WEBVTT - Climate and the Economy 0:00:01.280 --> 0:00:05.080 You're listening to the Bloomberg Opinion podcast count US Saturdays 0:00:05.120 --> 0:00:08.280 at one and seven pm Eastern on Bloomberg dot Com, 0:00:08.320 --> 0:00:11.479 the iHeartRadio app, and the Bloomberg Business App, or listen 0:00:11.520 --> 0:00:13.760 on demand wherever you get your podcasts. 0:00:15.680 --> 0:00:19.239 Welcome to Bloomberg Opinion. I'm Amy Morris, and this week 0:00:19.280 --> 0:00:21.640 we are taking a look at the cost of climate 0:00:21.720 --> 0:00:25.040 change and how it's created some volatility with what is 0:00:25.079 --> 0:00:29.080 traditionally the safest of stocks. We'll also look at how 0:00:29.200 --> 0:00:33.280 fossil fuels are having a heartbreaking impact all the weight 0:00:33.320 --> 0:00:36.040 to the South Pole. But first we begin with the 0:00:36.080 --> 0:00:40.720 economic cost of an increasingly warmer planet. Natural disasters like 0:00:40.800 --> 0:00:45.479 deadly hurricanes and wildfires from Canada to Louisiana are tragic 0:00:45.680 --> 0:00:50.000 in terms of lives lost. Louisiana Governor John Bell Edwards. 0:00:49.600 --> 0:00:55.080 Nobody alive in Louisiana has ever seen these conditions. It's 0:00:55.160 --> 0:00:57.880 never been this hot, this dry, for this long. 0:00:58.080 --> 0:01:01.240 That is not to say we should dismiss the economic damage, 0:01:01.400 --> 0:01:05.640 which is often substantial. FEMA Administrator Diane Criswell says the 0:01:05.680 --> 0:01:10.640 Disaster Relief Fund can cover the wildfire disasters in Maui, Louisiana, 0:01:11.080 --> 0:01:12.840 and the hurricane damage in Florida. 0:01:13.280 --> 0:01:15.800 For now, if we continue to see more storms, we're 0:01:15.800 --> 0:01:18.840 going to continuously monitor very closely the health of the 0:01:18.880 --> 0:01:21.720 disaster Relief Fund to determine what more may be needed. 0:01:21.760 --> 0:01:25.600 But right now, as situation stands, the supplemental request will 0:01:25.600 --> 0:01:27.000 get us through the end of this fisical year. 0:01:27.120 --> 0:01:30.039 Let's talk about this with Bloomberg opinion columns Claudias som Now. 0:01:30.080 --> 0:01:33.080 Claudia is the founder of Some Consulting and a former 0:01:33.160 --> 0:01:37.080 Federal Reserve economist. She joins me, Now, Claudia, your column 0:01:37.120 --> 0:01:40.400 on the Bloomberg terminal minces no words. You actually call 0:01:40.520 --> 0:01:43.200 heat the silent killer. What do you mean by that? 0:01:43.800 --> 0:01:46.520 We can see on the news when there's a hurricane, 0:01:46.680 --> 0:01:51.800 a tornado, like it's very apparent heat is another extreme 0:01:51.800 --> 0:01:56.240 Heat is another natural disaster another way, and yet we don't, 0:01:56.600 --> 0:01:58.560 I mean, we don't see it, Like there's nothing on 0:01:58.600 --> 0:02:01.280 the news where you can say, oh, there's you know, 0:02:01.560 --> 0:02:04.320 ninety degree weather. Now this summer there was more. I mean, 0:02:04.480 --> 0:02:07.520 this was a really hot summer. So that's what they 0:02:07.560 --> 0:02:11.639 mean by a silent killer. You don't necessarily see it coming. 0:02:12.560 --> 0:02:15.200 Right because normally when we think of natural disasters, we 0:02:15.240 --> 0:02:19.840 think of the hurricanes, the wildfires, the storms, the flooding. 0:02:20.280 --> 0:02:24.519 We don't usually think of triple digit temperatures m hmm. 0:02:24.680 --> 0:02:27.760 And people do suffer from them and it's hard to 0:02:28.360 --> 0:02:31.160 get your work done. I mean, that's what the post 0:02:31.200 --> 0:02:33.919 is talking a lot about what it means for work 0:02:34.000 --> 0:02:38.240 and productivity in addition to the human costs like the 0:02:38.280 --> 0:02:39.000 silent killer. 0:02:39.440 --> 0:02:42.520 So let's get into that. How higher temperatures are actually 0:02:42.600 --> 0:02:45.160 impact in the economy. And the obvious answer, of course, 0:02:45.200 --> 0:02:47.080 is there's a lot of damage done by the wildfires 0:02:47.120 --> 0:02:50.120 and the hurricanes and the flooding. But you actually dig deeper, 0:02:50.160 --> 0:02:53.800 getting into the labor sector. Tell us about that, right well. 0:02:53.880 --> 0:02:56.239 And one reason to do this is I want to 0:02:56.360 --> 0:03:01.480 underscore the economic impacts the damage done are not just 0:03:01.680 --> 0:03:05.200 where the damage is done, right, So it's not just 0:03:05.240 --> 0:03:08.799 the rebuilding. It affects all of us because it makes 0:03:08.880 --> 0:03:13.440 workers less productive. It may, for example, farm workers that 0:03:13.480 --> 0:03:16.160 are trying to bring in the crops like they it's 0:03:16.280 --> 0:03:17.960 very difficult for them to do it. They have to 0:03:18.000 --> 0:03:20.960 shift the hours when they do it. Well, that shows 0:03:21.040 --> 0:03:24.919 up in our prices. They're higher, maybe there's less veture. 0:03:25.000 --> 0:03:29.120 So it's not just where the natural disaster happens, that 0:03:29.200 --> 0:03:33.560 the economic damages, it's all of us. It's spread all 0:03:33.840 --> 0:03:36.160 and again we don't see that. But that's a really 0:03:36.160 --> 0:03:37.720 important and that's what I wanted to say, is the 0:03:37.760 --> 0:03:42.720 economic cost of these disasters. We experience them too, right, 0:03:42.720 --> 0:03:46.480 they're everywhere. And again it's because in the same amount 0:03:46.560 --> 0:03:49.760 of time, when it's really hot, workers just they can't 0:03:49.800 --> 0:03:53.160 get as much done, or it's just or they can't 0:03:53.200 --> 0:03:55.880 do anything right because it is just too hot. 0:03:56.160 --> 0:03:59.920 So we're talking beyond the localized impact that you might 0:04:00.120 --> 0:04:04.440 see work folks who are like construction workers, let's say 0:04:04.480 --> 0:04:08.080 in Houston, unable to finish their day because it was 0:04:08.360 --> 0:04:11.680 dangerously hot, so they had to cut off early, or 0:04:11.720 --> 0:04:14.880 they had to modify their workday or what have you. 0:04:15.680 --> 0:04:20.679 That somehow from Houston will impact folks elsewhere beyond Houston, 0:04:20.720 --> 0:04:21.520 beyond Texas. 0:04:22.640 --> 0:04:25.760 Well. It adds to a housing crisis, so it pushes 0:04:25.880 --> 0:04:28.760 up the housing prices, maybe fewer people move there. And 0:04:28.800 --> 0:04:31.640 they say in other areas, I mean it's you know, 0:04:31.880 --> 0:04:35.840 for some industries, it's maybe harder to tell the story 0:04:35.920 --> 0:04:39.360 of labor productivity, but it's there. Again, we can't see it, 0:04:39.680 --> 0:04:44.400 and productivity is so important for not just economic growth, 0:04:44.400 --> 0:04:46.720 but that's really what we think of as the engine 0:04:46.720 --> 0:04:50.440 of our prosperity. Right, and if the extreme weather events 0:04:50.480 --> 0:04:53.720 are cutting into that, they are already cutting into that, 0:04:53.880 --> 0:04:57.479 let alone the fact that with climate change they will 0:04:57.480 --> 0:04:58.000 get worse. 0:04:58.920 --> 0:05:00.640 I want to get into that. I want to also 0:05:00.640 --> 0:05:02.440 look at some of the other sectors that might be 0:05:02.480 --> 0:05:06.480 struggling with this more than others. We've we've already mentioned agriculture. 0:05:07.680 --> 0:05:12.000 What else is out there along with because agriculture is 0:05:12.000 --> 0:05:13.480 really the most obvious one. 0:05:13.480 --> 0:05:16.760 Yeah, right, and it actually is one of these smaller 0:05:16.800 --> 0:05:21.000 groups of workers, Like they're very affected, but agriculture workers 0:05:21.000 --> 0:05:23.960 are not a huge part of the labor force, right, 0:05:24.040 --> 0:05:28.719 and so, but there are other industries in heat exposed industries, 0:05:29.320 --> 0:05:31.880 and in fact, if you add them all up, they're 0:05:31.880 --> 0:05:33.800 about twenty percent of the workforce. 0:05:34.279 --> 0:05:34.400 Right. 0:05:34.440 --> 0:05:39.760 So these and other examples would be communication, if you're 0:05:39.760 --> 0:05:43.040 out there putting up the telephone polls, you know, working outside. 0:05:44.240 --> 0:05:48.040 Transportation is another one which makes sense, and in fact, 0:05:48.160 --> 0:05:52.599 in the new union contract that UPS negotiated, part of 0:05:52.640 --> 0:05:55.920 their deal was air conditioners in the trucks. 0:05:56.080 --> 0:05:59.720 Right, right, That's that's exactly you at all that they know. 0:06:00.279 --> 0:06:02.919 Because this is part I mean human comfort, right, like 0:06:03.000 --> 0:06:06.240 you're driving around a ninety degree weather, and yet that's 0:06:06.279 --> 0:06:09.880 exactly an example of I mean, it was making them 0:06:09.960 --> 0:06:13.480 hard and miserable to do their jobs. So an air conditioner, 0:06:14.200 --> 0:06:16.839 well that has environmental effect like air conditioning, is not 0:06:16.880 --> 0:06:19.440 always the solution. But that was an example to me 0:06:19.480 --> 0:06:24.360 of AHA that they are trying to and will raise 0:06:24.400 --> 0:06:27.960 that productivity, right, because that's an example of a heat 0:06:28.000 --> 0:06:34.599 exposed sector. So those are communication, transportation, those are some 0:06:34.720 --> 0:06:37.359 of the construction, like you mentioned, those are some of 0:06:37.400 --> 0:06:42.719 the bigger industries that are heat exposed. 0:06:43.160 --> 0:06:46.000 And we are talking with Bloomberg opinion columnists Claudius Slam 0:06:46.080 --> 0:06:49.000 about how the heat is already showing up as a 0:06:49.080 --> 0:06:53.880 drag on economic productivity. Let's talk about the other demographics. 0:06:53.920 --> 0:06:56.200 Does it matter what your income is, Does it matter 0:06:56.240 --> 0:06:57.039 where you live? 0:06:58.440 --> 0:07:02.919 Absolutely another aspect of heat exposure, So it's not just 0:07:02.960 --> 0:07:07.040 when you're at work. There are there are real disparities 0:07:07.160 --> 0:07:11.920 in who is exposed, in where they live, the neighborhoods 0:07:11.960 --> 0:07:15.960 they're in. There was one study that estimated that in Washington, 0:07:16.040 --> 0:07:21.160 d C. There can be a seventeen degree difference across 0:07:21.200 --> 0:07:24.840 the city in terms of how hot it is, right, 0:07:24.880 --> 0:07:28.239 And that's I mean, that's enormous. And where that comes 0:07:28.240 --> 0:07:32.320 from is that that some areas of the city, particularly 0:07:32.400 --> 0:07:35.240 lower income areas of the city, are what are called 0:07:35.440 --> 0:07:39.240 heat islands. So the way the buildings are built, there's 0:07:39.280 --> 0:07:41.440 not a lot of trees there is, so there's not 0:07:41.600 --> 0:07:44.840 a way to you know, kind of absorb the energy. 0:07:45.400 --> 0:07:47.920 The heat it like bounces off and it's all in 0:07:47.920 --> 0:07:51.880 the neighborhood where in more affluent parts neighborhoods, there are 0:07:51.920 --> 0:07:54.840 more trees, there are solar like there are ways that 0:07:56.000 --> 0:07:58.320 really blunt the effect of the heat. Now it's hot 0:07:58.360 --> 0:08:03.040 there too, But again and by income, these huge differences 0:08:03.400 --> 0:08:06.720 in heat obviously mean that when it's hot outside, it's 0:08:06.760 --> 0:08:09.440 going to be even hotter in areas with low income. 0:08:09.480 --> 0:08:12.400 And these are areas they often don't have air conditioning, 0:08:12.480 --> 0:08:17.120 they don't have a way to really protect themselves from 0:08:17.480 --> 0:08:19.080 adverse effects of the heat. 0:08:19.320 --> 0:08:22.920 Like areas neighborhoods that may have more lawns, more shrubbery, 0:08:23.040 --> 0:08:26.080 more trees, are going to definitely see a difference in 0:08:26.120 --> 0:08:29.160 temperature than areas that are all asphalt and concrete. 0:08:29.400 --> 0:08:31.840 Right exactly, does. 0:08:31.560 --> 0:08:34.800 This also impact more social programs like education. 0:08:34.960 --> 0:08:40.880 Howso right, these are some of these studies are I 0:08:40.920 --> 0:08:44.600 think some of the most depressing. I mean, we're not 0:08:44.720 --> 0:08:48.720 just hurting labor productivity now, I mean workers' ability to 0:08:48.840 --> 0:08:53.599 do their jobs. Now, we are undercutting the productivity the 0:08:55.160 --> 0:08:59.199 ability to work and be prosperous of future generations. So 0:08:59.280 --> 0:09:03.560 there is study that shows in schools when it is 0:09:03.720 --> 0:09:09.360 hotter in the school, students' educational outcomes are worse. So 0:09:09.440 --> 0:09:12.120 and they measure this with you know, p s AT scores, 0:09:12.240 --> 0:09:16.400 SAT scores, So that's and and then in schools where 0:09:16.400 --> 0:09:19.640 it's cooler or they have air conditioning or you don't, 0:09:19.679 --> 0:09:22.160 you don't see these effects. So I mean it makes 0:09:22.200 --> 0:09:24.560 sense if you're in a hot, sticky room, being able 0:09:24.559 --> 0:09:28.480 to concentrate and do your work is difficult. Again, this 0:09:28.559 --> 0:09:32.680 is one where you see racial income disparities. And and 0:09:32.760 --> 0:09:36.560 again this is showing we're we're affecting the next generation 0:09:36.840 --> 0:09:37.920 like right now. 0:09:38.360 --> 0:09:41.560 So I want to end this on at least a 0:09:41.600 --> 0:09:46.119 hopeful note if there is one, because it is depressing 0:09:46.800 --> 0:09:50.480 and it's not going away, this isn't changing. Is there 0:09:50.520 --> 0:09:51.880 a solution? What do we do? 0:09:52.360 --> 0:09:52.520 Well? 0:09:52.640 --> 0:09:56.280 Big picture, the solution is you know, dealing with the 0:09:56.640 --> 0:09:59.440 rising heat, right, and these are these are problems that 0:09:59.640 --> 0:10:02.960 you know, national level. You know, we have part of 0:10:02.960 --> 0:10:06.439 the Inflation Reduction Act was to have a climate change policy, 0:10:06.679 --> 0:10:08.439 and those kind of policies have to be at the 0:10:08.520 --> 0:10:11.880 national level and frankly at the global levels. Right. So 0:10:12.080 --> 0:10:16.280 a real fix to this is big picture. There are 0:10:16.480 --> 0:10:22.000 areas of the country that have tried to put ordinances 0:10:22.040 --> 0:10:27.440 in place, plant more trees, various things to deal with 0:10:27.520 --> 0:10:32.520 the higher temper Like Phoenix is the hottest, hottest city 0:10:32.679 --> 0:10:35.959 in the country. They can't lower the temperatures, but they 0:10:35.960 --> 0:10:38.240 can take steps that will help the workers. 0:10:38.559 --> 0:10:41.840 Bloomberg Opinion columnists Claudia Som. Claudia is the founder of 0:10:41.920 --> 0:10:45.440 Some Consulting and a former Federal Reserve economist. She's also 0:10:45.520 --> 0:10:48.439 the creator of the Psalm rule, which is a recession indicator. 0:10:48.679 --> 0:10:50.920 Now coming up, we're going to continue this conversation from 0:10:50.920 --> 0:10:53.439 a different point of view, how climate change is actually 0:10:53.840 --> 0:10:58.920 upending traditionally dependable utility stocks. That's just ahead. You're listening 0:10:58.920 --> 0:10:59.920 to Bloomberg Opinion. 0:11:09.240 --> 0:11:13.079 You're listening to the Bloomberg Opinion podcast. Catch us Saturdays 0:11:13.120 --> 0:11:16.240 at one and seven pm Eastern on Bloomberg dot Com, 0:11:16.320 --> 0:11:19.440 the iHeartRadio app, and the Bloomberg Business app, or listen 0:11:19.520 --> 0:11:21.720 on demand wherever you get your podcasts. 0:11:23.720 --> 0:11:27.400 You're listening to Bloomberg Opinion. I'm Amy Morris. Let's continue 0:11:27.400 --> 0:11:30.760 the discussion about climate change and its economic impact. Now 0:11:30.800 --> 0:11:33.360 we've talked about the cost of labor and the impact 0:11:33.400 --> 0:11:39.600 on agriculture, construction, manufacturing, even education and other heat exposed jobs. 0:11:40.160 --> 0:11:42.400 Now we're going to look at utilities. You know about 0:11:42.440 --> 0:11:46.080 lawsuits against Hawaii Electric after the wildfires in Maui and 0:11:46.200 --> 0:11:48.480 in Texas where a heat dome for much of the 0:11:48.520 --> 0:11:52.520 summer baked the state with triple digit temperatures, the power 0:11:52.559 --> 0:11:56.080 grid has been under considerable strain. Tom Overbye is with 0:11:56.120 --> 0:11:57.120 the Smart Grid Center. 0:11:57.360 --> 0:12:01.239 We have eight urban search and Rescue team teams staged 0:12:01.320 --> 0:12:05.240 ready to go, thirty three ambulance strike teams, fifty five 0:12:05.320 --> 0:12:10.320 hundred National guardsmen. We also have the Coastguard on standby 0:12:10.880 --> 0:12:12.239 should that be necessary. 0:12:12.480 --> 0:12:15.400 Let's talk now with Liam Denning, a Bloomberg Opinion columnist 0:12:15.480 --> 0:12:19.199 who covers energy and commodities. Liam, thank you for taking 0:12:19.240 --> 0:12:22.480 the time with us. The conventional wisdom has been for 0:12:22.679 --> 0:12:26.720 decades that utilities are the safe bet On Wall Street. 0:12:27.200 --> 0:12:30.600 Climate change seems to be upending that bring us up 0:12:30.600 --> 0:12:31.000 to speed. 0:12:32.360 --> 0:12:34.240 Well. The short story on that is that they were 0:12:34.240 --> 0:12:37.080 always seen as safe stocks because you know, if you 0:12:37.080 --> 0:12:41.239 think about what utilities do, they build and maintain essential 0:12:41.600 --> 0:12:44.440 infrastructure for a service that none of us can can 0:12:44.559 --> 0:12:48.920 do without. The reason they're peculiarly exposed to climate change 0:12:49.080 --> 0:12:53.800 is for the same reason their infrastructure, particularly in certain 0:12:53.840 --> 0:12:57.520 parts of the country, is very exposed to the sorts 0:12:57.559 --> 0:13:00.680 of natural disasters that are likely to become frequent and 0:13:00.720 --> 0:13:05.720 more intense less predictable due to climate change, And as 0:13:05.720 --> 0:13:10.720 we've seen in the recent case with Hawaiian Electric, they 0:13:10.760 --> 0:13:16.960 can also find themselves blamed for those natural disasters, particularly wildfires, 0:13:17.480 --> 0:13:24.080 where power lines get implicated in sparking them. 0:13:24.240 --> 0:13:28.280 Is there a possibility that it could forgive the terminology, 0:13:28.280 --> 0:13:29.840 but that it could somehow also help. 0:13:30.760 --> 0:13:35.360 It can up to a point if climate change demands 0:13:35.440 --> 0:13:39.640 that you strengthen the grid hard on it, maybe you know, 0:13:39.720 --> 0:13:43.280 do something like burying power lines in the ground in 0:13:43.400 --> 0:13:46.640 order to avoid wildfire risks, that sort of thing, then 0:13:47.000 --> 0:13:51.200 the utility will make a return on that investment. Where, 0:13:51.240 --> 0:13:53.360 of course it can go too far. Is that if 0:13:53.400 --> 0:13:58.400 you have a huge natural disaster that leads to extensive damage, 0:13:58.880 --> 0:14:04.680 leads to fatality and the resulting lawsuits from victims, then 0:14:04.720 --> 0:14:08.840 obviously the utility can be confronted with costs but simply 0:14:08.880 --> 0:14:14.280 overwhelm it. We saw this, you know, most famously with 0:14:14.400 --> 0:14:17.720 PG and E in northern California in the wildfire that 0:14:17.760 --> 0:14:20.120 happened there in twenty seventeen and twenty eighteen. 0:14:20.440 --> 0:14:23.720 Are we seeing more of that impact lately? And you've 0:14:23.800 --> 0:14:28.040 cited two examples, Maui and northern California, both of them 0:14:28.480 --> 0:14:32.960 with wildfire being the natural disaster. Are we seeing more 0:14:32.960 --> 0:14:34.920 of it lately? Are you expecting to see more of 0:14:34.960 --> 0:14:35.440 it lately? 0:14:35.920 --> 0:14:39.120 We've seen similar cases. We've seen We've seen a case 0:14:39.560 --> 0:14:45.680 involving Pacific Corp. Which is part of Berkshire Hathaway, relating 0:14:45.720 --> 0:14:51.240 to a fire in Oregon, and also Excel, which is 0:14:51.280 --> 0:14:55.480 a utility operating in Colorado. I think it's fair to 0:14:55.520 --> 0:14:59.960 say that, based on the track record of the last 0:15:00.120 --> 0:15:04.160 the five or so years, if you are a utility 0:15:04.360 --> 0:15:10.920 in a mountainous territory in the western US, in particular 0:15:11.000 --> 0:15:15.680 the drier parts of the US, then your risk of 0:15:15.680 --> 0:15:20.960 wildfire is elevated but those aren't the only places where 0:15:21.200 --> 0:15:23.720 you know climate change is likely to lead to more 0:15:23.800 --> 0:15:29.880 intense disasters. I mean, Florida obviously is no stranger to hurricanes, 0:15:30.000 --> 0:15:33.760 but those hurricanes are likely to get more intense over time. 0:15:34.600 --> 0:15:38.160 We've seen extreme weather events in Texas that took down 0:15:38.200 --> 0:15:43.320 the grid in early twenty nineteen. So my feeling would 0:15:43.360 --> 0:15:47.040 be that as climate change leads to less predictable and 0:15:47.080 --> 0:15:52.880 more intense weather impacts, that will have a disproportionate effect 0:15:53.080 --> 0:15:57.000 on infrastructure, particularly power grid infrastructure that was built for 0:15:57.080 --> 0:16:00.360 a different time. Remember most of our power grid built 0:16:00.400 --> 0:16:03.520 during the twentieth century. It's built at a time when 0:16:03.600 --> 0:16:06.920 we sure we had natural disasters, but we didn't really 0:16:06.960 --> 0:16:09.880 contemplate what something like climate change might portend. 0:16:11.040 --> 0:16:14.000 And we are talking with Bloomberg opinion columnist Liam Denning 0:16:14.000 --> 0:16:17.320 about the impact of climate change on what you know, 0:16:17.400 --> 0:16:20.960 conventional wisdom would call more stable stocks like utilities, But 0:16:21.000 --> 0:16:24.040 that's all changing now. Liam. You mentioned that this is 0:16:24.040 --> 0:16:26.800 bound to keep just getting worse, with more natural disasters, 0:16:26.840 --> 0:16:32.040 more wildfires. Can green grids help with this? The push 0:16:32.120 --> 0:16:34.480 towards smart grids green grids are they helping? 0:16:35.480 --> 0:16:38.400 You know? The long term mitigation effort against climate change 0:16:38.480 --> 0:16:42.720 is obviously decarbonization, so that involves using a lot more 0:16:42.880 --> 0:16:47.480 renewable energy, electrifying a lot more of our industrial and 0:16:47.520 --> 0:16:52.080 transportation processes over time. It's you know, that's kind of 0:16:52.080 --> 0:16:54.320 think of that as kind of your long term insurance 0:16:54.400 --> 0:17:01.240 plan against climate change getting much worse. In terms of 0:17:01.400 --> 0:17:06.400 more immediate fixes, distributed energy can can help I E. 0:17:07.080 --> 0:17:13.200 Use of things like micro grids, uh, you know, home 0:17:13.320 --> 0:17:20.480 and business cited energy systems can help you. You know, 0:17:20.560 --> 0:17:22.680 in the event that the grid goes down, you'll you'll 0:17:22.720 --> 0:17:26.720 be able to potentially supply your own power for a bit. 0:17:26.920 --> 0:17:30.760 Of course, a lot of those systems remain more expensive 0:17:31.080 --> 0:17:36.080 relative to the grid, but over time you may find 0:17:36.800 --> 0:17:41.240 communities paying that extra premium if they feel that they're 0:17:41.240 --> 0:17:45.800 exposed to the natural disasters that might take down their 0:17:45.920 --> 0:17:48.600 their local their local grid. To think of it as 0:17:48.600 --> 0:17:50.720 an insurance premium. 0:17:50.880 --> 0:17:54.440 How does this impact customers versus the companies? 0:17:55.359 --> 0:17:58.000 I mean, ultimately all of this cost comes back to 0:17:58.080 --> 0:18:00.200 the customers. You know. One thing you need to think 0:18:00.240 --> 0:18:03.719 about with regards to utilities is, you know, say you 0:18:03.720 --> 0:18:07.119 have a utility that is found absolutely liable for a 0:18:07.160 --> 0:18:10.680 major wildfire disaster, is confronted with a mass and bill 0:18:12.040 --> 0:18:15.920 that would force it, you know, to go into bankruptcy, 0:18:15.920 --> 0:18:20.160 as PGNE did. Now with a normal business, what happens 0:18:20.240 --> 0:18:23.200 is you go into bankruptcy. Generally the equity and a 0:18:23.280 --> 0:18:26.360 lot of the debt gets wiped out. The company emerges 0:18:26.400 --> 0:18:30.400 with a clean balance sheet, and it carries on utilities. 0:18:30.520 --> 0:18:32.840 The problem with the utilities is once you get through 0:18:33.480 --> 0:18:37.520 the initial shock and aftermath of a wildfire or other 0:18:37.600 --> 0:18:40.280 natural disaster, you still need to keep the lights on, 0:18:40.359 --> 0:18:45.080 which means you still need a functioning utility. The state 0:18:45.119 --> 0:18:48.919 has an interest in making sure that maybe equity holders 0:18:48.920 --> 0:18:52.880 and especially debt holders don't get wiped out, because once 0:18:52.920 --> 0:18:55.840 you're through that period, that company still needs to go 0:18:55.920 --> 0:18:58.080 back to capital markets. And so with PGNE, you had 0:18:58.119 --> 0:19:02.159 a very weird bankruptcy where it emerged with something like 0:19:02.200 --> 0:19:05.679 three times the debt it had going into it, and 0:19:05.720 --> 0:19:08.199 that was because they wanted to keep bondholder whole, and 0:19:08.280 --> 0:19:13.240 they found different ways of basically, you know, handling the 0:19:13.280 --> 0:19:16.920 costs of that disaster. But ultimately it all flows down 0:19:16.960 --> 0:19:19.280 into your electricity bill. It has to be paid for 0:19:19.920 --> 0:19:22.240 and it will end up jacking up the rates. And 0:19:22.280 --> 0:19:24.879 I think in a place like Hawaii, especially which already 0:19:24.880 --> 0:19:29.600 pays the highest electricity rates in the country, that those 0:19:29.640 --> 0:19:32.959 are going to rise quite a bit further. Climate change 0:19:33.000 --> 0:19:37.919 and the associated effort of decarbonization. These are things that 0:19:38.080 --> 0:19:41.159 just didn't really exist in a real sense, you know, 0:19:41.520 --> 0:19:44.479 thirty or forty years ago, certainly not in the minds 0:19:44.480 --> 0:19:47.600 of ourselves or in the minds of economists. And so 0:19:47.760 --> 0:19:50.879 that's effectively a new cost that's been put onto society, 0:19:50.920 --> 0:19:52.680 and it has to be paid for. They can be 0:19:52.720 --> 0:19:55.879 paid for broadly in two ways. One is paying for 0:19:56.000 --> 0:19:59.440 efforts to mitigate it or paying for the cost of cleanup. 0:20:00.080 --> 0:20:03.120 I would suggest that mitigating it is probably the better investment, 0:20:04.119 --> 0:20:06.320 but either way it has to be paid for. 0:20:06.640 --> 0:20:10.200 W Liam Denning a Bloomberg opinion columnist who covers energy 0:20:10.240 --> 0:20:13.680 and commodities and also a former investment banker. Now don't forget, 0:20:13.720 --> 0:20:16.879 We're available as a podcast on Apple, Spotify or your 0:20:16.920 --> 0:20:21.720 favorite podcast platform. Around parts of Antarctica last year, entire 0:20:21.840 --> 0:20:26.119 colonies of Emperor penguins lost all of the chicks that 0:20:26.160 --> 0:20:29.320 they'd incubated through weeks of darkness, one hundred mile per 0:20:29.359 --> 0:20:33.280 hour winds, and brutal sub zero temperatures. The US Fish 0:20:33.280 --> 0:20:36.840 and Wildlife Service has listed the emperor penguin as endangered. 0:20:37.200 --> 0:20:39.800 They depend on sea ice as a platform to breed 0:20:39.880 --> 0:20:42.800 and raise their chicks, but the ice is melting too 0:20:42.880 --> 0:20:47.120 early and the flocks of chicks lost all drowned. Let's 0:20:47.160 --> 0:20:49.560 find out what's going on. Fayflam As a Bloomberg opinion 0:20:49.680 --> 0:20:53.879 columnist who cover science and hosts the follow the Science podcasts. 0:20:54.320 --> 0:20:57.560 She joins me now, Fae, always a pleasure. Thank you 0:20:57.600 --> 0:21:01.280 for taking the time with me. Baby penguins. There's no 0:21:01.400 --> 0:21:04.600 way anybody can see the headline about baby penguins on 0:21:04.600 --> 0:21:06.960 the Bloomberg terminal and not go oh, I have to 0:21:06.960 --> 0:21:07.680 read about this. 0:21:08.320 --> 0:21:11.280 Yes, they are what people would call it charismatic species, 0:21:11.520 --> 0:21:14.200 you know, which sometimes is used in a good way 0:21:14.200 --> 0:21:16.359 and sometimes sort of a way to say, well, people 0:21:16.359 --> 0:21:18.400 pay too much attention to these ones that are cute, 0:21:18.400 --> 0:21:20.640 and we should pay attention to other species. So they're 0:21:20.720 --> 0:21:24.679 charismatic for good reason, because they're such interesting animals in 0:21:24.720 --> 0:21:25.439 so many ways. 0:21:26.119 --> 0:21:30.160 Now, how dire is this? And to be clear, your 0:21:30.200 --> 0:21:34.520 column isn't just about fossil fuels and baby penguins. That's 0:21:34.680 --> 0:21:38.160 just the hook. What you're talking about is the impact 0:21:38.160 --> 0:21:41.719 of climate change in global warming and man's role in 0:21:41.840 --> 0:21:46.720 that on species? Penguins just happen to be what's going 0:21:46.760 --> 0:21:47.160 on now? 0:21:47.800 --> 0:21:49.480 Yeah, that was just in the news, and it just 0:21:49.480 --> 0:21:52.560 made me think about this bigger philosophical question. You know, 0:21:52.680 --> 0:21:55.920 so often when we talk about endangered species, we talk 0:21:55.960 --> 0:21:58.840 about the potential use for humans. You know, maybe some 0:21:59.000 --> 0:22:02.200 rainforest plant have the cure for cancer, or disappearing frogs 0:22:02.280 --> 0:22:05.920 might have a chemical that's useful for medicine in their bloodstream. 0:22:06.160 --> 0:22:09.200 And you know, it sort of got me thinking, well, 0:22:09.440 --> 0:22:11.720 what about animals that may or may not be useful 0:22:11.760 --> 0:22:14.280 to humans? You know, should we care about them? And why? 0:22:14.480 --> 0:22:17.679 And I think that often is just something people feel 0:22:17.720 --> 0:22:20.800 intuitively but don't really think about that. Many of us 0:22:20.840 --> 0:22:23.560 are just singnituative. Of course we should care because they 0:22:23.640 --> 0:22:25.480 make the world a better place. So I thought it 0:22:25.520 --> 0:22:28.280 would be interesting to kind of open that discussion up. 0:22:28.520 --> 0:22:32.119 And I think even though a lot of people argued 0:22:32.160 --> 0:22:34.200 about the role of global warming, you know, there are 0:22:34.200 --> 0:22:37.760 lots of natural fluctuations that can affect penguin colonies, but 0:22:38.160 --> 0:22:42.239 there is you know, a huge scientific consensus that there 0:22:42.280 --> 0:22:45.800 is an overall trend warming trend that is caused by 0:22:46.320 --> 0:22:50.639 human activities, and that is causing the biggest changes at 0:22:50.720 --> 0:22:52.360 the polar regions of the planet. 0:22:53.040 --> 0:22:57.080 So how dire is this? Are penguins going extinct? Are 0:22:57.119 --> 0:22:58.320 other animals at risk? 0:22:59.119 --> 0:23:00.760 Yeah, I mean a lot of animals are going to 0:23:00.840 --> 0:23:04.080 go extinct in the next few decades if global warming 0:23:04.200 --> 0:23:06.840 sort of continues at the pace it's continuing, and some 0:23:06.960 --> 0:23:10.360 even if we, you know, change things, we'll go extinct. 0:23:10.440 --> 0:23:13.680 Emperor penguins. Actually, there are quite a few colonies that 0:23:13.720 --> 0:23:17.480 are still doing okay, that are in more stable regions 0:23:17.520 --> 0:23:22.439 of Antarctica, but if the trend continues unabated, they would 0:23:22.560 --> 0:23:27.040 eventually go extinct because they I mean, they're sort of contradictory. 0:23:27.080 --> 0:23:29.480 They're like the toughest animals you can imagine when you 0:23:29.520 --> 0:23:32.680 think about them spending this time, you know, and minus 0:23:32.760 --> 0:23:36.440 fifty degrees and the wind and they sit on they're 0:23:36.480 --> 0:23:39.239 out there incubating these eggs. But they're also delicate in 0:23:39.280 --> 0:23:42.159 a way because they depend on conditions being just so. 0:23:42.400 --> 0:23:44.960 They have to have the sea ice last through the winter. 0:23:44.960 --> 0:23:48.359 If it gets too warm and they lose the ice, 0:23:48.440 --> 0:23:50.760 then the chicks can get wet, and that's just deadly. 0:23:50.800 --> 0:23:52.480 Then you know, as one of the scientists that they 0:23:52.480 --> 0:23:55.040 turn to little ice cubes and hundreds of them can die. 0:23:56.480 --> 0:23:59.679 So how is this linked to the use of fossil fuels? 0:24:00.080 --> 0:24:02.400 Going to push back against you a little bit because. 0:24:02.760 --> 0:24:06.119