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Joe Biden speaks about climate change and wildfires affecting western states
Biden lashed at Trump, saying the moment requires “leadership, not scapegoating” and that “it's clear we are not safe in Donald Trump's America.”
LOS ANGELES - A recent report by federal regulators concluded that climate change poses a serious risk to the stability of the U.S. financial system and its ability to sustain the American economy. It is the first extensive federal government study outlining financial impacts on climate change.
“Over time, if significant action is not taken to check rising global average temperatures, climate change impacts could impair the productive capacity of the economy and undermine its ability to generate employment, income, and opportunity,” the report, titled “Managing Climate Risk in the Financial System,” stated.
The report, commissioned by President Donald Trump’s Commodity Futures Trading Commission (CFTC), found that climate change is already impacting or is anticipated to impact nearly every facet of the economy, including infrastructure, agriculture, residential and commercial property, as well as human health and labor productivity.
“As we’ve seen in the past few weeks alone, extreme weather events continue to sweep the nation from the severe wildfires of the West to the devastating Midwest derecho and damaging Gulf Coast hurricanes. This trend—which is increasingly becoming our new normal—will likely continue to worsen in frequency and intensity as a result of a changing climate,” CFTC Commissioner Rostin Behnam said in a press release introducing the report.
“Beyond their physical devastation and tragic loss of human life and livelihood, escalating weather events also pose significant challenges to our financial system and our ability to sustain long-term economic growth. Now, with this report in hand, policymakers, regulators, and stakeholders can begin the process of taking thoughtful and intentional steps toward building a climate-resilient financial system that prepares our country for the decades to come,” Behnam said.
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The report, released Sept. 9, presented 53 recommendations to mitigate the risks to financial markets posed by climate change.
The report found that financial markets will only be able to channel resources efficiently to “activities that reduce greenhouse gas emissions if an economy-wide price on carbon is in place at a level that reflects the true social cost of those emissions. Addressing climate change will require policy frameworks that incentivize the fair and effective reduction of greenhouse gas emissions.” Thus, capital will continue to flow in the wrong direction, rather than toward accelerating the transition to a net-zero emissions economy, the report said.
Other risks include price adjustments, potential disruption of the proper functioning of financial markets, and risks to the financial system if markets prove unable to adapt to rapid changes in policy, technology and consumer preferences.
The CFTC recommended that the United States establish a fair price on carbon that is economy-wide and effective in reducing emissions consistent with the Paris Agreement.
The regulators also suggested federal financial regulatory agencies incorporate climate-related risks into their mandates and develop strategies for integrating the risks into their work.
RELATED: Climate change largely missing from 2020 presidential campaigns as fires rage in the US
In July 2019, the CFTC voted unanimously to establish a Climate-Related Market Risk Subcommittee under the CFTC’s Market Risk Advisory Committee. The subcommittee is made up of dozens of analysts from investment firms including Morgan Stanley, S&P Global, BNP Paribas, BP, Citigroup and Vanguard.
“The June 2019 MRAC meeting, which examined climate change-related financial risks, laid the groundwork for this important next step. I look forward to convening experts from industry, academia, and the public interest for what I intend to be a robust and critical effort to identify and examine the risks that climate change poses to the stability of our financial system, and determine what future actions policymakers and market participants must consider to mitigate these risks,” said Behnam.
The new report comes on the heels of significant weather events across the country, including the record earliest named storms in the Atlantic Ocean, devastating wildfires out West, and scorching, record-breaking temperatures across the U.S.
RELATED: The Northern Hemisphere officially had its hottest summer on record, NOAA says
According to scientists at NOAA’s National Center for Environmental Information, the three-month season from June through August 2020 was the Northern Hemisphere’s hottest meteorological summer, surpassing 2019 and 2016, which were previously tied for the hottest.
A new United Nations report found that the world is getting closer to passing a temperature limit set by global leaders five years ago and may exceed it in the next decade or so.
If nothing is done to combat climate change, the CFTC warns it will have costly effects on the economy in the future. But it remains uncertain whether the federal government will address or enact any of the recommendations posed by the CFTC.
RELATED: Joe Biden says recent extreme weather, fires underscore urgent need to address climate change
Recently, Trump and Democratic presidential nominee Joe Biden focused their presidential battle on the wildfires that continue to scorch the West Coast. Trump met with fire officials in California, while Biden made remarks stating the urgent need to address climate change.
“This is another crisis, another crisis he [Trump] won't take responsibility for,” Biden said. “If you give a climate denier four more years in the White House, why would we be surprised that we have more America ablaze?”
According to the Associated Press, Biden released a $2 trillion plan in July to boost investment in clean energy and stop all climate-damaging emissions from U.S. power plants by 2035.
During Trump’s visit to California, the state’s natural resources secretary, Wade Crowfoot, discussed the central role of climate change in regards to the wildfires. Trump dismissed Crowfoot’s remarks, saying, “Well, I don't think science knows, actually.”