In a Thursday report from the Financial Stability Oversight Council, regulators warned that the climate crisis is “an ‘emerging threat’ to the stability of the U.S. financial system.”
The report was just one of several released on Thursday, including additional reports showing that the climate crisis threatens global stability. Every aspect of military and diplomatic planning is affected by a process that could see countries losing sources of income, dealing with sudden and severe food shortages, and doing it all against the background of a climate that itself becomes a global health crisis. Those reports also show that the movement of climate refugees and disruption of services can be expected inside the United States as well internationally.
Just as with most environmental issues, the burdens of the climate crisis are expected to fall disproportionately on people of color and the poor. Those are the populations most likely to be living in conditions that are already marginal when it comes to income stability, food stability, and housing stability. The U.S. has already had repeated previews of this effect in how hurricanes affected Black communities in New Orleans and Houston, as well as how drought has hit Native American nations in the West.
But when it comes to Manchin and the state he supposedly represents, there’s one particular threat that the financial report makes clear: The threat of clinging to a dying industry.
It’s not just that the climate crisis itself is creating a series of high-cost disasters and disruptions. These disasters are also creating a change in how everything, from real estate to stocks, is valued.
In particular, the sharply dropping cost of electricity from solar and wind—along with the increasing popularity of electric cars—places fossil fuels of all types in a unique bind. Prices may be high at the moment on speculation over near-future demands from China, but all those fuels—coal, oil, and natural gas—could lose value almost overnight. To a large extent, this has already happened with coal, with 11 of the top U.S. mining companies going through bankruptcy after the industry dropped sharply from 2008 peaks.
The whole fossil fuel sector could see much of its value erased as demand for those fuels crashes and investors take flight. Considering the size and value currently assigned to some of these companies, such a shift could not just spell doom for the fossil fuel corporations, but leave state governments, retirement funds, and individual investors holding the (suddenly empty) bag. Homes in areas dedicated to coal mining or oil and gas drilling could become worthless. So could massive refineries, giant port facilities, and thousands of miles of pipeline.
How those things are managed when the companies that once profited from them are no longer around is unclear. So is what to do about thousands of people stranded in areas that have lost their economic engine. The U.S. has seen such scenarios play out in the past, such as when dozens of mill towns found themselves centered around an industry rapidly moving overseas. And, of course, on balance, the economic effect of walking away from fossil fuels should be a large net positive. More and better jobs will be created if the U.S. properly manages the transition to renewable energy. If.
But it may not feel that way to communities impacted by the long tail of a crisis that’s already begun. It certainly won’t feel that way to communities, states, and senators whose “solution” is to try and drag out the death of fossil fuels rather than embrace the change.
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