Americans have made a habit out of making even the most universal issues politically polarized. The serious weather risks we’ve faced recently are no exception. But is our warming climate really a political issue that divides Americans? The reality is it should be a powerful opportunity to modernize our infrastructure, create permanent new jobs here at home, and build entire new industries of the future. This is an economics issue, not a political one.
The economic consequences of climate change are growing more serious by the day. The wildfires that raged across Southern California last month caused property damages on the order of $40 billion and total economic impacts in excess of $250 billion. Just four months earlier, Hurricane Helene wreaked havoc across the US Southeast before causing catastrophic destruction in North Carolina, with the estimated economic damage likely to exceed $53 billion.
According to JP Morgan, the costs of natural disasters in the United States have averaged in excess of $140 billion per year over 2020-2024, compared to average annual costs of roughly $20 billion per year from 1980-1989.
Climate change is caused by an increasing concentration of “greenhouse gases” in the atmosphere. Greenhouse gas emissions come from a variety of sources, with the largest single source being the fossil fuel industry. But at the same time, fossil fuels create strong jobs, ensure American energy independence, and made much of the modern world.
Most importantly, fossil fuels are the backbone of the U.S. energy system, providing 83% of our energy supply. Over the past 25 years, Democrats and Republicans have held office roughly equal periods of time, all while fossil fuels have consistently remained the primary energy source in the U.S.
In 2000, fossil fuels provided 88% of the US energy supply; in 2023, fossil fuels comprised 83%. The only major change has been the shift away from coal, which declined from 23% to 9% of total US energy from 2000 to 2023. Natural gas has increased from 25% to 36% and renewables have grown from 4% to 9% as a share of total US energy over the same period.
We have to acknowledge two things that are true at the same time: 1) Fossil fuels are going to remain the primary energy source in the US for the foreseeable future; 2) The costs of climate change are catching up with the positive economic impacts associated with fossil fuels. From 2020 to 2024, oil and gas extraction has contributed roughly $225 billion per year to the US economy while the U.S. incurred costs of roughly $140 billion per year associated with weather-related disasters over the same period. In other words, for every dollar the oil and gas industry contributed to the US economy, more than sixty cents has been lost through large-scale climate disasters.
We need to keep the lights on and address the economic consequences of climate change. Knowing we’re not in a position to get rid of fossil energy any time soon, the focus should be on: (1) using the lowest-carbon intensity, lowest-cost energy sources available, and (2) limiting, or otherwise removing, the greenhouse gas emissions associated with them.
Read more in the Carbon Herald.