Our Polycrisis Summer

If you were to unwrap the intersecting problems known as “the polycrisis,” you’d find climate change at the middle. Destructive floods, unaffordable energy, unsustainable debt burdens, and economic conflict between superpowers — the overheating of the planet plays a role in all of them.

This intersection of climate change, political economy, and global North/South dynamics are the focus of the work of both Carnegie’s Sustainability, Climate, and Geopolitics program and The Polycrisis platform hosted by Phenomenal World.

To kick off another hot summer, join the Carnegie Endowment for International Peace and Phenomenal World online on July 1, from 4 to 5pm EDT, for a conversation between Kate Mackenzie and Tim Sahay of The Polycrisis; David Wallace-Wells of the New York Times; and Noah Gordon of the Carnegie Endowment for International Peace.

Over the course of this discussion, each panelist will present one data point that encapsulates the polycrisis. They will take audience questions at the conclusion of the event.

Transcript

NOAH GORDON

Welcome everyone and thanks for joining us today. My name is Noah Gordon and I co-direct the Sustainability, Climate, and Geopolitics program at the Carnegie Endowment for International Peace, where we explore how climate change is changing the world. 

We're here today to talk about the intersecting problems known as “the polycrisis.” More   on that term in a moment. First, I want to introduce the three great guests we have for you today.

First, David Wallace Wells. David is a writer for New York Times opinion, a columnist for the New York Times magazine, and writes a great weekly newsletter for the paper on climate change, technology, and the future of the planet. He's also the author of the Uninhabitable Earth: Life after Warming. 

Second, we have Kate McKenzie. Kate is co-editor of the aforementioned Polycrisis newsletter/blog/platform/everything and an independent writer, researcher, and consultant who advises organizations pursuing the goals of the Paris agreement. She's also a fellow at the Center for Policy Development--a nonpartisan Australian think tank. Kate, thanks for being here. 

Finally, Tim Sahay. Tim is the co-editor of the Polycrisis at Phenomenal World and the co-director of the Net Zero Industrial Policy Lab at Johns Hopkins University. This event is co-hosted by the Carnegie Endowment and the Polycrisis so I want to give Tim and Kate a minute to introduce their newsletter and platform.

TIM SAHAY

Thanks Noah. We launched the Polycrisis about a year and a half ago and we set out to examine these intersecting crises in our economy, commodities, geopolitics, and climate. Our aim was to have a unified, joined up thinking on the political economy of climate, and to break some intellectual and political silos, where security people and climate people and commodities people who all are not able to come up with a common language. So we just said, let's create a pidgin where we teach each other some elementary concepts from each of these areas. 

Since we've started a year and a half ago, our world crisis of ecology and economics and empire has just continued to metastasize. It is really shaking confidence in all of our established world views and in ruling elites everywhere. We are here to discuss that today with you.

NOAH GORDON

I can’t recommend the Polycrisis highly enough. The same goes for David’s work. 

Here is how today's event is going to work. Each of us has a polycrisis story--a story on a crisis where the whole is even more dangerous than the sum of its parts as Adam Tooze has put it. Climate change plays an important role in each of our stories. We're going to discuss each polycrisis story for about 10 minutes before we take questions from you, the audience. You can use the Youtube chat to put questions in. Up first, we have Kate. Kate over to you.

KATE MACKENZIE

Thanks Noah! My story starts off with Guyana. Everyone has probably heard that Guyana has a huge amount of crude oil below its ocean waters – about 11 billion barrels – and an Exxon-led consortium is pumping out more than half a million barrels a day already and that is likely to rise quite considerably. 

A few months ago, a video of the country's president Dr. Irfaan Ali criticizing a journalist for questioning the ethics of selling oil went viral. The question is on the basis that the country is very exposed to sea level rise at five times the global average rate. It is true that sea level rise can be at different rates in different parts of the globe. This was a big juxtaposition of what wealthy countries and developing countries are able to do or should be entitled to do in terms of exploiting and profiting from fossil fuel reserves when there's almost no carbon budget left really to stay within 1.5 degrees of warming.

But Guyana is one of only a few new big frontiers in oil production. So I am going to pivot away from the questions about who's entitled to exploit what reserves and look at the fact that demand for oil is probably peaking--possibly peaked already by some measures. It's very contested when it's going to happen but we have some pretty impressive authorities saying that oil demand is going to peak in the next few years. The International Energy Agency says that it's going to peak before the end of this decade. 

Last month, the IEA put out another report projecting that the oversupply of oil--that the world will be producing too much oil--by the end of this decade will be to the tune of about eight million barrels a day and that global demand will fall. Global demand will be only 105 million barrels a day by 2030, but there'll be another 8 million barrels a day or so being produced. 

This is really unprecedented for the IEA to make this kind of warning. Typically, their role has been to warn of undersupply and underinvestment in future supply. But we're changing into this new world or moving into this new world where total demand for oil is plateauing and is not too far away from declining.

Oil producers were very critical of that projection but if you look at the countries that export oil and also the companies that produce oil, most of them are not acting like consumption is actually going to keep growing for decades--which is what most of them are saying will happen. Instead, they're planning for a future with shrinking oil demand.

Saudi Arabia is a perfect illustration of this. Commercial oil companies, that is big oil majors, are returning more cash to shareholders than they are investing in future production which is, again, a very unusual situation especially when prices have been so high as they have in the last couple of years since the invasion of Ukraine. Saudi Arabia being a country rather than a company (they of course have a national oil company), but they have a different obligation and a different imperative. They are keen to keep oil prices as high as they can for as long as possible in the face of declining demand (which is mostly due to electric vehicles, also including two or three wheelers, efficiency of ICE cars and so forth). 

We don't really know what this geopolitical and economic dynamic is going to look like because we've only really lived in a world with increasing oil demand. As the demand starts to decline, these countries and entities that are really dependent on oil, countries in particular, are going to face very different and interesting challenges that will in some cases be quite difficult. For some, it's fine. They can afford to invest in other industries which is what the wealthier petro states are doing, like Saudi Arabia and the United Arab Emirates--very furiously. I'll leave it there so we can discuss this a bit more. 

NOAH GORDON

There are so many different places to go with that, Kate. It's a really good point. I mean talking about peak oil demand, it really would be a revolutionary moment because we haven't hit peak demand for biomass or coal yet. I mean we just keep consuming more and more as you guys have written about on Polycrisis with your hockey sticks of doom and hope that Tim will talk about. I wonder if you could say more about how Saudi Arabia is responding to this. I guess, in some ways, they're pivoting to things that might not be so good for the climate, like petrochemicals, but Saudi also wants to invest more in energy transition in the Global South and even become a mining powerhouse itself. If you're concerned about emissions, how do we think about Saudi Arabia reacting to the possibility of peak oil demand?

KATE MACKENZIE

I think its reaction is not really that hopeful in some ways, but I do take it as a sign that (despite the rhetoric that is coming from the likes of Exxon and Saudi Aramco and OPEC officials) the peak of demand is within sight and it is being borne out by the behaviors of these entities as opposed to their words. The Kingdom of Saudi Arabia and Saudi Aramco's entities (which we can really effectively think of as the same thing) are doing things as you mentioned and diversifying into all kinds of things.

They have been diversifying furiously since the 2030 vision was announced in 2016. In particular, trying to create a tourism industry domestically, health tech industries, and so forth, and also, as you mentioned, investing in mining ventures. They're also investing in downstream processing. They own one of the biggest refineries in the US. A lot of it is economic diversification, but there is also this sort of hedging. For example, Aramco is an investor in a next generation solar wafer manufacturing technology firm.

TIM SAHAY

I just want to pick up on one of the geopolitical bits that Kate and I wrote about last year which is that the West is essentially finding it very hard to fund any energy transition in the Global South. So you have these COP meetings--the last COP meeting was in an oil kingdom that the Emiratis hosted and the next one is going to be in Azerbaijan. So there's this big question of: what are oil kingdoms and national oil companies going to be doing about the energy transition? They're sitting flush on a lot of cash as Kate mentioned. 

What the West is saying to them is “look, we cannot get any money from our congresses as the rightwing is rising in the US and in Europe. So why don't we just outsource this energy transition business to you guys. You can fund the developing countries in Africa and Asia and invest in your version of the energy transition because money, for you, is flush and easy, whereas money for us is hard and tight.” That's a very explicit geopolitical development where the United States government is really working with the Saudis and Emiratis to fund developing countries. They created a new developing country fund at the last COP for expressly this purpose.

KATE MACKENZIE

I think that's right. The important thing though with these amounts of money, as is also the case with Western climate money or traditional kind of international climate finance,  is to look at: where is the money going? Where is it likely to go? And on what terms?

So the UAE fund that was announced at COP in December of last year for example,

is actually a profit seeking fund. It's going to buy shares in green companies. It's not grants, it’s not concessional loans. Maybe there will be some generous equity terms. These things are not necessarily fixing the climate finance gap as we understand it, which is that a lot of the Global South just doesn't have enough upfront accessible capital to implement the green transition, not to mention adaptation.

NOAH GORDON

One reason we care about oil consumption is extreme temperatures and we should always bring the focus back to climate impacts. Can you recount for our audience what happened at the Hajj and some of the consequences of extreme heat in Saudi Arabia this year?

KATE MACKENZIE

We were all really struck by this story where reportedly over more than 1,300 people died from the intense heat during the Hajj Pilgrimage a couple of weeks ago. Some of the scenes that were reported were really dire and upsetting: people being turned away from health facilities and just dying from this intense heat of up to 50° C.

Saudi Arabia has been aware of this heat for years and they've taken measures (making water available and tents and so forth available for pilgrims), but it's an illustration of limits to adaptation and those limits are usually going to affect the more vulnerable people. It wasn't the people coming early and staying in luxury hotels. It was people who probably didn't have access to those facilities and the facilities that were provided weren't adequate in those extreme conditions. We know that this is not something that is going to get better in future years.

NOAH GORDON

It's really horrifying and in our work we talk so often about the second and third order consequences of climate change, but as Jeff Goodell has written “the heat will kill you first” and the heat alone can be devastating. But on that cheerful note we're going to move to the next polycrisis story. David, what do you have for us? What's your story?

DAVID WALLACE WELLS

I'm going to talk about the social cost of carbon which may not sound like a Polycrisis problem since it's such a technical question, but it actually connects to a few things that we've already been talking about which is the obligations that the Western world may have but not actually pay towards people elsewhere and exactly how to think about and tabulate the cost of impacts like the horrible heat that we saw at the Hajj.

I want to use the social cost of carbon figure (which has limitations and questions about its applicability and relevance), as a form of moral math that economists and bureaucrats like to play with. This tells us something about the scale of the problem we're dealing with and the reason that I think it connects to the broader question of polycrisis is that it amounts to an attempted solution to the problem of the polycrisis which is to say “we're going to put one number on this whole mass of problems that are connected and then we're going to proceed from that number to some set of

approaches or responses.” That's quixotic in many ways but it's useful as a sort of stage setter for what we'll be talking about throughout this conversation.

The crude way of putting it is that this figure is an estimate for how bad it is to put an extra ton of carbon dioxide into the atmosphere. It has been argued about and estimated in different ways over the decades at this point. Last year, the Biden EPA came out with its formal revision of its own estimate which was $190 a ton in 2019

and that was I think about a 20-fold increase on Trump's estimate and about a four-fold increase on the Obama era estimate from the EPA. These are government bureaucrats; they're certainly climate minded and climate economists working elsewhere but they are also working for the Biden Administration (they're not simply climate bedwetters or alarmists).  $190 a ton in 2019 translated into 2022 is about $220 a ton which means the US government is now officially estimating that the US economy is doing something on the order of a trillion dollars of damage a year based on its carbon emissions alone. 

Because most people who study climate change would tell you that, up to this point, the US is still on net benefiting from warming as opposed to suffering from it, that calculus implies that we are actually exporting something on the order of a trillion dollars of damage a year abroad and that is just an astonishing figure. It is a number so large that people yell at you for bringing it up. This often happens when you talk about any sort of cerebral effort to calculate climate damages. The numbers get so large that they seem objectionable on a number of fronts and people talk about estimates of damages as problematic because they're politically impractical (this is John Kerry's famous line: if you come to American voters with our climate debt they're going to shout you down and scream at you and never let you talk about it again because they think that you're going to be advocating for reparations which they're not going to stomach). People talk about it as politically ineffective in the sense that suggesting damages are so large that we have can do nothing about them, and they also suggest a scale of damage that seems intuitively implausible (how could it be that--in a world that I know today that seems relatively normal--the US is imposing something like a trillion dollars of damage every year on the world). This is the thing I want to focus on because it circles us back to the question of the Polycrisis. We have a resistance to seeing clearly or in moral terms the damage that we are doing. We prefer to not calculate those numbers or to not take them seriously and that brings us to a place where, collectively, we see the world as a zero cost setup with no damages being imposed. What that means is that we have effectively learned to normalize an absolutely gob smacking, astonishing and terrifying level of climate damage. What that tells us about what the world is going to look like going forward is quite disconcerting. It suggests that no matter how large climate impacts become, we are likely to interpret them through other lenses, through other languages (sometimes talking in climate terms but more often talking about other aspects of the Polycrisis they connect to). While that may be useful and practical from a political point of view, it really deprives us of the moral clarity and wisdom of perspective that we would get if we were able to see the full scope of changes that we are imposing on the world today. Instead, we sort of move forward somewhat blindly grasping forward, unable to see the full picture and calling ourselves wise and practical for being that blind. 

KATE MACKENZIE 

David, I talked to a lot of people about the social cost of carbon (modelers and so forth who are involved in developing and interrogating these numbers) and I really think those comments that you made are so great. The idea that a number just feels too reductive and it's technically not realistic to be able to put a cost on it (I can't remember, but one

researcher said that the marginal cost of a ton of carbon is infinite or so–in terms of what we know of it, anyway). Something that I often hear as a defense of this practice is “it's a policy ready tool.” I am just wondering what your thoughts are on that given that the US is an interesting example of a place that's had the social cost of carbon really present in some administrations and then ,in others, not being there really at all.

DAVID WALLACE WELLS:

I think probably all three of you are better experts to talk about the wonky details of the social cost of carbon and what it means, but what I would emphasize on that point is that even as a policy ready tool, it now seems too large to really implement into policy.  What does that mean? If we think about pricing this properly, it will completely transform the whole shape of the entire US and indeed the global economy. Maybe that's worth pursuing. I'd like to emphasize here what it tells us about the scope of the transformation that we're living through more than about the practical implications for policy. But I also think there's a big question about what happens when you have a

policy ready tool that develops into an impossible to implement estimate. That's sort of where we find ourselves today. One simple response to the Biden estimate in particular would be to say “well that number is so large because it is a global figure” and perhaps if it were simply domestic, as the Trump Administration made it, it would be easier to implement. On the other hand, that would deprive that estimate of an awful lot of its moral meaning and I think that would be damaging too.

NOAH GORDON: 

David, I have never heard the social cost of carbon discussed in those terms before. The framing that the US is exporting a trillion dollars of damage is really interesting and shocking. I think one reason it's hard to talk about is because when you put a number on the cost of carbon, you're getting closer to putting a value on the cost of human life and we do that in some areas of government and don't like to talk about it (like should a public health system pay for this surgery or is it worth doing this and that regulation) and then with climate change, it is always a question of intergenerational justice in this long problem. What discount rate do we use and how much should we value the lives of people 100 years from now? How do we balance this in deciding whether to restrict emissions from a smoke stack today? I don't have a question, I'm just sort of processing the trillion dollar figure that you put out. 

DAVID WALLACE WELLS:

It's amazing how many people I've spoken to about this--people who really work on this material. I will do the math for them and say “okay so your figure is this. Let me multiply that by the number of gigatons that we're producing. Here's the cost” and they're like “oh yeah. I hadn't really thought of it in those terms.” Maybe others on the panel have other thoughts?

NOAH GORDON

Tim, any thoughts?

TIM SAHAY: :

I'm just curious about the air pollution component. You've written a lot about air pollution--10 million deaths a year just from air pollution alone. I do not remember the [details of] the social cost of carbon: is the largest chunk of it just air pollution?

DAVID WALLACE WELLS:

No. I don't believe it it includes mortality at all.

TIM SAHAY 

Oh wow. 

NOAH GORDON

I want to ask David about air pollution too. We're talking about global and even intergenerational, but just on a local level, I've been so horrified following the story of New York's congestion charge and how it was blocked at the last minute. This is about more than just money, this has cost in terms of time and air pollution and safety. I guess maybe a quick question: David do you think the congestion charge is a polycrisis story as well?

DAVID WALLACE WELLS

It's certainly a showcase of political dysfunction and the cowardice of political leaders even in places that you'd imagine would be quite supportive of climate action. I've been really distressed for climate reasons but also just as a New Yorker (I really want my streets to be less trafficked. I live on an intersection of a highway and a bridge that doubles as a highway. I basically would like less cars there putting fumes into the lungs of me and my children). I really think that the distressing lesson about that failure is that we've heard a lot in the post IRA period about all of the obstacles to the roll out of renewables and other climate action in the form of regulatory oversight and legal action or challenges, NIMBY-ism, or NEPA problems. On some level, since the passage of the IRA that has been the dominant area of discussion among climate wonks. This was a case where we had gotten through all of those hoops and over all of those obstacles. And yet the political cowardice of a single figure was enough to torpedo this quite significant program. That's not to downplay the other challenge, it's not to say that we're primarily dealing with a political leadership problem when we talk about climate action in the US. But it is to say that sometimes policy can be easy in the confines of a little conference room or in a social media chat (to point the finger at permitting reform or whatever). The truth is if we are rebuilding all of the American energy system and transportation system and industrial system and agriculture and industry, we are going to be operating through an entire cobweb of challenges that are not reducible to a single target and include a lot of personal human difficulties like we saw in New York with Governor Hochul. 

NOAH GORDON

When the obstacles to the energy transition are more personal and political, it's even more frustrating. When the obstacle is physical, like batteries are less energy dense than fossil fuels, that's going to be a challenge, but we can work with that. Here you run into a governor who is very worried about a few Congressional races in New York and made the questionable decision to put off the charge.

I'm gonna tell my Polycrisis story now, shifting south from New York to another metropolis in the Western Hemisphere: Mexico City. The data point for my Polycrisis story is zero. That's the amount of water that some reports said would come out of taps in Mexico City after June 26 which they called “zero day.” As it turned out, there was more than zero water available because of efforts to reduce consumption and some rain came, So, this wasn’t an extinction-level event where people die of thirst in massive numbers. But, to paraphrase the climate scientist Kate Marvel, humans should probably aim for better than not extinct. That's a pretty low bar for us and there are a few reasons why the ongoing water crisis in Mexico City is a polycrisis story.

First, climate change is at the heart of it. We have higher temperatures in Mexico due to the climate crisis so you have more evaporation of groundwater. There's also a drought which scientists say is linked to climate change as well as the el nino weather pattern. We can blame climate change in part for the near dryness of the Cutzamala aqueduct system which supplies the capital with about a quarter of its water. But like any polycrisis, it's intersecting problems. It's also a supply-demand problem. You have 20

million people there and in so many cities they've been paving over roads and pumping water from aquifers for years. Households, industries, and farmers (we’ll come back to them) and they all want to consume more water because it takes a lot of resources to live and to give 8 billion people a good life on this planet. 

The biggest culprit is probably poor infrastructure. Mexico's water operator says about 40% of the city's water is lost due to leaky pipes. Then climate change exacerbates economic problems and it leads to those repairs not being done. Second, it's also a story about inequality and politics. When she was on the campaign trail. Mexico's now president Claudia Sheinbaum (who's a climate scientist) said every water user needs to put the national and people's interests above individual interests. But that's usually not how people respond. Neighborhoods are facing water rationing or just get dirty water to use for household chores. You have street protests about water shortages and in some parts of the city, armed guards have to accompany the water tanks to make sure they're not stolen. You also have wealthy Mexicans who have basically lakes of drinkable water and then you also have some water siphoned off illegally to maintain avocado orchards and then the fruits are exported to richer places so these north-south questions, the virtual water trade, does come up here. What is water being used for? It's agriculture. Agriculture is the biggest user. Finally, I think of Tim and Kate's work here, the connection to the politics of finance and currency. Juan Pablo Spinetto at Bloomberg has noted the contrast between the Mexican Government cutting the budget for the water commission (which would repair these pipes) as it increases state

funding for PEMEX (the debt ridden national oil company). According to some estimates, Mexico could fix a water system for less than 10% of what it spends on PEMEX, but Mexico has to think of how can it earn dollars from selling the crude oil that powers a world economy. You get into really hard trade-offs here. Polycrises are not easy to solve. 

Finally, there's Mexico-US relations. Texas politicians, like Senator John Cornyn, are angry that Mexico isn't providing the water to Texas that it is required to under a 1944 treaty. It is an issue where you have all these things coming together to cause a crisis that climate change is making worse. I've been trying to learn and read more about it over the past weeks. I wonder if you guys have any thoughts on the water crisis in Mexico or elsewhere. 

DAVID WALLACE WELLS

I wonder, you mentioned very briefly just as an aside, whether you know what portion of the water use is agriculture. What does that look like in Mexico City because in the US, whenever we hear about water problems, it is always talked about in terms of green lawns and shower lengths. Yet something like 90% of water use in the American West goes to agriculture, but we talk so much less about that as a problem. How does it shake out and how does it break down in the context of Mexico City?

NOAH GORDON

I don't have the figures with me for that but it's almost always agriculture, basically everywhere you go--and especially animal agriculture. Industry tends to use a lot of it, but it is so silly when we focus on celebrity swimming pools or things like that when, as you were saying in the American West, something like 80 plus or 90% of water is being used for agriculture. You even have people being unable to build new subdivisions or set up a chip foundry, while we don't talk about how wasteful our use of water is growing cotton or alfalfa in the desert. I have read about the avocados coming up as an issue, that was in the news recently with some US avocado inspectors being attacked by

Mexican criminals when they were trying to do inspections, but there have been some subsistence farmers in Mexico who have been destroying the illegal irrigation systems that water these avocados because they're shipped for export and there's no water

left for local people. We keep coming back to agriculture which in general is not something we talk about sufficiently as a cause and also victim of the climate crisis. 

KATE MACKENZIE

It's been a similar story to some degree in Australia. We haven't had really widespread droughts for a while now but there's a massive millennial drought around the 2000s. For the first time, public opinion shifted to the fact that we've got these rather large cotton

and rice growing industries which are incredibly water intensive-- not animal agriculture so much--but meanwhile, droughts are not uncommon here. There have been numerous campaigns that everyone's pretty familiar with (4 minute shower campaigns and only watering your lawn on certain days). It was really quite a moment here around 2004 when the whole question of the agricultural industry suddenly came into view. It's  interesting to see how it's really been pushed back on. These are not unpowerful industries even though there's an argument that they're not suited to a country that's got very little portable water. 

DAVID WALLACE WELLS

There have been some videos of water riots in Delhi too over the last month or two.

NOAH GORDON

I was talking to you guys earlier about the water minister in Delhi going on hunger strike because the situation is so bad and this problem was made worse by the outrageous temperatures we had in Delhi in June--52 Celsius or 125 Fahrenheit. Just shocking temperatures. I started to focus on Mexico City, but we could have talked about Cape Town in 2018 or Chennai in 2019. Even if you just talk about groundwater depletion like in Jakarta where the city is sinking, it's not a climate change story, it's just an overconsumption story of using so much water that the capital is sinking and Indonesia is now building a brand new one.

TIM SAHAY

Is there a similar problem in Mexico of plenty where you get a lot of floods and you get a lot of droughts? I mean what we don't talk about enough in the climate story is the water cycle is now extremely volatile. Unless countries are investing in storage systems and slow it down, sink it down through urban greening systems to recharge those groundwater tables and stripping away a lot of the concrete and hard surfaces in cities that is the reason why we get so much flooding, I don't see a solution that is just exclusively focused on agriculture. Obviously agriculture is the biggest user but it seems to me that we've had a 100 years of urban planning that has just completely upset

the water cycle by taking everything in hard surfaces and we should be thinking about urban redesign. I worked on this problem in Boston for a couple of years and it's a very tough nut to crack because real estate interests don't want to just give up expensive urban land to green ribbons and to rain gardens. They fight it quite vigorously.

NOAH GORDON

It's a good point Tim. There are a lot of ironies of the climate crisis. Places that are suffering from drought get too much water and can't handle it or can't capture it. Even air pollution that David was talking about earlier, like our efforts to cut air pollution in some cases raise temperatures because we're not blocking as much of the incoming sunlight. You do have these strange stories where we have too much and too little at the same time, and we end up in trouble.

TIM SAHAY

It also provides a lot of fuel to climate denialists: can't you guys get your story straight? 

DAVID WALLACE WELLS

I think to that point it's really useful to always keep in mind that global totals or even local annual totals for anything like rainfall are often quite misleading and understate the degree of transformation and disruption that we're living through. This is because you can have months without rain and then you have (like a Delhi just had) crazy crazy days of flooding and in some mathematical way that balances out. But the experience on the ground is very much unbalanced. 

KATE MACKENZIE

It's a challenge with modeling to predict or to get confidence around how much rainfall is going to change, but something that does seem to be fairly reliable is that climate change is intensifying downpours and just generally becoming more erratic. It has long been a difficult question about climate impacts. 

NOAH GORDON

We’re getting lots of great questions in the chat already so keep them coming, but I want to turn to Tim for our last Polycrisis before we start hearing from the audience.

TIM SAHAY

This is going to be a hopeful one and it's going to be about the hockey sticks of hope that we've been calling the immense acceleration in solar production coming out of China and largely across the world. The number that I have in mind is 11 cents per watt which is the cost of solar modules now and that was around 30 cents per watt just three years ago. It's almost fallen a third in price in just the last three years. It's coming out of that immense sort of technological dominance of China which has been sort of--it's not really a subsidy story--it really is a process of technological learning and squeezing of

costs with process efficiencies and that's an industrial policy that China has pursued since the late 2000s early 2010s of extreme competition between a lot of very large private firms that are now going down that cost curve and we're hitting around 11 cents per watt. They've generated a lot of process patterns and this is really a story of technological learning. We've been digging into one of our Polycrisis themes and that is what are the geopolitics of this? What are the economic questions that arise from these solar hockey sticks of hope? There's some positive ones. There's some dark side ones, so I will share some of those with you.

The positive one is what does it actually mean that solar is literally a dirt cheap

commodity? Jenny Chase, who is the solar analyst at Bloomberg, had this fantastic example of Europeans who are now starting to use solar panels as fencing for their Gardens because it's cheaper than the wire mesh fencing that you might buy. Who the hell would have thought you should do fencing with solar panels? 

Then there's the immense positive implications of what happens when countries are facing very disruptive electricity crises. Think about Lebanon, think about South Africa in the last couple of  years. They're importing these solar panels. There are very sudden switches in countries' policies where they start to import those solar panels and it's not really the country deciding that. It’s a lot of private actors, people, firms, businesses

that are just sick and tired of the electricity being out and they start to import solar panels as a form of self-generation and resilient self- production. Then you get a very fast reduction in air pollution if those solar panels are cutting into coal or if they're cutting into gas which is the next big story--solar plus batteries cutting into coal and cutting into gas. You're going to get a lot of air pollution reductions in these electricity crises. Those are some of the positive implications. 

There are dark sides to this hockey stick of hope and that is human rights abuses in Xinjiang where a lot of the polysilicon (which is the initial component of solar panel manufacturing) is manufactured. That has led to a lot of human rights campaigners and energy and climate people saying that we should make sure solar panels are not coming from polysilicon made from Xinjiang. And then the geoeconomic questions:

Should the West be derisking from China? Should we not be getting these these cheap solar panels? Should we create our own industrial policy to create new solar panel

manufacturing capacity at home whether it's in the US or whether it's in Europe? That has caused, as you may have heard in the news recently, a 50% tariff on solar panels. Those tariffs will start in 2024. Is that going to slow down climate action in the United States because we don't have enough solar panel domestic manufacturing capacity quite yet? These are some of these geoeconomic tradeoffs.

The last element of that is what we've been calling a cat and mouse game where Chinese firms realize that they're going to be slapped with the solar tariff if it says made in China so instead it's now made in Southeast Asia. It's coming from Laos, it's coming from Vietnam, Malaysia, Cambodia and this is something that started over a decade ago. It's going to be very hard to really enforce any kind of tariff policy. 

DAVID WALLACE WELLS

How do you see that playing out because I think in the US we've heard a lot about the US-China bilateral trade War, but it's obviously more complicated globally. How do you see the next few years unfolding with the global exchange of solar panels?

TIM SAHAY

I think you're going to get essentially countries realizing that they can use this cheap

electricity and import the solar panels.Once you have installed those solar panels in your home territory, it can't really be weaponized against you. They can't be blocked against you because once you have the solar panels installed, they're going to continue to produce electricity. 

I think a few countries are going to reject those cheap Chinese solar panels, but most countries in the world are just going to take them up and they're going to try and figure out what to do with them. Once you have cheap electricity, you could use it (Noah was just telling us about the water problem) for desalination. You could make liquids, you could think about making other molecules out of electrolyzers to produce green hydrogen for example. I think you're going to get a lot of value added things that

countries can do with that cheap electricity and this is in many ways a technological revolution when cheap electricity enters into more and more parts of the economy. I'm not very confident in what that's going to look like, but pretty confident--

DAVID WALLACE WELLS

You think the revolution is going to overwhelm any efforts to throw barriers to it?

TIM SAHAY

Yeah I think so. But, as always, politics gets in the way and politics is hugely important. It's a fight between different types of political interests. You have companies that make their money from installing solar panels who quite like having cheaper solar panels whereas companies that are interested in manufacturing solar panels would like to oppose cheap ones. It's a fight between installation and climate advocates versus manufacturing jobs and unions. That's a domestic fight that will only accelerate as these panels get cheaper and cheaper.

KATE MACKENZIE

Tim, you and I have talked about the massive increase in output and quality of clean

tech from China. China went from being an importer of technology to now really being an exporter of technology, of IP and not just intellectual property. IP in knowhow and manufacturing efficiently. A question I am always interested to hear your thoughts on is what can you see happening in terms of China now exporting that technology to other countries, particularly Global South countries, that are very keen to move up the value chain or move along the value chain rather than simply being called upon to export raw materials or very low value labor? This is actually really significant for development and is a potential pathway for a lot of countries to be able to make more sophisticated tech domestically. Do you feel confident that we're going to see China facilitating that production elsewhere in the world, particularly in Global South countries, or does that run counter to China's own economic strategy at the moment which is very much export-led and investment-led (really sort of doubling down on some aspects of their economic strategy)?

TIM SAHAY

This whole question of technological transfer, there's a way in which it works which is just FDI. A Chinese company will set up a joint venture in Germany, we'll set it up with Ford in Michigan, we'll set it up to manufacture electric buses in California so BYD has a bus manufacturing facility in California. All of these are just classic FDI, a classic globalization story and I think that is what we are seeing. A lot of countries just want to invite Chinese firms that are the leading firms in a particular sector (whether it's manufacturing solar panels, whether it's manufacturing batteries or a host of other green tech sectors) to do partnerships with their local firm so that their local firms can learn and upgrade their skills from a lead manufacturer. This is basically the story of globalization for the last 50 years. Developing countries have routinely invited leading American firms, European firms, German firms, Japanese firms to set up shop in

their country, learn from them, and upgrade. That's exactly what you said China did that for the last 40 years extremely successfully. 

I think we happen to be in a position of catchup growth with China which is a strange position for the Americans and the Europeans to be in but you do see a bunch of European countries (Germany, Hungary, France, etc.) inviting leading Chinese firms for that FDI. I think you're going to see pretty much that same story play out in Brazil, India, Indonesia, and many other developing countries. 

NOAH GORDON

I certainly hope so and even FDI into the US. I mean you should want to encourage tariff jumping and technology transfer. That's the only way that makes sense.Tim, I want to pick up on something you said. You mentioned the small downside to this very positive story of the falling price of solar panels. It's hard to think that low prices for a necessary good could ever be a bad thing, but you do sometimes see that with other important clean energy inputs like lithium (we've seen rapid falls in the price of lithium in 2019 after trying to cut subsidies or in 2023 when a wild price spike ended). They're mostly really good because it makes it cheaper to produce batteries and EVs today, but they can also bankrupt companies and destroy the business case for opening new mines today which could mean we won't have sufficient lithium 5 to 10 years from now. That's why you have growing interest among policy makers and ideas like a strategic minerals reserve or a strategic minerals bank that could backstop demand for important clean energy inputs. I shouldn't spoil what was a very happy story at the end of a talk on Polycrises. 

I want to go now to audience questions because we have another 10 minutes we've got some really good questions in the chat.

Kate, there's one that I think would be good for you: does the effective impossibility of integrating a real social cost of carbon on a global scale indict the financialization of climate in general? Basically, is there an alternative to the financialization of climate?

KATE MACKENZIE

As someone who's kind of arguably participated in the financialization of climate to some degree I think it's a really good question and possibly the answer is yes. In an attempt to make climate something that we can measure in a financial lens we've made it, as David was saying really eloquently before, we've made it something that is both too big to contemplate if that is done robustly but also less than what it really means. Is it really appropriate to be talking about a huge change and extremely threatening damaging change to the stable climate that we live in (in terms of this economy and financial system that we've built in our society, this very abstract layer that we've built in our society). I don't know if it's really possible to reconcile those things. Then the other argument is politically in terms of you political effectiveness: has that been the most effective way to actually get people supportive of taking action in climate when most people are dealing with extremely short term concerns in their life and to some extent financialization (talking about it just in financial abstract terms), keeps it further away and makes it seem more of an elite issue whereas we know it's really not.

DAVID WALLACE WELLS

As you guys have written about brilliantly and beautifully, if you're narrowly thinking about how developing countries can be supported in their efforts to decarbonize, there are solutions to the problems that do not incorporate a global reckoning with the social cost of carbon and the total damage estimate. It's just like we see the problem of poor countries having a cost of capital that is several multiples of what it is in the rich world. That's a huge part of the cost of deploying renewables. How can we build a system that allows those prices and that gap to close? I think Kate is absolutely right. There's

just some basic inconsistencies and some problems about financializing this whole challenge, but I also think that there are sometimes narrower ways of thinking about what lies ahead of us that we can see relatively clearly in pretty conventional financial terms.

KATE MACKENZIE

I really should add that I completely agree and actually some of the most difficult problems in advancing climate action globally are really simple ones that are constructs

of our current system. If the US Congress could ever see its way to pretty small changes and certain other actors, courts in the US and London. It's not that big a change that would be needed as I agree David--that could make a really significant difference to global solidarity and global ambition in terms of reducing the cost of capital and making it more available for lots of countries to invest in green things.

NOAH GORDON

We have a few questions here about the framing of the polycrisis. There's one: what utility does a polycrisis frame offer to policy makers? Another one: could everything be considered a polycrisis? Then there's even another one: what sort of governance is best suited to address the polycrisis? Tim, I wonder, do you have any thoughts on that? How can we take this frame that you use from your blog? How is that useful for policy makers to think in this way?

TIM SAHAY

If you have a web of interconnected crises, you need to create a more resilient system that can cope with unexpected new shocks. I'm very taken by something that Zoltan Pozsar (who was formerly of Credit Suisse) wrote, asking the question: what are

policy makers doing about the polycrisis? Broadly they're doing four “re-”s. They are reshoring production. They're Restocking – creating commodity stocks like the lithium stockpiling that you wrote about or the strategic petroleum reserve. They are rewiring--this is the solar hockey stick of hope where there's a lot of cheaper renewables and you need to build up new grids and change your electricity system so

there's a lot of money being put for rewiring. Then there's rearming. There's a lot of war in the world. In fact there's been a return of war to a greater degree than at any time since the end of World War II. So countries in a very highly securitized environment are spending way more money on war than they are spending on any of the other “re-s.”

That has been the response of policy makers. Whether they're spending more on war and less on each of those four “re-s” differs. In the United States, (since Biden's first year in office to this last year) the defense budget has gone up from about $600 billion to $900 billion. That's an increase of $300 billion while the rewiring program, the big bioeconomics and Inflation Reduction Act etc., is on the order of about $80 billion a year so you're spending three or four times more on war than we have on green spending. That gives you a sense of how policy makers are reacting to this polycrisis and I don't think we should be throwing up our hands and “oh we have no idea what to do.” I think policy makers have decided what to do. It doesn't exactly look pretty.

DAVID WALLACE WELLS

I would just say in response to the original question too, as a writer as opposed to a policy person, for me, on some level, the implications or the utility of policy makers is a secondary consideration to the first job of describing the world as it's unfolding in front of us. We need to do that well if we hope to shift this system. A first step is just seeing it as clearly as we can, which is, for me, the reason that the polycrisis is such a useful framework.

NOAH GORDON

I'll close with a sort of depressing question: could you discuss the implications of the climate crisis on the political stability of countries? Will we be seeing a trend to authoritarian states? There are a lot of factors that determine whether a state is authoritarian or democratic or otherwise. Certainly some elements of the polycrisis and the climate crisis could push polities towards authoritarianism. There's more pressure on resources, more demand for rationing or walls or keeping people away from resources, fighting among groups to hold on to what they have. But you can also see the flip side of the climate crisis as the opportunity that we have here. Some of the things, like the solar hockey stick of hope, if we really did get power that was too cheap to meter, as people said of nuclear 50 years ago, that's just transformative for the way people live and how we deal with disease and water shortages and so much more. Tim, you were talking about people replacing unreliable diesel generators or bad grids with their own solar power. You could imagine (if we solve the climate crisis in the way we promise to) that people are more secure and we turn away from authoritarianism and towards a more hopeful future. There's a possibility of abundance with lower emissions.  I just wanted to close on the note that there is still an opportunity here even if the

trends are quite bad. With that, we're right at 5:00. I want to thank the audience for coming and, of course, thank all of our guests Kate, Tim, David, for taking the

time to be with us today. Goodbye from Polycrisis and the Carnegie Endowment. We'll see you next time thank you.