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Hi Taylor
- I read a few articles about the recent climate report that
makes things sound pretty dire. If we try to meet those new emissions
goals, how do you think that will affect our economy and industries?
Hi Grace - That's the big question, which sadly doesn't have a
clear answer. If it was as simple as changing one bit of behavior
and suddenly the greenhouse gases were no more, we'd be in business.
As it stands, we have to change a lot of the ways we do business in
order to get those carbon emissions as low as the researchers say
they need to be. |
1. Fossil
fuels. This is kind of the whole ballgame. Coal and oil and
gas are non-renewable resources that we depend on but also put
a lot of CO2 into the atmosphere. Climate policy targets the companies
producing and using the most fossil fuels. At this point, energy
production is still very dependent on these products. Industries
will have to invest a lot of time and money into switching to
solar, hydro, wind, etc. That's an investment that bigger companies
can make, and many are. For smaller businesses with a vehicle
fleet or some type of private energy operation, the shift is a
lot more daunting. That's not to mention the workers physically
extracting these resources who will be out of a job.
2. Personal choice. One fear that doesn't get discussed
as much is what will happen to the ordinary consumer after stricter
laws get passed. Will there be a forced buy-back program with
cars? What materials will be available for construction? As we
move toward using more sustainably sourced items, that means a
lot of products (especially cheaper plastics) will be taken off
the shelves. The supply chain and shipping methods will have to
reinvent themselves, and that won't happen without some growing
pains.
3. The cost of inaction. The crux of the debate is short
versus long term. While we think about the immediate impact of
reducing gas consumption, central banks are starting to panic
about all the loans that will default as properties go underwater
or catch on fire. Businesses out west are closing because of unhealthy
air from wildfires and flooding in New York just shut down the
entire subway. If weather keeps getting more severe, some studies
think we'll lose about 20% of the global GDP over the next 25
years.
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| I guess the
answer, Grace, is that climate policy changes will affect our economy
in a lot of ways. It's encouraging to see that new energy sectors
are big job creators, but people also need to be mindful of all the
things that will get upended by new regulations. |
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an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
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