Climate change is already taking its toll on the US economy, according to the most sweeping national assessment yet that was published earlier this week. Conducted every four years, this was the first national climate assessment to dedicate an entire chapter to economics. Its “conservative estimate” is that extreme weather supercharged by global warming already costs the US $150 billion in damages a year. That’s just one example of how our changing planet will affect Americans’ pocketbooks.
Extreme weather supercharged by global warming already costs the US $150 billion in damages a year
How is the Biden administration coping with this new reality? And are new technologies like AI helping or hurting the cause? The Verge spoke with Ali Zaidi, who was appointed national climate adviser by President Joe Biden last year.
This interview has been edited for length and clarity.
This is the first time the national assessment has dedicated an entire chapter to economics. Why was that an important addition? And what, for you, are the biggest takeaways?
The physical sciences have a lot to obviously contribute to our understanding of climate change, but so do the social sciences. And understanding how the physical implications of a changing climate then cascade through the economy is critical both to understanding the nature of the threat and articulating the most robust and beneficial response.
Extreme heat is a physical phenomenon. But because of a combination of physical science research and social science research, we know that extreme heat impacts historically redlined communities, places set aside in our communities because of a racist housing policy of decades past where there’s literally more pavement and fewer trees. So that’s a combination of an insight from physical sciences and social sciences.
Similarly, we know that that extreme heat is going to put downward pressure on agricultural productivity. It actually puts downward pressure on worker productivity and leads, if not mitigated effectively, to public health outcomes that are problematic. And it even reduces manufacturing, straining, for example, water sources that help us produce things at factories.
“If you take a 50,000-foot view, and you say, ‘Okay, well, the planet’s warmed one-point-something degrees Celsius’ — that tells you just so little about what’s going on.”
If you take a 50,000-foot view, and you say, ‘Okay, well, the planet’s warmed one-point-something degrees Celsius’ — that tells you just so little about what’s going on. Because of the kind of work that the contributors to the National Climate Assessment are doing, our understanding is enriched and then the solutions we articulate as a result. For example, what work do we need the insurance markets to do in this new normal? What work do we need the credit markets to do in terms of underwriting practices, in terms of mortgage underwriting, in terms of project finance and underwriting in this new normal?
The US is currently the world’s biggest oil and gas producer. How is transitioning to clean energy going to affect our economy as well?
The transition is actively underway. It’s not in the future.
What we’ve seen under the president’s leadership is an unprecedented expansion in clean energy production in the United States. There are more than 10 million homes’ worth of new clean electricity pulsing across our grid today. We’ve approved massive transmission lines that carry the equivalent of 10 Hoover Dams’ worth of clean power from point A to point B. The number of charging stations that line our roads and highways has doubled, just in the time since the president took office. The number of EV models that are available has doubled since he took office and will double again by the end of next year, a massive expansion of consumer choice when it comes to the vehicles that they buy.
“The transition is actively underway. It’s not in the future.”
And that is a boom in our capacity to actually produce the products themselves: not just deploy in America, made in America. Since the Inflation Reduction Act was signed a little over a year ago, we’ve seen 100 factories and counting being announced to make this stuff here: solar panels, electrolyzer for green hydrogen, batteries.
What new technologies are we going to need as part of that transition that might not be the obvious ones like solar panels and wind turbines?
We don’t just look at opportunities in buildings, or power, or transportation. We also look at opportunities in heavy industry, in agriculture, in lands.
From a technology perspective, I’ll give you a few examples of why I’m so optimistic we can meet this moment. We’re seeing a massive ramp-up in climate-smart agriculture practices. Since the president’s taken office, we have 60,000 farms now signed up to do climate-smart agriculture. In many cases, what that means is higher-tech agriculture, precision agriculture, using drone flights to pinpoint or target where fertilizer goes, sensors that are being developed at a low cost to help reduce the amount of nutrients and resources that are being consumed. It’s helping the US pick back up on total factor productivity, more yield, more harvests per acre — and at the same time, reduce the net emissions from those operations.
Then there’s this massive transformation taking place in the industrial sector. For the first time, we’re producing steel cement, aluminum, glass that is being produced with lower emissions. There’s a company in California that is capturing carbon from the ambient air, just the air you and I breathe, and turning it into cement. Sequestering carbon in that building material, that’s transformational.
Then there’s the application of machine learning and AI in a beneficial way to the climate crisis. And you don’t have to come up with a sci-fi example. Here’s a really simple one that improves people’s lives: using machine learning to optimize traffic lights in a city. That helps reduce congestion, reduce idling, improve local air quality for the folks who live near the traffic intersections, and then reduce emissions overall. So it’s stuff like that. That makes me so excited that we can not only improve our climate outcomes but also local air quality, quality of life, energy security, job security. That’s the transformation we’re seeing block by block all across the United States.
“I think there needs to be transparency”
Speaking of new technologies, crypto mining and AI both burn through a lot of energy, and that means more greenhouse gas emissions. Do you worry about that potentially threatening US climate goals? And how would you stop that from happening?
I think there needs to be transparency around the amount of energy being consumed. I think there needs to be clarity about the energy mix that’s being used. I think there needs to be deliberate and concerted effort by companies and their customers to agitate toward the least environmental impact.
There’s an opportunity here, and that is to use this new electricity load growth to actually drive modernization of our grid, to fund some of the upgrades that we’re going to need. There’s an opportunity here for some of these high-tech customers to help get grid-enhancing technologies, efficiency technologies more ubiquitous in use across the country.
So look, I think there is definitely a tension here if any sector of the economy decides to just punt the ball on climate to someone else and say, “This is not part of my job description.” We’re all in the soup together. We’ve all got to be part of the solutions.
The SEC has been weighing mandates on disclosures about greenhouse gas emissions and climate risks. What do you think is needed?
The SEC is an independent agency. I am certainly paying a lot of attention, as a lot of us are, to how this regulatory environment develops, whether it’s at the federal level or what California is doing or what jurisdictions overseas are doing.
What we know to be true is that there are material risks to companies and to investment portfolios that are manifest. They are evident. Scientific analyses like the National Climate Assessment show how pervasive climate risk is cascading through our entire economy, resulting in both physical risks and transition and regulatory risks for firms.
We know that companies that are operating with foresight or a long view are securing value for their shareholders and for their stakeholders. They are strengthening their competitive position in a world where a stable climate is something you can no longer rely upon, where disruptions from climate to elements of operations like supply chains are the new normal and where the coin of the realm is clean energy, clean transportation, and clean products.
“The demand for fossil production is peaking”
When it comes to tackling this problem, a standard rallying call we hear is to reach carbon neutral emissions — which allows polluters to keep producing some greenhouse gas emissions as long as they offset or capture them. But some say that doesn’t go far enough, and we need to phase out fossil fuels. Should we keep fossil fuels in the ground or just deal with carbon emissions?
We have to, as urgently as we can, reduce the greenhouse gas emissions that are going into the atmosphere. That is the scientific imperative. The National Climate Assessment punctuates that not with a period or a comma but with an exclamation mark. We know how to do that through carbon management approaches, through cleaner generation sources, through new fuels that don’t result in the same pollution profile.
The fact is, over the next several decades, as you look out, the demand for fossil production is peaking. It’s peaking because of the proliferation of alternatives that, frankly, give consumers and businesses better choices in terms of how either to get from point A to point B, how to produce a product, how to grow something. And that’s why it’s getting taken up by the economy, because the product itself is delivering benefits economically in terms of public health and the environment.
I think that that is the very clear and secular trajectory for where we are headed. And a phasing out of the need for production of this kind, globally, is part of that trajectory.