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The Coming Post-COVID Anarchy

The Pandemic Bodes Ill for Both American and Chinese Power—and for the Global Order
By Kevin Rudd – In January and February of this year, there was audible popping of champagne corks in certain quarters of the U.S. foreign policy establishment. What some observers had long seen as this era’s giant geopolitical bubble had finally begun to deflate. China’s Communist Party leadership, the thinking went, was at last coming apart, a result of its obsession with official secrecy, its initial missteps in responding to the novel coronavirus outbreak, and the unfolding economic carnage across the country.

Then, as China began to recover and the virus migrated to the West in March and April, irrational jubilation turned to irrational despair. The commentariat greeted with outrage any possibility that the pandemic might in fact help China emerge triumphant in the ongoing geopolitical contest with the United States. This concern was a product of China’s seemingly cunning remolding of the narrative on the origins of the virus, the brutal efficiency of the Chinese authoritarian model in containing it, and Beijing’s global COVID-aid campaign. China’s own nationalist commentariat happily piled on, delighting in the United States’ distress and noting the supposed contrast between Chinese largesse and American indifference: the “people’s war” against COVID-19 had been won, and the virtues of China’s political model had been vindicated.

Yet despite the best efforts of ideological warriors in Beijing and Washington, the uncomfortable truth is that China and the United States are both likely to emerge from this crisis significantly diminished. Neither a new Pax Sinica nor a renewed Pax Americana will rise from the ruins. Rather, both powers will be weakened, at home and abroad. And the result will be a continued slow but steady drift toward international anarchy across everything from international security to trade to pandemic management. With nobody directing traffic, various forms of rampant nationalism are taking the place of order and cooperation. The chaotic nature of national and global responses to the pandemic thus stands as a warning of what could come on an even broader scale.

As with other historical inflection points, three factors will shape the future of the global order: changes in the relative military and economic strength of the great powers, how those changes are perceived around the world, and what strategies the great powers deploy. Based on all three factors, China and the United States have reason to worry about their global influence in the post-pandemic world.

Contrary to the common trope, China’s national power has taken a hit from this crisis on multiple levels. The outbreak has opened up significant political dissension within the Chinese Communist Party, even prompting thinly veiled criticism of President Xi Jinping’s highly centralized leadership style. This has been reflected in a number of semiofficial commentaries that have mysteriously found their way into the public domain during April. Xi’s draconian lockdown of half the country for months to suppress the virus has been widely hailed, but he has not emerged unscathed. Internal debate rages on the precise number of the dead and the infected, on the risks of second-wave effects as the country slowly reopens, and on the future direction of economic and foreign policy.

The economic damage has been massive. Despite China’s published return-to-work rates, no amount of domestic stimulus in the second half of 2020 will make up for the loss in economic activity in the first and second quarters. Drastic economic retrenchment among China’s principal trading partners will further impede economic recovery plans, given that pre-crisis, the traded sector of the economy represented 38 percent of GDP. Overall, 2020 growth is likely to be around zero—the worst performance since the Cultural Revolution five decades ago. China’s debt-to-GDP ratio already stands at around 310 percent, acting as a drag on other Chinese spending priorities, including education, technology, defense, and foreign aid. And all of this comes on the eve of the party’s centenary celebrations in 2021, by which point the leadership had committed to double China’s GDP over a decade. The pandemic now makes that impossible.

As for the United States’ power, the Trump administration’s chaotic management has left an indelible impression around the world of a country incapable of handling its own crises, let alone anybody else’s. More important, the United States seems set to emerge from this period as a more divided polity rather than a more united one, as would normally be the case following a national crisis of this magnitude; this continued fracturing of the American political establishment adds a further constraint on U.S. global leadership.

Meanwhile, conservative estimates see the U.S. economy shrinking by between six and 14 percent in 2020, the largest single contraction since the demobilization at the end of World War II. Washington’s fiscal interventions meant to arrest the slide already amount to ten percent of GDP, pushing the United States’ ratio of public debt to GDP toward 100 percent—near the wartime record of 106 percent. The U.S. dollar’s global reserve currency status enables the government to continue selling U.S. treasuries to fund the deficit. Nonetheless, large-scale debt sooner or later will constrain post-recovery spending, including on the military. And there’s also risk that the current economic crisis will metastasize into a broader financial crisis, although the Federal Reserve, other G-20 central banks, and the International Monetary Fund have so far managed to mitigate that risk.

Chinese leaders have a simple Leninist view of the United States’ power. It rests on two fundamentals: the U.S. military and the U.S. dollar (including the depth and liquidity of the U.S. financial markets that underpin it). Everything else is detail.

All states are mindful of what Leninists call “objective power” and the willingness of the great powers to deploy it. But the perception of power is equally important. China is now working overtime to repair the enormous damage to its global standing that resulted from the geographical origin of the virus and Beijing’s failure to contain the epidemic in the critical early months. Whatever China’s new generation of “wolf-warrior” diplomats may report back to Beijing, the reality is that China’s standing has taken a huge hit (the irony is that these wolf-warriors are adding to this damage, not ameliorating it). Anti-Chinese reaction over the spread of the virus, often racially charged, has been seen in countries as disparate as India, Indonesia, and Iran. Chinese soft power runs the risk of being shredded.

For different reasons, the United States does not come out of the crisis much better. The world has watched in horror as an American president acts not as the leader of the free world but as a quack apothecary recommending unproven “treatments.” It has seen what “America First” means in practice: don’t look to the United States for help in a genuine global crisis, because it can’t even look after itself. Once there was the United States of the Berlin airlift. Now there is the image of the USS Theodore Roosevelt crippled by the virus, reports of the administration trying to take exclusive control of a vaccine being developed in Germany, and federal intervention to stop the commercial sale of personal protective equipment to Canada. The world has been turned on its head.

The crisis also appears to have shredded much of what was left of the U.S.-Chinese relationship. In Washington, any return to a pre-2017 world of “strategic engagement” with Beijing is no longer politically tenable. A second Trump term will mean greater decoupling and possibly attempted containment, driven by Trump’s base and widespread national anger over the origins of the virus, although this strategy will be rendered incoherent at times by the president’s personal interventions. In a Biden administration, strategic competition (and decoupling in some areas) will continue, likely to be executed on a more systematic basis and leaving some scope for cooperation in defined areas, such as climate, pandemics, and global financial stability. On balance, Beijing would prefer Trump’s reelection over the alternative, because it sees value in his tendency to fracture traditional alliances, to withdraw from multilateral leadership, and episodically to derail the United States’ China strategy. Either way, the U.S. relationship with Beijing will become more confrontational.

In Beijing, China’s response to the United States’ ever-hardening posture is now under intense review. This process began in 2018, during the first full year of the U.S.-Chinese trade war. It has now been intensified, because of the pandemic and its international consequences. The review is part of a broader internal debate in Beijing about whether China’s national strategy, at this stage of its economic and military development, has in recent years become insufficiently reformist at home and excessively assertive abroad.

Prior to Xi, the strategy was to wait until the correlation of economic and military forces shifted in China’s favor before seeking any major adjustments to the regional and international order—including on Taiwan, the South China Sea, and the U.S. presence in Asia. Under Xi, Beijing has become significantly more assertive, taking calculated—and so far successful—risks to bring about changes on the ground, as demonstrated by island reclamation in the South China Sea and the Belt and Road Initiative (BRI). The United States’ reaction to this approach has been deemed to be manageable, but that calculation could change in a post-trade war, post-pandemic world. Xi could seek to ameliorate tensions with the United States until the pandemic is lost to political memory; or facing internal challenges, he could take a more nationalist approach abroad. Both of these tendencies will likely appear in Chinese policy behavior until China’s internal policy review process concludes, which may not happen until shortly before the 20th Communist Party Congress in 2022. But if Xi’s style thus far is any indication, he is likely to double down in the face of any internal dissent.

That would mean hardening China’s posture toward the United States, including on issues such as Taiwan, the single most destabilizing element in the U.S.-Chinese relationship. Beijing is likely to sharpen its strategy of shrinking Taiwan’s international space, even as U.S. efforts to secure Taiwan’s readmission to the World Health Organization intensify. Given that this comes on the heels of other recent U.S. efforts to upgrade official-level engagement between Washington and Taipei, the understandings of the “one China policy” that underpinned the normalization of U.S.-Chinese relations in 1979 could begin to unravel. If these understandings collapse, the prospect of some form of military confrontation over Taiwan, even as the inadvertent result of failed crisis management, suddenly moves from abstraction to reality.

Prior to the current crisis, the postwar liberal international order was already beginning to fragment. The United States’ military and economic power, the geopolitical fulcrum on which the order rested, was being challenged by China, first regionally and more recently, globally. The Trump administration was adding to the order’s problems by weakening the U.S. alliance structure (which in conventional strategic logic would have been central to maintaining a balance of power against Beijing) and systematically delegitimizing multilateral institutions (effectively creating a political and diplomatic vacuum for China to fill). The result has been an increasingly dysfunctional and chaotic world.

The current crisis is likely to reinforce such trends. Strategic rivalry will now define the entire spectrum of the U.S.-Chinese relationship—military, economic, financial, technological, ideological—and increasingly shape Beijing’s and Washington’s relationships with third countries. Until the current crisis, the notion that the world had entered a new Cold War, or Cold War 2.0, seemed premature at best; the two countries’ financial systems were so intertwined that true decoupling was unlikely, and there seemed to be little prospect of geopolitical or ideological proxy wars in third countries, a defining feature of the U.S.-Soviet rivalry.

But the new threats that both sides are making as COVID-related tensions grow could change all that. A decision in Washington to end U.S. pension-fund investments in China, restrict future Chinese holdings of U.S. Treasury bonds, or start a new currency war (exacerbated by the recent launch of China’s new digital currency) would quickly remove the financial glue that has held the two economies together; a decision in Beijing to increasingly militarize the BRI would raise the risk of proxy wars. Moreover, as U.S.-Chinese confrontation grows, the multilateral system and the norms and institutions underpinning it are beginning to falter. Many institutions are themselves becoming arenas for rivalry. And with a damaged United States and a damaged China, there is no “system manager,” to borrow Joseph Nye’s phrase, to keep the international system in functioning order. It may not yet be Cold War 2.0, but it is starting to look like Cold War 1.5.

There are better alternatives to this scenario. They depend, however, on significant political and policy change in Washington; a reformist and internationalist readjustment in Beijing; the development of a new architecture of détente between the United States and China (drawing on the U.S.-Soviet experience), which places clear parameters around competition in order to avoid military disaster; and efforts by other countries to pool political and financial resources to preserve the essential multilateral institutions of the current system as a form of institutional triage until there is a return to geopolitical stability. History is not predetermined. But none of this will come about unless political leaders in multiple capitals decide to change course. With the wrong decisions, the 2020s will look like a mindless rerun of the 1930s; the right decisions, however, could pull us back from the abyss. more>

Updates from Georgia Tech

Interactive Tool Helps People See Why Staying Home Matters During a Pandemic
By Brittany Aiello – Social distancing has become one of the most impactful strategies in the battle to contain the spread of COVID-19, and a new interactive modeling tool can help people understand why it is so important to “flatten the curve.” Known as VERA, the artificial intelligence (AI) application was developed by researchers at the Georgia Institute of Technology to raise awareness about why it matters that individuals distance themselves during an infectious disease outbreak.

Led by College of Computing faculty members Ashok Goel and Spencer Rugaber, and Design & Intelligence Laboratory graduate researchers William Broniec and Sungeun An, the VERA Epidemiology project uses AI techniques to empower users to build their own visual models that simulate the impact of social distancing. The project evolved from earlier National Science Foundation-supported research on a virtual ecological research assistant that enables researchers to explore “what if” experiments about complex ecological phenomena.

The beauty of VERA is that users do not need a background in complex mathematical equations or computer programming to explore it. A high school student interested in finding out what it looks like to “flatten the curve” can log in to VERA and investigate. A parent handling middle school science lessons from home can log in to VERA and demonstrate the reason that it is important that they do lessons from home during the COVID-19 outbreak. more>

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Authoritarianism and state surveillance cannot become a post-pandemic acceptable norm

By Nicholas Waller – In the space of just a few weeks, the COVID-19 pandemic has plunged much of the world into a state suspended paralysis. What’s more, this crisis has laid bare just how unprepared we in the developed world are when a major global catastrophe strikes at the very heart of our way of life. But if the coronavirus pandemic has taught us anything, it is that delaying prudent policymaking has deadly and economically ruinous consequences.

When the first signs of an outbreak began in China in late 2019, the earliest warnings were first covered up by a paranoid Communist regime that was intent on keeping the world uninformed about the deadly nature of the disease. Despite multiple alarms in Europe and the United States shortly after the new year, those warnings went unheeded.

While the lessons to be learned from the COVID-19 pandemic await an in-depth review once the worst phase of the crisis passes, the world is now left with finding a way to somehow tame the disease while at the same time picking up the pieces of the world’s economies and forging ahead with a more secure post-pandemic existence.

In order to do that, the world’s democracies must acknowledge the disturbing speed by which aggressive and heavy-handed measures were enacted by officials in nations with little-to-no-history of authoritarianism as part of their efforts to combat the spread of the virus. This has led to many of the core tenants of modern liberal democracy becoming the main casualties of the COVID-19 crisis as strict lockdowns, curfews, restrictions on the press, public shaming of those who question the authorities, and restrictions on the right to assemble became the order of the day.

The distinctly Orwellian character of each of the aforementioned acts is impossible to ignore. This means that each of the leading nations of the free world must come to the harsh realization that once certain inalienable rights are stripped away, it is nearly impossible to ever recoup what has been forever lost – the post-9/11 world taught each and every one of us that simple but fundamental lesson.

When the world moves into the next uncharted phases of the post- COVID-19, Europeans must be at the forefront of how to demonstrate the means by which democratic principles can be preserved.

As national economies contract, resources will shrink, and governments will struggle to provide for their own populations. But by pooling together the vast scientific, manufacturing, and innovative resources that the EU possesses – and working in tandem with its close allies in the US, UK, and Canada – Europe can produce and store vital medical and telecommunications resources that would wean itself off a destructive dependence on Chinese supplies, part of which contributed to the sense of malaise and outright hubris that contributed to the severity of the pandemic. more>

Leadership Reconceptualized: A Compass for the Leaders of the New Global Era

By Vassili Apostolopoulos – Deconstructing the New Era, is a formidable task. As I am writing these lines, the world has nearly stopped, with more than 180 countries fighting the Coronavirus, imposing different forms of social distancing and lockdown measures. The pandemic of COVID-19 has changed the world in ways and to lengths that we can still not begin to fathom.

Economics, politics, international relations, and governance, on all levels seem to be fundamentally changing. The ways in which firms, governments, international organizations, societies, and even families and individuals operate will change forever. Until a fully-fledged and widely available vaccine alleviates the health risk and contributes to efficiently managing the crisis, social distancing, restrictive measures in work and travel, fear and insecurity, instability and uncertainty will be part of our lives. And, even after the vaccine, the major global effort of preventing the next pandemic, by building a sustainable early warning system with solid safeguards and rapid response mechanisms across the globe and within states and societies will need to become our top priority.

Averting the next Pandemic, is the foremost collective responsibility, for leaders of all fields; from politicians to doctors, from health experts to corporate leaders, from researchers to philanthropists; we all need to contribute to the race for a vaccine, for effective and accessible cures, but also, to develop the action plan which will change the habits and the vicious cycles that generate new viruses. In our interconnected world, where poor hygienic conditions in a wet market in China, can within months bring the world into a standstill, global governance undoubtedly requires an overhaul.

The same applies to dealing with the root causes of infectious diseases such as influenzas, the bird flu, and then the swine flu -the previous pandemic- for which we had been warned a year in advance, in 2008 and had failed to act. More systematic global monitoring, early warning and proactive prevention models, need to be developed on a global level. Crucial institutions like the World Health Organization and the United Nations will need to be revamped, strengthened and upgraded. Shortcomings in global leadership during the COVID-19 pandemic came at a great cost, and a major global crisis was treated very poorly and highly unsystematically in some of its most decisive phases.

Leadership cannot be a la carte, and global cooperation in the face of existential global crises cannot be elective. more>

Out of the tragedy of coronavirus may come hope of a more just society

The lessons of necessity and solidarity learned during the pandemic must inform a transition to a just society within ecological limits in its aftermath.
By Michael D Higgins – The global loss of life and disruption to our daily lives resulting from the coronavirus pandemic is unprecedented in living memory. We have learned through tragedy that we have a shared, globalized vulnerability common to all humanity. We are learning how we, as a matter of urgency, must make changes to improve resilience in a range of essential areas: employment, healthcare, housing. We have been forced to recognize our dependence on our public-sector frontline workers, and the state’s broader role in mitigating this crisis and saving lives.

The coronavirus has magnified the scale of our existing social crises and has proved, if ever proof were required, how government can act decisively when the will is there. It has shown us how so many are only ever one wage payment away from impoverishment, how those in self-employment or workers in the ‘gig’ economy lack security and basic employment rights, how private tenants in unregulated housing markets are at the mercy of their landlords, how many designated ‘key workers’ are appallingly undervalued and underpaid. Averting our gaze to these grim truths is no longer an option.

Years of eroding welfare states in many societies have had to give way, under pressure from the virus, to significant welfare actions as emergency measures. These reflect the impact decades of unfettered neoliberalism have had on whole sectors of society and economy, left without protection as to basic necessities of life, security and the ability to participate.

There is now a widespread, recovered recognition not only of the state’s positive role in managing such crises but of how it can play a decisive, transformative role in our lives for the better. The erosion of the state’s role, the weakening of its institutions and the undermining of its significance for over four decades has left us with a less just and more precarious society and economy. more>

The New World Normal

By Erol User – The COVID-19 pandemic will accelerate the shift towards multipolarity. Besides the United States and China, a stronger and more centralised European Union will emerge and behave like a more classically geopolitical entity.

Russia will become a buffer zone between China and Europe, India will play an increasingly large role in the global economy, and Turkey will seek to become a dominant force in the Mediterranean. There will be more integration within these various networks, but between these networks, there will be less economic interaction.

Even before COVID-19 became a pandemic, the global balance of power was inching inexorably towards a state of “multipolarity.” The period after the Soviet Union collapsed was a “unipolar” period, a time when the United States was, and behaved like, the most powerful country in the world. For a host of reasons, there is now more parity between the world’s strongest countries. The emergence of this multipolar environment has encouraged increased competition and protectionism. The current pandemic will accelerate that shift.

The logic of economic globalisation is dependent on a certain level of trust and goodwill between interconnected countries. At a minimum, a globalised economy requires a lack of fear, but now fear abounds. Borders are being closed and supply chains are being disrupted throughout the world in the race to limit the spread of COVID-19. Some of these supply chains and borders, like a pinched nerve, will revert to their previous state once the crisis has passed. Others, however, will not – especially in those cases where fear, suspicion, and politics become a primary motivating factor.

The clearest example of this will be in the decoupling of the US and Chinese economies. China currently enjoys a dominant position in many global supply chains. China achieved this highly and strategically important position because of its comparative advantage. It was, and is, able to produce and manufacture goods cheaper and quicker than its competitors.

Geopolitical advantage will now supplant comparative advantage. In the future, American companies will be looking for more than the cheapest producer, they will look for the cheapest producer and the most politically reliable supply chain. more>

A green reboot after the pandemic

In addition to threatening millions of lives, the Covid-19 pandemic has demonstrated human societies are capable of transforming themselves more or less overnight—there’s no better time.
By Sandrine Dixson-Declève, Hunter Lovins, Hans Joachim Schellnhuber and Kate Raworth – The Covid-19 coronavirus has forced entire countries into lockdown mode, terrified citizens around the world and triggered a financial-market meltdown. The pandemic demands a forceful, immediate response. But in managing the crisis, governments also must look to the long term. One prominent policy blueprint with a deep time horizon is the European Commission’s European Green Deal, which offers several ways to support the communities and businesses most at risk from the current crisis.

Covid-19 reflects a broader trend: more planetary crises are coming. If we muddle through each new crisis while maintaining the same economic model that got us here, future shocks will eventually exceed the capacity of governments, financial institutions and corporate crisis managers to respond. Indeed, the ‘coronacrisis’ has already done so.

The Club of Rome issued a similar warning in its famous 1972 report, The Limits to Growth, and again in Beyond the Limits, a 1992 book by the lead author of that earlier report, Donella Meadows. As Meadows warned back then, humanity’s future will be defined not by a single emergency but by many separate yet related crises stemming from our failure to live sustainably. By using the Earth’s resources faster than they can be restored, and by releasing wastes and pollutants faster than they can be absorbed, we have long been setting ourselves up for disaster.

On one planet, all species, countries and geopolitical issues are ultimately interconnected. We are witnessing how the outbreak of a novel coronavirus in China can wreak havoc on the entire world. Like Covid-19, climate change, biodiversity loss and financial collapses do not observe national or even physical borders. These problems can be managed only through collective action that starts long before they become full-blown crises.

The coronavirus pandemic is a wake-up call to stop exceeding the planet’s limits. more>

Updates from McKinsey

Coronavirus: Five strategies for industrial and automotive companies
To rebound from the coronavirus pandemic, industrials must undertake a journey that begins with resolve and ends with fundamental reform.
By Joe Dertouzos, Heike Freund, Michael Mischkot, Asutosh Padhi, and Andreas Tschiesner – We are still in the early stages of a global health crisis resulting from the coronavirus pandemic. Protecting lives is the first priority, but we must also protect our livelihoods. For automotive and industrial companies, surviving and emerging stronger at the far end of this crisis will require thinking beyond the next fiscal quarter. Success in the long run will require a journey across five stages: Resolve, Resilience, Return, Reimagination, and Reform.

The first stage, Resolve, involves determining the scale, pace, and depth of action required. To do so, companies in advanced industries must take the following steps:

  • establishing a nerve center to steer the organization, serve as the information hub, manage risk and responses, and align all stakeholders
  • protecting employees by making their health the paramount concern and adjusting production as needed
  • screening and safeguarding the supply chain by understanding risks and taking action to address disruption
  • adapting marketing and sales by identifying and mitigating the risks of declining sales while meeting critical customer needs
  • maintaining financial health by improving liquidity, reducing costs, and establishing a spend control tower

During the Resolve phase, companies must also make difficult choices, such as suspending production facilities, suspending discretionary spending, and furloughing workers. These decisions will require a comprehensive understanding of the situation, including data-driven scenarios for market evolution.

Consider the automotive industry. It is difficult to predict how the pandemic will affect sales in the European Union and the United States, two regions where coronavirus penetration is still emerging. We draw insights about potential developments by looking at the evolution of auto sales in China over the first quarter, since this country has already “bent the curve” and begun to recover from the coronavirus.

As industrials experience virus-related shutdowns and economic pressures, they should move quickly to address near-term cash management challenges and broader resiliency issues. more>

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Simple steps to reduce the odds of a global catastrophe

By Warwick J. McKibbin and David Levine – The novel coronavirus COVID-19 may become a footnote in history – a disaster narrowly averted. It could also become a global pandemic similar to some of the worst pandemics of the twentieth century.

For example, assume the COVID-19 is as easy to spread and as dangerous as the 1957 Asian flu. Based on the epidemiological estimates of mortality and morbidity rates from that experience, our best estimate from a 2006 study on pandemics was that such a virus might kill more than 14 million people and shrink global GDP by more than $500 billion  (McKibbin and Alexandro Sidorenko. Global macroeconomic consequences of pandemic influenza. Australian National University, 2006). These estimates are far higher than the costs were in 1957 because our world is increasingly connected and urban. Preliminary results currently being updated  in 2020 suggest even higher numbers for worse case COVID-19.

We hope that scientists can rapidly develop a vaccine. Unfortunately, there is much we do not yet know about this new virus.

At the same time, we do know the virus mostly spreads when people sneeze or cough. The germs then spread when people inhale infected droplets. The germs also land on surfaces. People who touch their own mucus or an infected surface then spread the virus on their hands. For most respiratory infections, perhaps half the cases spread from people’s hands.

Fortunately, even without a vaccine, we already know how to slow an epidemic of respiratory infections.

If everyone coughed or sneezed into their elbow or a tissue (not into the air or on their hands), the germs would not travel very far. And if everyone washed hands with soap before preparing food or eating, that route of transmission would end. more>

Updates from McKinsey

Climate risk and decarbonization: What every mining CEO needs to know
Building a climate strategy won’t be quick or easy—but waiting is not an option.
By Lindsay Delevingne, Will Glazener, Liesbet Grégoir, and Kimberly Henderson – In the mining industry, the impact of climate change and how the industry can respond to it has increasingly been a topic of discussion over the past decade.

Mining is no stranger to harsh climates; much of the industry already operates in inhospitable conditions. But forecasts of hazards such as heavy precipitation, drought, and heat indicate these effects will get more frequent and intense, increasing the physical challenges to mining operations.

Under the 2015 Paris Agreement, 195 countries pledged to limit global warming to well below 2.0°C, and ideally not more than 1.5°C above preindustrial levels. That target, if pursued, would manifest in decarbonization across industries, creating major shifts in commodity demand for the mining industry and likely resulting in declining global mining revenue pools. Mining-portfolio evaluation must now account for potential decarbonization of other sectors.

The mining sector itself will also face pressure from governments, investors, and society to reduce emissions. Mining is currently responsible for 4 to 7 percent of greenhouse-gas (GHG) emissions globally. Scope 1 and Scope 2 CO2 emissions from the sector (those incurred through mining operations and power consumption, respectively) amount to 1 percent, and fugitive-methane emissions from coal mining are estimated at 3 to 6 percent. 1 A significant share of global emissions—28 percent—would be considered Scope 3 (indirect) emissions, including the combustion of coal.

The mining industry has only just begun to set emission-reduction goals. Current targets published by mining companies range from 0 to 30 percent by 2030, far below the Paris Agreement goals. Mines theoretically can fully decarbonize (excluding fugitive methane) through operational efficiency, electrification, and renewable-energy use. Capital investments are required to achieve most of the decarbonization potential, but certain measures, such as the adoption of renewables, electrification, and operational efficiency, are economical today for many mines. more>

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