Even in a news cycle as rapid fire as 2020’s, the headlines and media coverage around the California wildfires have been tough to miss, and even more difficult to ignore. While the fires have a number of causes – human missteps, a history of fire suppression, and natural events like lightning have all played a role – climate change is also considered a culprit. Shifting weather patterns have led to hotter and drier conditions across the West which are, well, adding fuel to the fire.
Reducing greenhouse gas emissions is one approach that could help curb climate change. While it’s a monumental task in itself, adapting to a changing climate will also require huge investment, as discussed in the Goldman Sachs Research report Taking the Heat.
First, some good news. Recent pandemic-related lockdowns made a dent in greenhouse gas emissions. From March to April 2020, CO2 emissions from petroleum and coal both plummeted 25% and 16%, respectively – and the changes in emissions resulted in record lows for those fuels. The reports of clearer skies showed that it’s still possible to enact positive environmental change.
Unfortunately we’ll still have to address the effects of years of damage, sea levels rising, more hurricanes brewing, and wildfires burning.
On top of hurting the planet, climate change is costly. According to a recent NPR report, in the last five years, climate-related natural disasters have cost the US $500 billion – and that figure doesn’t include this summer’s catastrophes, which could add tens of billions to that total.
But action on decarbonization can support recovery in the environment and the economy. Collaboration on green infrastructure between the public and private sectors could create up to 20 million net new jobs in clean energy by 2030, according to Goldman Sachs Research, in a pathway consistent with the ambition to keep global warming within 2 degrees Celsius.
Success depends on governments, industries and corporations all doing their part. Tackling climate change will take enormous financial resources from both public-sector financing, like tax revenues and municipal bonds, and private-sector financing, from direct investments and commercial bank loans.
But some cities are already taking a proactive lead. Following 2017’s Hurricane Harvey, Houston voters approved a $2.5 billion municipal bond for more than 200 projects dedicated to flood control. In the southeast, the Miami Forever Bond program allotted $200 million for climate-related infrastructure, including storm-water and flood management.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.