America’s Hidden Climate Tax

In the United States, the catastrophic impacts of climate change are becoming increasingly evident. Homeowners face a particularly dire situation as insurance companies cancel contracts or make policies unaffordable.

Last week, hailstones the size of melons pelted Texas. Such massive ice chunks falling from the sky have become a regular occurrence in the state. This year alone, dozens of storms have swept through Texas, 16 of which caused damages exceeding one billion dollars—an unprecedented number in a single year. And the hurricane season has just begun. A significant factor in this is the warmer Atlantic Ocean, a consequence of climate change. However, state politicians, whose primary industry is oil and gas production, remain skeptical about the human causes of climate change. Influential Texas Senator Ted Cruz once claimed that climate change is beneficial for plants and would make the planet “greener.” In 2015, his website stated, “Senator Cruz confronts the dogma of climate change alarmism.”

Cruz has long been one of the most generously funded politicians by the oil and gas industry. He and his party allies actively prevent efforts to combat climate change. Texas Governor Greg Abbott, another long-time recipient of fossil fuel industry donations, is attempting to block the expansion of renewable energy through legislation. Despite this, Texas is the leading producer of wind energy and one of the states most frequently hit by disasters such as storms and floods. According to an analysis by the New York Times and ProPublica, 135 counties in the U.S. are particularly vulnerable to the effects of climate change, 24 of which are in Texas.

The refusal to address climate change may increasingly challenge Abbott and Cruz as extreme weather events and mounting damages persist. Last year, property insurance premiums in Texas rose by about 23 percent, making them the highest in the country. For many homeowners, this has resulted in hundreds of additional dollars in insurance costs. This trend is not limited to Texas; home insurance premiums are rising across the U.S. This increase is partly due to the pandemic and subsequent inflation, which have significantly driven up repair and reconstruction costs. However, the upward trend began before 2020. Insurers face a dilemma: if premiums are insufficient to cover damages, they incur losses. If they charge premiums that accurately reflect the risk, policies become unaffordable for many homeowners. In California, for example, the risk of wildfires has dramatically increased in recent years. From 1996 to 2021, the burned areas in Northern and Central California quintupled compared to 1971 to 1995. According to a study by NIDIS, the National Integrated Drought Information System, this increase is due to climate warming and increased drought conditions.