Why the next decade will be warmer, more chaotic and conflict ridden
What is causing this?
- Global politics is changing. China has emerged as a rival to the US and a multilateral world is emerging. China, Russia and others feel constrained by the US and the West. Conflict has already emerged in Ukraine and many predict war over Taiwan before the decade is over.
- Many countries are highly vulnerable to climate change and will be busy dealing with a cycle of floods, heatwaves and extreme weather and the consequences of these changes: such as economic chaos, migration, starvation, and decline.
- As the world shifts to renewable energy and starts kicking its addiction to fossil fuels new international power structures will be forged. Competition over the critical resources will intensify and future wars could be fought over water, nickel, lithium and copper rather than oil or gas.
- These three trends will push the planet into economic, environmental and social decline unless governments, people and companies can respond to these challenges.
Geopolitical rivalry has already scuppered talks between the two big beasts of emissions – China and USA. US support for Taiwan has angered Beijing so much that it has suspended talks on all climate matters. Special US Climate Envoy John Kerry tried and failed to separate climate talks from other strands of diplomacy. Of course, Beijing and Washington will continue to develop their own climate plans, but lack of dialogue on such a crucial issue raises serious concerns.
This year the US Congress passed historic, albeit imperfect and two decades late legislation. But the Inflation Reduction Act (IRA) should now provide the path to a low carbon future for the country. Beijing is stepping up its impressive rollout of renewable energy but remains wedded to coal and many other high carbon industries. But the fact that the two climate giants are not talking is an indictment of global leadership.
This split could just be a taste of future conflict, China could seek to invade Taiwan potentially sparking a wider Pacific war involving the USA, Japan and others. China (and Russia) feel encircled by the west who they see as hypocritical and self-serving. Even without a full-blown war, the tensions between China and the US will see further disputes, flashpoints and proxy conflicts that will destabilise the global politics over the coming decade.
The Keys to the Economy of 2030
A low or net zero carbon economy is now the stated aim of virtually every country on earth. It is undeniable that progress towards net-zero has been too slow but shifts are clear to see. The falling price of renewable energy, the new focus on environmental values has taken root in large companies.
This trend is undoubtedly uneven, prone to greenwashing and has already attracted a backlash from climate deniers, but the momentum is clear. Large companies have at least now pretend to be green and many are making serious efforts to decarbonise their operations.
But what does this mean to the global economy and how will this impact geopolitics?
On a macro level there is a shift from a fossil fuel economy based on supplies of oil, coal and gas. Fossil fuels are mined, drilled and shipped in huge quantities to power every corner of the globe. The constant flow of these fuels powers every part of modern life.
Decarbonisation means modern life will be primarily powered by electricity. Electricity from the sun, wind, earth and water (plus nuclear).
These technologies such as wine turbines and solar panels are capital intensive and rely on the supply of critical materials such as copper, nickel, lithium, graphite, rare earth metals, cobalt and others.
The mining, refining and supply chains of these materials will become geopolitical flashpoints in the same way the Straits of Hormuz or Malacca, the Russian Federation invasion of Ukraine are for oil and gas supplies.
The world is steadily shifting away from fossil fuel intensive to mineral intensive one, driven by trends like the take up of electric cars, policy shifts like the EU Green New Deal or Inflation Reduction Act in the US.
China took an early lead realising the importance of electric batteries and subsidised the sector for many years. Beijing also took a strategic role in controlling the supply chain of metals and minerals needed to build these engines of the transition economy.
Supply Chain Security
Now other states have caught on. The USA recently took action to secure its own supply chains of critical materials. Now India, the EU and others are following China and the USA’s lead. For many years the electric car battery was a futuristic dream. Now it has become a symbol of national and economic security.
However, modern supply chains are long, complex and messy. It will be difficult to fully control the supply of so many different materials and components. This means that in the scenario of a major conflict between China, Taiwan and the USA in the Pacific – supply chains would be severely disrupted and many industries reliant on the flow of trade from the region would be interrupted. Thus slowing the energy transition.
2022 the year Climate Change hit home
2022 was for many the year that climate change felt real. Across China record breaking drought saw rivers shrink and whole industrial areas shut down due to the excess heat. India experienced a sweltering heatwave devasted farmers and making living conditions unbearable for many. But perhaps worst hit was Pakistan.
Pakistan received five times the normal amount of rain in 2022. The Indus River which runs through the length of the country flooded the country. The flood hit over 30 million people and washed away 2 million homes and businesses, over 700 km of roads and left widespread devastation.
The floods started with the record temperatures in Pakistan. Jacobabad recorded 51 C earlier in 2022. Hot air holds more moisture, this results in higher rainfall. This along with melting glaciers in the Himalayas created the ideal conditions for a record-breaking monsoon.
The floods have created thousands of internal refugees and the lingering water makes the perfect breeding ground for water borne diseases like dengue fever and malaria. Experts are also predicting that the floods will take years and decades to recover from. Farmers will struggle to plant crops, roads and bridges will have to be rebuilt and Pakistan’s overstretched finances will be pushed further into the red.
Pakistan was already a fragile country rocked by political instability and poor relations with its giant neighbour.
Despite these problems Pakistan had been enjoying moderate economic growth. But now the floods look set to reverse this trend as the country rebuilds. Pakistan may also end up becoming more dependent on China, which has invested heavily in the country as part of its flagship Belt and Road geo-economic policy. China has heavily backed infrastructure development, seeing Pakistan as an investment target and a potential alternative trade conduit from the Middle East.
Storm Clouds over Sharm el-Sheikh
The COP 27 Conference in Egypt this November is a chance for countries to discuss climate change, decarbonisation and how to pay for it. Western countries promised but failed to deliver on a promise of US$ 100 billion a year to mitigate and develop resilience around climate change.
Pakistan’s climate change minister Sherry Rehman asked why the country is paying the price for carbon emissions it had very little part in. This question is certain to come up in COP27 in Egypt this year. Developing countries that are paying the price for crippling climate change will be asking richer countries that created the emissions to stump up for the costs.
The problem is that public opinion in many richer countries will be unfavourable to funding climate mitigation overseas. In addition there will be the usual squabbling on which countries are most culpable – are high per capita emitters now and/or historic emitters but now decarbonising like the UK the most to blame? Many will point the finger at emerging economies like Pakistan with growing populations as future sources of carbon.
Pakistan also faces another risk as it has moved away from the west, the conflicts over Afghanistan and an eventual diplomatic breakdown with the US during the tail end of the war of terror saw aid inflows fall. Instead, Pakistan looked North and forged a partnership with China.
China – Pakistan Nexus
The China Pakistan Economic Corridor (CPEC) is a series of Chinese funded infrastructure projects across country valued at US 62 billion. However, economic pressures at home have hit China and its not clear if how they will support Pakistan through another debt crisis. Instead, Pakistan will most likely have to turn to a familiar source, the IMF – which will no doubt request economic reforms in exchange for further funding.
These over lapping crises have the potential to produce a outcome worse than the sum of their parts. This so called Polycrisis where disparate shocks interact and threaten to overwhelm our collective ability to respond to crises. Humans appear to be constantly firefighting and crisis managing, but not solving underlying problems.
Will this decade see humans resolve great power conflict, climate and many other technological and socetial issues? Recent history is not particularly comforting, but hiumans have proved themselves and adaptable and innovative in the past when faced with seemingly intractable problems.