Scientists have issued the most serious warning so far regarding the future of the planet. This calls for a fast and definitive break with the current market and growth economy. It could be the biggest challenge to political leaders so far. At least five challenges must be addressed.
By Erik Rasmussen
Earlier this month we saw yet another powerful wakeup call from international climate scientists. This time from a group that includes a number of the world’s leading experts, like Danish Professor Katherine Richardson, from the Institute for Biological Oceanography at the University of Copenhagen. For two reasons, this study gained significant international attention.
Firstly, because it alarmingly concludes that CO2 emissions apparently are about to trigger a domino effect that can lead to catastrophic temperature increases of 3°C to 5°C degrees, consequently disrupting the conditions for all life around the globe. If so, it will be a clear testimony of the fear expressed by numerous climate scientists for many years, that one day we would pass the tipping point where the consequences of climate change will be taken out of our hands. Today, we have reached that point.
Secondly, because it is published on the backdrop of a scorching summer that beats almost all previous weather records, with extreme temperatures, extensive drought, and wildfires. Climate change has suddenly taken a quantum leap from being the subject of remote technical reports and elite global conferences to a factor that is now affecting the everyday lives of ordinary people. As of today, weather forecasts are not only about next week’s wind, rain and sun but about the future of humanity.
The political challenge
The big question today is: Will the alarmist call to action from the scientists turn into drastic initiatives to alleviate the worst consequences of climate change or will we just go back to everyday life, when the summer cools off and the media loses interest? And will the politicians lose their interest once again? This has been the case many times, while the challenges of climate change have just accelerated.
There can hardly be any doubt that the next few years will be the ultimate challenge for political leadership – both nationally and internationally.
Judging from the reaction from the Danish Climate Minister, Lars Christian Lilleholt, on the scientists’ warning, we could maybe expect greater political interventions this time. To several media he has emphasized that we need to act faster and differently, from what we are doing today. Still, it would be naive to think that the commitment of one single Danish minister can be a catalyst for creating global political breakthroughs.
And that is exactly what we urgently need right now. Thus there can hardly be any doubt that the next few years will be the ultimate challenge for political leadership – both nationally and internationally. With all and great respect for what other actors like cities, business, citizens, etc. can do, politicians must set the framework and implement the regulations that are necessary to create common rules of play, including ensuring international cooperation, which is a condition for limiting the consequences of climate change – and meeting the the Paris Agreement goals.
And this is urgent.
There is every reason to take the scientists’ forecasts seriously. Moreover, their analysis is expected to be supported by a similar important announcement from the UN later this year. Together with the wide range of earlier and increasingly more alarmist scientific reports, there is now evidence that we are probably facing the greatest socio-economic paradigm shift in world history – a shift from the market driven economy to a climate-driven economy. The problem is however, that this shift is so comprehensive and so complex that it is really difficult – if not almost impossible – to handle within the framework of existing national and multinational political institutions.
The fight against climate change is goal number 13, and without achieving this, few of the remaining 16 can be achieved.
In November, the UN will host the 24th Climate Conference (COP), and after more than two decades of negotiations we are still waiting for a globally binding agreement to combat climate change – and this year one of the world’s greatest emitters, the United States, has decided to ditch the process. The political tardiness is also evident when looking at the implementation of the 17 UN Sustainable Development Goals (SDGs) adopted in 2015. Here, all research and analyses show that lack of political ambitions, initiatives and priorities is predominant and no countries or regions are currently on track when it comes to the action and implementation needed to fulfill the goals.
The fight against climate change is goal number 13, and without achieving this, few of the remaining 16 can be achieved. That is why climate change is the most important and urgent goal to achieve right now – but also the goal where the world community is lagging most behind.
One of the most important challenges is to define what the new climate economy is, what the new climate market looks like and how it affects businesses, submarkets and sectors. There are already many models and economic accounts that incorporate the environmental consequences of growth etc., but considering the current state of affairs in climate change, the academic models should quickly be transformed into reality.
Five challenges
Simplified, the climate economy should address five challenges:
New economic reality: World society must relate to the warnings of science and adjust to a climate that can be up to 5°C degrees hotter. For many years we have been operating with a framework of 1.5°C to 2°C degrees, and believed that these were realistic and the consequences manageable. However, the new study questions these assumptions and in fact it would be irresponsible not to operate with completely different scenarios – that we could just as well end up with a 3°C to 4°C temperature increase – maybe even 5°C degrees. Here we face drastically changed life conditions. There are many assumptions about when it will happen, but all being said, it can happen faster or slower than expected and therefore can crucially affect the decisions being made today, such as urban planning, infrastructure, migration and so on. For example: within the next 15 years we will see investments around US$ 90 billion in infrastructure. The climate challenge forces us to plan, align and invest these money based on the effects of climate change, but also to make sure that the investments support more sustainable and climate friendly infrastructure.
New growth: The criteria for growth must be reassessed. They must take into account the true cost economy. This means that the environmental and climate impact must be included. Growth must not strain the environment. KPMG has among others documented how big this challenge will be. In a report they concluded that for the food and beverage industry alone it would cost 224% of their earnings. This is hardly realistic on the short term, but shows how big “unpaid bills”, our current growth regime is leaving to society, and how big transitions are necessary, if we are to prevent insurmountable climate change consequences – consequences that will also hit the food sector in other ways. We are in other words hastily approaching a completely new market reality.
New technology: According to the new study, we have arrived to a point, where a range of the well known solutions such as energy efficiency and renewable energy, changes in consumption patterns cannot suffice. There will be a need for large technological breakthroughs, for instance the storage of CO2. This requires a quick implementation of comprehensive research and development programs, and the connection of existing scientific communities to attain stronger impact. Here, it truly makes sense to use concepts like industrial or technological revolutions.
New leadership: Here the usual suspects come to the fore: the politicians. Even though many cities and companies are taking lead, and even though investors are behaving more sustainably, the politicians will be crucial to develop the rules of the game in the climate economy. It can become one of the big barriers. So far, narrow national interests and influence from corporate lobbyism has halted the transition, and it will not be easier with the proliferation of populist regimes in large parts of the world. They are not characterized by a real understanding of climate challenges. If this problem should be overcome, it will require that leaders either show that there are votes in the fight against climate change, or – in extension of this – that there will be bottom-up pressure and ensuring sustainable prosperity will become a winning case.
New market reality: All sectors and markets will be strongly influenced by the new climate economy. Not just because of changed growth criteria and the true cost economy, but because the climate economy has to address new urgent needs, develop new solutions and respond to new consumer behaviour. That in itself will develop new marketplaces, create new business ventures and challenge old market structures. The climate economy is the economy of today and decides who will be the market winner of tomorrow.
One possible solution
These are just fragments of the challenges that should be addressed at the transition of the climate economy. One thing is certain: Regardless of whether the world society – hereof political leaders, chooses a bold, proactive strategy or continue the inertia, the years to come will assumedly be the most turbulent in recent history – maybe ever seen. The fight for a better climate should be fought in a political climate, that is already very unpredictable. But the scientists’ “climate shock” adds a new and very urgent dimension and means that the decisions that should be made in the months and years to come are not only about who will win the next election or who will have the market share, but about the conditions of survival for humanity.
Business has to evaluate how it would prepare for a new climate reality – how to prepare for a 3°C to 5°C degrees society. It is more “faction” than fiction.
Judging from past experiences, among them the UN convened 23 COPs that haven’t managed to come up with the essential solutions, time has maybe come to try something new. That means, rethinking the institutional frame for solving such an urgent, complex and comprehensive problem like climate change. It should be addressed as a global state of emergency. The Danish energy and climate minister Lars Christian Lilleholt has announced that Denmark will be hosting an international climate conference this fall. This could maybe be the place and occasion for not just discussing the challenges once again under even bigger pressure, but draft a new climate economy, and launching a real plan for how it could be carried through.
In the meantime any business has to evaluate how it would prepare for a new climate reality – how to prepare for a 3°C to 5°C degrees society. It is more “faction” than fiction.
