WSJ What’s News - The Costs of More Extreme Weather: Your Questions Answered

Episode Date: August 25, 2024

More extreme weather events are affecting everything from power grids to insurance. But how are individuals and companies reacting to these changes? WSJ science reporter Eric Niiler explains why we are seeing increasingly intense weather events and Journal climate finance reporter Amrith Ramkumar answers your questions on how the public and private sectors are responding. Charlotte Gartenberg hosts. Further Reading The Science Behind Why the World Is Getting Wetter  Why Beryl Is the Strongest Hurricane to Form This Early NOAA Predicts the Most Hurricanes That It Has Ever Forecast  Why Can’t Houston Keep the Power On?  Climate Cash Pivots to New Reality of a Hotter, Wetter Planet The Rush to Shore Up the Power Grid Against Hurricanes, Heat and Hail   Learn more about your ad choices. Visit megaphone.fm/adchoices

OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less, like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wall street. Hey What's News listeners, it's Sunday, August 25th. I'm Charlotte Gartenberg for the Wall Street Journal. This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. From heat

waves to flooding rains, there's been a lot of extreme weather this summer. This week, we're asking how that's impacting Americans and what businesses are doing about the effects of our changing climate. Let's get to it. According to NASA, 2023 was the hottest year on record worldwide. That's since modern record keeping began in the late 1800s. Some scientists are saying 2024 is already on course to break the record set just last year. There seem to be more, or at least more extreme, heat waves, wildfires, floods and hurricanes

every year. Federal officials from the National Oceanic and Atmospheric Administration, or NOAA, are predicting the most hurricanes ever forecasted since they started making seasonal forecasts. Hurricane Barrel broke records last month and the storm left around 2 million Texans without power in scorching temperatures. The increasing intensity of extreme weather events costs lives and costs money. Public and private funds are being directed to projects meant to shore up infrastructure to withstand more severe weather. But before we get to the changing business of climate change, we're

joined by Wall Street Journal science reporter Eric Neeler to get an idea of why we're seeing so many and such intense extreme weather events. Eric, it seems like extreme weather events are more numerous lately, but perhaps it's more that these events are simply more extreme in intensity. What's going on? Yes, that's for sure. Scientists believe that although there may not be more hurricanes, for example, the intensity of them is getting stronger. Ocean surface water temperatures are driving rapid intensification. That's affecting the wind speeds, the kind of the energy that goes into a storm. So we may not have more, but they're basically juiced. The warmer climate is sort of turning up the dial.

So we sort of started to get into this, but why are these events so much more extreme? So if we look at what's happened, say, over the past couple decades, we've seen a climb in greenhouse gases and a corresponding climb in atmospheric temperatures. One of the things that happens with higher atmospheric temperatures is warmer air can hold more moisture that falls down as rain. Warmer oceans evaporate and have more energy, and this energy from the ocean gets translated into storms, the typhoons, the hurricanes, the tropical storms that we see. These are all the knock-on effects of a warming planet.

Okay, more moisture, more energy. To me, that makes sense for hurricanes, but what about wildfires? Well, wildfires aren't started by climate change. They're often made worse. That's the findings of many scientists who look at these things. Maybe you have a period of extreme rainfall, you have a lot of growth of the understory, the canopy underneath, and then a flash drought in the spring or in the summer dries out that brush and then the conditions are ripe for a lightning strike or a camper who throws a cigarette or a campfire gets out of control. So we're seeing above average wildfires, California, Oregon and Washington.

All of these things are related. So Eric, we had a listener, Frank Chavez, call from Dallas, Fort Worth, and he says that he's experienced cooler weather than he expected so far this summer. He also sent this question. Are we the beneficiaries of other suffering or is too much tension being paid to extremes? Where you stand depends on where you sit. So not all parts of the country are warming at the same rate or experiencing the same number of storms. It's important to note though that over time, the days are getting warmer in most areas. The nights are getting warmer.

The summers are getting longer. The winters are getting shorter. The long-term climate is what we're trying to keep an eye on. And one of the reasons that the media is looking at these things is because of damages and deaths. Yeah. People lose their homes, their businesses, their lives. I mean, do we also have a picture of how much these extreme weather events are costing?

So NOAA does this thing every year where they sort of add up what they call their $1 billion disasters. And these can be storms, heat waves, floods, and so forth. If you look at the average from 1980 to 2023, the average is about eight and a half events. But If you look at the average from 1980 to 2023, the average is about eight and a half events. But if you look at the last five years, the average has jumped to 20.4 of these billion dollar weather events. And already this year, there have been 15 of these weather related events. And here we are in August. That was Eric Neeler. He's a science reporter here at the Wall Street Journal. Eric, thanks so much for your time. You're welcome.

Coming up, as the climate heats up and extreme events get more intense, what does that mean for Americans and for businesses reacting to these changes? That's after the break. Tim's has the flatbread pizza you love at a price that you won't want to skip. Served hot out of the oven in four delicious flavors. Simply cheese, chicken parmesan, pepperoni and bacon everything. Starting at only $6.99 plus tax. Order yours now. Here to talk us through some of the economic effects of extreme weather events is climate finance reporter Amrit Ramkumar. Amrit, I want to start by talking about insurance.

Extreme weather events have caused many insurance companies to raise their rates. This is something that Will Calderon from Omaha, Nebraska is worried about, and he's very worried about what this means for his city. We just had a storm roll through that caused over 200,000 people in the metro area to lose power and such events seem to be happening more frequently. Are such things that cause higher insurance costs going to start deterring companies and corporations from wanting to enter a relatively cheap cost of living otherwise and hopefully growing cities.

Amrit, can you talk us through what's happening with insurance in the U.S. and if it's having an impact on where people and companies settle? Insurance in the U.S. right now is a giant mess as it relates to extreme weather and climate change. Insurers are dealing with tens of billions, sometimes over a hundred billion in losses, as it relates to extreme weather and climate change. huge effect on consumers' wallets. It's having an impact on where people and companies live. The insurance market is only expected to get more chaotic, and yeah, this will be a factor for years to come. It's interesting, yeah, how it'll affect

where our populations live and settle. We also had caller Mike Derico from Houston, Texas. He brought up moving because he's frustrated with his state's power infrastructure in response to storms. When Hurricane Barrel came through recently, it left him and 2.2 million Texans without power in scorching heat. And this is only a few years after Texas experienced a big power crisis caused by winter storms.

I want to play you a bit of what he sent us. I don't feel like companies are doing anything to improve it. I'm sure that they're doing just enough, the minimum that's needed every year to make some infrastructure changes, but it's really hard. It's almost to the point where do we consider moving somewhere else. So Amrit, what is going on with Texas power? Is it simply economically impossible to do anything but what Mike's called the minimum here? I wouldn't say it's impossible, but it's very difficult. invest a lot in new generation capacity to produce electricity and you have to protect the infrastructure and you have to respond more quickly when outages and disruptions occur. So

utilities are being hit by a crazy number of different factors. The big challenge is that they're being asked to invest on so many different areas at once. Yeah, utilities are being hit across the country. Our reporter Katherine Blunt recently wrote about how power is gonna get less reliable and also more expensive nationwide. Should Americans start to expect that across the board, whether they're in Texas or anywhere else? Unfortunately a lot of consumers will have to just get ready for and brace for higher electricity bills. It's just this crazy double, triple whammy

of needing to invest in new renewable energy sources that are intermittent and then trying to balance that out with batteries or natural gas. And then also needing to upgrade all this infrastructure that's decades old and manage an electric grid across the country that's a bit of a mess, but also in certain states and markets, it's much worse than others.

A big factor in all of this is also that power demand in this country is now rising for the first time in decades at a really remarkable clip. That's because you have the rise of electric vehicles, you have rising data center demand to fuel artificial intelligence data centers across the country, and you have this manufacturing boom in the US following laws like the Chips Act, the Inflation Reduction Act, the Infrastructure artificial intelligence data centers across the country. that's why electricity prices are set to go up. The federal government is doing some stuff to try to blunt the impact. They're rolling out all these grant programs

and loan programs for billions of dollars of electric grid upgrades. They say some new technologies can help keep costs down and manage the grid as we go forward here, but it will definitely be a difficult situation for many consumers. So extreme weather seems to be a big chunk of a complicated pie that's making utilities more expensive. Amrith, I know you've reported on how business and government spending has gone towards efforts to mitigate or prevent further climate change,

but now it seems like some of that climate cash is pivoting to adaptation, you know, accepting these extreme weather events are happening, the climate is changing. What does adaptation look like? We're seeing a big shift in how climate projects are financed and that a lot of people are now putting money into adaptation projects like flood barriers, stormwater drains, upgrading all of this critical infrastructure that's often decades old and overlooked, basically to admit the reality that the energy transition is not going as fast as it needs to, and we are going to be living with a lot of the effects of a hotter, wetter world for a long time. So the Biden administration has done a number of programs that were funded by various laws in the past few years. So that's public funding. Are there private investors looking to do this as well?

That's been the really interesting new development, is that private sector investors on Wall Street are starting to put money into adaptation for the first time. Some investors are actually saying that you can build very attractive, fast growing businesses tied to these areas if you look at companies in the engineering space that will have to design and build a lot of these projects companies in the heating, ventilation, and air conditioning space

that are seeing rising demand because of all of this. So we are starting to see money move in interesting ways in response to adaptation and that's another way this is playing out across the private sector. So what could this pivot mean for individuals going forward, particularly for our pocketbooks? All of these factors mean consumers have to be just ready for volatility in insurance pricing, in energy pricing, and think about what solutions they want to sort of ride this out in the coming years

and decades. A lot of individuals are now getting their own solar panels on their roofs and their own battery systems or backup generators so they're not as reliant on clunky outdated electricity grids. And there are tons of federal subsidies now for individuals and businesses to get clean energy and sort of take control of their own situation. Amrith Ramkumar is our climate finance reporter. Amrith, thanks so much for being here. Thanks so much for having me.

And that's it for What's New Sunday for August 25th. Today's show was produced by me, Charlotte Gartenberg, with supervising producer Michael Kosmides. We got help from deputy editors Scott Salloway and Chris Zinsley. I'm Charlotte Gartenberg. We'll be back on Monday morning with a new show. Thanks for listening.