November 17 is a date which history will forever link to revolution. In the last century it was a month and year marking the end of the Russian Tsars, the beginning of authoritarian Communism in power, and its aggressive multi-decade global clash with Capitalism. History will record that the planet and both sides survived a Cold War nuclear stand-off, but that one economic model did not. Fast forward to today, and this century has a new “November 17” moment with stakes equally high. Possibly higher.
This time the planet faces TWO existential threats and TWO seismic economic revolutions. The events linked to the first revolution on November 17th last week have captured all the headlines but, in truth, their threat to humanity is not yet clear. Frenzied speculation will continue as to what spooked the board of OpenAI to ditch their revolutionary Artificial Intelligence (AI) leader, Sam Altman, but we would like to focus on the other less-discussed seismic events of the same day.
In this instance, the threat to the planet should be very clear but didn’t quite catch the same number of media eyeballs. We are a strange species. Despite fight or flight behaviours wired into our DNA, there has been remarkably little global leadership alarm triggered by the Earth’s temperature on November 17th briefly smashing through a significant warming limit for the first time in history(Source: Copernicus Climate Change Service). The scientists will tell you that when global average temperatures – as they were briefly last Friday – are more than 2 degrees hotter than levels before global industrialization, then we are moving into irreversible climate crisis territory.
The prospect of being too late to prevent cascading extreme climate events and destruction of Earth’s ecosystems makes for depressing reading, particularly when expectations for COP 28 leadership are so low. The annual UN gathering on climate change in Dubai will see 200 nations represented but pessimism dominates current commentary. For our part, we are less gloomy on climate change and the cleantech revolution rapidly developing. However, we are clear about the climate challenge. The report card for the annual COP gathering would suggest ‘cop out’ by leaders rather than real action. For illustration, the ‘success’ of the last 27 COP meetings has resulted in global CO2 emission increases actually growing by 50% since COP 1 (Source: NOAA). Ouch! The good news is that bad news might now be good news. And, of course, it’s related to money.
Best to start with the richest country in the world. The US in 2023 (by August) had already set a new annual record of 23 different disasters costing $1 billion or more, and mainly weather related. This doesn’t even account for extreme heat events (and damages to business, crops etc) but does rather starkly paint a picture of disaster striking every 3 weeks compared to the 1980s where frequency was more like 3 months (Source: NOAA). Those sort of risk intensifications tend to focus the minds of all providers of capital, from banks to insurers to pension funds. In turn, that level of capital angst begins to influence leaders relying on corporate/political donations. So, it was intriguing to see a major geopolitical shift in recent weeks.
Amazingly, the one area in US politics where there is bipartisan policy support is the current trading and technology “war” with China. And yet, the summit meeting between President Biden and President Xi in San Francisco went ahead with, seemingly, only political downside for the Biden administration. Thankfully for humanity, there was a mutual US-Sino desire to lead in the climate crisis. So, we should not underestimate the significance of both China and the US agreeing this week to target a trebling of renewable energy generation by 2030. Furthermore, the lead by the US, UK and 8 other nations to push at COP 28 the trebling of installed nuclear power capacity and a call for support from global financial institutions should be a real positive for global decarbonisation.
Clean energy is a start but clean manufacturing is a critical piece in the decarbonisation equation. Of course, in Europe with recent CBAM taxes on imported materials like cement, steel, iron and fertiliser, we are aware of how the cleantech revolution can impact non-European businesses in the manufacturing supply chain. However, for the world to really tackle the climate crisis all countries, big and small, need to be on board. The previously COP-promised $100 billion of funding annually to help poorer countries to deal with existing climate damage and transition away from fossil fuels really should be a major priority, in terms of delivery and building decarbonisation consensus/action. As a positive indicator in this direction, one news item this week caught the eye. Reuters gives the details:
Namibia began construction on Monday of Africa’s first decarbonised iron plant, to be powered exclusively by green hydrogen, the country’s investment promotion body said. Steelmaking is one of the most polluting industries in the world and the industry is seeking to shift away from coal-fired plants and towards the use of decarbonised iron. The Oshivela project in western Namibia is backed by the German federal government, which has injected 13 million euros, and will use renewable energy to generate 15,000 tonnes of iron per year with no carbon emissions, the Namibia Investment Promotion and Development Board (NIPDB) said in a statement.
Frankly, $100 billion is a tiny amount compared to the climate costs coming down the tracks. However, delivery on original commitments by richer (and polluting) nations should be a start. Also, with immaculate timing, Oxfam has released a report stating that since the 1990s the richest 1% of the planet emitted as much carbon as the poorest 5 billion (two thirds) people on the planet. Something, or more specifically, somebody has to give.
Finally, in a week where a disruptor CEO has dominated the headlines it might be worth remembering the business lesson of another industry disruptor CEO, Michael O’Leary of Ryanair. The connecting of developing less-wealthy nations to the cleantech revolution should be considered in a similar vein to Ryanair’s aggressive moves into smaller airports across Europe. Initially, Ryanair’s cheap fares were lobbied against as a threat to competition. But what actually happened? Total numbers of passengers flying into those airports dramatically increased, not just for Ryanair, but for other carriers too. And, the big winner was the destination town or city receiving thousands of new tourists every week. Dare we imagine that bold leadership in the financing of cleantech can dramatically change the trajectory of our climate crisis, but can also change the economies of less-travelled regions? Or….we could just ask the inhabitants of sub-Arctic Sweden, Quebec or Wrocław how cleantech investment can transform manufacturing, climate and lives with a bit of political ‘cop on’.