Fact Check: Examining the Potential Cost of Climate Change by 2070

The effects of climate change, both in terms of repairing damage from natural disasters as well as loss of revenue, will come with a high price tag, costing trillions of dollars to U.S. taxpayers and the government annually, but the exact number is unknown.

In August 2022, the United States House of Representatives passed the Inflation Reduction Act, which includes $370 billion in clean energy and climate investments over the next 10 years. According to an official statement from the White House Office of Management and Budget (OMB), this will save the average American family hundreds of dollars a year in energy costs.

The OMB found that the government could end up spending an additional $25 billion to $128 billion annually by 2100 due to climate-related financial risks, including flood insurance, crop insurance, and disaster relief. If nothing had been done about the consequences of climate change — i.e. climate inaction — the cost to U.S. taxpayers and the government would have been a $2 trillion loss of federal revenue annually.

The United States is the single-largest contributor to climate change, accounting for 25% of global carbon emissions historically. This is twice more than China, which contributes 12.7% to global carbon emissions, and a little more than the European Union’s 22% from 28 countries.

According to the Congressional Budget Office (CBO), a nonpartisan governmental office that provides objective analysis of economic issues, climate change will increase the federal budget deficit “by reducing revenues and increasing mandatory spending” on disaster relief like wildfires among other things. The CBO also mentions that mitigation efforts to combat climate change could reduce the costs of climate change. For example, the Inflation Reduction Act (IRA) which will provide Americans with tax credits to buy more efficient appliances and up to $7,500 to purchase electric vehicles. It is estimated that this will help American households save $500 per year as they switch to using cheaper electricity rather than gas for cooking, heating, and electricity.

The claim that climate inaction will cost trillions of dollars is mostly true; climate inaction will certainly be expensive, however, how much it costs American taxpayers and the government versus how much it costs globally is yet to be tallied and the exact cost is unknown.

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