Tag: climate

Clime and Punishment

This January was the hottest January on record, at a temperature of 1.75°C above the average for the month (2024 was the hottest year on record with 150 extreme weather events). February was the month with the highest level of economic policy uncertainty since the 1990’s (excluding COVID). Something must be brewing but, the global narrative is so concentrated on the White House and intensely short-term that in a way, the future has been obscured.

Whether we like it or not, climate damage is part of that future path, and will play its own role in the disorder and re-ordering of the international political economic landscape to come. Regular readers will know that in the framework of my ‘Levelling’, imbalances like the crisis of democracy, climate damage and debt will have to be overcome before a new world order is fully established.

 In particular, the deepening of climate damage and the rise of indebtedness are correlated and both are ‘world’ problems, at a time when coordination between the great powers is at its lowest ebb since the 1930’s. For game theorists at least, this produces a tricky equation – how to achieve a global solution or compromise when the main players in the game are trying to steal a march on each other.

Some of the pathways for climate warming are worrying (taking a range of datapoints from the IPCC, Berkley-Earth institute and the Global Carbon Project), if countries implement the commitments agreed at COP-Paris then global warming will be 2.4°C higher than the long-term average temperature by 2050, with current climate policies the increase is expected to be close to 3.5°C and with no climate policy adjustment it might be in the range of 4-5°C. Granted that a 1°C change in world average temperature can translate into a 4°C increase in some of the most climate precarious countries, this last scenario is frightening.

If climate damage encroaches on some of the thresholds mentioned above, it will become even more of a strategic issue for the economy (there is a good literature review here), the technology sector, financial markets and security. Indeed, the 2023 yearly threat assessment produced by the US Director for National Intelligence highlighted that ‘Climate change will increasingly exacerbate risks to U.S. national security interests’.

This report might well become a collector’s item because Pete Hegseth the new Defence Secretary recently (Jan 25) tweeted that ‘The (Department of Defence) does not do climate change crap’. Whilst the US economy is a very powerful driver of climate technology (Texas gets nearly a third of its electricity from wind power), its absence as a moral leader will mean weaker climate policy adherence by other countries.

In that context the link between climate damage and security will have to be made by others, notably the excellent team at UCL’s Dawes Centre for Future Crime, with whom I spent time last week exploring how climate damage is provoking new forms of crime and threats to security that go beyond the simple theft of copper wires and solar panels (a vibrant trade apparently).

There are a few strands in this emerging, important debate to draw out. Climate damage will in the long-run change cities, geographies and economies and produce migratory trends that malevolent states or non-state actors (gangs and organised crime) will exploit. Energy infrastructure is becoming more stressed because of climate change and the side-effects of this were evident last week with the closure of Heathrow following a fire in a nearby electricity substation.

In a more futuristic vein, the response to climate warming will create new technologies, some of them in the realm of geo-engineering which may be able to alter the effects of climate damage, but that might also be commandeered for harm. Then there is AI, which itself will create much greater demand for electricity, but that can help optimise energy usage, though the AI itself is vulnerable to manipulation.

Climate change is also leading to the development of new marketplaces – for carbon credits for example, as well as ESG driven assets and debt, but these new forms of financial market infrastructure are often illiquid, improperly regulated and prone to fraud.

What all this points to is that as climate damage provokes innovation, new infrastructure, technologies and markets in the context of a world where security is now a priority and where non-state actors (i.e. gangs) become more powerful and daring, the response to climate damage now also needs to have countermeasures built into it.

Have a great week ahead

Mike

Demonstration contagion

Is this the beginning or end ?

In last week’s missive (link), I discussed the role of rising food prices as a trigger for public protest and I suspect, as a cause of future geopolitical strife. It is not a very happy topic but one that deserves some further analysis given that in recent weeks there has been a remarkable outbreak of protests across a range of countries – from riots in Honduras, to ongoing tension in Hong Kong to climate related demonstrations in India.

Were I one of the many apocalyptic writers who seize upon every misfortune as confirmation of their worldview I would tell you that this is the start of ‘The Levelling’, and that the ‘end’ will follow shortly.

Though I will spare my readers such a gloomy outlook, there is nonetheless a ‘Levelling’ like narrative that unites the motivation for the many international protests in the sense that most of them are provoked by factors that are associated with globalization (though in reality not usually caused by it).

For example, climate change has spurred Extinction Rebellion movements in Europe and environmental protesters in India. Factors that are associated with a lack of what I call ‘country strength’, such as corruption and weak institutions have been amongst the triggers for protests in Lebanon and Iraq, whilst the cost of living and rising fuel costs have brought people out onto the streets in Chile, Egypt, Ecuador and France. Inequality is also a driver, especially so in Chile, Mexico and Turkey.

Together these protests (by the way the number of Google searches on the world ‘protest’ is at a five year high) point to a world where there is limited patience for policy negligence and it negative socio-economic effects. I’ve had a look across the IMF and World Bank databases to find countries that are exposed to corruption, indebtedness, inequality and climate change. Many ‘candidates’ if I can put it like that are in Africa. One country worth watching – where inequality and indebtedness are high (as high as Jamaica), and where climate change is having a growing impact, is the US.  It still has strong institutions but consider what might happen in the context of a deep recession (with no fiscal buffer).

While there is no sense that the various protest movements are in anyway coordinated, they may still be contagious within and across countries.

Within countries, social media makes protests easier to organize at short notice, easier to spread (dis)information and easier to bring to the attention of the wider public. It was no surprise that in the aftermath of the Arab Spring, protestors faced massive social media and cyber counterattacks from the Egyptian and Syrian authorities.

Protests are contagious across countries to the extent that social media can heighten sensitivity to issues and spread the ‘methodology’ of either violent or peaceful protest. For example, one image that crops up in protests around the world is the clenched fist of the Serbian peaceful protest group Otpor. There is also increasing contagion in financial markets in the sense that in emerging markets at least investors are reacting negatively to signs of political strife.

The troubling thought for the outlook is that the economic stresses underlying these protests will not go away anytime soon – inequality takes time to tackle, most governments are fiscally constrained, and many have high debt levels (i.e. Lebanon). To make matters worse, climate change points towards a more radically stressed environment.

However, the positive reading from all of this, at a time when it should be said that the quality of democracy and the rule of law internationally are deteriorating (according to the latest Freedom House ‘Freedom in the World’ report and the Rule of Law indicators in the World Justice Project dataset) is that people want less corruption, more equal societies and better balanced growth.

In that context, what is to be done? There are specific actions that can help, such as the relocation of the World Bank to Africa to act as an anchor against corruption and to spread best practice in institution building.

More broadly, I see a lot of space opening up for new political parties and movements, some that are interlinked across countries and others that are connected by their political methodology (i.e. use of social media). Then, eventually I see the such protests leading to efforts to remake social and political contracts along the lines of the Levellers’ Agreement of the People’, at least in democratic countries, so that policy issues such as climate change, inequality and corruption are more formally recognized and curbed at a policy level.

It will be a bumpy road politically, but the flourishing of protests around the world shows that something profound is occurring.

Have a great week ahead,

Mike