America’s richest 10% are responsible for 40% of planet-heating pollution, new report finds
Laura Paddison, CNN
Thu, August 17, 2023
America’s wealthiest people are also some of the world’s biggest polluters – not only because of their massive homes and private jets, but because of the fossil fuels generated by the companies they invest their money in.
A new study published Thursday in the journal PLOS Climate found the wealthiest 10% of Americans are responsible for almost half of planet-heating pollution in the US, and called on governments to shift away from “regressive” taxes on the carbon-intensity of what people buy and focus on taxing climate-polluting investments instead.
“Global warming can be this huge, overwhelming, nebulous thing happening in the world and you feel like you’ve got no agency over it. You kind of know that you’re contributing to it in some way, but it’s really not clear or quantifiable,” said Jared Starr, a sustainability scientist at the University of Massachusetts Amherst and a report author.
This study helps build a clearer picture of individual responsibility by going beyond what people consume, he told CNN.
A private jet at Santa Fe Municipal Airport in Santa Fe, New Mexico. Traditionally analyses of climate footprints of the very rich have focused on what they buy. - Robert Alexander/Getty Images
To do this, the researchers analyzed huge datasets spanning 30 years to connect financial transactions to carbon pollution.
They looked at the planet-heating pollution produced by companies’ direct operations, as well as those relating to companies’ climate impacts further down the supply chain – for example, the bulk of an oil company’s emissions comes when its customers burn the oil it extracts.
That gave a carbon footprint for each dollar of economic activity in the US, which the researchers linked to households using population survey data that showed the industries people work for and their income from wages and investments.
They found the wealthiest 10% in the US, households making more than about $178,000, were responsible for 40% of the nation’s human-caused, planet-heating pollution. The income of the top 1% alone – households making more than $550,000 – was linked to 15% to 17% of this pollution.
The report also identified “super-emitters.” They are almost exclusively among the wealthiest top 0.1% of Americans, concentrated in industries such as finance, insurance and mining, and produce around 3,000 tons of carbon pollution a year. To put that in perspective, it’s estimated people should limit their carbon footprint to around 2.3 tons a year to tackle climate change.
“Fifteen days of income for a top 0.1% household generates as much carbon pollution as a lifetime of income for a household in the bottom 10%,” Starr said.
Climate impact is not just about the size of the people’s income but the industries that generate it. A household making $980,000 from certain fossil fuel industries, for example, would be considered a super-emitter, according to the report. But a household making money from the hospital industry would need to bring in $11 million to produce the same amount of planet-heating pollution.
Carbon taxes that focus on what people buy – the food we eat, the cars we drive, the clothes we buy – “disproportionately punish the poor while having little impact on the extremely wealthy,” said Starr. They also miss the chunk of wealth rich people spend on investments rather than buying things.
Governments instead should focus on taxes that target shareholders and carbon-intensive investments, the report said. Although it will be “a hard political ask,” Starr acknowledged, especially as the wealthiest tend to have disproportionate political power.
Many ideas for taxing carbon have been floated around the world including windfall taxes on fossil fuel companies and wealth taxes, but few have been politically viable.
Kimberly Nicholas, associate professor of sustainability science at Lund University in Sweden, who was not involved in the report, said the study helps reveal how closely income, especially from investments, is tied to planet-heating pollution.
Sometimes when people talk about ways to tackle the climate crisis, they bring up population control, said Mark Paul, a political economist at Rutgers University who was also not involved in the study. But studies like this “shine light on the outsized responsibility that the rich have in generating and perpetuating the climate crisis,” he told CNN.
Identifying the main actors behind the climate crisis is vital for governments to develop policies that cut planet-heating pollution in a fair way, he added. Although he disagreed with the study’s assertion that carbon taxes on consumption disproportionately affect the poor, saying there were ways to implement them fairly.
The outsized climate impact of the rich is, of course, far from just a US problem.
Globally, the planet-heating pollution produced by billionaires is a million times higher than the average person outside the world’s wealthiest 10%, according to a report last year from the nonprofit Oxfam.
“At the moment, the way the economy works is that it takes money and turns it into climate pollution that is destabilizing life on Earth,” Nicholas said. “And that fundamentally has to change.”
The scale of emissions inequality in U.S. society
Emissions inequality across economic and racial lines, with the top 1% of households’ investment holdings accounting for 40% of their emissions
IMAGE: FIG 4. MEAN HOUSEHOLD T CO2E EMISSIONS (2019) PER INCOME GROUP UNDER THE PRE-TAX SUPPLIER FRAMEWORK. THE WIDTH OF EACH INCOME GROUP, ON THE X-AXIS, CORRESPONDS WITH EACH GROUP’S SHARE OF NATIONAL EMISSIONS. COLOR INDICATES INCOME CATEGORY. BLACK ERROR BARS ARE BOOTSTRAPPED 95% CONFIDENCE INTERVALS FOR TOTAL T CO2E FROM ALL THREE SOURCES. SIMILARLY, GRAY ERROR BARS ARE BOOTSTRAPPED 95% CONFIDENCE INTERVALS ON THE TOTAL T CO2E GIVEN AN ASSUMED ±20% ERROR IN CARBON INTENSITY PER DOLLAR. (PRODUCER-BASED RESULTS ARE PRESENTED IN S8 FIG). view more
CREDIT: STARR ET AL., 2023, PLOS CLIMATE, CC-BY 4.0 (HTTPS://CREATIVECOMMONS.ORG/LICENSES/BY/4.0/)
Researchers have linked US household income data to greenhouse gas emissions generated in creating that income, and found that 40% of total emissions are associated with income for the highest 10% of households. The paper, published in PLOS Climate suggests that an income or shareholder-based carbon tax focused on investments may have equity advantages over traditional consumer-facing cap-and-trade or carbon tax options.
Human created climate change is an existential threat, and there is a disconnect between those facing the worst impacts and those that drive the greatest greenhouse gas emissions.
Jared Starr of the University of Massachusetts Amherst, and colleagues, took 30 years of US household-level income data, from 1990-2019, and linked it to the emissions generated in that income. They look at both income from direct emissions, such as industries like power plants, and income related to industries supplying services or commodities to those industries - such as finance or fossil fuel suppliers.
In general, white non-Hispanic households had the highest emissions linked to income, and Black households had the lowest, predominantly because of the racial inequity of income distribution. In terms of age, emissions tend to increase with age until peaking within the 45 – 54 age group before declining again.
Among the highest earning 1% of households, whose income is linked to 15 - 17% of national emissions, investment holdings account for 38 - 43% of their emissions. The team also identifies “super emitters” with extremely high overall emissions, and these are almost exclusively among the top 0.1% of households, which are overrepresented in finance, real estate, and insurance; manufacturing; mining and quarrying.
The research offers a new perspective on emissions responsibility and climate finance and could be a useful policy tool to encourage decarbonization while raising revenue for climate finance.
Starr adds: “The scale of emission disparity is quite striking. Just fifteen days of income-based emissions from an average top 0.1% household is equal to a lifetime of emissions from a bottom decile household. I find that morally troubling, especially since low-income households face disproportionate climate harms.
I think we need to make sure that our climate policies take these disparities into account. One way to do that is to make sure that those who are financially benefitting thanks to emissions are properly incentivized to both reduce their emissions and pay for the damage caused by those emissions. I believe that an income or asset-based carbon tax would focus the minds of corporate executives, board members, and large shareholders to decarbonize their industries in order to reduce their taxes. In essence it is decarbonization and divestment out of self-interest. At the same time it would generate much needed revenue for climate finance. While no tool is perfect, I think this could be a useful new approach to encourage the most economically and politically powerful in our society to focus their minds on decarbonization.”
#####
In your coverage please use this URL to provide access to the freely available article in PLOS Climate: https://journals.plos.org/climate/article?id=10.1371/journal.pclm.0000190
Citation: Starr J, Nicolson C, Ash M, Markowitz EM, Moran D (2023) Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance. PLOS Clim 2(8): e0000190. https://doi.org/10.1371/journal.pclm.0000190
Author Countries: Norway, US
Funding: The authors received no specific funding for this work.
JOURNAL
PLOS Climate
METHOD OF RESEARCH
Computational simulation/modeling
SUBJECT OF RESEARCH
People
ARTICLE TITLE
Income-based U.S. household carbon footprints (1990–2019) offer new insights on emissions inequality and climate finance
ARTICLE PUBLICATION DATE
17-Aug-2023
A carbon tax on investment income could be more fair and make it less profitable to pollute – a new analysis shows why
Jared Starr, Sustainability Scientist, UMass Amherst
Thu, August 17, 2023
Investor pressure could drive down greenhouse gas emissions. Tippapatt/iStock/Getty Images Plus
About 10 years ago, a very thick book written by a French economist became a surprising bestseller. It was called “Capital in the 21st Century.” In it, Thomas Piketty traces the history of income and wealth inequality over the past couple of hundred years.
The book’s insights struck a chord with people who felt a growing sense of economic inequality but didn’t have the data to back it up. I was one of them. It made me wonder, how much carbon pollution is being generated to create wealth for a small group of extremely rich households? Two kids, 10 years and a Ph.D. later, I finally have some answers.
In a new study, colleagues and I investigated U.S. households’ personal responsibility for greenhouse gas emissions from 1990 to 2019. We previously studied emissions tied to consumption – the stuff people buy. This time, we looked at emissions used in generating people’s incomes, including investment income.
If you’ve ever thought about how oil company CEOs and shareholders get rich at the expense of the climate, then you’ve been thinking in an “income-responsibility” way.
While it may seem intuitive that those getting rich from fossil fuels bear responsibility for the emissions, very little research has been done to quantify this. Recent efforts have started to look at emissions related to household wages in France, global consumption and investments of different income groups and billionaires’ investments. But no one has analyzed households across a whole country based on the emissions used to generate their full range of income, including wages, investments and retirement income, until now.
We linked a global data set of financial transactions and emissions to microdata from the U.S. Census Bureau and Bureau of Labor Statistics’ monthly labor force survey, which includes respondents’ job, demographics and income from 35 categories, including wages and investments. People’s wages we connected to the emission intensity of the industries that employ them, and we based the emissions intensity of investment income on a portfolio that mirrors the overall economy.
The results of our analysis were eye-opening, and they could have profound implications for producing more effective and fair climate policies in the future.
Jared Starr, Sustainability Scientist, UMass Amherst
Thu, August 17, 2023
Investor pressure could drive down greenhouse gas emissions. Tippapatt/iStock/Getty Images Plus
About 10 years ago, a very thick book written by a French economist became a surprising bestseller. It was called “Capital in the 21st Century.” In it, Thomas Piketty traces the history of income and wealth inequality over the past couple of hundred years.
The book’s insights struck a chord with people who felt a growing sense of economic inequality but didn’t have the data to back it up. I was one of them. It made me wonder, how much carbon pollution is being generated to create wealth for a small group of extremely rich households? Two kids, 10 years and a Ph.D. later, I finally have some answers.
In a new study, colleagues and I investigated U.S. households’ personal responsibility for greenhouse gas emissions from 1990 to 2019. We previously studied emissions tied to consumption – the stuff people buy. This time, we looked at emissions used in generating people’s incomes, including investment income.
If you’ve ever thought about how oil company CEOs and shareholders get rich at the expense of the climate, then you’ve been thinking in an “income-responsibility” way.
While it may seem intuitive that those getting rich from fossil fuels bear responsibility for the emissions, very little research has been done to quantify this. Recent efforts have started to look at emissions related to household wages in France, global consumption and investments of different income groups and billionaires’ investments. But no one has analyzed households across a whole country based on the emissions used to generate their full range of income, including wages, investments and retirement income, until now.
We linked a global data set of financial transactions and emissions to microdata from the U.S. Census Bureau and Bureau of Labor Statistics’ monthly labor force survey, which includes respondents’ job, demographics and income from 35 categories, including wages and investments. People’s wages we connected to the emission intensity of the industries that employ them, and we based the emissions intensity of investment income on a portfolio that mirrors the overall economy.
The results of our analysis were eye-opening, and they could have profound implications for producing more effective and fair climate policies in the future.
A view from the top 1%
Both our consumption- and income-based approaches reveal that the highest-earning households are responsible for much more than an equitable share of carbon emissions. What’s more surprising is how different the level of responsibility is depending on whether you look at consumption or income.
In the income-based approach, the share of national emissions coming from the top 1% of households is 15% to 17% of national emissions. That’s about 2.5 times higher than their consumer-related emissions, which is about 6%.
In the bottom 50% of households, however, the trend is the exact opposite: Their share of consumption-based national emissions is 31%, about two times larger than their income-based emissions of 14%.
Why is that?
A couple things are going on here. First, the lowest earning 50% of U.S. households spend all that they earn, and often more via social assistance or debt. The top income groups, on the other hand, are able to save and reinvest more of their income.
Second, while high-income households have very high overall spending and emissions, the carbon intensity – tons of carbon dioxide emitted per dollar – of their purchases is actually lower than that of low-income households. This is because low-income households spend a large share of their income on carbon-intensive basic necessities, like home heating and transportation. High-income households spend more of their income on less-carbon-intensive services, like financial services or higher education.
Both our consumption- and income-based approaches reveal that the highest-earning households are responsible for much more than an equitable share of carbon emissions. What’s more surprising is how different the level of responsibility is depending on whether you look at consumption or income.
In the income-based approach, the share of national emissions coming from the top 1% of households is 15% to 17% of national emissions. That’s about 2.5 times higher than their consumer-related emissions, which is about 6%.
In the bottom 50% of households, however, the trend is the exact opposite: Their share of consumption-based national emissions is 31%, about two times larger than their income-based emissions of 14%.
Why is that?
A couple things are going on here. First, the lowest earning 50% of U.S. households spend all that they earn, and often more via social assistance or debt. The top income groups, on the other hand, are able to save and reinvest more of their income.
Second, while high-income households have very high overall spending and emissions, the carbon intensity – tons of carbon dioxide emitted per dollar – of their purchases is actually lower than that of low-income households. This is because low-income households spend a large share of their income on carbon-intensive basic necessities, like home heating and transportation. High-income households spend more of their income on less-carbon-intensive services, like financial services or higher education.
Implications for a carbon tax
Our detailed comparison could help change how governments think about carbon taxes.
Typically, a carbon tax is applied to fossil fuels when they enter the economy. Coal, oil and gas producers then pass this tax on to consumers. More than two dozen countries have a carbon tax, and U.S. policymakers have proposed adding one in recent years. The idea is that raising the price of these products by taxing them will get consumers to shift to cheaper and presumably less carbon-intensive alternatives.
But our studies show that this kind of tax would disproportionately fall on poorer Americans. Even if a universal dividend check was adopted, consumer-facing carbon taxes have no impact on saved income. Generating that income likely contributed to greenhouse gas emissions, but as long as the money is used to buy stocks rather than consumables, it is excluded from carbon taxes. So, this kind of carbon tax disproportionately affects people whose income goes primarily toward consumption.
Our detailed comparison could help change how governments think about carbon taxes.
Typically, a carbon tax is applied to fossil fuels when they enter the economy. Coal, oil and gas producers then pass this tax on to consumers. More than two dozen countries have a carbon tax, and U.S. policymakers have proposed adding one in recent years. The idea is that raising the price of these products by taxing them will get consumers to shift to cheaper and presumably less carbon-intensive alternatives.
But our studies show that this kind of tax would disproportionately fall on poorer Americans. Even if a universal dividend check was adopted, consumer-facing carbon taxes have no impact on saved income. Generating that income likely contributed to greenhouse gas emissions, but as long as the money is used to buy stocks rather than consumables, it is excluded from carbon taxes. So, this kind of carbon tax disproportionately affects people whose income goes primarily toward consumption.
A profit-focused carbon tax
What if, instead of focusing on consumption, carbon taxes addressed greenhouse gases as an outcome of profit generation?
The vast majority of American corporations operate under the principle of “shareholder primacy,” where they see a fiduciary duty to maximize profit for their investors. Products – and the greenhouse gases used to make them – are not created for the benefit of the consumer, but because the sale of those products will benefit the shareholders.
If carbon taxes were focused on shareholder income linked to greenhouse gas emissions rather than consumption, they could target those receiving the most economic benefits resulting from these emissions.
What if, instead of focusing on consumption, carbon taxes addressed greenhouse gases as an outcome of profit generation?
The vast majority of American corporations operate under the principle of “shareholder primacy,” where they see a fiduciary duty to maximize profit for their investors. Products – and the greenhouse gases used to make them – are not created for the benefit of the consumer, but because the sale of those products will benefit the shareholders.
If carbon taxes were focused on shareholder income linked to greenhouse gas emissions rather than consumption, they could target those receiving the most economic benefits resulting from these emissions.
The impact
A couple of interesting things might result, particularly if the tax was set based on the carbon intensity of the company.
Corporate executives and boards would have incentive to reduce emissions to lower taxes for shareholders. Shareholders would have incentive, out of self-interest, to pressure companies to do so.
Investors would also have incentive to shift their portfolios to less-polluting companies to avoid the tax. Pension and private wealth fund managers would have incentive to divest from carbon-polluting investments out of a fiduciary duty to their clients. To keep the tax focused on large shareholders, I could see retirement accounts being excluded from the tax, or a minimum asset threshold before the tax applies.
A couple of interesting things might result, particularly if the tax was set based on the carbon intensity of the company.
Corporate executives and boards would have incentive to reduce emissions to lower taxes for shareholders. Shareholders would have incentive, out of self-interest, to pressure companies to do so.
Investors would also have incentive to shift their portfolios to less-polluting companies to avoid the tax. Pension and private wealth fund managers would have incentive to divest from carbon-polluting investments out of a fiduciary duty to their clients. To keep the tax focused on large shareholders, I could see retirement accounts being excluded from the tax, or a minimum asset threshold before the tax applies.
Revenue generated from the carbon tax could help fund adaptation and the transition to clean energy.
Instead of putting the responsibility for cutting emissions on consumers, maybe policies should more directly tie that responsibility to corporate executives, board members and investors who have the most knowledge and power over their industries. Based on our analysis of the consumption and income benefits produced by greenhouse gas emissions, I believe a shareholder-based carbon tax is worth exploring.
This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts.
It was written by: Jared Starr, UMass Amherst.
Read more:
Taxing carbon may sound like a good idea but does it work?
What if carbon border taxes applied to all carbon – fossil fuels, too?
A carbon tax can have economic, not just environmental benefits for Australia
Instead of putting the responsibility for cutting emissions on consumers, maybe policies should more directly tie that responsibility to corporate executives, board members and investors who have the most knowledge and power over their industries. Based on our analysis of the consumption and income benefits produced by greenhouse gas emissions, I believe a shareholder-based carbon tax is worth exploring.
This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts.
It was written by: Jared Starr, UMass Amherst.
Read more:
Taxing carbon may sound like a good idea but does it work?
What if carbon border taxes applied to all carbon – fossil fuels, too?
A carbon tax can have economic, not just environmental benefits for Australia
Opinion: One thing we know about the Maui wildfires: Some of those most responsible won't pay a cent
Caroline Levine
Thu, August 17, 2023
Destroyed homes and cars in Lahaina, Hawaii. (Rick Bowmer / Associated Press)
Maui faces devastating economic costs beyond its intolerable human loss and suffering from recent wildfires. Scorched homes and businesses reduced to rubble won’t be rebuilt quickly; cleaning up their remnants, some of them toxic, won’t be cheap. Rebuilding costs have been estimated at $5.5 billion.
Who will pay for this? Most of us will, to varying degrees, but some of those most responsible — the fossil fuel companies that play a key role in such climate-related disasters — won’t.
Extreme weather events always take their highest economic toll on the communities directly hit. Maui’s families, many of whom live paycheck to paycheck, have suddenly lost both jobs and homes. They’ll now struggle to meet their most basic needs. Even those who have some savings will have to figure out how to make them last through long delays for inspections, insurance payments and federal aid.
Taxpayers will keep some emergency shelters and food supplies going and fund longer-term federal assistance. Over the past 10 years, the U.S. government has spent $350 billion on climate-related disasters.
Insurance companies will cover much of the property damage. They’ll probably hike rates across the state, too, passing on the costs to ordinary Hawaiians. Some may even stop selling homeowner coverage in Hawaii, as State Farm and others have done in wildfire-prone California, exposing residents to even greater costs.
Hawaiian Electric already faces legal action over the possibility that the utility's equipment started the fires. If California residents’ experience attempting to extract compensation from Pacific Gas and Electric Co. is any guide, the results will be mixed.
The fossil fuel companies, however, won’t be paying a cent. That’s despite the fact that their products created the climate conditions that made such fires more likely and more catastrophic. Less rain, higher temperatures and other factors related to climate change have made Hawaii, like California, more vulnerable to wildfires.
Read more: Opinion: What Hawai’i needs now from California, our sister state
As Naomi Oreskes and Erik M. Conway have shown, major oil, gas and coal companies foresaw the catastrophic climatic consequences of fossil fuel use. But instead of leading an energy transition, they opted to sow public doubt about the link between fossil fuels and global warming and continued to invest in new mines and oilfields.
Cannily, fossil fuel companies have also turned public attention away from themselves by encouraging ordinary people to feel guilty about our own “carbon footprints,” pointing the finger at you and me.
And it’s you and I and the struggling citizens of Maui who are left to pick up the ever-mounting bill for climate disasters.
It doesn’t have to be this way.
One solution is to put a price on carbon to account for “externalities,” the term economists use for costs that aren’t reflected in the prices consumers pay.
Let’s say I buy a fertilizer for my crops that assures me a great yield. But when that fertilizer leaches into a nearby lake, it spawns lethal algae blooms, contaminates drinking water and kills plants and fish. I may be delighted by my profits, but I’m costing my neighbors substantial sums in healthcare, tourism and fishing revenue. These are the fertilizer’s dispersed costs — its externalities.
According to 28 Nobel laureate economists and 15 former chairs of the Council of Economic Advisors, it makes good economic sense to charge fossil fuel companies for the real costs of their products through a carbon tax. That cost would include much of the billions of dollars of damage to Maui.
Of course, raising fuel prices could make life harder for Americans who already struggle to fill their gas tanks. But there’s an excellent economic solution to that too. The group Citizens Climate Lobby has proposed to return carbon pricing revenue through regular dividends to all U.S. households. This model would reduce emissions, create jobs and stimulate innovation without burdening low- and middle-income families.
Read more: We survived the Paradise fire. For Lahaina survivors, escape from hell will mark them forever
Another solution is divestment from fossil fuel companies. Investors can force these companies to bear more of the social costs of their products by declining to buy and own their stocks.
Your own savings may have played role in the cause of the devastation in Hawaii. Just 23 investors are responsible for 50% of worldwide investments in fossil fuels. The biggest culprits are asset management giants Vanguard and BlackRock, with Fidelity Investments, JPMorgan Chase, T. Rowe Price, Bank of America and Berkshire Hathaway also making the list. My own retirement fund, TIAA, a nonprofit founded for teachers, manages at least $78 billion in fossil fuel-related holdings, according to one analysis.
Once investors have sunk our money into fossil fuels, they join the chorus lobbying politicians to protect fossil fuel profits. Coal, oil and gas companies are wielding massive influence in the political arena to manipulate the economy to their benefit at our expense. After giving millions of dollars to Senate Republicans this year, fossil fuel companies lobbied for cuts to the Energy Department’s renewables office and reductions in energy efficiency standards.
What if these companies had acknowledged the need for an energy transition 10 or 20 years ago? For the sake of their own bottom lines, they would be championing renewable energy and climate regulation, and we would have a different political landscape.
As long as we keep investing in, subsidizing and cleaning up after the fossil fuel companies, they’ll keep happily passing on these exorbitant costs to us. Isn’t it time to send this bill to the right address?
Caroline Levine is a professor of the humanities at Cornell University, where she teaches in the Environment and Sustainability program, and the author of “The Activist Humanist: Form and Method in the Climate Crisis.”
This story originally appeared in Los Angeles Times.
Caroline Levine
Thu, August 17, 2023
Destroyed homes and cars in Lahaina, Hawaii. (Rick Bowmer / Associated Press)
Maui faces devastating economic costs beyond its intolerable human loss and suffering from recent wildfires. Scorched homes and businesses reduced to rubble won’t be rebuilt quickly; cleaning up their remnants, some of them toxic, won’t be cheap. Rebuilding costs have been estimated at $5.5 billion.
Who will pay for this? Most of us will, to varying degrees, but some of those most responsible — the fossil fuel companies that play a key role in such climate-related disasters — won’t.
Extreme weather events always take their highest economic toll on the communities directly hit. Maui’s families, many of whom live paycheck to paycheck, have suddenly lost both jobs and homes. They’ll now struggle to meet their most basic needs. Even those who have some savings will have to figure out how to make them last through long delays for inspections, insurance payments and federal aid.
Taxpayers will keep some emergency shelters and food supplies going and fund longer-term federal assistance. Over the past 10 years, the U.S. government has spent $350 billion on climate-related disasters.
Insurance companies will cover much of the property damage. They’ll probably hike rates across the state, too, passing on the costs to ordinary Hawaiians. Some may even stop selling homeowner coverage in Hawaii, as State Farm and others have done in wildfire-prone California, exposing residents to even greater costs.
Hawaiian Electric already faces legal action over the possibility that the utility's equipment started the fires. If California residents’ experience attempting to extract compensation from Pacific Gas and Electric Co. is any guide, the results will be mixed.
The fossil fuel companies, however, won’t be paying a cent. That’s despite the fact that their products created the climate conditions that made such fires more likely and more catastrophic. Less rain, higher temperatures and other factors related to climate change have made Hawaii, like California, more vulnerable to wildfires.
Read more: Opinion: What Hawai’i needs now from California, our sister state
As Naomi Oreskes and Erik M. Conway have shown, major oil, gas and coal companies foresaw the catastrophic climatic consequences of fossil fuel use. But instead of leading an energy transition, they opted to sow public doubt about the link between fossil fuels and global warming and continued to invest in new mines and oilfields.
Cannily, fossil fuel companies have also turned public attention away from themselves by encouraging ordinary people to feel guilty about our own “carbon footprints,” pointing the finger at you and me.
And it’s you and I and the struggling citizens of Maui who are left to pick up the ever-mounting bill for climate disasters.
It doesn’t have to be this way.
One solution is to put a price on carbon to account for “externalities,” the term economists use for costs that aren’t reflected in the prices consumers pay.
Let’s say I buy a fertilizer for my crops that assures me a great yield. But when that fertilizer leaches into a nearby lake, it spawns lethal algae blooms, contaminates drinking water and kills plants and fish. I may be delighted by my profits, but I’m costing my neighbors substantial sums in healthcare, tourism and fishing revenue. These are the fertilizer’s dispersed costs — its externalities.
According to 28 Nobel laureate economists and 15 former chairs of the Council of Economic Advisors, it makes good economic sense to charge fossil fuel companies for the real costs of their products through a carbon tax. That cost would include much of the billions of dollars of damage to Maui.
Of course, raising fuel prices could make life harder for Americans who already struggle to fill their gas tanks. But there’s an excellent economic solution to that too. The group Citizens Climate Lobby has proposed to return carbon pricing revenue through regular dividends to all U.S. households. This model would reduce emissions, create jobs and stimulate innovation without burdening low- and middle-income families.
Read more: We survived the Paradise fire. For Lahaina survivors, escape from hell will mark them forever
Another solution is divestment from fossil fuel companies. Investors can force these companies to bear more of the social costs of their products by declining to buy and own their stocks.
Your own savings may have played role in the cause of the devastation in Hawaii. Just 23 investors are responsible for 50% of worldwide investments in fossil fuels. The biggest culprits are asset management giants Vanguard and BlackRock, with Fidelity Investments, JPMorgan Chase, T. Rowe Price, Bank of America and Berkshire Hathaway also making the list. My own retirement fund, TIAA, a nonprofit founded for teachers, manages at least $78 billion in fossil fuel-related holdings, according to one analysis.
Once investors have sunk our money into fossil fuels, they join the chorus lobbying politicians to protect fossil fuel profits. Coal, oil and gas companies are wielding massive influence in the political arena to manipulate the economy to their benefit at our expense. After giving millions of dollars to Senate Republicans this year, fossil fuel companies lobbied for cuts to the Energy Department’s renewables office and reductions in energy efficiency standards.
What if these companies had acknowledged the need for an energy transition 10 or 20 years ago? For the sake of their own bottom lines, they would be championing renewable energy and climate regulation, and we would have a different political landscape.
As long as we keep investing in, subsidizing and cleaning up after the fossil fuel companies, they’ll keep happily passing on these exorbitant costs to us. Isn’t it time to send this bill to the right address?
Caroline Levine is a professor of the humanities at Cornell University, where she teaches in the Environment and Sustainability program, and the author of “The Activist Humanist: Form and Method in the Climate Crisis.”
This story originally appeared in Los Angeles Times.
