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Economy

The Rising Costs of Natural Catastrophes

On insurance and extreme weather, Nissan’s new business plan, and paint that cools

The Rising Costs of Natural Catastrophes
Heatmap Illustration/Getty Images

Current conditions: A cloud of Saharan dust is sweeping toward southern Europe • Malaysia’s oppressive heat wave could last through mid-April • The water temperature is about 48 degrees Fahrenheit in Baltimore Harbor, where rescuers are searching for survivors after the collapse of the Francis Scott Key Bridge.

THE TOP FIVE

1. Soaring losses from natural disasters ‘a new norm,’ says insurance giant

Extremely costly natural disasters have become “a new norm,” and insured losses will double in 10 years due to climate change, according to one of the world’s largest reinsurers. In a report published today, Swiss Re, a firm that provides insurance for insurers, calculated that natural disasters resulted in insured losses of $108 billion in 2023, marking the fourth consecutive year of losses exceeding $100 billion. As Bloomberg noted, “only about 40% of economic losses globally are insured, meaning the total economic losses are much higher.”

The main reason losses were so high was the sheer frequency with which “medium severity” disasters occurred. These are events that cost between $1 billion and $5 billion, and they’re on the rise. Severe thunderstorms (also called severe convective storms, or SCS) have become “the second largest loss-making peril” behind tropical cyclones. The Midwest accounted for the highest percentage of insured losses from severe thunderstorms in the U.S. last year:

Swiss Re

The report calls for adaptation measures, but concludes that “in the face of climate change, adaptation and insurance can only go so far. Mitigation of greenhouse gas emissions is also essential to counter the build-up of physical risks.”

2. Nissan outlines plan to slash EV manufacturing costs

Nissan yesterday announced a new business plan it hopes will “ensure sustainable growth and profitability” as it faces competition from Chinese rivals. Perhaps unsurprisingly, the strategy leans heavily on electric vehicles. The Japanese carmaker will launch 16 new EV models over the next three years and slash EV manufacturing costs by 30% in an effort to reach cost parity with internal combustion engine vehicles by 2030. It’ll bring down costs by incorporating battery innovations and new manufacturing processes. And the company will make EVs in “families,” starting with a “main vehicle” and then building on that design with new variations that can be significantly cheaper and faster to produce.

3. EV startup Fisker faces bankruptcy

The New York Stock Exchange yesterday halted trading of electric vehicle startup Fisker Inc.’s shares and said it planned to delist the stock due to “abnormally low” share prices. The company had been in talks with a major automaker about a potential investment, but the deal fell through, which means its financials are in bad shape and bankruptcy may be looming. If the cash-strapped company fails, it would join the ranks of other embattled EV startups including Aptera and Detroit Automotive. Last week Fisker paused its EV production.

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  • 4. Trader Joe’s raises banana prices

    Trader Joe’s is hiking the price of bananas for the first time in two decades. The grocery chain has long sold individual bananas for just 19 cents, but has raised the price to 23 cents. A spokesperson told CNN the change was due to cost increases. Earlier this month, industry experts gathering at the World Banana Forum warned that climate change was hurting banana production and supply chains and that this would soon result in higher banana prices for consumers.

    5. Study shows how ‘cooling’ paints can reduce urban temperatures

    Special “cooling” paint can significantly reduce the temperatures of surfaces in cities and help pedestrians feel cooler, according to a new study published in the journal Sustainable Cities and Society. The research is the first demonstration of how paints made to reflect the sun’s heat actually perform in the real world. For the study, researchers at Singapore’s Nanyang Technological University covered surfaces such as walls, rooftops, and pavements in an industrial neighborhood in Singapore. They found those surfaces were up to 2 degrees Celsius cooler than uncoated areas during the hottest time of the day, and that this helped pedestrians feel 1.5 degrees cooler. “This is a minimally intrusive solution for urban cooling that has an immediate effect,” said the study’s lead author, Dr. E V S Kiran Kumar Donthu. “By reducing the amount of heat absorbed in urban structures, we also reduce heat load in buildings, consequently reducing indoor air-conditioning energy consumption.” Below you can see some of the coated test surfaces:

    Nanyang Technological University

    THE KICKER

    Ohio has approved the Oak Run Solar Project, a 6,000-acre solar farm in Madison County that will also graze 1,000 sheep and grow crops. The farm will be the nation’s largest “agrivoltaics” project.

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    Adaptation

    The ‘Buffer’ That Can Protect a Town from Wildfires

    Paradise, California, is snatching up high-risk properties to create a defensive perimeter and prevent the town from burning again.

    Homes as a wildfire buffer.
    Heatmap Illustration/Getty Images

    The 2018 Camp Fire was the deadliest wildfire in California’s history, wiping out 90% of the structures in the mountain town of Paradise and killing at least 85 people in a matter of hours. Investigations afterward found that Paradise’s town planners had ignored warnings of the fire risk to its residents and forgone common-sense preparations that would have saved lives. In the years since, the Camp Fire has consequently become a cautionary tale for similar communities in high-risk wildfire areas — places like Chinese Camp, a small historic landmark in the Sierra Nevada foothills that dramatically burned to the ground last week as part of the nearly 14,000-acre TCU September Lightning Complex.

    More recently, Paradise has also become a model for how a town can rebuild wisely after a wildfire. At least some of that is due to the work of Dan Efseaff, the director of the Paradise Recreation and Park District, who has launched a program to identify and acquire some of the highest-risk, hardest-to-access properties in the Camp Fire burn scar. Though he has a limited total operating budget of around $5.5 million and relies heavily on the charity of local property owners (he’s currently in the process of applying for a $15 million grant with a $5 million match for the program) Efseaff has nevertheless managed to build the beginning of a defensible buffer of managed parkland around Paradise that could potentially buy the town time in the case of a future wildfire.

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    Spotlight

    How the Tax Bill Is Empowering Anti-Renewables Activists

    A war of attrition is now turning in opponents’ favor.

    Massachusetts and solar panels.
    Heatmap Illustration/Library of Congress, Getty Images

    A solar developer’s defeat in Massachusetts last week reveals just how much stronger project opponents are on the battlefield after the de facto repeal of the Inflation Reduction Act.

    Last week, solar developer PureSky pulled five projects under development around the western Massachusetts town of Shutesbury. PureSky’s facilities had been in the works for years and would together represent what the developer has claimed would be one of the state’s largest solar projects thus far. In a statement, the company laid blame on “broader policy and regulatory headwinds,” including the state’s existing renewables incentives not keeping pace with rising costs and “federal policy updates,” which PureSky said were “making it harder to finance projects like those proposed near Shutesbury.”

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    Hotspots

    The Midwest Is Becoming Even Tougher for Solar Projects

    And more on the week’s most important conflicts around renewables.

    The United States.
    Heatmap Illustration/Getty Images

    1. Wells County, Indiana – One of the nation’s most at-risk solar projects may now be prompting a full on moratorium.

    • Late last week, this county was teed up to potentially advance a new restrictive solar ordinance that would’ve cut off zoning access for large-scale facilities. That’s obviously bad for developers. But it would’ve still allowed solar facilities up to 50 acres and grandfathered in projects that had previously signed agreements with local officials.
    • However, solar opponents swamped the county Area Planning Commission meeting to decide on the ordinance, turning it into an over four-hour display in which many requested in public comments to outright ban solar projects entirely without a grandfathering clause.
    • It’s clear part of the opposition is inflamed over the EDF Paddlefish Solar project, which we ranked last year as one of the nation’s top imperiled renewables facilities in progress. The project has already resulted in a moratorium in another county, Huntington.
    • Although the Paddlefish project is not unique in its risks, it is what we view as a bellwether for the future of solar development in farming communities, as the Fort Wayne-adjacent county is a picturesque display of many areas across the United States. Pro-renewables advocates have sought to tamp down opposition with tactics such as a direct text messaging campaign, which I previously scooped last week.
    • Yet despite the counter-communications, momentum is heading in the other direction. At the meeting, officials ultimately decided to punt a decision to next month so they could edit their draft ordinance to assuage aggrieved residents.
    • Also worth noting: anyone could see from Heatmap Pro data that this county would be an incredibly difficult fight for a solar developer. Despite a slim majority of local support for renewable energy, the county has a nearly 100% opposition risk rating, due in no small part to its large agricultural workforce and MAGA leanings.

    2. Clark County, Ohio – Another Ohio county has significantly restricted renewable energy development, this time with big political implications.

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