US Grants for Resilience Hubs, Senate Warning on Climate Risks, Digital Twins Accelerator, and More

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Finance:

• Biden Admin Awards US$1.6bn in Climate Justice Grants

Policy:

• Senate Report Warns of Climate Threat to US Insurance, Housing Markets

Tech:

• “Digital Twin” Accelerator Takes Off

Research:

• Another round-up of papers and journal articles on all things climate adaptation

Editor’s Note: This is the last Monday newsletter of the year! Climate Proof will be on hiatus until January 6. Happy Holidays to one and all!

Biden Admin Awards US$1.6bn in Climate Justice Grants

Over 80 local climate projects in the US are receiving a share of US$1.6bn from the Biden Administration’s Community Change Grants Program, an initiative that provides traditionally overlooked areas with much-needed funding to cut pollution and build climate-proofing capacity.

The latest round of awards, announced December 12, include millions for community climate resilience hubs. EcoWorks in Detroit, Michigan, is receiving US$20mn to support its efforts to provide shelter and food to local residents when the power goes out or during weather emergencies. Another US$20mn is heading to California’s Gavioto Coast to provide disaster preparedness and response capabilities to disadvantaged communities in the area.

There’s also US$20mn for Evansville, a city in Indiana, funding that will be used to build 15 “Mobility Hubs” that promote travel by electric vehicles. These should help combat poor air quality caused by the region’s topography, wildfire smoke, and excessive heat.

The latest round of 84 project award winners follows the 21 awarded in July, bringing the total to 105. The Community Change Grants Program was authorized by President Biden’s signature climate legislation, the Inflation Reduction Act, and administered by the Environmental Protection Agency.

In Brief

California utility Pacific Gas & Electric has secured a US$15bn conditional loan guarantee from the US Department of Energy to help finance its grid resilience efforts and hydropower and battery storage initiatives. These infrastructure upgrades should support PG&E’s ability to meet energy demand and improve electricity reliability. The federal loan should reduce the utility’s borrowing costs, saving billpayers’ millions over time. (US Department of Energy)

Guy Carpenter, a risk advisory and reinsurance specialist, is launching a new research initiative to explore parametric insurance solutions for addressing wildfire and hurricane risks in California and Florida. In collaboration with academic and public sector partners, the project will assess “community-based parametric reciprocal exchanges” — insurance models where communities share natural catastrophe risks together, with payouts triggered by measurable events like wind speeds or rainfall levels. The research aims to navigate regulatory challenges, develop best practices for communicating the model’s value, and lay the groundwork for pilot projects. (Guy Carpenter)

The European Green Bond Standard (EUGBS) came into effect on December 21. Issuers may now assign a “European green bond” label to their securities if they align with rules approved by EU policymakers back in 2023. To qualify, at least 85% of a bond’s proceeds have to align with the EU’s Sustainable Taxonomy, which sets out those projects and activities that support EU climate goals. The standard is voluntary, and the eligibility criteria mean few borrowers are likely to try and qualify for the label initially. (Bloomberg)

The Climate Policy Initiative (CPI) has issued a methodology framework to guide the creation of Climate Finance Roadmaps, part of an effort to bridge the US$6.1trn annual climate investment gap projected by 2030. These roadmaps aim to identify suitable investors, financial instruments, and policy measures to scale climate investments across sectors and geographies.  The CPI intends for the roadmaps to inform users on the types of financial actors and instruments that can best mobilize finance for their specific contexts. (Climate Policy Initiative)

The US Department of Commerce and National Oceanic and Atmospheric Administration announced nearly US$1mn in funding over three years for Climate Adaptation Partnerships teams, which will support coastal communities facing climate risks in the Great Lakes, Gulf Coast, and East Coast regions. (NOAA)

Senate Report Warns of Climate Threat to US Insurance, Housing Markets

Climate shocks are putting US insurers under pressure and threaten to destabilize the country’s housing market, a new congressional committee report claims. Insurance companies have to adapt their business models if they are to survive.

Democrats on the Joint Economic Committee (JEC), led by Senator Martin Heinrich (D-NM), find that the US is being hit by a billion-dollar climate disaster once every three weeks on average, up from once every four months in the 1980s. Insured losses from natural disasters have also more than quintupled since 2009.

These more frequent, more expensive disasters are “contributing to rising uninsurability” in certain US regions and causing premiums to surge in others, the report says. Data gathered by the New York Times shows insurers lost money on homeowners policies in 18 states last year, up from 12 states five years ago, and eight states in 2013.

Total Insured Losses From Natural Disasters In The US (US$ Billions)

This simmering insurance crisis threatens Americans’ financial stability, the report adds. Today, around 7% of homeowners do not have property insurance, while more than 17 million homes (representing around 19% of US housing value) are underinsured against wildfire and flood hazards. Many of these undercovered households face financial hardship or ruin if a natural disaster were to wreck their properties.

Moreover, climate-driven catastrophes threaten to erode home values, a key source of Americans’ wealth. “If climate risks were properly priced into home values, then the most vulnerable homeowners could lose between 23% to 61% of their home equity depending on the scale of the re-pricing, with the average homeowner losing between 8% to 33.7% of their home equity,” the report reads.

To protect Americans’ access to insurance in climate risk-prone areas and stabilize premiums, Democrats recommend that insurers overhaul their business models. For example, they could extend traditional policies beyond the traditional one-year horizon “to better price the risk that homes face” and use more precise wildfire data to tailor plans for homeowners in high-risk areas.

The report also said that enhancing building codes could go a long way to bolstering homeowners’ climate resilience and reducing the amounts insurers have to pay out when disasters strike. Data analysis suggests rules on flood elevation and removing flammable brush could save US$4–US$11 per US$1 invested.

However, Democrats also argue that updating disaster relief appropriations is essential to bolstering Americans’ climate resilience.

On December 21, Congress passed a spending bill including US$100bn to address the fallout of hurricanes, floods, and fires after a tug-of-war between Republican lawmakers and incoming president Donald Trump.

In Brief

California Insurance Commissioner Ricardo Lara has enforced first-of-its-kind regulation obliging insurers to expand coverage in wildfire-prone areas and incorporate wildfire mitigation measures into catastrophe modeling. The initiative, part of the state’s Sustainable Insurance Strategy, makes it a legal requirement for large carriers to write policies in wildfire risk zones equivalent to no less than 85% of their statewide market shares. The regulation also requires insurers to account for homeowners’ wildfire mitigation efforts when pricing policies, and supports the development of a public catastrophe model. (California Department of Insurance)

Montana’s Supreme Court upheld a milestone ruling affirming residents’ constitutional right to a clean environment, and declaring the state violated this right by permitting fossil fuel projects without considering their climate impact. The court rejected the state’s arguments that its emissions are insignificant globally, emphasizing that environmental rights are enforceable regardless of others’ actions. The initial lawsuit against the state was brought by a group of young people, now aged 7 to 23. (AP)

“Digital Twin” Accelerator Takes Off

A US-backed climate resilience hub is collaborating with Microsoft to promote the development and commercialization of “digital twin technology” — tools that produce digital representations of the physical world for climate risk analytics and disaster response.

The Colorado-Wyoming Climate Resilience Engine (CO-WY Engine), backed by funding from the US National Science Foundation, is partnering with the tech giant to create the Digital Twins Deployment Accelerator, with a focus on companies and applications that promote climate resiliency. The accelerator will back 10 to 12 digital twin startups, providing business, technical, and commercialization support. Microsoft is putting up U$50,000 to support the initiative.

The accelerator is focused on companies that support natural hazard preparedness and response, water quality and availability, and soil health and productivity. Applications to apply for the 2025 cohort of startups close on January 24.

In Brief

Florida is rolling out BEACON, a new AI-powered emergency communication system for messaging populations before, during, and after natural disasters. The system delivers real-time, multilingual emergency alerts that are tailored to users’ locations via radio, TV, streaming, and a mobile app. BEACON is the brainchild of Futuri, an AI technology company, and has been launched in the Sunshine State in collaboration with Florida’s Division of Emergency Management (FDEM) and the University of Florida. (BEACON)

Rarefied Technologies, an aerospace startup launched out of Harvard University’s School of Engineering and Applied Sciences, is developing new devices that can venture into the mesosphere, a largely inaccessible atmospheric layer between 50 and 100 kilometers above Earth. Rarefied’s tiny, solar-powered devices have the potential to gather improved climate and weather data while levitating above the planet, data which can be used to enhance weather modeling and disaster forecasting. (Harvard Office of Technology Development)

NASA’s Disasters Program announced it is backing seven new projects that leverage Earth observation technology to promote improved disaster preparedness, response, and recovery. Each two-year project focuses on challenges including power grid resilience, transportation risk under climate change, and thunderstorm risk trend detection. The projects are designed to deliver practical tools for risk management and community resilience across the US and internationally. (NASA)

RESEARCH

Applications of generative artificial intelligence to influence climate change decisions (npj Climate Action)

Climate change, central banks, and monetary policy trade-offs (Centre for Economic Policy Research)

The heat is on: Heat stress, productivity, and adaptation among firms (Centre for Economic Policy Research)

Thanks for reading!

Louie Woodall
Editor