[Congressional Record Volume 166, Number 47 (Wednesday, March 11, 2020)]
[Senate]
[Pages S1694-S1697]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CLIMATE CHANGE
Mr. WHITEHOUSE. Mr. President, I rise today for ``Time to Wake Up''
speech No. 258 and my increasingly battered chart here to urge
colleagues in the Senate to wake up and see the looming danger we face
from climate change.
Just look at the recent climate effects in our Southern Hemisphere.
The most devastating wildfires anyone can remember have ripped across
Australia, burned more than a fifth of Australia's forests, destroying
thousands of homes, killing an estimated 1 billion animals, and making
a day of breathing air in Sydney like smoking 37 cigarettes. In the
ocean off Australia, there are new warnings that the Great Barrier
Reef--a Wonder of the World visible from space--is doomed.
The warmest temperatures ever were recorded in Antarctica--a 70-
degree day when the average February temperature would be 33 degrees.
Here is the Thwaites Glacier. Here on Antarctica's Thwaites Glacier,
scientists drilled through 2,000 feet of ice, down to the ocean water
below, and discovered water 2 degrees above freezing. With 70 degrees
above and 2 degrees above, it is a melting sandwich. Losing that
glacier would trigger almost 3 feet of sea level rise, and that glacier
is going.
Sea level rise brings me to the crash warnings that are the subject
of this speech, crash warnings that are flashing throughout the
economy. Sea level rise connects to these crash warnings because some
of these crash warnings revolve around sea level rise in its crashing
coastal property values. Other warnings are of a crash in what
economists call the carbon bubble.
I have a binder of these warnings that I put together, and I sent
this binder to every Member of the Senate in February of 2019. Every
Senator has all of the warnings that are compiled in that binder. I
have a letter, too, that follows up on the warnings in that binder--
just about the warnings that have emerged since February of 2019--in
fact, mostly just from this year. I sent this letter to all of the
members of the Senate Banking Committee because the economic crashes
that are warned of are within the Senate Banking Committee's
jurisdiction, and that committee has the responsibility to be the
distant early warning system for the rest of us in the Senate about
these warnings.
Mr. President, I ask unanimous consent to have printed in the Record
the letter to the Committee on Banking, Housing, and Urban Affairs,
dated February 6, 2020.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, February 6, 2020.
Hon. Mike Crapo,
Chairman, Committee on Banking, Housing and Urban Affairs,
U.S. Senate, Washington, DC.
Hon. Sherrod Brown,
Ranking Member, Committee on Banking, Housing and Urban
Affairs, U.S. Senate, Washington, DC.
Dear Chairman Crapo and Ranking Member Brown: With the
impeachment procedure behind us, we return to regular work,
and I write to bring your attention to further financial
warnings related to the climate crisis.
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You will recall that I wrote to you on December 2, 2019
about climate-related warnings emanating from the financial
and regulatory community. The two lead warnings were of a
coastal property value crash (which Freddie Mac has warned
could be worse than the 2008 mortgage meltdown), and a carbon
asset bubble crash (described by U.K. financial regulator the
Bank of England as a ``systemic risk''--meaning the crash
could cascade beyond fossil fuel companies out into the
global economy). A copy of that letter is attached for you as
a reference.
The warnings continue.
The Bank for International Settlements, described sometimes
as the bank of the central banks, has published a report,
``The Green Swan: Central banking and financial stability in
the age of climate change.'' This report recognizes and
reinforces the many previous warnings that ``[c]limate change
could . . . be the cause of the next systemic financial
crisis'' (p. 1), and that ``[c]entral banks, regulators and
supervisors have increasingly recognised that climate change
is a source of major systemic financial risks'' (p. 65,
emphasis added), indeed that ``climate catastrophes are even
more serious than most systemic financial crises.'' (p. 3)
The ``Green Swan'' report goes on to describe the stunning
scale of these risks: that ``[e]xceeding climate tipping
points could lead to catastrophic and irreversible impacts
that would make quantifying financial damages impossible.''
(p. 1, emphasis added; in an odd coincidence, that language
mirrors President Trump's 2009 warning in a New York Times ad
that climate change consequences would be ``catastrophic and
irreversible.'')
The ``Green Swan'' report warns that this risk is so
extreme because the risk is dual, and so dangerous because it
is so unpredictable: ``The complex chain reactions and
cascade effects associated with both physical and transition
risks could generate fundamentally unpredictable
environmental, geopolitical, social and economic dynamics.''
(p. 3, emphasis added). Like the ``black swans'' from which
this report derives its title, ``both physical and transition
risks are characterised by deep uncertainty and nonlinearity,
their chances of occurrence are not reflected in past data,
and the possibility of extreme values cannot be ruled out.''
(p. 3, emphasis added).
The ``Green Swan'' report warns that this dangerously
unpredictable risk can put our financial stability in danger,
citing ``growing awareness'' that these ``physical and
transition risks . . . would affect the stability of the
financial sector.'' (p. 65); and could be irremediable by
ordinary methods. The impact could be so great as to ``make
quantifying financial damages impossible,'' (p. 1), the
effects would be ``catastrophic and irreversible'' (p. 1),
and these ``climate-related risks will remain largely
unhedgeable as long as system-wide action is not
undertaken.'' (p. 1)
In this looming, ominous cloud of danger and uncertainty,
one thing is certain. ``[T]here is certainty about the need
for ambitious actions despite prevailing uncertainty
regarding the timing and nature of impacts of climate
change.'' (p. 3) The report identifies ``an array of
actions'': ``The most obvious ones are the need for carbon
pricing and for systematic disclosure of climate-related
risks by the private sector.'' (p. 2, emphasis added). To
achieve this safe and certain path, the report calls urgently
for an end to ``[t]he procrastination that has been the
dominant modus operandi of many governments for quite a
while.'' (p. 66) (As you know, I take the position that our
procrastination in Congress has been acquired by the fossil
fuel industry through its armada of front groups and dark
money channels, which will make the procrastination all the
more blameworthy when the full story emerges.)
The stem warning of the ``Green Swan'' report, and the
certain path to safety from the hazard, are echoed in a
recent open letter from BlackRock CEO Larry Fink.
In his letter to CEOs, Fink notes that ``[c]limate change
has become a defining factor in companies' long-term
prospects,'' and that as a result ``we are on the edge of a
fundamental reshaping of finance'' (emphasis in original),
one that is ``compelling investors to reassess core
assumptions about modem finance.''
This extraordinary language is based, as in the ``Green
Swan'' report, on the dual nature of the hazard, ``of how
climate risk will impact both our physical world and the
global system that finances economic growth.'' The conclusion
is harsh: ``In the near future--and sooner than most
anticipate--there will be a significant reallocation of
capital.'' (emphasis in original) The phrase ``significant
reallocation of capital'' couches in bland economic terms a
dramatic and painful human prospect.
BlackRock also agrees on the safe path: that ``government
must lead the way in this transition,'' and that ``the scale
and scope of government action'' is ``one of the most
important questions.'' In this regard, ``carbon pricing [is]
essential to combating climate change.'' (emphasis added)
In addition to the BIS ``Green Swan'' report and the
BlackRock letter, in the time since my last letter the
following organizations have also brought similar warnings
forward.
On December 18, 2019, the Bank of England published a
discussion paper outlining its proposal for climate stress
tests for corporations under its regulatory supervision.
In January 2020, the management consultancy McKinsey
released a comprehensive report on the physical risks of
climate change. McKinsey warns that climate change could
``make long-duration borrowing unavailable, impact insurance
cost and availability, and reduce terminal values.'' It could
``trigger capital reallocation and asset repricing.'' On
January 15, 2020, the World Economic Forum's Global Risks
Report identified the top five most likely risks facing the
world over the next 10 years, and all were climate-related
risks.
A January 2020 report from the Stanford Graduate School of
Business notes that ``the financial risks from climate change
are systemic'' and ``singular in nature,'' and ``[g]lobal
economic losses from climate change could reach $23
trillion--three or four times the scale of the 2008 financial
crisis.''
Given the scope and scale of these warnings, and given that
Senators depend on the Banking Committee as our official eyes
and ears into such hazards, I hope that the Committee will
rapidly hold searching and fair hearings about these danger
warnings.
Sincerely,
Sheldon Whitehouse,
U.S. Senator.
Mr. WHITEHOUSE. Mr. President, the warnings are serious. They come
from some of our foremost financial experts. So let's walk through what
we have in store if we keep sleepwalking through the climate crisis.
As I said, warning No. 1: coastal property value crash.
Freddie Mac, not an environmental organization but a giant mortgage
company, warned that rising sea levels will prompt a crash in coastal
property values that will be worse than the housing crash that
triggered the 2008 financial crisis.
First Street Foundation found that rising seas have already caused
$16 billion in lost property values in coastal homes from Maine to
Texas.
Moody's, the bond rating agency, warned that climate risk will
trigger downgrades in coastal communities' bond ratings.
BlackRock--the biggest asset manager in the world--estimated that, by
the end of the century, climate change will cause coastal communities
annual losses that will average up to 15 percent of local GDP with the
hardest hit communities, obviously, hit far worse. Hello, Florida.
Warning No. 2: a carbon asset bubble crash.
The Bank of England, the Bank of France, the Bank of Canada, and the
European Central Bank--all backed by top-tier, peer-reviewed economic
papers--all warn that fossil fuel assets are dramatically overvalued on
fossil fuel companies' books, that these assets are actually uneconomic
and will become stranded, and that the resulting ``carbon asset
bubble'' crash will swamp the world economy.
How bad is it? It is called systemic financial risk. Systemic
financial risk is finance speak for risk to the entire economic system.
Do you remember the 2008 financial crisis? Bad home mortgages blew up
more than mortgage companies; they caused a brutal economic recession,
and millions of people lost their jobs, their homes, and their
retirement savings. We are still recovering from that collapse. That is
a systemic financial crisis, and the warnings are that this one will be
worse.
In my recent letter, I looked at the more recent warnings. Here is
the Bank for International Settlements' recent Green Swan report. The
title is a reference to the metaphor of a black swan--an unpredictable
event with calamitous consequences for the economy.
Below is what my letter to the Banking Committee quoted from this
Green Swan report.
Page No. 1 warns: ``[c]limate change could . . . be the cause of the
next systemic financial crisis.''
From page No. 65: ``Central banks, regulators and supervisors have
increasingly recognized that climate change is a source of major
systemic financial risks,'' and ``climate catastrophes are even more
serious than most systemic financial crises.''
Again, from page No. 1: ``Exceeding climate tipping points could lead
to catastrophic and irreversible impacts that would make quantifying
financial damages impossible.''
Let's slow down and do that one again: ``Exceeding climate tipping
points could lead to catastrophic and irreversible impacts that would
make quantifying financial damages impossible.''
As a little aside here, it is an odd coincidence that the report's
language of ``catastrophic and irreversible'' mirrors President Trump's
warning in a New
[[Page S1696]]
York Times ad in 2009 that the consequences of climate change would be
catastrophic and irreversible--the same words, ``catastrophic and
irreversible.'' This was said by Trump in 2009 and was written in the
Bank for International Settlements' Green Swan report just 2 months
ago.
Back to the Green Swan report, on page No. 3: ``The complex chain
reactions and cascad[ing] effects associated with both physical and
transition risks could generate fundamentally unpredictable
environmental, geopolitical, social and economic dynamics.''
Fundamentally unpredictable economic dynamics? Fundamentally
unpredictable social dynamics?
Again, on page No. 1: ``climate-related risks will remain largely
unhedgeable as long as system-wide action is not undertaken.''
Back to page No. 3 again: Like the black swans from which the report
derives its title, the ``physical and transition risks are
characterised by deep uncertainty and nonlinearity, their chances of
occurrence are not reflected in past data, and the possibility of
extreme values cannot be ruled out''--the possibility of extreme
values.
Another big warning that I quoted in my letter to the Banking
Committee came from BlackRock CEO Larry Fink. In his open letter to
CEOs, Fink echoes the Green Swan warning, writing: ``[c]limate change
has become a defining factor in companies' long-term prospects.'' As a
result, ``we are on the edge of a fundamental reshaping of finance,''
one that is ``compelling investors to reassess core assumptions about
modern finance.''
Folks, BlackRock is the biggest asset manager in the world. When its
CEO speaks of a fundamental reshaping of modern finance and a shaking
of its core assumptions, that is serious stuff.
In my letter, I cite other recent warnings of this systemic financial
risk, all since I distributed the binder, many just this year. Here are
a few instances.
In December, the Bank of England proposed climate stress tests for
corporations under its regulatory supervision. We started bank
financial stress tests after the 2008 mortgage crisis, and central
banks are starting to do the same for the climate crisis.
In January, massive management consultant McKinsey--again, not a
green group but, presumably, a pretty smart group--warned that climate
change could ``make long-duration borrowing unavailable, impact
insurance cost and availability, and reduce terminal values.'' Climate
change could ``trigger capital reallocation and asset repricing,''
which is finance speak for the fundamental upheaval of our economy.
January: The World Economic Forum puts out its Global Risks Report
that identifies the five most likely global risks facing the world over
the next 10 years. Five for five, every single one of them was climate
related--all five.
Finally, from the Stanford business school's Corporations and Society
Initiative is a report that warns ``the financial risks from climate
change are systemic''--there is that word again, ``systemic''--that
these risks are ``singular in nature,'' like the green swan-black swan
warning, and that ``[g]lobal economic losses from climate change could
reach $23 trillion--three or four times the scale of the 2008 Financial
Crisis.''
Pause for a moment, and recall the agony of the 2008 financial
crisis. Losses in the stock market wiped out nearly $8 trillion.
Housing values cratered; retirement savings vanished; and Americans
lost jobs, lost homes, and lost nearly $10 trillion in wealth. Global
economic growth went negative. We all went home to States where we
witnessed extraordinary human suffering. Three or four times that? The
Stanford report is telling us that we are courting financial peril--
systemic risk--the likes of which we cannot imagine.
Climate change is a natural force. It has blown carbon dioxide levels
way outside what humankind has ever experienced. It is depositing the
equivalent of four Hiroshima-sized atomic bombs of excess heat per
second into our oceans--per second--and it is an economic bomb
positioned beneath our economy, its detonator ticking down steadily.
We have a chance to defuse the bomb. With all of these warnings that
I have described in this binder and that I have described in my letter
to the Committee on Banking, Housing, and Urban Affairs comes a clear
description of the solution: Government must act. Here are the
solutions that I quote in my letter to the Committee on Banking,
Housing, and Urban Affairs.
On page No. 66 of Green Swan: End ``[t]he procrastination that has
been the dominant modus operandi of many governments for quite a
while.''
By the way, here, it really hasn't been procrastination; it has been
obstruction. It has been obstruction by the fossil fuel industry, its
money, and its minions. Clearly, we haven't done anything serious about
it, so that has to end.
On page No. 2 of the Green Swan: ``The most obvious ones are the need
for carbon pricing and for systematic disclosure of climate-related
risks by the private sector.''
It is, indeed, obvious to people in the financial sector. It is only
not obvious to us because fossil fuel money swirls all around this
place, trying to convince us that the obvious isn't true. Yet BlackRock
CEO Fink's letter echoes that call for carbon pricing.
He says, ``carbon pricing [is] essential to combating climate
change.''
So we have the warnings, and we have the solutions. We have
everything except the will to act. The reason we don't have the will to
act is because we have dark money, political predators controlling our
behavior in ways that are deeply, deeply inappropriate.
Assume that these warnings are correct. When this blows, Senators who
didn't help us act will have to come up with a better excuse than:
Well, we weren't warned--because we were warned. We have been warned
over and over and over again. We have been warned by experts. We have
been warned by major financial institutions. We have been warned by the
custodians of our economy, the central banks.
Colleagues, you have the warnings in your inbox. When this blows up,
when coastal property values crash, or when the carbon bubble bursts,
or worse, when both happen--nothing says both can't happen--it is not
going to look good to say: Yes, I was warned, but, you see, my
political party is funded by the fossil fuel industry so naturally I
did nothing. That is how you lose the privilege of representing people.
It was a bit of a tempest in a teapot. It happened in Rhode Island 28
years ago, but I have lived through this. We had a financial crisis in
Rhode Island in 1991. I was working for the Governor, who came in to
have to clean up that horrible mess, and I was there for the following
election after the financial crisis hit.
The legislators who slept through the warnings lost their jobs in a
tidal wave of popular outrage. In the subsequent election, the 1992
election, more than one-third of Rhode Island's General Assembly was
either voted out or didn't even bother running again.
There was a movie, when I went to law school, about the Harvard Law
School. I think it was called ``One L.'' They brought in the freshman
class of the One L class, and the crotchety old dean looked at them all
and said: A third of you are going to be gone before you graduate
because this is so demanding. Look to your right. Look to your left.
One of you will not be here at graduation.
When this thing blows, that is going to be a ``Look to your left.
Look to your right. One of you won't be here afterwards'' moment here
in the U.S. Senate.
You think people are mad now, wait until this hits. Wait until these
warnings come true, and they know you were warned. Wait for that.
It is time to wake up.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. BOOKER. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BOOKER. Mr. President, before I begin my formal remarks, I just
want to state that the Senate page class--I don't know if you have
noticed--are better than adequate. They are doing a good job for the
United States of America, and I appreciate them in their service to the
U.S. Senate.
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