Climate Change

Floor Speech

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Mr. SCHATZ. Madam President, climate change is already wreaking havoc on the American economy, and anyone who cares today about having a strong economy in 10, 20, or 30 years needs to be committed to acting now.

We are already seeing the economic risks related to climate change. Temperatures are rising, sea levels are rising, and extreme weather events are becoming more frequent and more severe.

Ask families in California whose homes and businesses have been burned to the ground in record-setting fires or construction workers in Texas who have to cut their hours because of the heat or farmers in Nebraska, where the State Farm Bureau estimates that this spring's flood will cost ranchers $500 million and will cost grain farmers $400 million. Farm bankruptcies were already at a 10-year high even before the flooding.

We are getting closer to long-term tipping points. Within 30 years, which is a typical span of a mortgage, nearly 400,000 existing homes in the U.S. coastal areas are at risk of being uninhabitable. These homes collectively are worth about $210 billion. That is more than four times the estimated insured losses of Hurricane Katrina.

The ``National Climate Assessment'' says that $1 trillion worth of coastal real estate in the United States is threatened by the effects of climate change. The assessment also shows that labor productivity will take a hit. Under one scenario, the Southeast United States alone could lose $47 billion in productivity each year.

The ``National Climate Assessment'' also predicts that maize and soybean yields will each be down as much as 25 percent across the Midwest by midcentury, mostly due to hot temperatures. In other words, we are looking at a real estate bubble, massive changes in productivity, and increased disaster costs for State and Federal governments.

It is no wonder that experts say that climate change is the top economic risk facing our planet today. The World Economic Forum has warned us that we are ``sleepwalking into catastrophe.'' Citigroup estimates that world economies could lose at least $44 trillion in economic activity between now and the year 2060. Actuaries name climate change the No. 1 risk to insurers in North America.

All of those individuals and institutions and companies and agencies that just described the risks related to climate change--I have no idea how they feel about birds and butterflies. I have no idea if they care about conservation on a personal level. I don't know if they surf or they snowboard or they hike or they bird-watch. I don't know how much they care about the natural environment. I do know they care about money, and they are paid to care about money, and they are very worried about the impact that climate change will have on our economy.

You will notice that this is not a traditional climate speech. I got involved in climate because I care, but I understand that not everybody has the luxury of worrying about the birds and the butterflies and the creatures in the ocean. A lot of people worry every day about whether they are going to be able to put food on the table, and a lot of people worry about the value of their home and value of their 401(k) and whether the government is going to be consumed with these disaster costs.

You should be worried about the new and growing risks of droughts, floods, storms, wildfires, and sea level rise because these events reduce the value of assets. They decrease investment income. They can increase insured and uninsured losses. In other words, they promise to disrupt financial institutions. That means the health of our financial system is at stake.

There are now 36 central banks and financial regulators around the world who are worried about climate's economic impact and how to plan for it, including the UK, Germany, Australia, Canada, France, Japan, and China. They have come together to work on developing the tools to assess climate change risk to the financial system. This is not the ecological system, and these are not communities. This is about money and how much money is at risk when it comes to climate change.

The Bank of England is planning to include climate impacts in its bank's stress tests as early as next year, and the central bank of the Netherlands is doing more to include climate-related risks in its financial supervision. Yet guess who is not part of this group of 36 countries that is trying to develop the analytic tools to figure out what impacts climate change is going to have on our economic system-- the United States.

The three Federal Government Agencies that oversee the financial system are taking a unique approach to this problem by putting their heads in the sand. I know this because I asked them. I was part of a group of 20 Senators who sent a letter to the Federal Reserve, the OCC, and the FDIC, and asked them how they are accounting for climate change risks to our financial system. Their response was basically--listen, extreme weather shocks happen all the time. As for the risks of climate change, since they are so far out and hard to quantify, our regulators book that risk at zero. Now think about the absurdity of this. It is not that they are saying the risk doesn't exist. They are conceding that it exists. They are just saying it is so hard to quantify that they have decided it is nothing.

There are all kinds of risks that all of these supervisory institutions evaluate on a regular basis. That is their job. They have these big manuals that they use--these thick manuals--to supervise banks and financial institutions. They can look at how much excess capital you have, how much exposure you have to a real estate bubble, or how much exposure you may have to a downturn in the economy. They have decided the risk related to climate change is nothing at all.

This is in direct contrast to almost every other industrialized country and its regulatory agency. It doesn't matter what their politics are--whether they are run by rightwing or leftwing governments; everyone else is taking the financial risk related to climate change seriously except the United States. Everyone--the insurance industry, the defense community, the intelligence community, the international community--knows that climate is at increasing risk. They all know that climate change is real and that it is impacting our financial system right now, that it is impacting the finances of publicly held corporations and banks and the government itself. The U.S. financial community needs to join them.

Let me end by saying this: We don't have to agree on the many ways in which we should be acting on climate change. It is OK if you hate my bill, with my good friend Senator Whitehouse, on a carbon fee. It is OK if you think we should do the Green New Deal or not do the Green New Deal. It is OK if you think the Paris Agreement is bad or good. You get to think what you want, but you cannot ignore the risk that climate change is imposing on our financial system. You don't get to think that this cost--that this risk--is not material. You don't get to think that we should do nothing.

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