vice president and director of the
Energy and Climate Program
of Next Generation
Act Now to Manage the
Economic Risks of Climate Change A
Civic CaucusFocus on CompetitivenessInterview August
Broden (vice chair), Janis Clay, Pat Davies, Paul Gilje (coordinator),
Sallie Kemper, Dan Loritz (chair), Dana Schroeder.
By phone: Audrey Clay.
Gordon is vice
president and director of the Energy and Climate Program of Next
California-based nonprofit that
promotes solutions to two of the biggest challenges confronting the
next generation of Americans: the risk of dangerous climate change and
the threat of diminished prospects for children and families.
In that position, she develops policies and communications strategies
to combat climate change and move the U.S.
to a clean energy economy.
Prior to joining Next Generation, Gordon was vice president for energy
and environment at the Center for American Progress (CAP) in
Washington, D.C., and remains a senior fellow there.
She contributes regularly to the Wall Street Journal on energy,
blogs for the Huffington Post and writes a weekly update on
California energy and climate news for Next Generation.
Prior to joining
Gordon was co-director of the national Apollo Alliance (now part of
the BlueGreen Alliance) and still serves on its board of directors.
Earlier in her career, she was a senior associate at the Center on
Wisconsin Strategy and an employment and consumer-rights litigator at
Trial Lawyers for Public Justice in
Gordon earned a J.D.
and a master's degree in city planning from the University
of California-Berkeley and an undergraduate degree from Wesleyan
University in Middletown, Conn.
Because of the political realities surrounding climate change,
Risky Business is
structured as a nonpartisan project with a board of directors
representing differing perspectives on the economic impact of climate
According to Kate Gordon, executive director of Risky Business, "the
climate landscape had fallen apart, based on two partisan traps: (1)
the partisan fight over whether the science of climate change is real;
and (2) the partisan fight over which specific policy solution to
adopt."Former New York City Mayor Michael Bloomberg, former
U.S. Secretary of the Treasury Henry Paulson, Jr.,
and Thomas Steyer, retired founder of Farallon Capital Management,
became co-chairs of the project and recruited seven other board
members from across the spectrum. All of the board members come to the
climate change issue from different perspectives, Gordon noted.
Risky Business contracted with the
Rhodium Group to do the risk analysis for the project. Gordon said
Rhodium is "very nonpartisan" and has good experience working on
climate risk and other types of risk.
The group became a partner with Risky Business.
Risk Management Solutions, a global risk management firm, also
came in as a partner on the research side.
The risk perspective was very important to the project.
Gordon said in order to avoid partisan fights, the board decided early
on not to do a cost-benefit analysis on climate change.
"The problem with cost-benefit," she said, "is that it requires you to
pick a set of policy strategies and weigh the cost of them. We wanted
to acknowledge that climate change poses a real risk, but the way that
risk manifests itself is very different in different parts of the
country." She said the project used a risk approach because it's a
standard business practice and it didn't require choosing a particular
action. "It allowed the readers to decide what their own risk is and
their risk tolerance and then to act accordingly," she said.
financial and business press and business leaders understand the risk
approach, because they use it all the time for things like the risk of
inflation, the risk of war and terrorism, the risk of commodity price
changes and the risk of extreme weather," Gordon said. "Measuring risk
is something they understand."
The Risky Business project applied the risk approach to three specific
sectors of the U.S.:
Agriculture: specifically the commodities corn, wheat, soy and cotton.
Energy: the increase in energy demand due to extreme heat.
Coastal property and infrastructure: sea-level rise and storm surge
project also looked at heat-related mortality and heat-related labor
The U.S. faces multiple and diverse risks from climate change.
Gordon said aggregating to the national level is not helpful, because
the country is so big, so different and so diverse. "Minnesota does
not have the same impact as
she said. "We tried to focus on the regional nature of climate risk."
said the warming of the planet leads to direct impacts on the economy,
sea-level rise, extreme heat impact, agricultural impacts, health
impacts and changes in precipitation.
The extreme heat impact will have a definite effect on agriculture,
particularly in the southern states, the lower Midwest and the
Gordon said the data point to yield declines in commodity agriculture
across those states. They get less severe as you go north, and,
some parts of the northern U.S., yield increases are actually
"This isn't the same story across the U.S.," she said.
lower parts of the
will have greater increases in temperature, while Minnesota remains
"pretty temperate," she said.
However, there will be fewer cold days and warmer winters, which will
lead to impacts on forestation, pest populations and other concerns.
Major energy impacts are predicted, becausethe hotter it gets, the more energy people use.By
mid-century, Gordon said, the report predicts a need for about 95 more
gigawatts of electricity for the U.S.
than we have now. That is equivalent to 200 power plants (as we build
them now), which has a huge impact across the U.S. She also pointed
out that as it gets hotter, our existing power plants and transmission
lines are less efficient.
Sea-level rise impact is not equal across the U.S. It's
most severe, Gordon said, on the eastern seaboard and the Gulf Coast.
On the west coast, there are one-in-one-hundred risks of severe
impacts from Antarctic ice melt.
Heat results in the
in this century and the next show an increase in days over 95 degrees,
but, more importantly, an increase in a combination of heat and
humidity, measured by a "humid heatstroke index (HHSI)."
Gordon said for the body to be able to cool itself, the dew point must
be low enough to allow sweat to evaporate.
If the HHSI, incorporating both heat and humidity, is above 92
degrees, it's unsafe for humans to be outside.
She said Minnesota is looking at potentially three such days a year by
the end of this century and possibly 20 days a year by the end of the
"That's a really big deal," Gordon said, "because it means you can't
be outside on such days for more than 20 minutes, even standing in a
sprinkler, and survive."
She noted there would have to be emergency shelters for such
conditions, during which no children could be outside and there would
be no school.
The Midwest is a high-risk area for this, she said.
On days with the HHSI above 92 degrees, people can't do outdoor work,
which will affect industries like construction, manufacturing, and
mining or any business that operates outside.
Gordon said in Minnesota, 30 to 40 percent of the workforce is
involved in those outdoor, high-risk activities, so there would be a
significant decrease in labor productivity in the state.
The report modeled a path that does not include any major mitigations
or attempts to reduce emissions here or globally. "It's
the path we're currently on," Gordon said, "and that's pretty dire."
But we can affect the
The sea-level rise is already "baked in" and is the result of policy
decisions made 40 or 50 years ago, Gordon said.
But we can still change the heat impact and "get off that
path," she said.
There's been a false dichotomy between adapting to the heat impact and
"The study results say we have to do both," Gordon said. "There's a
certain amount we have to adapt to now, a certain amount we need to be
planning for and a certain amount we have to try to stop."
Anyone making long-term capital investments should be incorporating
climate risk into decision-making now.
Gordon said that includes businesses and governments. "If you're
thinking about where to site your supply chain, where to put a new
factory, where to put infrastructure you're building, you need to be
thinking about your potential climate risk now," she said. She noted
that's happening in a few industries and cited the example of Cargill
siting grain elevators along the
based on climate-based flood projections.
"Climate risk needs to be mainstreamed into their investments," she
Mitigation is not easy to talk about in Congress right now.
Gordon said coming to climate change from a risk perspective and from
a regional perspective is much more effective than coming at it from a
big national policy perspective. "We're calling on businesses to step
up and talk about these risks and the need for mitigation to the
district and local policymakers who represent their region," she said.
Policymakers need to be the long-term planners and protect the region
from climate change. She called on the U.S. to take leadership on
"Businesses can't be the only ones looking at this," Gordon said.
"It's a public-sector problem, too."
The goal of the Risky Business report is to make climate risk a
would be gratified if we saw big, multinational, global companies with
massive supply chains looking at climate risk as a matter of course in
their business decisions," Gordon said.
She'd like to see that same approach used as a standard practice by
utilities, public utility commissions, bond raters, bond issuers and
big institutional investors.
She thinks small businesses should do the same, but they have less
ability to plan that far ahead and are often more tied to their
region. "It's hard for farmers in Iowa
to move their farms," she said.
Gordon hopes the U.S.
will have a price on carbon in five years.
In two years, she'd like to see climate risk being priced into the
economy in a more consistent way than it is now.
"That will lead to political and policy change," she said.
The report is making people in the business sector very uncomfortable.
wanted people to feel uncomfortable," Gordon said, "because the report
points out these risks you need to deal with." After the report came
out, she said, conversations with investors have really changed.
Instead of taking no responsibility for climate change, they realize
that it has a large impact on their investments and are making it more
a part of their business decisions.
The Risk Committee is doing a lot of peer-to-peer CEO-level engagement
to push the idea of making climate risk a mainstream issue and to talk
through what that means for particular business sectors. In
the agricultural sector, Gordon said, there is a lot of public/private
overlap, because the agricultural industry depends on public
infrastructure. The industry is starting to push county governments
and other public infrastructure officials to incorporate risk into
infrastructure decisions, so the infrastructure that farmers need is
not at risk.
lot of adaptation to climate change is already being done in the
agricultural sector and more is planned.
"I have faith that they'll do a lot to try to keep yields where they
are," Gordon said. "It's a really big question whether those yields
will be located in the same place as before." Iowa, Illinois and
Indiana will be the big losers, she said.
Some counties in those states will have up to a 70 percent yield loss.
"We talk about adaptation in the abstract," she said, "but adaptation
is not really possible for a lot of people."
Risky Business is aiming to carry the message of its climate-risk
report to the state and local level.
Gordon said the project is preparing state-level fact sheets and is
doing a stand-alone climate-risk report on the Midwest, taking a much
deeper look at the data, even down to the county level.
She said the group will do a lot of communication around that report.
Because the project's very small staff and its overcommitted Risk
Committee members have limited capacity to widely communicate the
content of the June report, she is hoping other people will join in as
messengers, since the data are all readily available to the public.
The governors of
and other states should take executive action requiring that climate
risk be taken into account when making any state investments.
Gordon said states must do much more intentional planning and
decision-making. Governors should put out a call to action to the
federal government, she said. "States can't do the entire job by
themselves," she said. "It's really an unfunded mandate from the
federal government." She said Congress and the executive branch must
take a leadership position on climate change and start mitigating
climate risks because of their significant impact on the country.
"The impacts of climate change are local, but the solutions must be
global," she said.
There are only a few people in Congress who actually don't believe
climate change is real.
For most of the climate-change "deniers," Gordon said, it's a
convenient way to dismiss the issue, when their real problem is that
it calls for a government solution.
"The debates almost all focus on the cost to government and that this
is a conspiracy to grow government," she said.
"I think that, ideologically, that's the bigger issue."
The better question, Gordon said, is, "Do you think you should react
to this risk?" That will lead to a better discussion, she remarked.
hoping businesses will call on those Congress members to act in the
interest of the American economy," Gordon said, "and to shift the
whole discussion from the big cap-and-trade bill, which was a Big
I understand why that made people nervous.
It was not giving regions or businesses or stakeholders any possible
way to engage with that process.
It was a top-down, very partisan process. I
think the partisanship is around Big Government and not climate-change
can't really do anything about denial," Gordon continued. "All we can
do is put out the best data we can and hope that people read it."
There are only a few good examples around the country of multistate
regional compacts that hold together.
She mentioned a few: the Regional Greenhouse Gas Initiative in nine
Northeastern states that banded together to have a carbon-trading
system for electricity, which worked very well; the Appalachian
Regional Commission that works on economic development and how to plan
for the future; and the Great Lakes Regional Compact that focuses on
the future of the region. There is not an obvious way for regions to
work together in the U.S., she said, but it's an interesting approach.
The principals on the Risk Committee overseeing the Risky Business
project are very involved, but also incredibly busy. In
response to an interviewer's question as to whether Risky Business has
a spokesperson, Gordon said the committee chooses members to speak on
the issue based on the venue.
In a conservative forum, the spokespeople tend to be Gregory Page,
executive chairman of Cargill, Inc.; Hank
Paulson, chairman of the Paulson Institute, and former U.S. Secretary
of the Treasury; or former U.S.
Senator Olympia Snowe. George Schultz is also a very strong
conservative voice on these issues. In a forum more specific to the
real estate sector, Henry Cisneros, founder and chairman, CityView
Capital, and former U.S.
Secretary of Housing and Urban Development, will respond.
Gordon said the country is so diverse that Risky Business has
intentionally not had just one spokesperson.
The representatives can't come from within government or one
particular school, she said. But former U.S. Secretary of the Treasury
Henry Paulson, now chairman of the Paulson Institute has emerged as
the most visible spokesperson.
members of the Risk Committee are actually involved in an ongoing
basis, which is amazing," she said.
Gordon concluded by saying the main important point is how regional
climate impacts are.
"The overall report didn't talk about U.S.
GDP, because that number just masks the entire issue," she said. "You
must look at it regionally, how your region interacts with other
regions, including looking at
major companies with global supply chains."
She said, though, that the climate-change impacts in the U.S. look
relatively small compared to the huge impacts in southern countries
"Ultimately," she said,
"this is a global problem."
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Interview Group
includes persons of varying political persuasions,
reflecting years of leadership in politics and
business. Click here
to see a short personal background of each.
S. Adams, David Broden, Audrey Clay, Janis Clay, Pat Davies, Bill
Frenzel, Paul Gilje (coordinator), Randy Johnson, Sallie Kemper, Ted
Kolderie, Dan Loritz (chair),
Tim McDonald, Bruce Mooty, John Mooty, Jim Olson, Paul Ostrow, Wayne
Popham, Dana Schroeder, Clarence Shallbetter, and Fred Zimmerman