Kate Aronoff and Jake Bittle both write about climate. Bittle’s book, The Great Displacement, came out earlier this year and looks at how people have been forced by climate change to internally migrate in the United States. Aronoff’s Overheated, published in 2021, looks at the macroeconomic forces that have caused climate change. Their exchange below covers what’s currently standing in the way of resolving the climate crisis and how those obstacles might be moved.
JAKE BITTLE: In Overheated, you argued that modern capitalism is the root cause of the climate crisis and perhaps the largest obstacle to resolving that crisis. In explaining the state of climate politics, you wrote that “the private sector will be a major part of the transition off fossil fuels” but also argued that “to handle this crisis, capitalism will have to be replaced as society’s operating system.” A lot’s happened since then. Your book came out before the Inflation Reduction Act became law, before the war in Ukraine pushed Europe off Russian gas, and before so-called ESG investing got big enough to become a conservative bogeyman. Can you give a progress report on the capitalist energy transition? How is capitalism doing—better or worse than you would have expected in 2021?
KATE ARONOFF: Overheated came out a few months before UN climate talks in Glasgow. In the lead-up to that, companies rolled out frothy climate commitments, and there was some hope that capital had finally seen the way. The Glasgow Financial Alliance for Net-Zero promised to align banks and asset managers behind cutting carbon. Oil companies vowed to phase out production and invest in renewables. Policymakers thought the private sector might finally lead the way on climate where governments had failed.
The results have been a mixed bag. On the one hand, there are real material upsides for companies in taking the climate crisis seriously. It’s in their best interest to figure out the risks that climate impacts pose to corporate assets, for instance, and to weigh the reputational benefits of being seen as a climate laggard/reactionary. Companies that specialize in clean energy also have an obvious interest in IRA-style tax credits for wind, solar, and other clean energy technologies. The kind of green industrial policy embodied by the Inflation Reduction Act seemed unthinkable a few years ago. It was an incredible achievement, and I think even the most curmudgeonly among us—myself very much included—would be hard-pressed to say they aren’t glad something got passed against the odds.
The last few years has also shown pretty clearly that companies just won’t invest in things that they do not expect to make money from. Unfortunately, that category includes lots of things that are essential to cutting carbon: sequestering carbon underground forever isn’t exactly a glamorous business, and it’s hard to imagine Exxon or Chevron pivoting to primarily being carbon sink landlords. Those firms all saw record profits last year as oil prices spiked, and they have accordingly walked back their token investments in renewables, citing the low returns they’ve seen on wind and solar relative to their core products.
I think capitalist firms have done what they might reasonably be expected to do vis-à-vis decarbonization: find ways to make money off it. There’s certainly a lot more that governments can do to push them in that direction, i.e., through more strenuous green industrial policy. Still, I think the basic issue with entrusting the energy transition to capitalist impulses hasn’t gone away. The hammer of IRA-style green industrial policy is turning capital goods required for decarbonization into return-generating assets. We need that hammer! Not everything is a nail, though. The happy progress that’s been made to coax companies into investing in lower-carbon stuff doesn’t guarantee the erosion of carbon-intensive stuff, which will require very powerful companies to lose quite a lot of money. The last few years have seen an explosion of clean energy investment coupled with soaring oil and gas profits. If you think of capitalism as an operating system to deliver decarbonization, its capabilities are fairly limited.
The Great Displacement offers a pretty infuriating look at the mishmash of public and private bodies managing climate displacement. You note that “federal law does not recognize the slow rise of the oceans as an emergency like a hurricane or a wildfire.” Cutting-edge insurance industry modeling occasionally does, though. How seriously do you think climate-exposed sectors like insurance and real estate are taking the slower threats rising temperatures pose?
JB: Adaptation has always seemed to have a very different incentive structure than mitigation of carbon emissions. On the one hand, there’s a similar kind of profit-based push happening. Just as a big oil company might want to be seen as acting on climate change because it wants to retain a social license to operate, a big insurance company wants to act on climate change because it wants to keep making money. The incentives for the insurance company are even more urgent because a wildfire or a hurricane inflicts a much more coordinated economic harm than a divestment campaign or a shareholder revolt. Because the federal government is the main financier of disaster recovery, and all the things we call “climate adaptation,” and because the United States has a ton of money and is the backstop of the world financial system, a bad wildfire won’t bankrupt the entire country. But in California, insurance companies were the first and most aggressive movers when it came to providing a financial incentive for homeowners to retrofit their homes against wildfire or move out of the way.
On the other hand, this private-led adaptation produces terrible outcomes. Despite a big campaign to retrofit homes, a bunch of huge insurers have left California. Hurricane insurance markets in Louisiana and Florida have also started to collapse, which has led to enormously high prices and made homeownership all but impossible for all but the wealthiest people. When governments respond to this affordability crisis created by insurance, they use subsidies to shift the burden from insurance customers to taxpayers, who are subsidizing risky behavior like living on the coast. We can’t just tell people who live on eroding shorelines to pick up and leave because of a very strong legal precedent, rooted of course in capitalism, that protects private property rights.
While writing the book, it became clear to me that the solution to this problem has to come from the federal government, from the top down, and it likely has to involve spending quite a bit of money to incentivize better building, significant new flood control infrastructure, and managed retreat from the most vulnerable areas. That’s something only the federal government can afford to do, and private interests have no stake in such projects—if we let the big insurance companies force the adaptation issue, it’ll create a lot of financial pain for a lot of people.
I’m curious how you think we can supplement the hammer of the IRA in the next decade or so, given the difficulty of passing big bills through Congress, the political status quo, and public opinion about climate change. Does the decarbonization fight also have to happen at the federal level?
KA: In wildly different ways than something like the National Flood Insurance Program [NFIP], government policy really does incentivize a whole lot of risky behavior via fossil fuel subsidies, including tax breaks, subsidized leases for extraction on public lands, and diplomatic support. That’s true in some rhetorical sense—continued fossil fuel exploration is broadly dangerous—but in a more literal one, too. Shale drilling, which has taken the US to the brink of becoming a net exporter of oil, is leaving behind millions of orphaned and abandoned wells. Because the rules and fee structures for how to clean those up haven’t been updated in decades, those up costs are being put on the public in a couple of different ways. The Bipartisan Infrastructure Law allocated nearly $5 billion for orphan well cleanup, for instance. Benzene and other substances spewing out of them are taking a toll on the people who live near the wells. That growing stock of unwanted assets will be a hot potato for companies eager to get liabilities off their balance sheets.
There are some bonding requirements and other changes to be made at the state level, but ultimately I do think the problem—as with the energy transition more generally—is one only the federal government can solve. I’m pretty pessimistic that Congress is going to nationalize the fossil fuel industry or overhaul its disaster response infrastructure. But, eventually, the federal government will get saddled with tens of billions of dollars’ worth of unwanted corporate liabilities. Both adaptation and the energy transition (neither of these terms are great!) appear to require a level of planning that seems almost unthinkable. That is the unfinished business of the IRA: the range of new public institutions and planning capacities needed to mitigate and deal with climate change. The words narrative shift don’t exactly drive people into the streets, but I do wonder what it might look like to try to popularize the idea that holistic climate planning doesn’t require a new raft of government intervention so much as a transformation of the ones that are already in place.
That said, the partisan politics on adaptation strike me as a bit different from those around the energy transition. As you’ve noted, the NFIP—the country’s only public insurance program—has always been subject to an odd-bedfellows coalition of supporters based on the range of properties and geographies it protects. Do you have a sense of whether there might be any more possibilities for a weird coalition to do something potentially good to transform disaster response?
JB: I think the answer is yes, sort of. Broadly speaking, people seem to support the idea of the federal government spending money to help people to recover from disasters, and they’re even more supportive of the government spending money to protect people from future disasters. The rhetorical appeals of safety and preparedness are powerful: they cross partisan lines; and you rarely see people complaining that the government is spending too much money on infrastructure. There was a big protest campaign in New York City against the East River Park renovation, which is designed to protect against sea level rise, but in general resilience projects are popular. I think the public would be very supportive of more of this spending, and of reforms to FEMA, but the problem is that the biggest advocates tend to be people in specific districts. Until climate vulnerability becomes a lot more widespread, it’s hard to see adaptation spending becoming a hot-button issue on par with abortion or immigration. Case in point: HUD’S Community Development Block Grant Disaster Recovery [CDBG-DR] program, maybe the chief source of long-term climate recovery funding, doesn’t have permanent congressional authorization. Congress has to reauthorize it for each new disaster, a process that can take years.
I think the harder question is whether there could ever be support for the kind of nationwide planning you describe. Let’s say the federal government does start doing nationwide planning under a Democratic presidential administration and one thing the planners decide is that we should disincentivize development in water-stressed parts of Arizona and incentivize development in the Front Range communities of Colorado. This makes a lot of sense, and there are lots of policy levers we could use to accomplish it, from federal funding for managed retreat to subsidies for developers who build multifamily housing in Denver. But Arizona is a purple state, and Colorado is deep blue—can we really imagine a president getting behind such a plan in an election year? A nationwide adaptation plan requires picking winners and losers, on both sides of the migration coin, since it’s not just the residents of vulnerable shrinking communities but also existing residents of communities targeted for growth that would feel an economic squeeze. It’s similar to how a nationwide coordinated energy transition would likely require eliminating a lot of jobs in oil-heavy communities or coal communities. The IRA has some tax incentives to push for a more just transition in such communities, but it still seems like there’s a lot of economic friction involved.
To what extent does doing climate action “right” require the government to do things that voters don’t like? Is there a tension between an appropriately rapid program of climate action and a representative of government such as the one we have in the United States?
KA: What you lay out seems like a pretty strong case against the way centrist types have talked about the emissions reduction policies: that you can sneak gigantic changes to our energy infrastructure in around the edges without making a big deal out of it. I don’t think it ever held much water for mitigation, but seems much less true for climate “resilience,” which gets plenty of lip service from Davos types, too, of course. There’s a growing stock of problematic assets that it’s going to be a challenge to pry people away from. That health care and basic economic citizenship is so closely bound up with jobs and houses in the US seems to make this problem a lot harder.
That makes it tough to say what doing climate policy “right” means. A basic rubric might be anything that actually happens which does less harm than good. Ensuring something actually happens probably means it shouldn’t be wildly unpopular, but then again, the right has gotten far doing plenty of things that voters don’t like. Part of that agenda, unfortunately, has also been empowering a judiciary that makes it difficult to make the sorts of climate-related changes that might be unpopular and necessary without Congress, i.e., through executive action and agency regulations. That’s all to say, basically anything that could be done that way should be.
Most of what still needs to happen—like any policy that targets a certain number of economy-wide emissions reductions—will require action from Congress and probably court a massive fight with Republicans. Those things will need to be sold to voters in no small part because the GOP will demonize them via the virtually unlimited budgets and TV networks at their disposal. Does that mean a policy is unpopular? Not necessarily. But even the safest, most centrist, and poll-tested policy will get dragged through the right-wing media machine as an assault on American values. More optimistically, circumstances can shift what’s popular and what happens. It’s hard to imagine expanded unemployment and child tax credits without Covid, for instance. Climate impacts might put surprising things on the table in years to come. Since, as you say, climate policy requires picking winners and losers, why not push for things when those losers are especially unpopular? If oil companies come begging to the government for a bailout whenever fuel prices crash again, why not take the opportunity to snap up a Golden Share [ownership stake] and start down the road to nationalization and state oversight over extraction? Those kinds of moments are hard to predict, but one of the exciting things to come out of the last few years of talking about a Green New Deal is that there are a whole lot more people invested in the project of having those ideas ready to go.
The changes climate policy requires are massive, and I find it scary to imagine them not being subject to any sort of democratic input. The problem in the US is that there isn’t enough democracy. The right has spent most of the last century taking polluter money to figure out how to insulate minoritarian policies from democratic input. You can’t get comprehensive climate policy in the US without beating back the right’s inherently antidemocratic vision.
I’m wondering if you could help bring us back to the present. This July was the hottest in 120,000 years, and seemingly every week this summer has seen another headline about some record-breaking storm or a convergence of climate disasters. If we know a lot of the general outlines for how these tend to play out—and who gets hurt worst—what ideas about response and preparation might be good to have lying around?
JB: Achieving a full and just energy transition, and disempowering conservatives and the oil industry, is going to be the work of decades, and, as you say, it’s going to require political transformations that are hard to conceive right now. An enormous amount of warming-induced carnage is already baked in thanks to historical emissions, and when it comes to adaptation, we’re in the unfortunate position of having to do the best we can with the very fucked-up system that we have. Still, there are a lot of things that could happen in the short term. Congress could refill and beef up FEMA’s big pot of money for disaster response and allocate more money to resilience projects. It could also empower HUD to spend billions of dollars on long-term disaster recovery and relocation. FEMA could work harder to steer resources toward disadvantaged communities. A lot of this stuff is pretty popular, and I’m even optimistic that some of it will happen in the next few years.
This is maybe where “architecture” as a discipline comes in, in that this devastating crisis is also an opportunity. In my more optimistic moments I think that these crises could also be a hinge point for the left and for a more progressive, visionary way of organizing society. For every home that gets destroyed, for every town that gets wiped off the map, we need to build a new home and design a new city. For most of the last hundred years, we’ve just built things back the way they were—or not at all—but that doesn’t have to be the case.
You can think of the Army Corps’ massive post-Katrina levee project in New Orleans or the rush to rebuild the city of Cape Coral after Hurricane Ian as examples of how the status quo approaches the challenge of adapting to climate change. We use old ways of thinking and engineering to keep things the way they are for as long as possible. There’s another way. We could build cities that make space for nature, revitalize distressed areas that are resilient to climate change, or redesign a city like Miami to accommodate water and heat. It’s very expensive, but the alternative is even more expensive and much more painful. We can think of the climate crisis as a really painful, agonizing impetus to design a safer, better, greener, more accessible, and more equitable society.