Even before the coronavirus, the world was seeing the impact of the climate crisis. Evidence of its mounting toll was surfacing regularly in the form of deadly wildfires, warming seas, and stronger storms.
The cost of these events is already staggering. In 2019, Morgan Stanley pegged the three-year bill from climate change at $650 billion, and United Nations scientists are forecasting more than $50 trillion in climate-linked damages by 2040.
At the same time, people are starting to realize they must make changes to avert the worst. In early 2020, a survey found that 78% consumers take the environment into consideration when making purchases, at least occasionally.
We’re both in the midst of climate change and on the brink of a green revolution—two forces that could reshape the economy as we know it, much like the digital revolution did before them. Like any major upheaval, there will be winners and losers.
Here’s a look at five sectors being reshaped by climate change.
We’re both in the midst of climate change and on the brink of a green revolution—two forces that could reshape the economy as we know it … there will be winners and losers.
Agribusiness: Challenges Increase Along With Temperatures
Barring any major supply chain disruptions, agriculture may emerge from the pandemic on solid footing. But the sector is still facing major risks from rising temperatures, changing and unpredictable weather patterns, and dwindling water supplies.
A paper published in the Proceedings of the National Academy of Sciences found that crop yields from the world’s four largest corn producers (the U.S., China, Brazil, Argentina) could fall by 8-18% if global temperatures rise two degrees Celsius. Those figures jump to 19-46% under a four-degree rise.
Agriculture already accounts for nearly two-thirds of global freshwater use. A warming climate will increase that need, but farmers will be met with reduced supply. In California, where 90% of crops are grown on irrigated farms, climate change may force farmers to reduce cultivated acreage or shift from water-intensive crops. Over the next 75 years, the land capable of consistently growing high-quality wine grapes alone is likely to shrink by more than half.
One outcome could be a shift toward indoor vertical farming, which leverages LED lights and low-waste hydroponics. These farms can be anywhere, namely close to the point of consumption to eliminate long, carbon-intensive journeys to market.
Travel & Tourism: New Travel Patterns and Habits
Tourism is an $8 trillion industry worldwide. COVID-19 has put a hold on most travel plans for the foreseeable future, but a warming planet is putting the industry at risk, too.
Take winter sports, for example. As the climate warms, snowpacks will shrink in many of the world’s most popular ski destinations, shortening the season and drawing fewer visitors—and jeopardizing the businesses that depend on tourists. Already, the time between spring’s last frost and winter’s first chill is 10 days longer than in the early 20th century. If warming keeps up, experts predict some top winter destinations will all but lose their subfreezing temperatures by century’s end.
Warm-weather destinations are equally at risk. Coastal tourism is a $124 billion industry in the U.S., but rising seas and storm erosion threaten to eliminate half of the world’s beaches by 2100. And in getaway destinations both coastal and inland, the rising threat of severe storms and hotter temperatures could influence vacation decisions, too.
The coronavirus could accelerate a shift in travel patterns beyond vacationing. Residents of polluted cities during “normal” times are waking up to cleaner air and reduced smog thanks to stay-at-home orders. Post-pandemic, that could fuel a drop-off in unnecessary trips for environmental reasons—including during both commutes and business travel if remote work sticks.
Real Estate: Fire and Water are a Risky Combination
Some studies say climate change is already impacting real estate markets, with U.S. properties exposed to rising sea levels selling at a 7% discount. By the end of the century, rising sea levels, combined with more serious storms and erosion, will put an estimated $882 billion worth of U.S. real estate underwater. One Harvard professor has even coined a new term for the rush toward “resilient” property in at-risk places like coastal Florida: climate gentrification.
Insurance actuaries named climate change the top emerging risk for 2019, and real estate investment companies are now factoring climate risk into their decisions.
California’s Camp Fire was the single largest insurance event of 2018. National Flood Insurance Premiums rose 8% from 2018 to 2019, and FEMA’s new-for-2020 risk-rating system is expected to send premiums higher in flood-prone areas.
If climate-linked risks continue to rise, insurers may flee certain regions altogether, tanking property values in those areas. Throw a decline in home sales into the mix from the coronavirus, and the outlook for real estate is murky at best.
Renewable Energy: Electricity Looks Golden
The share of U.S. energy derived from renewables doubled from 2000 to 2018. And though Deloitte reports that renewables account for just 23% of U.S. power generation today, some states—California, New Mexico, and Hawaii among them—have pledged to go fully renewable by 2045.
Solar and wind, long propped up by tax incentives, are increasingly cost-competitive with traditional power sources. During the first half of 2019, utility-scale solar costs dropped 18%, and offshore wind fell 24%, according to Deloitte in its 2020 Renewable Energy Industry Outlook.
A slew of renewable energy storage companies are vying to solve for power delivery at night when the sun is down, or during periods of calm winds. One Swiss startup, Energy Vault, stores energy using stacked concrete blocks and cranes.
I think the impact of the coronavirus will be a speed bump in the shift toward green power. Signs of trouble: initial green job losses due to the pandemic are already north of 100,000, and industry trade group Advanced Energy Economy says 84% of its members have stopped or delayed projects due to the crisis.
Cleantech: Sustainability Chasers Shoot for the Moon
A low-carbon economy will coincide with a steady rise of clean energy, bio-engineering, and electric vehicle industries, among others.
The transportation industry alone accounts for over 24% of carbon dioxide emissions globally. Policymakers have been slapping incentives on electric cars to bring these numbers down. China is aiming for 25% electric new-vehicle sales by 2025. Tesla is churning out electric cars and the batteries to power them in Nevada, New York, Shanghai, and Brandenburg, Germany. New busses in New York City will be electric by 2029.
It won’t be enough to just reduce emissions. Many experts say we’ll have to capture previously emitted carbon from the atmosphere to keep warming within “safe” levels. “Carbon capture and utilization” technologies that turn CO2 into valuable products could be a trillion-dollar industry in a decade, according to Vox. Switzerland’s Climeworks AB is already capturing carbon from the air and funneling it into nearby greenhouses.
Clearly, there’s no shortage of ingenuity, but green startups may need a capital injection to extend their runway through a coronavirus slowdown.
If they survive the pandemic, companies that can leverage technological innovation to address climate change can capitalize on the carbon-free economy of the future. Those that wait until public opinion shifts or disaster strikes stand to lose.