By Carol Cam and Madeleine Para

From rising inflation to soaring prices for home and flood insurance to the cost of recovery after unprecedented storms, wildfires, and flooding, climate change is increasingly creating a financial burden for Americans. 

Hawaii residents are increasingly feeling the pain of rising household costs caused by America’s reliance on carbon-emitting energy, the interests of international oil producers, and climate change-exacerbated disasters. The Ukrainian war has exacerbated oil prices globally and this is impacting gas and electricity prices across Hawaii.

The Costs of Climate Change

Extreme weather, made worse by the heat-trapping emissions warming our planet, played a pivotal role in the growth of 2021 inflation. All around the world, we are seeing alarming weather events impact raw materials supply, which in turn lifts prices in Hawaii.

The Maui News reported gas prices were at record levels in Hawaii over the past week. The average price of regular unleaded gas was $5.24. During 2021, most Hawaii prices increased: 32.6% for energy; 25.0% for electricity; 21.4% for natural gas; and 5.2% for all items less food & energy. If that wasn’t enough, the cost of rebuilding from climate-related storms, floods, and wildfires is sky-rocketing. 

The increase in Hawaii’s extreme rainstorms has brought more flash floods which destroy homes, bridges, and dams, and cause mass evacuations. Climate scientists say they are occurring more frequently as the planet warms.  On Kauai, Hurricane Lane in 2018 brought 49.69 inches of rainfall in 24 hours, breaking the US rainfall record. Flash flooding and landslides covered roads, and damaged or destroyed 532 houses. Public damage totaled $19.7 million, and overall damage was estimated at over $125 million. 

During this century in Hawaii, the predicted cost of sea level rise will cost tens of billions of dollars. Currently, the state expects to spend over $6 billion on sea level rise mitigation, such as port and canal improvement, dredging, and restoration of wetland habitats. The risk from sea level rise is that flood-submerged land endangers important water, sewage, electrical infrastructure; and damages coral reefs and marine life.  Coastal erosion will damage homes, businesses, farmlands, and habitats which will drastically affect Hawaii’s economy. By 2100, the global mean sea level is likely to rise at least one foot above 2000 levels, even with relatively low GHG emissions.  With high emissions, the sea level could be 8.2 feet above 2000 levels by 2100.

Hawaii wildfires have been a growing problem for many years, harming environments from the top of mountains to below the ocean’s surface. Fires remove vegetation, and with heavy rainfall, exposed soil gets carried downstream, causing erosion and damage to our marine ecosystems and coral reefs. Reefs support local food production, create barriers to large storm surges, and are vital to tourism, a major part of Hawaii’s economy. Though Hawaii wildfires are not as big as mainland fires, a large percentage of our lands burn every year in grass fires, which impact our natural ecosystems and convert forests to more grass, which increases wildfire risk.

As climate change affects our quality of life, how bad are we willing to let things get? Unless we quickly reduce the heat-trapping gases that warm our world, climate catastrophes will soon outpace our ability to recover and adapt, and the financial costs will keep rising.

Air pollution from fossil fuels is linked to millions of deaths worldwide, yet polluting industries continue to get a free pass to emit heat-trapping gases into the atmosphere, which will lead to yet more warming. This, in turn, further exacerbates the extreme weather and climate disasters already harming us. This market failure means the true cost of carbon is being paid elsewhere. Frontline communities are disproportionately vulnerable to the first and worst impacts of climate change; small towns are struggling to rebuild, and people are burdened with soaring homeowner insurance and flood insurance in places once deemed low risk. 

Americans are losing out to a complicated and volatile global fossil fuel market, yet coal, oil, and natural gas received $5.9 trillion in subsidies in 2020.  Meanwhile, the conflict in Ukraine threatens Europe’s dependence on natural gas. Experts agree a faster transition to clean energy would lead to more stable energy economies worldwide.

A solution - price carbon pollution

To counteract inevitable risks from climate change to global economies, the IMF says a global carbon price floor of $75 or more per ton is needed by 2030 because it is “the fastest and most practical way to achieve” the Paris target.  The IMF proposes that an international carbon price floor agreement between the largest emitters – Canada, China, European Union, India, the United Kingdom, and the United States, could achieve a 23 percent reduction in global emissions below baseline by 2030. Additionally, the IMF analysis shows that market-based climate policy will increase employment, decrease regulatory approach expenses, and increase U.S. and world GDP.

The World Bank believes the problem in the U.S. and globally is not carbon pricing, but a lack of it, and that “it must be sufficiently ambitious” ... “It is clear the potential of carbon pricing is still largely untapped”.  They cite a large UN study that finds carbon prices of $40-$80 per ton rising over time can meet the Paris agreement to keep global temperatures below 2°C. 

Those critical of carbon pricing say that politically it will be too hard to achieve, while regulations are easier to pass.  The truth is we do not know which is harder to achieve.  Maybe a combination of both carbon pricing and regulations can reduce emissions while also being fair to lower-and-middle-income populations.

A federally enacted carbon fee levied on polluting industries would speed up this essential transition and let the market determine which clean technologies win out. What’s more, the revenue could be returned as a “carbon cashback” check to American households, providing invaluable monthly support. Any increase in cost passed on to the consumer would be covered by cashback instead of adding to the profits of the fossil fuel companies.

With clean energy destined to become cheaper and more popular, alongside a growing market for electric vehicles, the demand for fossil fuels will lessen and adjust over time, helping to slash the prices of carbon-intensive energy sources along the way.  Encouragingly, a new report from Stanford University demonstrates that transitioning away from the unpredictability of polluting fossil fuels to cleaner renewables would reduce per capita household annual energy costs by around 63 percent. It would also create millions of new jobs and save lives by reducing pollution. 

As both sides of the aisle discuss solutions to climate change and consider our energy future, volunteers with Citizens’ Climate Lobby in Hawaii are urging Senators Schatz and Hirono to support a price on carbon with a dividend returned directly to households already impacted by rising costs.

The transition to cheaper, reliable, greener energy is already happening, but it needs to happen faster. Our elected leaders must make sound economic decisions to secure a livable world and leave Americans with more cash in their pockets, too. 

 Carol Cam is a volunteer with the Maui chapter of Citizens’ Climate Lobby. Madeleine Para is Executive Director of Citizens’ Climate Lobby.