‘Windfall: The Booming Business of Global Warming’ by McKenzie Funk (Penguin Press; January 23, 2014)
Table of Contents:
i. Introduction/Synopsis
PART I: THE WORLD’S CLIMATE IS CHANGING, AND WE ARE THE MAIN CAUSE
1. Global Warming
a. The World Is Warming
b. We Are the Main Cause of Global Warming
2. Climate Change and its Effects
a. Rising Sea Levels
b. More Drought and Desertification, and More Deluges
c. Stronger Storms
3. The Response to Climate Change on the Part of the World’s Governments: Complacency
PART II: THE ECONOMIC BENEFITS OF BURNING FOSSIL FUELS, AND CLIMATE CHANGE ITSELF
Section A. The Economic Benefits of Burning Fossil Fuels
4. Fossil Fuels and Economic Productivity
Section B. How Some Countries Benefit from Climate Change
5. The Arctic 5, and the Fight for the (Melting) North
a. Melting Ice in the North Means Oil Finds, and Shipping Routes
b. The Fight for the North
6. Melting Ice in the North Means More Mineral and Gem Finds
7. Other Ways Northern Countries Are Benefiting from Climate Change—With a Focus on Greenland
a. Further Benefits of the Melt: Fresh Water and Hydroelectricity etc.
b. Fishing, Agriculture and Tourism
c. How Climate Change Is Paying for Greenland’s Independence
Section C. Individuals and Companies that Benefit from Burning Fossil Fuels, and Climate Change Itself
8. How Individuals and Companies Benefit from Burning Fossil Fuels
9. How Some Individuals and Companies Benefit from Climate Change
a. The Insurance Companies
b. Investing in Climate Change
10. The Psychology of Climate Change
PART III: ADAPTING TO CLIMATE CHANGE (AND MAKING A PROFIT)
11. Adapting to Water Shortages: From Sea-Water Desalination to Drought-Resistant Crops
a. Transporting Water to the Places that Need it (Is a Fail)
b. Desalinating Sea Water
c. Adapting to Drier Farmland: Drought-Resistant Crops
12. Protection Against the Sea
a. Storm-Surge Sea Walls
b. Floating Land-Masses
13. Skiing in a Warming World: Artificial Snow and the Indoor Ski Resort
PART IV: PROFITING FROM MITIGATING CLIMATE CHANGE (WITHOUT GOING OUT OF OUR WAY TO CURB EMISSIONS)
14. Renewable Energy
15. Geoengineering
a. Influencing Weather Events: From Rainmakers to Hurricane Stoppers
b. Cooling the Earth: Solar Radiation Management (and the StratoShield)
16. Conclusion
i. Introduction/Synopsis
That the earth’s climate is warming, and we are the main cause of this phenomenon (through the emission of greenhouse gases, including especially carbon), is now beyond dispute to anyone with an objective mind and an appreciation of science.
The clearest and most obvious effects of global warming are the melting of glacial ice and the corresponding rise in sea levels. But the effects of a warming world do not end here, we now know. The models tell us that warming also means less rain and even drought and desertification in some areas; more rain in others, often in deluges; stronger storms, such as hurricanes and cyclones; and an acidifying ocean.
On a human scale, this means salinated and eroding coast lines; desiccated farmland and more wild fires in drier areas; increased flooding and soil erosion in suddenly wetter areas; more destructive and deadly storms; and threatened sea life.
With all these negative effects, you would think that the people, companies and governments of the world would be eager to step in and do everything we can to stem the rising tide of climate change (including especially cutting emissions). Instead, however, what we have seen is much talk and little action.
There are several reasons for this complacency. One of the leading ones is that the effects of climate change often seem somewhat removed from our daily lives. Indeed, even though we are now seeing the beginnings of many of the effects listed above, most of us glimpse at most a small fraction of these effects. And besides, it is difficult to attribute any one of them to global warming specifically. What’s more, we like our way of life, and it’s difficult to imagine changing it for something as abstract and often remote as global weather patterns.
In connection with this, many of us are wont to think that the best approach to climate change might simply be to adapt. We’re an innovative species, after all, what’s to stop us from innovating our way out of trouble? This idea is especially appealing to the innovators and entrepreneurs among us, for whom not only peace of mind, but profits await. Given that this is the case, it is no surprise that we are already beginning to see some very innovative business approaches to adapting to the new normal. Everything from extensive water desalination plants, to man-made floating land-masses, to storm-surge sea walls, to snow machines and indoor skiing resorts.
Continuing with our wishful train of thought, it might also occur to us that as we are innovating to adapt, we should also be able to innovate to help mitigate and even halt climate change without necessarily weaning ourselves off oil until it is more convenient to do so. Once again, there are profits to be made here, and once again, such innovations are already underway. Everything from the development of alternative forms of energy (including solar, wind, and other renewables), to ingenious ways to manipulate the weather and climate back to normal (known as geoengineering).
Beyond optimism (some might say denial), and the fact that there are big profits to be made from adapting to climate change, there is also one other factor to consider in our relative complacency when it comes to halting and reversing carbon emissions. That is that while many of the effects of climate change listed above are bad for many people, at least some are good for some people some of the time—at least in the short-term. For instance, while melting ice stands to swamp some parts of the world, it is also leaving large tracts of land in the arctic open for resource exploration and shipping routes. In addition, while shifting hydrology is leading to the loss of large tracts of farmland in drier areas, it is also often leading to richer agriculture in newly warmer, wetter areas. Also, while shrinking farmland and water resources is leading to food and water shortages, and rising prices, those in control of these precious resources are making a fortune.
As we can see, then, being complacent about cutting carbon emissions is not only pleasant for most of us, for some of us, it’s even a windfall! And that brings us to the topic of the book: all the things that are now being done to profit off of climate change (which we have now been introduced to above).
What follows is a full executive summary of Windfall: The Booming Business of Global Warming by Mckenzie Funk.
PART I: THE WORLD’S CLIMATE IS CHANGING, AND WE ARE THE MAIN CAUSE
1. Global Warming
a. The World Is Warming
There is now ample evidence that the world is in fact warming. This is not something that can be gleaned from single weather events, or even single seasons or years (though these can act as indicators). Rather, it is something that becomes apparent when we trace long-term weather trends (loc. 273). And here the evidence is unequivocal. To mention just one of these recent trends (together with one stark indicator), consider the following: in 2006, “the National Oceanic and Atmospheric Administration would declare that winter the warmest since it began keeping records, which was in 1880. The Intergovernmental Panel on Climate Change would announce that eleven of the previous twelve years were the warmest in human history” (loc. 277).
Still, global temperature records, which have been trending upwards for over a century (and at an accelerating pace), can be somewhat abstract and remote. For this reason, it is also useful to reference real-world effects; and here too the instances are mounting. Consider that in the summer of 2006, the same year mentioned above, “drought-crazed camels would… rampage through a village in Australia, a manatee would swim past Chelsea Piers in New York City’s Hudson River, and the Netherlands would announce that its famous Elfstedentocht ice-skating race might have to be postponed forever. Armadillos were reaching northeast Arkansas… Fire consumed fifty million acres of Siberia. Greenland lost a hundred gigatons of ice. The Inuit got air-conditioning units. The polar bear lurched toward the endangered-species list. India’s Ghoramara Island was mostly lost to the Bay of Bengal, Papua New Guinea’s Malasiga village was mostly lost to the Solomon Sea, and Alaska’s Shishmaref village decided to evacuate before being lost to the Chukchi Sea. Canadian scientists reported that the forty-square-mile Ayles Ice Shelf had broken off Ellesmere Island and formed a rapidly melting island of its own. A European satellite showed a temporary crack in the ice pack leading from northern Russia all the way to the North Pole” (loc. 273).
Of all the physical evidence reinforcing the idea that the planet is warming, the starkest is the melting of glacial ice. A couple examples of this were mentioned in the quote above; however, those examples fail to capture the full extent of the phenomenon. The fact is that the world’s ice is shrinking at an alarming pace. As an indication of this, consider the ice atop the Arctic Circle. As Funk explains, “the Arctic ice cap has never been smaller than it was in the summers of 2007, 2008, 2009, 2010, 2011, and especially 2012, when 4.57 million square miles, an area larger than the United States, melted away” (loc. 183). Nor is this phenomenon confined to the North—consider the Alps, as another example. As the author explains, “as a whole, Europe’s Alps have lost half their ice over the last century, one-fifth of it since the 1980s. The 925 named glaciers in Austria are receding at an average of thirty to fifty feet a year, twice the rate recorded a decade ago” (loc. 1116).
So, just what is causing all this warming? It is true that the earth’s temperature fluctuates naturally—hence the periodic ice age. In our current case, though, it is clear that something different is going on.
b. We Are the Main Cause of Global Warming
And that something different is the greenhouse gases we humans are spewing into the atmosphere—at an ever increasing rate since the Industrial Revolution. As Funk explains, “the atmospheric concentration of carbon dioxide, our principal contribution to the climate and the principal driver of warming, has only been rising. It is now 40 percent higher than preindustrial levels, higher than it has been anytime in the last 800,000 years. In New York’s Madison Square Garden, a seventy–foot doomsday clock, recently unveiled by Deutsche Bank, is tracking greenhouse-gas levels in real time: 2 billion metric tons added each month, or 800 a second, for a total of 3.7 trillion tons and counting. The ticker has thirteen red digits, but when you stare at it from Seventh Avenue, the last three are a blur. They’re spinning too quickly to see” (loc. 135).
The logic is very simple: greenhouse gases have been shown to trap heat, thus preventing it from leaving the atmosphere; we are emitting greenhouse gases into the atmosphere on a massive scale; and temperatures are rising.
2. Climate Change and its Effects
a. Rising Sea Levels
As we have seen above, one immediate knock-on effect of global warming is the melting of glaciers and the corresponding rise in sea-levels. This, of course, means eroding coast lines (where people live and work); but this is not the only problem associated with rising sea levels. For the encroachment of the sea also means the salination and corruption of coastal farmland (loc. 2701-07).
Strangely, sea-levels are not rising uniformly across the world, mainly because of an unevenness in water circulation and winds across the oceans. As the author explains, “satellite measurements cited in the IPCC’s 2007 report show two parts of two oceans—the western Pacific and the eastern Indian—rising more quickly than any others, while measurements taken along the lengthy Indian coastline show that some areas, including West Bengal, adjacent to Bangladesh, are more quickly losing ground. The variability is attributed to tectonic movements, to changes in the distribution of heat and salt, which lead to changes in water circulation, and to the fact that surface winds can literally move oceans” (loc. 2681).
What this means is that some coastal areas are experiencing problems sooner than others. For example, coastlines in some areas have already undergone significant erosion, causing inland migration, and even whole islands have even been lost (loc. 273). And this is just the beginning. There is some debate over just how much sea-levels may rise in the next century, but even the best-case scenario does not look good. As Funk explains, “if [sea] expansion remains linear, oceans will be roughly a foot higher in 2100. But few scientists believe it will stay linear… Thermal expansion, the fact that when water heats up as it expands, is no longer the biggest contributor to sea-level rise… Instead, it’s melting ice. An average rise of three feet by 2100 is now considered a reasonable forecast; some experts believe six feet is within the range of possibility” (loc. 2694).
3 to 6 feet may not even sound like much, but the fact is that such a rise in sea-levels would have a devastating effect on the world’s coast-lines. Funk puts it this way: “the Maldives are probably doomed. Tuvalu is probably doomed. Kiribati is probably doomed. The Marshall Islands are probably doomed. The Seychelles are probably doomed. The Bahamas are probably doomed. The Carterets are probably doomed. Bangladesh, at least a fifth of it, is probably doomed. Large portions of Manila, Alexandria, Lagos, Kolkata, Jakarta, Dakar, Rio, Miami, and Ho Chi Minh City are probably doomed. Water enough to flood them all is stored in the world’s biggest reservoir, the Greenland ice cap, the frozen inland mass that covers 81 percent of the island. The rate of the ice cap’s melt h[as] been increasing by 7 percent a year since 1996. If someday it melts entirely, global sea levels will jump more than twenty feet” (loc. 907).
b. More Drought and Desertification, and More Deluges
Of course, melting glaciers and rising sea levels are not the only knock-on effect of global warming. There are many knock-on effects, and several of them just as devastating, if not more so, than rising sea levels. Take drought, for example.
By bumping up global temperatures, and stifling the frequency of rain-fall, warming causes drought and desertification conditions in many areas, including, presently, the American Midwest, Australia, southern Europe and many parts of Asia and Africa. As an indication of this, consider the following: “that drought is already beginning is evidenced not by specific events but by a pattern of them: wildfires in Colorado, water woes in northern China, desertification in Spain, food riots in Senegal, and the fact that to describe the recent state of Australia’s breadbasket, the Murray-Darling basin, the term ‘drought’ was discarded in favor of the more permanent-sounding ‘dryness’” (loc. 189).
As hinted at in the quote, it is not just farmland that is under threat due to increased drought. There is also the wild-fire factor. And here the effects have been even more dramatic. As the author explains, “across the globe, the first decade of the new millennium was a decade of fire: Fire in Alaska and Spain and Siberia and Corsica and Bolivia and Indonesia and British Columbia. In New Mexico and Oregon and Colorado and Texas and Arizona. In the Black Hills of South Dakota and the swamplands of North Carolina. In Greece, the worst fires in half a century during the worst drought in millennia. In Australia, the worst fire in recorded history during the worst drought in recorded history. In Russia, fires so destructive that the president—Medvedev, not Putin—said out loud that climate change was real. The largest fires in Georgia’s recorded history, in Florida’s recorded history, and in Utah’s recorded history. Across the United States, an average of seven million acres have burned each year of the new millennium—twice the 1990s average. Between 1986 and 2006, the number of major wildfires grew by 400 percent, the area burned by 600 percent” (loc. 1388).
The ironic thing about global warming is that it not only triggers more drought, but also more deluges (often times in separate places). This causes damaging floods, as well as increased soil erosion (loc. 1659, 1881, 2715-22).
c. Stronger Storms
In connection with the increase in deluges and floods is the growing intensity of major storms, such as hurricanes and cyclones. As Funk explains, “while warming’s effect on tropical storms is hotly debated, a general consensus is emerging: Whether or not it increases their frequency, it very likely increases their strength. Cyclones and hurricanes are fueled by ocean temperatures; more heat means more destructive winds” (loc. 2711; see also loc. 1490-97, 3820). And we are indeed seeing evidence that tropical storms are becoming more intense (loc. 2710-14, 3820).
3. The Response to Climate Change on the Part of the World’s Governments: Complacency
Given the negative consequences of climate change, and given the main cause of this phenomenon is our contributing greenhouse gases to the atmosphere (including especially carbon), we might think that we would be doing everything we can to cut emissions. And indeed, the governments of the world have met repeatedly to address just this issue, and to try and hash out a deal. To date, however, no consensus has been reached.
Indeed, the deals that have been struck (including, most famously, Kyoto), have not been signed by everyone, and many of those countries who have agreed to restrictions have failed to meet them (loc 296, 765). The entrepreneur Nathan Myhrvold (whom we will meet later) puts it this way: “I could be wrong, but I say that right now you can sort the world’s countries into two categories: Countries that say climate change is a top priority yet have done absolutely nothing. And countries that say, fuck it, we’re not doing anything. So what have we done? Nothing! Zero!” (loc. 3876).
Myrhvold’s comment may be an oversimplification, but the evidence indicates he’s not far off. For the world’s greenhouse-gas emissions are not decreasing, nor even leveling off, but increasing. As Funk explains, paraphrasing the head of the World Wildlife Fund’s Arctic program, “[by 2008] carbon in the atmosphere was increasing by 1.9 million parts per million during the previous thirty years. Natural carbon sinks—oceans, plants—could now hold 10 percent less carbon than fifty years ago, their efficiency as buffers weakening. ‘Since 2000, the growth in carbon emissions from fossil fuels has tripled—tripled compared to the 1990s!’ he said. ‘We’re exceeding even the highest IPCC emission scenarios’” (loc. 662).
PART II: THE ECONOMIC BENEFITS OF BURNING FOSSIL FUELS, AND CLIMATE CHANGE ITSELF
Section A. The Economic Benefits of Burning Fossil Fuels
4. Fossil Fuels and Economic Productivity
So, what explains the lack of action on the part of many governments around the world? Much of it, of course, has to do with the fact that economic productivity in large part depends on the burning of greenhouse-gas emitting fuels—since fossil fuels remain the cheapest and most convenient form of energy we have (loc. 802). This is clearly a major concern for all countries; however, it is especially an issue for the developing countries of the world that are currently trying to pull themselves up out of poverty. As a 2008 report by Shell oil pointed out, “‘developing nations, including population giants China and India, are entering their most energy-intensive phase of growth’” (loc. 706), and these nations are certainly not interested in cutting their energy-use and emissions just as they are about to bootstrap themselves out of poverty.
Given the choice between maintaining and even raising standards of living through burning more fossil fuels now, and dealing with the worst consequences of climate change, well, not now, the choice of the world’s nations has been clear: it’s full steam ahead.
Section B. How Some Countries Benefit from Climate Change
However, there’s also a more sinister reason why at least some countries are reluctant to get on board the carbon-cutting train. And this is because some countries stand to benefit not only from the continued burning of fossil fuels, but also a continually warming world—at least in the short-term.
5. The Arctic 5, and the Fight for the (Melting) North
To begin with, take the 5 countries with Arctic Ocean frontage: Canada, Denmark, Norway, Russia, and the United States (loc. 463). By the international agreement known as the Law of the Sea, these countries are entitled to all the territory of the far North (loc. 457-60). Now, until recently, this territory simply wasn’t all that valuable, because it was so covered in ice that its riches could not be exploited. With the ice of the North now melting, though, this is all beginning to change.
a. Melting Ice in the North Means Oil Finds, and Shipping Routes
Indeed, as the ice recedes it is opening up large tracts of land that are proving to be extremely rich when it comes to natural resources, as well as large tracts of sea that are extremely valuable when it comes to shipping routes. As Funk explains, “the Arctic h[olds] two main prizes: petroleum and new shipping lanes. An estimated 22 percent of the world’s untapped deposits—ninety billion barrels of oil and 1,670 trillion cubic feet of natural gas, according to the U.S. Geological Survey—is thought to be hiding in the high north… The less ice there is, the more petroleum there is within reach… Likewise, the less ice there is, the more the storied Northwest Passage—a long-sought, long-frozen-over shortcut between the Atlantic and the Pacific—becomes a viable alternative to the Panama Canal, saving potential shippers leaving Newark or Baltimore for Shanghai or Busan some four thousand miles and hundreds of thousands of dollars in transit fees and fuel costs” (loc. 253).
b. The Fight for the North
Interestingly, while it has been established that the 5 Arctic nations are privy to the land that is opening up in the North, it has not yet been established just which of these 5 nations are the rightful owners of which parcels of land (at least in many cases). This is leading to some very heated disputes over property rights, and some very interesting (and showy) attempts to bulk-up ownership claims. Everything from the Canadians staging mock military exercises in the Northwest Passage (and shooting up the ice bergs), to the Russians planting their national flag on the seabed beneath the North Pole (loc. 266-98, 505-11).
Still, as Funk makes clear, these proud attempts are all largely in vain, as the Law of the Sea stipulates ownership based on far less flashy criteria, such as the outlay of continental shelves. As the author explains, “for a year or two, everyone would pretend that Russia’s flag, like Canada’s sovereignty operations, possessed some sort of coherent geopolitical logic, that it fundamentally mattered. But the truth was, under the Law of the Sea, the partition of the Arctic was already well under way. It was just that it’s less dramatic: What matter are bathymetric charts, seismic surveys, and good lawyers. Scientists are mapping the formerly uncharted seabed and they and politicians and lawyers will argue about what is and isn’t continental shelf, and whose is whose, and then the warming Arctic will be split five ways by five rich countries whose historic emissions helped make it such a worthy conquest in the first place—no flags or warships needed” (loc. 518).
6. Melting Ice in the North Means More Mineral and Gem Finds
As we have seen, oil and shipping routes are considered to be the two biggest prizes of the receding ice in the North, but they are not the only ones. Indeed, the melting ice is also exposing land that is rich in minerals, metals, and precious gems. This is certainly occurring in the far North of Canada and Russia; however, the biggest winner here may well be Greenland (currently a territory of Denmark).
Indeed, the relenting ice in Greenland is leading not only to a spike in oil in finds, but a spike in mineral finds as well. As Funk explains, “in the waters off Greenland’s northern coast, the U.S. Geological Survey had just identified the nineteenth richest of the world’s five hundred known petroleum provinces: an untapped Gulf of Mexico in the North Atlantic. To our south, near Disko Bay, Greenland’s first oil leases had just been sold to the likes of Chevron and ExxonMobil. Shell and partners would soon claim a lease a hundred miles from Upernavik, in Baffin Bay. Onshore, glaciers were pulling back to reveal massive deposits of zinc, gold, diamonds, and uranium” (loc. 885).
At the first annual Greenland Sustainable Mineral and Petroleum Development Conference in May 2008, Greenland’s mineral riches were outlined in further detail. As the author explains, “[the conference’s] speakers, Canadians and Australians and Brits and Swedes, veteran operators in Rajasthan and Guinea and Mongolia and the Philippines, described the mineral rush: West Greenland gold discoveries and South Greenland gold mining; two-and-a-half-carat diamonds found by the Canadian firm Hudson Resources; rubies drilled by the Canadian firm True North Gems; open-pit molybdenum mines proposed by the Canadian firm Quadra Mining; and uranium and rare earth minerals finds by an Australian-owned, eventually Chinese-backed company with a local name, Greenland Minerals and Energy” (loc. 1027).
7. Other Ways the Northern Countries Are Benefiting from Climate Change—With a Focus on Greenland
The opening up of oil reserves, shipping routes, and mineral deposits are just a few ways many northern countries are benefiting from climate change. Obviously, the specific benefits differ from one place to the next, but there is one place where all the benefits seem to come together at once, and that is the territory we have just mentioned: Greenland. Thus this is a good place to concentrate our attention in order to get a general idea of the ways in which the north is winning.
a. Further Benefits of the Melt: Fresh Water and Hydroelectricity etc.
We have just seen how Greenland’s melting ice is leading to more oil and mineral finds, but it turns out the melting ice has other benefits as well. To begin with, the melting ice is itself of great value—as drinking water (an ever more precious resource in a warming world, as we shall see below). As Funk explains, “there were even plans for the melting ice itself: water exports. ‘The Greenland ice cap has an estimated volume of 1.7 million km3, the world’s biggest water reservoir,’ boasted a Web site set up by the Secretariat of Ice and Water. Investors could sell ‘two million years of history in a bottle!’” (loc. 902).
And much of the melting water that cannot be captured and bottled is finding its way into the nation’s river systems, and helping feed a budding hydro-electricity industry (loc. 895). The budding hydro-electricity industry (in conjunction with the territory’s cool temperatures), in turn, is drawing the interest of major Internet companies (such as Google and Amazon) who are looking for a convenient place to house their vast computer-server farms. As Funk explains, “there [are] plans for fields of server farms—warehouses of computer processors working for Google or Cisco or Amazon—to take advantage of the cheap electricity and high latitude. ‘They normally need a lot of air-conditioning,’ [the Greenlandic politician] Minik [Kleist] explained” (loc. 899).
b. Fishing, Agriculture and Tourism
Meanwhile, as Greenland’s ice melts to expose oil and minerals, yield drinking water, and power hydroelectric turbines, climate change is helping the country in other ways. For example, the warming oceans mean that more and more fish are migrating northwards into its waters. Another boon to the economy! As Funk explains, “the politicians were banking on more than mining. Valuable fish stocks—cod, herring, halibut, and haddock—were migrating into Greenlandic waters, moving north as the oceans warmed” (loc. 892).
In addition, just as Greenland’s fishing industry is beginning to thrive, so is its agricultural industry, helped along by warmer weather and a longer growing season. As the author explains, “the expansion of the South Greenland agricultural season—already three weeks longer than it was in the early 1990s—meant potato farms and carrot gardens and more grass for more sheep” (loc. 895). (The increased temperatures, and lengthened growing season in the north is also proving to be a great boon to agriculture in other northern countries—such as Canada and Russia, and the countries of northern Europe [loc. 81, 289, 510, 2114-21]).
Even Greenland’s tourism has enjoyed a surge since global warming began: “there was a rush of disaster tourists, people coming to see the glaciers slide into the sea: Cruise ship arrivals had jumped 250 percent in four years, and shops sold postcards showing melting ice with the label ‘Climate Change and Global Warming’” (loc. 895).
c. How Climate Change Is Paying for Greenland’s Independence
In Greenland’s case, climate change is not only helping the economy, it may even help the territory achieve independence. As mentioned above, Greenland is currently owned by Denmark, and has been since 1721 when it was first colonized by the Danes (loc. 945). Now, up until recently, Denmark subsidized Greenland to the tune of $650 million per year (loc. 887). With Greenland’s new-found wealth, though, Greenlanders have managed to secure an agreement with Denmark to purchase their independence (and end the subsidy). As Funk explains, “under the agreement, the island would split mineral revenues with Denmark after keeping the first $15 million. As revenues went up, the $650 million annual grant from Denmark would go down. Eventually, over five years or ten, over fifteen years or twenty, if it warmed enough, if they drilled enough, the grant would hit zero, and Greenland would declare independence” (loc. 887).
It is difficult to imagine a nation benefiting more from climate change than Greenland is. Meanwhile, Greenlanders are well aware that many other parts of the world do not stand to do so well. Thus it is no surprise that the nation’s politicians (and people) are feeling somewhat ambivalent about the issue of climate change. Regardless, the nation seems to have made up its mind about what it will do. One of Greenland’s leading separatist politicians, Minik Kleist, put it this way: “‘We’re very aware that we’ll cause more climate change by drilling for oil,’ he said. ‘But should we not? Should we not when it can buy us our independence?’” (loc. 1103).
Again, not all northern nations stand to benefit from climate change as much as Greenland; however, many of them share at least some of Greenland’s advantages. Thus we can begin to see why at least some of these nations would be less than eager to see climate change end just yet (loc. 862-66).
Section C. Individuals and Companies that Benefit from Burning Fossil Fuels, and Climate Change Itself
8. How Individuals and Companies Benefit from Burning Fossil Fuels
We have now seen how the economy in general stands to benefit from the continued burning of fossil fuels, and how at least some nations stand to benefit from continued climate change. This helps explain why the nations of the world are reluctant to do much about cutting emissions, and why they are having so much trouble coming to an agreement here. However, this is far from the only explanation.
The fact is that the governments of the world (particularly the democratic world) would be much more interested in doing something about climate change if this were something their citizens were insisting on. But this is simply not happening (or, at least, it is not happening on a big enough scale) (loc. 4022).
So, what gives? Well, to begin with, governments aren’t the only ones benefiting from the burning of fossil fuels, and (in some cases) climate change itself. Indeed, ordinary citizens benefit both directly and indirectly from the burning of fossil fuels, and some even benefit from climate change too.
For example, when it comes to the burning of fossil fuels, many people work in industries that are either directly involved in it, or that rely on it, and so their livelihoods depend on it. And we benefit from the burning of fossil fuels in other ways too—such as when we enjoy the convenience of our cars. And even those who don’t drive cars, or who don’t work in industries that depend directly on the burning of fossil fuels, it cannot be denied that fossil fuels boost the overall economy—and this helps improve the material standard of living of everyone.
Then there are those who, like the governments mentioned above, actually benefit from climate change. We shall now take a look at some of them.
9. How Some Individuals and Companies Benefit from Climate Change
a. The Insurance Companies
Let us begin with the insurance industry. You may think that insurance companies would be losing money on climate change—especially given all the added events that are calling for claims (everything from failed crops, to wild fires, to floods, to devastating storms). However, as Funk rightly points out, when you control the terms of the insurance policies there is no such thing as losing out (loc.1483).
Indeed, while some of the more vicious storms surprised the insurance industry at first, they have since modified the price of premiums accordingly, and, as a result, have recovered their losses and then some. As reflection of this, consider the following: “in 1992, when category 5 Hurricane Andrew stuck Florida and Louisiana, insurers paid out more than $23 billion in claims—$1.27 for every dollar of premium collected that year. They turned to catastrophe-modeling companies such as Eqecat and Risk Management Solutions—the quants of the insurance industry—which used a century of weather data to predict future losses, and then raised premiums accordingly. In 2005, after Hurricane Katrina, the first category 5 storm of the new climate era, they paid out more than $40 billion but, thanks to an expanded market and better models, only 71.5 cents per dollar collected. That year, the industry still made $49 billion in profits. It has profited, sometimes more, sometimes less, every year since” (loc. 1494).
Of course, the rest of us are not exactly happy about having to pay more for insurance—especially since the added risk of climate change has meant insurance companies have sometimes been compelled to raise their rates by 40% or more (loc. 1497). As a response to this unpopular move, some governments have even stepped in and blocked extreme rate-hikes of this nature. Even in these cases, though, the insurance companies have found a way to win, since they have responded by simply dropping large numbers of policies that have no way of earning them a profit. As Funk explains, “after RMS updated its hurricane model in 2006—by flying four scientists to a vacation spot in Bermuda for what it called ‘expert elicitation’—Allstate used the non-peer-reviewed results to justify jacking up rates in Florida by 43 percent, a move blocked by state regulators. State Farm was similarly blocked from hiking rates by 47 percent. Instead, both dropped tens of thousands of policies, as Allstate also did in storm-surge-threatened areas of New York long before Hurricane Sandy arrived: thirty thousand canceled policies in the five boroughs alone” (loc. 1497).
The new conditions are not only allowing the insurance companies to make money in the same old ways, they’re also allowing them to make money in whole new ways. For instance, insurance companies in California have recently begun offering a service that involves protecting people’s homes from wild fires. Essentially, the service works like this: people pay the insurance companies to protect their properties, and the insurance companies in turn hire sub-contractors to go into areas where wild fires are burning (yes, burning), locate homes that have paid for the service, and spray down their properties with powerful fire-retardant chemicals to protect them from the blaze (loc. 1422-26).
Of course, in this case, it isn’t just the insurance companies getting rich off climate change, it’s also the subcontractors who work for them (loc. 1419-22).
In another innovative move to profit from climate change, many insurance companies are now offering policies to greenhouse-gas emitting companies—to protect them in the event of being sued by parties harmed by climate change (whether individuals, companies, or whole communities and countries). As Funk explains, “in July 2008, after the Inuit of Kivalina sued the energy companies, Liberty Mutual introduced the world’s first insurance policy to protect corporate executives from lawsuits ‘stemming from the alleged improper release of carbon dioxide’” (loc. 1520).
b. Investing in Climate Change
Another way to get rich off climate change is to invest in those things that are likely to get more valuable as climate change continues to set in. And indeed, financial companies have already begun offering mutual funds and hedge funds intended to take advantage of this. As Funk explains, by 2008 “half a dozen major investment houses had launched global-warming-themed mutual funds. Deutsche Bank’s was the 2.9 billion DWS Climate Change Fund… ‘Without taking a position on climate change,’ a press release had explained, the ‘DWS Climate Change Fund is on the cutting edge of climate change investing’” (loc. 87).
The portfolios of these funds often include things like renewable energy and green technology, of course, but they also often include natural resources that are expected to become more and more scarce, and hence more and more valuable—including especially farmland and water rights. Indeed, as should be clear now, climate change threatens both farming output and freshwater availability. Thus it’s a good bet that these resources will only rise in price moving forward. And many investment firms are in fact making this bet.
For example, when Funk looked into the matter he found that climate investors “bought clean tech, green tech, the building blocks of the new, low-carbon economy—but they were also starting to hedge. In London, the Schroder Global Climate Change Fund was investing in Russian farmland—cheap, fertile soil suddenly made dear by milder winters and drought-fueled global food crises—and its manager was taking the logic a step further, buying stock in supermarket chains such as Carrefour and Tesco. ‘If climate change will be a negative for crop yields,’ he told me, ‘then people will just have to spend more on food. Retailers are a clear beneficiary’” (loc. 111).
(Many countries are following the same logic and are beginning to buy large tracts of land in other countries. However, the motivation here would seem to have at least as much to do with ensuring their own populations have enough food than with monetary profit. Regardless of the motivation, though, the amount of investment has been impressive. As the author notes, “China was pursuing land deals all over the globe: 3 million acres in the Philippines; more than 2 million in Kazakhstan; 25,000 in Cameroon; 200,000 in Russia; untold tens of thousands in Brazil. Korea, itself faced with water shortages, pursued 670,000 acres in Mongolia, nearly 2 million in Sudan, 3 million in Madagascar—a deal that failed after it helped spark a coup. India, with its population booming and monsoon beginning to shift, pursued 850,000 acres in Ethiopia. More than 1 million in Madagascar. More than 20,000 in Paraguay and Uruguay. Qatar sought 100,000 acres in Kenya. Kuwait, 300,000 in Cambodia. Saudi Arabia, 1.2 million acres in Indonesia, 1.2 million in Tanzania, 1.2 million in Ethiopia, and, in Sudan the first 25,000 of 250,000 acres of wheat and corn. The United Arab Emirates leased 800,000 acres in Pakistan and as many as 250,000 in Ukraine, 125,000 in Romania, and a million in Sudan” (loc. 2005). All told, wealthy countries and corporations have combined to buy over 200 million acres of farmland in poorer countries over the past decade—with much of the activity occurring since the food crisis of 2008 [loc. 1935-38]).
As mentioned above, many climate-based investment funds are also turning to water—the most important commodity of them all, and especially in a warming world. As Funk explains, “for the climate investor, water was the obvious thing. Carbon emissions are invisible. Temperatures are an abstraction. But melting ice, empty reservoirs, lapping waves, and torrential rainstorms are physical, tangible—the face of climate change. Water is what makes it real. After An Inconvenient Truth, during 2007’s record melt in the Arctic Ocean, at least fifteen water mutual funds had launched globally, more than doubling the number in existence. In two years, the amount of money under management ballooned tenfold to $13 billion. Credit Suisse, UBS, and Goldman Sachs hired dedicated water analysts, the latter calling water ‘the petroleum of the next century’ and referring to ‘major multi-year droughts’ in Israel, Australia, and the American West. ‘At the risk of being alarmist,’ Goldman said in a 2008 report, ‘we see parallels with Malthusian economics.’ Citigroup’s chief economist, Willem Buiter, would take it further. ‘I expect to see in the near future a massive expansion of investment in the water sector,’ he wrote… ‘Water as an asset class will, in my view, become eventually the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals’” (loc. 1648; see also loc. 1678-81).
10. The Psychology of Climate Change
We have now seen how many individuals and companies stand to benefit from the continued burning of fossil fuels, and even climate change itself (particularly in the developed world). This helps explain why many people might not be all that insistent on having their governments step in and put a significant curb on emissions. And this, in turn, takes pressure of these governments to do so—many of whom are themselves benefiting from burning fossil fuels, or climate change, or both.
However, the argument from self-interest is only a part of the story, and may not even be the biggest factor in our complacency regarding climate change. Rather, the biggest factor here may simply have to do with the quirks of our psychology.
To begin with, the fact is that the effects of climate change we have seen to this point have been relatively mild in most places (especially in the wealthy north). Indeed, the bulk of the negative effects of climate change are yet to come, and it is simply very difficult to worry about a remote problem (even if you have tangible evidence that it is in fact coming). Besides, even in those natural disasters where we suspect that global warming has played a part, we cannot see the causal link directly, and it is very difficult to despise an unseen cause (what’s more, scientists warn us that climate change shows up in trends, and that no single event can be attributed explicitly to climate change). Funk sums up it up thus: “the victims of warming are distant in space, distant in time, and the bullets are invisible” (loc. 4019). And when you throw in the fact that most of us benefit greatly from the burning of fossils (both directly and indirectly), it makes it a very difficult problem to confront.
Also at play here is that many of us harbor the belief, either consciously or not, that we should be able to adapt to the changes that are coming. Our technology has helped us on countless occasions before, we are wont to think, so why should it not also be able to help us here? This is certainly the spirit of the innovators among us—who are looking to cash in on the overcoming of our problems. Let us now turn our attention to these tireless innovators and their innovations.
PART III: ADAPTING TO CLIMATE CHANGE (AND MAKING A PROFIT)
11. Adapting to Water Shortages: From Sea-Water Desalination to Drought-Resistant Crops
We shall begin with water. In a warming world, with more droughts, deluges, and the disappearance of glaciers, the availability of fresh water is obviously an increasing concern (loc. 1206). John Dickerson, CEO of the investment firm Summit Global Management, puts it this way: “we still have the exact same amount [of water] in our ecosphere… but the ultimate effect of global warming is that the percentage that is freshwater is getting smaller, the percentage that is salt water is getting larger, and the maldistribution of freshwater is getting much more severe’” (loc. 1658).
a. Transporting Water to the Places that Need it (Is a Fail)
So the amount of freshwater in our world is shrinking, and while some places still have quite a lot of it, others are facing severe shortages. But this would seem to present an opportunity (at least in the short term). For if one could only tap into those places that have an abundance of water, and ship it to those places that do not, one could fix the world’s water woes (and make a fortune in the process).
Now, it is the case that we are beginning to see some shipping of fresh water supplies in emergence situations. For example, “in Spain, Barcelona became the first city in mainland Europe to resort to emergency water imports: five million gallons transported in 2008 in a converted oil tanker” (loc. 1229). However, the main problem with shipping water around the world is that water is enormously heavy, and hence enormously expensive to ship. As Funk explains, “water is heavy—about 8.3 pounds per gallon—and to move it in bulk without significant help from gravity… [is] still too expensive for privateers to profitably pull off” (loc. 1684).
Not that people haven’t tried. The most infamous attemptee is one Terry Spragg. Spragg has spent virtually his entire career trying to come up with a suitable solution to the problem of large-scale water transport—and is still at it. Spragg’s attempts include everything from iceberg-towing, to the invention of a large water-bag fit for shipping (called the Spragg Bag) (loc. 1706-22). After a number of spectacular failures, however, Spragg has yet to achieve success (loc. 1706-22).
Here is a short clip about the Spragg Bag:
Here is Terry Spragg’s website: http://www.waterbag.com/
b. Desalinating Sea Water
In the end, though, it turns out there may be a better way to get fresh water to those parts of the world that need it. And that’s simply by desalinating sea-water. For, as Funk found, “‘everywhere in the world,’ explained one Icelander who had run the numbers on shipping costs, ‘it is cheaper to do desalination’” (loc. 1699).
The desalination of sea-water is already fast becoming a big business in fact. As the author explains, “in China, India, Peru, Spain, and seemingly every country where rising heat and melt [has] induced drought, massive desalination plants [are] also on the rise. Between 2003 and 2008, 2,698 plants were built worldwide, and hundreds more were under construction” (loc. 1237).
So while the water transporters are struggling, the desalinators are making a fortune! One of the leaders in the industry is a company named IDE. To get an idea of just how well IDE is doing, consider the following: “IDE [is] responsible for nearly four hundred of the world’s desalination plants, including what [is] the biggest, most efficient, and most celebrated: the 86-million-gallon-per-day (mgd) plant in Ashkelon, Israel, next to the Gaza strip at the edge of the Negev… After Ashkelon, IDE had won contracts to construct the largest plant in China, a $119 million job; a 43-mgd plant in desiccating Australia, a $145 million job; and a giant, 109-mgd plant north of Tel Aviv in Hadera, a $495 million job. IDE was also part of the consortium building two contentious 50-mgd plants in Carlsbad and Huntington Beach, California” (loc. 1240).
Still, desalination is not a perfect solution to the planet’s water woes. The reason for this is that the process still requires enormous amounts of energy, which renders it relatively expensive, and thus it is as yet unviable in many parts of the world (plus the amount of energy it uses also means it contributes to climate change) (loc. 1250). Nevertheless, this is as much an opportunity as a barrier, for if some innovator among us manages to make desalination more efficient, there’s a fortune to be made.
c. Adapting to Drier Farmland: Drought-Resistant Crops
In the meantime, other innovators are trying to adapt our world in such a way that it simply needs less water. Take Monsanto, for example, which is currently investing millions in trying to come up with genetically-modified, drought-resistant crops. The company has in fact already patented a series of such crops, and is selling them commercially (loc. 3432). However, there is some question as to just how effective the current strains are in resisting drought. As Funk explains, “just after Christmas [in 2011], Monsanto’s MON 87460—… a genetically modified, drought-resistant variety of maize—was quietly deregulated for use in Iowa, Indiana, and Nebraska. It came with a catch: The USDA had found it scarcely more drought tolerant than existing breeds. ‘Equally comparable varieties produced through conventional breeding techniques are readily available,’ read the environmental assessment” (loc. 3432).
Still, Monsanto—and several other GM companies, including BASF, DuPont, Bayer, Dow, and Syngenta (loc. 3432)—remain hard at work trying to improve the effectiveness of existing drought-resistant crops. And it’s no surprise why; for, as the author explains, “in 2020, herbicide tolerance—the trait that made the industry’s fortunes up to now—[is projected to] be worth less than 100 million euros. The traits that constitute[] what [are] called ‘intrinsic yield’—drought tolerance, salt tolerance, stress tolerance—would be worth 2 billion euros” (loc. 3485).
With this kind of money at stake (largely because of the increasing effects of climate change), it is no surprise that so much money is going into the research and development of hardier, more productive crops. And that investment is beginning to show signs of paying off. For example, CropDesign, a subsidiary of BASF, has, as of now, filed for over 150,000 patents (one for every amino acid modification that shows signs of promise) (loc 3492). The real-world results? As the author explains, “already, [CropDesign] h[as] identified traits for 50 percent higher yield, 30 percent larger seeds” (loc. 3495).
12. Protection Against the Sea
a. Storm-Surge Sea Walls
As sea-levels rise, and tropical storms become more and powerful, it is increasingly necessary for vulnerable coastal cities to protect themselves against the worst that mother nature has to offer. And, as you might expect, a number of innovations have emerged recently in this area.
One of the leading innovations here is the storm-surge sea wall. As an example, take the storm-surge barrier known as the Maeslantkering, which protects the port city of Rotterdam, in the Netherlands. As Funk explains, “the crown jewel of the Netherlands’ Delta Works, the Maeslantkering [is] an enormous storm-surge barrier at the mouth of the port [of Rotterdam]. The barrier consists[s] of two curved, floating gates that sw[ing] closed, then s[ink] into place when one computer system—known as the BOS—predict[s] a storm surge of at least three meters and t[ells] another system—BES—to enact the closure sequence. It [is] among the largest moving structures on the planet. Each steel swing arm [is] twice as long as the statue of Liberty is tall. The Maeslant barrier took six years and $500 million to build and install, and when it was finally in place [in 1997], Queen Beatrix of the Netherlands came herself to inaugurate it. Since then, it has been used only once, in 2007. It [is] built to withstand all but a one-in-ten-thousand-year storm, though climate change, we were told, could muddy the math” (loc. 3195).
The Maeslantkering:
Source: http://www.rijkswaterstaat.nl/images/Maeslantkering%20met%20panorama_tcm174-138127.jpg
While the Maeslantkering may be the most impressive storm-surge wall on the planet, it is by no means the only one. The Netherlands alone has several, in fact, and was the first country to develop the technology—this makes sense, of course, given that a significant chunk of Holland is below sea level, and the country has long relied on a host of man-made systems to stay dry (loc. 3076). In any event, now that climate change means the rest of the world is beginning to worry about the encroaching sea as well, the Dutch are reaping the benefits of their expertise. As Funk explains, “Dutch companies [have] already helped build storm-surge barriers for Venice, New Orleans, London, and St. Petersburg” (loc. 3232).
And this is really just the beginning, for as climate change continues more and more coastal cities are looking to join the ranks of those above. Even New York City has recently shown interest in the solution—which is understandable given how much flooding and destruction New York sustained in the wake of Hurricane Sandy in 2011 (loc. 3260-66). Actually, New York City began considering the option of a sea-wall long before the latest hurricane, and thus we can see how this disaster may well push them (and other cities) over the edge (loc. 3233-37).
The investors, at least, are banking on it. The day after Hurricane Sandy hit, the Dutch storm-surge company Arcadis—which is one of the lead companies competing to build New York’s storm walls—experienced a bump in their stock to the tune of 5.6%, “capping a 43 percent rise for the year” (loc. 3266). It’s a good time to be in the storm-surge barrier business.
b. Floating Land-Masses
Storm-surge barriers are not the only solution to an ever-encroaching ocean. There’s also the solution of the floating land-mass; which is exactly what it sounds like: a man-made island that floats and rises with the sea. The brilliance of this innovation is that it works with the sea, rather than trying to fight against it. And once again, the Dutch are leading the way.
One of the first people to put the idea into practice was the Dutchman Koen Olthuis, and his company Dutch Docklands. As Funk explains, “for years the Netherlands h[as] been playing defense. It erected barriers and pumped water out of the polders. Olthuis’s vision, in brief, was to play offense—to build a floating world on top of the water rather than trying to keep the water out. Together with his development company, Dutch Docklands, he designed not houseboats but islands and infrastructure: highways, apartment buildings, parks, airports, churches, and mosques. He dreamed of floating and hybrid cities as big as 100,000-person Delft” (loc. 3137).
Dubai was the first country to sign up for Olthuis’s floating infrastructure (loc. 3160). According to the ambitious plan, the project was to feature upwards of 90 inter-connected islands to be called the Floating Proverb: “the eighty-nine floating islands of the Floating Proverb were to have spelled out a poem written by the sheikh himself: “It takes a man of vision to write on water/Not everyone who rides a horse is a jockey/Great men rise to greater challenges’” (loc. 3163).
Unfortunately, the latest recession has stalled the project; but in the meantime Dutch Docklands has secured other contracts, including one in the Maldives. As Funk explains, “Dutch Docklands and the Maldives would soon ink agreements for everything from floating villas to a floating marina. Greenstar, a two-million square-foot floating garden island with shops, restaurants, and a conference center that was originally designed for Dubai, would be recycled and rebranded as a Maldivian national icon’” (loc. 3170).
Needless to say, floating infrastructure stands to be increasingly valuable as our anchored land-masses are swallowed up by the encroaching sea, and Dutch Docklands is poised to take advantage.
Here is a nice short clip about floating land-masses that features Koen Olthuis.
And here is Koen Olthuis presenting his ideas in a TED talk:
From sea-level to the mountain tops we go now, to explore one last innovation in the name of adaptation.
13. Skiing in a Warming World: Artificial Snow and the Indoor Ski Resort
It doesn’t take much imagination to see that a warming world means less skiing. This is not only a problem for those of us who love skiing, but for those who make a living because of it as well. Take