And why converting ocean heat into work may be the missing economic assumption
For years, scientists have warned that climate change is not just an environmental crisis but an economic one. Now economists themselves are starting to admit something more unsettling: the models governments, central banks, and investors rely on are systematically underestimating the damage climate change is already doing to the global economy.
A new report led by the University of Exeter, in partnership with Carbon Tracker, concludes that today’s climate-damage models are creating a false sense of security. By treating climate change as a marginal shock to an otherwise stable system, they fail to capture cascading failures, compounding extremes, and structural economic breakdown.
But there is an even deeper problem the report only hints at.
Climate models are failing economically because they refuse to treat heat as the central variable.
And heat is where Thermodynamic Geoengineering (TG) fundamentally changes the conversation.
Climate change is not marginal—and neither is the energy it contains
Most economic models assume climate change gently trims future GDP. Output grows steadily, and damages are subtracted later, as if the planet were a mildly inefficient factory.
Reality looks nothing like that.
Extreme heat, floods, droughts, wildfires, and storms now strike simultaneously across regions and sectors. Supply chains fracture. Infrastructure fails outside its design envelope. Insurance retreats. Migration accelerates. Productivity collapses not because workers are lazy, but because physiology and physics impose hard limits.
The Exeter report is explicit: risks that alter the structure of the economy cannot be evaluated using models designed for small, reversible shocks.
Yet even this critique stops short of the core physical truth.
Global warming is not primarily a problem of emissions.
It is a problem of accumulated heat.
Over 90 percent of excess heat trapped by greenhouse gases ends up in the ocean. That heat is not abstract damage—it is physical energy, measurable in joules, accumulating at rates now exceeding 400–500 terawatts globally.
Economics has no place for this fact.
Extreme weather is heat made visible
Economic models still anchor damages to changes in global mean temperature, while largely ignoring how heat actually expresses itself: as extremes.
Last year alone, Europe experienced at least €43 billion in short-term losses from extreme weather, with projected costs rising to €126 billion by 2029. In Southeast Asia, monsoon flooding caused losses exceeding €130 billion in Thailand alone. These numbers exclude wildfires, wind damage, compound events, and long-term productivity losses.
The Exeter report notes these estimates are conservative. But the deeper issue is not undercounting—it is misclassification.
Extreme weather is not a secondary effect of warming.
It is warming, redistributed through the climate system.
From a thermodynamic perspective, storms, droughts, and floods are simply how excess heat moves, concentrates, and dissipates. Ignoring this is like modeling electricity without acknowledging voltage.
The “magical economy” and the immortality of GDP growth
Perhaps the most devastating section of the report dismantles how economists interpret GDP losses.
A projected “20 percent loss” does not mean society is poorer than today. It means a hypothetical future economy—assumed to grow at roughly three percent annually forever—is slightly smaller than a fantasy baseline.
At no point do most models allow for:
Structural contraction
Persistent decline
Economic collapse driven by physical limits
Growth is assumed immortal.
This is where thermodynamics matters most. Economic activity is inseparable from energy flows. When heat accumulation begins to overwhelm infrastructure, labor capacity, agriculture, and ecosystems, growth does not slow—it breaks.
You cannot compound GDP on a planet whose cooling systems are failing.
GDP is blind to the damage that matters
The report also confirms what many already suspect: GDP is far too narrow to represent climate harm.
It ignores:
Human mortality
Displacement and migration
Inequality
Ecosystem loss
Cultural and social breakdown
Worse, GDP can rise after disasters due to reconstruction spending—turning destruction into apparent “growth.” The economy looks healthy on paper even as resilience collapses underneath.
This accounting failure has a thermodynamic analogue: it treats heat dissipation as productive activity while ignoring the damage that heat caused in the first place.
The missing assumption: heat can be converted, not just endured
Here is where Thermodynamic Geoengineering fundamentally diverges from conventional climate economics.
Every existing model assumes excess heat is:
Pure damage
A cost to be minimized
An externality to be priced
TG starts from a different premise:
Excess heat is also energy.
By converting surface-level ocean heat into work—while transporting that heat to depth—TG directly addresses the physical driver of climate damage rather than merely its symptoms.
This matters economically in three ways current models cannot see:
Cooling is productive
Reducing upper-ocean heat lowers storm intensity, heatwaves, and thermosteric sea-level rise—cutting damages at their source.Energy generation and damage reduction occur simultaneously
TG does not trade growth for protection. It couples them.Heat is delayed, not destroyed
Heat moved to depth returns over centuries, allowing repeated energy extraction cycles in a decarbonized system—something no emissions-only framework can capture.
In short, TG converts what models treat as inevitable loss into usable work and long-term stability.
Why today’s models cannot price TG—or climate risk
The Exeter report calls for better collaboration between climate scientists, economists, and financial institutions before temperatures exceed 2 °C. That collaboration is necessary—but insufficient.
As long as economic models:
Treat climate change as marginal
Ignore heat as a conserved physical quantity
Assume perpetual growth
Use GDP as the primary scorecard
They will systematically undervalue both climate risk and climate solutions that operate at the thermodynamic level.
TG does not fit inside these models—not because it is unrealistic, but because the models themselves are.
A final thought
Climate damages are not marginal because heat is not marginal.
Until economics is rebuilt around the physics of energy accumulation, redistribution, and conversion, policymakers will continue to underestimate losses, misprice risk, and overlook solutions that act on the problem where it actually lives: in the ocean, in the heat, and in the laws of thermodynamics.
The danger is not just that we are underestimating climate damage.
It is that we are underestimating what is possible once we stop pretending heat is only a liability—and start treating it as the most abundant, mismanaged energy resource on Earth.
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