"Meeting our climate goals is critical. So is how we do it." Generated with Adobe Firefly. | | | | | How much does policy matter? Runaway, record-shattering heat. "Supercharged thunderstorms" complete with heavier rain and bigger, more dangerous hail. Rising seas and eroding beaches. Plus the hazards that intensify when extreme weather collides with outdated infrastructure. Call it what you like, but climate change is a crisis that will touch everyone. And most of the world's largest contributors, including the US, haven't come close to making the meaningful changes that will get us to full decarbonization. Still, the results of President Biden's climate-focused Inflation Reduction Act have been promising . However, the contentious 2024 election is now raising concerns that a Trump administration could decelerate the progress we're making. In his Chartbook newsletter, Adam Tooze asks, "How much difference does the choice between Trump and Harris make to the path of American emissions? " Or to put it a different way, "How much does policy matter?" Taking into account political gamesmanship and the limited data available, Tooze attests that a Trump victory would likely result in higher emissions, although he notes that for either administration, the future still trends toward decarbonization, so "what is at stake in this election is the choice between more or less gradual decarbonization paths." But more importantly, the data Tooze analyzes confirms the importance of good policy implemented well. Determining both the upshot and the limits of our meager (as of now) climate policy reveals a path toward the future. And as Tooze argues, it's a path only Democrats seem interested in traveling at the moment: "The election matters," he explains, "because the Democratic Party coalition is the only one in US politics that offers any prospects of continuing to push policy beyond its current limited scope." + There's plenty of work to do, so Dems should tap into that "go energy" and do it, says Jennifer Pahlka in "Democrats Should Be the Party of Go": "I want us to worry less about perfect consensus or the perception of perfect safety and more about getting the job done. I want Democrats to embrace the lessons that Jerusalem Demsas and Misha Chellam and Ezra Klein and others have been teaching us about a liberalism that builds." (Disclosure: Jennifer Pahlka is married to O'Reilly founder and CEO Tim O'Reilly.) | | | | | Rising AI emissions? It's complicated. Decarbonization won't just come about through government policy. Businesses have a role to play too in speeding up the process—and their workers are starting to demand action. But in the tech industry, the recent AI boom has threatened companies' stated climate goals. Google and Microsoft, for example, pledged to be carbon neutral by 2030, but Google's emissions in 2023 were "48% higher than in 2019. . .and 13% higher than in 2022," while Microsoft's " were. . .around 30 percent higher." The rise in emissions is due in large part to the increasing load on data centers to train and run AI tools. "So how worried should we be about AI's electricity demands?" MIT Technology Review's Casey Crownhart recently asked. Her answer: "It's complicated ." In the short term, AI technology is definitely contributing to emissions, and that's not great. But as Crownhart points out, "Ultimately, rising electricity demand from AI is in some ways no different from rising demand from EVs, heat pumps, or factory growth. It's really how we meet that demand that matters" (our emphasis). + At The Verge, Nilay Patel and Justine Calma remind us that "AI has a climate problem—but so does all of tech." + Tech companies must rein in their emissions, not just occlude them through creative accounting (see below). AI has the potential to assist in the process, through innovations like smart grids, more effective climate research, and more. + Meanwhile, here's a roundup of some of that creative accounting: "Google, Amazon and the Problem with Big Tech's Climate Claims" (MIT Technology Review); "How Tech Companies Are Obscuring AI's Real Carbon Footprint" (Bloomberg); and " Companies' Addiction to Junk Carbon Offsets Is Killing the Planet" (Bloomberg ). As we shared last week, isn't just a feature of the tech industry. + In the Financial Times, Andy Haldane argues that "accounting rules are holding back investment just as it needs to meet growth and net zero requirements." + From Grist: "Corporate Climate Targets Are a Mess. Could Tracking 'Spheres of Influence' Help?" | | | | | Cashing in on the climate crisis As we've mentioned before, the climate crisis has kindled a correlated insurance crisis, as fires and extreme weather make damage to homes and cars more likely. But as insurance rates have skyrocketed, so have the returns for catastrophe bonds—financial instruments that "that pa[y] the issuer when a predefined disaster risk is realized, such as a hurricane causing $500 million in insured losses or an earthquake reaching a magnitude of 7.0 (on the Richter scale)." Cat bonds offer insurance companies a way to offset risk while delivering potential returns to investors (in the double digits over the past two years). However, as Bloomberg explains, the security is now "facing scrutiny, amid concerns that its risk-reward dynamics might be skewed against some issuers," particularly after Jamaica's bond didn't pay out following hurricane Beryl, due to what Bloomberg diplomatically calls its "carefully calibrated terms." And while cat bonds may be big business at the moment, they're "hardly. . .risk free," as the Financial Times reports. + From Insurance Journal: "Catastrophe Bonds Use Models Underestimating Climate Risks, Investors Say." + Catastrophe bonds aren't the only security gaining ground in a more extreme climate: Bloomberg reports, "Against a backdrop of rising climate volatility and social shifts, demand for weather derivatives is surging." Unlike cat bonds, weather derivatives pay out for "less severe but more common meteorological threats. . .compensat[ing] a tourism business if there are too many rainy days, or a farmer if a hot summer stresses her crops" for instance. | | | | | | —Tim O’Reilly and Peyton Joyce | | | |
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