White House Finances Hundreds of Climate-Proofing Projects, What the New UK Government is Saying on Adaptation, and More

Today in Climate Proof:

Finance:

• Biden’s Billion for Climate-Proofing Projects

• Californians to Vote on Climate Adaptation Bond

• EU Reports on Climate Risks to Financial Stability

Policy:

• What Does the UK’s New Government Have to Say About Adaptation?

• US Officials Wrangle Public Development Banks on Resilience

Tech:

• White House Pours Millions into Climate Tech Hub

Research:

• Another round-up of papers and journal articles on all things climate adaptation

Biden’s Billion for Climate-Proofing Projects

US public investment in climate adaptation and resilience (A&R) is once again in the headlines. Last week, the Biden Administration doled out US$1bn to 656 climate-proofing projects across the country that are focused on extreme weather events and natural disasters.

Among the projects are those designed to eliminate or reduce flood damage, harden utilities and infrastructure, and update building codes to ensure new and existing properties are “hazard-resistant.” Financing is also going toward small, community-based projects that can deal with extreme heat — like shaded bus shelters in Washington, D.C.

The projects earmarked for financing are the winners of a national competition conducted by the Federal Emergency Management Agency (FEMA) as part of its Building Resilient Infrastructure and Communities (BRIC) program. BRIC was established to back states, local governments, tribes and territories as they work to reduce their climate-related risks. The dollars themselves were authorized by President Biden’s flagship Bipartisan Infrastructure Law and Inflation Reduction Act.

Breakdown of Building Resilient Infrastructure and Communities (BRIC) program spending

Notably, over half of the projects are categorized as nature-based solutions. For example, the city of Goldsboro, North Carolina, has bagged funding for a series of nature-based and infrastructure solutions for enhancing flood resilience. The project will expand a restored floodplain, making homes safer while also providing new wildlife habitats to local species.

The financial firepower turned toward A&R by the current White House is nothing short of awe-inspiring. According to the Biden Administration, US$50bn has been secured for climate-proofing through the two abovementioned laws.

Previous editions of Climate Proof have described where some of these funds are going: US$830mn for climate-resilient transportation, US$30mn for drought resilience in the Colorado River Basin, and US$123mn for coastal habitat restoration are just some of the disbursements covered.

Furthermore, Biden has signaled he wants billions more spent on adaptation through his 2025 budget proposal, which you can read about here.

Californians to Vote on Climate Adaptation Bond

It’s happening, folks — California lawmakers have put a first-of-its-kind climate adaptation bond on the ballot this November. 

If approved by voters, the Golden State will be authorized to borrow US$10bn to finance projects for: safe drinking water, drought, flood, and water resilience, wildfire and forest resilience, coastal resilience, extreme heat mitigation and much more. According to lawmakers, it would be the single largest public investment in climate resilience in California’s history.

The bond has had a tortuous journey through California’s policymaking process. Last year, the bond was floated with a US$15.5bn price tag, the idea being that this chunk of change would ensure climate-proofing projects were funded regardless of the ebb and flow of the California budget process.

Breakdown of Planned California Adaptation Bond Proceeds

The plan looked farsighted when earlier this year Governor Gavin Newsom took an ax to the state’s planned climate spending in his budget proposal. At the time, Newsom was noncommittal on whether he would support an adaptation bond. Civil society groups, on the other hand, were adamant that the bond go forward given the shrinking climate budget.

These same groups applauded California legislators for finally getting the bond on the ballot. “California must double down on climate action, and it’s exciting to see state leaders deliver this choice to voters,” said Katelyn Roedner Sutter, California state director at the Environmental Defense Fund. “This gives voters a real chance to invest in proven and necessary climate solutions to build a better future. We can’t afford to wait because we are already paying a steep price for growing but preventable risks from wildfires, pollution, extreme heat, drought, and flooding. Communities need help now, and our kids are counting on us to secure a safer, more prosperous future for them,” she added.

In a nod to ‘Just Adaptation’, the bill authorizing the bond spells out that at least 40% of the proceeds must “provide meaningful and direct benefits to vulnerable populations or disadvantaged communities.”

The vote on the bond will take place on November 5.

EU Reports on Climate Risks to Financial Stability

The European Union has been at the forefront of climate-related financial risk management and monitoring. A few years back, the European Central Bank set out a series of climate change-related indicators to analyze potential climate threats to the financial system, while the European Banking Authority has imposed comprehensive climate risk disclosures on banks in order to get a handle on their vulnerabilities.

What’s all this data-gathering telling EU policymakers about the financial system’s climate risk exposure? That’s what a recent report from the European Commission (EC) was designed to find out.

The report looks at how both climate physical and transition risks could imperil banks, insurers, asset managers, and other financial institutions, based on the findings of various stress tests, climate scenario analyses, and other data-gathering exercises.

On the physical risk side — which adaptation-heads are most likely to be concerned with — the findings are rather vague, to say the least. The report talks about a physical-to-credit risk intensity (PCI) measure, used to understand the likely transmission of physical climate risks to banks, via credit impairments to the corporates they lend to. Unsurprisingly, this shows that the construction and manufacturing industries have the highest PCI scores — likely because their fixed assets are vulnerable to these hazards. There’s nothing in the report on what these PCI scores mean in terms of potential credit losses to banks, however.

When it comes to insurers, the report references the European Insurance and Occupational Pension Authority’s stress test exercise of 2018, which found that companies exposed to natural catastrophes, which are likely to become fiercer and more common as climate change accelerates, are generally resilient to these shocks — largely due to reinsurance treaties that they have in place.

The policy outlook section of the report is probably more informative than the roundup of old risk assessment findings. Here, the authors say that “risk transfers between different sectors need to be considered for the financial system as a whole.”

In other words, policymakers have to look at where financial companies intersect, and how the web of mutually beneficial transactions and contracts could break down in response to climate-related events. Take the insurance-banking nexus, for instance. If insurers reduce coverage for some sectors or geographies, they may expose banks to more climate-related exposures.

Indeed, the end of the paper reads as if the authors are trying to move the climate risk management conversation away from siloed, sector-specific analyses of climate-related financial dangers to a more holistic one that considers the financial system as a whole. Given the weird and wonderful ways different financial firms interact, and our recent history of systemic risk events, this sounds like a smart way to proceed.

Other Stuff

AXA & Generali join IDF’s Infrastructure Resilience Development Blueprint (Reinsurance News)

New Zealand Regional Infrastructure Fund, aimed at climate resilience, focuses on loans, investments — not grants (RNZ)

New finance hub to support ambitions of pioneering cities in climate mitigation and adaptation (European Commission)

Investing in a greener future: successful debut of the green bond in the Dominican Republic (World Bank Blogs)

Understanding climate and disaster risk finance and insurance solutions in the Asia Pacific (World Food Programme)

OPEC loans US$100mn to Morocco for Economic Governance and Climate Change Resilience Support Program, and provides US$3mn grant to establish the OPEC Fund Food Security and Climate Adaptation Facility (OPEC Fund)

California Insurance Commissioner Lara releases analysis showing extreme heat in California costs US$7.7bn (California Department of Insurance)

International Monetary Fund Executive Board completes first review of Resilience and Sustainability Facility and sixth reviews of Extended Credit Facility and Extended Fund Facility for Cameroon (International Monetary Fund)

What Does the UK’s New Government Have to Say About Adaptation?

Change with a capital ‘C’ has come to the UK. Sir Keir Starmer’s Labour Party was swept into power last Friday with a mighty parliamentary majority and a strong mandate to implement its wide-ranging manifesto.

Climate change features prominently throughout. Labour wants to make the UK a “clean energy superpower” by setting up a state-owned green power company and upgrading the national grid. Labour has also committed to achieving a zero-carbon electricity system by 2030.

But what about climate adaptation and resilience? Here, Labour is somewhat vague. The manifesto’s section on “Improving Resilience” is a scant 95 words, many of which are used to bash the Conservative Party’s “poor risk management.” But here’s what Labour has said it will do:

“Labour will improve resilience and preparation across central government, local authorities, local communities, and emergency services. This includes formally working with all stakeholders in the Fire and Rescue services to inform policy and establish national standards.”

Elsewhere in the manifesto, the party talks about creating homes and places “that increase climate resilience and promote nature recovery.” Planning reform and expanding house building are central planks of the party’s programme for government, and it's certainly welcome that climate-proofing hasn’t been forgotten in this context.

Nature restoration also gets a look in. Labour says it will establish three new National Forests in England, and plant millions of trees and create new woodlands. It has also pledged to “expand nature-rich habitats such as wetlands, peat bogs and forests.” These nature-based solutions have the potential to bring climate adaptation and mitigation benefits to the UK.

On business, Labour says it will mandate financial institutions and large listed companies to “implement credible transition plans”, which are likely to include adaptation and resilience components given recent efforts by groups organized by the UK Transition Plan Taskforce. The party also wants to “make the UK the green finance capital of the world” — which surely bodes well for efforts to unlock private investment for adaptation and resilience.

Now it’s important to keep in mind that manifestos aren’t supposed to be detailed blueprints for governments. In the immortal words of Captain Barbossa, they're more guidelines than actual rules.

We’ll likely get a better sense of Labour’s adaptation and resilience priorities at the upcoming King’s Speech, which sets out the new government’s program. This is currently scheduled for July 17. Since adaptation and resilience cuts across government departments, it’s hard to say right now which Cabinet ministers will be taking a lead on this portfolio (if any), but I’ll be keeping my eyes on Steve Reed at the Department for Environment, Food and Rural Affairs, Jonathan Reynolds at the Department for Business and Trade, and Peter Kyle at the Department for Science, Innovation and Technology for starters.

US Officials Wrangle Public Development Banks on Resilience

Here’s a little tidbit I missed while swanning around Europe last week: US Treasury Secretary Janet Yellen and USAID Administrator Samantha Power gathered the leaders of five multilateral development banks (MDBs) on June 27 “to advance collaboration on climate resilience, including efforts to address extreme heat.” 

A readout of the gathering says the participants discussed the need to ramp up climate resilience financing and build on “existing initiatives” to bolster resilience, like USAID’s Adaptation Finance Window. 

Those present at the meeting included representatives from the African Development Bank, Asian Development Bank, Inter-American Development Bank, and European Bank for Reconstruction and Development, and the President of the Japanese International Cooperation Agency. The World Bank senior managing director and the French Ministry of Foreign Affairs special advisor on climate action and Ambassador for Climate Negotiations were also in attendance.

Yellen’s been vocal about the need to reform public financial institutions to better provide finance for climate purposes. In April, she called on the World Bank to “enact reforms to increase private capital mobilization for development- and climate-aligned investments, align staff incentives with the updated mission and vision and the need to dramatically expand private capital mobilization, and further strengthen operational effectiveness.”

Administrator Power has also stressed the importance of increasing public financing for climate-proofing. In a February speech, she said MDB should deploy “blended finance tools” to help catalyze investments to protect against climate shocks.

Other Stuff

Hurricane Beryl spotlights the importance of climate adaptation in the Caribbean (Atlantic Council)

UAE delivers joint statement on climate change and human rights on behalf of 69 states at 56th session of Human Rights Council (UAE Ministry of Foreign Affairs)

Public and private investment for sustainable development and adaptation to climate change on the agenda at G20 (G20.org)

The Minnesota dam that partially failed is one of nearly 200 across the Upper Midwest in similarly ‘poor’ condition (Inside Climate News)

Background press call by Biden administration officials to preview new actions on the impacts of extreme weather events (The White House)

Environmental groups call on New York legislators to return to Albany for special climate session (WSKG)

Central Asian states rally for water and climate solutions (United Nations Development Programme)

Rivers2Restore identifies key river restoration projects that could lessen the impact of floods & droughts (WWF)

White House Pours Millions into Climate Tech Hub

It’s a Biden-heavy edition of Climate Proof, for sure — but what news isn’t right now?

At least here, the focus is on the President’s climate initiatives. Besides the billion dollars of investments described above, last week the administration also announced it would replenish the coffers of 12 tech hubs scattered across the country, one of which is working on climate-proofing solutions.

The South Florida ClimateReady Tech Hub is spinning up solutions for sustainable and resilient infrastructure. It’s getting US$19mn to scale “advanced concrete technologies” that can protect communities in the path of extreme weather events, and also to finance workforce development programs and efforts to break down barriers “within the climate and capital ecosystem.”

Some of the funds will be directed to support the Hub’s Climate Ready Infrastructure Innovation Center, which aims to provide services and mentorship to at least 60 infrastructure-focused startups and small businesses. There will also be spending on improving building codes and standards, too — a crucial piece of the climate-resilient development puzzle.

In total, the 12 hubs are slated to receive US$504mn. The financing was authorized by the bipartisan CHIPS and Science Act, signed into law by President Biden in August 2022.

Other Stuff

OroraTech receives €20m (US$22mn) to build satellite-based wildfire system in Greece (TFN)

Cool Roofs could be most effective at reducing outdoor urban temperatures in London (United Kingdom) compared with other roof top and vegetation interventions: a mesoscale urban climate modeling study (Geophysical Research Letters)

Climate resilience AgTech company Mineral winds down (AFN)

‘It’s the future of sugar’: new technology feeds Vermont maple syrup boom amid climate crisis (The Guardian)

International Potato Center promotes “Attract-and-Kill” technology and Insect Life Cycle Modeling software as climate adaptation solution (International Potato Center)

Global Center on Adaptation launches 2024 Local Adaptation Champions Awards (Global Center on Adaptation)

RESEARCH

June 2024 marks 12th month of global temperature reaching 1.5°C above pre-industrial (Copernicus)

Asset-level assessment of climate physical risk matters for adaptation finance (Nature Communications)

The role of marketing in climate adaptation (King’s College London)

Contrasting fast and slow intertropical convergence zone migrations linked to delayed Southern Ocean warming (Nature Climate Change)

Climate finance: Earning trust through consistent reporting (Development Initiatives)

Research priorities to support coral reefs during rapid climate change (PLOS Climate)

Pakistan sees significant decline in societal resilience (World Risk Poll)

Community responses to flooding in risk mitigation actions: evidence from the Community Rating System (Resources for the Future)

Breaking the cycle of risk: addressing resilience and debt for a new global financial architecture (E3G)

Investing in women for climate resilience (SEI)

Environmental governance is critical for mitigating human displacement due to weather-related disasters (Communications Earth & Environment)

Thanks for reading!

Louie Woodall
Editor