Economics

ECONOMICS

The vast economic implications of climate change are explored here as we acknowledge  the interrelationships of economic and financial risk that are associated and often amplify one another --for example, weather-related property destruction can lead to bank losses, leading to less lending, leading to reduced investment, etc. We are watching, in these pages, the federal reserve closely as they monitor these connections – along with the actions of international organizations, governments, businesses as we search to develop an understanding of the implications of climate change for the financial sector and the financial stability of ourselves, our families, and our world.

We are also looking to gain information which can, in turn,  wield influence and encourage action by individuals, communities, financial organizations (such as pension funds), insurance companies, corporations and governments. Each member of the economy can influence change within their area of influence if they realize the extent of their power and wish to exercise it.

The section is organized in the following way:

  • CORONAVIRUS: As a result of the pandemic, global emission dropped in 2020 but the decline wasn’t nearly enough to halt the buildup of greenhouse gases in the atmosphere. This page also appears in the HEALTH section of the website.
  • COSTS: Extreme weather events cost U.S. taxpayers $99 billion in 2020 and things are only getting worse, and that is not taking into consideration the health impacts, and other side effects of climate change. Economic experts and climate insurers have warned that if climate change continues unmitigated, the world economy (particularly in developing countries) will lose growth opportunities in the trillions of dollars.
  • JOBS: Our future economic health will be heavily impacted by the jobs a clean energy future can deliver. It focuses on where the green jobs are growing.
  • INVESTMENTS AND DIVESTMENTS: As individual shareholders, we can take advantage of ESG (Energy, Sustainability, and Governance) investing and deliver our dollars to organizations, corporations and ideologies that are fighting against climate change. We can also divest from those organizations as can university, government and union pension funds.
  • INSURANCE: Insurance companies are in the business of predicting future loss, and so must ensure that they reserve for such events. What happens when history is no longer a reliable guide for predicting the future? Going forward, insurance companies may have a heavier hand in shaping human behavior. It’s unlikely that homebuyers would purchase (or be able to purchase) a house in uninsurable areas, for example.
  • HOUSING: Extreme weather has caused the burning and flooding of thousands of homes. It has destroyed power in both the 2019/20 Texas winter freeze and the 2021 summer hurricanes. It has disproportionately harmed the poor who have fewer resources to move. We have numerous mitigation and adaptation measures to explore.
  • THE CIRCULAR ECONOMY: Eliminating waste and pollution, this is instead a closed-loop system emphasizing reuse, recycling, sharing, and repair. Ideally, waste and pollution are cut out of the equation in the design phase, and products and materials are kept in use. One of the tools in our tool box.
  • CARBON PRICING: Burning fossil fuels is by far the greatest source of the greenhouse gases causing climate change. However, the full cost of fossil fuel energy is not included in the price of the fuel. We pay for that later when we deal with the consequences of global warming. Using a car to illustrate this point, “We pay for the gas, we pay for the car, and we pay for the insurance, but we don’t pay for the pollution that comes out of the tail pipe.” This page explores different carbon pricing solutions and appears again in our POLITICS section.

CURRENT NEWS

Western States Could Make Billions Selling Renewable Energy, But They’ll Need a Lot More Regional Transmission Lines – Inside Climate News

By Wyatt Myskow 04/18/24
The four western states that have traditionally exported large amounts of electricity generated with fossil fuels to neighboring states are poised to draw tens of billions of dollars by exporting clean energy across state lines,…
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Climate change will make you poorer, according to a new report

By Samantha Delouya 04/17/24
Record-breaking heat waves, severe floods and acute wildfires, exacerbated by climate change, carry a colossal price tag: an approximately 19% reduction in global income over just the next 26 years, a new study published Wednesday…
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Biden administration finalizes lightbulb efficiency rules

By Zack Budryk 04/12/24
The Biden administration on Friday finalized lightbulb efficiency rules first proposed in late 2022. The final rule will more than double the required efficiency level for the most common lightbulbs, from 45 lumens (the unit…
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Union for Reform Judaism pledges to divest millions from fossil fuel industry

By Asaf Elia-Shalev 04/11/24
The organization representing the largest American Jewish denomination is pledging to divest from the fossil fuel industry as a response to the climate crisis.
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Image By CCR + AI
Highlight Article

Enverus Says Peak Oil Won’t Happen Before 2030 as EV Impacts Ebb

By Tope Alake 04/10/24
Global oil demand won’t peak before the end of this decade because of underwhelming fuel economy standards and slowing adoption of electric vehicles in the US, energy researcher Enverus says.
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Dimon Calls Push to Stop All Oil and Gas Enormously Naïve

By Ruth Liao 04/08/24
Jamie Dimon said US delays of liquefied natural gas projects were done for political reasons to pacify those who believe oil and gas projects should simply be stopped — a position he calls “wrong” and…
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Biden admin doles out $20B in “green bank” funding

By Ben Geman 04/04/24
Biden officials just unveiled organizations that will receive $20 billion designed to flow into tens of thousands of clean energy and pollution-cutting projects nationwide. Why it matters: The "Greenhouse Gas Reduction Fund" is the largest…
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The Biden Administration Is Unleashing $20 Billion for Green Banks

By Emily Pontecorvo 04/04/24
Vice President Kamala Harris and EPA administrator Michael Regan are in Charlotte, North Carolina this morning to announce the award of … wait for it … $20 billiondollars for climate mitigation and adaptation projects. This…
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Fed Blocks Tough Global Climate Rules for Wall Street Banks

By Alastair Marsh 04/03/24
US regulators, led by the Federal Reserve, have thwarted a push to make climate risk a focus of global financial rules, according to people familiar with the matter. European central bankers have been advocating for…
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Higher temperatures mean higher food and other prices. A new study links climate shocks to inflation

By Seth Borenstein 03/22/24
Food prices and overall inflation will rise as temperatures climb with climate change, a new study by an environmental scientist and the European Central Bank found. Looking at monthly price tags of food and other…
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Global warming and heat extremes to enhance inflationary pressures

By Maximilian Kotz 03/21/24
Climate impacts on economic productivity indicate that climate change may threaten price stability. Here we apply fixed-effects regressions to over 27,000 observations of monthly consumer price indices worldwide to quantify the impacts of climate conditions…
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U.S. Approves $500 Million for Bahrain Oil Project, Despite Opposition

By Hiroko Tabuchi 03/14/24
A federal bank that finances projects overseas voted Thursday to put $500 million toward an oil and gas project in Bahrain, a transaction that critics said was out of step with President Biden’s climate commitments.
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KEY RESOURCES

Billion-Dollar Weather and Climate Disasters

02/28/24
Summary of U.S. billion-dollar weather and climate related disaster research, methodology, and data sources.

Principles for Net-Zero Financing & Investment

09/25/23
In recent years, financial institutions — including over 100 U.S. firms1 — have independently made voluntary net-zero commitments. Successful execution of such commitments can help firms mitigate exposure to climate-related risk and unlock economic opportunities…

National Green Bank

06/27/23
CGC is a non-profit with a mission to halt climate change by accelerating investment in clean energy technologies. CGC achieves this by advocating for, creating and implementing Green Bank finance institutions. Green Banks are a…

World Energy Investment 2023

05/31/23
This year’s edition of the World Energy Investment provides a full update on the investment picture in 2022 and an initial reading of the emerging picture for 2023.

F o s s i l Fuel Finance Report 2022

04/03/23
n a year that saw unprecedented attention to banks’ role in driving climate change, one of the most important developments flew largely under the radar: La Banque Postale — a major French bank with $901.7…

Track public money for energy in recovery packages

08/02/22
As governments across the world continue to invest hundreds of billions in the energy system to reboot their economies, our analysis is expanding to cover more countries and provide a more comprehensive global picture. Countries…

Task Force on Climate-related Financial Disclosures

04/18/22
Financial markets need clear, comprehensive, high-quality information on the impacts of climate change. This includes the risks and opportunities presented by rising temperatures, climate-related policy, and emerging technologies in our changing world.

Origin of the Network for Greening the Financial System

11/30/21
At the Paris “One Planet Summit” in December 2017, eight central banks and supervisors established the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). Since then, the membership of the Network…

Tracking climate mitigation efforts in 30 major emitters

11/02/21
This report by NewClimate Institute, International Institute for Applied Systems Analysis (IIASA) and FTSE Russell tracks climate mitigation efforts in 30 countries and regions. Our analysis shows that emissions trends remain far from the goals…

Gauging Economic Consensus on Climate Change – Issue Brief

04/14/21
We conducted a large-sample global survey on climate economics, which we sent to all economists who have published climate-related research in the field’s highest-ranked academic journals; 738 responded. To our knowledge, this is the largest-ever…

Climate Roadmap for U.S. Financial Regulation

04/08/21
The Biden Administration has taken office with an urgent climate mandate to act on climate and announced a “whole-of-government” approach in response.1 Because climate change threatens our financial system and, indeed, entire economy, the United…

Addressing Climate as a Systemic Risk: A call to action for U.S. financial regulators

10/01/20
This Ceres report outlines how and why U.S. financial regulators, who are responsible for protecting the stability and competitiveness of the U.S. economy, need to recognize and act on climate change as a systemic risk.

Moving To A Finite Earth Economy – Crew Manual

04/25/20
Moving To A Finite Earth Economy By 2030 Addresses Two Critical Human Issues: The Existential Threat Of Climate Change, And The Fact That Growth Economies Are The Root Cause.

Resources as a Constraint on Growth By William D. Nordhaus

12/18/19
Things which have traditionally been treated as free goods-air, water, quiet, natural beauty-must now be treated with the same care as other scarce goods.

MORE NEWS

Why Business Should Back a Biden Climate Plan

By Kate Zerrenner   12/02/20  
During the George W. Bush presidential administration, I worked for the Government Accountability Office. One project on which I worked was a look at the economic costs and benefits of the U.S. not taking action…
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Fighting climate change: Cheaper than ‘business as usual’ and better for the economy

By Dana Nuccitelli   11/30/20  
Here's why moving now to combat climate change is cheaper and better for the economy than postponing action.
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Banks Can’t Deny Services to Entire Industries Under OCC Proposal

By Andrew Ackerman   11/20/20  
Big U.S. banks can’t refuse to lend to entire categories of lawful businesses under a rule proposed Friday, following complaints that the oil-and-gas industry was unfairly denied financing by large lenders.
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The ‘market’ won’t save us from climate disaster. We must rethink our system

By Robert S. Devine   11/19/20  
Though it sounds like a generic phrase, “market failure” is actually a technical term. It doesn’t refer to scams like insider trading or corporate fraud. A failure occurs when the marketplace allocates resources in a…
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How These 5 Banks Are Fighting Climate Change

By Dana George   10/17/20  
Global warming may be the most pressing issue of the 21st century. Human activity, like chopping down forests, has raised average temperatures worldwide by 1.8 degrees Fahrenheit since the 19th century. While that may not…
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Tenth of pandemic stimulus spend could help world reach climate goals: Study

By Matthew Green   10/16/20  
The world could get on track to avert catastrophic climate change by investing a tenth of a planned $12 trillion in pandemic recovery packages in reducing dependence on fossil fuels.
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Natural Capital a Missing Piece in Climate Policy

By Kat Kerlin   09/28/20  
Clean air, clean water and a functioning ecosystem are considered priceless. Yet the economic value of nature remains elusive in cost-benefit analysis of climate policy regulations and greenhouse-gas-reduction efforts.
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Op-ed: Clean energy powers thousands of Indiana homes. It also buoys the pandemic economy.

By Tom Loturco   09/25/20  
This week, we celebrate Clean Energy Week: a recognition of the innovative, reliable, and affordable renewable energy that is increasingly powering the American economy. Clean energy projects are growing across the country, particularly in Indiana.
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COVID Economic Recovery: What Might a Green Stimulus Look Like?

By Eric Scheuch   09/24/20  
The current crisis has given us a once-in-a-generation opportunity to tackle two monumental challenges at the same time.
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This is why investors want financial regulators to tackle climate risk

By Ravi Varghese   08/24/20  
To understand economic crises of the recent past, present and future, there may be no finer teacher than Michael Lewis. Many readers will be familiar with Lewis’s book "The Big Short," which documented how excesses…
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Flooding from sea level rise could cost our planet $14.2 trillion, study says

By Helen Regan   07/30/20  
If the world does nothing to mitigate sea level rise, coastal flooding will become so extreme and destructive that it could cause damage worth up to 20% of global gross domestic product by 2100, according…
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Economic Giants Are Restarting. Here’s What It Means for Climate Change.

By Somini Sengupta   05/29/20  
Want to know whether the world can avert catastrophe? Watch the recovery plans coming out now in Europe, China and the United States.
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G.O.P. Coronavirus Message: Economic Crisis Is a Green New Deal Preview

By Lisa Friedman   05/08/20  
As the economy melts down, embattled conservatives are testing a political response: saying Democratic climate policies would bring similar pain.
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Stuck in the Past on the Climate

By Bill McKibben   04/24/20  
If you want to know why young people increasingly despair that the rest of us will leave them without a habitable world, consider the case of Lee Raymond.
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The Covid-19 crisis creates a chance to reset economies on a sustainable footing | James Shaw

By James Shaw   04/23/20  
New Zealand climate minister says governments must not just return to the way things were, and instead plot a new course to ease climate change James Shaw, New Zealand’s climate change minister, has asked the…
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The Role of Finance in Achieving Sustainability

By Kelsie DeFrancia   04/17/20  
Last month, the Earth Institute celebrated the publication of a new book and heard from panelists on the role of harnessing financial acumen to achieve long-run sustainability. ...
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A just and sustainable economic response to coronavirus, explained

By David Roberts   03/25/20  
After days of tense negotiations — and Democrats twice blocking the nearly $2 trillion package — the Senate and Treasury Department appear to have reached important compromises on legislation to shore up the economy. |…
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A Moderate Proposal: Nationalize the Fossil Fuel Industry

By Kate Aronoff   03/17/20  
We’re facing a shale crash, a likely recession, and a surefire climate crisis. One particular policy could help solve all three problems.
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Reinventing Capitalism

By Bob Leonard   02/13/20  
Mankind is faced with a profound dilemma. To resist growth is to risk economic collapse. To continue to pursue growth relentlessly ensures collapse of our ecosystem which supports all life. For the most part, this…
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CAN WE HAVE PROSPERITY WITHOUT GROWTH?

By John Cassidy   02/03/20  
In 1930, the English economist John Maynard Keynes took a break from writing about the problems of the interwar economy and indulged in a bit of futurology. In an essay entitled “Economic Possibilities for Our…
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Climate Change Could Blow Up the Economy. Banks Aren’t Ready

By Jack Ewing   01/23/20  
Climate change has already been blamed for deadly bush fires in Australia, withering coral reefs, rising sea levels and ever more cataclysmic storms. Could it also cause the next financial crisis?
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Mnuchin said Thunberg needed to study economics before offering climate proposals. So we talked to an economist.

By Philip Bump   01/23/20  
The Washington Post contacted someone who did study economics in college and asked him to explain it to us.
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Warren calls on big U.S. banks for steps on climate risk

By Ann Saphir and Lindsay Dunsmuir   01/22/20  
SAN FRANCISCO/WASHINGTON (Reuters) - U.S. Senator Elizabeth Warren, a contender for the Democratic Party’s presidential nomination, is asking the biggest U.S. banks for details on their assessments of and preparations for risks related to global…
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Climate change and economic inequality loom large as the powerful descend on Davos

By Catherine Thorbecke   01/21/20  
The world's political and economic elite are descending on the small Swiss Alps town of Davos this week for the annual World Economic Forum meeting where they hope to set this year's "global, regional and…
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Conservative States Seek Billions to Brace for Disaster. (Just Don’t Call It Climate Change.)

By Christopher Flavelle   01/20/20  
The Trump administration is about to distribute billions of dollars to coastal states mainly in the South to help steel them against natural disasters worsened by climate change.
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‘How can he face himself?’: Architect of Paris Agreement slams Trump’s approach to climate crisis

By Sam Meredith   01/20/20  
The architect of the landmark 2015 Paris Agreement told CNBC on Monday that it cannot be easy for President Donald Trump to justify his approach to the climate crisis — both to himself and citizens…
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Here’s What Putting $10,000 in These Assets Would Have Returned in 2019

By Gregor Stuart Hunter and Eric Lam   12/29/19  
In 2018, seemingly every asset class was a loser. In 2019 it’s been the reverse, with opportunities abounding -- and some of the biggest winners have come from unexpected corners of the market.
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Why Climate Change Matters for Monetary Policy and Financial Stability

By Lael Brainard   11/08/19  
By participating more actively in climate-related research and practice, the Federal Reserve can be more effective in supporting a strong economy and a stable financial system.
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Only one-fifth of climate finance going to adaptation, finds OECD

By Chloé Farand   09/13/19  
Donors overwhelmingly favour supporting projects that cut emissions rather than cope with the impacts of climate change, despite calls for parity
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It’s now cheaper to build new renewables than it is to build natural gas plants

By Adele Peters   09/11/19  
People could save $29 billion on their electric bills if utilities built new clean energy instead of new natural gas plants.
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Social Cost of Carbon 101

By Kevin Rennert and Cora Kingdon   08/01/19  
The social cost of carbon (SCC) is an estimate, in dollars, of the economic damages that would result from emitting one additional ton of carbon dioxide into the atmosphere. The SCC puts the effects of…
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Could Climate Change Spark a Financial Crisis? Candidates Warn Fed It’s a Risk

By John Lippert   07/15/19  
Some of the Democrats running for president are urging the U.S. central bank to actively confront climate risks to protect the nation's financial system.
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Editorial: Measuring the costs of preparing for rising seas

07/14/19  
A new report estimates the costs of seawalls. They’re not a good fit for Puget Sound, but what is?
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Bitcoin’s energy consumption ‘equals that of Switzerland’

By Chris Baraniuk   07/03/19  
A new tool makes it easier to see how the crypto-currency network's energy usage compares with other entities.
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Energy efficiency can be a tool for economic development

07/03/19  
A growing number of home and business owners want to increase energy efficiency. To do so, many will need to hire local contractors who are trained to perform home energy audits and retrofit buildings.
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Companies See Climate Change Hitting Their Bottom Lines in the Next 5 Years

By Brad Plumer   06/04/19  
Many of the world’s biggest companies, from Silicon Valley tech firms to large European banks, are bracing for the prospect that climate change could substantially affect their bottom lines within the next five years, according…
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Putting a Price on the Risk of Climate Change

By Matthew Carr   05/29/19  
Efforts to slow global warming threaten to turn energy investments into “stranded assets.”  
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Climate Adaptation, but Only for the Rich

By Peter Sinclair   03/21/19  
In November, as wildfires ripped through California, Kim Kardashian hired a squad of private firefighters to protect her $50m estate in Calabasas. During the aftermath of Hurricane Katrina in 2005, Blackwater security guards defended the houses…
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Climate Challenge Will Be Harder Than It Seems, JPMorgan Executive Warns

By Christopher Flavelle   03/20/19  
The world isn’t cutting carbon emissions anywhere near quickly enough, a senior executive at J.P. Morgan Asset Management told clients this week -- and changing that will require far harder choices than most people realize.
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The False Choice Between Economic Growth and Combatting Climate Change

By Carolyn Kormann   02/04/19  
In 1974, the economist William Nordhaus described the transition from a “cowboy economy” to a “spaceship economy.” In the former, he wrote, “we could afford to use our resources profligately,” and “the environment could be…
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The Economics of Climate Change Explained

By Brayden Gerrard   01/21/19  
Climate change is well known for its destructive impacts — ranging from rising sea levels to more fierce natural disasters.
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Economists’ Statement on Carbon Dividends

01/16/19  
Global climate change is a serious problem calling for immediate national action. Guided by sound economic principles, we are united in the following policy recommendations.
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Bitcoin Will Burn the Planet Down. The Question: How Fast?

By Adam Rogers   11/05/18  
Max Krause was thinking of buying some bitcoin, as one does. But Krause is an engineer—mostly he works on modeling greenhouse gas emissions from landfills—so his first step was to run the numbers.
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Pension Funds Point Finger at Lobbyists of Polluting Companies

By Anna Hirtenstein   10/28/18  
A group of pension funds that control $2 trillion are pushing for 55 large European energy, mining and transportation companies to scale back their anti-climate lobbying.
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