Climate, Energy, Resources, and the Redistribution of Power

Let's put things into perspective. It's worth our time. During the first century of the current era, Asia represented 76% of global GDP as far as we know. Contrast this with the 10% that had concentrated in Western Europe. A thousand years later that number had come down to 8.7% whereas in Asia it fallen to 70%. Everything changed with the Industrial Revolution. In 1820, Europe was worth 23% of world GDP. Meanwhile, Asia had tumbled down to 59%. In this regional context, China alone was responsible for 32% of the world pie. Industrial dynamics weren't confined to Western Europe, however. The United States of America, Canada, Australia, and New Zealand became regional economic hubs of considerable heft. In 1820, these four were worth 2% of world GDP but, in 1998, that figure had climbed to 25%. If you add Europe’s 20% to the equation you’ll find that, at the close of the millennium, the US-led West controlled almost half the wealth generated in the world, in sharp contrast to Asia’s 37%. 

 

We might then claim that the rise of the West happened fairly quickly over the past two hundred years and that, for most of recorded history, Asia, with the largest population density in the world, has held the biggest share of the global economy. In light of the above, it shouldn't surprise us that a plethora of studies in recent years converge in their forecasts on the consolidation of an Asian renaissance: in 2050, three of the world’s biggest economies will hail from Asia. And just how will we rank these? China, the US, India, and Japan. 

 

If we consider the geopolitical standpoint we can get a new snapshot of this dynamic. Let’s look at G7 countries (Canada, France, Germany, Italy, Japan, United Kingdom, and US). They now represent about 40% of global GDP. Down from 60% in 1975. The economic weight of the seven leading emerging nations (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) matches two-thirds of the G7’s scale. This relationship is likely to turn on its head by 2050. China is on track to become the largest economy before the decade comes to a close and India could outpace the EU over the next 20 years. However, growing GDP in emerging and developing nations may not necessarily lead to better standards of living for their citizens, which re-centres debate on a few structural challenges in these economies: increasing inequality, concentration of power, kleptocracy, disdain for environmental norms and labour standards and practices. These will certainly motivate unrest in societies that need accelerated growth to compete with each other and broadcast their development models across the world.  

Such economic competition will entail, as it always does, a frantic run on natural resources. Much remains unmapped and untapped. Whether we’re considering hydrocarbons in the eastern Mediterranean or the Arctic, ores in Africa or Latin America, these play an increasingly vital role in technological supply chain. Therefore, let us consider the interactions that bring together economic competition, power shifts, resource extraction, and climate change. It’ll help us understand risks that may worsen over the coming years and the consequences they’ll bring about.  

Several studies claim that, if we stay on our current path, global warming should exceed 1.5 Celsius over the next two decades and approach 2°C by 2050. World temperatures may reach that stage for the first time in the next five years. Each additional 0.5 degrees will feed the intensity and frequency of extreme weather events — drought, forest fires, floods — and no less in places where such things seldom happened. Rising temperatures also mean more polar cap melting and calving, and higher sea levels. These changes already take a toll on the environment, public health, food security, and access to water. Likewise, they impact our own safety and human development. It is estimated that weather events have displaced an average of 23 million people per year over the past decade, which aggravates migratory pressures. By 2050, over 200 million people may require humanitarian aid every year, partly due to weather-related catastrophes.  

In this context, a growing appetite for resources (energy, food, and raw materials) ratchets up extreme pressure on the planet, representing half of greenhouse gas emissions, over 90% of biodiversity loss, and stress on water resources. Without boosting circular economies or improving resource sustainability, we will hardly achieve climate neutrality by 2050. According to a recent study by the European Commission, the need for key raw material for technology and other strategic sectors will ramp up between 2030 and 2050, per currently available data. For example, the EU estimates it will need 18 times more lithium and 5 times more cobalt than it does now by 2030, in order to pursue the improvement of vehicle batteries and energy storage. In 2050, it is expected to need almost 60 times more lithium and 15 times more cobalt, which entails heightened competition among major extractive economies over the next decades; nobody’s hanging back. Currently the EU extracts and produces under 5% of critical raw materials, whereas EU industry consumes around 20% of said materials. China supplies the EU with 98% of the rare earth elements in consumes; Turkey, 98% of the boron and South Africa 71% of the EU’s platinum needs. Demand for rare earth minerals used in permanent magnets (for electric vehicles, digital technologies, or wind turbine generators) may increase tenfold by 2050. This must be seen in a global context: rising demand for raw materials owing to population growth, industrialization, decarbonisation in mass transport, energy systems and other industrial sectors, and much of that demand comes from developing countries; likewise, it is necessitated by new technological applications.  

 

At this juncture, the World Bank estimates that demand for metals and other minerals will rise, keeping pace with climate ambitions. The most significant illustration of this phenomenon are battery storage facilities. Growing demand for relevant metals (aluminium, cobalt, iron, lead, lithium, manganese, and nickel) is expected to rise by 1000% by 2050 in any scenario where mean world temperature rises to 2°C, in comparison to one where the status quo is preserved. In other words, EU countries rely fundamentally on imports of crucial raw materials, many of which indispensable to core industries and sectors of future relevance such as auto, foundries, aviation, information technology, health, and renewable energy.  

Under an accelerating dynamic of competition for power and resources, if not for territory and ideological dominance, EU countries must roll back their excessive reliance on third countries to avail themselves of indispensable raw materials if they are to increase the resilience of essential supply chains and therefore secure provisioning, energy transition and digital transformation.  

What this will mean, given that such raw materials are scarce on European soil, is that democracies must accelerate scientific innovation with the resources at hand, meet climate goals, avoid excessive reliance and dependence on non-member countries, and this contribute to bad wealth distribution cycles impacting local populations, bad governance and disregard for human rights, attrition of local ecosystems and adding to climate unsustainability. If they are able to balance autonomy with interdependence while avoiding the pitfalls above, and maybe even defusing them, perhaps the coming decades won't prove a total loss. However, the perils of flirting with the irrational and turning your back on the common good remain: years of unbridled competition for resources and power among more and more regional powers, with little regard for diplomacy and no time for sensible, shared management of the planet we all live in.