Carbon Caps and Emissions Trading Programs

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Dilemma on Wall Street: Short-Term Gain or Climate Benefit?

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A team of economists recently analyzed 20 years of peer-reviewed research on the social cost of carbon, an estimate of the damage from climate change. They concluded that the average cost, adjusted for improved methods, is substantially higher than even the U.S. government’s most up-to-date figure.That means greenhouse gas emissions, over time, will take a larger toll than regulators are accounting for. As tools for measuring the links between weather patterns and economic output evolve — and the interactions between weather and the economy magnify the costs in unpredictable ways — the damage estimates have only risen.It’s the kind of data that one might expect to set off alarm bells across the financial industry, which closely tracks economic developments that might affect portfolios of stocks and loans. But it was hard to detect even a ripple.In fact, the news from Wall Street lately has mostly been about retreat from climate goals, rather than recommitment. Banks and asset managers are withdrawing from international climate alliances and chafing at their rules. Regional banks are stepping up lending to fossil fuel producers. Sustainable investment funds have sustained crippling outflows, and many have collapsed.So what explains this apparent disconnect? In some cases, it’s a classic prisoner’s dilemma: If firms collectively shift to cleaner energy, a cooler climate benefits everyone more in the future. But in the short term, each firm has an individual incentive to cash in on fossil fuels, making the transition much harder to achieve.And when it comes to avoiding climate damage to their own operations, the financial industry is genuinely struggling to comprehend what a warming future will mean.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    in Economy

    As Wildfires Grow Fiercer, Some Companies Look to Rebuild the Tree Supply Chain

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    As forests succumb to ever-fiercer wildfires, the federal government and some adventurous private companies are trying to resuscitate an industry.When it came to wildfires, 2021 was an increasingly common kind of year in Montana: Flames consumed 747,000 acres, an area nearly the size of Long Island.About 2,700 of those acres were on Don Harland’s Sheep Creek Ranch, where ever-drier summers have turned lodgepole pines into matchsticks ready to ignite. After the smoke cleared, Mr. Harland found creeks running black with soot and the ground hardening more with every day that passed.A former timber industry executive, Mr. Harland knew the forest wouldn’t grow back on its own. The land is high and dry, the ground rocky and inhospitable — not like the rainy coastal Northwest, where trees grow thick and fast. Nor did he have the money to carry out a replanting operation, since growing for timber wouldn’t pay for itself; most of the nearby sawmills had shut down long ago anyway. The state government offered a few grants, but nothing on the scale needed to heal the scar.Then a local forester Mr. Harland knew suggested he get in touch with a new company out of Seattle, called Mast. After visiting to scope out the site, Mast’s staff proposed to replant the whole acreage, free, and even pay Mr. Harland a bit at the end. Mast, in turn, was to earn money from companies that wanted to offset their carbon emissions and would put millions of dollars into planting trees that otherwise wouldn’t exist.Mr. Harland said he had his doubts about the carbon-selling part of the plan, but he was impressed with Mast’s operations, so he said yes.Two years later, after seeds had been collected from similar trees on nearby lands, crews of planters came out with bags full of seedlings, rapidly plunking them into the ashen ground. As part of the deal, Mr. Harland signed an agreement to let the trees grow for at least 100 years, so they can keep sucking greenhouse gases out of the air as they mature.Can carbon credits help rebuild a forest? Tell us what you think. More

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    in Economy

    Climate Change Takes Center Stage in Economics

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    With climate change affecting everything from household finances to electric grids, the profession is increasingly focused on how society can mitigate carbon emissions and cope with their impact.A major economics conference this month included papers on wind turbine manufacturing, wildfire smoke and the stability of electricity grids.From left: Joe Buglewicz for The New York Times; Earl Wilson/The New York Times; Zack Wittman for The New York TimesIn early January in San Antonio, dozens of Ph.D. economists packed into a small windowless room in the recesses of a Grand Hyatt to hear brand-new research on the hottest topic of their annual conference: how climate change is affecting everything.The papers in this session focused on the impact of natural disasters on mortgage risk, railway safety and even payday loans. Some attendees had to stand in the back, as the seats had already been filled. It wasn’t an anomaly.Nearly every block of time at the Allied Social Science Associations conference — a gathering of dozens of economics-adjacent academic organizations recognized by the American Economic Association — had multiple climate-related presentations to choose from, and most appeared similarly popular.For those who have long focused on environmental issues, the proliferation of climate-related papers was a welcome development. “It’s so nice to not be the crazy people in the room with the last session,” said Avis Devine, an associate professor of real estate finance and sustainability at York University in Toronto, emerging after a lively discussion.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More