The business of climate change
Covid-19 has given a sense of how hard it will be to deal with climate change. As economic activity has stalled, carbon-dioxide emissions have fallen sharply. But to have a decent chance of keeping Earths mean temperature less than 2C above pre-industrial levels, net greenhouse-gas emission must fall close to zero by mid-century. That requires, if not halting the world economy in its tracks, then rewiring it. For that reason climate change is about to upend the corporate world. Harassed by consumers, regulators and lawyers, businesses greatest hope may lie in technological change. Big oil firms such as BP are talking up their investments in renewable power. Giant new businesses, meanwhile, are gearing up to support the switch from petrol-powered cars to electric ones: call it the Teslaverse. Euphoria (and doubts) surround one firm that aspires to be the next Tesla. Efforts to rein in climate change will also transform geopolitics. Oil fuelled the cars, wars, economics and politics of the 20th century. Now the world is in the throes of an energy shock that is speeding up the shift to a new order. Daniel Yergin, who three decades ago wrote a classic account of the quest for oil and its impact, has written a new survey of the world of energy. What it means to dominate that world is changing, to Chinas advantage. China produces more than 70% of the worlds solar modules and 60% of its rare earths, which have properties useful in electric motors, among other things. China is already engaged in electricity infrastructure diplomacy overseas. This may matter as much to its 21st-century power as sea-lane-dominance did to American 20th-century supremacy. The global economy is on the mend, albeit operating at about nine-tenths capacity, much as The Economist argued in April, when we coined the term 90% economy to describe what would happen once lockdowns began to be lifted. Analysts are pencilling in global GDP growth of 7% or more in the third quarter of this year, compared with the second. But there is a lot of variation. China is on track to expand by roughly 5% in the third quarter compared with a year earlier, a smidgen below the 6% growth it recorded last year. In Europe, Germany is recovering more robustly than most countries, but there are worries that the economy has become too reliant on government bail-outs. In Britain there are fears of mounting unemployment, especially among poorer people living in well-off areas. A UN assessment published his week on the progress made in stemming the global loss of species made depressing reading. Not one of the 20 targets adopted by 196 countries in a convention on biodiversity in 2010 has been met. And the latest biennial Living Planet Report from the WWF, an environmental group, found that animal populations worldwide shrank by an average of two-thirds between 1970 and 2016. The falls were greatest in the tropics. In Latin America and the Caribbean animal populations fell by 94%, on average, during the period. It is some comfort that around the world biodiversity and climate change have become big political issues. In Australia koala bears have almost brought down a state government. And in America Joe Biden seems likely to make climate change his signature issue in the presidential-election campaign. Even Ethiopias prime minister, Abiy Ahmed, who won the Nobel peace prize in 2019 for his efforts to make peace with Eritrea, admits his countrys democratic transition is under threat. Mr Abiy has been unable to patch the deep ethnic fissures that threaten to tear Ethiopia apart. This year alone at least 147 fatal clashes have left several hundred dead. Tensions have been building for months. Accused of trying to extend his time in office because of the postponement due to covid-19 of an election, Abiy insists there is no reversal of democratic reforms. In Uganda, meanwhile, primary elections have been held. But Yoweri Museveni, president since 1986, is probably not too worried. He commands a dominant party in which there is fierce competition for every position but his own.