Climate in a time of shifting global order
And why Damascus is just the first stop of Spongebob's world tour
Hi everyone, it’s been awhile. Nothing important happened in the last couple of months, right? Right?
To be honest, I’ve been feeling a bit short in the inspiration department after the previous geoengineering series. Long-read posts are increasingly difficult for me to find the suitable time to research, between work and changes in personal circumstances (no not more cats, iykyk!). And I feel more than a bit guilty of not providing you with more regular content on this newsletter: after all, you and I have plenty of newsletters, X/Bluesky, IG, Tiktok, podcasts and “old school” media bombarding your eyes for attention.
🦋 Speaking of Bluesky, join and follow me there for hot takes and rants. There’s a nice growing community of climate security people there too. X is the pigsty you love to wallow in, but I’ll be posting there far less going forward.
So going forward I’m pivoting to shorter, punchier bits. That way, you get more timely and content, and opens the door for a bit more experimentation.
COP29, the US elections and the revenge of hard power
Geopolitics has dominated my headspace of late, but not just the headlines around Ukraine, the Middle East, the US (China, China, China!), but why are so many people hopping on the bandwagon in the past year. And when I talk to people I get a few types of replies:
“Well, the pandemic changed things”
“So many elections this year, including the one that mattered most”
“It’s impacting markets and how we do business in a way we haven’t seen”
“We’re getting a lot of questions from clients and stakeholders”
“It’s all over my feeds, can you help make it stop” (lmao)
What is sometimes missing is that we’ve been here before, and challenging the limitations of our individual and collective lived experiences. Many government, corporate, tech and nonprofit leaders have NOT lived or worked in a time when the world operated very differently e.g. the Cold War, and definitely not previous eras: interwar, pre-WWI, the Gilded Age in the US. While those previous eras had their unique characteristics which set them apart (the Gilded Age was an era of breakneck technological change, but unlike the last 40 years was an era of major wage growth in real terms; the interwar period saw persistent hyperinflation in Germany, a leading global economy; middle powers were largely in decline in the Cold War), we can highlight how the current post-Cold War era is a) giving way to a Cold War 2.0 and b) we need to observe what new ground rules are emerging and the implications for tackling unstoppable forces like climate change.
If we look at the big macro drivers here, it gives a mixed picture for climate cooperation, proliferation of life-saving climate mitigation / adaptation solutions, and the finance to go with it:
🇺🇸🇨🇳 It’s US v China. It almost goes without saying that this is the big rivalry of at least this half of the century. 1st v 2nd in GDP, military prowess, and annual CO2 emissions. Both see value in the existing rules-based order, but seek to mould it in their favour, often behind the scenes away from big diplomatic summits e.g. international standards organisations. Both sides - particularly the US - are becoming more protectionist and mercantilist akin to economic realities a century ago. While military conflict is not inevitable - the fact that no declining power has gone down without a war against a rising power since the 1700s does not offer great empirical evidence for this.
💈💈💈It’s multipolar. The rise of the “middle powers” like India, Brazil, Saudi Arabia, UAE and maybe Indonesia means there is a lot to play for in these - also bankable - markets. In the Cold War 2.0 context, the big 2 must compete for alignment and support, and are in weaker positions to demand compliance.
🔋 Technology: China is the leader in 37 of 44 critical technologies in terms of talent, research and patents, according to the Australian Strategic Policy Institute. Among the technologies that have a clear climate-natsec nexus (e.g. advanced materials, biofuels, PVs, batteries, collaborative drone robotics, multispectral imaging, and nuclear - China has a notable if not dominant advantage. How US domestic subsidies, innovation and economic statecraft begin to close the gap remains to be seen.
🧶 Economic statecraft, while it never went away, is absolutely back as gardens get bigger and fences go higher in our new era. But unlike the first Cold War, economic interdependence - supply chains, capital, talent, regulations, data - is much higher. That can create false senses of economic security and unanticipated contagion risks from shifts in policy, as well as “old fashioned” conflict. Cyber and espionage as economic statecraft is going to be a tool more countries go to, more often to push the envelope against their rivals - and sometimes allies - without going over threshold into a hot war.
👓 Ideology and vision matters when we’re in a transitional phase as the pax Americana order is being challenged like never before - from within and outside of the US. Competing national and global visions mean some countries look within, others (China) seek to step in to inherit the rules-based order, while still others (Russia) seek to be disruptors without necessarily offering a vision. Finally, some other countries drift - either from sustained internal political polarisation (possibly the US and parts of Europe), or maintain non-alignment (India, ASEAN and GCC states). Developing and the poorest nations - who never had real power in the existing order - find themselves largely locked out of influence in influencing the rules of the road during and after a transition to a new order.
So a reminder as to why this matters for climate folks, including those investing or working in the space? Problem solving looks a bit different, and the pillars of risk in which we are comfortable with in the current era is going to look different for the next 5-10 years on.
🚧 When rules of the road looks messy, it gets gradually harder (for most) to identify easy investment opportunities, deploy (and repatriate) capital, hire and move talent, and secure your data at a global level. The universe of bankable opportunities shrinks and some markets may become effectively off limits. I wonder then how many COPs will we have left before the event loses the core of its momentum.
🇸🇬 🇦🇪 🇶🇦 Addressing a domestic / regional / “geopolitically friendly” markets may become a more material factor for some business models. As an individual, operator or investor, being based out of countries which are less aligned but friend to all can become a major asset if regulatory and capital raising changes really hamper solution scalability. Think Singapore, UAE, Qatar, maybe parts of LatAm. If you’re an American or UK firm, it may be harder to make inroads in China, and vice versa.
🚢 The impacts of migration from economic hardships and physical impacts of climate change are going to become more severe, and attractive destination countries will find themselves compelled to spend more to deter or manage inbound flows. Social infrastructure, border and maritime security and the digital infrastructure to support it all, will be in steadily greater demand. This is not necessarily the positive vision for climate security, but it is going to form a growing part of the “so what and now what” for solutions which manage both climate and security risks. I’d love to cover this more in a future edition - if you’re an expert in this space let’s chat.
⚔️ Defence is going to matter more as an asset class for folks with green creds - as a source and consumer of climate-related spend, as well as overall percentages of national budgets. This may not necessarily have a crowding out effect - there are major synergies between “green” and “defence” in the form of adaptation and resilience - but defence-led spending may also distort the kinds of solutions and the constituents benefiting. Everything from new compounds for vessel hulls to mobile cooling, loitering UAVs and advanced charging is going to be game.
🏙️ Regional and multinational corporations optimised to operate and generate returns in the pax Americana order are waking up to these realities and not everyone is going to make it. As I’ve discussed elsewhere, having the internal capabilities and expertise to conduct proactive horizon-scanning, strategy formation, scenario planning, and crisis management which support holistic risk and opportunity identification, is going to be essential to delivering on medium-to-long term growth. My friends Lewis Sage-Passant and Colin Reed provide a forceful rallying cry on this key point.
🫣 When you squint, energy transition and road to net zero looks harder to achieve at a global level even with the sharp falls in LCOE from existing and “newer” renewable energy sources. Supply chain (hardware and mining particularly), policy divergence, sustainability of regional and global markets (how many CBAMs should we have / will there be?), tech and manufacturing sovereignty, challenges in enforceability, structural shifts in fiscal spending priorities, and loss of buy-in to the transition (see: Russia, parts of the Middle East) are all likely to increase the drag coefficient on hitting 2040 and 2050 targets.
🛣️ And that leads us to a deeper question: are Shared Socioeconomic Pathways (SSPs) which are critical to Integrated Assessment scenario modelling, still fit for purpose? There are 5 key scenarios:
1: Sustainability: effective international cooperation on reducing emissions and sustainable development, some degree of just transition. We’re nowhere near this
2: Middle of the road: BAU in development and sustainability patterns
3: Regional rivalry: barriers to international trade, regional rivalries, policies revolving around security
4: Policies focused on elite, high inequality, low to moderate economic growth
5: Fossil-fuel driven development: burn baby burn! Doesn’t seem like we’re headed back this way
To me the world between now and 2040 feels like a mix of SSP3 and SSP4, but neither is quite suitable. As existing scenarios become more unrealistic, it should be a priority for those in the IPCC to work with economists and political science practitioners to revisit and tweak these models to better reflect likely futures.
The shifting order will create new winners and losers. For longtime readers of this newsletter, you know my high-conviction thesis has been - and continues to be - that investing in adaptation and resilience is and will continue to be a winner in this future, choppier, world. A lot to think about going into the new year.
I’ll be back in the new year, refreshed with more to come. Until then, wishing you a pleasant festive period with your loved ones. And as for the rest of you: