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The Problem with Stern’s New Infrastructure Initiative

Paul Tice’s Dilemma

Stern is building a new program focused on infrastructure, but it will fail if it continues on its current path.

The nascent initiative is an exciting development for Stern. Infrastructure investment will be massive in the coming decades: McKinsey estimates that $49.1 trillion will be invested between now and 2030 as developing economies grow and infrastructure in developed economies ages. Power plants and the electric grid, the largest category, make up one-third of this investment, while highways and roads, airports, rail, and telecom and water infrastructure make up the rest.

The faculty has tapped Paul Tice to organize the effort, and he will teach a course on infrastructure and energy next fall. He is currently an “Executive in Residence” at Stern.

The problem? Paul Tice is an outspoken denier of climate change.

In a recent Wall Street Journal opinion piece, Paul Tice called for the Environmental Protection Agency to overturn a key climate change rule because, as he wrote, it is “based on now-outdated science.” The key rule he so dislikes acknowledges that carbon dioxide contributes to man-made climate change and therefore classifies it as a pollutant. Key federal climate change policies, including the Clean Power Plan, are predicated on that essential finding.

Tice cites a hodgepodge of debunked claims and conspiracy theories to argue that the science does not support that finding, even though doing so puts him on the fringe of reason.

97 percent of scientists agree that climate change is real, happening now, man-made, and a result of carbon dioxide pollution. Even ExxonMobil acknowledges climate change and supports a carbon tax. What credibility does Tice have to contradict them? He is not a scientist and does not appear to have any scientific background.

Climate change is real and will have a huge impact on infrastructure whether Tice believes it or not. The renewable energy industry, which Tice has openly derided, is expanding exponentially in part because it produces negligible greenhouse gas emissions compared to coal, oil, and natural gas. Tice does not need to believe in climate change to understand that renewables are the best choice: solar and wind energy are now the cheapest sources of new energy, even without subsidy, as Bloomberg recently reported.

If Tice’s allegiance to old, dirty sources of energy is premised on fealty to the free market, then it may be time for him to change allegiances.

Furthermore, existing and new infrastructure – highways, levies, the electric grid, etc. – are exposed to severe damage and increased risk as a result of increasingly frequent extreme weather caused by climate change. Superstorm Sandy caused $1.13 billion in damages to New York City’s infrastructure. The L Train, which moves 300,000 people daily, will close for at least a year to make needed repairs after flooding caused by Sandy. The U.S. government, the World Bank, and the Risky Business project – co-chaired by Michael Bloomberg and Hank Paulson, among others – have all published research expressing urgent concern about damage to infrastructure due to climate change.

Given these facts, it would be unwise for any investor to ignore the potential risk and damage that man-made climate change poses to their investments. Stern must prepare students to avoid making this mistake. Teaching infrastructure without climate change would be like teaching finance without beta, accounting without depreciation, or strategy without Porter’s five forces analysis.

Students can only hope that Tice is willing and able to put his personal views aside and will acknowledge and discuss the impacts of climate change on infrastructure investment. If he does not, there is a real concern that students will not receive the up-to-date, fact-based, and balanced education they deserve.

The bottom line is that Tice and I both want the best for Stern’s infrastructure program. I sincerely hope that Tice’s political views do not inhibit its success.

Sam Blodgett is the outgoing co-president of the Stern Energy Club. The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of the Stern Energy Club or the Oppy.

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