April 2024 – Page 5 – This is Not Cool

Climate’s Big Short: Florida Insurance and a Financial Apocalypse

Trillions in real estate increasingly exposed to existential climate risk.
More and more experts as worried, for near term, about things like infrastructure and insurance as they are about ice and corals.

Andrew Dessler in The Climate Brink:

I’ve become convinced that insurance is one of the places where climate change will manifest itself most clearly in our everyday lives and I’ve written about it before on TCB (https://www.theclimatebrink.com/p/climate-change-and-insurance-the). Because of that, I wanted to bring to your attention this great post from the Moving Day Substack. It describes the details of how the insurance market, in collusion with State government, is using smoke and mirrors to push climate risk onto the general public — i.e., you and me. Insurance companies are among the most sophisticated evaluators of risk, so when climate risk gets too hot for them to handle, we should be worried.

Harvard Business School Faculty and Research:

This paper studies how homeowners insurance markets respond to growing climate losses and how this impacts mortgage market dynamics. Using Florida as a case study, we show that traditional insurers are exiting high risk areas, and new lower quality insurers are entering and filling the gap. These new insurers service the riskiest areas, are less diversified, hold less capital, and 20 percent of them become insolvent. We trace their growth to a lax insurance regulatory environment.
Yet, despite their low quality, these insurers secure high financial stability ratings, not from traditional rating agencies, but from emerging rating agencies. Importantly, these ratings are high enough to meet the minimum rating requirements set by government-sponsored enterprises (GSEs). We find that these new insurers would not meet GSE eligibility thresholds if subjected to traditional rating agencies’ methodologies. We then examine the implications of these dynamics for mortgage markets.
We show that lenders respond to the decline in insurance quality by selling a large portion of exposed loans to the GSEs. We quantify the counterparty risk by examining the surge in serious delinquencies and foreclosure around the landfall of Hurricane Irma. Our results show that the GSEs bear a large share of insurance counterparty risk, which is driven by their mis-calibrated insurer eligibility requirements and lax insurance regulation.

Susan Crawford in Moving Day:

Insurance makes the mortgage market work. You can’t get a mortgage from a bank (these days, likely a nonbank) without insurance, because the lender needs some kind of guarantee that you’ll pay them back. Your pledge to the bank that it can have your house if you don’t repay the loan has to be accompanied by property insurance that will preserve the collateral value of the property that secures the mortgage.

But what if the insurer is unreliable and isn’t able to pay claims following a major storm? Then everything happens at once: properties are damaged at the same time that the insurer becomes insolvent, borrowers default on their loans, and lenders have losses on their books. Multiply those losses, and you get tremendous economic pain to entire financial systems as credit freezes and markets plunge.

The 2008 financial crisis was triggered by the insolvency of nonbanks heavily involved in dodgy mortgages. You probably remember that credit rating agencies were at the heart of the problem: they gave high ratings to mortgage-backed securities that were bought by nonbanks (and investors around the globe). Those MBSs became worthless and the whole house of cards tumbled.

Today, a similar story appears to be playing out in Florida, where 10 percent of the nation’s homeowners live: a dubious credit rating agency is giving high “financial stability” ratings to flimsy insurers. A whole series of players is going along with those ratings, using them to check boxes and issue mortgages. And then those actors are swiftly shifting the resulting mass of risk to Fannie Mae and Freddie Mac. The GSEs are accepting these inflated financial stability rankings and buying these smelly mortgages. The strategy is, must be, to have the feds bail out the situation when storms strike and the casino suddenly closes its doors.

Climate Change Bringing Crushing Economic Costs

Trillions.

Phys.org:

Even if CO₂ emissions were to be drastically cut down starting today, the world economy is already committed to an income reduction of 19% until 2050 due to climate change, a study published in Nature finds. These damages are six times larger than the mitigation costs needed to limit global warming to two degrees.

Based on empirical data from more than 1,600 regions worldwide over the past 40 years, scientists at the Potsdam Institute for Climate Impact Research (PIK) assessed future impacts of changing climatic conditions on economic growth and their persistence.

“Strong income reductions are projected for the majority of regions, including North America and Europe, with South Asia and Africa being most strongly affected. These are caused by the impact of climate change on various aspects that are relevant for economic growth such as agricultural yields, labor productivity or infrastructure,” says PIK scientist and first author of the study Maximilian Kotz.

Overall, global annual damages are estimated to be at 38 trillion dollars, with a likely range of 19–59 trillion dollars in 2050. These damages mainly result from rising temperatures but also from changes in rainfall and temperature variability. Accounting for other weather extremes such as storms or wildfires could further raise them.

Associated Press:

These damages are compared to a baseline of no climate change and are then applied against overall expected global growth in gross domestic product, said study lead author Max Kotz, a climate scientist. So while it’s 19% globally less than it could have been with no climate change, in most places, income will still grow, just not as much because of warmer temperatures.

Irony Alert: CNBC Video Profiled UAE Cloud Seeding Effort, 2 Months Ago

Above, this video from 2 months ago profiled the United Arab Emirate’s cloud seeding program, and some successes in creating rainfall in desert areas, as part of a “greening desert” effort.
Ironically, Dubai and nearby areas were subject to an off the chart rain event this week, which the climate denial community attributed to the cloud seeding program, something this Reuters report refutes.
“UAE’s meteorology agency told Reuters there were no such operations before the storm”.

Reuters:

In the UAE, a record 254 millimetres (10 inches) of rainfall was recorded in Al Ain, a city bordering Oman. It was the largest ever in a 24-hour period since records started in 1949.

DID CLOUD SEEDING CAUSE THE STORM?

Rainfall is rare in the UAE and elsewhere on the Arabian Peninsula, that is typically known for its dry desert climate. Summer air temperatures can soar above 50 degrees Celsius.

But the UAE and Oman also lack drainage systems to cope with heavy rains and submerged roads are not uncommon during rainfall.

Following Tuesday’s events, questions were raised whether cloud seeding, a process that the UAE frequently conducts, could have caused the heavy rains.

Cloud seeding is a process in which chemicals are implanted into clouds to increase rainfall in an environment where water scarcity is a concern.

The UAE, located in one of the hottest and driest regions on earth, has been leading the effort to seed clouds and increase precipitation.

But the UAE’s meteorology agency told Reuters there were no such operations before the storm.

WHAT ABOUT ClIMATE CHANGE?

The huge rainfall was instead likely due to a normal weather system that was exacerbated by climate change, experts say.

A low pressure system in the upper atmosphere, coupled with low pressure at the surface had acted like a pressure ‘squeeze’ on the air, according to Esraa Alnaqbi, a senior forecaster at the UAE government’s National Centre of Meteorology.

That squeeze, intensified by the contrast between warmer temperatures at ground level and colder temperatures higher up, created the conditions for the powerful thunderstorm, she said.

The “abnormal phenomenon” was not unexpected in April as when the season changes the pressure changes rapidly, she said, adding that climate change also likely contributed to the storm.

Climate scientists say that rising global temperatures, caused by human-led climate change, is leading to more extreme weather events around the world, including intense rainfall.

Beefing Up Grid is Critical, But Don’t Panic

New roadmap released this week, for expanding grid capacity quickly without waiting for new transmission to be built.
Huge topic, I’ll start summarizing here and have more postings later.

Canary Media:

The DOE’s three-to-five-year roadmap starts with directing billions of dollars into “innovative grid deployments,” featuring technologies ranging from advanced grid equipment to next-generation grid-control software platforms, that can serve as templates for utilities across the nation.

It also recommends that utilities and their state regulators alter existing policies — like cost-of-service structures, which reward utilities for spending money on grid infrastructure — that have stymied adoption of these technologies in the U.S., compared with in Europe, Australia, and other parts of the world.

The goal of the DOE’s plan is to make such technologies a standard part of how power grids are built and operated across the country. That could solve big grid challenges in far less time than it takes to build new power lines — something the country is struggling to do, despite the urgent need to rapidly connect more clean energy to the grid in order to displace fossil fuels.

“We all know that we need new expansion of the grid, but we also all know that it takes over a decade right now to build some new transmission lines,” Maria Robinson, director of the DOE’s Grid Deployment Office, said in a Monday press event introducing the report. “The solutions that we talk about in this report are ready to go today and can serve as a bridge to address near-term concerns and needs.”

Smarter Grids Can Meet New Demands

First of all, we have to accelerate the rollout of new clean energy, solar, wind and battery storage.
That said, a lot of the panicky rhetoric about “running out” of electricity might be a bit overblown, or amplified by some utilities who like to build power plants, but also have other, cheaper options.
So much info coming out on this topic in recent weeks, I am breaking this up into smaller bites. Stay tuned.

Distilled:

Last month, the energy modeling nonprofit Energy Innovation released a report showing how utilities can meet growing demand without building new fossil fuel plants. They found many alternatives that don’t just result in fewer emissions, but would also cut utility bills across the country.

Some of those solutions have a long track record of success and simply need to be deployed at a greater scale. Energy efficiency—the breakout star of last year’s global climate conference—is one such solution.

Between 2006 and 2021, utility energy efficiency programs cut electricity demand by 220 TWh, as much power as the entire state of Florida consumes each year. Efficiency programs like these were one of the main reasons why power demand remained flat for the last 15 years. But many utilities are investing less in these programs than they were in 2019.

Duke Energy—the utility that wants to build a country’s worth of natural gas capacity—invests less in energy efficiency than most utilities in the country, according to the American Council for an Energy-Efficient Economy (ACEEE).

Jeff Berardelli on Dubai’s Desert Deluge

Jeff Berardelli is Chief Meteorologist at WFLA in Tampa, and he’s doing a great job with these spots highlighting climate topics.

Here he pushes back, again, on the idea that the worst-in-recorded history rain bomb in Dubai was somehow due only to cloud seeding nearby, something that has apparently been going on for years, without causing this kind of event.

“Cloud Seeding” Distraction Doesn’t Dampen Dubai Rain Dump

Denier and right wing asset Judith Curry sought to distract from massive rain Dubai rain dump with a “cloud seeding” dodge.
Science twitter pounced.

Note also that "it was cloud seeding" is a deflective conspiratorial framing ("HAARP", "contrails", "space lasers") used by bad actors (via social media) to deflect attention from the role human-caused climate change is playing in amplifying weather extremes https://t.co/nDDC77IE3b
— Prof Michael E. Mann (@MichaelEMann) April 17, 2024

This ⬇️

People have been trying cloud seeding here in Texas for decades. NM just passed a bill to try it. But Andy says, "Cloud seeding is one of the most dubious practices in meteorology and it's often a scam that takes advantage of desperate people." https://t.co/gQlEAxUq8P
— Prof. Katharine Hayhoe (@KHayhoe) April 17, 2024

The massive rain bomb in #Dubai – 6”- almost 2 years of rain in a day, was due to a very blocked pattern and slow moving southern jet stream with embedded disturbances. That’s the primary cause. Could cloud “seeding” have enhanced it? Maybe, but something else was going on… 1/ pic.twitter.com/MD5d8CbGlV
— Jeff Berardelli (@WeatherProf) April 17, 2024

Cybertruck in a Pothole. Twitter a Distraction, or Worse, for Musk

Major investor:
“I’m a skeptic of Elon Musk’s management style at the moment, what got Tesla to be as successful as it is, was a very focused CEO who worked very hard for Tesla, but ever since he left Tesla and bought Twitter, basically no one’s been running the ship, and the ship is clearly having a lot of issues.”

Wall Street Journal:

Tesla has delayed deliveries of its Cybertruck in recent days, according to buyers, the latest stumble for the automaker facing weakening demand for its electric vehicles.

Buyers say Tesla pushed back the scheduled delivery date for the stainless steel pickup truck without giving a reason. It couldn’t be determined how many buyers were affected.

Tesla didn’t immediately return a request for comment Tuesday.

The Cybertruck, Tesla’s newest electric vehicle, hit the market in November. Elon Musk, the company’s chief executive, has warned the model is unlikely to generate significant cash flow before the end of the year. The unusual-looking pickup turns heads when it is seen on the street. It isn’t nearly as ubiquitous as other Tesla models but has been driven by celebrities including Kim Kardashian.

Bogus Anti Solar Claims Exposed by Columbia U.

Great new resource from Columbia University – Rebutting Claims about Solar, Wind, and Electric Vehicles. Of course, I’ve been doing this for some time, but it’s great to have a resource like this bookmarked.

There are takedowns for 33 common claims, I’ll post a few every day or so. By all means bookmark the original document – where all the assertions of fact are footnoted.

Columbia University:

False Claim #1: Electromagnetic fields from solar farms are harmful to human
health.
“The EMF (electromagnetic field) from solar farms poses serious health risks especially to those who have electromagnetic hypersensitivity.”
The electromagnetic fields generated at a solar farm are similar in strength and frequency to those of toaster ovens and other household appliances—and harmless to humans. A detailed analysis from North Carolina State University concluded that there is “no conclusive and consistent evidence” of “negative health impact[s] from the EMF [electromagnetic fields]
produced in a solar farm.”
EMF exposure levels vary according to the EMF source, proximity to the source, and duration of the exposure. On a solar farm, EMFs are highest around electrical equipment such as inverters. However, even when standing next to the very largest inverter at a utility-scale solar farm, one’s exposure level (up to 1,050 milligauss, or mG) is less than one’s exposure level while operating an electric can opener (up to 1,500 mG), and well within accepted exposure limits (up to 2,000 mG).
When standing just nine feet from a residential inverter, or 150 feet from a utility-scale inverter, one’s exposure drops to “very low levels of 0.5 mG or less, and in many cases . . . less than background levels (0.2 mG).”33 For comparison, a typical American’s average background exposure level is 1mG, reaching 6 mG when standing three feet from a refrigerator, and 50 mG when standing three feet from a microwave.
The electromagnetic fields present on a solar farm constitute “non-ionizing radiation,” which, by definition, generates “enough energy to move atoms in a molecule around (experienced as heat), but not enough energy to remove electrons from an atom or molecule (ionize) or to damage DNA.”

In addition, EMFs are extremely low in frequency, which means
they contain “less energy than other commonly encountered types of non-ionizing radiation like radio waves, infrared
radiation, and visible light.”

Tesla’s Greasy Patch

The EV transition continues, with Ford, as described below, seeing an 86 percent year-over-year increase in the first quarter.
But Tesla has some issues.
I wonder if anyone has quantified the effect that Elon Musk outing himself as a fascist pig has had on sales?

New York Times Climate Forward:

Tesla is in a bad spot.

The world’s largest electric carmaker on Monday told employees it would lay off more than 10 percent of its work force, and two senior executives said they were leaving.

Earlier this month Tesla announced a stunning drop in sales, delivering 387,000 cars worldwide in the first quarter, down 8.5 percent from the same time last year. The company’s stock has fallen more than 35 percent this year, including a 5.5 percent drop on Monday. Elon Musk, Tesla’s chief executive, appears strangely disengaged with the company’s stumbles and preoccupied with other pursuits.

Tesla is still the biggest electric vehicle manufacturer, credited with almost single-handedly creating the E.V. sector. As Tesla went, so went the industry.

But in a remarkably short period of time, the electric vehicle business appears to have untethered itself from Tesla.

American, Korean, Chinese and European carmakers all have big, durable E.V. product lines with growing sales. Ford sold 20,223 electric vehicles in the first quarter of the year, an increase of 86 percent from the previous year, making it the second best-selling E.V. brand in the U.S.

BMW said it delivered 82,700 all-electric cars around the world in the first three months of the year, up sharply from a year earlier. And in China, where Musk helped establish the market for electric vehicles, and the expertise to produce them, Tesla is losing its edge over Chinese competitors.

In recent months, total E.V. sales have softened a bit. But analysts expect long term sales to keep rising. Phasing out gas powered cars is an effective, and relatively easy, way to bring down planet warming emissions. And policy developments around the globe make it a near certainty that most big carmakers will be going all-in on E.V.s in the years ahead.