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I caught up with Brett Christophers, the professor who argued in The New York Times that the Inflation Reduction Act is a gift to a secretive group of financial firms.
To the extent that they’re aware of it, American progressives are generally pretty happy with President Joe Biden’s flagship climate law, the Inflation Reduction Act.
The I.R.A. is slated to cut U.S. greenhouse-gas pollution up to 40% below its all-time high. It’s the centerpiece of Biden’s unprecedented experiment to revive industrial policy with a climate-friendly bent.
But what if it will have a tragic and unforeseen consequence? Earlier this week, Brett Christophers, a geography professor at Uppsala University in Sweden, argued in The New York Times that the I.R.A.’s green subsidies will backfire. The law will “accelerate the growing private ownership of U.S. infrastructure,” he warned, “dismantling” FDR’s legacy and leading to a “wholesale transformation of the national landscape of infrastructure ownership.”
Christophers is particularly worried that the law will enable a group of companies called “alternative asset managers,” who are the subject of his new book, Our Lives in Their Portfolios. These secretive firms own hundreds of billions of dollars’ worth of highways, tunnels, water systems, and power plants worldwide, and Christophers argues that they wield a huge amount of control over our daily lives.
I am sympathetic to his argument — the creeping privatization of America’s roads, tunnels, and water systems is a big problem — but I am far less sure than he is that the I.R.A. will affect that trend. The climate law’s subsidies will mostly go to the energy and industrial sectors, and those parts of the economy are already overwhelmingly privately owned. For the first time ever, the I.R.A. includes “direct pay” subsidies that will allow governments and nonprofits to receive federal money when they build renewables.
I called Christophers to discuss his concerns about the I.R.A, why it might accelerate asset managers’ power, and what a better option might look like. Our conversation has been edited for length and clarity.
So I was trying to make three arguments — and they span not just the book that’s just come out, but another book I’ve been working on about the political economy of the energy transition.
The first thing I was trying to get across in the piece is an argument about the growing influence of a particular set of financial institutions — asset-management institutions.
These are crucially not necessarily the types of asset managers that everyone talks about. Typically, the conversation is all about the BlackRocks, the Vanguards, the State Streets, which are the big holders of large proportions of basically every company that exists. Most of the funds that those big entities manage are passive index funds, which invest in proportion to the scale that companies represent within particular market indices. So if Exxon represents 1% of an index, then 1% of the fund is invested in Exxon, and so on. That's where most of the attention is focused.
What my book’s about is a completely different corner of the asset-management world, which are the active asset managers who increasingly own real assets. The ones I focus on in the book own housing of all shapes and sizes, and then everything that comes under the umbrella of infrastructure — transportation infrastructure, hospitals and schools, municipal water systems, and then all types of energy infrastructure. BlackRock dabbles in this, but the really big players are companies like Brookfield, Macquarie, and Blackstone.
My argument is that, actually, these are the guys that are much more consequential for people’s everyday lives. They determine what sort of condition these infrastructures are in — how much we pay in terms of water rates, or tenants pay in rents, or so on. These are the guys we should be focusing more on, but they’ve been kind of ignored.
Some of them are public, some are private. But even if they’re public, finding out much about what they’re doing is very difficult because all the investments occur through private funds domiciled in the Caymans or Delaware or Luxembourg. It’s a very, very secretive business.
So part of what I’m trying to do is literally just make people aware that these guys are out there and that energy is an important part of what they’re doing. [The asset manager] Brookfield, for example, probably has the fastest growing renewable portfolio in the world right now.
The second argument is that the approach that the world has right now to climate change — which is to put the energy transition in the private sector’s hands, albeit with subsidy and government-support mechanisms — is not working and will not work.
There’s various ways of substantiating that it’s not working. The International Energy Agency says that we need to go from $300 billion of clean-energy investment to $1.3 trillion straight away, and keep it there for the next decade. And it’s increasing now, but only in $50 billion a year chunks, rather than what we need.
And that’s because at root, renewable energy — the ownership and operation of renewable-energy-generating facilities — is actually just not a great business in terms of profitability. Their revenues and profits are very volatile because of the volatility of electricity prices. And if you talk to not only renewable developers, but also the people that finance new solar and wind facilities — the banks that put up the $300 million to buy the turbines — then you hear that the volatility of [electricity] pricing exerts a very kind of chilling effect on investment.
So when everyone obsesses about the fact that renewables are now cheaper than conventional generation, they’re looking at the wrong metric. Price is not what we should be looking at, profit is. And these businesses are just not very profitable.
So then the third argument is that of all the private-sector actors, asset managers are the very worst to rely on. They are particularly inappropriate owners of essential infrastructure that society relies on.
To cut a long story short, a basic reason is that the investment that Macquarie and Brookfield undertake is through investment vehicles that have a fixed-term life.
Yeah. When they buy these infrastructure assets, the only thing they’re thinking about is how they can sell them quickly, so that they can return the capital to the pension fund that gave them the money to invest in the first place. Because of the way the industry works, they’re disincentivized to carry out long-term capital expenditure — there’s inherent short-termism.
I was trying to compress all these things into the piece, which I obviously failed to do, but to the extent that it gets people talking about these problems, then I feel like I’ve succeeded.
That’s a good question. My basic answer is that the word “‘accelerate” is a very important one. As you’re no doubt aware, specifically in the energy realm, in energy-generating facilities, it’s not like privatization is a new thing there, right?
This has been going on for a long time. I guess it comes back to a strong belief I have, which is that the ongoing and accelerated privatization of these types of assets is generally not a good thing.
I would say two things to that. The first is that, we’ve obviously been at an important conjuncture in the U.S. for the last couple years, where the existing [renewable and EV] credits were being wound down. At the same time, there were proposals for a Green New Deal on the national level. So it felt like there was a possibility — arguably even the last possibility — of a different political economy of energy. So in a way, the IRA hammered the nail in the coffin of a substantially different future.
Second, in many other countries, energy has been more publicly owned than it is in the U.S. And the experience of other sectors and other parts of the world shows that the more you concentrate ownership in the hands of private entities, the more that those players increase their capacity to dictate the terms of what’s going on in the sector. They can influence — if not decide — the way that markets are constructed in the sector. You only have to look at the work of the legal scholar Shelly Welton, who has shown how regional wholesale power markets in the U.S. are still dominated by fossil fuels. What we think of as neutral mechanisms of market operation, the algorithms that award capacity and so on, are shaped by particular interests.
I hear that. But I think it’s important to distinguish what I think from another high-profile criticism of the IRA. I very rarely look at Twitter because I don’t find it healthy, but one thing that I see there all the time is this blanket critique of the derisking of investment. [Derisking is a term for when the government takes on some downside risk from private companies in order to persuade them to make investments in something “good,” like renewables or EVs. -Robinson]
That’s not my position at all. Give me a choice between derisking and not derisking, and from a climate perspective, I would always choose derisking. I would much rather the investment happens and Blackrock makes a killing than the investment doesn’t happen and we get stuck with fossil fuels.
To me, that’s not the choice. I think the blanket critique of derisking is naive in the sense that it either magically assumes we’re going to get state ownership of energy, or that the investment will happen anyway without the derisking. My whole book coming out next year is a critique of that argument, because the investment won’t happen. It absolutely won’t happen if you don’t derisk because of the profit constraints. You absolutely need that derisking.
My argument is that even with all of the support from various tax credits, and even with the historic — and amazing — reduction in [renewable] technology costs over the last 20 years, the private sector is still failing. That’s my argument. That’s why I believe we’re not going to reach where we need to be as long as we stick with this capital-centric model. But if you assume that we’re stuck with a private-sector-led model, then absolutely the IRA is a good thing, absolutely it is. You need that subsidization; I don’t disagree with that at all. Does that make sense?
Exactly.
You’ll get that, and I think you’ll get a modest amount of public-sector involvement, but in the big scheme of things I think it’ll be trivial. I think it will still amount to a transition that’s so much slower than we need.
For sure. If it wasn’t for direct pay, it would’ve been a nonstarter. I totally believe that.
I think that’s fair. I guess I would put it a slightly different way. I think I’m comparing it to a counterfactual under which we — by which I mean globally, but also within the U.S. — build renewables at something closer to the rate that is needed. So the IRA amounts, politically, within the U.S. context, to a degree of success, but it’s a degree of success within a framework that is failing.
I totally understand that. I think it comes down to what one’s counterfactual is. If your counterfactual is what was genuinely politically feasible in the U.S. context, then I can totally see that the IRA constitutes a significant success.
If your counterfactual is — and this may sound completely stupid — a situation in which we make really significant, genuine progress on changing what I see as the failing macro approach to the energy transition, then it doesn’t constitute success.
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New research out today shows a 10-fold increase in smoke mortality related to climate change from the 1960s to the 2010.
If you are one of the more than 2 billion people on Earth who have inhaled wildfire smoke, then you know firsthand that it is nasty stuff. It makes your eyes sting and your throat sore and raw; breathe in smoke for long enough, and you might get a headache or start to wheeze. Maybe you’ll have an asthma attack and end up in the emergency room. Or maybe, in the days or weeks afterward, you’ll suffer from a stroke or heart attack that you wouldn’t have had otherwise.
Researchers are increasingly convinced that the tiny, inhalable particulate matter in wildfire smoke, known as PM2.5, contributes to thousands of excess deaths annually in the United States alone. But is it fair to link those deaths directly to climate change?
A new study published Monday in Nature Climate Change suggests that for a growing number of cases, the answer should be yes. Chae Yeon Park, a climate risk modeling researcher at Japan’s National Institute for Environmental Studies, looked with her colleagues at three fire-vegetation models to understand how hazardous emissions changed from 1960 to 2019, compared to a hypothetical control model that excluded historical climate change data. They found that while fewer than 669 deaths in the 1960s could be attributed to climate change globally, that number ballooned to 12,566 in the 2010s — roughly a 20-fold increase. The proportion of all global PM2.5 deaths attributable to climate change jumped 10-fold over the same period, from 1.2% in the 1960s to 12.8% in the 2010s.
“It’s a timely and meaningful study that informs the public and the government about the dangers of wildfire smoke and how climate change is contributing to that,” Yiqun Ma, who researches the intersection of climate change, air pollution, and human health at the Yale School of Medicine, and who was not involved in the Nature study, told me.
The study found the highest climate change-attributable fire mortality values in South America, Australia, and Europe, where increases in heat and decreases in humidity were also the greatest. In the southern hemisphere of South America, for example, the authors wrote that fire mortalities attributable to climate change increased from a model average of 35% to 71% between the 1960s and 2010s, “coinciding with decreased relative humidity,” which dries out fire fuels. For the same reason, an increase in relative humidity lowered fire mortality in other regions, such as South Asia. North America exhibited a less dramatic leap in climate-related smoke mortalities, with climate change’s contribution around 3.6% in the 1960s, “with a notable rise in the 2010s” to 18.8%, Park told me in an email.
While that’s alarming all on its own, Ma told me there was a possibility that Park’s findings might actually be too conservative. “They assume PM2.5 from wildfire sources and from other sources” — like from cars or power plants — “have the same toxicity,” she explained. “But in fact, in recent studies, people have found PM2.5 from fire sources can be more toxic than those from an urban background.” Another reason Ma suspected the study’s numbers might be an underestimate was because the researchers focused on only six diseases that have known links to PM2.5 exposure: chronic obstructive pulmonary disease, lung cancer, coronary heart disease, type 2 diabetes, stroke, and lower respiratory infection. “According to our previous findings [at the Yale School of Medicine], other diseases can also be influenced by wildfire smoke, such as mental disorders, depression, and anxiety, and they did not consider that part,” she told me.
Minghao Qiu, an assistant professor at Stony Brook University and one of the country’s leading researchers on wildfire smoke exposure and climate change, generally agreed with Park’s findings, but cautioned that there is “a lot of uncertainty in the underlying numbers” in part because, intrinsically, wildfire smoke exposure is such a complicated thing to try to put firm numbers to. “It’s so difficult to model how climate influences wildfire because wildfire is such an idiosyncratic process and it’s so random, ” he told me, adding, “In general, models are not great in terms of capturing wildfire.”
Despite their few reservations, both Qiu and Ma emphasized the importance of studies like Park’s. “There are no really good solutions” to reduce wildfire PM2.5 exposure. You can’t just “put a filter on a stack” as you (sort of) can with power plant emissions, Qiu pointed out.
Even prescribed fires, often touted as an important wildfire mitigation technique, still produce smoke. Park’s team acknowledged that a whole suite of options would be needed to minimize future wildfire deaths, ranging from fire-resilient forest and urban planning to PM2.5 treatment advances in hospitals. And, of course, there is addressing the root cause of the increased mortality to begin with: our warming climate.
“To respond to these long-term changes,” Park told me, “it is crucial to gradually modify our system.”
On the COP16 biodiversity summit, Big Oil’s big plan, and sea level rise
Current conditions: Record rainfall triggered flooding in Roswell, New Mexico, that killed at least two people • Storm Ashley unleashed 80 mph winds across parts of the U.K. • A wildfire that broke out near Oakland, California, on Friday is now 85% contained.
Forecasters hadn’t expected Hurricane Oscar to develop into a hurricane at all, let alone in just 12 hours. But it did. The Category 1 storm made landfall in Cuba on Sunday, hours after passing over the Bahamas, bringing intense rain and strong winds. Up to a foot of rainfall was expected. Oscar struck while Cuba was struggling to recover from a large blackout that has left millions without power for four days. A second system, Tropical Storm Nadine, made landfall in Belize on Saturday with 60 mph winds and then quickly weakened. Both Oscar and Nadine developed in the Atlantic on the same day.
Hurricane OscarAccuWeather
The COP16 biodiversity summit starts today in Cali, Colombia. Diplomats from 190 countries will try to come up with a plan to halt global biodiversity loss, aiming to protect 30% of land and sea areas and restore 30% of degraded ecosystems by 2030. Discussions will revolve around how to monitor nature degradation, hold countries accountable for their protection pledges, and pay for biodiversity efforts. There will also be a big push to get many more countries to publish national biodiversity strategies. “This COP is a test of how serious countries are about upholding their international commitments to stop the rapid loss of biodiversity,” said Crystal Davis, Global Director of Food, Land, and Water at the World Resources Institute. “The world has no shot at doing so without richer countries providing more financial support to developing countries — which contain most of the world’s biodiversity.”
A prominent group of oil and gas producers has developed a plan to roll back environmental rules put in place by President Biden, The Washington Post reported. The paper got its hands on confidential documents from the American Exploration and Production Council (AXPC), which represents some 30 producers. The documents include draft executive orders promoting fossil fuel production for a newly-elected President Trump to sign if he takes the White House in November, as well as a roadmap for dismantling many policies aimed at getting oil and gas producers to disclose and curb emissions. AXPC’s members, including ExxonMobil, ConocoPhillips, and Hess, account for about half of the oil and gas produced in the U.S., the Post reported.
A new report from the energy think tank Ember looks at how the uptake of electric vehicles and heat pumps in the U.K. is affecting oil and gas consumption. It found that last year the country had 1.5 million EVs on the road, and 430,000 residential heat pumps in homes, and the reduction in fossil fuel use due to the growth of these technologies was equivalent to 14 million barrels of oil, or about what the U.K. imports over a two-week span. This reduction effect will be even stronger as more and more EVs and heat pumps are powered by clean energy. The report also found that even though power demand is expected to rise, efficiency gains from electrification and decarbonization will make up for this, leading to an overall decline in energy use and fossil fuel consumption.
Ember
The world’s sea levels are projected to rise by more than 6 inches on average over the next 30 years if current trends continue, according to a new study published in the journal Nature. “Such rates would represent an evolving challenge for adaptation efforts,” the authors wrote. By examining satellite data, the researchers found that sea levels have risen by about .4 inches since 1993, and that they’re rising faster now than they were then. In 1993 the seas were rising by about .08 inches per year, and last year they were rising at .17 inches per year. These are averages, of course, and some areas are seeing much more extreme changes. For example, areas around Miami, Florida, have already seen sea levels rise by 6 inches over the last 31 years.
“As the climate crisis grows more urgent, restoring faith in government will be more important than ever.” –Paul Waldman writing for Heatmap about the profound implications of America becoming a low-trust society.
That means big, bad things for disaster relief — and for climate policy in general.
When Hurricanes Helene and Milton swept through the Southeast, small-government conservatives demanded fast and effective government service, in the form of relief operations organized by the Federal Emergency Management Agency. Yet even as the agency was scrambling to meet the need, it found itself targeted by far-right militias, who prevented it from doing its job because they had been led by cynical politicians to believe it wasn't doing its job.
It’s almost a law of nature, or at least of politics, that when government does its job, few people notice — only when it screws up does everyone pay attention. While this is nothing new in itself, it has increasingly profound implications for the future of government-driven climate action. While that action comes in many forms and can be sold to the public in many ways, it depends on people having faith that when government steps in — whether to create new regulations, invest in new technologies, or provide benefits for climate-friendly choices — it knows what it’s doing and can accomplish its goals.
As the climate crisis grows more urgent, restoring faith in government will be more important than ever. Unfortunately, simply doing the right things — like responding competently to disasters — won’t be enough to convince people that the next climate initiative will do what it’s supposed to.
The number of people expressing faith in government today is nearly as low as it has been in the half-century pollsters have been asking the question. That trust has bounced up and down a bit — it rose after September 11, then fell again during the disastrous Iraq War — but for the last decade and half, only around 20% of Americans say they trust the government most of the time.
It’s partisan, of course: People express more trust when their party controls the White House. And the decline of trust reaches beyond the government. Faith in most of the key institutions of American life — business, education, religion, news media — has fallen in recent decades, sometimes for good reason. The net result is a public skeptical that those in authority have the ability to solve complex problems.
Changing that perspective is extraordinarily difficult, often because of the nature of good and bad news: The former usually happens slowly and invisibly, while the latter often happens dramatically and all at once.
Take the program created in the Energy Department under George W. Bush to provide loans to innovative energy technologies. If most Americans had heard of it, it was because of one company: Solyndra, a manufacturer of innovative but overly expensive solar panels. Undercut by a decline in prices of traditional panels, the company went under, and its $535 million loan was never repaid. Republicans made Solyndra’s failure into a major controversy, claiming that the program showed that government investment in green technology was corrupt, ineffective, and wasteful.
What few people heard about was that the loan program overall not only turned a profit at the time (and for what it’s worth, it still does), it also provided help to many successful companies, even if a few failed — as any venture capital investor could tell you is inevitable. The successes included Tesla, which used its federal loan to ramp up production of the sedans that would turn it from a niche manufacturer of electric roadsters into what it is today. Needless to say, Elon Musk does not advertise the fact that his success was built on government help.
More recently, the hurricane response has shown how partisan polarization can be used to undermine trust in government — especially when Donald Trump is involved. Trump took the opportunity of the hurricanes to accuse the federal government of being both political and partisan, delivering help only to those areas that vote for Democrats. Soon after, he promised to do precisely what he falsely accused the Biden administration of doing, saying that if he is president again, he will withhold disaster aid from California unless Gov. Gavin Newsom changes the state’s water policies to be more to Trump’s liking. “And we’ll say, Gavin, if you don’t do it, we’re not giving any of that fire money that we send you all the time for all the fire, forest fires that you have,” Trump said. And in fact, in his first term Trump did try to withhold disaster aid from blue states.
What sounds like hypocrisy is actually something much more pernicious. As he often does, Trump is arguing not that he is clean and his opponents are dirty, but that everyone is dirty, and it’s just a question of whether government is in the hands of our team or their team. When he says he’ll “drain the swamp,” he’s telling people both that government is corrupt, and the answer is merely to change who gets the spoils. If you believe him, you’ll have no trust in government whatsoever, even if you might think he’ll use it in a way you’ll approve of.
We’ve seen again and again that people want government to perform well and get angry when it doesn’t, but they don’t reward competence when it happens. Which is why making sure systems operate properly and problems are solved is necessary but not sufficient to win back trust. Government’s advocates — especially those who are counting on it to undertake ambitious climate action both now and in the future — need not only to deliver, they have to get better at, for lack of a better word, propaganda. Policy success is not its own advertisement. And despite his ample policy achievements, Joe Biden has not been a charismatic and effective messenger — on the role of government, or much else.
Ronald Reagan used to say that the most frightening words in the English language were “I’m from the government and I’m here to help”; the oft-repeated quip was at the center of his incredibly successful effort to delegitimize government in the eyes of voters. To reverse the decline of trust so people will believe that government has the knowledge and ability to tackle climate change, the public needs to be reminded — often and repeatedly — of what government does well.
Touting past and present successes on climate — and disaster relief, and so many other ways the government solves problems every day — is essential to building support for future climate initiatives. Those successes are all around, it’s just that most people never hear about them or take them for granted. But promoting government as an engine of positive change should be as high a priority for climate advocates, including those who hold public office, as discrediting government was for Reagan and is for Trump.