Carbon dioxide and methane emissions increase the amount of energy trapped in the atmosphere. This is a physical reality. We see the effects as the atmosphere goes crazy. Storms intensify. Heat waves last longer. Rain falls harder. Droughts cut deeper.
Insurance was always the way to manage risks from extreme weather. Soon, it’s not going to work. Already, State Farm and Allstate stopped insuring homes in California against wildfires. They can’t afford it. Rising ocean levels and wetter, wilder storms will make insurance for coastal — or Appalachian — homes cost more than the houses themselves.
Additionally, many roads, power lines, railways, ports and factories will become uninsurable. Rising heat will make some cities unlivable. Loss of value, interruption of business and market devaluation will render business as usual impossible to sustain.
This systemic risk threatens the foundations of the financial sector. Banks will not offer loans to buy uninsurable property. Credit markets will freeze. Capitalism as we know it will grind to a halt.
Don’t take my word for it. The above scenario comes from Günther Thallinger, director at the German financial giant Allianz SE, which holds $2.6 trillion of assets, of which $1.9 trillion are third-party assets.
Congress often refuses to push back against a Trump administration that is determined to burn more fossil fuels. The business-friendly members of Congress, including U.S. Rep. Lloyd Smucker, can defend successful entrepreneurial provisions in the Inflation Reduction Act such as clean energy tax credits.
Stopping climate change also protects the economy.
Daniel Erdman
Lancaster
