The climate disasters behind the debt ceiling deadline, and the energy solution

Plus, JPMorgan inks third major carbon storage removal deal in two weeks

In today’s edition:

— How the three states who saved the Colorado River deal took the money and ran

— How climate change messed up the debt ceiling debate, and why it lies in the way of an agreement

— JP Morgan just announced the third big carbon capture and storage deal in two weeks. A market is finally beginning to form

— The natural elements challenging advancements to the U.S. grid transmissions system

— Can this mineral change the international solar panel trade controversy?

Protesters and environmental groups including Greenpeace UK, Global Justice UK, and Extinction Rebellion disrupted Shell’s annual general meeting today in London, accusing the company of not switching away from fossil fuels quickly enough. Photo: Greenpeace UK via Twitter.

Nobody knows exactly when the U.S. will run out of money to pay its obligations without Congress raising the debt ceiling — possibly as soon as next week. But we certainly know why. Climate disasters in California and across the country have caused a huge chunk of the estimated $300 billion in tax shortfalls this year as authorities have extended filing deadlines to hard-hit areas.

California is responsible for more than $100 billion in late tax receipts alone, according to The Wall Street Journal, while Treasury Secretary Janet Yellen has often said tax receipts are notoriously difficult to measure and manage. At the same time, reports from Capitol Hill say a bipartisan agreement on raising the ceiling is increasingly focused on the “permitting” issue for both oil and gas projects and renewable ones. Everyone agrees these giant projects need less red tape.

For investors, this background on such a dramatic political battle demonstrates that our economic and energy health are increasingly tied into the changing climate and dangers from global warming — especially adequate disclosure of climate risks to our investments, from real estate to insurance stocks, right up to Treasury bonds.

Even at $300 billion, the late tax receipts represent only about three weeks of U.S. government spending, but that time is looking precious as we bear down on Yellen’s June 1 default date without a debt ceiling agreement.

We expect a deal will get done this weekend, and whether it gets through Congress, i.e. the House, will depend on how far Biden is willing to go to allow permitting for all energy projects to break through environmental obstacles. It’s a temporary fix, but only the first of several tough choices all governments will need to make going forward as climate risk expands its reach.

Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.

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