“A few months back, because I really know how to live, I spent a night reading “The Green Swan: Central banking and financial stability in the age of climate change.” The report, released in January 2020 by the Bank for International Settlements, argued that central banks, concerned as they are with the stability of prices and financial systems, were negligent if they ignored climate change. The economies we know are inseparable from the long climatic peace in which they were built. But that peace is ending. There are no stable prices in a burning world.
This is one of those papers where the measured language preferred by technocrats strains against the horrors they are trying to describe. What emerges is almost an apocalyptic form of poetry. One line, in particular, has rung in my head for months. “Climate-related risks will remain largely unhedgeable as long as systemwide action is not undertaken.” If you know anything about financial regulators, you know the word “unhedgeable” is an alarm bell shrieking into the night. Financial systems are built to hedge risk. When a global risk is unhedgeable, the danger it poses is existential.
The point of the report is simply this: The world’s economic systems teeter atop “backward-looking risk assessment models that merely extrapolate historical trends.” But the future will not be like the past. Our models are degrading by the day, and we don’t understand — we don’t want to understand — how much in society could topple when they fail, and how much suffering that could bring. One place to start is by recognizing how fragile the basic infrastructure of civilization is even now, in this climate, in rich countries.
Which brings me to Texas. Two facts from that crisis have gotten less attention than they deserve. First, the cold in Texas was not a generational climatic disaster. The problem, as Roger Pielke Jr., an environmental analyst at the University of Colorado at Boulder, wrote in his newsletter, is that the Electric Reliability Council of Texas’ worst-case scenario planning used a 2011 cold snap that was a one-in-10-year weather event. It wasn’t even the worst cold Texas experienced in living memory: in 1989 temperatures and electricity generation (as a percentage of peak demand) dropped even further than they did in 2011. Texas hadn’t just failed to prepare for the far future. It failed to prepare for the recent past.
Second, it could have been so much worse. Bill Magness, the president and chief executive of ERCOT, said Texas was “seconds and minutes” from complete energy system collapse — the kind where the system needs to be rebuilt, not just rebooted. “If we had allowed a catastrophic blackout to happen, we wouldn’t be talking today about hopefully getting most customers their power back,” Mr. Magness said. “We’d be talking about how many months it might be before you get your power back.”
This was not the worst weather imaginable and this was not the worst outcome imaginable. Climate change promises far more violent events to come. But this is what it looks like when we face a rare-but-predictable stretch of extreme weather, in a rich state in a rich country. The result was nearly 80 deaths — and counting — including an 11-year-old boy found frozen in his bed. I can barely stand to write those words.” . . .