Transcripts For CSPAN2 Hearing On Climate Change The Economy 20240713

Change the House Oversight subcommittee on the environment held its fifth hearing on Climate Change. Everybody sits together we will get started the subcommittee will come to order without objection the chair is authorized to declare a recess at any time so to discuss Climate Change on the future Economic Impact i will defer the Opening Statement for myself and when we spoke earlier i mentioned the fact we would hopefully to do a hearing we have time for Opening Statements but what i would like to do is to give each of you the opportunity to do so. Let me introduce the four of you have all freight oh gomez from the Accountability Office senior director for environmental risk the institute for Economic Freedom doctor greenstone Milton Friedman and the honorable Stephen Benjamin mayor from south carolina. So you are now recognized to give an oral presentation of your testimony for five minutes. I am pleased to be here today how to limit the federal government fiscal exposure by reducing risk this is an area on our high risk list since 2013 recent disaster has shown the need for planning and for investing in resilience the statement discusses Climate Change in the us and the federal Government Faces exposure from Climate Change risk and the extent the federal government has invested in resilience the economic effects of Climate Change could be significant and not easily distributed across sectors and regions of the us. For example the southeast and midwest to Great Plains Region have greater combined economic effects because of Property Damage and changes in the other two regions. Law the estimates are due to modeling and to better manage climate risk earlier the share we reported the federal Government Faces fiscal exposure in several areas. Including disaster aid and federal Insurance Program and federal property and land. The rising number of disasters are a key source of federal fiscal exposure since 2005 federal funding for Disaster Assistance is at least 450 billion according to the Global Change Research Program the cost are projected to increase as certain extreme weather events become more frequent and intense due to Climate Change. In addition the National Flood Insurance Program and federal crop Insurance Program are sources of federal exposure in part to the vulnerability of the insured property and crops due to Climate Change 2013 through 2017 bosses paid under these programs told us 51. 3 billion as of april of this year, the National Flood Insurance Program was 21 billion in debt to the treasury. With regard to federal property that government owns hundreds of thousands of facilities such as defense installations and manages millions of acres of land that could be affected by Climate Change. For example in september 2018 Hurricane Florence damaged camp lejeune and other marine corps facilities in North Carolina resulting in a preliminary repair estimate of three. 6 billion. One month later Hurricane Michael devastated the air force base in florida with the repair estimate of 3 billion. One way to reduce federal exposure is reduce or eliminate longterm risk from Natural Hazards for example september 2018 we reported the codes had greater damages in texas and florida during the 2017 Hurricane Season Congress Also passed the Disaster Recovery act of 2018 that had additional improvements at the state and local level. With regard to resilience the federal government has made limited investments it does not have a strategic approach for investing in Climate Resilience no one is in charge when it comes to prioritizing projects across the federal government no federal entity is looking holistically at how to strategically prioritize projects to address the nations most significant climate risk. The federal government could reduce fiscal exposure to focus and coordinate federal efforts. We have a total of 62 recommendations and since december last year 25 remain open. Some of these identify key efforts needed to help plan and manage climate risk and direct efforts to a common goal such as improving resilience. I conclude my Opening Statement. Thank you very much. You are now recognized for five minutes. Thank you mister chairman. I am the senior director from the Nature Conservancy in 2011 to 2018 serving california insurance commissioner. Climate scientist concluded contributing to catastrophic weather events sealevel rise and coastal river flooding are all made more severe and frequent by global temperature rise. Resulting in loss of life and injury and destruction. Producing these losses they are rising over time. From 19822019 those extreme weather is 1 billion more of one. 7 trillion. In 2017 Global Economic losses 300 million and global insured was 380 billion the highest in history United States Insurance Companies are responding to Severe Weather events by raising prices and limiting coverage for certain risk when the rot risk is too high. Flood insurance is an example how they could respond. Decades a gay they concluded the risk was too high and since then they have excluded coverage for flood risk in all standard Home Insurance policies. Today to focus on extreme wildfires but are increasing in and to have between two and six more damaging wildfires. In 2018 california had the largest wildfires in history 150 lives lost tens of thousands of structures destroyed and in california alone 21 dust in 2018 followed by 13 billion of losses the largest ever. Home insurers have responded by raising prices for insurance and declining to renew policies or refusing to write new policies if they have too high of a risk of wildfire and california is marching steadily to the uninsurable future so what do we do . Greenhouse gas emissions have to be reduced drastically in one important and overlooked way is Natural Climate Solutions giving a 37 percent carbon reduction. More public and private investment as a broad effort to meet the targets we need to address the ecosystems in the integrated fashion with collaboration and innovation and funding to Community Strategic that is a safe and Cost Effective way to remove overgrown brush that is resilient to wildfires. The 2018 fire fix help to stabilize however must be coupled with Risk Reduction programs. And employees an Important Role with the Risk Reduction benefits they could design it offer risk of wildfires they take into account Home Insurance pricing and availability the wildfire risk is one example of how insurers may respond to those risks associated with Climate Change hurricane risk and risk that are all examples of the consequences. The insurance sector can play a role to manage these risks but it is the underlying driver that need to be addressed with reducing Greenhouse Gas emissions and also to adapt the risk otherwise to find yourselves in an uninsured world. Thank you. Now recognized for five minutes. On the Milton Friedman professor of economics and in Energy Policy institute in chicago. The cost of carbon is the cost of deciding them of pollutants in the atmosphere. To account for potential benefits to society to lower carbon emission and to the carbon required gas emissions so first let me give a little history. In 2009 i convened the Interagency Working Group to determine a governmentwide value. In 2016 the government estimated social cost at 50 per ton of co2. Since its inception has been used as a foundational tool to have 150 federal regulations with Energy Efficiency but to date the benefits conclude the total cost of carbon have risen but there are several reasons that it is too low and as a consequence undermines the wellbeing of the american people. Number one in 2018 the Trump Administration instituted a smaller social cost of one or seven dollars compared to 50 based on two faulty assumptions it uses an appropriately high discount rates that are not supported by economic theory or Financial Markets. Second it doesnt account for those damages outside of the United States and other countries do not take emission cuts to benefit us citizens. The special role of global diplomacy can produce demonstrable benefits for citizens and we are failing. The absence of meaningful progress at madrid climate talks as evidence of what happens when we retreat. Number two the social cost of carbon is no longer of economic understanding is noted by the 2017 report by the National Academy of sciences. As to fill the whole i started to collate Climate Impact lab implementing the recommendations to update the cost of carbon. The finding is changes of mortality rates due to temperature changes alone will lead to a social cost of 24 per metric ton of co2. In context that 24 is ten times larger than the obama number of the mortality cost. In fact its half of the entire obama estimate and three times larger than the Trump Administrations entire cost of carbon. Number three while estimating climate damages and subject to uncertainty with climate models had estimations this actually strengthens the case. Economics reveal that people show a propensity toward risk aversion the entire industry of insurance depends on the idea that people dislike risk theyre willing to pay a premium and for this reason us governments estimate social cost of carbon under all administration is likely to low. What to do . Given the scale of the climate challenge and the urgent need of resources for other societal challenges with those cheapest reductions both in today and in the future. The surest way to achieve reductions is to price with a carbon tax while implementing a cap and trade program. At the right level these pricing approaches solve the main problem they dont take account of the damages to release co2. This approach great appeal as it unleashes Market Forces to uncover the least expensive way to reduce emissions by incentivizing the reductions families and businesses can reduce emissions and have money for other priorities. In contrast current federal state policy is a hodgepodge to target emissions in different sectors in different ways with different degrees of intensity. Iowa recent paper by colleagues at yale and harvard the range of cost of co2 mitigation policy is extremely wide less than ten dollars per ton to over 1000 per ton and both are relatively expensive in the sense they vastly exceed the government 2017 social cost. We have unnecessarily small reduction given the amount of money we are spending. In contrast price of carbon would prioritize those at the highest bang for the buck. Turning to future reductions the private sector on its own will not invest enough to uncover new approaches to reduce co2 because many returns would flow to their competitors. The fact that private firms lack in r d is a market failure in the government can addresses to give subsidies for Funding Research directly. In conclusion the United States needs to have mitigating Climate Change with the climate images that are calming one coming. Using the best Available Evidence to deliver the inexpensive reductions of emissions necessary today and in the future. Thank you. You are now recognized for five minutes. Thank you and the Ranking Member of the subcommittee members for the opportunity to testify with the loss of our chairman cummings and we all miss him the agree on a great deal the pleasure of serving the last ten years of Columbia South carolina we also the proud home to fort jackson with chains a proximally 45000 soldiers per year. Climate change effects s im glad youre holding this hearing and we are especially pleased if something was to hear on the impact on local budgets and economies mayors in cities throughout the country grapple with the impacts to mitigate those impacts to make the committees more resilient to modernize the infrastructure. Therefore its our hope of a Robust National Climate Action program to bolsters the efforts that were taken that existential challenge and in columbia firsthand Climate Change is already impacting cities and infrastructure over three days with Hurricane Joaquin with 30 inches of rain in this great city. Taking the lives of south carolinians. Into rapture sewer means enclosed over 100 streets to reach multiple dams and then in the aftermath it was the resilience of mitigation and was city infrastructure. And then increased low rainfall and to show the 1969 colon the experience above 90 degrees fahrenheit. And then we expect that to double and from the hometown also the days number 90 degrees. Also manual labor so last year through june of this year the honor of representing my fellow mayors throughout the country at the council of mayors Nonpartisan Organization and then a coalition dedicated to Municipal Bonds for 100 Percent Clean Energy at a time they take renewed providence to be at the forefront of Public Policy innovation. My written testimony and submitted for the record to save millions of dollars to update infrastructure then to upgrade the Transportation System moving forward significantly and took the next step or a target a target to power the community with Renewable Energy by 2035. And us actively and with the first evergreen bonds the First Tranche in a 95 milliondollar plan and the storm water drainage issues. Local government collects about 15 percent of our nations tax revenue we are expected to deliver core Governmental Services that we all understand that make up the heart of our Civilized Society in the western world we cannot tackle the test one the task on her own we need a strong federal local partnership or the conference of mayors has issued a call to action i have included as an attachment. But that existential threat and what that means to the world and with that Economic Impact it has on the cities and thank you for your work on this major generational challenge so let me emphasize part of the reason you are here the subcommittee on the environment for oversight and this is the number one issue they are trying to tackle and in that process looking at three phases of hearings so what did we know and we already had hearings for testimony and evidence was provided showing that shell and exxon new about the impact with more Severe Weather events and to help the public as well as lawmakers to understand both the economic and human impact of Climate Change. Unfortunately it is often quite easy to figure out the human impact of Climate Change. Counting the number of people who died from that event. We also had testimony from others talking about the human impact that is more difficult to ascertain but also quite important to get to that information. So that is what we are here today to help the public understand that Climate Change or Severe Weather events creates much greater damage and Economic Impact without having Climate Change at our doorstep. And in moving into the third phase of hearings it is the future quite literally painting two different pictures. One nirvana and one apocalyptic if we do nothing what type of world we will be leaving for our children and grandchildren and future generations. But if we do take action now how we can dramatically impact what the world will look like for future generations even if we take action now there will be impact from Climate Change that we cannot stop immediately and we will experience negative consequences for our past inactions are you being here today is extremely helpful to allow us to help educate the public and lawmakers of the impact of Climate Change in the end way to address that so i will bounce around talk about Economic Impact and with the social cost of carbon and i would like to try to pin you down a little bit from your comment there is a wide range of estimates on the social impact from carbon. I am curious, do you have a hard number to the cost per ton should be quicks and 51 from the Obama Administration in plain english that means every time we met 1 ton of co2 into the atmosphere we are giving the world 51 worth of damages. There is some variability so that would tend to increase how much you want to spend to protect ourselves. Some of the things that go into the calculation per ton is short in lifespan and healthcare cost due to air pollution as an example. Thank you mister chairman. There are some big and this will eventually want us to revise estimates people have shorter and sicker lives there would be wide parts of the United States that will be subject to flooding and to storm surge and that will have those political decisions about which parts of the United States and that will show up in crop yields house bill 763 on the carbon tax and in your mind from the economic standpoint does that need to be brought in progressively or to a 50dollar fee quicks. The best estimate we have is 50 so that starts around theyre the most important thing to get it around zero that the exact number is critical. My projection is that as we learn more 50 will look small and we may want to have room to increase two and reflect that. That the cost is underpriced by at least 50 with the social impact cost if that occurs therefore that have a fossil fuel should be an appropriate price also to suggest those same operators and manufacturers that we implemented this toward green and Clean Industries and fuels. There is very little innovation in response to no market. Until there is a price signal we are just hoping for the best and then even much less than what we had imagined that youre not mutually exclusive to work in tandem that would be the best to go down that path. That depends on what one wants to do with the revenues as insurance commissioner for the state of california with the Economic Impact the average citizens and homeowners with more Severe Weather event in the underlying insurance for homes if we do not provide greater check to homeowners and as pointed out there is no question there is no question the price of Home Insurance in certain geographies is going to go up you see this in california and the price of Home Insurance and high risk fire areas so in 200 or 350 percent more as a higher fire risk we have 100 filings this year seeking increases in rates and with the losses of 2018 and 2017. And that availability problem this applies broadly to all insurance. If the risk is so extreme there isnt a price the insurer can it except we have seen that with 50 years ago Home Insurance decided the flood risk was high so now they dont have that and i do see that in california with wild fire risk with a significant uptick of non renewals or writing new insurance now that has an effect on the real estate market. We dont have hard data yet but there is the implication there. As the price goes up it becomes increasingly difficult for those on fixed incomes to afford insurance that has consequences and that means they may go without insurance and then they havent had anything to fall back on to help recover so to be consequences of climate driven risk. Along those lines not long ago i was in miami and saw firsthand in the neighborhood causing flooding on an average sunny day and the implications from Flood Insurance and Title Insurance and the marketability of these properties you could get a good sense of what would occur in many municipal areas around the country. Can you speak to the Economic Impact of the real estate markets and homeownership markets cracks. In some regions of the country primarily due to flooding and Sea Level Rise we see that from studies that are telling us that. And really and those that see the impact because thats whats taking place. From a federal perspective how we can provide assistance whether through information to help them interpret and have the information to make the seawall higher or the building codes and standards. And we have recommended many things the federal government can do to help the state and local. What happens if due to some of these events with these wildfires with apocalyptic events and many people lose their homes we have seen church carriers go out of business because they cannot pay the claim for go the federal government acts as a backstop often. Is there a concern we may come to a day there are so many cataclysmic events the federal government is not in a position or unwilling to backstop those situations quick. Thats a good question. What we place on the high risk list and these are the National Flood Insurance Program at the high risk designation because that program was never really designed to generate enough revenue to pay for the expenses. The National Flood Insurance Program owes the treasury 21 billion currently actually congress wrote off a similar amount recently. So yes these are growing federal fiscal exposures that the Government Faces and it is unsustainable. Mayor, i want to circle back to a couple of comments. Talk about how you prepare and plan for greater Climate Change related events. What do you and your city council, how do you budget and plan to address future climate related events for your city quick. With increased focus on resiliency and mitigation we run a tight ship fiscally we finished the last nine years of Budget Surplus we always have a balanced budget with clean books with a smart investment in infrastructure that now is expensive because of resiliency with the longterm cost of that debt so even in the wonderful Interest Rate environment all of those have to be borne by the taxpayers. We decided voted unanimously we dont on a lot of things of a 100 Million Investment to address those flooding areas but over the last six years 750 million of consumer infrastructure to protect our three rivers but it has gotten that much more expensive as you build in the cost of resiliency and we have had the opportunity because of previous decisions made by the federal government to mitigate some of those cost meeting block grants are a significant opportunity that should be renewed we believe strongly in the program of focus targeted investment of resilient infrastructure as a smart move and certainly one of the major challenges we face i mentioned the role that we are allowed to make these investments with water and sewer and most of that investment almost 98 percent is borne by local governments not by the state or federal. We lost in the jobs act the ability to have the taxexempt debt getting that back someday is the case but now every single decision that we make since 2015 certainly includes an additional cost that it will have to be borrowed and fees over a period of time already affecting governments i will also say thriving on the American Economic experiment with the gdp of the metropolitan economies it would be wonderful to find creative ways as laid out in the statement to repatriate some of those dollars back home to make Smart Investments in infrastructure. Suffice it to say it would be helpful to have leadership from washington dc recognizing not just the impact and seriousness of Climate Change but also working to pass infrastructure bills to help local municipalities and states better address these issues quick. Absolutely since 2005 the federal government has spent 430 billion in Disaster Relief funding if we had that type of investment on the front and its in amazing but we can do to mitigate those damages to our homes and businesses. If you have information, my understanding is that wall street more and more looks at pricing in the impact of Climate Change into the price of bonds. I am curious if you have come across that type of information as well. Ultimately has the mayor talked about the green bonds his city has issued, if there is additional 25 basis points to be priced in at the municipal level the price dictated based on the geographical location, that is a cost ultimately passed on to the citizens of those areas doctor do you want to weigh in on that cracks. Thank you mister chairman. Let me start by saying we are not debate if we should have Climate Change we now have it. And the impacts on mitigated Climate Change is beginning to show up talking about the impacts in the city and you pointed to the Financial Markets. Importantly to show up with insurance rates that mister jones highlighted that causes people that there has been a growing recognition on wall street to show up in bond prices and a variety of other Asset Classes as well. But theres a big difference between the impact showing up versus policy that sends a clear signal which would also affect markets and that would affect markets in different ways and reduce the emissions that are occurring but the prices you point to are more or sending signals how they should adapt to treat that as if it cant be changed but sending a price signal to cap and trade or carbon tax would also affect Financial Markets and be very powerful at reducing the amount of Climate Change. I would agree with that we have seen that in the insurance sector for example , lots of activity in that area. One of the things i wanted to mention is a few years ago the comptroller general convened a forum of private Sector Companies to come to gao to what they were doing with the impacts of Climate Change. With oil and Gas Infrastructure where he was sourcing the materials from so they could not harvest some of those ingredients and to show how the private sector has been reacting so thats what we showed in that report to make the edgy 20 Financial Stability board in 2016 that Climate Change poses a Systemic Risk with led by the private sector 2017 which is a series of recommendations with regard to the real economy the first of those is disclosure thats not happening and second to recommend Financial Sector undertake stress testing of its portfolios with those transition and that is not happening. And another challenge is although a number of other International Financial regulators are taking up these recommendations in commercial and mortgagebacked securities and then to ascertain the differences of physical risk in each sector and there was a wide variance. Analysisl sector and the rating agencies to their credit are beginning to take on the capacity to look at these impacts but i have yet to mainstream into Core Financial ratings. Theyve cast a large cloud of doubt over the web that should include a reflection of these risks and that is a huge mistake. And there was another sai set we havent had the chance to talk about what are the risks associated with markets, technologies, governments moving away from the fossil fuel based economy which is where we need to go. Principal investors in this regard and banks lending into the sectors need to be looking at so we need to be doing a lot more with regards to the Financial Systems than we are currently doing in this country and that is a big area of exposure. Allow me to ask you this question as well. Thereve been a few ongoing battles between the state of california and one of those has been over the cafe standards at the emissions where california has had the ability to provide Higher Standards from auto manufacturers which 13 other states and the country of canada follow as well and the administration is trying to overturn the right as well as other states and canada certainly can make their own decision tha but will look to california for its leadership in this area. What is the impact for not just the people in those states but across the country and the world if that is enacted . I think the impacts are negative and multiple. One is more emissions generally but a sizable portion of what california is trying to accomplish is a significant reductions in Greenhouse Gas emissions which is one of the sectors. Undercutting californias ability to administer a separate standard will have significant negative consequences on the battle against Greenhouse Gas emissions. Its worth noting for the public, 40 of the imports in the United States that come in by ship coming through los angeles and long beach port. California certainly would like to continue to be able to monitor and set appropriate levels so those goods reach all 435 districts. You wanted to add a comment as well . Its only partially related d and i apologize if it is too far afield but i think that cafe is a terrific example of what i think of as the hodgepodge approach to regulating co2. To the solution to this would be able to have an economy wide price on carbon and instead we have these kind of sector by sector things that dont directly target carbon and in the case of cafe we are getting reductions probably at the cost of one to 200 per ton. If instead we were able to rely on clear price signals i think there are reductions available for ten or 15 a ton. We are paying about ten times what we would be able to pay for using a more direct mechanism. Votes are about to be called and i di would take this opportunito ask all four of you is there anything else you would like to add . Often in these hearings and briefings, you hear somebody else Say Something or a question gets asked that you were not able to respond to, and this is your chance to jump in and fill in any holes that you might have seemed. Thank you for the leadership and we look forward to continuing the conversation. I would add one thing im very well aware of pushing the Carbon Pricing that the bill does. The politics are that its complicated and one key got the nod as the concern about distributional issues and what will happen to the lowincome middleclass families and i just want to highlight which i know you know very well from the nature of your bill the carbon tax creates revenue that can be directly refunded to consumers and can actually improve the standing of lowincome and middleclass families. I think that while its often brought up it isnt a true impediment. At the portion of the legislation, thank you. Mr. Jones. We would like to thank you for your leadership, mr. Chairman, and think the committee for holding this important series of hearings. We would urge you to consider solutions to mitigat to mitigatn adaptinmitigate and adaptthem t. I would urge you to consider delving into the potential risk of the Financial System that we had a chance to talk about a little bit earlier. There is one bright spot among the financial regulators and that is the Trading Commission with the leadership of the subcommittee on climate risk that is going to be making a recommendation with regards to all u. S. Financial regulators on the steps they should take to address this risk and i think this would be an interesting subject for the committee to take up and finally, with regards to insurance, its a very important mechanism to help manage risk in communities and families, individuals, businesses recovering from catastrophic events but if we dont dramatically and quickly reduce the underlying driver of that risk, insurance isnt going to solve the problem it will be increasingly unavailable. We are always happy to assist congress and i want to thank you for bringing attention to our work and reports. I cant think each of you enough for attending the briefing and preventing your comments. At the end of the process of the official hearings we will be having addressing Climate Change and waiting out as i mentioned earlier one of two roads that we are faced with, our hope is to provide concrete recommendations as to how we can achieve a road that reduces the impact of Climate Change. What are the tools and th in thl box we can pull out to make a difference, recognizing that there is no single tool that is going to be the panacea for addressing this issue is going to take multiple tools to accomplish the outcomes that we desire. So your comments today will be a perfect final report that we take forward. In addition, dont be surprised if we may call on you again to attend another hearing down the road, and we certainly would hope that they would consider participating in doing so. Finally, along those lines as well as we continue to understand the true economic and human impact of Climate Change, we also need to further understand what are those tools, what are the emerging technologies that can help us in our quest and if you are aware of the emerging technologies or economic tools and incentives that should be considered under the tax code to move in the right directio direction to movr country in the right direction, please bring back to the committees attention. With that, again, i appreciate all of you taking the time to come to washington, d. C. To provide us with your knowledge and to this very important briefing. With that, the briefing is adjourned. Thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] is it was a sunday morning, i believe, or a saturday. It was empty because all of the semites were gone. 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Kennedy had no prepared text from his campaign speechwriters into this kind of the wha do whi going to say. He was someone who could speak to people directly and give them bad news and the counted upon to do the right thing. Someone decided that kennedy would come to 70th and broadway straight to address the crowd that had gathered. The great sense that you have as you walk through the space is how understated it is. Its not ostentatious but if anything it speaks deeply of quality, and i think that is harrisons character through and through, understated but of quality. Senate