Several Democrat presidential contenders say they want the federal government to require periodic “stress tests” on large banks to ensure they can handle potential economic shocks from climate change.
Several rivals for the Democrat nomination for president—Sens. Michael Bennet (CO), Amy Klobuchar (MN), and Elizabeth Warren (MA)—and former Democrat contenders Sens. Kamala Harris (CA) and Cory Booker (NJ) signed onto a bill charging the Federal Reserve with conducting climate stress tests on the nation’s largest financial institutions every two years.
The Federal Reserve would be guided by an advisory board of climate scientists and economists in examining how the big banks might weather three scenarios: warming of 1.5 degrees Celsius above preindustrial levels, more acute warming of 2 degrees Celsius, and runaway warming, all of which they assume are caused by human greenhouse-gas emissions.
Expects Biased Forecasts
Stress testing banks for climate risks would be a waste of resources because it will be designed by climate alarmists pushing extreme risk scenarios, says University of Delaware climatologist David Legates, Ph.D.
“There is no doubt alarmists who believe extreme climate change is likely to occur would be selected to serve on the advisory board,” said Legates. “They will base the forecasts in the stress tests on climate models which continually overstate the impact of climate change and provide scenarios that are direr than will ever come to pass.”
Instead of obsessing over highly unlikely extreme climate change scenarios, banks and governments should prepare for trends and events that already result in deaths and serious economic harm, Legates says.
“Policies should focus on urbanization, which alters local land, often worsening the impact of flooding,” said Legates. “Increasing populations in flood-prone areas exacerbates the effect of heavy rains.
“More people living in water-starved areas place a bigger strain on our resources and increase drought frequencies,” said Legates. “Each of these is a human-induced problem, but none is related to climate change.”
‘Vehicles for Political Mischief’
Stress tests for banks have all the makings of a self-fulfilling prophecy, says James Taylor, director of the Arthur B. Robinson Center for Climate and Environmental Policy at The Heartland Institute, which publishes Environment & Climate News.
“An accurate stress test would reveal substantial negative economic consequences from transitioning from affordable, reliable conventional energy to expensive, intermittent wind and solar power, which would especially be the case if such a transition were required over a relatively short period of time,” said Taylor. “Honest climate change stress tests would reveal our moderately warming climate is benefiting crop production, global plant growth, and human life expectancy, while predicted climate crises like extreme weather events are failing to materialize.
“Unfortunately, the proposed climate change stress tests are likely to serve as vehicles for political mischief,” said Taylor. “Moreover, inaccurate stress-test assessments may create the very financial stress and instability supporters claim they are seeking to avoid.”
Kenneth Artz ([email protected]) writes from Dallas, Texas.