Thread by @ShellenbergerMD

Many say climate change threatens economies but a major new report by the New York Fed says the impact of extreme weather events has been & will remain trivial

The real threat, the authors warn, comes not from climate change, but from climate policy

michaelshellenberger.substack.com/p/the-real-thr…

Over the last two years, some of the world’s most powerful and influential bankers and investors have argued that climate change poses a grave threat to financial markets and that nations must switch urgently from using fossil fuels to using renewables.

In 2019, the Fed Reserve Bank of SF warned climate change could cause banks to stop lending, towns to lose tax revenue, & home values to decline.

Last year, 36 fund managers representing $1 trillion in assets said climate “poses a systemic threat to financial markets & economy”

And upon taking office, President Joe Biden warned government agencies that climate change disasters threatened retirement funds, home prices, and the very stability of the financial system.

But a new report from the NY Fed Reserve throws cold water on the over-heated rhetoric.

“How Bad Are Weather Disasters for Banks?” asks the title of the report by three economists.

“Not very,” they answer in the first sentence of the abstract.

newyorkfed.org/research/staff…

The reason is because “weather disasters over the last quarter century had insignificant or small effects on U.S. banks’ performance.” The study looked at FEMA-level disasters between 1995 and 2018, at county-level property damage estimates, and the impact on banking revenue.

The New York Fed’s authors only looked at how banks have dealt with disasters in the past, and what they wrote isn’t likely to be the final word on the matter.

The United Nations Intergovernmental Panel on Climate Change and most other scientific bodies predict that many weather events, including hurricanes and floods, which cause the greatest financial damage, are likely to become more extreme in the future, due to climate change.

And in February, The NY Times quoted one of six US Fed Reserve governors saying, “Financial institutions that do not put in place frameworks to measure, monitor & manage climate-related risks could face outsized losses on climate-sensitive assets caused by environmental shifts.”

But the NY Fed economists looked at the most extreme 10% of all disasters & found banks not only didn’t suffer, “their income increases significantly with exposure” & improved financial performance of banks hit by disasters wasn’t explained by increased federal disaster FEMA aid,

In other words, disasters are actually good for banks, since they increase demand for loans. The larger a bank’s exposure to natural disasters, the larger its profits.

Happily, the profits made by banks are trivial compared to rising societal resilience to disasters, which can be seen by the fact that the share of GDP spent on natural disasters has actually declined over the last 30 years.

While scientists expect hurricanes to become 5% more extreme they also expect them to become 25% less frequent

Now, new data show global emissions actually declined over the last decade, and thus there is no longer any serious risk of a significant rise in global temperatures.

The real risk to banks and the global economy comes from climate policy, not climate change, particularly efforts to make energy more expensive and less reliable through the greater use of renewables, new taxes, and new regulations.

“For policymakers,” warned the three economists writing for the New York Fed, “our findings suggest that potential transition risks from climate change warrant more attention than physical disaster risks.”

While they may seem like outliers, they are far from alone in expressing their concern. The second half of the quote by the Fed governor, which was hyped by The Times, warned that banks “could face outsized losses” from the “transition to a low-carbon economy.”

And, now concern is growing among members of Congress about the dangers of over-relying on weather-dependent energy, with some members citing the New York Fed’s report after The Wall Street Journal editorialized about it last week .

Proof of the threat to the economy from climate policy is the worst global energy crisis in 50 years. Shareholder activists played a significant role in creating it, according to analysts at Goldman Sachs, Bloomberg, and The Financial Times.

The reason for the energy crisis is, in part, reduced investment in oil and gas production, and over-investment in unreliable solar and wind energies, which have driven up energy prices, and contributed to inflation.

michaelshellenberger.substack.com/p/how-climate-…

And yet a crucial Biden Administration nominee for bank regulation has openly said she would like to bankrupt firms that produce oil and gas, the two fuels whose scarcity is causing the global energy crisis.

Progressive academic, Saule Omarova, nominated by Biden, said recently that “we want [oil and gas firms] to go bankrupt” and that “the way we basically get rid of these carbon financiers is we starve them of their source of capital.

Omarova is not an outlier. The Biden Administration’s Financial Stability Oversight Council (FSOC) is advocating 30 new climate regulations that should be imposed on banking. Many analysts believe the US Securities and Exchange Commission will require new regulations.

The goal is to radically alter how America’s banks lend money, the energy sector, and the economy as a whole.

Now, former Bank of England chief, Mark Carney, co-chair of the Glasgow Financial Alliance for Net Zero, has organized $130 trillion investment on climate.

Carney said recently that his investors should expect to make higher, not lower, returns than the market.

How? In the exact same way Omarova predicted: by bankrupting some companies, and financing other ones, through government regulations and subsidies.

Carney created the Glasgow Financial Alliance with Michael Bloomberg, and they did so under the official seal of the United Nations. “Carney said the alliance will put global finance on a trajectory that ultimately leaves high-carbon assets facing a much bleaker future."

Wrote a reporter with Bloomberg, “He also said investors in such products will see the value of their holdings sink.”

What’s going on, exactly?

How is it that some of the world’s most powerful bankers, and the politicians they finance, came to support policies that threaten the stability of electrical grids, energy supplies, and thus the global economy itself?

Three of the largest donors to climate change causes are billionaire financial titans Michael Bloomberg, George Soros, and Tom Steyer, all of whom have significant investments in both renewables and fossil fuels.

Soros is worth $8B and recently made large investments in natural gas (EQT) and electric vehicles (Fisker), Bloomberg has a net worth of $70B and has large investments in gas and renewables, and Steyer’s wealth derives from investments in coal, oil, natural gas and renewables.

All three finance climate activists & politicians, including Biden, who then seek policies — from $500B for renewables & EVs to federal control over state energy systems to banking regulations to bankrupt oil and gas companies — which would benefit each of them personally.

Bloomberg gave over $100M to Sierra Club to shut down coal plants after he had taken a large stake in natural gas, and whose massive media company publishes articles nearly every day reporting that the climate threatens the economy & that solar and wind are the best solutions.

Soros donates heavily to Center for American Progress, whose founder John Podesta was chief of staff to the Clintons and runs policy at the Biden White House. So too does Steyer, who also funds the $20M organization founded by Bill McKibben, 350.org.

The most influential climate group is the Natural Resources Defense Council, NRDC, which advocated for federal control of state energy markets, $500B for EVs & renewables, and carbon markets that would be controlled by the bankers and financiers who also donate to it.

In the 1990s, NRDC helped Enron distribute hundreds of thousands of dollars to environmental groups. “On environmental stewardship, our experience is that you can trust Enron,” its climate head said, even as Enron executives were defrauding investors of billions in an epic scam.

From 2009 to 2011, NRDC advocated for and helped write complex cap-and-trade climate legislation that would have created and allowed some of their donors to take advantage of a carbon-trading market worth upwards of $1 trillion.

NRDC created and invested $66 million of its own money in a BlackRock stock fund that invested heavily in natural gas companies, and in 2014 disclosed that it had millions invested in renewable funds.

Former NRDC head, Gina McCarthey, now heads up Biden’s climate policy team, and Biden’s top economic advisor, Brian Deese, last worked at BlackRock, and almost certainly will return at the end of the Biden Administration.

McKibben called Steyer a “climate champ” when Steyer ran for president and in 2020 wrote an article called, “How Banks Could Bail Us Out of the Climate Crisis,” for The New Yorker claimed that extreme weather threatened financial interests, and renewables would save them.

Steyer gave 350.org, $250,000 in 2012, 2014, and 2015, and may have given money to 350.org in 2013, 2016, 2017, 2018, 2019, and 2020, as well, bc 350.org thanked Steyer’s philanthropies in each of its annual reports since 2013.

McKibben claims climate change threatens life on Earth and is thus “greatest challenge humans have ever faced,” a statement so unhinged from reality, considering declining deaths from disasters, and the absence of any science for such a claim, that it must be considered religious

McKibben first book about climate change, The End of Nature, explicitly expressed his spiritual views, arguing that, through capitalist industrialization, humankind had lost its connection to nature. “We can no longer imagine that we are part of something larger than ourselves.”

Said McKibben, “That is what this all boils down to.”

Indeed, for William James, the belief in “an unseen order” that we must adjust ourselves to, in order to avoid future punishment, is a defining feature of religion.

Climate change is punishment for our sins — that’s the basic narrative pushed by climate activists and their banker sponsors. It has a supernatural element: the belief that natural disasters are getting worse, killing millions, and threatening the economy.

In reality, disasters are killing fewer and costing less.

But the religion offers redemption: to avoid punishment we must align our behavior with the unseen order — one controlled by the U.N., bankers, and climate activists.

The unseen order of bankers, climate activists, and the news media is so powerful that it is difficult to imagine how it could ever be challenged. The climate lobby includes the wealth not only Soros, Steyer, and Bloomberg, but also $130 *trillion* in investment funds.

Those funds include many of the world’s largest pensions, including for public employees. The climate lobby’s political power is equally awesome, covering the entirety of the Democratic Party, a significant portion of the Republican Party, and most center-Left parties in Europe.

And all of that is sustained by cultural power, which has led many elites to view climate change as the world’s number one issue, has convinced half of all humans that climate change will make our species extinct, and has served as the apocalyptic foundation for Woke religion.

But serious cracks in the foundation are growing. The global energy crisis reveals the limits of renewables as governments subsidize energy to avoid public backlash, Biden & others open up emergency petroleum reserves, and all nations beg OPEC to produce more energy.

The blackouts and rising unreliability of electricity in California, along with the work of the pro-nuclear movement over the last 6 years, has resulted in a growing number of Democrats supporting nuclear energy.

US Energy Sec Jennifer Granholm just urged California Governor Gavin Newsom not to close California’s Diablo Canyon nuclear plant, the signature nuclear plant Environmental Progress has been trying to save since 2016.

And Democratic support in particular for nuclear is growing.

And alternative media including Substack, podcasts, and social media platforms are increasingly providing a counterweight to the mainstream news media, exposing a huge number of issues that the media got wrong in recent years, and amplifying alternative voices.

Nowhere is the change occurring faster than Europe, where fuel shortages are affecting prices in ways that undermine legitimacy. In Britain, private energy companies have gone bankrupt, forcing the government to bail them out. Energy companies, like banks, depend on voters.

Outgoing German Chancellor Angela Merkel, who led her nation’s exit from nuclear energy, acknowledged that Germany had been defeated in its anti-nuclear energy advocacy at the European Union level, and that nuclear would finally be recognized as low-carbon.

And French president Emanuel Macron, under pressure from the political right as voters look to elections next year, gave a passionate speech in favor of nuclear energy last month, announcing $35 billion for new reactors.

As the world returns to nuclear, policymakers, media elites, and climate advocates will be increasingly confronted with the question of why consumers and taxpayers will benefit from a global carbon trading scheme and more weather-dependent renewables.

These questions will be raised more and more at a time of declining global emissions from the continuing transition from coal to natural gas, reduced deforestation, and increased reforestation.

Simply building more nuclear power plants means there is no climate change justification for weather-dependent renewables, which actually require greater use of natural gas, in order to deal with the high amount of unreliability.

Nuclear power goes with patient capital. The obvious funders of a nuclear expansion would be pension funds, which need the secure return on investment that major construction and infrastructure projects provide, and which unreliable renewables, as the energy crisis shows, do not.

And though the news media is currently ignoring the New York Fed’s report, reporters will not be able to continue spreading misinformation about climate change indefinitely. Increasingly, they will be forced to confront facts inconvenient to their narrative.

Those facts include that humans are adapting remarkably well to climate change, that renewables make energy unreliable and expensive, and that only nuclear can achieve sustainability goals of reduced emissions, material throughput, and land use.

As people ask, “How Bad Are Weather Disasters?”, not just for banks, but for all of us, the answer will increasingly come back, “Not very.”

/END

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