May. 04, 2022
The Honorable Gary Gensler Chairman Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 RE: Proposed Rule: The Enhancement and Standardization of Climate-Related Disclosures for Investors Via email: rule-comments@sec.gov Dear Chairman Gensler: The following represents my personal thoughts, and is not intended to represent the position of NexTier Bank or NexTier Inc. It is very easy for me to see how we are embarking on an effort that is going to result in the creation of a entirely new regulatory edifice. It starts with the reporting requirements to guide data collection. From the data, new regulations will be promulgated. That will lead to staff training, compliance, internal audits, external audits, and regulatory examinations. All of which will become a major addition to our banking industry’s cost structure. I have only one question: Why? What is the justification? Where are the data that say there’s a compelling reason to do all of this? Below I have attached an excerpt from my Bestselling book which clearly explains why predictions of complex computer models are, by their very nature, unreliable. It is not a political argument, it is not even a climate argument, it is a mathematical argument. I am unaware of any credible evidence that would justify the SEC’s support for such a sweeping costly endeavor. If you are in possession of any such information, I would appreciate an opportunity to review it. If not, I’d ask that you reconsider your efforts on this costly initiative. Thank you. Respectfully, Richard J. Krauland —————————— “Climate Change” So let’s move on to another extremely important subject in modern society. Climate change was originally known as global warming. But as the real science measurements failed to show the expected rise in global temperatures, the name was changed. But the ferocity of its adherents has not diminished. No doubt, when you believe the future of mankind is at stake, it is right and proper to do everything you can do to save the planet. In the past few decades, many billions of dollars have been invested in the study of our atmosphere, with an emphasis on evaluating the effects of manmade climate change. Given the magnitude of the issue, it’s readily understandable that the United Nations would get involved. It’s Intergovernmental Panel on Climate Change (IPCC) has issued massive analyses. And well-attended international conferences in Kyoto, Copenhagen, Paris and elsewhere have issued major warnings and quantified goals for reducing carbon dioxide (CO2) emissions. True believers now claim that the science is “settled” and that there is an international consensus that manmade, damaging, climate change is a scientific fact. Of course, such an important subject has become a major political issue in the United States, as the two major political parties have pretty much come down on opposite sides of the issue. Those who do not accept the “settled science” of climate change are being called science deniers. And even their morality is being called into question. So, is this settled science fact, or not? Once again, I seek guidance from the real science world. It has been credibly demonstrated as a scientific fact that CO2 is indeed a greenhouse gas. It has unique heat retention characteristics, which help to keep the earth warm during the night time, as does water vapor and the other gases in the atmosphere, according to their own properties. And as we add CO2to the atmosphere, we are most likely having some effect on global temperatures. The big question of course is, how much of an effect does it have? That’s a tough question to answer. Today CO2 represents only about 0.0004 of the gasses in our air. That’s four parts per ten thousand. There is actually much, much more argon in the earth’s atmosphere than there is CO2. Even if the level of CO2 were to someday increase to five parts per ten thousand would that really have any noticeable effect? It seems unlikely to me, but I admit that I do not know. At this point, we also need to appreciate the fact that the earth’s climate is an incredibly complex system, with amazing corrective processes to keep things in equilibrium. As such, we do not yet fully understand all those processes. Virtually all of the alarm about climate change is driven by predictions of future temperature increases. Such increases are expected to cause a rise in sea level, with disastrous consequences for coastal population centers, and an increase in the frequency of extreme weather events. All these predictions are based on very complex computer models, which attempt to simulate the actual atmosphere of the earth. Fortunately, I do know something about computer models. To get a valid climate prediction, we need three things—first, supercomputers that are fast enough to run the complex climate models. Those we have. Advances in computer processing speed have achieved incredible results. Supercomputers can perform many trillions of calculations per minute. So the necessary hardware is in place to run these models. Secondly, we need a model that is complex enough to correctly simulate the atmosphere of the earth. We do not yet have that. When you consider that virtually everything affects the atmosphere, even external factors like the surface of the sun—it’s hard for me to imagine that we will ever have a thorough enough understanding of all the relevant factors, to ever create a reliable model. But that’s just my opinion. And I’m willing to keep an open mind on that subject. No doubt, real science has achieved incredible advances no one could’ve imagined many years earlier. So it is possible we may have a reliable model at some point in the future. But not today. And thirdly, we need a data set at t = 0 to initiate the model. This would necessarily include numbers for: temperature, wind speed, wind direction, relative humidity, barometric pressure, ground temperature, ocean temperature, ocean currents, cloud opacity, sunlight, solar winds, precipitation, etc., for every place and every altitude on earth, simultaneously.. We don’t have those. In fact, we never will. We will always have to use proxies or estimates to fill in the data’s blanks. And then there is the error factor. For example, if someone were to ask you what the high temperature was for your city, the day before yesterday, you could go to an authoritative source and look that up. Let’s say you learned that the high was 72 degrees Fahrenheit. That’s a historical fact. No problem. Right? Well, hold on a minute. If the actual high were 72.4 degrees, it would still have been reported as 72. Likewise, if the actual high was 71.8, it would have been reported as 72. In fact, the number 72 actually represents the range from 71.5 to 72.5 degrees. Now, let’s say you also learned that yesterday’s high temperature was 75 degrees. Again, that 75 really represents the range from 74.5 to 75.5. Now, if you were then asked to calculate the total of yesterday’s high temperature, plus the previous day’s high, you would reasonably and honestly answer that the total was 147—72 plus 75. However, in reality, the total could have been as low as 146, or as high as 148. There is a significant error factor created by simply adding two recent historical numbers together. Every single mathematical calculation actually serves to compound the error factor in the final answer. So it should be obvious now that the trillions of calculations, which occur as our complex climate model runs, would serve to compound the error factor to an astronomical level, thereby making the outputs completely useless. That’s worth repeating. Every complex computer model, climate or otherwise, will always have an error factor that overwhelms its actual outputs. The best examples of such models are the complex econometric models, which have been running for decades, attempting to make accurate financial projections. They simply don’t work. That’s a historical fact too. So any climate predictions that are based on computer climate models simply aren’t worth the paper they are printed on. That’s not my opinion. That’s a mathematical fact based on the nature of numbers and their error factors, which are a part of the very nature of numbers. — Enlightened in the 21st Century by Richard J.Krauland Sincerely, Richard J. Krauland