Why Climate Matters: Pricing Climate

Why It Matters

Council on Foreign Relations

News

4.2 • 876 Ratings

🗓️ 29 January 2025

⏱️ 36 minutes

🔗️ Recording | iTunes | RSS

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Summary

What does it mean to price our climate? The goal of fees like the “carbon tax” is to put a price on pollutants such as carbon dioxide that contribute to climate change, and incentivize businesses to reduce their emissions and make cleaner choices. But many companies are continuing to value profit over protecting the planet, backing out of their clean energy goals and sinking more money into fossil fuels and other short-term investments that harm the Earth. This has been happening for years, but has ramped up in anticipation of a new Trump administration which has pulled away from climate initiatives like the Paris Accord and Inflation Reduction Act since taking office. This episode was originally released on July 29, 2020. Featured Guests Kate Mackenzie, Green Columnist, Bloomberg Michael Greenstone, Professor of Economics, University of Chicago For an episode transcript and show notes, visit us at https://www.cfr.org/podcasts/pricing-our-climate

Transcript

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0:00.0	Hi, everyone. Welcome to the second installment in our special mini-series, featuring some of our favorite and most timely Why It Matters episodes that have centered around climate. In the first episode, we talked about the rising cost of home insurance and the billion dollar price tag on climate disasters. But what does that dollar value really mean when it comes to pricing climate?
0:24.7	In 2020, Larry Fink, the CEO of BlackRock, the world's largest asset manager, wrote a letter
0:31.1	to CEOs and investors, recognizing that, quote, climate risk is investment risk. BlackRock pledged to help clients, quote,
0:40.8	navigate the energy transition by leading the transformation to a decarbonized economy.
0:47.2	Five years later, the firm's position, along with others in the investment community, has changed.
0:52.0	In January of this year, BlackRock pulled out of the Net Zero Asset Managers Initiative,
0:58.7	which commits to activities with the goal of net zero greenhouse gas emissions by 2050.
1:04.7	But BlackRock is not alone.
1:06.8	Several big banks, asset managers, and U.S. financial institutions, including the Federal Reserve,
1:13.0	have withdrawn from climate action groups ahead of Trump's second term.
1:17.3	In this episode, we revisit a conversation with experts on climate-related finance.
1:23.0	We ask experts if the power of the dollar can incentivize businesses and individuals to reduce their carbon footprint by shifting towards cleaner technologies and practices that mitigate climate change.
1:35.5	Enjoy.
1:39.4	So I saw this cartoon the other day, and it showed two dinosaurs, and they were looking up at this
1:44.5	giant meteor, and one yells to the other, oh, no, the economy.
1:49.3	And, you know, it just makes you think, do you think there's something absurd about looking at
1:53.6	this existential problem from a financial standpoint?
1:57.5	Yeah, I absolutely do, actually. I have a lot of sympathy for that argument. There's a school
2:03.7	of thought, which is that, you know, talking about things in terms of the economy tends to make
2:09.2	people listen who might not otherwise want to listen or be inclined to listen. And a lot of people
2:16.0	feel that it's safer to talk about climate change in the
2:19.3	context of finance and the economy. Being in the US, people are very nervous about straying into
	...

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