The “Global Risks Report 2022” indicates climate change and the lack of a coordinated strategy to address this global challenge as one of the biggest risks, both for 2022 and the decades to come. Disorderly climate transitions can lead to major political and social crises that will further deepen existing geopolitical cleavages.
Part of the World Economic Forum’s No. 17 report entitled “The Global Risks Report 2022” describes the picture of a “disorderly climate transition” in the international context brought about by COP 26, the IPCC report, and the intergovernmental discussions and measures that took place last year.
The most optimistic scenario for rising global temperatures by 2050 is 1.8° C. This is only possible if all the assumed goals (including zero net goals) will be achieved. If we stick to maintaining the policies already adopted, we could reach an average increase in temperatures of up to 3.6° C.
Scientists say we still have a short window to implement important measures and avoid the scenario where any action was taken would be “too little and too late”. The report estimates that without a global effort to combat the effects of climate change, economic losses would range from 4% to 18% of global GDP.
Post-COVID economic recovery – Discrepancies between Western and emerging economies
The report discusses a very important element needed to implement measures to combat, mitigate and adapt to climate change. Socio-economic crises stemming from the effects of the global pandemic still need more attention from world governments, and we are already seeing substantial efforts that coincide with the implementation of environmentally friendly measures such as state-level recovery plans including green measures in the European Union.
However, a significant problem will be that many emerging economies will still be affected and slowed down in the medium and long term by the effects of a prolonged pandemic while Europe and North America will already go beyond that stage. In short, the global post-COVID-19 recovery will ignore many aspects of climate policy needed to comply with the Paris Climate Treaty and COP 26 in favor of achieving short-term economic stability. A relevant example is the current energy crisis where economic giants such as China have opted for a significant temporary increase in energy from coal-fired power plants.
Even at COP 26 we have had positions of global leaders that draw a line between pollution reduction actions and economic development. That is why a fair transition and a fair redistribution of costs for the transition should become an integral part of the global policy agenda.
How fast can we implement measures against climate change and what would be the cost?
One of the remaining questions after COP 26 was how quickly we can introduce global measures to combat climate change.
The report presents several scenarios that depend on the speed of implementation of these measures:
- Rapid adoption – it would obviously be preferable to significantly reduce carbon emissions and limit the rise in global temperatures to 1.5° C. But for these measures to work, alignment and coordination are needed between the business sector, the industrial sector and the government. In addition to the fact that this alignment now seems very difficult to achieve, the report also states that the short- and medium-term risks would be linked to the energy security of many countries, which would implicitly volatilize the global energy market. The issue of jobs in energy-dependent sectors of fossil fuels is often discussed. In this scenario, a third of the jobs related to the fossil fuel industry (~ 8.5 million) would be lost. These could be offset by new opportunities in the renewable energy sector, which has a potential of 40 million jobs. However, this boom should be carefully regulated so as not to create monopolies and potential geopolitical conflicts in areas rich in minerals and rare metals, which are necessary for technological progress.
- A slower transition would bring short-term socio-economic stability but would only delay taking even more drastic measures over time. The effects of climate change would become more and more pronounced over the decades, which in turn would lead to even more socio-economic and political instability. This option would make global efforts more focused on adaptation rather than mitigation. In other words, we should decide how to live with more difficult climatic realities instead of preventing them.
- Divergent paces, a scenario in which some developed economies will have the ability to implement more ambitious measures consisting of decarbonization, a rapid energy transition, and maintaining economic and political stability while emerging economies will be left behind because they do not have political stability and access to capital markets. Unfortunately, this scenario would have a global socio-economic impact. With the deterioration of climate change-induced conditions (droughts, floods, rising sea and ocean levels) a large number of populations in exposed areas (which are often also underdeveloped) would be displaced, for example from the Levant and the Middle East to resilient countries, with stable economies. Therefore, an uneven global pace would eventually lead to mass migration, which could trigger major political instability.
Loss of government & economic control and that of the natural environment
The report concludes that the implementation of climate measures will come at a cost in the short or long term. The question is how much we can limit these losses on individual, community, state, and global levels. On an individual level, tens of millions could migrate from Africa, the Middle East, and the Levant to areas of the planet’s north. On a governmental level, there is great pressure regardless of the direction of the measures taken due to the links between the financial, energy, and industrial environments. An uneven climate transition could have a profound impact on production chains given the nature of current economic systems and global economic interdependence. Then finally the most serious loss globally would be that of forests, natural ecosystems, biomes, etc.
Massive deforestation, pollution of the seas and oceans, and intensive and unsustainable agriculture have had a massive impact on climate change, especially in the last 50 years. The planet has lost significant sources of carbon capture while emissions from the energy and industrial sectors have skyrocketed. But even when we talk about greener methods of energy production (wind or hydro) we must take into account the cost to the environment so that for example the planning of large wind farms does not cause damage to nearby ecosystems.
Any global transition like the one discussed in this report will come at a cost. The question is whether there is the will and political determination for an inclusive transition to limit losses, facilitate adaptation and maximize long-term opportunities.