2022 Predictions

Link: https://www.linkedin.com/pulse/2022-predictions-max-rudolph/

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Regional conflicts are heating up around the world. Resource needs will accelerate the trend. Fresh water in the Himalayas provide multiple countries who have nuclear arsenals. Oil and rare earth metals could also trigger a war. Climatic events are happening more often, so the cost takes money away from solutions while making the goals seem more obvious.

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Resource depletion has no recommended debit treatment from accountants, but attribution analysis is going to do the work after the fact and charge companies for their past practices through the court system. I assume this is how the asbestos risk played out but I will need to learn more about similar historical events as these events play out. How should this enter your thought process as an investor? In 2021 I wrote 4 papers about climate; Climate System, Integrated Assessment Models, Impact of Climate Change on Investors and Municipalities and Climate Change. They are part of the SOA’s Environmental Risk Series. The impact of climate on investors will continue to evolve for many years. One topic of interest to me is how TCFD (disclosures) will play out – we could see “bad” investments like oil companies, gun makers and cigarette companies become privately owned. This would make it harder to apply peer pressure so is an important reminder to be careful what you wish for!

Author(s): Max Rudolph

Publication Date: 16 Jan 2022

Publication Site: LinkedIn

Fossil Fuel Investments Are Burning California Pensioners

Link: https://www.dailyposter.com/fossil-fuel-investments-are-burning-california-pensioners/

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California’s two biggest pension funds have invested a staggering $43 billion in fossil fuel companies, and their opposition to divesting from the industry — including fighting legislation that would have stopped them investing in firms involved with the controversial Dakota Access Pipeline (DAPL) — has cost retirees and taxpayers billions, research shows.

The findings hammer home the fact that the divestment movement isn’t just about protecting the planet from the worst effects of climate change. With the oil, gas, and coal industries all on the decline, pension funds’ refusal to divest from fossil fuels is also endangering the retirement savings of teachers, government employees, and other rank-and-file public workers who have paid into these funds.

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While it is common knowledge that fossil fuel stocks have underperformed the broader stock market, large bank stocks have been lackluster as well — including the banks that helped finance DAPL.

If CalPERS and CalSTRS had not opposed the original DAPL divestment legislation, they could have instead put pressure on the companies involved not to move forward with the pipeline, and such efforts might have been enough to stop the project, given the pipeline project’s turbulent history.

Author(s): MATTHEW CUNNINGHAM-COOK, ANDREW PEREZ

Publication Date: 11 Jan 2022

Publication Site: The Daily Poster

NYS Pension Fund Commits $2 Billion to Climate Transition Index

Link:https://www.osc.state.ny.us/press/releases/2021/12/nys-pension-fund-commits-2-billion-climate-transition-index?utm_source=weekly%20news&utm_medium=email&utm_term=climate%20transition%20index&utm_content=20211212&utm_campaign=pension%20fund&section=feature

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The New York State Common Retirement Fund (Fund) will invest $2 billion in an index focused on reducing the risks of climate change and capitalizing on the opportunities arising from the transition to a low-carbon economy, State Comptroller Thomas P. DiNapoli, trustee of the fund, announced today. This is part of the Comptroller’s Climate Action Plan announced in 2019 and his goal for the Fund of net-zero greenhouse gas emissions by 2040.

The Fund will allocate $2 billion within its internally managed public equity portfolio to FTSE Russell’s Russell 1000 TPI Climate Transition Index (CTI) in connection with the Fund’s Sustainable Investment & Climate Solutions (SICS) program.

Author(s): Thomas DiNapoli

Publication Date: 9 Dec 2021

Publication Site: Office of the NY State Comptroller

Finance Group Fails To Deliver at COP26

Link:https://www.nakedcapitalism.com/2021/11/finance-group-fails-to-deliver-at-cop26.html

Excerpt:

Not One of 60 Major Commercial Banks Has ‘Leadership Position on Decarbonizing’

Yet the trend line of bank finance for fossil fuels is rising not declining, and not a single big commercial bank has released a plan to stop financing new fossil fuels.

It’s striking that unlike any of other sectors implicated in speeding global warming, not a single one of the 60 major commercial banks has staked out a leadership position on decarbonizing.

On the other labelled days of COP, there were all kinds of interesting mash-ups of governments, private sector actors, and think tanks offering a web of creative announcements about their determination to set ambition on one thing or another. By contrast, on Private Finance Day, the one and only announcement was relating to GFANZ. Banks and investors didn’t even try to push out additional good ideas. Everyone covered themselves in the GFANZ penumbra and then went quiet.

Author(s): Michael Northrop

Publication Date: 30 Nov 2021

Publication Site: naked capitalism

Equity, tech and climate change: Three big takeaways from the infrastructure bill

Link:https://lizfarmer.substack.com/p/equity-tech-climate-change-infrastructure-bill

Excerpt:

Green bonds. Issuance is expected to hit a record high this year and so are municipal green bond offerings. My friend and colleague Mark Funkhouser explains why local leaders should take advantage of this alignment of financial interests and moral ones.

More spending flexibility in the American Rescue Plan. Legislation now making its way through Congress would allow governments to use some of their ARP funds for highway and transit projects and to address natural disasters.

Rising income tax revenue. The K-shaped recovery and federal stimulus has resulted in the largest median state personal income jump in 14 years. According to Fitch Ratings, state income tax revenues increased by 6.3% last year and this year is expected to produce similar growth. This has implications for public pensionstax cuts and — of course — the 2022 midterms.

Author(s): Liz Farmer

Publication Date: 17 Nov 2021

Publication Site: Long Story Short at substack

Jerry Theodorou on Natural Disasters and Insurance

Link:https://www.c-span.org/video/?514314-3/washington-journal-jerry-theodorou-discusses-natural-disasters-insurance

Excerpt: [transcript from closed captioning]

Jerry Theodorou
IT IS HARD TO CALCULATE. THE INSURANCE INDUSTRY WAS FACED WITH MASSIVE FLOOD LOSSES BUT FOUND THAT IT DID NOT HAVE THE DATA TO PRICE IT ACCURATELY. IT STARTED REDUCING AND EXCLUDING FLOOD FROM STANDARD INSURANCE POLICIES AND THE GOVERNMENT STEPPED IN TO CREATE THE PROGRAM. TO PROVIDE SOME LEVEL OF FLOOD INSURANCE. THERE IS AN INHERENT TENSION IN THE PROGRAM BECAUSE IT HAS TWO GOALS IN CONTENTION WITH EACH OTHER. THE GOAL TO PROVIDE AFFORDABLE FLOOD INSURANCE AND SOME DEGREE OF FISCAL SOUNDNESS. THEY ARE PAYING ABOUT $400 BILLION IN INTEREST, WHICH IS A BURDEN, SO IF WE FOCUS STRICTLY ON AFFORDABILITY, YOU WILL HAVE UNDERPRICED INSURANCE, NOT PRICED ACCORDING TO THE ACTUAL VOLUME. THIS IS WHAT IS HAPPENING NOW WITH LARGELY IMPACT — OVERPRICED INSURANCE. FOCUSING ON FISCAL SOUNDNESS, YOU WILL HAVE THOSE EXPOSED. IT IS A LITTLE BIT OF A BALANCE. DO YOU WANT FISCAL SOUNDNESS? PROBABLY A LITTLE BIT OF BOTH, WHICH IS MY NEXT MONTH, OCTOBER 1, THE NEW BEATING WILL BE INTRODUCED TO MAKE IT MAKE THE PRICING AND THE COST OF FLOOD INSURANCE MORE APPROPRIATE FOR THE LEVEL OF RISK. IT IS EITHER OR. IF YOU LIVE IN A FLOOD ZONE, YOU PAY HIGHER PREMIUMS. IT IS NOT BLACK-AND-WHITE BECAUSE THERE IS A SPECTRUM FOR THE DEGREE OF RISK. IT WILL INTRODUCE MORE VARIABLES SO THAT IT IS MORE APPROPRIATELY CORRELATED WITH THE LEVEL OF RISK.

Author(s): Jerry Theodorou, John McArdle

Publication Date: 5 Sept 2021

Publication Site: C-SPAN, Washington Journal

Your New Woke 401(k)

Link:https://www.wsj.com/articles/your-new-woke-401-k-retirement-savings-esg-erisa-biden-administration-department-of-labor-proposal-11634753095

Excerpt:

While Democrats in Congress negotiate over trillions of dollars in new spending, the Biden Administration is quietly advancing its agenda through regulation. Witness a little-noticed proposed rule last week by the Labor Department that will add new political directives to your retirement savings.

The Administration says the rule will make it easier for retirement plans to offer 401(k) funds focused on ESG (environmental, social and governance) objectives. In fact, the rule will coerce workers and businesses into supporting progressive policies.

An important Trump Labor rule last fall reinforced that the Employee Retirement Income Security Act (Erisa) requires retirement plan fiduciaries to act “solely in the interest” of participants. The rule prevented pension plans and asset managers from considering ESG factors like climate, workforce diversity and political donations unless they had a “material effect on the return and risk of an investment.”

The Biden DOL plans to scrap the Trump rule while putting retirement sponsors and asset managers on notice that they have a fiduciary duty to include ESG in investment decisions. The proposed rule “makes clear that climate change and other ESG factors are often material” and thus in many instances should be considered “in the assessment of investment risks and returns.”

Author(s): WSJ editorial board

Publication Date: 20 Oct 2021

Publication Site: WSJ

Flood-Threat Assessment Finds Danger Goes Far Beyond U.S. Homes

Link:https://www.bloomberg.com/graphics/2021-flood-risk-critical-infrastructure/

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Nearly a quarter of U.S. critical infrastructure—utilities, airports, police stations and more—is at risk of being inundated by flooding, according to a new report by First Street Foundation, a Brooklyn nonprofit dedicated to making climate risk more visible to the public.

Roughly 14% of Americans’ properties face direct risk from major storms, but the study shows danger extends far from those property lines.

The authors say the report provides the first holistic understanding of flood risk beyond individual property level. In addition to critical infrastructure, the report assesses commercial buildings, millions of miles of roads and socially important institutions such as schools and museums.

“Even if your home is far from the risk of flooding or forest fires, you may not so easily escape the systemic impacts from vulnerable critical infrastructure that sometimes extends hundreds of miles,” said Jesse Keenan, a climate-change and real-estate expert at Tulane University in New Orleans.

Author(s): Leslie Kaufman, Rachael Dottle, Mira Rojanasakul

Publication Date: 11 October 2021

Publication Site: Bloomberg

California Extreme heat deaths show climate change risks

Link:https://www.latimes.com/projects/california-extreme-heat-deaths-show-climate-change-risks/

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Between 2010 and 2019, the hottest decade on record, California’s official data from death certificates attributed 599 deaths to heat exposure.

But a Times analysis found that the true toll is probably six times higher. An examination of mortality data from this period shows that thousands more people died on extremely hot days than would have been typical during milder weather. All told, the analysis estimates that extreme heat caused about 3,900 deaths.

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California’s undercount is one of the ways it overlooks the threat posed by heat waves, even as climate change delivers them more frequently, more intensely and with deadlier consequences. Other states are moving with greater urgency to confront this public health challenge that disproportionately imperils the elderly and vulnerable.

Extreme heat did not suddenly become a threat to Californians’ lives. The Times found that state leaders have ignored years of warnings from within their own agencies that heat was becoming more dangerous. Data reviewed by The Times show heat-related hospital visits increasing in some parts of California, including Los Angeles County, for at least the last 15 years.

Github: https://github.com/datadesk/extreme-heat-excess-deaths-analysis

Author(s): Anna M. Phillips, Tony Barboza, Ruben Vives, Sean Greene

Publication Date: 7 Oct 2021

Publication Site: LA Times

Average Annual Temperature for Select Countries and Global Scale

Link: https://github.com/resource-watch/blog-analysis/tree/master/req_016_facebook_average_surface_temperature

Description:

This file describes analysis that was done by the Resource Watch team for Facebook to be used to display increased temperatures for select countries in their newly launched Climate Science Information Center. The goal of this analysis is to calculate the average monthly and annual temperatures in numerous countries at the national and state/provincial level and globally from 1950 through 2020.

Check out the Climate Science Information Center (CSIC) for up to date information on climate data in your area from trusted sources. And go to Resource Watch to explore over 300 datasets covering topics from food, forests, water, oceans, cities, energy, climate, and society. This analysis was originally performed by Kristine Lister and was QC’d by Weiqi Zhou.

Author: Kristine Lister

Date Accessed: 12 Oct 2021

Location: github

Investigating the Mass Hysteria Over 1 Degree in Climate Change Since 1850

Link: https://mishtalk.com/economics/investigating-the-mass-hysteria-over-1-degree-in-climate-change-since-1850

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Temperatures have risen a a best estimate of 1.07°C since 1850 due to man-made causes.

The sea rise between 1971 and 2006 was 1.3 mm per year. That’s 0.0511811 inches per year. 

The sea rise between 2006 and 2018 was 3.7 mm per year. That’s 0.145669 inches per year.

Under all emissions scenarios, global warming of 1.5°C and 2°C will be exceeded during the 21st century.

Author(s): Mike Shedlock

Publication Date: 5 September 2021

Publication Site: Mish Talk

Let’s Review 50 Years of Dire Climate Forecasts and What Actually Happened

Link: https://mishtalk.com/economics/lets-review-50-years-of-dire-climate-forecasts-and-what-actually-happened

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1970 Boston Globe: Scientist Predicts New Ice Age by 21st Century said James P. Lodge, a scientist at the National Center for Atmospheric Research.
1971 Washington Post: Disastrous New Ice Age Coming says S.I. Rasool at NASA.
1972 Brown University Letter to President Nixon: Warning on Global Cooling
1974 The Guardian: Space Satellites Show Ice Age Coming Fast

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1989 Salon: New York City’s West Side Highway underwater by 2019 said Jim Hansen the scientist who lectured Congress in 1988 about the greenhouse effect.
2000 The Independent: “Snowfalls are a thing of the past. Our children will not know what snow is,” says senior climate researcher.
2004 The Guardian: The Pentagon Tells Bush Climate Change Will Destroy Us. “Britain will be Siberian in less than 20 years,” the Pentagon told Bush.

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2013 The Guardian: US Navy Predicts Ice Free Arctic by 2016. “The US Navy’s department of Oceanography uses complex modeling to makes its forecast more accurate than others.
2014 John Kerry: “We have 500 days to Avoid Climate Chaos” discussed Sec of State John Kerry and French Foreign Minister Laurent Fabious at a joint meeting.

Author(s): Mike Shedlock

Publication Date: 18 February 2021

Publication Site: Mish Talk