Climate change is striking harder and more rapidly than expected, and the global economy is facing an increased risk of stagnation, according to the Davos World Economic Forum’s most recent Global Risks Report.
“The world cannot wait for the fog of geopolitical and geo-economic uncertainty to lift,” said the report. “Opting to ride out the current period in the hope that the global system will ‘snap back’ runs the risk of missing crucial windows to address pressing challenges.”
The World Economic Forum (WEF) said that it was the first time in the 15-year history of the report that environmental concerns were the top long-term risks in the Global Risks Perception Survey. It said climate-related issues dominated all the top-five long-term risks by likelihood among members of the WEF’s multi-stakeholder community
The report said the last five years are expected to be the warmest on record, and that natural disasters are becoming more intense and more frequent, including unprecedented extreme weather throughout the world during the past year alone. It also said that global temperatures are on track to increase by at least 3°C toward the end of the century, which is twice what climate experts say is the limit to avoid the most severe economic, social, and environmental consequences.
Powerful economic, demographic, and technological forces are shaping a new balance of power that has resulted in an “unsettled geopolitical landscape” in which states are increasingly viewing opportunities and challenges through a unilateral view, the report also said.
“What were once givens regarding alliance structures and multilateral systems no longer hold as states question the value of longstanding frameworks, adopt more nationalist postures in pursuit of individual agendas and weigh the potential geopolitical consequences of economic decoupling,” said the report. “Beyond the risk of conflict, if stakeholders concentrate on immediate geo-strategic advantage and fail to re-imagine or adapt mechanisms for coordination during this unsettled period, opportunities for action on key priorities will slip away.”
The WEF said climate-related economic risks threaten a “2008-style systemic collapse,” unless net human-caused carbon dioxide emissions fall by 50% in 10 years relative to 2010, and to net zero by 2050. It said reaching these targets will require “serious, interconnected economic and societal transitions” at macro and micro levels that depend on technological innovation and serious commitments from governments and businesses.
“So far, however, commitments are inadequate given the urgency of the challenge and current trends are not encouraging,” said the report. “Most critically, demand for energy is continuing to increase and much of this demand is still being met by fossil fuels.”
The WEF said that global energy demand increased 2.3% in 2018, which was the fastest pace in a decade, and that China, the US, and India account for nearly 70% of the rise. Additionally, energy demand is expected to grow by more than 25% in 20 years due to population growth, increasing incomes, and urbanization.
“There is a clear tension between calls to green society and the drive, particularly in emerging markets, to boost economic growth through investment in carbon-heavy projects such as roads, dams, energy resources, mines and ports,” the report emphasized. It also added that coal power plants built in Asia in the last decade accounted for nearly one-third of the total increase in carbon dioxide emissions in 2018. It also said annual subsidies for fossil fuels are approximately twice that of subsidies for renewable power globally.
“The next 10 years will shape the outlook for climate risk for the rest of the century,” said the report. “To avoid the worst consequences, global emissions need to peak almost immediately and decline precipitously.”