climate for Health works to mobilize student nurses in part by embedding climate content into the nursing curriculum. The value of nurses, the website explains, is in their being “the most trusted profession in the country.” Numerous medical professional organizations are signed on as partners of Climate for Health. 

Van Susteren homed in on the use of mental health professionals as advocates in a recent opinion piece in the research journal, Child and Adolescent Mental Health. She wrote: “This aggression against children, who are already known to be suffering deeply, must be called what it is: a form of child abuse.” She called on mental health professionals to work their powers. Mental Health Professionals “are uniquely qualified to address the perils of climate instability and the need for rapid change. We ‘do’ behavioral change for a living – we get science, we get suffering, we get urgency… As health professionals we can do what others cannot. People listen to us.”

Recently, the prestigious British Medical Journal ran an article on how to communicate about climate change with patients. Among their recommendations, the authors suggested referring climate anxious youth to a climate-aware therapist. Clinicians, the authors wrote, “may wish to educate interested patients about what they and other community members can do collectively to influence local, provincial, and national government policies in ways that will protect human health, air quality, and the climate.”

Luckily for overwhelmed practitioners, there’s ClimateRx, another ecoAmerica program, which provides them with a nifty QR code doctors can give patients to guide them to online information about climate advocacy concurrent with a QR code linking them to VO+ER, of course.

Several of the authors of the BMJ piece are deeply engaged in climate change advocacy and climate litigation. Lisa Patel, for instance, is listed as on the Board of Directors at Our Children’s Trust. Stefan Wheat is listed as an advisor to ClimateRx. John Kotcher and Edward Maibach are affiliated with Center for Climate Change Communication, a research advocacy group housed by George Mason University. The group has partnerships with the Yale Program on Climate Change Communication producing regular polling reports on how Americans think about climate change, how much they worry about it, and rates of anxiety. They’ve also partnered with Climate Central to recruit TV weathercasters and journalists to report on climate change by giving them information and graphics. Some of this work with Climate Central can be found in the Genesis complaint.

Dangerous games

At the core of all this are children—children climate advocates are now using as pawns in their dysfunctional game of climate politics. With climate advocates’ efforts having done little more than set back their own decarbonization efforts over the last 40 years, it makes sense that they’d try on a new (and more sympathetic) face.

The next generation’s future is now caught in the warped politics of misleading messaging, spurious litigation, strategic lawfare against the oil industry, and a rejection of any pragmatic solutions that address environmental and humanitarian concerns. And their path to a sustainable, healthy, and wealthy future will be made all the more treacherous with the health sciences having jumped aboard the sinking ship of climate change advocacy.

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As the dust of the global financial crisis of 2007–08 settled, many of those looking for someone to blame for the economic disaster zeroed in on something called the Gaussian copula model, a family of mathematical functions used to estimate the probability distribution of investment losses. In a lament on Wired, for example, the journalist Felix Salmon wrote that the model had become “so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.”

Other observers, like the financial sociologists Donald MacKenzie and Taylor Spears disagreed, arguing in an article for Social Studies of Science that the popular focus on Gaussian copula was superficial. The problem was not the models per se. Rather, the issue was the ways in which disparate social and organizational communities in the derivatives market used them to game the regulatory system.

MacKenzie and Spears showed that financial analysts knew the models were inaccurate but felt compelled to use them because common ways of compensating for its inaccuracies actively “performed” the market; the model created, shaped, and organized the phenomena it intended to describe. The Gaussian copula model created consensus. As one of the traders interviewed by the two researchers put it, “once everyone was using it, you have to use it as well, because it then becomes a good guide to prices.”

But so, too, did it become a shared guide for risk managers, auditors, and accountants in ensuring compliance to regulatory and financial objectives. In turn, traders’ reports of their activities and investments were structured in ways that produced favorable model results while masking the full nature of the underlying risk.

In their article, MacKenzie and Spears concluded that the financial crisis “was caused not by ‘model dopes’, but by creative, resourceful, informed and reflexive actors quite consciously exploiting the role of models in governance.” Their ability to do so underscores the extent to which financial markets are actively designed. Reflecting on the earlier 1987 stock market crash, in which models were also implicated, MacKenzie mused that “the design of financial markets is always implicitly political: it influences who will perform which transactions with whom and with what effects.” In turn, he explained, “it prompts a question: what sort of a world do we want to see performed?”

This is a question Mark Carney, who was governor of the Bank of England and chair of the Financial Stability Board, could well have asked himself in 2015, when he charged former New York Mayor Michael Bloomberg with leading the Task Force for Climate-related Financial Disclosures (TCFD) to develop regulatory guidelines for treating climate change as a risk to financial stability such that they must be disclosed. At the time, a major politically oriented risk modeling project funded by Bloomberg and colleagues had just wrapped up. The project was reportedly intended to “mak[e] the climate threat feel real, immediate and potentially devastating to the business world.”

Risky ideas about climate

Falling in line with Carney and Bloomberg’s herding of financial entities towards the management of climate-related financial risk, last week the U.S. Federal Reserve released results of a pilot banking stress test exercise.

The test was designed to align with modeling methods established by the Network for Greening the Financial System, a coalition of central banks co-founded by the Bank of England with Carney as its lead. NGFS members “pledge their support” for Bloomberg’s TCFD recommendations. Meanwhile, Bloomberg’s philanthropy funds the development of NGFS model scenarios.

The Fed was tasked with conducting the test after U.S. President Joe Biden’s 2021 Executive Order on Climate-Related Financial Risk. Climate-related financial risk, according to the order, threatens “US companies and markets, the life savings and pensions of US workers and families, and the ability of US financial institutions to serve communities.” And by managing climate-related financial risk through disclosure and emissions reporting, the nation will “achieve our target of a net-zero emission economy.”

No actual energy policy needed, then. Just some financial reporting, perhaps, and money would rain down on the good and just, bringing forth spontaneous decarbonization of the world’s largest economy.

This multi-tiered conflation is the Carney-Bloomberg vision. Carney said as much in 2015 when he pitched the idea of TCFD to an audience at Lloyd’s of London, the historic insurance market. Carney wanted to make “climate policy a bit more like monetary policy” and, in so doing played to insurers’ interest in risk to foster urgency.

And so it is, that deep within the technical details of the Bloomberg funded NGFS scenarios are outdated and extreme assumptions about emissions driving inflated views of climate risk.

Conceptual sins

Climate change is real and important. Even so, making connections between climate change and weather extremes is deeply nuanced, and effects marginal.

Warming is certainly associated with extreme heat getting hotter and extreme cold getting milder, but according to the Intergovernmental Panel on Climate Change, many supposed changes in extremes, such as river floods, precipitation droughts, and tropical cyclones, are not yet even detectable, which certainly undermines the idea that changes in these weather phenomena are having a large impact on society.

The science of climate change and weather extremes does not support the common conception that upward trends in weather-related economic losses are a result of climate change. Rather, increasing economic losses are a product of social change, including changes in population, wealth, and inflation. Trends in insured losses reflect this basic fact. When disaster losses are normalized to account for socioeconomic changes, there is no upward trend in loss. Hands down, the most meaningful factor is growing exposure: more people and their stuff in harm’s way.

Even the authors of the Fifth National Climate Assessment, some of whom were engaged in Bloomberg’s climate modeling project, could not articulate a clear impact of climate change on losses. “Although climate change has played a significant role in [loss] trends,” the writers assert, “consensus is lacking on the extent to which increased losses are attributable to climate change versus other factors.”

This type of misdirection—we are sure there is a climate change signal here, but we just can’t find it—is remarkably common. For example, a recent press release from reinsurer Swiss Re quoted an executive in saying that “As weather hazards are intensifying due to climate change, risk assessment and insurance premiums need to keep up with the fast-evolving risk landscape.”

The advertised report gives special attention to increased losses from severe convective storms attributing the increase to macroeconomic factors. But of the 8% increase over time, a “high level” estimate of 1% was labeled as climate change. And a dig through the technical details suggests this figure was more of a guesstimate than an estimate.  

Dollar dollar bill, y’all

If the connection between climate change, extreme weather, and losses is so indiscernible as to be reportable only in riddles, then why the sudden agreement that climate change threatens the stability of the financial system?

One reason may be the value of the data and modeling intensive climate change sciences to the makers of financial markets. Erica Thompson, a data scientist at the London School of Economics, reflects on the merging of climate science with financial business practices:

“future oriented climate modelling results are largely of use to the most quantitatively sophisticated stakeholder: insurance and finance companies, engineering consultants, multinational companies and so on…quantification of current and future climate has translated into the financialization of current and future climate.”

No model dopes here.

In 2023 testimony during a Senate Budget Committee hearing on climate change and insurance, climate scientist Judith Curry, who works closely with the insurance industry, explained:

“Privately, insurance industry leaders state that climate change isn’t taken into account since 90% of property and casualty policies last 12 months. Any change in climate related impacts can’t be effectively measured on the time scale of a year. However, the industry is under pressure from investors that are reacting to an exaggerated public narrative surrounding climate change, as well as confusing weather with climate.”

That investors play an outsized role in how the world understands climate change risk is nicely underscored in University of Illinois Professor Morton Lane’s scholarly history of the catastrophe bond market.

He recounts an episode in 2006 when a financial risk model vendor developed a new view of future hurricane activity to take into account climate change. Because science could be pieced together to support both the new view and the old, the company allowed users to choose. “The choice of two measures confronts the investor (and the issuer) with a valuation dilemma. Which estimate is most consistent with their belief?” In practice, he continued, “the marginal buyer determines price, and it is the cautious one—the one who expects the worst of two [loss] estimates—who will determine price.”

When this new climate changed hurricane risk became standard in certain sectors of the insurance industry it created havoc in the coastal property insurance market. Overnight, the industry needed to raise an additional $86 billion to remain solvent in the eyes of the rating agencies.

And so, a public narrative harping on risks to financial stability from climate change can stir demand for climate change risk estimates—a handy thing if you happen to be selling climate analytics or investments tied to weather risk or perhaps purchasing real estate recently devalued by risk adjustments. Or if you’re looking for news lines of business; the banks engaging in the Fed’s climate stress test hired modeling consultants for the exercise.  

A market in his image

Last fall, Senators Sheldon Whitehouse (D-RI), who is chairman of the Senate Budget Committee, and Ron Wyden (D-OR), who is chairman of the Senate Finance Committee, announced an investigation into the ways in which insurance companies are managing “mounting risks from climate change.”

The senators foresaw climate change leading to a systemic financial crisis as rising insurance costs put heavy pressure on the mortgage market. “A widescale decline in coastal and wildland-urban interface (WUI) community property values would present a systemic risk to the U.S. economy,” they noted, “similar to what occurred in the 2007-2008 mortgage meltdown.”

The senators’ evidence for this looming catastrophe?

Insurers’ own climate change risk models.

Whitehouse and Wyden’s insurance investigations come after a series of hearings last summer that kicked off with a familiar character: Carney, along with Robert Litterman, a former asset manager and member of government advisory groups on climate related financial risk. Both argued that climate change is causing increasing frequency and intensity of weather extremes and losses creating risks to financial stability. Both argued for managing emission to control losses. For his part, Litterman, referenced his work as chairman for the development of a report of the Commodity Futures Trading Commission on managing climate risk. The report, of course, made ample use of Bloomberg funded modeling projects.

In a later interview about the investigation, Whitehouse zeroed in on climate risk and financial risk. “There’s a core underlying reason for the insurance problems that Florida’s experiencing right now and for the risks it faces,” Whitehouse said. “And that is the persistent failure to deal with the problem of climate change.”

This is wrong. The underlying problem is the failure of policymakers to inspire a critical debate about urban development and risk mitigation—and about the misguided investor risk perceptions that may be inflating insurance costs.

And there you have it: the performance of climate change risk to financial stability.

“If you could control someone’s attention,” asked the famous pick-pocket Apollo Robbins in a 2013 TED talk, “what would you do with it?” 

Well, you may use it for misdirection — or the ability, as Robbins described it, to hold an audience’s attention intensely on one thing to distract them from some other thing. It is how a thief, as he demonstrated, can remove a watch from your wrist even as you focus on your hand.

Misdirection is as much a skill of the gentleman thief as it is of politicians and the media, which, in our era of short attention spans and constant flow of information, collude to create what journalist Mark Leibovich once called a “culture of distraction-mongering.” Our individual and collective attention has been artfully focused away from what is going on right in front of us. 

We watch a constant flow of reporting on climate change: elite research publications drive media storms — and careers; the IPCC puts out reports with easily downloadable images and flashy movie trailers; weather-tainment channels offer a constant play-by-play on temperature stats; public tensions rise over insurance affordability; anxious youth plaintiffs take to the courtrooms; and the seasoned American political leader, John Kerry, decries the “demagoguery” that impedes progress towards net zero emissions and puts “the whole world at risk” of planetary destruction.

But what we don’t see — what most simply cannot see because it is too deep in the weeds of footnotes, methodological assumptions, and researcher professional networks — is how, behind all this noise, the climate industry is quietly pilfering the legitimacy of our institutions of knowledge and democratic governance.

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What the climate political elite say, and what they do

In the summer of 2023, the U.S. Senate Committee on The Budget held a hearing on “Dollars and Degrees” to explore whether funding for research and media from the fossil fuel industry and conservative groups sow doubt about climate change and dampen perceptions of climate change risk.  

The framing of the hearing was a masterclass in misdirection. During the proceedings, committee chairman Senator Whitehouse lamented the Supreme Court’s Citizens United decision, which, he posited, led to growth in dark money spending (spending where the source of the money is not disclosed) meant to influence political outcomes, including to undermine efforts to reduce fossil fuel use.

The premise is one that Chairman Sheldon Whitehouse (D-RI) has pressed for quite some time, but it stands on shaky ground. Researchers have found that the fossil fuel industry did not effectively manufacture doubt at scale. Rather, it was cues from Democratic elite, exactly the kind on display at the Dollars and Degrees hearing, that rabble roused and fed polarization on climate change as an issue. 

The hearing rehashed a story that was made famous by historian Naomi Oreskes and her coauthor in the 2010 book, Merchants of Doubt, and was further developed in her subsequent work. The work likened the efforts by the fossil fuel industry to reduce public concern about climate change to those practices by the tobacco industry to reduce concern about cancer risk. In response to the book, Whitehouse implied the government could try the fossil fuel industry under racketeering charges as it had the tobacco industry. 

In 2014, Participant Productions, founded by billionaire Jeff Skoll, turned Oreskes’ book into a movie. Participant had previously produced An Inconvenient Truth, featuring former Vice President Al Gore, which fostered heightened views of climate change risk favorable to the climate industry. Skoll and Gore both run sustainable investment firms, Capricorn Investment Group and Generation, respectively. Skoll is straightforward about how his philanthropic and media efforts work in tandem with his commercial endeavors, “each of which is a distinctive lever for achieving transformational social change.”

“Climate change,” as this example illustrates, is as much an industry as it is a collection of scientific observations. It includes a distinct lobby that works to govern investment and technology activities, scientific research, activist litigation, and public relations campaigns. Heightened alarmism about climate change risk is useful for the climate change industry: it helps develop investment opportunities, promotes climate litigation, and shapes the court of public opinion. 

The profitability is apparent. Perceptions of climate risk drove remarkable growth in the catastrophe bond market; encouraged venture capital investment into so-called climate tech; supported development of trading schemes in carbon credits, derivatives, and offsets; and created demand for expansion of the climate intelligence consultancies to support analytical interests of various types of financial activities.

And yet leading methods for estimating climate change risk have been developed using controversial methods. For instance, commonly used emission scenarios are outdated, extreme, and misused. Media stories attributing extreme weather to climate change are statistical sleights-of-hand. Where climate change has produced measurable impacts on extreme weather, these effects are marginal and regionally heterogeneous. Meanwhile, the most common concept used in emissions accounting, aggregate global warming potentials, is fundamentally misleading in relation to Paris Agreement goals. 

And yet even faulty technical concepts and practices are difficult to move away from because of the climate industry that benefits from them — either directly or indirectly — from the heightened views of risk they support.

Artful maneuvering like Whitehouse’s and Oreskes’ keeps viewers’ attention focused on the fossil fuel industry so that they would not see the bigger truth: Industry’s influence on public understanding of climate change is not in production of reduced views of risk; it is in the production of inflated views of climate change risk. 

Climate’s illuminati, and where to find them

Heightened views of climate change risk distract attention from the network of interests that block critique of those views.

In the 2023 Dollars and Degrees hearing, Whitehouse used graphics reproduced from a research article by the Brown University academic Robert Brulle and colleagues. Whitehouse cribbed similar graphs from an earlier work from Brulle in 2015 for one of his numerous “Time to Wake Up” speeches on the Senate floor.  Both images are intended to depict what Brulle has dubbed the Climate Change Counter-Movement described through his work as a network of organizations that aim to “delegitimate the science that supports the necessity of mandatory limits on carbon emissions.”

The thing is, Brulle himself benefits from the very type of murky networking illustrated in his work and used in Whitehouse’s charts. Indeed, another witness testimony underscored the issue: be careful pointing the finger of dark money because it is “universal in politics.” 

The Climate Social Science Network (CSSN), which is co-directed by Brulle and housed at Brown University, backs research to root out “climate obstruction.” CSSN received funding from the High Tide Foundation, a vested interest in methane and carbon credits, and the Sequoia Climate Fund, which branched off from the Wellspring Philanthropic Fund. Influence Watch describes Wellspring as, “an elaborate and secretive network of grantmaking organizations.” All three groups have made donations to organizations managed by Arabella Advisors, queen bee of the left’s dark money.

Of course, it is in the interest of those with businesses that benefit from carbon emissions limits to push for regulatory frameworks protecting their interests. 

Just a few months after the Whitehouse’s 2023 hearing, U.S. Treasury Secretary Janet Yellen gave Sequoia Climate Fund a shout out for banding together with its philanthropic brethren including among others, Bezos Earth Fund and Rockefeller Foundation, to shell out $340 million towards developing United States Principles of climate risk investing, and other related work.

The Principles make reference to a new collaboration between the U.S. State Department, Bezos Earth Fund, and the Rockefeller Foundation to establish guidelines for accelerated phaseout of emission sources to create carbon credits. The credits will compensate developing countries for emissions reductions they make by, say, decommissioning their existing functional energy sources. 

Although Brulle characterizes these climate activist funding networks as loose, disconnected and having focus only on individual research projects, this stretches credibility. One can see these groups work together again, again, and again to advance their business interests in emissions trading. 

Meanwhile, Arabella Advisors organizations fund PR campaigns that create climate crisis messaging. For instance, in 2022 Bloomberg Philanthropies and Sequoia Climate Fund gave money to the Windward Fund, $1 million and $4 million respectively. In the same year, Windward Fund gave $13 million to the climate change marketing firm structured as a non-profit, Potential Energy Coalition. The firm runs the Science Moms campaign targeting mothers and promotes connecting extreme weather and disasters with climate change. Bloomberg and Sequoia both work to advance climate physical risk disclosure practices.

Rabble Rousing

Oreskes is thought to be an originator of the #Exxonknew online campaign aimed at establishing the fossil fuel industry as liable for “climate change damages.” She and her colleagues specifically targeted the court system as a tool of advocacy for their preferred energy policies. Part of doing so was the coordinated development of a cohesive and “compelling public narrative” around climate change to elicit dread in the message’s receiver. 

Gore’s advocacy group, The Climate Reality Project, was a front runner in encouraging the news media to change its framing of climate change. The end of one blog and petition reads: “We’re calling on the major networks that bring us the news and help us understand the world to call this what it is. Call it a climate crisis.”

This was not a lone effort, of course. It was hatched at the Columbia University Journalism School and marked by the start of Covering Climate Now, a coordinated media campaign to heighten public views of climate change risk. One of CCN’s niches is a project supporting litigation against the fossil fuel industry.

Elsewhere, the advocacy group, Climate Central, works to spread heightened views of climate change in run of the mill television weather broadcasting. Climate Central organized development of weather attribution studies fit for media rather than science. The studies are now integral to climate litigation. 

For their efforts, this mixture of scientists, public relations experts, and lawyers have established the climate litigation industry, for which Oreskes is called in as a consultant. The industry has grown from 884 cases in 2017 to 2,180 in 2022. Most of these cases are in the United States and some leverage children, enveloping them in a business enterprise as it parades them as the latest stars of the climate industry spectacle.

This has itself become a grotesque racket where climate change is introduced to children by “Science Moms” that have distilled their message into cartoon nuclear bombs; the climate alarm narrative leaves (at least some) children sad and anxious; lawyers and advocates use that faltering well-being to advance a political agenda; and leading psychological organizations encourage parents to engage their climate anxious children in litigation.

The most recent addition to this litigious affair is the vision to bring homicide charges against the fossil fuel industry. Maybe, the authors of that vision suggest, racketeering charges can also be brought with the evidence found using recent work co-authored by Oreskes. 

Just what Whitehouse had long hoped.

Public, misdirected

Dark money may or may not be a problem the public wants to address.

Concerning however is the extent to which the sprawling empire of the multifaceted climate industry has managed to discredit critique of its methods.

Those who do are dubbed obstructionists, and in no insignificant part by the billionaires moving money around in opaque ways.

Policymakers unwilling to acknowledge this dynamic are also turning their back on genuine problems in scientific integrity, misleading policy, courts, public health research, and threatening food security and development. The public is left with a sea of technocratic propaganda and limited ways to engage because the expertise barrier is too high.

Robbins claimed that “it is not what you look at that matters… It’s what you see.” All around us we look at the massive influence of the climate industry on climate change science and public messaging. But what most see are flashy graphs, dire futures, and get rich quick investment opportunities. 

All the while, the legitimacy of our democratic and scientific institutions are being snatched before our very eyes.

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