(NEW YORK) — Wildfire smoke bathed New York City’s front-line workers in fumes, atmospheric rivers forced hundreds of thousands of California homes into darkness, and hurricane Idalia battered tourism in Florida.
Natural disasters nationwide in 2023 focused attention on the life-or-death stakes of climate change but also underscored a grave risk of a different type: economic distress.
A landmark report released by the federal government last month put a price tag on extreme weather events, saying they impose nearly $150 billion in costs for the United States each year.
Those losses fall disproportionately on low-income and historically marginalized people, worsening inequality, the Fifth National Climate Assessment found.
While the economic consequences of climate change became more clear this year, the response from companies, economic policymakers and private investors was mixed, analysts told ABC News.
The largest climate legislation in the nation’s history, the Inflation Reduction Act, or IRA, helped unleash a wave of clean energy projects and record sales of electric vehicles, some experts said.
However, a backlash against environmental, social and governance investing, or ESG, brought a decline in financing for funds focused on those issues. Meanwhile, the U.S. produced a record amount of oil, even though the burning of fossil fuels makes up a key driver of climate change, experts added.
“There are reasons to be both optimistic and pessimistic,” Glenn Rudebusch, a former economist at the Federal Reserve, told ABC News. “Policymakers have made some slow, halting progress. But progress has been made.”
This year marked the first since the IRA took effect, offering tax credits meant to incentivize private investment in clean energy, such as wind and solar, and, in theory, boost U.S. production of renewables.
Roughly 280 clean energy projects representing $282 billion of investment were announced over the measure’s first year, Goldman Sachs found in a report in October. In all, the study said, such projects created about 175,000 jobs.
New initiatives included a battery manufacturing plant in Georgia, a solar complex in Alabama and the expansion of a wind turbine facility in Colorado, American Clean Power, an industry group representing green energy companies, said in a report last December.
“The uptake has been vastly greater than what the Biden White House anticipated,” Robert Stavins, a professor of energy and economic development at Harvard University, told ABC News.
Alongside the growth of its clean energy industry, however, the U.S. set a record for oil output this year. As of December, the country was on pace to increase its supply of oil by an average of 1.4 million barrels per day, according to the International Energy Agency, a government group.
The added supply puts downward pressure on gasoline prices but worsens climate emissions.
“This transition is rapidly accelerating on the renewable side, but there’s a stubborn entrenchment of fossil fuel production,” Dave White, director of the Global Institute of Sustainability and Innovation at Arizona State University, told ABC News. “This is a tension playing out in the U.S. energy sector.”
The surge of investing in clean energy also came alongside a sharp decline of ESG financing, a major source of private-sector funds for some green businesses.
Prominent Republican politicians, such as Florida Gov. Ron DeSantis, have assailed ESG as “woke” capitalism that prioritizes liberal goals over investor returns.
Some on the left have questioned the rigor of such funds, warning that they establish insufficient standards for companies seeking to qualify.
Funds worldwide categorized as “responsible investing” received $68 billion of net new deposits in 2023 through November, according to data from financial firm LSEG Lipper. That amount had fallen dramatically from $158 billion for all of 2022 and $558 billion for all of 2021.
“Over the course of 2023 we really saw a culmination of the backlash against ESG,” Robert Jenkins, global head of investment and wealth for LSEG Lipper, told ABC News. “This is not going to be helpful broadly for the world to reach [climate] goals.”
However, Jenkins added, the criticism has spurred a shift toward more sophisticated criteria for evaluating the environmental impact of a given business and assembling funds that reflect the values sought by investors.
“Good evolutionary things are happening when we look at this space,” Jenkins said.
Looking ahead, the analysts centered their attention on the 2024 presidential election. The outcome of that contest could ultimately propel green investment and galvanize corporate action, or reverse some of the recent progress, some experts said.
“It really requires another election to see where things are going,” Rudebusch said.
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