00:00A record-breaking heat has blanketed Europe this past week, causing fears over power supply, public health services, and public
00:05transportation.
00:06And with these record-setting temperatures reportedly likely to become more common around the world, places around the world,
00:12it's expected to increase prices, putting a heavy burden on people's wallets.
00:16Climate inflation. For more on this, we're joined by Bloomberg's weather and climate reporter, Joe Wirtz, Bloomberg climate reporter, Emma
00:22Kort.
00:22Joe, let me start with you and just ask you about the phenomenon we're seeing.
00:25We've all seen the videos, the pictures of people across Europe and in London grappling with all of this,
00:30bemoaning the fact that AC isn't as widespread there as it is here in the United States.
00:34First of all, what's it been like? And second of all, how out of the norm is what we've been
00:38seeing here over these last few days?
00:41It's been brutal, frankly. I'm sitting in a 83-degree house right now that's just barely keeping up with the
00:51fans
00:52and the little portable air conditioning unit I have right now.
00:55But it's been especially hard in France. That's sort of been the epicenter of this heat wave.
00:59There's been this high-pressure heat dome that compresses air, which heats up as it pushes it close to the
01:06ground.
01:06And it's just been hovering over France for more than a week.
01:11And it's just been pushing up temperatures to historic levels.
01:14You know, in France, they've seen highs of 111 degrees Fahrenheit in the western part of the country, in Paris,
01:22109.
01:23You know, here in the U.K., it's been unusually warm for this early in the summer.
01:29You know, temperatures setting monthly records here, 99 degrees Fahrenheit.
01:35It's been miserable. It's been deadly, you know, scores of deaths in Spain, France, all over the continent here.
01:44And look, it's been, you know, too hot to work in a factory, too hot to sleep,
01:50too hot to even have a pint outside and watch the World Cup.
01:54These are all activities that have been limited or banned in some way due to just the extraordinary temperatures we're
02:01seeing here.
02:01And this is just really out of the realm of what's typical here in Europe this time of year.
02:06Too hot for a pint, Christina.
02:08I didn't know that happened in the U.K., but that's really significant.
02:12But, Emma, like, in addition to being dangerous and uncomfortable, climate change can also be expensive.
02:18Can you explain to us, you've written extensively about the financial impact of increasing heat waves.
02:22Walk us through the main points.
02:25Yeah, so obviously there's a range of extreme weather events that you can see with climate change,
02:32but the most clearly studied that we've seen has really been sort of the impact of extreme heat on something
02:39like inflation.
02:40So we know as temperatures rise, because so much of agricultural production is occurring outside,
02:47and you've got, you know, crops out in the heat, you've got livestock, things like that out in the heat,
02:53you start seeing pretty significant disruptions in harvests.
02:58You have, you know, maybe your chicken meat production is not going to be as strong that year as it
03:04was the year before,
03:05and this can all add up into, you know, pretty significant increases for food prices,
03:11and food prices can then ripple out into the rest of the economy, raising prices more broadly.
03:17And we've actually seen this in Europe before, so this is not the first summer that Europe has been hit
03:22by a really intense heat wave.
03:24In the summer of 2022, what was a record-breaking heat wave then was estimated to raise food prices by
03:32about 0.7% in Europe that year,
03:36and it raised overall inflation up by about 0.3% that year.
03:41And so I think it's really, that example can really help us see how some of these things unfolding right
03:46now might, you know, play out more broadly.
03:49Let me ask you just about how governments and policymakers are trying to blunt some of the difficulties that have
03:55come with this on the economic side of things.
03:57I think here in the United States, we have a new Fed chair who has made no secret of how
04:02distasteful he finds the Fed's efforts on kind of climate finance
04:05and efforts related to climate change.
04:07I wonder, is that emblematic of the way that other central banks are approaching this issue, other policymakers are approaching
04:13this issue,
04:14or is the U.S. kind of standing alone in this regard as they kind of look again at the
04:17economic impacts of higher temperatures and climate change?
04:23No, that's not broadly representative of how central banks are thinking about it.
04:27I mean, the ECB in particular has really been leading the charge on concerns about this phenomenon known as climate
04:33inflation,
04:34and they've been studying it pretty extensively.
04:36They have for years, they've obviously long had sort of a focus on climate change and their economic policymaking.
04:42But this idea of climate inflation has really come to the fore because of the number of sort of extreme
04:48weather events that we've seen in recent years
04:50and the ways that it's played out, you know, begun to play out really in a clear economic way on
04:56pricing.
04:57And so, yes, the ECB has been at the forefront of this, but central banks all around the world have
05:02been trying to kind of get their arms around this.
05:04It's an early field.
05:05It's something that people are only beginning to understand now, and it's a complicated subject.
05:11It's not clear that climate change will always raise prices.
05:14There are actually situations in which, you know, it might cause deflation as well,
05:17though the overall concern is really that the overriding effect on prices will be upward.
05:24And then there were questions about how much can we adapt as a society, right?
05:28We know we can, for instance, you know, perhaps begin to put in ACs in places that didn't have infrastructure
05:34for that before.
05:35But to what extent can you shield crops from the heat when, you know, agricultural production has always, you know,
05:42been pretty much done outside?
05:44So there are questions about how much we can adapt as a society and blunt some of the price effects
05:48of these changes.
05:50And, Joe, it may not be as simple as putting in AC units.
05:53I mean, they went around France.
05:54I watched one of the networks did a montage, and they talked to a bunch of people sweating their faces
05:58off in a public park,
05:59and almost every single one of them said air conditioning is not the answer because long-term it's more energy
06:04prices, it's more energy costs.
06:05They need longer-term solutions.
06:07I feel like Europe has spoken more about climate change than other parts of the world.
06:10But are there any policies, are people advocating for any specific policies that will or can make a difference,
06:17or is it a lot of, and pardon the pun, hot air?
06:21Well, it's hard to think of any one policy that's going to fix this.
06:24I talk to climate scientists and researchers who look at this, and they say, look, this is not one tipping
06:29point with one solution.
06:30We're talking about a cascade of different factors that are all kind of failing at once.
06:36I mean, we've got infrastructure here that was built centuries ago that wasn't built with these types of temperatures in
06:43mind.
06:43You know, Europe is the fastest warming continent on Earth.
06:46It's warming at double the rate of the global average.
06:51And, you know, you're looking at systemic failures in a lot of cases across the board, health systems, transit systems.
07:02It's too hot to ride a train in many cases here.
07:04The subway and the tube here, it's a furnace down there.
07:09It's affecting real estate, you know, prices.
07:12It's affecting every part of the system in every imaginable way.
07:17You mentioned energy prices, too.
07:19I mean, this heat wave has made rivers in France too warm to cool nuclear plants with the environmental regulations
07:28that they have there.
07:29It's also smothered wind speeds.
07:31We had two instances where the U.K. warned that they were worried about power supplies, that they weren't going
07:37to have enough power.
07:38So this is really affecting a really aviary facet of how people live and work.
07:46So this is really important.
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