This article is part of the Futures Forecasting series. We’ve asked experts to identify crucial trends – from a shortlist of categories – that will influence national security out to 2035 and how those trends might intersect in a future scenario.
In this article, Wesley Morgan concludes that the pressures of climate change will see economies tansform to suit a post-carbon future, which will precipitate a shift in industrial bases and markets, changing the character of global competition.
1Economics: Major powers are shifting toward a post-carbon future
In the longer run of history, the 2015 Paris Agreement will be seen as a key moment, precipitating a global shift in investment, and prompting governments to develop industrial policies for green technologies. The product of incremental negotiations at the United Nations (UN), the Paris Agreement provides a framework for states to cooperate to transform their economies by 2050. Under the agreement, governments must pledge new targets to reduce carbon emissions every five years. Political pressure to meet commitments will only grow, as younger generations demand action and as countries reducing their emissions sanction others not doing their share.
Major powers are already reshaping their economies and integrating climate goals into traditional statecraft and foreign policy. The European Union for example has announced a Green Deal, a multi-trillion-dollar plan to cut emissions in half by 2030, and to achieve a carbon-neutral economy by 2050. The EU is also integrating climate goals into trade policy. At the 2020 World Economic Forum for example European Commission president Ursula von der Leyen pressed China to put a domestic price on carbon, or face a carbon tax in the lucrative European market. The EU wants trade deals, including a proposed deal with Australia, to include Paris Agreement commitments. The UK, the first major economy to legislate a net-zero emissions 2050 target, will host UN climate negotiations in 2021. This will be a key moment, with all states expected to pledge stronger Paris Agreement targets.
In the United States, things will change quickly if the Democrats win the White House in the November 2020 elections. Their candidate, Joe Biden, has announced a two-trillion-dollar plan to put the US economy on track for net-zero emissions by 2050, and has promised to host a summit of major economies in his first 100 days of office to galvanise global climate action. Under a Biden administration, the global goal of net-zero emissions would become a guide-star of US foreign policy. Biden says he would take ‘strong measures’ to ensure other states can’t undercut the US as it meets its own commitments, including by imposing a carbon border tax, and that trade agreements would be conditional on countries meeting their Paris targets. A Biden administration would also rally countries to pressure China – the world’s largest carbon emitter – to move away from coal-fired power and to stop financing fossil fuel projects through its Belt and Road Initiative. It would be a major setback for climate efforts if Trump were to win a second term. However, senior Republicans also see climate becoming central to US foreign policy. Former Republican Secretaries of State, James Baker and George Schultz, argue the US should forge a US-led climate alliance (working closely with the EU) to become a global front-runner in clean energy technologies and to cement a collective advantage over carbon-intensive competitors.
As signals from policymakers become clearer, major finance houses are divesting from the dirtiest of fossil fuels. Global investment in coal-fired power is in decline. Wall Street giant, Goldman Sachs has ruled out financing thermal coal mines or power stations. The world’s biggest miner, BHP, is getting out of thermal coal and has pledged to achieve net-zero emissions by 2050. So too has the global energy company BP. The centuries-long era of burning fossil fuels is at a pivotal moment; we are in the midst of an epochal shift towards post-carbon economies.
2Sovereignty: Geostrategic competition is intensifying in the Pacific
A more powerful China is relentlessly contesting the maritime security order in the Pacific Ocean. For the first time since the end of the Second World War (when US General Douglas MacArthur declared that the whole of the Pacific Ocean had become an ‘American lake’) a major power is challenging US power in the Pacific. For the past 75 years, US military preponderance – built on a series of fortified bases and an unrivalled mobile force in the north-west Pacific – has underpinned a stable regional security order. Now, China’s investment in military technologies and an ocean-going navy, as well as the fortification of artificial islands in the South China Sea, is unsettling that order.
This new dynamic has seen resurgent interest in Pacific island countries. The US and its allies and partners (particularly Australia, New Zealand and Japan) have stepped up engagement with island administrations. Of particular concern are reports that infrastructure loans could be used as leverage to secure a Chinese naval base in the Pacific islands. Regional democracies have promised to help protect the sovereignty of Pacific island states, and to ensure that island leaders are able to make decisions free from coercion.
Amidst this geostrategic competition, Pacific island governments insist climate change is their most pressing security concern. Commander of Fiji’s military, Rear Admiral Viliame Naupoto told the Shangri La Dialogue in 2019: “I believe there are three major powers in competition in our region … there is the US … there is China [and] the third competitor is climate change. Of the three, climate change is winning and climate change exerts the most influence on countries in our part of the world”. In 2018, Pacific leaders signed a regional security declaration affirming climate change is the ‘single greatest threat’ to the region. Pacific island states have lobbied the UN Security Council to address climate change, and called on countries to strengthen commitments under the Paris Agreement. Pacific island countries especially want Australia, the largest member of the Pacific Islands Forum, to develop more ambitious climate policy and join their diplomacy to strengthen global climate ambition.
2035 future forecast
By 2035, climate policy has become a central dynamic in economic and diplomatic rivalry between major powers. The United States and the European Union have established a transatlantic ‘climate alliance’, with common border measures designed to ensure their industries are not disadvantaged as they move toward a new green economy. Faced with pressure from a broad coalition of states, China has announced stronger reductions in greenhouse gas emissions, and is phasing out coal-fired power. Climate policy remains an area of both collaboration and competition between the US and China. With a common interest in securing a stable climate, Beijing and Washington are looking to shape global efforts to reduce emissions, competing where they can, and collaborating where they must. The race to become the global leader in clean energy technology has become fierce.
In 2035 the multilateral climate regime remains important for global cooperation. States are still expected to make ambitious pledges at UN climate summits every 5 years, and the 2035 climate summit – to be hosted in Sydney, Australia – is a defining moment in the push to reduce emissions by mid-century. Australia is working closely with Pacific island countries, as a significant diplomatic bloc within the UN, to strengthen global commitment to climate action.
The global economy has been transformed. Energy markets are dominated by renewables, which have pushed out more expensive forms of energy. Electricity grids are integrated across vast regions, draw on a range of renewable energy sources, and use small and large-scale energy storage. Remaining coal-fired power plants are slated for early retirement. States worldwide have developed sophisticated policy for a ‘just transition’ for workers in the coal industry. Transport is undergoing a revolution. In many countries, new petrol and diesel cars are banned. Achieving a net zero emissions global economy by 2050 remains a daunting task, but policymakers are increasingly resolute that it must and will be achieved.
What would this mean for Australia?
In the face of a global shift to post-carbon economies, Australia will reassess its national interests regarding climate change. The challenge will be seen as an opportunity for growth and international influence, rather than an economic cost. Australia will still be a major energy exporter, but prospects for coal and gas exports will have collapsed. New investment will be in the grids and transport infrastructure of tomorrow. With abundant supply, Australia will reposition as a major exporter of renewable energy. Australia will also be a major exporter of rare earth commodities needed for green technology. Undersea cables will supply cheap energy, particularly to South East Asia. Hydrogen exports to Japan will be booming. Rare earth minerals will be a key export to the EU.
By taking action on climate change Australia will also cement its place as a security partner of choice in the Pacific. Australia will continue to work with island nations to manage their maritime security and to respond to climate related disasters. Pacific island countries will be extremely wary of taking on infrastructure loans from China and will work closely with regional democracies to protect their own sovereignty. Working through the Pacific Islands Forum to pursue climate diplomacy will enhance Australian soft-power on the global stage, and will help Australia secure its place as a regional power.