Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Another thing
Speaker 1: that we certainly keep a watch on is what's going
Speaker 1: on when it comes to climate change E S G ascids.
Speaker 1: Yesterday I talked about all the money a Bloomberg intelligence
Speaker 1: number that's out there that says E S G may
Speaker 1: surpassed forty one trillion assets this year. Investors are increasingly
Speaker 1: asking for it. But you know, when it comes to
Speaker 1: climate change and all the different parties involved, it's complicated.
Speaker 1: It's really complicated. Fortunately for us we have Eugene Linden,
Speaker 1: journalists and author, author of the new book Fire and
Speaker 1: Flood of people's history of climate change from ninety nine
Speaker 1: to the present. Eugene joins us on the phone from Irvington,
Speaker 1: New York. Eugene, it's really good to have you with us.
Speaker 1: We've got quite a bit of time with you this afternoon,
Speaker 1: so we're looking forward to our conversation. I just want
Speaker 1: to start though with big picture and and really in
Speaker 1: your interpretation, how you think we're getting the conversation around
Speaker 1: climate change wrong in this day and well, we're not
Speaker 1: doing anything. Uh, we're a hell of a lot of
Speaker 1: talk about it. Twenty six congressive partner parties, and you know,
Speaker 1: we're on the sixth assessment from the u N and
Speaker 1: emissions are six higher than they were in nineteen ninety
Speaker 1: when they were already a problem. And between nine and
Speaker 1: now two point three billion people have been added to
Speaker 1: the population. The average emissions per person is about more
Speaker 1: than four tons, So that's another ten billion tons that
Speaker 1: we have to take out um. And we were already
Speaker 1: forcing the climate into a warmer state way back in
Speaker 1: nine So we have just a much bigger rock to
Speaker 1: roll up a much steeper hill with a much shorter timeline.
Speaker 1: Why have we been so bad about this? I think
Speaker 1: there's a number of reasons. One fundamental to the way
Speaker 1: we do business is that the momentum of business as
Speaker 1: usual is just enormous, and we have a kind of
Speaker 1: blind spot in our economy in that um we have
Speaker 1: a very hard time representing the long term threats in
Speaker 1: in in in a business that is focused very much
Speaker 1: on the short term and essentially makes us leaves us
Speaker 1: blind to these long term threats like climate change. And
Speaker 1: my best example of that, I think is the insurance industry,
Speaker 1: which recognized the threat at the reinsurance level, really part
Speaker 1: of the industry that insurance catastrophic risk very early on.
Speaker 1: But at the retail level, the momentum of business as
Speaker 1: usual is to keep writing policies even for people moving
Speaker 1: into harm's way. You did not have to say when
Speaker 1: we were talking about this on our early morning call
Speaker 1: this this morning about you coming on. I remember early
Speaker 1: on that that's what started to get everybody's attention about
Speaker 1: the cost of climate change and from an insurance industry aspect,
Speaker 1: and I feel like that was what initially made us
Speaker 1: all kind of sit up and take notice, and then
Speaker 1: it kind of just went away. Oh yeah, way back,
Speaker 1: I wrote an article for Time expecting that the insurance
Speaker 1: industry would be a white night um in the climate
Speaker 1: story because they live and die by pricing risk appropriately.
Speaker 1: And what I I there were a couple of things
Speaker 1: I didn't realize. They turned out to be a very timid,
Speaker 1: white night, by the way. But what I didn't realize
Speaker 1: then was the incredible momentum again to keep writing policies,
Speaker 1: and then secondly their genius at offloading and spreading risk,
Speaker 1: and and then also most insurers can UH have policies
Speaker 1: on an annual renewal basis, so if something goes wrong,
Speaker 1: they can get out unless regulators stop them. Is which
Speaker 1: was the case temporarily in California. But the net effect
Speaker 1: of this was, well, they did get out. Actually in
Speaker 1: Florida after Hurricane Andrew a bunch of mature stuff writing
Speaker 1: wind policies, UM and the state stepped in and basically
Speaker 1: socialize the risk. And that happened in California as well.
Speaker 1: And so where I expected to see a signal in
Speaker 1: the market, in the economy that would cause people to
Speaker 1: make an orderly move away from the zones that are
Speaker 1: really in jeopardy from climate change, that didn't happen. In fact,
Speaker 1: the reverse happened. The underpricing of risk led millions to
Speaker 1: move into areas that are most at risk of climate change,
Speaker 1: not just the fire zones in the West, but the
Speaker 1: flood zones on the coast. Yeah, and it's well, we've seen,
Speaker 1: you know, business We has done some reporting about areas
Speaker 1: where people are very vulnerable. It tends to be often
Speaker 1: lower income areas people that are really susceptible to flooding.
Speaker 1: And how municipalities certain across the country have started buying
Speaker 1: up those properties just to kind of stop it. We're
Speaker 1: speaking to Eugene Linden, journalist and author of the new
Speaker 1: book Fire and Flood of People's History of Climate Change
Speaker 1: from nineteen seventy nine to the present. Eugene, stick with us,
Speaker 1: because we're gonna get some serious time with you, uh
Speaker 1: in just a few minutes after we do some news. Well,
Speaker 1: there's a new book out. It's entitled Fire and Flood
Speaker 1: of People's History of Climate Change from nineteen nine to
Speaker 1: the present. It sounds the alarm about the looming climate
Speaker 1: caused financial crisis. We are talking with the author, Eugene Lindon.
Speaker 1: He's an award winning journalist and writer covering science, nature
Speaker 1: in the environment. He's still with us on the phone
Speaker 1: from Irvington, New York. Um, Eugene, I'm gonna let Tim
Speaker 1: ask this question because we both were thinking about this
Speaker 1: U during the break. Eugene, I had this professor in college.
Speaker 1: He taught science, technology, and society, and he was he
Speaker 1: was big into climate and he said that people just
Speaker 1: shouldn't live in California. I'm a California I'm from California.
Speaker 1: My parents are there. Is he right? I mean should
Speaker 1: should people not live in the West? Should should people
Speaker 1: not live in these areas that each year get consumed
Speaker 1: by fire. What's going to happen in California is that
Speaker 1: climate change is basically put it in a rain shadow.
Speaker 1: It's now in the midst of a drought that is
Speaker 1: the worst in a thousand years, and it isn't going
Speaker 1: away anytime soon. Basically, the the the rainstorms have been
Speaker 1: shifted pullward further north and uh leaving UM California and
Speaker 1: actually parts of Oregon dry. And that's not going to change,
Speaker 1: and so the fire regime is going to continue. An
Speaker 1: event truly that is going to get priced by the
Speaker 1: insurance industry UM. Even now UM A lot of insurance
Speaker 1: AIG pulled out of California, for instance, and a lot
Speaker 1: of homeowners can only get the bare bones backstop from
Speaker 1: the FAIR program, which is the California Insurance Backstop insurance program.
Speaker 1: What that means is, if you think about it, UM,
Speaker 1: is that most people have a mortgage. You can't get
Speaker 1: a mortgage without fire insurance UM and UM. If you
Speaker 1: can't get fire insurance, if you can't afford the premiums UM,
Speaker 1: you're not gonna be buying a home, some people aren't
Speaker 1: gonna be able to sell it. And already, Um, there's
Speaker 1: been stories about how climate migrants are leaving the fire zones,
Speaker 1: moving to perceived safer places like New England. Well, how
Speaker 1: do you how do you explain though the rising housing
Speaker 1: prices in California and continuing to be out of reach
Speaker 1: for so many people and people still staying there. I mean,
Speaker 1: it's not being priced in yet. No, it isn't being
Speaker 1: priced in, and it's not being priced in Florida. The
Speaker 1: hottest city in the country is Miami. And uh. The
Speaker 1: Rhodium Group with pro Publica in The Times did a
Speaker 1: study of every county in the United States for like
Speaker 1: five different risks from climate change, including sea level rise
Speaker 1: and windstorms and fires and everything else. And they aggregated
Speaker 1: those risks and they said, these counties might They named
Speaker 1: a bunch of counties that might be unlivable in twenty
Speaker 1: to forty years. Um. One of those counties was Miami
Speaker 1: Dade and that's one of the hottest real estate markets
Speaker 1: in the country. So um, people I hear anecdotal stories
Speaker 1: of people where they're a lot of condo and their
Speaker 1: prices doubled in the last year. Palm Beach County is
Speaker 1: another of those counties. The county that is home to
Speaker 1: Hilton Head is another, and there are also counties in
Speaker 1: Texas and Arizona and in California. So um I that
Speaker 1: will change at some point. And the problem is is
Speaker 1: that because of the underpricing of these risks for so long,
Speaker 1: there are a lot of people there and it it.
Speaker 1: I argue that it sets the stage for a replay
Speaker 1: of two thousand and eight, where you have home buyers
Speaker 1: who either can't sell our home or can't get a
Speaker 1: mortgage to buy it, and the values drop, and then
Speaker 1: of course you get a banking crisis, is what we
Speaker 1: had in two thousand and eight. I had a front
Speaker 1: row seat for that because I was chief investment strategist
Speaker 1: for a hedge fund back when as it was unfolding,
Speaker 1: and I can see something similar unfolding. The difference being
Speaker 1: is that two thousand and eight was a one off,
Speaker 1: and you know, basically, once we cleared up the bad
Speaker 1: debts and everything else, we could restart the economy and
Speaker 1: a climate reated related financial crisis it's going to get
Speaker 1: worse year after year after year, because the climate crisis
Speaker 1: will get worse and that's what we face. And you know,
Speaker 1: I think, um, but it's it's not just a financial
Speaker 1: crisis that's down the road. You mentioned a predicted temperature
Speaker 1: rise for if even if we abide by the Paris Agreement.
Speaker 1: I heard a figure of two point seven to three
Speaker 1: point seven degrees celsius, like eight to eleven degrees fahrenheit.
Speaker 1: That's those kinds of temperatures for haven't been seen on
Speaker 1: the planet since before the ice ages, some three million
Speaker 1: years ago. It was plenty of life back then, but
Speaker 1: no humans. So for those of who argue, God, we
Speaker 1: can't deal with climate change because of the lower our
Speaker 1: standard of living, I disagree with that. By the way,
Speaker 1: I would argue, um, there's a much more serious lowering
Speaker 1: of standard of living coming if we don't deal with
Speaker 1: climate change. I had a line in the lead to
Speaker 1: you initially, and I think I dropped it, but I
Speaker 1: would say how everybody is arguing, you know, when it
Speaker 1: comes to thinking much more about the environments, that the
Speaker 1: existence of our world depends on it, And you know,
Speaker 1: that's where we're going. And I don't think people understand
Speaker 1: the severity of it. I joke about the metaverse that
Speaker 1: that's where we're all going to have to live because
Speaker 1: we're not gonna be able to go outside because it's
Speaker 1: gonna either be so darn hot and it's funny, but
Speaker 1: it's not funny. Um. So we've only got a couple
Speaker 1: of minutes. We can't solve climate change right here in now.
Speaker 1: But what would you say to our audience, a smart
Speaker 1: audience who are plowing money into E s G assets
Speaker 1: and so on and so forth, thinking they're doing the
Speaker 1: right thing, making their contributions, companies who are playing out
Speaker 1: and you know, talking with him and me constantly about
Speaker 1: sustainability initiatives and how they're taking the right steps. What
Speaker 1: would you say, Well, I do think that the business
Speaker 1: and finance community has had a c change in the
Speaker 1: last couple of years, recognizing not the regulation for climate
Speaker 1: change is a threat to profits, but the climate change
Speaker 1: itself is a threat to business. That's heartening, and the
Speaker 1: money flowing into these things is heartening as well. And
Speaker 1: there are solutions out there, you know, to take carbon
Speaker 1: out of the atmosphere. You can make concrete um by
Speaker 1: making synthetic limestone, by combining carbon dioxide with calcium. You
Speaker 1: can make steel without coal um. That's eight percent of
Speaker 1: emissions two billion tons a year UM by running electrical
Speaker 1: current through iron oxide and other metals. And so there
Speaker 1: are of these solutions that can be the look deployed,
Speaker 1: and the money flowing in will help deploy them. We
Speaker 1: have to do that. Um. The thing that has to happen,
Speaker 1: I think, is that we need a universal agreement the
Speaker 1: lower emissions of universal being meaning every nation on Earth,
Speaker 1: because we can't have exceptions like China and India and
Speaker 1: other developing nations and put the entire burden on the
Speaker 1: develop the Western nations because they cannot do it alone.
Speaker 1: So the it is possible we are in for some
Speaker 1: degree of climate change, already experiencing it, and we're already
Speaker 1: it's already costing the economy trillions. All Right, we're gonna
Speaker 1: leave it there. Listen, Thank you so much. Really, some
Speaker 1: thoughtful things from Eugene Lyndon, journalist right or his new
Speaker 1: book Fire and Flood at People's history of climate change
Speaker 1: from nine to the present.