Earlier this month, NOAA confirmed that climate-warming carbon dioxide concentrations in the atmosphere grew at a record-breaking speed in 2024, surging by 3.7 parts per million (ppm). The previous record jump was 2.96 ppm, set in 2015. Despite weak La Niña conditions during the first two months of the year – which typically result in cooler temperatures – global temperatures in the first quarter of 2025 were the second warmest on record.
A climate realist approach suggests the US should prepare for a world that dramatically blows through its climate targets. Too much attention is paid to economists’ central estimates of climate damages, rather than to the tails. Policymakers should dramatically ramp up investments in disaster response, management, and prevention.
On all these fronts, however, the current administration is falling short. Cuts to the forest service will exacerbate wildfire risks. Eliminating NOAA’s research arm could have disastrous consequences for public safety and economic health. Rather than cancelling grants that gives states and communities billions of dollars to protect against natural disasters, the US needs to be working to increase its investment in resilience and adaptation. Even from an energy security and defence perspective, the current administration’s approach is short-sighted. By doubling down on oil & gas (and coal), and hamstringing its own renewables sector, the US will become less competitive vis-à-vis China over the longer-run.
Any serious risk management strategy for the US Treasury, cannot ignore the implications of climate change. At the same time, Congress is working on pushing through a tax bill that would allow for $5.3 trillion in deficit-financed tax cuts, which Treasury Secretary Bessent hopes will be passed by July 4th. The term premium could continue to rise, given the backdrop of persistently large federal budget deficits, and growing fiscal risks from climate change and the administration’s current policies.
